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Serco's acquisitions and contract wins will be in focus on Thursday

Serco has already flagged that it expects its strong order intake to boost revenue in 2019 after several years of declines.
Naval vessel
The support services provider landed new contracts in US, Dubai and Australia

On the eve of Friday’s G20 meetings market sentiment may well have to contend with posturing from President Donald Trump and Chinese leader Xi Jinping - as any comments in the media (or more likely via Twitter) could fuel trading in either direction.

All other things being equal, however, Thursday morning’s main market highlight should be Serco Group PLC (LON:SRP), as the government contractor releases a keenly awaited trading update.

Serco has already flagged that it expects its strong order intake to boost revenue in 2019 after several years of declines.

In its 2018 results statement in February, the outsourcing firm raised its sales guidance for 2019 to £2.9bn-£3.0bn, from a previous estimate of £2.8bn-£2.9bn.

That compares to revenue of £2.8bn last year, which was down 4% year-on-year due to a weak UK market.

Since the results, Serco has announced a number of contract wins and extensions in the US, Dubai and Australia along with a £140mln share placing to help fund the US$225mln acquisition of US engineering firm Alion’s naval systems division.

The acquisition of the US naval business is expected to complete in the second half of 2019 and will contribute an estimated US$370mln in revenues in the first year of ownership.

When Serco reports its first quarter trading update on Thursday, investors will be hoping the recent contract wins and acquisition will lead to another upgrade to its outlook.

They will also want to know whether the Company is any closure to resuming dividend payments, and look for any further comment about its rejected attempts to takeover Babcock International PLC (LON:BAB) earlier this year, confirmed recently.

Significant announcements due Thursday June 27:

Finals: Greene King PLC (LON:GNK), Itaconix Plc (LON:ITX), Liontrust Asset Management PLC (LON:LIO), James Latham PLC (LON:LTHM), Manolete Partners PLC (LON:MANO), SDCL Energy Efficiency Income Trust PLC (LON:SEIT), XPS Pensions Group PLC (LON:XPS)

Trading updates: Serco Group PLC (LON:SEP); Gama Aviation PLC (LON:GMAA)

AGMs: Bluejay Mining PLC (LON:JAY), Columbus Energy Resources PLC (LON:CERP), Erris Resources PLC (LON:ERIS), Immupharma PLC (LON:IMM), Immotion Group PLC (LON:IMMO), Metal Tiger Plc (LON:MTR)

Ex-dividends to knock 6.18 points off FTSE 100 index: British American Tobacco PLC (LON:BATS), British Land Company PLC (LON:BLND), Burberry Group PLC (LON:BRBY), Experian PLC (LON:EXPN), JD Sports PLC (LON:JD.)

Economic data: US weekly jobless claims; US GDP; US pending home sales; US PCE inflation


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