Pre-Close Trading Update
Strong close to the year; continued progress in revenue and margin
This statement updates investors on the estimated Group performance in the fourth quarter, ahead of the close of the financial year on 30 September 2021.
With 10 days of operations to go, the Group's revenue performance in the fourth quarter is expected to improve to c.86%[1] of 2019 revenues, slightly ahead of our guidance of 80-85%. For the full year 2021, our revenues are expected to be c.76%1 of 2019.
The outperformance was led by Sports & Leisure with improved attendance (particularly outdoor sports) and strong per capita spend. Our Healthcare and Defence, Offshore & Remote sectors have been resilient throughout the pandemic and continued to trade above 100% of 2019 revenues during the period. Since the start of September, the return to Education has been strong with high on campus spending, while trading in Business & Industry was in line with our cautious expectations.
The Group's underlying operating margin in the fourth quarter is expected to be around the mid-point of the guidance range of 5.5% to 6.0% as we continue to manage mobilisation costs and inflation whilst adapting our operations according to clients' changing requirements. For the full year 2021, our underlying operating margin is expected to be c.4.4%.
Currency
Trading results from our overseas operations are translated at the average exchange rates for the period. At current spot rates[2], foreign exchange translation is expected to reduce 2020 reported revenue by around £943 million and operating profit by £39 million.
Outlook
We continue to be encouraged by the ongoing growth opportunities including strong momentum in new business wins, from the acceleration in first-time outsourcing, and increased potential for market share gains.
Looking ahead to the start of the new financial year, most of our sectors are expected to continue performing well; although we remain cautious about Business & Industry given continued uncertainty over the pace of office reopening in our major markets.
As previously stated, the Group's recovery is unlikely to be linear and will depend on a number of factors including vaccination and infection rates as well as any further containment measures taken by governments. However, we remain confident in our ability to return to a Group underlying margin above 7% before we return to pre-COVID volumes.
Overall, we are excited about the significant structural market opportunities globally, the potential for further revenue and profit growth, and shareholder returns over time. We will provide a further update on trading performance at our full year results on 23 November 2021 when we intend to provide further financial guidance.