Good morning, everybody. Rupert Soames here, and welcome to our first half results presentation, which is the first without Angus Coben, who stepped down at the AGM. And my new responsible adult is Nigel Crossley, who's been with Serco since 2014 and who has played an absolutely vital and central role in the transformation of Serco. He also speaks Queen's English, so no need for instantaneous translation from Angus' Viking. Also on the call is our COO, Chief Operating Officer, Anthony Kirby, who joined Serco in 2017 as HR Director and was promoted to Chief Operating Officer a year ago.
So So I'm just going to talk through a couple of introductory slides, hand over to Nigel to cover the finances, and then I will come back for of the operational issue. So continued strong growth. Interestingly, sort of doing all the right in these slides out, almost all the percentages are very similar to the ones that we achieved in 2020. And our scalable and agile government services platform has delivered what we believe is, by any standards, an impressive first half with revenue up 20%, underlying trading profit up 62% and our margin increased by from sorry, from 4.3 percent to 5.7 percent and an exceptionally strong cash performance with free cash flow of $130,000,000 net debt, consequently, is $225,000,000 which is up only £82,000,000 year on year despite during that period having spent £249,000,000 on acquisitions £40,000,000 on share buybacks. That leaves our current leverage of 1x, which is right at the bottom of our target range.
But perhaps most encouraging and boding well for the future is the strong order intake of $4,100,000,000 That's 190% book to bill, and 60% of that order intake was represented by new work. Our pipeline also, which you would spec with that amount of order intake to have been ready hammered has actually been largely rebuilt and stands at $5,800,000,000 compared with $6,400,000,000 at the beginning of the year and is up 40% on the position a year ago. And this performance is not an accident. It's been the result of 7 years of investment in building our operating platform, our culture of loose tight management, which has performed extremely well, allowing the business to Gro and the people on the front line and the managers to do what they needed to do, but also within a strong compliance and governance framework. Our operating platform has proved to be extraordinarily scalable.
We now have nearly a third more employees than we had a year ago. That's 21,000 additional people and taking us to about 83,000 people. And that sort of growth to achieve that sort of growth without any loss of operational control is, I think, quite a control is, I think, quite a strong achievement. At the same time and looking forward to the second half, we are have stepped up the rate of investment further in our Government Services platform to increase our long term competitiveness. Just spend a few seconds on the dividend.
We're proposing an interim dividend of 0.8p. And just to put that a little bit into context, we had planned and hoped to pay both a final dividend in respect of 2019 and an interim in 2020, but because of COVID, we pulled both of them. But if you look back from the final dividend that we paid that we announced in with our results in respect to 2020 where we did pay a final dividend and go on the basis of 2 thirds, 1 third, that 0.8p would imply a 15% increase over the 0.7p that we would have paid if we last year. In terms of guidance for 2021, the UTP guidance remains unchanged, an increase of 23% year on year and around to about £200,000,000 And the free cash flow guidance has increased by £20,000,000 to £120,000,000 and the net debt forecast has reduced by $25,000,000 And we'll talk more about the drags in the second half and the slightly odd shape of the year with a very strong first half. But the important thing to note is that the €4,000,000,000 of order intake sets us up well to manage what will be the inevitable reduction over time and hoped for reduction over time of the COVID work as we come out of the pandemic.
Turning over to the next slide, that's Slide number 6 in the pack. This is, I think, in 18 years of running public companies and doing presentation. This is about my happiest slide, showing a consistent track record of progress over the last 4 years. For a government services company to achieve revenue CAGR since 2017 of 10% underlying trading profit CAGR of 30%, is, I think, pretty impressive. Our margins have gone from 2.3% in 2017 to 4.7% based on our forecast for guidance for 2021.
And over that period, between January 2017 June 2021, we booked $15,000,000,000 of revenue, but we booked $19,000,000,000 of order intake. And I think that that is a real, A, bodes well for the future, but B, shows the strength and the solid nature of our recovery as we are in the growth stage of our strategic plan, which those of you who've been following us since 2014. We set out and it's being stabilized, transform and grow. And I also think that the strong revenue CAGR and the profit growth rate tends and the order intake tends to indicate that we are performing well relative to peers in our sector. And at that point, I'm going to hand over to Nigel to take you through the financial review.
Thank you, Rupert, and good morning to everybody. This morning, I'll be talking about the group and the division's financial performance, and we slightly amended the way that we've organized our finance presentation to make it a little less dense. But I want to assure everybody that the detailed finance slides that were previously used are of that and in the appendix to the presentation, which we're putting on the website. So we'll move to Slide 8, the finance overview. So the first half has been exceptionally strong, as Rupert has said.
Revenue grew 19% to £2,200,000,000 5% of this growth has come from has been generated by 2 acquisitions of Facilities First in Australia, which we closed at the end of the year and WBB, the U. S. Defense acquisition, which closed at the end of April. Organic revenue growth was 15%, with the COVID-nineteen related work in Australia and the UK contributing most of this. And our 3 largest divisions of all grown in the period.
I'll provide more information in a minute on the performance by division. Underlying trading profit for the period was £123,000,000 an increase of 58% on the first half of last year and delivering a 5.7% margin, up from 4.3%. Part of the increase in margin was a result of operational leverage as our revenues grew more than twice as fast as our overheads, underlying the scalability of our government services platform. Acquisitions have contributed 8 percentage points of the 58% increase in the group's profit, where there's been a negative impact from foreign exchange. Underlying earnings per share was 6.7p per share.
Which is 75% higher than the first half of twenty twenty due to the strong trading profit performance, flat finance costs year on year at a tax rate of 23%, which is lower than last year, which is mainly due to the release of a tax provision that is no longer required. Free cash flow of GBP 130,000,000 has resulted in cash conversion of 137% unleverage at the bottom end of our target range of 1x to 2x EBITDA. So turn to Slide 9, the U. K. The U.
K. Has been the standout performer of the group in the first half of the year, reporting 33% organic revenue growth, more than doubling profits, adding 2 percentage points to the margin as well as securing £3,000,000,000 of order intake. Systems Services revenue was up 73% in the period. And COVID-nineteen related work, particularly test centers and tracing contracts, contributed most of this growth. The leisure business is starting to show early signs of recovery after the pandemic with both higher revenue and lower losses than last year.
Assistance Services also been successful winning 2 regions on the DWP restart contract, helping long term unemployed get back into the workplace. Mobilization of the contract has significant cost in the second half, that revenue and profits will start in full in 2022. Justice and Immigration had a strong first half, largely on the back of a successful start up of the new prisoner escorting contract, which covers a larger region of the South of England than the previous contract. This contract incurred significant start up costs last year, and the swing from loss to profit has had a notable impact on the division's margin. In addition, we've seen higher volumes on the asylum seeker contract in the first half of the year.
Transport and Health are the 2 sectors that have been most impacted by the pandemic. However, we are starting to see some early signs of recovery. Staff absence levels were high in the Q1 lockdown, and our transport businesses, particularly motor rail, has been hit hard by lower ridership volumes. The defense business has traded in line with our expectations in the period. But the significant development in defense is the contract wins in our Vivo joint venture with Angie, which will be providing facilities management to defense infrastructure organizations, where we have won 2 regions for both BIO's Estates and Housing.
The total value of these contract awards is £4,000,000,000 of which GBP 1,900,000,000 is Serco's share. The mobilization of the contracts and the set of the joint ventures management and processes I've already begun, but revenue does not start until Q1 of 2022. Despite the exceptional order intake during the first half of the year, the UK and Europe pipeline has largely been replenished and includes Gwenparver, a new prison bid. And in defense, there are further DIO opportunities on the next generation of the Skynet contract. Moving to Slide 10, the Americas.
It's clear that Americas results have been impacted by a weaker dollar when translating to sterling. But on a constant currency basis, revenue has grown 6% with flat organic growth and underlying trading properties up a noticeable 15%. In the Americas, there's modest growth in the three sectors where we operate. Defence has benefited from the WBB acquisition, which has added £30,000,000 of revenue in the period. Although elsewhere, there's been a small organic decline in defense, largely due to the delays by the customer in awarding new contracts.
We currently have about $2,500,000,000 of tenders awaiting adjudication. Underlying trading profit was £57,000,000 and then the Americas now accounts for almost 40% of the group's profits of over 24% of the group's revenue. The profit margins increased 95 basis points since last year, which is due to the higher margins in the WBB acquisition, stronger operational performance in the number of contracts and a £3,000,000 profit on the sale of our U. S. Parking contracts.
Order intake was £1,000,000,000 There were 2 important bids, which have been rebids, which have been secured from the Canadian Air Base in Goose Bay and the anti terrorism force protection for the U. S. Navy, along with a number of new contract wins totaling £250,000,000 which are largely in defense. The Americas pipeline is the largest in the group, with defense making up the bulk of the opportunities. As our customers return to their offices post the pandemic.
We expect to see an increase in the rates of awards being made by the return to organic growth in the second half. So turn to Slide 11. In Asia Pacific, revenue has grown by 38 percent to £458,000,000 11 percentage points of the growth is organic, or 17 percentage points came from the acquisition of Facilities First Australia, and FX has added a further 9 percentage points. The acquisition is included in the Health Sector results and accounts for most of the growth in the period most of their growth in the period. Justice and Immigration has generated strong growth from the new build Clarence Prison in New South Wales, which accepts its 1st prisoners in July 2020 and is still in the ramp up phase, with the prison currently at around twothree at full capacity.
There's been further growth in the immigration revenue arising from the reopening of Christmas Island and with additional variable work requested by the customer. The underlying profit margin for the period has increased by 1.5 percentage points to 5.5% due to the increased volumes on the immigration contract and operational leverage of higher revenue base on lower overheads, of the overheads are weighted to the second half of the year due to some additional bidding activity. Despite strong revenue growth, our order intake in the period was low, with this year's revenue growth largely coming from wins in the prior year and the existing business. Encouragingly, the pipeline as PAC is being rebuilt and includes the 2 largest opportunities in the group, the facilities management of Frankston Hospital of vehicle licensing in Victoria. The division also has the largest short term rebate risk in the group with the immigration contract scheduled to end later this year.
But I'm delighted to say that we have recently received a letter of intent from the customer to extend the contract for a further 2 years from December. Moving to Slide 12. The Middle East division's results have been impacted by COVID-nineteen, with revenue down 7% on constant currency basis and underlying trading profit broadly The areas of the business have been impacted by COVID-nineteen, including air traffic control and other airport related contracts piece of reduction in volume of flights and passengers. Additionally, there's been lower project activity in our Sits and Services business. And we've seen limited COVID-nineteen response work in the region.
However, we've just started a tracing program supporting 1 of the governments joined on our success in reacting to the customer demanding other regions. Despite the lower revenues, profit held up in the period, and this is largely because of above normal margins on contracts where the scope of work has increased and through good cost control of contracts where revenues have been negatively impacted. The division's pipeline is in the process of being built after loss of Dubai Metro, which ends in September, where the negative impacts on revenue will be greater than the loss of profit. Encouragingly there have been some wins in the period, including Ras Al Khaim at Air Traffic Control, Dubai Airport Technical Manpower as well as the mobilization of Dubai Airport customer services contract. So we can move on now to Slide 13, which is cash flow.
Our cash flow was exceptional in the first half of the year, continuing our recent trend of strong cash generation. Trading cash conversion was 130%, largely due to positive working capital inflow of £44,000,000 during a period of significant organic growth. This is due to a collection of some older debts, customers paying early to support their supplier base during the pandemic and some favorable timing effects. We have not used any financing or efforts out of the ordinary to reduce period end net debt. We continue to comply with the U.
K. Givens Prompt Payment Code, that 89% of our U. K. Suppliers were paid within 30 days. In the second half of the year, we expect the favorable working capital to unwind as customers revert to more normal terms.
And additionally, we will repay the payroll taxes deferred during the pandemic in the U. S, for which there was no mechanism to pay early. Overall, we expect cash conversion for full year to be around about 90%. The better than expected cash flow performance is also reflected in net debt, with adjusted net debt of GBP 225,000,000 unleverage of 1x EBITDA at the bottom end of our range. This has been achieved in a period when we've invested GBP 250,000,000 in acquisitions, £40,000,000 in a share buyback program and paid out 1st dividend for 7 years.
Turning to Slide 7, tax. In the June 2021 balance sheet, we've recognized a UK deferred tax asset relating to historical losses in the UK in the SOKO Group of UK Companies. We've been able to do this because we now have confidence that there are sufficient future profits to be made by the U. K. Business against which we can use these historical losses.
For the purposes of modeling the impact of the deferred tax asset, You should know that the historical losses can be offset against approximately 50% of the future taxable profits, having the effect of reducing the cash tax payable. We expect there to be £5,000,000 to £10,000,000 per annum of cash benefit at the medium term. However, there'll be no impact on the tax charge in the P and L because as the assets are utilized, the tax asset value is reduced and there's an equivalent charge in the P and L. And if anybody wants any more information on the subject, you can pick up with Paul or I after the call. I'll go to Slide 15 for our final guidance.
The revenue costs and profit guidance for 2021 is unchanged from what we communicated at the half year pre close announcements. However, we have improved our guidance for free cash flow and year end net debt, reflecting the strong performance we have seen in the first half. Revenues for the full year is actually expected to be around £4,300,000,000 which is 10% higher than last year, including 6% organic revenue growth. Within our full year underlying trading profit guidance of £200,000,000 there is a strong weighting towards profit in the first half. In the second half, we will see the profits end on AWE and Dubai Metro and the below COVID-nineteen related work, partially offset by some recovery of contracts adversely affected by the pandemic.
We'll also make a number of investments in the second half, including the mobilization of DWP Restart contracts that will turn into a profit in 2022. We'll also be developing and implementing our new employee management system, People First, accelerating the rollout of our workforce management, implementing Serco Workforce Solutions to manage contingent labor, bringing our European business onto SAP, preparing for UK SOX and holding the group's cybersecurity. The total investment is around £10,000,000 and is expected to be completed by the end of the year. As I've already referred to on the previous slide, we expect the exceptional working capital inflows we saw in the first half to reverse in the balance of the year. And our free cash flow is expected to be approximately GBP 120,000,000 for the full year.
This will result in net debt of around GBP 250,000,000 at year end and leverage at the bottom end of our target range of 1x to 2x EBITDA. Looking further ahead to 2022 And while we still have our budget process to work through, it is clear that the shape of next year will be quite different. We expect there'll be much more much lower COVID-nineteen response work. But there will be some offsets against this drag, including the profits from the exceptional order intake we've seen in 2021 and the reversal of this year's mobilization costs. The recovery of businesses negatively impacted by COVID-nineteen and the increased rates of investments we've had in second half returning to more normal levels.
The absolute level the absolute scale of these offsets are difficult to predict without a detailed budget process, which will be running the second half of the year. And Hans will provide more information on 2022 later this year. I'm now going to hand back to Rupert.
Thank you very much indeed, Nigel. And just moving to Slide 17, the usual highlights and
lowlights slide.
Well, obviously, I'm extremely proud of the operational delivery that my colleagues have produced. And whilst it has not been easy for anybody, The fact is that for the 90% or so of our employees who work on the frontline in hospitals and prisons and on defense spaces and in transport, it's what has been particularly hard. But what I think has been particularly pleasing this year. Not only have we had the big swings and changes, both on the upside and on the downside in our business from an operational point of view. We've also done 2 very substantial acquisitions, and those have been integrating well into our business.
I'm going to talk a little bit more in separate slides about both COVID-nineteen response and people. But I just want to reiterate this point about the platform that we have gone and built over the past few years and just look at the impact that, that has had where our overheads have grown at half of half the rate of our revenues. And that is a time when we've increased our headcount by 30% year on year. The order intake of 4,100,000,000 key wins are one of the things that we pride ourselves is that we play nicely with other people in the market, and we've created this joint venture with Angie. And together, we have won of a very large share of the DIO tenders, which is the largest tender that has run across Europe that have landed in the U.
K. For many years. The DWP restart program is about retraining people to come back into the jobs market. We're very proud to be associated with that, and the gain to have a significant market share there. And Goose Bay in Canada, an important foundational business contract for our Canadian business, an important one.
And Antiterrorism Force Protection, which is a worldwide contract where we go and support U. S. Bases around the world on their perimeter security, brings through a lot of chargeable work, less so at the moment, but as COVID lifts that will grow in importance. And finally NHS pest control. I'll talk more about what we've been doing there in a second.
Just we talked about the pipeline growing. That's obviously, again, boding well for the future. And on the acquisitions front, as I said that the integration is going well, but we also went and did another small acquisition of a marine maintenance business in Belgium a few weeks ago, which is helping us build up our defense business in year. In terms of investment in the platform, I just want to pull out a couple of these. I'll talk a little bit more about People First later.
But this what we're calling is U. K. SOX, as many of you will be aware of the consultation on audit and governance, which is proposing to introduce a regime not dissimilar entirely from the U. S. Sarbanes Oxley program, where there will be far greater requirements on boards to go and validate the operational controls.
This is going to be a huge investment for a lot of companies and worth getting ahead of that curve. I think you might say that we're making hay while the sun shines because we want to get that work done. There's goodness in it anyway, and we'll be spending about 2 between £2,000,000 £3,000,000 in the second half doing that work before even the final requirements are set because we think we know what the direction of travel is. And also just mention in passing the Employment and Learning Services, which is a platform that we are building to provide integrated access to employment and learning services of our own BASF. And we will with the early stages of that, but that may well produce an important new patent capability.
And we're bringing our European business into onto the SAP system, and we are still investing money impacting an increased rate on cyber security. So in terms moving then to the lowlights, well, the dreadful impact of COVID-nineteen on the lives and our welfare colleagues and families. And the dreadful truth is that for many of our colleagues, home life actually do not offer a lot of respite from work life. But that is the same for many companies up and down the line, but particularly, we feel for Serco with its emphasis on frontline services. We mentioned this rather strange shape to the year where the UTP in the second half is going to be significantly lower than the first half as we get various drags of the AWE and Dubai Metro, the investment in the DWP mobilization.
And we will see, we believe, a reduction in COVID-nineteen contracts through the second half and also increased investment, all of which that certainly the increased investment will set us up well for 2022. Bid losses, we lost Dubai Metro after many years of running that. We were sad to lose it. It wasn't our most profitable contract, but we were obviously sad to lose it, and we lost Dungebwl Immigrant Removal Centre in Scotland. And also, we were hoping to bid for the Australian Defence recruitment, and those were all losses.
I would mention emerging inflation. Well, it's the subject to du jour, as we would say. And yes, there's quite a lot of it about those 2 particular areas that I would mention that will affect us. 1 is utilities because we are looking after around about 25,000 asylum seekers in houses around the country, and that requires water and electricity, and the prices of those are going up. We tend to buy our electricity on sort of forward head 12 month forward contract that we are watching that carefully to see how that goes.
And I would also say the other sectors in insurance, where we're yet again looking at a very significant increase in insurance rates in the business. We were very sad to that AWE was taken back in house by the government, but we have put our shoulders to the wheel. We take the view that you judge a company, or you judge a regiment in military terms by how it leaves its barracks, not how it arrives
at the barracks.
And we are very pleased to say that the customers are very pleased with the way that we work with them to hand AWE bank. There's been a lot of slippage on tender adjudications, particularly in the U. S. Where as Nigel said, I think we got about $2,500,000,000 of sub waiving adjudication. But these delays are also encouraging incumbents to appeal.
I would say that actually despite this, of the North American business actually had very strong order intake, but a lot of that came from Goose Bay, which is a very long lived contract. And finally, on the issue of staff, it's been difficult to recruit and retain staff in some custodial and escort settings, particularly we've struggled to get to the full muster, particularly in the health care side at Clarence. PEX has been the proven escorting service is being difficult. And what we're seeing interestingly enough on Test and Trace is that a lot of the people who it was very easy to recruit into that service, a lot of them are beginning to return to their original jobs from which they left at the beginning of the pandemic. So just moving on to Slide 18 and talking a little bit more about a little bit more color on the support that we're giving to governments around the world on COVID-nineteen.
Well, our total revenues from direct revenues from COVID-nineteen has been about GBP 365,000,000 pounds in the first half, which compares to about £130,000,000 in the first half of twenty twenty, when really COVID only got going in the second quarter, our COVID revenues last year. And this year, obviously, we've had of full 6 months of it. But the majority of that is spent in the arises from the U. K, but by no means all. But within the U.
K, we have delivered the scale of the services that have been delivered under that are enormous. We've delivered in the first half 12,000,000 hours, equivalent of about 14,500 full time equivalents of people to NHS Test and Trace. And since May 2020, we've made 24,000,000 outbound calls. We've been 8,000,000 tests conducted on test sites run by Serco, and we've distributed 6,000,000 lateral flow devices. On tracing, we provided about 50% of tracing call handlers, and the numbers vary week by week in accordance with demand from a low of 3,000 FTE to over 10,000.
And at the moment, we are running at about 13,000, but expect that to drop off really quite quickly in the coming weeks. In terms of testing, we got about 25% of the Pillar two testing sites, which was about 200 sites. We expect this to reduce by September to around about 20% market share. It's a mixture of regional, local and mobile test sites. We've also had increased volumes in immigration, and we're now currently looking after about 25,000 asylum seekers who we are providing accommodation to, which is an increase of about 7% year on year.
In ASPAC, we've been providing extensive call center support for lockdown and vaccination programs. Last year we provided them with support on quarantine hotels for a brief period of time. But enduring is the temporary immigration in isolation facilities as part of our immigration contract and the reopening of Christmas Island to provide the customer with additional capacity. In the Middle East, we last year, we helped to mobilize the field hospital World Trade Center. And I'm delighted to say that we've actually now been asked by one of the governments there to start providing tracing support.
And as of now, we've got about 150 people providing tracing. We hope that might increase in the coming months. So We've said all the way along, since we started doing this work, we put our hands up and said, look, this is ephemeral. We hope that this is going to go away. And as soon as possible, this will mean that we are returning to normal life.
I am asked on a daily basis how much how long do I think it's going to last and how much will it. The answer is we don't know, and the government doesn't know. What the governments have put in place, though, is an extremely flexible framework that allows them to flex their capacities to respond up or down. We made our best guess for this year, which is part of our forecast of 200 well, our guidance of 200,000,000 for 2021. But whenever it comes off, it's going to leave an enduring legacy for our business.
It's gained a legacy of an enhanced reputation because I think the government believes that we've done extremely well for them. It's improved our systems, our skills, our know how and ability to respond to absolutely astonishing increase in the scale of last year ago, we still up 10,000 people in 4 weeks to provide additional tracing capacity. And as I say, this is going to that's given us a legacy of knowledge, understanding and know how and also reputation that will stand us in good stead in the future. Moving on to the next slide, Slide 19, and around people. I mentioned that we've increased our headcount by nearly 30%, which is 21,000 people year on year.
Most pleasing though is that Serco has become a sought after employer, which I have to say was not necessarily the case when I joined in 2014. In fact, I was knocked over by of the rush of people out of the door. But if I tell you that on an average basis, each month, 30,000 people apply to work for Circa worldwide, and that's an increase of 22% year on year. Naturally, we've repaid all our furlough claims. Under any one time.
We've got about 500 people who we keep on full pay whilst they are shielding. Part of our government services platform is People First. That is a significant amount of software partly adapted existing systems such as ServiceNow, partly using tools like Boomi to go and integrate with the HR core systems and using a system called Appian to go and produce proprietary content for us to allow us to be really efficient in terms of recruiting and onboarding and managing people. We think that that's going to give us some efficiencies in our offshore back office. We're in fact moving quite a lot of our back office from India into back into the U.
K. Because the more it's more and more that gets automated. But that's not really the point. The point is for the managers themselves. The system is much easier to use and more attractive.
We've set up Serco Workforce Solutions, which is an in house contingent labor resourcing and management system, and we will have 5,000 people on the books of Serco Workforce Solutions by the end of this month. Workforce management. We now have covering 27,000 employees. And as I mentioned earlier, we're developing a new employment and learning services platform. But it's not been without its challenges.
The restrictions on movement at the moment, though, particularly severe in Australia, not only can We there's a lot people can't come in, and that particularly affects the availability of nurses and other medical staff. But actually, within Australia, the states have shut their borders. And we've seen several weeks now where maybe you can move really into Western Australia or the other states that is locked down very tight. We've had the issue of EU workers who might have a right to work in the U. K, simply not returning.
And within businesses, people who joined us on a temporary basis going back to former careers. We've had having to do a lot of refresher training because people have not been doing their jobs. And most obviously, that might be air traffic controllers who are having to retrain because there's just not been a lot of air traffic. But also perhaps bizarrely, you think lifeguards were having to go through retraining in our leisure business. And custodial officers who we've taken on and recruited during the crisis used to working in prisons where that prisons are basically locked down for 23 hours a day and now having to adapt to their first experience of having prisons would open with free association.
The pandemic that is called unshielding, well, we're taking that in our stride. We're running in the U. K, about 7% to 10% daily absence rate in the U. K, which is compared to a normal rate of 5% to 6%. It is very annoying in some of our contracts, particularly environmental services and to a lesser extent transport that I think that we are managing through that quite well.
In terms of pay inflation, I think what I would say. So I think that around the world, a lot of the labor markets are in sort of spasm at the moment because as restrictions get lifted. People are thinking about where they want to go. There is some big demands from some unions taking intransigent positions to make sure that people they haven't seen the numbers that they are presenting them. And but we think that we have paid, pay increases.
We paid them last year, and we pay them again this year for our staff. So it's not that we've been in a pay freeze. And this year, we've already paid 2%. How that's going to work out in H2 and into 2022, we can't tell. We will have to play that one.
But my feeling is as more and more people come back to work with furlough coming off, the some of the stiffness in the labor market will start to at ease. And you may have seen that we got surprised to find in part of our supply chain, people using some of our suppliers were using mini umbrella companies to reduce their employment costs, which was completely unacceptable to us. I think what there's been a say about that is how fast we were able to react to that and as soon as we got literally some thousands of people were moved from out with the suppliers who were supplying through those mud companies into our own Circa workforce managed solutions will deploy directly whatever, but we got that tidied up within about 8 weeks of discovering it. Over the next slide, Slide 20, my second favorite slide of all time, with our engagement scores. You will remember that we do we test the engagement every September.
We're just preparing for the next engagement scores. And over time, they've been improving. But I just want to make the point that we also do pulse checks where we think where we want to check whether there's an issue. Pleasing you there. I would draw attention to a couple of those ones.
One is NHS testing, where we did and we had a huge response, over 70% response, and a very high score from NHSN, both in February when we did it. And again, when we went back in June 2021. We're still scoring 79%. It's actually above the average for the company. And that's quite several, sort of how many people there who have not been working for very long.
Sharjah Airport and Victoria Police were once where we we're worried about the morale within those contracts. So we went and did some pulse checks there. But also particularly pleasing for me is we did a post acquisition pulse check of facility starts in April 2021, which would have been sort of 4 months after acquisition and got a very high score from there. So that is all quite pleasing. Moving to summary and outlook, and that is Slide 22.
I mentioned 4 years of strong delivery, a 10% CAGR in revenue since 2017 and UTP of 30%. Book to bill since 2017 of 126 percent. For the last 18 months' performance, as I said, is not an accident, we've been working on transforming Circa to try and make it an agile and scalable government services platform for that time. Our loose tight management philosophy has worked well. I think that we've shown that despite a lot of the press, we're still a trusted and valued by governments.
And we've got a motivated strong and very highly experienced management team. Very strong 2021 in prospect, 10% revenue growth, 23% UTP and strong cash conversion. We mentioned that H2 'twenty one will be lower for reasons we've got into. I would point out that it's going to be partly offset by WBB and Facilities First and also reducing drag from those areas of the business that have been hit by COVID as the COVID contracts come off. And the €4,100,000,000 of order intake we'll start to flow through in 2022, including beginning to see revenue from DIO MDWP, and that sets us well to manage the rundown of the COVID work.
We're going to have a Capital Markets Day in the Q4, probably the end of November or beginning of December. We'll let you know the dates as soon as we half of them. But just to remind you all, in the future, we believe that the 4 forces, which we introduced to the unsuspecting world to in 2015 when we announced our strategy for our turnaround plan, the 4 forces still rule okay, and we'll rule even more okay going forward. That's governments having to deal with growing costs of health aging population and investment in infrastructure, rising expectations of choice in one of the things that COVID has brought many more people into contact with government services. And it's also given people got them into the habit of comparing government services across different countries.
People now know what the vaccination rate is in Germany or Australia or the United States. And this feeling that public services are important not only for people who are less well off and vulnerable, but also to the middle classes is going to have a profound political impact, we believe. Government that will need to balance public income and expenditure and reduce debt. And voters are going to be no more willing to tolerate higher taxation than they ever were before. So that's going to lead to fierce pressure on governments to deliver more public services of better quality and greater resilience for less money, and that plays to what we offer government.
Thank you all for your attention, and we'll now hand over to Q and A.
Thank you. Your first question is from the line of Paul Sullivan from Barclays. Please ask your question.
Yes. Good morning, everyone. 3 from me. Just firstly, I mean, the enduring benefit from COVID that you speak of, Rupert, I mean, How should we think about that in terms of medium term growth expectations? And are you seeing it starting to come through in the emerging pipeline in the conversations that you're having.
Secondly, can you talk about the timing And conversion of the existing pipeline. And given the higher first half win rate, should we be expecting you to win more of it going forward? And then finally, given the good progress on debt reduction, can you talk about your capacity for another deal and give us some color on the acquisition pipeline?
Thank you, Paul. Nigel, would you take the timing conversion of the pipeline. In terms of enduring a benefit, that's it's hard to quantify, but I think it's going to make us a better competitor in the marketplace. And if you want evidence that participating in this has done us good, then only just look at the $4,100,000,000 of order intake. I mean, these were decisions that were taken at the time when we were in the middle of going and responding to it.
And had governments been in any way cross or we weren't doing well. I don't think it would have happened. But we must be complacent here, but I think that when we're saying that there's enduring benefit, I'm not going to say that we will grow faster than we would have done otherwise. But I think that it is there's a danger in just saying, oh, well, This is just a one off, which it is. It's going to go away, and then the company will be no different to what it was in 2019.
Our company in 2022 is going to be a profoundly, I think, more capable company than it was in 2019 as a result of what we've done in over the last year and will continue to do in the second half. Nigel, do you want to talk a bit about timing conversion of the pipeline.
Yes. So Paul, a pipeline of £5,800,000 within that, we've talked already about the U. S. And this backlog of decisions to be made. Our expectation is that's going to get made in the next quarter or so, and we'd expect that to come through relatively quickly.
And there's also some decisions still to be made on DIO work, which are relatively near term in the next 6 months. The other stuff that we've got the big stuff we've got in the pipeline, Glenfelver Prison, Frankston Hospital, Victoria Road, and a bit further out. It's going to be a 2022 decision. And in some of those, it's even 2023 before the
revenue starts to kick in. So it's the big stuff in the pipeline, tends to be quite further out. In terms of capacity for M and A. Well, clearly, we have a balance sheet that has is in a pretty good position, and that's pleasing, I think, that we have shown ourselves willing and capable to do acquisitions. But I just want to say, we are pretty pragmatic, opportunistic.
We don't chase stuff around the market. We are not a sort of M and A engine. We see this being a useful addition. I think we're getting quite good at it. And we have a strong internal capability.
But we don't, as I say, go around drumming up M and A, but we do keep our ear to the ground and people know that we are in the market. So I think it's sort of, yes, we're there, but we're not desperate to do it and we don't run to a timescale. Paul, does that answer your questions?
Yes. That's great. Just a quick follow-up on the deals you've done so far. How should we think about the progress you're making and the performance there?
Yes. I think I mean, they're both I would say that following our experience with the previous acquisitions, BTP and Metz. We've moved to integrate them faster than we did the others. And in terms of FFA, that means quite a big systems challenge. We're having to bring them on to SAP.
We're having to do a lot, but it's going well. And that their contribution so far has been kind of where we thought it would. WBB, likewise, is doing pretty well. We have promoted the number 2 in that business to be running it. And Robert Olson, who was the CEO, has left were that they were very impressed by both the people and the business that we have found.
So we're happy with that, and we're getting already quite a lot of synergies between the overlap between them and our of other military businesses. So I think we're pleased, but it's early days still.
Great. Thank you very much.
Kevin. Next question.
Comes from the line of Kian Martin from Jefferies. Please ask your question.
Good morning, all. I've got 3 as well. Just, first of all, expanding a little on your people slide. Just looking at resourcing in the U. S, I think Biden recently suggested that anyone Operating the public sector would need to have a double jab.
I'm wondering how that affects your business and the potential resourcing complications that that may present. Secondly, you mentioned People First, which I think has been in the pipeline for quite some time. As you're starting to implement, can maybe share some initial insights into the sort of savings that that might produce over the next few years? And then thirdly, on the in house contingent labor pool, is there a trade off between higher costs and flexibility here. Or is that not part of the equation?
Thank you, Keane. And for all those, I'm going to hand over to Anthony Kirby for his first time out on the conference call. Anthony?
Okay. Thank you. In terms of the Jabs of the federal order for the double vaccination, that hasn't trickled down to commercial operations at the moment into commercial businesses. Our policy is that we are not insisting on vaccinations to enter the workplace until it becomes a requirement by law. So in the U.
S, we were currently about 84 between 84% 86% of our population have received their 1st jab and a slightly lower number of employees that received their 2nd job. If you quickly then just take the view in Asia Pacific, the Australian government have insisted that if our employees are working in aged care environment, that they are to receive the job before they can enter the workplace. So again, we're following the legislation in each of those different jurisdictions. In the U. S, we don't think it's going to impact our ability to recruit on the basis in the mid- to high 80s is a really good position to be in at the moment.
People First. So People First, the ATV system is due to operate in well, it's gone live. Actually, we've had soft launch. We've launched it in all of the divisions around the world outside of the U. S, purely for security reasons at this stage.
We're going to follow into the U. S. In due course, and it's due to be live in all of our contracts from about January 2022.
And the third question, sorry.
And what sort of how is it going to save us money? I mean, not without quantifying, but why is it going to make any difference to that?
So it's going to reduce duplication. We have a over a number of years, we've built system on system on system. The People First integrating all of those back office processes. It's taking process steps out by automation, And it's reducing unnecessary nonvalue added processes that we are currently operating in the contract.
So it's becoming more efficient, Less process, more automation. Okay. And in house contingent labor, what are we doing that for?
So we're doing it for two real reasons, which is quality to improve the quality of the folks that we're able to send into our contracts. And actually, by offering people more work on a regular basis, We hope that, that will retain people in the organization for longer, so the workforce becomes less transient. And overall, it will actually save us cost because we're no longer paying the agency margin to third party providers.
Keene, does that do it for you?
It does. I guess, 2 quick follow ups. So on just on the contingent labor. So is your intention here To allow people in that labor pool to move amongst Serco contracts, so Potentially into other disciplines. And so you end up with a more flexible pool of labor.
And then on People First, I don't Whether we thought whether you'd like to give an initial view here, but does this lead to a sort of permanent cost Saving or do you reinvest that in the business to drive harder?
Just talk a little bit about
So it will create more flexibility. This is a we now have a system whereby people can choose their own shifts. So we put shifts onto a system, and then people are able to choose of the shift that allowed them to fit work around life. So that's really helpful. Already, we've seen a huge reduction in labor turnover than you would normally see from a contingent workforce.
And then what we also do is once people have been working in Central Workforce Solutions for 4 weeks, they then get access into of the roles in the wider, Circle Workforce. We've already seen, I think, it's about 70 to 75 people who joined Serco Workforce Solutions 4 weeks ago now on the in a full time role in Serco in other parts of the business.
So yes, we do allow people to access the whole of Serco UK's business through this. And I have to say, having your own in house contingent labor is something that is done by people several of the larger employers anyway. So it's a well established version. In terms of the benefits of People First, look, I just refer you to the idea of continuous improvement. This is what you do not you must not stop because we need to be a competitive employer.
And part of that is being able to onboard people really quickly at scale, at volume. One of the few things we do at industrial scale is employ people. So doing that better, faster, cheaper is a good thing. It should reduce our cost employee, but I'm not going to put a number on it. We don't justify it to ourselves by saying that being having a better process for employing people is going to save us £1,000,000 we actually have faith in saying it's a good thing to do.
There is an element, as I said, of, say, we want to accelerate this work now because having learned that we can we asked to go and recruit lots of people. We want to be and having a much larger workforce now than we have before. Being able to have efficient systems is really important. Moving on to the next question. Can we have the next question, please?
Comes from the line of Oscar Valdez from JPMorgan. Please ask your question.
Yes. Good morning, Rupert and Nigel. I have two quick questions. The first one going back on COVID-nineteen, can you remind us your rough expectations for COVID-nineteen demand second half following the $365,000,000 in H1 given the strong start in July. And then the The second question is a bit more less sealed, but previously a few years ago, you talked about Brexit being a potential generator of new opportunities.
How do you see that part of the opportunity. Thank you.
Nigel, will you take the second half COVID expectations? Yes. So Oscar, the 365 in the first half, we expect that to drop off in
the second half. So we're expecting to be 100, little bit more than £100,000,000 less than we've seen in the first half. But also within the second half, there's a split as well. We expect the run rate to be relatively high in quarter 3 and really start to drop off in quarter 4.
So about $100,000,000 less in revenue and maybe a bit less a bit more than $100,000,000 for COVID revenues in the second half, in terms of Brexit, we have not seen sight nor sound or hair nor hand of additional work. We are bidding at the moment for some work around border controls, which are arguably Brexit related. But in terms of of there being widespread additional work coming from that. We don't see them as frankly, government has been so tied up with COVID. And they have done what they needed to do in terms of sum of the trading.
But in terms of the long term regulatory environment, actually, there's not being so much done on that at the moment, and we're not holding our breath. Does that do it for you, Oscar?
Yes, yes.
Next question?
Your last question comes from the line of Joe Brent from Liberum. Please ask your question.
Good morning, gentlemen.
Good morning, Joe.
Can I go
for 3 questions? That seems to be the order of the day. Maybe take them 1 at a time. So firstly, on inflation, you say rightly that's the sort of plateau de jure. And there's a good chart in your appendix, which shows your exposure.
Could you based on what you know, do you see the principal exposure as being asylum? And do you see there's something we need to worry about?
No, because I think that compared to, A, we've got quite a lot of protection within the contracts from all of our long term contracts. We have a variety of protections for inflation ranging it can be CPI, it can be specific index is like utilities or labor. So and then for the short term stuff, we know we're going to be bidding at spot rate. So if it is a short term issue, it normally corrects itself over time. The other thing, I would say, on ASC is that the volumes are far bigger than we expected anyway.
So there might be some short term dilution in terms of per head in terms if the utility costs go up. But against that is that we've got many more people. We've sort of added 7%, and we're now running at about 25,000 people. But most of our revenues are inflation get inflation adjusted. And mostly, that works in our favor because we do a bit better than inflation in terms of our driving out costs out of the contract.
Thank you. And the second question was on your kind of distribution plans. Do you have a stated dividend policy? And what are your buyback plans?
So we will address our We'll give an update on our capital allocation and our plans for that at the Capital Markets Day. We started at of 4 times cover at the last December. And I think that we recognize that, that is a pretty prudent level of coverage. However, I'm going to work, as I say, it's notionally a 15% increase in the on the interim. We will clearly take a decision about the final nearer the time.
But we would to expect to give more clarity on the dividend policy at the Capital Markets day. But I think that you will see a 15% increase. It shows that we are interested in increasing the dividend over time in terms of the other elements or in terms of share buybacks, you will know that we have been We regard that as etude in the armory. It was used for a very specific purpose back in the first half of this year to try and find a way of returning some value to shareholders who have been denied a final dividend for last year and interim for of 2020. So that was a sort of pragmatic approach.
And I think that we will let's just get through the next sort of 4, 5 months before we sort of take a further view forward on which of the tools that we might use. And we will give a full update at the Capital Markets Day.
Thank you. And the final question. I mean, I'm struggling a bit with this. So if Nigel Can you come up with some numbers? It would be great.
But you talk about reducing drag in leisure, transport and health. Can you give us some details of what that means for the second half and maybe 2022? And particularly some detail on Merseyrail. I have no real sense personally Where that's going, although I suspect it's getting better.
Yes. I mean, listen, this is a difficult one to try and predict and guess. What we can tell you about on Merseyrail is that we are seeing ridership go up, but we're only at the moment about 6 about twothree of what we don't know that we expect to be at this time of year. But in terms of an interesting mix within that, we're seeing less than the twothree of the weekdays and more of the weekends. There's more recreation.
So I think really, to give you an honest answer, what's going to happen on those rail. I think we have to see what happens to commuters and how they approach the meeting when they come back September or February, once we'll get a better feel for that. As far as leisure is concerned, We're starting to see some pickup. Obviously, lockdown was there for us. Fortunately, a lot of things pick up.
Passionate is about 60% of where we would expect to be. A little bit of a drop off in July, but nothing that we would be concerned about. And then Health really is about absence and is about managing costs. And we'll see progress in assets that will come down compared to what we saw in the Q1. So that's what we're seeing, but there is more the Q1 was poor.
The Q2 got better with FXE further improvement in Q2.
And in terms of the absence rates across the business in the U. K, they come down from 10% down to about 7 so there is some progress there. But I'm afraid I'm slightly unwilling to go and put hard numbers on what that might represent. I mean, the biggest one of them, I mean, Merseyrail was a very big hit for us. And we've got no government support for that almost uniquely amongst operating company.
So that is quite highly leveraged. And as Nigel was saying, we're running now at about 60% to 65% of our normal levels. But you ain't going to get much above that until people start getting back to offices.
Great. Thank you.
Thank you. Any more questions? Okay. I think we are done. Thank you all very much indeed for your attention.
And as always, Paul Checketts is here to ask any other questions that you might have. And of course, myself and Nigel of 3. Thank you all, and goodbye.