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Pre-close statement

Published: 28 Jun 2013

Ahead of Serco Group plc entering its close period for the half-year ending 30 June 2013, and following the recent Interim Management Statement released on 15 May 2013, we will be holding our customary pre-close meetings with analysts over the coming days. No new material information will be disclosed. The Group is on track to meet expectations for 2013: for the full year, we expect a modest improvement in the rate of organic revenue growth and the Adjusted operating margin to be broadly maintained around the level achieved in 2012. We remain confident in the ongoing resilience, overall outlook and future growth prospects for the Group.

For the first half of 2013, we expect to report strong organic revenue growth ahead of our expectations. This is driven in part by last year's record level of contract awards, many of which only started part way through last year, together with additional revenue from certain volume-related and project-based work. The effect of last year's acquisitions and disposals has a broadly neutral impact on total revenue growth.

Supporting the strong pipeline and market opportunities in the Global Services division, the level of investment in contract bidding and new market development activity has increased. Including the effect of this, a small reduction in the Adjusted operating margin for the Group as a whole is anticipated for the first half of 2013. The comparable period's Adjusted operating margin, before the reorganisation costs incurred in 2012, was 5.9%.

The net effect of stronger revenue growth and the small reduction in Adjusted operating margin is expected to result in an Adjusted operating profit for the half-year that is in line with our original expectations.

Driven principally by the incremental working capital investment that is supporting BPO growth as previously disclosed, the phasing of free cash generation over the course of 2013 is anticipated to be broadly similar to the prior financial year.

Serco will release its half-year results on Thursday 29 August 2013. As previously described, our reporting will now reflect the changes to accounting standards IAS19 and IFRS11. Neither of these have a material impact on the Group's reported earnings. A restatement of the 2012 financial year (as previously provided) and the first half of 2012 is published today on www.serco.com.