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2012 Half Year Results

Date: 29 Aug 2012

6 months to 30 June

Adjusted operating profit (i.e. excludes exceptional items) before reorganisation costs
Adjusted operating profit (i.e. excludes exceptional items)
Operating profit*
Adjusted profit before tax (i.e. excludes exceptional items) before reorganisation costs
Adjusted profit before tax (i.e. excludes exceptional items)
Profit before tax*
Adjusted earnings per share (i.e. excludes exceptional items) before reorganisation costs
Adjusted earnings per share (i.e. excludes exceptional items)
Earnings per share*
Dividend per share
Group free cash flow

 * Includes £31m exceptional net profit on disposals of subsidiaries and operations; full definitions of adjusted measures are provided on page 2 and the income statement is presented on page 25

Good performance held back by challenging US conditions

Excellent contract win performance

  • £4.2bn of awards in the period (2011: £2.5bn); £3.7bn signed and £0.5bn appointed preferred bidder
  • Increase in order book to £19.4bn as at 30 June 2012 (£17.9bn at 31 December 2011)
  • 98% revenue visibility for 2012, 83% for 2013 and 71% for 2014

Challenging US market conditions largely offset by resilience of broad portfolio

  • Conditions remain very difficult and uncertain for US federal outsourcing market
  • Further excellent revenue growth in AMEAA and areas of improvement in the UK have provided balance
  • Successful launch of Global Services BPO division; excellent underlying revenue growth in the period
  • Of total Group revenue: 46% is now generated outside the UK (2011: 42%); 13% is Business Process Outsourcing (BPO) (2011: 10%)

Strong pipeline including newly identified prospects

  • An estimated £31bn total value of opportunities reflects ongoing demand for efficient, high quality and innovative service provision
  • New opportunities added across frontline services markets; strong increase in the AMEAA region; expected further opening up of certain UK public sector markets
  • Strong growth prospects in the global BPO market with both private and public sector customers

Proactive portfolio management and organisational changes position the Group for the future

  • Intelenet fully integrated within Global Services and delivering to plan
  • Additional recent infill acquisitions such as Vertex UK public sector BPO operations bring further capabilities and market access
  • Exits from non-core operations reflect focus on strategic fit, performance and returns
  • Reorganisation successfully concluded: cost impact on first half profits to be recovered in the second half as expected

Remain confident in the overall outlook

  • Forecasts reflect a balance of risks and opportunities across our markets
  • 2012 expected to deliver another year of good organic revenue growth for the Group overall; first half decline of 2% to improve to a strong second half growth driven by previously announced contract wins
  • 2012 Adjusted operating margin to increase by a similar amount to 2011, reflecting second half revenue growth and underlying efficiencies
  • Action taken this year will position the Group well for future growth in revenue and profits

Christopher Hyman, Chief Executive of Serco Group plc, said: "I am pleased with the overall performance of the business over the last six months, particularly the quality and efficiency of the services delivered by our people.  As we continue to build Serco's international portfolio, our newly established global Business Process Outsourcing division has already seen a high level of contract wins and many with private sector customers.  Our business in Australasia and the Middle East continues to grow strongly and, while significant challenges in the US remain, we see conditions in the UK starting to improve.  The recent level of new contract wins across the group will help us deliver the anticipated strong financial performance in the second half of the year."

For further information please contact Serco:

Stuart Ford, Head of Investor Relations T +44 (0) 1256 386 227

Marcus De Ville, Head of Media Relations T +44 (0) 1256 386 226

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Last Updated: 29 Aug 2012