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Agreement reached for AWE pricing arrangements through to 2018

Published: 11 May 2012

Serco Group plc (Serco), the international service company, announces today that the arrangements for the next pricing period regarding the Atomic Weapons Establishment (AWE) contract have been successfully concluded. The agreement has been reached with the UK Ministry of Defence (MOD) by Serco and its joint venture partners Lockheed Martin and Jacobs Engineering Group Inc. with whom we manage and operate AWE on behalf of the MOD. This is the fourth such pricing period to date since the contract commenced on 1 April 2000.

Serco's share of revenue is expected to remain around £300m a year and approximately £1.5bn will be added to our order book. The new arrangements will take effect from 1 April 2013 and run through to 31 March 2018. The earnings and margin rate in the initial years will be similar to those achieved in the initial years of the current pricing period. As reflected in our recently announced 2011 financial results, the contract is delivering value for money for the MOD whilst achieving excellent performance in the quality and timeliness of our programme delivery. Under the agreed arrangements, the joint venture will again be incentivised to save money against the future programme.

Christopher Hyman, Chief Executive of Serco Group, said: "We are delighted to have successfully agreed this latest pricing period for our AWE contract. Working closely with the Ministry of Defence and our joint venture partners, we are delivering a critical component of national security and providing leading scientific research as well as delivering value for money for the taxpayer."

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