SERCO GROUP PLC: Interim Management Statement

Interim Management Statement 
On track to meet 2013 expectations with strong first half organic revenue
growth and investment in future market development 
15 May 2013 
Ahead of its Annual General Meeting today, Serco Group plc (Serco), the
international service company, is issuing the following Interim Management
Statement covering performance from 1 January 2013 to date. 
The Group is on track to meet previously stated expectations for the 2013
financial year as set out in the outlook and guidance section below. 
Christopher Hyman, Chief Executive of Serco Group plc, said: "We have begun
2013 with many important new contracts underway and have achieved a good
operational performance across our activities around the world. Our global BPO
business and AMEAA division are delivering further excellent organic revenue
growth. We are developing new opportunities in the Americas division, though
challenging conditions remain in the US federal contracting market. Meanwhile
in the UK, markets continue to show more encouraging signs. We are therefore
confident of Serco's portfolio achieving another year of good progress." 
Contract awardsand operational update 
Serco's order book was £19.1bn at 31 December 2012 and our pipeline of
identified opportunities around the world had a total estimated value of 
£31bn.
Since the beginning of the financial year, our contract awards total an
estimated £0.9bn. Winning or expanding smaller contracts also plays an
important role in our growth and a selection of these is included in today's
Contract News Update on www.serco.com. Notable contract developments so far in
the year are highlighted below. 
In UK & Europe frontline services, good progress has been made in the major new
contracts still in their initial year of Serco operation. We also secured an
18-month extension to our Docklands Light Railway contract, and are pleased to
be working with the Department for Transport to agree a future award to
continue operating Northern Rail through to February 2016. Other awards in the
period include a new contract for parking services for the West London
Alliance. 
In the Americas division, conditions in the US federal contracting market
remain challenging due to the implementation of sequestration and the ongoing
government budget and funding issues. However, we have continued to be awarded
task orders and contracts, including the rebid of driver examination services
in Ontario. Business development activity to further diversify the Americas
portfolio is progressing well, particularly in the areas of health and
transportation. 
In the AMEAA region, Serco has secured its first direct contract to provide
training services in the Middle East defence market and we have also extended
our support of the Australian Defence Force in the region. New health support
services have been awarded in the Middle East and extended in Hong Kong, and
our pre-operational activity continues to build at the Fiona Stanley Hospital
in Australia. Strong revenue growth in the period was also driven by further
increases in the number of people in our care for the Australian Department of
Immigration and Citizenship. 
Global Services, Serco's BPO business, is making good progress in the delivery
of major new operations including those for AEGON UK, Shop Direct Group and the
shared service support to NHS organisations through the Anglia Support
Partnership. New contract awards in the period include BPO services for a
further leading UK high street retailer and the provision of shared services to
over 50 government departments within the United Arab Emirates. Extensions have
also been awarded to UK Central Government contracts such as our complex case
management services for the Child Maintenance Group at the Department for Work
and Pensions. 
Serco has made two small infill acquisitions in the Kingdom of Saudi Arabia in
the period, building on the Group's strength and capabilities in the Middle
East. The first brings integrated facilities management capabilities in the
healthcare market and the second adds IT and BPO services in the region. While
remaining primarily focused on organic growth, Serco will continue to look at
potential acquisitions that bring new skills, capabilities or market access.
Our proactive portfolio management also involves an ongoing assessment of our
existing operations for strategic fit, together with expected future levels of
performance and returns. 
Financial position 
Serco has continued to achieve both greater diversification and a lengthened
maturity profile of its borrowing facilities. New US private placements
totalling $240m, which will be repaid between 2020 and 2024, have recently been
completed. No other material events, transactions or impacts on the Group's
strong financial position have taken place since the 31 December 2012 balance
sheet date. 
Outlook and guidance 
The outlook and our detailed financial assumptions for 2013 remain unchanged
from those set out within the results announced on 5 March 2013. For the full
year, we expect a modest improvement in the 3.3% rate of organic revenue growth
that was achieved in 2012, and the Adjusted operating margin to be broadly
maintained around the 6.4% level reported in 2012. 
The first half of 2013 is expected to deliver strong organic revenue growth
driven by last year's record level of contract awards, many of which only
started part way through last year. Supporting the strong pipeline and market
opportunities in the Global Services division, there is also a greater level of
investment in contract bidding and new market development activity occurring in
the first half. Including the effect of this, the Adjusted operating margin for
the Group as a whole is anticipated to be broadly flat on the comparable
period. 
We remain confident in the ongoing resilience, overall outlook and future
growth prospects for the Group. 
Ends 
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 
About Serco 
Serco is a FTSE 100 international service company, which combines commercial
know-how with a deep public service ethos. 
Around the world, we improve essential services by managing people, processes,
technology and assets more effectively. We advise policy makers, design
innovative solutions, integrate systems and - most of all - deliver to the
public. 
Serco supports governments, agencies and companies who seek a trusted partner
with a solid track record of providing assured service excellence. Our people
offer operational, management and consulting expertise in the aviation, BPO,
defence, education, environmental services, facilities management, health, home
affairs, information and communications technology, knowledge services, local
government, science and nuclear, transport, welfare to work and the commercial
sectors. 
More information can be found at www.serco.com 
END 
-0- May/15/2013 06:00 GMT
 
 
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