Update on DMS Maritime

SERCO GROUP PLC - Update on DMS Maritime

PR Newswire

London, February 19

Update on purchase of remaining stake in Australian defence and marine servicesjoint venture

20 February 2013

Serco Group plc (Serco), the international services company, provides today anupdate on its recent purchase of DMS Maritime Pty Ltd. The required valuationshave now been completed. These are expected to result in a non-cash exceptionalgain of £51m.

Serco announced on 7 November 2012 that it had signed an agreement to purchasethe remaining 50% equity stake in DMS Maritime from its joint venture partner P&O Maritime Services. It was subsequently announced on 20 December 2012 thatthe transaction had completed at an acquisition cost of £82m, comprising cashconsideration paid of £69m and incremental net debt acquired of £13m.

As Serco obtained control of DMS Maritime on the purchase of the remainingequity stake, step acquisition accounting, in accordance with IFRS 3 (Revised2008) - Business Combinations, is applied. The previously held 50% equityinterest is treated as if it was disposed of and re-acquired at fair value onthe acquisition date. Accordingly, it is re-measured to its acquisition datefair value, with the resulting gain compared to its book value recognised inthe consolidated income statement. This is expected to result in a £51mnon-cash exceptional gain in Serco's 2012 results. The overall balance sheeteffect of the acquisition is therefore expected to result in recognition of £120m of net assets. The valuation is subject to final confirmation as part ofthe audited results for the 2012 financial year, which will be announced onTuesday 5 March 2013.

DMS Maritime is one of Australia's largest marine service operators, withfacilities in every major port and a technical support network that extends awide range of engineering and technical services across Asia Pacific. The DMSMaritime purchase strengthens Serco's position as a leading defence servicesprovider and in the growing marine services market.

For the year to 31 December 2012, DMS Maritime had revenues of approximately £80m and underlying operating profit of approximately £12m; Serco willconsolidate the remaining 50% stake it has purchased. Expectations are forcontinued good revenue growth and for margins to be maintained. DMS Maritimehas an order book of over £500m; Serco will include within its order book theadditional 50% that it now owns.

Christopher Hyman, Chief Executive of Serco Group plc, said: "Our originalshareholding in DMS Maritime was made 15 years ago when we first establishedthe joint venture to provide a complex range of harbour and offshore servicesfor the Royal Australian Navy. DMS Maritime is a high quality business thatshares Serco's commitment to customer focus, has grown well and will be furtherenhanced under our full ownership. We believe that it will benefit from thecontinuing development of our defence business in the region from a basesupport services provider to a complex services integrator, and from thesignificant opportunities that we see in the marine systems integration andservices market - both for government and private sector customers."

Ends

For further information please contact Serco:

Stuart Ford, Head of Investor Relations T +44 (0) 1256 386 226

Marcus De Ville, Head of Media Relations T +44 (0) 1256 386 227

About Serco

Serco is a FTSE 100 international service company, which combines commercialknow-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, designinnovative solutions, integrate systems and - most of all - deliver to thepublic.

Serco supports governments, agencies and companies who seek a trusted partnerwith a solid track record of providing assured service excellence. Our peopleoffer operational, management and consulting expertise in the aviation, BPO,defence, education, environmental services, facilities management, health, homeaffairs, information and communications technology, knowledge services, localgovernment, science and nuclear, transport, welfare to work and the commercialsectors.

More information can be found at www.serco.com