Q2 2026 Serco Group PLC Earnings Call

August 6, 2026

Speaker #1: In a rapidly changing world, the challenges governments face are becoming ever more complex. Serco enables critical government missions globally, helping to make society safer for everyone.

[Company Representative] (Serco): In a rapidly changing world, the challenges governments face are becoming ever more complex. Serco enables critical government missions globally, helping to make society safer for everyone. Across defense, justice, and immigration, and citizen services. Serco keeps our armed forces mission-ready, recruiting, training, and supporting service personnel. Keeping military bases, sites, and infrastructure ready for action. Maintaining, repairing, and modernizing critical platforms, assets, and equipment. Serco enables governments to deliver safe and orderly immigration through the delivery of robust and effective border security and returns. While in justice, Serco brings scale, credibility, and expertise to keep the system moving across prisoner escorting, electronic monitoring, and end-to-end prison management, where our holistic approach to rehabilitation integrates education, therapy, and training to improve resettlement outcomes.

Speaker #1: Across defense, justice and immigration, and citizen services, Serco keeps our armed forces mission-ready—recruiting, training, and supporting service personnel, and keeping military bases, sites, and infrastructure ready for action.

Speaker #1: Maintaining, repairing, and modernizing critical platforms—assets and equipment—Serco enables governments to deliver safe and orderly immigration through the delivery of robust and effective border security and returns.

[Company Representative] (Serco): Maintaining, repairing, and modernizing critical platforms, assets, and equipment. Serco enables governments to deliver safe and orderly immigration through the delivery of robust and effective border security and returns. While in justice, Serco brings scale, credibility, and expertise to keep the system moving across prisoner escorting, electronic monitoring, and end-to-end prison management, where our holistic approach to rehabilitation integrates education, therapy, and training to improve resettlement outcomes.

Speaker #1: While in Justice, Serco brings scale, credibility, and expertise to keep the system moving across prisoner escorting, electronic monitoring, and end-to-end prison management. Our holistic approach to rehabilitation integrates education, therapy, and training to improve resettlement outcomes.

Speaker #1: As public services face growing pressure, Serco delivers citizen services at scale, blending modernization and automation with human empathy. We help people find meaningful work, build careers, and unlock their potential.

[Company Representative] (Serco): As public services face growing pressure, Serco delivers citizen services at scale, blending modernization and automation with human empathy, helping people find meaningful work, build careers, and unlock their potential, and delivering the everyday services that citizens rely on. In a rapidly changing world, governments need more than promises. They need delivery. Wherever the mission matters most, we're already there, delivering vital services for our customers.

Speaker #1: And delivering the everyday services that citizens rely on. In a rapidly changing world, governments need more than promises—they need delivery. Wherever the mission matters most, we're already there.

Speaker #1: Delivering vital services for our customers.

Speaker #2: Good morning and thank you to everyone who has joined us for the presentation of Serco's half-year results for 2026. Whether you're with us here in person today or joining via the livestream, you're very welcome.

Anthony Kirby: Good morning, thank you to everyone who's joined us for the presentation of Serco's 2026 H1 results. Whether you're with us here in person today or joining via the live stream, you're very welcome. I'm Anthony Kirby. I'm the proud Group Chief Executive of Serco, and I'm delighted to be joined by Mark Reid, our Chief Financial Officer. I was very pleased that Mark joined the business, the executive team, and the board back in early March. This morning, I'll begin with an overview of our progress and performance. We'll take you through the financials in more detail with Mark, and I'll return to discuss the outlook across our core geographies, the strong structural drivers that reinforce the need for trusted partners like Serco, and how we are positioning the business to deliver safe, sustainable growth in an ever-changing external landscape.

Speaker #2: I'm Anthony Kirby, the proud Group Chief Executive of Serco, and I'm delighted to be joined by Mark Reed, our Chief Financial Officer. I was very pleased that Mark joined the business, the executive team, and the board back in early March.

Speaker #2: This morning, I'll begin with an overview of our progress and performance. Then we'll take you through the financials in more detail with Mark, and then I'll return to discuss the outlook across our core geographies.

Anthony Kirby: This morning, I'll begin with an overview of our progress and performance. We'll take you through the financials in more detail with Mark, and I'll return to discuss the outlook across our core geographies, the strong structural drivers that reinforce the need for trusted partners like Serco, and how we are positioning the business to deliver safe, sustainable growth in an ever-changing external landscape.

Speaker #2: The strong structural drivers that reinforce the need for trusted partners like Serco, and how we are positioning the business to deliver safe, sustainable growth in an ever-changing external landscape.

Speaker #2: But before we go any further, I must refer you to the disclaimers in your pack. So, let's start at the top. Thanks to my 50,000 colleagues around the world, we've delivered another strong performance in the first half.

Anthony Kirby: Before we go any further, I must refer you to the disclaimers in your pack. Let's start at the top. Thanks to my 50,000 colleagues around the world, we've delivered another strong performance in the H1, reflecting disciplined execution and continued progress against our strategy. Through good operational delivery, productivity improvements, and disciplined cost control, we have increased profitability and delivered margin improvements that we can be proud of. We've continued to deliver good progress across our strategic pillars with retention once again north of 95%, a growing pipeline, and a leaner, more efficient organization supporting our ability to deliver against our 2026 guidance. We also remain confident in the outlook across all of our core geographies.

Speaker #2: Reflecting disciplined execution and continued progress against our strategy, through good operational delivery, productivity improvements, and disciplined cost control, we have increased profitability and delivered margin improvements that we can be proud of.

Speaker #2: We've continued to deliver good progress across our strategic pillars, with retention once again north of 95%. A growing pipeline and a leaner, more efficient organization are supporting our ability to deliver against our 2026 guidance.

Anthony Kirby: We've continued to deliver good progress across our strategic pillars with retention once again north of 95%, a growing pipeline, and a leaner, more efficient organization supporting our ability to deliver against our 2026 guidance. We also remain confident in the outlook across all of our core geographies.

Speaker #2: We also remain confident in the outlook across all of our core geographies. While market conditions are evolving, underlying demand for the critical services that we provide continues to be underpinned by the same long-term structural drivers that we've been talking to you about for many years.

Anthony Kirby: Whilst market conditions are evolving, underlying demand for the critical services that we provide continues to be underpinned by the same long-term structural drivers that we've been talking to you about for many years. The Four Forces as we describe them. During the period, we've continued to take deliberate action to better position Serco for the future. Building on the sector simplification announced at the full year, we're refining our operating model to drive greater focus, efficiency, and long-term growth. As a result, we're increasing our share buyback to GBP 150 million for the full year, following the GBP 75 million we announced and executed in H1, whilst reiterating our full-year guidance. Turning to the numbers, which I'm proud to present. As you can see, we've delivered revenue up 4% on a constant currency basis, including strong organic growth of 10% in our defense business.

Speaker #2: The four forces, as we described them. During the period, we’ve continued to take deliberate action to better position Serco for the future. Building on the sector simplification announced at the full year, we’re refining our operating model to drive greater focus, efficiency, and long-term growth.

Anthony Kirby: Building on the sector simplification announced at the full year, we're refining our operating model to drive greater focus, efficiency, and long-term growth. As a result, we're increasing our share buyback to GBP 150 million for the full year, following the GBP 75 million we announced and executed in H1, whilst reiterating our full-year guidance. Turning to the numbers, which I'm proud to present. As you can see, we've delivered revenue up 4% on a constant currency basis, including strong organic growth of 10% in our defense business.

Speaker #2: As a result, we're increasing our share buyback to £150 million for the full year, following the £75 million we announced and executed in the first half, whilst reiterating our full-year guidance.

Speaker #2: So, turning to the numbers—which I'm proud to present—as you can see, we've delivered revenue up 4% on a constant currency basis, including strong organic growth of 10% in our defense business.

Speaker #2: Free cash flow of £65 million, keeping us on track for full-year cash conversion of at least 80%. Order intake represented a book-to-bill of around 100%. Underlying operating profit was £157 million, delivering a 10-year high margin, which I'll come back to shortly.

Anthony Kirby: Free cash flow of GBP 65 million, keeping us on track for full-year cash conversion of at least 80%. Order intake representing a book-to-bill of around 100%. Underlying operating profit of GBP 157 million, delivering a 10-year high margin, which I'll come back to shortly. These results demonstrate the resilience of our business and our ability to deliver sustainable growth over the years ahead. I'd like to spend a few moments highlighting the progress that we've made against our three mutually reinforcing priorities of growth, competitiveness, and operational excellence. As many of you will know, I'm absolutely focused on growth, safe, sustainable growth in our revenue, our profit, and our margin. During the period, we've made good progress growing our pipeline to a record high of GBP 12.8 billion, securing around two and a half billion of order intake, maintaining strong retention rates across the group.

Speaker #2: But these results demonstrate the resilience of our business and our ability to deliver sustainable growth over the years ahead. So, I'd like to spend a few moments highlighting the progress we've made against our three mutually reinforcing priorities: growth, competitiveness, and operational excellence.

Anthony Kirby: I'd like to spend a few moments highlighting the progress that we've made against our three mutually reinforcing priorities of growth, competitiveness, and operational excellence. As many of you will know, I'm absolutely focused on growth, safe, sustainable growth in our revenue, our profit, and our margin. During the period, we've made good progress growing our pipeline to a record high of GBP 12.8 billion, securing around two and a half billion of order intake, maintaining strong retention rates across the group.

Speaker #2: As many of you will know, I'm absolutely focused on growth—safe, sustainable growth in our revenue, our profit, and our margin. During the period, we've made good progress, growing our pipeline to a record high of £12.8 billion, securing around £2.5 billion of order intake, and maintaining strong retention rates across the group.

Speaker #2: This reflects both our ability to win new work and to expand the great business that we already have. That gives me confidence in growing the business over the medium term.

Anthony Kirby: This reflects both our ability to win new work and expand the great business that we already have. That gives me confidence in growing the business over the medium term. Turning to competitiveness. When I stood here last year, I said that while Serco was a very strong business, there were opportunities to make us simpler, more focused, and more efficient. At the full year, I spoke about the changes we were making to simplify our sector structure and reduce unnecessary complexity. Since then, we've continued to embed those changes, helping to reduce our overhead costs. This is about creating a business that can respond more quickly to customer needs, allocate resources more effectively, and position ourselves to capture future opportunities.

Speaker #2: Turning to competitiveness, when I stood here last year, I said that while Serco was a very strong business, there were opportunities to make us simpler, more focused, and more efficient.

Speaker #2: At the full year, I spoke about the changes we were making to simplify our sector structure and reduce unnecessary complexity. Since then, we've continued to embed those changes, helping to reduce our overhead costs.

Anthony Kirby: At the full year, I spoke about the changes we were making to simplify our sector structure and reduce unnecessary complexity. Since then, we've continued to embed those changes, helping to reduce our overhead costs. This is about creating a business that can respond more quickly to customer needs, allocate resources more effectively, and position ourselves to capture future opportunities.

Speaker #2: And this is about creating a business that can respond more quickly to customer needs, allocate resources more effectively, and position ourselves to capture future opportunities.

Speaker #2: And on operational excellence, we've continued to deliver complex services reliably across our portfolio, while successfully mobilizing major programs and investing in capabilities that will support our future performance.

Anthony Kirby: On operational excellence, we've continued to deliver complex services reliably across our portfolio, while successfully mobilizing major programs and investing in capabilities that will support our future performance. Since January, mobilization activity contributed to strong organic growth, including 7% growth in the UK and Europe, whilst continued investment in technology and innovation is improving both service quality and productivity. Across the business, we have multiple live applications of AI supporting both customer solutions and internal process improvements. In Asia Pacific, we're using AI-enabled strategic workforce planning tools to improve resource allocation and predict future strategic requirements. In North America, we're using AI to help identify and qualify opportunities, strengthening our business development capability and supporting the growth of our record pipeline. In the UK, we're using AI services to automate asset monitoring, helping to improve operational efficiency and service performance.

Speaker #2: Since January, mobilization activity has contributed to strong organic growth, including 7% growth in the UK and Europe, while continued investment in technology and innovation is improving both service quality and productivity.

Speaker #2: Across the business, we have multiple live applications of AI support in both customer solutions and internal process improvements. In Asia Pacific, we're using AI-enabled strategic workforce planning tools to improve resource allocation and predict future strategic requirements.

Anthony Kirby: In Asia Pacific, we're using AI-enabled strategic workforce planning tools to improve resource allocation and predict future strategic requirements. In North America, we're using AI to help identify and qualify opportunities, strengthening our business development capability and supporting the growth of our record pipeline. In the UK, we're using AI services to automate asset monitoring, helping to improve operational efficiency and service performance.

Speaker #2: In North America, we're using AI to help identify and qualify opportunities, strengthening our business development capability and supporting the growth of our record pipeline.

Speaker #2: And in the UK, we're using AI services to automate asset monitoring, helping to improve operational efficiency and service performance. We've also continued to make Serco a safer place for our colleagues, with 15% fewer safety incidents resulting in time off work than we saw in the first half of 2025. More importantly, that represents a 40% reduction over the past three years.

Anthony Kirby: We've also continued to make Serco a safer place for our colleagues, with 15% fewer safety incidents resulting in time off work than we saw in H1 2025. More importantly, that represents a 40% reduction over the past 3 years. We now have more than 640 apprentices across our UK business, and we were exceptionally proud recently to be named UK's top employer for veterans, reservists, and military families. While there is always more that we can do, there's been good progress across all parts of our approach to executing our strategy. One of the most encouraging aspects of our performance has been the continued improvement in margin despite a number of headwinds. This is the result of a deliberate strategy that has been executed consistently over a number of years.

Speaker #2: And we now have more than 640 apprentices across our UK business, and we were exceptionally proud recently to be named the UK's top employer for veterans, reservists, and military families.

Speaker #2: So, whilst there is always more that we can do, there has been good progress across all parts of our approach to executing our strategy. One of the most encouraging aspects of our performance has been the continued improvement in margin, despite a number of headwinds.

Anthony Kirby: While there is always more that we can do, there's been good progress across all parts of our approach to executing our strategy. One of the most encouraging aspects of our performance has been the continued improvement in margin despite a number of headwinds. This is the result of a deliberate strategy that has been executed consistently over a number of years.

Speaker #2: This is the result of a deliberate strategy that has been executed consistently over a number of years. We strengthened the quality of our portfolio through disciplined contract selection, improved operational execution, a continued grip on governance, targeted acquisitions, and an increasing focus on complex service lines.

Anthony Kirby: We strengthen the quality of our portfolio through disciplined contract selection, improved operational execution, a continued grip on governance, targeted acquisitions, and an increasing focus on complex service lines. That coupled with greater exposure to higher value markets and stronger positions in defense and North America. The result is a sustained improvement in our margin profile. Importantly, this progression is being driven by an improvement in the quality of our business rather than any single action or short-term initiative. I'm pleased with the progress that we've made, and our focus remains on sustaining and further improving our performance over the years ahead. With that, I'll now hand over to Mark, who will take you through our financial performance in more detail. Grab your popcorn, sit back, and listen intently.

Speaker #2: That, coupled with greater exposure to higher-value markets and stronger positions in Defense and North America, has resulted in a sustained improvement in our margin profile. Importantly, this progression has been driven by an improvement in the quality of our business, rather than any single action or short-term initiative.

Anthony Kirby: Importantly, this progression is being driven by an improvement in the quality of our business rather than any single action or short-term initiative. I'm pleased with the progress that we've made, and our focus remains on sustaining and further improving our performance over the years ahead. With that, I'll now hand over to Mark, who will take you through our financial performance in more detail. Grab your popcorn, sit back, and listen intently.

Speaker #2: I'm pleased with the progress that we've made, and our focus remains on sustaining and further improving that performance over the years ahead. So, with that, I'll now hand over to Mark, who will take you through our financial performance in more detail.

Speaker #2: So, grab your popcorn, sit back, and listen intently.

Speaker #3: Thank you, Anthony. And good morning to everyone. I'm delighted to be here, standing in front of you and presenting my first Serco set of earnings.

Mark Reid: Thank you, Anthony. Good morning to everyone. I'm delighted to be here, standing in front of you presenting my first Serco set of earnings. The last 6 months have flown by. I've spent a great deal of time getting to know the business, and I'm very pleased with what I've experienced so far. Great culture, dedicated colleagues, and a huge opportunity with robust delivery, which I can hope you see as you go through these results. Let me start with a few observations. Firstly, Serco is underpinned by good market dynamics. You see this in the strong performance the team's delivered in 2025, and how that momentum has continued into H1 2026. It has become more and more clear to me that the governments around the world need partners like Serco as they prioritize quality outcomes and value for money the citizens demand.

Speaker #3: The last six months have flown by. I've spent a great deal of time getting to know the business, and I'm very pleased with what I've experienced so far.

Speaker #3: Great culture, dedicated colleagues, and a huge opportunity with robust delivery—which I hope you can see as you go through these results. Let me start with a few observations.

Mark Reid: Let me start with a few observations. Firstly, Serco is underpinned by good market dynamics. You see this in the strong performance the team's delivered in 2025, and how that momentum has continued into H1 2026. It has become more and more clear to me that the governments around the world need partners like Serco as they prioritize quality outcomes and value for money the citizens demand.

Speaker #3: Firstly, Serco is underpinned by good market dynamics. You see this in the strong performance the teams delivered in 2025, and how that momentum has continued into the first half of 2026.

Speaker #3: It has become more and more clear to me that governments around the world need partners like Serco as they prioritize quality outcomes and value for money, as citizens demand.

Speaker #3: Secondly, I've been impressed by the depth and breadth of the operating excellence, and this has been clear in the outcomes we have delivered for our customers.

Mark Reid: Secondly, I've been impressed by the depth and breadth of the operating excellence, and this has been clear in the outcomes we have delivered for our customers. Take the electronic monitoring service, for example. We have transformed this service, monitoring record numbers of users while delivering against all the performance measures that the customer set. Thirdly, working with the many fantastic colleagues I've met so far has been inspiring. I've been able to collaborate at pace with our leadership team and hopefully Anthony agrees our CEO/CFO partnership has got off to a good start. Now turning to the strong H1 performance. I'm delighted to present revenue increased by 4% to GBP 2.5 billion, including 2% organic growth. Underlying operating profit increased by 8% to GBP 157 million, with margin improving by 20 basis points to 6.2%. As Anthony noted earlier, our profit margin improved has been an impressive long-term trajectory.

Speaker #3: Take the electronic monitoring service, for example. We have transformed the service, monitoring record numbers of users, while delivering against all the performance measures that the customers set.

Speaker #3: Thirdly, working with the many fantastic colleagues I've met so far has been inspiring. I've been able to collaborate at pace with our leadership team, and hopefully Anthony agrees—our CEO/CFO partnership has got off to a good start.

Mark Reid: I've been able to collaborate at pace with our leadership team and hopefully Anthony agrees our CEO/CFO partnership has got off to a good start. Now turning to the strong H1 performance. I'm delighted to present revenue increased by 4% to GBP 2.5 billion, including 2% organic growth. Underlying operating profit increased by 8% to GBP 157 million, with margin improving by 20 basis points to 6.2%. As Anthony noted earlier, our profit margin improved has been an impressive long-term trajectory.

Speaker #3: Now turning to the strong half 1 performance, I'm delighted to present revenue increased by 4% to £2.5 billion, including 2% organic growth. Underlying operating profit increased by 8% to £157 million, with margin improving by 20 basis points to 6.2%.

Speaker #3: As Anthony noted earlier, our profit margin improved and has shown an impressive long-term trajectory. Profit growth was delivered by a full-period contribution from MT&S, improved contract outcomes—including electronic monitoring, which I mentioned earlier—lower corporate costs, and wider efficiency actions.

Mark Reid: Profit growth was delivered by a full period contribution from MT&S, improved contract outcomes, including electronic monitoring that I mentioned earlier, and lower corporate costs and wider efficiency actions. These more than offset the known headwinds from the exit of the Australian immigration contract, lower immigration, both UK and Europe, and higher UK National Insurance costs. Earnings per share increased by 6%, and the board has declared an interim dividend of GBP 0.016 per share, which is up 10% year over year. Cash generation continues to be a strength of the business. Free cash flow was GBP 65 million, and trading cash conversion at 74%. We remain on track to deliver at least 80% trading cash conversion for the full year. Our balance sheet remains strong with leverage at 0.7x EBITDA, even after significant progress on the share buyback by the half end close.

Speaker #3: These more than offset the known headwinds from the exit of the Australian immigration contract, lower immigration in both the UK and Europe, and higher UK National Insurance costs.

Speaker #3: Earnings per share increased by 6%, and the Board has declared an interim dividend of 1.6 pence per share, which is up 10% year-over-year.

Mark Reid: Earnings per share increased by 6%, and the board has declared an interim dividend of GBP 0.016 per share, which is up 10% year over year. Cash generation continues to be a strength of the business. Free cash flow was GBP 65 million, and trading cash conversion at 74%. We remain on track to deliver at least 80% trading cash conversion for the full year. Our balance sheet remains strong with leverage at 0.7x EBITDA, even after significant progress on the share buyback by the half end close.

Speaker #3: Cash generation continues to be a strength of the business. Free cash flow was £65 million, and trading cash conversion was at 74%. We remain on track to deliver at least 80% trading cash conversion for the full year.

Speaker #3: And our balance sheet remains strong, with leverage at 0.7 times EBITDA, even after significant progress on the share buyback by the half-end close.

Speaker #3: Our reiterated optionality—this gives us, on capital allocation, short term. Reflecting our confidence today, we have announced the doubling of our 2026 buyback to £150 million, with the additional £75 million to be completed by the end of the year.

Mark Reid: I reiterate the optionality this gives us on capital allocation short term. Reflecting our confidence today, we have announced the doubling of our 2026 buyback to GBP 150 million, with the additional GBP 75 million to be completed by the end of the year. Combined with dividends paid during the year, this will take our total capital return to shareholders in 2026 to just under GBP 200 million. Overall, this is a strong H1 performance with revenue growth, further margin progression, good cash generation, a robust balance sheet, and continued strong shareholder returns. I'll now turn to provide a bit more color around each of the divisions. First of all, to North America, which continues to be an important driver of growth and value creation for the group. Revenue increased 8% to GBP 775 million, supported by a full half year contribution from MT&S.

Speaker #3: Combined with dividends paid during the year, this will take our total capital return to shareholders in 2026 to just under £200 million.

Speaker #3: Overall, this is a strong first half performance, with revenue growth, further margin progression, good cash generation, a robust balance sheet, and continued strong shareholder returns.

Mark Reid: Overall, this is a strong H1 performance with revenue growth, further margin progression, good cash generation, a robust balance sheet, and continued strong shareholder returns. I'll now turn to provide a bit more color around each of the divisions. First of all, to North America, which continues to be an important driver of growth and value creation for the group. Revenue increased 8% to GBP 775 million, supported by a full half year contribution from MT&S.

Speaker #3: I'll now turn to provide a bit more color around each of the divisions. First of all, to North America, which continues to be an important driver of growth and value creation for the Group.

Speaker #3: Revenue increased 8% to £775 million, supported by a full half-year contribution from MT&S. There was good momentum in Defense, which saw 4% organic growth, including additional infrastructure work for the US Army and Space Force at the Pacific Space Base in Greenland.

Mark Reid: There was good momentum in Defense, which saw 4% organic growth, including additional infrastructure work for the United States Army and United States Space Force at the Pituffik Space Base in Greenland. This was partially offset by lower activity levels in our Citizen Services following the expected reductions in case management volumes on our CMS contract and the conclusion of an aviation contract in the US. Underlying operating profit increased by 10% to GBP 84 million with margin progression to 10.8%. The increase reflects a strong revenue growth, a focus on contract profitability, and the benefit of contracts moving from mobilization to the operational phase. Order intake was GBP 0.7 billion, with a book-to-bill ratio of around 90%. As expected, procurement delays across parts of the US federal market continued into the H1 and affected the timing of some of these awards.

Speaker #3: This was partially offset by lower activity levels in our Citizen Services, following the expected reductions in case management volumes on our CMS contract and the conclusion of an aviation contract in the US.

Speaker #3: Underlying operating profit increased by 10% to £84 million, with margin progression to 10.8%. The increase reflects strong revenue growth, a focus on contract profitability, and the benefit of contracts moving from mobilization to the operational phase.

Mark Reid: Underlying operating profit increased by 10% to GBP 84 million with margin progression to 10.8%. The increase reflects a strong revenue growth, a focus on contract profitability, and the benefit of contracts moving from mobilization to the operational phase. Order intake was GBP 0.7 billion, with a book-to-bill ratio of around 90%. As expected, procurement delays across parts of the US federal market continued into the H1 and affected the timing of some of these awards.

Speaker #3: Order intake was £0.7 billion, with a book-to-bill ratio of around 90%. As expected, procurement delays across parts of the US federal market continued into the first half and affected the timing of some of these awards.

Speaker #3: Win rates remained healthy at 46%, and new business was around 80% for retentions. We're seeing progress on a number of important opportunities. Several contract protests have now been resolved, and we have around £3.2 billion of bids awaiting adjudication.

Mark Reid: Win rates remained healthy at 46%, and new business were around 80% for retentions. We're seeing progress on a number of important opportunities. Several contract protests have now been resolved, and we have around GBP 3.2 billion of bids awaiting adjudication. This creates the conditions for improving environment through the H2 and into next year. Looking further ahead, the pipeline has strengthened significantly, increasing more than 60% to over GBP 8 billion. Defense accounts for the majority of these opportunities, reflecting sustained increases in The Pentagon spending and national security priorities. As Anthony will outline, this underpins our confidence in the continued growth potential of the North American region. Moving now to the UK and Europe, which has an excellent organic growth of 7%.

Speaker #3: This creates a condition for improving the environment through the second half and into next year. Looking further ahead, the pipeline has strengthened significantly, increasing more than 60% to over £8 billion. Defense accounts for the majority of these opportunities, reflecting sustained increases in Pentagon spending and national security priorities.

Mark Reid: Defense accounts for the majority of these opportunities, reflecting sustained increases in The Pentagon spending and national security priorities. As Anthony will outline, this underpins our confidence in the continued growth potential of the North American region. Moving now to the UK and Europe, which has an excellent organic growth of 7%.

Speaker #3: As Anthony will outline, this underpins our confidence in the continued growth potential of the North American region. Moving now to the UK and Europe, which has seen excellent organic growth of 7%.

Speaker #3: Growth was led by defense, with revenue increasing by 30%, reflecting the mobilization of our Royal Navy Maritime Support and Vessel Replacement contract, together with additional activity at the Defense Academy.

Mark Reid: Growth was led by Defense, with revenue increasing by 30%, reflecting the mobilization of our Royal Navy maritime support and vessel replacement contract, together with additional activity at the Defense Academy. Citizen Services also delivered good growth, and in the period, we were delighted to begin delivering BBC audience services. Progress was more limited in Justice Immigration, where we saw a reduced immigration activity both in the UK and in Europe. Underlying operating profit increased by 7% to £84 million, with margins remaining resilient at 6.2%, despite around £5 million of higher National Insurance costs and the expected headwinds from lower immigration activity. Profitability benefited from the strong ramp-up in Defense and improved outcomes with Justice, particularly on the electronic monitoring contract, where performance and productivity continue to improve. Order intake was £1.2 billion, with a book-to-bill ratio of around 90%.

Speaker #3: Citizen Services also delivered good growth, and in the period we were delighted to begin delivering BBC audience services. Progress was more limited in Justice & Immigration, where we saw reduced immigration activity, both in the UK and in Europe.

Speaker #3: Underlying operating profit increased by 7% to £84 million, with margins remaining resilient at 6.2%, despite around £5 million of higher national insurance costs and the expected headwinds from lower immigration activity.

Mark Reid: Underlying operating profit increased by 7% to £84 million, with margins remaining resilient at 6.2%, despite around £5 million of higher National Insurance costs and the expected headwinds from lower immigration activity. Profitability benefited from the strong ramp-up in Defense and improved outcomes with Justice, particularly on the electronic monitoring contract, where performance and productivity continue to improve. Order intake was £1.2 billion, with a book-to-bill ratio of around 90%.

Speaker #3: Profitability benefited from the strong ramp-up in Defense and improved outcomes with Justice, particularly on the electronic monitoring contract, where performance and productivity continue to improve.

Speaker #3: Order intake was £1.2 billion, with a book-to-bill ratio of around 90%. Retention rates were particularly strong at over 95%, including several side-role contract extensions and Citizen Services.

Mark Reid: Retention rates were particularly strong at over 95%, including several sizable contract extensions in Citizen Services. We also secured a number of new business awards from the UK Administrations of Defense, Justice, and the Home Office, reinforcing the continued demand for our services. Finally, the pipeline stands at about £3.8 billion, while lower than the GBP 5.8 billion at full year as a result of adjudications, we have sight of several large deals that are set to be qualified. Demand remains very robust in the UK and in Europe. Turning now to Asia Pacific, where the H1 performance reflects the Australian immigration contract exit alongside progress in strengthening the platform for future growth. Revenue was down 14%, primarily driven by previous year impacts, namely the conclusion of the immigration contract and disposal of our Hong Kong business.

Speaker #3: We also secured a number of new business awards from the UK Ministries of Defence, Justice, and the Home Office, reinforcing the continued demand for our services.

Speaker #3: Finally, the pipeline stands at about £3.8 billion, which is lower than the £5.8 billion at full year. As a result of adjudications, we have sight of several large deals that are set to be qualified.

Speaker #3: Demand remains very robust in the UK and in Europe. Turning now to Asia Pacific, our first half performance reflects the Australian immigration contract exit, alongside progress in strengthening the platform for future growth.

Mark Reid: Demand remains very robust in the UK and in Europe. Turning now to Asia Pacific, where the H1 performance reflects the Australian immigration contract exit alongside progress in strengthening the platform for future growth. Revenue was down 14%, primarily driven by previous year impacts, namely the conclusion of the immigration contract and disposal of our Hong Kong business.

Speaker #3: Revenue was down 14%, primarily driven by prior year impacts, namely the conclusion of the immigration contract and disposal of our Hong Kong business. This was partially offset by growth in Defence, progress on a number of Citizen Services contracts, and the commencement of the Justice transfer services contract in Victoria.

Mark Reid: This was partially offset by growth in Defense, progress on a number of Citizen Services contracts, and the commencement of the Justice Transport Services contract in Victoria. As expected, underlying operating profit declined in the period, with the immigration contract exit reducing profit by around $9 million on its own. Further operational efficiencies and workforce optimization mitigated some of this impact. We are encouraged by the progress we have made on growth. Order intake for the period was £0.6 billion, resulting in a very strong book-to-bill ratio of just shy of 190%. We signed two significant extensions for the Adelaide Remand Center and Acacia Prison in Western Australia, where we secured a significant expansion of our services. We also retained the Australian Defence Force health services contract for a further year to mid-2027. These outcomes help demonstrate both our improved customer relationships and our ability to retain strategically important work.

Speaker #3: As expected, underlying operating profit declined in the period, with the immigration contract exit reducing profit by around £9 million on its own. Further operational efficiencies and workforce optimization mitigated some of this impact.

Speaker #3: We're encouraged by the progress we have made on growth. Order intake for the period was £0.6 billion, resulting in a very strong book-to-bill ratio of just shy of 190%.

Mark Reid: Order intake for the period was £0.6 billion, resulting in a very strong book-to-bill ratio of just shy of 190%. We signed two significant extensions for the Adelaide Remand Center and Acacia Prison in Western Australia, where we secured a significant expansion of our services. We also retained the Australian Defence Force health services contract for a further year to mid-2027. These outcomes help demonstrate both our improved customer relationships and our ability to retain strategically important work.

Speaker #3: We signed two significant extensions for the Adelaide Remand Centre and Acacia Prison in Western Australia, where we secured a significant expansion of our services.

Speaker #3: We also retained the Australian Defence Force Health Services contract for a further year, to mid-2027. These outcomes help demonstrate both our improved customer relationships and our ability to retain strategically important work.

Speaker #3: The pipeline remains stable at approximately £0.7 billion, with a number of opportunities progressing across all three sectors. Now, let's turn to the Middle East, where the first half performance was resilient in a challenging environment.

Mark Reid: The pipeline remains stable at approximately £0.7 billion, with a number of opportunities progressing across all three sectors. Now let's turn to the Middle East, where the H1 performance was resilient in a challenging environment. Revenue was GBP 67 million, down 25% compared with the prior period. The reduction was driven by several elements, including transition of contracts into the Mubadala strategic partnership and volume-related impacts of the regional conflict. Underlying operating profit reduced by 12% to £6 million. However, despite the lower revenue base, margin improved by over 100 basis points to 8.5%. This reflects the Mubadala partnership and benefits of target operational efficiencies, which is better positioning the business for profitable growth as the market conditions improve. Order intake in the H1 was low and was inevitably impacted by the regional disruption.

Speaker #3: Revenue was $67 million, down 25% compared with the prior period. The reduction was driven by several elements, including the transition of contracts into the Mubadala strategic partnership and volume-related impacts from the regional conflict.

Speaker #3: Underlying operating profit reduced by 12% to £6 million. However, despite the lower revenue base, margin improved by over 100 basis points to 8.5%.

Mark Reid: Underlying operating profit reduced by 12% to £6 million. However, despite the lower revenue base, margin improved by over 100 basis points to 8.5%. This reflects the Mubadala partnership and benefits of target operational efficiencies, which is better positioning the business for profitable growth as the market conditions improve. Order intake in the H1 was low and was inevitably impacted by the regional disruption.

Speaker #3: This reflects a Mubadala partnership and the benefits of targeted operational efficiencies, which are better positioning the business for profitable growth as market conditions improve.

Speaker #3: Order intake in the first half was low and was inevitably impacted by the regional disruption. That said, we are very pleased to see the Mubadala partnership secure several contracts worth almost £60 million, and the pipeline currently stands at approximately £300 million. While this is lower than last year, this largely reflects reductions due to adjudications and several larger opportunities being removed or delayed, related to cancelled bids.

Mark Reid: That said, we are very pleased to see the Mubadala partnership secure several contracts worth almost £16 million, and the pipeline currently stands at approximately £0.3 billion. While this is lower than last year, this reflects the reductions largely because of adjudications and several larger opportunities removed or delayed related to canceled bids. Importantly, the Mubadala partnership continues to broaden our access to future opportunities and provides an attractive platform for sustainable long-term growth in the region. Now if we turn to cash flow and the balance sheet. Cash generation remained good, with free cash flow at £65 million and trading cash conversion of 74%. While this is lower than the exceptionally strong comparable period last year, it was in line with our expectations and keeps us on track to deliver at least 80% trading cash conversion for the full year.

Speaker #3: Importantly, the Mubadala partnership continues to broaden our access to future opportunities and provides an attractive platform for sustainable, long-term growth in the region. Now, if we turn to cash flow and the balance sheet.

Mark Reid: Now if we turn to cash flow and the balance sheet. Cash generation remained good, with free cash flow at £65 million and trading cash conversion of 74%. While this is lower than the exceptionally strong comparable period last year, it was in line with our expectations and keeps us on track to deliver at least 80% trading cash conversion for the full year.

Speaker #3: Cash generation remained good, with free cash flow at £65 million and trading cash conversion of 74%. While this is lower than the exceptionally strong comparative period last year, it was in line with our expectations and keeps us on track to deliver at least 80% trading cash conversion for the full year.

Speaker #3: Working capital was an outflow of £41 million in the period, compared with an outflow of £14 million in the first half of 2025. This primarily reflects the effect of the strong outperformance at the end of 2025, as we set out at the time, and is not indicative of any change in underlying cash performance.

Mark Reid: Working capital was an outflow of £41 million in the period, compared with an outflow of GBP 14 million in H1 2025. This primarily affects the effect of the strong outperformance at the end of 2025, as we set out at the time, and not indicative of any change in underlying cash performance. Turning to the balance sheet, adjusted net debt was GBP 228 million, only GBP 22 million higher than the position at the end of 2025, despite returning significant capital to shareholders during the period. This included GBP 58 million of the GBP 75 million share buyback program completed by 30 June and GBP 30 million of dividend payments. Strong cash generation has therefore substantially funded those shareholder returns while maintaining a very robust financial position. Leverage was around 0.7x EBITDA at the period end and remains below our target range of 1x to 2x.

Speaker #3: Turning to the balance sheet, adjusted net debt was £228 million, only £22 million higher than the position at the end of 2025, despite returning significant capital to shareholders during the period.

Speaker #3: This included £58 million of the £75 million share buyback program completed by the 30th of June, and £30 million of dividend payments. Strong cash generation has therefore substantially funded those shareholder returns, while maintaining a very robust financial position.

Mark Reid: This included GBP 58 million of the GBP 75 million share buyback program completed by 30 June and GBP 30 million of dividend payments. Strong cash generation has therefore substantially funded those shareholder returns while maintaining a very robust financial position. Leverage was around 0.7x EBITDA at the period end and remains below our target range of 1x to 2x.

Speaker #3: Leverage was around 0.7 times EBITDA at the period end and remains below our target range of 1 to 2 times. The balance sheet therefore continues to provide substantial capacity to support organic investment, discipline built on acquisitions, and further shareholder returns under our capital allocation framework.

Mark Reid: The balance sheet continues, therefore, to provide substantial capacity to support organic investment, discipline both on acquisitions, and further shareholder returns under our capital allocation framework. Our framework is unchanged and supported by the three core strengths of Serco: significant cash generation, a capital light business model, and a strong balance sheet. Our first priority is investing organic growth. During the year, we have continued to strengthen our business development capability through expanded specialist sales teams and refreshed confidence in the business and outlook. The board has declared an interim dividend of GBP 0.016 per share, up 10% year-on-year. Third, we continue to value both on our acquisition opportunities to enhance our capabilities on our organic growth potential. We have increased focus, resources in this area, and have strengthened pipeline of opportunities. As always, we will maintain the same financial discipline in this area.

Speaker #3: Our framework is unchanged and supported by the three core strengths of Serco: significant cash generation, a capital-light business model, and a strong balance sheet.

Speaker #3: Our first priority is investing in organic growth during the year. We have continued to strengthen our business development capability through expanded specialist sales teams and to refresh confidence in the business. In an outlook, the Board has declared an interim dividend of 1.6 pence per share, up 10% year on year.

Mark Reid: During the year, we have continued to strengthen our business development capability through expanded specialist sales teams and refreshed confidence in the business and outlook. The board has declared an interim dividend of GBP 0.016 per share, up 10% year-on-year. Third, we continue to value both on our acquisition opportunities to enhance our capabilities on our organic growth potential. We have increased focus, resources in this area, and have strengthened pipeline of opportunities. As always, we will maintain the same financial discipline in this area.

Speaker #3: And third, we continue to evaluate both our acquisition opportunities that enhance our capabilities and our organic growth potential. We have increased focus and resource in this area, and have strengthened our pipeline of opportunities.

Speaker #3: As always, we will maintain the same financial discipline in this area. Finally, if we have surplus capital, we will return it to shareholders consistent with that.

Mark Reid: Finally, we have surplus capital. We will return it to shareholders consistent with that. We have announced a further GBP 75 million buyback for the remainder of 2026. Let me finish with our guidance for 2026. Following the strong H1 performance, we are reiterating our guidance for revenue, profit, and free cash flow. The only changes are to net finance costs, which are now expected to be slightly lower than previously guided, and the year-end net debt position, both of which reflect the additional GBP 75 million buyback announced today. Overall, we enter the H2 with good visibility from our order book, a record pipeline, excellent retention rates, strong momentum across our strategic priorities, and as a result, we remain confident in delivering our full year expectations. Finished my first six months. I am very pleased with the state of the business. Markets continue to be supportive.

Speaker #3: We have announced a further £75 million buyback for the remainder of 2026. Let me finish with our guidance for 2026. Following the strong first-half performance, we are reiterating our guidance for revenue, profit, and free cash flow.

Speaker #3: The only changes are to net finance costs, which are now expected to be slightly lower than previously guided, and the year-end net debt position, both of which reflect the additional £75 million buyback announced today.

Speaker #3: Overall, we enter the second half with good visibility from our order book, a record pipeline, excellent retention rates, and strong momentum across our strategic priorities. As a result, we remain confident in delivering our full-year expectations.

Mark Reid: Overall, we enter the H2 with good visibility from our order book, a record pipeline, excellent retention rates, strong momentum across our strategic priorities, and as a result, we remain confident in delivering our full year expectations. Finished my first six months. I am very pleased with the state of the business. Markets continue to be supportive.

Speaker #3: Finishing my first six months, I'm very pleased with the state of the business. Markets continue to be supportive. Our teams execute with professionalism and precision that delivers great customer outcomes.

Mark Reid: Our teams execute with professionalism and precision that delivers great customer outcomes. I see multiple opportunities to support our growth and ambition, including cost efficiencies, self-funded organic investment, and bolt-on M&A, which I'm sure will continue to drive strong investor returns. With that, I'll hand over to Anthony.

Speaker #3: I see multiple opportunities to support our growth and ambition, including cost efficiencies, self-funded organic investments, and bolt-on M&A, which I'm sure will continue to drive strong investor returns.

Speaker #3: And with that, I'll hand over to Anthony.

Anthony Kirby: Mark, thank you. At the full year, I talked to you about our strategy to simplify and focus the business around our core sectors of defense, justice and immigration, and citizen services. Today, I'd like to take a similar approach, but through a geographic lens, focusing on our core markets. Before I turn to our first geography, I'd like to spend a few moments on why governments around the world continue to partner with the private sector, why we believe that those structural drivers will remain in place for many years and decades to come. Whilst the specific challenges facing governments may differ from country to country, the underlying pressures remain remarkably consistent the world over. For many years, we have used our Four Forces framework to explain why demand for publicly controlled and privately operated partnerships continue to grow. The first is growing costs.

Speaker #1: Mark, thank you. At the full year, I talked to you about our strategy to simplify and focus the business around our core sectors of Defense, Justice and Immigration, and Citizen Services.

Speaker #1: Today, I'd like to take a similar approach, but through a geographic lens, focusing on our core markets. But before I turn to our first geography, I'd like to spend a few moments on why governments around the world continue to partner with the private sector, and why we believe that those structural drivers will remain in place for many years—and decades—to come.

Speaker #1: So, whilst the specific challenges facing governments may differ from country to country, the underlying pressures remain remarkably consistent the world over. For many years, we have used our Four Forces framework to explain why demand for publicly controlled and privately operated partnerships continues to grow.

Anthony Kirby: Whilst the specific challenges facing governments may differ from country to country, the underlying pressures remain remarkably consistent the world over. For many years, we have used our Four Forces framework to explain why demand for publicly controlled and privately operated partnerships continue to grow. The first is growing costs.

Speaker #1: The first is growing costs. Governments around the world continue to face inflationary pressures and rising demand for public services. The second is voter intolerance of higher taxes.

Anthony Kirby: Governments around the world continue to face inflationary pressures and rising demand for public services. The second is voter intolerance of higher taxes. Citizens remain resistant to higher taxation, with the tax burden in many parts of the world already at an all-time high. Third, expectations keep rising. Whether it's in defense, justice and immigration, or citizen services, people increasingly expect services to become more responsive, more personalized, and more digitally enabled. Finally, governments must continue to balance the public expenditure against competing priorities. Collectively, these forces create intense pressure on governments to deliver more and better for less. Whatever the policy environment, decisions ultimately need to balance service quality, operational resilience, and value for taxpayers. Faced with these pressures, governments increasingly look for ways to access specialist capability, improve productivity, and importantly, deliver better outcomes whilst retaining control of critical public services.

Speaker #1: Citizens remain resistant to higher taxation, with the tax burden in many parts of the world already at an all-time high. Third, expectations keep rising.

Speaker #1: Whether it’s in defense, justice and immigration, or citizen services, people increasingly expect these services to become more responsive, more personalized, and more digitally enabled. And finally, governments must continue to balance public expenditure against competing priorities.

Anthony Kirby: Finally, governments must continue to balance the public expenditure against competing priorities. Collectively, these forces create intense pressure on governments to deliver more and better for less. Whatever the policy environment, decisions ultimately need to balance service quality, operational resilience, and value for taxpayers. Faced with these pressures, governments increasingly look for ways to access specialist capability, improve productivity, and importantly, deliver better outcomes whilst retaining control of critical public services.

Speaker #1: Collectively, these forces create intense pressure on governments to deliver more and better for less. So, whatever the policy environment, decisions ultimately need to balance service quality, operational resilience, and value for taxpayers.

Speaker #1: Faced with these pressures, governments increasingly look for ways to access specialist capability, improve productivity, and, importantly, deliver better outcomes whilst retaining control of critical public services.

Speaker #1: In fact, additional costs reinforce the importance of assessing delivery models on the basis of outcomes, efficiency, and value for money. Governments have long partnered with the private sector to help address exactly these kinds of challenges.

Anthony Kirby: In fact, additional cost, reinforcing the importance of assessing delivery models on the basis of outcomes, efficiency, and value for money. Governments have long partnered with the private sector to help address exactly these kinds of challenges. At Serco, we bring operational expertise, innovation, and global best practice to help customers improve productivity, manage risk, and deliver better public services on their behalf. Importantly, this is about value rather than cost alone. Independent research continues to demonstrate that publicly controlled services delivered by the private sector are often up to 15% more cost efficient. The customers seek is why organizations like Serco remain well-placed to support governments around the world. When you combine that with our ability, organizations like Serco remain well-placed to support governments around the world.

Speaker #1: At Serco, we bring operational expertise, innovation, and global best practices to help customers improve productivity, manage risk, and deliver better public services on their behalf.

Speaker #1: Importantly, this is about value rather than cost alone. Independent research continues to demonstrate that publicly controlled services delivered by the private sector are often up to 15% more cost efficient than customers seek, which is why organizations like Serco remain well placed to support governments around the world.

Anthony Kirby: Importantly, this is about value rather than cost alone. Independent research continues to demonstrate that publicly controlled services delivered by the private sector are often up to 15% more cost efficient. The customers seek is why organizations like Serco remain well-placed to support governments around the world. When you combine that with our ability, organizations like Serco remain well-placed to support governments around the world.

Speaker #1: And when you combine that with our ability, organizations like Serco remain well-placed to support governments around the world. And when you combine that with our ability to develop and deploy innovation and technology at pace, it is clear why this delivery model will remain important over the long term.

Anthony Kirby: When you combine that with our ability to develop, deploy innovation and technology at pace, it is clear why this delivery model will remain important over the long term. Those structural drivers underpin a geographically diverse portfolio of ours, spanning more than 20 countries, and a total addressable market of over GBP 900 billion. We believe the demand created by those Four Forces will continue to grow over the long term, which is why we have been taking deliberate action to simplify our business and position Serco to capture those opportunities. Our geographic footprint provides resilience. It gives us exposure to different governments, different spending priorities, different procurement cycles, and a broad range of opportunities across our core sectors.

Speaker #1: So, those structural drivers underpin a geographically diverse portfolio of ours, spanning more than 20 countries and a total addressable market of over £900 billion.

Speaker #1: We believe the demand created by those four forces will continue to grow over the long term, which is why we have been taking deliberate action to simplify our business and position Serco to capture those opportunities.

Anthony Kirby: We believe the demand created by those Four Forces will continue to grow over the long term, which is why we have been taking deliberate action to simplify our business and position Serco to capture those opportunities. Our geographic footprint provides resilience. It gives us exposure to different governments, different spending priorities, different procurement cycles, and a broad range of opportunities across our core sectors.

Speaker #1: Our geographic footprint provides resilience; it gives us exposure to different governments, different spending priorities, different procurement cycles, and a broad range of opportunities across our core sectors.

Speaker #1: Last year, we sharpened our focus on our sector structure, and we're taking that one step further by combining our Asia-Pacific and Middle East operations under a single leadership structure.

Anthony Kirby: Last year, we sharpened our focus of our sector structure, and we are taking that one step further by combining our Asia Pacific and Middle East operations under a single leadership structure. This creates a stronger regional platform, expanding opportunities and strengthening our ability to serve our customers across both regions. It also allows us to bring the expertise, capabilities, and lessons learned from the successful transformation of our Asia Pacific business to the Middle East, while exporting agility, innovation and pace throughout the broader division. I really do believe that this will help accelerate growth across the region. To North America, the largest government services market in the world, our largest by profit contribution. Underlying demand for our services remains strong. Although procurement delays have continued to affect some timing of awards, we continue to see significant opportunities across our key markets.

Speaker #1: This creates a stronger regional platform, expanding opportunities and strengthening our ability to serve our customers across both regions. It also allows us to bring the expertise, capabilities, and lessons learned from the successful transformation of our Asia-Pacific business to the Middle East, while exporting agility, innovation, and pace throughout the broader division.

Speaker #1: I really do believe that this will help accelerate growth across the region. So, to North America—the largest government services market in the world, and our largest by profit contribution.

Anthony Kirby: I really do believe that this will help accelerate growth across the region. To North America, the largest government services market in the world, our largest by profit contribution. Underlying demand for our services remains strong. Although procurement delays have continued to affect some timing of awards, we continue to see significant opportunities across our key markets.

Speaker #1: Underlying demand for our services remains strong, although procurement delays have continued to affect the timing of some awards. We continue to see significant opportunities across our key markets.

Speaker #1: This is reflected in our record pipeline of over £8 billion, reinforcing our confidence in the region's long-term attractiveness. We're now starting to see some early signs of procurement environments moving again, although we are mindful of the midterms approaching in November.

Anthony Kirby: This is reflected in our record pipeline of over GBP 8 billion, reinforcing our confidence in the region's long-term attractiveness. We are now starting to see some early signs of procurement environments moving again, although we are mindful of the midterms approaching in November. In recent weeks, we have seen a number of opportunities progress through the procurement process. We now have more than GBP 3 billion of awards submitted and awaiting adjudication, and several long-running protests have now been resolved. Let me bring that and our growth pillar to life with an example. In June, we secured the comprehensive error rate testing, or CERT for short, contract with CMS. The contract extends a relationship with the Centers for Medicare & Medicaid Services that builds on more than a decade of supporting the largest eligibility healthcare administration program in the world.

Speaker #1: But in recent weeks, we've seen a number of opportunities progress through the procurement process. We now have more than £3 billion of awards submitted and awaiting adjudication, and several long-running protests have now been resolved.

Speaker #1: So let me bring that and our growth pillar to life with an example. In June, we secured the Comprehensive Error Rate Testing, or CERT for short, contract with CMS.

Anthony Kirby: Let me bring that and our growth pillar to life with an example. In June, we secured the comprehensive error rate testing, or CERT for short, contract with CMS. The contract extends a relationship with the Centers for Medicare & Medicaid Services that builds on more than a decade of supporting the largest eligibility healthcare administration program in the world.

Speaker #1: The contract extends a relationship with the Centers for Medicare & Medicaid Services that builds on more than a decade of supporting the largest eligibility healthcare administration program in the world.

Speaker #1: Through CERT, Serco helps identify improper payments and tackles fraud, waste, and abuse across a healthcare program that supports more than 70 million Americans and oversees more than $1 trillion of annual spending.

Anthony Kirby: Through CERT, Serco helps identify improper payments and tackles fraud, waste, and abuse across a healthcare program that supports more than 70 million Americans and oversees more than $1 trillion of annual spending. Importantly, this is not simply contract expansion. It builds on the technology-enabled capabilities we have developed over many years in our citizen services business, combining specialist medical expertise, AI, and intelligent document processing to improve both outcomes for citizens and efficiency for the government customer. For me, this award is a good example of the direction we are taking the business. It demonstrates our ability to win and retain complex services, deepen long-term customer relationships, and apply technology and domain expertise to solve increasingly important challenges for governments.

Speaker #1: Importantly, this is not simply contract expansion. It builds on the technology-enabled capabilities we've developed over many years in our Citizen Services business, combining specialist medical expertise, artificial intelligence, and intelligent document processing to improve both outcomes for citizens and efficiency for the government customer.

Speaker #1: For me, this award is a good example of the direction we're taking the business. It demonstrates our ability to win and retain complex services, deepen long-term customer relationships, and apply technology and domain expertise to solve increasingly important challenges for governments.

Anthony Kirby: For me, this award is a good example of the direction we are taking the business. It demonstrates our ability to win and retain complex services, deepen long-term customer relationships, and apply technology and domain expertise to solve increasingly important challenges for governments.

Speaker #1: Turning to the UK, our second largest market, the structural drivers that we've already discussed are particularly evident here, reinforcing the importance of productivity, innovation, and getting more from every pound spent—areas where trusted partners like Serco can add real value.

Anthony Kirby: Turning to the UK, our second-largest market, the structural drivers that we've already discussed are particularly evident here, reinforcing the importance of productivity, innovation, and getting more from every pound spent, areas where trusted partners like Serco can add real value. Defense is a good example. Across the region, governments are increasing investment in national security and military readiness capability whilst operating within constrained fiscal environments. Through the UK Defence Investment Plan, priorities are becoming increasingly clear, with growing focus on personnel readiness, digital transformation, autonomy, and next-generation capability. These are all areas where Serco has deep and strong international track records of delivery. That's reflected in our performance, with defense revenues growing by around 30% in the region during the period, as Mark alluded to earlier, driven by operational excellence, and I'll bring that to life now.

Speaker #1: Defence is a good example. Across the region, governments are increasing investment in national security and military readiness capability, whilst operating within constrained fiscal environments.

Speaker #1: Through the UK defence investment plan, priorities are becoming increasingly clear, with growing focus on personnel readiness, digital transformation, autonomy, and next-generation capability. These are all areas where Serco has deep and strong international track records of delivery.

Anthony Kirby: Through the UK Defence Investment Plan, priorities are becoming increasingly clear, with growing focus on personnel readiness, digital transformation, autonomy, and next-generation capability. These are all areas where Serco has deep and strong international track records of delivery. That's reflected in our performance, with defense revenues growing by around 30% in the region during the period, as Mark alluded to earlier, driven by operational excellence, and I'll bring that to life now.

Speaker #1: That's reflected in our performance, with defence revenues growing by around 30% in the region during the period, as Mark alluded to earlier, driven by operational excellence.

Speaker #1: And I'll bring that to life now. We're currently mobilising the Royal Navy's £1 billion DMSNG program, delivering critical import services across the UK.

Anthony Kirby: We're currently mobilizing the Royal Navy's GBP 1 billion DMSNG program, delivering critical import services across the UK, bringing 24 new vessels into service while maintaining operational readiness. Importantly, this is about managing complex defense operations and ensuring that the infrastructure is in place to enable frontline capability. The trust our customers place in us is also reflected in the additional opportunities that we continue to secure. Earlier this year, we were awarded a new seven-year contract to support the British Army's fleet of more than 500 vessels, further strengthening our position in higher-value defense support services. These awards also reinforce a broader point. As the geopolitical environment becomes more volatile and more threatening, governments continue to invest in national security and military capability. The demand for trusted partners that can help deliver those ambitions efficiently and with operational excellence remains strong. Turning now to Asia-Pacific and the Middle East.

Speaker #1: Bringing 24 new vessels into service while maintaining operational readiness. Importantly, this is about managing complex defence operations and ensuring that the infrastructure is in place to enable frontline capability.

Speaker #1: The trust our customers place in us is also reflected in the additional opportunities that we continue to secure. Earlier this year, we were awarded a new seven-year contract to support the British Army's fleet of more than 500 vessels.

Anthony Kirby: Earlier this year, we were awarded a new seven-year contract to support the British Army's fleet of more than 500 vessels, further strengthening our position in higher-value defense support services. These awards also reinforce a broader point. As the geopolitical environment becomes more volatile and more threatening, governments continue to invest in national security and military capability. The demand for trusted partners that can help deliver those ambitions efficiently and with operational excellence remains strong. Turning now to Asia-Pacific and the Middle East.

Speaker #1: Further strengthening our position in higher-value defence support services. These awards also reinforce a broader point: as the geopolitical environment becomes more volatile and threatening, governments continue to invest in national security and military capability.

Speaker #1: The demand for trusted partners that can help deliver those ambitions efficiently and with operational excellence remains strong. Turning now to Asia-Pacific and the Middle East.

Speaker #1: PAC is a market where we have a long and established track record of service delivery and trusted customer relationships. Demand remains strong across Justice and is increasingly attractive in Defence.

Anthony Kirby: APAC is a market where we have a long and established track record of service delivery and trusted customer relationships. Demand remains strong across justice and increasingly attractive in defense. Partnerships such as AUKUS and the Five Eyes alliance continue to support investment in capability, infrastructure, and long-term readiness. That's reflected in our recent extension to continue improving health outcomes for more than 80,000 Australian Defence Force members and reservists. In justice, governments continue to face capacity pressures and increasing demand, creating opportunities for experienced providers like us. That's reflected in our performance during H1, including the exceptional order intake of GBP 600 million, demonstrating the strength of the market. Our long-standing presence, operational expertise, and established customer relationships positions us well as governments address the challenges they face.

Speaker #1: Partnerships such as AUKUS and the Five Eyes Alliance continue to support investment in capability, infrastructure, and long-term readiness. That's reflected in our recent expansion and extension to continue improving health outcomes for more than 80,000 Australian Defence Force members and reservists.

Speaker #1: In justice, governments continue to face capacity pressures and increasing demand, creating opportunities for experienced providers like us. That’s reflected in our performance during the first half, including the exceptional order intake of £600 million, demonstrating the strength of the market.

Anthony Kirby: In justice, governments continue to face capacity pressures and increasing demand, creating opportunities for experienced providers like us. That's reflected in our performance during H1, including the exceptional order intake of GBP 600 million, demonstrating the strength of the market. Our long-standing presence, operational expertise, and established customer relationships positions us well as governments address the challenges they face.

Speaker #1: Our long-standing presence, operational expertise, and established customer relationships position us well as governments address the challenges they face. Alongside this, we continue to see attractive opportunities emerging across the Middle East, and we're pleased, as Mark said, that our partnership with Mubadala continues to perform well, strengthening our position in that region.

Anthony Kirby: Alongside this, we continue to see attractive opportunities emerging across the Middle East, and we're pleased, as Mark said, about our partnership with Mubadala, continues to perform well, strengthening our position in that region. For me, APAC is a good example of how the actions we have taken over recent years have made us a stronger and more competitive business. The performance we're delivering today looks very different to what we were delivering just a few years ago, and this can be seen in the justice sector in Australia, where we will now be operating two of the largest prisons in the Southern Hemisphere. At full year, I shared our win of the Justice Transport Services contract in Australia, and having recently visited the operation and met with both our colleagues and the customer, I'm really pleased that that contract has mobilized so successfully.

Speaker #1: For me, as PAC, it is a good example of how the actions we have taken over recent years have made us a stronger and more competitive business.

Speaker #1: The performance we're delivering today looks very different from what we were delivering just a few years ago, and this can be seen in the justice sector in Australia.

Anthony Kirby: The performance we're delivering today looks very different to what we were delivering just a few years ago, and this can be seen in the justice sector in Australia, where we will now be operating two of the largest prisons in the Southern Hemisphere. At full year, I shared our win of the Justice Transport Services contract in Australia, and having recently visited the operation and met with both our colleagues and the customer, I'm really pleased that that contract has mobilized so successfully.

Speaker #1: We will now be operating two of the largest prisons in the Southern Hemisphere. At full year, we shared our win of the justice transport services contract in Australia, and having recently visited the operation and met with both our colleagues and the customer, I'm really pleased that the contract has mobilized so successfully.

Speaker #1: Momentum has continued in the first half, resulting in more than $400 million of awards across the Justice business. For me, the wins at Acacia in Western Australia, Adelaide Remand Centre, and now Christchurch Men's Prison in New Zealand are about much more than contract value.

Anthony Kirby: Momentum has continued in H1, resulting in more than GBP 400 million of awards across the justice business. For me, the wins at Acacia in Western Australia, Adelaide Remand Center, and now Christchurch Men's Prison in New Zealand are about much more than contract value. They demonstrate the strength of our customer relationships, the quality of our operational delivery, and importantly, the actions that we've taken over recent years translating into improved results. Across all our core markets, the structural drivers we've discussed today remain firmly in place. We've deliberately positioned Serco for success with leading positions in attractive government services markets across the geographies in which we're both proud and are passionate to serve and operate. At the same time, we've simplified both our sector and divisional structures, creating a more focused, competitive, and agile business to achieve our growth ambitions over the long term.

Speaker #1: They demonstrate the strength of our customer relationships, the quality of our operational delivery, and, importantly, the actions that we've taken over recent years translating into improved results.

Speaker #1: Across all our core markets, the structural drivers we've discussed today remain firmly in place. We've deliberately positioned Serco for success, with leading positions in attractive government services markets across the geographies in which we're both proud and passionate to serve and operate.

Anthony Kirby: Across all our core markets, the structural drivers we've discussed today remain firmly in place. We've deliberately positioned Serco for success with leading positions in attractive government services markets across the geographies in which we're both proud and are passionate to serve and operate. At the same time, we've simplified both our sector and divisional structures, creating a more focused, competitive, and agile business to achieve our growth ambitions over the long term.

Speaker #1: At the same time, we've simplified both our sector and divisional structures, creating a more focused, competitive, and agile business to achieve our growth ambitions.

Speaker #1: Over the long term. So with that, let me just leave you with a few key messages. We've had another good first-half performance: revenue growth, profit, and margin progression underpinned by strong cash generation.

Anthony Kirby: With that, let me just leave you with a few key messages. We've had another good H1 performance. Revenue growth, profit, and margin progression underpinned by strong cash generation. Importantly, that performance has not been driven by a single contract, market, or initiative. It reflects the strength of the business that we have built and the quality of the execution across the group over many years. We've also continued to make good progress against our strategic priorities of growth, competitiveness, and operational excellence. Strong retention rates, a growing pipeline, a leaner, more efficient organization support our confidence against our 2026 guidance. At the same time, our customers continue to face increasingly complex environments and growing demand. As a result, the need for trusted partners like us that can deliver more and better for less remains. We stand ready to support them in that endeavor.

Speaker #1: Importantly, that performance has not been driven by a single contract, market, or initiative. It reflects the strength of the business that we have built, and the quality of execution across the group over many years.

Speaker #1: We've also continued to make good progress against our strategic priorities of growth, competitiveness, and operational excellence. Strong retention rates are growing the pipeline, and we have a leaner, more efficient organisation.

Anthony Kirby: We've also continued to make good progress against our strategic priorities of growth, competitiveness, and operational excellence. Strong retention rates, a growing pipeline, a leaner, more efficient organization support our confidence against our 2026 guidance. At the same time, our customers continue to face increasingly complex environments and growing demand. As a result, the need for trusted partners like us that can deliver more and better for less remains. We stand ready to support them in that endeavor.

Speaker #1: We remain confident in our 2026 guidance. At the same time, our customers continue to face increasingly complex environments and growing demand. As a result, the need for trusted partners like us—who can deliver more and better for less—remains.

Speaker #1: We stand ready to support them in that endeavour. That gives me confidence in the opportunities ahead—confidence in our ability to continue to execute our strategy, and confidence that Serco is well positioned to deliver safe, sustainable, long-term value for our customers, our colleagues, and our shareholders.

Anthony Kirby: That gives me confidence in the opportunities ahead, confidence in our ability to continue to execute our strategy, and confidence that Serco is well-positioned to deliver safe, sustainable long-term value for our customers, our colleagues, and our shareholders. Thank you very much for listening so intently, and Mark and I will now take some questions. If you just say who you are and where you're from and put your hand up, a microphone should be with you.

Speaker #1: So thank you very much for listening so intently. Mark and I will now take some questions. If you could just say who you are and where you're from, and if you raise your hand, a microphone should be with you.

Speaker #2: Good. Good morning. It's David Brockson from Virginia.

David Brockton: Good morning. It's David Brockton from Deutsche Numis.

Speaker #1: I didn't say it was going to work, but I did say it would come to that. I get nothing.

Anthony Kirby: I didn't say it was going to work, but I did say we will come to you. Could we get that? I get nothing.

Speaker #2: Yeah, working? I'll show you. Yeah, it's David Brockson from Virgin UMIS. Can I ask two, please? It is working now. Firstly, in respect of the US procurement cycle, is your sense that we need to wait for the midterms to be out of the way before that market now fully opens up?

David Brockton: Yeah. Working? No.

Mark Reid: I will shout.

Anthony Kirby: Shout.

David Brockton: Yeah, it is David Brockton from Deutsche Numis. Can I ask two, please? It is working now. Firstly, in respect of the US procurement cycle, is your sense that we need to wait for the midterms to be out of the way before that market now fully opens up? I guess you gave a sort of somewhat non-committal response in terms of the recent levels of activity you are seeing there. Then the second question, in respect to the buyback, should we infer from that that there is a low likelihood that there is going to be any bolt-ons in the imminent future? Can you talk about what that pipeline does look like?

Speaker #2: I guess you gave a sort of somewhat non-committal response in terms of the recent levels of activity you're seeing there. And then the second question, in respect of the buyback, should we infer from that that the there is low likelihood that there's going to be any bolt-ons in the imminent future?

Speaker #2: And can you talk about what that pipeline does look like?

Speaker #1: Shall I take the first one, or you take the second one? Okay. So, in terms of the procurement environment in the US, we are seeing some decisions now starting to be made.

Anthony Kirby: Shall I take the first one and you take the second one, okay? In terms of the procurement environment in the US, we are seeing some decisions now starting to be made. There were a number of protests awaiting decision, which have now come through in terms of decisions. CMS CERT, as an example, was protested. We've seen that move along. I think we anticipate the procurement environment becoming slightly better as we move through H2 and into H1 of 2027. We are also mindful the midterms are approaching in November. We remain confident. I think what I would draw your attention to is where decisions are being made.

Speaker #1: There were a number of protests awaiting decision, which have now come through in terms of decisions. So CMS Cert, as an example, was protested.

Speaker #1: We've seen that move along. I think—and we anticipate—the procurement environment becoming slightly better as we move through the second half and into the first half of 2027.

Anthony Kirby: I think we anticipate the procurement environment becoming slightly better as we move through H2 and into H1 of 2027. We are also mindful the midterms are approaching in November. We remain confident. I think what I would draw your attention to is where decisions are being made.

Speaker #1: But we are also mindful that the midterms are approaching in November. However, we remain confident. I think what I would draw your attention to is where decisions are being made.

Speaker #1: Are retention rates on current business as strong as they've ever been? And also, are our win rates on new business decisions keeping pace with where they've been over the last three years?

Anthony Kirby: Our retention rates on current business are as strong as they've ever been, and also our win rates on new business decisions are also keeping pace with where they've been over the last three years. Where decisions are being made, we're still fortunate enough to win our fair share of both new and retention businesses, and we will look to see what happens over H2 of the year. The point I would just make is that we've got about 3.5, 3.2 billion actually, of awards awaiting decision submitted. The final point I would make is that our 2026 guidance doesn't rely on the movement of the US procurement framework.

Speaker #1: So, where decisions are being made, we're still fortunate enough to win our fair share of both new and retention business. And we will look to see what happens over the second half of the year.

Speaker #1: The point I would just make is that we've got about £3.2 billion, actually, of awards awaiting decision submitted. And the final point I would make is that our 2026 guidance doesn't rely on the movement of the US procurement framework.

Speaker #3: Yeah, David, thank you for the question. So maybe, first of all, I'll start off with a really great first-half performance, right? Left the balance sheet in a great position.

Mark Reid: David. Thank you for the question. Maybe first of all, I'll start off with, really great H1 performance, right? Left the balance sheet in a great position. I think often get this question in terms of our capital allocation strategy. I think it's very sound. I'm very pleased with it, and I think we've been very consistent with it. We found ourselves in a very strong position H1. I think consistently, we thought it was the right thing to do to return the additional buyback. That being said, we're still in a very strong position in terms of the free cash flow we'll generate in H2 of the year. The balance sheet still gives us optionality, right? We still got capacity.

Speaker #3: I think I often get this question in terms of our capital allocation strategy. I think it's very sound, I'm very pleased with it, and I think we've been very consistent with it.

Speaker #3: So we found ourselves in a very strong position in the first half. I think consistently we thought it was the right thing to do to return the additional buyback.

Mark Reid: We found ourselves in a very strong position H1. I think consistently, we thought it was the right thing to do to return the additional buyback. That being said, we're still in a very strong position in terms of the free cash flow we'll generate in H2 of the year. The balance sheet still gives us optionality, right? We still got capacity.

Speaker #3: That said, we're still in a very strong position in terms of the free cash flow that we will generate in the second half of the year.

Speaker #3: And so the balance sheet still gives us optionality, right? We've still got capacity. In terms of where we are with M&A, I think Anthony and I are spending, I'd say, more time on that.

Mark Reid: In terms of where we are with M&A, I think Anthony and I are spending, I'd say, more time on that. We put a bit more resource specifically in some of the regions where we thought strategically that makes more sense. We're working fast, but you know how these things are, right? It's a bit more art than science about when these things land. We'll see what. Be assured, you'll be first to know when we've got something buttoned down. We're working vigorously towards evaluating the right bolt-on acquisition.

Speaker #3: We've put a bit more resource specifically in some of the regions where we thought, strategically, that makes more sense. And so we're working fast, but you know how these things are, right?

Speaker #3: It's a bit more art than science about when these things land, so we'll see what happens. Be assured, you'll be the first to know when we've got something buttoned down.

Speaker #3: But we're working vigorously towards evaluating the right bolt-on acquisitions, and we've got a great balance sheet too.

David Brockton: Great.

Mark Reid: We've got a great balance sheet to

David Brockton: I hope we'll find out at the same time, but thank you.

Speaker #2: I hope we'll find that at the same time. But thank you.

Speaker #4: Good morning, Chris Bambry, Beyond. A couple of questions. You mentioned that you expect to see an increase in the UK pipeline in the second half.

Chris Bambury: Good morning, Chris Bambury. I have a couple of questions. You mentioned that you expect to see an increase in the UK pipeline in the H2. Can you just give us a flavor of some of the opportunities that might come in then?

[Analyst]: Good morning, Chris Bambury. I have a couple of questions. You mentioned that you expect to see an increase in the UK pipeline in the H2. Can you just give us a flavor of some of the opportunities that might come in then?

Speaker #4: Could you just give us a flavour of some of the opportunities that might come in, then? And secondly, you also talked about, when discussing the margin, the increasing complexity of some of the work you're doing.

Anthony Kirby: Yeah.

Chris Bambury: Secondly, you also talked about, within the margin, about the increasing complexity of some of the work you're doing. Is that primarily defense, or could you give us some examples of other areas as well? Thank you.

[Analyst]: Secondly, you also talked about, within the margin, about the increasing complexity of some of the work you're doing. Is that primarily defense, or could you give us some examples of other areas as well? Thank you.

Speaker #4: Is that primarily defense, right? Could you give us some examples of other areas as well? Thank you.

Speaker #1: Yeah, so do you want to take the first one and I'll take the second one?

Anthony Kirby: Yeah. Do you want to take the first one and I'll take the second one?

Speaker #3: Yeah, sure. So, I mean, I think, Chris, we've got— we continue to see strong demand for our services, right? I think that's been clear.

Mark Reid: Yeah, sure. I think, Chris, we continue to see strong demand for our services, right? I think that's been clear. I think we've got some nice opportunities from defense on the facility side primarily. Equally on justice, again, we've got some nice opportunities coming through in the UK. Again, we feel fantastic H1 performance. We'll see that flow through to the H2 on UK. As I said, we expect to continue the strength in both justice and defense pipeline as we go into the H2 of the year.

Speaker #3: I think we've got some nice opportunities from Defence on the facility side, primarily. And then, equally on Justice, again we've got some nice opportunities coming through in the UK.

Speaker #3: So again, we feel it's a fantastic first half performance. We'll see that flow through to the second half on UK. And, as I said, we'll expect to continue the strength in both Justice and Defence pipeline as we go into the second half.

Speaker #1: And then your second question, Chris, in terms of higher value services—if you look at the services that we're now delivering: complex defence services, support services, asset management and maintenance on vessels—the contract we'd won with the Army for those 500 vessels, again, is moving us up the complex chain, which generally derives greater value in terms of the things that we see in the pipeline.

Anthony Kirby: Your second question, Chris, in terms of higher value services, if you look at the services that we're now delivering, complex defense support services, asset management and maintenance on vessels. The contract we'd won with the army for those 500 vessels, again, is moving us up the complex chain, which generally derives a greater value. In terms of the things that we see in the pipeline, they are weighted more to defense. I think 60% of our pipeline is in-

Speaker #1: They are weighted more toward defence. I think 60% of our pipeline is in defence. And in North America, which represents 60% of the total group, 75 to 80% of that is also in defence.

Mark Reid: Yeah

Anthony Kirby: is in defense and in North America, which represents 60% of the total group, 75%, 80% of that is also in defense. We see higher value, more complex services, but also in things like our complex case management businesses in citizen services, as well as our electronic monitoring contract in the UK and elsewhere around the world.

Speaker #1: So, we see higher value, more complex services, but also in things like our complex case management businesses in citizen services, as well as our electronic monitoring contract in the UK and elsewhere around the world.

Speaker #4: Thank you.

Chris Bambury: Thank you.

[Analyst]: Thank you.

[Analyst] (Citi): Thank you very much. Arthur from Citi. First one from me. Just wondered what the environment was like now that Andy Burnham has taken over. In terms of contract adjudications, is that all going to plan? Within that, just what's the government's ability to break UK migration and what's the mood music coming out of that? Second question, obviously the margin in the UK over 6%, that's your sort of group upper end of guide. How much better do you think this could get in a sort of blue sky scenario? How much of it's to do with sort of management action, how much to do with the business mix improving? Thank you.

Speaker #5: Thank you very much. Arthur from Citi. First one from me—I just wondered what the environment was like now that Andy Burnham has taken over.

Speaker #5: So, in terms of contract adjudications, is that all kind of going to plan? And within that, just kind of—what’s the government’s ability to break UK migration, and what’s the music coming out of that?

Speaker #5: And then, second question. Obviously, the margin in the UK is over 6%. That's your sort of group upper end of guidance. How much better do you think this could get in a sort of blue-sky scenario?

[Analyst] (Citi): Second question, obviously the margin in the UK over 6%, that's your sort of group upper end of guide. How much better do you think this could get in a sort of blue sky scenario? How much of it's to do with sort of management action, how much to do with the business mix improving? Thank you.

Speaker #5: And how much of it is to do with sort of management action? How much is to do with the business mix improving? Thank you.

Speaker #1: It doesn't matter. You do the first. I'm joking, I'm joking. So let me take the UK political landscape, and then Mark can take the margin question.

Mark Reid: Does Mark want to take that one?

Anthony Kirby: Shall I do the first?

Mark Reid: Yeah, sure.

Anthony Kirby: I'm joking. Let me take the UK political landscape, and then Mark can take the margin question. Look, this is a new government with new secretaries of state appointed. The point I would make rather robustly, Arthur, is that we've worked in the UK for over 60 years with many different parties of all political persuasions with different policy outcomes. We deliver complex mission-critical services. We're not in the area of particularly security or cleaning without that being a wraparound of the contract. First and foremost, we are operating critical mission important services. Look, we're always aligned to helping the government customer of the day deliver their policy objectives.

Speaker #1: So look, this is a new government with new Secretaries of State appointed. The point I would make rather robustly, Arthur, is that we've worked in the UK for over 60 years, with many different parties of all political persuasions, with different policy outcomes.

Speaker #1: We deliver complex, mission-critical services. So we're not in the area of, particularly, security or cleaning, without that being a wraparound of the contract. So, first and foremost, we are operating critical, mission-important services.

Anthony Kirby: We deliver complex mission-critical services. We're not in the area of particularly security or cleaning without that being a wraparound of the contract. First and foremost, we are operating critical mission important services. Look, we're always aligned to helping the government customer of the day deliver their policy objectives.

Speaker #1: But look, we're always aligned to helping the government customer of the day deliver their policy objectives. If you look at the announcement that was made only yesterday, actually, by the Cabinet Office, which we were proud to support—the increase in social value scoring in contracts—I'm really pleased about that because that's something that Serco holds dear.

Anthony Kirby: If you look at the announcement that was made only yesterday actually by the Cabinet Office, which we were proud to support, the increase in social value scoring in contracts, I'm really pleased about that because that's something that Serco holds dear in terms of our social impact that we have in the communities that we're proud to operate in. Fundamentally, that moving up to 20% rather than 10% of the scoring criteria now, I welcome. We're doing very well in that under the current contracts, and as we move forward, our ability to showcase what we do to help socioeconomic disadvantaged individuals into career paths, what we do with our work with veterans and reservists, what we do with people with experience of homelessness, et cetera, is something that we hold dear. Overall, the structural drivers and the structural demand for our services remain.

Speaker #1: In terms of our social impact, which we have in the communities that we're proud to operate in—fundamentally, that moving up to 20%, rather than 10%, of the scoring criteria now is something I welcome.

Speaker #1: We're doing very, very well in that under the current contracts. And as we move forward, our ability to showcase what we do to help socioeconomically disadvantaged individuals into career paths, what we do with our work with veterans and reservists, what we do with people with experience of homelessness, etc., is something that we hold dear.

Anthony Kirby: We're doing very well in that under the current contracts, and as we move forward, our ability to showcase what we do to help socioeconomic disadvantaged individuals into career paths, what we do with our work with veterans and reservists, what we do with people with experience of homelessness, et cetera, is something that we hold dear.

Speaker #1: So overall, the structural drivers and the structural demand for our services remain. So, look, like I say, we employ just under 30,000 people in the UK.

Anthony Kirby: Overall, the structural drivers and the structural demand for our services remain. Look, like I say, we employ just under 30,000 people in the UK. We're very proud of the work that we do, and we continue to expect to deliver those as we move forward.

Anthony Kirby: Look, like I say, we employ just under 30,000 people in the UK. We're very proud of the work that we do, and we continue to expect to deliver those as we move forward.

Speaker #1: We're very proud of the work that we do, and we continue to expect to deliver those as we move forward.

Speaker #4: Okay.

Speaker #3: Arthur, on the UK margin, I think we're particularly pleased with that, given there are various puts and takes in there, right? So I think we've highlighted the Royal Navy—we've progressed on that.

Mark Reid: Now, from the UK margin, I think we're particularly pleased with that given there are various puts and takes in there, right? I think we've highlighted the Royal Navy. Good progress on that. Electronic monitoring is one specifically where we've seen great progress. The team have really driven operational improvements, not only from a margin perspective, but also a customer outcome perspective. That's very pleasing. Obviously we've still got UK immigration, which will continue to be a headwind. Obviously National Insurance in H1 was a headwind, which will lap itself into H2. I think without predicting exactly the margin, I think those are the puts and takes, but we'll continue to see positive progress on electronic monitoring and on the Royal Navy. National Insurance will drop off, we'll see how immigration continue its progress into H2.

Speaker #3: Electronic monitoring is one area where we've seen great progress. The team have really driven operational improvements, not only from a margin perspective, but also from a customer outcome perspective.

Speaker #3: So that's very, very pleasing. I think, obviously, we've still got UK immigration, which will continue to be a headwind. And then, obviously, national insurance in H1 was a headwind, which will lap itself in H2.

Mark Reid: Obviously we've still got UK immigration, which will continue to be a headwind. Obviously National Insurance in H1 was a headwind, which will lap itself into H2. I think without predicting exactly the margin, I think those are the puts and takes, but we'll continue to see positive progress on electronic monitoring and on the Royal Navy. National Insurance will drop off, we'll see how immigration continue its progress into H2.

Speaker #3: So I think, without predicting exactly the margin, I think those are the puts and takes, but we'll continue to see positive progress on electronic monitoring and on the Royal Navy.

Speaker #3: National Insurance will drop off, and then we'll see how Immigration continues its progress into the second half.

Speaker #4: Hi, Alan Wells from Jefferies. Maybe just kind of following on from Arthur's question on the margin to start with. Obviously, 6.2% for the half-year is ahead of the 5% to 6% kind of range that you guys have talked about.

Allen Wells: Hi, Allen Wells from Jefferies. Maybe just kind of following on from Arthur's question on the margin to start with, obviously 6.2% at the H1. It's ahead of the 5% to 6% kind of range that you guys have talked about. When we think about the group margin and the building blocks from here, could you maybe kind of split out where the risks and opportunities, how much is kind of cost out at a group level? How much is

Speaker #4: When we think about the group margin and the building blocks from here, could you maybe kind of lay out where the risks and opportunities are? How much is cost out at a group level? How much is contract-based opportunity? Maybe where some of the headwinds are on margin? And could you talk about where sustainable margins start to sit?

Mark Reid: Contract-based opportunity-

Anthony Kirby: Yeah

Mark Reid: maybe where some of the headwinds are on margin-

Allen Wells: maybe where some of the headwinds are on margin-

Anthony Kirby: Sure

Mark Reid: if you think about where sustainable margins-

Allen Wells: if you think about where sustainable margins-

Anthony Kirby: Yeah

Mark Reid: start to sit. That's the first question. Secondly, on the UK, the justice side, obviously a lot of noise in the news over the past couple of weeks on early release. Would be just interesting on the tagging contract you have. You inherited a pretty tough situation when you pitched that contract out. You made great progress. Where are we in terms of capabilities and capacity, I guess, in that contract to accept those additional volumes? Finally, a very quick one just on CMS in North America, the legacy contract there. Obviously, you talked about volumes coming back. Just the shape of that for our modeling purposes, the shape of that over the next few quarters would be really helpful. Thank you.

Allen Wells: start to sit. That's the first question. Secondly, on the UK, the justice side, obviously a lot of noise in the news over the past couple of weeks on early release. Would be just interesting on the tagging contract you have. You inherited a pretty tough situation when you pitched that contract out. You made great progress.

Speaker #4: That's the first question. And then, secondly, on the UK justice side, obviously there's been a lot of noise in the news over the past couple of weeks on early release, but I'm just interested in the kind of contracting that you have.

Speaker #4: You inherited a pretty tough situation when you picked that contract up. You’ve made great progress. But where are we in terms of capabilities and capacity, I guess, in that contract to accept those additional volumes?

Allen Wells: Where are we in terms of capabilities and capacity, I guess, in that contract to accept those additional volumes? Finally, a very quick one just on CMS in North America, the legacy contract there. Obviously, you talked about volumes coming back. Just the shape of that for our modeling purposes, the shape of that over the next few quarters would be really helpful. Thank you.

Speaker #4: And then finally, a very quick one just on CMS in North America, the legacy contract there. Obviously, you talked about volumes coming back. Just the shape of that for our modeling purposes—the shape of that over the next few quarters—would be really helpful.

Speaker #4: Thank you.

Speaker #3: Sure.

Speaker #1: Okay. Do you want to carry on, or do you want to just...

Anthony Kirby: Okay. Do you want to carry on, or do you want to do-

Mark Reid: Yeah. Let me continue with margin, because it's very similar component parts when you start talking about groups. I think, again, very happy, 6.2% I think is a decade high. We're very pleased with that. The overall geographical mix is helping, I think that's useful. If I look at North America, again, very nice margin in the H1, that's pleasing again. There's a real culture of continuing focus on driving in-contract profitability, and that's throughout the organization. That will continue to be a tailwind where we execute positively there. Defense and justice in the UK will continue in the H2, and will continue to be supportive in terms of raw margin from a group perspective. You've got this immigration effect. Again, we were slightly better from primarily a volumes perspective and mix perspective in the H1.

Speaker #3: Yeah, let me continue with margin because it's a very similar component part. When you start talking about groups, I think, again, very happy.

Speaker #3: 6.2% I think is a decade high, so we're very pleased with that. The overall geographical mix is helping, so I think that's useful. If I look at North America again, very nice margin in the first half.

Speaker #3: So that's pleasing again. There's a real culture of continued focus on driving in-contract profitability, and that's throughout the organization. So that will continue to be a tailwind where we execute positively there.

Mark Reid: There's a real culture of continuing focus on driving in-contract profitability, and that's throughout the organization. That will continue to be a tailwind where we execute positively there. Defense and justice in the UK will continue in the H2, and will continue to be supportive in terms of raw margin from a group perspective. You've got this immigration effect. Again, we were slightly better from primarily a volumes perspective and mix perspective in the H1.

Speaker #3: Defense and Justice in the UK will continue in the second half, and will continue to be supportive in terms of overall margin from a Group perspective. And then you've got this immigration effect.

Speaker #3: Again, we were slightly better from primarily a volumes perspective—mixed perspective—in the first half. That will continue to be a headwind as we go into the second half, and then clearly into 2027.

Mark Reid: That will continue to be a headwind as we go into H2 and then, clearly into 2027. National Insurance, as I said, was a large chunky number in H1. That starts to lap itself. Maybe finally on corporate costs, very pleased from a CFO seat of the performance in H1 on corporate costs. We continue to have a very thorough thought process in terms of managing costs. We managed, again, across workforce optimization in terms of third-party spend. That plays out well. There will be some time in H2, so you should not expect the costs to fall fully through into H2 because there is some small IT spend in H2 as we are phasing. Overall, I think, again, I am sure the question is going to come in terms of where does that look longer term? I think the business is performing.

Speaker #3: National Insurance, as I said, was a large, chunky number in H1. That starts to lap itself. And then maybe finally, on corporate costs—very pleased, from a CFO seat, with the performance in H1 on corporate costs.

Speaker #3: We continue to have a very thorough thought process in terms of managing costs. We managed, again, across workforce optimization and in terms of third-party spend.

Mark Reid: We managed, again, across workforce optimization in terms of third-party spend. That plays out well. There will be some time in H2, so you should not expect the costs to fall fully through into H2 because there is some small IT spend in H2 as we are phasing. Overall, I think, again, I am sure the question is going to come in terms of where does that look longer term? I think the business is performing.

Speaker #3: That plays out well. There'll be some time in the second half, so we shouldn't expect the costs to flow fully through into the second half because there's some small IT spend in the second half, which is phasing.

Speaker #3: But overall, I think—again, and I'm sure the question is going to come in terms of where does that look longer term? I think the business is performing.

Speaker #3: We've got very nice headwinds—sorry, very good tailwinds—in terms of the geographical mix, in terms of our defense, and in terms of the pipeline makeup there.

Mark Reid: We have got very good tailwinds in terms of the geographical mix, in terms of our defense, in terms of pipeline makeup there. There is some real nice structural elements of our business. Clearly, we have also got some headwinds in terms of immigration. We will come back and let you know what we think about that in due course once we have probably got through my first budget, I will have a better view of what that really looks like.

Speaker #3: So, there's some really nice structural elements of our business, clearly. But we've also got some headwinds in terms of immigration. We'll come back and let you know what we think about that in due course, once we've probably got through my first budget.

Speaker #3: I'll have a better view of what that really looks like.

Speaker #1: Thanks, Mark. Alan, just to answer your other two questions: In terms of CMS, the phasing that we see moving forward is no different than the historical trends that we've seen.

Anthony Kirby: Thanks, Mark. Allen, just to answer your other two questions. In terms of CMS, the phasing that we see moving forward is no different than the historical trends that we have seen. We do not give numbers at this point in the year. We have obviously got to go through the budgeting process. H1 to H2, we are seeing those trends continue to be as we have seen historically. In terms of the UK justice and electronic monitoring, I reviewed this contract probably 10 days ago, and we were obviously talking about the government's need for the early release scheme to ease the capacity issues across the UK male estate. Fundamentally, we are monitoring at the moment record numbers of people in the community. I think we are up to about 28,000 people per day that we are monitoring.

Speaker #1: We don't give numbers at this point in the year. We've obviously got to go through the budgeting process. But H1 to H2, we're seeing those trends continue to be as we've seen historically.

Speaker #1: In terms of UK justice and electronic monitoring, our review of this contract was probably 10 days ago. And we were obviously talking about the government's need for the early release scheme to ease the capacity issues across the UK mailer state.

Anthony Kirby: In terms of the UK justice and electronic monitoring, I reviewed this contract probably 10 days ago, and we were obviously talking about the government's need for the early release scheme to ease the capacity issues across the UK male estate. Fundamentally, we are monitoring at the moment record numbers of people in the community. I think we are up to about 28,000 people per day that we are monitoring.

Speaker #1: Fundamentally, we are monitoring, at the moment, record numbers of people in the community. I think we're up to about 28,000 people per day that we're monitoring.

Speaker #1: We have the capacity, the resources, and the capability to meet the government's demands as we move across the next couple of years. We expect those numbers, as the MOJ themselves have confirmed, to get into the mid-30,000s as we move over the coming years.

Anthony Kirby: We have the capacity, the resources, and the capability to meet the government's demands as we move across the next couple of years. We expect those numbers, as the MOJ themselves have confirmed, to get into the mid-30,000s as we move over the coming years. I was in the contract a couple of weeks ago, actually. I spent a day out with a team fitting the tags to device wearers. Actually, I am really proud of what we have done to get that contract to where it is. Every KPI bar none is green, and every KPI has been green for a significantly sustained period of time over the last couple of months. I am exceptionally proud of it.

Speaker #1: I was in the contract a couple of weeks ago, actually. I spent a day out with the team, fitting the tags to device wearers.

Speaker #1: And actually, I'm really proud of what we've done to get that contract to where it is. Every KPI bar none is green, and every KPI has been green for a significantly sustained period of time over the last couple of months.

Anthony Kirby: Actually, I am really proud of what we have done to get that contract to where it is. Every KPI bar none is green, and every KPI has been green for a significantly sustained period of time over the last couple of months. I am exceptionally proud of it. This is where we come into our own, where we stand up and we help customers deliver those critical services to help them solve a complex problem that they see in front of them.

Speaker #1: So I'm exceptionally proud of it. This is where we come into our own—where we stand up and help customers deliver those critical services, to help them solve the complex problems that they see in front of them.

Anthony Kirby: This is where we come into our own, where we stand up and we help customers deliver those critical services to help them solve a complex problem that they see in front of them.

Speaker #4: All right. So, James Rose from Barclays. I've got two, please. First is on productivity. I think that's been a significant contributor to profits over the last few years.

James Rosenthal: Hi, it's James Rose from Barclays. I've got two, please. First is on productivity. I think that's been a significant contributor to profits over the last few years. Mark, when you look across the group, how big a pool of opportunity do you think remains in that spectrum? Then the second one is on how contracts may be changing over time. I think the US is trying to push towards more fixed price contracts, UK sort of to be determined, but potentially a bit more outcome-based. How would you assess that framework in terms of the risks and potentially opportunities for Serco?

James Rose: Hi, it's James Rose from Barclays. I've got two, please. First is on productivity. I think that's been a significant contributor to profits over the last few years. Mark, when you look across the group, how big a pool of opportunity do you think remains in that spectrum? Then the second one is on how contracts may be changing over time. I think the US is trying to push towards more fixed price contracts, UK sort of to be determined, but potentially a bit more outcome-based. How would you assess that framework in terms of the risks and potentially opportunities for Serco?

Speaker #4: Mark, when you look across the group, how big a pool of opportunity do you think remains in that spectrum? And then the second one is on how contracts may be changing over time.

Speaker #4: I think the US is trying to push towards more fixed-price contracts. The UK is sort of to be determined, but potentially a bit more outcome-based.

Speaker #4: How would you assess that framework in terms of the risks and potential opportunities for Serco?

Speaker #1: Do you want to do the first one?

Mark Reid: You want to do the first one?

Anthony Kirby: You want to do the first one?

Speaker #3: Yeah, I'll take the first one. So, I mean, as I stated in my notes, look, I think—and you're probably expecting me to say—that first six months in.

Mark Reid: Yeah, I'll do the first one.

Mark Reid: Yeah, I'll do the first one. As I stated in my notes, look, I think you probably expect me to say that first six months in. I think there is a real DNA of driving productivity improvements right across the contracts, across the region. That is in the DNA of the company. I think the example you used in terms of electronic monitoring is just one of those examples.

Mark Reid: As I stated in my notes, look, I think you probably expect me to say that first six months in. I think there is a real DNA of driving productivity improvements right across the contracts, across the region. That is in the DNA of the company. I think the example you used in terms of electronic monitoring is just one of those examples. If you take that practice is there, we are definitely going to continue to focus on that and take that good practice. If you look across our cost base, it is a significant number. I think it is GBP 4.5 billion. There continues to be pools of spend to go against, you expect me to continue to look at that and push to accelerate those benefits. That is where I am. Thanks for the question.

Speaker #3: I think there's a real DNA of driving productivity improvements across the contracts and across the regions. That is in the DNA of the company.

Speaker #3: I think the example you used in terms of electronic monitoring is just one of those examples. And so if you take that practice there, we're definitely going to continue to focus on that and take that good practice.

Mark Reid: If you take that practice is there, we are definitely going to continue to focus on that and take that good practice. If you look across our cost base, it is a significant number. I think it is GBP 4.5 billion. There continues to be pools of spend to go against, you expect me to continue to look at that and push to accelerate those benefits. That is where I am.

Speaker #3: If you look across our cost base, it's a significant number. So I think it's four, four and a half billion. So there continue to be pools of spend to go against.

Speaker #3: And so you expect me to continue to look at that and push to accelerate those benefits. So that's where I am.

Speaker #1: Thanks for the question. Look, I think what I would say is our current landscape of contracts in the US is probably around 50% fixed price already.

Anthony Kirby: Thanks for the question. Look, I think what I would say is our current landscape of contracts in the US is probably around 50% fixed-priced already. We do not have a huge proportion of the business, or it is weighted more favorably to cost plus. We have got experience of operating in fixed-priced environments. Interestingly, that is generally how the rest of the world currently operates in terms of fixed-price contracts.

Anthony Kirby: Look, I think what I would say is our current landscape of contracts in the US is probably around 50% fixed-priced already. We do not have a huge proportion of the business, or it is weighted more favorably to cost plus. We have got experience of operating in fixed-priced environments. Interestingly, that is generally how the rest of the world currently operates in terms of fixed-price contracts. There is very few cost plus around the rest of the world. We have the skill and the capability within the organization to do that. Actually, we see the opportunity to help the customer reduce their costs through fixed-price contract as a good thing. Like I say, we have got some very good examples of where we have been able to help the customer reduce their overall costs, whilst we are also able to walk the margin up slightly in those fixed-priced contracts.

Speaker #1: So we don't have a huge proportion of the business or its own weight, or it's weighted more favorably to cost-plus. So we've got experience of operating in fixed-price environments.

Speaker #1: And interestingly, that's generally how the rest of the world currently operates in terms of fixed-price contracts. There's very little cost-plus around the rest of the world.

Anthony Kirby: There is very few cost plus around the rest of the world. We have the skill and the capability within the organization to do that. Actually, we see the opportunity to help the customer reduce their costs through fixed-price contract as a good thing. Like I say, we have got some very good examples of where we have been able to help the customer reduce their overall costs, whilst we are also able to walk the margin up slightly in those fixed-priced contracts. We are well-versed in that area.

Speaker #1: So, we have the skill and the capability within the organization to do that. And actually, we see the opportunity to help the customer reduce their costs through fixed-price contracts as a good thing.

Speaker #1: And, like I say, we've got some very good examples of where we've been able to help the customer reduce their overall costs, whilst we're also able to walk the margin up slightly in those fixed-price contracts.

Speaker #1: So we're well-versed in that area.

Anthony Kirby: We are well-versed in that area.

Speaker #4: Thank you. Alex Smith from Berenberg. Just two for me. Number one: on MTNS, kind of almost fully integrated, I wanted to ask—the objective there was to cross-sell and upsell that new capability into the US, but also into Europe. Could I get an update on that and any potential plans?

James Rosenthal: Alex Smith from Berenberg. Just two from me. Number one on MT&S, almost fully integrated. One of the objectives there was to cross-sell and upsell that new capability into the US, but also into Europe. Update on that and potential plans. Number two, just on UK immigration. You mentioned volume slightly lower, as you previously guided in July. You are approaching the 2029 end of the contract, there is discussions with the government, how that contract is looking. I guess that rebid process begins to start into next year. Any color there would be great.

Alex Smith: Alex Smith from Berenberg. Just two from me. Number one on MT&S, almost fully integrated. One of the objectives there was to cross-sell and upsell that new capability into the US, but also into Europe. Update on that and potential plans. Number two, just on UK immigration. You mentioned volume slightly lower, as you previously guided in July. You are approaching the 2029 end of the contract, there is discussions with the government, how that contract is looking. I guess that rebid process begins to start into next year. Any color there would be great.

Speaker #4: Number two, just on UK Immigration. You mentioned volume is slightly lower, as you previously guided in July, but you're approaching the 2029 end of the contract.

Speaker #4: Just kind of discussions with the government—how that contract’s looking. I guess that kind of rebid process begins to start into next year, so any color there would be great.

Speaker #1: Yeah. So, in terms of MTNS, we're already starting now. That's been very well integrated into the wider Serco portfolio. We're working with them on a number of quite sizable opportunities, both within the US and, Alex, to your point, more broadly.

Anthony Kirby: In terms of MT&S, we are already starting now. That has been very well integrated into the wider Serco portfolio. We are working with them on a number of opportunities, quite sizable opportunities, both within the US and Alex, to your point, more broadly. There is an opportunity in Canada that we would probably not have been able to bid for had we not have made the acquisition of MT&S. Also, MT&S supported a recent win in defense in New Zealand using some of that capability. We are already starting to see some positive green shoots of being able to take that capability more globally. In terms of immigration, Mark can touch on the numbers. In terms of the 2029 contract, that is still the case. The contract is up for renewal in 2029.

Speaker #1: So there's an opportunity in Canada that we would probably not have been able to bid for had we not made the acquisition of MTNS.

Speaker #1: And also, MTNS supported a recent win in Defense in New Zealand using some of that capability. So we're already starting to see some positive green shoots of being able to take that capability more globally.

Anthony Kirby: Also, MT&S supported a recent win in defense in New Zealand using some of that capability. We are already starting to see some positive green shoots of being able to take that capability more globally. In terms of immigration, Mark can touch on the numbers. In terms of the 2029 contract, that is still the case. The contract is up for renewal in 2029.

Speaker #1: In terms of immigration, Mark can touch on the numbers. In terms of the 2029 contract, that's still the case—so the contract is up for renewal in 2029.

Speaker #1: The customer previously came out and suggested one contractual mechanism for the future services from 2029 onwards. That's changed ever so slightly now, so we expect to be able to be absolutely, as a strategic partner to the Home Office, bidding for that contract retention in 2029.

Anthony Kirby: The customer previously come out and suggested one contractual mechanism for the future services from 2029 onwards. That has changed ever so slightly now. We expect to be able to be absolutely, as a strategic partner to the Home Office, bidding for that contract retention in 2029. The shape of it may be slightly different to what it is today, but fundamentally, I think the customer knows that having trusted partners like us, where they are able to publicly control the contract but have it privately delivered, is something where we think our skills and expertise will continue to be utilized by the Home Office.

Speaker #1: The shape of it may be slightly different to what it is today, but fundamentally I think the customer knows they have trusted partners like us, where they're able to publicly control the contract but have it privately delivered.

Speaker #1: It's an area where we believe our skills and expertise will continue to be utilized by the home office.

Speaker #3: Yeah. And then on numbers, I mean, I think like you're saying, I think our customers are happy. We're supporting them coming out of hotels.

Mark Reid: Yeah. On numbers, like you were saying, I think our customer is happy we are supporting them come out of hotels, the hotel mix is down. Overall volumes is slightly down. We are around 40,000, but that is not huge. The mix is moving more towards dispersed accommodation. In terms of overall financial effect of that, again, I think we talked about GBP 100 million headwind. That is not that size. It is probably more in the 60s at this point. We have still got the second half to go, but it is certainly attriting at a slightly lower pace than what we had expected.

Speaker #3: So, the hotel mix is down. Overall volumes are slightly down—we're around 40,000, but that's not huge. The mix is moving more towards dispersed accommodation.

Speaker #3: In terms of overall financial effect of that, again, I think we talked about about a £100 million headwind. It's not that size; it's probably more in the £60 millions at this point.

Speaker #3: And then we still have the second half to go, but it's certainly a trend. It's a slightly lower pace than what we had expected.

Speaker #4: James Barry from JP Morgan. Just one question, going back to the Cabinet Office announcement. You talked about what it means from a sort of relationship-with-government perspective.

Jane Sparrow: Jane Sparrow from JP Morgan. Just one, going back to the Cabinet Office announcement. You talked about what it means from a relationship with government perspective. Could you also talk about what it means from a competitive environment perspective? Does that 20% increase in social value and reducing and removing a lot of the other criteria lower the barrier to entry for some smaller competitors?

Speaker #4: Could you also talk about what it means from a competitive environment perspective? Does that sort of 20% increase in social value, and removing a lot of the other criteria, sort of lower the barrier to entry for some smaller competitors?

Speaker #1: Thanks for the question, Jane. I don't think it reduces the barrier to entry for other competitors. We work really well, actually, in our supply chain with SMEs.

Anthony Kirby: Thanks for the question, Jane. I don't think it reduces the barrier to entry for other competitors. We work really well, actually, in our supply chain with SMEs. We see this as an opportunity to work with more SMEs that can deliver some of those services where we think that others would be best placed under a prime relationship with us. Fundamentally, I don't see the barriers reducing. Some of the things that will no longer be part of the scoring criteria, we may still choose to do as an organization anyway. I don't think that that's going to be impactful. This is all about skills and job creation. I think I made the point a previous session that around 90% of our population that work in our contracts come from within the locality. We've got some very strong track record, 630 apprentices.

Speaker #1: So we see this as an opportunity to work with more SMEs that can deliver some of those services, where we think that others would be best placed under a prime relationship with us. But fundamentally, I don't see the barriers reducing.

Speaker #1: Some of the things that will no longer be part of the scoring criteria, we may still choose to do as an organization anyway. So I don't think that's going to be impactful.

Anthony Kirby: Some of the things that will no longer be part of the scoring criteria, we may still choose to do as an organization anyway. I don't think that that's going to be impactful. This is all about skills and job creation. I think I made the point a previous session that around 90% of our population that work in our contracts come from within the locality. We've got some very strong track record, 630 apprentices.

Speaker #1: This is all about skills and job creation. And I think I made the point in the previous session that around 90% of our population that work in our contracts come from within the locality.

Speaker #1: We've got a very strong track record—630 apprentices. We have many people on master's degree programs and apprenticeships within the organization.

Anthony Kirby: We have many people on master degree programs and apprenticeships that we have within the organization. This is about still delivering complex government services, the focus of what the government wants out of those locally delivered services is slightly altered in the scoring mechanism. What I just hope that we can give confidence on is that we are very, very good at this already. Our passion and our determination to make sure that we deliver those socioeconomic advantages, both in skills and jobs locally, absolutely is going to remain at the core.

Speaker #1: So, this is about still delivering complex government services, but the focus of what the government wants out of those locally delivered services is slightly altered in the scoring mechanism.

Speaker #1: What I just hope that we can give confidence on is that we are very, very good at this already. So our passion and our determination to make sure that we deliver those socioeconomic advantages, both in skills and jobs locally, absolutely is going to remain at the core.

Anthony Kirby: Our passion and our determination to make sure that we deliver those socioeconomic advantages, both in skills and jobs locally, absolutely is going to remain at the core. Any other questions from the room before we ask online? Somebody's hopefully going to appear from speaker in a minute.

Speaker #3: Any other questions from the room before we move to online? Somebody will hopefully appear from the speaker in a minute.

Anthony Kirby: Any other questions from the room before we ask online? Somebody's hopefully going to appear from speaker in a minute.

Speaker #5: If you would like to add a question in or dial into the conference line, please press the star key, followed by the number one on your telephone keypad.

Operator: If you would like to ask a question and are dialed into the conference line, please press star followed by the number 1 on your telephone keypad. Once again, if you are dialed into the conference and would like to ask a question, please press star followed by the number 1 on your telephone keypad. It seems that we have no questions on the conference line. I will now hand over to the management for closing remarks.

Speaker #5: Once again, if you're dialed into the conference and would like to ask a question, please press 'star,' followed by the number one on your telephone keypad.

Speaker #5: As we have no questions on the conference line, I will now hand over to the management for closing remarks.

Speaker #1: Fantastic. Well, thank you all very, very much. And in our continued pursuit of efficiency, we've managed to finish spot on time. So that was very well done, both from my colleague here and from the audience questions.

Anthony Kirby: Fantastic. Well, thank you all very much. In our continued pursuit of efficiency, we've managed to finish spot on the time. That was very well done both from my colleague here and from the audience questions. Thank you all very much. We will be around for any other individual questions that you may wish to ask, but we wish you a very safe day and a good rest of your week. Thank you all.

Speaker #1: So, thank you all very much. We will be around for any other individual questions that you may wish to ask, but we wish you a very safe day and a good rest of your week.

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Q2 2026 Serco Group PLC Earnings Call

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