Interim Results

Serco Group PLC
4 September 2001




                               Serco Group plc

            Interim Results for the six months ended 30 June 2001


                   STRONG GROWTH AND PERFORMANCE MAINTAINED


                                                     6 Months 6 Months
                                                           to       to
                                                      30.6.01  30.6.00
Turnover +                                            £531.8m  £454.9m  Up 16.9%
Profit before tax - pre FRS 10                         £24.4m   £18.6m  Up 31.1%
Earnings per share - pre FRS 10                         4.36p    3.34p  Up 30.5%
Dividend per share                                      0.57p    0.50p  Up 14.0%

Underlying profit before tax - pre FRS 10              £22.7m   £19.2m  Up 18.2%
Underlying operating profit                            £20.5m   £17.6m  Up 15.9%

+ Including joint ventures



Highlights:

  * Strong increases in sales and profits
  * Forward order book up to £6.2 billion
  * Excellent flow of new awards won totalling some £650m - including £160m
    contract for England's Traffic Control Centre
  * Bid win rate over 70%; with contract renewal rate over 90%
  * Major contracts extended include the National Physical Laboratory and
    Docklands Light Railway
  * New education business established with £35 million annual turnover
    including contracts in Bradford and Walsall



Richard White, Executive Chairman, said:

 'We are continuing to demonstrate strong organic growth across our range of
contracts and businesses. Our interim figures are underpinned by an
exceptionally high renewal rate for existing contracts, a substantial order
book and a continuing strong performance in winning new business in growth
markets.



This underlying strength and the increasing diversity of our portfolio is
providing us with a strong platform for sustained long-term growth. We remain
confident that we are well placed to benefit from significant growth
opportunities as the trend towards private sector involvement in public
services continues to gather impetus internationally.'

                                   - Ends -




For further information please contact Serco Group plc:
Tel: [phone]

Kevin Beeston                -     Chief Executive

Ben Woodford                 -     Communications Director



The Serco Group plc Interim Report 2001 is available from today on our website
at www.serco.com




                               SERCO GROUP PLC





A message from the Board

Strong increases in both sales and profits reflect our position in an
expanding range of international growth markets. We have continued to extend
our reach into public service activities such as transport, education, justice
and science, which offer substantial potential for further growth.



In the six months to 30 June 2001, turnover was £531.8 million - an increase
of 16.9% on the first half  of 2000. Pre-tax profits grew 31.1% to £24.4
million before goodwill amortisation and by 33.1% to    £22.4 million after
goodwill. This raises earnings per share by 30.5% to 4.36p before goodwill and
by 33.1% after goodwill. The tax rate remained at 32.5%.



Underlying pre-tax profits grew 18.2% to £22.7 million before goodwill, after
adjusting for the following one-off items. These are the unsuccessful National
Air Traffic Services (NATS) acquisition, the Great Southern Railway
refinancing and our investment in the People and Technology programme. As
planned, to cover the costs of the NATS acquisition - an exceptional item in
this year's Accounts - we took the opportunity to release cash and profit from
our Australian subsidiary, Great Southern Railway, by refinancing its rolling
stock. This also enables us to complete our current investment programme,
People and Technology.



The interim dividend of 0.57p per ordinary share - an increase of 14.0% - will
be paid on 12 October 2001 to shareholders on the register at close of
business on 14 September 2001.



During the period we won an excellent flow of new business, totalling some £
950 million of which £650 million are new awards. The forward order book grew
to over £6.2 billion. Contract renewals accounted for a quarter of our new
business as we maintained our retention rate above 90%. Major successes
included extensions to our contracts at the UK's National Physical Laboratory
(NPL) and Docklands Light Railway (DLR), our range support contracts with
QinetiQ and our manpower and personnel services contract for the Royal
Australian Air Force.



We further improved our traditionally high success rate in bidding for new
business. UK awards included two important education contracts, the management
of a new Immigration Detention Centre and the provision and operation of the
Traffic Control Centre for England; overseas awards included our ninth US
fleet management contract, the first private-sector contract for our joint
venture in Bermuda and our third contract from BHP Billiton in Australia.



Public private partnerships

In June, the influential Institute for Public Policy Research (IPPR) published
a report by its Commission on Public Private Partnerships (PPPs). The
Commission, which was supported by the Serco Institute, took evidence from a
broad cross-section of the public, private and independent sectors. It called
on the UK government to encourage diversity in the provision of public
services and embrace innovative models of partnership between the public and
private sectors. In the same month, the government renewed its commitment to
transform public services and indicated its willingness to involve the private
sector in the delivery of core public services in areas such as health and
education.



Serco has already built a strong position in public services, primarily in
defence, science, transport and justice. Our proven public service ethos and
sound relations with staff and unions in these areas will stand us in good
stead as we bid for projects with a higher public profile, for example in
education, arising from the government's new policy direction.



These developments in the UK are likely to have a substantial influence on our
international markets. Other nations have shown great interest in the UK's
innovative approach to delivering public services. The spread of these ideas
has already created new markets for us in Asia Pacific, North America and
mainland Europe. Private Finance Initiatives (PFIs) based on the UK experience
and focused on social infrastructure are developing in all these regions. We
believe the development of PPP models will not be far behind.



Acquisitions

Last year's acquisition of Quality Assurance Associates (QAA) helped us to win
our first two major education contracts. We have now agreed the acquisition of
AEA Technology's Consulting business to enlarge our customer base and
strengthen our position in science. The £69.8 million offer is subject only to
the approval of AEA Technology's shareholders. The business provides science
and safety based services to customers such as the UK Ministry of Defence,
British Nuclear Fuels, British Energy and the UK Atomic Energy Authority.



Our strategy remains to expand the business by organic growth and tactical
acquisitions.



Social and environmental responsibility

For a business that seeks a growing role in public service provision, it is
not enough to pay lip service to social responsibility. Our responsible
conduct and public service ethos have been crucial in maintaining our high
rates of contract wins and renewals. We will continue to earn the trust of
governments and public alike, and to make this a key differentiator for Serco.



After reviewing our UK operating contracts, we are currently consulting with
our businesses to create a more comprehensive, global approach to social
responsibility, clearly linked to our culture and values. By the end of the
year we will have defined realistic social responsibility commitments. This
will enable the Serco Best Practice Centre to develop processes for meeting
these commitments, training and encouraging staff to apply them, reporting on
our performance and disseminating best practice. We will begin reporting on
these initiatives in 2002.



Outlook

Serco will continue to increase the diversity of its contract portfolio,
primarily through organic growth - underpinned by an exceptionally high
renewal rate for existing contracts, a substantial order book and a continuing
strong performance in winning new business in growth markets.



The trend towards private sector involvement in public services is gathering
impetus internationally - and the recent elections of reforming governments in
the US, UK and Asia have added further momentum. The diversity of our
experience provides an increasingly strong platform for sustained long-term
growth as the concepts of outsourcing and PPPs gain wider acceptance - in new
territories, sectors and activities - and clients' requirements become ever
more complex.



Review of Operations



Expanding our role in public services



The UK government's determination to involve the private sector more closely
in the delivery of public services represents a major growth opportunity for
us - not least because we anticipate similar developments worldwide over the
next few years. In order to make the most of our early mover advantage in this
area we have continued to focus on selected markets - including the relatively
new areas of justice, science and education.



Justice

We are building a growing business in applying our management, IT and
facilities management expertise to support national and local police
operations. And we have already established a strong position in PFI projects
to build and run new prisons, through our Premier Custodial Group (PCG) joint
venture with Wackenhut Corrections Corporation.



The phase-in of our strategic partnership with the National Crime Squad for
England and Wales is now nearing completion. We have recruited almost 100
staff at six sites for this 10-year contract worth over £65 million. As well
as introducing core services on schedule, we are already broadening the scope
of the contract and are working with the National Crime Squad on several new
initiatives.



In January we were asked to intervene at short notice to support a critical
national intelligence system serving the 52 Police Forces in the UK, and other
agencies. The request was to provide remedial and maintenance services for the
intelligence system and we intend to bid for the full five-year contract when
it is tendered later this year.



We work with the majority of UK Police Forces as agent for Gatsometer
enforcement cameras. The government has announced its intention to allow the
police to reinvest fine revenues from enforcement cameras in new camera
technology and resources. Clearly, we are well placed to benefit from the
expansion of this market; our continuing development of the technology,
including colour digital and automatic numberplate recognition camera systems,
will stimulate further growth.



PCG was recently appointed to manage a new Immigration Detention Centre,
Dungavel House, in South Lanarkshire. This will house up to 150 immigration
detainees. Our expertise and experience were crucial in bringing the centre
into operation fast and efficiently to meet urgent demand.



In July, PCG opened Dovegate, a new 800-bed prison and therapeutic community
facility in Staffordshire, under a 25-year PFI contract. Its 200-bed
high-security therapeutic treatment facility is the first to be developed in
the UK for 30 years and the only one to be privately developed and managed.



PCG has broken more new ground by winning a contract from Staffordshire Police
to provide detention custody assistants. This staff support contract for a
police authority opens up a new market.



In addition to high-profile PFI projects, there is strongly growing demand for
outsourced services to the justice community. The market is now worth an
estimated £2.5 billion a year in the UK and we are confident of expanding our
role in this area.



Science

We are gaining real critical mass in science - by 2002 we expect to have a
business with an annual turnover of £150 million in the UK and continental
Europe.



In the UK we have gained a two-year, £60 million extension to our contract for
operating the National Physical Laboratory (NPL) and we continue to add new
business. This year - with our partners, Laboratory of the Government Chemist
and the BioIndustry Association - we undertook a strategically important
assignment to formulate a Biometrology Programme for the UK's Department of
Trade and Industry (DTI). We began a Photonics Programme for the DTI, aimed at
sustaining NPL's leadership in measurement for the fast-developing optical
communications industry. And we are in advanced discussions on a Department
of Health contract to support measurements needed in mobile phone research.



After a successful first 18 months, we anticipate further opportunities for
expansion at Britain's Atomic Weapons Establishment (AWE), which we manage
with partners Lockheed Martin and BNFL through our jointly owned subsidiary
AWE plc. Meanwhile, our rigorous approach to health and safety has been
recognised by a major award from the Royal Society for the Prevention of
Accidents (RoSPA). AWE was judged the best-performing company in the public
service and national defence sector - one of only 16 Sector Awards across the
UK in 2000.



Drawing on our marine services experience in the defence sector, we have won a
10-year contract to operate and maintain three marine research vessels for the
UK's Natural Environment Research Council.



We do not anticipate major opportunities arising frequently in the science
sector, but we are well positioned to seize them when they do. In Europe we
are playing to our strengths by focusing on opportunities in defence and
space-related science, mainly in France, Germany, Italy, the Netherlands and
Switzerland. We are also working with partners to develop opportunities in the
US. We continue to extend our capabilities in newer areas of science,
particularly those with the greatest commercial potential - for example, at
NPL we are shifting the emphasis from mature areas to those with applications
in the electronics, biotechnology, energy efficiency and environmental
sectors.



Education

Support for UK Local Education Authorities (LEAs) is a newly-emerging market
in which we have become one of the leading operators. Since December we have
built a business worth over £35 million a year after winning two strategically
important contracts.



In Bradford we are providing education services to the council and schools
under a 10-year contract involving almost 1,200 staff. It is the largest of
its kind yet awarded to a private sector supplier in the UK. We are supporting
all state maintained schools across the Bradford district and providing
additional help where needed in order to raise levels of attainment for
pupils.



In Walsall we are working in partnership with the LEA to deliver strategic
management and school improvement services; the five-year contract involves
around 100 staff.



Our success in securing a significant share of the first round of LEA
contracts positions us at the forefront of this new market and builds on the
excellent reputation that our QAA business has established in inspection,
consulting and training services.





Maintaining firm foundations

While positioning ourselves for growth in emerging public service markets, we
have continued to capitalise on Serco's strength in its more traditional
public sector markets. We have also made further progress in the commercial
sector.



Transport

The UK government has announced a 10-year transport plan involving investment
of £180 billion - of which over a quarter will come from attracting private
sector investment through long-term partnerships. This massive investment will
be spread across road, rail and local government initiatives; we are active in
all these market segments, bidding for contracts and pursuing long-term
partnership opportunities with local and central government agencies.



In March we signed a 10-year, £160 million PFI contract with the UK Highways
Agency to design, build and operate its national Traffic Control Centre (TCC).
The contract builds on our existing relationship with the Agency and draws on
our international experience of managing intelligent road systems. The TCC
will make it possible to view and manage England's strategic trunk roads as an
integrated network, directing traffic flows to reduce congestion. As operator,
we will distribute traffic and travel information through existing and new
media.



We have maintained our strong position in the UK rail industry after a series
of successful rebids for routine property maintenance contracts. Our 60%
market share makes us the leader in these contracts with Railtrack.



Since becoming operator of London's Docklands Light Railway (DLR) in 1997 we
have consistently invested in improving train services and passenger
information. Today, both reliability and customer satisfaction are at record
levels. In August we gained a two-year extension until 2006, enabling
Transport for London to retain our expertise while it integrates an extension
to London City Airport. Annual passenger numbers have more than doubled to 40
million since 1997 and are expected to reach 60 million by 2006.



Another example of successful investment is our contract for the UK's National
Rail Enquiry Scheme (NRES). Since winning this in 1997 we have introduced new
technology to improve responsiveness and added new services. This year, our
performance earned us an additional contract for the NRES Southern Region,
increasing our call volume by 20% to some 21 million calls a year. Meanwhile,
our performance on NRES has attracted contracts from ScotRail and the
Association of Train Operating Companies; we operate all four from our call
centre in Cardiff.



Since we took full control of Australia's Great Southern Railway (GSR) we have
significantly improved its performance and developed its tourism potential -
making possible this year's refinancing of its rolling stock. The refinancing
- through a conventional lease-out lease-in transaction - is part of our
continuing management of our portfolio of assets, releasing both profit and
cash. It has no impact on GSR's day-to-day services.



In the Middle East our contracts include air traffic control and engineering
maintenance support at many of the region's major international airports. This
year we have won a three-year renewal of our air traffic services contract at
Abu Dhabi and Al Ain International Airports.



Looking ahead, our prospects in road transport will benefit from the strong
position we have developed in the strategically important market for
transport-related IT, particularly in traffic management. In rail transport
our record as a light rail operator on the Manchester Metrolink, DLR and
Copenhagen Metro will provide a solid platform for future bids: we are the UK
market leader in light rail, and many more opportunities are expected to arise
across Europe over the next few years.



Defence

The defence market remains a strong growth area, and we are well established
as a market leader in outsourced support services to the military in the UK,
Australia and New Zealand.



In Australia we have extended the manpower and personnel services contract
under which we provide some 250 skilled technicians and managers to support
the Royal Australian Air Force at bases across the country. In New Zealand we
are negotiating with the army to renew our facilities management contract in
the Papakura and Northern Regions for up to 91/2 years. The air force has
extended our contract for technical services at Ohakea Base.



Contracts developed in the UK included the land ranges test and evaluation
support contract with QinetiQ, which operates and manages the ranges on behalf
of the MoD. The contract - covering two land range sites at Shoeburyness,
Essex and Eskmeals, Cumbria - confirms that we will continue to play a key
role in support of QinetiQ's land test and evaluation operations,
complementing our work at its air and sea ranges.



New activities won by our test systems business included a contract for
computerised verification of serviceability of the weapons systems fitted to
Harrier and Tornado aircraft. The technology we are using draws on expertise
acquired over the past 10 years in delivering the Merlin Avionics Test Systems
and MK 24 Torpedo Test Systems contracts.



With our first PFI contracts now operating successfully in the UK, we are
currently bidding for more and have invested in a strategic management team to
ensure that we compete strongly as public-private opportunities develop
internationally. We are already developing PPP proposals in Australia; and we
see opportunities in North America as Canada adopts PPP/PFI principles and the
US moves towards 'multi-activity' contracts that require technology solutions
coupled with change management skills.



Civil government

The trend towards outsourcing services is now firmly established in local and
regional government across the UK - and gathering momentum in Europe, North
America and Asia Pacific. For example, we provide about 20% of the outsourced
services to Australian utilities. Several Australian states are now developing
PFI projects and we are focusing on those that include a service element. We
are also pursuing opportunities in Europe, particularly in Italy.



We are building an increasingly strong position in leisure centre management.
During the first half we successfully negotiated extensions to three UK
contracts - in Buckingham, Tenterden and Stockport - and successfully rebid to
manage three centres in Northamptonshire for a further 15 years. In Sweden we
successfully rebid our Linkoping leisure centre contract and won a third at
Vaxjo, making us the country's largest private provider in the public leisure
centre market.



In May we won a seven-year professional property and construction services
contract with the London Borough of Richmond, adding to our existing business
in this field. The client commended our 'genuine understanding and commitment
to a partnership'.



In Australia we won a two-year extension to our contract to operate and
maintain the water and wastewater system in the Coliban area of Victoria. Over
the initial contract period we successfully consolidated water operations
serving 55 cities, towns and villages, delivering the intended substantial
cost savings. The proven success of this innovative project has made it an
attractive model for other areas.



We also extended our warehousing and distribution contract for the New South
Wales Government's    Q Stores, and our facilities management contract with
the Western Australia Department of Contract and Management Services.



In New Zealand, our performance for Wellington City Council has won us
additional business: we have signed a new five-year contract to provide
building maintenance services for the city.



In North America we won rebids on our contracts for examination and
registration services with the West Virginia Department of Motor Vehicles and
for maintaining the school buses in Portsmouth, Virginia. In both cases we
were re-appointed because of the quality of our service delivery over the
previous contract term.



In Kentucky, Louisville Gas and Electricity appointed us to manage its 1,300
vehicle fleet, with a contractual challenge to develop further outsourcing
opportunities within the company. The contract will provide a useful showcase
as the US utilities industry becomes increasingly interested in outsourcing.
It is our ninth fleet maintenance contract in the US, where we now maintain
over 6,000 vehicles.



Commercial and industrial

In Bermuda we were awarded a BMD13 million facilities management contract with
the Bank of Butterfield, which includes managing all the bank's properties
across the island. In the past our presence in Bermuda has been confined to
air traffic control and aviation services; this is the first result of an
initiative to build commercial business there.



In Australia our growing relationship with BHP Billiton has won us a third
contract with the company. Based at BHP Billiton's main steelworks site in
Port Kembla, this five-year contract to provide security, medical, fire and
emergency response services involves technology investment and a substantial
culture  change programme.



In Ireland, The Boots Company extended its facilities management contract,
which now covers 78 stores throughout the country. We also successfully rebid
for our facilities management contract with IBM.



In Germany we won a series of contracts to install fibre optic cable: a 40km
telecommunications network in Dusseldorf and Neuss for Metromedia, multimedia
links at the Nurburgring racetrack for WIGE-MIC Media Service, and a 50km
installation for mobile phone companies along part of the new
Frankfurt-Cologne high-speed rail link.



We see future growth potential in the US, where we have already established a
good foothold in the utilities sector.



The future

In the fast expanding worldwide market for public-private collaboration, both
governments and corporate partners are attracted by our proven experience. We
are making good headway in countries that have begun to follow the UK's lead,
notably in Europe and Asia Pacific. Opportunities are also beginning to emerge
in North America, and we are strengthening our position there to make the most
of our early mover advantage.



The diversity of our contract and market portfolios positions us well for the
future. Our contracts are widely spread around the world and across a broad
spectrum of sectors and clients; they also vary widely in complexity, from
relatively straightforward tasks to politically sensitive partnerships
demanding high levels of managerial and technological sophistication. This
well-balanced business model differentiates Serco from competitors. It enables
us to go on expanding at a rapid yet controlled pace, identifying and
addressing new business opportunities energetically but with the selectivity
that has underpinned our historic growth.






Proforma Summary Consolidated Profit and Loss Account
For the six months ended 30 June 2001



                                                 6 Months   6 Months    Year to
                                               to 30.6.01 to 30.6.00   31.12.00
                                                    £'000      £'000      £'000


Turnover: Group and share of joint

ventures - continuing operations                  531,784    454,933    966,991
Less: Share of joint ventures                    (97,557)   (77,640)  (194,948)

Group turnover                                    434,227    377,293    772,043
Cost of sales                                   (376,476)  (327,490)  (669,361)

Gross profit                                       57,751     49,803    102,682
Administrative expenses                          (40,203)   (32,536)   (74,601)
Exceptional item:  Cost of unsuccessful
NATS acquisition                                 (10,187)          -          -
Exceptional item: GSR refinancing                  15,356          -          -
Share of profits arising from joint
ventures - including group joint venture costs
and joint venture interest                          4,242      2,930     13,172

Profit before group interest and goodwill          26,959     20,197     41,253
Net group interest                                (2,563)    (1,592)    (3,543)

Profit on ordinary activities before
taxation - pre amortisation of goodwill            24,396     18,605     37,710
Amortisation of goodwill                          (1,970)    (1,750)    (3,681)

Profit on ordinary activities before taxation      22,426     16,855     34,029

Taxation on profit on ordinary activities         (7,288)    (5,478)   (11,059)

Profit on ordinary activities after taxation       15,138     11,377     22,970
Dividends                                         (2,270)    (1,964)    (6,387)
Retained profit                                    12,868      9,413     16,583

Earnings per Share ('EPS') of 2p each:
Basic EPS, after amortisation of goodwill           3.86p      2.90p      5.85p
Basic EPS, before amortisation of goodwill          4.36p      3.34p      6.78p



Basis of Preparation

As in our 2000 Annual Review and Accounts we have included a Proforma Summary
Consolidated Profit and Loss Account as an alternative presentation to aid in
the understanding of the Group results. The Proforma is derived directly from
the statutory profit and loss account.


Summary Consolidated Profit and Loss Account
For the six months ended 30 June 2001


                                                   6 Months  6 Months      Year
                                                         to        to        to
                                                    30.6.01   30.6.00  31.12.00 
                                                      £'000     £'000     £'000

Turnover: Group and share of joint
ventures - continuing operations                    531,784   454,933   966,991
Less: Share of joint ventures                      (97,557)  (77,640) (194,948)

Group turnover                                      434,227   377,293   772,043
Cost of sales                                     (376,476) (327,490) (669,361)

Gross profit                                         57,751    49,803   102,682
Administrative expenses                            (42,173)  (34,286)  (78,282)
                Amortisation of goodwill            (1,970)   (1,750)   (3,681)
                Other administrative expenses      (40,203)  (32,536)  (74,601)
Exceptional item: Cost of unsuccessful
NATS acquisition                                   (10,187)         -         -
Other operating costs relating to joint ventures    (3,352)   (2,227)   (7,654)

Operating profit - continuing operations              2,039    13,290    16,746
Exceptional item: GSR refinancing                    15,356         -         -
Share of operating profit in joint ventures          13,397     8,901    28,876
Net interest
                Group                               (2,563)   (1,592)   (3,543)
                Share of joint ventures             (5,803)   (3,744)   (8,050)


Profit on ordinary activities before                 22,426    16,855    34,029
taxation

Taxation on profit on ordinary activities           (7,288)   (5,478)  (11,059)


Profit on ordinary activities after                  15,138    11,377    22,970
taxation

Dividends                                           (2,270)   (1,964)   (6,387)
Retained profit                                      12,868     9,413    16,583


Earnings per Share ('EPS') of 2p each:
Basic EPS, after amortisation of goodwill             3.86p     2.90p     5.85p
Basic EPS, before amortisation of goodwill            4.36p     3.34p     6.78p

Diluted EPS, after amortisation of goodwill           3.84p     2.88p     5.79p
Diluted EPS, before amortisation of goodwill          4.33p     3.32p     6.72p

Dividend per share                                    0.57p     0.50p     1.63p



Notes to the Summary Consolidated Profit and Loss Account are at the end of
this statement.




Summary Consolidated Balance Sheet
As at 30 June 2001


                                               As at        As at         As at
                                             30.6.01      30.6.00      31.12.00
                                               £'000        £'000         £'000

Fixed assets

Intangible asset: Goodwill                    70,346       65,199        68,662
Tangible assets                               53,649       38,775        40,269
Investments in joint ventures                 31,707       25,023        27,688
Investment in own shares                       9,350        7,000         9,680
Total fixed assets                           165,052      135,997       146,299

Current assets/(liabilities)
Stocks                                        28,231       23,527        25,942
Debtors                                      210,552      163,992       190,729
Cash (net of overdraft)                       43,467       22,686        45,497
Trade and other creditors                  (147,310)     (99,853)     (137,957)
Accruals and deferred income                (91,832)     (72,876)      (88,386)
Net current assets                            43,108       37,476        35,825

Long term creditors+                        (59,643)     (47,053)      (47,121)

Provisions for liabilities and charges      (25,916)     (26,403)      (26,078)
Equity shareholders' funds                   122,601      100,017       108,925





+ includes £6,600,000 of PFI related non-recourse bank loans at 30 June 2001
(at 30 June 2000 and 31 December 2000: nil).






Summary Consolidated Cash Flow Statement
For the six months ended 30 June 2001


                                                    6 Months  6 Months      Year
                                                          to        to        to
                                                     30.6.01   30.6.00  31.12.00
                                                       £'000     £'000     £'000

Operating profit pre NATS cost                        12,226    13,290   16,746
Exceptional item: Cost of unsuccessful NATS         (10,187)         -        -
acquisition

Operating profit                                       2,039    13,290   16,746
Depreciation and goodwill amortisation                 8,131     7,492   15,419
Movement in working capital                         (13,542)   (9,702)   13,369

Net cash (outflow)/inflow from operating             (3,372)    11,080   45,534
activities
Dividends received from joint ventures                 2,376     1,971    7,477
Returns on investments and servicing of finance      (2,711)   (1,729)  (3,805)
Taxation                                             (1,824)   (1,253)  (5,653)
Capital expenditure and financial investment           2,799   (9,967) (17,965)
          Capital expenditure and financial         (15,060)   (9,967) (17,965)
          investment
          Exceptional item: GSR refinancing           17,859         -        -
Acquisitions and disposals                           (3,493)   (7,944)  (8,174)
Equity dividends paid                                (4,425)   (3,861)  (5,816)

Net cash (outflow)/inflow before financing          (10,650)  (11,703)   11,598
Financing                                              8,620     (798)  (1,288)
(Decrease)/increase in cash                          (2,030)  (12,501)   10,310
Opening balance                                       45,497    35,187   35,187
Closing balance                                       43,467    22,686   45,497





Interim Report

As required by Section 240 of the Companies Act 1985, notification is hereby
given that the accounting information contained in the Interim Report for 2001
does not comprise a full set of accounts and that no full accounts have been
delivered to the Registrar of Companies. The interim results for both 2000 and
2001 are unaudited whilst the results for the 2000 full year were audited, and
an unqualified audit report was made. The 2000 full year accounts have been
delivered to the Registrar of Companies.



Distribution of Report

Copies of this Report are being sent to all shareholders of Serco Group plc.
Copies can be obtained from our website, www.serco.com or on request from the
Registered Office:

Serco Group plc

Dolphin House

Windmill Road

Sunbury-on-Thames

Middlesex

TW16 7HT

United Kingdom

Notes

For the six months ended 30 June 2001


1. Earnings per share
The calculation of basic and fully diluted earnings per Ordinary Share after
goodwill is based on profits of £15,138,000 for the six months ended 30 June
2001 (2000 - £11,377,000) and the weighted average number of Ordinary Shares of
2p each in issue during the period.
The calculation of basic and fully diluted earnings per Ordinary Share before
goodwill is based on profits of £17,108,000 for the six months ended 30 June
2001 (2000 - £13,127,000) and the weighted average number of Ordinary Shares of
2p each in issue during the period.

2. Analysis of profit before tax - pre goodwill
                                                                      6       6
                                                                 Months  Months
                                                                     to      to
                                                                30.6.01 30.6.00
                                                                  £'000   £'000

Profit on ordinary activities before taxation reported           22,426  16,855
Amortisation of goodwill                                          1,970   1,750

Profit on ordinary activities before taxation - pre
amortisation of goodwill                                         24,396  18,605
Exceptional item: Cost of unsuccessful NATS acquisition          10,187       -
Investment: People and Technology project                         3,440     575
Exceptional item: GSR refinancing                              (15,356)       -

Underlying profit on ordinary activities before taxation - pre
amortisation of goodwill                                         22,667  19,180

3. Analysis of net joint venture profit
                                                                      6       6
                                                                 Months  Months
                                                                     to      to
                                                                30.6.01 30.6.00
                                                                  £'000   £'000

Share of joint venture operating profit                          13,397   8,901
Share of joint venture interest                                 (5,803) (3,744)
                                                                  7,594   5,157
Other operating costs                                           (2,756) (2,040)

Underlying net joint venture profit                               4,838   3,117
Investment: People and Technology project                         (596)   (187)
Share of profit arising from joint ventures                       4,242   2,930