Agreement reached for AWE pricing arrangements through to 2018
11 May 2012
Serco Group plc (Serco), the international service company, announces today
that the arrangements for the next pricing period regarding the Atomic Weapons
Establishment (AWE) contract have been successfully concluded. The agreement
has been reached with the UK Ministry of Defence (MOD) by Serco and its joint
venture partners Lockheed Martin and Jacobs Engineering Group Inc. with whom we
manage and operate AWE on behalf of the MOD. This is the fourth such pricing
period to date since the contract commenced on 1 April 2000.
Serco's share of revenue is expected to remain around £300m a year and
approximately £1.5bn will be added to our order book. The new arrangements will
take effect from 1 April 2013 and run through to 31 March 2018. The earnings
and margin rate in the initial years will be similar to those achieved in the
initial years of the current pricing period. As reflected in our recently
announced 2011 financial results, the contract is delivering value for money
for the MOD whilst achieving excellent performance in the quality and
timeliness of our programme delivery. Under the agreed arrangements, the joint
venture will again be incentivised to save money against the future programme.
Christopher Hyman, Chief Executive of Serco Group, said: "We are delighted to
have successfully agreed this latest pricing period for our AWE contract.
Working closely with the Ministry of Defence and our joint venture partners, we
are delivering a critical component of national security and providing leading
scientific research as well as delivering value for money for the taxpayer."
For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 208 334 4122
Marcus De Ville, Head of Media Relations T +44 (0) 208 334 4388
Notes to editors
AWE plays a crucial role in national nuclear security and the defence of the
United Kingdom, by providing and maintaining the warheads for the country's
nuclear deterrent. It is a centre of scientific and technological excellence,
with some of the most advanced research, design and production facilities in
the world. The work at AWE covers the entire life cycle of nuclear warheads;
from initial concept, assessment and design, through to component manufacture
and assembly, in-service support, and finally decommissioning and disposal.
Serco is a FTSE 100 international service company, which combines commercial
know-how with a deep public service ethos.
Around the world, we improve essential services by managing people, processes,
technology and assets more effectively. We advise policy makers, design
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More information can be found at www.serco.com