Rupert Soames - Group Chief Executive Angus Cockburn - CFO Ed Casey - Group COO

Rob Plant - JPMorgan Joel Spungin - Merrill Lynch Ed Steele - Citi Alex Magni - HSBC Allen Wells - Morgan Stanley Paul Sullivan - Barclays Andy Chu - Deutsche Bank Kean Marden - Jefferies

Right, Good morning. And thank you for coming here at such short notice for what proves to be something of a marathon session. Now the plan for the morning subject to a phrase which we in Serco have got very used to which is material adverse change is that after my introduction Angus will talk you through the 2014 results. I’ll then give you an overview of strategy and at that point which should be at around 10.15 we’ll take a short break of around 15 minutes before Ed talks to you about the implementation plan and Angus for financial plan around the strategy and then we’ll have Q&As. Now the last nine months have been quite extraordinary testing and we have to do some pretty extraordinary things like financing £150 million placement and profits warning on my first day at work back in May, like starting to prod our contracts and balance sheets and suddenly being told by Angus that we needed an additional 40 accountants from EY to cover the ground and then finding that we were looking at £1.5 billion write down, £0.5 billion rights offering and refinancing 1.6 billion of debt. Now to get here we’ve had to do some pretty novel things like a rights issue in November but not being able to launch it until the following March asking our auditors to sign off the prospectus standard, a one plus 11 month profit forecast which we struggle to find precedent for in the UK market and for us having to produce on the same day a complete annual report and the prospectus. But by taking it a day at the time and a challenge at the time here we are. We have a plan, a great management team, the support of our lenders and a fully underwritten rights issue raising because of the vagaries of pricing and my lathing of fractions £554 million which gold and investors willing will be successfully completed in the allotted time scales. So, it is appropriate I think but we start by saying what I know is going to be a hefty session but by saying some thank you for all those who have supported Serco through this period and through our time of need. Specifically Deloitte and EY, Clifford Chance, Rothschild and our lenders who’ve all risen to the occasion burnt huge amounts of midnight oil and supported a good business and so in doing so secured around 125,000 jobs and to judge from that fees quite a lot of theirs. Thank you also to our blessed underwriters whose name I cannot mention but you know who you are or at least I hope you do. I’d also like to thank our customers and in particular the UK government represented by the cabinet office and the treasury who have remained intelligently helpful and steadfast through what has being a difficult process since November whilst also having a keen eye on the national interest. Finally I would like to thank my colleagues particularly those in finance. Many of whom who have been called upon to work extraordinary hours and showing perseverance and loyalty of the highest order. I’d like to recognize Ed who has commuted weekly across the Atlantic while keeping the show on the road and of course Angus who only joined at the tail-end of October and has already gripped the business and shown a new and better way. He at least had the luxury of two weeks in the company before having to announce the major profits warning but he has led the process of producing a prospectus on the year end accounts for business in turmoil supported by the astonishing David Eveleigh who joined in December as our General Counsel and has earned the respect to all involved with his judgment attention to these and skill. And many of you will also know Stuart Ford, Head of IR who made up for week’s paternity leave by hopefully taking it over the new year and by working 20 hours a day through January until today to make up for it. Finally I would like to make pay tribute to our non-execs who have faced a daunting level of work read and reread thousands of pages of documentation with equanimity and given tremendous support to management. I say all these things and I know it’s unusual to start the presentation but I do think that people would not imagine the amount of work that the company has had to do in such a short period of time and I think saying thank you is appropriate. So thank you for coming this morning. And here we are. And we find ourselves able to announce that our expectations that we set in November have been met and we are holding to our forecast for 2015. Revenues and margins are as we expected, net debt is in the middle of the range we anticipated, despite having vastly reduced the working capital management “customarily exercised out year-end”. Write downs and provisions of 1.3 billion are 200 million lower than we suggested in November but be careful because there has been about 70 million reclassified as exceptional so the like-for-like figure is about 100 million better but within that be aware that the amount set aside for the onerous contract provisions has actually gone up and the group will write down intangible write-downs got less. Anyway, allowing for swings and roundabouts, we're about where we guess we would be in November and the trading profit forecast for 2015 of about £19 million trading profit is in line with our November's forecast of £100 million of adjusted operating profit. And on that note I am going to with very great pleasure hand over to Angus.

Thank you, Rupert. In this first part for me, I'll look backwards to run through the '14 results, I'll then come back later after Rupert and Ed have presented to talk about the outlook, the more of that onerous contract provisions on a forward-looking basis and future funding strategy. Let's start the review of '14 by looking at the background to the results and the basis of preparation. As you're all aware, we undertook a contract and balance sheet review during the second half, supported by EY, the early findings of which we reported on a November. This detailed review is now concluded and the overall outcome is broadly in line with our review in November albeit with some changes within the components and phase in as I'll talk about shortly. We also reviewed our accounting policies both with EY and then as part of the audit process and concluded that they're appropriate. In particular we looked hard at bid and phase-in costs and confirm that our current policy is correct as well as being consistent with the principals of the proposed new revenue recognition standard IFRS '15. However, with tightening of the application of our policies with greater discipline of what was onto the balance sheet most particular in the area of bid cost, phase in cost and the capitalization of other internal cost lead to the system implementation. We worked hard over the last few months not least in the preparation of the profit forecast and working capital statement that are needed to support our rights issue. As a result we now have fully integrated contract by contract financial model covering the whole group. We will get a lot of value from this initial Excel model as it will form the basis for the SAP automation of our new reporting and forecasting process. We have also updated our segmental disclosure to mirror of the new structure of how the business is now being running, bringing you greater and more straight forward disclosures. As this was not enough to offset your models, I have more good news. We have now introduced new reporting measures to simplify and increase transparency of how we report which in future will make it easier for you to interpret and reconcile the numbers now we know that today it's not going to feel that way, so Stuart, Jamie and I will be around as much as you need and as we can do to help you get through this and get all the models adjusted we've got a lot of extra information in the appendices to try and help you with it. Moving on to the income statement and the impact of the change in measures, these new measures are IFRS based with fewer adjusting items and will better reflect our strategy result. If there are major one-offs that flow through trading profit we'll of course let you know but we're going to make sure that we do the financial reporting on a consistent basis going forward. We've adopted IFRS equity accounting for our joint ventures which means that we'll no longer have an adjusted revenue number while it's trading profit will known through JV interest and tax charges. The impact of this in '14 was to reduce revenue by around 800 million and trading profit by 8 million. Additionally, we've replaced the adjusted profit measure which excluded a number of items including transaction cost and management estimates with a pretty exceptional trading profit measure which only excludes amortization and impairment charges on intangible assets arising on acquisition. As a result of these changes, trading profit before review items was 113 million in 2014, which is £25 million lower than it would have been under the previous adjusted operating profit measure. The equivalent 138 million is in line with our guidance back in November of achieving between 130 million and 140 million. Going back to trading profit, taking into account the 745 million of review items charge to trading profit the trading loss in 2014 was £632 million. As you are already aware we've increased the number of business segments to sticks having split the former UK and Europe and EMEA divisions in two enabling them to be closer to the customer with clearer internal reporting to the center. Following our new strategy, as outlined in the slide we also transferred a number of contracts and businesses between divisions to improve customer relationships, operational management and customer focus. Finally, from an accounting perspective we’ve got concept of contract sharing of revenue and profits between divisions. This again will simplify disclosure and enhance transparency. The 2014 numbers and 2013 competitors reflect all of these changes. You will see the new segmental disclosure under note 5 in the accounts and the note 42 you will see the former basis of segmental disclosure that help readers bridge the gap. I apologize for all the hassle this causes, but we’ve tried to get as much as we can into the 2014 results avoid more changes in 2015. In the appendix as I said you’ll find step by step reconciliations. Turning to the numbers and looking first at the bottom of the table revenue in ’14 was 3.95 billion a decline of 7.7% on 2013. Of this 7.7 percentage point fall 4.2 percentage points can be attributed to the impact of 4x movements. This mainly reflected the strengthening of sterling against the U.S. and Australian dollars and the detail of the rates given in the appendix. Just to help you here modeling going forward based on 2014 average exchange rates a 1% movement in either the U.S. dollar or Australian dollar versus sterling will result in a translation impact of £7 million in revenue and 9.4 million on trading profit. A further 1% point reduction in revenue can be attributed to the net of that remaining impact from the 2013 disposal of our UK transport maintenance operations and the small in year disposal such as Braintree hospital and Collectica debt collection service partially offset by the small MENA BPO acquisition in the Middle East at the start of this year. The remainder of the movement is from 2.5 percentage point decline was organic. The biggest organic revenue falls were in central government and AsPac, with a smaller decline in the U.S. offset to some extent by growth in LRG the Middle East and global services. The revenue decline in AsPac reflected primarily the reduction on our Australian immigration contract where we saw the average number of detainees fall from 7,400 in 2013 around 4,000 in 2014 with the current calculation no standing at around 2,000. The other key driver the organic decline was contract attrition in central government most notably the electronic monitoring contract. This chart looks at trading profit on margins. The right hand column is 2014 trading loss by division after the impact of review items which totaled 745 million our new trading profit measure was 113 million down 144 million from the 257 million results in ’13 this included in adverse ForEx impact of £13 million. The profitability of each division pre-review items declined in 2014 with the biggest falls being in AsPac and UK central government the biggest declines related to the PECS, electronic monitoring and COMPASS contracts, which accounted for almost half of 57 million decline in central government trading profit with other attrition contract changes such as AWE and Northern Rail or cost increases including corporate renewal, accounting for the balance. With respect to AsPac the biggest single contributor to 42 million declines was our Australian immigration contract where lower volumes led to a £20 million profit reduction which was exacerbated by the end of our garrison support joint venture. We also experienced significant fallen profit in the Americas where higher margin contracts such as the Federal Reserve Thrift and National Visa Center, were replaced by lower margin contracts such as that associated with the Affordable Care Act. The movements in the other businesses were smaller but profitability in all of them decline to some extent. This fall has driven having of the current trading margin from 6% in ’13 to 2.9% in ’14 on a preview items basis. I put a note on the bottom of the slide to show the enhancement in margin that equity accounting produces given that includes the share of JV profit but no share of revenue. Given the fact that the bulk of the JVs are in the UK central government division you should particularly note the impact there. The total loss for the year was 1.35 billion before tax. The biggest sale into the loss was related to the contract and balance sheet review which identified items that amounted to 1.3 billion. This was flip into 541 million of chargers that were exceptional mainly goodwill impairment and 745 million of items that flow through trading profit. Let me now discuss the number of these items in more detail starting with the contract and balance sheet review. The overall impact of the items identified in the balance sheet in contract review was 1.3 billion. The initial estimate we gave in November projected a number of around 1.5 billion but it should be noted that 73 million of this related to the DLR pension settlement and assets impairment charges associated with great southern rail that are now included as standalone exceptional. Taking these items into account, the overall number is broadly in line with what we indicated in November when the review was still in progress. However as we completed the review the makeup of the number has changed in terms of individual components and phasing. Most importantly though the total OCP the Onerous Contract Provision Element is around 100 million higher than we indicated in November this has driven by the updated estimate of future contract losses in other words a future of cash element as distinct from non-cash balance sheet impairments. This is the breakdown of all the components in the review items. The OCPs total is 447 million, in the 433 million on the top layer which is within trading profits and 14 million lower down which is an exceptional since it relates to UK clinical health. The review also highlighted the appropriate level of contract related asset impairments and other charges for these onerous contracts. These amounted to 133 million in total and therefore the total is 580 million at the bottom left hand column. This total is 130 million more than our estimated 450 million back in November, all of this 130 about 100 million as I said is from the OCPs which have a future cash impacts and about 30 million from non-cash impairments. Looking at the middle column there are 194 million of charges related to non-OCP areas of the business. 105 million of this relates to provisions and accruals or contracts without OCPs with the balance including property, employee and other contractual exposures. There is an estimated future cash impact of 73 million on these other items. In addition within other there were non-cash impairments of group assets abandoned as a result of the strategy review and a non-cash impairment of some receivable balances mainly related to disputes. Looking at the bottom half of the table the biggest element of the 541 million total exceptional charges relates to non-cash impairments, most notably the 466 million good will impairment of which 285 million related to the global services business which we earmarked for disposal in November. Additionally we impaired a 101 million of good will in our Americas business and 80 much in LRG, the additional 39 million exceptional asset impairment to the global services assets held for sale relates to the UK part of the global services business. One of the areas we looked at extensively together with EY and Deloitte as part of the audit was to the extent which these adjustments related to the current year or prior years. The conclusion was that the OCPs arose from unexpected events and operational challenges occurring in the course of '14 and therefore represented necessary revisions to accounting estimates used previously rather errors arising from prior years. We have a small error in relation to hedge documentation but it's not particularly material and that's the adjustment for prior year. Turning to onerous contract provisions specifically, given the quantum involved we've provided a detailed level of disclosure in the finance review on the contract and balance sheet review as a whole, and with a particular focus on OCPs. This slide gives some detail in the biggest OCPs. It is worth noting that the largest five charges account for almost three quarters of the total charge of 580 million. Our entire contract base is over 800 individual contracts and out of this there were five substantial provisions required and a long tail of around 50 others required an OCP. Rather whole impact is 580 million as I said it is the left hand column of 447 million future contract losses that are the most important given the future cash impact. In terms of that big five, the biggest charge related to our Armidale class patrol boat contract in Australia. We have had to take a total charge of almost £200 million which includes an OCP of 136 million. This charge primarily relates to the cost of remitting cracking and corrosion as well as the required ongoing maintenance to the boats which have been used extensively by the customer in more challenging environments than we originally anticipated. The provision is based on are recently completed third party engineering report and account of the anticipated costs through to the end of the contract in 2022. The second largest OCP relates to our COMPASS contract in the UK which could run until 2019. We've seen significant recent growth in volumes beyond our original estimates which have led to an OCP of 112 million which takes into account the fact that as asylum seeker numbers increase we earn less money for service user. Due to the inherent volatility of service user numbers and the difficulty of adjusting quickly to changing volumes, it is difficult to predict what the final item will be on this contract. Our future provision in marine services or FPNS contract, which like ACPB is a loan contract through to 2022 and has an OCP of 50 million as well as 15 million of associated balance sheet charges. These charges relate to reduction in variable revenues and an inability to hit the original anticipated cost savings. Our prisoner escorting and custody services contract or PECS has another four years to run and has an OCP of 14 million as well as 13 million of related balance sheet charges. This is largely arisen from the significant transformation cost that has been incurred to improve our operational performance. The final tale of woe relates to Ashfield prison where we have an OCP of 15 million and related balance sheet charges of 4 million. This is a reason due to our inability to agree a new pricing structure following the re-role of the prison from a young offenders' institution to an adult male sex offender prison and the provision covers the period through to 2024. I focused my narrative on OCPs because these provisions all have future cash consequences as they are utilized. I want to make one point very clear, we have not kitchen-sink the OCPs and they'll remain the potential for variability either up or down going forward given the structure of the contracts. These OCPs will be kept under regular review. It is clearly a judgmental area, but we will maintain a consistent approach and will provide clear disclosure in future periods of the utilization and other changes to OCPs. We worked very hard to reduce the costs in the affected contracts to reduce future losses and minimize the cash outflow over the coming years due both operational improvements and working with our customers. Exceptional items in the year totaled £661 million of which 541 million arose from items coming over the contract and balance sheet review, which I'd previously addressed namely the goodwill. Other exceptional totaled 120 million which had three main constituents. First, a £37 million charge arising from the decision to sell our Australian rail business in the form of an impairment of its net assets and a provision for the break cost of our train leases. We've also provided 36 billion for the full and final settlement of the DLR pension dispute payable in four equal installments from January '15 to January '18. Over the course of the year, we also incurred restructuring cost of 33 million relating to property exits notably the old head office at Richmond and headcount reductions part of which arose from the UK Government reviews as well as initial reductions coming out of the strategy review. The balance of the restructuring cost related to the external cost associated with undertaking the strategy and contract balance sheet reviews. The main question arising from tax is why we've not recognized the bigger tax credit in respect of the 1.3 billion loss? The answer is that we will generate significant UK tax deductions, but we cannot recognize them yet under IFRS rules. We estimate that as at 31 December, '14 we have contingent UK tax assets of 723 million gross with a potential tax value of 145 million which we will realize and bring on balance sheet as our transformation occurs and the UK business returns to profitability. Only 11 million of the tax losses are recognized in the year-end balance sheet as a deferred tax asset in accordance with IAS12. Our effective tax rate for '14 based on trading profit before review items was circa 30%. We expect the effective tax rate going forward to be higher given the fact that our profitability in the next few years is likely be driven by our businesses overseas with generally of higher tax rates than the UK, 38% in the U.S. and 30% in Australia. Taking into account the UK central cost, we expect to generate further tax losses in the UK and given the existing level of contingent tax asset, our group effective tax rate will not benefit from any deferred tax credit. In 2014, there was no cash cost for the group as overseas cash tax paid was fully offset by UK tax refunds. Looking forward, our Australian cash tax rate will benefit from the loss generated on ACPB contract, in the UK; we do not expect the tax charge for some time and expect to be able to continue to realize a cash tax benefit from surrendering some of our losses to Northern Rail and Mersey Rail. Just touching briefly on EPS, our statutory EPS was a loss of 250 pence per share. The average number of shares in issue was 521.5 million compared to 489 million in 2013. The increase was the result of the 156 million placing last May the number of shares in issue at 31 December 2014 was 549.3 million. As part of the actions being taken to reduce the group’s indebtedness the Board has now recommending the payment of a final dividend for the 2014 financial year. Dividends paid in the year total 53 million or 10.55 pence per share representing the final dividend for ’13 and the interim 2014 dividend. The board is committed to resuming dividend payments and adopting a progressive dividend policy when it is prudent to do so. The decision as to when to declare a dividend and the amount to be paid will take into account the group’s underlying earnings, cash flows and balance sheet leverage, the requirements of maintaining appropriate level of dividend cover and the market outlook at the time. It is not anticipated that the Board will recommend any dividend in respect to the 2015 financial year. Free cash flow now aligns to our new trading profit definition and therefore includes charges such as transaction costs and management estimate items previously adjusted for but it still excludes extensional items which are considered non-recurring in nature. The free cash flow for 2014 was broadly in line with 2013 at 62 million. This reflected a 17 million in flow from working capital in the year compared to an outflow of 137 million in the previous year and relative to last year the key driver of the improved trading cash conversion peer review items from 47% to 90%. Whilst there was less here in cash management to the tune of around 50 million this was offset by the benefit of a similar value from review item accruals that are included in the closing balance sheet. The dividends received from joint ventures reduced from 52 million to 35 million reflecting lower JV profitability particularly at AWE and Northern Rail. Capital expenditure of 36 million was lower than recent years mainly due to lower spend at IT systems and fewer contract start ups. This slide is largely for reference purposes and shows the make-up of free cash flow to the movement in net debt. Closing net debt including the element recognized within net assets held for sale was 682 million down from 745 million at the end of ’13. We have begun to unwind the negative aspects of the year-end cash push and we’ll continue to do so going forward. Average monthly net debt in the year was 783 million also of note is the 156 million of cash received from the new shares issued as part of the May 2014 placement. This slide shows the reconciliation of net debt to the net borrowings measure for covenant purposes. It is worth noting that the transfer of bank or the NPL on 1st January ’15 the 24 million of non-recourse debt at the end of 2014 both these will disappear. EBITDA peer reviewed items was 192 million in 2014 and with the net borrowings figure for covenant calculation purposes of 658 million the leverage ratio would have been 3.42 times compared to 2.25 times in 2013. This EBITDA number is pre the impact of the contracted balance sheet review items which is part of the agreement we reached with our lender group just before Christmas. Without these amendments together with the deferral the 2014 covenant test until May 2015 to take into account the rights issue we would have been in technical breach of our covenants. I will cover all three financing when I return later in the morning. Turning to the balance sheet. At the end of 2014 Serco had net liabilities of 66 million as compared to net assets of almost 1.1 billion at the end of ’13. The principle driver of this decline has been the 1.3 billion of charges against profits identified in respect of onerous contract provisions, asset impairments and other charges impart offset by the 156 million increases in net assets arising from the share placement in May. This summary balance sheet is here for your reference and pools out for you the line items from the statutory balance sheet which were used in our return on capital measure. In the appendix is reconciliation for you of the opening to closing balance sheet doing the impact of the reviews on each relevant balance sheet line. Measuring return on capital will be a key focus going forward the measure we will use both externally and internally is pretax return on invested capital, calculated as trading profit divided by invested capital. In fact the invested capital represents the assets and liabilities deployed in delivering the trading performance of the business. The detailed definition of invested capital is given in the finance review. ROIC will normally be calculated on a two points average that given the impact of the contracted balance sheet review we've used a single point at the end of 2014 for the calculation this year. Trading profit ROIC on a statutory basis is clearly negative but have a number really impacted the review items as used the ROIC is 11.3%. This number will be a real focus going forward and one of our key tasks will be to educate the business as to why this number is so important. That's the end of the 2014 review that will be released in my second presentation will be shorter covering forward-looking topics of guidance and funding after which we'll take you Q&A. So, I'll now hand over to Rupert to go through strategy review before we take a break.

All right, strategy review update thereon. You will remember that at November, when we announced our revised trading outlook and the write-downs we had of necessity to give a preview of our strategy review it was not meant to be like that we were hoping to have longer to do it to have more times of plan the implementation but we could really in all just as go out to the markets and not say what we already knew of directionally where we were heading so today I'm going to add a little bit more flesh to a bone that you'll have already know that. As we said them our strategy in the future is to be a focused B2G business. I'm personally not a great one for missions or visions or whatever so I've invented a word -- well use a word which is what our ambition is. And our ambition is to be a superb provider of public services and how we're going to do that is by being the best managed company in the sector. I've struggled with this because it does slightly sound like motherhood and apple pie, but let me just give you some context. First of all who do I want this ambition to speak to? I want this ambition to speak to the people who are going to achieve it, which is the colleagues within Serco. Secondly, is that I think we all believe that well managed companies are performed better than partly managed companies and 1.3 billion of write-downs and provisions says that Serco cannot playing currently or to being part of particularly well managed business. So if I can stand up in front of Serco colleagues and say look we all acknowledge that we're not the best managed business. Supposing we set ourselves the ambition of being the better managed business and would that make something that would be interesting and exciting and something that we could go and rally behind and say yes. Now, granted that what we are going to deliver is all about public service, granted that we are not asking the people in the business to go and invent a new pill or a new handheld device. What we're asking them to do is to deliver largely people based services really well. I think that putting an emphasis on our recovery on the importance of management is really, key. So I made no apologize if I say that the target and the ambition that we've set in front of the people within the business in the context of wanting to be a superb provider of public service is that we've our ambition to be the best managed company in our sector. Secondly and on a more strategic level, we absolutely believe that taking Serco and transforming it from being broadly speaking a very broad amalgam of hundreds of contracts operating in a huge number of sectors and trying to make sense of that into a focused public services business based around five pillars or sectors of defense transport just as an immigration, health and citizen services delivered across the geographies of UK and Europe, North America, Middle East, Australia and New Zealand and we'll go into that more detail and what you'll see is all of a sudden the Serco -- what Serco does becomes a whole lot clear. And it also brings us massive advantage because like all, like so many businesses actually demand moves around and demand moves between sectors within government spending and it moves between countries. So, if you take the situation in the UK at the moment and one of the sparkling things that we find when we're talking to a people about our business is that they're incredibly nationally focused. And even wise people in this room are very focused on UK, what's going on in the UK, if we go to Australia the focus on what’s going on in Australia, still there are elections coming. The regional join elections are tends to be a cycle things to slowdown. There is not a presidential election in the U.S. for over two years. They’ve just have bond every year ago, in Australia, in the Middle East elections, not so much. So, there is cycle and I think that people will see in five years time this benefit of having an international footprint because behaviors governments their preferences for spending in particular areas that desire to gain and have large amounts of risk transfer but markets become more or less attractive and having a global footprint over which to do that will be we believe incredibly powerful. But in order to become this focus a public service business is B2G business we have to shed some businesses because the private sector businesses have brought immense complexity to our offering and we’ll go into that a little bit more detail. Finally, I remember when I was thinking of joining well not thinking of joining, when I had put my hand up and volunteered and said, me, me, me, to come and join Serco, people said, what is Serco do? So I asked people in Serco and said tell me, what do we do? And it was very difficult to explain and one of my e-missions and coming up with the strategy is to have an elevated speech because I’m sure you know any company that cannot describe its strategy but we’re in the 1st floor and the 7th floor while going up in the lift has probably the wrong strategy. So I’m going to try and you walk into a lift with me I’m going to push the bottom and I’m going to say, we are a leading provider of public services. Our customers are governments or others operating in the public sector. We gain scale expertise and diversification by operating internationally across five sectors, and we will succeed and differentiated by being the best managed business in all sector. Now I have timed this in the lift, and that gets me to floor 5. So, we’re doing okay. And I think bringing some better clarity to do what we do to be able to explain what we do is really extremely helpful. Now any strategy, analysis of strategy has to take account into the past and history but I’m not getting ’12 on that. Other of them say, there is a caution retail and the caution retail is good company doing really-really well, hugely successful double-digit earnings in the revenue CAGR maybe if we get sudden phrase, when companies are doing their best they often laying their seeds of problems in years to come and it is the cost in retail of good company doing well diversifies doesn’t work so well and in some projects we go and implement new systems take longer and cost more than expected. So I think however that a little bit of analysis, deeper analysis of actually why the strategy to diversify into the private sector, did not work so well. It is important because from that what we get an illustration of why private and public are different because the whole point of the concept was that you can get synergies between private sector businesses and public sector businesses. And generally speaking strategies succeed or fail on the basis of three things, conception, execution and events interfering with your best laid plan. And actually the strategy device in 2015 but the most interesting one really is the conception. It was the conception, the public sector users would be as good as they were. But let me tell you going talk to a public sector and clients and you say, woo, we run the private sector. So would like some rehearsal yes, yes we want some new innovation and we want some your analytics and we want some of your loan costs and really efficient driving and all these things that are actually truth be told the real value in the private sector outsourcing business is taking jobs down expensive countries and doing them in cheaper countries. And actually as it happens is that we barely find any part of the public service that is prepared so except that, even when we go to Peterborough, God bless them, City Council and suggest that maybe they like to share a back office with Huntingdon, you might think that you’d suggested a Herodian act of massacre, quite apart from taking NHS records and saying, do you mind if we take DNA test records for 10.5 million people and have them processed in Mumbai. And it is a real issue that we're off-shoring really doesn’t work in public. So it's hard to make work in the public sector environment. And secondly all those smart analytics and stuff actually that whole market is being pretty much you can go and buy that lots of stuff, that analytics staff you can buy analytics skill you can buy digital channels really, really very easily. And the other flip side of it is that can you take a public sector marketing organization and say go and offer our lovely public sector I don't know what to a Google or to Zoopla or to -- they won't like to use it. Well actually public service doesn't really works much. So that is important to us and the reason it's important is it tells us the public service is different and it is different. And that's why we want to build a business there. Moving on and I knew you'd be really disappointed if we did not have evidence or value for the millions of pounds that we spent with a certain strategy consultant. So here is a chart to reassure you. Note it's marked, illustrative at top left hand corner. But actually they have done a good job first and the importance of this slide in terms of setting a context for our strategy review is it shows us that the 1820 rules okay in Serco. Along the bottom line you've got the number of contracts and they are in descending profits contribution order, so the most profitable the largest and most profitable contracts on the left and the least and loss making on the right. And what you will see which is typical of many organizations is a relatively small number of contracts contributing the vast bulk of the profits. You see a relatively small number of heavily loss making contracts then go and dilute and awful lot of the good work. And then in between the two you've got a large number of small contracts would actually produce relatively little amount of contracts but quite small that produce relatively little. And what does this tell you about what our strategy should be? First of all being bloody obvious is that you've got to go and fight like hell to hold on the big profitable contracts, you've got to go, if we can snip off that tail at the end, and we'll never get rid of it entirely, but if we can go and snip part of that tail of the loss making contracts at the end, we will as a whole that will release huge amounts of value. But also if we can take that middle group of contracts and increase our efficiency and reduce the burden of the bloated central costs of Soames, Cockburn and Casey and others and take out and reduce our group costs, these contracts in the middle will start to become more profitable. So you got to have some very basic views if you want to have a clear strategy and I have got a couple of them. One of them is the side, protect snip the tail, reduce your costs, raise the bar on the middle, we will service there very well. Another thing to point out, if you go look at the regional margin slides you can see that most of our businesses outside the UK actually make pretty decent margins, they make margins at the level at which we need to operate the place we got a margin issue particularly is in the UK. So simple go and sort out the UK, sort out the shared services in the middle of reduced costs and drive great, it's not terribly complicated. And as I said I think it's very important the strategy should not be over complicated. So the other bit of context Serco is not really about our strategy, it is not really market related it's much more Serco related we got clearly a constrain balance sheet hopeful no more after our rights issue we’ve got the loss making contracts, we have got -- the practice is I think what has astonishing me is that in many respects Serco a great simplifier. But Serco is phenomenally complicated. Because it's hundreds of individually hand crafted contracts where it's very difficult to find the same thing. So you have finding things is difficult but it is not impossible to find management reporting systems, that actually give you a depth of visibility about that and Ed has introduced monthly reporting packs which are already having a very good impact and soon the shadow of lower volume stock will be casting itself across the contract managers of Serco as they all get their monthly management accounts, which are now being produced monthly. We got a lot of inefficient process, we got too many people, but one of the reasons we have got too many people is because we've only got a partially implemented core SAP system and in sorting that out and then finishing off that implementation, we will allow us to drive better efficiencies within business. And then we need to position ourselves to produce growth, but good growth and that means being able to manage risks much better to be much more conscious of internal rates of return and cash flows and risk adjusted rates of return. And above all coming back to the best managed business bid, we need to be what we tended to do is to win a contract, cut the costs and then just sit on it for five years not really doing much with it because you know there is a retender coming up and you don’t really want to do too much and very often government makes the mistake of having risk sharing -- sorry, gain shares where they say you take all the risk, but if you make more than 8% profit you got to give us half of it. Well actually in a five year contract, that's not a great proposition to go and drive out cost. What you want to do is, you sit through the contract get hold of that keep all your costs, make your 8% of profit and then when it comes to rebid you go ping, you can go and take a whole lot more costs and nothing goes down, but it doesn’t go and in general it's a very poor way of contracting because what it drives out is any idea that during the life of the contract you drive improvement. And we have got to find a way of doing that, but first we have got to train our people in building their talent and capabilities due continuous improvement. So this point takes us to the point where, when we were looking at our strategy, what were our criteria. One was balancing risk and reward, the second was playing to our strengths. There's no point, no, going and playing to your weaknesses. And over 80% of our revenue already comes in a higher proportion of our profit already comes from our public sector business. But above all, I'd like to mark it that's got structural underlying structural growth and I will -- we will talk to you about that in a moment. And above all, I like the simplicity and clarity, so we wanted a strategy that would achieve those four things. And when that would deliver to shareholders sustainable increases in value and appropriate risk reward profile, it would allow us to deliver excellent reliable and innovative services to customers and to colleagues who make up this business rewarding careers and interesting and worthwhile work. So let's come back to our three headlines of our strategy. Being a superb provider, what does that mean? It means that we got to improve our cost competitiveness. It means that we need to strengthen our business development and our risk management. It means that we got to drive operational excellence and get our management systems up to speed, so we can properly measure the performance of the business. And it means that we got to drive talent and capabilities and Ed will be talking about that later. We have talked about the five pillars, the defense, justice and immigration, transport, health and citizen services across the four regions. We like -- we have strong existing positions in those marketplaces, so that's a tick against the strategy. And we believe that having this crossing of the pillars and the regions, we'll reduce volatility and give us regional diversification and allow us to build international scale. And then the business is that we're going to exit all the private sector BPO, the leisure and environmental services in the UK and the Great Southern Railway in Australia. Let me now come onto a slide which contains about the only bit of intellectual property in the whole presentation. It is the Serco four horses. These are the four horses that will drive structural growth in the government outsourcing to private sector providers. And starting at the top, all governments in our region face huge pressures on cost because of healthcare, aging populations and the need to renew aging infrastructure. If we just look at some of the facts around healthcare, the latest OBR estimate is that in the UK between 2013 and 2018 spending on health education and the care of the elderly would increase £32 billion between '13 and 2018 and the Congressional Budget Office forecasts for healthcare spending will rise from 5.1% of GDP to 6.8% by 2024. So, on the one hand you have the pressure of growing costs, on the other hand you got growing expectations of the quality of service. It is very remarkable now the all hell breaks loose last summer because people were having to wait two weeks to get the new possible, two weeks! I mean 15 years ago it was two months. If you are lucky and those testing people over written the private sector have taught people to expect far higher services they wanted multichannel, they wanted digital, they wanted by the phone, but also they want to be able to get it by voice as well. We do some help that’s doing national rail enquiries where the number of people operating the telephones has dropped from about 1,500 down to about 150 over the last four or five years since all the apps got onto there but there is still 150 people doing that. There is still people who want to ring up and use the phone do it so rising expectations of service product. And then all governments have these problems of balancing the books the fiscal deficit the need for debt reduction and the final forces the unwillingness of voters to pay for more tax. And people might say that is people being mean they don’t want to tax actually is an entirely rational reaction to mean that they’re going to live longer their pension is going to be probably inadequate they need to save more and they don’t want to pay it in tax and these four forces are what makes government really difficult because people want more they want it better but there ain’t no more money. So the challenge at its heart for governments in North America, in Europe and in Australia and to a lesser extent in the Middle East is how to provide more better or less and to me it is inconceivable that it will the more better and less is going to be provided by state monopoly provision it just went, it is not about say that is what we believe is the structural driver of growth. If we then come on to focusing on our five pillars across four regions in the business when we first look at the structure within the business and what we find was that circa operating across I think it was 38 different markets with two men and we struggle to find a theme. But when we took out the private sector part out of our market and saw it through a lens of five sectors being justice immigration defense citizen services transport and healthcare, across these all of the sudden we get clarity and what we see is a suite of businesses where we are strong in all of them in the UK we are strong in two of them in the Americas one of them in the Middle East and two of them in Australia and New Zealand. And if you then go on and look at how that works out in terms of the division of revenue you can see the revenue by sector and by geography and I say that this revenue includes our JVs but if you exclude them you end up with an absurdly small number for the UK transporting in particular. But you can actually see that we have some very sizeable businesses across these five segments across the world. Now just looking a bit at each sector internal I am not going to spend a huge amount of time on instead that we can come back more to those on the Q&A as we pick up if you’re interested but in the justice immigration revenues were about 702 million and it’s actually slightly bigger in Australia than this in the UK. Now the interesting thing about what we do here is we do custodial services aka prisons, immigration detention and dispersal and detainee obscured transport and monitoring. But what is interesting is that by having both Australia and the UK and one creating the other what does that prove, it proves first that we can sage strong businesses in public services and export them overseas. Secondly is it means that they can feed off each other because they’re different, so we run the nature of the immigration detainee model that we use in Australia and in the UK is wildly different the UK slight dispersed accommodation in the community in Australia we have immigrant detention arrangements, they’re different but we can do both. In terms of the prisons we run remand prisons, we run specialist sex offender prisons we run one of the prisons I am most absolutely proud of in the world is Wandoo Youth Reintegration Center where we take young people at the end of their sentence and seen through and end up with a recidivism rate that is 80% as they go from prison directly into the outside world and 24% if they do the last three months of their sentence in Wandoo. We do Yarl's Wood, which I'm also I have to say extremely proud of the difficult work that is done there and you were seeing some publicity around that and I just want to say that we have a meaningfully commissioned Kate Lampard to do an independent review of that and the sort of obnoxious and unacceptable language that we heard recorded on the cover of Yarl's Wood, we'll find out what went wrong with that it was full set of actions going on but one of the reasons that this in fact is that we must not as a business we as a business want to be able to look government in the eye and say we do work at the pointy end of the government stick. We do difficult things with government, we don't just sit there handling out benefits or education we're doing return for work, there are difficult functions that government needs to do one of which is detaining, holding women in detention in the very final stage before their removal under immigration proceedings. So we have some distinct capabilities, we have experience and the capability that is actually largely is extremely deep and highly respected in the businesses that we operate. The market growth will vary is actually quite variable dependant on the number of asylums seekers turning up, it can't be as high as 5% in the year, it can't be as low as 2% but the critical issue here, the critical point within the justice and immigration particularly in the prison side is that granted that it is the case that new build private prisons outperformed the public sector prisons really astonishing. They're lower cost, they've better outcomes they are more humane places. Why is it the only 15% to 20% of prisons in the UK and Australia and also why there is I don't know why it is that so few are actually run by the private sector and my guess is part of the job that we have to do is to say to governments who are pushed for money, who need to invest, hey there is still some low hanging fruit here and the low hanging fruit is take it from 15% to 30% in terms of outsourcing your prison provision and we have plenty of opportunity for growth in Australia that worldwide the prison population is expanding and we have the opportunity to go and look in North America for new opportunities maybe in the immigration space. Moving on to defense, 1.3 billion this includes JVs, this includes the revenue from AWE, this is our most diverse business and probably the hardest of this ride in the nutshell what we do because we do lots. Anything that requires a lot of people to be organized to provide reliable services, we do base on operational support, we do management insertion where we take a small number of managers as we do in defense business services and put them in the top of the organization and then go and transform the organization within as we got strong businesses both in the U.S. and in the United States and that we also have a strong maritime business in Australia. Now market growth rate in this market we think about 4% to 6% in the context of probably that is still declining or maybe stabilizing defense spending. There is some quite a lot of debate to say which is defense spending actually growing but whichever way it's going I think that they're going to be outsourcing more we've got a strong track record particularly being able to do this literally everything from pretty you might say a good example would be where we operate all the facilities at Shrivenham Staff College. And you think in your mind of mowing the lawns and keeping the paths kept there and making sure that everything is well organized and the libraries are well run and everything like that. Let me tell you some of the people with the highest security thermos in the whole of Serco work at Shrivenham because when they're having that big conference is to go and talk about really secret stuff you've got to have someone doing the AV. And it's a mixture of a lot of the stuff you do touches and we've got some big enrollments in intelligence programs in the U.S. so this is highly secure stuff also pulls down into the rest of the business. Our strategy there in defense as I say we are strong in the UK, Americas and Australia and we're just beginning to get a foothold in the Middle East where one of the things we do is we run the Qatar Staff College where we're training all the up and coming officers in the Qatari Armed Forces. Transport, revenues of 845 million again rather than collected combination of businesses we’ve got rail and ferries. In the UK we have just been voted, well our joint venture, UK Mersey Rail have just been related to Train Operator of the Year, hurrah Serco and for our partner in UK, Mersey Rail. We just won the Caledonian sleeper which we take over on the 1st of April. We run a great ferry service, NorthernLink Ferries, between Aberdeen and the islands. We also have a business that won’t really come on to your radar yet but it is fast scaling traction which is that we have been early innovative and vital that providers of integrated road traffic management into the U.S. in Georgia and in Virginia and we’ve just won a small sub contract in Alabama. And in traffic control we run huge amounts of the air space from Baghdad down to Sharjah. We run the approach control at the world’s busiest airport which is Dubai. And we also run towers for the Federal Aviation Authority in the U.S. In terms of the market positioning well, I think that we see 6% to 8% growth in this market. There is huge increases travel we see our international footprint being a very hopeful and being able to move big teams around the world and in terms of our footprint we’re vary in the UK of the heavy rail sets on the franchising, it is astonishing how we’ve got ourselves into the position of just beat into a major heavy rail franchise is 6 million to 8 million pounds. And if you say you win one in three, your risk, return really is double. So I think that we may find more fertile ground; we’re prepared to sit this one out. But in other areas such as the Middle East we are beating like how you would have seen that recently we won a major contract in Saudi Arabia to operate the Saudi railways. We are doing major studies to help the Qatar road, and in Dubai we’ve got the metro, we’ve got the light rail and we have the very strong position there and we are looking in the U.S. urban rail opportunities as we are in Australia. Citizen services, galloping on, again we do a quite remarkable things we are doing all the case management related to non-online applications for ObamaCare which is a huge contract we then do a lot of work for all government work comes into this area and we also do employment skills training and in terms of the markets dynamics is increasing demand high quality integrated citizens services and this come all of them with very high degrees of assurance that are required only ability to do as we’ve done frequently be it from doing the UCAS annual standing up of 150 people to do the applications for university places to looking what we did for CMS ObamaCare, how many people do stand up in three, four months.

3,500.

3,500 people we stood up in the fourth month period across four call centers together handle the ObamaCare. We have real skill. And again we are strong in the UK and in Americas and we have a good foundation in that business in Australia and Pacific. Finally, healthcare, 256 million of revenues I think this is the place where we have had our fingers burnt getting into the clinical space. But our non-clinical business is strong. We run hospitals really, really well on the non-clinical side whether it be Norfolk & Norwich. We’ve just opened Fiona Stanley in Australia. We are beginning to get traction in the Middle East where they are building hospitals like they are shelling and we see us being able to develop out our businesses in the healthcare market quite healthy growth 6% to 8%. Demand for hospitals in the Middle East as I said is very strong and we’ve got a very compelling proposition in terms that we’ve done everything. We’ve gone to existing hospitals and taken over their operations but we’ve also built hospitals from scratch under PFI arrangements. So this is our firm believe that the first problem to address in the healthcare marketplace is not resources but it is productivity. And we need in the healthcare sector to exit or vastly improve the performance of our Suffolk contract and focus on the non-clinical side. We’re beginning to explore well might be opportunities in North America and we believe that the Middle East will continue to be a fantastic opportunity. Talking of which coming on to looking at our new portfolio through a different lance I think one of the issues that people have when they think of us being in the public sector business, they say well what's the growth it is rather boring or where are the opportunities? Well actually when you stand back and see say where do we think we got big opportunities, we think it's early days yet. But there might be an opportunity for us to take our immigration capability to the Americas. We know that there is a lot of work coming up in Australia in justice and immigration. In transport as I said we have a strong nascent position in road traffic management and there are also a number of tenders coming up like urban rail in North America and the Middle East is probably the fastest growing rail market in the world. In citizen services we think that the base the foundation that we've got in Australia or New Zealand the Australian tax office to the work that we do administering speed cameras, is that this is areas that we can build on. In the UK we think the healthcare getting in on the non-clinical side and growing that business is an opportunity possibly in North America and absolutely certain in the Middle East. So what that tells you is that this is actually a surprisingly opportunity rich environment provided you take an international perspective. So let's come to our plan in a nutshell. We see it as being a three phase plan, the first part of the plan in 2014 was to stabilize the business and to get a plan for the business, we need to hire new management, identify what the strategy was, undertake the contracts and balance sheet review stabilize moral within the business and roll out corporate. The result next three years, '15, '16 and '17 when we will transform and rebuild our margins back up to industry levels, and that means rationalizing the portfolio strengthening our balance sheet, mitigating loss making contracts, rebuilding our business development effort and strengthening our sector propositions. We need to make ourselves world class in risk management and we need to rebuild confidence and trust with all of our stakeholders. And then finally having done that, having what our margins and our capability getting on our path to be the best managed business in the sector thereafter we intended to focus on growing our revenues and the planned would be that we note that in our sectors we think that aggregate growth is going between 5% and 7% a year and what we think that the margins that people achieve in our sectors will be by 2020 round about 5% or 6% and we believe with our performance can match those. So we think we got a bright future. We got a strong core business providing public services and most important of all is that the challenges are within our power. I don't need to go and find some fantastic technical wheezy, R&D-y, guru-y thing to make this. What we're going to do is manage what is fundamentally a strong business much better, and that's down to people, people, people and management, management, management and if I may say gently between Angus Ed and I that's what we've been doing for quite a long time and we think we know a little bit about. Resolving these challenges we can deliver a lot of value. You can take a business whether margins are low the business is not very well run and if we can turn that into a well run business with strong margins we can unleash a lot of value. The secrets of success people say to a strategy is accurate analysis of the position, we think we've done that. A good strategy and a plan and we think we won that. And to be executed immaculately and Ed is going to talk to after we've executed immaculately the task giving you some coffee. It won't be easy the time the progress will not be smooth, we will make this steps shorter and we will need to adapt as we did in Aggreko to changing events and maybe also the portfolio as we go through. But we have management, we have a plan it's in our hands and soon we will have balance sheet to provide the firm foundation. Thank you for listening, let's reconvene it's 25 past 10, if we would reconvene at 22:11. Thank you.

Well everyone I think we'll get started again. Thank you for coming back. We started with Angus and Rupert and after me Angus will come up again and talk about the financials looking forward and Rupert will close. So I feel little bit like the filling in a cookie or I guess did you say a biscuit. So I'll be short and sweet. As Rupert explained we intend to return to our roots as a focused B2G business. Rupert has gone into some detail about our market trends either five sectors in the four regions. So I'll briefly talk about what we're doing to address and fix our challenges and about our very early progress on becoming the best managed company in the sector and lastly provide an update on the progress on our divestitures. The picture of Serco a year ago was not one of a well managed business. We have made a lot of progress in the last year, but we have in fact much more to do. In the next couple of minutes, I'm going to focus on the four key areas that have contributed to some of our problems and by definition the things we've been focusing on and ultimately need to turn into strengths. The first area we need to address is our cost competitiveness. The second area is business development, winning the good business and returning to growth. The third area is about operational excellence which starts with good management information systems and a commitment to continuous improvement. And the fourth area is about people, especially rebuilding our leadership team. Although there is a general understanding over the last few years that our cost structure was not as efficient as it could be. Results of the strategy work we did last year provided the objective assessment that we needed to get broad ownership of the problem. It also provided an order of magnitude of the possible savings and it gave us a number of specific ideas to address. During the course of 2014, there were individual cost cutting initiatives that literally sprouted all across the company in every division in every functional area. To better focus our efforts and to ensure that we would follow through and drive material cost savings to the bottom-line, we developed a very professional program management office of senior leaders led by an experienced transformation executive that reports directly to me. And we have made significant progress on delivering the £20 million of cost savings that we are targeting for 2015. We've over 150 separate initiatives being tracked against detailed milestones and is driven by over 90 leaders across the business. We've eliminated one of our regional divisional headquarters, we've rationalized and de-layered business units and closed offices. For example in the U.S. two layers of management have been removed and the number of business units have been reduced from seven to six. And in the UK our citizen services business units serving central and local government have been combined. We're pushing more and more internal functional support into our corporate shared service center. We're tightly controlling our discretionary spend including new hires, the use of contractors and the engagement of consultants. There's real progress being made and there is a serious commitment for changing the way we do business, but it will take a number of years for us to see this program grew to fruition. There are also a number of plans initiatives that are in various stages in implementation. We're looking to gain further benefits of scale by pushing even more internal services from the group and the divisions into the shared service center by consolidating more of our procurement centrally and by redesigning how we deliver HR, Finance and IT. Today only one-third of the procurement spends in the UK goes through our shared central procurement process, but there's potential for significant savings in this area. However, these savings will take time to flow to the bottom-line as a number of investments in systems are going to be required to implement the necessary process changes. And we'll be introducing continuous improvement into our contracts and redesign the way we deliver service to our customers. The cost of delivering service to our customers on contracts represents the single largest category spend and therefore the greatest for potential savings. In the two UK divisions we're in the midst of systematic contract reviews to identify best practices and areas of opportunity to become more efficient. These findings have become the basis for the next phase of our program to drive further cost reductions. While our 2015 target is to take out £20 million of in year gross costs, we know we need to take out much more and we're committing to do so in order to improve our margins towards the industry average of 5% to 6%. Again it's important to remember that this is a multi-year plan that is dependent upon process changes, investments and systems and ultimately on changes in the behaviors of our people that will happen overnight. While much of the last 18 months has been around dealing with our problems, we're painfully aware that growth has suffered. And while fixing our problems and driving efficiencies are critical to our transformation, we all know you can't cost cut your way to prosperity. We ultimately need to win more and improve the top-line as well. But before we can talk about what we're doing to win more, we can't forget about the difficult lessons we've learnt about making poor decisions around risk and taking on bad contracts. Bad contracts typically start on day one. Contracts that are well conceived and well bid rarely turn bad through poor operational performance. One of the leading contributors to poor bid decisions was not consistently following our bid governance processes that we already had in place. In our revised management system we have strengthened considerably the bid process. We've lowered the threshold and broadened the criteria, refine bids to come before to group investment committee and we're getting the investment committee involved earlier in the process at the time we decide to pursue a bid as oppose to approving the bid as it's going out of the door at the time of submission. We appointed general counsel and added him to the investment committee bringing greater rigor around risk assessment and the structuring of contracts. We mandated that material bid decisions are reviewed and approved at the divisional leadership level as oppose to being delegated to lower levels in the organization. And at the divisional level, we've established formal signoffs and checklist before bids can get approved and got move on along the process. The combination of all these measures together I think have resulted in a much more robust bid governance process. The Americas and AsPac in the Middle East probably have the strongest potential pipelines as Rupert mentioned but overall our pipeline has declined in last year and is not where it should be. At both the group and the divisional levels improving our pipeline and our win rates are high priorities. Some of the planned activities for the remainder of the year to improve the effectiveness of our bidding include the following; rebuilding our front end business development capability which has been weakened by attrition and neglect and this will require the addition of some new people and a much stronger commitment to professional account management. We’re anticipating launching sector networks to better leverage our scale and best practices across the regions and in some of the sectors work has already started on developing more compelling customer propositions that highlight our capabilities and track record. And the bottom-line is that we need to just simply execute better both in terms of getting bids out the door and again making sure we don’t taking prudent risks and end up with anymore bad contracts. As part of the elevator pitch describing our strategy we said we will succeed and be differentiated by being the best management business in the sector. So the question is how are we going to do this, what is it take to manage an 800 plus contract business across five sectors and four regions. What we’ve learned over the years and we strongly believe is that success in our industry isn’t driven by some strategic silver bullet rather success is more about execution and to execute well in our space you need to focus on the details, on the contracts and on the bids. And you need to be relentless in the focus on these details every single day. The complexity of our business comes in the number of moving pieces the large number of contracts we have. So the way we stay on top of the business is our management reporting of critical information and our systematic reviews of the business. And we’ve made a number of significant changes in this area improved our visibility and control over the business. In the past monthly reviews were largely about revenue and profit and whether they are on plan. There was little discussion of the operational drivers of the business. And we have fundamentally changed our reviews, our monthly reviews to become much, much more operationally driven. In the past probably 80% to 90% of the time and the reviews was spent on financials as opposed to today where we spend 75% to 80% of our time on our business on the operations and we take remaining time to look at the financials. In these operational reviews we cover business development statistics, our pipeline, in bids, we focus on customer satisfaction and service delivery and we receive reports on the achievement of KPIs on our contracts with a considerable focus on those contracts where we’re having difficulty. We review a wide array of people and organization information including data relating to FX and health safety and environmental. These are detailed monthly reviews conducted by Rupert, Angus and me. As well, these reviews are smeared at the divisional executive team level and down the chain of command. And for the first time as part of our formal management system revisions we’ve set forth what we expect from our contract managers including that they sit down with their customers on a monthly basis and provide them with the same information that we’re reporting internally about the service delivery on their contracts. And lastly the most important area of all of us to ensure we have the right talent and an engaged leadership team. In 2014 there were seven new appointments to the group executive committee. Five new appointments to the board, six if you include my appointment at the end of 2013 and as you can imagine the new executive committee members are beginning to make changes on their teams as well. We rolled out an extensive management training program last year to embed the changes we’ve made to the Serco management system and to improve the skills of our contract managers and business development people. And we put over 3,500 global managers through our value space leadership training so that all managers could learn from the hard lessons of last year. In the next year we plan to implement contract level training and continuous improvement and to develop a leadership academy where we can more effectively deliver to our leaders the skills we need most in our business and hopefully over time rebuild our pipeline of up and coming talent. We continue to measure the engagement of our employees with both our annual viewpoint survey as well as periodic many surveys and we already see signs that morale is better and improving at the operational focus of the business is getting strong that our risk assessment as part of the bid process is getting better and our financial management is better informed and much more transparent. I can tell you there is a very different field to the business and the leadership culture than there was in the recent past. Let me give you a quick update on the status of our disposals. We’ve announced four potential divestitures by far the largest of these is our private sector BPO business and this business was built largely through the acquisitions of Intelenet the Listening Company and Excelion. As we've discussed previously this diversification strategy has proved difficult, more difficult than anticipated. Although the private sector BPO business is a good business and it's been a good market we think it is likely to be more valuable to others. The business will probably sold in a series of actions as oppose to a single transaction. An information memorandum was distributed to potential buyers in early January which included the largest piece of the business was the offshore business, the domestic business in India and the business in the other non-UK territories and through this process we've got a number of bidders and there is strong interest and we're working through the sales process. For the reminder of the BPO business which was primarily the UK onshore private sector businesses were exploring a variety of different actions to maximize the value of these contracts. The other three businesses that we've been announced for divestment include the environmental services business, Leisure and Great Southern Rail in Australia. The process is well advanced for environmental and leisure and we're currently working with customers to innovate contracts as part of the approval process. Regarding GSR, confirmatory due diligence is complete and we're now in the process of negotiating the documentation. With that I'll turn it over to Angus, who is going to take you through the financials looking forward and funding.

Thank you very much Ed. I'll now run through the second part of the presentation. We'll start, you can see the agenda and we'll flick through address the outlook funding and the right issue. Just before we address these items let me dwell for a minute on how we're looking to strengthen the finance function. First however, I want to recognize the dedication and hard work of the finance function over the last few months. They've put in an incredible number of extremely late nights, so thank you. Dealing with the contract and balance sheet review profit in working capital forecast, refinancing year end prospectus and rights issue whilst kicking off a wide ranging finance transformation has been a once in a career experience that we're not looking to repeat. We're changing the emphasis and focus of the finance function. In future, in addition to ensuring that there is a strong financial control environment, a key focus of finance will need to provide improved improve business support to the contract managers, their information analysis and insight that enables them to run the business with the lights on instead of the dark. This will range from basic monthly management accounts to more detailed KPI reporting in time. We've produced the first sets of group wide management accounts but I'm under no illusion as for the time, training and effort that we required make their use second nature in the business. Over the course of this year, we're working to automate the production of the account due to existing SAP system that we already have in place and we'll add balance sheet and cash flow forecasting functionality. These accounts are based on our existing accounting policies which we've assessed and find to be IFRS compliant and generally consistent with peers. In particular we allude to revenue and profit recognition, bid and phase-in cost, win fees and intangible assets. As you're all aware accounting policies are only the start of the story. The key is the interpretation and application of these policies. To this end, we will ensure that these policies are applied in a way that ensures a consistent prudent approach is taken across the group. The only saving grace about reporting on a profit forecast too early on a one and the 11 basis is the fact that it does force you to have a very robust budget process. We went through multiple iterations to arrive at broadly the same guidance we gave in November. The positives from this process however, are many. We're learning to use a single data warehouse for information which will increase consistency and bring greater rigor to the process. This rigor also forms the basis as a divisional performance reviews that Rupert, Ed and I do on a monthly basis. We will review financial and operational performance and focus on problem contracts. The final element of tangible early change in the finance function is around the major transformation project that is kicked off to improve the efficiency and effectiveness of the function into end. This is a huge undertaking but is much needed as we allude to streamline overhead cost and up the quality of output from finance. As part of this, we'll also look closely at the control environment. On a more intangible note, a lot of this is about creating a culture of high performance in an environment base on superb financial insight where behavior top down is guided by transparency and simply doing the right thing. Given the scope and breadth of what we need to do, this is clearly a major undertaking that will take time. However, it's a key ingredient in the future success of Serco and we already began to construct the base on which we can build. To moving on to the outlook, our expectation for revenue in 2015 is somewhere in the region of 3.5 billion which compares to reporting just under 4 billion in 2014. This projected net 12.5% reduction is consistent with the guidance we gave in November after adjusting for the treatment of joint ventures. This number reflects contract attrition of around 10% with around half of this coming from the end of our DLR and NPL contracts. This is compounded by volume reductions in a number of other contracts most notably our Australian integration contracts where they Australian successfully curtailed new arrivals and our new contract has a significantly lower level of pricing. Within the 2015 revenue forecast there is around 5% gross growth from signed new or expanded contracts. In terms of the other assumptions, we’ve included revenue of around 5% based on an assuming success rate that relates to contracts in which we will rebid of extend. In addition we’ve assumed broadly normal proportion of in the year incremental revenue which consist typically of task orders in the U.S. and other project work which usually accounts for 10% to 15% of annual group revenue. Given the weak pipeline that Ed talked about earlier we have assumed only a limited contribution from in year wins. In terms of the businesses we slated for disposal in the November the total revenue from these contracts amounts to Serco 560 million in 2014. We will clearly need to adjust forecast to reflect the timing of disposals on their completion. I’ve not noted ForEx as currently on a net basis there is no material impact as the strengthening in the U.S. dollar has been broadly offset by the weakening in the Australian dollar. Just to remind you in revenue visibility and how this builds over the financial year the order book is signed contracts through the 12.6 billion at the start of 2015 down from 13.6 billion a year earlier. Note that if you’re tracking this figure in your models we now exclude JVs from the order book there was the tie into revenue which also excludes JVs. While the order book is down it continues to provide the business with good revenue visibility for 2015 81% of our 3.5 billion revenue guidance is already within the order book. As with previous years we still need to secure revenue in year including task orders rolling over in the Americas, project and volume related work which is not reflected in the order book, rebids and extensions to secure any in year contribution for new contracts to be signed. Given the current challenges being faced by Serco and the uncertainty created by the UK election, the overall revenue left to secure in 2015 which is 19% of forecast is slightly less relative to the same time a year ago so this reflects the weakness in the bid pipeline that Ed alluded to earlier. Turning now to the outlook for trading profit in 2015. Last November we provided an early view of the outlook for 2015 and in that statement we said that we anticipated adjusted operating profit would be around 100 million. And so as with revenue this outlook is broadly unchanged. Trading profit of around 90 million would represent a margin of around 2.5% down 2.9% from 2014. The principle drivers of the underlying pressure on 2015 trading profit are a read across from revenue and that it reflects the net impact of attrition from lost contracts such as NPL, DLR, Colnbrook in the UK and the national visa center in the U.S. In addition the single biggest profit impact comes from reduced volumes and rebid pricing on our Australian immigration services contract. Within these numbers there is an assumption that we will utilize around 140 million of onerous contract provision during 2015 higher than the original estimate based and pre-budget in November. The biggest differences are in COMPASS following the recent surge in numbers and the pressure it puts in our ability to source appropriate accommodation and an ACPB where we are addressing the cracking and corrosion early with a view to quickly improving the condition of the fleet. Again the profit forecast does not include adjustment for potential disposals that maybe conflicted during 2015. I promise we’d be fully transparent and probably bore you to death in the impact of OCPs both now and in the future and the next couple of slides do just that. As I talked very earlier the 2014 results contained 447 million charge for OCPs in terms of utilization of these OCPs we expect to utilize around 140 million in 2015 these OCP contracts lost 95 million in 2014 although only 54 million impacted trading profit before review items given the 27 million ACPB loss was within the write-down of accrued income the UK clinical health loss of 12 million was recognized within exceptional items and there is a 2 million from utilizing provisions established prior to '14. Coming then to the phasing of OCP utilization. The 95 million aggregate loss in '14 is assumed to increase to 139 million in '15, principally reflecting the phasing assumptions on COMPASS and ACPB within 2016 position assumed to then improved to 83 million as loss-making contracts such as Suffolk and NCS come to an end. We would then expect the phasing tail to continue to reduce from 2017 onwards as the contract loss provision position improves as we take mitigating actions in contrast continue to roll off. The OCP utilization neutralizes the losses within the P&L, taking our trailing profit of guidance of around 90 in 2015, in simple terms this reflects a profitable contract base generating 90 million of trading profit which is then combined with a loss making portfolio with losses of 139 million. The provision utilization of 139 million and brings the position back to our forecast 90 million. It is important to remember however that we expect to incur the full 139 million in cash losses in 2015. Just to remind you, you have made the commitment to report transparently the effect the of the OCP provision utilization of the P&L and the underlying cash losses on these contracts. With that in mind you can understand why our free cash flow forecast for 2015 is expected to be an outflow of around 150 million to 200 million compared to this 62 million inflow in 2014. The increase cash losses and contracts with OCPs is a principle driver but cash profits of the rest of the business are also forecast to reduce. On top of this we will also continue unwinding some historical cash management activities and are likely to see some increases to CapEx and cash tax, which were both unusually low in '14. As with revenue and profit we will have to adjust free cash flow forecast for disposals when completed. After including exceptional items such as the expected refinancing costs which I come on to which are outside of free cash and net cash outflow of 150 million to 200 million is anticipated of which free cash we expect to be about 150 million. We will take the focus away from half year and full year cash management and look to embed an ongoing working capital focus that is measured and reviewed on a monthly basis. Our focus going forward will be in monthly cash flow and average net debt rather than just half year and full year targets. There will also be a lot more focus in cash flow forecasting as we look to implement both weekly treasury cash flow casting and system generated management claims cash forecasting. Moving onto some housekeeping items regarding 2015. This is mostly a reference slide I will cover in a moment the background the expected 30 million of refinancing costs in '15. In addition to this we expect further restructuring actions as we begin to implement a strategy review. As these plans are fully developed and put in place during the year we will provide further details. Clearly cost reduction will be a key focus of the business during '15, '16 and '17, given the expected revenue attrition as well as the need to improve margins and returns. We're looking at costs across the group, and this will include a reduction of overhead at the center. As the profit generated by the business strengths but we need to adjust our cost base. As you heard from Ed we have started a major cost reduction exercise which will reduce overheads through headcount reduction, purchasing savings and a program of continuous improvement. Net finance costs are focused to be around 35 million which takes account of the reduction in average net debt due to the proposed rights issue but the gross debt will carry a higher blended coupon as I will come on to. And this line also carries the discount un-wind on provisions. We haven't taken into account the impact of proceeds from potential disposals. With respect to tax rate we expect rate of approximately 40% on a trailing profit basis in '15 reflecting the higher rates of tax in Australia and the U.S. and the fact that we will lose money in the lower tax UK and are currently unable to recognize a deferred tax asset. The effective rate further down will move depending on where we are with deferred tax. More importantly we anticipate a cash tax cost in the region of £10 million to £15 million in 2015. Assuming the issue of approximately 550 million new shares in the rights issue we would anticipate the weaker average number of shares for the year of around 939 million compared to 521.5 million in 2014. Looking beyond our forecast for 2015 we're no longer providing for more guidance for '16 and beyond. This reflects the challenge of doing a one plus 11 month profit forecast in '15 and given the timeframe involved the impossibility of reporting in numbers almost two years out, especially given that there could be adjustments necessary for disposals. However performances lately at least in the initial stages do remain challenging given the impacts still to come through from known attrition such as our Northern Rail contract ending in February 2016. And in particular due to the time required to rebuild the pipeline and implement the various initiatives to further stabilize and then transform group performance. That said, the cash impact from loss making contract should reduce overtime and into the longer-term we expect to make progress towards the estimated average 5% to 7% growth rate for our markets and with margins moving gradually towards the 5% to 6% level typically seen in these sectors. Turning to refinancing. I'm pleased to report that after extensive engagement with our 21 private placement note holders and our 16 strong bank syndicate, we'd reached agreement for a refinancing contingent on the completion of the rights issue. This process was never going to be easy and I'm delighted with the outcome and the fact that we retained the support of all 37 institutions. This agreement follows the initial agreement reached just before Christmas to defer the December 2014 covenant test until the end of May 2015 as well as changing the basis of calculation to include the rights issue net cash proceeds and exclude the impact of the review items from the contract and balance sheet review. Following the rights issue, the RCF maturity will be extended from 2017 to 2019 and there'll be no change to the maturity profile of private placement notes which extend to 2024. Proceeds will reduce gross debt by up to 450 million split equally between the private placement note holders and the lending banks. We will have a one-off cost of approximately 30 million which includes make whole payments to note holders and refinancing fees. Going forward on the private placement debt there'll be about 1% increase in the blended note coupon to around 5% reflecting the longer dated fixed cost nature of this strong debt. With regard to the RCF there's an initial 60 basis point increase for the remainder of '15 following which there is a reversion to the original pricing metrics with a 10 basis point increase which would result in an all-in drawn rate of 2.6%. All-in-all our overall blended cost of debt will be around 4.5% using an assumed partial draw down of the RCF. We believe this is a fair reflection of the circumstances of the company going forward. Following the refinancing our two key covenants namely net debt to EBITDA of less than 3.5 times and EBITDA interest cover of greater than 3 times remain unchanged. The key definition of EBITDA is also unchanged and so we'll follow the accounting definition which includes the benefit of OCP utilization. Importantly however there's additional flexibility within the new agreement to mitigate the future risk of a multi-year OCP impacting a single year's EBITDA when the cash impact is in fact spread over a number of years. That brings us onto the shape of the new lending facilities in place following the equity raise. We've agreed that 450 million of the approximate 555 million gross rights issue proceeds will be used to reduce gross debt. And that it will be split equally between banks and note holders. Our committed facilities will reduce from 1.3 billion to 840 million consisting of £480 million RCF and 360 million of outstanding private placement debt. As part of our refinancing agreement, any cash generated from the proposed disposals will be offered one-third two-thirds between the banks and the private placement note holders. On this offer to the note holders, there is no requirement to include make whole payments. We believe our new facilities places us in a strong position for our long-term funding needs and give us a stable platform for which to implement the strategy. The strategy review has assessed the appropriate funding strategy for the group to ensure there's a strong capital structure in which to begin Serco's turnaround. We've also recognized that our customers are looking for Serco to emerge with a significantly stronger funding position following the issues over the last couple of years and in taking this into account the Board has concluded that the appropriate leverage for the business over the medium term is in the region of 1 times to 2 times average net debt to EBITDA. This point on the need to demonstrate once and for all that our balance sheet problems are behind us, it is at the heart of our decision as to how much to raise with the rights issue. Without winning back the absolute confidence of our key customers as to our financial strength particularly against the backdrop of all that has happened in the last couple of years it would be a challenge for us to secure long term contracts, where the customer has to be assured that his contractor is financially strong enough to execute for the life of the contract. The second driver of our decision to raise the full approximate 555 million is the level of cash outflow we anticipate in 2015. This is primarily driven by the impact of our loss making contracts. But we also have normal business cost to incur as well as one-offs connected to the rights issue in restructuring. The near term cash flow outlook is clearly not strong but this will improve as we begin to work through the loss making contracts. With 658 million of net debt for covenant purposes at the end of ’14 and the 150 million to 200 million of net cash outflow expected in ’15, as I’ve already outlines it is clear that in order to reach the top of our target range of 1 to 2 times the full approximate 555 million or 528 million after fees, rights issue is required. It is then our intention to use disposal proceeds to move us to around the bottom of the range. In the long term our recovery and profitability combined with reduced cash outflows in the respect of loss making contracts will help us to maintain a prudent balance sheet whilst being cognoscente to the fact that it should not be over prudent for a sustained period once recovery is well established. The rights issue is fully underwritten by a syndicate of investment banks. As previously set out the net proceeds from the rights issue will be used primarily to reduce the group’s net debt and provide working capital. The balance in terms of the working capital to be used for general corporate purposes. The offer is a 1:1 issue of new shares at 1.01 per share. The offer price represents a theoretical ex-rights price of 34.3% discount based on yesterday’s closing price of 206.4. The right issue is subject to shareholder approval at the forthcoming general meeting. Our prospectus will be published today at which time the notice period for the general meeting begins. The record date for participation in the rights issue is 26th March with a general meeting being scheduled for 30th of March. The offer will then be open to shareholders from 31st March with a closing date of 16th April. Dealing in new shares will commence on 17th April. Let me conclude then before Rupert provides you with his overall conclusions and we move to Q&A. I see our business with a quality core which is set to become more focused with a clear strategic direction as we’ve laid out for you. 2015 will remain challenging and there will be limited likely improvements until we’re through the 2015 to ‘17 transformation phase as described by Rupert, but beyond which we see the ability to start to recover towards growth rates and margins in line with our markets. Clearly, we have significant loss making contracts but these are a key management focus to reduce the cash drag in the business. The OCP’s neutralize the loss in the P&L and the balance sheet liability will get smaller each year and as time goes on and contracts run off so the cash performance will improve. As we’ve said we’ll change the emphasis of the business to include a focus on return invested capital, taking into account the varying levels of risk that are attached to contracts? Our planned exit of non-core businesses will help to focus the business in the B2G strategy implementation and with the proposed rights issue we’ve established a sustainable capital structure. Be under no illusion. We have a lot of hard work and heavy lifting to do over the next few years, but we do see a path to longer term recovery. A good growth at the right margin and the return driven by an unwavering focus on managing the business better. Thank you. With that, I’ll hand back to Rupert.

Well I guess just a few concluding thoughts. We believe that we’ve got a bright future, we got a strong core business as Angus said we got 4 billion of revenues were present in the largest public sector services marketplace. We are a trusted supplier of critical services in the public sector. Our customers value what we do and how do it. Above all our challenges are within our own power to resolve, it’s about people and it’s about management and we think that we’ve got a good management team to resolve this. It’s going to take time, progress as I said will not be smooth we will make our own miss-steps and miss-judgments and we will need to adapt to events. But if I may say we think we are on our way. Thank you very much and let’s have some Q&A. Q - Rob Plant: Rob Plant from JPMorgan. With your talk about industry margins being around 5% to 6%, can you give us a sense for currently within the margin mix what proportion of your business is at that level or higher and how much is at; say unacceptable levels or loss making?

As I said earlier, if you actually look at our divisional analysis that Angus talked about earlier, what you actually see is that rather than talking about how much of our business is out of depth, just look at the geographies and that the -- our businesses in the Americas, this is the full review items, 6.1% margin, Asia-Pacific 5%, Middle East to 7.3%. Where we have the low margins in particular are global services which was 1.9% and the UK LRG business, local regional work, which was 0.4% and the central government was 6%, albeit with the bad contracts as we're excluding. So as I said earlier and my [indiscernible] is one of the things that makes me optimistic is that our margins are suppressed in large part by some contracts that lose a lot of money, where they're also suppressed by the fact that we've got corporate cost at the divisional level of some £53 million and as the business gets smaller we’re going to need fewer -- and we've got an inefficient infrastructure in the UK. So, and as I keep saying to people in our business, is that people who clean lavatories for living make 5% to 6% margins and we do a hell of a lot more complicated things than that. Therefore we must be able to get back to that for a -- as I said, the majority of our business and you remember the big slide of outlook the majority of our business, numeric things are under contract, the whole lot of contracts making smallish amounts of profit. One of the reasons why they're making smallish amount of profit is because they've got quite a big overhead burden either within the contract or at side so, we have exemplars most of the business is making the money that's at least will get us back to that margin -- towards that margin level if we go and make better the bits that aren't, we will find ourselves drifting up there.

Hi, good morning it's Joel Spungin from Merrill Lynch. I've got two questions and the first is for Angus, just on the provisioning, you obviously said that this is not a kitchen sinking exercise, just wondering, for those of us who are less familiar with how these things are determined, can you just talk a little bit about some of the sensitivities on some of the bigger provisions and how they’re determined, just give us a sense of how that works in practice? And the second question for Rupert is can you talk a little bit about how your and the management teams compensation will be in line with the new strategy and particularly what KPIs will be used by the Board to determine its success?

First, I'd have liked to applied Angus Cockburn -- which is the kitchen sink, the oven, the cooker and most of the bedroom furniture but that's clearly not right and we've gone for something which is absolutely in line with what is right from an audit perspective and review perspective and sets the right tone for what we want to do going forward. Each contract we did a review a fill through review all the contracts to start with. We picked out about 125 and which we did limited scope work where we could see some issues and then we've picked on around 20 where we did full scope, did a real detail dive in. But every one of these contracts that were subject to either scope, we've got a financial model built and we tested sensitivities and assumptions hypothesis right through on an individual contract basis that was because of that, that is why we need so much support, our people work extremely hard but we also had EY there supporting us. So, it's been a very thorough robust basis around testing assumptions and looking at sensitivities but ultimately it comes to making a judgment and in years to come I bet you each contract will move around up and down but as whole, hopefully we're there or thereabouts I feel very comfortable as to the rigor the thoroughness of the review it's been [indiscernible]

On the subject of compensation, the remuneration committee is talking to some of our large shareholders about the minor changes to the LTIP to adjust the targets which are likely to be earnings per share, TSR and ROIC we want to introduce a measure of return on capital employed to the long term being in terms of the annual scheme last year in 2014 it was 50% financial bonus of the targets and 50% personal and I think the remuneration committee will change that to 70-30 in favor of financial performance on the basis that we now have a plan and we will be expected to achieve that plan. In the interest of full discloser you should know that the committee awarded me a bonus of just over -- well determined the bonus from me of just over £9,000 which I have declined to take this year. I just think it would not be appropriate in the current circumstances when the so much pain around and in the current atmosphere and I’m determine that my colleagues should get bonuses. But CEOs tend to be the lightning roles this and we do not want at a time that we’re raising money for that would be headlines and focus in the press or in the political arena about CEOs taking large bonuses for nine months work.

Ed Steele, Citi. Two questions as well, please. First of all on the owners’ contract divisions I think you said before, you will try and gets cover the money back from clients if possible, [indiscernible] patrol boats because that sounds like there is some changing the underlying market. And you still have any hope with that, as in possibility or was that quite for both now?

No, these are long term contract and that’s why the ACP are so long because you’re taking losses and multiplying them by a larger number of years. The conversations that we need to have with our customer either around adapting the way that the contracts work for operating practice or customers accepting that they could share some of the burden of some of the additional cost for which they bear responsibility. We tend to take a long time and clearly I’d like to get result immediately. But it is not in the nature of governments that you can easily persuade them to pay you, I mean if we’re going to take ACPB a £200 million provision, where in none of us is going to turn around and say we will give you half of it, here’s a cheque, I mean this is just not going to happen. We will take a period of time but we will be relentless in our quest or actable solutions to these issues. We’re very aware of the pain, that is responsible very aware. But in some cases it’s not, quite a lot of this is our fault. But actually quite a lot of it is over to the customer as well and we need to have identical sharing. So we will just running away on that but I would not be expecting any news fast, more to the point is you may see headlines of -- comments relating to us being quite difficult because we will have to be quite difficult. So I think we’re going to be very determined to protect our interest.

And you haven’t assumed any recompense in the OCPs?

No.

The second question, in your disposal of the global services arm, it sounds like you have at least two parcels in that. What’s the risk of having quite a big loss retained for cost associated with having disposal of that or close that loss making entity in the UK please?

Okay. The second piece of the business the reason why we kept it out is because it wasn’t making money and wouldn’t contribute to the divestiture. It’s hard to say exactly there are several different scenarios, there is some scenarios where someone will come in and buy it, eventually the buyer of the larger asset that we’re trying to sell, it could be that it gets sold in a number of pieces in terms of contract and contract. So it’s very hard to determine how that’s going to play out.

Good morning. Alex Magni from HSBC. One for Rupert and Ed and then couple of quick ones for Angus. Rupert coming back to nice illustration of management consulting chart about contracts and contribution to profit, any contracts that said the ambition is over that is going to be towards the left hand part of the chart there are reason why they drift over to the right-hand side of that chart; and contract costing liability or risk management and the things beyond the contract. Given the processes you’ve been through and Ed your [indiscernible] piece, but to what extent you feel the contract costing processes are better and particularly in the risk and liability management processes are better to stop as contracts shifting over on to the right.

As I mentioned a key part of the governors process is the group investment committee and in the past bids that had more than 50 million manual revenue came to the group investment committee, with lower debt and half so now 25 million a year of annual contract value comes before the group investment committee. So it's a reasonable threshold and Rupert, Angus and I and David Eveleigh, General Counsel, among others sit on that investment committee. I must add that none of sat on the investment committee when any of these owners contract provisions when those contracts were originally approved. So there is a much greater level of scrutiny over the bids. And the other thing as I mentioned maybe didn't catch was that in the past the investment committee which just at the time of bid would approve the bid, we now have mandated that anything of that size we want to get the division decides to bid it and the earliest stage of the process not at the tail end. We were not only going to be the approval body but we're also giving input in terms of what's prudent risk, what's imprudent risk, how to structure it? Making sure that contracts and the approach mitigate the liabilities. It's a much more rigorous and different process at the group investment committee level. We've also replicating that as I mentioned down at the divisions as well. In the past the divisions frequently would delegate that down the command, not it's a requirement to its divisional leadership teams after approved bids that either community investment committee or appear smaller to go out to markets. So I think we have high degree of confidence that there is much different level of debt assessments and as these bids are getting bid.

Is the investment community that bears the reasonability for those risks or is it at the operational level that people are to be responsible?

Divisions on the bids they’re responsible and we hold them accountable.

And then Angus couple of quick ones. There was a reference I saw to a 60 million receivables financing aspect. Is that on the balance sheet or is that factoring thing?

It's a factoring thing and we were 30 million drawn on it and that continues on this year all our facilities to support the things.

And then the other one was the comment you made about historically net debt profile over the year has been quite lumpy and you'd like to smooth that out. What in practice does that mean, how will that be reflected in what we see in cash flow?

Well coming into this year there is cash proof of just over sort of 150 million and the guys have worked very hard to reduce that. We've reduced it by probably around about £50 million and what we've eliminated is are there even discounts being offered to customers which don't -- when you do the IR it doesn’t make sense and also from a supplier perspective reducing the supplier holds that are over there. And we will -- you always want to have a push few times a year because we’re in the best world managing average cash becomes the same every month, you want the drive to capture your old debt. So there will always be an element pushing year end and half year but we want to get rid of all the negative stuff that actually costs us money and damages relationships.

So we might say what looks like working capital growing to scale.

The big chunk of that is now owed after this financial year end.

Allen Wells from Morgan Stanley, and three if I may. First question just on the 2016 guidance obviously the reasons you would explain you stepped away from today and but I guess what I just want to understand is now versus back where we were in November. Is there anything that's materially changed since just the confidence is actually materially reduced in meeting that target and these are the adjustments in accounting that we've talked about. And second question if you can give me any indication on the EBITDA or EBITDA contribution from 560 million of revenue disposals that you are planning to put out. And then finally on the assumed one-times or move towards one-time net debt to EBITDA number after the disposals have come through. And you put up an interesting chart liking some of the opportunities you got over the longer term and there is a number that you put in foundation positions in markets. You hope to explore and exploit those mostly organically or at one-time net debt to EBITDA is an opportunity and interesting and potentially doing some M&A over the longer term as well.

In terms of the first two I could answer no and no, but I will give you a little bit more detail. And nothing has fundamentally changed in our operational outlook since November as regard to '16 and we've talked about the withdrawal of forecast for the reasons given. Definitely we're not going to give guidance or talk about the profits or EBITDA on any of the expected proceeds. Given the fact that all these transactions are ongoing we don’t want to limit Ed's ability and out even in a real position.

As far as our foundation positions, it would be idiotic to rule anything, I in my career, Angus career and Ed’s career, we all made acquisitions and done them successfully. There is a pretty good golden rule, it is you should never to buy something unless you are pretty convinced that you got your own house in order in first place. Now I do hope there may be some small opportunities which are not going to go and frighten many foxes, around the place where just tiny little things that we can go add-on, but we may look at -- but fundamentally we are very much focused over the next three years on rebuilding our own house and getting our own house in order, but I'm not going to rule anything out other than something sizable. I think we can rule that out.

It's Paul Sullivan from Barclays. Just firstly going back to the divisional margins I mean you mentioned the low margins in local and regional businesses. Is there anything specific that you can point out which is really depressing that margin there? And how you think about prices over the next year or so?

So, which division is that?

The local and regional government, which stands out lowest, in one of the very low margin businesses in the group? You talked about cutting into central cost overtime, but when you look at the big buckets of costs that sit between gross margin and trading profit I don’t know if you can sort of pull out the other big areas and also how you think of where the opportunities lies there going forward? And then finally just in terms of going back to politics and the government, termination for the convenience, I don’t know that's a feature of your UK Government contracts G4S talked about it a little bit, maybe you can just maybe elaborate on that. And the possibility of both Labor and SNP coalition, I don’t know what your view is on that?

Shall I take this? On LRG it is a very varied business with lots of different contracts and I think that while a fewer of those contracts the revenue recognition has been shall I say front-end loaded. And as we get through to the later years of our contracts, contracts of profitability is much less on them, so I think that's the part of the impact. I think that there are areas of our operation within the local and regional government business that we can get much better and Liz Benison is all over about, I don’t want to go contract-by-contract -- I mean there's a job of work to do. It is partly to do with the overheads in the business and partly to do with a number of contracts, but they're now running at quite thin margins but are still profitable over their life. So they are not subject to OCPs. In terms of government, I think one should assume that on almost every contract that we have with government that the government is entitled to do almost anything it likes. And particularly in recent years the terms of government contracting have become quite incredibly harsh. And I just think there's a pattern of risk transfer going on. Now they are generally not -- they wise enough not to throw that around all the time, but the idea that a lot of government contracts have termination for convenience is absolutely so, they have step in rights. And very often they will have liabilities that if for whatever reason you fail to perform they can get the contract performed by somebody else and you have to pay somebody else to do it. And they are able to put in -- everybody sort of think that the government is not good at purchasing. They have terms and conditions that are extremely hard and would not be normal in the commercial environment. So normally it's not a problem, but that is a fact of life when they have been progressively doing it and they have been progressively transferring risks to the private sector. I myself would say two things for that, one is that any as any economist would tell you that the risk is best handled in the contract by the person who best mitigate it and the government has got into a habit which I think is a bad habit of chucking risk over to private contractors who have no way of managing or mitigating it. And just say its risk, I know you can't manage it, but you have it all the same. And I would say as a general comment and it is specific to the UK, is that if you go and make a tot-up of the companies that have sustained massive losses dealing with the UK government it’s now getting to a level which is quite extraordinary, it’s us, it’s G4S, there is Fujitsu, Raytheon went and got £240 million back from the government there today, HP Capita have lost money on some big contracts, Atos have lost fortune you can go and produce a very long list of companies that have got the wrong end of government contracts and have lost huge amounts of money. And I think on the one hand you can say well, there is example that the government is doing contracting very well and I think that on the other hand you can say that this is a market and what the government wants is a vibrant market with lots of competitors queuing up to go and offer its services. My sense is that over the pendulum will start to swing back, I think more and more people will just say no and I think that unless that there is some formal change of heart what will happen is that the government rather than seen a supply base that is vibrant, wide, lots of companies, SMEs and whatever we’ll find it getting increasingly small as the number of companies that have sustained massive losses, albeit very often it’s actually their fault I mean not suggesting that some of the losses that we’ve sustained on our own a silly thought, but companies who do things that are silly, but if you do them with the government you end up getting hit the very big stick. But we are committed to managing this we think that actually it’s something that big companies can probably manage better than small companies. If we’re intelligent, if we’re self-disciplined, if we do as we are doing more and more often now to saying no we won’t bid that and the other thing I would say is that the advantage we’ve got in the international footprint is that we can’t get the business here on the terms we’re going to get it -- on good term. And as to what’s going to happen at election, I have no idea. But I suspect that for that of you who interested in constitutional history you’re going to have the most interesting time that you had probably for the last two generations. Yes Andy -- but can we just get on, we got rattle on otherwise we’re going to be in --.

Andy Chu, Deutsche Bank. In terms of the 5 billion pipeline, could you split that by your 5 sectors please? And what proportion of that 5 billion do you expect to convert will be decided on this year? And secondly on numbers Angus could you give us some number in terms of how much the DLR plus the Great Southern Railways and cash cost will be for this year ’15? And if I understand the free cash flow down to 150, and that excluding into the one offs. How is it possible that you could get to your bottom end of a net cash flow at 150 please?

I’ll start with that in terms of GSR and DLR its 70 million DLR is four equal installments GSR will all come out to the wash of the disposal so that’s slightly off to the site. In terms of I think we’ve given you lots of numbers, bottom line where do we think that to be the end of ’15, 320-350 in that range and you’ve got a whole series of different moving parts within that which we can take you through in more detail later. But it comes down to we’ve given the EBITDA number of 160 we’ve said we’re on two times and therefore it’s regionally extensive straight forward mathematical calculation we can give you the breakdown of that later.

In terms of the pipeline the 5 billion that we mentioned those will all be awarded in the next 24 months and we haven’t had a breakdown by sector wise, but I am just like 30 deals and opportunities or bids that are in that portfolio of 5 billion and I don’t have it broken up by sector but they’re not dominant they’re single sector dominated the list. I would say though that there is a handful that makes up a significant percentage of the pipeline so there is a handful of bids that are I would say 500 million or larger in terms of total contract value so there is some concentration risk.

Kean Marden from Jefferies, could we just explore the business development and the big teams in a little bit more detail. So you fell that the churn within those units has been too higher the last two years so what’s your commitment in such scale and when does the process rebuild the expertise that commenced; do you have stronger balance sheet first of all, if we were to basically catalyze that?

Can I just take the balance sheet question first and then I’ll hand over to Ed to talk about the origination. I don't actually think that the balance sheet issue has been a huge issue except for in the last -- except for since November because nobody until November and we said we're going to have to raise a little money 1.3 billion as it was not seen as being so much of an issue, although we've had a cash raising in the previous years. I think it might be in the back of our minds. It's very much now in the front of people's minds which is why it's urgent to go and restore it. I think we're seeing reputational stuff. But I don't think yet we’ve had a big balancer but we would do if we did not repair the balance sheet, Ed?

Yes, I think that's first of all churn, there is probably been some churn in the UK business development teams, less so in the other non-UK divisions. I'd say that probably internalization across all of the divisions that we spend more of our BD, our total BD spend on bidding as oppose to the upfront business development and I think that so one of the lessons learned right lessons learned are number one, we need to invest more in upfront business development, in more professional account management and real relationship development and I'd say that's true across all our divisions especially the UK but it's true across all of them and I'd also say that one of the things that we need to do, we're going to actually execute this strategy and 5 years from now look and say we've achieved those growth rates it means we're going to have to win more than we've been winning and it means we're going to have to leverage our sector capabilities more in terms of leveraging capabilities we have in one region to other regions and that's something we're focusing on as well this sector networks and the third thing is that again without question certainly here in the UK, there has been distraction and we haven't executed as well both in terms of risk assessment but also putting a good product out the door but I think all of those things will have to come together. In our business development spend overall is a little bit less than it has been in the past but it's not because we're trying to harvest it for savings it's because there have been some fewer opportunities and it's naturally come down. There is more than enough money in this 2015 budget to do the things that we need to do at the start, rebuilding and getting on the road to recovery.

Thank you, it's very helpful.

It's just what we do. We'll take one more question it's mid-day now, many of you will want to get out, but Angus, Ed and I will stand in a tidy row for you to go and receive contradictory answers to the same question in a moment, so just one more and then we'd be away.

Okay, one more person or one more question.

Okay, right, I'll get to right my broadest question, just in terms of the environment in UK which you talked about clearly, the risk transfer has proven problematic and continued to do so and I think on your heat map in terms of the opportunities, the emphasis was very much on the internationalization of the business. Just looking down the pipe at 2020, do you have an aspiration to use your word as to the mix between the UK and overseas?

No, generally I don't have an -- for que sera sera. If we cannot wins standard business in the UK so the standard of risk and reward that we think are appropriate then we'll win it, we'll concentrate elsewhere and if we can't we will -- I'm very confident in UK still going to be very large part of our business we're very committed to it than lots of customers, lot of the things going on and lots fixing to do but the fundamental thing about risk reward will be [indiscernible]. Thank you all very much indeed I'm sorry to being so long, I'm sure you saw notice was so short. We will see you on our travels no doubt and thank you for your attention.