Rupert Soames - CEO Angus Cockburn - CFO Ed Casey - COO

Joel Spungin - Merrill Lynch Rob Plant - JP Morgan George Gregory - Exane BNP Emily Roberts - Deutsche Bank Carl Green - Credit Swiss Richard Jones - Tower House

Right good morning I'm going to kickoff just with the brief introduction. Talking about 2016, was a year of solid progress, and our strategy of delivery remains on track. A couple of points I would pull out for you from the headline numbers. First of all, as we've said the underlying trading profit would be heavily weighted towards the first half. So the first half-second half split was about 51 million of underlying trading profit in the first half and 31 million in the second, and those of you who were here during our half year presentation will remember that I was very-very firm in saying the first half of this year, 2017 looked very weak compared to the first half of 2016 when there were a number of one-off items. However in terms of the underlying trading profit decline of 14 million, there is -- about 19 million of that comes from the disposal of our private sector BPO business, The Intelenet business, was 9 million positive from FX, and the balance of the other movements is about 4 million down and actually that's quite a pleasing result to have only 4 million down when the equivalent revenue decline was about 344 million. So our cost reduction program we've taken out some 450 million of costs during the year, has worked well in ensuring that only 4 million of 344 million organic revenue decline flowed through to our profits. The other thing that is particularly pleasing for me is there're statutory returns [ph], there are management returns, and then there are operations returns and the figure that I look at each month whether I'm looking at the business is the underlying trading profit without the benefit of all the OCP provision, because at the end of day all the OCPs are doing is neutralizing the effect of loss making contracts. And 2016 was quite a milestone of a year, because 2016 is where we got breakeven, where the 82 million of underlying trading profit which have the benefit of 84 million of OCP utilization on loss making contracts meant that we actually broke even with more or less with the loss of 2 million. Compared to the previous year where we had underlying trading profit of 96 million, we used the 114 million of OCP utilization. So actually lost 18 million on what I call the operators metric. And in terms of the OCP utilization itself, it was 30 million down on the prior year and that is a good indication that we're getting to grips with our loss-making contracts. Good performance we think on the debt, Angus will explain us accounting change, the way that we account for the debt, closing net debt of 109 million and I think it's worth reiterating that debt figure was arrived at as we finally have got rid of the last vestiges of 414 [ph] which is invoice discounting, alternatively named as, flattering your cash flows at the yearend and there is a £23 million headwind as we reduced the amount of invoiced discounting and it was I think stood at 7 million or 8 million at the yearend and is not down to zero. So that particular elements has gone out of our -- we're going to keep -- will keep the facility as we need it, but there is a considerable headwind in the cash flow numbers from that. And a very encouraging performance on in terms of the order intake and the first part of our task has being stabilizing the business in two straws, and then I'll say one is, the revenues next year are going to be approximately the same as they were this year having been sharply declining for the last two years and also that we'd been munching into our order book, but with a 40% increase in order intake this year and that's not including the AWE value that is accounted under JVs and associates was 40%, without AWE actually our order input was stable. Our order book was stable about 9.9 billion and I'll talk about it bit later but there are -- there is not one, there is not two but there is a small heard perfectly formed of six elephants lurking in the Savanna, as six very large contracts, which we are pursuing at the moment, anyone of which would be either very, very good to win. We're making good progress on our transformation stage, we're about half way through it. We've taken out about 50 million of overhead cost including a 15% reduction in our group cost which is again shares that were doing. So in terms of the outlook for 2017 is unchanged, similar revenue to this year and although the range, like possible outcomes is very wide, you all know that particularly there is a time of the year 65 million to 70 million is where we think we would be on underlying trading profits. And 2018 a small increase from that in the margin expectations as we begin to turn the corner and enter our growth phase later in 2019 and thereafter. At this point I'm going to hand over to Angus for the financial details.

Thanks so much, Rupert. Good morning ladies and gentlemen. And I'll take you through the finance review. So let's start with income statement. Consistent with IFRS and our guidance the revenue measures exclude our share of JV and associate revenue while the trading profit measures include our shares of their profit after tax. The revenue number in this statutory income statement excludes discontinued of 3.048 billion was in line with our August and December guidance and is 13% lower than the prior period, which I'll break down for you in a few moments. Trading profit of a 100 million was 18 million higher than the underlying equivalent and getting to underlying we exclude the net benefits of 14 million from adjustments to OCPs and other contracted balance sheet review items. And also exclude a 3.5 million one-off positive pension settlement related to the early contract exit at Thurrock. The benefit from not depreciating, amortizing assets held for sale is now just 0.5 million but it was 12 million upheld last year. So, excluding these items, underlying trading profit was 82 million, down 14 million or 14%. As I will show in a moment, after taking into account the 19 million reduction from the private sector BPO exit partially offset by 9 million ForEx benefit, it was 4 million or 4% year-on-year reduction. We've put the currency impacts and approximate transitional sensitivity on the bottom of the slide for you. The net translational currency impact was favorable in the year, given the weakness in sterling. If the current rates of sterling against the U.S. dollar and Australian dollar continue we would expect to see a further benefit to trading profit of approximately 8 million which is already included in our guidance. Revenue fell in organic terms in four of our divisions, with AsPac is only one to grow due to some higher revenue in our system services, justice and defense businesses. The biggest falls were in our UK divisions, in LRG there was attrition from the previous loss making Suffolk Community Healthcare and National [indiscernible] Services Contracts as well as the profitable Thurrock cancelled contract and furthermore as a result of the de-recognition of health procurement revenue on contract renegotiation. In Central government, the biggest impact was DSTL, as well as attrition on a number of smaller contracts. In the Americas the reduction was largely driven by the end of the National Benefits Center and the Virginia Department of Transport contracts. The impact of disposals was small in AsPac and related to the sale was the Great Southern Railway in the first half of 2015. More the group perspective the exit of Global Services accounted for 301 million of the group's overall revenue decline of 467 million. You can see the benefit of ForEx here by division. Totaling a 189 million for the group, of which 164 million occurred during the second half. This slide shows divisional underlying trading profit and margin. Underlying trading profit of 82 million is 14% lower than the 96 million last year. You can see here the 19 million of this reduction is due to the exit of the Global Services business partially offset by the 9 million of currency benefit. The biggest decline was in LRG, where 3 million write down on an IT system development and support contract or European agency contract was compounded by the impact of contract attrition and a generally challenging trading environment, leading us to making 6 million loss compared to 5 million profit previous period. This decline was offset by profit growth in AsPac notably from in contract expansions, cost savings, and losses at [indiscernible] in 2015 being neutralized in 2016. The Middle East profit has been lowered in the year due to the investment in business development, as we bid for the major rail contracts in the region. Profits in the central government was slightly down due to the reduction in contribution from JVs and associates and contract attrition being partially offset by profits improvements on some continuing contract and savings and overhead. The slight fall in the Americas was largely due to the net effect of contract attrition. Corporate costs were 8 million lower in the year benefitting from the ongoing cost reduction program. We have achieved the target that we set at the start of the year to reduce overheads and shared service cost by 50 million across the group. Reducing our cost based and becoming more efficient is clearly critical for us to improve our margin over the longer-term, and in 2017 we're targeting an additional 20 million of further cost savings. Underlying trading margin in 2016 was flat on 2015 at 2.7%. This includes a profit contribution from JVs and associates of 33 million on equivalent share of revenues of 481 million. The revenue is excluded under equity accounting, but if it was included groups trading margin in 2016 would decreased from 2.7% to 2.5% with the UK central government's margin dropping from 7.7% to 5.3%. As we look to 2017 it should be borne in mind that the Northern Rail joint venture was contributed 5 million profit after tax in 2016 has now ended, and we also expect a lower contribution from AWE given the lower shareholding. We're committed to be transparent on the effect of the 2014 contract and balance sheet review on future profits and cash flows. The 2014 numbers included a charge of 1.3 billion of which 745 million was within trading profit. As we predicted there are multiple movements up and down. But overall as a portfolio, we believe the number remains reasonable and the overall liability is reducing. The OCP liability has declined from 447 million at the end of 2014 to 220 million at the latest balance sheet date, which includes adverse ForEx of 12 million and 14 million arising on the acquisition of the COMPASS sub-contractor Orchard [ph] and Shipment. OCPs are clearly still an area of focus key focus for us. Given that future cash impact and progress has been made during the year in a number of contracts to reduce these future cash out flows. During 2016, there was a net overall benefit of 14 million arising from adjustments to OCPs and other contract and balance sheet review items. In terms of OCPs the biggest release was on the COMPASS contract replacing updated volume forecast and the terms under which the contract was extended. Other releases included our Australian patrol boats and SPMS contracts, reflecting further operating cost improvements Acacia prison where agreement was reached in the terms of the reroll. Partially offsetting the OCP releases 66 million where additional OCP charges of 56 million was the largest element being the 29 million charge on the Ontario driver examination services contract where we have ongoing problems with an IT implementation compounded by higher estimates of future operating costs. We're beginning to make progress now in this contract but challenges remain in '17. The only other major charges related to PACs [ph] where we've now provided for one off three possible extension years and Caledonian Sleepers we've increased their cost of functions for running the old trains until the new trains come into service in 2018. Utilization of the OCP provision was 84 million, down from 140 million last year. Looking to 2017 we expect OCP utilization to be around 80 million. The OCP provision as a whole has so far stood the test of time through success of orders with the net cumulative release of 7 million to trading profit out of the original balance of 447 million. But within this portfolio there is clearly been some major movements. We've included the detailed provision slide in the appendix for you showing the movements and revised future phasing of utilization and the related revenue profile. Turning back to the income statement, pre-exceptional operating profit for the year was 95 million, down from 133 million in 2015. This is after amortization and impairment of intangibles arising on acquisition of 5 million. I will cover tax and exceptionals separately. So, just a quick word on the net finance cost line. Net finance costs pre-exceptional was 13 million, down from 32 million in the previous year. This was driven by the reduction in average net debt, reflecting the proceeds from the rights issue in April '15 and the offshore BPO disposal at the end of December '15; as well as the interest rate benefit of paying down 117 million of expensive private placement debt in February '16 with no make hold payment. Included in net finance costs is interest payable on our gross debt, which is a blended cost of 5.2%, resulting in 16 million cost in the period. You will find in the notes for the accounts that there're additional smaller finance costs relating to finance leases, facility fees, and the movement in discount on provisions. Investment income was 3.6 million, derived mainly from the six year 30 million Intelenet pick-note which accrues interest until it is paid out on maturity. With the only other item of note within finance income being a net pension credit of 4.7 million. This reflects the strong funding position of our pension schemes, with a pre-tax net balance sheet asset of 133 million. We're in a strong position, having allocated 1.4 billion of the 1.6 billion of pension assets to conservative liability driven investments. And this investment strategy has minimized the impact from low discount rates. This is reflected in the recently completed triennial actuarial valuation of our main scheme which showed a deficit of only 4 million at April '15. The tax charge for the year was 24 million on underlying profit of 82 million less pre-exceptional net finance costs of 13 million with an effective tax rate of 35%. The tax rate reflects the 30% plus tax charge in overseas profits and the fact that were still unable to take any differed tax credit for UK losses. The estimated value of the off-balance sheet potential gross differed tax asset is 1 billion, which is a contingent net value of around the 190 million. This potential asset will clearly have significant value in future years and when brought on balance sheet will lead to a material reduction in the effect of REIT. However this means that our tax charge and effect of REIT will be volatile. This is illustrated by the fact that our full-year tax charge was 7 million higher than anticipated at the half year, largely due to the differed tax movement arising on the twice annual revaluation of our pension surplus. As we look to 2017, we expect of having an effective tax rate in the region of 50% higher than 2016 given the anticipated decline in JV and associate profits which come into PVT on a post-tax basis, and due to the mix of UK losses and international profits and till a contingent asset for UK losses come on zone balance sheet the P&L tax charge will remain volatile and cash tax paid will be the most reliable measure. Cash tax paid in the year was around 6 million reflecting the impact of OCP losses overseas as well as the UK together with the sale of losses to joint venture entities. In 2017, we expect cash tax to be in the region of 10 million due to the reduction in the losses sold to joint ventures. The net charge for exceptional items was 68 million with the biggest cash element being restructuring cost related to transformation of 18 million. The biggest element of the non-cash exceptional charge related to an 18 million timed impairment and goodwill on the acquisition of the compass sub-contractor. The results to our 14 million increase on the endemicities provided on the BPO disposal driven primarily by currency translation. We have now reached our maximum potential exposure and any losses beyond this point would be to the account of the buyer. Within the impairment of other assets of 10.5 million the major element related to an impairment of a joint venture investment. We also incurred a 10.7 million charge from transferring back to the government the pension liabilities in our SPMS contract which will create a future benefit in terms of lower cash funding cost. The cash flow impact of exceptionals was 40 million reflecting both the current year restructuring and also the cash impact of charges taken in previous period for items such as the DLR pension and the exit of UK private sector BPO operations. The weighted average share times to period was 1.1 billion with the facts to the loss per share of being 0.11 pence. On a pre-exceptional basis earnings per share was 6.12 pence. Underlying EPS is the basis comparable with substances and it's based on underlying trading profit of 82 million less pre-exceptional net finance cost of 13 million and the related tax charge of 24 million. This figure was 4.13 pence. As previously indicated the Board is not proposing a dividend for 2016. The Board has committed to resuming dividend payments when it is prudent to do, so which will take into account the appraisal of future financial performance and prevailing market outlook. Free cash flow was an outflow of 33 million, however it should be noted that within this the working capital outflow was almost entirely comprised of 22 million reduction of factoring facility. Since the year end we've cleared utilization of this facility down to zero. The full and net expenditure from 73 million to 32 million largely reflects the disposal of the more capital intensive BPO business, with the balance being lower CapEx and fewer newer contracts passing in year and lowered internal CapEx spend. The biggest element to the provisions movement of 118 million related to 84 million utilization of OCP. Dividends from JVs and associates were 40 million, up 32 million in the previous year including the final dividends from Northern Rail which will not repeat in '17. Adding back tax and interest, trading cash outflow was 8 million, compared to underlying trading profit of 82 million. Trading cash conversion clearly remains low, as we work our way through the OCP contracts. This slide reconciles the free cash flow to the movement in net debt. Net debt increased by 46 million in the period to 109 million, this reflects a negative free cash flow compounded by cash outflows and exceptional items, and it translates our dollar denominated debt at the year end, reflecting the dollar strengthening relative to sterling. These negative flows were offset by positive cash movements on debt hedging instruments. It is worth pointing out that our closing net debt of 109 million compares to a daily average of 119 million over the year and with peak net debt being 183 million compared to 859 million in 2015. In the appendix, we've updated the chart showing daily average net debt volatility and the effects of our efforts to normalize yearend cash management. The implementation of our new treasury system which has automated much of this activity has enabled us to change the way we account for ForEx and investment and financing arrangements. Previously, these were accounted for in operating profit and included in free cash flow. Given the nature of these derivatives, the more appropriate treatment is for them to be accounted for in finance costs and below free cash flow. Similarly, our definition of net debt has been changed to include the value of derivatives that are hedging foreign currency debt. This new definition of accounting net debt is no more consistent with the debt covenant testing calculation. There's no impact on earnings per share with the in-year and prior-year props and loss impacts being a reduction in operating profits and an equal and opposite increase in finance cost of 1.2 million and 0.1 million respectively. In terms of free cash flow the impact from the current year and prior year was to reduce free cash flow by 47 million and 19 million respectively with an equal and opposite increase below free cash flow as shown on the slide. This new debt definition to include the value of derivatives related net debt components reduces net debt by 18 million in 2016 and 15 million in 2015. So this change brings us in line with common practice and better reflects our covenant definition. The covenant leverage ratio net debt to EBITDA has increased slightly from 9.4 to 9.7 times, but still remains at a low level. EBITDA on an underlying pro forma basis is 147 million resulting in leverage closer to 9.8 times. This clearly does not have a materially [indiscernible] but should be borne in mind when looking at leverage going forward. With respect to 2017, we expect leverage to be around in the middle of our long-term target of 1 to 2 times based on a projected net-debt figure between the 150 and 200 million. It is also worth noting that our covenant allows us to consulate net debt based on average ForEx rates, which clearly reduce the translation impact of the recent weakening of sterling on our covenant re-issues. Turning to our update on outlook and modeling assumptions. Our revenue guidance for 2017 on a reported currency basis is around £3.1 billion with the favorable currency impact within this being around just short of £200 million. This is based in the current sterling-U.S. dollar exchange rates of around 125. We expect underlying trading profit on a reported currency basis to be in the region of 65 million to 70 million, but it should be board in mind that as usual the range of potential outcomes to be significantly broader given the nature of our business. This number includes some anticipated additional reduction in overheads and shared service center cost of around 20 million. We expect net finance cost to be around 15 million with closing net debt as I said between 150 million and 200 million equivalent to leverage of around 1.2 times to 1.7 times. The underlying effect of tax rate is expected to be around 50% for 2017 with cash tax of around 10 million. The number of ex-shares is expected to stay at 1.1 billion, on top of the expected fallen underlying trading profit the higher tax rate will clearly reduce EPS in 2017 to a greater extent. Finally, then an early comment in 2018. Clearly we will know more as we progress through bidding activity over the course of this year, and as we see how the customer and market environments develop, but it is important to note that compared to the margin in 2017, which we expect to reduce to around 2.1% to 2.3% we would still only expect modest margin improvement on year in 2018, as we need to get further into a sustained period of growth and positive cost based leverage which will only come in later years. Thanks for your attention. I'll now hand it back to Rupert. Thank you.

Thank you, Angus. Right on to the usual highlights and low lights of slide. Talking from mainly from an operational point of view. Amongst the highlights was of course the joy of seeing many of you at our Capital Markets Day and thanks you for the feedback that we have from that, people said that it was a great degree of transparency and people were pleased to see and get some insight into our sectors. I would also like say, not on the Slide, but I do comment to you Appendix 21 in pack. Being our daily average cash moment, because I think it has used a quite salutary not only to ourselves but maybe to other in the business, it's what cash management can do for you. Also in terms of highlights I would repeat what I said earlier, that the [indiscernible] getting now to break even on the UGP, but also cautioning about the phasing profits in first half, second half in 2016. Very pleased about the order intake. I can't over emphasis this, we really did go through a very solid period, the value of the shadow debt in terms of not order intake, but also having new opportunities in front of us to go and look at. and we've now got six of these very large opportunities and well distributed around, well we got the firmware of the defense congress who management organization in the UK, immigration escorting in the UK which is a contract that Capture currently have, but is involved so hoping to deport people. In the Middle East we've got two major opportunities being the urban rail metro systems in the Doha [ph] and re-add in Australia we have Grafton prison which is a huge PPI. But there are actually a number of different present opportunities in Australia, then there is not only Grafton, the thing about Grafton is enormous rather like, [indiscernible] prison where we build it and one of them operation it for many, many years. Its value is very high, but it won't attract any revenues probably till 2021. In parallel there is a baby elephant trotting along on him hills called John Morini [ph], which is a contract take over an existing, it's much more in value, but that one begins revenues much earlier. So both of them in New South Wales. Albeit the value of one is much smaller than the other. And in the U.S. we have a charming renamed opportunity who look NAWC-AD, Navy is quite working out, what we'll see works for, but it is to go repair naval vessels for the Navy and would be a very large contracts. It is been years, years since we had so many opportunities as, whether its priced well a hull strategy of having been able to address multiple market at the same time. Very good progresses as we talked about the markets there by employing engagements, 17 percentage points increased in the engagement of the leadership seen, an overall employee engagement of record high. We made good progress on the operational delivery of of many of our key contracts. We've been invited back into the government circle of love in the form of being nominations of strategic supply, so a small group of suppliers who they have very structured relationships with them so we're pleased by that. In terms of low license, we said the significant amount of the profits in 2016 came from elements that will not repeat, we've also because as always have some bid losses. Passport in the U.S., a big court escorting contract in Australia that we lost and [indiscernible], we lost as well. The other thing I think need we need to be aware of is there are 8.4 billion pipeline is very front end loaded. Nearly about 70% and 80% of the bids in that pipeline are due to be decided in the next 12 months, which is good news, but it also means that I think we will scrabble, it will be a tough job to go and rebuild the pipeline after all those jobs are cleared through. Lot of uncertainty in the U.S. from the new administration, we'll talk a bit more about that, when we get to the sectional in the U.S. and also about the contract in Ontario. We needed to step in and being [indiscernible] which was a small company in [indiscernible] to set things to do that, and during that we had to taking about £14 million of liabilities related to the implementation of the COMPASS contract. And finally you’ll see some words in our FDA about the challenges facing in the UK's full service around Brexit, which we see as being a major operational challenge for them. Moving on to the central government, I think Kevin and his collogues did well here because there was pretty strong revenue decline with some contracts coming to an end like DSTL and DBS. And they were also faced by £2.5 million reduction in the profits coming from the joint ventures and spaces. And despite that £64 million revenue dropped and the 2.5 million reduction in JV income. The underlying trading profit only dropped £900,000. So they've done a good job across the rest of the contracts improving margins and improving operational delivery. This is during the half of our [indiscernible] operational excellence, you know that one of our four key things of winning great business, executing brilliantly and making Serco [indiscernible] and making it profitable and sustainable, is around operational excellence and so far in such we've trained 500 people as yellow-belt and 158 in local regional government. In terms of next year that's going to lower JV revenues, as Angus says with Northern Rail and AWE being a smaller percentage, but basically this business is doing a good job, it's got a strong pipeline [indiscernible], immigration escorting. Hades which is a big contract to do, base management in the UK and we’re also bidding to run the Gatwick immigration removal center. In terms of the UK and local regional government and Europe, this is a complex picture with a very sharp decline, 25% in revenue and there are a lot of moving parts here. First of all, we got by £48 million of revenue reduction that comes from not counting as revenue the past view through value of purchases that we're doing for the NHS. These were purchasing contracts on which we make a tiny-tiny-tiny margin, we're effectively acting as a purchasing organization. And previously all the revenue for those purchases have gone through our revenue line, we've taken that out. That's 48 million and is actually going to be a bigger drop next year it's going to be about 60 million drop next year as of LRG, but has no margin impact. We've done about 60 million of revenue reductions going from contracts that have -- that we've exited being preferentially suffered community care and natural citizen services and was also what was a profitable contract, 27 million of [indiscernible] dropped out of revenue. But this business is a portfolio driven, we got a healthcare business which is actually doing very well with the [indiscernible] and also having taken Suffolk out of it, which is definitely big loss making contract and the profitability of the healthcare business is now doing a lot better and will do better next year as well. Our citizens services business was hit although it was covered by OCPs by the Lincolnshire implementation, you'll remember Lincolnshire was the one that went the ugly last year, that we took a large provision on, that I'm glad to say we are through the IT implementation, the system is substantially operating now and we're now into grinding out the economies over the next years of the contracts of that, some at better controlling the losses on that, will diminish in the years ahead. In our environmental services business they had a [indiscernible], this was a business actually we tried to sell, we then when we sold in Telenet and we raised our money we didn't so much so we kept that back in house and they started off -- they have very few orders for a long time, they started off year in fine style and they just gotten one, two cancels to do the waste disposal, so they're doing better. The year has been quite badly troubled this last year with one contract for the ICI that has caused operational issues. So it's a bit of a mixture analogy, but it's a complex business to run, but the bits of it now that are beginning to run really much better and we are confident that the performance of that business will start to improve next year. Australia Pacific increased profits by nearly 10 million they had some good wins, they won the Icebreaker contract where we had front contracts of building and then operating icebreaker, I have to say we are not taking any of the revenue for the icebreaker build through our hooks because it’s essentially a pass through contract to our subcontractor Darmon we won the extension of the biggest private prison in Australia which is Acacia, we lost a big escorting contract in Western Australia, but there was a big reduction in the level of losses in defense last year, and in particular on the troubled OCPB contract where we -- it was our largest single OCP. And part of the settlement of that, we got a new contract that kicked in last year with the government that reduced quite substantially the losses on OCPB and that contract comes to an end in July. They also have the benefit of losses from 19 prison which the previous year had been taken straight to the P&L were actually protected by an OCP last year. Lots of opportunities in prisons as I mentioned and also healthy, we recruited some new managers on the healthcare side just trying to build out from our success in the Fiona Stanley and the largest single part of that business which is the onshore care of detainees had a very, very good year. On to the Middle-East. Middle-East has been and dominated by one thing, profits are down 3.7 million a very large part of that is the bidding cost related to two of our elephants being Doha and Riyadh and -- but we're spending millions of pounds on putting the bits together. So that the rest of the business is being pretty stable, there has being increased volumes overall in the defense side with our Milaps [ph] contract, slightly reduced volumes on the air traffic control for Dubai airport, but importantly we hold one position in during FM at Dubai airport which we are very pleased with. The Dubai metro continues to run extremely well and we are all on tender hooks [ph] watching how are these two major bids are going to work out in the next coming months. In terms of the Americas there is quite a sharp revenue decline, it was largely driven by the loss of the national benefits center contract, contract reduction in scope of the contract called solider for life [indiscernible] and the hand back of the Virginia department of transporter contract. Despite that legal and after that cost they have a big cost reduction program and they were able to take the margins broadly flat on the business. On contract awards they have a big pipeline, that they welcome that point of view on new managements on the defense side of being beating the bushes and we won a big pipeline and they did well on contractor awards including an upgrade to the high altitudes electromagnetic pulse protection of a big radar installation in that marvelous place called Thule, a Ultima Thule, Greenland. And if any of you want to go and get seriously cold you can go there. Another very cold place where we do business is Gustavo where we won the extension of the contract to provide base services that. Also a little bit about Des, the ugly as the year which is that this is a contract that we've always had as an OCP, but it's been a very, very long and difficult IT implementation followed by a seven year operating contract and it's just being really painful. The terms of the contract are far from ideal, a lot of the requirements to the customer were ill-defined and it's been difficult to get certainty around when the customer would feel that they have the system that they needed or we would have to change contractors half way through and it's been a shocker. Anyway as we get to where we are now, which is the final run in on the IT implementation, about 90% of the software is now running fine; there's about 10% that is we've had the code drop, it's due to go live in May. So we're over the hump in terms of the IT implementation and now look forward to a seven year contract where we have some very tough obligations and also where we took on some quite bold assumptions about how many people we could run the contract with, and it all comes down to how many driving instructors we use in harmony, dispatches we use on the light, we're just taking the deal over the next seven years, one unlike to be able to get all of the savings as was bid. There's also big thing around IT costs, because lurking in the contract was a possible requirement that we may have to go and refresh all the IT infrastructure before we hand it back to the customer in the seven years time. This is an unclear contract obligation and will very much depend on the extent to which the software we provided will still be being supported in seven years time, and I think we've taken the view of what we'll likely have to do it. So we've taken the provision on nearly £29 million. I will say it's part of the portfolio, we've got good news elsewhere. Overall we had a net release from OCPs and I'll just say and in respect to my learned friend, if you remember we took £447 million of OCP provision; we're now down to 220 million outstanding. Over the three cycles of audit that we've been through, those provisions, the amount of those provisions has varied from what we said by one percentage point. And for those who thought that we were either chucking the kitchen sink at it or being grossly over optimistic, I think that we ended up in the right place on that. And as I said last year we had links, and this year we got debt, but we had other [indiscernible] and so it goes on the portfolio moves. The other thing I just want talk to you a little bit about in the U.S. is the status of business with the arrival of the new administration. And clearly I'm sure you'll be following as I do on twitter the eliminations from the White House and it's sometimes hard to interpret exactly what policy is -- anyway [indiscernible] is just been appointed the new Health Secretary, I think it was described to me by analyst I met, a political analyst I met a couple of weeks ago, who said, look those things will sound like, what is certain is every republican knows they want to get rid of ObamaCare and no two republicans can agree with what it should be replaced by. And it is a very difficult issue, there're 24 million people covered by ObamaCare in the U.S. 11 million of those receive federal subsidy and the idea that those people are going to go uninsured really seems a bit farfetched. There have been commenced by the President that this will have to go onto 2018 to see, it's pretty critical to us, it's about a third of our revenues, less of our profits, because the margin is quite low, but there is big overhead recovery on that. So it really depends how we navigate through that, depends whether how long the program goes on, in what form, whether they still want eligibility testing whether where the program goes we can follow, and they want to use the eligibility testing skills that we brought up. And it also depends with what else we can win out of our pipeline, because you're going to take some of the big navel contracts, which eat up a lot of the overhead recovery that we're currently getting from CMS. So I frankly have to tell you, we don’t know, we think on balances it's going to be helpful to our defense business and likely in the longer term to be challenging for the citizens services business. But all we can do is manage from day to day to see how it goes. In terms of our discontinued operations not much to say, other than that we have cleanly exited businesses and we've got fewer stranded costs than we thought, and the effects of those will be all gone by the end of 2016, and three million OCP utilization, one contract left remaining, which is quite small and there we will just have to come to decision whether we keep it or whether we exit it depending, but essential we're at our best business. Summary and outlook, trading was up ahead of expectations at the start of '16 and in line with what we said in December, there should be no surprises, encouraging performance, I really am encouraged by the state of the wins and the pipeline stabilization of business, the fact we've not got to what I call breakeven after taking at all, the smoothing effect of the OCP's, strong balance sheet and we're making good way on our strategy plan on the transformation stage. It may be a long and winding road, but we're at least clopping along it and the plan is on track. So with that I'll say thank you and we'll get into question and answer which Angus will be the arbiter of who get to ask the questions.

Q - Joel Spungin: Good morning its Joel Spungin from Merrill Lynch and a couple on the pipeline and then one quick one on accounting. Just in terms of the fixed big elephant contracts that you highlighted Rupert and the 7 billion that you mentioned that might fall out of the pipe, is that including all six of those contracts you expect to hear on this year. And obviously you mentioned that Grafton and has a very long time. Can you give us an idea on the other day contracts when you'd expecting to start contributing to revenue? That’s first question.

Yes we expect all six of them, to have a decision this year. Subject to, god knows, they all delay, but at the moment it looks like all six of them will be decided in the next twelve months. But the [indiscernible] lip on that. if you see that most of the other contracts, other than Grafton, there will be run in on both Dubai and Riyadh. There would be not much contribution in 2017 or 2018 but those will start producing we're thinking 2019 to pharma and escorting will be pretty quick off the blocks. Grafton would be, as I mentioned 2021, but if we won [indiscernible] instead that would be pretty much immediate and [indiscernible] that would be actually 2018. What they will all bring with them probably is some quite large mobilization cost and working capital requirements. But that’s what new business does for you. And as I said, I really want to, this is not accommodative, if we win one of them we'll be delighted, but it’s the change that I want to draw your attention to a couple of years ago where there were no elephants around, we caught one, we’ve got six in front of this. And I think that that is from what we hear around the marketplace, I think it’s not particularly our brains, I think it’s just luck that we happen -- well not entirely luck position where the action is at the moment.

Just one for Angus. There is also a couple of new accounting standards coming down the line in terms of treatment at least is an also long-term contract accounting. I was wondering if you had any views on that mean for you?

The one that we spent most time on so far is the revenue recognition. Most of our contracts are actually quite straight forward. We’ve got a number that required a huge amount of work by the good team. But we don’t think it’s going to have a particularly material impact on us. So we’ll give more detail in the summer, but it’s not going to make a huge change to where we are.

Rob Plant from JP Morgan. As well as the new bid pipeline, you also talked quite a lot about the rebid of about 40% of the revenues coming up for rebid up to 2019. When you think about those rebids, do you have a sense of what you’d actually like to keep, what needs to be renegotiated for you to want to keep it, what you'd be happy to lose?

Yes. I mean, it’s not in the extraordinary number. We think that the average length of our contract might be six or seven years. It's not an extraordinary number in the next three years, you’ve got 40% or you’re having to recomplete. And actually this next year is relatively quiet on the recomplete. Ed, do you want to say something about recomplete?

Yes. I mean in ’17, we have the option here for CMS contract and also Rupert mentioned, we’re going to hear more about the future of that. In ’18, we have Northern Isle Ferries rebid and then we’ve been and then we’ve got a bunch of small once in LRG. In ’19, we’ve got COMPASS, we’ve got PECS, we’ve got Dubai Metro and the Australian immigration services contract. Now Dubai Metro and the Australian immigration services contract we're hope they'll get extended as oppose to recompleted, but nonetheless take them under ’19. All of those, we would like to retain. Now again we certainly hope that on COMPASS and PECS. We would I mean recomplete, we’ll do some on better returns. But I think in all of those our terms, we would like to retain all those contracts.

Good morning. [indiscernible]. Three questions if I may. Firstly, can you give some any indication when you continue to make pay tax in the UK and bring those off-balance sheets -- tax asset back on to the balance sheet? Secondly my expectations for margin progress in ’18 are lower than they were can you just talk us through the dynamics of that? And as part of that mobilization costs? And thirdly, I mean is it too early to look at the OCP for ObamaCare?

Well, in terms of coming in the come in the balance sheet, we’re now got a process where we do -- each year you have to do your impairment testing and your viability thing and everything else. So we do five year numbers, two years bottom up, three years top down, once a year as part of the budget process. And so we'll continue to look at that. The last set of numbers indicated it wasn't going to come on, so we need to get further improvement in the UK business and you know I would expect it to be medium term not short term. In terms of question two, which was margin in '18, you know we did say at the half year that we had a whole series of one offs and you look at the first half, second half split, 51 to 31. It was you know the margin in '16 was flatter, '17 the margin sort of is at a more normal level if you like in terms of the run rate going back to our guidance of 50 and 50 which if you split out the currency out is still holding for '17 and then in '18 you heard Rupert talk about the timing in terms of, there's not going to be a sudden flood of all the new work coming in '18 when it does come there is likely to be upfront costs and the rest of it and you know we've got to look at the accounting standards and the whole recognition process in that. And you got to remember overheads are coming down, until we get that revenue line growing again it's very hard, we've got to -- we've actually got to paddle very fast to stay still, because once you start to get the revenue line growing you get the leverage you will begin to get far more in terms of what happens in margin. OCPs when COMPASS, PECS, et cetera. drops off then that will begin to make a better impact if we can rebid and if we rebid and are successful. So I think it is it’s later on in the process before you'll begin to see the margins coming up.

Your third question was OCP on ObamaCare. No I was -- there's no -- I can’t see any way that we would know that. The contract comes up for an extension year, it's last extension year is June. The contract is profitable and that's not the point, the point is, what do they what will be the volumes of eligibility testing be, we don't see there might be an impact this year and probably not a huge impact, equally in my also along through 2018 and be fine. But the issue there is not an OCP issue, it is how long does it run for, at what rate of volumes employing how many people, because the people are attracted overhead recovery. And it's always been known that margin -- that contract was quite low margin and it is. But the other dynamic is, if we're bidding other contractors that equally have very high levels of overhead recovery, but there's not any -- I can't see that the OCP issue.

Just following up on that, if the contract was terminated wouldn’t you be left with a lot of overhead that'd be quite expensive to restructure and so just going back to the margin point as well, is there an element that new contracts are being rebased at lower margins?

There's a mix, you know the OCP contracts clearly, we’re not going to rebid at the margins that we have with money. So the very little margin ones we will leave at a higher price but the normal way it works is in terms of rebids, if you're earning a reasonable margin you would expect that margin to come down because the risk is getting less because you understand the contract better you're into an extra extension of five or seven years or whatever. So there's clearly pressure on rebids on profitable contracts.

It was a follow up on the ObamaCare question. I mean if it does get terminated, does that not result in a as you might have recovery problems, potential losses and wouldn’t you have to provide for that?

Well you wouldn’t provide for an OCP. Clearly there is two elements to ObamaCare. The first is the margin, it's a relatively low margin business, but you are absolutely right. This is a third of our North American business, so it's soaks up our overhead and we would be left with stranded cost. Given that scale we absolutely would be, but we allude to take cost side -- we've got a strong order book -- we have a strong pipeline in the U.S. and our hope is we would soak up indirect and direct cost as we go forwards, but and that's why we've highlighted in the statements today, clearly there is uncertainty and there is some risk on it , as you rightly pointed on.

And to be fair we've been highlighting that sometime we mentioned it in our Capital Markets Day that this is was the [indiscernible] that we will manage our way through that. The other thing I would just spoke that the North American businesses has proved extremely adept at matching costs down, they took 13 million out of their overheads just as last year.

And I think to your point I mean we see this coming while there is a risk and with the fairly robust order book we're going to price those opportunities pretty sharply to maximize the chances of us winning.

It's George Gregory from Exane BNP. And just three from me. First, maybe just following up on the ACA and how much of the existing revenue relates to the eligibility testing of existing and policies and how much is incremental, just so we get a sense of risk to sort of new additions to the health exchanges. Secondly, on the Ontario provision how much of that incremental 29 million related to the requirement to refresh IT infrastructure before handing it back to the customer. And finally, I wondered if you could just quantify the one-offs that benefitted the EBIT in 2016. You mentioned a stepdown the 51 to the 31, maybe if you could just break those out that would be very helpful? Thanks.

Why don’t I start with that and then maybe Ed comments on ObamaCare. So in terms of the original guidance for 2016 was 50, we have ForEx benefit of 9 and then on top of that we've talked about at the interims we had [indiscernible] contracts that ran longer on the exit than we expected that was like 3 million. We had volume growth in a defense contract in the Middle-East with a few million and we had and extra revenue from the JVs about 10 million split with Northern Rail and AWE and we had BPO private sector exit of about 6 million. So that bridges you from the 52 to the 82. Ed?

Yes, on the CMS or ObamaCare contract, over the three plus years that we've had it, the volumes have increased and the revenues have increased associated with it, so the revenue does vary to some degree with volume, but over the last few years so that volume the revenues has been fairly constant and the volumes haven’t change that much. So we have a fair amount of a repeat business just verifying the information in those contracts as people renew every year and that's the core of the work. As we have said with the republicans trying -- or they're going to repeal it, the real question is, what are they going to replace it, and when is that going to happen? That’s the real question, but when it gets renewed in the next auction year at the end of June, for July 1st of 2017, we're anticipating there'll likely be some revenue decline, because we would anticipate the republicans will begin to try to tighten the funding on that, but we have -- it'll be probably less to do with volumes and more to do with policy and therefore this point in time we just really don’t have any visibility on that.

On the test front, of the 29 million, that is about 2 million that is related to the finalization of the IT implementation, there's about sort of 3.5 million which is our estimate to go and replace the -- refresh the IT at the end of the contract period and it is actually unclear whether we'll have to do that, we depend on lot of round, what service contracts we can buy for the money and how much they cost. And then the balance is around the fact that the IT infrastructure is going to be more expensive to maintain and our view of the lightly saying things against the current labor plan that we have, that we'll likely be able to get over the next seven years. So, the majority of it is provisions against ongoing running costs rather than the specificity of the IT implementation.

Sorry could you just clarify the first, about 2 million that you first mentioned was what?

Yes, that was about 2 -- we're going to spend -- we've OCP in place of about £2 million to finalize and put in the service all elements of the IT implementation and that's going to be live in service by the end of March -- sorry end of May. And according to current plan and probably fully rolled out through June, July.

And that's where the bulk of the costs of being up to note.

Hi, it's Emily Roberts from Deutsche Bank. So first on the six contracts in the pipeline, can you share with us what you can around expected margins on this contract and whether there'll any CapEx associated with any of them? And then secondly please could you give us some color on the marketed contracts of less than 10 million per year in value?

So, I'll take that, no we can't sadly share with you the margins that we've bid on these contracts; it might be placed but I suppose to say they have been eye of Angus and Ed. So it's all their fault. And, but certainly we can't do that. In terms of the wider pipeline Ed under 10 million?

Yes I mean I think that in our LRG business somewhat CG and the U.S. typically have a lot of the smaller contracts and in the U.S. they come under framework contracts and we've had very good success and especially in 2016 in winning more than our fair share of task orders under our framework contracts. So, I think that business has been solid, it's less effected by any kind of delays that slowdown in politics and things like that; but from our perspective the real success of the business in the next couple of years is going to be driven by larger deals.

Thank you. its Cark Green from Credit Swiss. I've got three question. Firstly something you talked about capital market was the increased cyber security investment, could you just give us an update as to how you're thinking about that. And the second question, I'm not expecting any hard numbers on this necessarily, but in terms of the big six contracts, could you kind of rank where they sit in terms of the incremental mobilization cost, in terms on which one might be a bigger drop in the margin and the short term if you're successful. And then there is last one is just, two part question around the JV's. First you any quantify the final dividend from Northern Rail, and second just on AWE, I remember rightly, I think you said that the level of profit, not necessary the margin, but the level of profits would be broadly similar on that contract. So is that live example two to three years down the line, because I think you did [Multiple Speaker].

Over the contract, right. Why don’t we start with cyber, Ed and then Rupert can pick up the big sets.

We made the investment decision over a year ago to make some improvements on the cyber fronts. So those investments, we've been making them or making them, we can only expect that they'll be material in any one year. But I think you should expect that, we will have some level of cyber, capital expenditures for years to come. But they get absorbed in our budgets and I wouldn’t anticipate you seeing a material hit in any single year. As it relates to the mobilization cost --.

I'll do that, we sort of lifted our skirts in sharing which of the elephants we'll ride there. I don’t particularly want to go into the ranking orders as margin or mobilization cost or I just think that that's unwise. Other than to flag out that Grafton doesn't produce revenue for a long time, the others won't produce much revenue until 2018 and we'll build up from them. So they're not going to be an instant hit, but as I said, we win one of those or pray to god, if we were to win two, it will have a major effect on our pipeline and it is important development in order to be able to get back to get -- to be part of our strategy, which is phase three, which is growth we need to be doing some of these stuff. But I what I've never been able to pretend that we could predict is exactly when it would fall, and when the margin would fall, and that’s asking too much, I think too much of them. But at least we're sitting there as promised, with a pipeline that can give us -- that has a little possibility of giving this growth. If we were sitting here in early 2017, and I was say we got a pipeline of 5 billion and it was nothing big in that, that would be something serious worrisome. And the other line I want to just repeat, I think I've said quite a few times before is this thing about, when do the margins get back up to, is it 2020 -- it is 2021, when do they get, I can't tell you precisely, but what I can say is you will be able to come to some conclusions about whether the strategy is really working or not. Really I would thought in back into 2018, because we will either have one of some of these elephants and have the capacity and order book that will allow us to grow, because we aren't going to get our margins back unless we can grow, keep on working the cost there and get some margins, and you're going to see the results of that in a shorter time scale than having to wait till 2020 or 2021. You all know whether we got the order book to allow that happen before that?

Finally, in terms of the joint ventures, the profit contribution from Northern Rail is around 5 million and the dividend coming out 10 million reflect that we were at the end of the theory, reflecting that we were at the end of the franchise period. In terms of AWE over the contract period, we would expect to earn the same profit based on the some of the incentives build-in. But in the short-term, starter contract period historically, it dips a little bit and builds through the contract period. Any other questions?

Richard Jones at Tower House. Just interested in your thoughts about, when you -- on the progress that you’re making and you might be in a position to start paying a dividend again?

Right. I’ve been accused, accused is the wrong word, [indiscernible] about this, I promised to make no mention on this it seems and [indiscernible] getting her dividend. So what we have to be here, is we have to be a realistic. First of all, we want to start to paying dividend. Certainly, I personally have a deep and fundamental dislikes about paying dividends over the cycle by increasing your debt. I just figure it shouldn’t -- you may go and give a special dividend, you may go into share buyback. But actually go and put dividends that you're paying with increased debt is I think a bad idea. So what we will want to look for is to see when the business is firmly and I'm looking forward to where we can see cash flow positive, when we can see its profitable and when we can see that the investment requirements are going to allow room for that happy and rigorous day when can start dividend. Clearly the fact that we are by my [indiscernible] trading profit, ignoring the OCP were is kind of breakeven. That is a step along the way, but we’re still going to have cash out flows in 2017. Our profits are actually getting done in 2017, I don’t think it’s appropriate to do that in the short-term. But we will take an intelligent look at this and what it comes, as I think is the word is sustainable, is we go to be confident, we got to be sustainable.

Thank you very much for coming long. And good luck getting back to the office of the [indiscernible].