Sandwell Environmental Services Contract

Serco signs new £650m contract to deliver environmental services for Sandwell
Metropolitan Borough Council

9 November 2010

Serco Group plc (Serco), the international service company, is pleased to
announce that it has signed a new contract valued at £650m over 25 years with
Sandwell Metropolitan Borough Council (Sandwell) to deliver its new Waste
Improvement Plan (WIP). The contract signature follows the announcement in
August that Serco had been selected preferred bidder. Under the contract we
will provide refuse collection, recycling, waste processing and disposal, and
street cleaning services, including the construction of a new waste transfer
station.

Our innovative approach to this contract, which commences on 15th November,
will increase recycling rates to 60%, deliver cost savings of at least £30m and
reduce carbon consumption across the vehicle fleet by 40%. The approach will
help the Council meet its financial challenges and introduce operational
improvements that respond to the needs and requirements of both Sandwell and
its residents.

The introduction of a new seven days-a-week service over longer hours will
improve street cleanliness. Weekly bin collections will be developed with the
introduction of zonal operations where all services including recycling are
co-ordinated by area, reducing the number of vehicle movements.

Initiatives such as the introduction of a weekly food waste collection will
improve recycling rates from less than 40% to 60% by 2020. This will
significantly reduce the amount of waste sent to landfill, help the Council to
meet Government recycling targets, reduce costs such as landfill taxes and
result in potential cost savings for the Council of £1.75m per year or £30m
over the length of the contract.

Serco will also introduce hybrid diesel and electric vehicles, whose mechanical
compaction and lift gear will be powered electrically, a first for a UK local
authority. This, together with the introduction of route optimisation
technology and engine management systems, will achieve an overall carbon
reduction of 40% across the vehicle fleet during the term of this contract.

We have engaged with local community and third sector partners to implement a
number of community support programmes. For example, an education programme
will be provided for local schools to build awareness of environmental and
sustainability issues amongst pupils. This includes providing a fully equipped
Eco-bus fitted out with educational technology and activities.

Serco will also introduce a Recycling Improvement Fund, which will see the
local community being incentivised and subsequently rewarded for increased
recycling participation, with direct re-investment into local projects such as
creation of community allotments and wildlife areas, or the refurbishment of
parks and play areas.

Councillor Derek Rowley, Cabinet Member for Safer Neighbourhoods, welcoming the
contract signature with Serco, said: "This partnership allows us to provide a
first class service to the people of Sandwell. When fully operational, it will
be among the very best in the country and I'm confident people across the
borough will enjoy its benefits."

Christopher Hyman, Chief Executive of Serco Group plc, said: "Serco is
delighted to have signed this important new contract with Sandwell and we look
forward to delivering substantial improvements in the efficiency and quality of
these important services for both the Council and local residents. This
contract is our largest ever environmental services contract and represents a
significant development for our environmental services business where we have a
strong track record for delivery and innovation."

Ends

For further information please contact Serco:

Jill Sherratt, Head of Investor Relations T [phone]

Dominic Cheetham, Director of Corporate Communications T [phone]

Marcus De Ville, Head of Media Relations T [phone]

About Serco

Serco is a FTSE 100 international service company, which combines commercial
know-how with a deep public service ethos.

Around the world we improve essential services by managing people, processes,
technology and assets more effectively. We advise policy makers, design
innovative solutions, integrate systems and - most of all - deliver to the
public.

Serco supports governments, agencies and companies who seek a trusted partner
with a solid track record of providing assured service excellence. Our people
offer operational, management and consulting expertise in the aviation, BPO,
defence, education, environmental services, facilities management, health, home
affairs, information and communications technology, knowledge services, local
government, science and nuclear, transport, welfare to work and the commercial
sectors. More information can be found at www.serco.com

About Serco in Environmental services

Serco currently provides environmental services to 15 local authorities
throughout the UK and has achieved significant growth in recent years, due to
our ability to develop operational solutions which respond to the needs and
aspirations of our local authority customers and the general public alike. This
contract represents a further development of our business, with the inclusion
of waste processing and disposal.