Disposal of the majority of operations in Germany
Disposal of the majority of Serco's operations in Germany
2 July 2012
Serco Group plc (Serco), the international services company, has signed an
agreement to dispose of the majority of its operations in Germany in a
transaction with its local management team. With effect from 29 June 2012, the
operations were transferred in return for net nil cash consideration. The
transaction is in line with Serco's stated strategy to proactively manage its
portfolio of contracts, assessing operations for strategic fit together with
their expected future levels of performance and returns.
Serco Germany was originally established in 1961 to provide installation and
support services for the German air defence radar systems. The business
subsequently diversified into additional engineering and administrative support
services for the defence sector as well as training services, facilities
management, field installation and maintenance services, and IT consulting and
related services.
Serco sees limited revenue growth potential or opportunity to achieve the
necessary improvement in returns from these contracts. There are few synergies
with the rest of the Group. Where appropriate, certain contracts have been
retained, such as IT services to the European Space Agency and facilities
management for State Street in Europe.
The contracts being transferred have delivered combined annual revenue of
approximately £90m. Whilst revenues have been growing in recent years, Adjusted
operating profit has maintained a broadly breakeven position. The disposal will
have a broadly neutral impact on Adjusted earnings. The provisional value of
net assets being disposed of is approximately £25m, which includes goodwill of
around £22m. The provisional accounting loss on disposal, after
disposal-related costs of around £2m, is therefore expected to be approximately
£27m. An existing loan of approximately £12m will be settled by Serco over the
next 18 months.
Christopher Hyman, Chief Executive of Serco Group, said: "I would like to thank
our colleagues for their hard work and commitment in our German business whilst
part of Serco, however, as we take Serco forward, this area of the business has
become non-core to the ongoing development of the Group. Our withdrawal from
these operations will allow Serco to focus on selecting the best future
opportunities and continue to build a balanced contract portfolio in markets
and geographies around the world, where we can deliver economies of scale or
the transfer of our expertise to the greater benefit of customers."
Ends
For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 1256 744 278
Clive Barton, Corporate Affairs Director T +44 (0) 1256 744 123
Notes
Adjusted operating profit and Adjusted profit before tax are before
amortisation of intangibles arising on acquisition, acquisition-related costs,
and profits and losses on business disposals, as shown on the face of the
Group's consolidated income statement and the accompanying notes. For Adjusted
earnings per share it is also before tax arising on the adjusting items.
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
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