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Serco Group offloads majority of German operations

Published: 20:50 02 Jul 2012 AEST

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Serco Group (LON:SRP) has decided to dispose of most of its operations in Germany to focus on other geographies that offer better growth potential.

The government services group said this morning that it has transferred the assets to its local management team in return for no consideration.

Serco explained that its German assets have limited revenue growth potential and have few synergies with the rest of the group.

Serco has retained some of its existing contracts in the country including IT services to the European Space Agency and facilities management for State Street in Europe. The contracts that are being transferred generated total annual revenues of £90 million.

While revenues have been on the rise in the recent years, operating profits have been around the breakeven level, which means the sale is not expected to make an impact on earnings.

The provisional accounting loss on the disposal is expected to amount to £27 million.

An existing loan of approximately £12m will be settled by Serco over the next 18 months.

“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,” said CEO Christopher Hyman.

Shares in Serco changed hands at 541.5 pence at 11:40am, giving the group a market cap of nearly £2.7 billion.

 

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