Serco offloads German unit to look for growth

OUTSOURCER Serco yesterday announced that it was disposing of the majority of its German interests in pursuit of growth elsewhere.

The FTSE 100 company said the local management team would take over the German business.

Serco sees little chance to extend revenues in Germany and is to focus its efforts on other territories.

But the company said that it had retained some contracts in the country including IT services to the European Space Agency and facilities management for State Street in Europe.

Serco said that while the contracts generate around £90m in revenue a year, operating profits have hovered around the break-even mark. There was therefore no cash charge for the handover.

The company said the provisional value of net assets being disposed of is approximately £25m, including goodwill of around £22m. The provisional accounting loss on disposal, after costs of around £2m, is expected to be around £27m, and a loan of around £12m will be settled by Serco within 18 months.

Chief executive Christopher Hyman said: “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 to the greater benefit of customers.”

Serco Germany was originally established in 1961 to provide installation and support services for the German air defence radar systems.