Serco Group plc (‘Serco’ or ‘the Group’), the international service company, has signed a contract with the UK Ministry of Justice (MoJ) to provide Prisoner Escort and Custody Services (PECS) for the South of England region. The new contract will start on 29 August 2020 and has a total estimated value to Serco of approximately £800m over the ten-year term.
Serco will be responsible for the safe and secure transportation of prisoners between prisons and courts, and for the safe and secure custody of prisoners while at court. We are investing in a new fleet of vehicles and an IT upgrade programme which we are confident will deliver further improvements to the strong performance and innovation we have already delivered over recent years.
The contract will incur mobilisation and transformation costs of around £4m that will be charged to profit in 2020 in accordance with IFRS15.
The contracts tendered by the MoJ were for two regions of England and Wales, broadly North and South. Serco has been selected to provide the service across the whole of the South of England region, which includes an area as far north as Gloucestershire, Northamptonshire, Cambridgeshire and Norfolk. This represents a significantly increased geographical area in comparison to our current contract, which is for just one of four regions (being London and the East of England). Serco’s current contract was awarded in March 2011 and was valued at approximately £285m over its initial seven-year period; it was subsequently extended through to August 2020. Serco’s revenue on the current contract for the 2019 financial year is expected to be around £41m, and losses on the current contract, which in our Trading Profit are offset by the utilisation of the Onerous Contract Provision (OCP), are anticipated to be around £6m. The current operations handle approximately 24,000 prisoner movements a month, servicing 67 courts utilising 8 vehicle bases. The new contract will service 104 courts and utilise 16 vehicle bases.
Rupert Soames, Serco Group Chief Executive, said: “We are delighted to have been awarded this major contract to provide prisoner escort and custody services for the Ministry of Justice across the whole of the South of England region. Looking after prisoners as they are transported between secure locations and during their time in court is a sensitive and demanding role and their welfare and security is at the heart of our operations. In recent years our performance has steadily and significantly improved, and today our team provides an outstanding service in what are often very challenging conditions.”