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Serco purchases remaining stake in Australian defence and marine services joint venture

Date: 07 Nov 2012

Serco Group plc (Serco), the international services company, announces that it has signed an agreement to purchase the remaining 50% equity stake in DMS Maritime Pty Ltd from its joint venture partner P&O Maritime Services for a consideration of A$106m (approximately £68m) payable in cash on completion.  DMS Maritime is expected to have net debt of around A$38m on completion, giving a valuation for 100% of the business on a cash-free and debt-free basis of A$250m (approximately £160m).  The transaction strengthens Serco's position as a leading defence services provider in Australia and in the growing marine services market.

DMS Maritime is one of Australia's largest maritime service operators, with facilities in every major port and a technical support network that extends a wide range of engineering and technical services across Asia Pacific.  These include: integrated management of through-life support covering vessel design, build, modification, engineering and maintenance; marine systems support; port services; maritime training; and specialist services such as under-sea exploration and recovery.  DMS Maritime manages, operates and maintains over 600 vessels in the region, with commercial, defence and government agency customers including the Royal Australian Navy and the Australian Customs & Border Protection Service.  Its highly skilled and experienced workforce of around 450 employees and contractors supplies substantial expertise in project management, systems integration and engineering to the marine industry.

This transaction is key to Serco's strategy to grow our defence operations in Australia, and in particular to pursue more complex opportunities that may emerge from new capability requirements for the Australian Defence Force to be detailed in its forthcoming White Paper 2013.  It will allow Serco to fully leverage DMS Maritime's defence systems integration, supply chain management and through-life support capabilities across the maritime, land, systems and ultimately aerospace domains.  The transaction additionally provides Serco with a platform to further expand the breadth of our marine services to the commercial maritime market.  This includes port infrastructure and related services to the resources sector, driven by the ongoing high demand for commodities and energy.

For the year to 31 December 2012, DMS Maritime is expected to report revenues of approximately £80m and an underlying operating profit of approximately £12m.  As at 31 December 2011, DMS Maritime had reported total assets of approximately £42m.  Serco will consolidate the remaining 50% stake it has purchased following completion of the transaction, which subject to consents and statutory approvals is expected in the coming weeks.  Transaction costs of approximately £2m are expected to be incurred.  The purchase will be funded from Serco's existing debt facilities.

Expectations are for continued good revenue growth and for margins to be maintained.  DMS Maritime has an order book of over £500m; Serco will include within its order book the additional 50% that it now owns.  The transaction is expected to be accretive to earnings in the first full year following completion.

Christopher Hyman, Chief Executive of Serco Group plc, said: "DMS Maritime is a high quality business that we have known intimately since Serco first established the joint venture some 15 years ago to provide a complex range of harbour and offshore services for the Royal Australian Navy.  The business shares Serco's commitment to customer focus, has grown well and will be further enhanced under our full ownership.  We believe that it will benefit from the continuing development of our defence business from a base support services provider to a complex services integrator, and from the significant opportunities that we see in the marine systems integration and services market - both for government and private sector customers."


For further information please contact Serco:

Stuart Ford, Head of Investor Relations T +44 (0) 1256 386 227

Marcus De Ville, Head of Media Relations T +44 (0) 1256 386 226

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Last Updated: 29 May 2015