Further to the announcement of 23 May 2012, Serco Group plc (Serco), the international services company, announces today that it has completed the transaction with AMEC plc for the sale of Serco's Technical Services (TS) business for cash consideration of £137m. 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's TS business provides consulting and project solutions primarily to the UK civil and nuclear defence markets, and has a diverse customer base covering the majority of UK nuclear sites. The business has around 600 employees, most of whom are nuclear qualified and experienced personnel. Under Serco's continued ownership the business was expected to achieve limited future revenue growth in a highly competitive market, where future growth is likely to be more orientated toward the civil market and in particular the build of new nuclear power stations. Therefore an integrated engineering company such as AMEC plc will be better placed to benefit from this shift, given the breadth of their support to the energy market.
For the year to 31 December 2011, the financial result for TS was approximately £70m of revenue and £13m of Adjusted operating profit. The disposal proceeds of £137m therefore represent a multiple of around 10.5 times Adjusted operating profit. The disposal will have a small dilutive impact on Adjusted earnings. The provisional value of net assets being disposed of is approximately £75m, which includes goodwill of £64m. The provisional accounting profit on disposal, after disposal-related costs of around £3m, is therefore expected to be approximately £60m.
Christopher Hyman, Chief Executive of Serco Group, said: "I would like to thank our colleagues for their hard work and commitment whilst part of Serco, however, as we take Serco forward, this area of the business has become non-core to the future development of the Group. We will continue to serve the defence and science sectors, notably AWE and the National Nuclear and National Physical laboratories, as well as developing our proposition in energy management services. We believe a higher strategic value for these specialist consulting skills can be achieved under alternative ownership, leaving Serco to focus on our long-term contract model delivering high quality and efficient services. We will seek to favourably reinvest by selecting the best opportunities and continue to build a balanced portfolio of contracts in markets and geographies around the world."