Serco, the international services company, has signed an agreement to dispose of most of its operations in Germany in a transaction with the local management team.
On June 29th, most of the business was transferred in return for net nil cash consideration.
Serco Germany was originally established in 1961 to provide installation and support services for the German air defence radar systems. The business subsequently diversified into additional engineering and administrative support for the defence sector as well as training services.
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Serco now says it sees "limited revenue growth potential" in Germany but has retained a few important contracts, including an IT services agreement with the European Space Agency.
The contracts being transferred have delivered combined annual revenue of approximately £90m. Whilst revenues have been growing in recent years, adjusted operating profit has been at a broadly breakeven position.
The disposal will have a "broadly" neutral impact on the main group's adjusted earnings. The provisional value of net assets being disposed of is approximately £25m, which includes goodwill of around £22m.
The provisional accounting loss on disposal, after disposal-related costs of around £2m, is expected to be approximately £27m. An existing loan of £12m will be settled by Serco over the next 18 months.
Christopher Hyman, Chief Executive of Serco Group, said: "I would like to thank our colleagues for their hard work and commitment in our German business whilst part of Serco, however, as we take Serco forward, this area of the business has become non-core to the ongoing development of the group."
BS
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