15th Dec 2015 08:19
LONDON (Alliance News) - British outsourcing company Serco Group PLC Tuesday said it has made a U-turn on its previous plans and now intends to retain its Environmental Services and Leisure businesses.
The company struck a deal back in September to sell its offshore business process outsourcing operations to US private equity house Blackstone for GBP250.0 million. Serco has previously said the business is expected to deliver a GBP20.0 million trading profit in 2015, with the deal expected to be completed before the end of the year.
The sale of the business is expected to drive a large decline in revenue and profit in 2016.
Serco has forecast revenue for 2015 to come in at around GBP3.50 billion with trading profit set to come in at around GBP95.0 million. However, on the assumption that sale will go through, the company is expecting revenue to plummet to GBP2.80 billion in 2016 with trading profit expected to almost half to GBP50.0 million.
That sale prompted Serco to conduct a review of its plan to sell its Environmental Services and Leisure businesses, with Serco making a U-turn on Tuesday.
"The recent agreement to dispose of the offshore private sector BPO operations has prompted us to review the previously stated intention to also dispose of our Environmental Services and Leisure businesses," said Serco.
"Our conclusion is that, for both strategic and financial reasons, the interests of the group will be best served by retaining these businesses within the portfolio," the company added.
Serco said the businesses "deliver frontline services" to its public sector customers, singling out the services provided to local authorities in the UK where there is "real merit in retaining a broad offering".
"Furthermore, the Environmental Services and Leisure businesses have continued to perform well both financially and operationally, and have a strong pipeline of opportunities," the company added.
Serco shares were down 1.1% to 95.60 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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