Company Announcements

Serco signs £800m ten-year Prisoner Escort and Custody Services contract

30 October 2019

Serco Group plc

LEI: 549300PT2CIHYN5GWJ21

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."

Ends

For further information please contact Serco:

Stuart Ford, Head of Investor Relations T +44 (0) 7738 894 788

Marcus De Ville, Head of Media Relations T +44 (0) 7738 898 550

About Serco

Serco is a leading provider of public services. Our customers are governments or others operating in the public sector.  We gain scale, expertise and diversification by operating internationally across five sectors and four geographies: Defence, Justice & Immigration, Transport, Health and Citizen Services, delivered in UK & Europe, North America, Asia Pacific and the Middle East.

More information can be found at www.serco.com

Forward-looking statements

This announcement contains statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature.  All statements other than statements of historical fact are forward-looking statements.  Generally, words such as "expect", "anticipate", "may", "could", "should", "will", "aspire", "aim", "plan", "target", "goal", "ambition", "intend" and similar expressions identify forward-looking statements.  By their nature, these forward-looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements.  Factors which may cause future outcomes to differ from those foreseen or implied in forward-looking statements include, but are not limited to: general economic conditions and business conditions in Serco's markets; contracts awarded to Serco; customers' acceptance of Serco's products and services; operational problems; the actions of competitors, trading partners, creditors, rating agencies and others; the success or otherwise of partnering; changes in laws and governmental regulations; regulatory or legal actions, including the types of enforcement action pursued and the nature of remedies sought or imposed; the receipt of relevant third party and/or regulatory approvals; exchange rate fluctuations; the development and use of new technology; changes in public expectations and other changes to business conditions; wars and acts of terrorism; and cyber-attacks.  Many of these factors are beyond Serco's control or influence.  These forward-looking statements speak only as of the date of this announcement and have not been audited or otherwise independently verified.  Past performance should not be taken as an indication or guarantee of future results and no representation or warranty, express or implied, is made regarding future performance.  Except as required by any applicable law or regulation, Serco expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in Serco's expectations or any change in events, conditions or circumstances on which any such statement is based after the date of this announcement, or to keep current any other information contained in this announcement.  Accordingly, undue reliance should not be placed on the forward-looking statements.