Serco's latest asset disposal (see Serco exits occupational health),is its ‘London streets maintenance and UK transport technology business’, which has been sold to US-based transportation IT giant Cubic Corporation for £43.5m. Cubic has a growing presence in the UK transport sector, running the TfL London Oyster card scheme and the ITSO smart ticketing rollout for Southern Railway (see here and here).
The business sold to Cubic made revenue of £42m in FY12 and £8m in adjusted profit. It provides maintenance for transport infrastructure such as traffic signals and CCTV systems in London as well as the design, installation and maintenance of UK transportation management technology. However acting CEO Ed Casey said that these activities have become non-core in the UK, because of the ‘limited synergies’ with its core UK transport portfolio of operating public transport networks, which include light and heavy rail, ferry services and cycle hire.
This view doesn’t quite seem to stack up with our analysis of Serco’s UK transport activities though, since at least two big London transport deals, ‘Boris Bikes’ and the fully automated Docklands Light Railway, are both heavily reliant on technology. One of the differentiators Serco offered this space was its strengths in front line support services and technology services. As HotViews readers will know, Serco also disposed of its IT infrastructure business to Sungard earlier this year (see here).
Serco is going through a very difficult time right now with top management departures and the Serious Fraud Office (SFO) investigation into its electronic monitoring contract (see here and work back). This latest disposal only adds to further uncertainty around the future shape of Serco’s IT-enabled support services operations once the dust has finally settled.