Serco Group Plc (SRP) won a 120 million-pound ($200 million) contract extension to operate a London prison, a day after the U.K. services provider settled its bill for incorrect invoicing in a Ministry of Justice inquiry.
Serco has managed the HMP Thameside prison in East London’s Plumstead district since it opened in March 2012 under a 415 million-pound, 26 1/2-year order. The extension will run for 22 years and includes a 36 million-pound, 18-month construction phase, Serco said in a statement.
“We are delighted to have been awarded this contract expansion to extend the size of the prison at Thameside which will support the MoJ in its program to modernize the U.K. prison estate,” said James Thorburn, Serco’s managing director for home affairs.
Serco rose 6.2 percent yesterday after the company reached a settlement with the U.K. government over claims it overcharged for the electronic tagging of prisoners. Shares were down 0.8 percent at 472.90 pounds as of 1:16 p.m. London time.
The Hook, England-based company agreed to pay 68.5 million pounds to settle the inquiry that has caused the resignation of its chief executive officer and shaved 30 percent off its share price since July.
Serco’s settlement and the absence of additional issues are “positive” steps in rebuilding the company’s credibility and “significantly” shrinks the risk of it being barred from future U.K. government work, UBS said in a note today.
Serco can’t gain new U.K. public contracts before the government signs off on its satisfaction with the company’s corporate renewal plans, a company spokesman said. The report is expected to be announced in January.
To contact the reporter on this story: Natasha Doff in London at email@example.com
To contact the editor responsible for this story: David Risser at firstname.lastname@example.org