Serco does about turn on sale of Environmental Services and Leisure businesses

The FTSE 250 company made the announcement on Tuesday, citing strategic and financial reasons.

It follows the disposal of its offshore private sector Business Process Outsourcing operations to private equity funds announced in September.

Serco said that agreement prompted it to review the intention announced in November 2014 to sell its Environmental Services and Leisure businesses.

It concluded that strategically and financially, the interests of the group will be best served by retaining them.

“The Environmental Services and Leisure businesses have continued to perform well both financially and operationally, and have a strong pipeline of opportunities,” it said.

It also said that the business provide frontline services to public sector customers, in line with the rest of the group’s operations.

“In particular, they serve Local Authorities in the UK, to whom we provide a number of other services and we feel that there is real merit in retaining a broad offering to these important customers."

It follows a report in October from Health Club Management magazine that the sale of the leisure services business would be delayed by up to a year.

“It’s thought that the complexity of divesting from the various leisure and environmental contracts it has in place with local authorities is part of the reason for the slow progress,” the magazine reported at the time.

Shares in Serco were in the red in early trading, down 0.9p (0.93%) to 95.8p per share at 0819 GMT.