Public services outsourcer Serco Group (LON:SRP) has had its contract to run Acacia Prison in Western Australia extended for a further five years.
The Western Australian government has contracted Serco to continue running the medium security prison until May 2021.
It comes as ratification for the outsourcer after the death of an inmate sparked riots at its Christmas Island immigration detention centre last November.
Acacia Prison is Australia’s sole private-sector adult prison and Serco claims it is the most efficient prison in the state with cost per prisoner per day 44% lower than the average.
The total value of the contract extension is expected to be around £166mln (A$324mln).
“This announcement is not only an endorsement of the work our team at Acacia do, but also of Serco's ability as a prison operator, focusing on the rehabilitation of prisoners and efficient management of prisons, in Australia and elsewhere," said chief executive Rupert Soames.
Australia is one of Serco’s key markets and the extension signals renewed confidence in the group.
Robin Speakman, analyst at Shore Capital, said the contract extension “eased any fears over the continuity of the business in Australia but we can expect a further challenging year.”
Serco has lost three–quarters of its value in recent years as it has been beset with operational issues.
In 2013, the group had to repay £64mln following an investigation by the Serious Fraud Office after it overcharged the British government for tagging former prisoners.
Subsequently, it lost the contracts to run the Docklands Light Railway in London’s East End and the Colnbrook immigration centre near Heathrow.
In December, Serco issued another profit warning after the sale of its business process outsourcing (BPO) offshore private sector back office contracting operation.
Shares today were unchanged at 80p. Full year results for 2015 are due tomorrow.