8 November 2024
Serco unsuccessful in Australian immigration
rebid
The Australian Government's
Department of Home Affairs has informed Serco that it has been
unsuccessful in rebidding the contract for the provision of onshore
immigration detention facilities and detainee services.
Serco is proud to have provided
immigration services as a partner to the Australian Government
since October 2009. Our performance levels have been high on
the current contract, and we submitted what we believed to be a
compelling bid that would have delivered continued strong
performance to the Australian government as well as meeting our
framework for achieving margins appropriate for the services we
deliver. We will now work to ensure a smooth transition of
these critical services to the new provider.
The end date of our contract is 10
December 2024, after which there is a transition out period of up
to 180 days. If the contract had been retained, we would have
expected it to contribute around £165m of revenue in 2025 and £18m
of underlying operating profit, which is approximately 6% of
analysts' consensus*. We anticipate one-off end of contract
cash costs of around £20m, which have already been provided for, in
accordance with our normal accounting policy.
As part of general business, we
planned for all scenarios related to this rebid. As a result
of the outcome, we will now proceed with a change programme during
the transition period. The programme will reduce the cost
base, so it is appropriate for the remaining operations and ensure
the business is well-positioned for opportunities in the coming
years. Asia Pacific remains an important market for
Serco.
UK
national insurance
Tax changes announced by the UK
Government in the budget on 30 October will impact our business.
We estimate the combination of lowering the earnings
threshold at which employers start paying national insurance
contributions from £9,100 to £5,000 and increasing the rate from
13.8% to 15.0% will increase our direct labour costs by around £20m
per year. The changes will be effective from April 2025 and
we are actively exploring ways to offset these costs.
Guidance for 2024 remains unchanged.
*Serco-compiled consensus for 2025
is £4.9bn of revenue and £282m of underlying operating
profit. Bloomberg consensus is £4.9bn of revenue and £276m of
underlying operating profit as at 6 November 2024.
This announcement contains
inside information.
Ends.
For further
information, please contact:
Paul Checketts, Head of Investor Relations |
+44 (0) 7718 195 074 |
paul.checketts@serco.com
Scot Marchbank, Group Communications and
Marketing Director | +44 (0) 7958 675 706 |
scot.marchbank@serco.com
About Serco
Serco brings together the right
people, the right technology and the right partners to create
innovative solutions that make a positive impact and address some
of the most urgent and complex challenges facing the modern
world.
With a primary focus on serving
governments globally, Serco's services are powered by more than
50,000 people working across defence, space, migration, justice,
healthcare, mobility and customer services.
Serco's core capabilities include
service design and advisory, resourcing, complex programme
management, systems integration, case management, engineering, and
asset & facilities management.
Underpinned by Serco's unique
operating model, Serco drives innovation and supports customers
from service discovery through to delivery.
More information can be found
at www.serco.com
Forward looking statements
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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",
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negative or other variations or comparable terminology identify
forward looking statements. By their nature, these forward
looking statements are subject to a number of known and unknown
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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;
cyber-attacks; and pandemics, epidemics or natural disasters.
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 (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority), 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.
LEI: 549300PT2CIHYN5GWJ21