REG - Serco Group PLC - Serco unsuccessful in Australian immigration rebid

SercoAnnouncement

08/11/2024 07:00

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RNS Number : 4457L  Serco Group PLC  08 November 2024

 

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 (http://www.serco.com)

 

Forward looking statements

This announcement contains 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", "target", "goal", "ambition", "intend" or, in
each case, their 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 risks, uncertainties
and contingencies, and actual results and 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

 

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