(Reuters) – Serco Group shares fell more than 12% on Friday after the British outsourcing company said it was unsuccessful in its bid to renew an immigration services contract with the Australian government.
Serco has been providing immigration services to the Australian government since October 2009. The contract is set to expire on Dec. 10, the company said.
Brokerage Jefferies said the “loss of a long-standing and relatively high margin contract is a blow to (Serco’s) regional operations”.
The company provides defence, security, immigration, health and transport services for governments.
Had the contract been retained, it would have contributed around 18 million pounds ($23.30 million) of Serco’s 2025 underlying operating profit, amounting to about 6% of analysts’ consensus of 282 million pounds, the company said.
Separately, Serco said that the UK government’s national insurance tax changes will increase its direct labour costs by around 20 million pounds per year and it was exploring ways to offset these costs.
British finance minister Rachel Reeves raised employers’ social security contributions, or social security, contributions by 1.2 percentage points to 15% from April next year.
($1 = 0.7724 pounds)
(Reporting by Shanima A in Bengaluru; Editing by Mrigank Dhaniwala)
