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The company will operate as well as handle both Tinsley House and the Brook House Immigration Removal Centres under the new Gatwick Immigration Removal Centres deal. The company will also deliver Pre-departure accommodation services which are currently operated under a distinct contract and serviced from a particular division within Tinsley House. On 20th February 2020, the Serco Group Plc (LON:SRP) announced the information that the company has entered into a new agreement with the Immigration Enforcement division of the United Kingdom Home Office to handle the Gatwick Immigration Removal Centres. The contract is anticipated to commence on 21st May 2020. The projected total contract value is around £0.2 billion to Serco Group Plc over an initial eight-year period. Â
As per the company information, Serco Group Plc will be taking care of entire aspects of security, detainee protection and welfare provisions jointly with catering and facilities management. But it excludes healthcare facilities that are managed under a separate agreement inked by NHS England.
Serco Group Plc will be hiring nearly 170 new personnel which will increase the number of employees to around 580. Through this the company intends to ensure consistency and stability in the care and support for residents.
As per the company information, the management support and training will be arranged for the current and new employees so that there is a positive culture as well as high levels of professional conduct are maintained. The company will also launch a new programme for residentsâ activities which would consist of focused activities and an expanded core day to enhance the centre environment for all work staff and detainees, in-line with Home Office requirements.
Serco Group Plc has been facing troubles with of some other government contracts in recent times. In the year 2019, the outsourcing firm confessed to deceiving the government authority regarding profits which was made on the Ministry of Justice agreements for the electronic labelling of lawbreakers during the years 2010 to 2013. It was penalised around £19 million, and two of its erstwhile executives are expected to confront trial in the year 2021. The company presently operates several prisons and other immigration confinement centre such as Yarlâs Wood, which was inspected over charges of sexual assault and abuse in the year 2015.
The company is now mainly concentrating on work related to the public sector internationally. Since Chief Executive Rupert Soames took the charge of the company in the year 2014, it has worked hard to reorganise itself. In the year 2019, the company achieved £1,800 million of work on new contracts delivering housing for refuge seekers in the United Kingdom for the next ten years.
Lastly, Chief Executive of Serco Group Plc stated in his comment that the company is delighted to win this current contract to operate the Gatwick Immigration Removal Centres. The company has a vast experience of taking care of individuals in the immigration system both internationally and in the United Kingdom. He further stated that the company knows that team and executives at Gatwick Immigration Removal Centres, having given their best to achieve advancements in recent years, and the company also wants to work with all of them.
Serco Group Plc
Serco Group Plc (LON:SRP) is a public services expert. It focuses on the providing of necessary public services with more than 50,000 workforce who are working worldwide in Immigration, Health, Transport, Justice, Defence and other Citizen Services throughout the state, national, and local government. The company is an FTSE top 250 company, which delivers more than five hundred contracts internationally. It operates globally throughout four geographies, i.e. the Middle East, North America, UK & Europe, and the Asia Pacific as well as throughout five sectors, i.e. Transport, Defence, Justice & Immigration, Health and Citizen Services.
SRP â News Updates
On 3rd February 2020, the company declared that its total issued share capital consists of 1,233.4 million shares of 2 pence each with one voting right per share. The company has zero shares in Treasury stock. Therefore, the total number of voting rights is 1.2 billion.
SRP â Trading Updates
On 12th December 2019, the company announced its update on trading for the 2019 financial year and preliminary view for the year 2020.
The company reported solid revenue improvement in the second half of the year 2019. The revenue expected to increase by 14 per cent to £3.2 billion in the year 2019. The revenue income includes five per cent contribution from acquisitions, two per cent currency benefit and seven per cent organic growth.
The revenue growth is expected to approach 20 per cent in the second half of the FY2019, out of which 8 per cent will be as a result of the five months of contribution of the Naval Systems Business Unit (NSBU) acquisition around and 10 per cent will result from organic growth.
The year 2019 is the third year after 2018 and 2017, in which revenue will be less than order intake. Due to that a record order intake at over £5 billion and a book-to-bill ratio at 150 per cent have been reported.
The company expects constant robust growth in the year 2020 with revenue between £3.4 billion to £3.5 billion. It includes a total increase of 7 per cent to 8 per cent, which assumes organic growth of about 4 per cent, a currency headwind of around 2 per cent and an acquisition contribution of 5 per cent to 6 per cent from the annualisation of NSBU.
The anticipated Underlying Trading Profit increased by approximately 20 per cent to nearly £145 million, which consist of formerly declared impact of PECS transition expenses of £4 million and an anticipated £3 million to £4 million unfavourable currency effect.
SRP - Stock Price Performance
On 21st February 2020, at around 10:30 AM (GMT), by the time of writing this report, the stock of Serco Group Plc traded at a price of GBX 155.0 per share on the London Stock Exchange, an increase in the value of around 0.19 per cent or GBX 0.30 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 154.70 per share.
At the time of writing, the market capitalisation of Serco Group Plc was £1.89 billion with regards to the current market price of the stock. The free float and outstanding shares of Serco Group Plc were reported at 1.21 billion and 1.22 billion, respectively.
The share price of Serco Group Plc recorded at GBX 169.0 as on 06th February 2020 was its 1-year peak price, whereas the share price recorded at GBX 116.60 as on 21st February 2019 was the 1-year low share price. The current share price was lower by 8.3 per cent from the 1-year high price, whereas the current share price was higher by 32.9 per cent from the 1-year low price.
The beta of the stock has been reported at a value of 1.23, representing the fact that the movement of the share price of the company has higher volatility as compared with the movement in the comparative benchmark index.
