LONDON (Reuters) - British outsourcer Serco (SRP.L) has signed a 1 billion pound contract to continue running Australia’s onshore immigration detention services, the company said on Wednesday.
Though less lucrative than in previous years, the work is a welcome boost to Serco, the share price of which has been in freefall after a string of contract failures and profit warnings.
The contract, the value of which is dependent on the number of people in Serco’s care, had been the the company’s biggest in 2013, accounting for a tenth of its revenue. Its value, however, has plunged more recently as Australia pushes ahead with tough policies to deter refugees arriving by boat.
In mid-2013 the number of immigrants under Serco’s watch had reached 10,000 but now stands at about 3,000, it said.
Serco said the new five-year deal for services including accommodation and education at immigration detention centres was valued by the Australian government at 1 billion pounds but that its own valuation is lower, based on the number of people in its care.
The company did not say how much lower but estimated that revenue in the first year of the contract would be 100-150 million pounds. The contract will start immediately.
Serco, which announced an emergency cash call and restructuring plan alongside a profit warning in November, was named preferred bidder for the work in September but said a deal was subject to commercial negotiations.
Reporting by Neil Maidment; Editing by David Goodman