GCIFTSE 250 movers: Serco tanks on lost contract, while NI tax changes bite
Shares in Serco fell 8% after it was revealed that the company had lost a long-running Australian immigration detention centres contract while simultaneously warning of rising labour costs.
The public sector-focused outsourcing group said it has been unsuccessful in rebidding for the contract with Australia's Department of Home Affairs for the provision of onshore immigration detention facilities and detainee services - a contract that it has repeatedly won since 2009 which would have contributed £165m in revenue in 2025.
Serco also said that changes to employer national insurance contributions announced in last week's autumn budget will increase labour costs by £20m a year from next year, causing shares in sector peer Mitie to also tank 9%.
Last week's announced tax changes in the autumn budget mean that the earnings threshold at which employers start paying national insurance contributions will fall from £9,100 to £5,000, while the rate being paid will rise from 13.8% to 15.0%.
The new rules, set to kick in in April 2025, were also the reason why pub and restaurant owner Mitchells & Butlers and bakery chain Greggs were falling sharply. Deutsche Bank downgraded its ratings on both stocks, saying that the new tax changes disproportionately impact a "labour-intensive leisure sector". M&B was cut to 'hold', while Greggs was lowered to 'sell'.
Burberry was also lower, falling in sympathy with the rest of the luxury sector after a disappointing set of results from Swiss luxury accessories firm Richemont, which blamed weak conditions in China for a fall in quarterly sales.
Leading the upside was Wood Group as its stock attempted to recover after more than halving the previous session following the news that the engineering services group is bringing in Deloitte to conduct a review of the business. The review, which will focus on certain contract write-offs could result in prior-year restatements, the company said.
Great Portland Estates was also performing well after Citi upgraded its stance on the real estate group to 'buy', saying it was the most attractive time to buy in the last decade.
FTSE 250 - Risers
Wood Group (John) (WG.) 57.30p 14.97%
Wizz Air Holdings (WIZZ) 1,511.00p 9.81%
Endeavour Mining (EDV) 1,666.00p 4.06%
TI Fluid Systems (TIFS) 170.20p 3.15%
Great Portland Estates (GPE) 313.00p 2.29%
Lancashire Holdings Limited (LRE) 674.00p 2.28%
Helios Towers (HTWS) 108.60p 2.26%
Essentra (ESNT) 157.20p 1.95%
Raspberry PI Holdings (RPI) 335.40p 1.95%
NB Private Equity Partners Ltd. (NBPE) 1,596.00p 1.92%
FTSE 250 - Fallers
Mitie Group (MTO) 108.20p -9.23%
Serco Group (SRP) 162.40p -8.46%
Mitchells & Butlers (MAB) 234.00p -7.33%
Burberry Group (BRBY) 813.60p -6.55%
Close Brothers Group (CBG) 205.60p -6.29%
Foresight Environmental Infrastructure Limited (FGEN) 79.60p -6.13%
Greggs (GRG) 2,638.00p -5.99%
Trainline (TRN) 399.40p -4.17%
Ninety One (N91) 161.70p -3.75%
BlackRock World Mining Trust (BRWM) 532.00p -3.62%
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.