Serco forecasts profits growth as it acquires German immigration firm

This comes as Serco announces that it has entered an agreement to acquire European Homecare, a private provider of immigration services in Germany, for a consideration of £34 million.

The acquisition follows a similar move from Serco in 2022, when it acquired the Swiss firm ORS.

Serco said the new acquisition would create a “strong partner for European governments in immigration services and complement the support we already provide to government customers in the UK and Australia.”

Serco has also agreed to acquire Climatize, a small business operating out of the United Arab Emirates and the Kingdom of Saudi Arabia offering “zero-carbon” advisory and related engineering services. Serco said the business will “significantly boost” its sustainability advisory capability in the Middle East with possible scalability across the group.

The firm said it expects its acquisitions to contribute around 3 per cent to its 2023 revenue.

Commenting on the firm’s most recent announcement, Mark Irwin, Serco Group chief executive, said: "Our strong focus on execution has delivered good performance in the second half, resulting in full year outcomes that are better than those expected when we initially laid out guidance.

“For 2023, we will deliver growth in revenue, profit and cash, as well as an improvement in colleague safety and strengthened operational delivery of services to our customers.

"We have also announced two strategic acquisitions, European Homecare, to accelerate growth in our immigration services portfolio, and Climatize, to deepen our advisory expertise in sustainable developments and operations.

"We expect to enter 2024 with a strong pipeline of new business opportunities and a robust balance sheet.”

This year marks Mr Irwin’s first full year leading Serco.

Serco provides security, immigration, defence, health and transport services to governments.

Over the pandemic, the company managed around 20 per cent of covid 19 testing sites across England and Northern Ireland.

Despite its expected boost in profits for 2024, the firm said that it expects revenue to fall at £4.8 billion next year, similar to levels seen this year.

The firm added that it expects new finance costs to be around £33 million, up from £25 million this year.

It said that this is due to higher interest rates, increased volume of lease-related interest and acquisition spend.

Serco added that it expects free cash flow to again be strong in 2024 at around £140m in the year.