FTSE 250 movers: Serco tanks on lost contract, while NI tax changes bite

8th Nov 2024 14:58

(Sharecast News) - 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%