549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 sercogroupplc:UnderlyingMember iso4217:GBP 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 sercogroupplc:NonUnderlyingItemsMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 sercogroupplc:UnderlyingMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 sercogroupplc:NonUnderlyingItemsMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 iso4217:GBP xbrli:shares 549300PT2CIHYN5GWJ21 2022-12-31 ifrs-full:IssuedCapitalMember 549300PT2CIHYN5GWJ21 2022-12-31 ifrs-full:SharePremiumMember 549300PT2CIHYN5GWJ21 2022-12-31 ifrs-full:RetainedEarningsMember 549300PT2CIHYN5GWJ21 2022-12-31 ifrs-full:OtherReservesMember 549300PT2CIHYN5GWJ21 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300PT2CIHYN5GWJ21 2022-12-31 ifrs-full:NoncontrollingInterestsMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 ifrs-full:SharePremiumMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 ifrs-full:OtherReservesMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300PT2CIHYN5GWJ21 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 549300PT2CIHYN5GWJ21 2023-12-31 ifrs-full:IssuedCapitalMember 549300PT2CIHYN5GWJ21 2023-12-31 ifrs-full:SharePremiumMember 549300PT2CIHYN5GWJ21 2023-12-31 ifrs-full:RetainedEarningsMember 549300PT2CIHYN5GWJ21 2023-12-31 ifrs-full:OtherReservesMember 549300PT2CIHYN5GWJ21 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300PT2CIHYN5GWJ21 2023-12-31 ifrs-full:NoncontrollingInterestsMember 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 ifrs-full:IssuedCapitalMember 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 ifrs-full:SharePremiumMember 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 ifrs-full:RetainedEarningsMember 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 ifrs-full:OtherReservesMember 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300PT2CIHYN5GWJ21 2024-01-01 2024-12-31 ifrs-full:NoncontrollingInterestsMember 549300PT2CIHYN5GWJ21 2024-12-31 ifrs-full:IssuedCapitalMember 549300PT2CIHYN5GWJ21 2024-12-31 ifrs-full:SharePremiumMember 549300PT2CIHYN5GWJ21 2024-12-31 ifrs-full:RetainedEarningsMember 549300PT2CIHYN5GWJ21 2024-12-31 ifrs-full:OtherReservesMember 549300PT2CIHYN5GWJ21 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300PT2CIHYN5GWJ21 2024-12-31 ifrs-full:NoncontrollingInterestsMember 549300PT2CIHYN5GWJ21 2024-12-31 549300PT2CIHYN5GWJ21 2023-12-31 549300PT2CIHYN5GWJ21 2022-12-31 549300PT2CIHYN5GWJ21 bus:ChiefExecutive bus:Consolidated 2024-01-01 2024-12-31 549300PT2CIHYN5GWJ21 bus:Director1 bus:Consolidated 2024-01-01 2024-12-31 549300PT2CIHYN5GWJ21 bus:Consolidated 2024-12-31 549300PT2CIHYN5GWJ21 bus:Audited 2024-01-01 2024-12-31 549300PT2CIHYN5GWJ21 bus:Consolidated 2024-01-01 2024-12-31 549300PT2CIHYN5GWJ21 bus:ChiefExecutive 2024-01-01 2024-12-31 549300PT2CIHYN5GWJ21 bus:Director1 2024-01-01 2024-12-31 549300PT2CIHYN5GWJ21 bus:FullAccounts 2024-01-01 2024-12-31 xbrli:pure 549300PT2CIHYN5GWJ21 bus:FullIFRS 2024-01-01 2024-12-31
serco
Annual
Report
and
Accounts
2024
Impact
a
better
future
Our Purpose
is to impact a
better future.
We bring together the right people, the
right technology and the right partners to
create innovative solutions that deliver
positive impact and address some of the
most urgent and complex challenges
facing governments globally.
With a primary focus on serving
governments globally, our services are
powered by more than 50,000 colleagues
working across multiple sectors including
Defence, Migration, Healthcare, Transport
and Citizen Services. We operate across
four regions: UK & Europe, North America,
Asia Pacific and the Middle East.
20+
Countries
700+
Contracts
50,000+
Colleagues
Strategic Report
1 Highlights
2 At a Glance
4 Chair’s Statement
6 Group Chief Executive’s Summary Review
8 Group and Divisional Review
22 Our Market
24 Our Strategy
28 Key Performance Indicators
30 Our People and Culture
33 Our Impact
52 ESG Governance
56 TCFD
62 Risk Management
65
Principal Risks and Uncertainties
72 Viability Statement
74 Section 172(1) Statement
Corporate Governance
77 Chair’s Corporate Governance Overview
78 Governance at a Glance
79 Board of Directors
82 Group Executive Committee
83 Corporate Governance
87 Nomination Committee Report
89 Audit Committee Report
94 Risk Committee Report
95 Corporate Responsibility Committee Report
97 Directors’ Remuneration Report
118 Directors’ Report: Other Information
123 Directors’ Responsibility Statement
Financial Statements
125 Independent Auditor’s Report
135 Consolidated Income Statement
136 Consolidated Statement of Comprehensive Income
137 Consolidated Statement of Changes in Equity
138 Consolidated Balance Sheet
140 Consolidated Cash Flow Statement
141 Notes to the Consolidated Financial Statements
198 Company Balance Sheet
199 Company Statement of Changes in Equity
200 Notes to the Company Financial Statements
Additional information
208 Alternative Perfomance Measures
211 Debt Covenants
212 Glossary
214 Our Impact - data tables
221 Shareholder Information
222 Useful Contacts
Contents
For more and the latest
information, please visit our
website at www.serco.com
Revenue
Order book
£4.8bn
£13.3bn
2023: £4.9bn 2023: £13.6bn
Underlying operating profit Reported operating profit
£274m
£130m
2023: £249m 2023: £272m
Underlying EPS, diluted
Reported EPS, diluted
16.7p
4.1p
2023: 15.4p 2023: 17.9p
Dividend per share Underlying ROIC
4.16p
26.2%
2023: 3.41p 2023: 21.4%
Free cash flow Employee engagement
£228m
72 points
2023: £209m 2023: 71 points
Major incident frequency rate Lost time incident frequency rate
0.37 per
1m hours
4.86 per
1m hours
2023: 0.37 per 1m hours 2023: 6.36 per 1m hours
Definitions for each KPI can be found in the Glossary on
pages 212 and 213
See pages 6 and 7 for our Group Chief Executive’s
Summary
Highlights
Serco Group plc | Annual Report and Accounts 2024 | 1
We bring together the right people, the right technology and the right
partners to create innovative solutions that deliver positive impact.
Our vision is to be the partner of choice to governments globally.
Our core capabilities includes service design and advisory, resourcing,
complex programme management, systems integration, case
management, engineering, assets and facilities management.
Underpinned by our unique operating model, Serco drives innovation
and supports customers from service discovery through to delivery.
£4,787m £5,292m £130m £274m
Revenue
Revenue including our
share of joint ventures
and associates
Reported operating
profit
Underlying operating
profit
At a Glance
Serco Group plc | Annual Report and Accounts 2024 | 2
See pages 24 to 27 for more information on our strategy
What we do
Our success will be defined
by creating positive impact
for People, Place
and Planet.
An international business,
that works hand-in-hand
with our customers to
discover, design and
deliver solutions to some of
the government’s most
complex challenges.
Empowering colleagues,
harnessing technology and
embracing partnership to
enable service excellence.
The principles that shape
our behaviours and the
culture we create to deliver
our ambitions.
Revenue in 2024
Our revenue in 2024 was £5,292m including our share of joint ventures and associates.
We report this through our five key sectors and four geographic divisions.
Sectors by revenue
Defence Justice &
Immigration
Health &
Other Facilities
Management
Transport Citizen
Services
£1,894m £1,732m £461m £424m £781m
Share of sector revenue
35%
33%
9%
8%
15%
Divisions by revenue
North
America
UK &
Europe
Middle
East
Asia
Pacific
£1,326m £2,951m £216m £799m
Share of divisions revenue
25%
56% 4%
15%
At a Glance continued
Serco Group plc | Annual Report and Accounts 2024 | 3
See more in our
Divisional Reviews
on pages 14 to 18
It has been another challenging but
successful year for Serco. The business
again delivered strong financial and non-
financial results reflecting a huge amount
of hard work by all of our colleagues.
2024 highlights
• Strong financial performance with underlying operating profits up
10% and free cash flow of £227.5m.
• Pipeline of potential new work at highest level in more than
a decade.
• Much improved health and safety performance.
• Higher employee engagement score.
The strong financial results, in particular underlying operating profit
and cash flow, reflect growth in Defence, Immigration, Health and
Citizen Services, an intense focus on operational improvements and
continued relentless attention on cash generation. Our retention rate
for rebids was running at more than 90% in 2023 and the first half of
2024, which made it particularly disappointing to lose the rebid for
immigration services in Australia. Despite that loss, strong order
intake in the second half, in particular new US Defence contracts,
resulted in a book-to-bill of over 100% in the year. We also saw strong
development in our pipeline of potential new work, which is at its
highest level in more than a decade.
Safety was an area of focus for everyone in 2024 and it was
very pleasing to see our performance improve significantly.
But we still have room for further improvement. I was also
delighted to see that, despite the challenges and workload,
our employee engagement scores improved again - a
testament to our culture and the attention paid everyday
by our leaders to our colleagues.
Strategy
Serco operates in very large and growing markets. The
focused Business to Government operating model established
over many years is delivering competitive advantage and
differentiation.
The strategic framework has helped us to deliver strong results
and continues to serve us well. In 2024, particular attention was
paid to operational excellence and while good progress was
made, there is opportunity for further improvements.
Acquisitions are an important aspect of our strategy and in
March 2024 we added to our capabilities to provide
immigration support to governments by acquiring European
Homecare (EHC), a leading provider of immigration services in
Germany. In early 2025, we announced that we have agreed to
acquire Northrop Grumman’s mission training and satellite
ground optimisation business (MT&S). This acquisition
supports our strategy of growing in Defence in the US and also
provides expertise that can be deployed in our other regions.
Chair’s Statement
Serco Group plc | Annual Report and Accounts 2024 | 4
After another successful year, I am
confident about the outlook for 2025
and beyond. I believe that we have a
sustainable growth focused business
with strong purpose and values.
John Rishton
Chair
Corporate Governance
One of my most important roles as Chair is to ensure that Serco
has strong governance and risk management processes.
Probably the most important aspect of this is the appointment
of the Group Chief Executive. After 12 years with Serco, Mark
Irwin advised the Board of his intention to retire as Group Chief
Executive. Mark steps down on 28 February 2025 and will be
succeeded by Anthony Kirby who was previously CEO of our
UK & Europe Division. I, and the Board, would like to thank
Mark for his commitment, dedication and hard work over the
last 12 years and wish him well for the future.
Anthony joined Serco seven years ago from Compass and has
been in our Group Chief Executive succession planning
process for several years. As part of this process we have
exposed Anthony to ever more challenging roles including
Group Chief Operating Officer and most recently CEO of our
UK & Europe Division. The Board is confident that he has the
skills, resilience and leadership capabilities to deliver the
Group’s strategy.
We were delighted to welcome a new Non-Executive Director,
Victoria Hull, to the Board in September. Victoria brings a
wealth of board experience and will take on the role of
Remuneration Committee Chair in 2025.
As investors may be aware, my tenure at Serco reaches nine
years toward the end of this year. The process to find my
successor has been started.
As in previous years, the Board members took time to visit
various contracts to get a real understanding of our business
and to meet our colleagues delivering the contracts on a day
to day basis. As always, these visits were humbling and
inspiring as we saw first hand the care, passion and
professionalism that our colleagues exhibit especially while
looking after others in challenging circumstances. During
2024, I visited our businesses in the UK, the Middle East,
Australia and, in May, we took the entire Board to the US where
we spent time with the management team, the North American
Board members and had detailed strategy and key
programme presentations.
Our employee Board representative is Dame Sue Owen and I
would like to recognise the time energy and enthusiasm that
she dedicates to this role. Serco also has a dedicated
employee working with Sue and the Board to provide support
and to help us understand employee perspectives and issues.
Prior to their appointment, our employee representative was
working at HMP Thameside. As part of our engagement
programme, Non-Executive Directors participated in virtual
and face to face meetings with employees from all of our
regions to discuss topics important to them. We also have an
“Ask the Board” function where employees can raise questions.
We have been clear on our purpose, values and impact on
society for many years. Our culture demands high ethical
standards and we live our values of Trust, Care, Innovation and
Pride. Our customers are governments and their contracts
frequently include specific measures covering social value, the
environment and governance.
In 2024, we had an external Board performance review. It
concluded that the Board was highly effective while making a
number of suggestions, including agenda management,
potential Committee simplification and broadening out the
skills over time. The observations made in the report will be
considered during 2025. Further details are provided on page
86.
Capital allocation
Our priorities for allocating capital are unchanged - invest
organically, grow dividends, invest in strategic acquisitions and
return surplus capital to shareholders through buy backs. In
2024, we applied all aspects of this policy including dividend
payments of £38m (up 14% from 2023) and £140m of share
buy backs (taking the total of buy backs to £340m since 2021).
Looking ahead
Governments around the world continue to face many
challenges, in particular providing cost effective, quality
services to society where expectations and demand continue
to increase. We are well placed to support governments to
meet these challenges. Our focus remains on operational
excellence, competitiveness and continually looking for ways
to support our customers to provide the right service in the
right way. We are well placed to grow our business as demand
for our services keeps growing as reflected in our increased
pipeline.
I am confident about the outlook for 2025 and beyond. I
believe that we have a sustainable growth-focused business
with strong purpose and values.
I and the Board would like to thank all of our colleagues for
their extraordinary work in 2024. Once again you have been
amazing and I remain in awe of the work you do everyday.
John Rishton
Chair
26 February 2025
Chair’s Statement continued
Serco Group plc | Annual Report and Accounts 2024 | 5
See more in our Governance section
on pages 76 to 123
We delivered strong financial and operational
results in 2024. The resilience of our platform
saw us offsetting known headwinds to deliver
revenue in line with guidance,we materially
increased underlying operating profit,
generated excellent cash flow, improved
safety outcomes for our colleagues and
employee engagement went up.
Strong performance in 2024
]
•
Revenue: £4.8bn in 2024, in line with guidance; improving
organic trend as we moved through the year led by our North
American Defence business.
•
Underlying operating profit: £274m, up 10% in the full year,
and an increase of 30% in the second half compared to the
same period in 2023.
•
Margin: 60 basis point increase in full year underlying
operating profit margin to 5.7% with progress in all regions,
reflecting ongoing focus on efficiency and productivity.
•
Reported operating profit: ~£130m, reduction due to an
exceptional £115m non-cash goodwill impairment charge in
Asia Pacific.
•
Order intake: +7% to £4.9bn, book-to-bill of 102%, order book of
£13.3bn.
•
Cash flow: Very strong free cash flow at £228m, ahead of
guidance of ~£170m, trading cash conversion has averaged
more than 100% since 2019, ahead of our medium-term
guidance of 80%+.
•
Strong financial position: adjusted net debt £100m, £45m
lower than prior guidance, leverage c.0.3x net debt to
EBITDA, and pro-forma net leverage of 1.2x including
proposed acquisition of MT&S. The Board will review the
capital position again at the half year.
•
Attractive shareholder returns: £140m share buyback in 2024,
taking the total amount returned to shareholders through
buybacks to £340m since 2021, recommended final dividend
of 2.82 pence per share, +24% year on year.
Group Chief Executive’s Summary Review
Serco Group plc | Annual Report and Accounts 2024 | 6
Good momentum into 2025
• Dynamic global backdrop driving demand: Mounting
fiscal challenges and geopolitical complexity mean we are
able to leverage our capabilities, expertise, and value
proposition to deliver critical services for our government
customers better, faster, and more efficiently.
• Record pipeline: Entered year with highest level of
potential new work in more than a decade at £11.2bn, 11%
higher than prior year end.
• High visibility: Robust order book combined with low level
of rebids or extensions in 2025 and only one contract
above 2% of Group revenue due for rebid before 2028.
• Good momentum in early 2025: Order intake of more than
£1bn including the landmark UK Armed Forces
Recruitment Service contract.
• MT&S acquisition strategically and financially compelling:
US$327m acquisition of leading US Defence business from
Northrop Grumman agreed and expected to complete in
mid-2025, resulting in a US$2bn North America business
delivering 10% margins, and a £2bn Defence business
across the Group.
• Guidance for 2025: Revenue in line with 2024, organic growth
across other parts of business offsetting expected reduction
from immigration in Australia and UK of c.7%; ongoing focus
on efficiency and productivity will largely compensate for
known headwinds on underlying operating profit.
In a global environment of
continuous change and increasing
complexity, Serco’s purpose to
impact a better future by enabling
more efficiency and greater agility
in the delivery of critical services
for governments has never been
more relevant.
Mark Irwin
Group Chief Executive
We delivered strong financial and operational results in 2024, a
year that presented a dynamic operating environment framed
by unprecedented political change, as voters in more than 60
countries went to the polls. Despite some headwinds, we
delivered revenue in line with guidance, we materially
increased underlying operating profit, generated excellent
cash flow, and we improved colleague safety and engagement.
Our focus has been on reinforcing our market positioning by
concentrating on growth, operational excellence and
competitiveness. We made demonstrable progress in all three
areas in 2024.
Growth
On growth, we entered the year with a robust pipeline of new
business opportunities and a clear focus on effective execution.
Momentum grew as we moved through the year with an
improving trend in organic revenue and strengthened order
intake. In the UK & Europe we offset the expected organic
revenue reduction from exiting a variety of lower margin
contracts in 2023, with good growth in our European business.
North America, a core strategic focus area for us, was the
standout performer. Strong order intake - book-to-bill was 1.6x
in the year – saw organic revenue growth step up to 5% in the
second half and sets the business up for good growth in 2025;
and in January 2025, we agreed to acquire MT&S, a leading
provider to the US military of advanced mission training
services, and software that makes satellite ground networks
more efficient. MT&S grows our North American business to
beyond US$2bn of revenue and US$200m of profit. It brings
new capabilities and access to a broader base of customers,
which will provide further opportunities for Serco to grow
organically in both North America and internationally.
Operational excellence
Operational excellence was focused on the safety,
engagement and productivity of colleagues as a critical
enabler to provide exceptional service to our customers. The
high importance we placed on keeping our colleagues safe in
2024 resulted in a 22% reduction in lost time injuries and 31%
reduction in lost working days. As we continue to evolve our
employee value proposition, it was encouraging to see
vacancy rates drop from approximately 13% to 5% over the
past two years, voluntary attrition reduce by 5 percentage
points, and employee engagement increase to 72.
We see in-contract operational performance as the foundation
to retaining business across multiple contracting cycles. We
achieved high levels of success on rebids and extensions of
existing work through the year securing around £3bn of awards
with retention rates in excess of 90% in our two largest markets.
The exception across the Group was the disappointing
outcome of the Australian immigration rebid as notified in
November. We will learn from this loss, and Management is
actively resetting the cost base of the business, which we still
expect to deliver approximately £700m of revenue in 2025.
Beyond immigration, the underlying performance of the
Australian portfolio has improved during the year, we have
retained key contracts and we continue to work to ensure we
are well positioned in a market where we see opportunity to
grow, particularly noting the importance of the country for
geopolitical security.
Competitiveness
Our focus on competitiveness in the year included concerted
efforts to improve the productivity and efficiency of the
business. We are pleased with the ramp up in our progress,
which included an increase of 120 basis points (bp) in the
second half compared to the same period in the prior year and
where every region delivered higher underlying operating
profit compared to the same period in 2023. The UK & Europe
was the leading contributor to the Group, delivering a margin
of 6.0% over the full year, 110bp higher than in 2023. Overall,
at the Group level we increased our underlying operating
profit margin by 60bp in 2024, an improvement driven by
better gross profit. This was achieved through a combination
of improvements on underperforming contracts, increased
contract productivity, agreeing new contract terms with
customers, and in-contract organic revenue growth. We are
confident these improvements pave the way for additional
opportunities in the future.
Strong financial performance enabled us to deliver all aspects
of our capital allocation strategy: investing in the business to
drive growth and efficiency; increasing returns to shareholders
by raising dividends; maintaining adequate headroom to fund
strategic bolt-on acquisitions; using share buybacks to keep
our leverage within our target range of 1-2x EBITDA. We
expect strong cash generation to continue and will regularly
assess the opportunity for further buybacks.
In summary
We are proud of the progress made in 2024, with strong
financial performance, positive employee metrics and high-
quality delivery of important services to customers in a
dynamic environment. Strong drivers of demand in our
markets have resulted in a record pipeline of potential new
work and the momentum in our business. This supports our
confidence in delivering our medium-term goals.
In January, it was announced I would be retiring as Group
Chief Executive, having served as a member of the Executive
leadership team for the past 12 years. It has been a true
privilege to lead this remarkable Company. I am delighted with
the progress we have made in the last few years and
particularly proud of what has been achieved to keep our
colleagues safer, deliver consistently strong financial
performance and develop the biggest pipeline in more than a
decade to meet our strategic growth goals. I know that my
successor, Anthony Kirby, will continue to build on these solid
foundations. I remain deeply grateful for the hard work and
dedication of more than 50,000 colleagues across the Group,
for the continued trust of our customers, and for the ongoing
support of our shareholders.
Looking forward
Looking forward, governments and citizens are facing changes
that are complex and challenging. Governments need to balance
fiscal constraint with responding to growing demand for citizen
services, critical infrastructure, AI-driven transformation, defence
and broader national security including cyber resilience, among
others. The need to be agile, adaptive and efficient in the delivery
of critical services has never been clearer. Serco is well positioned
to help navigate these changes and our opportunity to grow has
never been more compelling.
Mark Irwin
Group Chief Executive
26February 2025
Group Chief Executive’s Summary Review continued
Serco Group plc | Annual Report and Accounts 2024 | 7
See more in Our strategy
on pages 24 to 27
See more in Our impact
on pages 33 to 55
Group Review
Strong performance in 2024, good momentum into 2025
Year ended 31 December 2024 2023
Change at
reported
currency
Change at
constant
currency
Reported revenue £4,787m £4,874m (2) % — %
Underlying operating profit £274m £249m 10% 12%
Reported operating profit £130m £272m (52)%
Underlying earnings per share (EPS), diluted 16.67p 15.36p 9%
Reported EPS (i.e. after non-underlying items), diluted 4.10p 17.93p (77)%
Dividend per share (recommended) 4.16p 3.41p 22%
Free cash flow £228m £209m 9%
Net cash inflow from operating activities £419m £393m 7%
Adjusted net debt £100m £109m (8)%
Reported net debt £630m £562m 12%
Group and Divisional Review
Serco Group plc | Annual Report and Accounts 2024 | 8
Mark Irwin
Group Chief Executive
Nigel Crossley
Group Chief Financial Officer
Definitions for each Alternative Performance Measure (APM) can be found in the Glossary on page 212 to 213 .
A reconciliation of each measure to the relevant statutory measure can be found on pages 208 to 210.
Revenue, underlying operating profit and underlying
earnings per share
Revenue was £4,787m, which was 2%, or £87m, lower than the
£4,874m reported in 2023, or flat on a constant currency basis.
Organically, revenue declined by 3% (£123m), while
acquisitions added 3% (£121m) and currency was a drag of 2%
(£85m). We saw good growth from new and expanded
contracts in Defence, Justice and Citizen Services sectors. The
reduction reflects lower volume-variable work in the
Immigration sector in both the UK and Australia, our Centers
for Medicare & Medicaid Services (CMS) contract being in its
new five-year agreement and the annualisation of our
previously announced exit from certain low-margin contracts.
Despite revenue reducing in the year, we increased underlying
operating profit by 10% to £274m (2023: £249m); and taking
account of a 2%, or £6m, adverse impact of currency, on a
constant currency basis, underlying operating profit increased
by 12%. There were also higher costs associated with
mobilising our electronic monitoring contract. We more than
offset these with our efforts to improve the productivity and
efficiency of the business and the positive contribution from
acquisitions. It was pleasing to see increasing momentum as
the year progressed. In the second six months of the year,
every region delivered higher underlying operating profit
compared to the same period in 2023. Our margin was 60bp
higher in the year as a whole and increased by 120bp in the
second half alone.
Reported operating profit reduced by 52% to £130m (2023:
£272m). The decline was because of a £115m impairment
charge in Asia Pacific following the loss of our immigration
contract. Underlying profit after net finance costs and tax, both
of which were higher in the year, increased by 4% to £180m
(2023: £173m).
Diluted underlying earnings per share increased by 9% to 16.67p
(2023: 15.36p). The growth was higher than underlying profit after
tax as our share buybacks in 2023 and 2024 led to a 4% reduction
in our weighted average number of shares in the year.
Cash flow and net debt
Free cash flow was £228m (2023: £209m). Over recent years
we have created a system and culture around invoicing and
cash collection that has structurally improved our working
capital. This continued efficiency, in conjunction with cash
received for mobilisation costs and this being a period of catch
up of dividends from joint ventures, delivered cash conversion
of more than 100%. The ongoing rigour on cash management
means we expect the business to convert at least 80% of profit
into cash on an ongoing basis. Average working capital days
were at attractive levels with debtor days of 17 (2023: 16 days)
and creditor days of 19 (2023: 20 days). Including accrued
income and other unbilled receivables, day sales outstanding
were 39 days (2023: 38 days). Of all UK supplier invoices, 92%
were paid in under 30 days (2023: 94%) and 97% were paid in
under 60 days (2023: 98%). No working capital financing
facilities were utilised in this or the prior year.
Adjusted net debt was £100m at the end of December. This
was a reduction in the year of £9m (December 2023: £109m)
despite £38m of dividend payments, a £21m net cash outflow
for acquisitions and £141m being spent on our share buyback
programme, including fees.
The period end adjusted net debt compares to a daily average
of £146m (2023: £232m) and a peak of £212m (2023: £362m).
The difference between average and peak figures reflected
working capital fluctuations. These can be caused when certain
discrete outflows - for example payroll, supplier payments, VAT
payments on account - occur in a short timeframe. Variances
like this are normal for the Group.
Our measure of adjusted net debt excludes lease liabilities,
which aligns closely with the covenants on our financing
facilities. Lease liabilities totalled £530m at the end of
December (2023: £454m), the majority being leases on
housing for asylum seekers under our Asylum Accommodation
and Support Services Contract (AASC). These leases are
serviced with contracted revenue from the customer and their
terms do not extend beyond the expected life of the contract
we have.
At the closing balance sheet date, our leverage for debt
covenant purposes was 0.3x EBITDA (2023: 0.5x). This
compares with the covenant requirement for net debt to be
less than 3.5x EBITDA and our target range of 1-2x.
In February 2024, we issued US$150m (£118m) of US private
placement loan notes. The notes were equally split into two
series of US$75m each with maturities of five and ten years,
giving an average maturity of seven and a half years. The
average interest rate on the new loan notes was fixed at 6.58%.
On 14 May 2024, we repaid US$66m (£53m) of maturing US
private placement loan notes which had a coupon of 5.08%.
The blended rate on US private placement loan notes in issue
at the end of December 2024 was 4.88% (December 2023:
3.97%).
Group and Divisional review
Serco Group plc | Annual Report and Accounts 2024 | 9
Capital allocation and returns to shareholders
We aim to have a strong balance sheet with our target financial
leverage of 1x to 2x net debt to EBITDA, and, consistent with
this, the Board’s capital allocation priorities are to:
• Invest in the business to support organic growth.
• Increase ordinary dividends to reward shareholders with a
growing and sustainable income stream.
• Selectively invest in strategic acquisitions that add
capability, scale or access to new markets, enhance the
Group’s future potential organic growth and have attractive
returns.
• Return any surplus cash to shareholders through share
buybacks or other means.
Our capital allocation framework was actively applied in 2024:
• Invest to support organic growth: investment has been put
into business development, which has supported our healthy
pipeline of new opportunities. We continued to invest in pilot
programmes to partner with both start-up and established
technology businesses to create a broader capability
ecosystem from which to deliver future growth. Investment
was made to improve productivity and competitiveness.
• Increase ordinary dividends: the Board is recommending a
final dividend of 2.82 pence per share. Following the
interim dividend of 1.34 pence per share, this results in a
full year dividend of 4.16 pence per share, an increase of
22% compared to 2023, as we continue our path to reduce
dividend cover progressively towards 3x over the coming
years.
• Invest in acquisitions: in March, we acquired European
Homecare (EHC), a leading provider of immigration
services in Germany. In January, we acquired Climatize, a
small, fast-growing business that operates in the United
Arab Emirates and the Kingdom of Saudi Arabia offering
‘zero-carbon’ advisory and related engineering services. In
January 2025, we agreed to acquire Northrop Grumman’s
mission training and satellite ground network
communications software business (MT&S) for US$327m
(£264m). MT&S is a leading provider of services to the US
military. We continue to assess other opportunities that are
aligned to our strategy and provide potential to enhance
future organic growth.
• Return surplus cash to shareholders: we completed a
£140m share buyback. We have now returned £340m to
shareholders through buybacks since 2021.
Contract awards, order book, rebids and pipeline
Contract awards
Order intake was £4.9bn (2023: £4.6bn), a book-to-bill rate of
102%. Consistent with the momentum we saw generally across
our business, order intake was much improved in the second half.
Book-to-bill was 82% in the first half and 121% in the second.
There were around 65 contract awards worth £10m or more each.
North America had the strongest book-to-bill at 165%, with wins
across the Defence and Citizen Services sectors. Unsuccessful bids
and some existing work being extended rather than proceeding
with the tender left the UK & Europe book-to-bill at 78%. After
strong order intake in 2023, our Middle East business experienced
a period of lower wins, with book-to-bill reducing to 93%. In Asia
Pacific, we had the disappointing news in November 2024 that we
were unsuccessful in rebidding the contract for immigration
services. As is the nature of larger binary decisions, the loss
depressed book-to-bill, with the year ending at 74%.
Encouragingly, momentum did improve through the year, with
book-to-bill of 35% in the first half and 113% in the second six
months.
North America had order intake of £2.2bn, or approximately 45%
of the total for the Group, the UK & Europe contributed £1.9bn, or
approximately 40%, Asia Pacific secured £0.6bn, or approximately
10% and the Middle East £0.2bn, or approximately 5%.
Approximately 35% of the order intake value was new business
and 65% was rebids or extensions of existing work. The win
rate by value for new work was approximately 25%, which was
at the lower end of the range we have delivered over recent
years as some larger bids were unsuccessful. The win rate by
value for retaining existing work was approximately 75%.
Having had a success rate of more than 90% on rebids in 2023
and the first half of 2024, the full year rate was depressed by
the unsuccessful Australian immigration rebid. Excluding this,
the rate for the year would have been approximately 95%.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 10
New wins included a US$320m four-year contract to upgrade
Defence infrastructure at the US Space Force’s Pituffik Space
Base in Greenland, a US$247m contract to support soldier
readiness and performance within the US Army’s Holistic
Health and Fitness (H2F) System, which has an eight-month
base period plus four one-year options, a c.£90m six and a half
year contract to deliver emergency response services in the
NEOM economic zone in the Kingdom of Saudi Arabia, a £70m
six-year agreement to operate and maintain the Shing Mun
Tunnels and Tseung Kwan O Tunnel in Hong Kong, and a
further £50m five-year contract with the Government of
Ontario to help job seekers develop their skills and match
them to employment opportunities. We successfully rebid our
contract to manage HMP Ashfield in the UK. The new contract
has an estimated value to Serco of £200m over its initial ten-
year period. Also in the UK, we extended parts of our
immigration accommodation work and retained our contract to
provide facilities management services at Forth Valley Royal
Hospital, which is worth approximately £150m over seven
years.
In the US, we won the rebid of our contract to provide
customer support services to the US Pension Benefit Guaranty
Corporation. The contract has a one-year base period and four
option years with a value of approximately £180m if all options
years are exercised. Our contracts with the UK Department for
Work and Pensions to help people find jobs in the West
Central region and Wales as part of the Restart programme,
were extended for a further two years, with an estimated value
of £130m.
Following the year end, as announced on 6 February 2025, we
were selected by the UK Ministry of Defence to deliver its next-
generation recruitment solution for the Royal Navy, the British
Army, the Royal Air Force and Strategic Command. The
contract has an estimated value of £1.0bn over the initial
seven-year term and up to £1.5bn should the Ministry of
Defence elect to exercise all three one-year extension options
beyond the initial term. A 21-month mobilisation period is
expected to begin in April 2025 with most of the costs charged
to profit as they are incurred. The new service is scheduled to
commence in early 2027.
Order book
The order book remains strong at £13.3bn at the end of
December (2023: £13.6bn). Our order book definition gives
our assessment of the future revenue expected to be
recognised from the remaining performance obligations on
existing contractual arrangements. This excludes unsigned
extension periods, and the order book would be £3.0bn (2023:
£2.6bn) higher if option periods in our US business, which
typically tend to be exercised, were included. If joint venture
work was included this would add a further £1.9bn (2023:
£1.9bn) to our order book.
Rebids
In our portfolio of existing work, we have around 75 contracts
with annual revenue of £5m or more where an extension or
rebid will be required before the end of 2027, with an
aggregate annual revenue of £1.5bn. At around 30% of the
Group’s 2024 revenue guidance, this proportion of work that
will be up for rebid is at the low end of the range we have seen
over recent years. Contracts that will either need to be rebid or
extended in 2025 have an annual contract value of around
£0.4bn. The annual value of rebids is approximately £0.6bn in
both 2026 and 2027. The largest contract that is scheduled to
be rebid in the next three years represents around 2.5% of
Group revenue. This is the only contract with annual revenue of
more than £100m, or 2% of Group revenue, scheduled to be
rebid before 2028.
New business pipeline
Our measure of pipeline includes only opportunities for new
business that have an estimated annual contract value (ACV) of
at least £10m and which we expect to bid and to be
adjudicated within a rolling 24-month timeframe. We cap the
total contract value (TCV) of individual opportunities at £1bn,
to lessen the impact of single large opportunities. The
definition does not include rebids and extension opportunities,
and in the case of framework, or call-off, contracts such as
Indefinite Delivery/Indefinite Quantity contracts (ID/IQ), which
are common in the US, we only take the value of individual task
orders into our pipeline as the customer confirms them. Our
published pipeline is thus a small proportion of the total
universe of opportunities, as many opportunities have annual
revenues less than £10m, are likely to be decided beyond the
next 24 months, or are rebids and extensions.
Our pipeline was £11.2bn at the end of December 2024, 11%
higher than the £10.1bn level at the end of December 2023.
This is the largest pipeline of potential new work we have had
in more than a decade. The pipeline consists of over 50 bids
with an average ACV of £36m and an average contract length
of around six years. The pipeline of opportunities for new
business with an estimated ACV of less than £10m totalled
£2.0bn at the end of December (2023: £2.6bn).
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 11
Acquisitions
We view acquisitions as an important part of our strategic
toolkit, which, if deployed correctly, can add significant value
to the business. They should therefore supplement and be
capable of delivering new opportunities for organic growth.
Generally speaking, we regard acquisitions as higher risk than
organic growth, so any potential opportunities have to meet
our stringent criteria of being both financially and strategically
compelling. We judge potential acquisitions against three
criteria: Do they add new, or strengthen existing, capability?
Do they add scale which we can use to increase efficiency? Do
they bring us access to new and desirable customers and
markets? We also recognise that acquisition opportunities
come in different shapes, sizes and sectors, and a small one
can be strategically important to a region, but not necessarily
significant at Group level. But large or small, the execution of
all acquisitions is centrally managed and follows the same
rigorous process. Equal focus and discipline are applied to
post-acquisition value drivers such as effective integration and
value realisation from synergy and growth. Our approach of
selectively adding acquisitions to our organic strategy has
enabled us to accelerate growth, strengthen the business and
improve its future growth potential in North America and in
Europe.
In Europe, we have grown our business from approximately
£100m of revenue in 2020 to more than £500m in 2024.
Acquisitions in the Immigration and Defence sectors gave us
positions that would have been very difficult to achieve
organically; and being part of Serco has enabled the acquired
businesses to scale up in a way that would not have been
possible as standalone entities. We see strong potential for
further growth in Europe.
In North America, we have approximately doubled revenue
and more than trebled profit between 2017 and 2024 through
a successful combination of organic growth and strategic
acquisitions. This demonstrates the success of our M&A
strategy, which is that acquisitions should provide access to
new markets and bring new capabilities that broaden the
opportunities for further organic growth and improve
profitability.
Equally importantly, we have transformed the business from a
low-margin portfolio of contracts largely performing front-line
installation work on industrial systems back in 2017. The
acquisition of NSBU in 2019 added a strong US Navy business.
We are now the leading naval architecture firm in the US and
have capability in upfront engineering and asset-light
management. WBB, which we acquired in 2021, brought
strong positions with the Air Force, Space Force, and the Army.
Today, Serco is a leading provider of services to the US Navy
and that has strengthened positions with Army, Air Force, and
Space Force, and has capabilities in government site program
support, high-end engineering, equipment support, and
technology-enabled frontline services.
The proposed acquisition of MT&S, covered below, will
continue this growth through new capabilities and access to
new markets and customers, providing exciting opportunities
for future organic growth.
Two acquisitions completed in 2024
In March, we acquired European Homecare (EHC), for an
enterprise value of €40m (£34m). EHC is a leading private
provider of immigration services in Germany. In conjunction
with ORS, the Swiss-based business we acquired in 2022, this
strategic acquisition creates a strong partner for European
governments in immigration services and complements the
support we already provide to government customers in the
UK and Australia.
In January, we acquired Climatize, for an initial consideration of
AED9m (£2m) and a contingent consideration of up to
AED51m (£11m), payable on achieving certain financial
targets. Climatize is a small, fast-growing business that
operates in the United Arab Emirates and the Kingdom of
Saudi Arabia offering ‘zero-carbon’ advisory and related
engineering services.
Acquisition of MT&S in 2025
Following the year end, in January 2025, we agreed to acquire
Northrop Grumman’s mission training and satellite ground
network communications software business (MT&S) for
US$327m (£264m). The acquisition is expected to complete in
mid-2025, subject to regulatory approvals.
MT&S provides the US military with advanced mission training
services, and software that makes satellite ground networks
more efficient. With expertise in training services and software
engineering, and a track record of innovation, it supports
programmes across the US Army, Space Force, Air Force,
Navy, Combatant Commands and international partners.
The acquisition will build additional scale for Serco in North
America, growing our business to beyond US$2bn of revenue
and US$200m of profit. It brings new capabilities and access to
a broader base of customers, which will provide further
opportunities for Serco to grow organically in both North
America and internationally.
We continue to seek out and evaluate new opportunities for
acquisitions that fit our criteria and focus on delivering value
from those acquisitions already executed.
Asia Pacific segment
The 2024 results include a £115m non-cash, non-underlying,
impairment charge in respect of the Asia Pacific goodwill
balance, which has been triggered by the loss of the
immigration rebid in November 2024. The Directors recognise
that the Asia Pacific business has performed below
expectations but continue to be committed to the market and
believe that they have a strong platform to grow the business.
A number of changes have been made that have started to
show improvements in 2024. Further plans are being
developed and executed to strengthen the business. The stage
of development of these plans means that for accounting
purposes, and to be compliant with IAS36, they are not
considered in the goodwill valuation.
Corporate costs
Corporate costs relate to typical central function costs of
running the Group, including executive, governance and
support functions such as HR, finance and IT. Where
appropriate, these costs are stated after allocation of recharges
to operating divisions. The costs of Group-wide programmes
and initiatives are also incurred centrally. Corporate costs
increased by £1.8m to £51.1m (2023: £49.3m). The higher
level was due to investments made in the year.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 12
Guidance for 2025
In 2025, our focus remains steadfast on reinforcing our market
positioning by concentrating on growth, operational
excellence and cost competitiveness. We expect revenue in
2025 will be similar to 2024 despite a 7% revenue reduction
relating to the UK and Australian immigration contracts, while
underlying operating profit will reduce only slightly despite
known headwinds. The conversion of profit to cash will
continue to be strong and our pipeline of new business
opportunities is healthy. The acquisition of MT&S is expected
to complete in mid-2025 and will be included in guidance at
that point.
Revenue: We anticipate revenue of around £4.8bn with flat
organic revenue growth and a c.1% contribution from
businesses acquired in 2024. Having had a success rate of
more than 90% on rebids in 2023 and the first half of 2024, it
was disappointing to be unsuccessful in rebidding the contract
for immigration services in Australia. In the UK, we expect to
continue supporting the UK Government’s efforts to reduce the
number of asylum seekers being accommodated in hotels.
These two impacts are expected to reduce revenue by
approximately 7% in 2025, however, the business is making
good progress elsewhere in the portfolio to offset this impact.
Growth is anticipated to be strongest in the North American
market where we expect mid-single digit organic growth after
securing new work in the defence sector in 2024 and early
2025. In addition, contracts mobilised during 2024 in the UK
justice and citizen services sectors will contribute further in
2025.
Underlying operating profit: Underlying operating profit is
expected to be around £260m, compared to the £274m
delivered in 2024. This is a relatively small reduction given the
previously disclosed headwinds from our Australian
immigration contract ending, lower activity levels within our UK
immigration business and higher UK national insurance
contributions. Significant progress is expected from the ramp
up and reduced costs on newly mobilised contracts, and
continued opportunities to improve productivity and efficiency
across the portfolio. These support our margin which is
expected to be around the mid-point of our medium-term
target of 5-6%.
Net finance costs and tax: Net finance costs are expected to
increase to around £40m. This is more than 2024 due to the
increased volume of lease interest, particularly in relation to
immigration services in the UK. The underlying effective tax
rate is expected to be around 25%, although this is sensitive to
the geographic mix of our profit and any changes to current
corporate tax rates.
Financial position: Free cash flow is again expected to be
strong at around £135m in the year, in line with our medium-
term target of converting at least 80% of profit into cash. This is
below 2024 as the prior year included cash received on
contracts in their mobilisation phase and a catch up of
dividends from joint ventures. The current year includes one-
off end of contract cash costs of £20m in relation to our
Australian immigration contract, which were expensed in
previous years. We expect adjusted net debt to end the year at
around £10m.
Surplus capital in 2025: Consistent with our capital allocation
priorities, we have a preferred financial leverage range of 1-2x
net debt to EBITDA. If we are below 1.0x leverage we consider
the business to be in a position of having surplus capital, which
will be returned to our shareholders through share buybacks
or other means. Leverage at the year end was 0.3x net debt to
EBITDA and on a pro forma basis, including the proposed
acquisition of MT&S that was announced in January, leverage
was 1.2x. Although we are not currently in a position of surplus
capital, we are only modestly above the threshold and have an
established track record of strong cash flow reducing our
leverage. We will review the capital position again at the half
year.
2024 2025
Actual Initial
guidance
New
guidance
Revenue £4.8bn ~£4.8bn ~£4.8bn
Organic sales growth (3) % ~0% ~0%
Underlying operating
profit
£274m ~£260m ~£260m
Net finance costs £33m ~£42m ~£40m
Underlying effective
tax rate
25% ~25% ~25%
Free cash flow £228m ~£135m ~£135m
Adjusted Net Debt £100m ~£60m ~£10m
NB: The guidance uses an average GBP:USD exchange rate of 1.26 in 2025,
GBP:EUR of 1.20 and GBP:AUD of 1.98. We expect a weighted average
number of shares in 2025 of 1,015m for basic EPS and 1,035m for diluted
EPS.
Outlook for growth in the medium-term
Our medium-term targets remain unchanged:
• Revenues to grow at ~4-6% per year over the medium-term
• Profits to grow faster than revenue with margins of 5-6%
• At least 80% of profit converted into cash
• Returns to shareholders will grow faster than profits
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 13
Divisional Reviews
Serco’s operations are reported through four geographic divisions:
North America, UK & Europe, the Asia Pacific region and the Middle East.
Revenue Underlying operating profit Margin
Total 2024
£4,787.3m
Total 2023
£4,873.8
Total 2024
£273.5m
Total 2023
£248.7
Total 2024
5.7%
Total 2023
5.1%
£m 2024 2023 £m 2024 2023 £m 2024 2023
North America 1,326.1 1,362.8 North America 136.1 138.2 North America 10.3% 10.1%
UK & Europe 2,445.9 2,439.5 UK & Europe 147.9 120.8 UK & Europe 6.0% 5.0%
Asia Pacific 799.4 845.1 Asia Pacific 24.6 23.7 Asia Pacific 3.1% 2.8%
Middle East 215.9 226.4 Middle East 16.0 15.3 Middle East 7.4% 6.8%
Corporate costs — — Corporate costs (51.1) (49.3) Corporate costs (1.1) % (1.0) %
Reflecting statutory reporting requirements, Serco’s share of revenue from its joint ventures and associates is not included in
revenue, while Serco’s share of joint ventures and associates’ profit after interest and tax is included in underlying operating profit.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 14
North America
Revenue Underlying operating profit Sectors
28%
42%
2023: 28% 2023: 46%
Year ended 31 December
£m 2024 2023 Growth
Revenue
1,326.1 1,362.8 (3) %
Organic change
1% 8%
Acquisitions
— % — %
Currency
(4) % (1) %
Underlying operating profit
136.1 138.2 (2) %
Organic change
2% 1%
Acquisitions
— % — %
Currency
(4) % — %
Margin
10.3% 10.1% 12bp
Revenue declined by 3% to £1,326m (2023:£1,363m), with
organic growth of 1% more than offset by a 4% adverse
translational effect of currency. Growth in our Defence business,
drove the organic revenue increase for the division overall.
There were positive contributions from new work ramping up,
maritime services and anti-terrorist force protection for the navy.
We were pleased to see this more than offset the effect of our
CMS contract being in its new five-year agreement and lower
revenue in the transport sector. Momentum improved as the
year progressed with an organic revenue decline of 4% in the
first half shifting to 5% growth in the second six months.
Underlying operating profit reduced by 2% to £136m (2023:
£138m). Currency had a 4% adverse impact, with underlying
operating profit up 2% on a constant currency basis. Good
progress in our Defence business and in Canada, more than
offset lower profit from the new CMS contract. Margins
increased from 10.1% to 10.3% as a result. We saw momentum
improve in the year. Underlying operating profit was 13% lower
in the first half but increased by 14% in the second half,
compared to the same period in 2023.
Order intake was strong at £2.2bn, which was 45% of the total
for the Group and a book-to-bill ratio of 1.6x. New business
wins were around 55% of the order intake. Our largest new win
was a US$320m four-year contract to upgrade Defence
infrastructure at the US Space Force’s Pituffik Space Base in
Greenland. We were also successful in being awarded a
US$247m contract to support soldier readiness and
performance within the US Army’s Holistic Health and Fitness
(H2F) System, which has an eight-month base period plus four
one-year options.
Following on from our success in 2022 and 2023, we secured a
further £50m five-year contract with the Government of Ontario
to help job seekers develop their skills and match them to
employment opportunities. We won the rebid of our contract
with the US Pension Benefit Guaranty Corporation. We provide
benefits administration and customer support for over one
million individuals whose defined benefits plans have been
disrupted. The contract has a one-year base period and four
option years with a value of approximately £180m if all options
years are exercised.
We also successfully rebid our IT support contract with the US
Air Force. The new agreement has a one-year base period and
four one-year option periods, and a value of approximately
£70m if all options are exercised. As the NexGen Information
Technology (IT) Service Provider, Serco will manage, configure,
deploy, operate, sustain, and enhance the NexGen IT program
solutions for Air Force Civil Engineering activities. This includes
delivering the largest implementation of the IBM TRIRIGA
software application in the world, to enable data-driven
decisions for the Air Force.
As we worked through and successfully converted a lot of the
pipeline of new bid opportunities in 2024, the pipeline reduced
from £3.2bn at the end of 2023 to £2.1bn at the end of 2024.
We are actively looking to replenish the pipeline through 2025.
Defence makes up around 75% of the North American pipeline
and Citizen Services is approximately 25%.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 15
UK & Europe
Revenue Underlying operating profit Sectors
51%
46%
2023: 50% 2023: 41%
Year ended 31 December
£m 2024 2023 Growth
Revenue
2,445.9 2,439.5 — %
Organic change
(5) % 7%
Acquisitions
5% 8%
Currency
— % 1 %
Underlying operating profit
147.9 120.8 22%
Organic change
7% 55%
Acquisitions
16% 12%
Currency
(1) % 1%
Margin
6.0% 5.0% 110bp
Revenue was stable at £2,446m (2023: £2,440m), with an
organic decline of 5% offset by a 5% contribution from
acquisitions. EHC, the German immigration services business
we acquired in March 2024, traded strongly with robust
demand due to global migration patterns. The organic decline
resulted from us exiting a variety of contracts in 2023, several of
which had margins below the level we see as appropriate for
the services we deliver. These contracts were in different
sectors, so revenue declined in Citizen Services, Transport and
Health & Facilities Management as we exited this work.
Elsewhere we saw growth in Justice & Immigration and
Defence.
Underlying operating profit increased by 22% to £148m (2023:
£121m). The good underlying operating profit outcome was
supported by immigration, where the EHC acquisition
contributed and performance in the UK was better than
originally anticipated, successful mobilisation of the newly built
Fosse Way prison and from our focus on productivity and
improving the underlying performance of our portfolio. Our
Health & Facilities Management business, in particular, saw
much improved profitability compared to the prior year.
These factors more than offset higher costs associated with
the ongoing mobilisation of our electronic monitoring
contract. Margin performance in the period was strong,
with it increasing by around 110bp to 6.0%
(2023: 5.0%).
Underlying operating profit includes the profit contribution of
joint ventures, from which interest and tax have already been
deducted. If the proportional share of revenue from joint
ventures was included and the share of interest and tax cost was
excluded, the overall divisional margin would have been 5.3%
(2023: 4.5%). The joint venture profit contribution reduced to
£23m (2023: £29m) due to a one-off settlement being included
in the prior year.
Order intake was £1.9bn, a book-to-bill ratio of 0.8x and around
40% of the total intake for the Group. The book-to-bill reflected
some larger bids on new work not landing in our favour. Our
win rate by value on new work was around 15% as a result.
Offsetting this, our win rate on rebids and extensions was very
good at more than 95%. Rebids and extensions represented
approximately 85% of the order intake. Agreements signed
included the rebid of our contract to manage HMP Ashfield in
the UK. The new contract has an estimated value of £200m and
by the end of the ten-year period, Serco will have been
managing the prison for 29 years. We extended parts of our
immigration accommodation work and retained our contract to
provide facilities management services at Forth Valley Royal
Hospital, which is worth approximately £150m over seven years.
Following the year end, as announced on 6 February 2025, we
were selected by the UK Ministry of Defence to deliver its next-
generation recruitment solution for the Royal Navy, the British
Army, the Royal Air Force and Strategic Command. The contract
has an estimated value of £1.0bn over the initial seven-year term
and up to £1.5bn if all three one-year extension options are taken.
The pipeline of new opportunities in the UK & Europe increased by
more than 30% in the year to £6.4bn (2023: £4.8bn). The Armed
Forces Recruitment Service contract, which we have now won, was
the largest bid in our pipeline. Excluding this, the pipeline remains
very healthy with significant new opportunities across the Justice &
Immigration, Defence and Citizen Services sectors.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 16
Asia Pacific
Revenue Underlying operating profit Sectors
17%
8%
2023: 17% 2023: 8%
Year ended 31 December
£m 2024 2023 Growth
Revenue
799.4 845.1 (5) %
Organic change
(2) % (7) %
Acquisitions
— % — %
Currency
(3) % (4) %
Underlying operating profit
24.6 23.7 4%
Organic change
8% (56) %
Acquisitions
— % — %
Currency
(4) % (2) %
Margin
3.1% 2.8% 27bp
We are working through a plan to turn around our Asia Pacific
segment and this began to deliver positive results as 2024
progressed. The first half saw us take action to reduce the cost
base and improve profitability on some larger contracts, the
benefits of which began to come through in the second half of
the year. Although it was disappointing to be unsuccessful in
rebidding our immigration contract, our turnaround plan is
independent of this. We remain committed to the Asia Pacific
market and continue to position the business for the
opportunities we expect in the coming years.
Revenue reduced by 5% to £799m (2023: £845m). The business
contracted by 2% organically and adverse currency moves had a
3% impact. Revenue fell because of reduced work in facilities
management, lower volume-variable work in parts of the
immigration network and some lost work in the Citizen
Services sector.
Underlying operating profit increased by 4% to £25m (2023:
£24m), representing an increased margin of 3.1% (2023: 2.8%).
Our focus on contract profitability improvements and cost
transformation more than offset lower profit in the Justice &
Immigration sectors. Progress came through as the year
progressed with underlying operating profit down 44% in the
first half and up 71% in the second.
Disappointingly, we were unsuccessful in rebidding the contract
for the provision of onshore immigration detention facilities and
detainee services. Serco is proud to have provided immigration
services as a partner to the Australian Government since
October 2009.
Our performance levels have been high on the contract and we
submitted what we believed to be a compelling bid that would
have delivered continued strong performance to the Australian
Government as well as meeting our framework for achieving
margins appropriate for the services we deliver.
The unsuccessful rebid led to an exceptional £115m goodwill
impairment charge for the division, which resulted in a reported
operating loss of £90m (2023: profit of £12m).
Order intake was £0.6bn in the year, a book-to-bill rate of 0.7x.
Momentum improved through the year, with book-to-bill of 33%
in the first six months then stepping up to 113% in the second
half.
Larger contributors included a £122m award to continue to
provide health services personnel to the Australian Defence
Force at garrisons across the country and a £99m three-year
award with the National Disability Insurance Agency (NDIA) to
continue providing contact centre services. New work included
a £70m six-year agreement to operate and maintain the Shing
Mun Tunnels and Tseung Kwan O Tunnel in Hong Kong.
The pipeline of potential new business stands at £1.7bn
(December 2023: £1.3bn). Defence makes up around 75% of
the pipeline, Citizen Services 20%, with smaller opportunities in
the Transport and Health sectors.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 17
IMAGE TBC
Middle East
Revenue Underlying operating profit Sectors
4%
4%
2023: 5% 2023: 5%
Year ended 31 December
£m 2024 2023 Growth
Revenue
215.9
226.4
(5) %
Organic change
(3) %
9%
Acquisitions
1 %
— %
Currency
(3) %
(1) %
Underlying operating profit
16.0
15.3
5%
Organic change
— %
(2) %
Acquisitions
9%
— %
Currency
(4) %
(2) %
Margin
7.4%
6.8%
65bp
Revenue reduced by 5% to £216m (2023: £226m). The business
declined by 3% organically, currency moves had a further 3%
adverse impact, while acquisitions added 1%. Organic
contraction resulted from some lost facilities management work
and lower revenue in Defence, where a large contract, which we
successfully retained, moved to a reduced scope in its new
term. These factors more than offset good growth in our
Transport business, which includes fire and rescue work.
Underlying operating profit increased by 5% to £16m (2023:
£15m). We managed to deliver higher profit on a lower revenue
base through our focus on productivity and improving the
underlying performance of our portfolio, and the exited facilities
management work being lower margin. Margins increased from
6.8% to 7.4% as a result.
Order intake was around £0.2bn, a book-to-bill ratio of 0.9x.
Around 75% of the order intake was new business and 25%
rebids and extensions. The largest win was a new contract to
provide fire rescue, emergency and ambulance services in the
NEOM economic zone in the Kingdom of Saudi Arabia. This
followed on from other similar work in the zone and is estimated
to be worth around £90m over its six-and-a-half-year term.
Our pipeline of major new bid opportunities in the Middle East
totals around £1.0bn (December 2023: £0.8bn) and includes
opportunities in Transport, Justice & Immigration and Defence.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 18
Other Financial Information
Underlying
Non-
Underlying
items Reported Underlying
Non-
Underlying
items Reported
2024 2024 2024 2023 2023 2023
For the year ended 31 December £m £m £m £m £m £m
Revenue 4,787.3 — 4,787.3 4,873.8 — 4,873.8
Cost of sales (4,268.7) — (4,268.7) (4,378.3) — (4,378.3)
Gross profit 518.6 — 518.6 495.5 — 495.5
Administrative expenses (267.9) — (267.9) (275.8) — (275.8)
Exceptional Items comprising
- Operating items — — — — 53.8 53.8
- Goodwill impairment — (114.5) (114.5) — — —
Amortisation and impairment of intangibles arising
on acquisition (excluding exceptional items)
— (28.9) (28.9) — (30.9) (30.9)
Share of results of joint ventures and associates, net
of interest and tax
22.8 — 22.8 29.0 — 29.0
Operating profit / (loss) 273.5 (143.4) 130.1 248.7 22.9 271.6
Net finance costs (33.1) — (33.1) (24.6) — (24.6)
Profit/(loss) before tax 240.4 (143.4) 97.0 224.1 22.9 247.0
Tax (charge)/credit (60.4) 7.9 (52.5) (50.8) 6.2 (44.6)
Effective tax rate 25.1% 54.1% 22.7% 18.1%
Profit/(loss) for the year 180.0 (135.5) 44.5 173.3 29.1 202.4
Basic EPS 16.97p 4.17p 15.61p 18.23p
Diluted EPS 16.67p 4.10p 15.36p 17.93p
Joint ventures and associates – share of results
During the year, the most significant joint ventures and
associates in terms of scale of operations were Merseyrail
Services Holding Company Limited (Merseyrail) and VIVO
Defence Services Limited (VIVO). Both are incorporated and
operated in the UK.
Merseyrail generated revenue of £215.0m (2023: £217.0m),
with the Group’s share of profits net of interest and tax for the
year being £10.9m (2023: £15.9m). The reduction in Merseyrail
revenue and profits is primarily due to a one-off commercial
settlement received in 2023. The Group received dividends of
£14.1m (2023: £21.1m).
VIVO revenue for the year was £917.8m (2023: £844.9m) with
the Group’s share of profits net of interest and tax for the year
being £11.9m (2023: £13.1m). The increase in VIVO’s revenue
is largely due to volumes and the impact of indexation. The
decrease in profit is due to lower margins on billable work and
the mix of margins within different contracts. The Group
received dividends of £16.7m (2023: £nil).
Whilst the revenues and individual line items are not
consolidated in the Group Consolidated Income Statement,
summary financial performance measures for the Group’s
proportion of the aggregate of all joint ventures and associates
are set out below for information purposes.
For the year ended 31 December
2024
£m
2023
£m
Revenue 504.5 473.4
Operating profit
30.6
38.1
Net finance cost (0.1) (0.2)
Income tax charge (7.7) (8.9)
Profit after tax 22.8 29.0
Dividends received from joint ventures 30.8 21.1
Non-underlying items
Non underlying items in the year were a charge net of tax of
£135.5m (2023: credit net of tax of £29.1m).
Exceptional items - goodwill impairment: The 2024 result
includes an impairment charge before tax of £114.5m, non-
cash, non-underlying, in respect of the Asia Pacific goodwill
balance, which has been triggered by the loss of the
Immigration rebid in November 2024. The directors recognise
that the Asia Pacific business has performed below
expectations but continue to be committed to the market, and
recognise that they have a strong platform to grow the
business from. A number of changes have been made that
have started to show improvements in 2024. Further plans are
being developed and executed to strengthen the business,
however, for accounting purposes and to be compliant with
IAS36, these improvements and plans are not used to support
the goodwill valuation (see note16).
Exceptional items - operating items: In 2023 there was a credit
before tax of £53.8m following a release of the provisions held
for indemnities provided on disposed businesses totalling
£43.9m, due to the claims period ending. The Group also
received in 2023, £9.9m compensation on the early
termination of a contract which, due to the size of the
settlement, had been disclosed as exceptional.
Amortisation and impairment of intangible assets arising on
acquisitions of £28.9m (2023: £30.9m) (see note 17).
Non-underlying tax for the year was a credit of £7.9m (2023:
credit of £6.2m).
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 19
Finance costs and investment revenue
Net finance costs recognised in the income statement were
£33.1m (2023: £24.6m), consisting of investment revenue of
£7.7m, less finance costs of £40.8m.
Investment revenue of £7.7m (2023: £7.0m) includes interest
accruing on net retirement benefit assets of £1.9m (2023:
£3.1m), and interest income of £5.3m (2023: £3.9m).
Finance costs of £40.8m (2023: £31.6m) include interest
incurred on loans, primarily the US private placement loan
notes and the revolving credit facility of £14.7m (2023:
£15.6m) and lease interest expense of £19.9m (2023: £13.1m)
as well as other financing related costs including the impact of
foreign exchange on financing activities. The increase in lease
interest expense year on year is primarily due to the continuing
increase in the number of leases for dispersed properties
required for our UK asylum contract.
Net interest paid recognised in the cash flow statement was
£28.5m (2023: £26.5m), consisting of interest received of
£5.3m less interest paid of £33.8m.
Tax
Underlying tax
The underlying tax charge recognised in the year was £60.4m
(2023: £50.8m). The effective tax rate of 25.1% is higher than in
2023 (22.7%). The increase compared with 2023 is due to
movements in provisions as part of the regular reassessment of
tax exposures across the Group together with charges
recognised in 2023 in connection with the finalisation of tax
filings, withholding taxes suffered for which no tax benefit is
expected and the change in mix of where profits have arisen.
The tax rate at 25.1% is slightly higher than the UK standard
corporation tax rate of 25%. This is due to withholding taxes
suffered to the extent no tax benefit is expected (increasing the
rate by 1%), the increase in provisions held for uncertain tax
positions (increasing the rate by 0.4%), additional charges on
the finalisation of prior year returns (increasing the rate by
0.6%) and the movement in unprovided deferred tax
(increasing the rate by 0.2%). This is offset by the impact of
profits of joint ventures and associates whose post-tax profits
are included in the Group’s profit before tax (reducing the rate
by 2.4%) together with the impact of lower statutory rates of tax
on overseas profits (reducing the rate by 0.3%). Other smaller
items result in a net increase to the rate of 0.6%.
Non-underlying tax
A tax credit of £7.9m (2023: £6.2m) arises due to tax
deductions associated with the amortisation of intangibles
arising on acquisitions.
The goodwill impairment during the year is not tax deductible
and therefore has no tax credit associated with it.
Deferred tax assets
At 31 December 2024, the Group has recognised a net
deferred tax asset of £177.7m (2023: £184.8m). This consists of
a deferred tax asset of £229.8m (2023: £235.7m) and a
deferred tax liability of £52.1m (2023: £50.9m). A £177.5m UK
deferred tax asset has been recognised on the Group’s
balance sheet at 31 December 2024 (2023: £179.9m) on the
basis that the performance in the underlying UK business
indicates sustained profitability which will enable the
accumulated tax losses within the UK to be utilised.
Taxes paid
Net corporate income tax of £41.3m (2023: £41.1m) was paid
during the year, relating to the Group’s operations in Asia
Pacific (£5.3m), North America (£25.0m), Europe (£9.4m) and
the Middle East (£2.2m). The UK has a net repayment of £0.6m
in the year, this consisted of a £2.6m payment to HMRC, offset
by £3.2m received from the Group’s joint ventures and
associates for losses sold to them. The amount of tax paid,
£41.3m, differs from the tax charge in the period, £52.5m,
mainly because taxes paid/received from Tax Authorities can
arise in later periods to the associated tax charge/credit. This is
particularly the case with regards to movements in deferred
tax, such as on the use of prior year losses, and provisions for
uncertain tax positions.
Total tax contribution
The Group’s published tax strategy of paying the appropriate
amount of tax as determined by local legislation in the
countries in which it operates means that a variety of taxes are
paid across the globe. To increase the transparency of the
Group’s tax profile, the cash taxes that have been paid across
its regional markets is shown below.
In total during 2024, Serco globally contributed £981.4m of tax
to governments in the jurisdictions in which it operates.
Taxes by category
Taxes borne
£m
Taxes
collected
£m
Total
£m
Total of Corporate
Income Tax
41.8 — 41.8
Total of VAT and
similar
7.8 298.7 306.5
Total of People
Taxes
178.9 428.2 607.1
Total Other Taxes 21.8 4.2 26.0
250.3 731.1 981.4
Taxes by region
Taxes borne
£m
Taxes collected
£m
Total
£m
UK & Europe 150.0 429.9 579.9
Asia Pacific 29.0 166.8 195.8
North America 67.5 128.3 195.8
Middle East 3.8 6.1 9.9
250.3 731.1 981.4
Corporation tax, which is the only cost to be separately
disclosed in our Financial Statements, is only one element of
the Group’s tax contribution. For every £1 of corporate tax paid
directly by the Group (tax borne), a further £4.99 is borne in
other business taxes. The largest proportion of these is in
connection with employing people.
In addition, for every £1 of tax borne, £2.92 is collected on
behalf of national governments (taxes collected). This amount
is directly impacted by the number of people employed and
the sales made.
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 20
Treasury risk management and operations
The Group’s operations expose it to a variety of financial risks
that include access to liquidity, the effects of changes in
foreign currency exchange rates, interest rates and credit risk.
The Group has a centralised treasury function whose principal
role is to seek to ensure that adequate liquidity is available to
meet the Group’s funding requirements as they arise and that
the financial risk arising from the Group’s underlying
operations is effectively identified and managed.
Treasury operations are conducted in accordance with policies
and procedures approved by the Board which are reviewed
annually. Financial instruments are only used for hedging
purposes and speculation is not permitted. A monthly report is
provided to senior management outlining performance against
key risk management metrics, as required by the Treasury Policy.
Liquidity and funding
As at 31 December 2024, the Group had committed funding of
£629.2m (2023: £558.8m), comprising £279.2m of US private
placement loan notes, and a £350.0m revolving credit facility
which was undrawn. The US private placement loan notes are
repayable in bullet payments between October 2025 and
February 2034. The Group does not engage in any external
financing arrangements associated with either receivables or
payables.
During the year ended 31 December 2024 total repayments of
debt were £52.8m.
The Group’s revolving credit facility provides £350.0m of
committed funding for five years from the arrangement date in
November 2022. The facility includes an accordion option,
providing a further £100.0m of funding (uncommitted and
therefore not incurring any fees) if required without the need
for additional documentation. This option has not been
included in the Group’s assessment of available liquidity as
approvals are required to access the funding.
Interest rate risk
The Group has a preference for fixed rate debt to reduce the
volatility of net finance costs. The Group’s Treasury Policy
requires it to maintain a minimum proportion of fixed rate debt
as a proportion of overall Adjusted Net Debt and for this
proportion to increase as the ratio of EBITDA to interest
expense falls. As at 31 December 2024, £279.2m of debt was
held at fixed rates and Adjusted Net Debt was £99.8m.
Foreign exchange risk
The Group is subject to currency exposure on the translation to
Sterling of its net investments in overseas subsidiaries. The
Group seeks to manage this risk, where appropriate, by
borrowing in the same currency as those investments. Group
borrowings are predominantly denominated in Sterling and US
Dollars. The Group seeks to manage its currency cash flows to
minimise foreign exchange risk arising on transactions
denominated in foreign currencies and uses forward contracts
where appropriate to hedge net currency cash flows.
Credit risk
Cash deposits and in-the-money financial instruments give rise to
credit risk on the amounts due from counterparties. The Group
manages this risk by adhering to counterparty exposure limits
based on external credit ratings of the relevant counterparty.
Net assets
At 31December 2024, the consolidated balance sheet shown
on page 138 had net assets of £842.5m, a movement of
£191.2m from the closing net asset position of £1,033.7m as at
31December 2023. This reduction is a result of returns to
shareholders totalling £179.7m through share buybacks and
dividend payments, offset by £4.7m of total comprehensive
income generated during the year.
Key movements since 31 December 2023 on the consolidated
balance sheet shown on page 138 include:
• A decrease in goodwill of £80.5m driven predominantly
by £114.5m impairment in Asia Pacific CGU offset by
the goodwill on acquisition of EHC and Climatize
totalling £30.9m.
• A reduction in other intangible assets of £14.2m due to
amortisation of £31.4m, partly offset by assets arising on
acquisition of £15.5m.
• A decrease in the net retirement benefit asset of £20.5m
primarily in respect of SPLAS; further details are provided
in the pensions section below.
• Provisions have increased by £20.0m predominantly due
to a provision in respect of a contingent liability
recognised on the acquisition of EHC.
• Cash and cash equivalents have increased by £88.6m. In
the period the Group generated free cash flow of
£227.5m and £65.4m from net advance of loans. This was
offset by £141.3m shares repurchased, £38.4m dividends
to shareholders and £20.8m acquisition of subsidiaries,
net of cash acquired.
• Lease liabilities have increased by £76.3m largely as a
result of circa 1,000 more leases for dispersed properties
in our UK asylum contract. This has also resulted in an
increase of £74.0m of right of use assets.
• Net loan balances have increased by £70.2m due to the
issue of additional USPP notes of £118.2m partially offset
by repayment of USPP notes of £52.8m.
• The movement in contract assets, trade receivables
and other assets, and, contract liabilities, trade payables
and other liabilities are as a result of normal working
capital movements.
Pensions
Serco’s pension schemes have an accounting surplus before
tax of £4.0m (2023: £24.5m). The decrease in the net
retirement benefit asset of £20.5m is primarily due to market
conditions and changes to assumptions on the two UK funded
schemes, SPLAS and RPS. Higher yields compared to 2023
resulted in the majority of the £102.6m fall in the fair value of
UK schemes assets . The Group’s UK schemes liabilities
reduced by £79.9m primarily due to the higher yields
increasing discount rates.
Based on the 2021 actuarial funding valuation which was
finalised in 2022 for SPLAS, the Group has committed to make
deficit recovery payments of £6.6m per year from 2022 to 2030.
The opening net asset position led to a net interest income
within net finance costs of £1.9m (2023: £3.1m).
Group and Divisional Review continued
Serco Group plc | Annual Report and Accounts 2024 | 21
Current trends
The ‘Four Forces’ continue to drive demand in our markets
As a partner to governments in more than 20 countries, across
five sectors, we are well positioned to access opportunities in
the most valuable business-to-government (B2G) markets. This
international and sectoral footprint not only gives us resilience,
but the agility to respond to changes in our operating
environment. This year has been one of change in our markets -
alongside significant geopolitical conflict, 2024 also saw around
half of the world’s population head to the polls and a rapid
growth in technological innovation. Much of this has driven
demand for our services, with governments seeking support to
manage uncertainty and change. Despite this fluctuation, our
B2G market was, and continues to be, large and growing, with
high barriers to entry.
Large
In 2023, the estimated addressable spend by governments in
geographies
1
and sectors where we offer services
2
was
£870bn
3
, of which we have a <1% market share
4
.
Looking
ahead, our B2G market is expected to see growth driven by the
rising expectations of citizens, alongside the need to modernise
infrastructure, extend the life of assets and improve resilience
across the military and civilian space. It is clear that commercial
partners to the public sector will be needed to realise these
requirements for government services.
Growing
With change and uncertainty comes the demand for proven
expertise, particularly in places where we have a long pedigree
and deep operational understanding.
As such, we see significant opportunity across many of our key
areas of operation, including two of our largest:
• Defence: ~£1.9bn
5
(~36%) of Serco revenue that has
grown by 10% over the past 5 years, with a large pipeline of
opportunities and strong track record across areas
including acquisition and engineering support, Training and
People services
6
, Uncrewed Surface Vessels, C6ISR
7
and
SatCom, and asset modernisation (see Pituffik case study on
page 26). Despite this, we currently only have a small share
of this ~£300bn market
4
,which is growing rapidly.
• Migration: a ~£1.3bn
5
sector for Serco, where we lead the
market in many geographies through the delivery of
services including accommodation and integration, case
management, repatriation, and border protection (see case
study on page 26). We have seen significant growth of 34%
over the past 5 years and the fundamental drivers of
demand continue to be strong. 350m migrants (4% of the
global population)
8
are expected globally by 2030, making
it a ~£30bn government services market
9
.
High barriers to entry
With regulatory, technical and governance standards all
creating high barriers to entry, the B2G market is not only
growing, we believe it is more insulated from shocks and new
entrants. Our strong pedigree, long-standing customer
relationships and tested operating model will continue to allow
us to maintain and grow our market position in these sectors.
More broadly, the fundamental dynamics of our operating
environment remain consistent. Governments remain subject to
the ‘Four Forces’ (see below), which we have long referenced as
the key drivers of government spending on private sector
service delivery. In fact, with greater labour market challenges,
geopolitical risk, and technology transformation, we expect
these Forces to intensify.
Localisation and insourcing has been noted in some
geographies, although this seems isolated to specific sectors
(e.g. UK passenger rail), with the general trend of greater
demand for private sector expertise from governments
continuing. Specific details on each of the geographies’
operating environments can be found in their respective
sections (see pages 14 to 18).
In this growing market, our deep-rooted partnerships with
customers, alongside operational expertise and robust financial
and risk management keep us well placed to seek to meet the
demands of the operating environment, deliver superb services
and strong commercial performance.
The ‘Four Forces’ driving demand
Our Market
Serco Group plc | Annual Report and Accounts 2024 | 22
5. Including share of joint ventures.
6. People services refers to recruitment, training, transition support and
related solutions.
7. Command, Control, Communications, Computers, Cyber, Intelligence,
Surveillance, and Reconnaissance.
8. World Economic Forum and BCG Henderson Institute.
9. Excludes Non-Governmental Organisations’ spend, which may also be
addressable (i.e. NATO).
1. 2023 government services spend in Serco geographies. Serco geographies included
are Australia, Austria, Belgium, Canada, Czech Republic, France, Germany, Hong
Kong SAR, Italy, Luxembourg, the Netherlands, New Zealand, Spain, Saudi Arabia,
Singapore, Sweden, Switzerland, the UAE, United Kingdom and the United States.
2. Estimated based on a refined version of the model used for 2021 Capital Markets Day
that projected a total addressable market of £715bn. Market data provided by
Renaissance Strategic Advisors.
3. Estimates based on independent analysis by Renaissance Strategy Advisors.
4. 2023 market share on Serco geographies listed in 1.
Global themes
How the ‘Four Forces’ are driving demand in government services markets
Our Market continued
Serco Group plc | Annual Report and Accounts 2024 | 23
GROWING
COSTS -
geopolitical
uncertainty
driving demand
Global conflicts and tensions continue to drive demand for security from national
governments as well as international organisations. As such, Defence spending
commitments and targets have increased, including investment in services
provided by private sector partners such as training and equipment maintenance.
This uncertainty – among other factors such as climate change – is also expected
to influence global migration patterns, creating more demand to manage
borders and support those moving across them.
RISING
EXPECTATIONS OF
SERVICE QUALITY -
technological change
transforming
services
2024 was the year generative AI truly penetrated the public consciousness.
Governments and business alike began in earnest to try and embed AI and its
associated advancements into their operations. From call centres to preventative
maintenance, or even military training, the expanding use of AI will continue as
we discover new use cases. Governments will need to work with private sector
experts to develop and integrate this new technology.
VOTER
INTOLERANCE OF
HIGHER TAXATION -
fiscal pressures
continuing to squeeze
government
budgets
Despite some easing in inflation and a generally improved economic outlook,
government budgets around the world remain under significant pressure. Public
sector debt remains at, or near, historic highs and administrations continue to
face challenges as they look to balance their books. As they seek to find
efficiencies, governments will continue to turn to the private sector to help find
more economical means of delivering services.
NEED TO BALANCE
PUBLIC INCOME
AND EXPENDITURE -
addressing urgent
and costly talent
shortages
With an increasingly internationally mobile workforce and skilled workers in high
demand (particularly driven by the technology transformation, as noted above),
governments are looking to partners outside the public sector to support their
talent base. For example, the number of digital, data and technology
professionals in the UK civil service is estimated to be 4.5%, according to official
estimates. This is less than half the number it needs when compared to an
equivalent industry average of between 8% and 12%
1
. For governments to
develop their own specialist workforce is not only time-consuming, but costly. We
therefore continue to see demand for private sector partners to support
governments in managing these demands by providing targeted expertise in a
more timely and cost-efficient way.
1. UK Parliament - PAC Report - Digital transformation in government: addressing the barriers to efficiency.
Empowering productivity through
simplification, smarter ways of working
and technology-enabled innovation.
Consistently exceeding expectations
through service delivery and growing on-
contract through a deep understanding
of customer needs.
Winning and protecting high-quality business that
drives value for our customers and our Company.
Delivering growth
A focus on execution
Our Purpose, Vision, Mission and Values
Last year we redefined our Purpose, Vision and Mission,
alongside our Goals. These central principles, as well as
our commitment to an international, diversified portfolio
of government customers, continues to be at the core of
our strategy.
Our medium-term goals
We remain confident that focusing on the growing B2G market
within our existing geographies and sectors remains the key to
delivering our medium-term goals. This is reinforced by the ten-
year high £11.2bn pipeline of opportunities we have reported at
the end of 2024.
Three priorities to drive delivery:
Growth, Operational Excellence
and Competitiveness
In last year’s annual report, we identified a plan with several
priority areas to drive the execution of our strategy. We
continually refine our portfolio and how we work, to remain
agile and innovative and seize the significant opportunities
in our key markets. Therefore, we are now narrowing our
focus to three of these priorities, through which we continue
to execute our strategy.
These three interconnected priorities are mutually
reinforcing. Growth fuels investment in operational
excellence and innovation. Operational excellence builds
the trust that wins us new opportunities. Competitiveness
underpins our ability to win and creates the headroom we
need to invest.
At the same time, fundamental to the delivery of our plan is
continued development of our people, a relentless focus on
our customers and advancing our offering through
technological improvement. To take the latter as an
example, we are investing in our digital and technology
capabilities more than ever, to ensure that we can meet and
exceed our customers’ expectations. AI has penetrated the
public consciousness in 2024, and government services are
not immune from its impact.
Recognising the increasing importance of these changes to
our market, we have taken steps to accelerate our use and
development of digital and technology platforms through
the creation of the new Group Chief Digital and Technology
Officer role, who sits on the Group Executive Committee
and leads a dedicated team of technology specialists (see
case study on page 27).
Our Strategy
Serco Group plc | Annual Report and Accounts 2024 | 24
M&A - augmenting organic growth
Alongside our strategy to deliver sustainable, profitable organic growth, we have a strong balance sheet that we can leverage to
further enhance our growth ambitions. Our long-standing three criteria for acquisitions are:
1. Capability – enhance or add to our offering
2. Market access – reach into new geographies, sectors or customers
3. Scale – create economies of scale
Following two successful acquisitions in Europe (see page 26), our recent focus has been on converting a US Defence acquisition to
further build scale and capability in this large, growing market. In January 2025, we announced an agreement (subject to regulatory
approval) to acquire Northrop Grumman’s mission training and satellite ground network communications software business (MT&S).
As outlined in the case study below, this purchase increases our growth potential in US as well as providing solutions we can offer to
our customers worldwide.
Growth
MT&S Acquisition - enhancing our capabilities,
increasing our exposure to high-growth markets
Providing the US military with advanced mission training
services and software that makes satellite ground networks
more efficient, MT&S supports programmes across the US
Army, Space Force, Air Force, Navy, Combatant Commands
and international partners.
Its technology-enabled training services help war fighters
achieve mission readiness through advanced simulation-based
training and mission rehearsal capabilities across multi-domain
immersive environments, powered by live, virtual and
constructive technologies. Through the Mission Command
Training Program (MCTP) the business coordinates advanced
training exercises using US Army principles, tactics, techniques
and procedures to give soldiers the most realistic scenarios to
train with. MT&S owns and develops the Distributed Mission
Operations Network (DMON). The network delivers secure
connectivity and network interoperability between unique
simulator platforms across the globe, allowing aircrews in
different locations to train together in a high-fidelity virtual
environment, including mission planning and execution
materials, scheduling, briefing, execution and debriefing.
Its software optimises satellite ground station performance.
This includes providing software for communications planning
and network monitoring.
MT&S will build further scale for us in North America, growing
our business beyond US$2bn of revenue, US$200m of profit
and increasing our number of colleagues by ~1,000.
Beyond the bolstering of our US-based business through
increased exposure to high-growth markets and improved
capabilities, the combination of MT&S and Serco increases the
growth potential of both organisations, through:
• Improved cost competitiveness of MT&S: MT&S will
benefit from being part of Serco where services are core
and Defence training is a strategic priority area. Under our
ownership, MT&S will have a lower indirect cost base,
significantly enhancing its competitiveness.
• Increased scale and technology capabilities will benefit
Serco’s pipeline of potential new work: MT&S has a strong
track record delivering large programmes in training,
space and technology services for the US Department of
Defense. The ability to reference this past performance will
enhance our ability to win new work in our existing pipeline.
We also expect to be able to expand the pipeline as we
explore new opportunities with our combined capabilities.
• Exporting MT&S’ capabilities outside of the US: Military
training and satellite ground network communications
software capabilities are critical services for armed forces
around the world. MT&S offers best in class solutions in
these areas, which have so far been primarily limited to the
US. We see significant applicability to our other existing
markets, including Australia, UK & Europe. The US$327m
(£264m) deal is expected to close in mid-2025.
Our Strategy in action
Serco Group plc | Annual Report and Accounts 2024 | 25
Growth continued
Delivering Defence excellence in the ice
Pituffik - Greenland Space Base modernisation for
US Department of Defense
We expanded our services in the military space market, with
the award of the £250m Pituffik Space Base contract in 2024.
Appointed by the US Department of Defense, we are
delivering the modernisation of the back-up electrical plant for
the US Space Force’s Pituffik Space Base in Greenland. The
base is locked by ice nine months each year, making
continuous and secure energy to the facility an essential
priority. Working to a tight schedule, we are responsible for
managing the repairs and upgrades to support missile
warning, missile defence, and space surveillance missions.
Partnering with local Danish construction and engineering firm
Aarsleff; once complete, the new alternate power plant will
provide greater and more stable electrical capacity to the US
Department of Defense’s northernmost installation. This
contract is an example of our continued growth in the US
Defence market and trust we have from our customers to
deliver complex critical infrastructure projects.
Creating an impact through combining migration
support operations across Europe
Supporting migrants and governments across
Europe by integrating specialist providers
We continue to strengthen our position as a leading provider
of migration services, particularly in the European market. The
acquisitions of the Organisation for Refugee Services (ORS) in
2022 and European Homecare (EHC) in 2024 show our
expanding footprint and enhanced capabilities, allowing us to
support governments to manage all aspects of migration.
These acquisitions have bolstered our capabilities across
accommodation, medical and social care, community
integration and repatriation. Building on a strong pedigree in
the sector, collaboration across the businesses has enabled
us to combine resources and expertise to build a strong
platform to deliver scalable, tailored solutions for
governments and other public authorities. This has allowed
Swiss-based ORS and German-based EHC to work together
to expand into other European nations such as Austria. This
has been especially important during the integration of ORS
and EHC into the wider Serco business, harmonising
operational practices and tailoring solutions to the specific
needs of countries across Europe. By bringing ORS and EHC
into Serco, we have furthered our role as a trusted and
reliable partner to governments in delivering these vital and
in-demand services.
Our Strategy in action continued
Serco Group plc | Annual Report and Accounts 2024 | 26
Competitiveness
Accelerating Serco’s AI and technology capabilities
Driving digital-first solutions with a new tech team
Serco continues to invest and innovate in its digital and
technology capabilities to deliver better quality services at a
reduced cost to our customers. Further focus in this area has
been brought by the creation of a new Group Executive
Committee role of Group Chief Digital and Technology Officer
(Tom Read). This new role leads a team aimed at delivering
digital transformation for the business, both in back-office
functions as well as frontline operations. This will deliver best-
in-class digital solutions, instil a culture of data literacy in the
business, and expand the use of AI and automation across our
operations. We can see this work already having an impact
across multiple functions, from the embedding of AI-powered
bid-writing software to the roll-out of AI-generated training
videos. This digital transformation will continue to drive
competitiveness through delivering more efficient processes,
reducing cost and improving the quality of delivery.
Operational Excellence
Delivering excellence in employment services
Health Assessment Advisory Services for the UK
Department of Work and Pensions
By September 2024, we had safely mobilised the new Health
Assessment Advisory Service (HAAS) contract, working with the
UK Government’s Department for Work and Pensions. The
team comprises doctors, nurses, paramedics, physiotherapists
and occupational health specialists, supported by back office
and contact centre colleagues, and delivers assessments for a
range of key social security benefits, including Personal
Independence Payment, Universal Credit and Employment and
Support Allowance. The £365m contract covers South West
and South Central England. Successfully transferring over
1,000 new colleagues into the business from two previous
service providers with minimal impact to operations, we have
designed a service that places often vulnerable customers and
their safety at its heart. With our partners Advo Health and
PFAS, we carry out over 350,000 telephone, video and face-to-
face assessments at designated centres across the contract
area. The complex yet smooth transition demonstrates our strong
capabilities in delivering highly complex, critical operations,
working in lockstep with our clients, colleagues and partners.
Our Strategy in action continued
Serco Group plc | Annual Report and Accounts 2024 | 27
We use key performance indicators (KPIs) to monitor our performance,
ensuring that we have a balance and an appropriate emphasis to both
financial and non-financial aspects.
For each KPI, we explain the relevance to our strategy and the performance in 2024. Our KPIs are unchanged in 2024 and therefore
there is comparability and consistency with our focus in the business and the guidance we issue. The Additional Information section
from page 207 provides further detailed definitions and reconciliations of our Alternative Performance Measures (APMs). ESG
performance and disclosure data can also be found in the Our Impact section on pages 33 to 61 as well as in our complete 2024
ESG Databook available on www.serco.com/our-impact. Definitions for each KPI can be found in the Glossary on pages 212 and 213.
Priority area:
1. Underlying operating profit (UOP)
Link to priority area:
Relevance to strategy
The level of absolute UOP and the
relationship of UOP with revenue – i.e. the
margin we earn on what our customers
pay us – is at the heart of our aspiration to
be profitable and sustainable. We believe
the delivery of strategic success has
potential to support annual revenue
growth of 4-6%, in the medium term, and
trading margins of 5-6%.
Performance
Underlying operating profit increased by
10% to £274m. The growth was driven by
our efforts to improve the productivity
and efficiency of the business and the
positive contribution from acquisitions.
2. Underlying earnings per share
(EPS), diluted
Link to priority area:
Relevance to strategy
EPS builds on the relevance of UOP and
further reflects the strength and costs of
our financial funding and tax arrangements.
EPS is, therefore, a measure of financial
return for our shareholders.
Performance
Diluted underlying earnings per share
increased by 9% to 16.7p. Underlying
profit after net finance costs and tax
increased by 4% and this was boosted at
the EPS level by a reduction in the
weighted average number of shares, due
to our share buybacks in 2023 and 2024.
3. Free cash flow (FCF)
Link to priority area:
Relevance to strategy
FCF is a reflection of the sustainability of
the organisation, by showing how much of
our effort turns into cash to reinvest into
the business or to deploy in other ways.
Our philosophy is that we should only win
business that generates appropriate cash
returns and we apply disciplined
management of our working capital cash
flow cycles.
Performance
Free cash flow was very strong at £228m,
and trading cash conversion of 109%.
Strong cash generation has been
achieved by continued focus on the
timeliness and accuracy of issuing sales
invoices, which enables our customers to
pay us on time.
4. Underlying return on invested
capital (ROIC)
Link to priority area:
Relevance to strategy
ROIC measures how efficiently the Group
uses its capital to generate returns from its
assets. To be a sufficiently profitable and
sustainable business, a return must be
achieved that is appropriately above a
cost of capital hurdle reflective of the
typical returns required by our weighting
of equity and debt capital.
Performance
ROIC increased by 480 basis points to
26.2%. The improvement resulted from
the combination of increased underlying
operating profit and lower average
invested capital.
Key Performance Indicators
Serco Group plc | Annual Report and Accounts 2024 | 28
£274m
£249m
£237m
£229m
£163m
2024
2023
2022
2021
2020
16.7p
15.4p
13.9p
12.6p
8.4p
2024
2023
2022
2021
2020
£228m
£209m
£159m
£190m
£135m
2024
2023
2022
2021
2020
26.2%
21.4%
20.6%
23.7%
19.1%
2024
2023
2022
2021
2020
5. Pipeline of large new
bid opportunities
Link to priority area:
Relevance to strategy
The pipeline provides a measure of
potential for winning new business and,
therefore, is a major input to being
profitable and sustainable. The size of the
pipeline and our win-rate on the bids
within it are at the heart of our strategy to
grow the business.
Performance
Our pipeline of potential new work was
£11.2bn at the end of December, 11%
higher than the £10.1bn level at the end
of 2023. This is the highest level seen in
more than a decade.
6. Order book
Link to priority area:
Relevance to strategy
The order book reflects progress with
winning and retaining good business and,
as a store of future value, it is a key
measure to ensure that the Group is
profitable and sustainable. The value of
how much is added to the order book
compared to how much revenue we are
billing our customers – the book-to-bill
ratio – is important to achieving long-term
growth.
Performance
The order book remains strong at 13.3bn.
This excludes unsigned extension
periods, and the order book would be
£3.0bn (2023: £2.6bn) higher if option
periods in our US business, which typically
tend to be exercised, were included.
7. Major incident frequency rate
(MIFR), per 1 million hours worked
Link to priority area:
Relevance to strategy
Our vision of Zero Harm strives to operate
in the safest and healthiest way possible at
all times. A positive, collaborative and
open approach to safety and the
continuous drive to improve our safety
culture has a direct bearing on the
commitment and engagement of our
people and our overall performance.
Performance
Following a substantial decrease in major
injuries and the MIFR in 2023, with
reductions of 24% and 14%, respectively,
we maintained the MIFR level at 0.37
in 2024.
8. Lost time incident frequency rate
(LTIFR)
Link to priority area:
Relevance to strategy
Building on MIFR, focusing on reducing
lost time incidents is an additional, more
specific way of working towards our Zero
Harm vision, by ensuring our people are
safe, healthy and able to thrive. This
supports an open and honest culture of
continuous safety improvement and
incident reduction.
Performance
Continuing focus on situational
awareness, supported by specific
divisional initiatives saw a 24% reduction
during the year in our LTIFR to 4.86.
9. Employee engagement
Link to priority area:
Relevance to strategy
Employee engagement reflects our
aspiration to create ‘a place people are
proud to work’. This is crucial to delivering
outstanding customer service and
achieving our strategic aims including our
growth targets.
Performance
Findings indicate modest but steady gains
in colleague and leadership engagement
worldwide. Overall engagement rose
from 71 to 72, marking two consecutive
years of improvement, with leadership
engagement increasing from 77 to 80.
These encouraging results reflect
the stability of engagement at Serco
and provide a foundation for
further improvement.
Key Performance Indicators continued
Serco Group plc | Annual Report and Accounts 2024 | 29
£11.2bn
£10.1bn
£8.4bn
£9.9bn
£6.4bn
2024
2023
2022
2021
2020
£13.3bn
£13.6bn
£14.8bn
£13.7bn
£13.5bn
2024
2023
2022
2021
2020
0.37
0.37
0.43
0.36
0.41
2024
2023
2022
2021
2020
4.86
6.36
5.78
4.17
4.48
2024
2023
2022
2021
2020
72 points
71 points
70 points
70 points
73 points
2024
2023
2022
2021
2020
See Glossary on pages 212 and 213 for KPI definitions
Building capability and
improving productivity
This year, we prioritised key elements of our global People and Culture
strategy, focusing on recruitment, productivity and performance to drive
better outcomes. The dedication of our people has been critical in
advancing these priorities, fostering stronger regional collaboration and
delivering enhanced performance and impact for our customers.
Often working in unique and challenging environments, our
people are dedicated to helping some of the most vulnerable
people in our society at times when their lives are in deep
crisis. Our organisation is orientated to this purpose and our
challenge is to ensure that Serco’s promise to its customers is
delivered safely, effectively and with human compassion.
Our People and Culture strategy
Building on this momentum, 2024 saw the early phases of our
three-year strategy come to life, with a sharp focus on
workforce stability, continuous improvement and operational
efficiency. These efforts are not only strengthening our ability
to deliver exceptional service for customers and communities
but also positioning Serco to capitalise on emerging market
opportunities. By reinforcing our role as a trusted partner, we
are laying the foundation for delivering impactful, sustainable
solutions that meet the needs of those we serve.
Our People and Culture strategy is built around a set of objectives
and key results, structured within six interconnected pillars of
change. Each pillar seeks to address a range of challenges shared
across our operational geographies, from improving recruitment
and retention to enhancing safety, productivity and development.
This unified approach seeks to enable Serco to tackle complex,
global issues with consistency and collaboration, creating
opportunities for our teams to share knowledge, transfer best
practices and implement innovative solutions. By aligning efforts
across regions, we are fostering stronger cross-functional
partnerships, driving efficiencies and delivering tangible
improvements that strengthen both local operations and our
global enterprise.
Ultimately, this strategy seeks to ensure that we are better
equipped to support our customers and communities while
empowering our people to thrive.
The six pillars of our People and Culture strategy
The six pillars above represent a cohesive strategy that empowers our people and strengthens teams to drive Serco’s mission
forward. Together, they create a unified framework for achieving operational excellence, cultivating an inclusive and growth-
oriented culture and enhancing our market competitiveness.
Our People and Culture
Serco Group plc | Annual Report and Accounts 2024 | 30
Creating greater workforce stability
through smarter recruitment
In 2024, we elevated our approach to global talent attraction
and recruitment, focusing on streamlining both systems and
processes to support the global People and Culture strategy.
Recruiting and retaining people for high-risk and demanding
roles remains critical to Serco’s ability to deliver consistent,
high-quality service. By improving the way we attract, select
and recruit talent, we have strengthened workforce stability
and resilience, while driving operational efficiency across our
global operations.
International collaboration among our Talent Attraction teams
has allowed shared expertise and innovation to address
complex recruitment challenges. This collaboration has
resulted in enhanced recruitment outcomes:
1. Reduced voluntary attrition: Targeted interventions
contributed to a 4.7 percentage point reduction in our 12-
month rolling voluntary attrition rate, equating to retaining
1,718 more colleagues compared to the previous year.
This achievement reflects our use of advanced candidate
profiling and close collaboration across divisions. By
improving the quality of our hires we are building a
stronger, more resilient workforce.
2. Recruitment efficiency: In 2024, we stabilised global
vacancies to c.5% of our workforce. This reflects the output
of a two-year improvement programme where the total
number of vacancies in January 2023 stood at 6,481,
compared to 2,225 in December 2024. Average time-to-
hire decreased by 6.8%. Over the past year, voluntary
turnover within key timeframes also dropped, with 449
fewer colleagues leaving within three months and 1,661
fewer leaving within 12 months.
3. Transforming recruitment technology: Following a
detailed evaluation, we retained and strengthened our in-
house recruitment expertise and partnered with Phenom
People - an organisation whose mission is to help one
billion people find the right work. Together, we have
begun the process of implementing an enterprise-wide
recruitment technology platform, set to go live in 2025.
By combining improved recruitment processes with
streamlined systems, we are creating a stronger, more agile
workforce ready to deliver better outcomes for our customers
and communities.
In addition, addressing voluntary attrition and enhancing
training has reinforced our ability to create more resilient
operational teams. Lower turnover rates have contributed to a
more experienced workforce, while improved onboarding and
learning initiatives have better prepared colleagues to
navigate risks effectively and maintain high safety standards.
Enhanced tracking of high-incident contracts, supported by
Executive oversight and a collaborative approach, have led to
improved health and safety-related outcomes.
The success of this integrated approach demonstrates how
focusing on workforce stability, quality of hire, and training
strengthens safety, reduces operational risks, and creates a
more supportive environment for colleagues and the
communities we serve.
Our People and Culture continued
Serco Group plc | Annual Report and Accounts 2024 | 31
See more in the People section of Our Impact
on pages 36 to 41
Turning the Tide: How our Asia
Pacific Division achieved a substantial
reduction in voluntary attrition
What was done:
Post Covid-19, labour markets faced disruption, leading
to higher voluntary attrition rates, increasing costs, and
operational volatility. Our Asia Pacific team launched
Project Orion, in which reducing attrition became a
strategic priority with executive sponsorship and a data-
driven plan.
The team addressed unique attrition factors with tailored
initiatives, including better role advertising, improved
candidate profiling, refined training and onboarding,
leadership adjustments and competitive pay reviews.
Positive momentum in Asia Pacific provided a global
learning blueprint. Serco's International Collaboration
event enabled teams to share insights and adapt
strategies.
This initiative reflects Serco’s value of Care, creating a
supportive work environment and ensuring high-quality,
reliable services.
What we achieved:
• Rapidly sharing knowledge to address high voluntary
attrition globally.
• Tracking the five most challenging contracts in each
division and reviewing their progress through the
Divisional Performance Review (DPR) process.
• Meeting Agreed Staffing Levels (ASL) to avoid
revenue abatements.
• Reduced Asia Pacific’s annual voluntary attrition rate
from 35% to 26.2%.
Unlocking potential through leadership
and development
In 2024, Serco engaged global Talent Development teams to
create a unified approach to performance, talent development
and leadership continuity, laying the groundwork for Grow
with Serco. This initiative places learning at the heart of our
culture, aligning individual aspirations with organisational
goals and providing pathways for growth and development.
Guided by our values - Trust, Care, Innovation and Pride, and
well-established standards of behaviour, the framework fosters
growth-oriented behaviours, inclusivity and a shared
commitment to success.
In 2024, key tools, frameworks and resources were designed
and developed to support the launch of Grow With Serco in
2025. These initiatives are designed to empower colleagues,
reinforce our values and drive a culture of excellence, bringing
our global vision to life.
Aligning careers and compensation for equity
Colleagues have expressed a strong desire for more
development opportunities, reflecting their ambition to grow
and build long-term careers within the organisation. To
support this, we conducted a comprehensive review of our
global job architecture, with the aim of creating a clearer, more
consistent structure for roles across Serco. Simplifying and
standardising roles is essential to ensuring fairness in career
progression by providing greater transparency on job
expectations, skill requirements and pathways for
advancement. By reducing unnecessary complexity, we can
create more structured career opportunities, strengthen
alignment with our organisational values and improve
operational efficiency.
This work is a critical enabler of Grow With Serco, ensuring that
all colleagues, regardless of location or role, have access to
meaningful development and clear routes for progression.
In 2024, we conducted an independent Pay Equity Audit, using
advanced statistical analysis to assess pay fairness across the
UK’s corporate workforce. This approach examined how
various objective factors - such as job level, business unit and
role type, contribute to differences in pay, allowing us to
identify patterns and ensure a reliable assessment. The audit
found a statistically significant link between gender and pay,
with a gap of approximately 3% - a figure within regulatory
thresholds but one that we remain committed to monitoring
and addressing.
Moving forward, we will review flagged discrepancies, refine
our pay policies and use these insights to strengthen
transparency and fairness in our compensation practices. By
taking this proactive approach, we are reinforcing our
commitment to an inclusive and equitable workplace, ensuring
that pay decisions are based on merit and that all colleagues
have confidence in the fairness of their compensation.
Our People and Culture continued
Serco Group plc | Annual Report and Accounts 2024 | 32
Leveraging US talent to enhance
global recruitment with advanced
AI tools
What was done:
Serco’s Talent Acquisition teams are crucial in sourcing strategic roles for the
organisation and its clients. Many positions are highly specialised, leading to
scarcity in suitable candidates and lengthy recruitment timelines. By creating more
effective synergy between several AI-driven sourcing tools alongside established
platforms such as LinkedIn and Talent Neuron, Serco’s North America Talent
Acquisition team has built a high-impact recruitment engine.
Led by a dedicated Sourcing Manager, these technologies amplify one another -
automating searches, enriching data insights, and sharpening candidate
targeting, ultimately accelerating hiring for hard-to-fill roles. This interconnected
approach demonstrates how strategically layering technology can drive superior
recruitment outcomes.
What we achieved:
• Over two years, a 21.4% reduction
in time to accept, and a 48.7%
reduction in aged vacancies (60+
days open).
• A US$5m reduction in recruitment
agency spend for direct
placements and contract to hire
candidates.
Our impact
Our ESG strategy is directly linked to our
purpose to impact a better future, which
we define as creating a positive impact for
People, Place and Planet.
Our ESG framework brings together our strategic ESG
priorities, enabling us to focus on core themes within these
pillars. The foundation of our approach is our Responsible
Business Foundations, which include a commitment to integrity,
ethical decision making and living our Values every day.
Serco is a diverse and dynamic business, through which the impact
and potential for impact is significant. Our strategy centres on
maximising this impact through our most material ESG issues,
supported by the high-level Double Materiality Assessment we
undertook in 2022 (see page 34) and will be refreshing in 2025.
The strategic relevance of ESG to both the short and long-term
success of Serco is recognised through our integration of core
ESG metrics into our performance measures and relative
weightings, which are linked to the remuneration of our leadership
population. In 2024, the weighting related to ESG performance
measures was 15% for annual bonus and 10% for our Long-term
Incentive Plan, respectively, continuing our focus on the
environment and colleague safety, engagement and retention.
In 2025, we will continue to strengthen our focus on ESG,
enhancing our impact in line with our customer and broader
stakeholder expectations.
Impact report
Serco Group plc | Annual Report and Accounts 2024 | 33
Our ESG framework:
Supporting
our colleagues
to succeed
Helping our
communities
to thrive
Transitioning
our business
to Net Zero
See pages 36 to 41 for more information See pages 42 to 44 for more information See pages 45 to 51 for more information
• Health and safety
• Wellbeing
• Diversity, Equity and Inclusion (DEI)
• Colleague engagement
• Service impact - delivering
through our contracts
• Community and customers -
delivering through our
communities
• Serco’s journey to Net Zero
• Supporting nature and biodiversity
Governance - Our Responsible Business Foundations
We act with integrity in all that we do. Everyone plays their part in complying with our Code of Conduct, policies
and responsible business standards - on everything from health and safety to ethics and compliance, human rights
and the prevention of modern slavery.
Our approach to materiality
Serco’s focus on Double Materiality is
growing, as we embark on compliance
with the Corporate Sustainability
Reporting Directive (CSRD).
Double Materiality as a concept continues to gain greater focus
in ESG reporting regulations globally. In line with relevant
regulatory requirements – specifically the CSRD – we continue
to monitor industry guidance on the identification, treatment
and reporting of topics from a Double Materiality perspective.
Our ambition through this work is to better understand our
impacts, risks and opportunities (IROs) from both a financial and
non-financial perspective. Once better understood, our aim is to
navigate, manage and report on these issues as required.
In 2022, we completed a high-level Double Materiality
Assessment (DMA), which concluded that 14 issues were of
most material importance (in relation to Serco) to our various
stakeholders, including customers, shareholders and colleagues.
For this exercise, we relied on Datamaran, an AI-powered, data-
driven platform that enables companies to identify their ESG risks,
opportunities and impacts, using analysis from multiple sources.
Those issues have been mapped to our ESG framework, and in
2025 we will be partnering with Datamaran to undertake a further,
more comprehensive DMA in line with CSRD requirements.
We are pleased to be partnering with
Serco to enable their CSRD compliance
through smart ESG governance. Serco has
demonstrated a strong commitment to
bolstering their approach to ESG and
using the Double Materiality Assessment
process to build a solid foundation for
managing and monitoring their material
sustainability issues going forward.
Marjella Lecourt-Alma
CEO and Co-Founder of Datamaran
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 34
Our approach to reporting
Our approach to reporting is designed to help us better inform
and communicate with a range of stakeholders. Key
publications in our reporting suite are detailed below.
Our reporting and disclosures are designed to meet regulatory
requirements and external stakeholder expectations, while also
providing insight into our priorities, progress and ambitions on
all areas of ESG strategy.
ESG Impact Report ESG Data Book Impact Hub
For more information go to
https://www.serco.com/our-
impact
For more information go to
https://www.serco.com/our-
impact/performance
https://www.serco.com/
our-impact
ESG indices
On an annual basis we participate in a select number of ESG indices to support our improvement and transparency. The table below
outlines our latest scores and we are pleased to have seen some improvement in 2024.
Sustainability indices Scale 2024 2023 2022
MSCI AAA to CCC, AAA as a best possible score A BBB BBB
Sustainalytics 0–100, 0 as a best possible score 18.4 21 19.1
ISS ESG Corporate Rating A+ to D-, A+ as a best possible score C C C
S&P Global CSA/DJSI Ranking of companies, 100 as a best possible score 57 48 54
FTSE4Good 0–5, 5 as a best possible score 4.5 4.1 –
EcoVadis 0–100, 100 as a best possible score 60 – –
Workforce Disclosure Initiative Number of questions with a meaningful response
expressed as a percentage, 100% as a best possible
score
88% 93% –
CDP A–F, A as a best possible score A- B A-
Europe’s Climate Leaders,
Financial Times
Ranking of companies, 100 as a best possible score 76 63 –
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 35
People
Supporting our
colleagues to succeed
We place our people at the heart of our
mission to partner for impact, striving to
make Serco a place of safety and
support, where everyone matters and
everyone belongs – a place worthy of our
colleague’s dedication and commitment.
Inclusivity, engagement, safety and
wellbeing are fundamental elements in
our approach to maintain a collaborative,
high-performing culture and a loyal
workforce of diverse, top-tier talent to
enable our continued growth and
resilience.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 36
2024 highlights
22%
Reduction in Lost Time
Incidents (versus a 2023
baseline)
72
Colleague engagement
score (up from 71 in 2023)
GOLD
Membership in the 5%
Club, reflecting our
dedication to creating
‘earn and learn’
apprenticeship
opportunities
Health and safety
Health and safety is a core business
priority for Serco, as our people serve
society in some of the most physically and
psychologically demanding situations and
environments on the planet. As
governments call on us to help manage
the complex issues of an increasingly
volatile world, the risks we encounter can
be significant.
Health and safety at Serco
Our health and safety efforts focus on our vision of ‘Zero Harm’.
A core part of this is helping colleagues to better recognise
and remain alert to everyday risks through ongoing
campaigns, training and engagement efforts. In 2024, we
continued to emphasise the importance of safety in how our
colleagues think, work and behave, including through our
annual Zero Harm Week.
At the beginning of 2024, we set a goal to reduce LTIs by 50%
by the end of 2026, against a 2023 baseline. Through visible,
data-driven safety leadership and communication; and by
driving colleague ownership and accountability, we are
pleased to have seen a 22% reduction in the number of Lost
Time Incidents (LTIs) in 2024, a 31% reduction in associated
lost days, an 8% increase in recorded Zero Harm engagement
activities and a 62% increase in reported safety observations.
However, we have seen an increase in incidents involving
violence and aggression in some areas, which has had the
impact of increasing assaults and serious assaults by 31% and
29% respectively.
Understanding and managing such incidents has always been,
and continues to be, a priority and has seen heightened focus
in 2024. We have received recognition for our safety culture
and commitment, including Serco in the Middle East winning
‘Game Changer in Health, Safety & ESG’ at the Game Changers
in Sustainability and Technology Awards 2024.
Focused efforts in 2024
We have intensified efforts throughout 2024 to address
principal safety risks. Key achievements include:
Public violence and aggression: In our Justice business the
challenges in the wider Justice sector have been felt within our
Justice estate. In 2024, we introduced a number of initiatives to
try and reduce the increased levels of violence and assaults on
our staff; establishing a Safer Custody Taskforce, introducing
body-worn cameras into our UK Prisoner Escort business and
trialling innovative AI-based safe-cell behavioural analytics in
our Asia Pacific prisons. This continues to be an area of
significant focus through 2025.
Slips, trips and falls: Introduced new foot traction slip-on
devices for our Drivers Examination Services business in
Canada, which have contributed to a 22% LTI reduction.
Road risk: Implemented ‘Mobileye’ collision avoidance systems
and an online driver evaluation and training portal in the US.
We also introduced safety light displays on refuse collection
vehicles in our UK Environmental Services business, to help
alert colleagues to other vehicles in proximity.
Contract collaboration: We have grown our Contractors Forum
programme in Serco in the Middle East, evolving from several
Divisional-level events to a greater number of contract-led
forums. By openly discussing health and safety challenges with
our partners, we are driving focused collaboration in the name
of improved safety performance.
2025 priorities
We will continue to work towards our Zero Harm vision,
maintaining sharp focus on principal safety risk sites and seeking
to drive value out of our 2024 improvements; exploring
opportunities to leverage the growth of safety observation
reporting to drive new prevention focus on injury-risk events;
ongoing continuous improvement of our health and safety
training needs analysis and content; and exploring data-driven
opportunities to develop incident prediction capabilities.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 37
Wellbeing
We understand that a healthy workforce is
a more engaged and productive one, and
are, therefore, proud of the steps we have
taken to support our people with mental
health resources and wellbeing initiatives
that promote a holistic approach to health.
Serco colleagues never shy away from the toughest
challenges, so our job is to give them the best protection and
support we can, to enable them to keep doing the same for
others. This includes striving to maintain higher levels of
psychological and physical fitness, resilience and stability – for
themselves and the vital work they do.
Prioritising psychological health and safety
In 2024, Serco’s operations at His Majesty’s Prison (HMP) Ashfield
were the first prison to have achieved recognition for the
implementation of BSIs Psychological Health and Safety at
Work Scheme based on ISO 45003:2021. ISO 45003 is the
accreditation for robust management of psychosocial risks in
the workplace, issued by the International Organization
for Standardization.
The accreditation provides a framework to identify and address
potential psychological hazards that could affect our
colleagues, and while achieving it for HMP Ashfield, we also
retained our ISO 45003 Group certification. The ISO 45003
framework provides a foundation for the ‘Trauma Support
Pathway’ we are developing for colleagues, and have been
building through implementation of a trauma risk management
approach across our UK Justice & Immigration business,
including trials of post-incident trauma assessments at HMP
Thameside and trauma-focused therapy at HMP Dovegate.
We were recognised for these efforts with the Workplace
Wellbeing Award at the UK Mental Health Awards in 2024.
Building on our ISO 45003 journey, we have launched a new
‘Psychological Consequence LTI’ metric to manage
psychosocial risks (aspects of work design, management and
social and organisational contexts that can cause psychological
or physical harm) in our operations with the same forensic
rigour as we do physical risks.
This new metric will highlight areas of positive practice, while
also enabling us to target specific interventions to reduce
incidents for our colleagues. We will establish a 2024 baseline
for this metric in 2025, in order to measure progress towards
the 2026 ambition. This work has been informed by our
wellbeing research partnership with Sheffield University and a
digital psychosocial risk assessment pilot.
Improving colleague wellbeing
Our colleague wellbeing work continues to be informed by the
CCLA Mental Health Benchmark, where we have retained our
Tier 1 ranking, becoming one of only two in the Top 100
participating employers to do so for three consecutive years.
We continue to prioritise mental health training, with our
Wellbeing Ally network reaching 259 colleagues. This includes
maintaining and improving our regional Wellbeing
Programmes and Employee Assistance Programmes.
Our comprehensive approach to colleague health and
wellbeing includes financial wellbeing, to support our
colleagues to achieve and maintain financial resilience while
making the most of their money. Under leadership from our
new Group Head of Pensions and Financial Wellbeing,
appointed in 2024, we will continue seeking out new and
innovative ways to support the financial wellbeing of our
colleagues through all stages of their careers with Serco.
In 2025, we plan to use data from our new Psychological
Consequence LTI metric to target more effective risk controls,
roll out further ISO 45003 certifications in key business areas,
and refresh our wellbeing training offer to further embed
psychological and physical fitness, resilience and stability
across our organisation.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 38
Diversity, equity and inclusion
At Serco, we are working to create fairer
and more inclusive environments for all
colleagues, and the communities that
we serve.
Our diversity, equity and inclusion (DEI) approach is focused
on tackling obstacles that colleagues from disadvantaged
backgrounds face. We adopt a comprehensive approach to
understanding the challenges faced by different groups, and
the overlapping barriers experienced by some. This supports
us to create inclusive solutions for all colleagues. We also have
a specific focus on tackling the under-representation of women
in global senior leadership positions. Overall, this agenda is
rooted in the pursuit of meritocracy, and the importance of
championing merit-based, rather than prejudice or
discrimination driven successes.
Colleague experience is important to us, which is why we work
to build support structures that benefit all and enable them to
succeed. In 2024, we launched a new programme in the UK &
Europe division, Empower, designed by Serco women in
leadership to help support more women into leadership
positions. In 2025, we are launching a new talent acquisition
platform that will look to tackle bias faced by many groups,
including women and under-represented ethnic groups. We
continue to share Serco’s experience and insight externally
where appropriate, including the Serco Institute report,
‘Marching Towards Inclusivity: Bridging the Gap Between the
Armed Forces and Society,’ published in March 2024.
In response to the US President’s Executive Orders regarding
DEI and Gender Ideology in January 2025, we are actively
reviewing the policies and practices applicable to our
operations and employees in the United States to ensure full
compliance with the relevant anti-discrimination laws.
Underrepresented ethnic groups
At Serco, we recognise that diversity at the Board level is
critical to driving sustainable success and fostering a culture of
inclusion. Change begins at the top, and we are proud to have
exceeded the Parker Review's target of having at least one
minority ethnic Group Board member, with two members
currently in place. This achievement demonstrates our
commitment to creating an inclusive leadership team that
drives positive change across the organisation.
Our Middle East Nationalisation programme, Indigenous
programme in Australia, and upcoming UK Black Talent
programme are examples of our focus on tackling challenges
faced disproportionately by under-represented ethnic groups.
We are also committed to the UK Race at Work Charter and the
UK Government Parker Review. Our multiculturalism network,
SercoEmbrace, has partnered with Business in the Community
on this priority area.
We actively seek colleague feedback on our approach to DEI
to iterate its design. Two of our top scoring areas in our
colleague engagement survey relate to DEI, ‘Serco actively
promotes diversity’ and ‘I feel like I belong at Serco’, with male
and female colleagues scoring these questions equally, 74 and
75 out of 100 for each question respectively. We are looking at
talent that is coming into the business and creating internal
pathways for the talent that already exists within our business.
Championing equity through digital inclusion and
development
We believe DEI can only be achieved when everyone has fair
access to the tools, training and opportunities needed to
thrive. We have, therefore, made digital inclusion a strategic
priority, with a focus on under-represented groups. During
2024 we have driven frontline digital inclusion initiatives in
both our UK & Europe and Asia Pacific divisions to create
awareness and provide simpler ways of connecting. In the UK
& Europe 4,475 frontline workers connected onto Serco
systems through the initiative, and in Asia Pacific a new mobile
App has enabled 2,030 new users to be regularly accessing
Serco systems.
‘Belonging’ is a focus area in our new behavioural framework,
Serco Standards, which supports colleague development and
career progression. It also features in our new training
programme, Licence to Lead, which helps to raise inclusive
people-management capability. We anticipate that our new
Talent Hub – a digital performance and career marketplace
platform – will help raise visibility of diverse talent, supported
by new AI-driven recruitment tools, which support greater
diversity in candidate pools. This platform will not be launched
in the United States.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 39
Empowering diversity through colleague networks
We support a system of strong colleague networks to help colleagues mobilise around the issues they care about. Our networks aim
to engage colleagues of all levels and backgrounds, to gather insights, shape policies and bring our diversity to life through
colleague-led events. They also maintain specialist partnerships in key focus areas.
Activities and achievements in 2024 include:
Gender
• Launching our new ‘Empower’ development programme for women
in the UK & Europe division.
• Successful completion of the White Ribbon Australia Workplace
Accreditation Program, strengthening our stand against gendered
violence and sexual harassment.
• Winning ‘Best Employer (over 1,000 employees)’, and ‘Best
Employer Network’ for our Women in Technology network, at the UK
Women in Tech Employer Awards 2024.
Multiculturalism
• Continued partnership with Evenfields, a grassroots organisation
supporting black and ethnic minority talent, to create and deliver a
new Black talent development programme, Ignite.
• New partnership with Dubai Airports to foster Emirati talent and a
NAFIS (UAE Nationalisation programme) Award for our broader
Nationalisation efforts in the UAE.
• Growing our Kanyini First Nations network in Serco Asia Pacific.
LGBTQ+
1
• Continuing to support and empower the voices of our LGBTQ+
community and allies, including celebration and awareness-raising
around key events in the LGBTQ+ calendar.
• Amelia Mugridge, Chair of In@Serco, won ‘Future Leader’
recognition at the British LGBT Awards.
• Continuing to fund the multi-year Serco Scholarship, in Asia Pacific,
to support LGBTQ+ youth as a Gold partner of the Pinnacle
Foundation, an LGBTQ+ education charity.
Disability - visible
and nonvisible
• Retaining ‘Leader’ accreditation in the UK Disability Confident
scheme.
• Our colleague, Claire Kimberley, won a Chartered Institute of
Personnel and Development (CIPD) Award for her learning
programme, Neurodiversity for Managers.
• Working with The Butterfly, an advocacy agency supporting disabled
people, to update our Middle East supplier diversity strategy.
Parents
and carers
• Becoming an Employer Member with Working Families, the UK
charity for working parents and carers.
• Completing The Working Families Benchmark to evaluate our
culture, policies and practices against industry best practice and
identify opportunities for further improvement.
Veterans
• Winning ‘Employer of the Year’ at the National Veterans’
Employment Awards in Australia.
• Running our SercoVets Mentorship Program to support veterans in
North America, where we have been awarded VETS Indexes 5-Star
Employer for the fourth consecutive year.
1. This is a UK network.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 40
Colleague
engagement
We are committed to maintaining a
resilient and motivated workforce in a
challenging world.
The engagement of our colleagues helps shape our
approach and strategy throughout the year. By assessing
how they feel about Serco, we can better anticipate and respond
to colleague needs, and optimise the conditions for them to
thrive in the workplace.
Taking action on colleague feedback in 2024
Throughout 2024, we built on the results of our 2023 colleague
engagement survey, Viewpoint, with Group and Divisional action
plans, which addressed colleague feedback. This included:
• Strengthening our UK Apprenticeships Programme to
expand the variety of opportunities on offer and increase
awareness among eligible colleagues. We were also
awarded Gold accredited membership in The 5% Club – a
movement of employers committed to increasing ‘earn and
learn’ opportunities in the UK – which means more than 5%
of our workforce are on earn and learn schemes. We also
achieved our maximum levy gifting pledge of more than
£3m, and pledged to gift £1.4m to support Serco suppliers
going forward, aligned to our supplier diversity strategy.
• Running a programme of interactive events in multiple
locations for all Middle East colleagues, called the ‘Wheel
of Impact’, focusing on increasing colleague awareness
and engagement on Group purpose and strategy.
• Launching a new ‘Serco Connect’ mobile app in Asia Pacific
to make it even easier for colleagues to access Serco
systems and resources, regardless of role and location.
• Running our third Career Week in North America, centred
on fostering colleague empowerment, responsibility for
career growth, and equipping colleagues with tools to
drive their careers with Serco.
Improvement plans targeted operational sites whose 2023
results indicated a need for intensified efforts. All targeted sites
demonstrated improved levels of engagement in 2024. We also
monitor progress through frequent site-specific pulse surveys.
Gaining deeper insights from our new starters
To support the evolution of our colleague engagement
strategy and continue improving the quality of our new starter
experience, we worked to increase uptake in our ‘Getting
Started at Serco’ colleague feedback survey, raising
participation by 8% from 2023 to 2024.
Viewpoint 2024 results and insights
Leaders
People Mangers
All Employees
2011 2012 2013
2014 2015 2016
2017 2018 2019
2020 2021 2022
2023 2024
40
50
60
70
80
90
Findings from our 2024 Viewpoint survey indicated modest but
steady gains in colleague and leadership engagement
worldwide. Overall engagement rose from 71 to 72, with
overall leadership engagement increasing from 77 to 80.
Thematically, colleagues continue to give feedback that
providing a high level of service to customers and service users
is a key strength. Although many colleagues told us they have
had positive experiences with career development at Serco,
the main areas where they feel we need to make improvements
are career opportunities and future prospects.
Colleague engagement will remain a priority in our People
Strategy going forward, as will enhancing digital inclusivity for
frontline teams. Through our new ‘frontline employee
experience programme’ (FEXP), we aim to provide our teams
with a virtual space for daily communications, resource access,
continuous training, and the management of everyday tasks, to
help make the colleague experience at Serco even easier and
more enjoyable. We will also re-energise our Board Colleague
Voice programme with the appointment of a new Colleague
Voice Lead from our frontline operations.
Celebrating colleague impact
Our Impact Awards are the most prestigious way we celebrate
our colleagues and honour deserving individuals and teams
who live our Values. These awards recognise those who go
above and beyond in creating positive impact for people,
place, and planet. In 2024, we received nearly 1,000
nominations from across our four Divisions and celebrated
over 100 winners at both the Divisional and Global levels.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 41
Place
Helping our communities
to thrive
In every region where we operate, we
provide local services, employ local
people, and participate in local social
and economic ecosystems.
In this context, the ‘Place’ where we
operate is of critical importance to us.
Our teams are committed to creating
value within their local communities
alongside delivery of societal
infrastructure for governments, helping
to build local and regional resilience.
Impact Report continued
Serco Group plc | Annual Report and Accounts 2024 | 42
2024 highlights
£7m
Community
investment ambition
by 2026 (versus a 2024
baseline)
£33m
Proxy Social Value
delivered, as estimated
using the Social Value
Portal's TOMs System
£568k
Donated by the Serco
People Fund
Service impact
Delivering through our contracts
Our customers trust us to manage and meet the needs of
specific communities, delivering life and place-enhancing
outcomes for individuals and society. Some are local
communities and some are defined by specific social
challenges. For each, we deliver people-centric services,
addressing distinct needs while working to improve the
service-user experience and optimise impact.
Facilitating prisoner rehabilitation
With extensive experience in prisoner management, we help
governments and service users to generate value from Justice
systems through technology, specialist partnerships and a
focused rehabilitative approach to offender management.
In the UK, for example, our Psychological Services team
supports offenders through specialist behavioural analysis and
evidence-based interventions, including our Break The Cycle
programme for self-harm and RE-ACT training to impact safety.
We have also launched the Shout mental health app for prisoners,
giving them discreet and confidential 24/7 access to mental health
support. We continue to partner with Koestler Arts, a charity
supporting rehabilitation through artistic creative expression.
Supporting job seekers into sustainable employment
We deliver government employability programmes to help
unemployed communities upskill and find their way into
sustainable employment. In Ontario, Canada, we deliver
EmployNext, an integrated employment services programme
assisting job seekers in upskilling and matching to
employment opportunities. Collaborating with a wide range of
partners, our team works to embed EmployNext in the
community, addressing disadvantaged community access
barriers and ensuring that individuals with complex needs are
connected with specialist support providers.
Helping the veteran community to thrive
We recognise the value of ex-forces personnel and the
challenges they can face. We are proud to support veteran
communities through employment, partnership and
sponsorship. Our SercoVets network offers colleagues an array
of initiatives and activities, transition support, professional
development, mentoring and networking opportunities. Serco
signed the UK Armed Forces Covenant in 2013, a public
declaration of our commitment to help support ex-forces
personnel transitioning into work, which we do in the UK
through our work with organisations such as the Careers
Transition Partnership.
Supporting Indigenous communities
in Australia and Canada
We are committed to supporting national Indigenous
reconciliation movements in Australia and Canada, helping
governments to address inequality and build stronger
relationships between all members of the community. In 2024,
we launched our fourth Reconciliation Action Plan (RAP) in
Australia, which has been awarded ‘Stretch’ status by
Reconciliation Australia, in recognition of “a very strong
approach towards advancing reconciliation internally and
within the organisation’s sphere of influence”. We are also
developing a RAP for Serco Canada.
Supplier diversity
We work to maximise service and community impact by
diversifying our supply chain to include a range of small and
medium-sized enterprises (SMEs) and voluntary, community
and social enterprises (VCSEs). We also collaborate with our
suppliers, supporting them in contributing to Serco ESG
objectives in a proportionate way where relevant.
Region-specific supplier diversity programmes operate in
different Divisions, aligned to local ESG priorities. In North
America, that includes veteran-owned small businesses and in
Australia, it includes Indigenous enterprises. In the Middle
East, we are working with The Butterfly, an advocacy agency
supporting people with disabilities in the UAE, to baseline and
then raise DEI maturity in our supply chain whilst incorporating
this approach into new supplier selection.
In the UK, 41% of Serco suppliers are SMEs or VCSEs and 27%
of Serco spend in the UK is with suppliers that are SME or
VCSE. In 2024, Serco pledged more than £2.5m of its unspent
Apprenticeship Levy fund to local SME employers and public
service providers, supporting vital training and skills. In 2025,
we will be applying to the UK Government’s Fair Payment
Code and developing our plan to progress through the tiers.
We will also be improving our standard payment terms for
SMEs from 30 to 21 days, committing £1.4m of Apprenticeship
Levy gifting to SME and diverse suppliers, and embedding
advocacy for them in our procurement processes.
Delivering social value
In support of the UK Government’s requirements regarding the
delivery of social value, we are using the Social Value Portal
and the National Themes Outcomes and Measures (TOMs)
System to attribute proxy financial values for key social value
activities. The TOMs system is a recognised method for
calculating social value delivery, which aligns to the UK
Government Social Value Model. The System is underpinned
by extensive research and evidence, calculating financial
values from publicly accessible data, backed by economists
and data analysts. In 2024, we increased the number of UK
contracts recording social value using the Social Value Portal to
56 contracts from 19 contracts in 2023
1
. This has delivered an
estimated £33m in proxy value. This equates to an estimated
additional value (relative to contract value) of 2.9%. In 2025, we
plan to onboard a significant number of our Health and
Defence contracts while also sharpening our focus on the
delivery of local employment opportunities.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 43
1. In 2023, we reported our social value proxy figure for the first time.
This number was subsequently reviewed and assured; and reduced
from a stated £43m to £42.6m.
Community impact
Delivering for our communities
Throughout our many diverse teams and operations, our
colleagues are passionate about supporting their local
communities. We actively engage in projects and partnerships
that benefit our communities, whilst also supporting and
sponsoring causes aligned with our Values.
In 2024, we set a new, three-year ambition of £7m in
community investment from 2024 to the end of 2026. This
marks a strengthened approach to community investment
activity, aligned to specific thematic focus areas. We will be
building out an updated community investment strategy in
2025, in support of this commitment.
The Serco Foundation Volunteering and being
good neighbours
We support our colleagues to volunteer in
the community and to be good neighbours
in the good times and the bad.
Achievements in 2024 include:
• When residents of Labrador City were
evacuated to Happy Valley-Goose Bay
due to wildfires in July 2024, our
colleagues at Canadian Forces Base 5-
Wing Goose Bay stepped up to
provide shelter in collaboration with
the Department of National Defence.
Sustained efforts by senior
management, customer service and
janitorial teams helped house more
than 700 evacuees.
• Serco in the Middle East launched a
new Social Impact Programme in 2024,
enabling participation in 55 charity
events, with 938 volunteers from across
the business giving 2,971 hours to
chosen causes.
• Serco is a major sponsor of the non-
profit community celebration, the
Grafton Jacaranda Festival, in New
South Wales, Australia. The biggest
event in the local community calendar,
it depends on local partners like Serco.
In 2024, our volunteer team from
Clarence Correctional Centre doubled
their 2023 hours to more than 2,800.
Total Serco in-kind support was
calculated by the festival organisers to
be AUD140,000 this year.
Hours given to charity
8,362
The Serco Foundation is a charitable trust
working to support vulnerable citizens and
enhance public service outcomes by
sponsoring associated causes
internationally. In total, the Foundation
donated £56k
1
to six charities in 2024.
Beneficiaries have included the St Peter &
St James Hospice and the Winston’s Wish
charity for families affected by suicide.
Total donations for 2024
£56k
The Serco People Fund
The Serco People Fund is an independent
charity providing grants to current and
retired Serco colleagues and their families
when they face extraordinary financial
challenges. In 2024, the Serco People
Fund aided more than 359 people around
the world with grants totalling over £568k.
Total donations for 2024
£568k
Corporate donations and sponsorship
We are proud to stand beside the charitable
causes that matter most to our colleagues
and communities. In addition to others
mentioned in this report, significant Serco
donations and sponsorships in 2024 include
AUD100k to the Clontarf Foundation,
supporting Indigenous students, US$25k to
Make-a-Wish America, and AUD20k to the
Koori Knockout, the largest Indigenous
sporting event in Australia.
Donation to
Clontarf Foundation
AUD100K
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 44
1. We are currently reviewing our approach to the Foundation, to ensure that we
maximise impact in line with its charitable aims and objectives. As a result we expect
the total to increase in 2025.
Planet
Our transition to Net Zero
The climate and nature crisis represents
one of the biggest challenges of our time.
We recognise the risks and opportunities
it presents to our business, and the
important role we have to play in reducing
our Greenhouse Gas (GHG) footprint.
We have set a target to reach Net
Zero by 2050, or sooner, which is the
milestone guiding all of our related
environmental work.
Our goal aligns closely with our purpose
to impact a better future, as environmental
sustainability represents a critical factor in
the wellbeing of society. This commitment
is demonstrated through the ongoing
reduction of our own GHG footprint, and
the delivery of sustainability services for
governments internationally.
Impact Report continued
Serco Group plc | Annual Report and Accounts 2024 | 45
2024 highlights
34%
Reduction in
operational GHG
emissions (Scope 1
and 2) versus 2022
base year
100%
Reliance on
renewable-sourced
electricity globally for
the first time
91%
Of our EcoVadis
rated suppliers
scored above the
minimum threshold
Serco’s journey to Net Zero
Our Net Zero targets were validated by the Science-
Based Targets initiative (SBTi) in 2024, establishing
robust milestones for us to work towards over the months
and years; and a solid foundation for our Climate
Transition Plan (CTP), which is being updated in 2025 to
align with these new targets (see below).
We are reliant on factors that we do not directly control to
meet our targets. Proactive collaboration and influencing is,
therefore, a key element in our approach. This includes
working with our customers on investment in lower-carbon
infrastructure and assets, advocating for progressive,
climate friendly policies where appropriate and with our
supply chain to support and accelerate their own adoption
of SBTs, as part of the transition to Net Zero.
For the full text of our approved targets, see our website.
Our operational emissions
In our direct operations, we prioritise the avoidance and reduction of GHGs through energy efficient
operations, the use of renewable energy, and efforts to decarbonise our fleet and client assets.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 46
Net Zero
by 2050
Serco’s Science-Based
Targets
46%
reduction of operational
emissions reduction by
2030 (Scope 1 and 2)
25%
reduction in business travel
and fuel-and energy-
related emissions by 2030
95%
of suppliers (by emissions)
to have Science-Based
Targets (SBTs) by 2028
(Scope 3)
Our own operations Our supply chain
46%
reduction in CO
2
e
emissions by 2030
from 2022
baseline
Lower emission fleet and fuels
Highlights: Petrol: 24% to 20% Diesel: 46% to 45% Hybrid: 20% to 23% Electric: 10% to
12%. In 2024, fleet emissions accounted for 86% of our overall Scope 1 and 2 emissions.
Renewable-sourced electricity (RSE)
Highlights: North America: 25% to 100% Middle East: retained 100%
Asia Pacific: 5% to 100% UK&E: 88% to 100%
Decarbonising the built environment
• We continue to decarbonise our
fleet within our UK Environmental
Services business. 27% of our refuse
collection vehicles have moved from
diesel to hydrotreated vegetable oil
(HVO) fuel, which is around 90% less
carbon intensive.
• We increased our global percentage
coverage of electric and hybrid
vehicles to 35% of our total fleet
from 30% in 2023.
• UK Net Zero fleet strategy to be developed and
adopted, including:
– Fleet decarbonisation in our UK Environmental
Services business, which accounts for 24% of group
Scope 1 and 2 emissions, through targeted
customer engagement on the transition to HVO
and electric vehicles (EVs).
– Explore a low-carbon vehicle trial for our UK Prisoner
Escort and Custody Services fleet, which accounts for
14% of Group Scope 1 and 2 emissions.
• Refresh a significant proportion of our Asia Pacific fleet
to lower emission vehicles.
• We became 100% reliable on RSE
globally in 2024, delivering a 14%
emissions reduction.
• Continue to purchase RSE across the Group.
• Explore opportunities to deploy RSE within
our contracts.
• Energy efficiency measures contributed
toward 960 TCO
2
e savings from fuel
use in our buildings.
• 24% reduction in natural gas use
across our North American
building portfolio.
• Review opportunities to electrify heating in buildings.
• Explore green leasing opportunities with landlords
along with wider energy efficiency opportunities.
Our operational emissions continued
Transitioning to electric vehicles in our UK
Environmental Services business
In 2024, we conducted an eight-week pilot of electric refuse
collection vehicles (eRVCs) with our partners Vitol Electric Vehicles
and Refuse Vehicle Solutions. Our ambition was to demonstrate
the capabilities of eRCVs to reduce the substantial GHG footprint
created by recycling and refuse collection. Covering 69
collection routes in Hampshire, UK, the pilot saved 8 tonnes of
GHG emissions. We are exploring options to deploy this solution
more widely across similar contracts.
Supporting our customers to reach Net Zero
In 2024, we launched a new international advisory business,
+impact, to provide user-centric solutions designed to support
customers throughout project lifecycles and into operations.
+impact is already channelling Serco experience and expertise
to address customer challenges on climate change and the
environment, delivering practical pathways to sustainability –
from waste reduction strategies to realisable Net Zero
commitments. At the centre of +impact environmental expertise
is Climatize, the UAE-based sustainability and engineering
consultancy acquired by Serco in 2024. An ecological leader in
green building engineering and sustainability strategies,
Climatize is reinforcing the +impact portfolio and extending our
capabilities into new service areas.
We also support our customers’ transitions to Net Zero when
we work on customer premises and assets and are not in direct
financial control of those assets. For example, Serco Northlink
Ferries is operated on behalf of Transport Scotland and our UK
Leisure business is delivered on behalf of local government
and leisure trust customers. In a similar way to our direct
operations, we focus on operational efficiencies, the transition
to low-emission fleet and fuels and decarbonising the built
environment. Northlink Ferries fuel efficiency improvements in
2024 delivered a 4.5% emissions reduction, and we continue
to support renewable energy shore power plans in
Aberdeen. Leisure centre photovoltaic array
installations in 2024 delivered circa 41 tCO
2
e
reduction. We will continue working to progress
energy efficiency improvements across our
leisure portfolio in 2025.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 47
• Reduced travel emissions in two
divisions however increased overall
by 23% due to Covid-related travel
impacts in our 2022 base year.
• Planning undertaken for enhanced
sustainability features to be introduced
in travel booking process.
25%
reduction in
business travel
emissions by 2030
from 2022 baseline
• Review our travel policies (including our company car
policy) to support achievement of our new business
travel target.
• Introduce enhanced sustainability features in travel
booking processes to support colleague awareness
of CO
2
e impact of travel choices.
Decarbonising our supply chain
The emissions within our supply chain
represent the biggest proportion of Serco’s
Scope 1, 2 and 3 GHG emissions at 57%.
Working closely with our supply chain to tackle these emissions
is a key focus of our Net Zero strategy. Our approach to supply
chain decarbonisation is born from our historical approach to
sustainable procurement, which has worked to incorporate
ESG principles into the sourcing of goods, products and
services throughout the supply chain. With a newly validated
Science-Based Target (SBT) related to ensuring that 95% of our
suppliers, by emissions, have SBTs in place by the end of 2028,
we will be embarking on the creation of a new Sustainable
Procurement programme in 2025, which is directly linked to
the achievement of that target.
This work will be underpinned by our Sustainable Procurement
Charter and supported by the Supplier Code of Conduct. This
Code sets out the high standards we expect from our suppliers
of products and services, regardless of where they are located.
Core topics include environmental management.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 48
The challenge
Nearly
of Serco’s emissions are within
our supply chain
70
%
1. 13.5% have targets validated on SBTi, 1.5% are committed/
awaiting validation.
Decarbonising our supply chain continued
Measuring supply chain emissions
In 2024, we established a new partnership with Emitwise, a
leading AI-enabled technology platform designed to support
the measurement of supply chain emissions. This data will
support more tailored conversations with suppliers, as part of
our collaborative efforts to reduce supply chain emissions in
the years ahead.
Supplier engagement campaigns will commence in 2025,
targeting carbon-intensive, preferred suppliers who do not yet
have SBTs. Participating suppliers will receive free access to a
corporate emissions calculation service, helping them measure
their carbon footprint and begin their decarbonisation journeys.
Driving sustainability performance of suppliers
We have also continued our partnership with EcoVadis, the
globally recognised sustainability assessment platform, which
we launched in 2022. Alongside engagement campaigns
targeting preferred suppliers, in 2024 we introduced a minimum
assessment score threshold of 45 (out of a possible 100).
As of 31 December 2024, the average score of all rated
suppliers was 60.1, which is 12.6 points above the EcoVadis
global benchmark. 91.4% of suppliers scored above the
threshold and 65.8% achieved EcoVadis Medal status,
demonstrating higher levels of sustainability maturity than the
market average. We are also using the platform to support
suppliers to improve their scores. Of the 178 suppliers who
completed reassessment in 2024, 122 improved on their
previous score.
2023 2024 2025
Number of suppliers with
EcoVadis rating
178 274 350
% of supplier addressable
spend represented
29% 44% 58%
In 2025, we plan to introduce sustainability criteria into our
sourcing processes, linked to our new SBTi-validated targets,
including a contract clause requiring EcoVadis assessment for
newly onboarded in-scope suppliers.
In 2024, we completed our own EcoVadis assessment, scoring
Bronze Medal status. This puts us in the top 35% of companies
assessed, and we look forward to working to improve our
score in 2025 and beyond.
Serco Sustainable Procurement Charter
Our Sustainable Procurement Charter, launched in 2021,
continues to set out the ESG commitments and standards we
expect of our supply chain. This includes encouraging the
setting of Net Zero targets and commitments. In 2025, we will
look to see how our Sustainable Procurement Charter can be
better leveraged to support our wider Sustainable
Procurement Programme.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 49
Emitwise is proud to support Serco in their
efforts to decarbonise their supply chain and
achieve their sustainability targets. The platform
enables targeted supplier engagement,
empowering suppliers regardless of their
maturity to measure, track and reduce their
emissions. Through this partnership, we will
increase the number of suppliers aligned with the
SBTi and on a clear path to decarbonisation.
Mauro Cozzi
Co-Founder & CEO, Emitwise
Our company's purpose is to guide all companies
toward a sustainable world and act as a North
Star to ensure our approach is delivering a
positive impact for our planet and society. We're
pleased that since 2022, Serco has been working
closely with EcoVadis to enable, support and
empower their business partners and supply
chain on their sustainable journey.
Richard Eyram
Chief Customer Officer, EcoVadis
Supporting nature and biodiversity
We recognise that our environmental sustainability strategy
must reach beyond emissions reduction, taking account of our
impact on biodiversity and the natural environment. The
planetary crisis we face is multi-faceted, and achieving Net
Zero is not possible without efforts to support the natural
environment and the ecosystems underpinning it.
Assessing our nature risks, impacts and dependencies
In anticipation of reporting against the Taskforce on Nature-
Related Financial Disclosure (TNFD) framework in future years,
we have initiated work to better understand our impacts and
dependencies on the natural environment. In 2024, we joined
the Green Finance Institute’s UK Food, Retail & Hospitality
TNFD Working Group, gaining insights on leading practice
employed by other organisations. We have undertaken
preliminary analysis in the UK, using TNFD-recommended
tools to develop high-level heatmaps indicating our most
material operational nature and biodiversity impacts and
dependencies, risks and opportunities. Going forward, we
intend to scale our approach across other regions while
continuing to monitor emerging best practice.
We also joined the TNFD Members Forum, an initiative
supporting members to develop a robust approach to
mitigating and managing nature impacts and dependencies,
risks and opportunities on the journey to Net Zero.
Supporting our customers to deliver a positive impact
on nature
Some of the services we deliver for government customers
help to facilitate critical nature and biodiversity scientific
monitoring and protection. For example, our European Space
business continues to support Earth Observation and won a
contract in 2024 to support the operations of the ‘Biomass’
mission designed to deliver crucial information about our
forests and their role in the carbon cycle. Our support to the
Australian Antarctic Program through the operation of the
research and supply vessel, RSV Nuyina, facilitates climate and
biodiversity studies, such as the 2024 voyage to monitor
seabird colonies and investigate avian influenza in marine life
populations. Across the United States, our Environmental and
Life Sciences business works to ensure the US Environmental
Protection Agency has the critical intelligence it needs to
protect human health and the environment.
Partnering to support nature recovery
In 2024, we partnered with the Hampshire and Isle of Wight
Wildlife Trust, focused on supporting nature recovery and
restoration, close to our Head Office in Hook, Hampshire. The
UK is one of the most nature-depleted countries in the world;
and through our membership we support the Trust’s ambition
to protect the natural environment and help it to thrive.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 50
Serco’s Climate Transition Plan
Our approach to transition planning aligns with the
framework set out in the Transition Plan Taskforce
(TPT) guidance, designed to help organisations set
out a credible and robust Climate Transition Plan
(CTP), consisting of three principles and five
disclosure elements.
In 2025, we intend to further mature our CTP, supported by
external partners and strategic engagement with relevant
internal and external stakeholders.
Ambition
Foundation: Our purpose is to impact a better future,
supporting our customers to address some of the most urgent
and complex challenges they have. This includes climate
change. As an organisation, we are committed to reaching Net
Zero by 2050, and supporting our customers to do the same.
Our SBTi-validated targets demonstrate our commitment to
decarbonise in line with a credible, science-aligned trajectory,
and we continue to develop our approach to nature and
biodiversity to support a Net Zero and Nature Positive future.
Action
Implementation: We continue to develop our approach to
decarbonising by scope, focusing on critical areas including
the transition to lower-emission vehicles, decarbonising the
built environment, transitioning to renewable electricity, and
decarbonising our supply chain.
We remain focused on embedding sustainable solutions
across our operations, both where we have direct financial
control, and where we are supporting customers to
decarbonise their own financially controlled assets. We
continue to refine the measurement of our supply chain
emissions, which will support us to understand our most
material, supplier emission focus areas. Our plan is to
strengthen our Sustainable Procurement Programme in the
round, in line with our new supplier-related Science Based
Target (SBT).
Engagement: To achieve our Net Zero goal, increased
engagement and collaboration is essential. This includes with
external partners, industry groups, government customers,
investors, environmental organisations and wider stakeholders.
This engagement and collaboration is a core part of our CTP.
Accountability
Metrics and targets: Our SBTi-validated targets are the primary
metrics and targets which form the basis of our CTP. However,
we are working to develop additional targets and approaches
on items such as waste, water, and nature and biodiversity, and
recognise that additional metrics, targets and approaches are
required to align more fully with the TPT disclosure framework.
Governance: We have an established approach to climate
governance, which includes a named Executive who provides
leadership of our agenda, and Board Committee oversight of
our strategy and progress. Environmental decarbonisation is
also included within our Executive remuneration scorecard.
Improving environmental sustainability-related knowledge and
skills is a focus for us in 2025, with bespoke Executive and
Board training planned.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 51
We published our
first Corporate
Responsibility
Report.
Submitted our
first CDP climate
change
disclosure.
Received the
Carbon Trust
Standard in the UK,
reflecting our effort
to reduce emissions.
Began reporting our
carbon footprint globally
for the first time.
Engaged with Action
Sustainability to help
embed sustainability
into our procurement
processes.
Launched our
Sustainable
Procurement Charter
to improve our review
of ESG risks and
opportunities within
our supply chain.
We committed to
achieving Net Zero
by 2050.
We partnered with
EcoVadis to introduce
Supplier Sustainability
ratings.
North America
Sustainable Real Estate
Strategy.
Launch of +impact, our global
ESG advisory business.
Purchased 100% of global electricity
from renewable sources.
Received validation of our
Science-Based Net Zero Targets,
by the Science-Based Targets
initiative (SBTi).
Highlights from our Net Zero journey
Undertook an initial materiality
assessment of our nature-related
risks, impacts and dependencies.
UK Carbon Reduction
plan introduced.
Governance
We are committed to being
a responsible business and upholding
high standards of governance across all
areas of our business.
The opportunity to fulfil our purpose,
and be partner of choice to governments
globally, depends on strong governance
that enables ethical and effective
decision making.
In the last 10 years, we have taken
significant steps to reform our governance
platform, implementing new strategies,
structures and systems, which underpin
strong delivery. We will continue to evolve
and develop our approach to ensure it
supports delivery of our purpose and
values moving forward.
Impact Report continued
Serco Group plc | Annual Report and Accounts 2024 | 52
2024 highlights
0
Data protection
breaches
0
Substantiated
modern slavery
Speak Up cases in
the last five years
74/100
In the Viewpoint
survey, employees
felt they could report
unethical conduct
without fear of
retaliation
ESG governance and risk management
We remain committed to robust governance of our ESG
agenda and continue to be thoughtful about its importance in
the face of a fast-evolving external environment.
This year, we welcomed a new Group Sustainability and ESG
Director, who will lead our Sustainability and ESG efforts across
the Group. We reviewed and strengthened our ESG Oversight
Group, which the new Director chairs, comprising stakeholders
from across the business in every region, providing
management oversight and ownership of ESG across the
business. There is a separate Environment Oversight Group,
which provides strategic management of our Climate
Transition Plan, linked to our Net Zero goal. Board oversight of
ESG is managed through the Corporate Responsibility
Committee (CRC). See page 95 for our 2024 CRC Report. Our
Group General Counsel, a member of the Group Executive
Committee, provides Executive oversight of our ESG agenda.
We work in sensitive areas of government policy delivery,
balancing diverse interests across complex stakeholder
ecosystems. Business decisions – including where we operate,
what we do and who we serve – are governed through our
Business Lifecycle Review Process. This includes consideration
of legal, ethical and human rights risks, and health, safety and
environmental risks and opportunities.
Our enterprise risk management approach plays a key role in
how we identify, understand and manage our most material
ESG risks, monitoring a spectrum of present and emerging
risks, informed by a wide range of ESG factors. We do not
include ESG or climate change as a standalone principal risk;
however, they were considered as an emerging risk in our
2024 annual risk review. The detail of how we manage climate-
specific risks can be found in our TCFD Statement, on page 56,
and additional detail on how we manage ESG risk overall can
be found on page 64.
The Serco Management System (SMS)
The SMS is a continuously evolving global management
framework encompassing how we operate and behave in line
with applicable laws, regulations and customs in all locations
worldwide. Biannual statements of divisional compliance and
annual contract self-assessments provide base assurance of
SMS compliance. In 2024, we completed our SMS refresh, to
support simplification and streamlining, and launched a new
AI-based ‘AskSMS’ service enabling colleagues to find what
they need more quickly.
mycode
Our Code of Conduct, mycode, defines what Serco expects of
its businesses and colleagues regardless of location or
background. mycode is based on our Values and not only
outlines the rules and procedures to follow, but what
colleagues should expect of one another. It covers looking
after each other, doing business the right way, keeping safe,
making difficult decisions and speaking up. Our subject matter
experts regularly review mycode. In 2024, we added
introductory videos and new content on AI technologies. Our
Supplier Code of Conduct, which details our expectations of
suppliers, was also reviewed and updated.
Serco
Essentials
Serco Essentials is our mandatory, all-employee training
programme. Core modules are refreshed periodically and
include Living our Code, safety, prevention of financial crime,
data protection and information security. Colleagues are
required to complete certain modules on joining Serco and
there is an ongoing annual programme of modules,
differentiated for managers and non-managers.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 53
Scan the QR code to access
www.serco.com/mycode
Ethics and
compliance
A better future can only be achieved on a firm foundation of
integrity and fair, ethical behaviour. We strive to hold firm to
our Values and act with integrity in all that we do. Our Principal
Group Risk, ‘Failure to Act with Integrity’ underpins the
importance of ethics and compliance (E&C) at Serco.
Our E&C programme
Our E&C programme continues to be a fundamental part of
our organisation – educating, engaging and empowering
colleagues globally to do the right thing. The programme is
structured around leadership and oversight, risk assessment
and mycode, together with other standards and procedures,
due diligence, Speak Up and investigations, training,
engagement, monitoring and assurance. Its scope includes
anti-bribery and corruption, other financial crimes, competition
law, trade sanctions and export control, human rights and
prevention of modern slavery, and whistleblowing. We also
maintain a global network of E&C Champions who help embed
the programme locally and inform its further development.
Alongside annual implementation of the ongoing programme,
we drive specific projects to strengthen it. In 2024, we
continued to implement the recommendations from our
participation in the Transparency International UK Corporate
Anti-Corruption Benchmark, participated in the Institute of
Business Ethics Health Check and Benchmark, worked with
Slave-Free Alliance, developed new Financial Crime training
for 2025, and formed a Group Fraud Risk Governance Forum
to support continued preparation for the new UK ‘failure to
prevent fraud’ offence.
Under leadership from our new Group Head of E&C, projects
in 2025 will align to a new strategy structured around three
pillars: Efficiency, Engagement and Effectiveness.
Speak Up
We foster a culture of speaking up, prohibiting retaliation
towards anyone who reports a concern or aids an investigation.
We maintain multiple channels for speaking up, including
our confidential reporting service, Speak Up, hosted by an
independent third party; reports can be raised anonymously.
We encourage colleagues, partners and the public to report any
suspected breach of mycode, our Values or applicable laws. Issues
raised are dealt with promptly and appropriate action taken,
including thorough internal investigation where appropriate. In
2024, we ran a campaign to raise awareness of and confidence in
Speak Up. We also worked to strengthen our root cause analysis
and use of data analytics to drive future improvements.
Third-party due diligence
We undertake proportionate risk-based due diligence on
suppliers, agents, strategic partners and customers. We
recently migrated to a new screening partner to strengthen our
due diligence in certain areas, including human rights and
modern slavery; and improve ongoing monitoring.
Human rights and
modern slavery
We have zero tolerance to pursue activity that breaks any law
relating to human rights and we believe that we can contribute
positively to upholding human rights through the services we
deliver, which involves thousands of people every day. We
strive to respect and protect the dignity and human rights of
our colleagues and service users, addressing complex social
challenges in the most appropriate, humane manner.
We take reasonable steps to identify, prevent or mitigate risks
of adverse human rights impacts in our operations through our
Business Lifecycle Review Process. We are conscious of the
particular risks in our Immigration and Justice businesses,
whereas other business lines have a lower risk profile for
human rights concerns. Information about how we manage
human rights across Serco and in our Immigration and Justice
business can be found in the Human Rights Supplement on
our website.
Modern slavery and human trafficking
Operational risks regarding modern slavery are managed and
monitored throughout the business lifecycle in line with our
Enterprise Risk Management methodology.
We recognise modern slavery risk in our extended supply
chain and take a risk-based approach to managing it, focusing
on mitigation in those purchase categories that have been
assessed as high risk. This is supported by E&C risk profiles we
create for current and prospective suppliers, based on
assessment against key risk indicators, informed by our third-
party risk management solution.
In 2024, we continued our partnership with Slave-Free Alliance,
working with them to develop specialised training for specific
business units and procurement colleagues, while also engaging
their support for enhancing our modern slavery due diligence.
We remained active members of the UK Business Services
Association Modern Slavery Council and helped develop their
second toolkit, published in December 2024, to help
organisations raise awareness within their workforce, and to
empower frontline workers to be able to identify modern
slavery and labour exploitation.
More information about how we manage modern slavery risks
across Serco and in our supply chain can be found in the Modern
Slavery and Human Trafficking Statement on our website.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 54
Data protection and
information security
We are committed to delivering secure services and protecting
the data we collect, store and process. The Group regularly
reviews its mitigating controls to seek to avoid a breach and
our approach is based on industry practice and international
standards. Recognising the complex nature of our business
and evolving threats, we continue to invest and make
improvements to our underlying processes, alongside regular
security awareness training, phishing simulations and crisis
management exercises.
Our data protection and information security programmes
We maintain an ongoing programme of information security
investment to address our evolving threat landscape and drive
compliance with customer, legal and regulatory standards and
contract requirements. In 2024, we completed global
deployment of our new Microsoft Defender Extended Detection
and Response (EDR) Security Tooling and engaged a global
Microsoft partner specialising in managed EDR service provision
to be the frontline of our security operations beginning in 2025.
Underpinned by a risk-based framework, our Data Protection
Programme seeks to ensure that we maintain robust data
policies and remain compliant, whilst maturing capabilities in
line with best practice, evolving business objectives and
evolving laws and regulations. In 2024, this included significant
focus on international data transfer, data retention, and the
rights of the data subject.
Colleague training and awareness remains a key mitigant.
Training is regularly refreshed, together with wider awareness
campaigns and testing, including our annual schedule of
global phishing simulations and a ‘Protect Together’ security
awareness campaign in 2024. Supplementary Data Protection
training has been delivered to Bid teams and on legal changes
in Saudi Arabia and the UK. Our international network of over
250 embedded Data Protection Champions, which is well-
established in the UK, Europe and Middle East - and now also
launched in North America - have continued working with our
business to engage, train and support on this critical issue.
Impact report continued
Serco Group plc | Annual Report and Accounts 2024 | 55
Our 2024 Task Force on Climate-Related Financial Disclosures (TCFD) statement is
fully consistent with the eleven recommended disclosures against the four pillars of
the TCFD Framework. We have considered the 'Guidance for all sectors’ as set out in
section C of ‘Annex: Implementing the Recommendations of the Task Force on Climate-
related Financial Disclosures’, October 2021. The table below outlines the location of
disclosures within our 2024 Annual Report and Accounts. Our standalone TCFD Report
is available on the Impact section of our website.
TCFD summary
Pillar Recommended disclosures Annual Report and Accounts
Standalone compliance
statement
Governance
(a) Describe the Board’s oversight of climate-
related risks and opportunities.
Pages 56 to 57 Corporate
Governance section pages 77 to
86 Corporate Responsibility
Committee Report pages 95 to 96
Pages 3 to 8
(b) Describe Management’s role in assessing
and managing climate-related risks and
opportunities.
Pages 56 to 57 Corporate
Governance section pages 77 to
86 Corporate Responsibility
Committee Report pages 95 to 96
Pages 3 to 8
Strategy
(a) Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium and long term.
Pages 57 to 60 Pages 9 to 17
(b) Describe the impact of climate-related risks
and opportunities on the organisation’s
businesses, strategy and financial planning.
Pages 57 to 60 Critical accounting
judgements climate risk page 154
Pages 10 to 17
(c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario.
Pages 57 to 60 Critical accounting
judgements climate risk page 154
Page 10
Risk management
(a) Describe the organisation’s processes for
identifying and assessing climate-related risks.
Pages 57 to 58 Risk management
section pages 62 to 64
Pages 8 to 11
(b) Describe the organisation’s processes for
managing climate-related risks.
Pages 57 to 60 Risk management
section pages and 62 to 64
Pages 4 to 17
(c) Describe how processes for identifying,
assessing and managing climate-related risks
are integrated into the organisation’s overall
risk management.
Pages 57 to 60 Risk management
section pages 62 to 64
Pages 8 to 11
Metrics and targets
(a) Disclose the metrics used by the
organisation to assess climate-related risks and
opportunities in line with its strategy and risk
management process.
Our Impact Planet section pages
45 to 51 Our Impact performance
data: Planet section pages 218 to
219
Pages 19 to 20
(b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas (GHG)
emissions, and the related risks.
Our Impact performance data:
Planet section pages 218 to 219
Pages 19 to 22
(c) Describe the targets used by the
organisation to manage climate-related risks
and opportunities and performance against
targets.
Our Impact Planet section pages
45 to 51
Pages 19 to 22
Governance
Responsibility for climate risk and opportunity is embedded within our Corporate Governance structure, primarily through the
Corporate Responsibility Committee (CRC). The CRC provides oversight of TCFD activities, including our Climate Transition
Strategy, linked to the delivery of our Net Zero-related targets and transition plans.
We have assigned specific roles and responsibilities for assessing and managing climate-related risks and opportunities by
Committee, Group and wider management function. Further details are available in our standalone TCFD report which has been
prepared to include further information on our TCFD approach that is not outlined in this Annual Report and Accounts.
Task Force on Climate-related Financial Disclosures (TCFD)
Compliance Statement
Serco Group plc | Annual Report and Accounts 2024 | 56
Climate Governance at Serco
Risk
We recognise that the climate crisis continues to pose significant risks to society and the planet. The ways in which climate change impacts
our own and our customers’ assets, supply chains, and operations are diverse. We do not currently consider climate risk as a standalone
principal risk, instead we consider it within several of our principal risks. Our business model dictates that the majority of our work takes
place on client sites and assets, and therefore we do not always have financial control from a carbon accounting perspective, legal or
contractual responsibility to upgrade assets to support decarbonisation. Our contracts are, on average, around five years in length, and
as a consequence we do not hold long-term, high-value assets that could be adversely affected by climate risks.
Risk and opportunity timeframes
Risk/Opportunity term Timeframe (years) Reason for timeframe selection
Short 0 – 3 As per our principal risks and viability statement
Medium 3 – 5 As per medium term contracts
Long 5 – 30 As per longer-term contracts and our/customer Net Zero targets
To determine which climate-related risks and opportunities are most material for us, we annually consult a group of core
stakeholders from across the business, who judge a long list of potential risks and opportunities and score using our Climate Risk
Scoring Matrix. These include physical risks from extreme weather, changes in long-term weather patterns, and transition risks from
a policy, legal, technology, market and reputation perspective. Transition opportunities are scored from a resource efficiency,
energy source, products and services and market opportunity perspective. This provides a judgement based on relevant scenarios,
and a scoring of risks as minor, moderate, major or severe, and opportunities as minor, moderate, major or significant. You can find
more detail on the result of the 2024 annual review on page 9 of our standalone TCFD report on the Impact section of our website.
We continue to assess and prepare for region-specific climate risk disclosure requirements, which may require climate risks and
opportunities to be evaluated at an entity or country level.
Climate change resilience
Focusing on the growing B2G market within our existing geographic footprint and five sectors remains the key to sustainable long-
term growth. We continue to address some of the most urgent and complex challenges facing the modern world, which includes
supporting our customers on decarbonisation through operational excellence and helping address wider environmental crises such
as nature loss where practicable. We will continue to provide services that support government-led policies and mostly we will
operate on customer assets in the locations where the services are required, supporting and aligning with customer-led Net Zero
policies, supply chain and climate resilience approaches. As a Group, the current level of geographic and market diversity of our
operations helps to support our overall resilience to climate change in the short to medium term and presents us with the
opportunity to shift our focus should climate risk exposures escalate to material levels in any given market, sector, or geography.
Task Force on Climate-related Financial Disclosures (TCFD)
Compliance Statement continued
Serco Group plc | Annual Report and Accounts 2024 | 57
We are also an asset-light organisation, we do not expect to have issues around redeploying and repurposing existing assets. For
example, the net book value of our owned land and buildings is £4.3m at 31 December 2024. For the majority of our contracts, we
lease assets in line with the contract terms and the average length of our contracts is five years. Our critical accounting judgement
on climate risk on page 154 sets out more detail on how climate impact has been considered within the financial statements. It does
not yet identify significant risks linked to climate change that might negatively and materially affect the Group over the short or
medium term.
Transition risk
The transition risk judged to be the most severe to Serco is that of carbon pricing. The impact of both direct and indirect carbon
pricing is uncertain and, therefore, remains an area of focus. In 2024, we engaged Emitwise (see page 49) to gain improved
measurement of supply chain emissions. Further engagement with our suppliers on decarbonisation will help to build resilience and
decipher the potential impact of future carbon pricing risks.
Physical risk
Extreme weather events are anticipated to increase, as shown by the established climate scenarios in the table below. We will
continue to develop a greater understanding of these physical risks, as well as long-term chronic physical risks such as sustained
higher temperatures in our operating geographies. We have experienced limited impact to date on operations and insurance claims
relating to extreme weather events. However, this could change, and may require increased engagement with customers on climate
adaption and resilience.
Transition opportunities
We recognise that we must continue to support customer requirements and challenges where we have influence, bringing focus
and innovation through our service provision and supply chain. In 2024, our acquisition of Climatize, part of +impact (see page 47),
signals our intent to expand sustainable services, building upon our established services, such as in the recycling and low-carbon
transport sectors.
Metrics and targets
We report a range of environmental metrics and KPIs against our Planet theme. Metrics to assess climate-related risks and
opportunities, associated targets and key performance indicators are outlined in our Impact table on pages 218 and 219.
Strategy
We have set a goal to reach Net Zero by 2050. This goal is supported by newly validated Science-Based Targets (SBTs), by the SBTi.
Serco defines Net Zero as per the SBTi Corporate Net Zero Standard:
Companies shall set one or more targets to reach a state of net-zero emissions, which involves: (a) reducing scope 1, 2 and 3
emissions to zero or a residual level consistent with reaching net-zero emissions at the global or sector level in eligible 1.5°C
scenarios or sector pathways and (b) neutralizing any residual emissions at the net-zero target date – and any GHG emissions released
into the atmosphere thereafter.
Our new SBTs provide a clearly defined focus to reduce emissions in line with the 2015 Paris Agreement. Our Climate Transition
Plan, which aligns with the Transition Plan Taskforce Framework, is on page 51, however, we are working with a third-party in 2025
to update our Climate Transition Plan in line with our new SBTs. We are actively exploring the creation of a new nature and
biodiversity approach, which aligns with our Net Zero goal. As part of this we continue to review investment opportunities which
support nature restoration, while also supporting carbon removals to neutralise any unavoidable emissions
1
across Scopes 1-3,
helping to meet our long-term targets. We have used an internal shadow carbon price range of between £20-£25 per tCO
2
e.
Climate scenarios
Our risks and opportunities draw upon some of the most recently updated and recognised climate scenarios and models, consistent
with 2˚C and lower, with a focus on 2030 and beyond.
Warming
trajectory by
2100
Transition scenarios Physical scenarios
1.5˚C
International Energy Agency (IEA) Net Zero
Emissions (NZE) This scenario assumes a rapid
transition to Net Zero as available technologies
deployed quickly and governments cooperate.
Not considered by models.
2-3˚C
IEA Announced Pledges Scenario (APS) This
scenario considers current government Net Zero
pledges (up to end August 2024) but are more
conservative, assuming that not all will be met.
Intergovernmental Panel on Climate Change (IPCC) SSP 2-4.5.
This scenario assumes medium challenges to mitigation and
adaptation. Institutions make slow progress in achieving
sustainable development goals and environmental systems continue
to experience degradation. Shift to sustainable lifestyles slow.
4˚C Not considered by models.
IPCC SSP 5-8.5. This scenario places greater emphasis on competitive
markets, innovation and participatory societies to produce rapid
technological progress toward sustainable development.
Globalisation and the exploitation of fossil fuels continue.
Task Force on Climate-related Financial Disclosures (TCFD)
Compliance Statement continued
Serco Group plc | Annual Report and Accounts 2024 | 58
1. After reducing emissions by at least 90% to meet long-term science-based targets, companies are required to neutralise unabated emissions.
Risks and opportunities
Transitional risk:
Policy and legal
(including
reporting and
carbon pricing)
Short
Direct costs:
• Cost attached to meeting increasing regulatory compliance requirements on
climate and wider ESG reporting.
Low
Short -
Long
Indirect costs (Scope 3)
• We have considered a range of costs based on the impact of current and
forecast carbon pricing mechanisms which affect our supply chain and are
indirectly passed down to Serco and customers.
• The minimum range is based on 2024 supply chain costs and PwC’s ‘hidden
cost of carbon’ tool. Current carbon cost is estimated using World Bank carbon
pricing and a PwC model (which uses data from 2014).
• The maximum range is based on 2024 supply chain costs and PwC’s ‘hidden
cost of carbon’ tool and 2030 carbon prices implied by the Net Zero Emissions
scenario.
• The EU and UK carbon border adjustment mechanisms (CBAM) will introduce
tariffs over the coming years on carbon intensive products which are imported
and filter down supply chains, impacting our UK&E division.
• It is unclear to what extent global carbon pricing mechanism costs will
materialise or be transparent, however, these costs are not expected to be fully
funded by the Group as some would pass through to our customers through
indexation mechanisms, pricing of new contracts or legislative changes.
Low
Low
Low
Long
Direct costs (Scope 1-3):
• There are a range of costs related to us meeting our Scope 1and 2 SBTs. These
range from investments in decarbonising our fleet, the built environment
where we have direct financial control from a carbon accounting perspective,
and the switch to renewable energy.
• The minimum range assumes our Scope 1 and 2 emissions remain stable and
our 46% operational emissions reduction target is met. In that scenario we are
exposed to costs using the Announced Pledges Scenario carbon cost of £108
per tonne by 2030.
• The maximum range assumes 20% growth in Scope 1 and 2 carbon emissions
through additional contract wins, with only 25% of our 46% operational
emissions reduction target being met. In that scenario we are exposed to costs
using the Net Zero Emissions scenario carbon cost of £112 per tonne by 2030.
• 2030 Net Zero transition costs for Scopes 1-3 relate to:
– Climate-focused teams across the Group
– External consultancy support
– Renewable electricity procurement
– Fleet transition
– Decarbonising buildings
– Carbon accounting system upgrades
– Supply chain engagement programme
– Nature-based solutions investment
• The majority is built into existing budgets and our five-year plan, which
underpins any impairment assessment for the elements within our control.
External consultancy support will further inform any budgetary requirements
not yet accounted for.
• Managing decarbonisation through our contracts is dependent on our
accountability and contractual requirements. We do not expect to fund
material changes to customer/landlord owned infrastructure or assets.
• In some contracts, we are dependent on our customers investing in Net Zero
infrastructure and assets.
Low
Low
Low
Transitional risk:
Reputation
Short -
Long
• There are a range of costs dependent on our level of success in meeting
potentially increasing stakeholder expectations related to the Net Zero
transition.
• The minimum range assumes that through our Climate Transition Plan, we do
not suffer any material reputational damage or significant contract losses, and
key customers and suppliers support Net Zero by investing in decarbonisation
efforts.
• The maximum range assumes that we fail to meet potentially increasing
stakeholder expectations and our Net Zero targets, and key customers and
suppliers do not support Net Zero by investing in decarbonisation.
Low
Low
Severe risk
Time
horizon
Description, scenarios, assumptions £ impact
Task Force on Climate-related Financial Disclosures (TCFD)
Compliance Statement continued
Serco Group plc | Annual Report and Accounts 2024 | 59
Risk / opportunity financial impact key: Reduction / increase in underlying operating profit
Low Medium High
Risk /
opportunity £m
<10 10-20 >20
Physical risk:
Extreme weather
Long
• We previously engaged a climate analytics consultancy to model flood and
wind impacts causing building and contents damage and causing downtime
across 52 sites using standard climate models for 2030 and 2050. The 52 sites
were chosen based on criteria agreed with some investors, including the risk of
extreme weather (now and future), longer term contracts, higher revenue
contracts, secure facilities with vulnerable people in our care, and a mix of
Serco leased/client sites from across the geographies and sectors in which we
operate.
• The output highlighted a collective, substantive level of financial risk for both
the <2 degrees scenario and >4 degrees scenario.
• We have deemed these amounts not to be decision useful for disclosure for
the following reasons:
– Serco operates a contract-based model and therefore we may no longer
be operating at the sites with the potential to be severely impacted by
climate change in 2030. As a result, long-term modelling is less decision-
useful for Serco specifically.
– Modelled costs suggest that impacts would occur uniformly across all
locations at the same time and crucially do not take account of mitigation
measures such as business continuity planning or flood defence
infrastructure which would significantly reduce modelled numbers.
– Buildings, contents, and business interruption insurance would be in place
to cover many of the costs incurred. We have had limited insurance costs
related to physical risks on sites insured by Serco, noting the majority of our
operating sites are insured by customers or landlords. Insurance costs
relating to our insured sites have not yet experienced any material uplifts as
a consequence of physical risk.
– Given the critical nature of most of the Group’s services, should business
interruption risks be prohibitively high, we would expect our customer to
consider the location of the site and where services are provided.
• We will continue to explore climate risk analytics support from external advisers
and the best approach to integrating existing mitigation measures into
modelled costs to disclose decision useful financial impacts at appropriate
operating locations.
• On customer sites where we hold facilities management responsibilities, we
will continue to support customers on climate adaption measures to address
physical risks posed by extreme weather.
Not disclosed
Significant
Opportunity
Time
horizon
Description, scenarios, assumptions £ impact
Net Zero and
sustainability
enabling services
Long
• A range of underlying operating profit increase has been calculated based on
the level of success in expanding and growing sustainable services likely to be
recognised by the EU and anticipated UK green taxonomies.
• The minimum range assumes an increase in underlying operating profit by
2030 based on modest growth and meeting projected green taxonomy criteria
(which will be externally assured in future).
• The maximum range assumes an increase in underlying operating profit by
2030 based on targeted growth and meeting green taxonomy criteria.
Low
Low
Severe risk
Time
horizon
Description, scenarios, assumptions £ impact
Task Force on Climate-related Financial Disclosures (TCFD)
Compliance Statement continued
Serco Group plc | Annual Report and Accounts 2024 | 60
We have complied with the requirements of sections 414CA and 414CB of the
Companies Act (as amended by the Companies (Strategic Report) (Climate-related
Financial Disclosures) Regulations 2022) through the information in the table below
and other disclosures throughout the Strategic Report.
Non-financial information Principal locations in this Annual Report Page(s)
Climate change and sustainability
Environmental matters
Our Impact – Planet
Our Impact performance data: Planet
TCFD compliance statement
Principal risks and uncertainties
Governance (S414C2A) a
Risks and impacts (S414C2A) b-f
Targets and KPIs (S414C2A) g-h
45-51
45, 218-219
56-60
65-71
56, 57, 77, 95
62, 56-60,154
45-49, 219
Colleagues Our Impact – People
Our Impact performance data: People
Principal risks and uncertainties
People and culture
36-41
37-41, 214
69-71
30-32
Anti-corruption and anti-bribery
Human rights
(including slavery and human trafficking)
Our Impact – Governance
Our Impact performance data: Governance
Principal risks and uncertainties
53-55
53-55, 220
69
Social matters
See also: content relating to Colleagues, above.
Our Impact – Place
Our Impact performance data: Place
42-44
42-44, 217
Strategy Our Strategy 24-27
Market Our Markets 22-23
Non-financial principal risks Principal risks and uncertainties 67-71
Non-financial key performance indicators Key Performance Indicators 28-29
Corporate Governance Directors’ Report 76-123
All Serco Group Policies are available on our website; this includes policies relating to the Environment, People, Health, Safety and
Wellbeing, Business Conduct and Ethics, Human Rights, and Data Privacy.
Non-Financial and Sustainability Information Statement
Serco Group plc | Annual Report and Accounts 2024 | 61
Managing risk
Proactive risk management underpins our strategy and business performance and remains
a key focus of our Board. It helps shape our business decisions throughout all levels of the
organisation to help drive the right outcomes for our customers, service users, colleagues
and wider stakeholder groups.
Risk management process
The Board oversees the Group’s risk management and
internal control processes within an Enterprise Risk
Management (ERM) framework, discharging its
oversight responsibilities through the Risk Committee,
supported by the Corporate Responsibility Committee
(CRC), Audit Committee and the Group Executive
Committee (ExCo). The Serco Inc. Audit Committee
and our Divisional Leadership teams also play a critical
part in our risk management process. The Board has
monitored and reviewed the effectiveness of risk
management and internal control systems through
these Committees and the ERM process. Risk
management operates in all levels of the business with
a mandated ‘bottom up/top down’ approach with
formal quarterly reporting updates, as shown in the
table opposite. The ERM framework is facilitated by
the Group ERM team and supported by Divisional
based colleagues.
The management of our key controls forms a critical
part of our ERM framework. Group and Divisional
Compliance Assurance teams operate as a second
line function to ensure appropriate focus on the
articulation, monitoring and testing of key controls,
supported by documented policies and procedures
held within our Serco Management System (SMS).
An annual program of work focuses on the
validation and testing of key controls to supplement
annual control self-assessments and biannual
compliance assurance attestation statements. Some
larger contracts and business units (BU) also have
embedded risk and assurance resources to
strengthen our first line focus on controls design
and operation. This first and second line activity is
augmented by our in-house Internal Audit assurance
work and additional external partners support in
certain specialist areas. Significant third line
assurance activities and audits are also delivered
through external third parties to support certification
standards and customer requirements in our varied
service lines and business units. These include those
that support ISO certifications we manage as well as
independent performance and regulatory reports
on Serco operations. Examples of such reviews
include Aviation Air Traffic Services, Vessel reviews,
Fleet Operating Licence and related inspections. A
key element of our control environment in our North
America Division is compliance with the Special
Security Agreement, we have with the US Government
which is managed by dedicated resources and
oversight delivered by the Serco Inc. Audit
Committee.
Risk Management
Serco Group plc | Annual Report and Accounts 2024 | 62
• Assigning responsibility
and ownership for risk
management
implementation and
management oversight
• Risk Committee setting
and reviewing Risk
Appetite Statements
and Risk Tolerance for
Principal Risks on, at
least, an annual basis
• Setting a target risk
position to determine
objective for mitigating
actions
• Agreeing Executive
Risk sponsors and
dedicated subject
matter expert to
support risk updates
and challenge
• Divisional, BU, Contract
and Functional teams
annual planning
• Risk and Audit
Committee oversight of
our internal
programme to prepare
for changes under the
UK Corporate
Governance Code and
our Integrated
Assurance Framework
(IAF) including
planning of our
approach for
attestation declaration
itself and associated
materiality definition
• Identifying risks
associated with the
achievement of our
business objectives
including risks from
external factors
inherently associated
with the environment in
which we operate, and
internal risks arising
from the nature of our
business
• Bottom-up risk
identification from
functions and contracts
upwards including
operational, financial,
compliance and
strategic risks
• Updating risk registers
with causes and
consequences
• Divisional, ExCo and
Risk Committee
identification of
emerging risk areas
considering internal
and external themes
and trends
Risk Management continued
Serco Group plc | Annual Report and Accounts 2024 | 63
• Assessing the level of
inherent and residual
risk exposure based
on a standardised
assessment
methodology of
likelihood and impact,
reflecting the
effectiveness of current
implemented controls in
place to mitigate the risk
• Bottom-up risk
assessment from
business functions and
contracts upwards
against a Group
defined criteria, using
the likelihood and
impact of a risk
manifesting on a worst-
case credible scenario
basis
• Formal quarterly
assessment of risks
from within the
Division, including any
risks that have been
escalated up from the
contract, functions or
BUs
• Identifying and
implementing
mitigations and control
improvements that seek
to reduce the material
risks to the target risk
position aligned to our
risk appetite
• Development and
implementation of
improvements
following lessons learnt
where we have
encountered issues or
when risks have
materialised
• Continued operation of
mitigating controls
• Monitoring risk
mitigation actions and
their impact and
monitoring changes to
our business and the
external environment,
including emerging risk
themes and operational
issues
• Formal quarterly update
on the principal risks,
their mitigations and
outcomes from the
Compliance Assurance
teams testing activity
reported to the Risk
Committee, CRC, Audit
Committee or Board
• Board Committee
oversight of Divisional
risk deep dives and
principal risk deep
dives on a rotating
schedule (typically
annually). Independent
review and challenge
forms part of the role of
the Group ERM teams
and Committee
members
• Audit and Risk
Committee Compliance
Assurance testing
programme oversight
detailing testing of
specific risk controls and
mitigation progress
• Reporting the status of
material risks and
associated controls
from contracts upwards
through BUs and
Divisions to seek
assurance the business
risks are being
appropriately managed
and reviewed
• Reporting update of
risk positions by the
Chair of the
Committees to the
Board following each
quarterly meeting
• Reporting of any
material risks that have
occurred or significant
control failures to
ensure that lessons
learnt are identified
• Development of our
approach to support
future reporting
requirements as part of
the changes to the UK
Corporate Governance
Code
Emerging risks
We recognise our risk profile is not static as the business is
exposed and responds to internal and external threats and
uncertainties. As part of an annual review with the ExCo and
the Risk Committee, we complete a robust assessment to
identify and monitor emerging risks to ensure that adequate
steps are being taken to understand and mitigate them and to
assess any impact on our principal risks.
Examples of some of the current emerging risks trends being
monitored include continued geopolitical disruption and
political volatility including any associated ideology or
significant policy changes.
Other risk areas
While not considered as emerging risks, we also reviewed our
approach to ESG (including climate change). We continue not
to include ESG or climate change as standalone principal risks
but instead continue to consider these as part of the emerging
risk review.
• ESG: We continue to recognise ESG risks across the
business. As a solutions provider to governments globally,
we deliver on a range of ESG commitments where we can
contribute to delivering public impact and have
recognised our corporate responsibilities for many years.
Further detail on our approach to ESG can be found in our
Impact Report.
• Climate change: We recognise that the climate and wider
environmental emergencies present significant risks to
society and the planet. As an impact partner operating
across multiple sectors and geographies, the ways in which
climate change may impact our own and our customers’
assets (where we deliver most of our services), supply
chains and operations are diverse. We generally operate in
short to medium-term contract-driven sectors, therefore we
do not generally hold long-term assets which can be as
adversely affected by climate risks from a valuation
perspective, which is a challenge faced by many other sectors.
• In considering our climate risks and opportunities we have
treated short-term risks to be between 0-3 years which is in
line with how we assess our principal risks and viability
statement. Medium-term risks are between 3-5 years, in
line with our medium-term contracts. Long-term risks are
between 5-30 years, in line with some longer-term
contracts, our Group Environment Strategy, the Net Zero
transition plans and visions and commitments of the
governments we serve. Our most severe risks and
opportunities are identified using our Group standard risk
assessment process and scoring matrix. Stakeholders
reviewed our long list of climate risk and opportunities,
taking into account relevant scenarios, and scored them as
minor, moderate, major or severe or significant. Further
detail on our approach to environmental reporting and the
Task Force on Climate-related Financial Disclosures (TCFD)
can be found on page 56 and our commitment to climate
change as part of our ESG agenda on page 53.
Changes during the year
We continue to drive improvements in our ERM framework. A
key focus throughout 2024 has been on the design and
implementation of the Risk Management module of our new
Governance, Risk and Compliance tool. This new module
replaces legacy risk register systems to provide enhanced risk
and controls functionality, transparency and reporting. The
ERM module is now live across all Divisions and its capabilities
are being rolled out across the Group including contract and
function-based risk registers.
The implementation of the new tool is a key enabler for our
work in preparation for the implementation of changes to the
Code, which is progressing well. As outlined in last year’s
Annual Report, we implemented an Integrated Assurance
Framework programme (IAF), a global project to review and
enhance our risk and assurance framework. Using our existing
ERM process to help define materiality for the Group, we have
taken a risk-based approach to identifying and validating our
key risks and controls in our most critical contracts globally, as
well as those operating in Divisional and Group functions. Our
review has also included management controls operating at
Divisional and BU levels. Design effectiveness and operational
effectiveness testing for these key controls is underway. We
have also begun to develop our approach to the attestation
declaration, which will be required in 2026.
Risk Management continued
Serco Group plc | Annual Report and Accounts 2024 | 64
Summary of principal risks and uncertainties
Our principal risks, detailed on pages 66 to 71 are those risks that we determine to be the most material when considered against
our strategic ambition and that can materially affect the performance, prospects or reputation of the business. They have been
reviewed using our ERM framework as outlined in previous pages.
For each risk we capture the inherent, residual and target position as assessed against a standard set of impact categories on a
worst-case credible scenario basis. The likelihood of each risk occurring is then assessed, resulting in a final risk position that
enables us to rank the risks from minor to severe. Every principal risk has an appetite statement to determine the nature and amount
of risk the Group is willing to accept. This is shown against each risk on pages 66 to 71. This risk appetite position is set through
discussion with the principal risk ExCo sponsor and ratified by the Risk Committee. The statements include one of four appetite
categories - averse, cautious, moderate and flexible - that reflect the Board’s tolerance to each risk.
Each Principal Risk also shows the linkage to the relevant strategic business objectives and the link to the achievement of our KPIs as
outlined on pages 28 and 29. Appropriate consideration and management of the principal risks have a link to key Executive
remuneration as outlined in the Directors Remuneration Report on page 99. For each Principal Risk we have also included the
residual risk trend observed in 2024.
Following the annual Principal Risk review with the ExCo and subsequent Risk Committee we have made the following changes:
• removal of Financial Control Failure and Failure to Attract, Recruit and Retain as principal risks. This reflects improvements in the
control environment and the impact they are having on our risk indicators in each area. We will continue to monitor these risks at
the Enterprise level and their controls will form part of our 2025 Compliance Assurance testing programme;
• addition of a new risk that recognises the operational disruption that could be caused if we were failed to adequately invest and
improve our IT estate which may result in significant IT infrastructure failures and service disruptions;
• splitting out Contract Performance from the existing risk leaving Contract Non-Compliance and Misreporting as a standalone
risk with the new Contract performance risk focusing on key controls from contract mobilisation, through contract stabilisation
and ongoing delivery; and
• in splitting out contract performance we have also refocused the Failure to Grow risk on the early stages of our business lifecycle
from pre-bid activity, through solution development and bid submission.
Principal risks are considered over the same three-year timeframe as the Viability Statement set out on page 72, which takes account
of the principal risks in its assessment.
In addition to the principal risks and uncertainties already identified, there may be other risks, either unknown, or currently believed
to be immaterial, which could evolve to be material. These risks, whether they materialise individually or simultaneously, could
significantly affect the Group’s business and financial results.
Each of our principal risks supports one or more of the priority areas that drive strategic delivery, namely;
The trend indicator depicts the trend of our residual risk rating internally over the course of 2024
Increase Decrease No change New
Principal Risks and Uncertainties
Serco Group plc | Annual Report and Accounts 2024 | 65
STRATEGIC RISKS
Failure to grow profitably
Risk appetite: Cautious Risk trend:
This risk considers the potential impact of failure to win material bids or a lack of opportunities in our chosen markets,
restricting revenue growth which may in turn have an adverse impact on Serco’s profitability. Sustainable growth requires us
to identify where and how to create opportunities for new work, whilst retaining and expanding our current portfolio of
contracts. This includes having a deep understanding of our market and macro-economic environment, through to managing
our pipeline, bidding, and converting opportunities into value generating work.
Risk context
In line with expectations, our revenues in 2024 reduced slightly
as compared to 2023 due to changing terms on large rebids won
the previous year, lost contracts and fluctuations in volumes on
other contracts. Underlying operating profit, however, increased
year-on-year by £24.8m, highlighting our more productive,
resilient, and sustainable footing.
Long bidding cycles means we typically see the financial impact
of a new contract in the following year to which it was won. With
a strong pipeline £11.2bn we head into 2025 in a robust
position.
Compared to 2023, the risk trend is increasing in part due to the
loss of the Onshore Immigration contract in the Asia Pacific
region. However, our large portfolio of long-term partnerships
with customers should minimise our exposure to the loss of a
single contract. In addition, our international and sector diversity
means we should be able to balance these risks effectively in
2025.
Example mitigations
• Investment Committee and Business Lifecycle review
team (BLRT) bid process and governance.
• Serco Group and Divisional Business Strategy reviewed
annually with ExCo and Board.
• Monitoring of customer satisfaction or similar and using
relationship management systems to determine trends.
• Monitoring of lead indicators, including KPIs such as bid
submissions and oversight of acquisition activities, win
rates and book to bid performance.
• Monthly monitoring of qualified and non-qualified
pipeline at Group and Divisional level and additional
reviews in bi-weekly Growth team meetings and Growth
Forum.
• Monthly Divisional Performance Reviews include
oversight of key growth metrics.
• Geographical and Industry diversification helps protect
against concentration risk.
Oversight by: Board, Risk Committee and ExCo
Executive sponsor: Ruth McGowan, Group Chief Strategy and Growth Officer
Principal Risks and Uncertainties continued
Serco Group plc | Annual Report and Accounts 2024 | 66
OPERATIONAL RISKS
Major information security breach
(including cyber attack and data protection)
Risk appetite: Averse Risk trend:
An information security breach, resulting in the loss or compromise of information (including personal or customer data) or
wilful damage, is a key risk for us. A successful attack or significant control failure may result in regulatory fines, loss of customer
or data subject confidence and follow-on civil claims. We operate an averse risk appetite to any major data breaches and cyber-
attacks.
Risk context
Noting the increased sophistication of cyber-attacks, the
residual risk trend remains stable, reflecting investment and
implementation of strengthened IT device controls, and
continued focus on execution of good practice.
The Group is reliant on the effectiveness of mitigating controls
that seek to avoid a breach and our security approach is based
on good industry practice, seeking to adhere to government
and international security standards, such as the worldwide
recognised National Institute of Standards and Technology
(NIST) cyber security framework, along with customer
accreditations appropriate to each region. We also rely on key
third parties whose failure due to a cyber-attack could impact
Serco’s ability to deliver contract services or expose sensitive
data due to a failure in the suppliers cyber and data controls.
Example mitigations
• Global Technology and Information Security Policy
Boards to manage processes and exceptions.
• Divisional solution reviews overseeing implementation of
new technology.
• Internal Security Standard including 23 minimum control
areas being implemented across the Group.
• Contract and divisional aligned controls to meet
customer specified security obligations.
• 24-hour Security Operations Centre monitoring alerts and
incidents.
• Specialist information security and data privacy officers in
all divisions supported by data protection and security
awareness training.
• Risk based third-party material supplier cyber assessments.
• Crisis management and business continuity processes.
• Global Incident Response Retainer with specialist external
partner.
Oversight by: Board, Risk Committee and ExCo
Executive sponsor: Tom Read, Group Chief Technology and Digital Officer
Strategic technology
Risk appetite: Averse Risk trend:
A fundamental technology capability gap is emerging that may threaten our market position and long-term growth ambitions.
Without action to modernise our technology estate, automate our operation and build digital innovation capabilities we risk
becoming structurally uncompetitive, leading to sustained market share erosion and shareholder value destruction. Our
reliance on legacy systems and infrastructure poses risks of service disruption, margin erosion and reputational damage. We
operate an averse risk appetite in relation to this risk, with an active programme of work to modernise and simplify our
Infrastructure and to invest in emerging technologies.
Risk context
Artificial intelligence and automation are rapidly transforming
our industry, creating unprecedented opportunities to
streamline operations, reduce costs and enhance service
delivery. Without significant investment in our technology estate
we may face a widening competitive gap that could become
insurmountable.
Our competitive position is threatened on three fronts:
– Our legacy systems limit our ability to innovate and compete
for new business, particularly in key growth markets where
digital capabilities are essential.
– Our manual processes result in higher operational costs
compared to competitor’s automated operations, forcing
difficult choices between margins and market share.
– Our ageing technology infrastructure, burdened with
technical debt, increases the risk of significant service
disruptions that could halt operations.
Example mitigations
• Multi-year technology modernisation roadmap with
dedicated investment plan and clear milestones.
• Legacy system replacement programme focused on
highest risk platforms.
• Automation strategy and implementation programme to
drive operational efficiency.
• Build new capability in emerging technologies like AI and
data science.
• Invest in differentiating digital solutions for strategic
global sectors.
• Strategic technology partnerships to accelerate
modernisation.
• Regular assessment of emerging technology risks and
opportunities.
• Technology skills development and recruitment strategy.
• Business continuity and resilience planning for critical
systems.
Oversight by: Board, Risk Committee and ExCo
Executive sponsor: Tom Read, Group Chief Technology and Digital Officer
Principal Risks and Uncertainties continued
Serco Group plc | Annual Report and Accounts 2024 | 67
Contract non-compliance or misreporting
Risk appetite: Averse Risk trend:
Our broad and diverse business requires many thousands of customer contract key performance indicators (KPIs), legal and
contractual obligations to be met daily by our frontline colleagues. There is a risk that we experience contract breaches
caused by a failure to comply with these obligations and/or report compliance with these obligations accurately either
through error or deliberate misreporting by a rogue employee. This could result in negative impact to our customers and
public confidence in us, and consequently would impact our ability to bid and win further or future business.
Risk context
In delivering over 700 government contracts with differing terms
and conditions through more than 50,000 employees, there is
considerable scope for failure to comply with contractual
obligations and/or report accurately.
Some of the key causes of this risk manifesting include unclear
contract requirements, data availability and integrity issues,
manual errors, poor bidding assumptions, IT system failures, and
unclear roles and responsibilities. We also recognise the risk of
deliberate misreporting due to pressure to deliver, inadequate
supervision and inherited ways of working may be a unlikely
cause of this risk.
Example mitigations
• Contract obligations procedure including maintenance of
up to date copies of contract, contract variations and key
regulatory requirements.
• Tracking the delivery of obligations on our Contract
Management Application (CMA) for larger contracts and
reporting in Divisional and Business Unit performance
reviews.
• Procedures for measuring and reporting performance,
agreeing KPI definitions with customer, training delivery
teams on delivering and reporting processes.
• Ongoing tracking and reporting performance of contracts
through monthly and annual performance reviews.
• Strong, meaningful and understood Values and required
behaviours, which are defined in our Code of Conduct
(mycode), supported by the right tone from leaders.
• Robust governance exercising oversight of Ethics and
Compliance programmes including Non-Executive
Directors only sessions at the CRC Committee.
Oversight by: Risk Committee and ExCo
Executive sponsor: Phil Malem, Middle East and +impact CEO
Contract performance
Risk appetite: Averse Risk trend:
Delivery of our diverse and varied portfolio of contracts is at the heart of our business. In managing such a complex range of
contracts and programmes there is a risk that we fail to deliver contract efficiencies, effectively manage our costs and ensure
that each contract meets their financial and internal performance targets whilst delivering to our customer expectations and
committed to contract deliverables. We strive to exceed our customer expectations to create and secure on contract growth
and successful rebid opportunities.
Risk context
This is a newly-created risk that was previously grouped with the
Contract non-compliance and misreporting risk. It considers
contract performance from the point of contract mobilisation
onwards to seek to ensure we set our contracts up to succeed
from inception - bridging the development of the solution to
operational go live, through contract set up, ongoing contract
execution and contract rebid/extensions to exit and lessons
learnt.
We operate over 700 contracts, many of which have specific
customer requirements. Drivers of this risk include inability to
operationalise the proposed solution, resourcing challenges,
unanticipated contract costs and lack of sufficient or effective
handover from bidding to operational teams. It also includes
contract change processes and scope management.
Example mitigations
• Standardised contract lifecycle process including
mandated governance stage gates and management
oversight and approval steps from contract mobilisation
to contract extension/exit and lessons learnt.
• Risk and issue registers embedded in contract lifecycle
process forming part of contract mobilisation.
• Implementation of Programme Boards in 2025 for
material and complex new contracts to oversee
mobilisation activities.
• Operating a procedure for delivering contract obligations
including maintaining up-to-date copies of contract,
contract variations and key regulatory requirements.
• Monthly contract performance reviews feeding into
Business Unit and Divisional performance reviews.
• Annual Gate 8 lessons learnt reviews.
• Proactively managing contract change, raising written
contract changes, involving contract experts, and keeping
full records of signed changes in CMA.
Oversight by: Risk Committee and ExCo
Executive sponsor: Nigel Crossley, Group Chief Financial Officer
Principal Risks and Uncertainties continued
Serco Group plc | Annual Report and Accounts 2024 | 68
Significant failure of the supply chain
Risk appetite: Moderate Risk trend:
Serco failure to fulfil customer and legal obligations, deliver essential operations or win new business due to a significant
failure in the supply chain resulting in financial losses, operational disruptions, and reputational damage. Supply chain failure
includes poor supplier performance and resilience, cyber security and data protection issues, health, safety and environment
incidents and ethics and compliance breaches.
Risk context
Managing supplier risk has become a more critical and complex
task for Serco due to the existence of more complex, globalised
supply chains. We recognise increasing risk of disruption from
distant parts of the world with geopolitical uncertainty creating
an unpredictable environment for global supply chains,
economic uncertainty and inflation leading to higher costs and
affecting labour availability. In addition, the rise in cyber threats
poses significant risks to supply chain security as attacks can
target critical infrastructure and data.
Despite these risks we have not experienced any material
disruptions across the Group and therefore consider the risk
trend as stable.
Example mitigations
• Procurement Policy, Standards and Procedure including
Supplier Code of Conduct processes.
• Serco standard contracts where possible including
appropriate obligations, KPIs and Service Level
Agreements.
• Annual procurement review process of identified
business-critical suppliers.
• A supplier management framework focusing on key risk
themes including supplier, cyber and information security
specific due diligence and monitoring.
Oversight by: Risk Committee and ExCo
Executive sponsor: Anthony Kirby, UK & Europe CEO
PEOPLE RISKS
Failure to act with integrity
Risk appetite: Averse Risk trend:
We recognise an inherent risk of corrupt, illegal, or dishonest behaviour by individuals within or connected to our
organisation. A material failure to act with integrity or significant control failure could result in regulatory fines or other
penalties, damages claims, legal action against individuals and the Company and the potential loss of ability to bid, win or
retain contracts. A failure could also adversely impact colleague engagement and the confidence of customers, investors and
other stakeholders.
Risk context
We are committed to operating with integrity and are averse to
behaviours and actions that might compromise this. We
recognise that, as a provider of frontline public services, we are
subject to public scrutiny and challenge and that there may be
occasions where ‘things go wrong’. In such situations, we seek to
minimise the impact of any failure, accept responsibility and take
action. We have no tolerance for any significant breach resulting
in risk of prosecution, regulatory or government censure.
Emerging risk considerations include increasing legislation, such
as modern slavery regulations and failure to prevent fraud in the
UK. Geopolitical tensions impact sanctions legislation and
enforcement and focus for the governments we serve. Potential
pressures which might drive inappropriate behaviour can be
caused by inflationary and economic challenges, increasing
mental health risk and higher medium-term levels of colleague
attrition.
Despite the increases in regulatory requirements, these are
generally introduced gradually or do not impact significant
areas of our business and are part of the general environment in
which we operate. These pressures are known and taken into
account in the ethics and compliance programme. We do not
therefore consider these factors to move the overall position of
this risk which we see as stable.
Example mitigations
• Strong, meaningful and understood Values and required
behaviours, which are defined in mycode, supported by
the right tone from leaders.
• Robust governance exercising oversight of Ethics and
Compliance programme including Non-Executive
Directors only sessions at the CRC Committee.
• Ethics and Compliance (E&C) teams in each Division
delivering training.
• Group-led compliance tools, standards, frameworks and
platforms including mycode.
• Independent Speak Up process supported by Corporate
Investigation teams.
• Mandatory Serco Essentials training covering E&C topics.
• Third-party due diligence on key customers, suppliers
and high risk third parties to identify regulatory non-
compliance and risks such as sanctions and bribery.
Oversight by: Corporate Responsibility Committee, Risk Committee and ExCo
Executive Sponsor: Mark Irwin, Group Chief Executive
Principal Risks and Uncertainties continued
Serco Group plc | Annual Report and Accounts 2024 | 69
Health, safety and wellbeing
Risk appetite: Averse Risk trend:
The diversity of services provided by Serco exposes our employees, customers and third parties to a wide range of health, safety, and
wellbeing (HS&W) risks inherent to our operations. This risk also includes psycho-social, environmental and societal concerns
that may impact the safety and wellbeing of our employees, partners and those in our care. Additional considerations include
environmental concerns recognising that extreme heat, flooding or other extreme weather events may impact the safety and
wellbeing of our employees, customers and service users. A breach of health and safety regulations or failure to meet our contracted
expectations could disrupt our business and lead to contractual, financial, regulatory and reputational costs.
Risk context
Our vision is Zero Harm. We have an averse risk appetite for actions
and/or failures, that would cause loss of life. Despite a strong
performance when considering our key KPIs for H&S, as shown on
page 28 to 29 (LTIs reduction of 22% and Lost Working Days
reduction of 33%) we recognise that we cannot eradicate risk
entirely while maintaining operational delivery and we therefore
consider the risk trend as stable. We continue to prioritise
prevention of major injuries and threats to wellbeing whilst
tolerating that minor injuries will occur on occasion but are
minimised by appropriate controls.
Our HS&W risk has the potential to impact or interconnect with
several principal risk areas including Legal and Regulatory, Contract
Non-Compliance, Integrity and Catastrophic Risk.
As societal challenges are predicted to increase, we anticipate
that our exposure to the interconnectivity of risks will also
increase, largely driven by cost-of-living pressures which will
disproportionately impact our frontline workforce. Continuing to
meet these developing people and compliance needs and
mitigating their impact will be a key challenge for the organisation
through 2025.
Example mitigations
• HS&W Strategy and Safety Management Systems
mandated in policy and implemented in each Division,
including task-based enhanced risk assessments.
• Effective use of data and information to drive
improvements including introduction of a psychological
H&S injury metric.
• Updated HS&W training, communication and guidance, in
addition to mandated Group wide safety training (Serco
Essentials) with completion captured and reviewed.
• Spontaneous and planned preventative, maintenance,
audit, and inspection through a programme of first,
second and third line assurance activities.
• Role-specific training, based on site and task specific risk
assessment findings and control measures.
• Incident reporting and investigations through effective
use of reporting and compliance systems.
• Continued growth of the review and sharing of lessons
learnt throughout the global organisation.
• ISO Certifications including ISO 45003.
Oversight by: Board, Corporate Responsibility Committee, Risk Committee and ExCo
Executive sponsor: Gillian Duggan, Group Chief People and Culture Officer
Principal Risks and Uncertainties continued
Serco Group plc | Annual Report and Accounts 2024 | 70
Catastrophic incident
Risk appetite: Averse Risk trend:
Given the nature of our business, we are exposed to the risk of an event (incident or accident) occurring as a result of Serco’s
actions or failure to effectively respond to/prepare for an event that results in multiple fatalities, and/or severe property/asset
damage/loss and/or very serious environmental damage.
Risk context
We operate a five-step Catastrophic Risk plan to ensure that
each Division continues to assess risks at a contract level, to
ensure that relevant material risks have been identified and
mitigated appropriately. The physical risks linked to climate
change-related events are included more explicitly in our risk
management framework as part of the work initiated for TCFD
and outlined in more detail on pages 56 to 60. The Health,
Safety and Wellbeing elements of this risk are included in the
Health, Safety and Wellbeing principal risk.
Given our average contract length, there tend not to be large
fluctuations in this risk and we consider the risk trend to be
stable. We continue to work with some of our key insurance
brokers to leverage climate change impact scenario analyses
they have conducted, to see what potential risk quantification
changes they project. This helps ensure that the insurance limits
purchased remain adequate, given insurance is one of the key
mitigations for this risk and also helps inform our TCFD response
as detailed on pages 56 to 60.
Example mitigations
• HSE&W Strategies and Safety Management System
(policies and procedures) underpinned by our Impact
framework.
• Safety training (including Serco Essentials) and individual
development plans and processes based on role and
operational risk.
• Effective incident/near-miss investigations and effective
use of ASSURE (independent reporting and compliance
system).
• Business continuity, crisis and incident emergency
response plans and testing.
• Risk transfer via prudent insurance cover where
appropriate.
Oversight by: Risk Committee and ExCo
Executive sponsor: Tom Watson, North America CEO
LEGAL AND COMPLIANCE RISKS
Material legal and regulatory
compliance failure
Risk appetite: Averse Risk trend:
Serco operates in complex legal and regulatory environments across multiple industries and geographies and there is a risk
that the Company might not comply with all relevant laws and regulations. Failure to comply with laws and regulations may
cause significant loss and damage to the Group and harm to people including exposure to regulatory prosecution and fines,
reputational damage and the potential loss of licences and authorisations, all of which may prejudice the prospects for future
bids and contracts. Defending legal proceedings may be costly and may also divert management attention away from running
the business for a prolonged period. Uninsured losses or financial penalties resulting from any current or threatened legal
actions may also have a material adverse effect on the Group.
Risk context
We remain subject to a fast-moving and complex global legal
and regulatory environment and Serco is subject to
investigations and potential claims which involve legal
proceedings. We successfully settled a material class action
claim during 2024 involving former shareholders but remain
vigilant to the increasing threat of class action litigation.
In addition, various laws and regulations that apply across the
business continue to be subject to increased focus and
attention, including anti-bribery and corruption laws, market
abuse regulation, data and privacy laws, sanctions and trade
compliance, competition and antitrust, human rights, modern
slavery and employment laws. We are averse to risks which may
result in legal and regulatory non-compliance and demand
processes that seek to minimise regulatory and legal action, as
well as targeted and selected assurance activity.
Example mitigations
• Embedded internal and external legal and other subject
matter experts (for example HR) with responsibility for
monitoring and understanding legal and regulatory
obligations and risks.
• Dedicated legal teams at Group and Divisions aligned to
business and operations.
• Investment Committee and Business Lifecycle Review
Team (BLRT) bid process and governance.
• Third-party due diligence on key customers, suppliers
and high risk third parties.
• Group-led compliance tools including Speak Up and
MyCode.
• Serco-wide Essentials Training modules as well as targeted
roles-based and ad hoc training on specific legal areas.
• Annual and half year statements attesting material
compliance with laws and regulations.
Oversight by: Risk Committee and ExCo
Executive sponsor: David Eveleigh, Group General Counsel
Principal Risks and Uncertainties continued
Serco Group plc | Annual Report and Accounts 2024 | 71
In accordance with provision 31 of the UK Corporate Governance Code published
by the Financial Reporting Council (FRC) in July 2018 and the FRC Guidance on
Risk Management and Business Reporting, the Directors have assessed the prospects of
the Group over the three-year period to 31 December 2027.
Three-year term
Whilst the Group operates many long term contracts, the nature
of the Group’s business relies on continued bidding activity and
contract wins in order to sustain its revenue streams and facilitate
growth. The pipeline of contract opportunities is carefully
managed, however, the outcome of bid submissions is binary
and the Group uses past experience and estimated win rates to
provide short term budgets against which performance is
measured. As a result of the estimates used in developing the
Group’s forecast, it remains challenging to develop detailed
projections against which the Group’s viability can be assessed.
Therefore, the Directors believe that a three-year period is
appropriate since it reflects the fact that:
• Short term projections can be heavily reliant on successful
bidding opportunities which have a binary outcome.
• The Group has limited visibility of contract bidding
opportunities beyond three years given the lead times which
generally exist before opportunities come to market.
• Approximately 51% (2023: 50%) of the current year revenue
relates to contracts where the contract term potentially
comes to an end within three years.
In line with the annual budgeting process the Group has
prepared an updated five-year business plan to establish
whether it is on target to achieve its long-term strategic goals.
The future cash flows are derived from the latest Board
approved five-year plan, with the key assumptions being
revenue growth which is sensitive to known and unknown
pipeline opportunities, which is common within the industry, win
rates for rebids and new business, margins on existing and new
business, and cash conversion rates, all of which drive short-term
growth rates. The Board approved five-year plan has an element
of contingency to take into consideration potential risks within
these assumptions. Given the nature of the assumptions used in
the latter years of the five-year plan it is appropriate to forecast
the future performance of the business, however, given the
assumptions used and the items noted above, is not of definitive
certainty against which a statement of viability can be assessed
against.
Financial forecasts
In assessing the prospects of the Group over the three-year
period, the Directors have also considered the Group’s current
financial position as well as its financial projections in the context
of the Group’s debt facilities and associated covenants. These
financial projections which have been approved by the Board
are based on a bottom-up budget exercise for 2025 and 2026,
and a higher-level forecast for 2027 based on key assumptions
such as current contracted revenue and assumed win rates
applied to new business and rebid opportunities.
The Group’s covenant net debt balance at 31 December 2024 is
£103.3m. The Group’s base projections indicate that debt
facilities and projected headroom are adequate to support the
Group over the period to 31 December 2027. The Group’s financial
plan has been stress-tested against key sensitivities which could
materialise as a result of the crystallisation of one or a number of the
principal risks, the objective being that the future viability of the
Group is tested against severe but plausible scenarios.
Funding facilities
At 31 December 2024, the Group’s principal debt facilities
comprised a £350m revolving credit facility maturing in
November 2027 (of which £nil was drawn), and £279m of US
private placement loan notes (USPP notes). The principal
financial covenant ratios are consistent across the USPP notes
and revolving credit facility, and are outlined on page 211.
The Group refinanced its revolving credit facility at the end of
2022 and the associated five-year funding facility provides the
financial platform to continue to invest in the growth of the
Group. The refinanced bank debt expires during the three-year
assessment period and the viability assessment assumes that it
will be refinanced on similar terms. The Directors are of the
opinion that refinancing the debt, to at least a level that would
allow the Group to remain viable, is an achievable outcome.
During the period of assessment, £104m of the Group’s USPP
notes mature. The long-term forecasts supporting this statement
show that, on the assumption that these are repaid and no
further refinancing occurs after the date of the approval of these
financial statements, there is still sufficient liquidity headroom for
the Group to remain viable.
As detailed in post balance sheet events within note 36 to the
financial statements, subsequent to the balance sheet date the
Group signed a committed 2-year term loan facility of US$250m
(c.£199m) on the announcement to acquire Northrop
Grumman’s mission training and satellite ground network
communications software business (MT&S), which has been
included in the Directors’ liquidity forecast supporting this
assessment. The facility provides a source of additional liquidity
in the near term, becoming available after the completion of the
acquisition, and it will mandatorily cancel in the event of
equivalent future debt issuance by the Group. The principal
financial covenant ratios of this facility are consistent with the
USPP loan notes and revolving credit facility.
Risks
The Board and the Risk Committee continue to monitor the
principal risks facing the Group, including those that would
threaten the execution of its strategy, business model, future
performance, solvency and liquidity. The potential outcome,
management and mitigation of those principal risks have been
taken into consideration when modelling sensitivities to assess
the future viability of the Group. The Group’s risk review is set
out on pages 65 to 71 and outlines the Group’s principal risks
and mitigating controls that are in place.
Severe but plausible downside scenarios
Due to the Group’s long-term contracting nature, the sensitivities
tested include a reduction in the win rates for rebids, extensions
and the pipeline of new opportunities, a reduction in delivering
margin improvements and a potential penalty arising from risks
such as a major information security breach or a material legal
and regulatory compliance failure.
Viability Statement
Serco Group plc | Annual Report and Accounts 2024 | 72
A reverse stress test of the Group’s profit forecast has been
completed using different assumptions of new business and
rebid win rates and the Group’s profit margin. This analysis
shows that the Group can afford to be unsuccessful on 40% of its
target new business and rebid wins combined with a profit
margin 80 basis points below the Group’s forecast, and the
Group will still have sufficient liquidity available throughout the
assessment period, on the assumption that all USPP notes are
repaid during the period, and that the Group’s Revolving Credit
Facility is refinanced on similar terms. May 2025 is the point with
the lowest amount of liquidity headroom using the sensitivities
outlined above against which the forecast has been stress tested.
As context, rebids have a more significant impact on the Group’s
revenue than new business wins, as contracts accounting for
51% of total revenues are expected to be rebid in the next three
years. The Group has won more than 85% of its rebids and
available contract extensions over the last two years by volume,
therefore a reduction of the budgeted bids and extensions by
40% is not considered plausible. While these sensitivities will
change in line with the Group’s order book and contract
performance going forward, including the impact of new
contract wins and losses, the ability for the Group to absorb
sensitivities of this scale within its existing financing
arrangements drove the assumptions below, which the Directors
felt appropriate to disclose in making this viability statement.
Mitigations
It is considered unlikely, but not impossible, that the
crystallisation of a single risk would test the future viability of the
Group; however, unsurprisingly, and as with many companies, it
is possible to construct scenarios where either multiple
occurrences of the same risk, or single occurrences of different
significant risks, could put pressure on the Group’s ability to
meet its financial covenants. At this point, the Group would look
to address the issue by exploring a range of options including,
amongst others, a temporary or permanent renegotiation of the
financial covenants, disposals of parts of the Group’s operations
to reduce net debt and/or raising additional capital in the form
of equity, subordinated debt or other such instruments.
Conclusions and assumptions
Subject to these risks and on the basis of the analysis
undertaken, the Directors have a reasonable expectation that the
Group will be able to continue in operation and meet its
liabilities as they fall due over the three-year period of their
assessment. In doing so, it is recognised that such future
assessments are subject to a level of uncertainty that increases
further out in time and, therefore, future outcomes cannot be
guaranteed or predicted with certainty. The Directors have made
the following key assumptions in connection with this assessment:
• there is no significant unexpected contract attrition of
existing work that becomes due for extension or rebid over
the next three years;
• there is no significant reduction in scale of existing contract
operations as a result of customer policy or other changes;
• the Group is able to refinance the £350m revolving credit
facility which matures during the assessment term;
• there is no significant deterioration in new business and
rebid win rates from those anticipated;
• the Group is able to continue the execution of its strategy of
growing revenue and profits; and
• the Group is not subject to any material penalties, claims,
litigations, direct and indirect costs and/or debarment from
bidding for new contracts.
Viability Statement continued
Serco Group plc | Annual Report and Accounts 2024 | 73
Section 172 (1) of the Companies Act 2006 requires a director of a company to act in the
way that they consider, in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole. The Directors, both individually and
collectively, believe that they have given due regard to the matters set out in section 172
(1) (a-f) of the Companies Act 2006 in discharging this duty during the year.
The following pages, which includes examples of key decisions taken during the year, describe how the
Directors individually, and the Board collectively, have had regard to the matters set out in Section 172
and forms the Directors’ statement required under section 414CZA of the Companies Act 2006.
Section 172 factor Further information
(a) The likely consequences of any decision in the long term
The Board’s diverse set of skills, knowledge and experience assists in making
informed decisions promoting the long-term success of the Company whilst
considering the needs of our stakeholders.
Strategic report
• Our Market: pages 22 and 23
• Our Strategy: pages 24 to 27
• KPIs: pages 28 and 29
Governance
• Board Leadership and Company Purpose: page
83
(b) The interests of the Company’s employees
The Board has oversight of colleague wellbeing, safety culture, and diversity;
talent development; and the alignment of culture and strategy with core
values through the work of the Corporate Responsibility Committee. The
Board also considers feedback received from colleagues through the Group-
wide engagement survey, Viewpoint, and through Dame Sue Owen DCB,
Designated Non-Executive Director for Employee Voice.
Strategic report
• Our People and Culture: pages 30 to 32
• KPIs: pages 28 and 29
• Our Impact: pages 33 to 55 and on our website
Governance
• Board Leadership and Company Purpose: page
83
• Corporate Responsibility Committee report:
pages 95 and 96
(c) The need to foster the Company’s business relationships with suppliers,
customers and others
Regular operational updates are provided to the Board directly and through
its Committees by senior management including on matters such as the
management and assessment of suppliers and customer engagement and
feedback. Members of the Board also meet with customers during contract
visits.
Strategic report
• Divisional Reviews: pages 14 to 18
• KPIs: pages 28 and 29
• Our Impact: pages 33 to 55 and on our website
• Principal Risks and Uncertainties: pages 65 to 71
(d) The impact of the Company’s operations on the community and the
environment
Members of the Board meet with users of the services we provide on behalf
of our customers during contract visits. Senior management also provide
regular updates directly to the Board and through its Committees on matters
such as ethics and business conduct, the Speak Up service and
environmental strategy.
Strategic Report
• Our Impact: pages 33 to 55 and on our website
(e) The desirability of the Company maintaining a reputation for high
standards of business conduct
Our Values, Code of Conduct, Serco Management System and related
policies cover the values and behaviours expected of employees, the
standards to which they must adhere, how we engage with stakeholders and
how the Board looks to ensure that we have robust systems of control and
assurance processes. Together, they are designed to drive high standards of
business conduct across the Group and compliance is monitored by the
Board directly and through the work of its Committees.
Strategic report
• Our Impact: pages 33 to 55 and on our website
• Principal Risks and Uncertainties: pages 65 to 71
(f) The need to act fairly as between members of the Company
The Board considers feedback received from engagement with
shareholders, debt investors, analysts and proxy advisors throughout the
year. Members of the Board meet with a number of shareholders and
analysts during the year; and the AGM provides an additional opportunity to
communicate with private and institutional investors.
Strategic report
• KPIs: pages 28 and 29
• Our Impact: pages 33 to 55 and on our website
Section 172 (1) Statement
Serco Group plc | Annual Report and Accounts 2024 | 74
Key:
Our stakeholder groups at a glance and link to priority areas
Colleagues
Our people are at the heart of our business and are critical to achieving our mission of bringing
together the right people, technology and partners to deliver positive impact through equitable,
meaningful and safe employment.
Customers
Our ability to retain existing, and win new, customers through understanding, engaging with,
and responding to their needs ensures our continued success. We aim to deliver quality public
services, at a price that represents good value for money.
Suppliers
We aim for honest, respectful and transparent relationships with suppliers that share our ethical
standards and commitment to sustainability to fulfil our purpose of being a valued and trusted
partner of governments, delivering superb public services that transform outcomes and make a
positive difference to our fellow citizens.
Communities and society We deliver public services for and on behalf of our government customers, employing local
people and working with those who represent the needs of the communities we operate in,
strengthening the social and economic wellbeing of the communities we serve.
Shareholders
Engagement with and receiving the support of our shareholders is a key factor in achieving our
strategic goals. We seek long-term relationships based on transparency, honesty and clarity, all
of which are critical for building trust.
Returning funds to shareholders:
Share Repurchase Programme
2024
See also:
• Group and Divisional review
on pages 8 to 21
• Share buyback announcement
(29 February 2024)
Shareholders The Company launched a share buyback programme of £140m, the objective of the
programme was to return surplus capital to shareholders in line with the Group’s capital
allocation model. The buyback programme was completed on 29 November 2024 and
the repurchased shares have been cancelled.
The Board considered the share buyback programme to be in line with shareholder
expectations and consistent with the Group’s capital allocation policy. The Company
took advice from advisers.
Strategy review
See also:
• Our Strategy on pages 24
to 27
• Our Impact on pages 33
to 55 and on our website
Colleagues,
Customers,
Suppliers,
and
Shareholders
In 2023, we redefined our Purpose, Vision and Mission, alongside our Goals. In 2024,
the Board determined that these central principles, as well as our commitment to an
international, diversified portfolio of government customers, continues to be at the core
of our strategy.
Contract Bids
See also:
• Contract announcements
• (22 August 2024; 8 November
2024; 15 January 2025; and
6 February 2025)
Colleagues,
Customers,
Communities
and society,
and
Shareholders
Board approval is required for contract bids where the contract value exceeds a specified
value per year or is of an unusual scope, nature or liability exposure. When assessing
bids that meet this criteria, the Board consider a number of factors including existing
knowledge, experience and capabilities in the sector, strategic growth ambitions, and
the longer term benefit to the Company’s shareholders. During 2024, the Board
considered and approved a number of bid submissions, including US Space Force's
Pituffik Space Base, Australia Immigration, Federal Aviation Administration, Canada
National Capital Region of Ottawa and the UK Armed Forces Recruitment Service.
Acquisition
See also:
• Acquisition announcement
(30 January 2025)
Colleagues,
Customers,
and
Shareholders
The Board considered a number of acquisitions including the acquisition of Northrop
Grumman’s mission training and satellite ground optimisation business and how it
could increase the Company’s scale, capabilities and growth potential providing
benefit to shareholders in the long term.
The Board also considered how the acquired capability and the knowledge and
experience of the workforce would enhance the solutions the Company can offer to
customers worldwide.
Principal Decision Stakeholder
groups
Section 172 considerations
Section 172 (1) Statement continued
Serco Group plc | Annual Report and Accounts 2024 | 75
The Strategic Report on pages 1 to 75 is approved by the Board of Directors and signed on its behalf by:
Nickesha Graham-Burrell
Group Company Secretary
26 February 2025
Corporate Governance
Serco Group plc | Annual Report and Accounts 2024 | 76
Directors Report
77 Chair’s Corporate Governance Overview
78 Corporate Governance Compliance Statement
78 Governance at a Glance
79 Board of Directors
82 Group Executive Committee
87 Nomination Committee Report
89 Audit Committee Report
94 Risk Committee Report
95 Corporate Responsibility Committee Report
97 Directors’ Remuneration Report
118 Directors’ Report: Other Information
123 Directors’ Responsibility Statement
Contents
Effective Governance
This report sets out how Serco is governed and the key activities of the Board of
Directors in promoting effective governance during 2024. Further information on how
the Company complied with the UK Corporate Governance Code during 2024 is set out
on the following pages.
Chair’s Corporate Governance Overview
Serco Group plc | Annual Report and Accounts 2024 | 77
Dear Shareholders
I am pleased to present the Corporate Governance Report for 2024. The
Board believes that good governance is key to the long-term success of
the Group and is committed to upholding high standards of governance.
Board leadership and Company purpose
As Chair, I am responsible for providing leadership to ensure that the
Board operates effectively and that Serco has strong governance which,
in recent years, is an area that has received increased focus from our
stakeholders. I continue to be supported in this by each of the Directors,
in particular, Lynne Peacock, our Senior Independent Director. Details of
our Board, Committees and Governance structure are provided on
pages 83 to 86. Further information on how we are performing against
our strategic objectives can be found on pages 28 and 29. Details of
how we ensure that we operate and deliver our strategic objectives in a
way that is responsible and consistent with the broader interests of
society is summarised on pages 33 to 55 and in our separate Impact
Report, which is available on the Company website.
Effectiveness
The Board and its Committees have continued to work well together
over the last year. We continue to have a separate discussion after each
Board meeting with only the Non-Executive Directors (NEDs) present
and to have informal dinners – attended by all members of the Board
and to which members of senior management are sometimes invited.
These additional opportunities to meet continue to prove productive
and effective. The work of the Board’s Committees during the year is set
out on the following pages. The annual Board performance review
assists the Board in assessing how the Board and its Committees
operate and to identify areas in which improvements can be made. This
year, the review was externally-facilitated and a summary of the outcome
of this review is set out on page 86.
John Rishton
Chair
26 February 2025
John Rishton
Chair
Director Board Nomination Audit Risk
Corporate
Responsibility Remuneration
John Rishton
8 of 8
2 of 2 n/a n/a n/a 4 of 4
Kirsty Bashforth
8 of 8
2 of 2 n/a 4 of 4 4 of 4 4 of 4
Nigel Crossley 8 of 8 n/a n/a n/a n/a n/a
Kru Desai 8 of 8 2 of 2 7 of 7 n/a 4 of 4 n/a
Ian El-Mokadem 8 of 8 2 of 2 7 of 7 4 of 4 n/a n/a
Victoria Hull 3 of 3 1 of 1 n/a n/a n/a 2 of 2
Mark Irwin 8 of 8 n/a n/a n/a 4 of 4 n/a
Tim Lodge 8 of 8 2 of 2 7 of 7 4 of 4 n/a 4 of 4
Dame Sue Owen 8 of 8 2 of 2 n/a 4 of 4 4 of 4 n/a
Lynne Peacock 8 of 8 2 of 2 7 of 7 n/a n/a 4 of 4
Meeting attendance
UK Corporate Governance Code 2018
(the Code) Compliance Statement
During 2024, the Company complied with all of the provisions
of the Code. The Corporate Governance Report and the table
below illustrate how we have applied the Code principles and
complied with the provisions.
The Code is available at www.frc.org.uk.
The Board believes that good
governance is key to the long-
term success of the Group.”
Governance at a Glance
Serco Group plc | Annual Report and Accounts 2024 | 78
UK Corporate Governance Code
Board Leadership and Company Purpose
Pages 83 to 85
A Board effectiveness and activities 83
B Purpose, culture and values 83
C Risk management and controls 84
D Stakeholder engagement 84
E Workforce policies and practices 85
Division of Responsibilities
Pages 83 to 86
F Board roles 85 to 86
G Independence 86
H Time commitment and conflicts of interest 86
I Board resources 83 to 84
Composition, Succession and Evaluation
Page 86
J Appointments and succession plans 86
K Board composition 86
L Board performance review 86
Audit, Risk and Internal Control
Pages 89 to 94
M Auditor independence and effectiveness 93
N Review of Annual Report 91
O Risk management and internal control 89 to 93, 94
Remuneration Pages
Pages 97 to 117
P Annual Report on Remuneration 97 to 98, 102
Q Determining the Remuneration Policy 115 to 117
R 2024 performance outcomes 102 to 106, 114
Female
Male
White
Ethnic Minority
Female
Male
Board Gender
1
Board Ethnicity
2
Group Executive Committee Gender
3
2024
2024
2024
Skills and Experience
Board Skills Assessment 2024
Very
Limited Limited Moderate Substantial
Very
Substantial Total
Environmental (E in ESG) 2 5 3 10
Social (S in ESG)
1
2 7 10
Governance (G in ESG) including of PLCs and complex global groups 1 4 5 10
Previous and/or current PLC board & committee experience 3
1
6 10
Financial expertise including banking, financing and audit etc 2 3
1
4 10
HR & remuneration in international businesses
1
2 4 3 10
Working with governments 1 4 2 3 10
Outsourcing contracting 2 2 2 4 10
Leadership of complex global groups 1
2
7 10
Management and oversight of group health and safety arrangements 1 6 3 10
Risk management, ethics and compliance 2 8 10
People and culture including D&I, employee incentives and change
programme implementation or ongoing oversight etc.
1 4 5 10
Technology, digital and cyber security
1
5 4 10
Strategy and M&A of complex global groups
1
3 6 10
1. As at 31 December 2024.
2. As at 31 December 2024 and where white is defined by the Office of National
Statistics Ethnic Group Response Categories for England.
3. Further information can be found on page 88.
Board of Directors
Serco Group plc | Annual Report and Accounts 2024 | 79
Mark Irwin
Group Chief Executive
Appointed to the Board
January 2023
Skills and experience
Mark Irwin has extensive
international experience in
business and operations
management, holding numerous
senior leadership positions in
state-owned, public and private
equity business environments.
He has worked for Serco since
2013.
He has an MBA from Victoria
University.
Previous roles
Leadership roles in several US-
based private equity portfolio
businesses, including Momentive
Performance Materials and Nalco
Company as well as China
National Bluestar Group
following Blackstone’s
investment in the company. Prior
to working in China, Mark spent
eight years in the United States
working for multinational
companies including General
Electric (GE), after commencing
with GE in Australia.
Current external commitments
None.
John Rishton
Board Chair
Appointed to the Board
September 2016 (Chair since
April 2021)
Skills and experience
John Rishton has over 40 years’
business experience gained in a
variety of companies, industries
and roles, including nearly 14
years as a Chief Executive or
Chief Financial Officer.
He has a BA in Economics from
Nottingham University.
Previous roles
Chief Executive of Rolls-Royce
Group plc, Chief Executive and
President of the Dutch
international retailer, Royal Ahold
NV (and prior to that, its Chief
Financial Officer) and Chief
Financial Officer of British
Airways plc. Non-Executive
Director of Associated British
Ports, Allied Domecq and ICA
Gruppen AB. Non-Executive
Director and Chair of the Audit
Committee of Unilever plc.
Current external commitments
Chair of Informa plc.
Non-Executive Director of Majid
al Futtaim Properties LLC.
Nigel Crossley
Group Chief Financial Officer
Appointed to the Board
April 2021
Skills and experience
Nigel Crossley is an experienced
Chief Financial Officer with over
30 years’ experience in finance
roles in international
organisations. He has worked for
Serco since 2014.
He has a BSc in Mathematics
from Hull University.
Previous roles
Director of Finance and
Transformation at EMI, Group
Financial Controller of RHM plc
and various finance roles at
Procter & Gamble.
Current external commitments
None.
C
N
RE
Key to Committee
membership
Audit
Committee
Nomination
Committee
Remuneration
Committee
Corporate
Responsibility
Committee
Risk
Committee
Committee
Chair
C
A
N
RE
RI
Board of Directors continued
Serco Group plc | Annual Report and Accounts 2024 | 80
Ian El-Mokadem
Independent NED
Appointed to the Board
July 2017
Skills and experience
Ian El-Mokadem is an
experienced Chief Executive
Officer with international
experience in business
transformation and acquisitions
anddisposals.
He has a BSc (Hons) in
Economics and Statistics from
University College, London and
an MBA from INSEAD.
Previous roles
Chief Executive Officer of RWS
Holdings plc, V. Group and of
Exova Group plc. Group
Managing Director, UK & Ireland
of Compass Group plc and
senior management positions
with Centrica plc and the global
management consultancy,
Accenture.
Current external commitments
Non-Executive Director and
member of the Audit and
Nomination Committees of
Diploma PLC.
Director of Roegate Consulting
Limited.
Kru Desai
Independent NED
Appointed to the Board
October 2021
Skills and experience
Kru Desai has over 30 years’
experience of working with the
public and private sector in
leading transformation of public
services in the UK and
internationally. She has held
general management and board
leadership roles in sales and
operational delivery.
She has an MSc in Politics and
Administration from Birkbeck
College, University of London
and an Executive MBA from the
University of Bristol.
Previous roles
Partner, KPMG LLP (UK). Non-
Executive Director and Chair of
the Remuneration Committee of
KPMG LLP (UK). Executive
Director and Member of the
Group Management Board of
Mouchel Group plc and of the
Management Board of Hedra
PLC. Managing Director of Atos
(UK). Independent
Commissioner of the Geospatial
Commission. Chair of the Zinc
Network. Vice Chair of City St
George's, University of London
(formerly City, University of
London).
Current external commitments
Independent Non-Executive
Director of Buro Happold
Limited.
Kirsty Bashforth
Independent NED
Appointed to the Board
September 2017
Skills and experience
Kirsty Bashforth is an
experienced executive and
board member within the
construction, services, consumer
goods, energy, education and
health industries, with expertise
in change management, safety
and risk management,
organisational culture and
leadership.
She has an MA in Economics
from the University of Cambridge
and is the author of ‘Culture Shift
– a practical guide to managing
organizational culture’.
Previous roles
Non-Executive Director, Chair of
the Safety, Health and
Environment Committee and a
member of the Nomination,
Remuneration, Risk Management
and Audit Committees of Kier
Group plc. Chief Business
Officer, Non-Executive Director
and Chair of the Remuneration
Committee of Diaverum AB.
Group Head of Organisational
Effectiveness at bp plc and other
global roles. Non-Executive
Director, Chair of the
Remuneration & People
Committee and a member of the
Audit & Risk and Reputation &
Ethics Committees of GEMS
Education. Governor of Leeds
Beckett University and Ashville
College. Chair of Northern
Superchargers Limited.
Current external commitments
Chief People and Culture Officer
of Delinian Trading Limited.
Non-Executive Director, Chair of
the Remuneration Committee
and a member of the Nomination
and Environmental and Social
Impact Committees of PZ
Cussons plc.
Director of QuayFive Limited.
RIN RE C A N C
Tim Lodge
Independent NED
Appointed to the Board
February 2021
Skills and experience
Tim Lodge is a fellow of the
Chartered Institute of
Management Accountants and
has a strong finance and
accounting background with
over 30 years’ experience in
financial roles within international
organisations, some eight of
which were spent as Chief
Financial Officer. He has
considerable experience in
leading significant strategic and
operational transformation and
driving commercial performance.
He has an MA in Classics from
the University of Cambridge.
Previous roles
Chief Financial Officer at Tate &
Lyle PLC and COFCO
International and a Non-
Executive Director and Chair of
the Audit Committee of Aryzta
AG. Chair of the Management
Committee of the Cordwainers
Livery Company.
Current external commitments
Non-Executive Director of
Howden Joinery Group Plc.
Non-Executive Director and
Chair of the Audit Committee of
SSP Group plc.
Senior Independent Director of
Arco Limited.
Director of An African Canvas
(UK) Limited.
Trustee of Gambia School
Support.
RIA N RERIA N
Board of Directors continued
Serco Group plc | Annual Report and Accounts 2024 | 81
Dame Sue Owen DCB
Independent NED
Designated Non-Executive
Director for Employee Voice
Appointed to the Board
August 2020
Skills and experience
Dame Sue Owen DCB has
significant experience of
government and economic
policy, having held senior roles
in several government
departments.
She has an MA in Economics
from Cambridge University and
an MSc in Economics from
Cardiff University.
Previous roles
Permanent Secretary for the
Department for Digital, Culture,
Media and Sport, Diversity and
Inclusion Champion, chair of the
Charity for Civil Servants and
senior posts in the Department
for Work and Pensions,
Department for International
Development, Foreign Office
and HM Treasury.
Current external commitments
Chair of the Royal Ballet
Governors.
Specialist Partner at Flint-Global
Advisory.
Non-Executive Director of
Pantheon International plc.
Non-Executive Director of Pool
Reinsurance Company Limited
and Pool Reinsurance (Nuclear)
Limited.
Non-Executive Director of
Methera-Global
Communications.
Trustee of Opera Holland Park.
Supervisory Board member of
DAF NV.
Chair of the UK Debt
Management Office Advisory
Board.
Lynne Peacock
Senior Independent Director
Appointed to the Board
July 2017
Skills and experience
Lynne Peacock has over 30 years’
senior management experience
in a range of roles including
brand development, mergers
and acquisitions, change
management and business
transformation.
She has a BA (Hons) in Business
Studies.
Previous roles
Deputy Chair of The Royal
London Mutual Society Limited
and member of the
Remuneration and Nominations
and Governance Committees.
Senior Independent Director of
TSB Bank plc and member of
Nomination, Remuneration and
Risk Committees. Non-Executive
Chair of Standard Life Assurance
Limited and Non-Executive
Director and a member of the
Nomination and Governance
Committee and Audit
Committee of Standard Life
Aberdeen plc. Non-Executive
Director and Chair of the Audit
Committee of Scottish Water.
Senior Independent Director,
Chair of the Remuneration
Committee and member of the
Audit, Risk and Nomination
Committees of Nationwide
Building Society. Non-Executive
Director and a member of the
Audit and Risk, Nominations and
Remuneration Committees of
Jardine Lloyd Thompson Group
plc. Chief Executive of Woolwich
plc and National Australia Bank
Limited’s UK businesses.
Current external commitments
Non-Executive Director, Chair of
the Environmental, Social and
Governance Committee and
member of the Audit and Risk,
Remuneration and Nomination
Committees of International
Distributions Services plc
(trading as Royal Mail).
Chair of the Learning Disability
Network London charity.
Victoria Hull
Independent NED
Appointed to the Board
1 September 2024
Skills and experience
Victoria has extensive senior
executive experience across a
broad range of business, legal,
commercial and governance
matters as well as strong
international experience.
She is a Solicitor with a law
degree from the University of
Southampton.
Previous roles
Executive Director and General
Counsel of Invensys plc and
Telewest Communications plc.
Senior Independent Director of
Ultra Electronics plc.
Current external commitments
Senior Independent Director and
Chair of the Nomination and
Governance Committee of
Hikma Pharmaceuticals plc.
Non-Executive Director and
Chair of the Remuneration
Committee of IQE plc.
Non-Executive Director and
member of the Nomination,
Remuneration, and Sustainability
Committees of IMI plc.
Key to Committee
membership
Audit
Committee
Nomination
Committee
Remuneration
Committee
Corporate
Responsibility
Committee
Risk
Committee
Committee
Chair
C
A
N
RE
RI
A N RE
RIN C
N RE
The Group Chief Executive is supported by his team who form the
Group Executive Committee (ExCo). The ExCo is responsible for
executing strategy and day-to-day management of the business.
Group Executive Committee
Serco Group plc | Annual Report and Accounts 2024 | 82
Scan the QR code to access
the biographies of our ExCo
members online
Mark Irwin
Group Chief Executive
Anthony Kirby
Chief Executive Officer,
UK & Europe and Group Chief
Executive designate
Nigel Crossley
Group Chief Financial Officer
Tom Watson
Chief Executive Officer,
North America
Phil Malem
Chief Executive Officer,
Middle East
Andrew Head
Chief Executive Officer,
Asia Pacific
David Eveleigh
Group General Counsel
Tom Read
Group Chief Digital and
Technology Officer
Ruth McGowan
Group Chief Strategy and
Growth Officer
Gillian Duggan
Group Chief People and
Culture Officer
Board Leadership and Company Purpose
The role and structure of the Board
The Board has collective responsibility for the management,
direction and performance of the Company ensuring that due
regard is paid, at all times, to the interests of its stakeholders.
The governance framework ensures that the Board has the
right level of oversight for matters that are material to the
Group. The Group’s delegation of authority provides a clear
direction on decision-making and ensures that decisions are
taken at the right level of the business by colleagues who are
best placed to take them. Each decision taken aligns to our
culture and values and considers the benefits, risks, financial
implications and impact on relevant stakeholders.
The Board, with the support of its Committees, is committed to
achieving high standards of corporate governance, integrity
and business ethics for all its activities around the world. This
supports the Board when delivering its strategic objectives and
meeting its key performance indicators (KPIs). Our culture
supports the delivery of the Company’s strategy and its long-
term sustainable success, while generating value for
shareholders. The Board has overall responsibility for
establishing the Company’s purpose, values and behaviours
and ultimate responsibility for ensuring that adequate resources
are available to meet agreed objectives and strategy.
The Board is mindful of the need to create value for
shareholders and ensure long-term sustainable success; in
doing so, the Board takes account of the wider interests of
other stakeholders including suppliers, communities, the
environment, employees and customers. Transactions, new
business and the renewal of existing contracts above an
agreed level are considered at Divisional level and then by the
Investment Committee, prior to review by the Board; this is
undertaken having regard to the Company’s four principal
values of Trust, Care, Innovation and Pride, and the impact on
its workforce. The ways in which the interests of the Company’s
stakeholders and the matters set out in section 172 of the
Companies Act 2006 have been considered are set out on
pages 74 and 75.
The Board is conscious of the benefits of aligning culture
with strategy and is further embedding this through our
Impact Framework.
The activities undertaken by the Board during the year are set
out on page 84.
The Board is supported by the activities of its Committees,
which ensure that specific matters receive the right level of
attention and consideration. Members of each Committee are
provided with detailed information to enable them to
discharge their duties and make recommendations to the
Board. Cross-Committee membership provides visibility and
awareness of relevant matters. The Committees are namely,
Nomination, Audit, Risk, Corporate Responsibility and
Remuneration. Each have their own Terms of Reference, which
are reviewed at least annually. Details of each Committee’s
membership and activities during 2024 are set out in their
respective reports on pages 87 to 98. The Board retains
specific powers in relation to the approval of the Serco’s
strategic aims, policies and other matters, which must be
approved by it in line with legislation or the Articles of
Association (Articles). These powers are set out in the Matters
Reserved for the Board, which are reviewed at least annually
and are available on our website.
The Group Chief Executive has delegated responsibility from
the Board to ensure the effective direction and control of the
business and to deliver the Group’s long-term strategy and
goals. The Group Chief Executive has established a Group
Executive Committee (ExCo), which he chairs, to assist him in
discharging his responsibilities. The ExCo comprises the
Group Chief Financial Officer, the CEOs of North America, UK
& Europe, Asia Pacific and the Middle East; the Group Chief
Strategy and Growth Officer; the Group Chief People and
Culture Officer; the Group Chief Digital and Technology
Officer; and the Group General Counsel.
Further details relating to their experience are provided on our
website and the members of the ExCo are shown on page 82.
There are other Management Committees that support ExCo,
namely, the Investment Committee and the Disclosure Committee.
Governance structure
Board of Directors
Audit Committee
Nomination
Committee
Risk Committee
Corporate
Responsibility
Committee
Remuneration
Committee
Approvals and Allotments
Committee
Investment Committee Group Executive Committee Disclosure Committee
n
Board of Directors
n
Committee comprised
solely of Board members
n
Committee comprised of Executive
Directors and other senior management
Directors
The Board currently consists of ten Directors; the Board Chair, two Executive Directors (being the Group Chief Executive and Group
Chief Financial Officer (CFO)) and seven independent Non-Executive Directors (NEDs). The biographies of the Directors can be
found on pages 79 to 81.
Corporate Governance
Serco Group plc | Annual Report and Accounts 2024 | 83
Board meetings and attendance
The Board met eight times during the year. The Board and
each Board Committee has an annual agenda plan and a
formal meeting schedule to ensure that all matters are given
due consideration at the appropriate point in the regulatory
and financial cycle. Ad hoc meetings are scheduled when
circumstances require.
Each Director is expected to attend all meetings of the Board,
any Committees of which they are members, and to devote
sufficient time to Serco’s affairs to fulfil their duties as Directors.
All Directors attend the Audit Committee meeting that reviews
the year end results. Where Directors are unable to attend a
meeting, they are encouraged to submit any comments on the
meeting materials in advance to the Chair to ensure that their
views are recorded and taken into account during the meeting.
During the year, two joint Audit and Risk Committee meetings
were held and attended by each member of the respective
Committee. Ad hoc Board and Audit Committee meetings
were also held during the year.
Private NED-only sessions are held at the end of each Board
meeting. Each Committee meets without Management present
and relevant subject matter experts are invited to attend
private sessions. The Group General Counsel and Group
Company Secretary attend all meetings and members of senior
management and other subject matter experts are invited to
attend at the discretion of the Board Chair or relevant
Committee Chair.
The table on page 77 shows the Directors who served during
the year and their attendance at the Board and Committee
meetings they were eligible to attend in 2024. Victoria Hull
joined the Board on 1 September 2024.
The Approvals and Allotments Committee is comprised of the
Executive Directors and Group General Counsel and meet on
an ad hoc basis.
What did the Board achieve in 2024?
Key Board activities during the year included:
• Review of relevant contracts including new bids, rebids and
extensions. The Board carefully considered each bid
presented including how it supported the strategy.
• Review of M&A opportunities. The Board challenged each
proposal and whether they were in the best long-term
interests of the Company and its stakeholders. As a result,
some of the opportunities were not pursued and others
were progressed.
• Review of strategy and actions being taken to ensure that
the strategic ambitions are met.
Risk Management and Internal Control
The Board has overall responsibility for risk management and
internal control and formally reviews the findings of the overall
Internal Audit programme. It is supported by the Audit, Risk
and Corporate Responsibility Committees.
The Audit Committee report sets out the details of the
Committee’s responsibility for ensuring the integrity of the
financial reporting process and the key matters considered
during the year in respect of its oversight of financial and
business reporting.
The Board has carried out a robust assessment of the
emerging and principal risks facing the Company, including
those which would threaten its business model, future
performance, solvency or liquidity.
Further details about these risks and how they are managed
and mitigated are included in this Annual Report and
Accounts, together with the Viability Statement, which explains
how the Directors have assessed the prospects of the
Company and concluded that they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
period of their assessment.
The Board determines the Company’s risk appetite and has
established risk management and internal control systems, the
effectiveness of which are reviewed at least annually by the Board.
Serco’s internal control framework includes financial,
operational, compliance and risk management controls. These
are designed to manage and minimise risks that would
adversely affect services to our customers and to safeguard
shareholders’ investments, our assets, our people, and our
reputation (collectively, business risks).
Internal controls and key processes are defined within the Serco
Management System. We use a ‘three lines of defence’
compliance assurance model to test business compliance to
provide the Board with assurance that these controls are effective.
The Board confirms that there has been a focus on the three
lines of defence for the year under review and up to the date of
approval of the 2024 Annual Report and Accounts.
In addition to our in-house assurance teams, we are also
subject to significant third line assurance activities and audits
delivered through external third parties appropriate to the
regulatory environment, certification standards and customer
requirements in our varied service lines and business units.
These reviews include those that support the range of ISO
certifications across the business as well as independent
performance and regulatory reports on Serco operations.
Stakeholder engagement
The Board is committed to enhancing engagement and seeks
to build honest, respectful and transparent relationships with
all of the Company’s stakeholders. NEDs are encouraged to
continually increase their knowledge of the operations of the
Company, our customers, our employees, those who use the
services we provide on behalf of our customers and the
communities we work in.
The Company has established ‘Employee Voice’ to ensure
employee engagement and employees can raise concerns
through Speak Up, our global, confidential, ethics helpline. Our
commitment to engaging with the wider workforce continues
and Dame Sue Owen DCB, as the Board’s designated Non-
Executive Director for Employee Voice, supported by our HR
team, ensures that the Board understands employee
perspectives and issues. The overall engagement score from
this year’s Group-wide engagement survey, Viewpoint, was
high at 72 and we received 13,565 ‘Tell the Board’ comments,
which were considered as part of a deep dive undertaken by
the Board on the Viewpoint outputs.
Regular engagement is sought with major shareholders,
primarily through the Executive Directors, following the
announcement of the full and half year results; and also
through the Board Chair, who is available to major
shareholders; and the Chair of the Remuneration Committee
who consults with shareholders, as appropriate. The Board
Chair meets shareholders during the annual governance
roadshow and NEDs have the opportunity to meet investors at
the full and half year results. The outcome of such engagement
is shared to ensure that the Board as a whole has a clear
understanding of the views of shareholders.
Corporate Governance continued
Serco Group plc | Annual Report and Accounts 2024 | 84
During the year, accompanied by other members of the Board,
the Board Chair attended a number of meetings with
shareholders to discuss a range of matters, including
governance and remuneration.
We value the input received from shareholders, which helps us
to shape our approach to governance and to ensure our
disclosures meet their specific requirements, in addition to
those required by regulation.
Further information about how the Board engaged with
stakeholders and how stakeholder feedback has influenced
Board decisions is set out in the Section 172 Statement on
pages 74 and 75.
Relations with shareholders
The Group Head of Investor Relations maintains regular, open
and transparent dialogue with institutional investors and sell-
side analysts. He has access to the Group Chief Executive and
Group CFO who are available for meetings with shareholders
and frequently attend industry conferences. They also meet
with shareholders to discuss relevant developments in the
business at our post-results roadshows; through our
programme of investor meetings; and with our debt investors,
including lending banks and US private placement note
holders. Feedback received from this engagement with
shareholders, debt investors, analysts and proxy advisers is
provided to the Board as part of the rolling agenda of matters
considered throughout the year. The Group Chief Executive
and the Group CFO had more than 90 meetings with investors
in 2024.
We also consult with investors and fund managers to seek their
views and actively engage with proxy advisers and ESG
analysts to provide feedback on specific topics.
During 2024, Serco facilitated a site visit with investors (hosted
by Investec) to Portsmouth Maritime Services. Investors had the
opportunity to see up-close how embedded and crucial
Serco’s auxiliary services are to The Royal Navy and UK Ministry
of Defence. The attendees provided positive feedback.
Further details can be found in the Section 172 Statement on
pages 74 and 75.
Annual General Meeting
Our AGM will be held on 24 April 2025 at the offices of Clifford
Chance, 10 Upper Bank Street, London E14 5JJ at 10am. The
Annual Report and Accounts and Notice of the AGM will be
sent to shareholders at least 20 working days prior to the date
of the meeting.
Shareholders are encouraged to participate in the AGM
process and all resolutions will be proposed and voted on at
the meeting on an individual basis by shareholders or their
proxies. Voting results will be announced and made available
our website. At the 2024 AGM, all resolutions were passed with
at least 83% of votes in favour.
Shareholders may require the Directors to call a general
meeting other than an AGM as provided by the Companies Act
2006. Requests to call a general meeting may be made by
members representing at least 5% of the paid-up capital of the
Company as carries the right of voting at general meetings of the
Company (excluding any paid-up capital held as treasury shares).
A request must state the general nature of the business to be
dealt with at the meeting and may include the text of a
resolution that may properly be moved and is intended to be
moved at the meeting.
A request may be in hard copy form or in electronic form and
must be authenticated by the person or persons making it. A
request may be made in writing to the Group Company
Secretary to the registered office or by sending an email to
agm@serco.com. At any general meeting convened on such
request, no business shall be transacted, except that stated by
the requisition or proposed by the Board.
Workforce policies and practices
The Board is supported by its Committees to ensure that
workforce policies and practices are consistent with the
Company’s core values and support its long-term sustainable
success. The Board monitors and assesses culture to ensure
that it is aligned to Serco’s continued commitment to its
employees. The Board, with the support of its Committees,
approves key policies and practices which impact the
workforce and drive their behaviours. Training is provided to
employees to ensure that the policies are embedded within
the culture. Further details of workforce policies and practices
are included in the People and Culture and Impact sections.
Speak Up
Serco has established procedures by which employees may, in
confidence, raise concerns relating to possible improprieties in
matters of financial reporting, financial control or any other
matter. The Audit and Corporate Responsibility Committees
are responsible for monitoring Serco’s whistleblowing
arrangements and regularly report to the Board on their
activities. Further details are provided in the Impact section.
Division of Responsibilities
Roles of the Chair, Senior Independent Director and
Group Chief Executive
The roles of Chair and Group Chief Executive are distinct and
held by different people, with a clear division of responsibilities
agreed by the Board and formalised in a schedule of
responsibilities for each.
The roles and responsibilities of the Board and its Committees
are clearly defined, documented, approved by the Board and
are available on our website.
Details of the activities of each of these Committees are set out
in their reports elsewhere within this Annual Report.
The Board Chair, who was independent on his appointment,
leads and is responsible for the operation of the Board. The
Group Chief Executive is responsible for the leadership and
management of the business within the authorities delegated
by the Board. Their respective responsibilities are documented
and regularly reviewed.
The Senior Independent Director (SID) provides a sounding
board for the Board Chair, supporting on all governance issues
including the annual Board performance review and the Board
Chair’s performance review. The SID also acts as an additional
communication channel between the Board Chair and NEDs
and, when required, major shareholders.
Corporate Governance continued
Serco Group plc | Annual Report and Accounts 2024 | 85
Balance and independence
The Board comprises seven Non-Executive Directors (NEDs),
the Board Chair and two Executive Directors. All of the NEDs,
including the Board Chair, have been determined by the Board
to be independent in character and judgement and free from
relationships or circumstances which may affect, or could
appear to affect, the relevant individual’s judgement.
The Board regularly reviews the overall balance of skills,
experience, diversity, independence and knowledge of Board
and Committee members and undertakes an annual review of
the independence of its NEDs. Any NED who does not meet
the independence criteria will not stand for election or re-
election at the AGM.
Non-Executive Directors’ terms of appointment and
time commitment
NEDs are appointed for terms of three years, subject to annual
re-election by shareholders. The initial term may be renewed
up to a maximum of three terms (a total of nine years).
The terms of appointment of NEDs specify the amount of time
they are expected to devote to the business, which is a
minimum of 30 days per annum calculated based on the time
required to prepare for and attend Board and Committee
meetings, the AGM, meetings with shareholders and training.
NEDs are also committed to working additional hours as may
be required in exceptional circumstances and are required to
confirm annually that they continue to have sufficient time to
devote to the role. No Director holds more than four
directorships on the boards of publicly-listed companies.
External directorships
The Company has a policy which allows the Executive Directors
to accept directorships of other quoted companies and to
retain the fees paid, provided that they have obtained the prior
permission of the Board Chair. In accordance with the Code,
and to ensure sufficient time is devoted to their executive role,
no Executive Director would be permitted to take on more
than one non-executive directorship in a FTSE company or the
chairmanship of such a company.
A review of the NEDs’ external commitments, taking account of
the views of institutional investor bodies, was undertaken from
which it was concluded that each of the Company’s NEDs was
able to dedicate sufficient time to undertake their duties on
behalf of the Company.
Conflicts of interest
Every Director has a duty to avoid a conflict between their
personal interests and those of the Company. The provisions of
Section 175 of the Companies Act 2006 and the Company’s
Articles permit the Board to authorise situations identified by a
Director in which he or she has, or may have, a direct or
indirect interest that conflicts, or may conflict, with the interests
of the Company. The Board undertakes regular reviews of the
external positions and interests held in and arrangements
made with third parties by each Director and, where
appropriate, authorises such conflicts. Notwithstanding the
above, each Director is aware of their duty to notify the Board
should there be any material change to their positions or
interests during the year. Potential and actual conflicts of interest
are considered at Board meetings and, where appropriate, at
Committee meetings. Directors do not participate in Board
discussions or decisions which relate to any matter in which
they have, or may have, a conflict of interest.
Directors’ indemnities
The Company maintains Directors’ and Officers’ liability
insurance. As permitted under the Articles and in accordance
with best practice, deeds of indemnity have been executed
indemnifying each of the Directors and the Group Company
Secretary in respect of their positions as officers of the
Company as a supplement to this insurance cover. The
indemnities, which constitute a qualifying third party indemnity
provision as defined by Section 234 of the Companies Act
2006, remain in force for all current Directors and the Group
Company Secretary.
Board composition and succession
The size and composition of the Board is kept under review by
the Nomination Committee and the Board to ensure that an
appropriate balance of skills and experience are represented.
The Board may appoint a Director, either to fill a vacancy or as
an addition to the existing Board as set out in the Articles; any
amendment to the Articles requires shareholder approval. All
appointments to the Board are made on the recommendation
of the Nomination Committee and are subject to a formal,
rigorous and transparent procedure. Succession plans are also
considered by the Nomination Committee. Appointments and
succession plans are based on merit and objective criteria and,
within this context, promote diversity of gender, social and
ethnic backgrounds, as well as cognitive and personal
strengths. The Nomination Committee Report on page 87
provides further details on the process for appointing Board
Directors, succession planning and diversity.
Board Performance Review
An externally-facilitated Board performance review was
conducted by Gould Consulting
4
. The process included a
questionnaire, one-to-one interviews, observations of a
meeting of the Board and each of its Committees and a review
of meeting agendas and minutes. A group session was also
held with members of the Group Executive Committee. A
report was then shared with the Group General Counsel,
Group Company Secretary and the Board Chair.
Gould Consulting concluded that Serco’s Board is highly
effective. They observed that the Board Chair was able to get
to the heart of issues that matter and find ways to make
interventions both within and outside the formality of the
Board to good effect. The NEDs interviewed also reported that
they find it stimulating and satisfying to be members of the
Board; collectively, the NEDs have developed an interactive,
fluent, open and questioning style of engagement amongst
themselves and with those who periodically attend the Board.
Gould Consulting also made suggestions around agenda
management and potential Committee simplification; and
recommended that with some NEDs due to retire and the
current composition of the Board due to change as a result, it
may be a good time to consider whether a more diverse set of
skills may be required.
Corporate Governance continued
Serco Group plc | Annual Report and Accounts 2024 | 86
4. Gould Consulting has no other connection with the Company or individual Directors.
John Rishton
Nomination Committee members
John Rishton (Chair)
Kirsty Bashforth
Kru Desai
Ian El-Mokadem
Victoria Hull
Tim Lodge
Dame Sue Owen DCB
Lynne Peacock
Dear Shareholders
I am pleased to present the Committee’s report this year.
During the year we appointed an independent Non-Executive
Director (NED), Victoria Hull, to help strengthen your Board.
Further information on Victoria’s skills and experience are
provided in her biography on page 81 of this Corporate
Governance Report and details of the selection process we
followed and our approach to Board and senior leadership
succession are provided later in this report.
We have also recently announced the retirement of our Group
Chief Executive Mark Irwin with effect from 28 February 2025;
and the appointment of Anthony Kirby as Group Chief
Executive with effect from 1 March 2025.
Committee responsibilities
The Committee is responsible for leading the process on the
appointment of new members of the Board and to ensure that
plans are in place for orderly succession to both the Board and
senior management positions as well as overseeing the
development of a diverse pipeline for succession.
The Committee’s Terms of Reference are available on
our website.
Membership and attendees
The Committee is comprised of independent NEDs and their
biographical details are provided on pages 79 to 81. In
addition to the members of the Committee, the Group General
Counsel and the Group Company Secretary attended each
meeting. The Committee held two formal meetings during the
year; discussions relating to succession were held over dinner.
Details of attendance at meetings are set out on page 77.
Activities of the Committee during 2024
The Committee’s key activities included appointment of a new
NED, succession planning (over dinner), a review of conflicts of
interest, NED tenure and review of the Board Diversity Policy.
Appointment, induction and training
Victoria Hull was appointed to the Board on 1 September
2024. An external search firm
1
was engaged to assist with the
appointment process. The firm was given instructions that
aligned with our Board Diversity Policy. The firm provided a
long list of potential candidates which was discussed and filtered.
A shortlist of those candidates were interviewed resulting in
Victoria Hull being recommended to the Board for appointment.
The Committee is responsible for ensuring that an appropriate
induction is provided to new Board members. The induction
programme is specifically tailored to the needs of the incoming
Director and includes an overview of the Board’s policies and
procedures, meetings with senior management and subject
matter experts; and contract site visits. Victoria Hull’s induction
is ongoing.
Training is provided to the Board on a range of governance
and other matters at Board and Committee meetings and in
other forums. Access to online seminars and training was made
available to and undertaken by Directors throughout the year
covering areas such as Corporate Governance updates and
upcoming regulatory and legal changes. A record is
maintained of the training undertaken by each Director.
Individual training needs are identified as part of the annual
appraisal process and Directors are encouraged to take
advantage of both internally and externally provided training
opportunities.
The Company believes that visits by NEDs to the Company’s
contracts, leadership conferences and Management meetings
are important for increasing NEDs’ awareness of the
Company’s operations and their accessibility to the Group’s
employees. A number of such contract visits were undertaken
in 2024, some virtual. In addition, the Board met in North
America for the May Board and Committee meetings and used
the opportunity to spend time with the local management team
formally and in social settings.
Diversity
The Board values diversity and has established a Board
Diversity Policy, which is periodically reviewed. The percentage
of women on the Board is currently 50%, exceeding the target
of 40% set by the FTSE Women Leaders Review; the Company
also meets the target set by the Parker Review with three
Directors from an ethnic minority background. In addition, our
Senior Independent Director is female. However, the Board is
aware that it would be beneficial to broaden its diversity in
other respects and this will continue to be a key focus as the
Committee looks to broaden and refresh the Board.
The Board is committed to ensuring the development of
gender and ethnic diversity within the Company’s senior
management and reviews progress annually.
We have included additional data on gender and ethnicity
representation on page 88. Further details on diversity in
senior management and the workforce are provided in the
Impact performance and data disclosure 2024 on pages 214 to
220 and in the standalone Impact Report available on our website.
Nomination Committee Report
Serco Group plc | Annual Report and Accounts 2024 | 87
1. Russell Reynolds Associates, which has no other connection with the Company or individual Directors.
Diversity data
Our gender identity and ethnicity data in accordance with Listing Rule 6.6.6R as at 31 December 2024 is set out below. Board and
ExCo members are asked to complete a diversity disclosure to confirm which of the categories set out below they identify with. The
Group Company Secretary is not a member of ExCo.
Numerical gender data
Number of Board
members Percentage of the Board
Number of senior
positions on the Board
(CEO, CFO, SID and
Chair)
Number in Executive
Management
Percentage of Executive
Management
Board and executive
gender representation 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024
Men 5 5 56 50 3 3 7 8 70 73
Women 4 5 44 50 1 1 3 3 30 27
Other Categories 0 0 0 0 0 0 0 0 0 0
Not Specified/Prefer
not to say
0 0 0 0 0 0 0 0 0 0
Numerical ethnicity data
Number of Board
members % of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in Executive
Management
Percentage of
Executive
Management
Board and executive ethnicity
representation 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024
White British or other White
(including minority-white groups)
6 7 67 70 3 3 8 9 80 82
Mixed/Multiple Ethnic groups 2 2 22 20 1 1 1 1 10 9
Asian/Asian British 1 1 11 10 0 0 0 0 0 0
Black/African/Caribbean/Black
British
0 0 0 0 0 0 1 1 10 9
Other ethnic group, including
Arab
0 0 0 0 0 0 0 0 0 0
Not specified/prefer not to say 0 0 0 0 0 0 — 0 — 0
Board balance
The Committee regularly reviews the skills, knowledge, experience and diversity of the Board and its Committees to ensure that the
Board is collectively well placed to meet the strategic objectives of the Company and the challenges and opportunities that are likely
to arise in meeting these objectives.
Further details of the skills and experience of the Board that are relevant to the Company are set out on page 78. This followed a
skills assessment undertaken in 2024.
2025 priorities and focus
During 2025, the Committee will oversee NED Succession Planning (particularly the Board Chair whose nine-year tenure expires in
September 2025) to ensure that the Board is adequately refreshed; monitor implementation of the feedback from the externally-
facilitated Board performance review; and oversee the transition of Anthony Kirby as Group Chief Executive and that of the Chief
Executive Officer of the UK & Europe Division.
John Rishton
Chair of the Nomination Committee
26 February 2025
Nomination Committee Report continued
Serco Group plc | Annual Report and Accounts 2024 | 88
Tim Lodge
Audit Committee members
Tim Lodge (Chair)
Kru Desai
Ian El-Mokadem
Lynne Peacock
Dear Shareholders
I am pleased to present the Committee’s report for the year
ended 31 December 2024. This review gives an insight into
how the Committee addressed significant issues during the
year, which were reported to the Board as a matter of course,
and how other responsibilities of the Committee were
discharged. The Committee continues to have a fundamental
role to play in reviewing, monitoring and challenging the
effectiveness of the Group’s financial reporting, internal
controls and external audit.
During the year, the Committee oversaw and challenged a
range of finance, accounting and control related reviews
concerning specific risks identified within the Group’s
operations through its Internal Audit and Financial Assurance
programme. We reviewed the work done by Management and
auditors to remove a number of bottlenecks, including those in
joint ventures, that had affected the previous year close and
audit and were pleased to see that they led to significant
improvements to mitigate this risk, and the External Audit
process was effectively delivered.
Joint meetings were also held with the Risk Committee. At
these meetings, the Committee members jointly reviewed the
integration of the Group’s risk and assurance programmes and
how the Group is developing its Integrated Assurance
Framework (IAF) in preparation for the changes to the UK
Corporate Governance Code (the Code) applicable from 2026
onwards. We continued to refine the role of Internal Audit to
evolve alongside this framework and on how to conduct
reviews of thematic risks across a diverse range of activities.
Audit tender
In last year’s report, the Committee outlined its intention to
tender the external audit. A robust audit is the Committee’s top
priority and, whilst KPMG decided not to participate in the
tender, we commend them on the improvements they have
made to their audit process. During the tender process, the
Committee carefully considered the quality of the bidders’
audit processes, their understanding of the contracting industry,
the strength and depth of their international capability and the
ability to appropriately challenge Management.
The tender process undertaken during 2024 is outlined on
page 93 and I would like to thank everyone involved in its
successful execution. The Committee chose to recommend EY,
having demonstrated a deep understanding of our operations
and industry as well as a commitment to audit quality. Subject
to approval by shareholders at the AGM, EY will be appointed
as our new external auditor for the year ending 31 December
2025 and I look forward to working with them.
Having completed their final year as our external auditor, I
would like to thank the KPMG audit team, past and present, for
their challenge and support over the years.
2025 priorities and focus
With the change in external auditor, the Committee will ensure
that an effective transition process is undertaken and that an
effective audit process is delivered, with any new learnings,
and process or control improvements taken into consideration
by Management. The Committee will also work closely with the
Risk Committee to ensure that the Company’s risk
management and internal control framework is operating
effectively in preparation for the changes to the Code from 1
January 2026 onwards.
Additionally, throughout 2025, the Committee will continue to
focus on the critical accounting judgements made; the
effectiveness of the Group’s financial controls and assurance
programme, including activities within its joint ventures given
their increase in scale; and the delivery and effectiveness of the
Group’s Internal Audit function.
Tim Lodge
Chair of the Audit Committee
26 February 2025
Audit Committee Report
Serco Group plc | Annual Report and Accounts 2024 | 89
Committee responsibilities
The Committee supports the Board in fulfilling its
responsibilities including overseeing the Group’s financial
reporting processes; reviewing, challenging and approving
significant accounting judgements proposed by Management;
assessing the way in which Management ensures and monitors
the adequacy of financial and compliance controls; the
appointment, remuneration, independence and performance
of the Group’s external auditor; and the independence and
performance of the Group’s Internal Audit function.
In May 2023, the Financial Reporting Council (FRC) published
the Audit Committees and the External Audit: Minimum
Standard. Whilst not yet mandatory, the Committee believes
that it currently discharges its responsibilities in line with the
requirements, including how the audit tender process
undertaken in 2024 was delivered. Nevertheless, the
Committee will keep the requirements under review and
consider any improvements required.
The Terms of Reference for the Committee are available on
our website.
Membership and attendees
The Committee is comprised of Independent Non-Executive
Directors. Between them, the members of the Committee
bring strong international, service and public sector expertise
and experience which is highly relevant to the Group. Tim
Lodge has served as Chair of the Committee since April 2021
and has recent and relevant financial experience, as required
by the Code. Biographical details for each member of the
Committee are provided on pages 79 to 81.
In addition to the members of the Committee, the Group Chief
Financial Officer (CFO) and other members of the Board, the
Group General Counsel, the Group Company Secretary, the
Group Head of Internal Audit, other Management personnel
and representatives of the Group’s external auditor, KPMG,
attended and received papers in advance for each meeting as
required. The Committee allocated time at the end of each
meeting to have discussions without Management present and
invite either the Group Chief Financial Officer, Group Head of
Internal Audit or KPMG to attend for part of this session. The
Committee Chair also meets with Management (including the
Group Head of Internal Audit) and external auditors prior to
each meeting.
The Committee met seven times during the year including a
meeting to discuss the outcome of the external audit tender
process. In addition, joint meetings were held with the Risk
Committee. The details of attendance at meetings are set out
on page 77.
Activities of the Committee during 2024
The list below summarises the activities covered by the
Committee to fulfil its responsibilities:
• Financial Statements: Reviewed and recommended for
Board approval the Annual Report and Accounts, 2024 Half
Year Results, and associated preliminary announcements,
focusing on key financial judgments, disclosures and
whether the reports are fair, balanced and understandable.
• Going Concern and Viability Statements: Ensured the Going
Concern and Viability Statements accurately reflected the
Group's risks and that the assumptions used were
appropriate. Endorsed both statements for Board approval.
• Task Force on Climate-related Financial Disclosures
(TCFD): Reviewed the TCFD disclosure in the Annual
Report and Accounts.
• Accounting Updates: Received updates on accounting
developments, financial, and climate reporting.
• Internal Audit: Reviewed the Internal Audit Charter, annual
plan, and internal audit findings, ensuring that they were
appropriately addressed.
• Financial Controls: Assessed the effectiveness of the
Group’s financial controls and assurance program,
focusing on the control environment of the Group’s
material joint ventures. Considered changes to the Code
relating to internal controls.
• Joint Audit and Risk Committee: Received updates on the
development of the Integrated Assurance Framework (IAF).
• Fraud Matters: Reviewed any fraud-related issues,
including those raised through the Speak Up process.
• External Auditor: Recommended to the Board the
reappointment of KPMG for the 2024 audit, approved the
audit fee, assessed the audit strategy and plan, considered
regular updates on audit progress and KPMG’s view on
financial judgments taken, endorsed the representation
letter signed on behalf of the Board. The Committee and
Chair held regular private sessions with KPMG.
• Non-audit fees and independence: Reviewed non-audit
fees incurred with the external auditor and assessed their
independence and objectivity.
• Audit Tender: Convened a Selection Committee, reviewed
the audit tender plan, received updates, reviewed tender
submissions and presentations, and recommended the
appointment of EY to the Board for the 2025 audit.
• Tax Strategy: Oversaw the Group’s tax strategy, including
uncertain tax positions, tax audits, historic tax losses, and
compliance with tax legislation.
• Treasury Strategy: Reviewed and approved the Financing
strategy and Treasury Policy.
• Management of Information Technology (including Cyber
Security): Received updates on the Group’s approach to
Information Technology, particularly in relation to
assurance and internal control.
• Training: Reviewed the approach to global standardised
training and the use of technology.
Performance review
The Committee’s effectiveness was reviewed as part of the
Board’s annual performance review. The findings from the
review were mainly positive with it being noted that the
Committee is sufficiently informed of the risks identified by the
internal and external auditors and that the Committee review
of key judgements is rigorous. The level of information
received at the Committee is considered to be sufficient with
appropriate opportunity to challenge both Management and
the external auditors. Areas of improvement centred around
the external audit process, particularly given the challenges in
completing the audit on time for the 31 December 2022 and
31 December 2023 financial statements.
Internal control environment
The Committee oversees the Group's internal control
environment and evaluates its effectiveness. It regularly
receives updates on internal controls and considers making
recommendations to the Board based on its findings.
The Group has both a Financial Assurance function and an
Internal Audit function, both of which regularly contribute to
Committee meetings. The Committee reviews Financial
Assurance findings and provides guidance to direct their work.
Similarly, it receives Internal Audit reports regularly and may
invite management teams from various functions, divisions,
and business units to discuss these findings.
Audit Committee Report continued
Serco Group plc | Annual Report and Accounts 2024 | 90
The Committee is also responsible for reviewing and
approving the annual Internal Audit programme and assessing
the adequacy of the functions resources and scope.
Management is also well progressed in the process of
reviewing the risk and assurance framework across the Group
and their proposal was discussed at joint Audit and Risk
Committee meetings held during the year. The objective of the
project is to ensure there is an effective risk management
process within the Group and that the Group is well prepared
for the changes to the Code effective from 1 January 2026.
Internal Audit
Internal Audit is an independent function that evaluates the
Group's governance, risk management, and control activities. It
helps Management, the Committee, and the Board discharge
their duties to maintain effective internal controls and risk
management, and protect the Group's assets and interests. The
Internal Audit Charter outlines its role and is reviewed annually.
The Group Head of Internal Audit reports to the Committee
Chair. In North America, a local internal audit team maintains
independence through reporting to the Serco Inc. Audit
Committee, chaired by the Group CFO. Internal Audit
also uses external providers for specialised skills such as IT
and cybersecurity.
The Internal Audit Plan is risk-based and approved annually by
the Committee. It covers contracts, processes, functions and
specific risks. The Committee receives updates on the plan's
execution, findings and Management's responses. In 2024,
audits included business controls, support functions, change
programs, financial controls and IT operations.
The Committee assesses the performance and effectiveness of
internal audit during the year through the approval of the
internal audit plan, periodic reports on its work to the
Committee and private sessions between the Committee and
Group Head of Internal Audit. The Committee concluded that
Internal Audit has been effective in the context of the Group’s
overall assurance framework.
Financial assurance
The Group aims to have a strong and well-monitored control
environment that minimises financial risk and, as part of the
Committee’s responsibilities, it reviews the effectiveness of
systems for internal financial control and financial reporting.
Where relevant, the Committee also works with the Risk
Committee to consider financial risk management and the
Corporate Responsibility Committee to the extent that matters
such as fraud are reported through the Speak Up process.
The Committee monitored financial control risk during 2024
with particular focus on:
• Management’s review of the output and adequacy of the
Group’s financial assurance programme;
• Management’s ongoing programme to improve internal
controls; and
• review of Management’s Key Risk Indicators associated
with the risk and the strength of mitigating controls and
actions to improve their effectiveness.
Following review and challenge, the Committee believes that,
to the best of its knowledge, the financial control framework
and the monitoring of this framework has worked effectively
during the year, and that in cases of non-compliance, the Group
has not been exposed to critical, severe or significant risk.
As noted on page 65 of the Strategic Report, reflecting the
improvements made in the control environment, Financial
Control Failure has been removed as a principal risk of the
Group and will be monitored as an enterprise level risk.
Financial reporting
The Committee concluded that, in its opinion, the information
presented in the Annual Report and Accounts and half-year
financial results, when taken as a whole, is fair, balanced and
understandable and contains information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy. To arrive at this conclusion and
to form a basis upon which to make a recommendation to the
Board, the following was considered:
• the effectiveness of the disclosure controls and procedures
designed to ensure that the Annual Report and Accounts
complies with all relevant legal and regulatory
requirements;
• comprehensive reviews by different levels of management,
including subject matter experts as well as the Committee’s
own reviews;
• the internal verification process led by the financial
assurance team;
• the management representation letter to the external
auditor; and
• the findings and opinions of the external auditor.
In November 2024, the FRC wrote to the Company following a
review of the Group’s interim report for the period ended 30
June 2024. The Committee was pleased to note that no formal
questions or queries were raised that required a response from
the Company with only several recommendations provided to
enhance the existing reporting.
Audit Committee Report continued
Serco Group plc | Annual Report and Accounts 2024 | 91
Significant accounting issues and areas of financial judgement
The significant accounting issues and areas of judgement considered by the Committee during the year, and how these were
addressed, are as follows:
Significant accounting issues and areas of
financial judgement
How these were addressed by the Committee
Contract performance, including Onerous Contract Provisions (OCPs)
The measurement of OCPs is
underpinned by assumptions
regarding the future operational
performance of a contract and
possibly the outcome of commercial
discussions all of which may involve
significant judgement by
Management. The Committee
considers whether an OCP exists at
each reporting period end.
The Committee reviewed and challenged the view formed by Management regarding
each individually material potential OCP, as well as the aggregate view, which includes
Management’s assessment of portfolio risk, and concluded they were reasonable. The
Committee was satisfied that the work undertaken by Management to monitor existing
contracts and identify contracts where a new OCP may be required, and associated
allocation of central costs, was sufficiently robust.
Goodwill Impairment
The Group has goodwill arising from
acquisitions allocated across four cash
generating units (CGUs). The
Committee evaluate the recoverability
of this goodwill formally at the end of
each financial year and consider
whether impairment indicators exist at
the half year.
The Committee reviewed and challenged Management on the cash flows and
assumptions used in the impairment assessment of goodwill as outlined in Note 16 to the
Consolidated Financial Statements. The Committee concurred with Management’s
assessment that an impairment of £114.5m was required for the Asia Pacific CGU, while
the carrying value of goodwill for the remaining CGUs was supportable. In arriving at this
conclusion, particular consideration was given to the impact of material new business and
contract rebids in the context of historic win rates. The Committee reviewed the
corresponding disclosures and noted that they give appropriate detail over the range of
plausible outcomes that could have been reached in the assessment, and that the
disclosure of the impairment charge as an exceptional item was deemed in line with the
consistent application of the Group’s accounting policies.
The Committee also reviewed the recognition of the Australian deferred tax asset in light
of the impairment charge, and concluded that it was appropriate as there was an
expectation of future profits against which the tax deductions would be used.
Defined Benefit Pension Schemes
The Group’s defined benefit pension
schemes include a number of
significant estimates and judgements,
principal amongst which is the
assumptions underpinning the
liabilities and the valuation of assets
without market observable prices.
The Committee considered the process undertaken by Management to arrive at the key
assumptions underlying the valuation of defined benefit obligations as detailed in note 29
of the Consolidated Financial Statements. The Committee is satisfied that the
assumptions used remain appropriate and balanced based on comparison to observable
benchmarks in the market and advice taken from independent actuaries.
The Committee has also reviewed the approach taken to value scheme assets. The
Committee is satisfied that the valuations included within these financial statements are
reasonable and reflect the best estimate of the schemes’ assets and liabilities, and that the
disclosures are appropriate.
Viability and Going Concern
The Committee considered Management’s assessment in
respect of the viability and going concern statements, focusing
on the Group’s headroom within its financial covenants and
available liquidity. The Committee considered the likely severity of
key risks crystallising over the period of assessment, including
potential reductions in forecast win rates and profit margins.
The Committee concluded that, despite severe scenarios
potentially pressuring the Group’s headroom, the Group
remains viable. Key assumptions are disclosed within the
viability statement on pages 72 and 73.
The Committee also agreed that the going concern basis of
accounting is appropriate, as disclosed within the going
concern statement on pages 141 and 142. Both statements
were endorsed for recommendation to the Board.
External auditor
The Committee oversees the relationship with the Group's
external auditor, recommends their appointment to the Board,
assesses their effectiveness and independence, and agrees on
the audit's scope and fee.
Following a tender process undertaken in 2016, KPMG was
appointed as the Group’s external auditor for the 2016 Annual
Report and Accounts and has served for nine years.
Juliette Lowes, the Group Engagement Partner, was appointed
in 2023 and has completed two year-ends. The Committee has
satisfied itself that the Company has complied with the
provisions of the Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of Competitive Processes
and Audit Committee Responsibilities) Order 2014. Under
these requirements a tender for the 2026 external audit should
be undertaken; however, during the year the Company
commenced and completed a formal tender process for the
2025 audit, details of which are included on page 93.
Oversight of external audit
In respect of the audit scope and materiality, the Committee
reviewed the audit strategy as presented by KPMG and found
it to be comprehensive and focused on the key risks within the
Group. The Committee did not require any further areas of
focus to be considered with respect to key judgements and
estimates. However, consistent with the 2023 audit, the
Committee continued to monitor the delivery of the audit
timetable, ensuring that issues were closed out appropriately,
efficiently and on a timely basis. The Committee also reviewed
and challenged reports from KPMG, which, in addition to its risk
assessments and audit plans, included audit findings and
Management responses. The Committee and Chair held regular
private sessions with KPMG without Management in attendance.
Audit Committee Report continued
Serco Group plc | Annual Report and Accounts 2024 | 92
The Committee challenged the fee increase and supporting
documentation received from KPMG and, after significant
debate, concluded that it would be accepted.
The Independent Auditor’s Report to shareholders is set out on
pages 125 to 134.
External auditor effectiveness and quality
The Committee did not perform a formal evaluation of the
effectiveness of KPMG due to the audit tender process taking
place, however, ensured that the learnings from the 2023 audit
were actioned.
The FRC’s Audit Quality Review (AQR) selected the external
audit by KPMG LLP of the Group’s Annual Report and Accounts
for the year ended 31 December 2023 for review as part of its
annual inspection of audit firms. The AQR covered matters
relating to planning, completion and reporting, including the
quality of communication with the Audit Committee. The
review focused on revenue and profit recognition particularly
in relation to the UK & Europe component audit as well as the
Group audit work over the recoverability of goodwill and
deferred tax assets. The AQR’s report highlighted good
practices in respect of certain aspects of KPMG’s audit with no
findings for the Audit Committee to consider further.
Following a review of KPMG’s audit strategy, the Committee
was satisfied that the auditor demonstrated appropriate
qualifications and expertise, remained independent of the
Group, and had appropriate focus on the key issues within the
Group. The external auditors continued to challenge the level
of prudence adopted in contract judgements, which were
deemed to be balanced overall. However, those judgements
which were slightly cautious or optimistic were highlighted to
the Committee for consideration. No judgements were
reported to be outside the auditor’s acceptable range.
Audit tender
As announced in the 2023 Annual Report and Accounts, the
Company undertook a formal tender process for the 2025 audit
during the year. The tender was overseen by a Selection
Committee comprising the members of the Audit Committee,
Group CFO and Group Financial Controller. The Selection
Committee took due consideration of the FRC’s ‘Audit Tenders:
Notes on Best Practice’, following the below process:
1. Three of the big four and three mid-tier accounting firms
were approached to participate in the tender process
based on their experience of auditing large-listed
companies and geographical reach. Two big four firms, EY
and PwC, were asked to formally tender. KPMG were
invited to participate in the tender process, however, chose
to decline this invitation. No mid-tier firms chose to
participate predominantly citing capacity constraints in
delivering an audit of this scale.
2. Participating firms held individual discussions with Audit
Committee members and the Board Chair to understand
the risks associated with the business and to provide
insight into the audit processes of the firms.
3. A virtual data room was made available and the
participating audit firms were invited to meet members of
Management, both finance and non-finance. In addition,
key Serco personnel within the Group’s divisions met with
the prospective local audit partners. Following these
sessions, feedback on the audit firms was sought from
Management.
4. A contract visit was arranged for the participating firms to
provide insight on the nature of the Group’s operations
and industry.
5. The Selection Committee received presentations from
each audit firm following their submission of tender
documents. Both firms were asked to outline their audit
process, ways of working, how they maintained audit
quality, and how they intend to implement technology and
analytics into the audit.
6. A scorecard designed to aid the decision-making process
was completed for each audit firm, grading the experience
of the Audit Partner and team, their understanding of the
Group, its operations and industry, and how they intend to
deliver high quality assurance.
The Committee acknowledged the high quality and
enthusiasm which both firms brought to the tender and
concluded that EY showcased strong knowledge of the
Group’s operations, relevant experience within a contracting
business, and a robust audit approach which had been well
planned following detailed review of the information provided
within the virtual data room. In key divisions, the experience of
the local audit partners was taken positively by the Selection
Committee. Overall, EY demonstrated a commitment to
delivering a high quality, focused audit, and the Committee
recommended to the Board that EY be appointed as Serco
Group plc’s external auditor for the financial year ending 31
December 2025, subject to shareholder approval. A timetable
and plan have been developed to ensure the effective and
efficient transition of the audit from KPMG to EY.
Independence and non-audit services
The Group’s policy on the use of KPMG to deliver non-audit
services has been designed to comply in full with the
requirements of the FRC’s Revised Ethical Standard 2019
(Ethical Standard). The Committee limits the non-audit work
undertaken by the external auditor, approving only those
which are required either by law or regulation, or due to
contractual requirements. In limited circumstances, the use of
the external auditor may be permitted where it is materially
more efficient for them to be engaged, as opposed to another
third party, due to the work completed in relation to the audit,
provided it is permitted by the Ethical Standard.
The policy also states that the Committee has pre-approved
the Group CFO to have authority to commission the external
auditors to undertake non-audit work, in accordance with the
Group policy, where there is a specific project with a cost that
does not exceed £20,000.
The Committee regularly reviews the nature of non-audit work
performed by the external auditor and the volume of that work.
Focus is given to ensuring that engagement for non-audit
services does not: (i) create a conflict of interest; (ii) place the
auditor in a position to audit their own work; (iii) result in the
auditor acting as a manager or employee; or (iv) put the
auditor in the role of advocate for the Group. The Committee
also considers the independence confirmation received from
the external auditor which outlines the permissible non-audit
services delivered, the safeguards put in place and any other
matters related to wider compliance with the FRC’s ethical
standard such as employment and rotation requirements. The
Committee is satisfied that there were no non-audit services or
other matters which prejudiced the independence or
objectivity of KPMG.
For the financial year ended 31 December 2024, the non-audit
fees paid to KPMG were £6k (2023: £135k) excluding the half-
year review. The non-audit services relate to Agreed Upon
Procedures required to be performed under certain customer
contracts. The fee for the half-year review, which is designated
an audit-related assurance service was £612k (2023: £440k).
An analysis of fees paid in respect of audit and non-audit
services provided by the external auditor for the past two years
is disclosed on page 163.
Audit Committee Report continued
Serco Group plc | Annual Report and Accounts 2024 | 93
Ian El-Mokadem
Risk Committee members
Ian El-Mokadem (Chair)
Kirsty Bashforth
Tim Lodge
Dame Sue Owen DCB
Dear Shareholders
The Committee continued to oversee the effectiveness of the
Group’s risk management framework and internal controls
during the year. Further details are included below.
Committee’s responsibilities
The Committee advises the Board on the Group’s overall risk
appetite, tolerance and strategy, taking account of the current
and prospective geopolitical and financial environments.
The Committee’s Terms of Reference are available on
our website.
Membership and attendees
The Committee is comprised of independent Non-Executive
Directors; there were no changes made during the year.
Biographical details for each member of the Committee are
provided on pages 79 to 81. The Committee met four times
during the year. In addition, two joint Audit and Risk
Committee meetings were held to provide holistic oversight of
assurance activities and to maintain oversight of the
programme of work underway to further mature our approach
to assurance. Details of attendance at meetings are set out on
page 77.
Committee meetings are held in advance of Board meetings,
with the Committee Chair updating the Board directly on the
outcomes of each meeting. Meetings of the Committee are
attended by the Group Chief Executive, Group General
Counsel, Group Company Secretary, Group Director Risk and
Assurance and the Group Head of Internal Audit. The Board
Chair also attended meetings.
Each Divisional Head of Compliance is invited to attend a
private session with the Committee, without Management
present, providing an opportunity for open discussion and for
any concerns or issues to be raised.
Activities of the Committee during 2024
During the year, the Committee continued to oversee the
effectiveness of the Group’s risk management framework and
internal controls. It also continued to review the Group’s risk
profile on a quarterly basis holding focused in-depth reviews
(deep dives) and considering the key changes and trends for
the following risks; Significant Failure of Supply Chain;
Contract Non-Compliance, Non-performance and
Misreporting; Catastrophic Incident; Major Information
Security Breach; and Failure to Grow Profitably. The principal
risks of Failure to Attract, Recruit and Retain, Failure to Act with
Integrity, and Health, Safety and Wellbeing were reviewed by
our Corporate Responsibility Committee. The principal risk of
Financial Control Failure was reviewed by our Audit
Committee and additional sessions on Failure to Grow
Profitably and Major Information Security breach were
reviewed by the Board.
Following consideration of internal and emerging risks and
themes, which included treatment of ESG, climate change,
political volatility, and geopolitical uncertainty, the Committee
approved amendments to the Principal Risk definitions and the
creation of two new risks, Strategic Technology Risk and
Contract Performance, as recommended by the Group
Executive Committee. Further information is provided on
pages 65 to 71. We have received updates from each Division
on risk management processes, including alignment of their
risks to the Group Principal Risks and progress against their
annual Compliance Assurance testing programme.
At each of our meetings, the Group Director Risk and
Assurance provided updates on the enhancements introduced
under the Integrated Assurance Framework (IAF) programme
to further embed the Enterprise Risk Management Framework
(ERM) across the Group and the preparations to comply with
changes relating to Provision 29 of the UK Corporate
Governance Code (the Code) and the associated requirements
for material controls attestation; the Governance, Risk and
Compliance (GRC) tool has now been implemented across the
Group to better support the Business Unit, Functional, and
Divisional ERM process. As part of this report, the Committee
also has oversight of the compliance assurance programme,
including monitoring key findings and process.
Following the appointment of Tom Read to the Group
Executive Committee as Group Chief Digital and Technology
Officer, we have also made some changes to the Executive
Sponsors of our Principal Risks. The Executive Sponsor for each
risk is provided on pages 66 to 71.
The Committee conducted its annual performance review and
the findings were mainly positive; the minor suggestions for
improvement will be addressed.
2025 priorities and focus
• Working closely with the Audit Committee, focus on
completion of changes required for compliance with the
relevant changes to the Code. This will include the
development of our definition of materiality in relation to
the articulation of the key controls we determine to be in
scope and oversight of the testing and assurance work
over the design and operation of these key controls within
the business including remediation of any material issues
found. We also plan to develop a trial attestation process
through 2025 in readiness for the implementation of the
changes in 2026.
• Maintain focus on undertaking detailed deep dive reviews
into the Group’s principal risks and continue to maintain a
more flexible approach to include deep dives into specific
risk themes and emerging risks delivered by functional leaders
and/or subject matter experts from across the Group.
Ian El-Mokadem
Chair of the Risk Committee
26 February 2025
Risk Committee Report
Serco Group plc | Annual Report and Accounts 2024 | 94
Kirsty Bashforth
Committee members
Kirsty Bashforth (Chair)
Kru Desai
Dame Sue Owen DCB
Mark Irwin
Dear Shareholders
This has been my sixth year chairing the Corporate
Responsibility Committee at Serco, and while the remit of the
Committee endures, as do the core values of Trust, Care,
Innovation and Pride, the intensity and maturity of the
landscape on this overall agenda continues to evolve. The
ecosystem of public need continues to rapidly evolve for
individuals and governments, whether that is the cost of living,
extreme climate events or increasing migration. In 2024, the
Committee conducted its agenda with this changing backdrop
in mind and has continued its focus on operational safety
culture, plans to deliver environmental goals, colleague
wellbeing with a specific focus on psychological safety, and the
maturity of the ethics, compliance and overall integrity
ecosystem within a growth agenda. I am particularly pleased to
see both our MSCI and CDP ratings having improved within
that growth context.
As Serco’s Impact strategy for growth develops, so does its
wider ESG credentials, as core to that, with a refreshed focus in
2024 and into 2025 on the importance of consolidating efforts
to deliver outsized impact in priority areas. So, while we
continue to explore ESG factors (including implementation of
our Climate Transition Plan) as part of operational resilience
into 2025, as a Committee we will assess the ways in which ESG
does and will continue to add new value throughout the
contract life cycle.
As an impact partner to the world’s governments, cultural
stability and vitality, along with ESG factors, are key underpins
of Serco’s success. The Committee looks forward to working
with leadership in the year ahead to continue progress towards
value creation for all.
Committee responsibilities
The Committee is responsible for assisting the Board in
providing independent oversight and guidance of the
Company’s ESG approach, which includes Ethics and
Compliance, and, based on this agreed framework,
considering related strategies, policies and practices on how
the Company conducts its business, through its values of Trust,
Care, Innovation and Pride. The Committee’s Terms of
Reference are available on our website.
Membership and attendees
The Committee comprises both Executive and Non-Executive
Directors. Biographical details for each member of the
Committee are provided on pages 79 to 81. The Committee
met four times during the year. Details of attendance at
meetings are set out on page 77. Committee meetings are
held in advance of Board meetings, with the Committee Chair
updating the Board directly on the outcomes of each meeting.
Meetings of the Committee are usually attended by the Group
General Counsel, Group Company Secretary, Group Chief
People and Culture Officer, Group Sustainability and ESG
Director and the Group Head of Ethics and Compliance. Each
Divisional Head of Ethics and Compliance is also invited to
attend a private session with the Committee, without
Management present, providing an opportunity for open
discussion and for any concerns or issues to be raised.
Activities of the Committee during 2024
During the year, the Committee continued to conduct a mix of
contract-specific and thematic deep dives on governance,
strategy, performance and challenges in priority areas to
ensure appropriate focus, control and rigour across the Group.
Key activities included:
• continued focus on operational safety, with focus on the
50% reduction goal in Lost Time Incidents (LTIs), and the
ever-maturing area of psychological health and safety,
including the development of KPIs as leading indicators of
risk;
• the Group principal risk, ‘Health, Safety and Wellbeing
(HSW)’; colleague wellbeing and the focus on preventative
strategies; and safety culture in specific business areas
(Justice) including two deep dives on the Prisoner Escort
and Custody Services contract;
• cultural resilience, linkage to delivery of the growth
strategy and the behavioural impact of change including
the annual review of the Group principal risk, 'Failure to act
with integrity'; human rights and modern slavery in the
context of the increasing footprint of migration contracts
Serco operates including its European acquisitions;
• colleague diversity, including reviewing the diversity of
talent required to support future growth, equity and
inclusion; colleague training and skilling colleagues for the
future; and colleague engagement, including the
Company's annual engagement survey results (Viewpoint);
and
• continued oversight of Serco’s approach to its overall ESG
strategy, positioning and ecosystem, including current
status and future approach on environmental targets, plans
and partnerships to achieve these; review of the TCFD
compliance statement on climate risks and opportunities;
and stakeholder feedback on Serco’s approach to ESG.
Corporate Responsibility Committee Report
Serco Group plc | Annual Report and Accounts 2024 | 95
The Committee has ongoing quarterly oversight of the
effective delivery of the Group Ethics and Compliance strategy
(including the Speak Up process) and the Group strategies for
Health, Safety, Environment and Wellbeing and receives
updates from the Group Head of Ethics and Compliance,
Group HSW Director and Group Sustainability and ESG
Director at each meeting. The Committee also convenes a
NED-only session with a regional Ethics and Compliance Lead
each meeting.
The Committee conducted its annual performance review and
the findings were mainly positive; the minor suggestions for
improvement will be addressed.
Further information can be found in our Impact section on
pages 33 to 55 and in the separate Impact Report, which is
available on our website.
2025 priorities and focus
• Test resilience of the Group-level expectations and systems
at the contract level through specific reviews with contract
leads in the areas of Immigration (Europe), leadership and
capability (North America); environmental decisions in a
growth agenda (Middle East); continued drive towards 50%
LTI reduction from 2023 levels (Electronic Monitoring (UK));
and psychological safety and health maturity (Asia Pacific).
• Strengthen focus on ESG as an enabler and driver of growth.
• Reviewing the updated ESG strategy including specific
Social Group-wide priorities and the climate impact
transition plan.
• Drive Board education on Sustainability including the
specific requirements of the Corporate Sustainability
Reporting Directive.
• Review an updated Climate Transition Plan and its
implementation, linked to Serco’s new Science-Based Net
Zero targets.
• Continued oversight of the HSW agenda and ecosystem,
through monitoring progress against agreed measures
and continued sector specific reviews of key new HSW
challenges, with particular focus on preventative measures
that are being implemented across the Justice &
Immigration sectors and considering the complexity and
breadth of road risk.
• Oversight of the organisational maturity of the wellbeing
and data/digital capability strategies.
• Maintain focus on colleague diversity and development of
talent to support future growth.
• Oversight of the Group’s Ethics and Compliance strategy
Speak Up processes and outcomes.
Kirsty Bashforth
Chair of the Corporate Responsibility Committee
26 February 2025
Corporate Responsibility Committee Report continued
Serco Group plc | Annual Report and Accounts 2024 | 96
Lynne Peacock
Remuneration Committee members
Lynne Peacock (Chair)
Kirsty Bashforth
Victoria Hull
Tim Lodge
John Rishton
Dear Shareholders
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report (the Report) for Serco Group plc for the
year ended 31 December 2024. In this Report we set out how
our Remuneration Policy has been implemented in 2024, and
how we will apply it for 2025. This will be my last report as Chair
of the Remuneration Committee for the Group as I will hand over
to Victoria Hull at the conclusion of the 2025 AGM.
2024 – another successful year
As set out in the rest of this annual report, 2024 was another
successful year for Serco, with the Company delivering good
results. Underlying Operating Profit at £273.5m rose for the
seventh consecutive year. Revenue was £4.8bn, Free Cash Flow
increased to £227.5m and our order book finished the year at
£13.3bn. We again increased our returns to shareholders with
our ordinary dividend up £4.8m and a share buyback in 2024
of £141.3m.
Environmental, Social and Governance (ESG) matters have
always been central to our business, with those matters which
are most important to our organisation forming part of our
remuneration practices (initially through personal objectives,
and since 2021 with formal ‘ESG’ scorecards within both our
bonus and Long Term Incentive Plan (LTIP)). Our ESG strategy
has been updated to ensure absolute alignment with our
purpose to impact a better future. We continue to evolve our
Impact strategy, challenging ourselves to continue to do more
and better across the three key areas of People, Place and
Planet. Further details on our wider Impact strategy can be found
on pages 33 to 55 of this annual report.
Context of remuneration decisions
The Remuneration Committee continues to consider and value
the views and experience of all stakeholders when making
remuneration decisions. In particular, we remain cognisant of the
ongoing cost of living challenges facing many in society, and
within the Serco workforce, and are pleased to support the
initiatives taken by Management for our people (more details of
which can be found on page 102).
2024 performance-linked variable pay
In considering the variable pay outcomes, the Committee seeks
to ensure that all payments are appropriate against the
backdrop of the overall performance of the Company, the
experience of all stakeholders and the context of the wider
economic environment.
Assurances are sought from the Audit Committee (with regards
to financial performance) as well as from the Risk and Corporate
Responsibility Committees (which, in particular, provide broader
feedback on the performance against and management of the
principal risks) where required to support our decisions.
2024 Annual bonus
The Executive Directors’ 2024 bonus awards have been
determined based on a combination of financial measures (70%
weighting: 40% Underlying Operating Profit and 30% Free Cash
Flow), an ESG scorecard (15%) and personal objectives (15%).
Taking into account performance against the targets set,
including the individual performance of the Executive Directors,
it was determined that the 2024 bonus award will be 89.4% of
maximum for both the Group Chief Executive and the Group Chief
Financial Officer (Group CFO). Further details can be found on
pages 103 to 105. The overall performance of the Company in 2024
has been strong and the Committee is satisfied that the bonuses are
a true and fair reflection of the underlying performance of both the
Company and the Executive Directors.
2022 LTIP
As reported, the Company’s performance has been consistently
strong over recent years, and this is reflected in the performance
outcomes against the three-year performance targets set for the
2022 LTIP awards. The Committee is satisfied that the overall
vesting outcome of 85.0% of the maximum opportunity
appropriately reflects the overall performance of the Company
over this period. Full details of the performance achieved, and
vesting outcome, can be found on pages 106 and 106.
We confirm that no malus and clawback provisions were
exercised during the year.
Implementation of the Policy in 2025
Appointment of Anthony Kirby
On 13 January 2025, it was announced that Mark Irwin had
indicated his intention to retire as Group Chief Executive of
Serco and will step down from his role on 28 February 2025. At
the same time, it was announced that Anthony Kirby would
succeed Mark on 1 March 2025. The terms of Mark’s retirement
were set out in the announcement and the subsequent Section
430 (2B) statement on our website.
The Committee reviewed the base salary for the new Group
Chief Executive, taking into consideration the size and
complexity of Serco, and the experience of Anthony. As set out
in our announcement, the Committee determined that Anthony
will receive a base salary of £845,000 per annum, in line with his
predecessor, taking into account the scheduled salary review
that would have applied had the predecessor remained in role.
Anthony will be eligible for a maximum bonus and LTIP
opportunity for 2025 of 175% and 200% of salary, respectively;
any bonus awarded over 100% of salary will be subject to
mandatory deferral into Serco shares. In line with our approved
Policy, Anthony’s pension opportunity will align with that of our
wider workforce (8% of salary).
Directors’ Remuneration Report
Serco Group plc | Annual Report and Accounts 2024 | 97
Review of base salary for our Group CFO
The Committee reviewed the base salary for the Group CFO and
determined that Nigel should receive an increase of 2.75% in
2025, aligning with the average for the broader workforce. For
2025, budgeted salary increases across our UK workforce will
range from 2.25% to 7%, with 16% of our lowest paid colleagues
receiving increases from 6.7%.
2025 Annual bonus
Reflecting our goal to meet the growth opportunity we see in the
market through delivering greater productivity and operational
excellence and in line with our approved Remuneration Policy,
the Committee decided to adjust the performance measures
applicable to the 2025 bonus for Executive Directors to include a
specific growth target. Specifically, the proposal is to include an
Order Intake Target. Following the Company’s return to growth,
the Committee agrees that now is the right time to reintroduce a
growth target into the bonus. This will encourage Executive
Directors to focus on delivering sustainable growth in addition to
profitability, which retains a significant weighting in the bonus.
Free Cash Flow will also remain within the bonus plan as in prior
years; however, to accommodate the growth metric, the
weighting given to Free Cash Flow will be reduced from 30% to
15%. ESG underpins our delivery of operational excellence and
remains the same as prior years.
2025 LTIP
The performance framework for the 2025 LTIP will follow that
applied in 2024, with measures to reflect the Company’s focus
on longer-term sustainable growth. The 2025 LTIP will vest
subject to aggregate Earnings Per Share (25% weighting),
average Pre-tax Return on Invested Capital (25%) and relative
Total Shareholder Return (20%), together with two growth
measures aligned to our medium-term growth goals (total of
20% weighting split between a Book-to-Bill ratio and Organic
Revenue Growth), and an ESG scorecard (10%) focused on
sustained colleague engagement and, building on our previous
environmental measures, specific Scope 1 and 2 carbon
reduction targets aligned to our longer-term Net Zero ambition.
Full details of the performance measures for the 2025 LTIP can
be found on page 109.
Stakeholder engagement
Our programme of shareholder dialogue in the first quarter of
the year was focused on feedback on our Policy, its
implementation in 2024 and its proposed implementation for
2025. Any feedback was considered by the Committee and, in
particular, helped shape our approach to performance
measurement for the coming year. We continue to welcome
your input and are always prepared to listen and take on board
suggestions that help the Company continue to grow and
develop its services. In addition to direct engagement with
shareholders, our Investor Relations team is in regular contact
with our shareholders and shares any feedback or queries on
remuneration throughout the year so that we can maintain an
ongoing dialogue.
As mentioned elsewhere in this annual report, the Board regularly
engage with Serco’s workforce through a number of channels,
receiving feedback on general pay and conditions, and invite
comment on remuneration matters from all colleagues.
Concluding comments
On behalf of my colleagues on the Committee, I wish to thank all
our shareholders for their ongoing support. The Committee
believes that our proposals for 2025 onwards will continue to
ensure that the Executive Directors are fairly rewarded for
delivery against the strategic goals of the Company, with due
consideration given to all Company risks and performance.
Together, these ensure that our remuneration framework
supports all colleagues to continue to deliver the critical services
to governments, impacting a better future for us all. I hope you
will all support the resolution to vote for this Report at the
forthcoming AGM.
Lynne Peacock
Chair of the Remuneration Committee
26 February 2025
This Report has been prepared in accordance with the requirements of the Companies Act 2006 and the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended) (the Regulations). The Report also meets the relevant requirements of the Listing Rules of the Financial
Conduct Authority and describes how the Board has complied with the principles and provisions of the UK Corporate Governance Code relating to remuneration
matters.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 98
Overview of Remuneration 2024 – What we paid our Executive Directors for 2024
Single figure remuneration at a glance (£m)
2.25
1.93
Base Salary
Pension Allowance
Taxable Benefits
Bonus
Share Awards
0.00 0.20
0.40 0.60
0.80 1.00
1.20
1.40 1.60
1.80 2.00
2.20 2.40
Mark Irwin
Nigel Crossley
Annual Bonus Outcomes
Outcomes (% of element achieved)
2024 bonus earned
Mark Irwin Nigel Crossley
of which
89.4% 89.4% 27.9%
of total maximum
1
of total maximum is subject to deferral
2022 LTIP outcome
10.0%
—%
25.0%
25.0%
25.0%
5.0%
10.0%
Achieved
Not Achieved (against maximum for that measure)
ESG
Order Book
ROIC
EPS
Relative TSR
Executive Director shareholdings (% of base salary)
Both Executive Directors have exceeded their
shareholding requirement.
335%
204%
48%
34%
200%
Owned outright (% of salary)
Net under award
(not subject to performance)
(% of salary)
0%
100%
200%
300%
Mark Irwin – 2024
Nigel Crossley – 2024
Shareholding
guideline 200%
of salary
Total spend on pay Dividends & share buyback Average increase for UK colleagues
£2,263.3m (3.1% on 2023) £179.7m (46.7% on 2023) 4.64%
2023 - £2,194.2m 2023 - £122.5m 2023 - 6.43%
The dividend per share and overall expenditure on wages and salaries have the same meaning as in the notes to the Company Financial Statements.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 99
The Policy applied for the year ended 31 December 2024 was consistent with
the Policy approved by shareholders at the AGM on 24 April 2024.
Max opportunity
(% bonus)
Mark Irwin
Nigel Crossley
Vesting Outcome
85.0%
of maximum
Underlying Operating Profit
(40% weighting)
Free cash flow
(30% weighting)
ESG
(15% weighting)
Personal Objectives
(15% weighting)
Not Achieved
40% 30% 15% 15%
87.7% 100% 100%
62.5%
87.7%
100%
100%
62.5%
1. Mark Irwin was appointed to the Board on 1 January 2023. Mark’s 2022 LTIP award, for which the performance period ended in 2024, was granted in
respect of his previously held role within Serco. This is therefore excluded from the figures above as it was not awarded in respect of qualifying services.
1
1. Mark Irwin will be stepping down as Group Chief Executive on 28 February 2025; the Committee has therefore determined that the full bonus will be paid
in cash in March 2025.
Implementation of Remuneration Policy 2025 – How our Executive Directors will be paid in 2025
Remuneration in 2025 will align to the approved 2024 Remuneration Policy as set out in the 2024 Annual Report & Accounts.
Fixed pay
Group Chief
Executive salary
Group CFO salary General increase
for all colleagues
Executive Directors’ pension contributions
aligned to the wider UK workforce
£845,000 £507,996 2.75% 8.0% salary
2.75% increase on 2024
Variable Pay aligned to Business Strategy
Priority areas Our Impact
Annual Bonus Long-Term Incentive Plan
40%
15%
15%
15%
15%
Underlying Operating Profit
Growth
ESG
Free Cash Flow
Personal objectives
25%
25%
20%
20%
10%
Aggregate EPS
Average ROIC
Relative TSR
Growth
ESG
Malus and clawback provisions apply to the deferred bonus and LTIP share awards during the three-year period prior to vesting and
within five years of grant respectively. Clawback provisions apply to the annual bonus.
Alignment with shareholders
In employment Minimum shareholding of 200% of salary.
Post-employment Retain 100% of the in-employment shareholding guideline for the first year post-employment; and 50% of
the in-employment shareholding guideline for the second year post-employment.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 100
% of base salary Anthony Kirby Nigel Crossley
Maximum 175% 155%
On-target 88% 78%
% of base salary Anthony Kirby Nigel Crossley
Maximum 200% 175%
On-target 100% 88%
Bonuses in excess of 100% of salary are subject to
mandatory deferral into shares for three years.
On vesting, shares received (after payment of tax) are
subject to a further post-vest holding period until the fifth
anniversary of grant.
Element Link to priority areas
Aggregate EPS
Average ROIC
Relative TSR
Growth
ESG
Element Link to priority areas
Underlying
Operating Profit
Free Cash Flow
Growth
ESG
Personal objectives
People
Place
Planet
Illustration of remuneration opportunity for 2025
The following charts illustrate the value that may be delivered to Executive Directors for 2025 under the Policy.
£967
£2,551
£4,135
£4,980
Minimum
Target
Maximum
Maximum
(including
share price
appreciation)
£0
£1,000
£2,000
£3,000
£4,000
£5,000
£6,000
£591
£1,429
£2,267
£2,712
Minimum
Target
Maximum
Maximum
(including
share price
appreciation)
£0
£500
£1,000
£1,500
£2,000
£2,500
£3,000
Fixed elements Annual variable Multiple period variable Value attributable to share
price appreciation
The scenarios in the above graphs are defined as follows:
• Fixed elements of remuneration:
– Base salary as applicable from 1 April 2025.
– Estimated value of benefits to be provided in 2025 in line with the Policy.
– Pension contribution/cash supplement equal to 8% in line with the Policy applicable in 2025.
• Annual bonus and LTIP participation as set out in the Policy table. In all cases, target performance results in delivery of 50% of
maximum opportunity. The LTIP values reflect the ‘face value’ at grant of shares that could be received for target and maximum
performance. The LTIP value under the maximum scenario is also shown assuming 50% share price appreciation over the
performance period.
Wider remuneration at Serco
The principles of colleague-centred, fair and impactful total reward
Our reward principles, which apply to all colleagues, are that reward should be fair, competitive and aligned to the sectors and
markets from which we draw our talent, while ensuring that we are appropriately managing the cost of our workforce which, as a
people business, is our biggest operating cost.
How our approach to reward is implemented throughout our organisation
The Committee believes that the structure of the Executive Directors’ reward at Serco should be linked to Serco’s strategy and
performance, and that reward throughout the whole organisation should follow the same philosophy and underlying principles. The
table below provides an overview of how the Policy cascades throughout the organisation.
Element
Base salary Salary levels throughout the Group, as far as possible, are set using the same principles applicable to the
Executive Directors. Salaries are reviewed annually, subject to engagement with employee representatives/
unions, where appropriate. Unless exceptional circumstances apply, salary increases for Executive Directors
are normally no more than the average increase of the wider workforce.
Benefits Benefits aligned to local market practice, including wellbeing support, are provided for all employees.
Colleagues in our main operating countries (Australia, Canada, UAE, UK and US) are able to participate in
MyShareSave (our all-employee Sharesave Scheme).
Pension The Group operates a large number of different pension/retirement benefit arrangements globally,
including cash allowance alternatives, where appropriate, in line with local market practice.
Annual bonus Approximately 1,550 colleagues, including members of the Global Leadership Team, are invited annually
to participate in the Serco Bonus Plan.
Long-term incentive Long-term incentive awards are granted annually to approximately 170 colleagues in the Global Leadership
Team.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 101
17%
41% 34%
33%
36% 30%
29%
100% 38% 23% 19%
16%
39% 33%
31%
35% 29%
28%
100% 41% 26% 22%
1. Anthony Kirby will succeed Mark Irwin as Group Chief Executive on 1 March 2025. The amounts shown assume a full year of participation.
Anthony Kirby
1
(£'000s) Nigel Crossley (£'000s)
Supporting our people
We have more than 50,000 colleagues across our operations and each individual is critical to our ability to impact a better future for
the service users we support through our contracts. The wellbeing of our people is therefore of utmost importance to us as an
organisation. Various targeted and whole-workforce actions have been taken by the Company to support colleagues throughout
these difficult times. These vary across our Divisions in response to regional pressures and in 2024 included:
Whole-workforce initiatives Targeted initiatives
Global coverage of the Serco People Fund.
1
2024 MyShareSave
2
offering across our main operating countries.
Continued benefits including discounts on everyday spend,
wellness offerings, improved support under the Employee
Assistance Programme, improved financial education and
wellbeing support.
Expand coverage to include Canadian workforce.
MyShareSave supports colleagues' financial wellbeing and
encourages long-term planning.
ISO 45003 certificate across Justice, Immigration & Asylum
contracts.
Trauma support pathways for sector with higher potential
exposure.
Cultural specific wellbeing content and resources, bespoke
for each region.
1. The Serco People Fund provides financial support for current and former Serco colleagues and their close family in a range of situations, including hardship or
personal crisis and when help is required for health, wellbeing or recovery. In 2024, the fund was available to individuals in Australia, Middle East, UK and US.
2. MyShareSave is our all-employee savings-linked share plan. In 2024, this benefit was made available to colleagues in the Australia, Canada, UAE, UK and US.
Annual Report on Remuneration
Single total figure of remuneration – Executive Directors (audited information)
The following table shows a single total figure of remuneration in respect of qualifying services in 2024 for each Executive Director,
together with comparative figures for 2023. Details of Non-Executive Directors’ fees are set out in the next section.
All figures in £
Mark Irwin
1
Nigel Crossley
1
2024 2023 2024 2023
Salary 818,000 800,000 490,800 480,000
Taxable benefits
2
80,698 38,177 41,666 56,259
Pension
3
65,440 64,000 39,264 38,400
Total Fixed Remuneration 964,138 902,177 571,730 574,659
Bonus 1,289,820 1,036,631 685,450 550,896
Long-Term Incentives
4
N/A N/A 668,185 837,354
Total Variable Remuneration
5
1,289,820 1,036,631 1,353,635 1,338,249
Total 2,253,958 1,938,808 1,925,365 1,962,909
1. Mark Irwin and Nigel Crossley were appointed to the Board on 1 January 2023 and 21 April 2021 respectively. Mark’s 2022 LTIP award, for which the
performance period ended in 2024, was granted in respect of his role previously held within Serco. This is therefore excluded from the figures above as it was
not awarded in respect of qualifying services.
2. The taxable benefits relate to the provision of independent financial advice and tax support, as appropriate; a car or car allowance (fully inclusive of all scheme
costs including insurance and maintenance), healthcare and private medical assessments, as well as taxable business expenses. Where Serco settles the
income tax and social security liability in respect of benefits provided, the value of the benefit has been grossed up at the individual’s marginal tax rate.
Accommodation expenses for Mark Irwin amounting to £30,759 and Tax advice totalling £37,700 were provided as taxable benefits in kind during the
reporting period, in accordance with applicable taxation regulations.
3. The pension amounts comprise payments made in lieu of pension, calculated as a percentage of base salary, from which the Executive Directors make their
own pension arrangements.
4. This is the estimated or actual value of LTIP awards for which the performance period ended in the year including dividend equivalents. The quantum
attributable to share price appreciation is £69,396. The Committee believes that the share price movement appropriately reflects the broader performance of
the Company and, therefore, did not make any discretionary adjustments to the vesting of these awards. Further details are provided on pages 108 and 108.
The LTIP value reported for Nigel in respect of 2023 has been restated to reflect the actual share price at the relevant vest date for the award (being his 2021
LTIP award, which vested on 6 April 2024: £1.859394).
5. Malus and clawback provisions, as set out in the Remuneration Policy, apply to the relevant incentive awards, including the annual bonus and LTIP. These
provisions were not exercised during the reporting year.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 102
Variable pay outcome (audited information)
Performance-related annual bonus
In line with the Policy, the 2024 target and maximum annual bonus opportunities were 87.5% and 175% of salary respectively for
Mark Irwin (Group Chief Executive) and 77.5% and 155% of salary respectively for Nigel Crossley (Group CFO). Overall outcomes
against the 2024 bonus are summarised on page 105.
Performance targets and achievement against them
The following table sets out the performance targets for 2024 as well as achievement against these.
The 2024 ESG scorecard focused on two key areas with the emphasis (two-thirds of this element) placed on the first area:
• Health and safety within our operations, measured by reference to Lost Time Incidents (LTI); and
• Colleague retention, measured as improvements in the % of voluntary attrition over the financial year.
The performance measured against each component of the scorecard, and the overall performance outcome determined by the
Committee in considering the overall ESG performance, is set out in the table below. The Committee recognised that the LTI for
2024 was 472, well below the 511 target required for maximum payout, reflecting a significant improvement in health and safety
performance. The substantial reduction in LTIs demonstrates tangible progress across multiple regions, reinforcing Serco’s
commitment to a safe working environment. Given the critical importance of health and safety, the performance against this
component has been appropriately reflected in the overall ESG scorecard outcome.
Performance measure and relative weighting
Threshold
Target Target
Maximum
target Actual
performance
Achievement
against measure
(% maximum
opportunity for
this measure)
Underlying Operating Profit
1
(40%) £257.3 £263.9 £285.0 £279.8 87.7%
Free Cash Flow
1
(30%) £130.3 £153.7 £177.1 £227.5 100.0%
ESG scorecard (15%) 100.0%
LTI
554
541
511
472
Colleague retention
2
22.7%
22.2% 21.7% 21.2%
Individual Objectives (15%)
Mark Irwin
62.5%
Nigel Crossley
62.5%
Overall bonus (% max)
Mark Irwin
89.4%
Nigel Crossley
89.4%
1. Actual performance at constant currency.
2. Assessed against the 12m rolling voluntary attrition rates across the Group for the financial year.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 103
Achievement of individual objectives
Executive Director Achievements in year
Mark Irwin,
Group Chief
Executive
The Committee considered Mark’s performance against his stated objectives and deemed his overall
performance in 2024 to be good. Mark demonstrated effective and visible leadership throughout 2024 and
delivered another successful year with strong results, maintaining organisational stability alongside a number of
substantial organisational changes and a new Executive appointment. He maintains strong governance, a
compelling vision for growth, one that will improve safety, engagement and performance outcomes for our
people and customers.
Achievements include:
• Recognising total pipeline as at 31 December 2024 was £13.11bn (versus investor pipeline of £11.16bn).
Both total reported pipeline and investor pipeline are materially larger than in FY23. New business wins were
in line with last year at £1.82bn, although total wins were above FY23 at £4.89bn. As such we delivered a
book-to-bill of 102%.
• The acquisition of the MT&S business from Northrop Grumman was progressed and announced publicly in
January 2025. During the year, we have strengthened the Group M&A function with both new talent and
stronger controls and processes for all M&A deals.
• Managing portfolio performance delivered margin improvements in all 4 regions yielding a 60-basis points
improvement at the Group level for FY24.
• Successful implementation of Think Safe, Work Safe, Home Safe over the past 12 months, delivering a ~25%
reduction in Lost Time Incidents (LTIs) and 32% reduction in lost working days. Notable progress in safety
outcomes specific to injuries related to Slips, Trips & Falls (reduced by 36%), Control & Restraint (reduced by
45%) and Manual Handling (reduced by 34%).
• Appointment of first Group Chief Digital and Technology Officer to lead enterprise level cyber and digital
agenda. Broader succession planning for Executive Committee continues to be work in progress with market
mapping for key roles completed.
• Established strong and productive relationship with the Board Chair and Board.
• Achieved a 34% reduction in Scope 1 and 2 Carbon compared to 2022 base year.
Achievement
(% maximum
for this
measure)
62.5%
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 104
Achievement of individual objectives continued
Nigel Crossley,
Group CFO
The Committee considered Nigel’s performance against his stated objectives and deemed his overall
performance in 2024 to be good. Nigel continued to demonstrate effective and visible leadership throughout
2024. With a strong revenue portfolio, good liquidity and balance sheet strength, Nigel has delivered strong
financial results for the seventh consecutive year. This is despite a range of challenging global and market
economic factors that affect each of Serco’s Divisions. Nigel has maintained effective relationships with internal
and external stakeholders, and maintained the confidence of the wider investment community, essential as Serco
embarks upon a refreshed strategy to deliver growth and improved safety, engagement and performance
outcomes for our people and customers.
Achievements include:
• Recognising total pipeline as at 31 December 2024 was £13.11bn (versus investor pipeline of £11.16bn).
Both total reported pipeline and investor pipeline are materially larger than in FY23. New business wins were
in line with last year at £1.82bn, although total wins were above FY23 at £4.89bn. As such we delivered a
book-to-bill of 102%.
• Achieving full year revenue of £4.8bn, Underlying Operating Profit of £274m, cash conversion exceeding
100% and a book-to-bill ratio of 102%.
• Free Cash Flow of £227.5m achieved.
• Effective support on internal succession planning and continued build of the capability of the Finance and
Investor Relations function with key senior appointments made at Group level.
• Supported the achievement of the Divisional growth plans and the acquisition of MT&S in January 2025.
Active support to win and retain key contracts.
• The Group's Underlying Operating Profit margin improved by 60 basis points, with margin improvements in
all 4 regions during the year, as profit improvements plans were successfully executed across the Group.
• The Integrated Assurance Framework to manage the Group-wide risks has developed during the year, to
ensure the Group is ready for changes in the UK governance requirements coming into effect in 2026.
Achievement
(% maximum
for this
measure)
62.5%
When approving the payments, the Committee considered Serco’s wider business performance during the year as well as the
experience of all our stakeholders. This included the bonus outcomes for our wider employee base, which factor in a combination of
Group, Divisional and Business Unit performance to ensure payments are reflective of the overall contribution to Serco’s
performance. In addition, an Underlying Operating Profit (UOP) test applied to ensure affordability. After a full review, the
Committee determined that the formulaic outturn is fair and appropriate with no adjustments needed. The table below sets out the
bonus outturn for 2024 as well as the amount to be deferred.
2024 Bonus outcome
Mark Irwin Nigel Crossley
Bonus amount earned
1
£1,289,820 £685,450
Bonus payable as % max (% salary) 89.4% (156.5%) 89.4% (138.6%)
Value of bonus to be deferred for three years into Serco shares (% of total bonus) N/A
1
£191,050 (27.9%)
1. Mark Irwin will step down as Group Chief Executive effective on 28 February 2025. The Committee has therefore determined that the full bonus will be paid in
cash in March 2025.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 105
2022 Long-term incentive Plan (2022 LTIP)
The 2024 single figure is comprised of the 2022 LTIP awards granted on 6 April 2022, which are due to vest on 6 April 2025 subject
to Total Shareholder Return (TSR), Earnings Per Share (EPS), Return on Invested Capital (ROIC), Order Book (measured as the book-
to-bill ratio) and an ESG scorecard performance in the three-year period to 31 December 2024. Careful consideration was given to
the overall performance of the Group over the whole performance period. The Committee is satisfied that the overall vesting
outcome is an appropriate reflection of the overall performance of the Group over the performance period, during which
Management successfully continued the journey of growth in Serco’s corporate strategy. The Committee is satisfied that no
adjustment to the vesting outcome is required.
The performance and formulaic vesting outcome for each tranche of the 2022 LTIP is as follows:
Performance condition and relative weighting
Threshold –
25% vesting Maximum – 100% Performance measured
Vesting
(% of maximum)
Relative TSR
1
(25%) Median ranking Upper quartile ranking Rank 29/123 100.0%
Aggregate EPS
2
(25%) 28.41p 34.72p 42.77p 100.0%
Average pre-tax ROIC
2
(25%) 17.3% 21.2% 22.8% 100.0%
Order Book
2
(10%) N/A 105.0% 95.9% — %
ESG scorecard
2
(15%) N/A See below See below 66.7%
Overall vesting outcome 85.0%
1. For the 2022 LTIP, the Company’s TSR performance was assessed relative to the constituents of the FTSE 250, excluding investment trusts, over the three-year
period ended 31 December 2024. The Company’s TSR of 32.3% ranked 29, giving a vesting outcome of 100%.
2. Only the financial performance targets vest at 25% for threshold performance, rising on a straight-line basis to 100% vesting at maximum performance. The
Committee views the Order Book and ESG scorecard targets to be strategically critical to the longer-term success of the Company, and that there should be
no vesting below target performance. The Order Book vesting level for on-target performance (being a book-to-bill ratio of 100%) is 50% of this element,
rising on a straight-line basis to 100% for maximum performance. Further details of the ESG scorecard are below.
ESG scorecard performance
The Committee considered the overall performance of all components of the ESG scorecard in the round in determining an overall
outcome for this element of 66.7% of maximum.
Scorecard component Actual performance
Average annual Group employee engagement score over the
three-year performance period (score of 70 for target, and 72 at
maximum).
Improvement in colleague diversity, including assessment of
quantitative metrics against senior global leadership roles.
Employee Engagement: The three-year average engagement
score was 71, meeting the target threshold and demonstrating
continued positive sentiment.
Colleague Diversity: Senior leadership roles held by women
rose slightly to 34.6%, and those held by diverse ethnic
backgrounds reached 12.3%, reflecting steady progress in
diversity and inclusion efforts. Further details of progress in
2024 can be found on page 39 of this Annual Report.
Improvement in our understanding, management and
disclosure of Serco’s environmental risks.
Environmental Progress: Our ESG performance continued to
improve, with a 34% reduction in Scope 1 and 2 carbon
emissions versus 2022 baseline and progress in renewable
energy usage, supporting Serco’s long-term sustainability
commitments. Further details of progress can be found on
pages 48 to 50 of this Annual Report.
2022 LTIP Awards vesting
Nigel Crossley has 454,099 shares under his 2022 LTIP award, of which awards over 385,984 shares (plus 22,442 associated
dividend equivalent shares) will vest on 6 April 2025. The total value at vest is estimated at £668,185 based on the three-month
(ended 31 December 2024) average closing share price of £1.636.
Pensions (audited information)
As at 31 December 2024, there were no Executive Directors actively participating or accruing additional entitlement in the Serco
Pension and Life Assurance Scheme, which is a defined benefits scheme.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 106
Payments for loss of office and to past Directors (audited information)
Angus Cockburn stepped down as Group CFO on 21 April 2021. Rupert Soames stepped down as Group Chief Executive on 31
December 2022. Share awards vested to Rupert and Angus in 2024 are in line with the treatment on cessation of employment as
previously disclosed in our 2022 and 2021 Reports, respectively. The awards below vested during the year.
Award vesting
No. of shares
vesting
1
Value vesting
Rupert Soames 2021 LTIP 972,483 £1,808,229
2021 ESBP 256,787 £483,145
Angus Cockburn
2021 ESBP 90,162 £169,640
1. Shares vesting from the 2021 LTIP awards remain subject to a post-vest holding requirement until the fifth anniversary of grant (6 April 2026).
All ESBP and LTIP awards noted above remain subject to malus and clawback provisions. There were no other payments made to
past Directors in 2024.
Single figure – Non-Executive Directors’ remuneration (audited information)
Non-Executive Directors’ remuneration consists of cash fees paid monthly with increments for positions of additional responsibility.
In addition, reasonable travel and related business expenses are paid. No bonuses are paid to Non-Executive Directors. Non-
Executive Directors’ fees are not performance-related.
Fee-bearing Committee
roles held in the year
Board fee (including
Chairmanship fees) Taxable benefits
1
Total
2
(£) (£) (£)
2024 2023 2024 2023 2024 2023
John Rishton (Chair) 297,752 288,400 10,249 7,199 308,001 295,599
Kirsty Bashforth C RE RI 81,696 79,130 4,899 5,325 86,595 84,455
Kru Desai A C 68,403 66,255 — — 68,403 66,255
Victoria Hull
3
RE 19,398 [N/A] — [N/A] 19,398 [N/A]
Tim Lodge A RE RI 81,696 79,130 1,081 365 82,777 79,495
Ian El-Mokadem A RI 76,379 73,980 409 84 76,788 74,064
Dame Sue Owen
4
C RI 73,720 70,155 — 196 73,720 70,351
Lynne Peacock (SID) A RE 91,716 88,980 — 841 91,716 89,821
Total 790,760 746,030 16,638 14,010 807,398 760,040
A = Audit Committee, C = Corporate Responsibility Committee, RE = Remuneration Committee, RI = Risk Committee. Red denotes Chair. No fee is payable for
being a member or Chair of the Nomination Committee.
1. Taxable benefits in 2023 and 2024 relate to reimbursed taxable travel and subsistence business expenses.
2. Non-Executive Directors do not receive any variable pay so ‘Total’ is total fixed remuneration.
3. Victoria Hull was appointed to the Board on 1 September 2024.
4. As Designated Non-Executive Director for Workforce Engagement, Dame Sue Owen received a fee which was introduced from 1 April 2023, as disclosed in
the 2022 Report and aligned to the fees payable for membership of a Committee.
Awards made in 2024
Equity Settled Bonus Plan (ESBP) (audited information)
In line with the approved Policy, in connection with the compulsory deferral of the 2023 bonus in excess of 100% of salary, Mark
Irwin and Nigel Crossley were granted the following ESBP awards on 28 March 2024 in the form of a conditional share award. ESBP
awards granted in 2024 vest on the third anniversary of grant on 28 March 2027, provided the individual is still in employment with
Serco at vest.
Face value Market price at award
Directors (£)
1
Grant date (£)
2
Number of shares
3
Mark Irwin 236,631 28 March 2024 1.8824 125,707
Nigel Crossley 70,896 28 March 2024 1.8824 37,662
1. Calculated as the value of the Executive Directors’ 2023 bonus in excess of 100% of salary.
2. Average closing share price on the five trading days immediately prior to the date of grant.
3. Calculated using the average share price used to determine the number of shares awarded.
Pre-vesting malus and post-vesting clawback are applicable to these awards, but no further performance conditions apply.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 107
Long Term Incentive Plan (LTIP) (audited information)
In line with the approved 2024 Policy, in 2024, the Group Chief Executive received LTIP awards equivalent to 200% of salary, and the
Group CFO received awards equivalent to 175% of salary. All awards were in the form of conditional share awards and have a
normal vesting date of 8 April 2027. Awards will vest to the extent that the performance conditions have been met, as measured over the
three-year performance period ending 31 December 2026, and provided the individual is still in employment with Serco at vest.
Performance measure Weighting of measure Performance target
Aggregate EPS 25% Statutory Earnings Per Share (EPS) before exceptional items (adjusted to reflect tax
paid on a cash basis) of 43.39p (threshold, 25% vesting) to 53.03p (maximum, 100%
vesting), measured as an aggregate over the three-year performance period.
Relative TSR 20% Total Shareholder Return (TSR) of median (threshold, 25% vesting) to upper quartile
(maximum, 100% vesting) when ranked relative to companies in the FTSE 250
(excluding investment trusts), measured over the three-year performance period.
Average ROIC 25% Pre-tax Return on Invested Capital (ROIC) of 22.1% (threshold, 25% vesting) to 27.1%
(maximum, 100% vesting), measured as an average over the three-year performance
period.
Growth 20% Measured through two equally weighted assessments:
• Book-to-bill ratio of 100% (target, 50% vesting) to 105% (maximum, 100% vesting),
measured as an average over the three-year performance period; and
• Organic Revenue Growth of 4% (threshold, 25% vesting) to 6% (maximum, 100%
vesting), measured as an average over the three-year performance period.
ESG scorecard 10% Scorecard focusing on two key areas:
• employee engagement score of 71 for threshold and 73 for maximum
performance measured via the Serco Employee Engagement Survey as an average
across the three-year performance period; and
• reduction in Scope 1 and 2 carbon emissions over the three-year performance
period, measured in tonnes of carbon dioxide equivalent (tCO2e), 1,628 tonnes
for threshold and 4,331 tonnes for maximum performance.
The structure for vesting of the EPS, TSR, ROIC, Organic Revenue Growth and ESG scorecard conditions is straight-line vesting
between threshold and target, and target and maximum; no shares vest where performance is below threshold. The Committee
views the book-to-bill growth target to be strategically critical to the longer-term success of the Company and that there should be
no vesting below target performance. Threshold performance of this element, therefore, delivers a 0% vesting outcome. The vesting
level for on-target performance is 50%, with straight-line vesting between target and maximum. This is a more stringent approach
than required under the approved Policy. In determining the extent to which these LTIP awards will vest, the Committee will
consider the Group’s underlying performance (with input from the Audit and Risk Committees, as appropriate) and external market
reference points to ensure that outcomes are fair.
Each element of the LTIP award is subject to a post-vesting holding requirement that takes the total term of the LTIP award (i.e.
performance period plus holding period) to a minimum of five years. Pre-vesting malus and post-vesting clawback are also
applicable to these LTIP awards.
Directors
Basis of
award
(% salary)
Face
value
(£) Grant date
Market price
at award
(£)
1
Number
of shares
2
Percentage
vesting at
threshold
performance
3
Performance
period
end date
Mark Irwin 200% 1,648,000 8 April 2024 1.8752 878,839 18.75% 31 December 2026
Nigel Crossley 175% 865,200 8 April 2024 1.8752 461,390 18.75% 31 December 2026
1. Average closing share price on the five trading days immediately prior to the date of grant.
2. Calculated using the average share price used to determine the number of shares awarded.
3. 90% of the awards that are subject to financial and ESG performance conditions vest at 25% for threshold performance. 10% of the awards that relate to Book-
to-Bill performance conditions vest at 0% for threshold performance and only begin to vest when at least target performance is achieved.
MyShareSave 2024 (audited information)
In line with the approved Policy, and HMRC’s requirements relating to UK Sharesave, the Executive Directors were invited to
participate in the 2024 scheme on the same terms as all other eligible employees. For 2024, Mark Irwin chose to take up the
invitation to participate. These options were granted at a 20% discount (in line with HMRC’s requirements relating to SAYE plans).
The 2024 MyShareSave options will mature from 1 December 2027 following the completion of the associated 36-month savings
contract and if the Executive Director remains in Serco employment at that time.
Directors
Face value
(£)
1
Grant date
Market price at
award
(£)
2
SAYE exercise price
(£)
3
Number of shares
4
Mark Irwin 6,734 27 September 2024 1.7460 1.40 3,857
1. Calculated as the value of the shares under option taking the market price for the options used to determine the exercise price.
2. Mid-market price on the option pricing date, 30 August 2024.
3. Being a 20% discount to the mid-market price on the option pricing date.
4. The number of shares under option based on the total savings under the savings contract and the exercise price.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 108
Implementation of the Policy in 2025
Directors
Details of the salary increases, pension opportunity and annual bonus and LTIP awards (including a summary of the performance
measures and relative weightings) are provided on page 99.
Details of the performance measures to apply to the 2025 annual bonus and long-term incentive awards
We are focused on three core areas which are most significant to driving value and delivering our strategy: Growth, Operational
Excellence and Competitiveness. Our variable pay for 2025 aligns to this through the targets set against a number of these areas.
The performance measures and relative weightings applicable to the 2025 annual bonus and LTIP are summarised on page 99,
further details are provided below. The Committee takes a robust approach to target setting, informed by internal budget and long-
term plans, analyst forecasts and strategic objectives.
The remuneration framework is structured to maintain an appropriate balance between short-term and long-term incentives. The
annual bonus is designed to reward delivery against key financial and strategic priorities within a single year, while the LTIP
incentivises sustained performance over multiple years, ensuring alignment with long-term shareholder value. This supports both
the Company’s immediate operational success and its long-term strategic goals, promoting sustainable and responsible
performance.
2025 Annual bonus
The performance measures applicable to the 2025 bonus have been determined taking into consideration the key strategic
priorities of Serco over the next 12 months. In particular, the 2025 ESG scorecard metrics recognise the continued business priorities
of care for our colleagues. Determination of the amount payable under the 2025 annual bonus plan will also take into consideration
the wider performance of the Group as well as the affordability of the bonuses so determined. The final payouts will be adjusted,
where appropriate, to ensure that the outcomes are a fair and reasonable reflection of the performance of the Group.
2025 LTIP
The table below provides details of the performance measures and targets to apply to the 2025 LTIP awards. Targets have been set
taking into account our longer-term business forecasts and strategy, as well as analyst consensus. In each case performance will be
assessed over the three-year period ending 31 December 2027. In determining the final vesting of these awards, the Committee will
also give consideration to the Group’s underlying performance (with input from the Audit and Risk Committees as appropriate) and
external market reference point. The final payouts will be adjusted, where appropriate, to ensure that the outcomes are a fair and
reasonable reflection of the underlying performance of the Group.
Performance
measure
Weighting of
measure Performance target
Threshold 25%
vesting
1
Maximum 100%
vesting
Aggregate EPS 25% Statutory Earnings Per Share (EPS) before exceptional
items (adjusted to reflect tax paid on a cash basis)
measured as an aggregate over the three-year
performance period.
46.92p 57.35p
Average ROIC 25% Pre-tax Return on Invested Capital (ROIC) measured as an
average over the three-year performance period.
24.93% 30.48%
Relative TSR 20% Total Shareholder Return (TSR) when ranked relative to
companies in the FTSE 250 (excluding investment trusts),
measured over the three-year performance period.
Median ranking Upper quartile
ranking
Growth 20% Book-to-bill ratio of 100% (target, 50% vesting) to 105%
(maximum, 100% vesting), measured as the cumulative
average over the three-year performance period.
N/A
1
105 %
Organic Revenue Growth, measured as a three point
average over the three-year performance period.
4% 6%
ESG scorecard 10% Average annual Group employee engagement score over
the three-year performance period at or above 72 for on-
target performance.
71 73
Reduction in Scope 1 and 2 carbon emissions towards our
longer-term net zero goal. Total reduction of 1,603 tCO2e for
on-target performance, to be measured over the three- year
performance period.
Reduction of
794 tCO
2
e
Reduction of
2,105 tCO
2
e
1. Unless indicated, each tranche vests at 25% for threshold performance, rising on a straight-line basis to 100% vesting at maximum performance. The
Committee views the Book-to-bill target to be strategically critical to the longer-term success of the Company and that there should be no vesting below
target performance. Performance below target will deliver a 0% vesting outcome. The vesting level for on-target performance will be 50%, with straight-line
vesting between target and maximum. This is a more stringent approach than that required under the Policy. The vesting level for on-target performance is
50% of these elements, rising on a straight-line basis to 100% for maximum performance.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 109
Non-Executive Directors
Following the annual review of Non-Executive Director fees, the Committee (in respect of the Board Chair’s fee) and the Board (in
respect of all other Non-Executive Director fees) determined that a 2.75% increase should apply from 1 April 2025 (this is in line with
the average increase which will apply to the wider workforce). In line with the approved Policy, the fees to apply in 2025 will be as
follows:
Base fee to
apply from
1 April 2025
£
Base fee
1 April 2024
£
Change
£
Element – Annual Board and Committee fees
Board Chair 308,000 299,936 8,064
Senior Independent Director 15,750 15,450 300
Board fees 59,800 58,193 1,607
Chair of a Board Committee (Audit, Corporate Responsibility, Risk or Remuneration) 13,750 13,390 360
Membership of a Board Committee (Audit, Corporate Responsibility, Risk or Remuneration) 5,500 5,356 144
Designated Non-Executive Director 5,500 5,356 144
No additional fee is payable for the Chair or membership of the Nomination Committee. The Board Chair does not receive any
additional fees for his Committee memberships.
Performance graph and table
This graph shows the value as at 31 December 2024, of a £100 investment in Serco on 31 December 2014 compared with £100
invested in the FTSE 250 index on the same date. It has been assumed that all dividends paid have been reinvested. The TSR
performance for the long-term incentives applies over a different period and details of the Company’s performance versus the FTSE
250 relevant to the 2024 single figure can be found on page 106.
The TSR level shown at 31 December each year is the average of the closing daily TSR levels for the 30-day period up to and
including that date. The Company chose the FTSE 250 index as the comparator for this graph as Serco has been a constituent of that
index throughout the period.
Serco
FTSE 250 Index
Dec 2014
Dec 2015
Dec 2016
Dec 2017
Dec 2018
Dec 2019
Dec 2020
Dec 2021
Dec 2022
Dec 2023
Dec 2024
0
50
100
150
200
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 110
CEO’s pay in last ten financial years
Year ended 31 December 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Group Chief Executive
Rupert
Soames
Rupert
Soames
Rupert
Soames
Rupert
Soames
Rupert
Soames
Rupert
Soames
Rupert
Soames
Rupert
Soames
Mark
Irwin
Mark
Irwin
Single figure
remuneration (£’000) 2,255 2,217 3,681 5,176 5,201 5,219 4,011 4,377 1,939 2,254
Annual bonus outcome
(as % of maximum
opportunity) 87% 82% 75% 77% 94% 80% 93% 88% 74% 89%
LTIP vesting outcome (as
% of maximum
opportunity) 100% 24% 91% 73% 71% 99% 89% 90% N/A N/A
Percentage change in Directors’ remuneration
The table below shows the percentage change in remuneration for all Directors who served during 2024, compared to that for the
average UK employee. The UK employee sub-set of the Company’s global workforce has been chosen as the group which provides
the most appropriate comparator. There are no employees in the Group’s Parent Company. The UK employee population
comprises some 18,000 of the approximately 50,000 individuals Serco employs worldwide. Inflation and local pay practices form a
key driver in the salary and benefits provided in each location, and as the Directors’ pay is set against the UK market (with the
Executive Directors based in the UK), we have chosen employees within the same country. Information will need to be shown for
each Director in the relevant year on a rolling five-year basis. 2024 is the fifth year of disclosure.
Executive Directors Non-Executive Directors
UK
employees
Mark
Irwin
Nigel
Crossley
John
Rishton
Kirsty
Bashforth
Kru
Desai
Victoria
Hull
Tim
Lodge
Ian El-
Mokadem
Dame Sue
Owen
Lynne
Peacock
2024
Salary/fees
1
5% 2% 2% 3% 3% 3% N/A 3% 3% 5% 3%
Benefits
2
3.5% 111% (26) % 42% (8) % N/A N/A 196% 387% N/A N/A
Bonus
3
(10) % 24% 24% N/A N/A N/A N/A N/A N/A N/A N/A
2023
Salary/fees
1
6% N/A 10% 3% 3% 4% N/A 3% 4% 10% 3%
Benefits
2
— % N/A 64% 23% (27) % N/A N/A (38) % N/A (17) % 87%
Bonus
3
11% N/A 3% N/A N/A N/A N/A N/A N/A N/A N/A
2022
Salary/fees
1
4.5% N/A 47% 26% 1% 467% N/A 22% 1% 2% 7%
Benefits
2
2% N/A 102% 194% 435% 0% N/A 100% 0% 100% 1%
Bonus
3
(13) % N/A 38% N/A N/A N/A N/A N/A N/A N/A N/A
2021
Salary/fees
1
2.1% N/A N/A 146% 0% N/A N/A N/A 8% 140% 15%
Benefits
2
2% N/A N/A 128% 114% N/A N/A N/A 0% 0% 0%
Bonus
3
21% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
2020
Salary/fees
1
1.9% N/A N/A 0% 2% N/A N/A N/A 4% N/A 0%
Benefits
2
(3) % N/A N/A (51) % (81) % N/A N/A N/A 0% N/A 0%
Bonus
3
20% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
1. The average salary change for UK employees for 2020 represents the average pay increase applied in the corporate annual pay review effective 1 April 2020.
From 2021, the average salary change for UK employees represents the average level salary change recorded over the relevant financial year, excluding role
changes or promotions, to better reflect our wider workforce pay rates, including those parts of our workforce subject to collective bargaining agreements,
customer-set pay structures, or trade union negotiations. Changes in NED fees reflect changes in each individual’s role on the Board and its Committees, in
addition to the April 2023 fee uplift which was disclosed in the 2022 Report.
2. The nature of taxable benefits provided to all Directors and employees in 2024 remains the same as in prior years.
3. The bonus element is shown for those employees eligible for such payments. The figures shown here relate to a calculation of the bonus earned, but not yet
paid, related to performance in 2024 compared to the 2023 bonuses paid in March 2024. The Executive Directors’ 2024 bonuses over 100% of salary are
subject to compulsory deferral for three years into shares. NEDs do not receive bonus pay.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 111
CEO Pay Ratio
The table below shows how pay for the Group Chief Executive compares to our UK colleagues at the 25
th
, median and 75
th
percentiles.
2019
(Option B)
2020
(Option B)
2021
(Option B)
2022
(Option B)
2023
(Option B)
2024
(Option B)
UK colleagues’
salary
1
UK colleagues’
total pay and
benefits
2
25
th
percentile 1:219 1:186 1:168 1:141 1:80 1:74 £27,596 £30,415
Median 1:190 1:149 1:139 1:129 1:60 1:70 £30,148 £32,161
75
th
percentile 1:166 1:142 1:122 1:101 1:56 1:49 £42,852 £45,674
1. Includes salary enhancements such as shift allowances, unsociable hours payments and overtime.
2. Includes the value of employer pension contributions made to a defined contribution pension arrangement. Each of these representative colleagues
participated in a salary sacrifice pension arrangement.
The Committee believes that the median ratio is consistent with the Company’s pay, reward and progression policies for our UK
colleagues, noting that, as in 2023, for 2024 the comparative Group Chief Executive pay figure is relatively suppressed due to the
reduced variable pay component in this second year in role for the Group Chief Executive. As a business, Serco employs a very wide
range of people with different skills, experiences and capabilities, and our colleagues’ pay and benefits reflect this. The
remuneration of Serco’s Group Chief Executive has a significant weighting towards variable pay to align his remuneration with
Company performance. In contrast, due to our workforce profile, all three of our pay ratio reference points represent frontline
operational or administrative staff who are critical to the delivery of the commitments we make under our contracts every day. In line
with market practice for such roles, these colleagues are in receipt of fixed pay only (including pension contributions). The increase
in the median Pay Ratio from 2023 to 2024 is due to the strong financial performance in 2024, which contributed to a higher bonus
outturn for the Group Chief Executive.
Consistent with prior years, we have used our 2024 Gender Pay Gap data to identify employee representatives at each pay quartile
of our UK employee population. Employees were ranked by hourly pay and, where possible, full-time colleagues at the quartile
points fulfilling common roles within the UK employee population were selected as the representatives for comparison. Given our
diverse workforce and large number of UK employees across many contracts and payrolls, this is considered to be the most
appropriate method of identifying employees who are representative of our workforce. The single figures for each representative
employee (all of whom were full-time) were calculated in respect of the financial year to 31 December 2024. The single figures have
been calculated taking into consideration regular salary and allowances (for example, shift allowances), employer pension
contributions, taxable benefits and bonuses following the same approach taken in determining the Group Chief Executive’s single
figure. Significant salary enhancements, such as acting up allowances, which were not received at the date the pay was calculated for
Gender Pay Gap purposes are disregarded from the single figure calculation for the representative employees to avoid over-
inflating the representative pay at the quartile levels. The pay and benefits figures for the employee representatives do not include
any amounts in respect of long-term incentives as these are only available to the most senior members of the Group.
External appointments
The Board believes that the Group can benefit from its Executive Directors holding appropriate non-executive directorships of
companies or independent bodies. Such appointments are subject to the approval of the Board. Fees are retained by the Executive
Director concerned. Neither Executive Director held any external appointments in the year.
Directors’ shareholding and share interests (audited information)
Current shareholdings are summarised on page 99. Shares are valued for shareholding guideline purposes using the closing share
price of £1.513 on 31 December 2024 (being the last trading day of the financial year).
Share awards Share options
Name
1
Share
ownership
requirements
(% of salary)
Number of shares
owned outright at 31
December 2024
2
Subject to
performance
conditions
3
Not subject to
performance
conditions
4
Not subject to
performance
conditions
5
Exercised
during the
year
6
Total share
interests at 31
December
2024
7
Mark Irwin 200% 1,810,193 2,625,097 477,755 8,142 — 4,921,187
Nigel Crossley 200% 662,489 1,521,395 200,326 4,285 — 2,388,495
1. Both Executive Directors have exceeded their in-employment shareholding requirement.
2. Includes shares owned by connected persons.
3. Includes awards made to Mark Irwin and Nigel Crossley under the LTIP. All awards are in the form of conditional share awards.
4. These are awards made under the ESBP in connection with the compulsory deferral of bonus into shares. Awards are in the form of conditional share awards
and have not yet vested.
5. Options over shares pursuant to participation in MyShareSave. These are options granted under a UK Sharesave plan subject to an exercise price at a
maximum discount of 20% of the share price at grant. There are no unvested share options held which are subject to performance conditions.
6. There are no share options that are vested but unexercised.
7. There were no changes in Executive Directors’ interests in the period between 1 January 2025 and the date of this report.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 112
Non-Executive Directors do not participate in any share-based incentives and do not hold any interests in shares other than shares owned
outright. Non-Executive Directors are encouraged to hold shares in the Company but are not subject to a shareholding requirement.
Name Number of shares owned outright
(including connected persons) at
31 December 2024
2
John Rishton 43,086
Kirsty Bashforth 10,000
Kru Desai —
Victoria Hull —
Tim Lodge 40,000
Ian El-Mokadem
1
50,000
Dame Sue Owen 10,000
Lynne Peacock 15,000
1. Jointly held with spouse.
2. There were no changes in Non-Executive Directors’ interests in the period between 1 January 2025 and the date of this report.
Shareholder dilution
Awards granted under the Company share plans are met either by the issue of new shares or by shares held in trust when awards
vest. The Committee monitors the number of shares issued under its various share plans and their impact on dilution limits. The
relevant dilution limits established by the Investment Association in respect of all share plans is 10% in any rolling ten-year period.
According to the rules of our employee share plans, we impose a 5% dilution limit for our discretionary employee share plans and
10% for all employee share plans. Dilution against these 5% and 10% limits is regularly reviewed. Based on the Company’s issued
share capital as at 31 December 2024, the Company had headroom of 1.19% and 6.19%, respectively, so our dilution level was
within these limits. The Group has an employee share ownership trust which is administered by an independent trustee and which
holds ordinary shares in the Company to meet various obligations under the share plans. The Trust held 11,351,967 and 13,418,111
ordinary shares at 1 January 2024 and 31 December 2024, respectively.
Voting outcomes
At the 2024 AGM, votes on remuneration matters were cast as follows:
For Against Number
Year of AGM % % withheld
1
2023 Annual Report on Remuneration 2024 90.76% 9.24% 6,275,479
2024 Remuneration Policy 2024 83.34% 16.66% 35,355
1. A ‘Vote Withheld’ is not a vote in law and is not counted in the calculation of the proportion of votes ‘For’ or ‘Against’ a Resolution.
Committee overview and activities
The Remuneration Committee
All members of the Committee are independent Non-Executive Directors, initially appointed for a three-year term. Their
appointment may be terminated on three months’ written notice.
The role of the Committee is to determine and recommend to the Board a fair and responsible remuneration framework that aligns
the Executive management team to shareholders’ interests and is designed to reward and incentivise them appropriately for their
contribution to Group performance. The Committee’s primary focus is to ensure a clear link between reward and performance. This
means ensuring that the Policy, structure and levels of remuneration for the Executive Directors and other senior executives
reinforce the strategic aims of the business and are appropriate given the market context in which Serco operates and the reward
strategy throughout the rest of the business.
The Committee’s composition, responsibilities and operation comply with the principles of good governance as set out in the UK
Corporate Governance Code, the Listing Rules and the Companies Act 2006. The Terms of Reference for the Committee are
available on the Company’s website.
The Committee met four times during the year. Details of attendance at meetings are set out on page 77. Meetings of the
Committee are normally attended by the Group Chief Executive, the Group Chief People and Culture Officer, the Group Director
Reward and Recognition, the Group General Counsel, the Group Company Secretary, and representatives of Willis Towers Watson
(WTW), the Committee’s independent external advisers. No person is present during any discussion relating to their own
remuneration arrangements.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 113
Summary of the Committee’s activities during 2024
The table below summarises the key issues that the Committee considered at each meeting. Remuneration packages for new hires
and severance packages for roles subject to the Committee’s oversight, together with regulatory and market developments were
reviewed at each meeting as required. The Employee Dashboard and key points from the engagement with the workforce are
considered at each meeting as appropriate.
Meeting Key agenda items
February Shareholder consultation update; Employee Dashboard review on policy and workforce demographics; 2023
annual bonus achievement and payouts for Executive Directors and Group Executive Committee members;
2024 bonus performance framework; 2021 LTIP vesting; and 2024 discretionary share award policy.
June AGM voting results for the 2023 Remuneration Report and 2024 Remuneration Policy; and discretionary
share awards update.
September 2024 UK Gender Pay Gap; and executives’ shareholdings update.
December Executive 2025 pay review; Employee Dashboard review including employee feedback on reward; 2024
bonus and 2022 LTIP performance update; and 2025 bonus and LTIP proposals.
The Committee conducted its annual performance review and the findings were mainly positive; the minor suggestions for
improvement will be addressed.
External advisers
WTW provided advice to the Committee throughout the year. WTW is a member of the Remuneration Consultants’ Group and, as
such, voluntarily operates under the Remuneration Consultants’ Group Code of Conduct. The Committee is satisfied that WTW are
providing robust and professional advice.
The fees in respect of 2024 paid to WTW (excluding VAT) are set out in the table:
Adviser Appointed by Services provided to the Committee
Fees for services provided
to the Committee
1
Other services provided to the Company
2
WTW Remuneration
Committee in 2020
Advice on market practice;
governance; reward consultancy
£79,722 Reward and benefits consultancy;
provision of benchmark data; DRR review
1. Fees are determined on a time spent basis.
2. WTW do not, to the Committee’s awareness, have any other connection with the Company or individual Directors.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 114
Summary of the approved Remuneration Policy
The 2024 Policy took effect following shareholder approval at the 2024 Annual General Meeting (held on 24 April 2024). A summary
of the 2024 Executive Director Remuneration Policy is provided below and the full approved Directors’ Remuneration Policy,
including that applicable to Non-Executive Directors, can be found on our website within the 2023 Annual Report and Accounts.
This summary does not replace or override the full approved Policy.
Features of the 2024 Executive Director Remuneration Policy
The Policy table below for Executive Directors below sets out how each element of the 2024 Policy aligns with, and supports, our
strategic objectives.
Base salary
Purpose and link to strategy
To recognise an individual’s experience, responsibility and performance of the role, and by providing the basis for a competitive
remuneration package; to help recruit and retain executives of the necessary calibre to execute Serco’s strategic objectives.
Opportunity and operation
Salaries are normally reviewed annually, and any changes are usually effective from 1 April. Salary reviews take account of the
individual’s performance and contribution to the Company during the year as well as positioning against the market.
Any increases proposed will be with reference to the typical level of increase awarded to other colleagues in the jurisdiction in
which the Executive Director is based. Higher increases may be made in exceptional circumstances, for example, where there has
been a significant change in role size or complexity, which has resulted in the salary falling below a market competitive level given
the enhanced responsibilities of the role. Full rationale would be disclosed in the relevant report.
In some circumstances an Executive Director may start on a lower salary than is market typical, with higher phased increases
applying depending on performance in role and individual ability.
Benefits
Purpose and link to strategy
To provide a competitive level of benefits to enable the recruitment and retention of Executive Directors.
Opportunity and operation
The maximum opportunity for benefits is defined by the nature of the benefits and the cost of providing them. As the cost of
providing such benefits varies based on market rates and other factors, there is no formal maximum monetary value.
A range of benefits may be provided to Executive Directors, including (but not limited to) Company car or car allowance, private
medical insurance, permanent healthcare insurance, life cover, annual allowance for independent financial advice, relocation
benefits and voluntary health checks.
Directors may also be eligible to participate in any all-employee share plans, with participation on the same basis as other
employees, up to HMRC-approved limits (where relevant).
Pension
Purpose and link to strategy
To provide pension-related benefits to encourage Executive Directors to build savings for retirement, supporting the recruitment
and retention of Executive Directors.
Opportunity and operation
Executive Directors may participate in the Group defined contribution pension plan (or overseas Serco pension plan, as
appropriate).
The maximum contribution or cash allowance (or mix of both) for current Executive Directors will be aligned with the pension
opportunity available to the wider workforce in the relevant jurisdiction in which the Executive is based. For a UK-based Executive
Director, the maximum Company contribution (or cash payment in lieu) is 8% of salary.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 115
Annual bonus
Purpose and link to strategy
To incentivise Executive Directors to achieve specific, strategically-aligned annual targets and objectives, and to reward ongoing
stewardship and contribution to core values. Bonus deferral provides alignment with shareholder interests.
Opportunity and operation
Maximum bonus opportunity is 175% of salary for the Group Chief Executive and 155% of salary for other Executive Directors.
Bonus awards are based on the achievement of specific targets over the year and are paid after the end of the financial year to
which they relate. Any bonus earned over 100% of salary is deferred into shares, typically vesting after three years.
The Committee may decide to pay the entire bonus in cash in certain exceptional circumstances. Dividend equivalents may accrue
during the vesting period on the deferred bonus shares (in the form of cash or shares).
Malus and clawback provisions apply.
Performance framework
At the start of each performance year, the Committee reviews and sets objectives against key financial measures and strategic
objectives aligned to the Group’s overall strategy, annual business plan and priorities for the year, and the weighting for each
measure.
At least 70% of the total bonus will be based on the achievement against financial measures with the remainder based on strategic
and personal objectives which may include ESG objectives.
Bonus awards are at the Committee’s discretion. The Committee may override the formulaic bonus outcome within the limits of the
plan where it believes that the outcome is not reflective of wider performance, or affordability of the bonus, to ensure fairness to
both shareholders and participants.
Awards are typically on a straight-line basis from 0% for threshold performance to 50% at target, and to 100% at maximum
performance.
Long-term incentive – Serco Group Long Term Incentive Plan (LTIP)
Purpose and link to strategy
To recognise delivery of the Group’s longer-term strategy and value creation and align the long-term interests of the Executive
Directors with the Group’s shareholders.
Opportunity and operation
Maximum annual award of up to 200% of base salary for the Group Chief Executive and 175% for other Executive Directors.
Share awards subject to performance conditions are normally granted annually, typically vesting on the third anniversary of their
grant. A post-vesting holding period applies, usually ending on the fifth anniversary of grant. During this time, the shares must be
retained but are not subject to forfeiture provisions. Shares may be sold in order to satisfy tax or other liabilities as a result of the
vesting of the award.
At the discretion of the Committee, awards may be converted to a cash equivalent based on the value of the shares at the vesting
date (in cases where due to local law, it is not possible to deliver shares), or subject to net settlement.
Dividend equivalents may accrue during the vesting period (in the form of cash or shares). Malus and clawback provisions apply.
Performance framework
At least 70% of the vesting of LTIP awards will be dependent on financial performance, with up to 30% of the vesting based on the
achievement of strategic measures aligned with the Company’s strategic plan, which may include ESG objectives. The Committee
(with input from the Audit and Risk Committees as appropriate) considers Serco’s underlying performance and external market
reference points, as well as performance against the specific targets set in determining the overall outcome of the LTIP awards. The
Committee retains discretion to determine the appropriate level of vesting.
The maximum vesting for threshold performance is 25% of the total award, and 100% vesting for maximum performance.
Shareholding guidelines
Purpose and link to strategy
To support long-term commitment to the Company and the alignment of Executive Directors’ interests with those of shareholders.
Operation
Executive Directors are required to build up and maintain holdings in Serco Group plc as follows:
In-employment guideline
The in-employment shareholding guideline is 200% of salary. Executive Directors are required to retain, in shares, at least 50% of
the net value of any performance shares vesting or options exercised until they satisfy the shareholding guideline.
Post-employment guideline
Reflecting the nature of Serco’s business, the post-employment guideline is equal to 100% of the in-employment guideline (or
actual shareholding on cessation if lower) for the first 12 months, and 50% of the in-employment guideline (or actual shareholding
on cessation if lower) for the second 12 months.
Unvested awards that are subject to performance conditions are not considered in determining an Executive Director’s shareholding for
these purposes. Share price is measured as at end of the relevant financial year, or at the date of cessation as applicable.
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 116
Malus and clawback
Malus and clawback provisions apply to awards under the annual bonus and long-term incentive which enable the Committee, at its
discretion, to reduce, cancel or recover some or all of the awards granted to Executive Directors in certain circumstances. These
include (but are not limited to) a material misstatement of the Group’s audited financial results; material or misleading results
announcements prior to vesting; a clear and material contravention of Serco’s Codes of Practice or Values; a serious failure of risk
management; or an event that leads to serious reputational damage or corporate failure. Clawback may be invoked in the most
serious of these circumstances and must be implemented within five years of the grant of the relevant long-term incentive or
deferred bonus share award; and within two years in respect of a bonus award paid in cash.
The Committee has reviewed the appropriateness of the malus and clawback provisions to ensure that they remain aligned with
regulatory expectations, shareholder interests, and prevailing market practice. Malus applies during the three-year vesting period of
LTIP awards, while clawback extends for five years from grant. These timeframes reflect the Company’s business model, contract lifecyle,
and approach to risk management, promoting long-term accountability while maintaining competitiveness in executive
remuneration.
Use of discretion
The Committee will operate the annual bonus plan and LTIP according to their respective rules and the Listing Rules, where
applicable. The Committee retains discretion, consistent with market practice, in a number of areas with regard to the operation and
administration of these plans. These include, but are not limited to, the timing of grant and vehicle of an award. Discretion may also
be exercised, in line with the rules, when dealing with a change of control or restructuring of the Group, or in respect of adjustments
as required in certain circumstances (for example, rights issues, corporate restructuring events and special dividends).
In relation to the long-term incentive and bonus, the Committee retains the ability, in exceptional circumstances, to change
performance measures, targets and/or the relative weighting of performance measures part-way through a performance period if
there is a significant event (such as a major transaction or, in the case of the bonus only, a transition in role) which causes the
Committee to believe the original performance conditions are no longer appropriate.
In exercising this discretion, the Committee will determine that the original conditions are no longer appropriate, and the
amendment is required so that the conditions achieve their original purpose and are not materially less difficult to satisfy. In
exceptional circumstances, the Committee also has discretion to vary the proportion of bonus or LTIP that pay out, to ensure that the
outcomes are fair and appropriate and reflect the underlying financial performance of the Group. Any use of the above discretions
would, where relevant, be explained in the remuneration report.
Dates of Directors’ service contracts/letters of appointment
Directors who served on the Board during the financial year ended 31 December 2024:
Director Date of appointment to the Board
John Rishton 13 September 2016
Mark Irwin 1 January 2023
Nigel Crossley 21 April 2021
Kirsty Bashforth 15 September 2017
Kru Desai 21 October 2021
Victoria Hull 1 September 2024
Tim Lodge 21 February 2021
Ian El-Mokadem 1 July 2017
Dame Sue Owen 3 August 2020
Lynne Peacock 1 July 2017
Each Director is subject to election at the first AGM following their appointment and re-election at each subsequent AGM.
The Remuneration Report has been prepared to ensure that the Company’s remuneration policies align with strategic objectives,
governance principles and shareholder interests. The policies and practices set out in this report have been designed to attract,
retain and motivate high calibre leadership, supporting Serco’s long-term success. The remuneration framework will continue to
be reviewed and refined to maintain competitiveness, transparency and compliance with evolving best practices and regulatory
requirements.
Lynne Peacock
Chair of the Remuneration Committee
26 February 2025
Directors’ Remuneration Report continued
Serco Group plc | Annual Report and Accounts 2024 | 117
Share capital and Rights attaching to shares
The Company had 1,023,855,243 ordinary shares of 2 pence
each in issue as at 31 December 2024. Further details relating
to share capital can be found in note 30.
Without prejudice to any special rights previously conferred on
the holders of any existing shares or class of shares, any share
in the Company may be issued with such rights (including
preferred, deferred or other special rights) or such restrictions,
whether in regard to dividend, voting, return of capital or
otherwise as the Company may from time to time by ordinary
resolution determine (or, in the absence of any such
determination, as the Directors may determine).
The Company is not aware of any agreement between
shareholders that may result in restrictions on the transfer of
securities and/or voting rights.
Authorities to allot and pre-emption rights
The powers of the Directors to issue or buy back shares are
restricted to those approved at the Company’s Annual
General Meeting.
At the Annual General Meeting on 24 April 2024, pursuant to
Section 570 of the Companies Act 2006, shareholders
approved the disapplication of pre-emption rights in
connection with the issue of shares for cash up to 10% of the
existing issued share capital and an additional 10% (only to be
used in connection with an acquisition or specified capital
investment) and in connection with a follow-on offer to existing
shareholders not allocated shares under an issue made
pursuant to either of the authorities. These authorities will
expire at the conclusion of the 2025 Annual General Meeting.
Authority for the purchase of shares
At the Annual General Meeting on 24 April 2024, the Company
was granted authority by shareholders to purchase up to
109,996,914 ordinary shares (10% of the Company’s issued
ordinary share capital). This authority will expire at the conclusion
of the 2025 Annual General Meeting, at which a resolution will
be proposed for its renewal, or, if earlier, 30 June 2025.
As announced on 29 February 2024, the Company undertook
a programme to purchase its own shares with a value of up to
£140m. During the year, the Company purchased a total of
79,690,723 shares with a nominal value of £1,593,814.46
(representing 7.78% of the Company’s issued share capital
(excluding those purchased and held in treasury) as at 29
November 2024; the date the repurchase programme was
completed) at a total cost of £141.3m. The Company cancelled
all shares that were purchased and held in treasury.
Employee share schemes
The details of the Company’s employee share schemes are set
out on page 101 in the Directors’ Remuneration Report and in
the Employee engagement section on page 121.
The Company’s share plan rules contain provisions in relation
to a change of control. Outstanding options and awards may
vest and become exercisable on a change of control of the
Company, in accordance with the rules of the plans.
Results, dividends and dividend waiver
The results for the year are set out in the Statement of
Comprehensive Income on page 136. Our dividend policy for
2025 remains to increase dividends and reduce the payout
ratio of underlying profit after taxation dividend cover to
approximately three times over the medium term. The
Directors recommend the payment of a final dividend of 2.82
pence per share for 2024 (2023: 2.27 pence), making a total
ordinary dividend of 4.16 pence per share (2023: 3.41 pence).
The recommended final dividend is subject to approval at the
AGM on 24 April 2025. The final dividend will be paid on 9
May 2025, with an ex-dividend date of 10 April 2025 and a
record date of 11 April 2025. The Serco Group plc 1998 Share
Ownership Trust, an employee benefit trust, which holds
13,418,111 shares in the Company as at 31 December 2024 in
connection with the operation of Serco’s share plans, has
lodged standing instructions to waive dividends (except for
one pence) on shares held by it that have not been allocated to
employees. The total amount of dividends waived during 2024
was £523,652.
Directors and Directors’ interests
The names of the Directors who served during the year can be
found in the attendance chart on page 77.
Directors’ interests in the shares of the Company are set out
on pages 112 and 113 in the Directors’ Remuneration Report.
None of the Directors had interests in shares of the Company
greater than 0.48% of the ordinary shares in issue. There
have been no changes to Directors’ interests in shares since
31 December 2024.
Branch offices
The Group operates through branches of subsidiary
companies in the following jurisdictions: Abu Dhabi, Dubai,
France, Italy, the Kingdom of Saudi Arabia, Qatar, Ras Al
Khaimah, Sharjah and Switzerland.
Significant agreements that take effect, alter or
terminate upon a change of control
Given the business-to-government nature of many of the
services provided by the Company and its subsidiaries, many
agreements contain provisions entitling the other parties to
terminate them in the event of a change of control, including a
takeover of the Company. The following agreements are those
individual agreements which the Company considers to be
significant to the Group as a whole that contain provisions
giving the other party a specific right to terminate if the
Company is subject to a change of control.
There are no agreements between the Company and its
Directors or employees providing for compensation for loss of
office or employment that occurs because of a takeover bid.
No Director had a material interest in any contract of
significance in relation to Serco’s business at any time during
the year or at the date of this report.
Directors’ Report: Other Information
Serco Group plc | Annual Report and Accounts 2024 | 118
Material contracts
Clarence Correctional Centre: On 14 June 2017,
NorthernPathways Project Trust (of which Serco Australia Pty
Limited was a member at the time) entered into a project deed
with the Australian State of New South Wales to design,
construct and operate a new build prison named the New
Grafton Correctional Centre, the name of which has
subsequently been changed to Clarence Correctional Centre.
Also, on 14 June 2017, Serco Australia Pty Limited entered into
an operator sub-contract with NorthernPathways, pursuant to
which Serco was awarded the rights to operate the prison. The
prison entered operations on 1 July 2020, following
acceptance of the completed Clarence Correctional Centre by
the State (Commencement Date). The operator sub-contract
will run for 20 years from the Commencement Date. Both the
project deed and the operator subcontract contain change of
control provisions that provide that any change of control to an
unrelated third-party that has not been approved by the State
of New South Wales would be a major default. A major default
under either the project deed or operator sub-contract, if not
cured, could result in a termination of that contract.
Australian Immigration Services: On 11 December 2014,
Serco Australia Pty Limited entered into a contract with the
Commonwealth of Australia (acting through the Department of
Immigration and Border Protection) for the provision of detention
services at all onshore immigration facilities in Australia. The
contract has an initial five-year term, with two two-year
extension options. The first option was exercised by the client
in late 2019 and the second option was exercised in 2021,with
an original end date December 2023. In August 2023, the
client negotiated two further six month extension periods,
taking the end date to December 2024. The contract has now
entered a six month transition out process ending in June
2025. In the event of a change in control or ownership of Serco
Australia Pty Limited, which in the reasonable opinion of the
Commonwealth adversely affects the Company’s ability to
perform the services, the contract may be terminated by
the Commonwealth.
Subcontract relating to the provision of ADF Health
Services by Bupa Health Services Pty (Bupa) to the
Commonwealth of Australia, Department of Defence
(NGHS Contract): On 4 February 2019, Serco Australia Pty
Limited entered into a Subcontract with Bupa for the provision
of national garrison health services to the Commonwealth of
Australia, Department of Defence. The contract had a services
commencement date of 1 July 2019, with an initial six-year
term. The NGHS Contract includes a change of control
provision that provides that a change of control of the ultimate
holding company, Serco Group plc, requires Bupa’s prior
written consent. If the change is as a result of market
transactions, then Bupa is to be notified as soon as possible
and consent sought after the event. On request, details of the
change and its impact on Serco Australia Pty Limited’s
obligations under the NGHS Contract are to be provided to
Bupa. Bupa may provide consent to the change subject to
conditions. If Bupa does not consent to the change of control,
Bupa may terminate the NGHS Contract for default.
Special Security Agreement: In order to bid and perform
on certain classified contracts concerning US national security
interests, Serco Inc. was required to mitigate its foreign
ownership through a Special Security Agreement (SSA) among
the US Department of Defense (DoD), Serco Inc., and Serco
Group plc. The effective date of the current SSA is 24
September 2024. The DoD may terminate the SSA in the event
of the sale of Serco Inc. to an entity not under Foreign
Ownership, Control or Influence (FOCI).
CMS Eligibility Support Services: In July 2023, Serco Inc.
was awarded a follow-on contract with the US Government
(acting through the Centers for Medicare and Medicaid
Services (CMS)) for the provision of support for the Exchanges
implemented to provide affordable health insurance and
insurance affordability programmes. The contract has an initial
base term of one year, with four options of one year each, and
one final seven-month option. In the event of a change in
control or ownership of Serco Inc., which in the reasonable
opinion of the US Government adversely affects the
Company’s ability to perform the services, the contract may be
terminated by the US Government.
Anti-Terrorism/Force Protection (AT/FP) Ashore
Program Global Sustainment Contract: In February 2021,
Serco Inc. was awarded a contract with the US Government
(acting through the Naval Facilities Engineering Systems
Command) to provide sustainment services for electronic anti-
terrorism and force protection systems at US Navy installations
around the world. The contract has an initial base term of five
years, with one option for an additional three years. In the
event of a change in control or ownership of Serco Inc., which
in the reasonable opinion of the US Government adversely
affects the Company’s ability to perform the services, the
contract may be terminated by the US Government.
Asylum Accommodation and Support Services Contract
(AASC): On 8 January 2019, Serco Limited entered into
contracts with the Secretary of State for the Home Department
(acting through its UK Home Office Visas and Immigration
department) (the Home Office) for two AASC regions, being
the North West of England and the Midlands & East of
England. Under AASC, Serco is responsible for the provision of
properties for initial and dispersed accommodation
requirements, for transportation to and from properties, and
for a range of other services to support the welfare of asylum
seekers. The AASC contracts became operational on 1
September 2019. The contracts are for a ten-year term. In the
event of a change of control or ownership of Serco Limited or
Serco Group plc, which in the reasonable opinion of the Home
Office adversely affects Serco’s ability to perform the services,
the contracts may be terminated by the Home Office.
Agreement relating to the Continued Procurement of
Marine Services (CPMS): On 11 November 2022, Serco
Limited entered into a contract with the Secretary of State for
Defence (MoD) to continue to provide support services to the
Royal Navy (the CPMS Contract). The CPMS Contract
commenced on 17 December 2022 with the current term of
the contract running until 31 March 2025 with an option for the
SSD to extend by a further six months to 30 September 2025.
The option to extend to 30 September 2025 was exercised by
the MoD with the four successor Defence Marine Services –
Next Generation (DMS-NG) contracts to commence service
delivery on 1 October 2025. Serco Limited has submitted
tenders for three of those DMS-NG contracts with contract
awards expected in the first quarter of 2025. In the event of a
change of ownership of Serco Limited or Serco Group plc to
what the MoD may consider an “Unsuitable Third Party” (i.e. a
legal person whose activities, in the reasonable opinion of the
MoD, pose a threat to national security; whose activities are
incompatible with operations, activities, legal duties or other
functions of the MoD; or who is inappropriate because of
specific information received by the MoD from the Crown, the
SFO or the CPMS about their suitability), the contract may be
terminated by the MoD.
Directors’ Report: Other Information continued
Serco Group plc | Annual Report and Accounts 2024 | 119
Concession Agreement relating to the operation of
Merseyrail: Serco Holdings Limited is a 50% shareholder in
Merseyrail Services Holding Company Limited (the Merseyrail
JV Co). Serco Holdings Limited’s joint venture partner and the
other shareholder in the Merseyrail JV Co is Transport UK Group
Limited (following the acquisition of Abellio Transport Group
Limited by its management team and related restructuring).
The Merseyrail JV Co is the concessionaire for the Merseyrail
rail network under a concession agreement dated 23 May
2003 (the Merseyrail Concession Agreement) among
Merseytravel (the passenger transport executive responsible
for co-ordination of public transport in the Liverpool city
region), the Merseyrail JV Co and Merseyrail Electrics 2002
Limited (the Merseyrail Operating Co). The Merseyrail
Operating Co is a wholly-owned subsidiary of the Merseyrail JV
Co. The Merseyrail Concession Agreement expires in July
2028 with an option to extend to July 2033 by agreement of
the parties. In the event there is a change of control of Serco
Holdings Limited or Serco Group plc without Merseytravel’s
prior consent then the Merseyrail Concession Agreement may
be terminated by Merseytravel. In addition, there would be a
requirement under the terms of the JV agreement to consider
the representations of Transport UK Group Limited in relation
to the conduct of any such change of control.
Electronic Monitoring Services Contract (EMS): On 27
October 2023, Serco Limited entered into a contract with the
Secretary of State for Justice (the MoJ) for the provision of
electronic monitoring services, field monitoring services and
other related services. The EMS Contract has an initial six-year
term commencing on 1 May 2024 and ending on 30 April 2030
with an option for the MoJ to extend the EMS contract for up to
a maximum of a further two years to 30 April 2032. In the event
of a change of control or ownership of Serco Limited or Serco
Group plc for which the MoJ has not given its prior written
consent, the EMS contract may be terminated by the MoJ
during the six-month period following the change of control.
Future Defence Infrastructure Services (FDIS) programme:
Serco Holdings Limited is a 50% shareholder in VIVO Defence
Services Limited (the VIVO JV). Serco Holdings Limited’s joint
venture partner and the other shareholder in the VIVO JV is a
UK subsidiary company of EQUANS SAS (EQUANS Holding UK
Limited) which is now part of the Bouygues Group (following its
acquisition of EQUANS from Engie). The VIVO JV performs
facilities management services pursuant to call-off contracts
procured by the UK Defence Infrastructure Organisation (DIO)
part of the UK Ministry of Defence under a Crown Commercial
Services Framework Agreement for the provision of Workplace
Services (RM6089) (the CCS Framework) as part of the Future
Defence Infrastructure Services (FDIS) programme. On 14 June
2021, VIVO entered into two call-off contracts (one for the
Central Region and one for the South West Region) for Lot 3
contracts under the CCS Framework for a seven-year term
(with the possibility of extension for further periods of up to
three years) (the Lot 3 Contracts). The Lot 3 Contracts became
operational on 1 February 2022. On 24 June 2021, VIVO
entered into two further call-off contracts (one for the South
East and one for the South West Region) for Regional
Accommodation Maintenance Services (RAMS) under Lot 2b
for an initial seven-year term (with the possibility of extension
for further periods of up to three years) (the Lot 2b Contacts).
The Lot 2b Contracts become operational on 1 March 2022.
Under the terms of the CCS Framework, in the event of a
change of control of VIVO without the prior approval of the
DIO, the Lot 2b Contracts and Lot 3 Contracts may be
terminated by the DIO. In the event that there is a change of
control of Serco Holdings Limited, it is required to transfer its
entire shareholding in the VIVO JV to Serco Group plc or
another wholly-owned subsidiary of Serco Group plc prior to
such change of control. In the event that there is a change of
control of Serco Holdings Limited without its entire
shareholding in the VIVO JV first being transferred to another
member of the Serco Group or if there is a change of control of
Serco Group plc then, unless the prior approval of the other
shareholder in the VIVO JV is given, the other shareholder in
the VIVO JV is entitled to purchase the VIVO JV shares and loans
held by Serco Holdings Limited and any other member of Serco
Group plc at fair market value determined by an expert.
Financing facilities
Revolving credit facility: The Company has a £350,000,000
revolving credit facility dated 18 November 2022 with a
syndicate of banks. The facility provides funds for general
corporate and working capital purposes and bonds to support
the Group’s business needs. The facility was undrawn as at 31
December 2024.
The facility agreement provides that, in the event of a change
of control of the Company, each lender may, within a certain
period, call for the prepayment of the amounts owed to it and
cancel its commitments under the facility.
US notes: At 31 December 2024, the Company had US
private placement loan notes outstanding under two Note
Purchase Agreements (the USPP Agreements) dated 8
October 2020 and 27 February 2024, respectively. The total
amount of the notes outstanding under the two USPP
Agreements was US$350,000,000 at 31 December 2024, with
their maturities between October 2025 and February 2034.
Under the terms of all the USPP Agreements, if a change of
control of the Company occurs, it is required to offer to prepay
the entire principal amount of the notes together with interest
to the prepayment date but without payment of any make-
whole amount.
Employment policies
The Board is committed to maintaining a working environment
where employees are individually valued and recognised.
Group companies and Divisions operate within a framework of
human resources policies, practices and regulations
appropriate to their own market sector and country of
operation, while subject to Group-wide policies and principles.
Diversity
The Group is committed to ensuring equal opportunity,
honouring the rights of the individual, and fostering
partnership and trust in every working relationship. Policies
and procedures for recruitment, training and career development
promote diversity, respect for human rights and equality of
opportunity regardless of gender, gender reassignment,
sexual orientation, age, marital status, disability, race, religion
or other beliefs and ethnic or national origin.
The Group promotes diversity and inclusion so that every
employee is able to be successful. The Group gives full
consideration to applications for employment, career
development and promotion from persons of disability,
and offers employment when suitable opportunities arise.
Wherever practicable, adjustments will be made for persons
with a disability to continue with employment and training.
In response to the US President’s Executive Orders regarding
Diversity, Equity and Inclusion and Gender Ideology in January
2025, we are actively reviewing the policies and practices
applicable to our operations and employees in the United
States to ensure full compliance with the relevant laws.
Directors’ Report: Other Information continued
Serco Group plc | Annual Report and Accounts 2024 | 120
Human rights
Serco is committed to respecting the human rights of individuals
in all aspects of our business, wherever we operate. Living our
Values of Trust, Care, Innovation and Pride requires respect for
human rights. Human rights are fundamental rights and freedoms,
and standards of treatment to which people are entitled.
We are committed to complying with laws relating to human
rights, either directly or indirectly, throughout our business.
Recognising all applicable modern slavery legislation, we will
not engage in any form of human trafficking or use forced,
bonded, illegal or child labour, nor knowingly work with
anyone who does. We consider international human rights
standards as a framework to assess, monitor, mitigate and
remedy any actual or potential adverse human rights impacts
that may affect our business. We provide guidance and
support to our employees to help them identify, manage and
respond to any risk or issue; and maintain confidential
reporting resources for anyone concerned about violations of
our Values, policies or Code of Conduct, and are clear that
anyone raising a concern in good faith or assisting with an
investigation will not be retaliated against.
Our commitment to human rights is set out in our Group
Human Rights Policy Statement, related operating procedures,
and relevant sections of mycode. We use international human
rights principles such as the International Bill of Human Rights,
the International Labour Organization’s Declaration on
Fundamental Principles and Rights at Work, the United Nations
Global Compact and the United Nations Guiding Principles on
Business and Human Rights to guide decision making,
constructive engagement and the assessment and
management of adverse human rights impacts.
Further information is available in our human rights
supplement on our website.
Employee engagement
The Group is proud of its record of managing employee
relations and believes that the structure of individual and
collective consultation and negotiation is best developed at a
local level. Over the years, the Group has demonstrated that
working with trade unions and creating effective partnerships
allows improvements to be delivered in business performance
as well as in employment terms and conditions. Where
employees choose not to belong to a trade union, employee
communication forums such as works councils exist to ensure
involvement of employees within the business. The Group has
been proactive in providing employees with information on
matters of concern to them as employees and in taking their
views into account.
Effective leadership and line management are our principal
means of engagement and employee feedback is invited through
Viewpoint (our employee engagement survey); Speak Up (our
global ethics helpline and investigation process); Yammer (our
internal social media platform); and Colleague ConneXions
(our approach to amplifying employee voice and
strengthening dialogue between the Board and employees).
These mechanisms ensure that employees’ views are
considered in decision-making and that they have a common
awareness of Group strategy, matters of concern to them and
the financial and economic factors affecting the performance
of the Company.
Participation by employees in the success of the Group is
encouraged by the availability of long-term incentive
arrangements for senior management, which effectively aligns
their interests with those of shareholders by requiring that
Company-level financial performance criteria are achieved as a
condition of vesting.
We have also continued to strengthen our global benefits
offerings and created further opportunities for colleagues to
share in the success of the Company. The Group offers
MyShareSave, which is an all-employee savings-linked share
option plan open to the majority of employees.
MyShareSave allows employees to enter into a savings
commitment of 36 monthly payments for a fixed amount of
between £5 and £150 per month, on completion of which the
options may, subject to leaver provisions, be exercised with the
savings used to buy shares at a discounted option price.
MyShareSave was launched in 2022 and options are granted
annually, with the exercise price set at up to a maximum of 20%
discount of the share price on the date of grant.
Further information is contained in the Our People and Culture
section on pages 30 to 32, the People section of the Impact
report on pages 36 to 41 and in the separate People Report
which is available on our website.
Corporate responsibility
Our commitment to a responsible business approach is built
on our Values, acting with integrity and making ethical
decisions. This is integral to our purpose of having a positive
impact on the future. We have been committed to delivering
and communicating our position and performance across
environmental, social and governance (ESG) criteria for many
years. ESG factors are embedded in how we deliver our
strategy, defined and driven through our Impact Framework.
Our framework brings strategic ESG priorities together in one
model. This is driven through the Serco Management System
with appropriate Board and Executive oversight and dedicated
leadership at both Group and Divisional levels.
Board oversight and scrutiny of environmental, social and
certain governance matters (including anti-corruption and anti-
bribery, human rights, environmental approach, health and
safety and other employee matters) is embedded in our
corporate governance through the Corporate Responsibility
Committee. Oversight and scrutiny of other governance
matters is distributed between all Board Committees, with
certain matters reserved for the Board itself.
Further information can be found in our Corporate
Responsibility Committee report on pages 95 and 96, the
Impact Report on pages 33 to 55, the TCFD Compliance
Statement on pages 56 to 60 and the Impact performance and
data disclosure 2024 on pages 214 to 220.
Political donations
Shareholder authority to make aggregate political donations
not exceeding £100,000 was obtained at the AGM on 24 April
2024. During the year, neither the Company nor any of its
subsidiaries made any political donations as defined by the
Companies Act 2006.
Within the US business there exists a Political Action
Committee (PAC), which is funded entirely by employees. The
Serco PAC and its contributions are administered in strict
accordance with regulatory requirements. Employee
contributions are entirely voluntary and no pressure is placed
on employees to participate. Under US law, an employee-
funded PAC must bear the name of the employing company.
Directors’ Report: Other Information continued
Serco Group plc | Annual Report and Accounts 2024 | 121
Viability Statement and Going Concern
The Company’s Viability Statement and Going Concern can be
found on pages 72 to 73 and 141 to 142, respectively.
Notifiable interests in share capital
Information provided to the Company pursuant to Rule 5 of the
Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority (DTR 5) is published on a regulatory
information service and on the Company’s website.
At 31 December 2024, the following information had been
received in accordance with DTR 5 from holders of notifiable
interests in the issued share capital of the Company:
No. of ordinary
shares
% of issued share
capital
BlackRock, Inc 89,237,719 8.17
FIL Limited 52,272,758 5.10
Marathon Asset
Management Limited 54,372,120 4.93
Slater Investments 54,352,261 4.93
Since 31 December 2024, the Company has received the
following notifications in accordance with DTR 5 from holders
of notifiable interests in the issued share capital of the
Company:
– On 6 January 2025, JPMorgan Asset Management
Holdings Inc. notified that it had increased its interest to
52,154,199 representing 5.09%.
– On 9 January 2025, FIL Limited notified that it had
increased its interest to 58,087,555 representing 5.67%.
– On 16 January 2025, JPMorgan Asset Management
Holdings Inc. notified that it had increased its interest to
52,644,990 representing 5.14%.
– On 17 January 2025, JPMorgan Asset Management
Holdings Inc. notified that it had increased its interest to
53,984,192 representing 5.27%.
The information provided above was correct at the date of
notification. It should be noted that these holdings are likely to
have changed since the Company was notified. However,
notification of any change is not required until the notifiable
threshold is crossed.
Other information
Likely future developments in the Group are contained in the
Strategic Report on pages 22 to 75.
A summary of the Group’s treasury policies and objectives
relating to financial risk management, including exposure to
associated risks, is set out in note 28 on pages 179 to 184.
Details on how the Company has complied with section 172 of
the Companies Act 2006 can be found throughout the
Strategic and Directors’ Reports and on pages 74 and 75.
Details relating to post-balance sheet events are set out in
note 36 on page 197.
Details relating to underlying operating profit can be found on
page 28.
Details relating to Research and Development can be found on
page 163.
The Directors' Report comprises pages 83 to 122, together
with the sections of the 2024 Annual Report and Accounts
incorporated by cross reference.
The Directors' Report on pages 83 to 122, together with the
Strategic Report on pages 1 to 75, serve as the Management
Report for the purpose of Disclosure Guidance and
Transparency Rule 4.1.8R.
Approved by the Board of Directors and signed on its behalf by:
Nickesha Graham-Burrell
Group Company Secretary
26 February 2025
Directors’ Report: Other Information continued
Serco Group plc | Annual Report and Accounts 2024 | 122
The Directors are responsible for preparing the Annual Report
and the Group and Parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial year.
Under that law they are required to prepare the Group financial
statements in accordance with UK-adopted international
accounting standards and applicable law and have elected to
prepare the Parent Company financial statements in accordance
with UK accounting standards and applicable law, including FRS
101 Reduced Disclosure Framework.
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and Parent
Company and of the Group’s profit or loss for that period. In
preparing each of the Group and Parent Company financial
statements, the Directors are required to:
– select suitable accounting policies and then apply them
consistently;
– make judgements and estimates that are reasonable,
relevant, reliable and, in respect of of the Parent Company
financial statements only, prudent;
– for the Group financial statements, state whether they have
been prepared in accordance with UK-adopted international
accounting standards;
– for the Parent Company financial statements, state whether
applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained
in the Parent Company financial statements;
– assess the Group and Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern; and
– use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Parent Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal
control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on our
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule
(DTR) 4.1.16R, the financial statements will form part of the
annual financial report prepared under DTR 4.1.17R and 4.1.18R.
The auditor’s report on these financial statements provides no
assurance over whether the annual financial report has been
prepared in accordance with these requirements.
Responsibility statement of the Directors in respect of
the Annual Report and Accounts
The Directors, whose names and functions are set out on pages
79 to 81, confirm to the best of their knowledge that:
– the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
– the Management Report includes a fair review of the
development and performance of the business and the
position of the issuer and the undertakings included in the
consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face.
Each of the persons who is a Director at the date of approval of
this report confirms that:
– so far as the Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
– they have taken all the steps they ought to have taken as a
Director in order to make themselves aware of any relevant
audit information and to establish that the Company’s
auditors are aware of that information.
We consider the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
By order of the Board
26 February 2025
Mark Irwin Nigel Crossley
Group Chief Executive Group Chief Financial Officer
Directors’ Responsibility Statement
Serco Group plc | Annual Report and Accounts 2024 | 123
Financial Statements
Serco Group plc | Annual Report and Accounts 2024 | 124
125 Independent Auditor’s Report
135 Consolidated Income Statement
136 Consolidated Statement of Comprehensive Income
137 Consolidated Statement of Changes in Equity
138 Consolidated Balance Sheet
140 Consolidated Cash Flow Statement
141 Notes to the Consolidated Financial Statements
198 Company Balance Sheet
199 Company Statement of Changes in Equity
200 Notes to the Company Financial Statements
Contents
1 Our opinion is unmodified
We have audited the financial statements of Serco Group plc (“the Company”) for the year ended 31 December 2024 which
comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement
of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Company Balance Sheet, the
Company Statement of Changes in Equity, and the related notes, including the accounting policies in note 2 of the Group financial
statements and note 37 of the Company financial statements.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31
December 2024 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards;
• the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the directors on 27 May 2016. The period of total uninterrupted engagement is for the 9
financial years ended 31 December 2024. We have fulfilled our ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities.
No non-audit services prohibited by that standard were provided.
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. We summarise below the key audit matters (unchanged from 2023, in decreasing order of audit
significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and our
findings from those procedures in order that the Company’s members, as a body, may better understand the process by which we
arrived at our audit opinion. These matters were addressed, and our findings are based on procedures undertaken, in the context
of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and
consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
Revenue recognition – Revenue £4,787.3m (2023: £4,873.8m), and Accrued Income and Other Unbilled Receivables £289.0m
(2023: £287.6)
Risk vs 2023:
Refer to page 89 (Audit Committee Report), pages 141 to 151 (accounting policy), pages 151 to 153 (key sources of estimation
uncertainty), pages 161 and 162 (revenue from contracts with customers note in the financial statements) and pages 173 and 174
(contract assets, trade and other receivables note in the financial statements).
The risk
Accounting Application
The many and sometimes unique contractual arrangements that underpin the measurement and recognition of revenue by the group
(excluding Americas) can be complex, particularly in relation to variable revenue, with judgement involved in the assessment of current
and future financial performance. The key judgements impacting the recognition of revenue and resulting operating profit include:
• Interpretations of terms and conditions in relation to the required service obligations in accordance with contractual arrangements;
• The allocation of revenue and costs to performance obligations where multiple deliverables exist;
• Assessment of measures of completion where required;
• Consideration of the Group’s performance against contractual obligations including contractual Key Performance Indicators
(KPI), where relevant, and the impact on revenue and costs of delivery from related deductions and abatements;
• Identification of onerous contracts and the associated provisions; and
• The recognition and recoverability assessments of accrued income and other unbilled receivables.
Revenue in the Americas is predominantly non-judgemental, with less complex contractual terms which are common across the
majority of contracts. As for the prior year we assess this revenue to have a lower level of risk compared to the rest of the group.
As such, our Significant Risk does not cover revenue of £1,326.1m (2023: £1,362.8m) and related accrued income and other unbilled
receivables within the Americas segment of the business. However, due to their materiality and the level of resources and efforts
of the engagement team required to perform the related audit procedures, these remain part of the Key Audit Matter.
Professional standards require us to make a rebuttable presumption that the fraud risk associated with revenue recognition is a
significant risk. The potential for incentive/pressures on management to achieve bonus targets and/or market consensus increase
the risk of fraudulent revenue recognition. The opportunity is considered to apply to the group’s contracts with customers
(excluding the Americas) and we have identified a fraud risk over revenue recognition.
Independent Auditor’s Report
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 125
Our response
We performed the tests below rather than seeking to rely on any of the Group’s controls (outside of the Americas) because the
nature of the balance and the varied contractual arrangements are such that it is most effective to obtain evidence primarily through
the detailed procedures described. We were able to place reliance on controls over revenue in the Americas where the nature of
revenue recognition is predominantly non-judgemental, allowing us to rely on system generated information.
Our procedures included:
Contracts were selected for substantive audit procedures based on qualitative factors, such as commercial complexity, and
quantitative factors, such as financial significance and profitability, that we considered to be indicative of risk. In addition, a number
of contracts were selected haphazardly which otherwise did not meet these criteria. Our audit testing for the contracts selected
included the following:
Assessing policy application
We inspected those contracts selected for substantive procedures to identify the key contractual terms relevant to assess the
method of revenue recognition. We determined whether these were in accordance with the Group’s accounting policies and
relevant accounting standards, including the appropriate recognition of revenue as performance obligations are satisfied on service
contracts.
Accounting analysis
We inspected and challenged accounting papers prepared by the Group to explain the positions taken in respect of key contract
judgements including contract modifications and onerous contracts. We also challenged whether it is highly probable that the
variable revenue recognised will not be reversed in future periods as required by the application of the revenue constraint in
accordance with the Group’s accounting policy and relevant accounting standards.
Tests of details
To assess whether revenue was recognised appropriately in accordance with the Group’s accounting policy and relevant accounting
standards, for these contracts:
• we agreed a sample of revenue to documents such as invoices or purchase orders associated with contract services, or customer
agreements for the work performed, as well as cash receipts;
• we inspected a sample of customer contracts to identify any contractual KPI obligations and assessed the contract’s operational
performance against those obligations and deductions and abatements relating to these where relevant; and
• we investigated a sample of customer contracts to identify contractual variations and claims and where these arose, obtained
evidence of correspondence with customers and third parties.
In addition, we undertook additional data analytic procedures over the remaining UK & Europe revenue in relation to performance
obligations satisfied over time (which represents 44% of group revenue) in order to identify revenue recognised using journals
which did not meet our expectations in respect of revenue and revenue related transactions. For a selection of revenue which did
not meet our expectations we obtained audit evidence to support the postings made and agree them to supporting documentation.
Site visits
For all divisions the Group Audit team and relevant component teams attended a selection of monthly Divisional and Business Unit
Performance Reviews used to assess business performance by the Group’s management in order to inform our assessment of
operational and financial performance of the contracts.
The Group Audit team and each of the component teams performed a selection of physical contract site visits and also made
enquiries of contract and Business Unit management teams as to matters related to operational and financial performance in order
to inform our assessment of operational and financial performance of the contracts.
For accrued income and other unbilled receivables, our procedures included:
Assessing application
We assessed whether contract related assets for those contracts selected in the form of revenue accruals had been recognised in
accordance with the Group’s accounting policy and relevant accounting standards.
Our sector experience
We assessed the contractual terms and conditions to identify the key obligations of the contract and compared these with common
industry risk factors to inform our challenge of completeness of forecast costs.
Assessing transparency
We assessed whether the Group’s disclosures in the financial statements provided sufficient detail regarding the revenue and
accrued income and other unbilled receivables recognition policies and the key judgements applied.
Our results
We found the group’s application of its revenue and contract asset recognition accounting policies, along with the key judgements,
to be balanced (2023: balanced).
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 126
Recoverability of group goodwill, including the value of impairment to goodwill – Goodwill £826.2m (2023: £906.7m),
Impairment of Goodwill £114.5m (2023: nil)
Risk vs 2023:
Refer to page 89 (Audit Committee Report), page 146 (Goodwill accounting policy), page 152 (key sources of estimation uncertainty
relating to impairment of Goodwill), pages 168 to 170 (Goodwill note in the consolidated financial statements).
The Risk
Forecast-based assessment
The carrying value of Goodwill in the group’s financial statements is significant and at risk of irrecoverability due to the inherent
estimation uncertainty in valuing the recoverable amounts of the Group’s cash generating units.
The estimated recoverable amount of these balances through value in use calculations applied by the Group relies on key
assumptions across all CGUs, including the discount rate applied to future cash flows, the terminal growth rate, and projected win
probabilities for new business and rebids. There is also complexity involved in the appropriateness of assumptions between fair vale
less cost of disposal or value in use models.
The estimated recoverable amount of these balances is subjective due to the inherent uncertainty involved in forecasting and
discounting future cash flows, their key assumptions being discount rates and determining a terminal growth rate.
The Asia Pacific CGU was the most sensitive to key assumptions (2023: Asia Pacific CGU), including the discount rate, win
probabilities for new business and rebids, and assumptions regarding large bids where there was a significant degree of uncertainty
as to the outcome.
In 2023, we identified that the Asia Pacific CGU was highly sensitive to assumptions about the Australian Immigration re-bid. In
November 2024, the result of the re-bid was announced with Serco losing the contract, which materially impacted the expected
future cash flows for this CGU. Given the nature of these assumptions and the impact on forecast cash flows, changes in these
variables may have a material impact on the impairment conclusion.
The effect of these matters is that, as part of our risk assessment for audit planning purposes, we determined that the recoverable
amount of the relevant CGUs had a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater
than our materiality for the financial statements, and possibly many times that amount.
In conducting our final audit work, we concluded that reasonably possible changes to the value in use of the UKE, Americas and
Middle East CGUs would not be expected to result in an impairment, but that the Asia Pacific CGU was impaired, with an impairment
charge of £114.5m (2023: nil). The financial statements (Note 16) disclose the sensitivity for goodwill estimated by the Group.
Our response
We performed the tests below rather than seeking to rely on any of the Group's controls, as the group does not have formal controls
in this area. Given the nature of the balances, detailed substantive testing is inherently the most effective means of obtaining audit
evidence.
Our audit procedures over goodwill included:
Benchmarking assumptions
With the assistance of our valuation specialists, we challenged the key assumptions applied in Group’s impairment model. We
assessed the discount rate and the terminal growth rate against externally derived market data and observed market trends. Our
analysis included reviewing changes in discount rates over the past 12 months for comparable entities, engaging comparison
specialists to assess whether the Group’s assumptions were within a reasonable market range, and challenging the Group’s
approach based on analyst expectations and market conditions.
Additionally, we evaluated the implied cumulative annual growth rate within the five-year forecasts and assessed these against past
performance and market expectations. Win probabilities for new business and rebids were challenged by comparing the Group’s
assumptions to historical performance, adjusted for market conditions and expected pipeline opportunities. We also assessed
forecast assumptions around new contract wins or rebids, contract attrition, and margin assumptions, leveraging our component
auditors’ local knowledge of market conditions. As part of this valuation, we also considered underperforming contracts and
obtained feedback from our component auditors on the reasonableness of forecasts.
Historical comparisons
We compared actual cashflows for the past five years to historic forecasts to assess the historical accuracy of forecasts used in
impairment models. Given the sensitivity in the Asia Pacific CGU, we also specifically assessed the longer-term win rate performance
and assumptions in the model, comparing these to longer-term averages. Additionally, we engaged with our component teams to
evaluate forecasts at a local level, ensuring consistency with past performance and expected market trends.
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 127
Evaluation of Valuation Methodology
IAS 36 defines the recoverable amount of a CGU as the higher of its value in use and fair value less cost of disposal.. As the initial
value in use estimated was below the carrying amount, we assessed whether the Group had appropriately estimated the fair value
less cost of disposal and the appropriateness of adjustments made in the estimate. We ensured that the impairment test
appropriately took the higher valuation of the two methods in reaching the conclusion.
Sensitivity analysis
We performed extensive sensitivity analysis on the impairment model, particularly for Asia Pacific, to determine a range of plausible
impairment outcomes. This included testing the impact of changes in key assumptions such as discount rates, win rates, and growth
assumptions. We also performed scenario testing for large complex bids where the outcome had a high degree of uncertainty, such
as Base Services, where the tender process remains ongoing. Our analysis focused on assessing the range of possible outcomes
and their potential impact on the impairment conclusion. Additionally, we evaluated the impact of combined plausible downside
scenarios, considering the interdependencies between key assumptions and their cumulative effect on impairment conclusions.
Comparing valuations
We assessed whether the assumptions used in the value in use calculation were consistent with other estimates, including those
used in determining the expected loss on onerous contract provisions, the recognition and recoverability of deferred tax assets, and
the Directors’ assessment of going concern and viability. Additionally, we compared the results of discounted cash flows against the
Group’s market capitalisation, adjusting for net debt to assess the reasonableness of the Group’s valuation approach.
Assessing transparency
We also evaluated the adequacy of the Group’s disclosures related to the estimation uncertainty, judgements made and
assumptions over the recoverability of goodwill and the level of detail included in the disclosures. We challenged the Directors on
the range of sensitivities considered to ensure that these reflected the key risks particularly in respect to the Asia Pacific CGU, with
regards to both win rate assumptions being aligned to the longer-term five-year average and the assumptions regarding the Base
Services bid and the weighting of potential outcomes of this bid together with the sensitivity to the discount rate to ensure overall
the disclosure reflects the risks inherent in the valuation of goodwill and the resulting impairment in the Asia Pacific CGU.
We also evaluated the presentation of Impairment to Goodwill being presented as an exceptional item, considering Serco’s stated policy in
this area, the circumstances surrounding the impairment, and the judgements made by the Group in determining the presentation.
Our Findings
We found the Group’s conclusion that there is no impairment of goodwill for the UK & Europe, Americas, and Middle East CGUs to
be balanced (2023: balanced).
We found the Group’s estimated recoverable amount of goodwill for the Asia Pacfic CGU and the related impairment charge to be
optimistic (2023: n/a).
In determining the treatment of impairment to goodwill as an exceptional item there is room for judgement and we found that
within that, the group's judgement gave more weight to arguments favouring treatment as exceptional.
The related goodwill disclosures, including those addressing sensitivities considered, were found to be proportionate
(2023: proportionate).
Recoverability of parent’s investment in subsidiary – Investment in Subsidiary £2,052.5m (2023: £2,052.5m)
Risk vs 2023:
Refer to page 200 (Investments held as fixed assets note in the Company financial statements) and page 200 (Fixed Asset
Investments accounting policy in the Company financial statements).
The Risk
Forecast-based assessment
The carrying amount of the parent Company’s investments in subsidiaries represents 79% (2023: 79%) of the Company’s total assets.
Their recoverability is not at a high risk of material misstatement or subject to significant judgement. However, due to their
materiality in the context of the parent Company financial statements, this is considered to be the area that had the greatest effect
on our overall parent Company audit.
Our Response
We performed the tests below rather than seeking to rely on any of the parent Company’s controls because the nature of the
balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described.
In addition to those procedures included under the Recoverability of Goodwill KAM, our procedures included:
• Test of details: Comparing the carrying amount of the investment with the subsidiary’s draft balance sheet to identify whether
the net assets, being an approximation of their minimum recoverable amount, were in excess of their carrying amount.
• Comparing valuations: Comparing the carrying amount of the investment to the market capitalisation of the Group (after
adjusting for net debt)
Our Findings
We found the Group’s assessment that there is no impairment of parent company’s investment in subsidiary to be balanced
(2023: balanced)
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 128
3 Our application of materiality and an overview of the scope of our audit
Our application of materiality
Materiality for the Group financial statements as a whole was set at £9.7m (2023: £9.0m), determined with reference to a benchmark
of Group Profit Before Tax from Continuing Operations (adjusted for impairment of Goodwill) (of which it represents 4.6% (2023: 4.5%)).
Materiality for the parent Company financial statements as a whole was set at £4.35m (2023: £4.10m), which is the component
materiality for the parent company determined by the group auditor. This is lower than the materiality that we would otherwise have
determined with reference to the parent company total assets, of which it represents 0.2% (2023: 0.2%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in
individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 75% (2023: 75%) of materiality for the financial statements as a whole, which equates to £7.27m
(2023: £6.75m) for the Group and £3.26m (2023: £3.10m) for the parent Company. We applied this percentage in our determination
of performance materiality because we did not identify any factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £485k (2023:
£450k), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Overview of the scope of our audit
This year, we applied the revised group auditing standard in our audit of the consolidated financial statements. The revised standard
changes how an auditor approaches the identification of components, and how the audit procedures are planned and executed
across components.
In particular, the definition of a component has changed, shifting the focus from how the entity prepares financial information to how
we, as the group auditor, plan to perform audit procedures to address group risks of material misstatement (“RMMs”). Similarly, the
group auditor has an increased role in designing the audit procedures as well as making decisions on where these procedures are
performed (centrally and/or at component level) and how these procedures are executed and supervised. As a result, we assess
scoping and coverage in a different way and comparisons to prior period coverage figures are not meaningful. In this report we
provide an indication of scope coverage on the new basis.
We performed risk assessment procedures to determine which of the Group’s components are likely to include risks of material
misstatement to the Group financial statements and which procedures to perform at these components to address those risks.
In total, we identified 25 components, having considered our evaluation of:
• the Group’s operational structure
• the existence of common information systems
• the existence of common management across entities
• the existence of common risk profiles across entities
• geographical location
and our ability to perform audit procedures centrally.
Quantitively
Significant
Other in Scope Total In-Scope Out of Scope Group Total
Number of Components 4 13 17 8 25
Revenue (£m) 3,899.2
(81.4%)
791.9
(16.5%)
4,691.1
(98.0%)
96.2
(2.0%)
4,787.3
(100%)
Profit before tax (£m) 46.9
(48.3%)
40.7
(42.0%)
87.6
(90.3%)
9.4
(9.7%)
97.0
(100%)
Assets (£m) 1,911.2
(71.8%)
610.1
(22.9%)
2,521.3
(94.7%)
142.0
(5.3%)
2,663.3m
(100%)
Of those, we identified 4 quantitatively significant components which contained the largest percentages of either total revenue or
total assets of the Group, for which we performed audit procedures.
We also identified 12 components as requiring special audit consideration, owing to Group risks relating to revenue or share of
results of joint ventures and associates, net of interest and tax residing in these components.
Additionally, having considered qualitative and quantitative factors, we selected 1 component with accounts contributing to the
specific RMMs of the Group financial statements.
Accordingly, we performed audit procedures on 17 components, of which we involved component auditors in performing the audit
work on 15 components. We also performed the audit of the parent Company.
We set the component materialities, ranging from £5.06m to £0.36m, having regard to the mix of size and risk profile of the Group
across the components.
The scope of the audit work performed was predominantly substantive as we only placed limited reliance upon the Group’s internal
control over financial reporting.
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 129
Group auditor oversight:
As part of establishing the overall Group audit strategy and plan, we conducted the risk assessment and planning discussion
meetings with component auditors to discuss Group audit risks relevant to the components, including the key audit matter in
respect of revenue recognition.
We visited all component auditors in the United Kingdom, the United States of America, Australia, the United Arab Emirates,
Switzerland and Germany. Virtual meetings were also held on a regular basis during each phase of our audit with these component
auditors. At these visits and meetings, the results of the planning procedures and further audit procedures communicated to us
were discussed in more detail, and any further work required by us was then performed by the component auditors.
We inspected the work performed by the component auditors for the purpose of the Group audit and evaluated the
appropriateness of conclusions drawn from the audit evidence obtained and consistencies between communicated findings and
work performed, with a particular focus on revenue recognition.
We identified the main finance IT system, the consolidation system, the HR system and the procurement system used by the group,
which are managed centrally, as well as the separate finance system used by the Americas component to be the main IT systems
relevant to the audit.
The component auditors for the Americas used IT auditors to assist in their assessment of the design and operating effectiveness of
the general IT controls of the separate Americas finance system. For the remaining systems described above, we used our IT
auditors to assist us in assessing the design and operating effectiveness of the general IT controls.
In our previous audits we identified IT control deficiencies in some systems. As part of obtaining an understanding of the IT systems
in the current year, we identified that deficiencies still existed. However, following our testing, including testing mitigating controls
and performing impact assessments for deficiencies identified where necessary, we were able to place reliance on IT general
controls in respect of all of the IT systems identified above in determining the work to be performed in the audit, particularly in
regard to covering the completeness and accuracy of system generated information. We did not plan to rely on automated controls
over journal entries due to the complexity of the associated systems. Therefore, our work to respond to the risk of management
override of controls considered both automated and manual journals and we increased the extent of direct data testing over the
completeness and reliability of data used in auditing journals.
We tested operating effectiveness and placed reliance on manual controls in relation to payables, which allowed us to reduce the
extent of our substantive testing in this area, but not in our audit of revenue other than in the Americas, or payroll. For revenue
outside the Americas, we did not place reliance on controls, due to the contract-driven nature of revenue recognition, meaning the
substantive testing detailed in our key audit matter in section 2 of our report is inherently the most effective means of obtaining
audit evidence. We were able to place reliance on controls over revenue in the Americas where the nature of revenue recognition is
predominantly non-judgemental, allowing us to rely on system generated information. For payroll, we did not place reliance on
controls due to our identification of control deficiencies in manual controls and the timing of relevant external service organisations’
controls reporting. Accordingly, we increased the extent of our substantive procedures in relation to payroll.
4 The impact of climate change on our audit
In planning our audit, we considered the potential impacts of climate change on the Group’s business and its financial statements.
The Group has made a commitment to be Net Zero across Scope 1, 2 and 3 emissions and to support its customers to meeting this target
by 2050. Further information has been provided in the Group’s Strategic Report on page 45. The Group’s climate related disclosures as
recommended by the Task Force on Climate Related Financial Disclosure (TCFD) are included on pages 56 to 60 of the Annual Report.
As part of our audit, we have made enquiries of the directors to understand the extent of the potential impact of climate change risk on
the Group’s financial statements. We have performed a risk assessment of how climate risks facing the Group and the Group’s
strategy to mitigate these risks may affect the financial statements and our audit. In addition, we also held discussions with our own
climate change professionals to challenge our risk assessment.
Taking into account our risk assessment procedures, the nature and duration of the group’s current contracts and pipeline and on
the basis of our risk assessment we have determined that the climate change risks to the Group’s business and strategy do not have
a significant impact on the 2024 financial statements or our key audit matters. There was therefore no significant impact from climate
change on our key audit matters.
We have also read the climate change related information in the front half of the Annual Report and considered consistency with the
financial statements and our audit knowledge.
5 Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its
business model and analysed how those risks might affect the Group’s and Company’s financial resources or ability to continue
operations over the going concern period. The risks that we considered most likely to adversely affect the Group’s and Company’s
available financial resources and metrics relevant to debt covenants over this period were:
• Significant deterioration of contractual performance impacting on profit margins across the Group;
• Significant deterioration in the Group’s ability to win new contracts and successfully retain existing contracts which are being
rebid or bids for new contracts (focusing particularly on the Asia Pacific region as with the prior year);
• Significant committed cash outflows for planned acquisitions.
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 130
We also considered less predictable but realistic second order impacts, such as possible impact of major contractual or other claims
which could result in a rapid reduction of available financial resources, the potential for changes in government procurement in the
wake of the change of government in the United Kingdom and the United States, the potential for reduced spending due to
financial instability at certain local authorities in the United Kingdom, and the impact of recent developments in relation to
international trade and tariff barriers.
We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by
assessing the directors’ sensitivities over the level of available financial resources and covenant thresholds indicated by the Group’s
financial forecasts taking account of severe, but plausible adverse effects that could arise from these risks individually and collectively.
Our procedures also included:
• Critically assessing the cashflow forecasts and the appropriateness of the key assumptions in the base case and downside
scenarios relevant to liquidity and covenant metrics, in particular in relation to profitability of existing contracts, and win rates
assumed for future pipeline, by comparing to the group’s approved budgets, growth and economic forecasts and our
knowledge of the entity and the sector in which it operates;
• Challenging whether the break-points in the Group’s reverse-stress test analysis were not plausible to occur by comparing these
scenarios with the Group’s previous experience, assessing the working capital assumptions by comparing the forecasts to actual
recent experience and existing supplier/customer arrangements;
• Comparing actual performance in the current year to the budget prepared by the Group for the same period to assess the
ability of the Group to prepare forecasts and budget accurately;
• Inspecting confirmations from lenders of the level of committed financing, and the associated covenant requirements;
• Making inquiries of relevant parties to understand the group’s insurance arrangements in respect of certain items and obtaining
copies of key insurance policies to corroborate the assertions made;
• Obtaining documentation confirming committed material cash outflows and related financing for the disclosed post-balance
sheet acquisition and critically assessing the impact of this on the liquidity and covenant compliance in the near to medium term.
We considered whether the going concern disclosure in note 2 to the financial statements gives a full and accurate description of
the directors’ assessment of going concern, including the identified risks, dependencies and related sensitivities.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is
appropriate;
• we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s or Company's ability to continue as a going
concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the directors’ statement in note 2 to the financial statements
on the use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the
Group and Company’s use of that basis for the going concern period, and we found the going concern disclosure in note 2 to
be acceptable; and
• the related statement under the Listing Rules set out on pages 141 and 142 is materially consistent with the financial statements
and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
6 Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit, internal and external legal counsel, and the Group’s Ethics &
Compliance function, and inspection of policy documentation as to the Group’s high-level policies and procedures to prevent
and detect fraud, including the internal audit function, and the Group’s channel for “whistleblowing”, as well as whether they
have knowledge of any actual, suspected or alleged fraud.
• Reading Board minutes, including the minutes of certain committees of the board such as the Audit and Risk committees.
• Considering remuneration incentive schemes and performance targets for management and directors including the Revenue,
Underlying Operating Profit and Free Cash Flow / Days Sales Outstanding targets for management remuneration.
• Using analytical procedures to identify any unusual or unexpected relationships.
• Consultation with our own forensic professionals regarding the identified fraud risks and the design of the audit procedures
planned in response to these. This involved the forensic professionals attending the Risk Assessment and Planning Discussion
and discussion between the engagement partner and the forensic professional.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the
audit. This included communication from the Group auditor to component auditors of relevant fraud risks identified at the Group
level and requesting component auditors performing procedures at the component level to report to the Group auditor any
identified fraud risk factors or identified or suspected instances of fraud.
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 131
As required by auditing standards, and taking into account possible pressures to meet profit targets and our overall knowledge of
the control environment, we perform procedures to address the risk of management override of controls and the risk of fraudulent
revenue recognition, in particular:
• the risk that Group and component management may be in a position to make inappropriate accounting entries;
• the risk of bias in accounting estimates such as assessing whether a long-term contract is onerous, the valuation of the provision
in such cases, the recognition and valuation of provisions for disputes and litigation, and the selection of certain assumptions
when testing for impairment of goodwill;
• the risk that revenue is overstated or understated through recording revenues in the wrong period.
We did not identify any additional fraud risks.
Further detail in respect of the risk of fraudulent revenue recognition is set out in the key audit matter disclosures in section 2 of
this report.
We performed procedures including:
• Identifying journal entries and other adjustments to test at the Group level and for selected components based on risk criteria
and comparing the identified entries to supporting documentation. These included those posted by senior finance management
or infrequent users, posted to unusual account combinations or seldom used accounts, containing high-risk terms in the
description, and significantly backdated journals;
• Evaluating the business purpose of significant unusual transactions;
• Assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
• Selecting and subjecting to substantive procedures certain long-term contracts that were otherwise below our threshold for
detailed testing.
We discussed with the audit committee matters related to actual or suspected fraud, for which disclosure is not necessary, and
considered any implications for our audit.
Identifying and responding to risks of material misstatement related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements
from our general commercial and sector experience, through discussion with the directors and other management (as required by
auditing standards), and from inspection of the Group’s regulatory and legal correspondence and discussed with the directors and
other management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance
throughout the audit. This included communication from the Group auditor to component auditors of relevant laws and regulations
identified at the Group level, and a request for component auditors to report to the Group audit team any instances of non-
compliance with laws and regulations that could give rise to a material misstatement at the Group level.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation
(including related companies legislation), distributable profits legislation, taxation legislation and pensions legislation and we assessed
the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or the loss of the
Group’s ability to tender for or complete contracts. We identified the following areas as those most likely to have such an effect:
• health and safety, given the front-line nature of many of the Group’s operations.
• data protection laws, given the number of employees and the sensitive nature of certain data handled as part of contracts.
• anti-bribery and anti-corruption, given the Governmental nature of many of the Group’s customers.
• employment law, given the significant number of employees in the group.
• national security law in the United States, given the importance of the Defence sector to Serco’s North America operations.
• certain aspects of company legislation recognising the nature of the Group’s activities.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of
operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the
financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance
with all laws and regulations.
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 132
7 We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report and the directors’ report;
• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ disclosures in
respect of emerging and principal risks and the viability statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
• the directors’ confirmation within the Viability Statement on pages 72 and 73 that they have carried out a robust assessment of
the emerging and principal risks facing the Group, including those that would threaten its business model, future performance,
solvency and liquidity;
• the Principal Risks disclosures describing these risks and how emerging risks are identified, and explaining how they are being
managed and mitigated; and
• the directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the
period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on pages 72 and 73 under the Listing Rules. Based on the above procedures,
we have concluded that the above disclosures are materially consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit.
As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the absence of anything to report on these statements is not a
guarantee as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate
governance disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the financial statements and
our audit knowledge:
• the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to assess the Group’s position and performance,
business model and strategy;
• the section of the annual report describing the work of the Audit Committee, including the significant issues that the audit
committee considered in relation to the financial statements, and how these issues were addressed; and
• the section of the annual report that describes the review of the effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance Statement relating to the Group’s compliance with the provisions
of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in this respect.
Independent Auditor’s Report continued
To the members of Serco Group plc
Serco Group plc | Annual Report and Accounts 2024 | 133
8 We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
9 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 123, the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group
and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using
the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial report prepared under Disclosure Guidance
and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report provides no assurance over whether the annual financial report has
been prepared in accordance with those requirements.
10 The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006 and the terms of our engagement by the company. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report, and the further matters we are required
to state to them in accordance with the terms agreed with the company, and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we have formed.
Juliette Lowes (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London, E14 5GL
26 February 2025
Independent Auditor’s Report
To the members of Serco Group plc continued
Serco Group plc | Annual Report and Accounts 2024 | 134

|  |  | Non- |  |  | Non- |
|  |  | Underlying |  |  | Underlying |
|  | Underlying | items | Reported | Underlying | items | Reported
|  | 2024 | 2024 | 2024 | 2023 | 2023 | 2023
For the year ended 31 December | Note | £m | £m | £m | £m | £m | £m
Revenue | 7 | 4,787.3 | — | 4,787.3 | 4,873.8 | — | 4,873.8
Cost of sales |  | (4,268.7) | — | (4,268.7) | (4,378.3) | — | (4,378.3)
Gross profit |  | 518.6 | — | 518.6 | 495.5 | — | 495.5
Administrative expenses |  | (267.9) | — | (267.9) | (275.8) | — | (275.8)
Exceptional Items comprising |  |  |  |  |  |  |
- Operating items | 8 | — | — | — | — | 53.8 | 53.8
- Goodwill impairment | 8 | — | (114.5) | (114.5) | — | — | —
Amortisation and impairment of intangibles |  |  |  |  |  |  |
arising on acquisition (excluding exceptional | 8 | — | (28.9) | (28.9) | — | (30.9) | (30.9)
items) |  |  |  |  |  |  |
Share of results of joint ventures and associates, net of interest and tax | 5 | 22.8 | — | 22.8 | 29.0 | — | 29.0
Operating profit/(loss) | 9 | 273.5 | (143.4) | 130.1 | 248.7 | 22.9 | 271.6
Investment revenue | 11 | 7.7 | — | 7.7 | 7.0 | — | 7.0
Finance costs | 12 | (40.8) | — | (40.8) | (31.6) | — | (31.6)
Net finance costs |  | (33.1) | — | (33.1) | (24.6) | — | (24.6)
Profit/(loss) before tax |  | 240.4 | (143.4) | 97.0 | 224.1 | 22.9 | 247.0
Tax (charge)/credit | 13 | (60.4) | 7.9 | (52.5) | (50.8) | 6.2 | (44.6)
Profit/(loss) for the year |  | 180.0 | (135.5) | 44.5 | 173.3 | 29.1 | 202.4
Attributable to: |  |  |  |  |  |  |
Equity owners of the Company |  | 179.7 | (135.5) | 44.2 | 173.3 | 29.1 | 202.4
Non-controlling interest |  | 0.3 | — | 0.3 | — | — | —
Earnings per share (EPS) |  |  |  |  |  |  |
Basic EPS | 15 | 16.97p |  | 4.17p | 15.61p |  | 18.23p
Diluted EPS | 15 | 16.67p |  | 4.10p | 15.36p |  | 17.93p

The accompanying notes on pages 141 to 197 form an integral part of the financial statements.
Consolidated Income Statement
For the year ended 31December 2024
Serco Group plc | Annual Report and Accounts 2024 | 135

|  | 2024 | 2023
| Note | £m | £m
Profit for the year |  | 44.5 | 202.4
Other comprehensive income/(loss) for the year: |  |  |
Items that will not be reclassified subsequently to profit or loss: |  |  |
Share of other comprehensive income in joint ventures and associates | 5 | 0.7 | 1.1
Remeasurements of post-employment benefit obligations 1 | 29 | (38.7) | (29.1)
Actuarial loss on reimbursable rights 1 | 29 | — | (3.0)
Income tax relating to components of other comprehensive income that will not be reclassified subsequently to profit or loss | 13 | 7.7 | 6.1
Items that may be reclassified subsequently to profit or loss: |  |  |
Net exchange loss on translation of foreign operations |  | (18.6) | (38.4)
Fair value loss on cash flow hedges during the year 2 |  | (0.4) | (0.8)
Tax relating to items that may be reclassified 2 | 13 | 0.1 | 0.2
Total other comprehensive loss for the year |  | (49.2) | (63.9)
Total comprehensive (loss)/income for the year |  | (4.7) | 138.5
Attributable to: |  |  |
Equity owners of the Company |  | (5.0) | 138.4
Non-controlling interest |  | 0.3 | 0.1

1 Recorded in retirement benefit obligations reserve in the Consolidated Statement of Changes in Equity.
2 Recorded in hedging and translation reserve in the Consolidated Statement of Changes in Equity.
The accompanying notes on pages 141 to 197 form an integral part of the financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 31December 2024
Serco Group plc | Annual Report and Accounts 2024 | 136

|  |  |  |  | Total |
|  | Share premium | Retained |  | shareholders’ | Non-controlling
| Share capital | account | earnings | Other Reserves 1 | equity | interest
| £m | £m | £m | £m | £m | £m
At 1 January 2023 | 24.4 | 463.1 | 670.6 | (129.9) | 1,028.2 | 1.5
Total comprehensive income/(loss) | — | — | 203.4 | (65.0) | 138.4 | 0.1
for the year |  |  |  |  |  |
Dividends paid | — | — | (33.7) | — | (33.7) | (1.7)
Shares purchased and held in own share reserve | — | — | — | (22.9) | (22.9) | —
Shares purchased and held in Treasury | — | — | — | (88.8) | (88.8) | —
Cancellation of shares held in Treasury | (2.3) | — | (180.0) | 182.3 | — | —
Change in non-controlling interests | — | — | (1.2) | — | (1.2) | (0.2)
Expense in relation to share-based | — | — | — | 13.5 | 13.5 | —
payments |  |  |  |  |  |
Tax credit on items taken directly to equity | — | — | — | 0.5 | 0.5 | —
At 1 January 2024 | 22.1 | 463.1 | 659.1 | (110.3) | 1,034.0 | (0.3)
Total comprehensive income/(loss) | — | — | 44.9 | (49.9) | (5.0) | 0.3
for the year |  |  |  |  |  |
Dividends paid | — | — | (38.4) | — | (38.4) | —
Shares purchased and held in own share reserve | — | — | — | (22.8) | (22.8) | —
Shares purchased and held in Treasury | — | — | — | (141.3) | (141.3) | —
Cancellation of shares held in Treasury | (1.6) | — | (141.3) | 142.9 | — | —
Shares transferred to award holders | — | — | — | 0.1 | 0.1 | —
on exercise of share awards |  |  |  |  |  |
Expense in relation to share-based | — | — | — | 15.2 | 15.2 | —
payments |  |  |  |  |  |
Tax credit on items taken directly to equity | — | — | — | 0.7 | 0.7 | —
At 31 December 2024 | 20.5 | 463.1 | 524.3 | (165.4) | 842.5 | —

1. An analysis of other reserves is presented as part of note 32 Reserves.
The accompanying notes form on pages 141 to 197 an integral part of the financial statements.
Consolidated Statement ofChanges in Equity
For the year ended 31December 2024
Serco Group plc | Annual Report and Accounts 2024 | 137

|  | At 31 December | At 31 December
|  | 2024 | 2023
| Notes | £m | £m
Non-current assets |  |  |
Goodwill | 16 | 826.2 | 906.7
Other intangible assets | 17 | 101.4 | 115.6
Property, plant and equipment | 18 | 56.8 | 44.3
Right of use assets | 18 | 514.9 | 440.9
Interests in joint ventures and associates | 5 | 25.1 | 32.1
Trade and other receivables | 20 | 26.3 | 14.8
Deferred tax assets | 14 | 229.8 | 235.7
Retirement benefit assets | 29 | 15.2 | 37.4
|  | 1,795.7 | 1,827.5
Current assets |  |  |
Inventories | 19 | 24.1 | 24.1
Contract assets | 20 | 300.0 | 296.6
Trade and other receivables | 20 | 331.5 | 329.0
Loan to joint ventures | 5 | — | 10.0
Current tax assets |  | 25.2 | 23.8
Cash and cash equivalents | 21 | 183.0 | 94.4
Derivative financial instruments | 28 | 0.8 | 4.9
|  | 864.6 | 782.8
Total assets |  | 2,660.3 | 2,610.3
Current liabilities |  |  |
Contract liabilities | 22 | (37.5) | (35.8)
Trade and other payables | 22 | (595.0) | (558.0)
Derivative financial instruments | 28 | (6.6) | (1.7)
Current tax liabilities |  | (35.9) | (18.4)
Provisions | 25 | (108.9) | (92.9)
Obligations under leases | 23 | (168.3) | (140.0)
Loans | 24 | (38.8) | (51.0)
|  | (991.0) | (897.8)
Non-current liabilities |  |  |
Contract liabilities | 22 | (60.7) | (59.3)
Trade and other payables | 22 | (21.5) | (9.2)
Derivative financial instruments | 28 | (0.6) | (0.2)
Deferred tax liabilities | 14 | (52.1) | (50.9)
Provisions | 25 | (81.4) | (77.4)
Obligations under leases | 23 | (361.7) | (313.7)
Loans | 24 | (237.6) | (155.2)
Retirement benefit obligations | 29 | (11.2) | (12.9)
|  | (826.8) | (678.8)
Total liabilities |  | (1,817.8) | (1,576.6)
Net assets |  | 842.5 | 1,033.7

Consolidated Balance Sheet
For the year ended 31December 2024
Serco Group plc | Annual Report and Accounts 2024 | 138

|  | At 31 December | At 31 December
|  | 2024 | 2023
| Notes | £m | £m
Equity |  |  |
Share capital | 30 | 20.5 | 22.1
Share premium account | 31 | 463.1 | 463.1
Retained earnings |  | 524.3 | 659.1
Other reserves | 32 | (165.4) | (110.3)
Equity attributable to owners of the Company |  | 842.5 | 1,034.0
Non-controlling interest |  | — | (0.3)
Total equity |  | 842.5 | 1,033.7

The accompanying notes form on pages 141 to 197 an integral part of the financial statements.
The financial statements were approved by the Board of Directors on 26 February 2025 and signed on its behalf by:
Mark Irwin Nigel Crossley
Group Chief Executive Group Chief Financial Officer
Consolidated Balance Sheet continued
Serco Group plc | Annual Report and Accounts 2024 | 139

|  | 2024 | 2023
| Note | £m | £m
Net cash inflow from underlying operating activities |  | 419.4 | 383.8
Non-underlying items |  | — | 9.3
Net cash inflow from operating activities | 35 | 419.4 | 393.1
Investing activities |  |  |
Interest received |  | 5.3 | 3.9
Dividends received from joint ventures and associates |  | 30.8 | 21.1
Loan repaid by joint venture |  | 10.0 | —
Purchase of other intangible assets | 17 | (9.1) | (8.8)
Purchase of property, plant and equipment | 18 | (25.3) | (15.9)
Proceeds from disposal of property, plant and equipment |  | 1.3 | 1.4
Proceeds from disposal of intangible assets |  | — | 1.3
Proceeds from disposal of subsidiary |  | — | 0.2
Acquisition of subsidiaries, net of cash acquired | 6 | (20.8) | (7.7)
Other investing activities |  | 0.4 | (0.9)
Net cash outflow from investing activities |  | (7.4) | (5.4)
Financing activities |  |  |
Interest paid |  | (33.8) | (30.4)
Capitalised finance costs paid |  | (1.0) | —
Advances of loans | 24 | 118.2 | —
Repayments of loans | 24 | (52.8) | (44.5)
Capital element of lease repayments | 24 | (137.4) | (124.4)
Cash movements on finance related derivatives | 12 | (13.1) | (1.5)
Dividends paid to shareholders |  | (38.4) | (33.7)
Dividends paid to non-controlling interests |  | — | (1.7)
Purchase of own shares for Employee Share Ownership Trust |  | (22.8) | (22.9)
Own shares repurchased |  | (141.3) | (88.8)
Proceeds received from exercise of share options |  | 0.1 | —
Net cash outflow from financing activities |  | (322.3) | (347.9)
Net increase in cash and cash equivalents |  | 89.7 | 39.8
Cash and cash equivalents at beginning of year |  | 94.4 | 57.2
Net exchange loss | 24 | (1.1) | (2.6)
Cash and cash equivalents at end of year | 21 | 183.0 | 94.4

The accompanying notes on pages 141 to 197 form an integral part of the financial statements.
Consolidated Cash Flow Statement
For the year ended 31December 2024
Serco Group plc | Annual Report and Accounts 2024 | 140
1. General information
Serco Group plc (the Company) is a company incorporated in the United Kingdom under the Companies Act 2006. The address of
the registered office is Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook, Hampshire, RG27 9UY.
These Consolidated Financial Statements comprise the Company, its subsidiaries and its interest in joint ventures and associates
(together referred to as the Group) and are presented in pounds Sterling because this is the currency of the primary economic
environment in which Serco operates. All amounts have been rounded to the nearest one hundred thousand pounds and foreign
operations are included in accordance with the policies set out in note 2.
The nature of the Group’s operations are set out in the Strategic Report on pages 1 to 123 and the principal activities are set out in
note 4.
A full list of subsidiaries and related undertakings is included in note 53 of the Company financial statements on page 204.
2. Material accounting policies
Basis of preparation
The Consolidated Financial Statements on pages 135 to 197 have been prepared in accordance with UK-adopted International
Accounting Standards (IAS), UK-adopted International Financial Reporting Standards (IFRS) and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared on the historical cost basis, except for the following which are measured at fair value:
• certain financial assets and liabilities (including derivative instruments)
• retirement benefit obligations (plan assets and liabilities)
• share-based payments
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The following principal accounting policies adopted have been applied consistently in the current and preceding financial year
except as stated in the change in accounting policies on page 143.
Basis of consolidation
The Consolidated Financial Statements incorporate the financial statements of the Company and entities controlled by the Company
up to 31 December each year. Control is achieved when the Company:
(i) has power over the investee;
(ii) is exposed, or has rights to variable returns from its involvement with the investee; and
(iii) has the ability to use its power to affect the returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the
effective date of acquisition or up to the effective date of disposal as appropriate. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring accounting policies into line with those used by the Group. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
Non-controlling interest represents the portion of profits or losses and net assets in subsidiaries that are not held by the Group and
are presented within equity in the Consolidated Balance Sheet, separate from equity of shareholders of Serco Group plc.
Going concern
In assessing the basis of preparation of the financial statements for the year ended 31 December 2024, the Directors have
considered the principles of the Financial Reporting Council’s ‘Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting, 2014’; particularly in assessing the applicability of the going concern basis, the review period and
disclosures. The period of assessment is considered to be at least 12 months from the date of approval of these financial statements.
At 31 December 2024, the Group’s principal debt facilities comprised a £350m revolving credit facility maturing in November 2027
(of which £nil was drawn), and £279.2m of US private placement notes (USPP notes), giving £629.2m of committed credit facilities
and committed headroom of £533.0m, being the undrawn RCF plus cash of £183.0m. The principal financial covenant ratios are
consistent across the USPP notes and revolving credit facility, and are outlined on page 211. As at 31 December 2024, the Group’s
primary restricting covenant, its leverage ratio, is below the covenant of 3.5x and is below the Group’s target range of 1x-2x at 0.33x.
The Directors have undertaken a rigorous assessment of going concern and liquidity, taking into account financial forecasts, as well
as the potential impact of key uncertainties and sensitivities on the Group’s future performance. In making this assessment the
Directors have considered the Group’s existing debt levels, the committed funding and liquidity positions under its debt covenants,
its ability to generate cash from trading activities and its working capital requirements. The Directors have also identified a series of
mitigating actions within their control that could be used to preserve cash in the business should the need arise.
The basis of the assessment continues to be the Board-approved budget which is prepared annually for the next two-year period
and is based on a bottom-up approach to all of the Group’s existing contracts, potential new contracts and administrative functions.
During the period of assessment, £39.9m of the Group’s USPP notes mature. The forecast supporting this statement shows that, on
the assumption that these are repaid, there is still sufficient liquidity headroom for the Group to remain a going concern.
Notes to the Consolidated Financial Statements
Serco Group plc | Annual Report and Accounts 2024 | 141
2. Material accounting policies continued
The Directors believe that appropriate sensitivities in assessing the Group’s ability to continue as a going concern are to model
reductions in the Group’s win rates for bids and extensions, and reductions in profit margins. Due to the diversity in the Group’s
operations, the Directors believe that a reverse stress test of these sensitivities to assess the headroom available under the Group’s
debt covenants and available liquidity provides meaningful analysis of the Group’s ability to continue as a going concern. Based on
the headroom available, the Directors are then able to assess whether the reductions required to breach the Group’s financial
covenants, or exhaust available liquidity, are plausible.
This reverse stress test shows that after assuming no additional refinancing occurs after the date of approval of the financial
statements, the Group can afford to be unsuccessful on 80% of its budgeted bids and extensions, combined with a profit margin 80
basis points below the Group’s forecast, and still retain sufficient liquidity to meet all liabilities as they fall due for a period of 12
months from approval of these financial statements, and remain compliant with the Group’s financial covenants.
In respect of win rates, rebids and extensions have a more significant impact on the Group’s revenue than new business wins during
the assessment period. The Group has won more than 85% of its rebids and available contract extensions by volume over the last
two years, therefore a reduction of budgeted bids and extensions by 80% is not considered plausible. The Group does not generally
bid for contracts at margins below its target range.
As detailed in post balance sheet events within note 36 to the financial statements, subsequent to the balance sheet date the Group
signed a committed 2-year term loan facility of US$250m (c.£199m) on the announcement to acquire Northrop Grumman’s mission
training and satellite ground network communications software business (MT&S), which has been included in the Directors’ liquidity
forecast supporting this assessment. The facility provides a source of additional liquidity in the near term, becoming available after
the completion of the acquisition, and it will mandatorily cancel in the event of equivalent future debt issuance by the Group. The
principal financial covenant ratios of this facility are consistent with the USPP loan notes and revolving credit facility.
Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its liabilities as
they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial
statements on a going concern basis.
Adoption of new and revised standards
No new or amended accounting standards had a material impact on the Group for the 31 December 2024 reporting period. The
following standards were considered.
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
In September 2023, the IASB issued Lease Liability in a Sale and Leaseback (amendments to IFRS 16). This amendment clarifies how
entities should account for sale and leaseback transactions after the transaction date. Management has assessed that the change has
not had a material impact on the Group.
Non-current Liabilities with Covenants (Amendments to IAS 1)
In October 2022, the IASB issued Non-current Liabilities with Covenants (Amendments to IAS 1). This amendment clarifies how
conditions which an entity must comply with, within twelve months after the reporting period, affect the classification of a liability.
The amendment also aims to improve information an entity provides related to liabilities subject to Covenants. This amendment
requires the Group to disclose additional information in the financial statements which was previously reported in the Strategic
Report. See note 24 for the details on loans subject to covenant.
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
In May 2023, the IASB issued Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7). The amendment requires specific
disclosures about supplier finance arrangements. Management has assessed that the change has not had a material impact on the
Group.
New standards, amendments and interpretations not yet adopted
The following published new accounting standards, amendments to accounting standards and interpretations that are not
mandatory for 31 December 2024 reporting periods, have not been early adopted by the Group. These are effective for annual
reporting periods beginning on or after the date indicated:

| Effective dates 1
The Effects of Changes in Foreign Exchange Rates for Lack of Exchangeability (amendment to IAS21) 2 | 1 January 2025
Annual Improvements to IFRS Accounting Standards (Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and 2 | 1 January 2026
IAS 7) |
Classification and Measurement of Financial Instrument (Amendments to IFRS 9 and IFRS 7) 2 | 1 January 2026
Presentation and Disclosure in Financial Statements (New standard IFRS 18) 3 | 1 January 2027
Subsidiaries without Public Accountability: Disclosures (New standard IFRS 19) 2 | 1 January 2027

1. The effective date is based on the standards, amendments or interpretation issued by the IASB and may still be subject to adoption by the UK Endorsement Board.
2. The standards, amendments or interpretations are not expected to have a material impact on the Group in the current or future reporting periods.
3. IFRS 18 introduces new requirements for the presentation and disclosure of information in financial statements, pending UK endorsement. This standard will
influence how information is reported, particularly in the income statement, and may also affect the level of detail disclosed in the notes to the financial
statements. Whilst IFRS 18 will not alter the recognition or measurement of items in the financial statements and thus will not impact the Group’s overall
results, it may change what the Group reports as its 'Operating Profit’.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 142
Changes in accounting policies
There have been no changes to the Group’s accounting policies during the year ended 31 December 2024 with the exception of the
following policies:
• Contingent liabilities on business combinations (see page 150)
• Share repurchase arrangements (see page 151)
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing
market participants at the measurement date, regardless of whether that price is directly observable or is estimated using another
valuation technique. There are certain transactions in these Financial Statements which are similar to fair value but are determined
by the treatment set out in their respective standards. These are share-based payment transactions that are within the scope of IFRS
2 Share-Based Payment, leasing transactions that are within the scope of IFRS 16 Leases, the calculation of net realisable value under
IAS 2 Inventories and value in use under IAS 36 Impairment of Assets.
Revenue
The Group recognises revenue based on the principles set out in IFRS 15 Revenue from Contracts with Customers. Revenue is
recognised in any period based on the delivery of performance obligations and an assessment of when control is transferred to the
customer.
For all contracts, the Group determines whether each arrangement meets the definition of a contract under IFRS 15 and creates
enforceable rights and obligations.
Contracts are combined if they are entered into at or near the same time and one or more of the following criteria are met:
• They are negotiated as a package with a single commercial objective.
• Consideration receivable in one contract depends on the other contract.
• Goods or services are a single performance obligation.
For contracts with multiple components, Management applies judgement to consider whether those promised goods and
services are:
• a deliverable (i.e. a good or a service) that is distinct; or
• a series of distinct deliverables that are substantially the same and that have the same pattern of transfer to the customer
(transferred over time using the same measure of progress).
At contract inception, the transaction price is the total amount of consideration to which the Group expects to be entitled to
exchange for transferring goods or services to a customer.
Once the total transaction price is determined, the Group allocates this to the identified performance obligations in proportion to
their relative standalone selling prices and recognises revenue when (or as) those performance obligations are satisfied. Where
there is only one performance obligation, no allocation is necessary as the full transaction price is allocated to the single
performance obligation.
Where there is more than one performance obligation, the Group looks at each performance obligation separately to see if there is
an observable price available; however, due to the bespoke nature of the services provided by the Group, there is normally no
observable standalone selling price and the expected cost-plus margin approach is used. All bid models for new contracts are built
up and negotiated with the customers on a cost-plus margin basis and therefore this approach most accurately reflects the
commercial reality and the value of the benefits transferred to the customer.
The Group enters into contracts which contain extension periods where either the customer or both parties can choose to extend
the contract or there is an automatic renewal and/or termination clause that could impact the actual duration of the contract.
Judgement is applied to assess the impact that these clauses have when determining the appropriate contract term. The term of the
contract impacts both the period over which revenue from performance obligations may be recognised and the period over which
contract fulfilment assets and capitalised bid and phase-in costs are expensed.
Further details on revenue recognition for specific contract types is shown below.
Revenue recognition: Repeat service-based contracts
The majority of the Group’s contracts are repeat service-based contracts where value is transferred to the customer over time as the
core services are delivered. Therefore, in most cases revenue will be recognised on the output basis, based on direct measurements
of the value to the customer of the services transferred to date relative to the remaining services under the contract. This is a faithful
depiction of the transfer of services since the service delivered to the customer is unchanged. Where the output method is used, the
Group often uses a method of time elapsed which requires minimal estimation. Certain repeat service-based contracts use output
methods based upon user numbers; service activity levels; or fees collected. Where any price reductions within output-based
contracts are contractual, but the level of service is not decreasing, revenue will be deferred from initial years to subsequent years in
order for revenue to be recognised on a consistent basis.
There are certain contracts where a separate performance obligation has been identified for services where the pattern of delivery
differs to the core services and which are capable of being distinct, such as asset construction or asset maintenance. In these
instances, where the transfer of control is most closely aligned to our efforts in delivering the service, the input method is used to
measure progress and revenue is recognised in direct proportion to costs incurred. In limited circumstances, other methods are
used to measure progress under the input method, including resources consumed, time elapsed or labour hours expended. This is
a faithful depiction of the transfer of services because costs (or other inputs) most accurately reflect the incremental benefits
received by the customer from efforts to date.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 143
Revenue recognition: Repeat service-based contracts continued
Where deemed appropriate, the Group will utilise the practical expedient within IFRS 15, allowing revenue to be recognised at the
amount which the Group has the right to invoice, where that amount corresponds directly with the value to the customer of the
Group’s performance completed to date.
Under IFRS 15, unless upfront fees received from customers including transition payments can be clearly attributable to a distinct
service the customer is obtaining, such payments do not constitute a separate performance obligation and instead are deferred and
spread over the life of the core services.
In general, the timing of satisfaction of performance obligations is consistent with when payment becomes due, other than in
instances where up front win fees or transition payments are received, where in most instances these are deferred.
Any changes to the enforceable rights and obligations with customers and/or an update to the transaction price will not be
recognised as revenue until there is evidence of customer agreement in line with the Group’s policies.
Revenue recognition: Variable revenue
The Group has a number of contracts where at least an element of the revenue generated is variable in nature. Variability in revenue
recognised can arise from a number of factors, including usage-related volumes, graduated performance against contractual
performance indicators, indexation-linked pricing, profit sharing elements and customer decisions related to the provision of goods
or services. Any variable amounts will only be recognised where it is highly probable that a significant reversal will not occur.
Revenue recognition: Long-term project-based contracts
The Group has a limited number of project-based long-term contracts. Revenue associated with these contracts is recognised at the
point in time when control over the deliverable is passed to the customer.
Revenue recognition: Contract modifications
When a modification to an existing contract is approved, the Group first assesses whether it adds distinct goods or services to the
existing contract that are priced commensurate with the standalone selling prices for those goods or services. If this is the case, then
the modification is accounted for prospectively as a separate contract. If the pricing is not commensurate with the standalone selling
prices for the goods or services and the new goods or services are not distinct from those in the original contract, then this is
considered to form part of the original contract. Pricing is updated for the entirety of the revised contract and any historic
adjustments recorded as a result are recognised as a cumulative adjustment to revenue in the period of the modification. If the
pricing is not commensurate with the standalone selling prices for the goods or services and the new goods or services are distinct
from those in the original contract, then this is considered to represent the termination of the original contract and the creation of a
new contract which is accounted for prospectively from the date of modification.
Revenue recognition: Other
Sales of goods are recognised when goods are delivered and title has passed.
The Group has a limited number of pass-through arrangements in respect of goods or services procured by the Group on behalf of
customers where it assesses whether it is acting as a principal or as an agent. The Group is acting as principal if it is in control of a
good or a service prior to transferring to the customer and gross revenue and costs are recognised. More commonly, the Group is
acting as agent where it is arranging for those goods or services to be provided to the customer without obtaining control, for
example, where the Group is engaged to manage operations for a customer but procures goods or services on behalf of the
customer in order to deliver the operation. When acting as an agent, only the fee or commission is recognised as revenue and the
costs represent only the direct costs of facilitating the transaction.
The Group has no material exposure to returns or refunds.
Revenue recognition: Contract assets and liabilities
Contract assets are recognised for goods and services for which control has transferred to the customer before the Group has the
right to bill and are reported under accrued income and other unbilled receivables in note 20. Contract assets are reclassified as
receivables when the right to payment becomes unconditional and the Group has billed the customer.
Contract liabilities are recognised when the Group has received advance payment for goods and services that the Group has not
transferred to the customer and are reported under deferred income in note 22.
Where the initial set-up, transition or transformation phase of a long-term contract is not considered to be a distinct performance
obligation and upfront consideration is received, the Group recognises contract liabilities reported under deferred income in note
22. In this case eligible costs (see contract costs policy below) associated with delivering these services are reported under
capitalised mobilisation and phase in costs in note 20.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 144
Government grants
The majority of the Group’s customers are governments. Any income that arises from a contractual agreement for the delivery of
goods or services, or a specific modification to such a contract, is treated as revenue. Income from governments is only considered
to be a government grant if it is not related to the supply of goods or services under a contractual arrangement.
Government grants are recognised where there is reasonable assurance that the grant will be received. Grants that compensate the
Group for expenses incurred are recognised in the income statement as a reduction to the corresponding expenses on a systematic
basis in the periods in which the expenses are recognised. There were no material government grants received during the current or
prior year.
Contract costs
Bid costs are capitalised only when they relate directly to a contract and are incremental to securing the contract. Bid costs are
amortised over the duration of the contract to which they relate in equal annual instalments. Any costs which would have been
incurred whether or not the contract is actually won are not considered to be capitalised bid costs.
Contract costs are charged to the income statement as incurred, including the necessary accrual for costs which have not yet been
invoiced, unless the expense relates to a specific timeframe covering future periods.
Contract costs can only be capitalised when the expenditure meets all of the following three criteria and are not within the scope of
another accounting standard, such as inventories, intangible assets, or property, plant and equipment:
• The costs relate directly to a contract. These include direct labour, being the salaries and wages of employees providing the
promised services to the customer; direct materials such as supplies used in providing the promised services to a customer; and
other costs that are incurred only because an entity entered into the contract, such as payments to subcontractors.
• The costs generate or enhance the resources used in satisfying performance obligations in the future. For initial contract costs
capitalised, such costs only fall into one of the following two categories: the mobilisation of contract staff, being the costs of
moving existing contract staff to other Group locations; or directly incremental costs incurred in meeting contractual obligations
incurred prior to contract delivery, which are required to ensure a proper handover from the previous contractor. Redundancy
costs are never capitalised.
• The costs are expected to be recovered, i.e. the contract is expected to be profitable after amortising the capitalised costs.
Operating profit
Operating profit is not a measure defined by IFRS and the Group considers this to include the profits and losses from operations
prior to corporation tax, investment revenue and finance costs.
Exceptional items
IAS 1 Presentation of Financial Statements sets out disclosure requirements regarding fair representation of information and the
composition, labelling, prominence and consistency of additional line items and subtotals in financial statements. IAS 1 paragraph 97
requires separate disclosure of the nature and amount of material items of income or expense. The company uses the term ‘exceptional
items” to categorise those items which require disclosure under IAS 1 paragraph 97, but this is not a term defined by IFRS. These items are
separately disclosed and explained within note 8 to the Financial Statements. A level of judgement is involved in determining what items
are classified as exceptional items. Management considers exceptional items to be outside of normal practice of the business (i.e. the
financial impact is unusual or rare in occurrence), and are material to the results of the Group by virtue of their size or nature, and are
suitable for separate presentation and detailed explanation. There is a level of judgement required in determining which items are
exceptional on a consistent basis and require separate disclosure. Further details can be seen in note 8.
Foreign currencies
Transactions in currencies other than Sterling are recorded at the rate of exchange on the date of the transaction using a monthly average.
If exchange rates fluctuate significantly during a period, the use of average rates are reviewed to ensure they are still appropriate.
At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the net profit or loss for the period,
except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised
directly in equity through the Consolidated Statement of Comprehensive Income (SOCI).
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences
arising, if any, are recognised directly within equity in the Group’s hedging and translation reserve. On disposal of an operation,
such translation differences are recognised as income or expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 145
Dividends
Dividend distributions are recognised as a liability in the year in which the dividends are approved by the Company’s shareholders.
Interim dividends are recognised when they are paid; final dividends when authorised in general meetings by shareholders.
Dividend income is recognised on receipt.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition
is measured as the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are recognised in profit or loss as
incurred. Where acquisition and transition costs for successful acquisitions are material, they are disclosed as exceptional costs
within note 8.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition date fair value. Subsequent changes in fair values are adjusted against the cost of
acquisition where they qualify as measurement period adjustments (which is subject to a maximum of one year). All other
subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance
with the relevant accounting standards.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business
Combinations are recognised at their fair value at the acquisition date, except where a different treatment is mandated by another standard.
Investments in joint ventures and associates
A joint venture is an arrangement whereby the owning parties have joint control and rights over the net assets of the arrangement.
The Group’s investments in joint ventures are incorporated using the equity method of accounting.
Under the equity method, an investment in an associate or a joint venture is initially recognised in the Consolidated Balance Sheet at
cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or
joint venture. Any excess of the cost of acquisition over the Group’s share of net fair value of the identifiable assets, liabilities and
contingent liabilities of the joint venture recognised at the date of acquisition is recognised as goodwill. Goodwill is included within
the carrying value amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group’s
share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after
reassessment, is recognised immediately in profit or loss.
Determining whether joint control exists requires a level of judgement based upon specific facts and circumstances which exist at
the year-end. Details of the unconsolidated joint ventures are provided in note 5.
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint
venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not
control or joint control. The results and assets and liabilities of associates are also incorporated in these financial statements using
the equity method of accounting.
Goodwill
Goodwill is measured as the excess of the fair value of purchase consideration over the fair value of the net assets acquired and is
recognised as an intangible asset when control is achieved. Negative goodwill is recognised immediately in the income statement.
Fair value measurements are based on provisional estimates and may be subject to amendment within one year of the acquisition,
resulting in an adjustment to goodwill.
Goodwill itself does not generate independent cash flows and therefore, in order to perform required tests for impairment, it is
allocated at inception to the specific cash generating unit (CGU) or groups of CGUs which are expected to benefit from the acquisition.
On the disposal of a business which includes all or part of a CGU, any attributable goodwill is included in the determination of the
profit or loss on disposal.
The fair values associated with material business combinations are valued by external advisers and any amount of consideration
which is contingent in nature is evaluated at the end of each reporting period, based on internal forecasts.
Other intangible assets
Material intangible assets are grouped into classes of similar nature and use and separately disclosed. Other intangible assets are
amortised from the date of completion.
Customer relationships can arise on the acquisition of subsidiaries and represent the incremental value expected to be gained as a
result of existing contracts in the purchased business using our best estimate of forecast cash flows discounted to present value.
These assets are amortised over the average length of the related contracts which typically ranges between five and fifteen years.
Software and IT represent computer systems and processes used by the Group in order to generate future economic value through
normal business operations. The underlying assets are amortised over the period from which the Group expects to benefit, which is
typically between three to eight years.
Development expenditure is capitalised as an intangible asset only if the conditions below are met, with all research costs and other
development expenditure being expensed when incurred. The period of expected benefit, and therefore period of amortisation, is
typically between three and eight years. The capitalisation criteria are as follows:
• an asset is created that can be separately identified and which the Group intends to use or sell;
• the finalisation of the asset is technically feasible and the Group has adequate resources to complete its development for use or sale;
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 146
Property, plant and equipment
Assets held for use in the rendering of services, or for administrative purposes, are stated in the balance sheet at cost, net of
accumulated depreciation and any provision for impairment. Assets are grouped into classes of a similar nature and use and
separately disclosed except where this is not material.
Depreciation is provided on a straight-line basis at rates designed to reduce the assets to their residual value over their estimated
useful lives.

The principal annual rates used are: |
Freehold buildings | 2.5%
Leasehold improvements | The higher of 10% or the rate produced by the lease term
Machinery | 15% – 20%
Vehicles | 10% – 50%
Furniture | 10%
Office equipment | 20% – 33%
Right of use assets | Equally over the lease term from inception or equally over the remainder of the lease
| term from the date of a reassessment of the lease end date

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the income statement. Given that there is limited history of material gains or losses
on disposal of fixed assets, the level of judgement involved in determining the depreciation rates is not considered to be significant.
For acquisitions property, plant and equipment are measured at fair value and the right of use assets are measured as the present
value of the remaining lease payments as if the acquired lease was a new lease at the acquisition date.
Asset impairment
The Group reviews the carrying amounts of its tangible and intangible assets (including goodwill) at each reporting period, together
with any other assets under the scope of IAS 36 Impairment of Assets, in order to assess whether there is any indication that those
assets have suffered an impairment loss. As the impairment of assets has been identified as both a key source of estimation
uncertainty and a critical accounting judgement, further details around the specific judgements and estimates can be seen in note 3.
If any indication of impairment exists, the recoverable amount of the asset is estimated in order to determine if there is any
impairment loss. Goodwill is assessed for impairment annually, irrespective of whether there are any indicators of impairment.
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount
of the cash generating unit (CGU) to which the asset belongs.
Recoverable amount is defined as the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value with reference to pre-tax discount rates that reflect the risks specific to the
asset for which the estimates of future cash flows have not been adjusted. Fair value less cost to sell is the amount that a market
participant would pay for the asset or CGU, less the costs of sale. The fair value less cost to sell is determined using the discounted
cash flows method, where there is no readily available market price for the asset, or where there are no recent market transactions
for the fair value to be determined through a comparison between the asset or CGU being tested for impairment, and a recent
market transaction.
If the recoverable amount is estimated to be less than the carrying amount of the asset, the carrying amount is impaired to its
recoverable amount. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any
goodwill allocated to the CGU and then to reduce the carrying amount of the other assets in the CGU on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods
are assessed at each reporting date for indications that the loss which led to the impairment has decreased or no longer exists.
Where an impairment loss is subsequently reversed, the carrying amount is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, had no impairment loss been recognised in prior years.
Impairment losses and reversals are recognised immediately within expenses in the income statement unless it is considered to be
an exceptional item when the Group’s criteria are met.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 147
Retirement benefit costs
Payments to defined contribution pension schemes are charged as an expense as they fall due.
For defined benefit pension schemes, the cost of providing benefits is determined using the projected unit credit actuarial cost
method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in
the period in which they occur. They are recognised outside the income statement and are presented in the statement of
comprehensive income.
Both current and past service costs are the amounts recognised in the income statement, reflecting the expense associated with the
individuals. Current service cost represents the increase in the present value of the scheme liabilities expected to arise from
employee service in the current period. Past service cost is recognised immediately. Gains and losses on curtailments or settlements
are recognised in the income statement in the period in which the curtailment or settlement occurs.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as
reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available
refunds (which is only recognised to the extent that the Group has an unconditional right to receive it) and reductions in future
contributions to the scheme. To the extent that an economic benefit is available as a reduction in future contributions and there is a
minimum funding requirement required of the Group, the economic benefit available as a reduction in contributions is calculated as
the present value of the estimated future service cost in each year, less the estimated minimum funding contributions required in
respect of the future accrual and benefits in that year.
Calculation of the amounts recognised in the Consolidated Financial Statements in respect of defined benefit pension schemes
requires a high level of judgement, as further explained in note 3.
End of contract provisions
Where the Group has a legal or constructive obligation to compensate employees at the end of a contract term and these
employees cannot be relocated within the Group, a provision is recognised to reflect the expected outflow of economic benefits at
the end of the contract. The obligation is reassessed at each reporting date. The amount calculated assumes the tenure of the
employee base, expected turnover, and salary.
Derivative financial instruments and hedging activities
The Group may enter into a variety of derivative financial instruments to manage the exposure to interest rate, foreign exchange risk
and price risk, including currency swaps, foreign exchange forward contracts, interest rate swaps and commodity future contracts.
Further details of derivative financial instruments are given in note 28.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to
their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative
is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the
nature of the hedge relationship. The Group designates certain derivatives as either hedges of the fair value of recognised assets or
liabilities (fair value hedges), hedges of highly probable forecast transactions or hedges of firm commitments (cash flow hedges).
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Both at the inception of
the hedge and on a periodic basis, the Group assesses whether the hedging instrument that is used in a hedging relationship is
highly effective in offsetting changes in fair values or cash flows of the hedged item.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12
months and it is not expected to be realised or settled within 12 months. Derivatives, which mature within 12 months, are presented
as current assets or current liabilities.
Details of the fair values of the derivative instruments used for hedging purposes and movements in the hedging and translation
reserve in equity are detailed in the Statement of Comprehensive Income and described in note 28.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in
equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts accumulated in equity
are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line of the income statement
as the recognised hedged item.
Hedge accounting is discontinued when the Group de-designates the hedging relationship, the hedging instrument expires or is
sold, terminated, exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time
remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in
profit or loss.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 148
Tax
The tax expense represents the sum of current tax expense and deferred tax expense.
Current tax expense is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is provided, using the liability method, on temporary differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for accounting purposes.
Deferred tax assets are generally recognised for all deductible temporary differences, carry forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profits will be available against which these items can be utilised.
Deferred tax is not recognised for:
• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries, associates, and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised,
based upon tax rates and legislation that have been enacted or substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the income statement, except where it relates to items charged or credited directly to equity, in which case
the deferred tax is recognised in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same tax authority where the Group intends to settle its current tax
assets and liabilities on a net basis.
For acquisitions, deferred tax assets and liabilities are measured based on the provisional fair values at the acquisition date.
Share-based payment
Where the fair value of share options or shares under award requires the use of a valuation model, fair value is measured by use of
Black-Scholes or Monte Carlo Simulation models depending on the type of scheme, as set out in note 33. For performance-based
awards with non-market-based performance conditions or non-performance related awards which accrue dividend equivalents
through the vesting period, the fair value is equal to the share price on the date of grant as no adjustment to the market price is
required. The expected life used in the models has been adjusted, based on Management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations. Where relevant, the value of the option or award has also been
adjusted to take account of market conditions applicable to the option or award. Awards are equity settled with straight-line vesting.
Inventories
Inventories are stated at the lower of cost and net realisable value and comprise service spares, supplies and consumables used in
the rendering of services to our customers. Cost comprises direct materials and, where applicable, direct labour costs that have
been incurred in bringing the inventories to their present location and condition.
Trade receivables
Trade receivables are recognised initially at cost (being the same as fair value) and subsequently at amortised cost less any credit
notes, provision for impairment and expected credit losses, to ensure that amounts recognised represent the recoverable amount.
Determining whether a trade receivable is impaired requires judgement to be applied based on the information available at each
reporting date. A provision for impairment arises where there is evidence that the Group will not be able to collect amounts due for
reasons other than customer default, which is achieved by creating an allowance for doubtful debts recognised in the income
statement within expenses. When a trade receivable is expected to be uncollectible for reasons other than credit-related losses, it is
provided for within the allowance. Subsequent recoveries of amounts previously provided for or written off are credited against
expenses.
The majority of contracts entered into by the Group are with government organisations and therefore historic levels of default are
relatively low and as a result, the risks associated with this judgement are not considered to be significant. An expected credit loss is
recorded where there is evidence that a counterparty is at risk of default due to their credit worthiness. If the loss was material, the
amount would be presented separately in the Consolidated Income Statement, however, the Group’s customer base is
predominantly government or government-backed and as a result, the Group’s expected credit loss at a given point in time across
the entirety of the customer base is typically immaterial.
For acquisitions, the best estimate at acquisition date of trade and other receivables are the gross contractual amounts as there are
no cash flows that are not expected to be collected.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 149
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and balances with banks and similar institutions which are readily convertible to
known amounts of cash, subject to insignificant changes in value and have a maturity of three months or less from the date of
acquisition. This definition is also used for the Consolidated Cash Flow Statement.
Leases
The Group uses leases in the delivery of a number of contracts and in other centralised functions. Most notably, the Group uses
accommodation leases in the delivery of the Asylum Accommodation and Support Services contract, vehicle leases in the Prisoner
Escort and Custody Services contract and to deliver its UK vehicle fleet and support offices, amongst others. Where leases are
utilised in the delivery of contracts, the Group aims to limit the duration of any non-cancellable periods of leases to be no longer
than the duration of the underlying contract. For non-contract related leases, the Group has set policies on lease duration and
purpose to ensure their appropriate use.
On entering into a lease, a lease liability is recorded equal to the value of future lease payments discounted at the appropriate
incremental borrowing rate and, simultaneously, a right of use asset is created representing the right conferred to control the
manner of use of the leased asset. The Group typically uses an appropriate incremental borrowing rate, based on the lease location
and duration, as it typically does not have access to the interest rate implicit in the lease.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are charged directly to the income statement and corresponding
assets are depreciated on a straight-line basis over the lease term.
The lease term is measured as the non-cancellable period of a lease, together with periods covered by an option to extend the lease
if it is reasonably certain that the option will be exercised, and periods covered by an option to terminate the lease if it is reasonably
certain that the option will not be exercised. The lease term is reassessed if an event occurs which causes either the non-cancellable
period to change, or another event occurs which changes the assessment of the likelihood of exercising an option included in the
lease.
All changes to leases are accounted for on a prospective basis from the point at which the change is triggered.
Where, on inception, the term of a lease is less than 12 months or the value of the leased asset is less than £5,000, or both, rentals
payable under the lease are charged to the income statement on a straight-line basis over the term of the relevant lease.
For acquisitions, leases are measured as the present value of the remaining lease payments as if the acquired lease was a new lease
at the acquisition date.
Loans
Loans are stated at amortised cost using the effective interest rate method. Accrued interest is recorded separately from the
associated borrowings within current liabilities.
Loans are described as non-recourse loans and classified as such only if no Group company other than the relevant borrower has an
obligation, under a guarantee or other arrangement, to repay the debt.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised as an expense in the period in which they are incurred.
Provisions
Provisions are recognised when the Group has an obligation to make a cash outflow as a result of a past event. Provisions are
measured at the best estimate of the expenditure required to settle the obligation at the balance sheet date when settlement is
considered to be likely.
Onerous contract provisions (OCPs) arise when the unavoidable costs of meeting contractual obligations exceed the remuneration
expected to be received. Unavoidable costs include total contract costs together with a rational allocation of shared costs that can
be directly linked to fulfilling contractual obligations, which have been systematically allocated to OCPs on the basis of key cost
drivers except when this is impracticable, where contract revenue is used as a proxy to activity. The provision is calculated as the
lower of the termination costs payable for an early exit and the best estimate of net cost to fulfil the Group’s unavoidable contract
obligations. Where a customer has an option to extend a contract and it is likely that such an extension will be made, the expected
net cost arising during the extension period is included within the calculation. However, where a profit can be reasonably expected
in the extension period, no credit is taken on the basis that such profits are uncertain given the potential for the customer to either
not extend or offer an extension under lower pricing terms. Further details of the judgements can be seen in note 3.
Contingent liabilities on business combinations
Any present obligation that exists when a business is acquired is recognised as a liability within provisions measured at its fair value,
even if the outflow of economic benefits is not probable.
After initial recognition and until the liability is settled, cancelled, or expires, the liability continues to be measured at the amount initially
recognised in the business combination unless the liability becomes probable. Once probable it is then measured at the higher of the
amount initially recognised or the amount that would be recognised based on the accounting policy for provisions above.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 150
Net investments in foreign operations
Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations are initially
recognised in equity and accumulated in the hedging and translation reserve and reclassified from equity to profit or loss on
disposal of the net investment. When monetary items no longer form part of a hedging relationship, the exchange differences that
arose during the time that the hedge was in place remain in the hedging translation reserve until such time as the net investment is
disposed of.
Dividends payable
Dividends are recorded in the Group’s Consolidated Financial Statements in the period in which they are declared, appropriately
authorised and no longer at the discretion of the Company.
Share repurchase arrangements
Any shares repurchased (excluding shares repurchased by employee share ownership trusts) are recognised when legal ownership
is transferred to the Group. These are measured at cost and are included in the treasury share reserve until used or cancelled.
Any shares that the Group is contractually committed to purchase after the balance sheet date are recognised at the expected cost
and included in the treasury share reserve.
When treasury shares are cancelled the cost is transferred from the treasury share reserve into retained earnings.
Shares purchased by employee share ownership trusts are recognised when legal ownership is transferred to the trust. These are
measured at cost and are included in the own share reserve until transferred to the share based payment reserve on exercise of
share awards.
Segmental information
Segmental information is based on internal reports about components of the Group that are regularly reviewed by the Group’s Chief
Operating Decision Maker (CODM) in order to allocate resources to the segments and to assess their performance. The CODM is
considered to be the Board of Directors as a body.
Segmental revenue is analysed on an external basis. Inter-segment revenue is not presented as it is not significant in the context of
revenue as a whole. Net finance costs are not presented for each operating segment as they are reviewed on a consolidated basis
by the CODM.
Specific corporate expenses are allocated to the corresponding segments. Segment assets comprise goodwill, other intangible
assets, property, plant and equipment including right of use assets, inventories, trade and other receivables (excluding corporation
tax recoverable) and any retirement benefit assets. Segment liabilities comprise trade and other payables, lease liabilities, provisions
and retirement benefit obligations.
3. Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group’s accounting policies, which are described in note 2, Management has made the following
judgements that have the most significant effect on the amounts recognised in the Consolidated Financial Statements. As described
below, many of these areas of judgement also involve a high level of estimation uncertainty.
Key sources of estimation uncertainty
Provisions for onerous contracts
Determining the carrying value of onerous contract provisions requires assumptions and complex judgements to be made about the
future performance of the Group’s contracts. The level of uncertainty in the estimates made, either in determining whether a
provision is required, or in the calculation of a provision booked, is linked to the complexity of the underlying contract and the form
of service delivery. Due to the level of uncertainty and a combination of variables associated with those estimates, there is a
significant risk that there could be a material adjustment to the carrying amounts of onerous contract provisions within the next
financial reporting period. This includes the potential recognition of onerous contract provisions for contracts which Management
has assessed do not require a provision as at 31 December 2024.
Major sources of uncertainty which could result in a material adjustment within the next financial year are:
• the ability of the Group to maintain or improve operational performance to ensure costs or performance-related penalties are in
line with expected levels;
• volume driven revenue and costs being within the expected ranges;
• the outcome of open claims made by or against a customer regarding contractual performance or contractual negotiations
taking place where there is expected to be a positive outcome from the Group’s perspective; and
• the ability of suppliers to deliver their contractual obligations on time and on budget.
In the current year, there has been an overall net charge of new and existing onerous contract provisions (OCPs) within UOP of
£5.7m (2023: £8.2m). Revisions have resulted from triggering events in the current year, either through changes in contractual
positions or changes in circumstances which could not have been reasonably foreseen at the previous balance sheet date. To
mitigate the level of uncertainty in making these estimates, Management regularly compares actual performance of the contracts
against previous forecasts and considers whether there have been any changes to significant judgements.
The future range of possible outcomes in respect of those assumptions and significant judgements made to determine the carrying
value of onerous contracts could result in either a material increase or decrease in the value of onerous contract provisions in the
next financial year. The extent to which actual results differ from estimates made at the reporting date depends on the combined
outcome and timing of a large number of variables associated with performance across multiple contracts.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 151
The individual provisions are discounted where the impact is assessed to be significant. When used, discount rates are calculated
based on the estimated risk-free rate of interest for the region in which the provision is located and matched against the ageing
profile of the provision.
The Group undertakes a robust assessment at each reporting date to determine whether any individual customer contracts, which
the Group has entered into, are onerous and require a provision to be recognised in accordance with IAS 37 Provisions, Contingent
Liabilities & Contingent Assets. The Group operates a large number of long-term contracts at different phases of their contract life
cycle. Within the Group’s portfolio, there are a small number of contracts where the balance of risks and opportunities indicates that
they might be onerous if transformation initiatives or contract changes are not successful. The Group has concluded that these
contracts do not require an onerous contract provision on an individual basis. Following the individual contract reviews, the Group
has also undertaken a top-down assessment which assumes that, while the contracts may not be onerous on an individual basis, as a
portfolio there is a risk that at least some of the transformation programmes or customer negotiations required to avoid a contract
loss will not be fully successful, and it is more likely than not that one or more of these contracts will be onerous. Therefore, in
considering the Group’s overall onerous contract provision, the Group has made a best estimate of the provision required to take
into consideration this portfolio risk. As a result, the risk of OCPs and the monitoring of individual contracts for indicators remains a
critical estimate for the Group. As at 31 December 2024, the provision recognised in respect of this portfolio of contracts is £6.6m
(2023: £8.1m).
Onerous contract provisions totalling £13.2m (2023: £8.6m) are estimated for individual contracts, based on the specific
characteristics of the contract including possible contract variations, estimates of transaction price such as variable revenues and
forecast costs to fulfil those contracts. As noted above, the Group also holds a balance of £6.6m in respect of the portfolio risk
associated with operating a large number of long-term contracts, giving a total onerous contract provision of £19.8m (see note 25;
2023: £16.7m) . Management has considered the nature of the estimate for onerous contract provisions and concluded that it is
reasonably possible that outcomes within the next financial year may be different from Management’s assumptions and could, in
aggregate, require a material adjustment to the onerous contract provision. However, due to the estimation uncertainty across
numerous contracts each with different characteristics, it is not practical to provide a quantitative analysis of the aggregated
judgements that are applied, and Management does not believe that disclosing a potential range of outcomes on a consolidated
basis would provide meaningful information to a reader of the financial statements.
While the focus of the estimate is to determine whether the Group is required to record an onerous contract provision, Management
also inherently assess whether any assets dedicated to the contract are required to be impaired where contracts are forecast to
make sustainable losses in the future. In accordance with IAS 37, the Group will impair assets dedicated to the contract before the
recognition of an onerous contract provision.
Impairment of goodwill
A key area of judgement is the impairment testing of goodwill. At each reporting period an assessment is performed in order to
determine whether there are any indicators of impairment, which involves considering the performance of the business and any
significant changes to the markets in which the Group operates. There continues to be headroom across all cash generating units
(CGUs) even when reasonably possible sensitivities are applied, except for Asia Pacific as detailed in note 16.
Determining whether goodwill requires an actual impairment involves an estimation of the expected value in use or fair value less
cost of disposal of the asset (or CGU to which the asset relates), whichever results in a higher value. The Group’s CGUs are consistent
with its reportable operating segments as outlined in note 4. The value in use calculation, the method which returns the higher value
for all CGU’s (see note 16), involves an estimation of future cash flows and also the selection of appropriate discount rates and
terminal growth rates, all of which involve considerable judgement. The future cash flows are derived from the latest Board-
approved five-year plan, with the key assumptions being revenue growth, which is sensitive to known and unknown pipeline
opportunities, and is common within the industry, win rates for rebids and new business, margins on existing and new business, and
cash conversion rates, all of which drive short-term growth rates. The Board-approved five-year plan has an element of contingency
to take into consideration potential risks within these assumptions.
Discount rates and terminal growth rates are calculated with reference to the specific risks associated with the assets, based on
advice provided by external experts engaged by the Directors. The calculation of discount rates is performed using a risk-free rate
appropriate to the currency of the cash flows related to the CGU being tested. This rate is then adjusted to factor in local market
risks and risks specific to the Group, with cash flow risks considered within the cash flows themselves rather than the discount rate.
For the purpose of impairment testing in accordance with IAS36 Impairment of Assets, the Group estimates pre-tax discount rates
based on the post-tax weighted average cost of capital, which is used for internal purposes.
There is heightened judgement in determining the future cash flows of the Asia Pacific CGU, as the Division has performed below
expectations due to lower variable income on material contracts, a challenging labour market, and lower-than-expected win rates
for new business. Additionally, on 8 November 2024, the Group was notified that it had lost the rebid of the immigration contract
which has had a significant impact on the cash flows within the five-year plan for the CGU; as at 31 December 2023, the Directors
had estimated retaining the contract on a weighted basis due to the Group’s performance in meeting the service requirements
under the contract and historically high retention rate within the region. Based on the modelling performed, the Directors have
concluded that the goodwill attributable to the Asia Pacific CGU is no longer supportable (2023: Headroom £110.0m) and have
recognised an impairment in the current year of £114.5m (see note 16).
Impairment losses are recognised immediately within expenses in the income statement unless, in Management’s judgement, the
loss is considered to be an exceptional item being outside of the normal operations of the business and material to the results of the
Group by virtue of its size or nature and hence the Group’s criteria for such items are met.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 152
Provisions for onerous contracts continued
There is significant judgement required in estimating the recoverable amount of the CGU which includes expectations of future
revenue growth, operating costs, profit margins, operating cash flows and the discount rate for the CGU. The estimates used
generate a range of outcomes which could result in the full impairment of the remaining goodwill, or no impairment being
recognised with headroom of £100.1m (see note 16 for further details). The key estimates which have the most significant impact on
determining the recoverable amount of the CGU are:
• Win rates applied for new business and rebids based on the known pipeline of opportunities within the region.
• The outcome of the Base Services Transformation Programme contract, which forms a significant part of the CGU’s pipeline, the
outcome of which is expected in the first half of 2025.
Retirement benefit obligations
Identifying whether the Group has a retirement benefit obligation as a result of contractual arrangements entered into requires a
level of judgement, largely driven by the legal position held between the Group, the customer and the relevant pension scheme.
The Group’s retirement benefit obligations are covered in note 29.
The calculation of retirement benefit obligations is dependent on material key assumptions including discount rates, mortality rates,
inflation rates and future contribution rates.
In accounting for the defined benefit schemes, the Group has applied the principle that the asset recognised for the Serco Pension
and Life Assurance Scheme (SPLAS) and the shared cost section of the Railways Pension Scheme is equal to the full surplus that will
ultimately be available to the Group as a future refund.
No pension assets are invested in the Group’s own financial instruments or property.
Pension assets held by insurance companies including the annuity policies in SPLAS are valued at the equal and opposite of the
defined benefit obligations that they insure.
The SPLAS pension scheme invests into private debt funds which do not have an observable market price and are remeasured to fair
value at each reporting date. The valuation methodology relies upon the net asset value provided by the fund administrator at 30
September adjusted for actual cash flows in the period to 31 December. The Group has undertaken a risk assessment to assess
whether this industry standard valuation methodology remains the Group’s best estimate at 31 December and has concluded that
although there is heightened estimation uncertainty, this methodology provides the most accurate valuation and estimate for
Management.
Critical accounting judgements
Deferred tax
Deferred tax assets are recognised on tax deductible temporary differences to the extent that it is probable that taxable profit will be
available against which they can be utilised. Significant Management judgement is required to determine the amount of the
deferred tax asset that should be recognised, based upon the likely timing, geography and level of future taxable profits.
A £177.5m, UK deferred tax asset is recognised on the Group’s balance sheet at 31 December 2024 (2023: £179.9m). This is
recognised on the basis of a sustained return to profitability of the UK business which will enable future tax deductions and previous
tax losses within the UK to be utilised.
An Australian deferred tax asset continues to be recognised in full, on the basis that this business is expected to have future profits
against which these future tax deductions will be used. This asset is valued at £50.5m on the Group’s balance sheet at 31 December
2024 (2023: £52.5m).
Further details on deferred taxes are disclosed in note 14.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 153
Impairment of goodwill continued
Use of Alternative Performance Measures: Underlying Operating Profit
The Group uses Underlying Operating Profit (UOP) as an alternative measure to reported operating profit by making adjustments
for the following:
IAS 1 Presentation of Financial Statements sets out disclosure requirements regarding fair representation of information and the
composition, labelling, prominence and consistency of additional line items and subtotals in financial statements. IAS 1 paragraph
97 requires separate disclosure of the nature and amount of material items of income or expense. The company uses the term
‘exceptional items” to categorise those items which require disclosure under IAS 1 paragraph 97, but this is not a term defined by
IFRS. These items are separately disclosed and explained within note 8 to the Financial Statements. A level of judgement is involved
in determining what items are classified as exceptional items. Management considers exceptional items to be outside of normal
practice of the business (i.e. the financial impact is unusual or rare in occurrence), and are material to the results of the Group by
virtue of their size or nature, and are suitable for separate presentation and detailed explanation. There is a level of judgement
required in determining which items are exceptional on a consistent basis and require separate disclosure. Further details can be
seen in note 8.
Amortisation and impairment of intangibles arising on acquisitions: These are excluded, because these charges are based on
judgements about the value and economic life of assets that, in the case of items such as customer relationships, would not be
capitalised in normal operating practice.
The consolidated income statement on page 135 and the segmental analysis in note 4 includes a reconciliation of reported
operating profit to UOP.
Climate risk
Risks arising from climate change may have future adverse effects on the Group’s business activities. These risks include:
• major physical risks such as extreme weather events, impacting assets, operations and employee wellbeing;
• major transitional risks including policy and legal changes such as increasing reporting and contractual requirements and
increasing carbon taxes and levies;
• technology risks including costs to transition to lower emission options; and
• reputational risks such as investor and stakeholder concerns on not transitioning quickly enough to Net Zero.
As an outsourcing organisation operating across multiple sectors and geographies, the ways in which climate change may impact
the Group’s and its customers’ assets (where the Group delivers the majority of its services), supply chains and operations is diverse.
In preparing the Group financial statements, Management has considered the impact of climate-related matters but has not
identified significant risks induced by climate changes that could negatively and materially affect the Group’s financial statements. In
arriving at this conclusion, Management has considered the areas of the Group’s financial statements where climate-related matters
could reasonably impact measurement and disclosure including key estimates and judgements.
When undertaking the Goodwill impairment review, the Group’s latest approved forecast is used to estimate the value in use of its
CGUs. Climate assumptions are built into the contract level budgets to the extent that contractual commitments exist. However,
Management’s current assessment shows that there are no such material contractual obligations. In addition, Group-wide strategic
commitments, such as those made as part of the Net Zero targets and planning, are not material in the short term for inclusion in the
Group’s forecast. The forecast is underpinned by a number of assumptions, and it represents the Group’s best estimate of future
business performance. Management cannot reliably predict how climate changes will impact the forecast particularly in areas such
as carbon levies and the cost of insurance. As such, Management has presented sensitivity analysis to demonstrate the Group’s
ability to withstand changes to the forecast before recording an impairment (see note 16). The forecast used in the goodwill
impairment review is also used in the assessment of deferred tax assets and the Group’s ability to continue as a going concern.
The Group also continuously reviews the property, plant and equipment under its control to identify opportunities to reduce its
carbon impact. Primarily there has been a transition to electric and hybrid vehicles, both in the company car fleet as well as vehicles
required to operate contracts. For example, electric light commercial vehicles are beginning to replace the diesel fleet in certain
geographies. The transition is currently being undertaken where assets are identified as nearing the end of their useful economic life
(UEL) and therefore there has been no revision to the UEL related to motor vehicles.
Other areas considered include retirement benefit obligations, namely the valuation of assets, share-based payments linked to ESG
targets and those critical accounting judgements and sources of estimation uncertainty not noted above.
Management continuously assesses the impact of climate-related matters. Assumptions will likely change in the future in response to
the Group’s understanding of risks and opportunities maturing, forthcoming environmental regulations, climate change impacts,
new commitments taken and increasing customer Net Zero requirements. These changes, if not anticipated and continually
assessed, could have an impact on the Group’s future cash flows, financial performance and financial position.
4. Segmental information
Segmental revenue is analysed on an external basis. Inter-segment revenue is not presented as it is not significant in the context of
revenue as a whole. Net finance costs are not presented for each reportable operating segment as they are reviewed on a
consolidated basis by the CODM.
Specific corporate expenses are allocated to the corresponding segments. Segment assets comprise goodwill, other intangible
assets, property, plant and equipment including right of use assets, inventories, trade and other receivables (excluding corporation
tax recoverable) and any retirement benefit asset. Segment liabilities comprise trade and other payables, lease liabilities, provisions
and retirement benefit obligations.
The accounting policies of the reportable operating segments are the same as the Group’s accounting policies described in note 2.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 154
4. Segmental information continued
The Group’s operating segments reflecting the information reported to the Board in 2024 under IFRS 8 Operating Segments are as
set out below:

Reportable operating segments | Sectors
UK & Europe | Services for sectors including Citizen Services, Defence, Health & Other Facilities
| Management, Justice & Immigration and Transport delivered to UK Government, UK
| devolved authorities and other public sector customers in the UK & Europe
North America | Services for sectors including Citizen Services, Defence and Transport delivered to US
| federal and civilian agencies, selected state and municipal governments and the
| Canadian Government
Asia Pacific | Services for sectors including Citizen Services, Defence, Health & Other Facilities
| Management, Justice & Immigration and Transport in the Asia Pacific region including
| Australia, New Zealand and Hong Kong
Middle East | Services for sectors including Citizen Services, Defence, Health & Other Facilities
| Management and Transport in the Middle East region
Corporate | Central and head office costs

Each reportable operating segment is focused on a narrow group of customers in a specific geographic region and is run by a local
Management team which reports directly to the Group’s Chief Operating Decision Maker (CODM) on a regular basis. As a result of
this focus, the sectors in each region have similar economic characteristics and are aggregated at the reportable operating segment
level in these financial statements.
Information about major customers
The Group has three major governmental customers which each represent more than 5% of Group revenues in the current year. The
customers’ revenues were £1,709.0m (2023: £1,863.8m) for the UK Government within the UK & Europe segment; £1,129.6m (2023:
£1,167.7m) for the US Government within the North America segment; and £709.4m (2023: £782.8m) for the Australian Government
within the Asia Pacific segment. These customers do not act in a unified way in making purchase decisions, and in general, the
Group engages directly with the various departments of these customers in respect of the services it provides.
The following is an analysis of the Group’s revenue, results, assets and liabilities by reportable operating segment:

| UK&E | North America | Asia Pacific | Middle East | Corporate | Total
Year ended 31 December 2024 | £m | £m | £m | £m | £m | £m
Revenue | 2,445.9 | 1,326.1 | 799.4 | 215.9 | — | 4,787.3
Result |  |  |  |  |  |
Underlying operating profit/(loss) | 147.9 | 136.1 | 24.6 | 16.0 | (51.1) | 273.5
Amortisation and impairment of intangibles |  |  |  |  |  |
arising on acquisition (excluding exceptional | (13.4) | (15.5) | — | — | — | (28.9)
items) |  |  |  |  |  |
Exceptional Items comprising |  |  |  |  |  |
- Operating items | — | — | — | — | — | —
- Goodwill impairment | — | — | (114.5) | — | — | (114.5)
Operating profit/(loss) | 134.5 | 120.6 | (89.9) | 16.0 | (51.1) | 130.1
Net finance cost |  |  |  |  |  | (33.1)
Profit before tax |  |  |  |  |  | 97.0
Tax charge |  |  |  |  |  | (52.5)
Profit for the year |  |  |  |  |  | 44.5
Supplementary Information |  |  |  |  |  |
Share of profits in joint ventures and associates, net of interest and tax | 22.8 | — | — | — | — | 22.8
Total depreciation and impairment of plant, property and equipment and right of use | (129.4) | (19.3) | (8.8) | (1.7) | 0.7 | (158.5)
assets |  |  |  |  |  |
Amortisation and impairment of intangible assets | (5.7) | (1.1) | (1.4) | (0.2) | — | (8.4)

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 155
4. Segmental information continued

| UK&E | North America | Asia Pacific | Middle East | Corporate | Total
Year ended 31 December 2023 | £m | £m | £m | £m | £m | £m
Revenue | 2,439.5 | 1,362.8 | 845.1 | 226.4 | — | 4,873.8
Result |  |  |  |  |  |
Underlying operating profit/(loss) | 120.8 | 138.2 | 23.7 | 15.3 | (49.3) | 248.7
Amortisation and impairment of intangibles |  |  |  |  |  |
arising on acquisition (excluding exceptional | (3.4) | (16.0) | (11.5) | — | — | (30.9)
items) |  |  |  |  |  |
Exceptional Items comprising |  |  |  |  |  |
- Operating items | 9.9 | — | — | — | 43.9 | 53.8
- Goodwill impairment | — | — | — | — | — | —
Operating profit/(loss) | 127.3 | 122.2 | 12.2 | 15.3 | (5.4) | 271.6
Net finance cost |  |  |  |  |  | (24.6)
Profit before tax |  |  |  |  |  | 247.0
Tax charge |  |  |  |  |  | (42.3)
Tax on exceptional items |  |  |  |  |  | (2.3)
Profit for the year |  |  |  |  |  | 202.4
Supplementary Information |  |  |  |  |  |
Share of profits in joint ventures and associates, net of interest and tax | 29.0 | — | — | — | — | 29.0
Total depreciation and impairment of plant, property and equipment and right of use | (99.4) | (20.6) | (10.0) | (2.1) | (11.9) | (144.0)
assets |  |  |  |  |  |
Amortisation and impairment of intangible assets | (1.9) | (0.9) | (1.1) | (0.1) | (3.6) | (7.6)

| UK&E | North America | Asia Pacific | Middle East | Corporate | Total
As at 31 December 2024 | £m | £m | £m | £m | £m | £m
Segment assets |  |  |  |  |  |
Interests in joint ventures and associates | 27.7 | — | — | 0.4 | — | 28.1
Other segment assets 1 | 1,052.2 | 886.7 | 136.1 | 68.6 | 52.7 | 2,196.3
Total segment assets 4 | 1,079.9 | 886.7 | 136.1 | 69.0 | 52.7 | 2,224.4
Unallocated assets 2 |  |  |  |  |  | 438.9
Consolidated total assets |  |  |  |  |  | 2,663.3
Segment liabilities |  |  |  |  |  |
Segment liabilities 4 | (921.9) | (169.6) | (213.6) | (61.6) | (79.4) | (1,446.1)
Unallocated liabilities 2 |  |  |  |  |  | (371.7)
Consolidated total liabilities |  |  |  |  |  | (1,817.8)
Supplementary Information |  |  |  |  |  |
Additions to non-current assets 3 | 280.6 | 22.5 | 9.3 | 11.4 | 0.2 | 324.0
Segment non-current assets | 826.8 | 686.5 | 32.4 | 22.8 | — | 1,568.5
Unallocated non-current assets |  |  |  |  |  | 230.2

1. The Corporate segment assets and liabilities include balance sheet items which provide benefit to the wider Group, including defined benefit pension
schemes.
2. Unallocated assets and liabilities include deferred tax, cash and cash equivalents, derivative financial instruments and loans.
3. Additions to non-current assets reflects additions and amounts arising on acquisition for goodwill, other intangible assets, property plant and equipment and
right of use assets.
4. In 2024, central managed assets and liabilities were moved from corporate to UK&E to reflect an internal restructure of overhead functions predominately
used by UK&E.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 156
4. Segmental information continued

| UK&E | North America | Asia Pacific | Middle East | Corporate | Total
As at 31 December 2023 | £m | £m | £m | £m | £m | £m
Segment assets |  |  |  |  |  |
Interests in joint ventures and associates | 31.8 | — | — | 0.3 | — | 32.1
Other segment assets 1 | 891.6 | 897.7 | 254.5 | 62.4 | 113.2 | 2,219.4
Total segment assets | 923.4 | 897.7 | 254.5 | 62.7 | 113.2 | 2,251.5
Unallocated assets 2 |  |  |  |  |  | 358.8
Consolidated total assets |  |  |  |  |  | 2,610.3
Segment liabilities |  |  |  |  |  |
Segment liabilities | (725.1) | (172.0) | (223.5) | (54.1) | (124.7) | (1,299.4)
Unallocated liabilities 2 |  |  |  |  |  | (277.2)
Consolidated total liabilities |  |  |  |  |  | (1,576.6)
Supplementary Information |  |  |  |  |  |
Additions to non-current assets 3 | 125.3 | 16.7 | 8.0 | 2.6 | 15.7 | 168.3
Segment non-current assets | 677.1 | 688.6 | 151.9 | 13.5 | 60.8 | 1,591.9
Unallocated non-current assets |  |  |  |  |  | 235.8

1 The Corporate segment assets and liabilities include balance sheet items which provide benefit to the wider Group, including defined benefit pension
schemes and corporate intangible assets.
2 Unallocated assets and liabilities include deferred tax, cash and cash equivalents, derivative financial instruments and loans.
3 Additions to non-current assets reflects additions and amounts arising on acquisition for goodwill, other intangible assets, property plant and equipment
and right of use assets.
5. Joint ventures and associates
During the year, the most significant joint ventures and associates in terms of scale of operations were Merseyrail Services Holding
Company Limited (Merseyrail) and VIVO Defence Services Limited (VIVO). Both are incorporated and operated in the UK.
Merseyrail generated revenue of £215.0m (2023: £217.0m), with the Group’s share of profits net of interest and tax for the year
being £10.9m (2023: £15.9m). The reduction in Merseyrail revenue and profits is primarily due to a one-off commercial settlement
received in 2023. The Group received dividends of £14.1m (2023: £21.1m).
VIVO revenue for the year was £917.8m (2023: £844.9m) with the Group’s share of profits net of interest and tax for the year being
£11.9m (2023: £13.1m). The increase in VIVO’s revenue is largely due to volumes and the impact of indexation. The decrease in
profit is due to lower margins on billable work and the mix of margins within different contracts. The Group received dividends of
£16.7m (2023: £nil).
Summarised financial information of Merseyrail and VIVO, and an aggregation of the other equity accounted entities in which the
Group has an interest in is as follows:
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 157
31 December 2024

|  |  | Group portion | Group portion |
| Merseyrail | VIVO | of material joint | of other joint |
| (100% of | (100% of | ventures and | ventures and |
| results) | results) | associates 1 | associates 1 | Total
Summarised financial information | £m | £m | £m | £m | £m
Revenue | 215.0 | 917.8 | 502.6 | 1.9 | 504.5
Operating profit | 29.6 | 47.0 | 30.6 | — | 30.6
Net (finance costs)/investment revenue | (0.9) | 0.5 | (0.1) | — | (0.1)
Tax charge | (6.9) | (11.8) | (7.7) | — | (7.7)
Profit from operations | 21.8 | 35.7 | 22.8 | — | 22.8
Other comprehensive income | 1.4 | — | 0.7 | — | 0.7
Total comprehensive income | 23.2 | 35.7 | 23.5 | — | 23.5
Non-current assets | 53.9 | 13.0 | 33.4 | — | 33.4
Current assets | 80.6 | 212.9 | 131.8 | 1.1 | 132.9
Current liabilities | (79.0) | (173.8) | (115.2) | (0.6) | (115.8)
Non-current liabilities | (36.2) | (16.4) | (25.4) | — | (25.4)
Net Assets | 19.3 | 35.7 | 24.6 | 0.5 | 25.1
Portion of Group ownership | 50% | 50% |  |  |
Carrying amount of investment 1 | 9.7 | 14.9 | 24.6 | 0.5 | 25.1

1. For Merseyrail and other joint ventures and associates, these are the total results of the entity multiplied by the proportion of Group ownership. For VIVO,
although the equity ownership is 50%, the share of profits from contracts operated by VIVO is either 25% or 50%. Therefore the Group portion of material joint
ventures will not represent exactly 50% of their income and net assets.

|  |  | Group portion | Group portion |
| Merseyrail | VIVO | of material joint | of other joint |
| (100% of | (100% of | ventures and | ventures and |
| results) | results) | associates 1 | associates 1 | Total
| £m | £m | £m | £m | £m
Cash and cash equivalents | 52.4 | 46.9 | 43.4 | 0.4 | 43.8
Current financial liabilities excluding trade and other payables and provisions | (25.4) | (14.3) | (20.1) | (0.3) | (20.4)
Non-current financial liabilities excluding |  |  |  |  |
intercompany loans, trade and other payables and provisions | (36.0) | (16.3) | (25.3) | — | (25.3)
Depreciation and amortisation | (12.1) | (4.8) | (6.1) | — | (6.1)
Interest income | 2.3 | 1.6 | 1.9 | — | 1.9
Interest expense | (3.2) | (1.1) | (2.0) | — | (2.0)

1. For Merseyrail and other joint ventures and associates, these are the total results of the entity multiplied by the proportion of Group ownership. For VIVO,
although the equity ownership is 50%, the share of profits from contracts operated by VIVO is either 25% or 50%. Therefore the Group portion of material joint
ventures will not represent exactly 50% of their income and net assets.
The Group’s share of liabilities within joint ventures and associates is £141.2m (2023: £131.4m) which include £24.2m of lease
obligations (2023: £29.1m) and £nil in joint venture loan liabilities (2023: £10.0m). The balance is trade and other payables which
arise as part of the day-to-day operations carried out by those entities. Other than liabilities associated with leases, the Group has no
material exposure to third party debt or other financing arrangements within any of its joint ventures and associates.
VIVO’s funding requirement is agreed by both shareholders and based on the strategic business plan. At 31 December 2023, the
funding provided was £10.0m from each shareholder which was repaid in the year ended 31 December 2024.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 158
31 December 2023

|  |  | Group portion | Group portion |
| Merseyrail | VIVO | of material joint | of other joint |
| (100% of | (100% of | ventures and | ventures and |
| results) | results) | associates 1 | associates 1 | Total
Summarised financial information | £m | £m | £m | £m | £m
Revenue | 217.0 | 844.9 | 472.4 | 1.0 | 473.4
Operating profit | 41.5 | 35.3 | 38.1 | — | 38.1
Net finance costs | 0.3 | (1.2) | (0.2) | — | (0.2)
Tax charge | (10.0) | (7.7) | (8.9) | — | (8.9)
Profit from operations | 31.8 | 26.4 | 29.0 | — | 29.0
Other comprehensive income | 2.2 | — | 1.1 | — | 1.1
Total comprehensive income | 34.0 | 26.4 | 30.1 | — | 30.1
Non-current assets | 61.3 | 8.9 | 34.3 | — | 34.3
Current assets | 48.5 | 230.9 | 127.7 | 1.5 | 129.2
Current liabilities | (39.9) | (186.0) | (111.5) | (1.1) | (112.6)
Non-current liabilities | (45.6) | (14.1) | (18.7) | (0.1) | (18.8)
Net Assets | 24.3 | 39.7 | 31.8 | 0.3 | 32.1
Portion of Group ownership | 50% | 50% |  |  |
Carrying amount of investment | 12.2 | 19.9 | 31.8 | 0.3 | 32.1

1. For Merseyrail and other joint ventures and associates, these are the total results of the entity multiplied by the proportion of Group ownership. For VIVO,
although the equity ownership is 50%, the share of profits from contracts operated by VIVO is either 25% or 50%. Therefore the Group portion of material joint
ventures will not represent exactly 50% of their income and net assets.

|  |  | Group portion | Group portion |
| Merseyrail | VIVO | of material joint | of other joint |
| (100% of | (100% of | ventures and | ventures and |
| results) | results) | associates1 | associates1 | Total
Summarised financial information | £m | £m | £m | £m | £m
Cash and cash equivalents | 27.2 | 43.8 | 35.5 | 0.4 | 35.9
Current financial liabilities excluding trade and other payables and provisions | (13.5) | (9.5) | (12.9) | (0.3) | (13.2)
Non-current financial liabilities excluding |  |  |  |  |
intercompany loans, trade and other payables and provisions | (45.4) | (14.1) | (38.6) | (0.1) | (38.7)
Current joint venture loans liability | — | (20.0) | (10.0) | — | (10.0)
Depreciation and amortisation | (9.1) | (4.0) | (5.0) | — | (5.0)
Interest income | 2.0 | 0.5 | 1.3 | — | 1.3
Interest expense | (1.7) | (1.7) | (1.6) | 0.1 | (1.5)

1. For Merseyrail and other joint ventures and associates, these are the total results of the entity multiplied by the proportion of Group ownership. For VIVO,
although the equity ownership is 50%, the share of profits from contracts operated by VIVO is either 25% or 50%. Therefore the Group portion of material joint
ventures will not represent exactly 50% of their income and net assets.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 159
6. Acquisitions
See note 36 for details of acquisitions announced subsequent to the Balance Sheet date.
On 1 March 2024, the Group acquired 100% of the issued share capital of European Homecare (EHC), a private provider of
immigration services in Germany. The operating results, assets and liabilities have been recognised effective 1 March 2024 and EHC
contributed £115.6m of revenue and £18.9m of operating profit before exceptional items, including an appropriate allocation of
charges for shared support services and fully allocated overheads, to the Group’s result during the year to 31 December 2024.
On 31 January 2024, the Group acquired 100% of the issued share capital of Climatize, a business that operates in the United Arab
Emirates and the Kingdom of Saudi Arabia offering ‘zero-carbon’ advisory and related engineering advisory services. The operating
results, assets and liabilities have been recognised effective 31 January 2024. Climatize contributed £2.3m of revenue and £1.4m of
operating profit before exceptional items, including an appropriate allocation of charges for shared support services and fully
allocated overheads, to the Group’s results during the year to 31 December 2024.
In the event that certain annual financial targets and conditions are achieved by Climatize, additional undiscounted consideration of
between nil or up to AED51.3m (£10.8m) might be payable in cash over a three year period. The fair value of the contingent
consideration of AED40m (£8.5m) was estimated by calculating the present value of the future expected cash flows. The estimate is
based on a discount rate of 12% and Climatize achieving the maximum financial target in each of the three years. As at 31 December
2024, there has been no change to the expected earn-out since acquisition.
The total impact of acquisitions to the Group’s cash flow position in the period was as follows:

| EHC | Climatize | Total
| £m | £m | £m
Enterprise value 1 | 34.0 | 13.0 | 47.0
Working capital and completion account finalisation | 9.7 | (2.0) | 7.7
Acquisition date fair value of consideration transferred | 43.7 | 11.0 | 54.7
Contingent consideration on acquisition | — | (8.5) | (8.5)
Cash consideration | 43.7 | 2.5 | 46.2
Cash acquired on acquisition of businesses | (24.9) | (0.5) | (25.4)
Acquisition of subsidiaries, net of cash acquired | 18.8 | 2.0 | 20.8

1. Enterprise value reflects the consideration prior to working capital and fair value adjustments on the acquisition date. In local currency the enterprise value
was €40m for EHC and AED60m for Climatize.
The fair value of assets acquired of the two acquisitions undertaken during the period are summarised below:

| EHC | Climatize | Total
| £m | £m | £m
Other intangible assets | 15.5 | — | 15.5
Property, plant and equipment | 5.7 | — | 5.7
Right of use assets | 1.7 | — | 1.7
Trade and other receivables 1 | 28.7 | 0.8 | 29.5
Cash and cash equivalents | 24.9 | 0.5 | 25.4
Trade and other payables | (9.0) | — | (9.0)
Provisions 2 | (27.0) | — | (27.0)
Corporation tax liabilities | (11.8) | — | (11.8)
Deferred tax liabilities | (4.7) | — | (4.7)
Lease obligations | (1.5) | — | (1.5)
Net Assets Acquired | 22.5 | 1.3 | 23.8
Goodwill 3 | 21.2 | 9.7 | 30.9
Acquisition date fair value of consideration transferred | 43.7 | 11.0 | 54.7

1. The fair value of acquired trade and other receivables was £28.7m. The gross contractual amount was £29.4m, with a loss allowance of £0.7m recognised on
acquisition.
2. See note 25 for details of the contingent liability recognised in provisions on acquisition for EHC.
3. The goodwill for EHC and Climatize is attributable to the workforce and an increase in market share. No goodwill is expected to be deductible for tax
purposes.
The total transaction and integration costs for EHC and Climatize recognised in administrative expenses for the year ended
31 December 2024 were £0.1m (2023: £1.1m).
Based on estimates made of the full-year impact of the acquisition of EHC and Climatize, had the acquisitions taken place on 1
January 2024, Group revenue and underlying operating profit for the period would have increased by approximately £23.8m and
£3.2m respectively, taking total Group revenue to £4,811.1m and total Group underlying operating profit to £276.7m.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 160
7. Revenue from contracts with customers
Revenue
Information regarding the Group’s major customers and a segmental analysis of revenue is provided in note 4.
An analysis of the Group’s revenue from its key market sectors, together with the timing of revenue recognition across the Group’s
revenue from contracts with customers, is as follows:

| UK&E | North America | Asia Pacific | Middle East | Total
Year ended 31 December 2024 | £m | £m | £m | £m | £m
Key sectors |  |  |  |  |
Defence | 358.2 | 932.5 | 181.4 | 26.3 | 1,498.4
Justice & Immigration | 1,409.2 | — | 323.1 | — | 1,732.3
Transport | 130.7 | 85.3 | 16.6 | 82.4 | 315.0
Health & Other Facilities Management | 217.1 | — | 160.2 | 83.7 | 461.0
Citizen Services | 330.7 | 308.3 | 118.1 | 23.5 | 780.6
| 2,445.9 | 1,326.1 | 799.4 | 215.9 | 4,787.3
Timing of revenue recognition |  |  |  |  |
Revenue recognised from performance obligations | 4.8 | — | — | — | 4.8
satisfied in previous periods |  |  |  |  |
Revenue recognised at a point in time | 48.0 | — | 12.3 | — | 60.3
Products and services transferred over time | 2,393.1 | 1,326.1 | 787.1 | 215.9 | 4,722.2
| 2,445.9 | 1,326.1 | 799.4 | 215.9 | 4,787.3

| UK&E | North America | Asia Pacific | Middle East | Total
Year ended 31 December 2023 | £m | £m | £m | £m | £m
Key sectors |  |  |  |  |
Defence | 355.0 | 931.9 | 156.7 | 30.9 | 1,474.5
Justice & Immigration | 1,329.8 | — | 351.3 | — | 1,681.1
Transport | 148.7 | 102.5 | 12.2 | 71.3 | 334.7
Health & Other Facilities Management | 227.4 | — | 196.5 | 103.2 | 527.1
Citizen Services | 378.6 | 328.4 | 128.4 | 21.0 | 856.4
| 2,439.5 | 1,362.8 | 845.1 | 226.4 | 4,873.8
Timing of revenue recognition |  |  |  |  |
Revenue recognised from performance obligations | 2.8 | — | 1.3 | — | 4.1
satisfied in previous periods |  |  |  |  |
Revenue recognised at a point in time | 42.1 | — | 11.4 | — | 53.5
Products and services transferred over time | 2,394.6 | 1,362.8 | 832.4 | 226.4 | 4,816.2
| 2,439.5 | 1,362.8 | 845.1 | 226.4 | 4,873.8

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 161
7. Revenue from contracts with customers continued
Transaction price allocated to remaining performance obligations
The following table shows the transaction price allocated to remaining performance obligations. This represents revenue expected
to be recognised in subsequent periods arising on existing contractual arrangements. In assessing the future transaction price, the
judgements of most relevance are the future term over which the transaction price is calculated and the estimation of variable
revenue to be included.
Where a contract with a customer includes within the term of the committed contract provisions for price-rebasing or a provision for
market testing, revenue beyond these is included to the extent that there are no indicators which suggest that the contract will not
continue past this point, and it is highly probable that a significant reduction will not occur. Where there is a requirement for the
Group, or a customer, to enter into a new contract, rather than continuing an existing contract, such an extension is not included for
the purposes of calculating future transaction price.
Additionally, the Group has a small subset of contracts that contain a termination for convenience clause, for example, due to
national security considerations, which are assumed by the Group not to be without cause. These contracts are considered to run for
the full intended term for the purpose of calculating the transaction price allocated to remaining performance obligations, other
than instances where the Group believes that termination will occur before the original contract end date. Under the terms of certain
contracts which the Group has with its customers, the Group’s compensation for providing those services is based on volumes or other
drivers of variable activity, such as additional activities awarded under existing contracts. These volumes are not guaranteed, however,
based on historic volumes and the nature of the contracts in operation, such as the provision of asylum seeker accommodation,
Management is able to prepare a sufficiently reliable estimate of the minimum level of variable revenue that is likely to be earned. As a
result, variable revenue is included only to the level at which Management remains confident that a significant reduction will not occur.
As part of the considerations around variable revenue, Management considers the impact that factors such as contractual performance,
anticipated demand and pricing (including indexation) may have on future revenue recognised. Management also considers whether
there are possible impacts from climate change and other environmental related risks, with certain sectors considered to be more at risk
than others, however, no significant adjustments were identified in relation to the future revenue forecasts of existing contracts.

| UK&E | North America 1 | Asia Pacific | Middle East | Total
| £m | £m | £m | £m | £m
Within 1 year (2025) | 2,187.4 | 747.9 | 536.2 | 134.1 | 3,605.6
Between 2 – 5 years (2026 – 2029) | 4,822.1 | 415.4 | 833.7 | 240.0 | 6,311.2
5 years and beyond (2030+) | 2,164.7 | 58.5 | 1,013.8 | 124.5 | 3,361.5
| 9,174.2 | 1,221.8 | 2,383.7 | 498.6 | 13,278.3

1. Due to the nature of the contracting environment in the North America Division, the transaction price allocated to remaining performance obligations is
primarily within 1 year and as a result the future years are inherently lower than other segments.
8. Non-underlying items
Non-underlying items consist of:
-
IAS 1 Presentation of Financial Statements sets out disclosure requirements regarding fair representation of information and the
composition, labelling, prominence and consistency of additional line items and subtotals in financial statements. IAS 1 paragraph
97 requires separate disclosure of the nature and amount of material items of income or expense. The company uses the term
‘exceptional items” to categorise those items which require disclosure under IAS 1 paragraph 97, but this is not a term defined by
IFRS. These items are separately disclosed and explained below. A level of judgement is involved in determining what items are
classified as exceptional items. Management considers exceptional items to be outside of normal practice of the business (i.e. the
financial impact is unusual or rare in occurrence), and are material to the results of the Group by virtue of their size or nature, and
are suitable for separate presentation and detailed explanation. There is a level of judgement required in determining which items
are exceptional on a consistent basis and require separate disclosure. Further details can be seen below.
-
Amortisation and impairment of intangible assets arising on acquisition: These charges are disclosed separately because they are
based on judgements about the value and economic life of assets that would not be capitalised in normal operating practice.

| 2024 | 2023
Year ended 31 December | £m | £m
Compensation received on the early termination of contractual services | — | 9.9
Release of provisions held for indemnities given on disposed businesses | — | 43.9
Impairment of goodwill in Asia Pacific (see note 16) | (114.5) | —
Exceptional items | (114.5) | 53.8
Amortisation of customer relationship intangibles (see note 17) | (26.9) | (22.8)
Impairment of customer relationship intangibles (see note 17) | (2.0) | (8.1)
Amortisation and impairment of intangible assets arising on acquisition (excl. exceptional items) | (28.9) | (30.9)
Total non-underlying items before tax | (143.4) | 22.9
Non-underlying tax credit | 7.9 | 6.2
Total non-underlying items net of tax | (135.5) | 29.1

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 162
9. Operating profit
Operating profit is stated after charging/(crediting):

| 2024 | 2023
Year ended 31 December | £m | £m
Research and development costs | 0.1 | 2.9
Profit on disposal of property, plant and equipment | (0.3) | (0.6)
Loss on early termination of leases | 0.1 | 0.6
Loss/(profit) on disposal of intangible assets | 0.7 | (0.8)
Depreciation and impairment of property, plant and equipment | 16.8 | 17.9
Depreciation and impairment of right of use assets | 141.7 | 126.1
Impairment of goodwill | 114.5 | —
Amortisation and impairment of intangible assets – arising on acquisition | 28.9 | 30.9
Amortisation and impairment of intangible assets | 8.3 | 7.8
Staff costs (note 10) | 2,278.5 | 2,207.7
Allowance for doubtful debts charged/(credited) to income statement | 1.0 | (0.4)
Net foreign exchange charge | 0.7 | 0.8
Movement on non-designated hedges and reclassified cashflow hedges | 0.4 | (0.2)
Lease payments recognised through operating profit 1 | 3.0 | 3.7
Operating lease income from sub-leases | (2.0) | (2.4)

1. The lease payments recognised in operating profit are those which have not been recorded in accordance with the permissible exemptions in IFRS 16 Leases
for short-term or low-value leases.
Amounts payable by the Company and its subsidiary undertakings in respect of audit and non-audit services to the Company’s
Auditor are shown below.

| 2024 | 2023
Year ended 31 December | £m | £m
Fees payable to the Company’s Auditor for the audit of the Company’s annual accounts | 5.4 | 3.9
Fees payable to the Company’s Auditor and their associates for other services to the Group: |  |
– audit of the Company’s subsidiaries pursuant to legislation | 1.6 | 1.5
Total audit fees | 7.0 | 5.4
– Audit-related assurance services | 0.6 | 0.6
– Other non-audit services | — | —
Total non-audit fees | 0.6 | 0.6

Fees payable to the Company’s Auditor for non-audit services to the Company are not required to be disclosed separately because
the Consolidated Financial Statements are required to disclose such fees on a consolidated basis.
Details of the Company’s policy on the use of auditors for non-audit services and how the auditor’s independence and objectivity was
safeguarded, are set out in the Audit Committee Report on page 93. No services were provided pursuant to contingent fee arrangements.
10. Staff costs
The average number of persons employed by the Group (including Executive Directors) was:

| 2024 | 2023
Year ended 31 December | Number | Number
UK & Europe 1 | 24,702 | 21,415
North America | 8,681 | 9,145
Asia Pacific | 12,825 | 13,017
Middle East | 1,453 | 1,744
Unallocated 2 | 128 | 884
| 47,789 | 46,205

1 UK & Europe in 2024 includes Enabling Services and ITS employees who were previously under unallocated in 2023.
2 Unallocated includes Group overhead functions.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 163
1
UK & Europe in 2024 includes Enabling Services and ITS employees who were previously under unallocated in 2023.
2
Unallocated includes Group overhead functions.
10. Staff costs continued
The average number of persons employed includes all individuals employed under contracts of service by the Group. This
comprises permanent, part-time, and casual employees and those with fixed term contracts. It excludes self-employed contractors
and other casual workers.
Aggregate remuneration of all employees based on the average number of employees reported above was:

| 2024 | 2023
Year ended 31 December | £m | £m
Wages and salaries | 1,987.2 | 1,934.2
Social security costs | 170.5 | 157.9
Other pension costs (note 29) | 105.6 | 102.1
| 2,263.3 | 2,194.2
Share-based payment expense (note 33) | 15.2 | 13.5
| 2,278.5 | 2,207.7

11. Investment revenue

| 2024 | 2023
Year ended 31 December | £m | £m
Interest receivable on loans and deposits | 5.3 | 3.9
Net interest receivable on retirement benefit obligations (note 29) | 1.9 | 3.1
Movement in discount on other debtors | 0.5 | —
| 7.7 | 7.0

12. Finance costs

| 2024 | 2023
Year ended 31 December | £m | £m
Interest payable on lease liabilities | 19.9 | 13.1
Interest payable on loans | 14.7 | 15.6
Facility fees and other charges | 2.7 | 2.1
| 37.3 | 30.8
Movement in discount on deferred consideration | 0.9 | —
Movement in discount on other creditors | 0.5 | —
Foreign exchange on financing activities 1 | 2.1 | 0.8
| 40.8 | 31.6

1. Foreign exchange on financing activities includes realised losses of £13.1m (2023: £1.5m) on derivates which is shown in the cash flow statement under
financing activities and £11.0m (2023: £0.7) of unrealised gains on derivates and loans. The derivatives have been entered into to offset foreign exchange
exposures arising on the intra group financing arrangements within the Group.
13. Tax
13 (a) Income tax recognised in the income statement

|  | Non underlying |  |  | Non underlying |
| Underlying | items | Reported | Underlying | items | Reported
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
Year ended 31 December | £m | £m | £m | £m | £m | £m
Current income tax |  |  |  |  |  |
Current income tax charge/(credit) | 53.3 | (4.0) | 49.3 | 34.0 | (1.5) | 32.5
Adjustments in respect of prior years | 0.4 | — | 0.4 | 1.3 | — | 1.3
Deferred tax |  |  |  |  |  |
Current year charge/(credit) | 5.3 | (3.9) | 1.4 | 16.8 | (4.7) | 12.1
Adjustments in respect of prior years | 1.4 | — | 1.4 | (1.3) | — | (1.3)
| 60.4 | (7.9) | 52.5 | 50.8 | (6.2) | 44.6

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 164
13. Tax continued
The tax expense for the year can be reconciled to the profit in the Consolidated Income Statement as follows:

|  | Non-underlying |  |  | Non-underlying |
| Underlying | items | Reported | Underlying | items | Reported
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
Year ended 31 December | £m | £m | £m | £m | £m | £m
Profit before tax | 240.4 | (143.4) | 97.0 | 224.1 | 22.9 | 247.0
Tax calculated at a rate of 25.0% | 60.1 | (35.8) | 24.3 | 52.7 | 5.3 | 58.0
(2023: 23.5%) |  |  |  |  |  |
Expenses not deductible for tax |  |  |  |  |  |
1 | 3.5 | 28.6 | 32.1 | 2.9 | — | 2.9
purposes |  |  |  |  |  |
Unprovided deferred tax 2 | 0.6 | — | 0.6 | 1.5 | — | 1.5
Impact of changes in statutory tax | — | — | — | 0.3 | — | 0.3
rates on current income tax |  |  |  |  |  |
Overseas rate differences | (0.6) | (0.7) | (1.3) | 1.8 | (1.2) | 0.6
Other non-taxable income | (1.4) | — | (1.4) | (2.4) | (10.3) | (12.7)
Adjustments in respect of prior years | 1.4 | — | 1.4 | — | — | —
Adjustments in respect of equity | (5.7) | — | (5.7) | (6.8) | — | (6.8)
accounted investments |  |  |  |  |  |
Witholding tax 3 | 2.5 | — | 2.5 | 0.8 | — | 0.8
Tax charge/(credit) | 60.4 | (7.9) | 52.5 | 50.8 | (6.2) | 44.6

1. Relates to costs that are not allowable for tax deduction under local tax law.
2. The unprovided deferred tax disclosure for 2023 has been amended. Due to the value of each component, UK unprovided and other unprovided deferred tax
are now combined. There is no change to the total unprovided deferred tax balance in 2023.
3. The 2023 disclosure has been amended to move £0.8m from “other expenses not deductible” to “withholding taxes”. A new reconciling item named
“withholding taxes” has been included in 2024 due to the increase in this amount during the year; 2023 has been amended to aid comparison. There is no
change to the total tax charge for 2023.
The corporate income tax expense for the year is based on the UK statutory rate of corporation tax for the period of 25.0% (2023:
23.5%). Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
13 (b) Income tax recognised in the SOCI

| 2024 | 2023
Year ended 31 December | £m | £m
Current tax |  |
Taken to retirement benefit obligations reserve | 2.4 | 1.9
Deferred tax |  |
Relating to cash flow hedges | 0.1 | 0.2
Taken to retirement benefit obligations reserve | 5.3 | 4.2
| 7.8 | 6.3

13 (c) Tax on items taken directly to equity

| 2024 | 2023
Year ended 31 December | £m | £m
Current tax |  |
Recorded in share-based payment reserve | 1.1 | 1.0
Deferred tax |  |
Recorded in share-based payment reserve | (0.4) | (0.5)
| 0.7 | 0.5

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 165
14. Deferred tax
Deferred income taxes are calculated in full on temporary differences under the liability method using local substantively enacted
tax rates.
The movement in net deferred tax (assets)/liabilities during the year was as follows:

| 2024 | 2023
Year ended 31 December | £m | £m
At 1 January – asset | (184.8) | (190.4)
Income statement charge | 2.8 | 10.8
Items recognised in equity and in other comprehensive income | (5.0) | (3.9)
Arising on acquisition | 4.7 | (1.3)
Exchange differences | 4.6 | —
At 31 December – asset | (177.7) | (184.8)

The movement in deferred tax (assets)/liabilities during the year was as follows:

| Temporary | Temporary | Temporary | Share-based |  |  |  |  |  |
| differences | differences | differences | payment and | Retirement | Onerous | Derivative |  | Other |
| on assets/ | on right of | on lease | employee | benefit | contract | financial | Tax | temporary |
| intangibles | use assets | liabilities | benefits | schemes | provisions | instruments | losses | differences | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
1 January 2024 | 29.0 | 15.4 | (17.6) | (36.8) | 7.1 | (1.0) | (0.1) | (157.5) | (23.3) | (184.8)
(Credited)/charged |  |  |  |  |  |  |  |  |  |
to income | (0.6) | (0.1) | 0.7 | (3.4) | (0.2) | 0.3 | — | 2.0 | 4.1 | 2.8
statement (note |  |  |  |  |  |  |  |  |  |
13a) |  |  |  |  |  |  |  |  |  |
Transfer in temporary | 17.7 | — | — | — | — | — | — | — | (17.7) | —
difference |  |  |  |  |  |  |  |  |  |
Arising on acquisition of a subsidiary | 4.7 | — | — | — | — | — | — | — | — | 4.7
Items recognised in equity and in other comprehensive income (notes 13b | — | — | — | 0.4 | (5.3) | — | (0.1) | — | — | (5.0)
and 13c) |  |  |  |  |  |  |  |  |  |
Exchange | 1.0 | (0.2) | 0.2 | 1.3 | — | — | — | — | 2.3 | 4.6
differences |  |  |  |  |  |  |  |  |  |
31 December | 51.8 | 15.1 | (16.7) | (38.5) | 1.6 | (0.7) | (0.2) | (155.5) | (34.6) | (177.7)
2024 |  |  |  |  |  |  |  |  |  |

Other temporary differences include amounts such as provisions and accruals which, under certain tax laws, are only allowable when
expended. £17.7m previously included within ‘other timing differences’ has been reclassified to ‘temporary difference on assets/
intangibles.’ This balance relates to intangible assets held.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 166
14. Deferred tax continued
The movement in deferred tax (assets)/liabilities during the previous year was as follows:

|  |  |  | Share- |  |  |  |  |  |
|  |  |  | based |  |  |  |  |  |
| Temporary | Temporary | Temporary | payment |  |  |  |  |  |
| differences | differences | differences | and | Retirement | Onerous | Derivative |  | Other |
| on assets/ | on right of | on lease | employee | benefit | contract | financial | Tax | temporary |
| intangibles | use assets | liabilities | benefits | schemes | provisions | instruments | losses | differences | Total
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m
1 January 2023 | 32.8 | — | — | (38.0) | 11.2 | (0.8) | 0.1 | (165.6) | (30.1) | (190.4)
IFRS 16 | 0.8 | 18.6 | (22.1) | — | — | — | — | — | 2.7 | —
Restatement |  |  |  |  |  |  |  |  |  |
At 1 January | 33.6 | 18.6 | (22.1) | (38.0) | 11.2 | (0.8) | 0.1 | (165.6) | (27.4) | (190.4)
(Restated) |  |  |  |  |  |  |  |  |  |
(Credited)/charged |  |  |  |  |  |  |  |  |  |
to income | (0.4) | (2.4) | 3.6 | (0.9) | 0.1 | (0.2) | — | 8.0 | 3.0 | 10.8
statement (note |  |  |  |  |  |  |  |  |  |
13a) |  |  |  |  |  |  |  |  |  |
Arising on acquisition of a subsidiary | (1.3) | — | — | — | — | — | — | — | — | (1.3)
Items recognised in equity and in other comprehensive income (notes 13b | — | — | — | 0.5 | (4.2) | — | (0.2) | — | — | (3.9)
and 13c) |  |  |  |  |  |  |  |  |  |
Exchange | (2.9) | (0.8) | 0.9 | 1.6 | — | — | — | 0.1 | 1.1 | —
differences |  |  |  |  |  |  |  |  |  |
31 December 2023 | 29.0 | 15.4 | (17.6) | (36.8) | 7.1 | (1.0) | (0.1) | (157.5) | (23.3) | (184.8)

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The following analysis shows the
deferred tax balances (after offset) for financial reporting purposes:

| 2024 | 2023
| £ | £
Deferred tax liabilities | 52.1 | 50.9
Deferred tax assets | (229.8) | (235.7)
| (177.7) | (184.8)

As at the balance sheet date, the UK has a potential deferred tax asset of £235.6m (2023: £238.4m) available for offset against future
profits. A UK deferred tax asset has currently been recognised of £177.5m (2023: £179.9m). Recognition has been based on the
ongoing strength of the underlying UK business, indicating a sustained profitability which will enable accumulated tax losses within
the UK to be utilised.
An Australian deferred tax asset continues to be recognised in full, on the basis that this business is expected to have future profits
against which these future tax deductions will be used. This asset is valued at £50.5m on the Group’s balance sheet at 31 December
2024 (2023: £52.5m).
No deferred tax asset has been recognised in respect of the remaining UK asset (net £58.1m) as they are more restricted in their use
either due to their nature, such as capital losses, or the period and entity in which they arose; in particular, revenue losses arising
prior to April 2017 are more restricted in their use. The deferred tax balance at 31 December 2024 has been calculated reflecting
the increased rate of 25%.
Outside of the UK, there is a further £18.6m (2023: £20.5m) of deferred tax assets which have not been recognised. £17.9m (2023:
£19.8m) of this relates to revenue losses where current forecasts do not support recognition.
On 9 December 2022, the Ministry of Finance in UAE published tax law under which certain Serco operations in UAE pay tax from
January 2024. The introduction of this tax has not had a material impact on the Group’s tax liability.
In October 2021, over 130 countries in the Organisation for Economic Cooperation and Development (OECD) jointly released a
framework to introduce a global minimum tax rate of 15% in order to address concerns about uneven profit distributions and tax
contributions of large multinationals. In July 2023, the UK government enacted legislation which brought this framework into UK law
from January 2024. During 2024 this minimum tax also does not have a material impact on the Group tax liability.
The Group has applied a temporary mandatory relief from deferred tax accounting for the impact of the top-up tax and accounts for
it as a current tax when it is incurred.
Losses of £2.2m (2023: £7.0m) expire within 5 years, losses of £42.0m (2023: £45.7m) expire within 6-10 years, losses of £4.3m
(2023: £4.8m) expire within 20 years and losses of £885.2m (2023: £887.7m) may be carried forward indefinitely.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 167
15. Earnings per share
Basic earnings per share is calculated by dividing the profit after tax attributable to owners of the Company by the weighted average
number of shares in issue after deducting the own shares held by employee share ownership trusts and treasury shares and adding
back vested share options not exercised.
In calculating the diluted earnings per share, unvested share options outstanding have been taken into account where the impact of
these is dilutive.
The calculation of the basic and diluted EPS is based on the following data:

| 2024 | 2023
Number of shares | millions | millions
Weighted average number of ordinary shares for the purpose of basic EPS | 1,058.9 | 1,110.2
Effect of dilutive potential ordinary shares: Shares under award | 19.2 | 18.4
Weighted average number of ordinary shares for the purpose of diluted EPS | 1,078.1 | 1,128.6

Earnings per share

|  | Per share |  | Per share
| Earnings | amount | Earnings | amount
| 2024 | 2024 | 2023 | 2023
Basic EPS | £m | pence | £m | pence
Earnings for the purpose of basic EPS | 44.2 | 4.17 | 202.4 | 18.23
Effect of dilutive potential ordinary shares | — | (0.07) | — | (0.30)
Diluted EPS | 44.2 | 4.10 | 202.4 | 17.93

16. Goodwill

|  | Accumulated |
|  | impairment |
| Cost | losses | Carrying amount
| £m | £m | £m
1 January 2023 | 1,298.9 | (353.9) | 945.0
Acquisitions - revision of provisional fair value estimates | 3.1 | — | 3.1
Disposals | (0.1) | — | (0.1)
Exchange differences | (55.1) | 13.8 | (41.3)
At 31 December 2023 | 1,246.8 | (340.1) | 906.7
Acquisitions | 30.9 | — | 30.9
Impairment | — | (114.5) | (114.5)
Exchange differences | 3.1 | — | 3.1
At 31 December 2024 | 1,280.8 | (454.6) | 826.2

Movements in the balance since the prior year end can be seen as follows:

| Goodwill |  |  |  | Goodwill | Headroom on | Headroom on
| balance 1 |  |  | Exchange | balance 31 | impairment | impairment
| January |  |  | differences | December | analysis | analysis
| 2024 | Acquisitions | Impairment | 2024 | 2024 | 2024 | 2023
| £m | £m | £m | £m | £m | £m | £m
UK & Europe | 206.6 | 21.2 | — | (0.8) | 227.0 | 1,234.8 | 1,051.1
North America | 559.5 | — | — | 9.0 | 568.5 | 889.2 | 644.3
Asia Pacific | 130.2 | — | (114.5) | (5.4) | 10.3 | — | 110.0
Middle East | 10.4 | 9.7 | — | 0.3 | 20.4 | 327.0 | 285.5
| 906.7 | 30.9 | (114.5) | 3.1 | 826.2 | 2,451.0 | 2,090.9

Included above is the headroom on the cash generating units (CGUs) existing at the year end, which reflects where future
discounted cash flows are greater than the underlying assets and includes all relevant cash flows, including where provisions have
been made for future costs and losses. In all CGUs other than Asia Pacific, there is sufficient headroom available (2023: all CGUs had
sufficient headroom).
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 168
16. Goodwill continued
The key quantifiable assumptions applied in the impairment assessment are set out below:

|  |  | Terminal | Terminal
| Discount | Discount | growth | growth
| rate | rate | rates | rates
| % | % | % | %
| 2024 | 2023 | 2024 | 2023
UK & Europe | 10.1 | 10.2 | 2.1 | 2.0
North America | 11.1 | 11.4 | 2.3 | 2.3
Asia Pacific | 12.1 | 12.3 | 2.2 | 2.2
Middle East | 11.4 | 12.0 | 2.5 | 2.5

Discount rate
Pre-tax discount rates derived from the Group’s post-tax weighted average cost of capital have been used in discounting the
projected cash flows. These rates are reviewed annually with external advisers and are adjusted for risks specific to the market in
which the CGU operates and risks specific to the Group; cash flow risks are considered within cash flows and not the discount rate.
Terminal growth rates
The value in use calculation includes a terminal value based on the projections for the fifth year of the five-year plan, with a growth
rate assumption applied which extrapolates the business into perpetuity. The terminal growth rates are based on long-term inflation
rates of the geographic market in which the CGUs operate and therefore do not exceed the average long-term growth rates forecast
for the individual markets. These are provided by external advisers and have not materially changed as compared with 2023.
Short-term growth rates
The annual impairment test is performed immediately prior to the year end, based initially on the Board-approved five-year plan.
Short-term revenue growth rates used in each CGU’s five-year plan are based on internal data regarding our current contracted
position, the pipeline of opportunities and forecast growth for the relevant market.
Short-term profitability and cash conversion is based on our historic experiences and requires a level of judgement. Where businesses
have been poor performers, performance improvement has only been assumed where the Directors have assessed that an achievable
plan is in place and all forecasts include cash flows relating to contracts where onerous contract provisions have been made.
As explained in note 3, the Directors consider certain sectors in which the Group operates to be more exposed to environmental
risks than others. For example, changes in consumer attitudes to aviation or the use of private vehicles, may have an impact on the
Group’s transport contracts. Currently, no adjustment to existing contracts is required, although Management will continue to
monitor the potential impact of environmental risks.
Outcome of our annual impairment assessment
Management’s impairment assessment has concluded that there is significant headroom within the UK&E, North America, and the
Middle East CGUs, consistent with the assessment at the year ended 31 December 2023.
The impairment exercise at the year ended 31 December 2024 concluded that the carrying value of the Asia Pacific CGU exceeded
its recoverable amount by £114.5m having determined the value in use to exceed the CGU's fair value less cost of disposal.
Consequently, the Directors have recognised an impairment charge equivalent to this amount within the income statement,
presented within ‘Exceptional items’ (see note 8). The remaining goodwill held in respect of the Asia Pacific CGU following the
impairment is £10.3m. No impairment was recognised for the year ended 31 December 2023.
Sensitivity analysis
Reflecting the assumptions made in the estimation of future cash flows and the selection of appropriate discount rates and terminal
growth rates, a number of plausible scenarios have been considered as part of the overall impairment assessment below. Due to the
impairment recognised in respect of the Asia Pacific CGU, separate sensitivities have been performed and therefore the scenarios
below do not apply to this CGU.

Sensitivity | Impact
1% increase in discount rates combined with a 1% decrease in terminal growth rates | No impairment
No growth to cash flows outside the two-year budget period | No impairment
10% reduction in cash flows in the terminal year 1 | No impairment

1. Cash flows in the terminal year would need to reduce by 99% in the Middle East (£34.1m), 64% in North America (£74.9m) and 89% in UK & Europe
(£117.7m), before an impairment would need to be recognised.
Asia Pacific CGU
2024 has been a year of change for the Asia Pacific Division after a challenging year in 2023. New management has been appointed
and their focus has been on improving margins by establishing an overhead cost structure which is appropriate for the size of the
business, and improving contract performance where the profits being generated are lower than expected. Good progress has
been made with annualised overhead reductions of c£9m being realised, and profitability on some key contracts improved; these
continue to be a priority for 2025 and further progress is expected. Underlying Operating Profit has increased by 71% to £16.8m in
H2 2024 compared to the same period in 2023.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 169
Organic growth declined by 5% in 2024, although the second half of the year compared to the same period in 2023 saw organic
growth of 4%. The Directors continue to recognise that this element of the turnaround plan will take longer to realise given the lead
time to identify new business opportunities and convert them into revenue. The Division saw an improvement in new business win
rates during 2024 of 15% in key markets compared to the Asia Pacific five-year average of 9% although still below the Group’s five-
year average win rate of 55%. The Directors see no significant structural differences within the Asia Pacific market which would
prevent the Division achieving win rates at, or near, the Group average. The average win rates assumed for new business within the
five-year plan submitted by the Division are lower than the Group five-year average at 21%.
In order to improve the Division’s pipeline and win rates on new business, changes to the execution of the growth strategy have
been introduced, including reviewing the root causes for low win rates and developing a more focused and refined strategy and
pipeline. To implement these improvements, the CGU also underwent a restructure of the Growth team to enhance capabilities and
engagement with government departments. Regarding the pipeline, the Division's 2025 five-year plan submission focuses on a
smaller number of targeted opportunities, aiming to allocate more effort to each bid to achieve better win rates; the current pipeline
does not represent the universe of opportunities available within the market, and identification of new opportunities is also a priority
for the new Growth Team.
The five-year plan submitted by the Division has been risk-adjusted to ensure compliance with IAS 36, and this adjusted plan has been
used to determine the impairment charge. This plan is based on historic new business win rates for the Division of 9%, assuming no
improvement from the activities outlined above. Consequently, the win rates used are lower than both the Group’s average and below
the Directors' expectations for the Division. For the purposes of the impairment calculation, and in accordance with IAS 36, any planned
enhancements to business performance have not been considered, except where benefits have already been realised.
On 8 November 2024, the Group was informed it had been unsuccessful in its rebid of the Immigration services contract in Australia. The
financial statements for the year ended 31 December 2023 disclosed that a loss of this contract may lead to an impairment unless a
fundamental restructuring of the Division was undertaken to improve profitability and mitigate the risk of any impairment. As at 31
December 2024, the Directors were in the process of developing a revised operating structure for the Asia Pacific Division, but this had not
been finalised or communicated, and therefore has not been taken into consideration for the impairment test in accordance with IAS 36.
The Group will continue to provide immigration services under the contract during the transition period, which is expected to end
during the first half of 2025. As required by IAS 36, no benefits from any subsequent restructuring of the Division have been
considered within the value-in-use assessment and no provisions for any such restructuring have been recorded on the balance
sheet at 31 December 2024.
Key assumptions and sensitivities applied to testing goodwill allocated to the Asia Pacific CGU
The Directors have risk adjusted the cash flows in the five-year plan submitted by Divisional management used in the value-in-use
assessment under IAS 36, which effectively assumes a continuation of poor historic performance and no further enhancements to
the Asia Pacific business. These adjustments remove the benefit of any further the turnaround activity being undertaken in the
Division and therefore values the business based on growth in the terminal year of 2.2%, the long-term inflation rate for the region.
Uncommitted restructuring costs and benefits of the Division following the loss of the immigration contract have been excluded
from the value-in-use calculation. The following risk adjustments have been made to the baseline forecast submitted by the Asia
Pacific Division to reflect the Directors’ assessment of certain key assumptions:
-
New business win rates are at the five year average of 9% by value which is lower than the average win rates assumed within
the five-year plan submitted by the Asia Pacific Management team of 21%. Whilst this does not require an improvement
from current levels experienced by the Division in 2024 of 15% (2023: 2%), it requires improvement on win rates
experienced by the Division in recent years.
-
Rebid win rates by value align with the five-year average when excluding the loss of the immigration contract of 72% (2023:
63%) which is lower than the current levels experienced by the Division in 2024 of 90% on the same basis. The five-year
average including the loss of the immigration contract is 58%.
-
A lower estimate associated to a win of the Base Services Transformation Programme (BSTP) opportunity which forms a significant
part of the CGU’s pipeline of opportunities, for which a decision could made in 2025. The win rate used is higher than the long
term historic win rate, reflecting the experience the Group has in delivering facility management services as a core capability, and
the diversified nature of the contract enabling multiple bidders to be successful in winning one or multiple regions.
The table below demonstrates how the impairment charge would change if each of the sensitivities outlined above is adjusted
within the value-in-use model for the Asia Pacific Division.

| Low scenario | High scenario
New business win rate at 9% / 21% | No more impairment | £67.9m less impairment
Rebid win rate at 58% / 90% | Full impairment of goodwill 1 | £44.6m less impairment
BSTP loss / as planned | Full impairment of goodwill 1 | £41.9m less impairment
1% increase / decrease in discount rate | Full impairment of goodwill 1 | £15.2m less impairment

1. The Directors have assessed the recoverability of assets other than Goodwill within the Asia Pacific CGU and have determined that an impairment beyond the
full value of Goodwill would not result in an impairment of any further assets.
The Directors consider that it is possible to expect that actual future cash flows will outperform the risk-adjusted cash flows modelled
for the purpose of testing goodwill impairment. A less conservative view of risks and opportunities in the base case forecast, which
aligns to the Divisional plan excluding risk adjustments to the cash flows, would result in headroom of approximately £100.1m rather
than the impairment charge.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 170
Asia Pacific CGU continued
17. Other intangible assets

| Acquisition |  |  |
| related | Other |  |
|  |  | Internally |
|  |  | generated |
| Customer |  | development |
| relationships | Software and IT | expenditure | Total
| £m | £m | £m | £m
Cost |  |  |  |
At 1 January 2024 | 202.8 | 132.8 | 57.6 | 393.2
Arising on acquisition | 15.4 | 0.1 | — | 15.5
Additions - internal development | — | 1.8 | 1.9 | 3.7
Additions - external | — | 5.4 | — | 5.4
Disposals | (0.4) | (2.3) | (11.4) | (14.1)
Exchange differences | 0.3 | (1.7) | — | (1.4)
At 31 December 2024 | 218.1 | 136.1 | 48.1 | 402.3
Accumulated amortisation and impairment |  |  |  |
At 1 January 2024 | 114.2 | 110.2 | 53.2 | 277.6
Impairment charge | 2.0 | — | — | 2.0
Amortisation charge - internal development | — | 2.6 | 1.2 | 3.8
Amortisation charge - external | 26.9 | 4.5 | — | 31.4
Disposals | (0.4) | (1.6) | (11.4) | (13.4)
Exchange differences | 0.8 | (1.3) | — | (0.5)
At 31 December 2024 | 143.5 | 114.4 | 43.0 | 300.9
Net book value |  |  |  |
At 31 December 2024 | 74.6 | 21.7 | 5.1 | 101.4

| Acquisition |  |  |
| related | Other |  |
|  |  | Internally |
|  |  | generated |
| Customer |  | development |
| relationships | Software | expenditure | Total
| £m | £m | £m | £m
Cost |  |  |  |
At 1 January 2023 | 219.5 | 137.5 | 54.4 | 411.4
Acquisitions - revision of provisional fair value estimates | (6.9) | — | — | (6.9)
Additions - internal development | — | — | 3.4 | 3.4
Additions - external | — | 5.4 | — | 5.4
Disposals | — | (7.1) | — | (7.1)
Exchange differences | (9.8) | (3.0) | (0.2) | (13.0)
At 31 December 2023 | 202.8 | 132.8 | 57.6 | 393.2
Accumulated amortisation and impairment |  |  |  |
At 1 January 2023 | 88.5 | 112.1 | 52.8 | 253.4
Impairment charge | 8.1 | 0.1 | — | 8.2
Amortisation charge - internal development | — | 3.3 | 0.6 | 3.9
Amortisation charge - external | 22.8 | 3.8 | — | 26.6
Disposals | — | (6.5) | — | (6.5)
Exchange differences | (5.2) | (2.6) | (0.2) | (8.0)
At 31 December 2023 | 114.2 | 110.2 | 53.2 | 277.6
Net book value |  |  |  |
At 31 December 2023 | 88.6 | 22.6 | 4.4 | 115.6

During the year ended 31 December 2023, the Group recognised an impairment charge on customer relationships of £8.1m. The
customer relationship arose on acquisition, however, the unexpected loss of key contracts and lack of visible opportunities with the
relevant customer resulted in an impairment of the intangible asset.
The net book value of internally generated intangible assets as at 31 December 2024 was £5.1m (2023: £4.4m) in development
expenditure and £2.1m (2023: £nil) in software and IT.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 171
18. Property, plant and equipment and right of use assets

|  |  | Leasehold |  |  |
| Land & Buildings | Land & Buildings | Improvements | Other Assets | Other Assets |
| Owned | Leased | Owned | Owned 1 | Leased 1 | TOTAL
| £m | £m | £m | £m | £m | £m
Cost |  |  |  |  |  |
At 1 January 2024 | 4.1 | 737.1 | 35.9 | 132.1 | 87.1 | 996.3
Arising on acquisition | 3.8 | 1.5 | — | 1.9 | 0.2 | 7.4
Additions | 0.1 | 207.7 | 5.0 | 20.2 | 27.6 | 260.6
Reclassifications between categories | (0.5) | — | 0.5 | — | — | —
Disposals | (0.1) | (52.6) | (4.6) | (15.0) | (27.6) | (99.9)
Exchange differences | (0.1) | (2.6) | (0.3) | (2.1) | (0.3) | (5.4)
At 31 December 2024 | 7.3 | 891.1 | 36.5 | 137.1 | 87.0 | 1,159.0
Accumulated depreciation and impairment |  |  |  |  |  |
At 1 January 2024 | 2.9 | 333.8 | 25.0 | 99.9 | 49.5 | 511.1
Charge/(credit) for the year - impairment | — | 0.2 | — | (0.4) | — | (0.2)
Charge for the year - depreciation | 0.3 | 123.9 | 3.7 | 13.2 | 17.6 | 158.7
Disposals | (0.2) | (41.7) | (4.4) | (14.2) | (18.6) | (79.1)
Exchange differences | — | (1.4) | (0.2) | (1.5) | (0.1) | (3.2)
At 31 December 2024 | 3.0 | 414.8 | 24.1 | 97.0 | 48.4 | 587.3
Net book value 2 |  |  |  |  |  |
At 31 December 2024 | 4.3 | 476.3 | 12.4 | 40.1 | 38.6 | 571.7

1. Other assets include machinery, vehicles, furniture and equipment.
2. The net book value is shown on the balance sheet as £56.8m of owned assets in property, plant and equipment and £514.9m of leased assets in right of
use assets.
The additions for leased land and buildings include £2.0m (2023: £0.9m) for dismantling provisions.

|  |  | Leasehold |  |  |
| Land & Buildings | Land & Buildings | Improvements | Other Assets | Other Assets |
| Owned | Leased | Owned | Owned 1 | Leased 1 | TOTAL
| £m | £m | £m | £m | £m | £m
Cost |  |  |  |  |  |
1 January 2023 | 4.3 | 673.5 | 37.2 | 139.9 | 132.9 | 987.8
Additions | 0.4 | 135.7 | 1.2 | 14.3 | 12.8 | 164.4
Reclassifications between categories | — | 8.2 | — | — | (8.2) | —
Disposals | (0.6) | (74.4) | (1.1) | (18.7) | (49.6) | (144.4)
Exchange differences | — | (5.9) | (1.4) | (3.4) | (0.8) | (11.5)
At 31 December 2023 | 4.1 | 737.1 | 35.9 | 132.1 | 87.1 | 996.3
Accumulated depreciation and impairment |  |  |  |  |  |
1 January 2023 | 3.3 | 294.2 | 22.8 | 107.2 | 78.0 | 505.5
Charge for the year - impairment | 0.2 | 0.7 | 0.1 | 0.3 | — | 1.3
Charge for the year - depreciation | — | 107.6 | 3.8 | 13.5 | 17.8 | 142.7
Disposals | (0.6) | (65.0) | (0.8) | (18.3) | (45.9) | (130.6)
Exchange differences | — | (3.7) | (0.9) | (2.8) | (0.4) | (7.8)
At 31 December 2023 | 2.9 | 333.8 | 25.0 | 99.9 | 49.5 | 511.1
Net book value 2 |  |  |  |  |  |
At 31 December 2023 | 1.2 | 403.3 | 10.9 | 32.2 | 37.6 | 485.2

1. Other assets include machinery, vehicles, furniture and equipment.
2. The net book value is shown on the balance sheet as £44.3m of owned assets in property, plant and equipment and £440.9m of leased assets in right of
use assets.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 172
19. Inventories

| 2024 | 2023
| £m | £m
Service spares, supplies, consumables and work in progress | 24.1 | 24.1

20. Contract assets, trade and other receivables

| 2024 | 2023
Contract assets: Current | £m | £m
Accrued income and other unbilled receivables | 289.0 | 287.6
Capitalised bid costs | 1.8 | 2.1
Capitalised mobilisation and phase in costs | 7.7 | 5.6
Other contract assets | 1.5 | 1.3
| 300.0 | 296.6

The Group’s Consolidated Balance Sheet includes capitalised bid and phase-in costs that are realised as part of the normal
operating cycle of the Group. These assets represent upfront investments in contracts which are recoverable and expected to
provide benefits over the life of those contracts. Bid costs are capitalised only when they relate directly to a contract and are
incremental to securing the contract. Any costs which would have been incurred whether or not the contract is actually won are not
considered to be capitalised bid costs.
Contract costs can only be capitalised when the expenditure meets all three criteria identified in note 2.
Movements in the period were as follows:

| 2024 | 2023
Capitalised other contract assets, bid and phase-in costs | £m | £m
At 1 January | 9.0 | 10.6
Additions | 4.2 | 0.8
Amortisation | (2.0) | (2.2)
Exchange differences | (0.2) | (0.2)
At 31 December | 11.0 | 9.0

Total trade and other receivables held by the Group at 31 December 2024 amount to £357.8m (2023: £343.8m).

| 2024 | 2023
Trade and other receivables: Non-current | £m | £m
Prepayments | 5.0 | 0.4
Other receivables | 21.3 | 14.4
| 26.3 | 14.8

Other non-current receivables include long-term employee compensation plans, advances and other non-trade receivables.

| 2024 | 2023
Trade and other receivables: Current | £m | £m
Trade receivables | 228.2 | 219.1
Prepayments | 55.0 | 55.2
Amounts owed by joint ventures and associates | — | 1.1
Other receivables | 48.3 | 53.6
| 331.5 | 329.0

Other receivables includes advanced deposits to suppliers and 2023 included cash transferred to purchase shares for the Employee
Share Ownership Trust where the shares are yet to be received. Included in the current other receivables balance is a further £18.0m
(2023: £1.2m) due from agencies of the UK Government.
The management of trade receivables is the responsibility of the reportable operating segments, although they report to the Group
on a monthly basis on debtor days, debtor ageing and significant outstanding debts. The average credit period taken by customers
is 17 days (2023: 16 days) and no interest was charged on overdue amounts in the current or prior reporting period.
Each customer has an external credit score which determines the level of credit provided. However, the majority of the Group’s
customers have a sovereign credit rating as a result of being government organisations. Of the trade receivables balance at the end
of the year, £44.7m is due from agencies of the UK Government, the Group’s largest customer (2023: £43.5m); £42.9m from the
Australian Government (2023: £43.6m); £27.8m from the US Government (2023: £35.7m); and £18.1m from the Government of the
United Arab Emirates (2023: £15.2m). There are no other customers who represent more than 5% of the total balance of trade
receivables. The maximum potential exposure to credit risk in relation to trade receivables at the reporting date is equal to their
carrying value. The Group does not hold any collateral as security.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 173
20. Contract assets, trade and other receivables continued
The Group does not have any material impairments associated with expected credit losses due to the sovereign credit rating of most
customers. Further, specific impairments to trade receivables are based on estimated irrecoverable amounts and provisions on
outstanding balances greater than 90 days old unless there is firm evidence that the balance is recoverable or is not covered by a
credit note provision in unbilled receivables. The total amount of these impairments for the Group as at 31 December 2024 was
£4.8m (2023: £2.8m).
An Expected Credit Loss (ECL) is recognised against contract assets, trade and other receivables only when the ECL is considered to
be material and there is evidence that the credit worthiness of a counterparty may render balances irrecoverable. The amount of
ECL recognised at 31 December 2024 was £nil (2023: £nil).

| 2024 | 2023
Ageing of trade receivables | £m | £m
Not due | 183.4 | 168.6
Overdue by less than 30 days | 29.2 | 31.3
Overdue by between 30 and 60 days | 8.4 | 11.0
Overdue by more than 60 days | 12.0 | 11.0
Allowance for doubtful debts | (4.8) | (2.8)
| 228.2 | 219.1

Of the total overdue trade receivable balance, 57% (2023: 61%) relates to the Group’s four major governmental customers (being
the governments of the UK, US, Australia and the United Arab Emirates).

| 2024 | 2023
Movements on the Group allowance for doubtful debts | £m | £m
At 1 January | 2.8 | 3.3
Arising on acquisition | 1.5 | —
Net charges and releases to income statement | 1.0 | (0.4)
Utilised | (0.1) | —
Exchange differences | (0.4) | (0.1)
At 31 December | 4.8 | 2.8

21. Cash and cash equivalents

| Sterling | Other currencies | Total | Sterling | Other currencies | Total
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
| £m | £m | £m | £m | £m | £m
Total cash and cash equivalents | 102.5 | 80.5 | 183.0 | 38.2 | 56.2 | 94.4

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other
short-term highly liquid investments (money market funds) with a maturity of three months or less from the date of acquisition.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 174
22. Contract liabilities, trade and other payables

| 2024 | 2023
Contract liabilities: Current | £m | £m
Deferred income | 37.5 | 35.8

| 2024 | 2023
Contract liabilities: Non-current | £m | £m
Deferred income | 60.7 | 59.3

The allocation of deferred income between current and non-current is presented on the basis that the current portion will unwind in
the following 12 months through revenue. There were no material items in the current portion of deferred income in 2023 which did
not unwind during the year.
Total trade and other payables held by the Group at 31 December 2024 amount to £616.5m (2023: £567.2m).

| 2024 | 2023
Trade and other payables: Current | £m | £m
Trade payables | 92.3 | 99.3
Contingent consideration payable | 3.2 | —
Amounts owed to joint ventures | 0.2 | —
Other payables | 161.3 | 140.0
Accruals | 338.0 | 318.7
| 595.0 | 558.0

Other payables include sales and other direct taxes, payroll taxes, salaries and other non-trade payables.
The average credit period taken for trade purchases is 19 days (2023: 20 days).

| 2024 | 2023
Trade and other payables: Non-current | £m | £m
Contingent consideration payable | 6.2 | —
Other payables | 15.3 | 9.2
| 21.5 | 9.2

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 175
23. Leases
Management estimates that the fair value of the Group’s lease obligations approximates their carrying amount. The Group uses
leases in the delivery of its contractual obligations and the services required to support the delivery of those contracts, including
administrative functions. There are no material future cash outflows relating to leases in place as at 31 December 2024 that are not
reflected in the minimum lease payments disclosed below and the Group does not have any leases to which it is contracted but
which are not yet reflected in the minimum lease payments. Additionally, the Group does not have any material leases where
payments are variable. The Group has a significant number of leases which include either termination or extension options, or both.
Included in amounts payable under leases below are only those amounts which reflect Management’s view of the reasonably certain
lease term in line with current operational requirements.
The total cash outflow for leases, excluding short-term leases and low-value leases, in the year was £157.3m (2023: £137.5m). This is
presented in the Consolidated Cash Flow Statement as £137.4m (2023: £124.4m) relating to the capital element of the lease liability
payments, with the remaining balance of £19.9m (2023: £13.1m) presented within interest paid.

| Minimum lease | Minimum lease
| payments | payments
| 2024 | 2023
Amounts payable under leases | £m | £m
Within one year | 177.8 | 149.0
Between one and five years | 306.8 | 277.1
After five years | 75.3 | 45.8
| 559.9 | 471.9
Less: future finance charges | (29.9) | (18.2)
Present value of lease obligations | 530.0 | 453.7
Less: amount due for settlement within one year (shown under current liabilities) | (168.3) | (140.0)
Amount due for settlement after one year | 361.7 | 313.7

The following amounts are included in the Group’s Consolidated Financial Statements in respect of its leases:

|  | 2024 | 2023
| Note | £m | £m
Additions to right of use assets | 18 | 235.3 | 148.5
Depreciation charge on right of use assets | 18 | (141.5) | (125.4)
Net impairment on right of use assets | 18 | (0.2) | (0.7)
Net disposal of right of use assets | 18 | (19.8) | (13.1)
Net exchange differences on right of use assets | 18 | (1.5) | (2.4)
Carrying amount of right of use assets | 18 | 514.9 | 440.9
Current lease liabilities | 23 | 168.3 | 140.0
Non-current lease liabilities | 23 | 361.7 | 313.7
Capital element of lease repayments |  | (137.4) | (124.4)
Interest expense on lease liabilities | 12 | (19.9) | (13.1)
Profit/(loss) on early termination of leases | 9 | (0.1) | (0.6)
Expenses relating to short term or low value leases | 9 | (3.0) | (3.7)

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 176
24. Loans

| Total | Total
| 2024 | 2023
| £m | £m
Loans are repayable as follows: |  |
On demand or within one year | 38.8 | 51.0
Between one and two years | — | 38.5
Between two and five years | 122.2 | 61.9
After five years | 115.4 | 54.8
| 276.4 | 206.2
Less: amount due for settlement within one year (shown in current liabilities) | (38.8) | (51.0)
Amount due for settlement after one year | 237.6 | 155.2

Fair value of loans

| Carrying amount | Fair value | Carrying amount | Fair value
| 2024 | 2024 | 2023 | 2023
| £m | £m | £m | £m
Loans | 276.4 | 263.2 | 206.2 | 189.2

The fair values are based on cash flows discounted using a market rate appropriate to the loan. All loans are held at amortised cost.
Loans subject to covenant
The principal financial covenant ratios are consistent across the US private placement loan notes and revolving credit facility, with a
maximum Consolidated Total Net Borrowings (CTNB) to covenant EBITDA of 3.5 times and minimum covenant EBITDA to covenant
net finance costs of 3.0 times, tested semi-annually. A reconciliation of the basis of calculation is set out in the additional information
section on page 211. As set out in the going concern section in note 2 there are no indicators that the Group will have difficulty
complying with the covenants for at least the next 12 months.
Analysis of Net Debt
The analysis below provides a reconciliation between the opening and closing positions in the balance sheet for liabilities arising
from financing activities together with movements in derivatives relating to the items included in Net Debt. There were no changes
in fair value noted in either the current or prior year.

| At 1 January |  |  | Exchange | Non-cash | At 31
| 2024 | Cash flow | Acquisitions 1 | differences | movements 2 | December 2024
| £m | £m | £m | £m | £m | £m
Loans payable | (206.2) | (65.4) | — | (4.8) | 0.1 | (276.3)
Lease obligations | (453.7) | 137.4 | (1.5) | 1.5 | (213.7) | (530.0)
Liabilities arising from financing activities | (659.9) | 72.0 | (1.5) | (3.3) | (213.6) | (806.3)
Cash and cash equivalents | 94.4 | 89.7 | — | (1.1) | — | 183.0
Derivatives relating to net debt | 3.1 | — | — | (9.5) | — | (6.4)
Net debt | (562.4) | 161.7 | (1.5) | (13.9) | (213.6) | (629.7)

1. Acquisitions represent the net cash/(debt) acquired on acquisition.
2. Non-cash movements on loans payable relate to movement in capitalised finance costs in the year. For lease obligations non-cash movements relate to the
net impact of entering into new leases and exiting certain leases before the end of the lease term without payment of a cash termination cost.

| At 1 January |  |  | Exchange | Non-cash | At 31
| 2023 | Cash flow | Acquisitions1 | differences | movements2 | December 2023
| £m | £m | £m | £m | £m | £m
Loans payable | (262.9) | 44.5 | — | 13.1 | (0.9) | (206.2)
Lease obligations | (446.0) | 124.4 | — | 3.1 | (135.2) | (453.7)
Liabilities arising from financing activities | (708.9) | 168.9 | — | 16.2 | (136.1) | (659.9)
Cash and cash equivalents | 57.2 | 39.8 | — | (2.6) | — | 94.4
Derivatives relating to net debt | 1.8 | — | — | 1.3 | — | 3.1
Net debt | (649.9) | 208.7 | — | 14.9 | (136.1) | (562.4)

1. Acquisitions represent the net cash/(debt) acquired on acquisition.
2. Non-cash movements relate to the net impact of entering into new leases and exiting certain leases before the end of the lease term without payment of a
cash termination cost.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 177
25. Provisions

| Employee |  |  |  |  |
| related | Property | Contract | Claims | Other | Total
| £m | £m | £m | £m | £m | £m
At 1 January 2024 | 83.9 | 23.2 | 16.7 | 25.6 | 20.9 | 170.3
Arising on acquisition | — | — | 0.3 | — | 26.7 | 27.0
Charge capitalised in right of use | — | 2.0 | — | — | — | 2.0
assets |  |  |  |  |  |
Charged to income statement | 19.7 | 2.3 | 6.1 | 9.2 | 10.8 | 48.1
Released to income statement | (3.4) | (5.7) | (0.4) | (4.9) | (8.0) | (22.4)
Utilised during the year | (15.7) | (2.1) | (2.7) | (4.4) | (3.9) | (28.8)
Exchange differences | (4.7) | 0.1 | (0.2) | — | (1.1) | (5.9)
At 31 December 2024 | 79.8 | 19.8 | 19.8 | 25.5 | 45.4 | 190.3
Analysed as: |  |  |  |  |  |
Current | 46.9 | 5.5 | 8.7 | 5.5 | 42.3 | 108.9
Non-current | 32.9 | 14.3 | 11.1 | 20.0 | 3.1 | 81.4
| 79.8 | 19.8 | 19.8 | 25.5 | 45.4 | 190.3

Employee-related provisions include amounts for long-term service awards and terminal gratuity liabilities which have been accrued
and are based on contractual entitlement, together with an estimate of the probabilities that employees will stay until rewards fall
due and receive all relevant amounts. The provisions will be utilised over various periods driven by attrition and demobilisation of
contracts, the timing of which is uncertain. There are also amounts included in relation to restructuring.
The majority of property provisions relate to leased properties and are associated with the requirement to return properties to either
their original condition, or to enact specific improvement activities in advance of exiting the lease. Dilapidations associated with
leased properties are held as a provision until such time as they fall due, with the longest running lease ending in March 2037.
A contract provision is recorded when a contract is deemed to be unprofitable and therefore is considered onerous. The present
value of the estimated future cash outflow required to settle the contract obligations as they fall due over the respective contracts
has been used in determining the provision.
Claims provisions relate to claims made against the Group. These claims are varied in nature, although they typically come from
either the Group’s service users, claimants for vehicle-related incidents or the Group’s employees. While there is some level of
judgement on the amount to be recorded, in almost all instances the variance to the actual claim paid out will not individually be
material; however, the timing of when the claims are reported and settled is less certain as a process needs to be followed prior to
the amounts being paid.
Included within other provisions:
-
£20.5m relates to legal and other costs that the Group expects to incur over an extended period, in respect of past events for
which a provision has been recorded, none of which are individually material.
-
£24.9m relates to a provision in respect of a contingent liability recognised on the acquisition of EHC. The Directors have
assessed that a present obligation exists in respect of the treatment of certain historic transactions and have measured the
fair value of these as required by IFRS 3 Business Combinations notwithstanding that the outflow of economic benefits is not
probable. This provision will be reassessed at each reporting date as the risk associated with the contingent liability in due
course expires.
Individual provisions are only discounted where the impact is assessed to be significant. Currently, the effect of discounting is not
material.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 178
26. Capital and other commitments

| 2024 | 2023
Capital expenditure contracted but not provided | £m | £m
Property, plant and equipment | 3.3 | 9.3
Intangible assets | 0.9 | 0.4

27. Contingent liabilities
The Group and its subsidiaries have provided certain guarantees and indemnities in respect of performance and other bonds,
issued by its banks on its behalf in the ordinary course of business. The total commitment outstanding as at 31 December 2024 was
£278.4m (2023: £214.4m).
The Group has guaranteed overdrafts, finance leases and bonding facilities of its joint ventures and associates up to a maximum
value of £5.7m (2023: £5.7m). The actual commitment outstanding at 31 December 2024 was £5.7m (2023: £5.7m).
The Group has previously disclosed a contingent liability in respect of damages for alleged losses as a result of the reduction in
Serco’s share price in 2013. The claim has now been resolved with no material impact to the Group's financial statements.
The Group is also aware of other claims and potential claims which involve or may involve legal proceedings against the Group
although the timing of settlement of these claims remains uncertain. The Directors are of the opinion, having regard to legal advice
received and the Group’s insurance arrangements, that it is unlikely that these matters will, in aggregate, have a material effect on
the Group’s financial position.
28. Financial risk management
28(a) Fair value of financial instruments
(i) Fair value hierarchy
The vast majority of financial instruments are held at amortised cost. The classification of the fair value measurement falls into three
levels, based on the degree to which the fair value is observable. The levels are as follows:
Level 1: Inputs derived from unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs that are observable for the asset or liability, either directly or indirectly, other than quoted prices included within
Level 1.
Level 3: Inputs are unobservable inputs for the asset or liability.
Based on the above, the derivative financial instruments held by the Group at 31 December 2024 and the comparison fair values for
loans are all considered to fall into Level 2. The contingent consideration and contingent liabilities on acquisition are considered to
fall into Level 3. Market prices are sourced from Bloomberg and third party valuations. The valuation models incorporate various
inputs including foreign exchange spot and forward rates and interest rate curves.
There have been no transfers between levels in the year.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 179
28. Financial risk management continued
The Group held the following financial instruments which fall within the scope of IFRS 9 Financial Instruments at 31 December:

|  | Carrying amount | Comparison |  | Carrying amount | Comparison
|  | (measurement basis) | fair value |  | (measurement basis) | fair value
| Amortised cost | Fair value |  | Amortised cost | Fair value |
| £m | £m | £m | £m | £m | £m
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
Financial assets – current |  |  |  |  |  |
Cash and bank balances 1 | 183.0 | — | 183.0 | 94.4 | — | 94.4
Derivatives designated as FVTPL |  |  |  |  |  |
(Level 2) |  |  |  |  |  |
Forward foreign exchange contracts | — | 0.8 | 0.8 | — | 4.8 | 4.8
Derivative instruments in designated |  |  |  |  |  |
hedge accounting relationships |  |  |  |  |  |
(Level 2) |  |  |  |  |  |
Forward foreign exchange contracts | — | — | — | — | 0.1 | 0.1
Receivables |  |  |  |  |  |
Trade receivables (note 20) 1 | 228.2 | — | 228.2 | 219.1 | — | 219.1
Amounts owed by joint ventures | — | — | — | 1.1 | — | 1.1
and associates (note 20) |  |  |  |  |  |
Financial liabilities – current |  |  |  |  |  |
Derivatives designated as FVTPL |  |  |  |  |  |
(Level 2) |  |  |  |  |  |
Forward foreign exchange contracts | — | (6.4) | (6.4) | — | (1.6) | (1.6)
Derivative instruments in designated |  |  |  |  |  |
hedge accounting relationships |  |  |  |  |  |
(Level 2) |  |  |  |  |  |
Forward foreign exchange contracts | — | (0.2) | (0.2) | — | (0.1) | (0.1)
Financial liabilities at fair value (Level |  |  |  |  |  |
3) |  |  |  |  |  |
Contingent consideration (note 22) | — | (3.2) | (3.2) | — | — | —
Contingent liabilities on acquisition | — | (24.9) | (24.9) | — | — | —
(note 25) |  |  |  |  |  |
Financial liabilities at amortised cost |  |  |  |  |  |
Trade payables (note 23) 1 | (92.3) | — | (92.3) | (99.3) | — | (99.3)
Loans (note 24) | (38.8) | — | (38.0) | (51.0) | — | (50.7)
Financial liabilities – non-current |  |  |  |  |  |
Derivatives designated as FVTPL |  |  |  |  |  |
(Level 2) |  |  |  |  |  |
Forward foreign exchange contracts | — | (0.3) | (0.3) | — | — | —
Derivative instruments in designated |  |  |  |  |  |
hedge accounting relationships |  |  |  |  |  |
(Level 2) |  |  |  |  |  |
Forward foreign exchange contracts | — | (0.3) | (0.3) | — | (0.2) | (0.2)
Financial liabilities at fair value (Level |  |  |  |  |  |
3) |  |  |  |  |  |
Contingent consideration (note 22) | — | (6.2) | (6.2) | — | — | —
Financial liabilities at amortised cost |  |  |  |  |  |
Loans (note 24) | (237.6) | — | (225.2) | (155.2) | — | (138.5)

1. Management estimate that the carrying amounts of cash, trade receivables and trade payables approximate to their fair value due to the short-term maturity of
these instruments.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 180
28. Financial risk management continued
The following tables show the development of financial assets and liabilities categorised as level 3:

|  |  | Acquisitions - |  |  |  |
|  |  | revision of |  |  |  |
|  |  | provisional |  |  |  | At 31
| At 1 January |  | fair value | Unwind of | Cash | Exchange | December
| 2024 | Acquisitions | estimates | discount | Settlement | differences | 2024
| £m | £m | £m | £m | £m | £m | £m
Financial liabilities – current |  |  |  |  |  |  |
Contingent consideration | — | (2.4) | — | (0.8) | — | — | (3.2)
Contingent liabilities on acquisition | — | (26.7) | — | — | 1.0 | 0.7 | (24.9)
Financial liabilities – non-current |  |  |  |  |  |  |
Contingent consideration | — | (6.2) | — | (0.1) | — | — | (6.2)

|  |  | Acquisitions - |  |  |  |
|  |  | revision of |  |  |  |
|  |  | provisional |  |  |  | At 31
| At 1 January |  | fair value | Unwind of | Cash | Exchange | December
| 2023 | Acquisitions | estimates | discount | Settlement | differences | 2023
| £m | £m | £m | £m | £m | £m | £m
Financial liabilities – current |  |  |  |  |  |  |
Contingent consideration | (11.2) | — | 1.0 | — | 10.2 |  | —

The fair values of loans and lease obligations are based on cash flows discounted using a rate based on the borrowing rate
associated with the liability.
The fair value of derivatives is calculated using a discounted cash flow approach applying discount factors derived from observable
market data to actual and estimated future cash flows. Credit risk is considered in the calculation of these fair values.
The fair value of the contingent consideration is estimated by calculating the present value of the future expected cash flows.
(ii) Fair value of derivative financial instruments
The fair value of derivative financial instruments results in a net liability of £6.4m (2023: £3.0m) comprising current assets of £0.8m
(2023: £4.9m), current liabilities of £6.6m (2023: £1.7m) and non-current liabilities of 0.6m (2023: £0.2m).

|  | Movement in | Movement in |
|  | fair value | fair value of |
|  | of derivatives | derivatives not |
|  | designated | designated |
|  | in hedge | in hedge |
|  | accounting | accounting | 31 December
| 1 January 2024 | relationships | relationships | 2024
| £m | £m | £m | £m
Forward foreign exchange contracts | 3.0 | (0.4) | (9.0) | (6.4)

|  | Movement in | Movement in |
|  | fair value | fair value of |
|  | of derivatives | derivatives not |
|  | designated | designated |
|  | in hedge | in hedge |
|  | accounting | accounting | 31 December
| 1 January 2023 | relationships | relationships | 2023
| £m | £m | £m | £m
Forward foreign exchange contracts | 2.5 | (0.8) | 1.3 | 3.0

The fair value of financial liabilities recognised at fair value through profit and loss is £6.8m (2023: £1.7m) and relates to derivatives
that are not designated in hedge accounting relationships. The fair value of the derivatives and their credit risk adjusted fair value
are not materially different and are approximately equal to the amount contractually payable at maturity due to the short tenure of
the instruments.
28 (b) Financial risk
The Board is ultimately responsible for ensuring that financial and non-financial risks are monitored and managed within acceptable
and known parameters. The Board delegates authority to the Executive team to manage financial risks. The Group’s Treasury function
acts as a service centre and operates within clearly defined guidelines and policies that are approved by the Board. The guidelines
and policies define the financial risks to be managed, specify the objectives in managing these risks, delegate responsibilities to those
managing the risks and establish a control framework to regulate treasury activities to minimise operational risk.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 181
28. Financial risk management continued
28 (c) Liquidity risk
(i) Credit facilities
The Group maintains committed credit facilities to ensure that it has sufficient liquidity to maintain its ongoing operations. As at 31
December, the Group’s committed bank credit facilities and corresponding borrowings were as follows:

|  |  |  | Utilised | Total
|  |  |  | for bonding | facility
| Currency | Amount | Drawn | facility | available
|  | 2024 | 2024 | 2024 | 2024
|  | £m | £m | £m | £m
Syndicated revolving credit facility | Sterling | 350.0 | — | — | 350.0

|  |  |  | Utilised | Total
|  |  |  | for bonding | facility
| Currency | Amount | Drawn | facility | available
|  | 2023 | 2023 | 2023 | 2023
|  | £m | £m | £m | £m
Syndicated revolving credit facility | Sterling | 350.0 | — | — | 350.0

The Group has available a revolving credit facility with a maximum capacity of £350.0m and a five year term ending November 2027.
In addition, the facility provides an accordion facility of £100m which is uncommitted. At 31 December 2024, the Group had
£279.2m (2023: £208.8m) of US private placement loan notes which will be repaid as bullet repayments between October 2025 and
February 2034.
(ii) Maturity of financial liabilities
The Group’s financial liabilities will be settled on both a net and a gross basis over the remaining period between the balance sheet
date and the contractual maturity date. The amounts disclosed below are the contractual undiscounted cash flows based on the
earliest date on which the Group can be required to pay.

|  | On demand or | Between one | Between two | After |
|  | within one year | and two years | and five years | five years | Total
At 31 December 2024 | Note | £m | £m | £m | £m | £m
Trade payables | 22 | 92.3 | — | — | — | 92.3
Obligations under leases 1 |  | 177.8 | 129.4 | 177.4 | 75.3 | 559.9
| 23 |  |  |  |  |
Loans 2 |  | 39.9 | — | 123.7 | 115.6 | 279.2
| 24 |  |  |  |  |
Future loan interest |  | 13.4 | 12.3 | 28.8 | 19.3 | 73.8
Derivatives settled on gross basis: |  |  |  |  |  |
Outflow |  | 971.5 | 9.5 | 26.7 | 0.9 | 1,008.6
Inflow |  | (965.8) | (9.4) | (26.2) | (0.8) | (1,002.2)
|  | 329.1 | 141.8 | 330.4 | 210.3 | 1,011.6

1. The present value of lease obligations is £530.0m after deducting £29.9m of future finance costs.
2. Loans are stated gross of capitalised finance costs.

|  | On demand or | Between one | Between two | After |
|  | within one year | and two years | and five years | five years | Total
At 31 December 2023 | Note | £m | £m | £m | £m | £m
Trade payables | 22 | 99.3 | — | — | — | 99.3
Obligations under leases 1 |  | 149.0 | 119.0 | 158.1 | 45.8 | 471.9
| 23 |  |  |  |  |
Loans 2 |  | 51.9 | 39.2 | 62.8 | 54.9 | 208.8
| 24 |  |  |  |  |
Future loan interest |  | 6.5 | 5.4 | 10.5 | 6.0 | 28.4
Derivatives settled on gross basis: |  |  |  |  |  |
Outflow |  | 1,094.7 | 0.7 | — | — | 1,095.4
Inflow |  | (1,097.9) | (0.4) | — | — | (1,098.3)
|  | 303.5 | 163.9 | 231.4 | 106.7 | 805.5

1. The present value of lease obligations is £453.7m after deducting £18.2m of future finance costs.
2. Loans are stated gross of capitalised finance costs.
Gross cash flows in the table above relating to forward foreign exchange contracts total £965.8m (inflow) and £971.5m (outflow) on
demand or within one year (2023: £1,097.9m (inflow) and £1,094.7m (outflow) on demand or within one year).
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 182
28 (d) Foreign exchange risk
(i) Transactional
It is the Group’s policy to hedge material transactional exposures using forward foreign exchange contracts to fix the functional
currency value of non-functional currency cash flows. At 31 December 2024, there were no material unhedged non-functional
currency monetary assets or liabilities, firm commitments, or highly probable forecast transactions.
(ii) Translational
Where possible the Group will raise external funding to match the currency profile of its foreign operations, in order to mitigate
translation exposure. If matched funding is not possible, currency derivatives are used to protect against movements in foreign
exchange but are not designated in hedge accounting relationships. These are settled gross and are shown in 28 (c) (ii) maturity of
financial liabilities.
(iii) Hedge accounting
For the purposes of hedge accounting, hedges are classified as either fair value hedges, cash flow hedges or hedges of net
investments in foreign operations. Details of the Group’s accounting policies in relation to derivatives qualifying for hedge
accounting under IFRS 9 Financial Instruments can be seen in note 2.
The Group holds a number of forward foreign exchange contracts designated as cash flow hedges. These derivatives are hedging
highly probable forecast foreign currency trade payments in the UK business. The net notional amounts are summarised by currency
below:

| 2024 | 2023
| £m | £m
Sterling | 9.4 | (15.1)
US Dollar | (16.4) | 0.9
Indian Rupee | 7.0 | 14.2

All derivatives designated as cash flow hedges are highly effective and as at 31 December 2024, £0.4m net fair value loss (2023:
£0.9m net fair value loss) has been deferred in the hedging reserve. During the year to 31 December 2024, £0.4m of net fair value
loss (2023: £0.6m loss) was transferred to the hedging reserve and £0.1m fair value loss (2023: £0.2m gain) was reclassified to the
Consolidated Income Statement.
(iv) Currency sensitivity
The Group’s currency exposures in respect of monetary items at 31 December 2024 that result in net currency gains and losses in
the income statement and equity arise principally from movement in US Dollar and Indian Rupee exchange rates. The impact of a
10% movement is summarised below:

| Pre-tax profits | Equity gain/ | Pre-tax profits | Equity gain/
| gain/(loss) | (loss) | gain/(loss) | (loss)
| 2024 | 2024 | 2023 | 2023
| £m | £m | £m | £m
US Dollar | (0.9) | (1.7) | (1.0) | 0.1
Euro | (0.1) | — | — | —
Indian Rupee | — | 0.7 | — | 1.4
| (1.0) | (1.0) | (1.0) | 1.5

28 (e) Interest rate risk
The Group’s policy is to minimise the impact of interest rate volatility on earnings to provide an appropriate level of certainty to cost
of funds. Exposure to interest rate risk arises principally on changes to US Dollar and Sterling interest rates.
(i) Interest rate management
An analysis of financial assets and liabilities exposed to interest rate risk is set out below:

|  |  | Weighted |  |  | Weighted
|  |  | average |  |  | average
| Floating rate | Fixed rate | interest rate | Floating rate | Fixed rate | interest rate
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
Financial assets | £m | £m | % | £m | £m | %
Cash and cash equivalents | 183.0 | — | 4.1 | 94.4 | — | 4.3

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 183
28. Financial risk management continued

|  |  | Weighted |  |  | Weighted
|  |  | average |  |  | average
| Floating rate | Fixed rate | interest rate | Floating rate | Fixed rate | interest rate
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
Financial assets | £m | £m | % | £m | £m | %
US Dollar loans | — | 279.2 | 4.9 | — | 208.8 | 4.0
| — | 279.2 | — | — | 208.8 | —

Exposure to interest rate fluctuations is mitigated through the issuance of fixed rate debt. The rates on the US Dollar loans are fixed
for the term of each loan. The loans will be repaid as bullet repayments between October 2025 and February 2034. Excluded from
the above analysis is £530.0m (2023: £453.7m) of amounts payable under leases, which are subject to fixed rates of interest.
(ii) Interest rate sensitivity
The effect of a 100 basis point increase in Sterling Overnight Index Average (SONIA) rates on the net financial liability position
(excluding leases) at the balance sheet date, with all other variables held constant, would have resulted in a £1.8m increase in pre-
tax profit for the year to 31 December 2024 (2023: increase of £0.9m).
28 (f) Credit risk
The Group’s principal financial assets are cash and cash equivalents, contract assets, and trade and other receivables.
Credit risk is the risk that a counterparty could default on its contractual obligations. In this regard, the Group’s principal exposure is
to cash and cash equivalents, derivative transactions and trade receivables.
The Group’s contract asset and trade receivables credit risk is relatively low given that a high proportion of our customer base are
government bodies with strong sovereign, or sovereign-like, credit ratings. However, where the assessed credit worthiness of a
customer, government or non-government, falls below that considered acceptable, appropriate measures are taken to mitigate
against the risk of contractual default using instruments such as credit guarantees.
The Group has not recorded any impairments related to contract assets or trade and other receivables due to credit risk during the
year ended 31 December 2024 (2023: none).
The Group’s Treasury function primarily transacts with counterparties that comply with Board policy. Where exceptions are
approved due to local requirements, the Group’s exposures are monitored and kept to an immaterial level. The credit risk is
measured by way of a counterparty credit rating from any two recognised rating agencies. Pre-approved limits are set based on a
rating matrix and exposures monitored accordingly. The Group also employs the use of set-off rights in some agreements.
The Group’s policy is to provide guarantees for joint ventures and associates only to the relevant proportion of support provided by
the partners. At 31 December 2024, the Group has issued guarantees in respect of certain joint ventures and associates as per note
27.
28 (g) Capital risk
Management’s objective is to maintain a capital structure that supports the Group’s strategic objectives. The Group’s target leverage
is 1x-2x net debt to EBITDA which enables execution of the Board’s capital allocation priorities and includes but is not limited to
supporting organic growth, reshaping the portfolio through mergers, acquisitions and disposals, optimising shareholder returns
and maintaining an implied investment grade credit rating. This strategy is unchanged from the prior year.
Management reviews and approves, at least annually, a Treasury policy document which covers, inter alia, funding and liquidity risk,
capital structure and risk management. This policy details targets for committed funding headroom, diversification of committed
funding and debt maturity profile.
The Group plans to maintain sufficient funds and distributable reserves to allow payments of projected dividends to shareholders.
The following table summarises the capital of the Group:

| 2024 | 2023
| £m | £m
Cash and cash equivalents | (183.0) | (94.4)
Loans | 276.4 | 206.2
Obligations under leases | 530.0 | 453.7
Equity | 842.5 | 1,033.7
Capital | 1,465.9 | 1,599.2

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 184
29. Retirement benefit schemes
29 (a) Defined benefit schemes
(i) Characteristics and risks
The Group contributes to defined benefit schemes for qualifying employees of its subsidiaries. The schemes in which the Group
participates are categorised as follows:
Non-contract specific schemes
These schemes do not relate to any specific contract and represent 99.6% (2023: 99.6%) of the Group’s pension assets and 99.7%
(2023: 99.6%) of the Group’s pension liabilities. They consist of eight pre-funded defined benefit schemes and one unfunded
defined benefit scheme.
The two UK funded schemes are Serco Pension and Life Assurance Scheme (SPLAS) and a non-contract specific section of the
Railways Pension Scheme (RPS). The funding policy for the UK pre-funded schemes is to contribute amounts which will achieve
100% funding on a projected salary basis based on regular actuarial valuations.
There are three non-UK schemes based in Switzerland and are available for the employees of OXZ Holdings AG (ORS) and its
subsidiaries which are part of a collective foundation. The occupational benefits fund commission defines the contributions which
are shared equally between the employer and the employees.
The Group has obligations in three funded public sector schemes in Australia and there is an unfunded scheme in Germany where
the liabilities arising are recognised in full at £0.2m (2023: £0.2m).
Contract specific scheme
There is one scheme which represents 0.4% (2023: 0.4%) of the Group’s pension assets and 0.3% (2023: 0.4%) of the Group’s
pension liabilities.
The Group makes contributions under Admitted Body status for one section of the Local Government Pension Scheme for the
period to the end of the relevant customer contract. The Group is required to pay regular contributions as decided by the scheme
actuary and as detailed in the scheme’s schedule of contributions. In addition, the Group may be required to pay some or all of any
deficit (as determined by the scheme actuary) that is remaining at the end of the contract.
In respect of Local Government Pension Schemes, as there is a residual liability, the Group recognises a sufficient level of provision
in these financial statements based on the IAS 19 Employee Benefits valuation at the reporting date and contractual obligations.
Joint venture scheme
Under contractual arrangements, the Group’s joint venture Merseyrail Services Holding Company Limited (Merseyrail) sponsors a
section of the RPS, paying contributions in accordance with a Schedule of Contributions. There is no residual liability to fund any
deficit at the end of the franchise period and there is no pension obligation on the balance sheet of the Group or Merseyrail. The
costs associated with the scheme are included in profit from operations for Merseyrail shown in note 5 and are reflected in the share
of results in joint ventures and associates net of interest and tax in the income statement. Therefore the disclosures in this note do
not include Merseyrail.
Scheme funding
The normal employer contributions (excluding SPLAS deficit recovery payments) expected to be paid during the financial year for all
schemes ending 31 December 2025 are £10.8m (31 December 2024: £10.7m).
The assets of funded schemes are held independently of the Group’s assets in separate trustee administered schemes. The trustees
of each pension scheme are required by law to act in the interest of the scheme and of all relevant stakeholders in the scheme. The
trustees of the pension schemes are responsible for the investment policy with regard to the assets of the scheme. The Group’s
schemes are valued by independent actuaries annually using the projected unit credit actuarial cost method for accounting
purposes. This reflects service rendered by employees to the date of valuation and incorporates actuarial assumptions including
discount rates to determine the present value of benefits, inflation assumptions, projected rates of salary growth and life expectancy
of pension plan members. Discount rates are based on the market yields of high-quality corporate bonds in the country concerned.
Net pension assets and liabilities in the different defined benefit schemes are not offset.
The schemes typically expose the Group to risks that impact the financial performance and position of the Group and may affect the
amount and timing of future cash flows. The key risks are set out below:
• Investment risk. The schemes hold assets with which to discharge the future liabilities of these schemes. Any decline in the value
of these investments directly impacts on the ability of the schemes to meet its commitments and could require the Group to fund
this shortfall in future years. SPLAS’s investment strategy aims to reduce volatility risk by better matching assets to liabilities and
is based on the actuarial funding basis. 47% of the scheme’s assets are annuity policies, which result in an insurer funding the
future benefit payments to the relevant members and therefore eliminate the risk of changes in the future value of the benefits to
the scheme. The investment strategy outside of the annuity has a benchmark allocation of 45% Liability Driven Investments (LDIs)
and 28% Private Debt. The remaining 27% is split between short-dated credit, asset backed securities, and buy and maintain
credit . The main asset classes that make up the LDI investments are gilts and corporate bonds with inflation and interest swap
overlays and are therefore linked to the key drivers of the scheme’s liabilities.The Group and trustee monitor the allocation over
time, as the actual allocation will vary from above due to market movements, changing collateral requirements and cashflows for
illiquid assets.
• Interest risk. The present values of the defined benefit schemes’ liabilities are calculated using a discount rate determined by
reference to high-quality corporate bond yields and therefore a decrease in interest rates will increase the schemes’ liabilities.
This will be partially offset by an increase in the fair value of the schemes’ debt investments.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 185
(i) Characteristics and risks continued
• Longevity risk. The present values of the defined benefit schemes’ liabilities are calculated by reference to the best estimate of
the mortality of the schemes’ participants, both during and after their employment. An increase in the life expectancy of the
schemes’ participants will increase the schemes’ liabilities.
• Inflation risk. The present values of the defined benefit schemes’ liabilities are calculated to include the effect of inflation on
future purchasing power based on estimations around inflation rates. Higher inflation will trigger larger annual benefits for the
members and an increase in expected future inflation rates will increase the schemes’ liabilities.
• Salary risk. The present values of the defined benefit schemes’ liabilities are calculated by reference to the future salaries of the
schemes’ participants, as such, an increase in the salary of the schemes’ participants will increase the schemes’ liabilities.
Serco Pension and Life Assurance Scheme (SPLAS)
The largest non-contract specific scheme is SPLAS. The most recent full actuarial valuation of this scheme was undertaken as at 5
April 2021 and completed in May 2022. The actuarially assessed deficit for funding purposes at this time was £70.0m. The increase
to the actuarially assessed deficit for funding purposes was as a result of the RPI reform announced by the UK government to take
effect from 2030. The full actuarial valuation of this scheme for 2024 is expected to complete in 2025.
Pension obligations are valued separately for accounting and funding purposes and there is often a material difference between
these valuations. As at 31 December 2024, the estimated actuarial deficit on a funding basis for SPLAS was £52m (2023: £23m)
whereas the accounting valuation resulted in an asset of £12.8m (2023: £30.5m). The primary reason a difference arises is that IAS
19 accounting requires the valuation to be performed on the basis of a best estimate whereas the funding valuation used by the
trustees uses more prudent assumptions.
The schedule of contributions for SPLAS was agreed during 2022, with 44.3% of pensionable salaries for active employees due to be
paid in regular contributions from 1 June 2022. The schedule of contributions also determined that additional shortfall contributions
were required and the Group has committed to make deficit recovery payments of £6.6m per year by 31 March from 2022 to 2030.
An annual assessment of the shortfall is performed and if the scheme is determined to be in a surplus position the shortfall contributions
due by 31 March are deferred to the following year. If the shortfall calculated in the annual assessment is less than the cumulative
shortfall due to date, the contribution is capped at the shortfall calculation and any excess is carried forward to the next year.
(ii) Events in the year
Market conditions and assumption changes
Serco’s pension schemes have an accounting surplus before tax of £4.0m (2023: £24.5m). The decrease in the net retirement benefit
asset of £20.5m is primarily due to market conditions and changes to assumptions on the two UK funded schemes, SPLAS and RPS.
Higher yields compared to 2023 resulted in the majority of the £102.6m fall in the fair value of UK schemes assets . The Group’s UK
schemes liabilities reduced by £79.9m primarily due to the higher yields increasing discount rates, offset by the Group refining the
AA corporate bonds used to derive the discount rates. This adjustment resulted in a reduction of approximately 20 basis points to
the discount rate compared to 2023. If the 2023 basis was applied, the present value of scheme liabilities would have been £19.2m
lower.
Virgin Media case
In June 2023, the High Court made a ruling in the case Virgin Media Ltd v NTL Pension Trustees II Limited which rendered
amendments to the Virgin Media scheme invalid because they were not accompanied by the correct Section 37 actuarial
confirmation, even if the amendment did not affect benefits (the ruling related to Section 37 of the 1993 Pensions Act and the
correct interpretation of historic legislation governing the amendment of contracted-out DB schemes). In July 2024, the Court of
Appeal upheld the original High Court judgment which could have wider ranging implications to other schemes. There is still
uncertainty around any potential overriding legislation or regulation from the Department of Work and Pensions (DWP) which might
validate any amendment which is held to be void under the judgement.
The Group had been waiting for the Court of Appeal’s decision before investigating any possible implications for the Group’s
pension schemes. The trustees of SPLAS have taken initial legal advice on the matter and the review of some historic amendments is
still being undertaken by the trustees and its legal advisors. Therefore, the amount of any potential impact on the schemes’ defined
benefit obligation cannot yet be measured with sufficient reliability and consequently no allowance for this has been made in
calculating the defined benefit obligations at the reporting date. No material impact is expected from the Group’s other UK schemes
following discussions with Trustees where no issues has been noted in the review of deeds.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 186
(iii) Values recognised in total comprehensive income in the year
The amounts recognised in the Consolidated Financial Statements for the year are analysed as follows:

| 2024 | 2023
Recognised in the income statement | £m | £m
Current service cost – employer | 7.1 | 5.3
Administrative expenses and taxes | 1.7 | 2.0
Recognised in arriving at operating profit | 8.8 | 7.3
Interest income on scheme assets – employer | (47.5) | (50.4)
Interest cost on scheme liabilities – employer | 45.6 | 47.3
Finance income | (1.9) | (3.1)
Total recognised in the income statement | 6.9 | 4.2

| 2024 | 2023
Included within the SOCI | £m | £m
Actual return on scheme assets | (60.7) | 41.4
Less: interest income on scheme assets | (47.4) | (50.4)
Net return on scheme assets | (108.1) | (9.0)
Effect of changes in demographic assumptions | 2.1 | 24.3
Effect of changes in financial assumptions | 63.9 | (22.7)
Effect of experience adjustments | 3.4 | (21.7)
Remeasurements | (38.7) | (29.1)
Change in franchise adjustment | — | (1.8)
Change in members’ share | — | (1.2)
Actuarial loss on reimbursable rights | — | (3.0)
Total recognised in the SOCI | (38.7) | (32.1)

(iv) Balance sheet values
The assets and liabilities of the schemes at 31 December are:

|  | Present value of |  |  | Present value of |
| Fair value of | scheme |  | Fair value of | scheme |
| scheme assets | liabilities | Surplus/(deficit) | scheme assets | liabilities | Surplus/(deficit)
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
| £m | £m | £m | £m | £m | £m
SPLAS 1 | 822.8 | (810.0) | 12.8 | 917.0 | (886.5) | 30.5
ORS | 83.2 | (93.9) | (10.7) | 68.5 | (80.5) | (12.0)
RPS | 58.4 | (57.4) | 1.0 | 66.7 | (60.8) | 5.9
Other Schemes in surplus | 4.0 | (2.6) | 1.4 | 3.8 | (2.8) | 1.0
Other schemes in deficit | 1.1 | (1.6) | (0.5) | 1.1 | (2.0) | (0.9)
Net retirement benefit asset 2 | 969.5 | (965.5) | 4.0 | 1,057.1 | (1,032.6) | 24.5

1. The SPLAS Trust Deed gives the Group an unconditional right to a refund of surplus assets assuming the gradual settlement of plan liabilities over time until all
members have left the plan. Pension assets are deemed to be recoverable and there are no adjustments in respect of minimum funding requirements as
economic benefits are available to the Group either in the form of future refunds or in the form of possible reductions in future contributions.
2. The net retirement benefit asset (before tax) is split in the balance sheet between schemes in surplus totalling £15.2m (2023: £37.4m) reported in retirement
benefit assets and schemes in deficit totalling £11.2m (2023: £12.9m) reported in retirement benefit obligations.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 187
(v) Pension asset values
The schemes asset values at 31 December are:

|  | Restated 1
| 2024 | 2023
Scheme assets at fair value | £m | £m
Fair value of scheme assets - SPLAS |  |
Buy and maintain credit | 17.8 | 55.8
Short-dated credit | 31.9 | 30.5
Asset backed securities | 38.0 | 12.0
LDIs | 181.7 | 235.8
Private debt | 143.5 | 145.0
Amounts held by insurance companies | 385.8 | 430.3
Cash and other | 24.1 | 7.6
Fair value of scheme assets - SPLAS | 822.8 | 917.0
Pooled investment funds - RPS | 58.4 | 66.7
Amounts held by insurance companies - ORS | 83.2 | 68.5
Fair value of assets - Other schemes | 5.1 | 4.9
Total fair value of scheme assets 2 | 969.5 | 1,057.1

1. The classification of scheme assets in 2023 have been updated to separately identify the assets relating to the SPLAS scheme and other schemes the Group
participates in. In addition, the assets of the SPLAS scheme have been realigned to the investment strategy as set out in the investment risk section for SPLAS
on page 185. There has been no change to the value of the assets in the prior year.
2. There are no investments in the Group’s own transferable financial instruments held as pension assets. No property pension assets are occupied, or other
pension assets used by the Group.
As required by IAS 19 Employee Benefits, the Group has considered the extent to which the pension plan assets should be classified
in accordance with the fair value hierarchy of IFRS 13 Fair Value Measurement.
• Buy and maintain credit are valued at fair value which is typically the Net Asset Value provided by the fund administrator and
consist of level 2 investments in bonds.
• Short-dated credit and Asset backed securities are value at fair value which is typically the net asset value provided by the fund
administrator and consist of level 2 investments in pooled investment vehicles.
• LDIs are valued at fair value which is typically the Net Asset Value provided by the fund administrator and consist of level 2
investments in bonds and derivatives.
• Private debt funds have no observable market price and the valuation is based on the Net Asset Value provided by the fund
administrator at 30 September adjusted for actual cash flows in the period to 31 December. Therefore, these investments are
classified as level 3.
• Pooled investment funds - Railway Pension Scheme are unitised fund investments in the non-contract specific section of the
Railways Pension Scheme and are Level 2 or Level 3 based on the Net Asset Value provided by the fund administrator.
• Amounts held by insurance companies are valued at the equal and opposite of the defined benefit obligations that they insure
and are classified as level 3.
• Fair value of assets - Other schemes include investments in equity and bonds classified as level 1.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 188
(vi) Changes in the fair value of scheme assets and liabilities
The table below shows the movements in fair value of scheme assets and liabilities and shows where they are reflected in the
financial statements.

|  | Present value |  |  | Present value |
| Fair value of | of scheme | Surplus/ | Fair value of | of scheme | Surplus/
| scheme assets | liabilities | (deficit) | scheme assets | liabilities | (deficit)
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
| £m | £m | £m | £m | £m | £m
At 1 January | 1,057.1 | (1,032.6) | 24.5 | 1,059.7 | (1,011.9) | 47.8
Current service cost – employer | — | (7.1) | (7.1) | — | (5.3) | (5.3)
Administration expenses – employer | (1.7) | — | (1.7) | (2.0) | — | (2.0)
Net interest on scheme assets and liabilities | 47.5 | (45.6) | 1.9 | 50.4 | (47.3) | 3.1
Total recognised in the income statement | 45.8 | (52.7) | (6.9) | 48.4 | (52.6) | (4.2)
Return of plan assets | (108.1) | — | (108.1) | (9.0) | — | (9.0)
Effect of changes in demographic | — | 2.1 | 2.1 | — | 24.3 | 24.3
assumptions |  |  |  |  |  |
Effect of changes in financial assumptions | — | 63.9 | 63.9 | — | (22.7) | (22.7)
Effect of experience adjustments | — | 3.4 | 3.4 | — | (21.7) | (21.7)
Total recognised in the SOCI | (108.1) | 69.4 | (38.7) | (9.0) | (20.1) | (29.1)
Contributions by employer | 24.2 | — | 24.2 | 10.5 | — | 10.5
Total recognised in the cash flow | 24.2 | — | 24.2 | 10.5 | — | 10.5
statement |  |  |  |  |  |
Contributions by employees | 6.0 | (6.0) | — | 5.1 | (4.9) | 0.2
Current service cost – employees | — | — | — | — | (0.3) | (0.3)
Net Interest cost – employee | — | — | — | 0.1 | (0.1) | —
Change in member share | 6.0 | (6.0) | — | 5.2 | (5.3) | (0.1)
Benefits paid | (54.4) | 54.4 | — | (50.3) | 50.3 | —
Insurance premiums for risk benefits | (2.5) | 2.5 | — | (2.0) | 2.0 | —
Transfer in of accrued benefits | 5.6 | (5.6) | — | 4.1 | (4.1) | —
Transfer out of benefits | — | — | — | (12.2) | 12.2 | —
Foreign exchange | (4.2) | 5.1 | 0.9 | 2.7 | (3.1) | (0.4)
Other movements | (55.5) | 56.4 | 0.9 | (57.7) | 57.3 | (0.4)
At 31 December | 969.5 | (965.5) | 4.0 | 1,057.1 | (1,032.6) | 24.5

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 189
(vii) Actuarial assumptions: SPLAS
The assumptions set out below are for SPLAS, which reflects 84% of total liabilities and 85% of total assets of the defined benefit
pension scheme in which the Group participates. The significant actuarial assumptions with regards to the determination of the
defined benefit obligation are set out below.
The Group continued to set RPI inflation in line with the market expectation less an inflation risk premium. The inflation risk premium
is 0.3% both at 31 December 2023 and at 31 December 2024.
The average duration of the benefit obligation at the end of the reporting period is 11 years (2023: 12 years).

| 2024 | 2023
Significant actuarial assumptions | % | %
Discount rate | 5.50 | 4.80
Rate of salary increases | 3.05 | 2.85
RPI Inflation | 3.15 | 3.05
CPI Inflation - pre-retirement | 2.55 | 2.35

| 2024 | 2023
Post-retirement mortality 1 | years | years
Current pensioners at 65 – male | 20.8 | 20.9
Current pensioners at 65 – female | 23.6 | 23.6
Future pensioners at 65 – male | 22.8 | 22.8
Future pensioners at 65 – female | 25.7 | 25.6

1. The mortality assumptions have been updated to reflect the latest available mortality tables CMI_2023 (2023: CMI_2022).
Sensitivity analysis for SPLAS is provided below, based on reasonably possible changes of the assumptions occurring at the end of
the reporting period, assuming all other assumptions are held constant. The sensitivities have been derived in the same manner as
the defined benefit obligation as at 31 December 2024 where the defined benefit obligation is estimated using the Projected Unit
Credit method. Under this method each participant’s benefits are attributed to years of service, taking into consideration future
salary increases and the scheme’s benefit allocation formula. Thus, the estimated total pension to which each participant is expected
to become entitled at retirement is broken down into units, each associated with a year of past or future credited service. The
defined benefit obligation as at 31 December 2024 is calculated on the actuarial assumptions agreed as at that date. The
sensitivities are calculated by changing each assumption in turn following the methodology above with all other things held
constant. The change in the defined benefit obligation from updating the single assumption represents the impact of that
assumption on the calculation of the defined benefit obligation.

| 2024 | 2023
Increase/(decrease) in defined benefit obligation of SPLAS | £m | £m
Discount rate – 1.0% increase | (79.8) | (93.8)
Discount rate – 1.0% decrease | 96.1 | 114.1
Inflation – 1.0% increase | 57.6 | 74.1
Inflation – 1.0% decrease | (53.7) | (69.1)
Rate of salary increase – 1.0% increase | 1.1 | 1.5
Rate of salary increase – 1.0% decrease | (1.0) | (1.3)
Mortality – one-year age rating | 23.3 | 26.6

Management acknowledges that the method used of presuming that all other assumptions remaining constant has inherent
limitations given that a combination of changes is more likely, but highlights the value of each individual risk and is therefore a
suitable basis for providing this analysis.
The increase or decrease in the defined benefit obligation in the sensitivity table above would be offset by the corresponding
movement in the scheme’s assets. A 1% change in the long-term gilt yields consistent with the discount rates would result in an
approximate offsetting movement of £70m (2023: £90m) in the scheme’s LDI investment and a 1% change in long term inflation
expectation would result in an approximate offsetting movement of £50m (2023: £60m) in the scheme’s LDI Investment.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 190
(viii) Actuarial assumptions: Other schemes
The other UK based schemes are valued on a consistent basis to SPLAS. The non-UK based schemes use a discount rate ranging
from 1.00% to 5.40% (2023: 1.40% to 5.72%).
The expected yield on bond investments with fixed interest rates is derived from their market value. The yield on equity investments
contains an additional premium (an ‘equity risk premium’) to compensate investors for the additional anticipated risks of holding this
type of investment, when compared to bond yields. The Group applies an equity risk premium of 3.0% (2023: 4.6%).
The overall expected return on assets is calculated as the weighted average of the expected returns for the principal asset
categories held by the scheme.
29 (b) Defined contribution schemes
The Group paid employer contributions of £96.8m (2023: £97.9m) into UK defined contribution schemes, foreign defined
contribution schemes and foreign state pension schemes.
Serco participated in certain pre-funded defined benefit pension arrangements relating to contracts, including participations in
public sector schemes, however, contractual protections are in place allowing actuarial and investment risk to be passed to the end
customer via recoveries for contributions paid.
The nature of these arrangements varies from contract to contract but typically allow for the majority of contributions payable to the
schemes in excess of an initial rate agreed at the inception to be recovered from the end customer, as well as exit payments payable
to the schemes at the cessation of the contract, such that the Group’s net exposure to actuarial and investment risk is immaterial.
Cash contributions are recognised as pension costs and no asset or liability is shown on the balance sheet.
30. Share capital

|  | 2024 | 2023
Issued and fully paid |  | £m | £m
1,023,855,243 | (2023: 1,103,545,966) ordinary shares of 2p each | 20.5 | 22.1

| 2024 | 2023
| Number | Number
Number of shares at 1 January | 1,103,545,966 | 1,218,008,788
Shares cancelled | (79,690,723) | (114,462,822)
Number of shares 31 December | 1,023,855,243 | 1,103,545,966

The Company has one class of ordinary shares which carry no right to fixed income.
31. Share premium account

| 2024 | 2023
| £m | £m
At 1 January and 31 December | 463.1 | 463.1

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 191
32. Reserves
32 (a) Movements in other reserves

| Retirement |  |  |  |  |  |  |
| benefit | Share-based |  |  |  |  | Capital |
| obligations | payment | Own shares | Treasury | Hedging | Translation | redemption | Total other
| reserve | reserve | reserve | shares | reserve | reserve | reserve | reserves
| £m | £m | £m | £m | £m | £m | £m | £m
At 1 January 2023 | (169.9) | 105.5 | (7.7) | (91.2) | 0.3 | 32.6 | 0.5 | (129.9)
Total comprehensive | (26.0) | — | — | — | (0.6) | (38.4) | — | (65.0)
loss for the year |  |  |  |  |  |  |  |
Shares purchased and held in own share | — | — | (22.9) | — | — | — | — | (22.9)
reserve |  |  |  |  |  |  |  |
Shares purchased and held in Treasury | — | — | — | (88.8) | — | — | — | (88.8)
Cancellation of shares |  |  |  | 180.0 |  |  | 2.3 | 182.3
held in Treasury |  |  |  |  |  |  |  |
Shares transferred to award holders on exercise of share awards | — | (15.6) | 15.6 | — | — | — | — | —
Expense in relation to share-based payments | — | 13.5 | — | — | — | — | — | 13.5
Tax credit on items taken | — | 0.5 | — | — | — | — | — | 0.5
directly to equity |  |  |  |  |  |  |  |
At 1 January 2024 | (195.9) | 103.9 | (15.0) | — | (0.3) | (5.8) | 2.8 | (110.3)
Total comprehensive | (31.0) | — | — | — | (0.3) | (18.6) | — | (49.9)
loss for the year |  |  |  |  |  |  |  |
Shares purchased and held in own share | — | — | (22.8) | — | — | — | — | (22.8)
reserve |  |  |  |  |  |  |  |
Shares purchased and held in Treasury | — | — | — | (141.3) | — | — | — | (141.3)
Cancellation of shares | — | — | — | 141.3 | — | — | 1.6 | 142.9
held in Treasury |  |  |  |  |  |  |  |
Shares transferred to award holders on exercise of share awards | — | (17.0) | 17.1 | — | — | — | — | 0.1
Expense in relation to share-based payments | — | 15.2 | — | — | — | — | — | 15.2
Tax credit on items taken | — | 0.7 | — | — | — | — | — | 0.7
directly to equity |  |  |  |  |  |  |  |
At 31 December 2024 | (226.9) | 102.8 | (20.7) | — | (0.6) | (24.4) | 4.4 | (165.4)

32 (b) Retirement benefit obligations reserve
The retirement benefit obligations reserve represents the actuarial gains and losses recognised in respect of annual actuarial
valuations for defined benefit retirement schemes, the fair value adjustments on reimbursable rights and the related movements in
deferred tax balances.
32 (c) Share-based payment reserve
The share-based payment reserve represents credits relating to equity-settled share-based payment transactions and any gain or
loss on the exercise of share award schemes satisfied by own shares.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 192
32 (d) Own shares reserve
The own shares reserve represents the cost of shares in Serco Group plc held by the Serco Group plc Employee Share Ownership
Trust (ESOT) to satisfy awards under the Group’s share plan schemes. At 31 December 2024, the ESOT held 13,418,111 (2023:
11,351,967) shares equal to 1.3% of the current allotted share capital (2023: 1.0%). The market value of shares held by the ESOT as
at 31 December 2024 was £20.3m (2023: £18.4m).
32 (e) Treasury shares
The Treasury shares reserve represents amounts paid to repurchase ordinary shares. On 29 February 2024, the Group announced
its intention to repurchase ordinary shares with a value of up to £140m. The buyback programme took place between 6 March and
29 November. During this period, the Group repurchased 79,690,723 shares at an average cost of £1.773 for total cost including
fees of £141.3m. All shares purchased in 2024 have been cancelled.
32 (f) Hedging and translation reserve
The hedging and translation reserve represents foreign exchange differences arising on translation of the Group’s overseas
operations and movements relating to cash flow hedges.
33. Share based payment expense
The Group recognised the following expenses related to equity-settled share-based payment transactions:

| 2024 | 2023
| £m | £m
Long-Term Incentive Plan | 12.3 | 10.7
Deferred Bonus Plan | 0.7 | 0.9
Equity Settled Bonus Plan | 0.2 | 0.6
MyShareSave Plan | 2.0 | 1.3
| 15.2 | 13.5

There are no cash settled arrangements and all schemes are issued by the Serco Group plc for eligible employees within the Group
and its subsidiaries.
Long-Term Incentive Plan (LTIP)
Under the LTIP, eligible employees have been granted conditional share awards. Awards vest after the performance period of two
to three years and are subject to the achievement of certain performance measures, with the exception of non-performance awards.
These non-performance awards are subject only to continued employment on vesting dates which vary from two to three years after
the grant dates.
On the performance-related awards, the performance measures are Earnings per Share (EPS), Total Shareholder Return (TSR),
Return on Invested Capital (ROIC) and measures linked to Strategic Objectives.

| Number of | Weighted | Number of | Weighted
| shares under | average | shares under | average
| award | exercise price | award | exercise price
| 2024 | 2024 | 2023 | 2023
| thousands | £ | thousands | £
Outstanding at 1 January | 28,341 | nil | 30,284 | nil
Granted during the year | 9,290 | nil | 11,305 | nil
Dividend equivalent granted during the year | 555 | nil | 588 | nil
Exercised during the year | (8,364) | nil | (9,013) | nil
Lapsed during the year | (2,768) | nil | (4,823) | nil
Outstanding at 31 December | 27,054 | nil | 28,341 | nil

The awards over shares outstanding at 31 December 2024 were all unvested and had a weighted average contractual life remaining
of 1.3 years (2023: 1.0 years).
In the year, 9,289,543 grants were made, of which 1,294,211 were non-performance related. The remaining 7,995,332 awards were
performance-based awards, split between the following performance conditions EPS (25% weighting), average ROIC (25%) and
relative TSR (20%), together with two growth measures aligned to our medium-term growth goals (total of 20% weighting split
between the Book-to-Bill ratio and Organic Revenue Growth), and an ESG scorecard (10%). The rewards subject to market-based
performance conditions (such as the TSR condition for these awards) were valued using the Monte Carlo Simulation model. For all
other awards the fair value is equal to the share price on the date of grant, no adjustment to the market price is required as the
awards accrue dividend equivalents.
The Monte Carlo Simulation model is considered to be the most appropriate for valuing awards granted under schemes where
there are changes in performance conditions by which the awards are measured, such as for the TSR-based awards.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 193
Long-Term Incentive Plan (LTIP) continued
The Monte Carlo Simulation model used the following inputs:

| 2024
Weighted average share price | £1.84
Weighted average exercise price | nil
Expected volatility | 22.5 %
Average expected life (years) | 2.91
Risk-free rate | 3.96 %

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years.
The expected life used in the model has been adjusted, based on Management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
The weighted average fair value of awards granted under this scheme in the year is £1.74 (2023: £1.37).
Performance Share Plan (PSP)
Under the PSP, eligible employees have been granted options or conditional share awards with an exercise price of two or zero
pence. Awards vest after the performance period of two to three years and are subject to the achievement of certain performance
measures, with the exception of non-performance awards. These non-performance awards are only subject to continued
employment on vesting dates which vary from two to three years after the grant dates.
On the performance-related awards, the performance measures are Earnings per Share (EPS), Total Shareholder Return (TSR) and
Return on Invested Capital (ROIC). If options remain unexercised after a period of ten years from the date of grant, then the options
expire.

| Number of |  | Number of |
| options or | Weighted | options or | Weighted
| shares | average | shares | average
| under award | exercise price | under award | exercise price
| 2024 | 2024 | 2023 | 2023
| thousands | £ | thousands | £
Outstanding at 1 January | 4,357 | 0.02 | 6,455 | 0.02
Dividend equivalent granted during the year | — | nil | — | nil
Exercised during the year | (1,342) | 0.02 | (2,098) | 0.02
Lapsed during the year | (37) | 0.02 | — | nil
Outstanding at 31 December | 2,978 | 0.02 | 4,357 | 0.02

Of these awards, 2,978,436 (2023: 4,356,603) were exercisable at the end of the year. The awards outstanding at 31 December
2024 had a weighted average contractual life remaining of 2.4 years (2023: 2.9 years). There were no new awards granted under the
Performance Share Plan in the year.
Deferred Bonus Plan (DBP)
Under the DBP, eligible employees are entitled to participate in a voluntary bonus deferral, using up to 50% of their earned annual
bonus to purchase shares in the Group at market price. In connection with this, the Group will make a matching share award, up to a
maximum of two times the gross bonus deferred, which will vest provided they remain in employment for that period, the shares are
retained for that period, and the performance measures have been met.

| Number of | Weighted | Number of | Weighted
| shares | average | shares | average
| under award | exercise price | under award | exercise price
| 2024 | 2024 | 2023 | 2023
| thousands | £ | thousands | £
Outstanding at 1 January | 1,875 | nil | 2,075 | nil
Granted during the year | 212 | nil | 473 | nil
Dividend equivalent granted during the year | 17 | nil | 40 | nil
Exercised during the year | (723) | nil | (613) | nil
Lapsed during the year | — | nil | (100) | nil
Outstanding at 31 December | 1,381 | nil | 1,875 | nil

None of these awards were exercisable at the end of the year (2023: none). The awards outstanding at 31 December 2024 had a
weighted average contractual life remaining of 0.9 years (2023: 0.7 years).
There were 212,204 new awards granted under the Deferred Bonus Plan in the year, with 100% of the deferred bonus subject to the

| same EPS performance conditions as the LTIPs. The fair value of these non-market performance awards is equal to the share price
on the date of grant. No adjustment to the market price is required as the awards accrue dividend equivalents. |

Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 194
The weighted average fair value of awards granted under this scheme in the year is £1.86 (2023: £1.52).
Equity Settled Bonus Plan (ESBP)
Under the ESBP, eligible employees who are subject to a compulsory bonus deferral are granted share awards equivalent in value to
the gross bonus deferred. The awards vest at the end of the deferral period and the awards are not subject to any performance or
service conditions.

| Number of | Weighted | Number of | Weighted
| shares | average | shares | average
| under award | exercise price | under award | exercise price
| 2024 | 2024 | 2023 | 2023
| thousands | £ | thousands | £
Outstanding at 1 January | 1,209 | nil | 1,443 | nil
Granted during the year | 163 | nil | 361 | nil
Dividend equivalent granted during the year | 13 | nil | 24 | nil
Exercised during the year | (347) | nil | (619) | nil
Outstanding at 31 December | 1,038 | nil | 1,209 | nil

None of these awards were exercisable at the end of the year (2023: none). The awards outstanding at 31 December 2024 had a
weighted average contractual life remaining of 0.9 years (2023: 0.6 years).
There were 163,369 new awards granted under the Equity Settled Bonus Plan in the year. The fair value of these non-performance

| awards is equal to the share price on the date of grant. No adjustment to the market price is required as the awards accrue dividend
equivalents. |

The weighted average fair value of awards granted under this scheme in the year is £1.90 (2023: £1.54).
UK and International save as you earn (MyShareSave)
MyShareSave schemes open annually to employees in UK, USA, Canada, United Arab Emirates and Australia. Participating
individuals are required to save 36 monthly payments over a maximum of a 48-month period and thus will have the option to buy
shares at a discounted grant price. Participants can withdraw from the scheme at any time including after the vesting period has
ended.

| Number of | Weighted | Number of | Weighted
| shares | average | shares | average
| under award | exercise price | under award | exercise price
| 2024 | 2024 | 2023 | 2023
| thousands | £ | thousands | £
Outstanding at 1 January | 10,906 | 1.25 | 5,536 | 1.26
Granted during the year | 6,349 | 1.42 | 6,306 | 1.25
Exercised during the year | (124) | 1.26 | (28) | 1.26
Lapsed during the year | (1,494) | 1.26 | (908) | 1.26
Outstanding at 31 December | 15,637 | 1.32 | 10,906 | 1.25

Of these awards 110,800 (2023: 72,310) were exercisable at the end of the year. The awards outstanding at 31 December 2024 had
a weighted average contractual life remaining of 2.5 years (2023: 3.0 years).
There were 6,349,422 new awards granted under the MyShareSave plan in the year and the Black-Scholes model used the following
inputs:

| 2024
Weighted average share price | £1.79
Exercise price | £1.42
Expected volatility | 23.0%
Dividend yield | 3.0%
Expected life (years) | 3.68
Risk-free rate | 4.5%

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years.
The expected life used in the model has been adjusted, based on Management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
The weighted average estimated fair value of awards granted under this scheme in the year was £0.47 (2023: £0.43).
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 195
34. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note. Transactions between the Group and its joint venture undertakings and associates are disclosed below.
Transactions
During the year, Group companies entered into the following transactions with joint ventures and associates:

|  | Current | Non-current |  | Current | Non-current
| Transactions | outstanding | outstanding | Transactions | outstanding | outstanding
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023
| £m | £m | £m | £m | £m | £m
Sale of goods and services |  |  |  |  |  |
Joint ventures | 20.2 | (0.2) | — | 15.4 | 1.1 | —
Other Loan to joint venture | 10.0 | — | — | — | 10.0 | —
Dividends received – joint ventures | 30.8 | — | — | 21.1 | — | —
Receivable from consortium for tax – joint | 9.6 | 9.4 | 10.1 | 9.9 | 3.7 | 9.4
ventures |  |  |  |  |  |
Total | 70.6 | 9.2 | 10.1 | 46.4 | 14.8 | 9.4

Sales of goods and services to joint ventures relates to services provided including administrative and back office activities to VIVO.
Joint venture receivable and loan amounts outstanding have arisen from transactions undertaken during the general course of

| trading, are unsecured and will be settled in cash. In the year ended 31 December 2023 there was a loan receivable balance from
VIVO; this was repaid in year. |
Remuneration of key Management personnel |
The Directors of Serco Group plc had no material transactions with the Group during the year other than service contracts and |

Directors’ liability insurance.
The remuneration of the key Management personnel of the Group is set out below:

| 2024 | 2023
| £m | £m
Short-term employee benefits | 8.3 | 7.7
Post-employment benefits | 0.3 | 0.3
Termination benefits | 0.1 | 0.2
Share-based payment expense | 4.9 | 4.1
| 13.6 | 12.3

The key Management personnel comprise the Executive Directors, Non-Executive Directors and members of the Group Executive
Committee (2024: 18 individuals, 2023: 18 individuals).
Aggregate Directors’ remuneration
The total amounts for Directors’ remuneration were as follows:

| 2024 | 2023
| £m | £m
Salaries, fees, bonuses and benefits in kind | 3.5 | 3.1
Amounts receivable under long-term incentive schemes | 2.8 | 2.5
Gains on exercise of share awards | 1.9 | 0.9
| 8.2 | 6.5

None of the Directors are members of the Company’s defined benefit or money purchase pension schemes.
Further information about the remuneration of individual Directors is provided in the audited part of the Directors’ Remuneration
Report on pages 97 to 117.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 196
35. Notes to the Consolidated cash flow statement

|  | 2024 |  |  | 2023 |
|  | Non- |  |  | Non- |
| 2024 | underlying | 2024 | 2023 | underlying | 2023
| Underlying | items | Reported | Underlying | items | Reported
Year ended 31 December | £m | £m | £m | £m | £m | £m
Profit before tax | 240.4 | (143.4) | 97.0 | 224.1 | 22.9 | 247.0
Net finance costs | 33.1 | — | 33.1 | 24.6 | — | 24.6
Operating profit for the year | 273.5 | (143.4) | 130.1 | 248.7 | 22.9 | 271.6
Adjustments for: |  |  |  |  |  |
Share of profits in joint ventures and associates | (22.8) | — | (22.8) | (29.0) | — | (29.0)
Share-based payment expense | 15.2 | — | 15.2 | 13.5 | — | 13.5
Impairment of intangible assets | — | 2.0 | 2.0 | 0.1 | 8.1 | 8.2
Amortisation of intangible assets | 8.3 | 26.9 | 35.2 | 7.7 | 22.8 | 30.5
Impairment of goodwill | — | 114.5 | 114.5 | — | — | —
(Reversal of impairment)/Impairment | (0.4) | — | (0.4) | 0.6 | — | 0.6
of property, plant and equipment |  |  |  |  |  |
Net impairment of right of use assets | 0.2 | — | 0.2 | 0.7 | — | 0.7
Depreciation of property, plant and equipment | 17.2 | — | 17.2 | 17.3 | — | 17.3
Depreciation of right of use assets | 141.5 | — | 141.5 | 125.4 | — | 125.4
Loss/(profit) on disposal of intangible assets | 0.7 | — | 0.7 | (0.8) | — | (0.8)
(Profit)/Loss on early termination of leases | 0.1 | — | 0.1 | 0.6 | — | 0.6
Profit on disposal of property, plant | (0.3) | — | (0.3) | (0.6) | — | (0.6)
and equipment |  |  |  |  |  |
Other non-cash movements | — | — | — | (1.5) | — | (1.5)
(Decrease)/increase in provisions | (3.1) | — | (3.1) | 12.6 | (44.6) | (32.0)
Total non-cash items | 156.6 | 143.4 | 300.0 | 146.6 | (13.7) | 132.9
Operating cash inflow before movements in working capital | 430.1 | — | 430.1 | 395.3 | 9.2 | 404.5
(Increase) in inventories | (0.7) | — | (0.7) | (2.4) | 0.1 | (2.3)
(Increase)/decrease in receivables | (1.9) | — | (1.9) | 63.1 | — | 63.1
Decrease/(increase) in payables | 32.9 | — | 32.9 | (30.7) | — | (30.7)
Movements in working capital | 30.3 | — | 30.3 | 30.0 | 0.1 | 30.1
Cash generated by operations | 460.4 | — | 460.4 | 425.3 | 9.3 | 434.6
Tax paid | (41.3) | — | (41.3) | (41.1) | — | (41.1)
Non-cash R&D credit/(expenditure) | 0.3 | — | 0.3 | (0.4) | — | (0.4)
Net cash inflow from operating | 419.4 | — | 419.4 | 383.8 | 9.3 | 393.1
activities |  |  |  |  |  |

36. Post balance sheet events
Acquisitions
On 30 January 2025, Serco agreed to acquire Northrop Grumman’s mission training and satellite ground network communications
software business (MT&S) for US$327m (£264m) subject to regulatory approval and final fair value assessments. The acquisition is
expected to complete midway through 2025 and therefore the availability of financial information, the measurement of the fair value
of net assets acquired and any goodwill to be recognised as a result of the acquisition is in progress.
The Group maintains committed credit facilities to ensure that it has sufficient liquidity to maintain its ongoing operations. On 30
January 2025, Serco Group plc signed a committed 2-year term loan facility of US$250m (c.£199m) on the announcement of the
acquisition of MT&S. The facility provides a source of additional liquidity in the near term, becoming available after the completion
of the acquisition, and it will mandatorily cancel in the event of equivalent future debt issuance by the Group. The principal financial
covenant ratios of this facility are consistent with the USPP loan notes and revolving credit facility.
Dividends
Subsequent to the year-end, the Board has recommended the payment of a final dividend in respect of the year ended 31
December 2024 of 2.82 pence per share. The dividend remains subject to shareholder approval at the Annual General Meeting and
therefore no amounts have been recognised in respect of a dividend in these Consolidated Financial Statements.
Notes to the Consolidated Financial Statements continued
Serco Group plc | Annual Report and Accounts 2024 | 197
At 31 December Note
2024
£m
2023
£m
Fixed assets
Right of use assets 38 0.2 0.1
Investments in subsidiaries 39 2,052.5 2,052.5
2,052.7 2,052.6
Current assets
Debtors: amounts due within one year 40 11.5 23.1
Debtors: amounts due after more than one year 40 397.8 449.1
Corporation tax assets 17.9 9.9
Derivative financial instruments 44 1.1 4.9
Cash at bank and in hand 101.3 45.0
529.6 532.0
Total assets 2,582.3 2,584.6
Creditors: amounts falling due within one year
Trade and other payables 41 (155.2) (140.4)
Loans 42 (38.8) (51.0)
Derivative financial instruments 44 (6.8) (1.7)
Provisions 43 (6.6) (8.1)
(207.4) (201.2)
Net current assets 322.2 330.8
Creditors: amounts falling due after more than one year
Loans 42 (237.6) (155.2)
Amounts owed to subsidiary companies (1,013.5) (1,043.0)
(1,251.1) (1,198.2)
Total liabilities (1,458.5) (1,399.4)
Net assets 1,123.8 1,185.2
Capital and reserves
Called up share capital 46 20.5 22.1
Share premium account 47 463.1 463.1
Capital redemption reserve 4.3 2.7
Profit and loss account 48 571.6 626.0
Share-based payment reserve 49 85.0 86.3
Own shares reserve 50 (20.7) (15.0)
Total shareholders' funds 1,123.8 1,185.2
The accompanying notes form an integral part of the financial statements.
The Company has not presented its own profit and loss account as permitted by Section 408 of the Companies Act 2006. The total
profit for the year was £125.3m (2023: £437.9m) and the total comprehensive profit for the year was £125.3m (2023: £437.9m).
The financial statements on pages 198 to 206 (registered number 02048608) were approved by the Board of Directors on 26
February 2025 and signed on its behalf by:
Mark Irwin Nigel Crossley
Group Chief Executive Group Chief Financial Officer
Company Balance Sheet
Serco Group plc | Annual Report and Accounts 2024 | 198
Share capital
Share
premium
account
Capital
redemption
reserve
Profit and loss
account
Treasury
shares reserve
Share-based
payment
reserve
Own shares
reserve
Total
shareholders'
equity
£m £m £m £m £m £m £m £m
At 1 January 2023 24.4 463.1 0.4 401.8 (91.2) 88.0 (7.7) 878.8
Total
comprehensive
income for the year
— — — 437.9 — — — 437.9
Dividends paid — — — (33.7) — — — (33.7)
Shares purchased
and held in own
share reserve
— — — — — — (22.9) (22.9)
Shares purchased
and held in Treasury
— — — — (88.8) — — (88.8)
Cancellation of
shares held in
Treasury
(2.3) — 2.3 (180.0) 180.0 — — —
Shares transferred
to option holders
on exercise
— — — — — (15.6) 15.6 —
Awards over
parent's shares
made to employees
of subsidiaries
— — — — — 7.9 — 7.9
Expense in relation
to share-based
payments
— — — — — 5.6 — 5.6
Tax credit on items
taken directly to
equity
— — — — — 0.4 — 0.4
At 1 January 2024 22.1 463.1 2.7 626.0 — 86.3 (15.0) 1,185.2
Total
comprehensive
income for the year
— — — 125.3 — — — 125.3
Dividends paid — — — (38.4) — — — (38.4)
Shares purchased
and held in own
share reserve
— — — — — — (22.8) (22.8)
Shares purchased
and held in Treasury
— — — — (141.3) — — (141.3)
Cancellation of
shares held in
Treasury
(1.6) — 1.6 (141.3) 141.3 — — —
Shares transferred
to option holders
on exercise
— — — — — (17.0) 17.1 0.1
Awards over
parent's shares
made to employees
of subsidiaries
— — — — — 8.9 — 8.9
Expense in relation
to share-based
payments
— — — — — 6.3 — 6.3
Tax credit on items
taken directly to
equity
— — — — — 0.5 — 0.5
At 31 December
2024
20.5 463.1 4.3 571.6 — 85.0 (20.7) 1,123.8
Company Statement of Changes in Equity
Serco Group plc | Annual Report and Accounts 2024 | 199
37. Material accounting policies
The principal accounting policies adopted are set out below and have been applied consistently throughout the current and
preceding year.
Basis of accounting
The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 (FRS 100) issued by the Financial
Reporting Council. These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (FRS 101). In preparing these financial statements, the Company applies the recognition, measurement and disclosure
requirements of the UK-adopted International Financial Reporting Standards but makes amendments where necessary in order to
comply with the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions have been taken.
The Company has not presented its own profit and loss account as permitted by Section 408 of the Companies Act 2006. As
permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to
share-based payments, financial instruments, capital management, presentation of comparative information in respect of certain
assets, presentation of a cash flow statement, standards not yet effective, impairment of assets and related party transactions.
The financial statements have been prepared on the historical cost basis and the going concern basis, except for the revaluation of
certain financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for the goods
and services. The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial
Statements, except as noted below.
Fixed asset investments
Investments held as fixed assets are stated at cost less provision for any impairment in value.
38. Right of use assets
Leased vehicles of £0.2m (2023: £0.1m) have been included on the balance sheet.
39. Investments held as fixed assets
Shares in subsidiary companies at cost £m
At 1 January 2023, 1 January 2024, 31 December 2024 2,052.5
An impairment test has been performed at the year end by comparing the carrying amount of 100% of investments with the relevant
subsidiary financial information to identify whether their net assets, being an approximation of their recoverable amount, are in
excess of their carrying amount. No impairment resulted from this test.
A full list of subsidiaries and related undertakings is included in note 53 which form part of the financial statements.
40. Debtors
Amounts due within one year
2024
£m
2023
£m
Prepayments 0.4 15.2
Amounts owed by subsidiary companies 0.9 1.2
Prepaid intercompany interest 10.2 6.7
11.5 23.1
Amounts due after more than one year
2024
£m
2023
£m
Amounts owed by subsidiary companies 397.8 439.1
Amounts owed by joint venture of Serco Group — 10.0
397.8 449.1
The expected credit loss provision against amounts owed by subsidiary companies is immaterial.
41. Trade and other payables
Amounts due within one year
2024
£m
2023
£m
Amounts owed to subsidiary companies 103.7 73.3
Trade creditors 0.2 1.4
Accruals and deferred income 51.2 46.9
Other creditors including taxation and social security 0.1 18.8
155.2 140.4
Notes to the Company FinancialStatements
Serco Group plc | Annual Report and Accounts 2024 | 200
42. Loans
2024
£m
2023
£m
Loans are repayable as follows:
On demand or within one year 38.8 51.0
Between one and two years — 38.5
Between two and five years 122.2 61.9
After five years 115.4 54.8
276.4 206.2
Less: amount due for settlement within one year (shown within current liabilities) (38.8) (51.0)
Amount due for settlement after one year 237.6 155.2
43. Provisions
Contract
£m
1 January 2024 8.1
Released to the income statement (1.5)
31 December 2024 6.6
Analysed as:
Current 6.6
Within the Company’s subsidiaries, there are a small number of contracts where the balance of risks and opportunities indicates that
they might be onerous if transformation initiatives or contract changes are not successful, but do not require an onerous contract
provision on an individual basis. The Company has made a best estimate of the provision required to take into consideration the
portfolio risk of contracts held by its subsidiaries.
44. Derivative financial instruments
Assets
2024
£m
Liabilities
2024
£m
Assets
2023
£m
Liabilities
2023
£m
Forward foreign exchange contracts 1.1 (6.8) 4.9 (1.7)
Analysed as
Current 1.1 (6.8) 4.9 (1.7)
The Company holds derivative financial instruments in accordance with the Group’s policy in relation to its financial risk
management. More information is set out in note 28 of the Group’s Consolidated Financial Statements.
45. Deferred tax
The movement in the deferred tax asset during the year was as follows:
2024
£m
2023
£m
At 1 January — 0.7
Credit to profit and loss account — (0.7)
At 31 December — —
The deferred tax asset not recognised is as follows:
At 31 December
2024
£m
2023
£m
Temporary differences on assets/intangibles 0.2 0.2
Share-based payments and employee benefits 1.0 1.5
Other temporary differences 2.9 1.5
Tax losses 46.3 51.3
50.4 54.5
Notes to the Company FinancialStatements continued
Serco Group plc | Annual Report and Accounts 2024 | 201
46. Called up share capital
2024 2023
Issued and fully paid £m £m
1,023,855,243 (2023: 1,103,545,966) ordinary shares of 2p each 20.5 22.1
2024 2023
Number Number
Number of shares at 1 January 1,103,545,966 1,218,008,788
Shares cancelled (79,690,723) (114,462,822)
Number of shares 31 December 1,023,855,243 1,103,545,966
The Company has one class of ordinary shares which carry no right to fixed income.
47. Share premium account
2024 2023
£m £m
Share premium account 463.1 463.1
48. Profit and loss
2024
£m
2023
£m
At 1 January 626.0 401.8
Profit/(loss) for the year 125.3 437.9
Equity dividends paid (38.4) (33.7)
Cancellation of shares held in Treasury (141.3) (180.0)
At 31 December 571.6 626.0
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented as part of
these accounts. The total profit for the year was £125.3m (2023: £437.9m) and the total comprehensive profit for the year was
£125.3m (2023: £437.9m).
The Company plans to maintain sufficient funds and distributable reserves to allow payments of projected dividends to
shareholders.
49. Share based payment reserve
2024
£m
2023
£m
At 1 January 86.3 88.0
Awards over parent's shares made to employees of subsidiaries 8.9 7.9
Share based payment charge 6.3 5.6
Shares transferred to award holders on exercise of share awards (17.0) (15.6)
Tax credit/charge on items taken directly to equity 0.5 0.4
At 31 December 85.0 86.3
Details of the share-based payment disclosures are set out in note 33 of the Group’s Consolidated Financial Statements.
50. Other reserves
Treasury shares reserve
The Treasury shares reserve represents amounts paid to repurchase ordinary shares. On 29February 2024, the Group announced
its intention to repurchase ordinary shares with a value of up to £140m. The buyback programme took place between 6 March and
29 November. During this period, the Group repurchased 79,690,723 shares at an average cost of £1.773 for total cost including
fees of £141.3m. All shares purchased in 2024 have been cancelled.
Own share reserve
The own shares reserve represents the cost of shares in Serco Group plc held by the Serco Group plc Employee Share Ownership
Trust (ESOT) to satisfy awards under the Group’s share plan schemes. At 31December 2024, the ESOT held 13,418,111 (2023:
11,351,967) shares equal to 1.3% of the current allotted share capital (2023: 1.0%). The market value of shares held by the ESOT as
at 31December 2024 was £20.3m (2023: £18.4m).
Notes to the Company FinancialStatements continued
Serco Group plc | Annual Report and Accounts 2024 | 202
51. Contingent liabilities
The Company and its subsidiaries have provided certain guarantees and indemnities in respect of performance and other bonds,
issued by its banks on its behalf in the ordinary course of business. The total commitment outstanding as at 31December 2024 was
£210.4m (2023: £212.7m).
The Company has previously disclosed a contingent liability in respect of damages for alleged losses as a result of the reduction in
Serco’s share price in 2013. The claim has now been resolved with no material impact to the Company’s financial statements.
The Company is also aware of other claims and potential claims which involve or may involve legal proceedings against the
Company although the timing of settlement of these claims remains uncertain. The Directors are of the opinion, having regard to
legal advice received and the Company’s insurance arrangements, that it is unlikely that these matters will, in aggregate, have a
material effect on the Company’s financial position.
The Company has a guarantee in place with the SPLAS Trustees in respect of any pension contribution obligations that remain
unpaid after 30 days of being due from other Group entities, including the plan sponsor, up to a total of £200m (2023: £200m) less
contributions made by the Group since April 2022. This guarantee runs until 2030 (2023: 2030).
The Company has guaranteed overdrafts, leases, and bonding facilities of its joint ventures and associates up to a maximum value of
£5.7m (2023: £5.7m). The actual commitment outstanding at 31December 2024 was £5.7m (2023: £5.7m).
52. Related party transactions
The Directors of Serco Group plc had no material transactions with the Company or its subsidiaries during the year other than
service contracts and Directors’ liability insurance. Details of the Directors’ remuneration are disclosed in the Remuneration Report
for the Group.
Transactions between the Company and its wholly-owned subsidiaries are not disclosed in this note as they are exempt from
disclosure under FRS 101. The following transactions between the Company and subsidiaries that are not wholly-owned, joint
ventures and associates are set out below:
Restated
2
Restated
2
Restated
2
Transactions
Current
outstanding
Non-current
outstanding Transactions
Current
outstanding
Non-current
outstanding
2024 2024 2024 2023 2023 2023
£m £m £m £m £m £m
Loan interest receivable 2.9 — — 0.1 — —
Loans to subsidiaries not wholly
owned
(0.2) — (19.0) 36.0 — (18.8)
Loan to joint venture
1
10.0 — — — 10.0 —
Receivables from consortium for tax -
joint ventures
9.2 7.7 10.1 10.2 2.4 8.0
Total 21.9 7.7 (8.9) 46.3 12.4 (10.8)
1. In the year ended 31 December 2023 there was a loan receivable balance from VIVO; this was repaid in year.
2. In 2023, related party transactions with subsidiaries that are not wholly-owned, joint ventures and associates were not separately disclosed. In the current year,
these transactions have been included in the table above as required by IAS 24. An exemption from disclosure is not permitted under FRS 101.
Notes to the Company FinancialStatements continued
Serco Group plc | Annual Report and Accounts 2024 | 203
53. List of subsidiaries and related undertakings
ACN 611 392 744 Pty Ltd 49% Level 6, 123 Epping Road, Macquarie Park, NSW 2113, Australia
AI Recruiting BV 100% Kapteynstraat 1, 2201 BB Noordwijk, The Netherlands
BRTRC Federal Solutions, Inc. 100% 12930 Worldgate Drive, Suite 600, Herndon, VA 20170, United States
Cardinal Insurance Company Limited 100% Dorey Court, Admiral Park, St Peter Port, GY1 4AT, Guernsey
Chimera WBB JV L.L.C. 49% 12930 Worldgate Drive, Suite 600, Herndon, VA 20170, United
States
Clemaco Trading NV 100% Sint-Sebastiaanstraat 5, 8400 Oostende, Belgium
Climatize Engineering Consultants FZE 100% Building No. A4, Al Hamra Industrial Zone F-Z, Ras Al Khaimah
(RAK), A4-901, United Arab Emirates
Climatize Engineering Consultants L.L.C 100% 20th Floor, Rolex Tower, Sheik Zayed Road, Dubai, Dubai, United
Arab Emirates
Conflucent Innovations, L.L.C. 49% 5880 Innovation Drive, Dublin, OH 43016, United States
Decisive Analytics Corporation 100% 12930 Worldgate Drive, Suite 600, Herndon, VA 20170, United States
Defence Contractor Management and
Operations Limited
24.5% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Djurgårdens Färjetrafik AB 50% Svensksundsvagen 17, 111 49 Stockholm, Sweden
DMS Maritime Pty Limited 100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Innu Serco Inc 49% P.O. Box 1012, Station C, Happy Valley – Goose Bay, NL, A0P 1C0,
Canada
Innu Serco Limited Partnership 49% P.O. Box 1012, Station C, Happy Valley – Goose Bay, NL, A0P 1C0,
Canada
International Aeradio (Emirates) L.L.C. – Abu
Dhabi
49% Office No. 503, 5th Floor, Al Muhairy Building, Zayed The First
Street, PO Box 3164 Abu Dhabi, United Arab Emirates
International Aeradio (Emirates) L.L.C. – Dubai 49% 19th Floor, Rolex Tower, Sheikh Zayed Road, PO Box 9197 Dubai,
United Arab Emirates
JBI Properties Services Company L.L.C. 49% Alnahyan East 19, Ayad Alharazeen Building, Abu Dhabi, United
Arab Emirates
Joint Integrated Range Solutions L.L.C. 49% 8337 W. Sunset Road, Suite 250, Las Vegas, NV 89113, United States
Khadamat Facilities Management L.L.C. 49% The United Arab Emirates University, Al Jamea Street, Al Maqam
District, PO Box 66718 Al Ain, United Arab Emirates
Lift BV 100% Kapteynstraat 1, 2201 BB Noordwijk, Netherlands
LOGTEC Inc. 100% 12930 Worldgate Drive, Suite 600, Herndon, VA 20170, United States
Mahani Technical Services, L.L.C. 49% 511 Duckwater Fall Road, Duckwater, NV, 89314, United States
Mercurius Finance SA 100% 11 Avenue de la Porte-Neuve, L-2227 Luxembourg
Merseyrail Electrics 2002 Limited 50%
Rail House, Lord Nelson Street, Liverpool, Merseyside, L1 1JF,
United Kingdom
Merseyrail Services Holding Company Limited
3
50% St Andrews House, 18 - 20 St. Andrew Street, London, EC4A 3AG,
United Kingdom
ORS Deutschland GmbH 100% Güterhallenstrasse 4, 79106 Freiburg, Germany
ORS España Servicios Sociales, S.L. 100% Avda Felipe II 1 7 1 ° Madrid 28009-Madrid, Spain
ORS Greece Monoprosopi A.E 100% 280, Kifisias Ave., Chalandri, Greece
ORS Group AG 100% Röschibachstrasse 22, 8037 Zürich, Switzerland
ORS Italia S.r.l 100% Piazza Annibaliano, 18 CAP 00198 Presso Studio Filippini & Ass, Italy
ORS Service AG 100% Röschibachstrasse 22, 8037 Zürich, Switzerland
ORS Service GmbH (Austria) 100% Leopold-Ungar-Platz 2, 1190, Döbling, Wien, Austria
ORS Slovakia s.r.o 100% Grösslingova 45, Bratislava, Slovakia
OXZ Holdings AG 100% Röschibachstrasse 22, 8037 Zürich, Switzerland
Priority Properties North West Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Sapienza Consulting France SAS 100% 4 Allée des Cormorans 06150 CANNES LA BOCCA, France
Sapienza Consulting GmbH 100% Lise-Meitner-Straße 10, 64293 Darmstadt, Germany
Sapienza Consulting Holding BV 100% Kapteynstraat 1, 2201 BB Noordwijk, Netherlands
Company name
Serco Group
interest
Registered office address
Notes to the Company FinancialStatements continued
Serco Group plc | Annual Report and Accounts 2024 | 204
Sapienza Consulting Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Sapienza Consulting S.r.l. 100% Piazza Sant’Andrea della Valle, 3 Roma, Italy
Serco (Jersey) Limited 100% 26 New Street, St. Helier, JE2 3RA, Jersey
Serco Australia Pty Limited
3
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Belgium S.A. 100% 1945 Chaussée de Wavre, 1160 Auderghem, Brussels, Belgium
Serco Caledonian Sleepers Limited 100% C/O Serco Northlink Ferries Aberdeen Ferry Terminal, Jamieson's
Quay, Aberdeen, United Kingdom, AB11 5NP
Serco Canada Inc. 100% 37 Carl Hall Rd, North York, ON M3K 2B6, Canada
Serco Canada Marine Corporation 100% 555 Legget Drive, Suite 400, Tower A, Ottawa, ON, K2K 2X3,
Canada
Serco Citizen Services Pty Ltd 100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Corporate Services Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Czech Republic s.r.o. 100% Praha City Centre, Klimentska 46, Prague, 110 02, Czech Republic
Serco Defence Clothing Pty Ltd 100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Defence S.A. 100% 1945 Chaussée de Wavre, 1160 Auderghem, Brussels, Belgium
Serco Defence Services Pty Ltd 100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Environmental Services Limited
2
100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Facilities Management Holdings Pty
Limited
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Facilities Management Pty Limited 100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Facilities Management Sub-Holdings Pty
Limited
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Ferries (Guernsey) Crewing Limited 100% 4th Floor, West Wing, Trafalgar Court, Admiral Park, St Peter Port,
GY1 2JA, Guernsey
Serco Ferries (HR) Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Gestion de Negocios S.L.U. 100% Calle Ayala no 13, 1° derecha, CP-28001, Madrid, Spain
Serco Group (HK) Limited 100% Unit 3103, 31/F, Millennium City 6, 392 Kwun Tong Road, Kwun
Tong, Kowloon, Hong Kong
Serco Group Pty Limited
3
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco Holdings Limited
1
100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Inc.
3
100% 12930 Worldgate Drive, Suite 600, Herndon, VA 20170, United States
Serco International Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Italia S.p.A. 100% Viale dell’Astronomia no. 13 – 00144 Roma, Italy
Serco Leisure Operating Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Limited
3
100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Listening Company Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Luxembourg S.A. 100% 8-10 Avenue de la Gare L-1610 Luxembourg (Lëtzebuerg)
Serco Maritime Services NV 100% Sint-Sebastiaanstraat 5, 8400 Oostende, Belgium
Serco MENA Regional Head Quarters LLC 100% 8793 Riyadh Front, Unit S7, King Khalid Int. Airport District, Riyadh
13413-3718, Kingdom of Saudi Arabia
Serco Netherlands B.V. 100% Kapteynstraat 1, 2201 BB Noordwijk ZH, Netherlands
Serco New Zealand (Asset Management
Services) Limited
100% Level 4, KPMG Centre, 18 Viaduct Harbour Avenue, Auckland
Central, Auckland, 1010, New Zealand
Serco New Zealand Limited 100% Level 4, KPMG Centre, 18 Viaduct Harbour Avenue, Auckland
Central, Auckland, 1010, New Zealand
Serco New Zealand Training Limited 100% Level 4, KPMG Centre, 18 Viaduct Harbour Avenue, Auckland
Central, Auckland, 1010, New Zealand
Company name
Serco Group
interest
Registered office address
Notes to the Company FinancialStatements continued
Serco Group plc | Annual Report and Accounts 2024 | 205
Serco North America (Holdings), Inc. 100% 1209 Orange Street, Wilmington, DE 19801, United States
Serco Nunavut Ltd 49% Field Law, House 2436, PO Box 1734, Iqaluit, NU X0A 0H0, Canada
Serco Paisa Limited 50% 80 Fenchurch Street, London, EC3M 4BY
Serco Pension Trustee Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Projects L.L.C. 49% Office Number 1904, 19th Floor, Serco Projects, The E18hteen,
Alliance Business Center, Doha, PO BOX 23107, Qatar
Serco Regional Services Limited
2
100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco Safety Services L.L.C. 100% 20th Floor, Rolex Tower, Sheik Zayed Road, Dubai, Dubai, United
Arab Emirates
Serco S.a.r.l. 100% le Technoparc Gessien, 15 Rue Lumière, 01630 Saint-Genis-
Pouilly, France
Serco SAS 100% Bourg en Bresse, Technoparc du pays de Gex, 15 rue Lumiere,
01630 Saint Genis Pouilly, France
Serco Saudi Arabia L.L.C. 100% Building No 7026, Postal Code 13458 Airport Road, King Khaled
International Airport District, Kingdom of Saudi Arabia, Secondary
No 2795, Riyadh, 13458, Saudi Arabia
Serco Saudi Firefighting LLC 95% Building No 7026, Postal Code 13458 Airport Road, King Khaled
International Airport District, Kingdom of Saudi Arabia
Serco Security Services SASU 100% 15 Rue Lumière, Technoparc Pays de Gex, 01630 Saint Genis
Pouilly, France
Serco Services GmbH 100% Lise-Meitner-Straße 10, 64293 Darmstadt
Serco Singapore Pte Limited 100% 38 Beach Road, #29-11 South Beach Tower, Singapore, 189767
Serco Switzerland S.A. 100% 86bis Route de Frontenex, 1208 Geneva, Switzerland
Serco Traffic Camera Services (VIC) Pty Limited 100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Serco-IAL Limited 100% Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook,
Hampshire, RG27 9UY, United Kingdom
Serco-IPS Corporation 100% 12930 Worldgate Drive, Suite 600, Herndon, VA 20170, United
States
TJS Corporate Security WA Pty Limited
2
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
TJS Hospitality & Entertainment Pty Ltd
2
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
TJS Services (FNQ) Pty Ltd
2
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
TJS Services (Newcastle) Pty Ltd
2
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
TJS Services (SA) Pty Ltd
2
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
TJS Services (Vic) Pty Ltd
2
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
TJS Services (WA) Pty Ltd
2
100% Level 23, 60 Margaret Street, Sydney, NSW 2000, Australia
Vivo Defence Services Limited
3
50% First Floor, Neon Q10 Quorum Business Park, Benton Lane,
Newcastle Upon Tyne, NE12 8BU, United Kingdom
Whitney, Bradley & Brown, Inc. 100% 12930 Worldgate Drive, Suite 600, Herndon, VA 20170, United States
Company name
Serco Group
interest
Registered office address
1. Serco Holdings Limited is directly owned by Serco Group plc. All other subsidiaries and associated undertakings are held indirectly via Group companies.
2. Companies in liquidation or with an active proposal for strike off as at 31 December 2024.
3. Companies key to the consolidated numbers, all of which are engaged in the provision of support services.
Notes to the Company FinancialStatements continued
Serco Group plc | Annual Report and Accounts 2024 | 206
Additional Information
Serco Group plc | Annual Report and Accounts 2024 | 207
208 Alternative Performance Measures
211 Debt Covenants
212 Glossary
214 Our Impact - Data
221 Shareholder Information
222 Useful Contacts
Contents
Alternative Performance Measures (APMs) reconciliations
Overview
In general, APMs are presented externally to meet investors’ requirements for further clarity and transparency of the Group’s
financial performance. The APMs are also used internally in the management of our business performance, budgeting and
forecasting, and for determining Executive Directors’ remuneration and that of other Management throughout the business.
APMs are non-IFRS measures. Where additional revenue is being included in an APM, this reflects revenues presented elsewhere
within the reported financial information, except where amounts are recalculated to reflect constant currency. Where items of
income or expense are being excluded in an APM, these are included elsewhere in our reported financial information as they
represent actual income or expense of the Group, except where amounts are recalculated to reflect constant currency. As a result,
APMs allow investors and other readers to review different kinds of revenue, profits and costs and should not be used in isolation.
Commentary including in the Group and Divisional Review, as well as the Consolidated Financial Statements and their
accompanying notes, should be referred to in order to fully appreciate all the factors that affect our business. We strongly
encourage readers not to rely on any single financial measure, but to carefully review our reporting in its entirety.
Definitions of the Group’s APMs is shown in the glossary on pages 212 to 213 and the reconciliations for each measure are shown
as follows:
Alternative revenue measures
A reconciliation of reported revenue to the alternative revenue measures is as follows:
Statutory
Revenue
Statutory
Revenue
Organic
Revenue
Organic
Revenue
Revenue plus
share of joint
ventures and
associates
Revenue plus
share of joint
ventures and
associates
Year ended 31 December 2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Alternative revenue measure at
constant currency
4,872.7 4,873.8 4,751.2 4,873.8 5,377.2 5,347.2
Foreign exchange differences (85.4) — (81.9) — (85.4) —
Alternative revenue measure at
reported currency
4,787.3 4,873.8 4,669.3 4,873.8 5,291.8 5,347.2
Impact of relevant acquisitions or
disposals
— — 118.0 — — —
Share of joint venture and
associates
— — — — (504.5) (473.4)
Reported revenue at reported
currency
4,787.3 4,873.8 4,787.3 4,873.8 4,787.3 4,873.8
Alternative profit measures
A reconciliation of underlying operating profit to reported operating profit is as follows:
Year ended 31 December
2024 2023
£m £m
Underlying operating profit at constant currency 279.8 248.7
Foreign exchange differences
(6.3) —
Underlying operating profit at reported currency 273.5 248.7
Amortisation and impairment of intangibles arising on acquisition
(28.9) (30.9)
Exceptional Items comprising
- Operating items
— 53.8
- Goodwill impairment
(114.5) —
Reported operating profit at reported currency
130.1 271.6
Alternative Performance Measures
Serco Group plc | Annual Report and Accounts 2024 | 208
Underlying EPS
A reconciliation of underlying EPS to reported EPS is as follows:
2024 2023 2024 2023
Year ended 31 December
basic
pence
basic
pence
diluted
pence
diluted
pence
Underlying EPS 16.97 15.61 16.67 15.36
Non-underlying items:
Amortisation and impairment of intangibles arising on acquisition, net of tax (1.98) (2.02) (1.95) (1.99)
Exceptional items, net of tax (10.82) 4.64 (10.62) 4.56
Reported EPS 4.17 18.23 4.10 17.93
Alternative cash flow measures
A reconciliation of underlying operating profit, net cash inflow from underlying operating activities, free cash flow and trading cash
flow is as follows:
Year ended 31 December
2024 2023
£m £m
Underlying operating profit 273.5 248.7
Less: Share of profit from joint ventures and associates (22.8) (29.0)
Movement in provisions (3.1) 12.6
Depreciation, amortisation and impairment of property, plant and equipment and intangible assets 25.1 25.7
Depreciation and impairment of right of use assets 141.7 126.1
Other non-cash movements 15.7 11.1
Working capital movements 30.3 30.1
Tax paid (41.3) (41.1)
Non-cash R&D expenditure 0.3 (0.4)
Net cash inflow from underlying operating activities 419.4 383.8
Dividends from joint ventures and associates 30.8 21.1
Net interest paid (28.5) (26.5)
Capitalised finance costs paid (1.0) —
Capital element of lease repayments (137.4) (124.4)
Proceeds received from exercise of share options 0.1 —
Purchase of own shares to satisfy share awards (22.8) (22.9)
Purchase of intangible and tangible assets net of proceeds from disposal (33.1) (21.9)
Free cash flow 227.5 209.2
Add back:
Tax paid 41.3 41.1
Non-cash R&D expenditure (0.3) 0.4
Net interest paid 28.5 26.5
Capitalised finance costs paid 1.0 —
Trading cash flow 298.0 277.2
Underlying Operating Profit 273.5 248.7
Trading cash conversion 109% 111%
Alternative Performance Measures continued
Serco Group plc | Annual Report and Accounts 2024 | 209
Free cash flow to adjusted net debt
A reconciliation from free cash flow to adjusted net debt is as follows:
Year ended 31 December
2024 2023
£m £m
Free cash flow 227.5 209.2
Net cash outflow on acquisition and disposal of subsidiaries, joint ventures and associates (20.8) (7.5)
Dividends paid to non-controlling interests — (1.7)
Dividends paid to shareholders (38.4) (33.7)
Purchase of own shares (141.3) (88.8)
Movements on other investment balances — (0.7)
Loans repaid from joint venture 10.0 —
Capitalisation and amortisation of loan costs — (0.8)
Exceptional cash items — 9.2
Cash movements on hedging instruments (13.1) (1.5)
Foreign exchange (loss)/gain on adjusted net debt (15.0) 11.5
Movement in adjusted net debt 8.9 95.2
Opening adjusted net debt - 1 January (108.7) (203.9)
Closing adjusted net debt - 31 December (99.8) (108.7)
Reported net debt to adjusted net debt
A reconciliation of adjusted net debt to reported net debt is as follows:
2024 2023
£m £m
Cash and cash equivalents 183.0 94.4
Loans payable (276.4) (206.2)
Lease liabilities (530.0) (453.7)
Derivatives relating to net debt (6.4) 3.1
Reported net debt (629.8) (562.4)
Add back: Lease liabilities 530.0 453.7
Adjusted net debt (99.8) (108.7)
Underlying return on invested capital (ROIC)
Below is the calculation of Underlying ROIC:
Year ended 31 December 2024 2023
ROIC excluding right of use assets £m £m
Non-current assets
Goodwill
826.2 906.7
Other intangible assets - owned
101.4 115.6
Property, plant and equipment - owned
56.8 44.3
Interest in joint ventures
25.1 32.1
Contract assets, trade and other receivables
26.3 14.8
Current assets
Inventories
24.1 24.1
Loans to joint ventures
— 10.0
Contract assets, trade and other receivables
631.5 625.6
Total invested capital assets
1,691.4 1,773.2
Current Liabilities - Contract liabilities, trade and other payables
(632.5) (593.8)
Non-current liabilities - Contract liabilities, trade and other payables
(82.2) (68.5)
Total invested capital liabilities
(714.7) (662.3)
Invested capital
976.7 1,110.9
Two point average of opening and closing invested capital
1,043.8 1,163.7
Underlying operating profit 12 months
273.5 248.7
Underlying ROIC % 26.2% 21.4%
Alternative Performance Measures continued
Serco Group plc | Annual Report and Accounts 2024 | 210
Debt covenants
The principal financial covenant ratios are consistent across the US private placement loan notes and revolving credit facility, with a
maximum Consolidated Total Net Borrowings (CTNB) to covenant EBITDA of 3.5 times and minimum covenant EBITDA to covenant
net finance costs of 3.0 times, tested semi-annually. A reconciliation of the basis of calculation is set out in the table below.
The covenants exclude the impact of IFRS 16 Leases on the Group’s results.
2024 2023
For the year ended 31 December
£m £m
Operating Profit 130.1 271.6
Remove: Exceptional items 114.5 (53.8)
Remove: Amortisation and impairment of intangibles arising on acquisition 28.9 30.9
Exclude: Share of joint venture post-tax profits (22.8) (29.0)
Include: Dividends from joint ventures 30.8 21.1
Add back: Net non-exceptional charges/(releases) to OCPs 5.7 8.2
Add back: Net covenant OCP utilisation (2.7) (3.2)
Add back: Depreciation, amortisation and impairment of owned property, plant and equipment and
non acquisition intangible assets
25.1 25.7
Add back: Depreciation, amortisation and impairment of property, plant and equipment and non
acquisition intangible assets held under finance leases - in accordance with IAS17 Leases
4.4 4.3
Add back: Foreign exchange on investing and financing arrangements (2.1) (0.9)
Add back: Share-based payment expense 15.2 13.5
Net other covenant adjustments to EBITDA (15.0) (11.5)
Covenant EBITDA
312.1 276.9
Net finance costs 33.1 24.6
Exclude: Net interest receivable on retirement benefit obligations 1.9 3.1
Exclude: Movement in discount on deferred consideration (0.8) —
Exclude: Foreign exchange on investing and financing arrangements (2.1) (0.9)
Other covenant adjustments to net finance costs (19.6) (12.7)
Covenant net finance costs
12.5 14.1
Adjusted net debt 99.8 108.7
Obligations under finance leases - in accordance with IAS17 Leases 13.1 17.4
Recourse net debt
112.9 126.1
Add back: Disposal vendor loan note, encumbered cash and other adjustments (3.7) 5.9
Covenant adjustment for average FX rates (5.9) 5.6
CTNB
103.3 137.6
CTNB / Covenant EBITDA (not to exceed 3.5x)
0.33x 0.50x
Covenant EBITDA / Covenant net finance costs (at least 3.0x)
25.0x 19.6x
Debt Covenants
Serco Group plc | Annual Report and Accounts 2024 | 211
Adjusted Net Debt
The Adjusted Net Debt measure more closely aligns with the
covenant measure for the Group’s financing facilities than reported
net debt because it excludes all lease liabilities recognised under
IFRS 16 Leases. Principally as a result of the Asylum
Accommodation and Support Services Contract (AASC), the
Group has entered into a significant number of leases which
contain a termination option. The use of Adjusted Net Debt
removes the volatility that would result from the estimation of
lease periods and the recognition of liabilities associated with
such leases where the Group has the right to cancel the lease.
Though the intention is not to exercise the options to cancel
the leases, it is available, unlike other debt obligations.
Colleagues
The number of colleagues is derived from the average number
of persons employed and includes all individuals employed
under contracts of service by the Group as disclosed in note 10
of the Financial Statements. This comprises permanent, part-
time, and casual employees and those with fixed term
contracts. In contrast with the number of employees disclosed
in note 10 of the Financial Statements, colleagues also includes
self-employed contractors, other casual workers and
employees of Trusts. This is because such colleagues fall within
Serco’s duty of care and are within the scope of a number of
our KPIs. Employees of Joint Ventures where Serco is not the
controlling shareholder and sub-contractors, are excluded.
Constant currency
Constant currency is calculated by translating non-sterling
values for the Year ended 31 December into sterling at the
average exchange rates for the prior year. Constant currency
and reported currency are equal for the prior year numbers.
Employee engagement
We use a specialist third party provider to run Viewpoint, our
global employee engagement survey. The survey covers
employees, excluding our joint ventures, and measures
engagement in two key areas: how happy employees are
working at Serco and their intention to recommend Serco to
others. Our engagement score incorporates all respondents’
perceptions and shows the overall average view of these two
areas when we survey.
Exceptional items
IAS 1 Presentation of Financial Statements sets out disclosure
requirements regarding fair representation of information and
the composition, labelling, prominence and consistency of
additional line items and subtotals in financial statements. IAS
1 paragraph 97 requires separate disclosure of the nature and
amount of material items of income or expense. The company
uses the term ‘exceptional items” to categorise those items
which require disclosure under IAS 1 paragraph 97, but this is
not a term defined by IFRS. A level of judgement is involved in
determining what items are classified as exceptional items.
Management considers exceptional items to be outside of
normal practice of the business (i.e. the financial impact is
unusual or rare in occurrence), and are material to the results
of the Group by virtue of their size or nature, and are suitable
for separate presentation and detailed explanation. There is a
level of judgement required in determining which items are
exceptional on a consistent basis and require separate disclosure.
Free Cash Flow (FCF)
Free cash flow is the net cash flow from operating activities
adjusted to remove the impact of non-underlying cash flows
from operating activities, adding dividends we receive from
joint ventures and associates and deducting net interest, net
capital expenditure on tangible and intangible asset purchases
and the purchase of own shares to satisfy share awards.
Invested Capital
Invested Capital represents the assets and liabilities
considered to be deployed in delivering the trading
performance of the business. Invested Capital assets are:
goodwill and other intangible assets; property, plant and
equipment; interests in joint ventures and associates; contract
assets, trade and other receivables; and inventories. Invested
Capital liabilities are contract liabilities, trade and other
payables. Invested Capital is calculated as a two-point average
of the opening and closing balance sheet positions. The
Invested Capital of the Group used in underlying ROIC are for
those items for which resources are or have been committed.
This excludes right of use assets recognised under IFRS 16
Leases as many have termination options and commitments for
expenditure in future years.
Lost Time Incident Frequency Rate (LTIFR)
Lost Time Incidents (LTIs) are incidents when personal injury
accidents at work, or when travelling on company business,
cause an employee to incur one or more working days (or
shifts) absence as a result. LTIs are recorded from the date the
incident occurred, not from when time was lost. The LTIFR is
calculated using the total number of Lost Time Incidents,
normalised using the total number of hours worked in the
period. This provides a view on the frequency of lost time
incidents, regardless of movements in staff numbers, which is
comparable across all areas where LTIs are incurred. Minor
revisions can be made to prior reported performance based
on data received post publication date.
Major incident frequency rate (MIFR), per 1 million hours worked
Major incidents include but are not limited to; any injury
requiring resuscitation or admittance to hospital for more than
24 hours; fracture other than to fingers, thumbs or toes;
dislocation of the shoulder, hip, knee or spine; amputation;
loss of sight (temporary or permanent); chemical or hot metal
burn to the eye or any penetrating injury to the eye. The MIFR
is calculated using the total number of major incidents, normalised
using the total number of hours worked in the period. This
provides a view on the frequency of major incidents, regardless of
movements in staff numbers, which is comparable across all areas
where major incidents are incurred.
Glossary
Serco Group plc | Annual Report and Accounts 2024 | 212
Order book
The order book reflects the estimated value of future revenue
based on all existing signed contracts, excluding Serco’s share
of joint ventures and associates. It excludes contracts at the
preferred bidder stage and excludes the award of new
Multiple Award Contracts (MACs), Indefinite Delivery/Indefinite
Quantity (IDIQ) contracts or framework vehicles, where Serco
cannot estimate with sufficient certainty its expected future
value of specific task orders that may be issued under the IDIQ
or MAC; in these situations the value of any task order is
recognised within the order book when subsequently won. The
definition is aligned with IFRS15 disclosures of the future
revenue expected to be recognised from the remaining
performance obligations on existing contractual arrangements
and therefore excludes unsigned extension periods and option
periods in our US business. Order intake is the value of
business which has been won during the year and typically
includes Serco’s share of order intake from its joint ventures
and option periods in our US business.
Organic
Organic measures exclude the impact of relevant acquisitions
or disposals (European Homecare and Climatize). The prior
year figures are recalculated on a consistent basis with the
relevant acquisitions or disposals removed in the current
year and therefore may not agree to the organic revenue
previously reported.
Net debt
Net debt is a measure to reflect the net indebtedness of the
Group and includes all cash and cash equivalents and any debt
or debt-like items, including any derivatives entered into in
order to manage risk exposures on these items. Net debt
brings together the various funding sources that are included
on the Group’s Consolidated Balance Sheet and the
accompanying notes. Net debt includes all lease liabilities,
whilst Adjusted Net Debt is derived from net debt by excluding
liabilities associated with leases.
Non-underlying items
Included in non-underlying items are exceptional items as well
as amortisation and impairment of intangibles arising on
acquisitions, because these charges are based on judgements
about the value and economic life of assets that, in the case of
items such as customer relationships, would not be capitalised
in normal operating practice.
Pipeline of large new bid opportunities
Pipeline of large new bid opportunities reflects the estimated
aggregate value at the end of the reporting period of new bid
opportunities with Annual Contract Value (ACV) greater than
£10m and which we expect to bid and be awarded within a
rolling 24-month timeframe. It does not include re-bids or
extensions of existing business and the Total Contract Value
(TCV) of individual opportunities is capped at £1bn; also
excluded is the potential value of framework agreements,
prevalent in the US in particular where there are numerous
arrangements classed as IDIQ. In this case only the potential
value of any individual task order is included.
Revenue plus share of joint ventures and associates
This alternative measure includes the share of revenue from
joint ventures and associates for the benefit of reflecting the
overall change in scale of the Group’s ongoing operations,
which is particularly relevant for evaluating Serco’s presence in
market sectors such as Defence and Transport. The alternative
measure allows the performance of the joint venture and
associate operations themselves, and their impact on the
Group as a whole, to be evaluated on measures other than just
the post-tax result.
Trading cash conversion
In order to calculate an appropriate cash conversion metric
equivalent to UOP, trading cash flow is derived from FCF by
excluding capitalised finance costs, interest, non-cash R&D
expenditure and tax items. Trading cash conversion therefore
provides a measure of the efficiency of the business in terms of
converting profit into cash before taking account of the impact
of capitalised finance costs, interest, non-cash R&D
expenditure, tax and non-underlying items.
Underlying Earnings Per Share (EPS), diluted
Underlying EPS reflects the Underlying Operating Profit
measure after deducting underlying net finance costs and tax.
It takes into account any non-controlling interests share of the
result for the period, and divides the remaining result that is
attributable to the equity owners of the Company by the
weighted average number of ordinary shares outstanding,
including the potential dilutive effect of share options, in
accordance with IFRS. Underlying net finance costs and tax are
used to calculate Underlying EPS to remove the impact of
typical non-recurring or out of period items.
Underlying Operating Profit (UOP)
Underlying Operating Profit is defined as IFRS Operating Profit
excluding non-underlying items (as described above).
Consistent with IFRS, it includes Serco’s share of profit after
interest and tax of its joint ventures and associates.
Underlying Return on Invested Capital (ROIC)
ROIC is calculated as UOP for the period divided by the
Invested Capital balance (as described above).
Glossary continued
Serco Group plc | Annual Report and Accounts 2024 | 213
2024 Impact performance and data disclosure
Here we share select ESG data points relevant to our ESG framework. A larger suite of ESG data is available in our 2024 ESG Data
Book, which is available on the Impact hub on our website. The ESG Data Book is supported by two basis of reporting documents,
which set out our reporting approach including the criteria we apply to our non-financial reporting. One covers the scope of our
Environment (Planet) indicators, and the the second our Social and Governance (People, Place and Governance) indicators.
We have engaged Grant Thornton UK LLP to provide independent, limited assurance over selected Social and Governance KPIs,
shown below, in accordance with ISAE 3000 (revised) for the year ended 31 December 2024. Grant Thornton has issued an
unqualified opinion over the data and the full assurance report is available on our website. Accenture provide independent,
reasonable assurance over our Environmental KPIs in accordance with ISO 14064-3:2019 for the period 1 October 2023 to 30
September 2024, and their assurance statement is also available on our website.
We also publish GRI and SFDR Content Indexes on our website to support stakeholders to navigate our disclosures.
Trend key:
l
Positive
l
Steady
l
Negative
o
New (no comparison)/non-indicator (statement)
Externally assured: GT = Grant Thornton UK LLP Acc = Accenture
Indicator/Disclosure Units 2023 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
People
Safe operations: Health and safety is a core business priority for Serco. Our people serve society in some of the most physically
and psychologically demanding situations and environments on the planet. The following KPIs enable us to monitor safety
consistently across the business whilst maintaining sharp focus on key areas of risk.
Colleague engagement: Safety Avg. score 77 77 0 0
l
GT
Lost Time Incident Frequency Rate (LTIFR)
Per 1m hours
worked
6.36 4.86 -1.50 -23.6
l
GT 3
Lost Time Incident Severity Rate (LTISR) Avg. days 23.55 20.94 -2.61 -11.1
l
GT 3
Major Incident Frequency Rate (MIFR)
Per 1m hours
worked
0.37 0.37 0.00 1.4
l
GT 3
Fatalities (work related) Number 1 1 0 0
l
GT 1, 2
Fatal Incident Frequency Rate (FIFR)
Per 1m hours
worked
0.01 0.01 -0.00 -1.5
l
GT
Physical Assault Frequency Rate (PAFR)
Per 1m hours
worked
6.49 8.39 1.90 29.3
l
GT 3
Serious Physical Assault Frequency Rate (SPAFR)
Per 1m hours
worked
0.81 1.04 0.23 28.4
l
GT 3
Health and Safety prosecutions Number 0 0 0 0.0
l
GT
Health and Safety fines paid £'000 2,490 0 -2,490 -100
l
GT
Improvement/Enforcement notices Number 5 8 3 60
l
GT
Colleague wellbeing: We understand that a healthy workforce is a more engaged and productive one; and we are committed to
supporting the wellbeing of our people. In 2025, we will be augmenting our existing set of wellbeing and sickness absence KPIs
with a new metric: Psychological Consequence Lost Time Incidents.
Colleague engagement: Wellbeing Avg. score 77 78 1 1.3
l
GT
Absence due to sickness
Avg. days
per emp.
6.9 8.2 1.2 17.5
l
GT 4
Safety and wellbeing - notes and commentary
1. We have adjusted our Fatalities KPI so that it is specific to work related safety incidents where previously illness-related fatalities at work were included.
2. During 2024, we sadly saw one work-related fatality (a fatal road traffic accident) and whilst not a result of workplace safety failings, the incident had a
significant impact on colleagues.
3. 2023 values updated to reflect required adjustments to 2023 data identified in 2024
4. Adjustment made to Absence due to sickness to include Covid related sickness, this was omitted in 2023 and will not be restated.
At the beginning of 2024, and baselining against 2023 performance, we set ourselves an ambition to reduce our lost time incidents (LTIs) and associated lost days
by 50%, by the end of 2026. Focusing on reduction activities in key areas and continuing our Situational Awareness theme, we saw positive progress against these
metrics, with a 22% and 31% improvement respectively, against our LTI and lost days vision. Our lost time frequency rates and severity rates also saw significant
improvements, reducing by 24% from 6.36 to 4.86 and 11.1%, from 23.55 to 20.94 respectively. We maintained our major injury frequency rate at 0.37 against a
threshold of 0.32. Despite a strong and continued focus striving to reduce levels of incidents resulting from violence and aggression across the business, the
physical assault frequency rate increased from 6.49 to 8.39 (threshold 5.63). Serious assaults also became more prevalent in 2024, with our serious physical assault
rate rising from 0.81 to 1.04 (threshold 0.66). 2024 performance has been impacted by a rise in violence and aggression across the Justice sector and in the UK
estate in particular – see page 37.
Our Impact
Serco Group plc | Annual Report and Accounts 2024 | 214
Indicator/Disclosure Units 2023 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
People continued
Diversity, equity and inclusion: At Serco, we are working to create fairer and more inclusive environments for all colleagues, and the
communities that we serve. The following KPIs demonstrate progress against our DEI commitments, aligned to reporting requirements.
Colleague engagement: Diversity & Inclusion Avg. score 74 75 1 1.4
l
GT
Age profile – Serco Group plc Board
16-24 % 0.0 0.0 — —
o
GT
25-40 % 0.0 0.0 — —
o
GT
41-54 % 11.1 10.0 -1.1 -9.9
o
GT
55-64 % 55.6 60.0 4.4 7.9
o
GT
65+ % 33.3 30.0 -3.3 -9.9
o
GT
Undisclosed % 0.0 0.0 — —
o
GT
Indicator/Disclosure Units 2023 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
Gender diversity - Serco Group all employee
levels - women
% 42.3 43.8 1.5 3.5
o
GT
Gender diversity - Global Leadership Team -
women
% 33.8 34.6 0.8 2.4
l
GT 2
Gender diversity - Global Executive Committee
and direct reports - women
% 30.0 42.2 12.2 40.5
l
GT
Gender diversity - All other employee levels -
women
% 42.9 43.8 0.9 2.0
l
GT
Gender diversity - All other employee levels -
women
Number 18,958 20,711 1,753 9.2
o
GT
Gender diversity - All other employee levels -
men
Number 25,153 26,532 1,379 5.5
o
GT
Gender diversity - All other employee levels -
Not disclosed
Number 37 94 57 154.1
o
GT
Gender Pay Gap (Median) % 8.54 5.16 -3 -39.6
o
GT
Our Impact continued
Serco Group plc | Annual Report and Accounts 2024 | 215
Colleague engagement: We are committed to supportively maintaining a resilient and motivated workforce in a challenging
world. We monitor colleague engagement through metrics aligned to our annual colleague engagement survey, as well as
through broader measures aligned to colleague experience, including attraction and retention.
Colleague engagement: All areas Avg. score 71 72 1 1.4
l
GT
Colleague engagement: Learning and
Development
Avg. score 66 67 1 1.5
l
GT
New hires Number 16,294 16,670 376 2.3
o
GT
Staff turnover % 32.8 30.8 -2.0 -6.0
l
GT
Staff turnover - voluntary % 23.5 21.1 -2.4 -10.4
l
GT
Redundancies Number 733 406 -327 -44.6
o
GT
Indicator/Disclosure Units 2023 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
People - notes and commentary
1. Gender diversity across Serco at all employee levels is influenced by contract wins and losses.
2. Serco’s representation of women in senior global leadership roles was 34.6%. This excludes Boards and the Group Executive Committee, which, if included
would increase representation to 36.7%.
Our Impact continued
Serco Group plc | Annual Report and Accounts 2024 | 216
Indicator/Disclosure Units 2023 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
Place
Community impact: Serco and our people are committed to supporting local communities not just through the services we deliver
but through volunteering, corporate donations and sponsorship, The Serco Foundation and The Serco People fund.
Community Investment £ Number 213,075 359,040 145,965 68.5
l
Serco Foundation - grants made £ Number 184,569 56,476 -128,093 -69.4
l
GT 1
Serco Foundation - charities supported Number 35 6 -29 -82.9
l
GT 1
Serco People Fund - grants made £ Number 406,117 568,108 161,991 39.9
l
GT 2
Serco People Fund - colleagues supported Number 270 359 89 33.0
l
GT 2
Place - notes and commentary
1. For more information on the Serco Foundation, go to www.sercofoundation.org
2. For more information on the Serco People Fund, go to www.sercopeoplefund.org
Our Impact continued
Serco Group plc | Annual Report and Accounts 2024 | 217
Planet
Carbon dioxide equivalent (Scope 1 and
2) market-based Scope 2 - Total Group
tCO
2
e 37,248 30,702 24,731 -5,971 -19.4
l
Acc 1, 2
Total UK tCO
2
e 21,176 18,485 16,648 -1,837 -9.9
l
Acc 1
Total Rest of World tCO
2
e 16,072 12,217 8,083 -4,134 -33.8
l
Acc 1
Carbon dioxide equivalent (Scope 1 and
2) location-based Scope 2 - Total Group
tCO
2
e 44,891 39,349 36,795 -2,554 -6.5
l
Acc 1
Total UK tCO
2
e 28,353 25,639 24,442 -1,197 -4.7
l
Acc 1
Total Rest of World tCO
2
e 16,539 13,709 12,353 -1,356 -9.9
l
Acc 1
Combustion of fuels and operation of
facilities (Scope 1) - Total Group (all fuel
types)
tCO
2
e 29,381 26,636 24,731 -1,905 -7.2
l
Acc 1
Total UK (all fuel types) tCO
2
e 20,963 18,243 16,648 -1,595 -8.7
l
Acc 1
Total Rest of World (all fuel types) tCO
2
e 8,418 8,393 8,083 -310 -3.7
l
Acc 1
Combustion of fuels and operation of
facilities (Scope 1) - Total Group (all fuel
types)
MWH 139,121 129,627 106,250 -23,377 -18.0
l
Acc 1
Total UK (all fuel types) MWH 86,720 77,418 73,338 -4,080 -5.3
l
Acc 1
Total Rest of World (all fuel types) MWH 52,401 52,209 32,912 -19,297 -37.0
l
Acc 1
Scope 2 – Grid electricity purchased/
acquired for own use (market-based) -
Total Group
tCO
2
e 7,866 4,066 0 -4,066 -100.0
l
Acc 1
Total UK tCO
2
e 213 242 0 -242 -100.0
l
Acc 1
Total Rest of World tCO
2
e 7,653 3,824 0 -3,824 -100.0
l
Acc 1
Scope 2 – Grid electricity purchased/
acquired for own use (location-based) -
Total Group
tCO
2
e 15,704 12,713 12,064 -649 -5.1
l
Acc 1
Total UK tCO
2
e 7,390 7,396 7,794 398 5.4
l
Acc 1
Total Rest of World tCO
2
e 8,313 5,317 4,270 -1,047 -19.7
l
Acc 1
Scope 2 – Grid electricity purchased /
acquired for own use - Total Group
MWH 56,275 50,425 48,271 -2,154 -4.3
l
Acc 1
Total UK MWH 38,071 37,565 37,645 80 0.2
l
Acc 1
Total Rest of World MWH 18,203 12,860 10,626 -2,234 -17.4
l
Acc 1
Headcount intensity (Scope 1 and 2)
market-based Scope 2
tCO
2
e
/FTE
0.64 0.57 0.47 -0.10 -17.2
l
Acc 1, 3
Headcount intensity (Scope 1 and 2)
location-based Scope 2
tCO
2
e
/FTE
0.77 0.73 0.70 -0.03 -3.9
l
Acc 1, 3
Financial intensity (Scope 1 and 2)
market-based Scope 2
tCO
2
e/
per £m
revenu
e
8.19 6.26 5.14 -1.12 -17.9
l
1, 3
Financial intensity (Scope 1 and 2)
location-based Scope 2
tCO
2
e/
per £m
revenu
e
9.87 8.03 7.65 -0.38 -4.7
l
1, 3
Total energy consumption Scope 1 and 2
- Total Group
MWH 195,396 180,052 154,521 -25,531 -14.2
l
Acc 1
Indicator/Disclosure Units
2022
Restated
2023
Restated 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
Our Impact continued
Serco Group plc | Annual Report and Accounts 2024 | 218
Total UK MWH 124,791 114,983 110,982 -4,001 -3.5
l
Acc 1
Total Rest of World MWH 70,605 65,069 43,538 -21,531 -33.1
l
Acc 1
Electricity consumption, renewable
sources
% 66.9 79.1 100.0 21 26.4
l
Acc 1, 4
Electricity consumption, renewable
sources
MWH 37,638 39,884 48,271 8,387 21.0
l
Acc 1, 4
Electricity consumption, non-renewable
sources
MWH 18,637 10,541 0 -10,541 -100.0
l
Acc 1, 4
Fuel consumption, renewable sources % 2.45 1.51 5.18 4 243.0
l
Acc 1, 4
Fuel consumption, renewable sources MWH 3,412 1,955 5,501 3,546 181.4
l
Acc 1, 4
Fuel consumption, non-renewable sources MWH 135,709 127,672 100,749 -26,923 -21.1
l
Acc 1, 4
Scope 3 supply chain tCO
2
e 447,722 452,516 428,508 -24,008 -5.3
l
Acc 2, 8
Suppliers with science based targets % NA NA 15 NA NA
o
6
Scope 3 business travel and fuel-and
energy-related
tCO
2
e 60,351 61,647 61,287 -360 -0.6
l
Acc 1, 7
Transition to greener fleet - proportion of
hybrid and electric vehicles
% 25 30 35 5 16.7
l
4
Proportion of operating locations
exposed to 1:100 year climate-related
hazard - flooding
% 12 12 12 0 0
l
5
Impact of carbon taxes and levies -
electricity and gas
£‘000 781 818 988 170 20.8
l
4
Operations covered by certified ISO
14001 EMS - by revenue
% 28 28 28 0 0
l
9
Operations covered by certified ISO
50001 EMS - by revenue
% 0.5 0.5 0.9 0.4 80
l
9
Indicator/Disclosure Units
2022
Restated
2023
Restated 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
Planet - notes and commentary
Our reporting year for greenhouse gas (GHG) emissions is one quarter behind our financial year, namely 1 Oct 2023 to 30 Sept 2024. See our Planet Basis of
Reporting Supplement for information on our reporting boundary and methodologies, available on Our Impact hub on our website. We quantify and report GHG
emissions using the financial control approach in line with the World Resources Institute’s Greenhouse Gas Protocol Corporate Accounting and Reporting Standard.
We report all material emission sources for which we consider ourselves responsible and have set our materiality threshold at 5%. We have recalculated and
restated emissions and associated energy data for 2022 and 2023 to account for structural changes and changes to GHG calculation methodologies, in line with our
base year emissions recalculation policy and best practice to ensure a meaningful and accurate comparison of emissions data over time. 2022 is the base year for
our Net Zero targets which were validated by the Science Based Targets initiative in 2024.
1. 2022 and 2023 data recalculated and restated in line with our base year emissions recalculation policy and best practice. Significant changes included inclusion of
joint venture emissions, carbon intensive contract wins, asset ownership updates, as well as smaller data, methodology and emission factor updates and errors.
2. SBTi target: We have reduced scope 1 & 2 emissions by 34% in 2024 versus 2022, with reductions resulting from a focus on operational and energy efficiency,
increased proportion of renewable sourced electricity, 79% to 100%, switching to greener fleet and fuels, and improvement in data quality. TCFD: Linked to
disclosed risks on carbon pricing and reputation.
3. TCFD: Linked to disclosed risks on carbon pricing and reputation.
4. TCFD: Linked to disclosed risks on carbon pricing and reputation. Internal target to retain 100% renewable sourced electricity.
5. TCFD: Linked to disclosed risk from extreme weather.
6. SBTi target: 95% of suppliers by emissions to have science-based targets by 2028. 13.5% have targets validated on SBTi, 1.5% are committed/awaiting
validation. TCFD: Linked to disclosed opportunity on net zero enabling services and carbon pricing.
7. SBTi target: 25% reduction in business travel and fuel-and energy-related scope 3 emissions by 2030. In 2024, our emissions increased by 2% versus 2022, in
part due to the SBTi target setting methodology which required our base year to be 2022 despite our business travel being lower due to covid impacts.
8. For many companies Scope 3 emissions form the majority of emissions with supply chain categories being the most significant. In 2024, we introduced
Emitwise, a carbon accounting technology partner, and have re-calculated and restated our 2022 and 2023 supply chain emissions.
9. All contracts are required to comply with our Serco Management System and environmental requirements, which align with ISO 14001. At many of our
contracts we also operate within customer ISO 14001 certified management systems. A smaller proportion of our contracts have certified ISO 50001
management systems, as only our more energy-intensive operations benefit from this standard. TCFD: Linked to disclosed risk on reputation.
Streamlined energy and carbon reporting commentary
We continue to support energy-saving activity across our customers and our own assets. For example, where we deliver facilities management services; we
continue to seek to embed energy efficiency measures such as in our Leisure contracts where we have reduced gas consumption through solar PV installations.
At our NorthLink Ferries contract, best practice enhancements and initiatives are regularly implemented and our bespoke monitoring systems continue to drive
energy and emission reduction activity whilst also assisting current and future reporting requirements. In 2024, energy efficiency initiatives included operational
changes following monitoring system analysis as well as upgrades such as engine management systems, boiler burner units, fuel pumps and hull cleaning/
coatings. We have prepared the Aberdeen vessels to accept shore power from a renewable energy tariff following the commitment of funding from Caledonian
Maritime Assets Limited (CMAL) and the Port of Aberdeen to install shore power facilities for Serco’s two passenger ferries. This initiative is expected to be
operational in Q2 2025 and removes the need to run oil-fired generators to power the vessels when docked, mitigating around 1,300 tonnes of CO2 equivalent
per year, improving air quality, and reducing noise. Preliminary discussions have also been held with relevant stakeholders on alternative low carbon fuels for use
later in the life of the vessels, we will continue to review these options in future.
Our Impact continued
Serco Group plc | Annual Report and Accounts 2024 | 219
Indicator/Disclosure Units 2023 2024
2024
versus
2023 Var % Trend
Externally
Assured Notes
Governance
Ethics and compliance: A better future can only be achieved on a firm foundation of integrity and fair, ethical behaviour. We strive
to hold firm to our values and act with integrity in all that we do. We monitor a broad range of KPIs to demonstrate our positive
reporting culture and our commitment to investigate each Speak Up allegation thoroughly, confidentially and in a manner to
prevent retaliation.
Colleague engagement: Ethical Standards Avg. score 76 76 0 0
l
GT
Colleague engagement: Reporting Unethical
Conduct
Avg. score 74 74 0 0
l
GT
Speak Up Case rate
Per 100
employees
1.03 1.30 0.27 26.2
l
GT 2
Speak Up cases reported anonymously % 60.6 60.5 -0.1 -0.2
l
GT
Speak Up cases investigated % 95.3 98.1 2.8 3.0
l
GT
Speak Up cases average days to close Number 52.7 37.0 -15.7 -29.8
l
GT
Speak Up cases closed within three months of
case being raised
% 82 88 6 7.3
l
GT
Speak Up closed case substantiation rate % 23 20 -3 -13.0
l
GT 3
Substantiated Speak Up cases with corrective
action taken
% 99 93 -6 -6.1
l
GT
Substantiated Speak Up cases with disciplinary
action taken
% 45 46 1 2.2
l
GT 3
Substantiated Speak Up cases where one or
more individual(s) were dismissed
% 21 19 -2 -9.5
l
GT 3
Prosecutions for corrupt behaviour Number 0 0 0 0
l
GT
Prosecutions for anti-competitive behaviour Number 0 0 0 0
l
GT
On time payment % 83.6 84.8 1.3 1.5
l
GT
Agent payments £'000 2,342 1,598 -744 -32
o
GT 1
Lobbying payments £'000 267 392 125 47
o
GT
Annual SMS self-assessments completed % 99.7 93.0 -6.7 -6.7
l
GT
Annual Compliance Assurance plan delivered % 98.1 98.8 0.7 0.8
l
GT
Annual Audit plan delivered % 100.0 100.0 0.0 0.0
l
GT
Human rights and modern slavery: We have zero tolerance to pursue activity that breaks any law relating to human rights; and we
believe that we can contribute positively to upholding human rights through the services we deliver. We closely monitor cases
reported through Speak Up and ensure effective screening of modern slavery within our supply chain.
Prosecutions for human rights violations
(including indigenous, modern slavery, etc.)
Number 0 0 0 0.0
l
GT
Case rate substantiated human rights and
modern slavery Speak Up cases
Per 100
employees
0 0 0 0.0
l
GT
Data protection and information security: We are committed to delivering secure services and protecting the data we collect,
store and process. Our core KPIs focus not only on significant data breaches but also complaints we receive, in line with the GRI
framework.
Substantiated complaints received from data
protection regulators
Number 4 2 -2 -50.0
l
GT 3
Significant data breaches Number 1 0 -1 -100
l
GT
Governance – notes and commentary
1. We use agents across the Group to provide strategic advice, connect us with other parties and obtain or promote business for Serco. We pay agents either
fixed fees for their time or success fees. We use lobbyists to perform advocacy or interact with Public Officials on behalf of Serco. All agents and lobbyists are
subject to due diligence prior to being engaged. They operate to an agreed contract in line with local laws, including standard clauses covering a range of
compliance matters, and stating services and fees. Payments are reviewed to ensure compliance with contracts.
2. 2023 Speak Up case rate updated to reflect required adjustments identified in 2024.
3. Adjustment to 2023 baseline to reflect change in calculation of substantiation rates, this is to align with industry standard method of calculation.
4. Globally, in 2024, we have had two substantiated complaints from data protection regulators; two in the UK relating to minor data breaches.
Our Impact continued
Serco Group plc | Annual Report and Accounts 2024 | 220
Our website
The Company’s website, www.serco.com, provides access to
share price information as well as sections on managing your
shareholding online, corporate governance and other investor
relations information.
Shareholder queries
Our share register is maintained by our Registrar, Equiniti.
Shareholders with queries relating to their shareholding should
contact Equiniti directly using one of the methods listed
opposite.
American Depositary Receipts (ADRs)
Serco has established a sponsored Level I ADR programme.
Serco ADRs are traded on the US over-the-counter market
(SCGPY).
For queries relating to your ADR holding, please contact our
ADR depositary bank, Deutsche Bank Trust Company Americas.
Managing your shares online
Shareholders can manage their holding online by registering to
use our shareholder portal at www.shareview.co.uk. This free
service is provided by our Registrar, giving quick and easy
access to your shareholding.
Electronic communications
We encourage shareholders to consider receiving their
communications electronically which means you receive
information quickly and securely and allows us to communicate
in a more environmentally friendly and cost-effective way. You
can register for this service online using our share portal at
www.shareview.co.uk
Duplicate documents
Some shareholders find that they receive duplicate
documentation due to having more than one account on the
share register. If you think you fall into this group and would like
to combine your accounts, please contact our Registrar, Equiniti.
Changes of address
To avoid missing important correspondence relating to your
shareholding, it is important that you inform our Registrar of your
new address as soon as possible.
Sharegift
If you have a very small shareholding that is uneconomical to
sell, you may want to consider donating it to Sharegift
(Registered Charity no.1052686), a charity that specialises in the
donation of small, unwanted shareholdings to good causes. You
can find out more by visiting www.sharegift.org or by calling +44
(0) 207 930 3737.
Dividend
Proposed final dividend
The Directors have recommended payment of a final dividend of
2.82 pence per share in respect of the year ended 31 December
2024, subject to approval by shareholders at the Annual General
Meeting.
Key dates
Annual General Meeting 24 April 2025
Ex-dividend date 10 April 2025
Record date 11 April 2025
Payment date 9 May 2025
Dividend payment to your bank account
Shareholders are encouraged to receive dividends directly to
their bank or building society which saves paper, helping to
minimise our environmental impact and reducing the cost of
printing and delivery. Mandate forms are available at
www.shareview.co.uk
Shareholder Information
Serco Group plc | Annual Report and Accounts 2024 | 221
Serco’s registered office
Serco House
16 Bartley Wood Business Park
Bartley Way
Hook
Hampshire
RG27 9UY
United Kingdom
Telephone:
+44 (0)1256 745 900
Email:
investorcentre@serco.com
Registered in England and Wales No. 02048608
Group General Counsel
David Eveleigh
Group Company Secretary
Nickesha Graham-Burrell
Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
Telephone:
0371 384 2932 (from within UK)
+44 (0)121 415 7047 (from outside UK)
Lines are open 8.30am to 5.30pm
Monday to Friday (excluding public
holidays in England and Wales).
Website:
www.shareview.co.uk
Shareholders can securely send queries via the website using the
‘Help’ section.
ADR depositary bank
Deutsche Bank Trust Company Americas
Peck Slip Station
PO Box 2050
New York NY10272-2050
USA
Telephone:
+1 866 249 2593 (toll-free within USA)
+1 718 921 8124 (from outside USA)
Website:
www.adr.db.com
Email:
adr@equiniti.com
Brokers
JP Morgan
RBC
Auditor
KPMG LLP
Unsolicited mail and shareholder fraud
Shareholders are advised to be wary of unsolicited mail or
telephone calls offering free advice, to buy shares at a discount
or offering free company reports. For further information on how
shareholders can be protected from investment scams visit www.
fca.org.uk/scamsmart
Notification of major interests in shares (TR1 Forms)
Email:
cosec@serco.com
Useful Contacts
Serco Group plc | Annual Report and Accounts 2024 | 222
Legal Disclaimer
This Annual Report and Accounts contains statements which are,
or may be deemed to be, “forward looking statements” which
are prospective in nature. All statements other than statements
of historical fact are forward-looking statements. Generally,
words such as “expect”, “anticipate”, “may”, “could”, “should”,
“will”, “aspire” “aim”, “plan”, “target”, “goal”, “ambition”, “intend”
or, in each case, their negative or other variations or comparable
terminology identify forward looking statements. By their nature,
these forward-looking statements are subject to a number of
known and unknown risks, uncertainties and contingencies, and
actual results and events could differ materially from those
currently being anticipated as reflected in such statements.
Factors which may cause future outcomes to differ from those
foreseen or implied in forward looking statements include, but
are not limited to: general economic conditions and business
conditions in Serco’s markets; contracts awarded to Serco;
customers’ acceptance of Serco’s products and services;
operational problems; the actions of competitors, trading
partners, creditors, rating agencies and others; the success or
otherwise of partnering; changes in laws or governments or to
governmental regulations; regulatory or legal actions, including
the types of enforcement action pursued and the nature of
remedies sought or imposed; the receipt of relevant third party
and/or regulatory approvals; exchange rate fluctuations; the
development and use of new technology; changes in public
expectations and other changes to business conditions; wars
and acts of terrorism; cyber-attacks; and pandemics, epidemics
or natural disasters.
Many of these factors are beyond Serco’s control or influence.
For a description of the principal risks and uncertainties that may
affect Serco’s business, financial performance or results of
operations, please refer to the Principal Risks and Uncertainties
set out in this Annual Report and Accounts. These forward
looking statements speak only as of the date of this publication
and have not been audited or otherwise independently verified.
Past performance should not be taken as an indication or
guarantee of future results and no representation or warranty,
express or implied, is made in relation to future performance or
otherwise. Except as required by any applicable law or regulation
(including under the UK Listing Rules and the Disclosure
Guidance and Transparency Rules of the Financial Conduct
Authority), Serco expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
statements contained in this publication to reflect any change in
Serco’s expectations or any change in events, conditions or
circumstances on which any such statement is based after the
date of this publication, or to keep current any other information
contained in this publication. Accordingly, undue reliance should
not be placed on the forward looking statements. Any references
in this publication to other reports or materials, including website
addresses, are for the reader’s interest only. Neither the content
of Serco’s website nor any website accessible from hyperlinks
from Serco’s website, including any materials contained or
accessible thereon, are incorporated in or form part of this
publication. Serco is subject to the regulatory requirements of
the Financial Conduct Authority of the United Kingdom.
Notes
Serco Group plc | Annual Report and Accounts 2024 | 223
Notes
Serco Group plc | Annual Report and Accounts 2024 | 224
Printed on material from well-managed, FSC® certified forests and other
controlled sources.
100% of the inks used are HP Indigo ElectroInk which complies with RoHS
legislation and meets the chemical requirements of the Nordic Ecolabel
(Nordic Swan) for printing companies, 95% of press chemicals are recycled for
further use and, on average 99% of any waste associated with this production
will be recycled and the remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an international
conservation charity, who offset carbon emissions through the purchase and
preservation of high conservation value land. Through protecting standing
forests, under threat of clearance, carbon is locked-in, that would otherwise be
released.