FTSE 250 movers: Serco surges; Direct Line drops

UK government outsourcer Serco lifted annual guidance on Thursday after a strong first half, driven by higher demand for its immigration services.

The company, said it expected full-year underlying trading profits of around £245m, 3% higher than 2022 and a 4% upgrade to prior guidance. Shares in the company, which provides security at immigration detention centres, surged by 11% on the news as as the demand from the British government more than offset a fall in sales related to the Covid pandemic.

Revenue guidance was lifted by around 4% to at least £4.8bn, 6% higher than the £4.5bn reported in 2022 with estimates for organic revenue growth to around 4% from flat.

However, the company's operations have not been without controversy. The UK immigration minister, Robert Jenrick, met Serco executives last month for talks over a riot at the Yarl’s Wood detention centre.

Sources working at Merseyside hotels run by Serco, which were used to house people seeking asylum last month, told the Observer newspaper they believed there was a culture of “institutional abuse”. Serco has strongly denied the allegations, saying they were “without foundation”.

Construction group Morgan Sindall lifted annual guidance driven by a strong performance from its fit-out division in the first half.

The company on Thursday said the division had continued to perform strongly since a trading update in May and was now expected to show a 40% year-on-year first-half profit rise.

"Consequently, as a result of the continued strong momentum in Fit Out and its forward order book for the second half, together with the anticipated net prospects for the rest of the group, the Board now expects full year profit for the group to be ahead of its previous expectations," Morgan Sindall said.

Cruise operator Carnival rallied from this week's sell-off after forecasting third-quarter profit largely below estimates.

UK insurer Direct Line said rectifying unfair motor claim payments over a five-year period to 2022 would not have a "material financial impact" on this year's results.

The company was on Wednesday ordered by Britain's Financial Conduct Authority to carry out a review of total losses where vehicles had been written off after it admitted it had underpaid some car and van insurance customers.

Direct Line was told “to identify any policyholders who received unfair settlements and provide them with appropriate redress”.

In response on Thursday, the firm said an estimate of potential payments the group might make as a result of the review "was provided for within the group's 2022 financial year end claims reserves".

"The group does not expect the review to have a material financial impact in 2023," it added.

FTSE 250 (MCX) 18,257.95 -0.84%

FTSE 250 - Risers

Serco Group (SRP) 155.30p 9.14%
Morgan Sindall Group (MGNS) 1,812.00p 4.14%
Capita (CPI) 28.28p 3.06%
Carnival (CCL) 1,255.50p 2.99%
Aston Martin Lagonda Global Holdings (AML) 342.60p 2.39%
Wood Group (John) (WG.) 134.50p 1.59%
3i Infrastructure (3IN) 307.00p 1.49%
Ithaca Energy (ITH) 148.10p 1.44%
TUI AG Reg Shs (DI) (TUI) 570.00p 1.42%
W.A.G Payment Solutions (WPS) 87.00p 1.40%

FTSE 250 - Fallers

Ferrexpo (FXPO) 88.25p -7.06%
Liontrust Asset Management (LIO) 727.50p -6.31%
Bank of Georgia Group (BGEO) 2,960.00p -6.03%
Urban Logistics Reit (SHED) 114.00p -5.94%
TP Icap Group (TCAP) 148.40p -5.90%
TR Property Inv Trust (TRY) 262.00p -5.59%
IWG (IWG) 132.20p -5.57%
Pennon Group (PNN) 707.00p -4.52%
Direct Line Insurance Group (DLG) 135.75p -4.00%
Tritax Eurobox (GBP) (EBOX) 52.20p -3.87%