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"94400000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-397": { "value": "57200000", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-401": { "value": "
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 (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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-3": { "value": "Serco Group plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-399": { "value": "Serco Group plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-398": { "value": "plc", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-4": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-5": { "value": "Serco House, 16 Bartley Wood Business Park, Bartley Way, Hook, Hampshire, RG27 9UY", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-461": { "value": "These Consolidated Financial Statements comprise the Company, its subsidiaries and its interest in joint ventures (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.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-400": { "value": "
2. Material accounting policies
Basis of preparation
The Consolidated Financial Statements on pages 155 to 219 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:
\u2013 certain financial assets and liabilities (including derivative instruments)
\u2013 retirement benefit obligations (plan assets and liabilities)
\u2013 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 below.
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 2023, the Directors have
considered the principles of the Financial Reporting Council\u2019s \u2018Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting, 2014\u2019; 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 2023, the Group\u2019s principal debt facilities comprised a \u00a3350.0m revolving credit facility maturing in November
2027 (of which \u00a3nil was drawn), and \u00a3208.8m of US private placement notes, giving \u00a3558.8m of committed credit facilities and
committed headroom of \u00a3444.4m, being the undrawn revolving credit facility plus cash of \u00a394.4m. The principal financial covenant
ratios are consistent across the US Private Placement loan notes and revolving credit facility and are outlined on page 85. As at 31
December 2023, the Group\u2019s primary restricting covenant, its leverage ratio, is below the covenant of 3.5x and is below the Group\u2019s
target range of 1x to 2x at 0.50x.
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\u2019s future performance. In making this assessment, the
Directors have considered the Group\u2019s 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 that could be used to preserve cash in the business should the need arise.
As noted in post balance sheet events within note 37, subsequent to the balance sheet date the Group issued a further \u00a3118m
($150m) of US private placement notes which have been included in the Directors liquidity forecast supporting this assessment.
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\u2019s existing contracts, potential new contracts and administrative functions.
Owing to the unprecedented levels of inflation driven by geopolitical factors, the Directors have considered the Group\u2019s resilience
to rising costs. Due to the nature of the Group\u2019s operations, almost all of the revenue base has some form of inflationary protection,
whether it be through contractual indexation mechanisms, cost plus billing or being short term in nature. Though the timing of such
protections becoming effective may, in the short term, differ from the impact of cost pressures, it is expected that the current
inflation levels will not have a material impact on the Group\u2019s profitability or cash flow.
The Directors believe that appropriate sensitivities in assessing the Group\u2019s ability to continue as a going concern are to model
reductions in the Group\u2019s win rates for bids and extensions, and reductions in profit margins. Due to the diversity in the Group\u2019s
operations, the Directors believe that a reverse stress test of these sensitivities to assess the headroom available under the Group\u2019s
debt covenants and available liquidity provides meaningful analysis of the Group\u2019s 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\u2019s financial
covenants, or exhaust available liquidity, are plausible.
This reverse stress test shows that, even after assuming that the US private placement loan of \u00a351m due to mature during the
assessment period is repaid, and that no additional refinancing occurs after the date of approval of the financial statements, the
Group can afford to be unsuccessful on 80% of its bids and extensions, combined with a profit margin 80 basis points below the
Group\u2019s forecast, and still retain sufficient liquidity to meet all liabilities as they fall due and remain compliant with the Group\u2019s
financial covenants.
In respect of win rates, rebids and extensions have a more significant impact on the Group\u2019s revenue than new business wins during
the assessment period. The Group has won more than 85% of its rebids and extensions and available contract extensions by volume
over the last two years, therefore a reduction of 80% or more to the budgeted bid and extensions rates is not considered plausible.
The Group does not generally bid for contracts at margins below its target range.
In respect of margin reduction, due to the diversified nature of the Group\u2019s portfolio of long-term contracts and the fact that the Group
has met or exceeded its full year guidance for the last five years, a reduction in margin of 80 basis points (bps) versus the Group\u2019s
budget is not considered plausible within the assessment period combined with an 80% reduction in bid and extensions rates.
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 2023 reporting period. The
following standards were considered.
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
In May 2017, the International Accounting Standards Board (IASB) issued IFRS 17 \u2018Insurance Contracts\u2019 and in June 2020 issued
amendments to IFRS 17. Though expected to primarily impact the insurance sector, IFRS 17 applies more widely than contracts
issued by traditional insurance entities.
Management has not identified any contracts or obligations that should be classified as insurance contracts but continues to assess
new contracts and any further interpretations issued. While some contracts transfer insurance risk, this is either not deemed
significant or not a pre-existing risk, therefore will remain accounted for under the existing revenue standard.
The Group has assessed that the standard would impact its captive insurance company as it issues insurance contracts, however,
since the contracts insure other group companies, there is no impact on the Consolidated Financial Statements.
The Group has assessed the impact of its parent company guarantee arrangements on the financial statements of the Group. Parent
company guarantees could meet the IFRS 17 definition of insurance contracts. Management has identified two forms of guarantees
that the Group enters into which captured by IFRS 17 and has concluded no material impact on the Consolidated Financial
Statements, or the individual subsidiaries financial statements based on the following:
\u2013 Performance Guarantees are not captured by IFRS 17 as Management has identified no significant insurance risk that exists for the
contracts which contain these guarantees.
\u2013 Financial Guarantees meet the definition of an insurance contract under IFRS 17, however, the standard allows companies to
continue to apply the measurement criteria under IFRS 9. The measurement of the guarantees under IFRS 9 continues to be not
material.
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
In February 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2). The
amendment requires entities to disclose material accounting policies rather than significant accounting policies. Management has
concluded that the amendment does not result in a change to the accounting policies disclosed.
Definition of Accounting Estimates (Amendments to IAS 8)
In February 2021, the IASB issued Definition of Accounting Estimates (Amendments to IAS 8). The amendment clarifies the
difference between a change in accounting estimate from a change in accounting policy. Management has assessed that the change
has no impact on the accounting estimates or accounting policies disclosed.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendment to IAS 12)
In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendment to IAS 12).
The amendment clarified that the initial recognition exemption does not apply to transactions in which both deductible and taxable
temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities.
Management has assessed that the change has not had a material impact on net deferred tax position of the Group. A gross up
between deferred tax assets and liabilities of \u00a322.1m was required.
Initial Application of IFRS 17 and IFRS\u20069 - Comparative Information
In December 2021, the IASB issued Initial Application of IFRS 17 and IFRS 9\u2014Comparative Information (Amendment to IFRS 17). The
amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS
17. The Group is already applying IFRS 9 and has concluded IFRS 17 has no material impact on the Consolidated Financial
Statements, or the individual subsidiaries financial statements.
International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12)
In May 2023, the IASB issued International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12). The amendment provides
a temporary exception to the requirements regarding deferred tax assets and liabilities related to pillar two income taxes.
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 2023 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 Date
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) 1 January 2024
Lease Liability in a Sale and Leaseback Amendments to IFRS 16 1 January 2024
Non-current Liabilities with Covenants (Amendments to IAS 1) 1 January 2024
Supplier Finance Arrangements (amendment to IAS 7 and IFRS 7) 1 January 2024
The Effects of Changes in Foreign Exchange Rates for Lack of Exchangeability (amendment to IAS21) 1 January 2025
1
2
2
2
2
2
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.
Consolidation of profit measures
The Group has simplified its profit measures by removing Trading Profit and renaming Underlying Trading Profit (UTP) to Underlying
Operating Profit (UOP). The historic UOP will be the same as the reported UTP.
The UTP definition was introduced in 2015 to exclude onerous contract provision (OCP) releases or charges, other Contract and
Balance Sheet Review adjustments, depreciation and amortisation of assets held for sale, and some other one-time items. It was
maintained to ensure that there was transparency outside the underlying results of large charges and releases from the portfolio of
onerous contracts recorded in 2014. These definitions are no longer required as the Contract and Balance Sheet Adjustments
recorded in 2014 are now at an insignificant level. In the future, no items will be recorded between UTP and Trading Profit, meaning
the additional measure no longer adds any value.
Items excluded from UOP will be the amortisation and impairment of intangibles arising on acquisition and exceptional operating
items (and in the prior year other non-underlying items), which is consistent with the items currently excluded from Trading Profit.
The methodology applied to calculating other APMs has not changed since 31 December 2022.
Changes in accounting policies
There have been no changes to the Group\u2019s accounting policies during the year ended 31 December 2023 except for the change in
accounting policy for alternative profit measures mentioned above.
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 and 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:
\u2013 They are negotiated as a package with a single commercial objective.
\u2013 Consideration receivable in one contract depends on the other contract.
\u2013 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:
\u2013 a deliverable (i.e. a good or a service) that is distinct; or
\u2013 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 annual 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\u2019s 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.
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\u2019s 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, then 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\u2019s 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.
Interest income is accrued for on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset\u2019s
net carrying amount.
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 21. 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 23.
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
23. 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 21.
Government grants
The majority of the Group\u2019s 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 time frame 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:
\u2013 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.
\u2013 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.
\u2013 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.
Foreign currencies
Transactions in currencies other than Sterling are recorded at the rate of exchange on the date of the transaction which is 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\u2019s 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\u2019s 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.
Dividends
Dividend distributions are recognised as a liability in the year in which the dividends are approved by the Company\u2019s 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 9.
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\u2019s 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\u2019s 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\u2019s 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\u2019s 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\u2019s
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 notes 5 and 6.
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. Where part of a CGU with goodwill is sold, the attributable amount is calculated based on the future
discounted cash flows leaving the Group as a proportion of the total CGU\u2019s future discounted cash flows.
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. 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:
\u2013 an asset is created that can be separately identified and which the Group intends to use or sell;
\u2013 the finalisation of the asset is technically feasible and the Group has adequate resources to complete its development for use or sale;
\u2013 it is probable that the asset created will generate future economic benefits; and
\u2013 the development cost of the asset can be measured reliably.
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% \u2013 20%
Vehicles
10% \u2013 50%
Furniture
10%
Office equipment
20% \u2013 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.
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.
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\u2019s criteria are met.
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 29.
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 29.
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.
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\u2019s 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:
\u2013 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;
\u2013 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
\u2013 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.
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
Binomial Lattice, Black-Scholes or Monte Carlo Simulation models depending on the type of scheme, as set out in note 34. The
expected life used in the models has been adjusted, based on Management\u2019s 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.
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\u2019s customer base is
predominantly government or government-backed and as a result, the Group\u2019s expected credit loss at a given point in time across
the entirety of the customer base is typically immaterial.
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
Escorting and Custodial 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 \u00a35,000, 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.
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\u2019s 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.
Net investments in foreign operations
Exchange differences arising on monetary items that form part of the Group\u2019s 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\u2019s Consolidated Financial Statements in the period in which they are declared, appropriately
authorised and no longer at the discretion of the Company.
Segmental information
Segmental information is based on internal reports about components of the Group that are regularly reviewed by the Group\u2019s 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-403": { "value": "Basis of preparation The Consolidated Financial Statements on pages 155 to 219 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: \u2013 certain financial assets and liabilities (including derivative instruments) \u2013 retirement benefit obligations (plan assets and liabilities) \u2013 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 below. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-462": { "value": "The Consolidated Financial Statements on pages 155 to 219 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. ", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-402": { "value": "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. Consolidation of profit measures The Group has simplified its profit measures by removing Trading Profit and renaming Underlying Trading Profit (UTP) to Underlying Operating Profit (UOP). The historic UOP will be the same as the reported UTP. The UTP definition was introduced in 2015 to exclude onerous contract provision (OCP) releases or charges, other Contract and Balance Sheet Review adjustments, depreciation and amortisation of assets held for sale, and some other one-time items. It was maintained to ensure that there was transparency outside the underlying results of large charges and releases from the portfolio of onerous contracts recorded in 2014. These definitions are no longer required as the Contract and Balance Sheet Adjustments recorded in 2014 are now at an insignificant level. In the future, no items will be recorded between UTP and Trading Profit, meaning the additional measure no longer adds any value. Items excluded from UOP will be the amortisation and impairment of intangibles arising on acquisition and exceptional operating items (and in the prior year other non-underlying items), which is consistent with the items currently excluded from Trading Profit. The methodology applied to calculating other APMs has not changed since 31 December 2022. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-463": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-500": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-404": { "value": "Going concern In assessing the basis of preparation of the financial statements for the year ended 31 December 2023, the Directors have considered the principles of the Financial Reporting Council\u2019s \u2018Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, 2014\u2019; 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 2023, the Group\u2019s principal debt facilities comprised a \u00a3350.0m revolving credit facility maturing in November 2027 (of which \u00a3nil was drawn), and \u00a3208.8m of US private placement notes, giving \u00a3558.8m of committed credit facilities and committed headroom of \u00a3444.4m, being the undrawn revolving credit facility plus cash of \u00a394.4m. The principal financial covenant ratios are consistent across the US Private Placement loan notes and revolving credit facility and are outlined on page 85. As at 31 December 2023, the Group\u2019s primary restricting covenant, its leverage ratio, is below the covenant of 3.5x and is below the Group\u2019s target range of 1x to 2x at 0.50x. 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\u2019s future performance. In making this assessment, the Directors have considered the Group\u2019s 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 that could be used to preserve cash in the business should the need arise. As noted in post balance sheet events within note 37, subsequent to the balance sheet date the Group issued a further \u00a3118m ($150m) of US private placement notes which have been included in the Directors liquidity forecast supporting this assessment. 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\u2019s existing contracts, potential new contracts and administrative functions. Owing to the unprecedented levels of inflation driven by geopolitical factors, the Directors have considered the Group\u2019s resilience to rising costs. Due to the nature of the Group\u2019s operations, almost all of the revenue base has some form of inflationary protection, whether it be through contractual indexation mechanisms, cost plus billing or being short term in nature. Though the timing of such protections becoming effective may, in the short term, differ from the impact of cost pressures, it is expected that the current inflation levels will not have a material impact on the Group\u2019s profitability or cash flow. The Directors believe that appropriate sensitivities in assessing the Group\u2019s ability to continue as a going concern are to model reductions in the Group\u2019s win rates for bids and extensions, and reductions in profit margins. Due to the diversity in the Group\u2019s operations, the Directors believe that a reverse stress test of these sensitivities to assess the headroom available under the Group\u2019s debt covenants and available liquidity provides meaningful analysis of the Group\u2019s 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\u2019s financial covenants, or exhaust available liquidity, are plausible. This reverse stress test shows that, even after assuming that the US private placement loan of \u00a351m due to mature during the assessment period is repaid, and that no additional refinancing occurs after the date of approval of the financial statements, the Group can afford to be unsuccessful on 80% of its bids and extensions, combined with a profit margin 80 basis points below the Group\u2019s forecast, and still retain sufficient liquidity to meet all liabilities as they fall due and remain compliant with the Group\u2019s financial covenants. In respect of win rates, rebids and extensions have a more significant impact on the Group\u2019s revenue than new business wins during the assessment period. The Group has won more than 85% of its rebids and extensions and available contract extensions by volume over the last two years, therefore a reduction of 80% or more to the budgeted bid and extensions rates is not considered plausible. The Group does not generally bid for contracts at margins below its target range. In respect of margin reduction, due to the diversified nature of the Group\u2019s portfolio of long-term contracts and the fact that the Group has met or exceeded its full year guidance for the last five years, a reduction in margin of 80 basis points (bps) versus the Group\u2019s budget is not considered plausible within the assessment period combined with an 80% reduction in bid and extensions rates. 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-464": { "value": "Adoption of new and revised standards No new or amended accounting standards had a material impact on the Group for the 31 December 2023 reporting period. The following standards were considered. IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts In May 2017, the International Accounting Standards Board (IASB) issued IFRS 17 \u2018Insurance Contracts\u2019 and in June 2020 issued amendments to IFRS 17. Though expected to primarily impact the insurance sector, IFRS 17 applies more widely than contracts issued by traditional insurance entities. Management has not identified any contracts or obligations that should be classified as insurance contracts but continues to assess new contracts and any further interpretations issued. While some contracts transfer insurance risk, this is either not deemed significant or not a pre-existing risk, therefore will remain accounted for under the existing revenue standard. The Group has assessed that the standard would impact its captive insurance company as it issues insurance contracts, however, since the contracts insure other group companies, there is no impact on the Consolidated Financial Statements. The Group has assessed the impact of its parent company guarantee arrangements on the financial statements of the Group. Parent company guarantees could meet the IFRS 17 definition of insurance contracts. Management has identified two forms of guarantees that the Group enters into which captured by IFRS 17 and has concluded no material impact on the Consolidated Financial Statements, or the individual subsidiaries financial statements based on the following: \u2013 Performance Guarantees are not captured by IFRS 17 as Management has identified no significant insurance risk that exists for the contracts which contain these guarantees. \u2013 Financial Guarantees meet the definition of an insurance contract under IFRS 17, however, the standard allows companies to continue to apply the measurement criteria under IFRS 9. The measurement of the guarantees under IFRS 9 continues to be not material. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) In February 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2). The amendment requires entities to disclose material accounting policies rather than significant accounting policies. Management has concluded that the amendment does not result in a change to the accounting policies disclosed. Definition of Accounting Estimates (Amendments to IAS 8) In February 2021, the IASB issued Definition of Accounting Estimates (Amendments to IAS 8). The amendment clarifies the difference between a change in accounting estimate from a change in accounting policy. Management has assessed that the change has no impact on the accounting estimates or accounting policies disclosed. Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendment to IAS 12) In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendment to IAS 12). The amendment clarified that the initial recognition exemption does not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities. Management has assessed that the change has not had a material impact on net deferred tax position of the Group. A gross up between deferred tax assets and liabilities of \u00a322.1m was required. Initial Application of IFRS 17 and IFRS\u20069 - Comparative Information In December 2021, the IASB issued Initial Application of IFRS 17 and IFRS 9\u2014Comparative Information (Amendment to IFRS 17). The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The Group is already applying IFRS 9 and has concluded IFRS 17 has no material impact on the Consolidated Financial Statements, or the individual subsidiaries financial statements. International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12) In May 2023, the IASB issued International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12). The amendment provides a temporary exception to the requirements regarding deferred tax assets and liabilities related to pillar two income taxes. Management has assessed that the change has not had a material impact on the Group. ", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-405": { "value": "Adoption of new and revised standards No new or amended accounting standards had a material impact on the Group for the 31 December 2023 reporting period. The following standards were considered. IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts In May 2017, the International Accounting Standards Board (IASB) issued IFRS 17 \u2018Insurance Contracts\u2019 and in June 2020 issued amendments to IFRS 17. Though expected to primarily impact the insurance sector, IFRS 17 applies more widely than contracts issued by traditional insurance entities. Management has not identified any contracts or obligations that should be classified as insurance contracts but continues to assess new contracts and any further interpretations issued. While some contracts transfer insurance risk, this is either not deemed significant or not a pre-existing risk, therefore will remain accounted for under the existing revenue standard. The Group has assessed that the standard would impact its captive insurance company as it issues insurance contracts, however, since the contracts insure other group companies, there is no impact on the Consolidated Financial Statements. The Group has assessed the impact of its parent company guarantee arrangements on the financial statements of the Group. Parent company guarantees could meet the IFRS 17 definition of insurance contracts. Management has identified two forms of guarantees that the Group enters into which captured by IFRS 17 and has concluded no material impact on the Consolidated Financial Statements, or the individual subsidiaries financial statements based on the following: \u2013 Performance Guarantees are not captured by IFRS 17 as Management has identified no significant insurance risk that exists for the contracts which contain these guarantees. \u2013 Financial Guarantees meet the definition of an insurance contract under IFRS 17, however, the standard allows companies to continue to apply the measurement criteria under IFRS 9. The measurement of the guarantees under IFRS 9 continues to be not material. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) In February 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2). The amendment requires entities to disclose material accounting policies rather than significant accounting policies. Management has concluded that the amendment does not result in a change to the accounting policies disclosed. Definition of Accounting Estimates (Amendments to IAS 8) In February 2021, the IASB issued Definition of Accounting Estimates (Amendments to IAS 8). The amendment clarifies the difference between a change in accounting estimate from a change in accounting policy. Management has assessed that the change has no impact on the accounting estimates or accounting policies disclosed. Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendment to IAS 12) In May 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendment to IAS 12). The amendment clarified that the initial recognition exemption does not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities. Management has assessed that the change has not had a material impact on net deferred tax position of the Group. A gross up between deferred tax assets and liabilities of \u00a322.1m was required. Initial Application of IFRS 17 and IFRS\u20069 - Comparative Information In December 2021, the IASB issued Initial Application of IFRS 17 and IFRS 9\u2014Comparative Information (Amendment to IFRS 17). The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The Group is already applying IFRS 9 and has concluded IFRS 17 has no material impact on the Consolidated Financial Statements, or the individual subsidiaries financial statements. International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12) In May 2023, the IASB issued International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12). The amendment provides a temporary exception to the requirements regarding deferred tax assets and liabilities related to pillar two income taxes. 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 2023 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 Date
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) 1 January 2024
Lease Liability in a Sale and Leaseback Amendments to IFRS 16 1 January 2024
Non-current Liabilities with Covenants (Amendments to IAS 1) 1 January 2024
Supplier Finance Arrangements (amendment to IAS 7 and IFRS 7) 1 January 2024
The Effects of Changes in Foreign Exchange Rates for Lack of Exchangeability (amendment to IAS21) 1 January 2025
1 2 2 2 2 2 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. Changes in accounting policies There have been no changes to the Group\u2019s accounting policies during the year ended 31 December 2023 except for the change in accounting policy for alternative profit measures mentioned above. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-465": { "value": "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 2023 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 Date
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) 1 January 2024
Lease Liability in a Sale and Leaseback Amendments to IFRS 16 1 January 2024
Non-current Liabilities with Covenants (Amendments to IAS 1) 1 January 2024
Supplier Finance Arrangements (amendment to IAS 7 and IFRS 7) 1 January 2024
The Effects of Changes in Foreign Exchange Rates for Lack of Exchangeability (amendment to IAS21) 1 January 2025
1 2 2 2 2 2 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-466": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-406": { "value": "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. 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 29. 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 29. 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. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-407": { "value": "Revenue The Group recognises revenue based on the principles set out in IFRS 15 Revenue from Contracts with Customers and 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: \u2013 They are negotiated as a package with a single commercial objective. \u2013 Consideration receivable in one contract depends on the other contract. \u2013 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: \u2013 a deliverable (i.e. a good or a service) that is distinct; or \u2013 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 annual 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\u2019s 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. 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\u2019s 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, then 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\u2019s 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. Interest income is accrued for on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset\u2019s net carrying amount. 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 21. 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 23. 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 23. 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 21. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-408": { "value": "Government grants The majority of the Group\u2019s 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-409": { "value": "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 time frame 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: \u2013 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. \u2013 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. \u2013 The costs are expected to be recovered, i.e. the contract is expected to be profitable after amortising the capitalised costs. ", "dimensions": { "concept": "sercogroupplc:DescriptionOfAccountingPolicyForContractCosts", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-410": { "value": "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. ", "dimensions": { "concept": "sercogroupplc:DescriptionOfAccountingPolicyForOperatingProfit", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-411": { "value": "Foreign currencies Transactions in currencies other than Sterling are recorded at the rate of exchange on the date of the transaction which is 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\u2019s 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\u2019s 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-412": { "value": "Dividends Dividend distributions are recognised as a liability in the year in which the dividends are approved by the Company\u2019s shareholders. Interim dividends are recognised when they are paid; final dividends when authorised in general meetings by shareholders. Dividend income is recognised on receipt. Dividends payable Dividends are recorded in the Group\u2019s Consolidated Financial Statements in the period in which they are declared, appropriately authorised and no longer at the discretion of the Company. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-413": { "value": "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 9. 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\u2019s 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-501": { "value": "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\u2019s 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\u2019s 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\u2019s 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\u2019s 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 notes 5 and 6. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-467": { "value": "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\u2019s 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\u2019s 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\u2019s 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\u2019s 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 notes 5 and 6. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-414": { "value": "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\u2019s 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\u2019s 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\u2019s 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\u2019s 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 notes 5 and 6. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-415": { "value": "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. Where part of a CGU with goodwill is sold, the attributable amount is calculated based on the future discounted cash flows leaving the Group as a proportion of the total CGU\u2019s future discounted cash flows. 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. 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: \u2013 an asset is created that can be separately identified and which the Group intends to use or sell; \u2013 the finalisation of the asset is technically feasible and the Group has adequate resources to complete its development for use or sale; \u2013 it is probable that the asset created will generate future economic benefits; and \u2013 the development cost of the asset can be measured reliably. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-468": { "value": "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. Where part of a CGU with goodwill is sold, the attributable amount is calculated based on the future discounted cash flows leaving the Group as a proportion of the total CGU\u2019s future discounted cash flows. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-502": { "value": "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. Where part of a CGU with goodwill is sold, the attributable amount is calculated based on the future discounted cash flows leaving the Group as a proportion of the total CGU\u2019s future discounted cash flows. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-469": { "value": "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. 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: \u2013 an asset is created that can be separately identified and which the Group intends to use or sell; \u2013 the finalisation of the asset is technically feasible and the Group has adequate resources to complete its development for use or sale; \u2013 it is probable that the asset created will generate future economic benefits; and \u2013 the development cost of the asset can be measured reliably. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-524": { "value": "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: \u2013 an asset is created that can be separately identified and which the Group intends to use or sell; \u2013 the finalisation of the asset is technically feasible and the Group has adequate resources to complete its development for use or sale; \u2013 it is probable that the asset created will generate future economic benefits; and \u2013 the development cost of the asset can be measured reliably.
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% \u2013 20%
Vehicles
10% \u2013 50%
Furniture
10%
Office equipment
20% \u2013 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
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-503": { "value": "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: \u2013 an asset is created that can be separately identified and which the Group intends to use or sell; \u2013 the finalisation of the asset is technically feasible and the Group has adequate resources to complete its development for use or sale; \u2013 it is probable that the asset created will generate future economic benefits; and \u2013 the development cost of the asset can be measured reliably. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-417": { "value": "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% \u2013 20%
Vehicles
10% \u2013 50%
Furniture
10%
Office equipment
20% \u2013 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-504": { "value": "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% \u2013 20%
Vehicles
10% \u2013 50%
Furniture
10%
Office equipment
20% \u2013 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
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-416": { "value": "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. 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\u2019s criteria are met. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-418": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-470": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-419": { "value": "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. ", "dimensions": { "concept": "sercogroupplc:DescriptionOfAccountingPolicyForEndOfContractProvisions", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-471": { "value": "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 29. 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 29. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-525": { "value": "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 29. 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 29. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-505": { "value": "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 29. 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 29. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-472": { "value": "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\u2019s 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: \u2013 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; \u2013 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 \u2013 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-420": { "value": "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\u2019s 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: \u2013 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; \u2013 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 \u2013 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-421": { "value": "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 Binomial Lattice, Black-Scholes or Monte Carlo Simulation models depending on the type of scheme, as set out in note 34. The expected life used in the models has been adjusted, based on Management\u2019s 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-422": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-423": { "value": "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\u2019s customer base is predominantly government or government-backed and as a result, the Group\u2019s expected credit loss at a given point in time across the entirety of the customer base is typically immaterial. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-424": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-425": { "value": "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 Escorting and Custodial 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 \u00a35,000, 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-526": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-506": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-473": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-426": { "value": "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-427": { "value": "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\u2019s 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-428": { "value": "Net investments in foreign operations Exchange differences arising on monetary items that form part of the Group\u2019s 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. ", "dimensions": { "concept": "sercogroupplc:DescriptionOfAccountingPolicyForNetInvestmentsInForeignOperations", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-429": { "value": "Segmental information Segmental information is based on internal reports about components of the Group that are regularly reviewed by the Group\u2019s 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.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-430": { "value": "
3. Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group\u2019s 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\u2019s 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 2023.
Major sources of uncertainty which could result in a material adjustment within the next financial year, are:
\u2013 the ability of the Company to maintain or improve operational performance to ensure costs or performance-related penalties
are in line with expected levels;
\u2013 volume driven revenue and costs being within the expected ranges;
\u2013 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\u2019s perspective; and
\u2013 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 OCPs within UOP of \u00a38.2m. 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.
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\u2019s 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\u2019s 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 2023, the provision recognised in respect of this portfolio of contracts is \u00a38.1m
(2022: \u00a38.1m).
Onerous contract provisions totalling \u00a38.6m 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 \u00a38.1m in respect of the portfolio risk associated with operating a
large number of long-term contracts, giving a total onerous contract provision of \u00a316.7m (see note 26). 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\u2019s 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 focus 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 17.
Determining whether goodwill requires an actual impairment involves an estimation of the expected value in use of the asset (or
CGU to which the asset relates). The Group\u2019s CGUs are consistent with its reportable operating segments as outlined in note 4. The
value in use calculation 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, 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.
Discount rates and terminal growth rates are calculated with reference to the specific risks associated with the assets and are based
on advice provided by external experts engaged by Management. The calculation of discount rates is performed based on a risk-
free rate appropriate to the currency of the cash flows related to the CGU being tested, which is subsequently adjusted to factor in
local market risks and risks specific to the Group; cash flow risks are considered within the cash flows and not the discount rate.
During 2022, there was a significant increase in market interest rates and therefore risk free rates in response to rising global
inflation. Whilst rates have fallen in 2023, the discount rates used in the assessment as at 31 December 2023 remain higher than
recent years overall. 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 the determination of future cash flows of the Asia Pacific CGU as the Division has performed
below expectations as a result of lower variable income on material contracts, a challenging labour market, and lower than expected
win rates for both new business and rebids. In addition, the immigration contract, whilst extended to December 2024, contributes
significantly to the cash flows within the five-year plan, and a loss of this rebid will have a material impact on the Division. Continued
low win rates or the loss of the immigration contract could result in an impairment of the CGU\u2019s goodwill, however, should these
risks materialise then a fundamental restructuring of the Division may be required to improve profitability. This is discussed in more
detail in note 17.
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\u2019s retirement benefit obligations are covered in note 30.
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\u2019s 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\u2019s 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 \u00a3179.9m, UK deferred tax asset is recognised on the Group\u2019s balance sheet at 31 December 2023 (2022: \u00a3186.9m). 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.
Further details on deferred taxes are disclosed in note 15.
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:
\u2013 Exceptional items (and in the prior year other non-underlying items): IAS 1 Presentation of Financial Statements requires material
items to be disclosed separately in a way that enables users to assess the quality of a company\u2019s profitability. In practice, these are
commonly referred to as \u2018exceptional\u2019 items, but this is not a concept defined by IFRS and therefore there is a level of judgement
involved in arriving at an Alternative Performance Measure which excludes such exceptional items (and in the prior year other
non-underlying items). Management considers exceptional items (and in the prior year other non-underlying items) to be outside
of normal operations 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 (and in
the prior year non-underlying) on a consistent basis and require separate disclosure. Further details can be seen in note 9.
\u2013 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 155 and the segmental analysis in note 4 includes a reconciliation of reported
operating profit to UOP. The Group\u2019s Chief Operating Decision Maker (CODM) reviews the segmental analysis during the year.
Climate risk
Risks arising from climate change may have future adverse effects on the Group\u2019s business activities. These risks include:
\u2013 major physical risks such as extreme weather events, impacting assets, operations and employee wellbeing;
\u2013 major transitional risks including policy and legal changes such as increasing reporting and contractual requirements and
increasing carbon taxes and levies;
\u2013 technology risks including costs to transition to lower emission options; and
\u2013 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\u2019s and its customers\u2019 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\u2019s financial statements. In
arriving at this conclusion, Management has considered the areas of the Groups 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\u2019s 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\u2019s 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\u2019s forecast. The forecast is underpinned by a number of assumptions, and it represents the Group\u2019s 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\u2019s
ability to withstand changes to the forecast before recording an impairment (see note 17). The forecast used in the goodwill
impairment review is also used in the assessment of deferred tax assets and the Group\u2019s 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\u2019s 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\u2019s future cash flows, financial performance and financial position.
Claim for losses in respect of the 2013 share price reduction
Following the announcement during 2020 that the Group has received a claim seeking damages for alleged losses as a result of the
reduction in Serco\u2019s share price in 2013, as the claim progresses, the Group has continued to assess the merit, likely outcome, and
potential impact on the Group of any such litigation that either has been or might potentially be brought against the Group. Any
outcome is subject to a number of significant uncertainties. The Group does not currently assess the merits as strong, especially
given the legal uncertainties in such actions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-431": { "value": "4. Segmental information The Group\u2019s operating segments reflecting the information reported to the Board in 2023 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 and 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\u2019s 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. The accounting policies of the reportable operating segments are the same as the Group\u2019s accounting policies described in note 2. 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\u2019 revenues were \u00a31,863.8m (2022: \u00a31,716.9m) for the UK Government within the UK & Europe segment; \u00a31,167.7m (2022: \u00a31,109.6m) for the US Government within the North America segment; and \u00a3782.8m (2022: \u00a3880.5m) 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. 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 following is an analysis of the Group\u2019s revenue, results, assets and liabilities by reportable operating segment:
UK&E
North America
Asia Pacific
Middle East
Corporate
Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Revenue
2,439.5
1,362.8
845.1
226.4
\u2014
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
(3.4)
(16.0)
(11.5)
\u2014
\u2014
(30.9)
Exceptional operating items
9.9
\u2014
\u2014
\u2014
43.9
53.8
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)/credit
(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
\u2014
\u2014
\u2014
\u2014
29.0
Total depreciation and impairment of
plant, property and equipment and
right of use assets
(99.4)
(20.6)
(10.0)
(2.1)
(11.9)
(144.0)
Amortisation and impairment of
intangible assets
(1.9)
(0.9)
(1.1)
(0.1)
(3.6)
(7.6)
1
2
1 Underlying operating profit/(loss) is defined as operating profit/(loss) before exceptional items (and in the prior year other non-underlying items) and
amortisation and impairment of intangible assets arising on acquisition.
2 Included within exceptional operating items are releases of provisions previously held for indemnities given on disposed businesses of \u00a343.9m and
compensation received on the early termination of a contract of \u00a39.9m. Exceptional items incurred by the Corporate segment are not allocated to other
segments. Such items may represent costs that will benefit the wider business.
UK&E
North America
Asia Pacific
Middle East
Corporate
Total
Year ended 31 December 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Revenue
2,100.2
1,269.8
954.6
209.4
\u2014
4,534.0
Result
)
Underlying operating profit/(loss
72.1
136.6
56.9
16.0
(44.6)
237.0
Other non-underlying items
4.1
0.1
\u2014
\u2014
4.2
\u2014
Amortisation and impairment of
intangibles arising on acquisition
(1.5)
(16.5)
(3.6)
\u2014
\u2014
(21.6)
Exceptional operating items
(1.2)
(1.2)
\u2014
\u2014
\u2014
(2.4)
Operating profit/(loss)
73.5
119.0
53.3
16.0
(44.6)
217.2
Net finance cost
(20.4)
Profit before tax
196.8
Tax (charge)/credit
(42.1)
Tax on exceptional items
0.3
Profit for the year
155.0
Supplementary Information
Share of profits in joint ventures and
associates, net of interest and tax
12.0
\u2014
\u2014
\u2014
\u2014
12.0
Total depreciation and impairment of
plant, property and equipment and
right of use assets
(86.4)
(26.7)
(12.6)
(1.9)
(12.9)
(140.5)
Amortisation and impairment of
intangible assets
(1.3)
(1.0)
(2.1)
(0.1)
(5.6)
(10.1)
1
2
3
1 Underlying operating profit/(Loss) is defined as operating profit/(loss) before exceptional items (and in the prior year other non-underlying items) and
amortisation and impairment of intangible assets arising on acquisition.
2 Non-underlying items include the reversal of an impairment in respect of assets which is no longer required due to contractual changes which the Group
has agreed with its customer.
3 Included within exceptional operating items are total acquisition related costs of \u00a32.4m.
UK&E
North America
Asia Pacific
Middle East
Corporate
Total
As at 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Segment assets
Interests in joint ventures and
associates
31.8
\u2014
\u2014
0.3
\u2014
32.1
Other segment assets
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 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 (277.2)
Consolidated total liabilities
(1,576.6)
Supplementary Information
Additions to non current assets
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
2
2
3
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.
UK&E
North America
Asia Pacific
Middle East
Corporate
Total
As at 31 December 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Segment assets
Interests in joint ventures and
associates
22.9
\u2014
\u2014
0.4
\u2014
23.3
Other segment assets
960.8
948.0
309.6
68.7
123.3
2,410.4
Total segment assets
983.7
948.0
309.6
69.1
123.3
2,433.7
Unallocated assets 316.5
Consolidated total assets
2,750.2
Segment liabilities
Segment liabilities
(720.2)
(178.3)
(248.1)
(61.1)
(179.0)
(1,386.7)
Unallocated liabilities (333.8)
Consolidated total liabilities
(1,720.5)
Supplementary Information
Additions to non current assets
173.7
14.5
7.4
3.0
12.1
210.7
Segment non-current assets
701.1
718.6
177.1
14.1
80.8
1,691.7
Unallocated non-current assets
244.5
1
2
2
3
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-474": { "value": "
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\u2019 revenues were \u00a31,863.8m (2022: \u00a31,716.9m) for the UK Government within the UK & Europe segment; \u00a31,167.7m (2022:
\u00a31,109.6m) for the US Government within the North America segment; and \u00a3782.8m (2022: \u00a3880.5m) 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSegmentsMajorCustomersExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-432": { "value": "
5. List of principal undertakings
The following are considered to be the principal undertakings of the Group as at the year-end:
Principal subsidiaries
2023
2022
United Kingdom
Serco Limited
100 %
100 %
Australia
Serco Australia Pty Limited
100 %
100 %
USA
Serco Inc.
100 %
100 %
Principal joint ventures and associates
2023
2022
United Kingdom
Merseyrail Services Holding Company Limited
50 %
50 %
United Kingdom
Vivo Defence Services Limited
50 %
50 %
A full list of subsidiaries and related undertakings is included in the Appendix on pages 226 to 228 which form part of the financial
statements.
6. Joint ventures and associates
The principal joint ventures, Merseyrail Services Holding Company Limited (Merseyrail) and Vivo Defence Services Limited (VIVO),
were the only equity accounted entities which were material to the Group during the year with dividends received of \u00a321.1m and
\u00a3nil (2022: \u00a37.3m and \u00a3nil), and total revenues of \u00a3217.0m and \u00a3844.9m, respectively (2022: \u00a3185.0m and \u00a3327.0m). Both revenue
and dividends have increased in Merseyrail as a result of higher passenger volumes and a commercial settlement relating to current
and prior periods. The increase in VIVO\u2019s revenue is due to higher volumes of variable work and additional service contracts
awarded to the joint venture during the year.
The split of the share of profits in joint ventures and associates, net of interest and tax for the year ended 31 December 2023 was
\u00a329.0m (2022: \u00a312.0m), comprising of profit from Merseyrail \u00a315.9m (2022: \u00a35.3m), VIVO \u00a313.1m (2022: \u00a36.6m) and a profit on
other joint ventures and associates of \u00a3nil (2022: profit of \u00a30.1m). Profit has increased as a result of additional variable revenue and
the commercial settlement in Merseyrail.
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:
31 December 2023
Group portion Group portion
Merseyrail VIVO of material joint of other joint
(100% of (100% of ventures and ventures and
Summarised financial information results) results)
associates
1
associates Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Revenue
217.0
844.9
472.4
1.0
473.4
Operating profit/(loss)
41.5
35.3
38.1
\u2014
38.1
Net (finance costs)/investment revenue
0.3
(1.2)
(0.2)
\u2014
(0.2)
Income tax (charge)/credit
(10.0)
(7.7)
(8.9)
\u2014
(8.9)
Profit/(loss) from operations
31.8
26.4
29.0
\u2014
29.0
Other comprehensive income
2.2
\u2014
1.1
\u2014
1.1
Total comprehensive income
34.0
26.4
30.1
\u2014
30.1
Non current assets
61.3
8.9
34.3
\u2014
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
50.0 %
50.0 %
Carrying amount of investment
12.2
19.9
31.8
0.3
32.1
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 Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
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
\u2014
(20.0)
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(9.1)
(4.0)
(5.0)
\u2014
(5.0)
Interest income
2.0
0.5
1.3
\u2014
1.3
Interest expense
(1.7)
(1.7)
(1.6)
0.1
(1.5)
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.
The Group\u2019s share of liabilities within joint ventures and associates is \u00a3131.4m (2022: \u00a390.0m) which include \u00a329.1m of lease
obligations (2022: \u00a35.1m) and \u00a310.0m in joint venture loan liabilities (2022: \u00a310.0m). 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\u2019s funding requirement is agreed by both shareholders and based on the strategic business plan. At 31 December 2023, the
funding provided was \u00a310.0m from each shareholder. In the future, distributions of net profits will be returned to the Group once
VIVO has sufficient reserves.
31 December 2022
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 Total
Summarised financial information \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
185.0
327.0
236.8
1.1
237.9
Operating profit/(loss)
12.0
17.6
14.4
(0.1)
14.3
Net finance costs
(0.4)
(0.6)
(0.4)
0.1
(0.3)
Income tax (charge)/credit
(1.0)
(3.2)
(2.1)
0.1
(2.0)
Profit from operations
10.6
13.8
11.9
0.1
12.0
Other comprehensive income
5.8
\u2014
2.9
\u2014
2.9
Total comprehensive income/(expense)
16.4
13.8
14.8
0.1
14.9
Non-current assets
36.1
5.9
21.0
0.3
21.3
Current assets
51.2
129.9
90.5
1.5
92.0
Current liabilities
(29.6)
(91.7)
(60.6)
(0.8)
(61.4)
Non-current liabilities
(26.5)
(31.1)
(28.6)
\u2014
(28.6)
Net Assets
31.2
13.0
22.3
1.0
23.3
Portion of Group ownership
50.0 %
50.0 %
\u2014
\u2014
Carrying amount of investment
15.6
6.5
22.3
1.0
23.3
1
1. For Merseyrail and other joint venturess 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 of other
Merseyrail VIVO of material joint joint venture
(100% of (100% of ventures and arrangements
results) results)
associates
1
and associates Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cash and cash equivalents
33.2
18.0
25.6
0.6
26.2
Current financial liabilities excluding trade and other
payables and provisions
(7.1)
(3.2)
(5.1)
(0.3)
(5.4)
Non-current financial liabilities excluding trade and
other payables and provisions
(25.8)
(13.6)
(18.4)
\u2014
(18.4)
Non-current joint venture loan liabilities
\u2014
20.0
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(5.0)
(1.3)
(3.2)
(0.1)
(3.3)
Interest income
0.1
\u2014
0.1
\u2014
0.1
Interest expense
(0.4)
(0.2)
(0.3)
(0.1)
(0.4)
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.
7. Acquisitions
No acquisitions were completed during the year. See note 37 for details of acquisitions completed subsequent to the Balance Sheet
date.
During the year, the Group finalised the integration of OXZ Holdings AG (ORS), completed the analysis of balances acquired as part
of the transaction, and made closing net working capital settlements with the vendors. As a result of these activities, the Group
revised the fair values of the acquired assets and liabilities resulting in an increase to goodwill of \u00a33.3m, a reduction in other
intangibles of \u00a36.9m, an increase to the deferred tax asset of \u00a31.3m, and a cash receipt of \u00a32.3m for final working capital
settlements.
Contingent consideration recognised on acquisition of ORS in 2022 was CHF12.8m (\u00a311.2m) and reflected the fair value of the earn-
out and over performance payments based on a range of targets for the full year 2022 EBITDA. The maximum earn-out and over
performance payments were CHF10.0m and CHF4.0m respectively. The final earn-out and over performance payments settled at
CHF 12.3m (\u00a310.2m) which resulted in a change to the fair value of the contingent consideration resulting in a profit of \u00a31.0m
including the impact of foreign currency translation.
During the year the Group finalised the integration of Sapienza Consulting Holdings BV (Sapienza), completed the analysis of
balances acquired as part of the transaction, and made closing net working capital settlements with the vendors. As a result of these
activities, the Group revised the fair values of the acquired assets and liabilities resulting in a decrease of goodwill of \u00a30.2m, an
increase in provisions of \u00a30.4m, a reduction in trade and other payables of \u00a30.4m, and a cash receipt of \u00a30.2m for final working
capital settlements.
The total impact of acquisitions to the Group\u2019s cash flow position in the period was as follows:
\u00a3m
Cash received in respect of prior period acquisitions
(2.5)
Settlement of deferred consideration in respect of prior year acquisitions
10.2
Net cash outflow in respect of prior year acquisitions
7.7
Acquisition related costs
1.3
Net cash impact in the year on acquisitions
9.0
The total transaction and implementation costs recognised in exceptional items for the year ended 31 December 2023 was nil (2022
\u00a32.4m).
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-534": { "value": "5. List of principal undertakings The following are considered to be the principal undertakings of the Group as at the year-end:
Principal subsidiaries
2023
2022
United Kingdom
Serco Limited
100 %
100 %
Australia
Serco Australia Pty Limited
100 %
100 %
USA
Serco Inc.
100 %
100 %
Principal joint ventures and associates
2023
2022
United Kingdom
Merseyrail Services Holding Company Limited
50 %
50 %
United Kingdom
Vivo Defence Services Limited
50 %
50 %
A full list of subsidiaries and related undertakings is included in the Appendix on pages 226 to 228 which form part of the financial statements. 6. Joint ventures and associates The principal joint ventures, Merseyrail Services Holding Company Limited (Merseyrail) and Vivo Defence Services Limited (VIVO), were the only equity accounted entities which were material to the Group during the year with dividends received of \u00a321.1m and \u00a3nil (2022: \u00a37.3m and \u00a3nil), and total revenues of \u00a3217.0m and \u00a3844.9m, respectively (2022: \u00a3185.0m and \u00a3327.0m). Both revenue and dividends have increased in Merseyrail as a result of higher passenger volumes and a commercial settlement relating to current and prior periods. The increase in VIVO\u2019s revenue is due to higher volumes of variable work and additional service contracts awarded to the joint venture during the year. The split of the share of profits in joint ventures and associates, net of interest and tax for the year ended 31 December 2023 was \u00a329.0m (2022: \u00a312.0m), comprising of profit from Merseyrail \u00a315.9m (2022: \u00a35.3m), VIVO \u00a313.1m (2022: \u00a36.6m) and a profit on other joint ventures and associates of \u00a3nil (2022: profit of \u00a30.1m). Profit has increased as a result of additional variable revenue and the commercial settlement in Merseyrail. 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: 31 December 2023
Group portion Group portion
Merseyrail VIVO of material joint of other joint
(100% of (100% of ventures and ventures and
Summarised financial information results) results)
associates
1
associates Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Revenue
217.0
844.9
472.4
1.0
473.4
Operating profit/(loss)
41.5
35.3
38.1
\u2014
38.1
Net (finance costs)/investment revenue
0.3
(1.2)
(0.2)
\u2014
(0.2)
Income tax (charge)/credit
(10.0)
(7.7)
(8.9)
\u2014
(8.9)
Profit/(loss) from operations
31.8
26.4
29.0
\u2014
29.0
Other comprehensive income
2.2
\u2014
1.1
\u2014
1.1
Total comprehensive income
34.0
26.4
30.1
\u2014
30.1
Non current assets
61.3
8.9
34.3
\u2014
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
50.0 %
50.0 %
Carrying amount of investment
12.2
19.9
31.8
0.3
32.1
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 Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
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
\u2014
(20.0)
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(9.1)
(4.0)
(5.0)
\u2014
(5.0)
Interest income
2.0
0.5
1.3
\u2014
1.3
Interest expense
(1.7)
(1.7)
(1.6)
0.1
(1.5)
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. The Group\u2019s share of liabilities within joint ventures and associates is \u00a3131.4m (2022: \u00a390.0m) which include \u00a329.1m of lease obligations (2022: \u00a35.1m) and \u00a310.0m in joint venture loan liabilities (2022: \u00a310.0m). 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\u2019s funding requirement is agreed by both shareholders and based on the strategic business plan. At 31 December 2023, the funding provided was \u00a310.0m from each shareholder. In the future, distributions of net profits will be returned to the Group once VIVO has sufficient reserves. 31 December 2022
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 Total
Summarised financial information \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
185.0
327.0
236.8
1.1
237.9
Operating profit/(loss)
12.0
17.6
14.4
(0.1)
14.3
Net finance costs
(0.4)
(0.6)
(0.4)
0.1
(0.3)
Income tax (charge)/credit
(1.0)
(3.2)
(2.1)
0.1
(2.0)
Profit from operations
10.6
13.8
11.9
0.1
12.0
Other comprehensive income
5.8
\u2014
2.9
\u2014
2.9
Total comprehensive income/(expense)
16.4
13.8
14.8
0.1
14.9
Non-current assets
36.1
5.9
21.0
0.3
21.3
Current assets
51.2
129.9
90.5
1.5
92.0
Current liabilities
(29.6)
(91.7)
(60.6)
(0.8)
(61.4)
Non-current liabilities
(26.5)
(31.1)
(28.6)
\u2014
(28.6)
Net Assets
31.2
13.0
22.3
1.0
23.3
Portion of Group ownership
50.0 %
50.0 %
\u2014
\u2014
Carrying amount of investment
15.6
6.5
22.3
1.0
23.3
1 1. For Merseyrail and other joint venturess 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 of other
Merseyrail VIVO of material joint joint venture
(100% of (100% of ventures and arrangements
results) results)
associates
1
and associates Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cash and cash equivalents
33.2
18.0
25.6
0.6
26.2
Current financial liabilities excluding trade and other
payables and provisions
(7.1)
(3.2)
(5.1)
(0.3)
(5.4)
Non-current financial liabilities excluding trade and
other payables and provisions
(25.8)
(13.6)
(18.4)
\u2014
(18.4)
Non-current joint venture loan liabilities
\u2014
20.0
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(5.0)
(1.3)
(3.2)
(0.1)
(3.3)
Interest income
0.1
\u2014
0.1
\u2014
0.1
Interest expense
(0.4)
(0.2)
(0.3)
(0.1)
(0.4)
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. 7. Acquisitions No acquisitions were completed during the year. See note 37 for details of acquisitions completed subsequent to the Balance Sheet date. During the year, the Group finalised the integration of OXZ Holdings AG (ORS), completed the analysis of balances acquired as part of the transaction, and made closing net working capital settlements with the vendors. As a result of these activities, the Group revised the fair values of the acquired assets and liabilities resulting in an increase to goodwill of \u00a33.3m, a reduction in other intangibles of \u00a36.9m, an increase to the deferred tax asset of \u00a31.3m, and a cash receipt of \u00a32.3m for final working capital settlements. Contingent consideration recognised on acquisition of ORS in 2022 was CHF12.8m (\u00a311.2m) and reflected the fair value of the earn- out and over performance payments based on a range of targets for the full year 2022 EBITDA. The maximum earn-out and over performance payments were CHF10.0m and CHF4.0m respectively. The final earn-out and over performance payments settled at CHF 12.3m (\u00a310.2m) which resulted in a change to the fair value of the contingent consideration resulting in a profit of \u00a31.0m including the impact of foreign currency translation. During the year the Group finalised the integration of Sapienza Consulting Holdings BV (Sapienza), completed the analysis of balances acquired as part of the transaction, and made closing net working capital settlements with the vendors. As a result of these activities, the Group revised the fair values of the acquired assets and liabilities resulting in a decrease of goodwill of \u00a30.2m, an increase in provisions of \u00a30.4m, a reduction in trade and other payables of \u00a30.4m, and a cash receipt of \u00a30.2m for final working capital settlements. The total impact of acquisitions to the Group\u2019s cash flow position in the period was as follows:
\u00a3m
Cash received in respect of prior period acquisitions
(2.5)
Settlement of deferred consideration in respect of prior year acquisitions
10.2
Net cash outflow in respect of prior year acquisitions
7.7
Acquisition related costs
1.3
Net cash impact in the year on acquisitions
9.0
The total transaction and implementation costs recognised in exceptional items for the year ended 31 December 2023 was nil (2022 \u00a32.4m).", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-527": { "value": "5. List of principal undertakings The following are considered to be the principal undertakings of the Group as at the year-end:
Principal subsidiaries
2023
2022
United Kingdom
Serco Limited
100 %
100 %
Australia
Serco Australia Pty Limited
100 %
100 %
USA
Serco Inc.
100 %
100 %
Principal joint ventures and associates
2023
2022
United Kingdom
Merseyrail Services Holding Company Limited
50 %
50 %
United Kingdom
Vivo Defence Services Limited
50 %
50 %
A full list of subsidiaries and related undertakings is included in the Appendix on pages 226 to 228 which form part of the financial statements. 6. Joint ventures and associates The principal joint ventures, Merseyrail Services Holding Company Limited (Merseyrail) and Vivo Defence Services Limited (VIVO), were the only equity accounted entities which were material to the Group during the year with dividends received of \u00a321.1m and \u00a3nil (2022: \u00a37.3m and \u00a3nil), and total revenues of \u00a3217.0m and \u00a3844.9m, respectively (2022: \u00a3185.0m and \u00a3327.0m). Both revenue and dividends have increased in Merseyrail as a result of higher passenger volumes and a commercial settlement relating to current and prior periods. The increase in VIVO\u2019s revenue is due to higher volumes of variable work and additional service contracts awarded to the joint venture during the year. The split of the share of profits in joint ventures and associates, net of interest and tax for the year ended 31 December 2023 was \u00a329.0m (2022: \u00a312.0m), comprising of profit from Merseyrail \u00a315.9m (2022: \u00a35.3m), VIVO \u00a313.1m (2022: \u00a36.6m) and a profit on other joint ventures and associates of \u00a3nil (2022: profit of \u00a30.1m). Profit has increased as a result of additional variable revenue and the commercial settlement in Merseyrail. 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: 31 December 2023
Group portion Group portion
Merseyrail VIVO of material joint of other joint
(100% of (100% of ventures and ventures and
Summarised financial information results) results)
associates
1
associates Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Revenue
217.0
844.9
472.4
1.0
473.4
Operating profit/(loss)
41.5
35.3
38.1
\u2014
38.1
Net (finance costs)/investment revenue
0.3
(1.2)
(0.2)
\u2014
(0.2)
Income tax (charge)/credit
(10.0)
(7.7)
(8.9)
\u2014
(8.9)
Profit/(loss) from operations
31.8
26.4
29.0
\u2014
29.0
Other comprehensive income
2.2
\u2014
1.1
\u2014
1.1
Total comprehensive income
34.0
26.4
30.1
\u2014
30.1
Non current assets
61.3
8.9
34.3
\u2014
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
50.0 %
50.0 %
Carrying amount of investment
12.2
19.9
31.8
0.3
32.1
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 Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
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
\u2014
(20.0)
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(9.1)
(4.0)
(5.0)
\u2014
(5.0)
Interest income
2.0
0.5
1.3
\u2014
1.3
Interest expense
(1.7)
(1.7)
(1.6)
0.1
(1.5)
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. The Group\u2019s share of liabilities within joint ventures and associates is \u00a3131.4m (2022: \u00a390.0m) which include \u00a329.1m of lease obligations (2022: \u00a35.1m) and \u00a310.0m in joint venture loan liabilities (2022: \u00a310.0m). 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\u2019s funding requirement is agreed by both shareholders and based on the strategic business plan. At 31 December 2023, the funding provided was \u00a310.0m from each shareholder. In the future, distributions of net profits will be returned to the Group once VIVO has sufficient reserves. 31 December 2022
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 Total
Summarised financial information \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
185.0
327.0
236.8
1.1
237.9
Operating profit/(loss)
12.0
17.6
14.4
(0.1)
14.3
Net finance costs
(0.4)
(0.6)
(0.4)
0.1
(0.3)
Income tax (charge)/credit
(1.0)
(3.2)
(2.1)
0.1
(2.0)
Profit from operations
10.6
13.8
11.9
0.1
12.0
Other comprehensive income
5.8
\u2014
2.9
\u2014
2.9
Total comprehensive income/(expense)
16.4
13.8
14.8
0.1
14.9
Non-current assets
36.1
5.9
21.0
0.3
21.3
Current assets
51.2
129.9
90.5
1.5
92.0
Current liabilities
(29.6)
(91.7)
(60.6)
(0.8)
(61.4)
Non-current liabilities
(26.5)
(31.1)
(28.6)
\u2014
(28.6)
Net Assets
31.2
13.0
22.3
1.0
23.3
Portion of Group ownership
50.0 %
50.0 %
\u2014
\u2014
Carrying amount of investment
15.6
6.5
22.3
1.0
23.3
1 1. For Merseyrail and other joint venturess 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 of other
Merseyrail VIVO of material joint joint venture
(100% of (100% of ventures and arrangements
results) results)
associates
1
and associates Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cash and cash equivalents
33.2
18.0
25.6
0.6
26.2
Current financial liabilities excluding trade and other
payables and provisions
(7.1)
(3.2)
(5.1)
(0.3)
(5.4)
Non-current financial liabilities excluding trade and
other payables and provisions
(25.8)
(13.6)
(18.4)
\u2014
(18.4)
Non-current joint venture loan liabilities
\u2014
20.0
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(5.0)
(1.3)
(3.2)
(0.1)
(3.3)
Interest income
0.1
\u2014
0.1
\u2014
0.1
Interest expense
(0.4)
(0.2)
(0.3)
(0.1)
(0.4)
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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-507": { "value": "5. List of principal undertakings The following are considered to be the principal undertakings of the Group as at the year-end:
Principal subsidiaries
2023
2022
United Kingdom
Serco Limited
100 %
100 %
Australia
Serco Australia Pty Limited
100 %
100 %
USA
Serco Inc.
100 %
100 %
Principal joint ventures and associates
2023
2022
United Kingdom
Merseyrail Services Holding Company Limited
50 %
50 %
United Kingdom
Vivo Defence Services Limited
50 %
50 %
A full list of subsidiaries and related undertakings is included in the Appendix on pages 226 to 228 which form part of the financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-475": { "value": "5. List of principal undertakings The following are considered to be the principal undertakings of the Group as at the year-end:
Principal subsidiaries
2023
2022
United Kingdom
Serco Limited
100 %
100 %
Australia
Serco Australia Pty Limited
100 %
100 %
USA
Serco Inc.
100 %
100 %
Principal joint ventures and associates
2023
2022
United Kingdom
Merseyrail Services Holding Company Limited
50 %
50 %
United Kingdom
Vivo Defence Services Limited
50 %
50 %
A full list of subsidiaries and related undertakings is included in the Appendix on pages 226 to 228 which form part of the financial statements. 6. Joint ventures and associates The principal joint ventures, Merseyrail Services Holding Company Limited (Merseyrail) and Vivo Defence Services Limited (VIVO), were the only equity accounted entities which were material to the Group during the year with dividends received of \u00a321.1m and \u00a3nil (2022: \u00a37.3m and \u00a3nil), and total revenues of \u00a3217.0m and \u00a3844.9m, respectively (2022: \u00a3185.0m and \u00a3327.0m). Both revenue and dividends have increased in Merseyrail as a result of higher passenger volumes and a commercial settlement relating to current and prior periods. The increase in VIVO\u2019s revenue is due to higher volumes of variable work and additional service contracts awarded to the joint venture during the year. The split of the share of profits in joint ventures and associates, net of interest and tax for the year ended 31 December 2023 was \u00a329.0m (2022: \u00a312.0m), comprising of profit from Merseyrail \u00a315.9m (2022: \u00a35.3m), VIVO \u00a313.1m (2022: \u00a36.6m) and a profit on other joint ventures and associates of \u00a3nil (2022: profit of \u00a30.1m). Profit has increased as a result of additional variable revenue and the commercial settlement in Merseyrail. 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: 31 December 2023
Group portion Group portion
Merseyrail VIVO of material joint of other joint
(100% of (100% of ventures and ventures and
Summarised financial information results) results)
associates
1
associates Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Revenue
217.0
844.9
472.4
1.0
473.4
Operating profit/(loss)
41.5
35.3
38.1
\u2014
38.1
Net (finance costs)/investment revenue
0.3
(1.2)
(0.2)
\u2014
(0.2)
Income tax (charge)/credit
(10.0)
(7.7)
(8.9)
\u2014
(8.9)
Profit/(loss) from operations
31.8
26.4
29.0
\u2014
29.0
Other comprehensive income
2.2
\u2014
1.1
\u2014
1.1
Total comprehensive income
34.0
26.4
30.1
\u2014
30.1
Non current assets
61.3
8.9
34.3
\u2014
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
50.0 %
50.0 %
Carrying amount of investment
12.2
19.9
31.8
0.3
32.1
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 Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
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
\u2014
(20.0)
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(9.1)
(4.0)
(5.0)
\u2014
(5.0)
Interest income
2.0
0.5
1.3
\u2014
1.3
Interest expense
(1.7)
(1.7)
(1.6)
0.1
(1.5)
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. The Group\u2019s share of liabilities within joint ventures and associates is \u00a3131.4m (2022: \u00a390.0m) which include \u00a329.1m of lease obligations (2022: \u00a35.1m) and \u00a310.0m in joint venture loan liabilities (2022: \u00a310.0m). 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\u2019s funding requirement is agreed by both shareholders and based on the strategic business plan. At 31 December 2023, the funding provided was \u00a310.0m from each shareholder. In the future, distributions of net profits will be returned to the Group once VIVO has sufficient reserves. 31 December 2022
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 Total
Summarised financial information \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
185.0
327.0
236.8
1.1
237.9
Operating profit/(loss)
12.0
17.6
14.4
(0.1)
14.3
Net finance costs
(0.4)
(0.6)
(0.4)
0.1
(0.3)
Income tax (charge)/credit
(1.0)
(3.2)
(2.1)
0.1
(2.0)
Profit from operations
10.6
13.8
11.9
0.1
12.0
Other comprehensive income
5.8
\u2014
2.9
\u2014
2.9
Total comprehensive income/(expense)
16.4
13.8
14.8
0.1
14.9
Non-current assets
36.1
5.9
21.0
0.3
21.3
Current assets
51.2
129.9
90.5
1.5
92.0
Current liabilities
(29.6)
(91.7)
(60.6)
(0.8)
(61.4)
Non-current liabilities
(26.5)
(31.1)
(28.6)
\u2014
(28.6)
Net Assets
31.2
13.0
22.3
1.0
23.3
Portion of Group ownership
50.0 %
50.0 %
\u2014
\u2014
Carrying amount of investment
15.6
6.5
22.3
1.0
23.3
1 1. For Merseyrail and other joint venturess 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 of other
Merseyrail VIVO of material joint joint venture
(100% of (100% of ventures and arrangements
results) results)
associates
1
and associates Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cash and cash equivalents
33.2
18.0
25.6
0.6
26.2
Current financial liabilities excluding trade and other
payables and provisions
(7.1)
(3.2)
(5.1)
(0.3)
(5.4)
Non-current financial liabilities excluding trade and
other payables and provisions
(25.8)
(13.6)
(18.4)
\u2014
(18.4)
Non-current joint venture loan liabilities
\u2014
20.0
(10.0)
\u2014
(10.0)
Depreciation and amortisation
(5.0)
(1.3)
(3.2)
(0.1)
(3.3)
Interest income
0.1
\u2014
0.1
\u2014
0.1
Interest expense
(0.4)
(0.2)
(0.3)
(0.1)
(0.4)
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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-476": { "value": "7. Acquisitions No acquisitions were completed during the year. See note 37 for details of acquisitions completed subsequent to the Balance Sheet date. During the year, the Group finalised the integration of OXZ Holdings AG (ORS), completed the analysis of balances acquired as part of the transaction, and made closing net working capital settlements with the vendors. As a result of these activities, the Group revised the fair values of the acquired assets and liabilities resulting in an increase to goodwill of \u00a33.3m, a reduction in other intangibles of \u00a36.9m, an increase to the deferred tax asset of \u00a31.3m, and a cash receipt of \u00a32.3m for final working capital settlements. Contingent consideration recognised on acquisition of ORS in 2022 was CHF12.8m (\u00a311.2m) and reflected the fair value of the earn- out and over performance payments based on a range of targets for the full year 2022 EBITDA. The maximum earn-out and over performance payments were CHF10.0m and CHF4.0m respectively. The final earn-out and over performance payments settled at CHF 12.3m (\u00a310.2m) which resulted in a change to the fair value of the contingent consideration resulting in a profit of \u00a31.0m including the impact of foreign currency translation. During the year the Group finalised the integration of Sapienza Consulting Holdings BV (Sapienza), completed the analysis of balances acquired as part of the transaction, and made closing net working capital settlements with the vendors. As a result of these activities, the Group revised the fair values of the acquired assets and liabilities resulting in a decrease of goodwill of \u00a30.2m, an increase in provisions of \u00a30.4m, a reduction in trade and other payables of \u00a30.4m, and a cash receipt of \u00a30.2m for final working capital settlements. The total impact of acquisitions to the Group\u2019s cash flow position in the period was as follows:
\u00a3m
Cash received in respect of prior period acquisitions
(2.5)
Settlement of deferred consideration in respect of prior year acquisitions
10.2
Net cash outflow in respect of prior year acquisitions
7.7
Acquisition related costs
1.3
Net cash impact in the year on acquisitions
9.0
The total transaction and implementation costs recognised in exceptional items for the year ended 31 December 2023 was nil (2022 \u00a32.4m).", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-433": { "value": "
8. Revenue from contracts with customers
Revenue
Information regarding the Group\u2019s major customers and a segmental analysis of revenue is provided in note 4.
An analysis of the Group\u2019s revenue from its key market sectors, together with the timing of revenue recognition across the Group\u2019s
revenue from contracts with customers, is as follows:
UK&E
North America
Asia Pacific
Middle East
Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Key sectors
Defence
355.0
931.9
156.7
30.9
1,474.5
Justice & Immigration
1,329.8
\u2014
351.3
\u2014
1,681.1
Transport
148.7
102.5
12.2
71.3
334.7
Health & Other Facilities Management
227.4
\u2014
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
\u2014
1.3
\u2014
4.1
satisfied in previous periods
Revenue recognised at a point in time
42.1
\u2014
11.4
\u2014
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
UK&E
North America
Asia Pacific
Middle East
Total
Year ended 31 December 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Key sectors
Defence
315.8
863.0
147.9
30.5
1,357.2
Justice & Immigration
798.9
\u2014
412.9
\u2014
1,211.8
Transport
173.9
95.9
9.8
70.0
349.6
Health & Other Facilities Management
264.4
\u2014
225.3
103.0
592.7
Citizen Services
547.2
310.9
158.7
5.9
1,022.7
2,100.2
1,269.8
954.6
209.4
4,534.0
Timing of revenue recognition
Revenue recognised from performance obligations
5.8
\u2014
0.8
\u2014
6.6
satisfied in previous periods
Revenue recognised at a point in time
21.9
\u2014
5.5
\u2014
27.4
Products and services transferred over time
2,072.5
1,269.8
948.3
209.4
4,500.0
2,100.2
1,269.8
954.6
209.4
4,534.0
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\u2019s 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 or
passenger transport, 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
Asia Pacific
Middle East
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year (2024)
1,950.9
599.1
706.7
153.9
3,410.6
Between 2 \u2013 5 years (2025 \u2013 2028)
5,239.1
288.6
988.4
271.6
6,787.7
5 years and beyond (2029+)
2,131.9
57.9
1,113.7
101.6
3,405.1
9,321.9
945.6
2,808.8
527.1
13,603.4
1
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.
12. Investment revenue
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest receivable on loans and deposits
3.9
1.9
Net interest receivable on retirement benefit obligations (note 30)
3.1
2.7
Movement in discount on other debtors
\u2014
0.1
7.0
4.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-477": { "value": "8. Revenue from contracts with customers Revenue Information regarding the Group\u2019s major customers and a segmental analysis of revenue is provided in note 4. An analysis of the Group\u2019s revenue from its key market sectors, together with the timing of revenue recognition across the Group\u2019s revenue from contracts with customers, is as follows:
UK&E
North America
Asia Pacific
Middle East
Total
Year ended 31 December 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Key sectors
Defence
355.0
931.9
156.7
30.9
1,474.5
Justice & Immigration
1,329.8
\u2014
351.3
\u2014
1,681.1
Transport
148.7
102.5
12.2
71.3
334.7
Health & Other Facilities Management
227.4
\u2014
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
\u2014
1.3
\u2014
4.1
satisfied in previous periods
Revenue recognised at a point in time
42.1
\u2014
11.4
\u2014
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
UK&E
North America
Asia Pacific
Middle East
Total
Year ended 31 December 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Key sectors
Defence
315.8
863.0
147.9
30.5
1,357.2
Justice & Immigration
798.9
\u2014
412.9
\u2014
1,211.8
Transport
173.9
95.9
9.8
70.0
349.6
Health & Other Facilities Management
264.4
\u2014
225.3
103.0
592.7
Citizen Services
547.2
310.9
158.7
5.9
1,022.7
2,100.2
1,269.8
954.6
209.4
4,534.0
Timing of revenue recognition
Revenue recognised from performance obligations
5.8
\u2014
0.8
\u2014
6.6
satisfied in previous periods
Revenue recognised at a point in time
21.9
\u2014
5.5
\u2014
27.4
Products and services transferred over time
2,072.5
1,269.8
948.3
209.4
4,500.0
2,100.2
1,269.8
954.6
209.4
4,534.0
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\u2019s 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 or passenger transport, 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
Asia Pacific
Middle East
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within 1 year (2024)
1,950.9
599.1
706.7
153.9
3,410.6
Between 2 \u2013 5 years (2025 \u2013 2028)
5,239.1
288.6
988.4
271.6
6,787.7
5 years and beyond (2029+)
2,131.9
57.9
1,113.7
101.6
3,405.1
9,321.9
945.6
2,808.8
527.1
13,603.4
1 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-434": { "value": "
9. Exceptional operating items
Exceptional items are items of financial performance that are outside normal operations and are material to the results of the Group
either by virtue of size or nature. As such, the items set out below require separate disclosure on the face of the income statement to
assist in the understanding of the performance of the Group.
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Compensation received on the early termination of contractual services
9.9
\u2014
Release of provisions held for indemnities given on disposed businesses
43.9
\u2014
Costs associated with successful acquisitions
\u2014
(2.4)
Exceptional operating items
53.8
(2.4)
Exceptional tax (charge)/credit
(2.3)
0.3
Total exceptional operating items net of tax
51.5
(2.1)
", "dimensions": { "concept": "sercogroupplc:DisclosureOfExceptionalIItems", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-435": { "value": "
10. Operating profit
Operating profit is stated after charging/(crediting):
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Research and development costs
2.9
2.6
Profit on disposal of property, plant and equipment
(0.6)
(0.5)
Loss/(profit) on early termination of leases
0.6
(0.2)
(Profit)/loss on disposal of intangible assets
(0.8)
0.4
Depreciation and impairment of property, plant and equipment
17.9
23.0
Depreciation and impairment of right of use assets
126.1
117.5
Amortisation and impairment of intangible assets \u2013 arising on acquisition
30.9
21.6
Amortisation and impairment of intangible assets
7.8
10.1
Staff costs (note 11)
2,207.7
2,155.8
Allowance for doubtful debts credited to income statement
(0.4)
(0.4)
Net foreign exchange charge/(gain)
0.8
(0.1)
Movement on non-designated hedges and reclassified cashflow hedges
(0.2)
(0.8)
Lease payments recognised through operating profit
3.7
4.2
Operating lease income from sub-leases
(2.4)
(1.8)
1
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\u2019s
Auditor are shown below.
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Fees payable to the Company\u2019s Auditor for the audit of the Company\u2019s annual accounts
3.9
2.6
Fees payable to the Company\u2019s Auditor and their associates for other services to the Group:
\u2013 audit of the Company\u2019s subsidiaries pursuant to legislation
1.5
1.3
Total audit fees
5.4
3.9
\u2013 Audit-related assurance services
0.6
0.1
\u2013 Other non-audit services
\u2014
0.1
Total non-audit fees
0.6
0.2
Fees payable to the Company\u2019s 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\u2019s policy on the use of auditors for non-audit services and how the auditor\u2019s independence and objectivity
was safeguarded, are set out in the Audit Committee Report on page 111. No services were provided pursuant to contingent fee
arrangements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-478": { "value": "10. Operating profit Operating profit is stated after charging/(crediting):
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Research and development costs
2.9
2.6
Profit on disposal of property, plant and equipment
(0.6)
(0.5)
Loss/(profit) on early termination of leases
0.6
(0.2)
(Profit)/loss on disposal of intangible assets
(0.8)
0.4
Depreciation and impairment of property, plant and equipment
17.9
23.0
Depreciation and impairment of right of use assets
126.1
117.5
Amortisation and impairment of intangible assets \u2013 arising on acquisition
30.9
21.6
Amortisation and impairment of intangible assets
7.8
10.1
Staff costs (note 11)
2,207.7
2,155.8
Allowance for doubtful debts credited to income statement
(0.4)
(0.4)
Net foreign exchange charge/(gain)
0.8
(0.1)
Movement on non-designated hedges and reclassified cashflow hedges
(0.2)
(0.8)
Lease payments recognised through operating profit
3.7
4.2
Operating lease income from sub-leases
(2.4)
(1.8)
1 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\u2019s Auditor are shown below.
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Fees payable to the Company\u2019s Auditor for the audit of the Company\u2019s annual accounts
3.9
2.6
Fees payable to the Company\u2019s Auditor and their associates for other services to the Group:
\u2013 audit of the Company\u2019s subsidiaries pursuant to legislation
1.5
1.3
Total audit fees
5.4
3.9
\u2013 Audit-related assurance services
0.6
0.1
\u2013 Other non-audit services
\u2014
0.1
Total non-audit fees
0.6
0.2
Fees payable to the Company\u2019s 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\u2019s policy on the use of auditors for non-audit services and how the auditor\u2019s independence and objectivity was safeguarded, are set out in the Audit Committee Report on page 111. No services were provided pursuant to contingent fee arrangements.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-508": { "value": "
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Research and development costs
2.9
2.6
Profit on disposal of property, plant and equipment
(0.6)
(0.5)
Loss/(profit) on early termination of leases
0.6
(0.2)
(Profit)/loss on disposal of intangible assets
(0.8)
0.4
Depreciation and impairment of property, plant and equipment
17.9
23.0
Depreciation and impairment of right of use assets
126.1
117.5
Amortisation and impairment of intangible assets \u2013 arising on acquisition
30.9
21.6
Amortisation and impairment of intangible assets
7.8
10.1
Staff costs (note 11)
2,207.7
2,155.8
Allowance for doubtful debts credited to income statement
(0.4)
(0.4)
Net foreign exchange charge/(gain)
0.8
(0.1)
Movement on non-designated hedges and reclassified cashflow hedges
(0.2)
(0.8)
Lease payments recognised through operating profit
3.7
4.2
Operating lease income from sub-leases
(2.4)
(1.8)
1 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-528": { "value": "
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Research and development costs
2.9
2.6
Profit on disposal of property, plant and equipment
(0.6)
(0.5)
Loss/(profit) on early termination of leases
0.6
(0.2)
(Profit)/loss on disposal of intangible assets
(0.8)
0.4
Depreciation and impairment of property, plant and equipment
17.9
23.0
Depreciation and impairment of right of use assets
126.1
117.5
Amortisation and impairment of intangible assets \u2013 arising on acquisition
30.9
21.6
Amortisation and impairment of intangible assets
7.8
10.1
Staff costs (note 11)
2,207.7
2,155.8
Allowance for doubtful debts credited to income statement
(0.4)
(0.4)
Net foreign exchange charge/(gain)
0.8
(0.1)
Movement on non-designated hedges and reclassified cashflow hedges
(0.2)
(0.8)
Lease payments recognised through operating profit
3.7
4.2
Operating lease income from sub-leases
(2.4)
(1.8)
1 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-535": { "value": "
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Research and development costs
2.9
2.6
Profit on disposal of property, plant and equipment
(0.6)
(0.5)
Loss/(profit) on early termination of leases
0.6
(0.2)
(Profit)/loss on disposal of intangible assets
(0.8)
0.4
Depreciation and impairment of property, plant and equipment
17.9
23.0
Depreciation and impairment of right of use assets
126.1
117.5
Amortisation and impairment of intangible assets \u2013 arising on acquisition
30.9
21.6
Amortisation and impairment of intangible assets
7.8
10.1
Staff costs (note 11)
2,207.7
2,155.8
Allowance for doubtful debts credited to income statement
(0.4)
(0.4)
Net foreign exchange charge/(gain)
0.8
(0.1)
Movement on non-designated hedges and reclassified cashflow hedges
(0.2)
(0.8)
Lease payments recognised through operating profit
3.7
4.2
Operating lease income from sub-leases
(2.4)
(1.8)
1 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-509": { "value": "Amounts payable by the Company and its subsidiary undertakings in respect of audit and non-audit services to the Company\u2019s Auditor are shown below.
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Fees payable to the Company\u2019s Auditor for the audit of the Company\u2019s annual accounts
3.9
2.6
Fees payable to the Company\u2019s Auditor and their associates for other services to the Group:
\u2013 audit of the Company\u2019s subsidiaries pursuant to legislation
1.5
1.3
Total audit fees
5.4
3.9
\u2013 Audit-related assurance services
0.6
0.1
\u2013 Other non-audit services
\u2014
0.1
Total non-audit fees
0.6
0.2
Fees payable to the Company\u2019s 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\u2019s policy on the use of auditors for non-audit services and how the auditor\u2019s independence and objectivity was safeguarded, are set out in the Audit Committee Report on page 111. No services were provided pursuant to contingent fee arrangements.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-436": { "value": "
11. Staff costs
The average number of persons employed by the Group (including Executive Directors) was:
2023
2022
Year ended 31 December
Number
Number
UK & Europe
21,415
23,855
North America
9,145
8,960
Asia Pacific
13,017
14,024
Middle East
1,744
2,122
Unallocated
884
999
46,205
49,960
1
1. Unallocated includes Group overhead functions.
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:
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Wages and salaries
1,934.2
1,889.1
Social security costs
157.9
148.3
Other pension costs (note 30)
102.1
102.8
2,194.2
2,140.2
Share-based payment expense (note 34)
13.5
15.6
2,207.7
2,155.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-510": { "value": "12. Investment revenue
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest receivable on loans and deposits
3.9
1.9
Net interest receivable on retirement benefit obligations (note 30)
3.1
2.7
Movement in discount on other debtors
\u2014
0.1
7.0
4.7
13. Finance costs
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest payable on lease liabilities
13.1
7.9
Interest payable on loans
15.6
15.2
Facility fees and other charges
2.1
2.4
30.8
25.5
Foreign exchange on financing activities
0.8
(0.4)
31.6
25.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-538": { "value": "12. Investment revenue
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest receivable on loans and deposits
3.9
1.9
Net interest receivable on retirement benefit obligations (note 30)
3.1
2.7
Movement in discount on other debtors
\u2014
0.1
7.0
4.7
", "dimensions": { "concept": "sercogroupplc:DisclosureOfInvestmentRevenue", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-529": { "value": "12. Investment revenue
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest receivable on loans and deposits
3.9
1.9
Net interest receivable on retirement benefit obligations (note 30)
3.1
2.7
Movement in discount on other debtors
\u2014
0.1
7.0
4.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-437": { "value": "
13. Finance costs
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest payable on lease liabilities
13.1
7.9
Interest payable on loans
15.6
15.2
Facility fees and other charges
2.1
2.4
30.8
25.5
Foreign exchange on financing activities
0.8
(0.4)
31.6
25.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-530": { "value": "13. Finance costs
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest payable on lease liabilities
13.1
7.9
Interest payable on loans
15.6
15.2
Facility fees and other charges
2.1
2.4
30.8
25.5
Foreign exchange on financing activities
0.8
(0.4)
31.6
25.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-479": { "value": "13. Finance costs
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Interest payable on lease liabilities
13.1
7.9
Interest payable on loans
15.6
15.2
Facility fees and other charges
2.1
2.4
30.8
25.5
Foreign exchange on financing activities
0.8
(0.4)
31.6
25.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-438": { "value": "
14. Tax
14 (a) Income tax recognised in the income statement
Non-underlying Non-underlying
Underlying
items
Reported
Underlying
items
Reported
2023
2023
2023
2022
2022
2022
Year ended 31 December
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current income tax
Current income tax charge/(credit)
34.0
(1.5)
32.5
41.8
(4.0)
37.8
Adjustments in respect of prior years
1.3
\u2014
1.3
3.5
\u2014
3.5
Deferred tax
Current year charge/(credit)
16.8
(4.7)
12.1
7.5
(2.1)
5.4
Adjustments in respect of prior years
(1.3)
\u2014
(1.3)
(4.9)
\u2014
(4.9)
50.8
(6.2)
44.6
47.9
(6.1)
41.8
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
2023
2023
2023
2022
2022
2022
Year ended 31 December
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit before tax
224.1
22.9
247.0
216.6
(19.8)
196.8
Tax calculated at a rate of 23.5%
52.7
5.3
58.0
41.1
(3.8)
37.3
(2022: 19.0%)
Expenses not deductible for tax
1
3.7
\u2014
3.7
2.0
0.2
2.2
purposes
UK unprovided deferred tax
0.2
\u2014
0.2
0.3
\u2014
0.3
Other unprovided deferred tax
1.3
\u2014
1.3
2.5
0.1
2.6
Effect of the use of unrecognised tax
\u2014
\u2014
\u2014
(1.1)
\u2014
(1.1)
losses
Impact of changes in statutory tax
0.3
\u2014
0.3
(0.8)
\u2014
(0.8)
rates on current income tax
Overseas rate differences
1.8
(1.2)
0.6
13.0
(2.6)
10.4
Other non-taxable income
(2.4)
(10.3)
(12.7)
(5.5)
\u2014
(5.5)
Adjustments in respect of prior years
\u2014
\u2014
\u2014
(1.4)
\u2014
(1.4)
R&D expenditure credit (RDEC)
\u2014
\u2014
\u2014
0.1
\u2014
0.1
Adjustments in respect of equity
(6.8)
\u2014
(6.8)
(2.3)
\u2014
(2.3)
accounted investments
Tax charge/(credit)
50.8
(6.2)
44.6
47.9
(6.1)
41.8
2
3
1. Relates to costs that are not allowable for tax deduction under local tax law.
2. Arises due to timing differences between when an amount is recognised in the income statement and when the amount is subject to UK tax.
3. Included within adjustments in respect of prior years for the year ended 31 December 2022, is a credit of \u00a30.9m in relation to the finalisation of the prior year
position on share-based payments and a credit of \u00a30.7m reflecting the utilisation of the R&D expenditure credit, previously written off to deferred tax, against
the 2021 current tax liability.
The corporate income tax expense for the year is based on the UK statutory rate of corporation tax for the period of 23.5% (2022:
19.0%). Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
14 (b) Income tax recognised in the SOCI
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Current tax
Taken to retirement benefit obligations reserve
1.9
2.0
Deferred tax
Relating to cash flow hedges
0.2
(0.1)
Taken to retirement benefit obligations reserve
4.2
25.1
6.3
27.0
14 (c) Tax on items taken directly to equity
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
Current tax
Recorded in share-based payment reserve
1.0
2.2
Deferred tax
Recorded in share-based payment reserve
(0.5)
1.2
0.5
3.4
15. 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:
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
At 1 January \u2013 asset
(190.4)
(174.0)
Income statement charge/(credit)
10.8
0.6
R&D expenditure credit transferred to current tax
\u2014
0.7
Items recognised in equity and in other comprehensive income
(3.9)
(26.2)
Arising on acquisition
(1.3)
5.5
Exchange differences
\u2014
3.0
At 31 December \u2013 asset
(184.8)
(190.4)
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2023
32.8
\u2014
\u2014
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
IFRS 16
0.8
18.6
(22.1)
\u2014
\u2014
\u2014
\u2014
\u2014
2.7
\u2014
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)
Charged/(credited)
to income
(0.4)
(2.4)
3.6
(0.9)
0.1
(0.2)
\u2014
8.0
3.0
10.8
statement (note
14a)
Arising on
acquisition of a
subsidiary
(1.3)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(1.3)
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
\u2014
\u2014
0.5
(4.2)
\u2014
(0.2)
\u2014
\u2014
(3.9)
and 14c)
Exchange
(2.9)
(0.8)
0.9
1.6
\u2014
\u2014
\u2014
0.1
1.1
\u2014
differences
31 December
29.0
15.4
(17.6)
(36.8)
7.1
(1.0)
(0.1)
(157.5)
(23.3)
(184.8)
2023
Other temporary differences include amounts such as provisions and accruals which, under certain tax laws, are only allowable when
expended.
The movement in deferred tax (assets)/liabilities during the previous year was as follows:
Temporary Share-based
differences payment and Retirement Onerous Derivative Other
on assets/ employee benefit contract financial Tax temporary
intangibles benefits schemes provisions instruments losses
differences
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2022
19.9
(34.5)
36.2
(0.8)
\u2014
(166.0)
(28.8)
(174.0)
Credited to income
statement (note
1.7
(0.5)
0.2
0.1
\u2014
0.8
(1.7)
0.6
14a)
R&D expenditure
credit transferred to
current tax
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
0.7
0.7
Arising on
acquisition of a
subsidiary
5.5
\u2014
0.1
\u2014
\u2014
(0.1)
\u2014
5.5
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
(1.2)
(25.1)
\u2014
0.1
\u2014
\u2014
(26.2)
and 14c)
Exchange
5.7
(1.8)
(0.2)
(0.1)
\u2014
(0.3)
(0.3)
3.0
differences
31 December 2022
32.8
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
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:
2023
2022
\u00a3
\u00a3
Deferred tax liabilities
50.9
53.8
Deferred tax assets
(235.7)
(244.2)
(184.8)
(190.4)
As at the balance sheet date, the UK has a potential deferred tax asset of \u00a3238.4m (2022: \u00a3253.6m) available for offset against future
profits. A UK deferred tax asset has currently been recognised of \u00a3179.9m (2022: \u00a3186.9m). Recognition has been based on the
improved performance in the underlying UK business indicating a sustained return to profitability which will enable accumulated tax
losses within the UK to be utilised. The return to profitability is as a result of onerous contracts ending and new profitable long-term
contracts being entered into, as well as a significant reduction in exceptional restructuring spend following the strategy review in
2015, which also reduced the level of overhead spend within the UK business. No deferred tax asset has been recognised in respect
of the remaining asset (net \u00a358.5m) 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, as revenue losses made before April 2017 are more restricted in their use. On 24 May 2021,
legislation which increases the UK tax rate from 19% to 25% from April 2023 was substantively enacted. These measures increase
the Group\u2019s future current tax charge accordingly. The deferred tax balance at 31 December 2023 has been calculated reflecting
the increased rate of 25%.
Outside of the UK, there is a further \u00a320.5m (2022: \u00a339.5m) of deferred tax assets which have not been recognised. \u00a319.8m
(2022: \u00a338.8m) 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 will pay tax
from January 2024. The Group continues to work with local advisers to ascertain the implications on filing requirements and tax
payment, however, current expectations are that the introduction of this new tax will not have a material impact on the Group\u2019s 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 to bring this framework into UK law from
January 2024. Work undertaken to date suggests that the introduction of this minimum tax will also 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 \u00a37.0m (2022: \u00a31.6m) expire within 5 years, losses of \u00a345.7m (2022: \u00a34.1m) expire within 6-10 years, losses of \u00a34.8m (2022:
\u00a311.8m) expire within 20 years and losses of \u00a3887.7m (2022: \u00a31,072.6m) may be carried forward indefinitely.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-536": { "value": "15. 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:
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
At 1 January \u2013 asset
(190.4)
(174.0)
Income statement charge/(credit)
10.8
0.6
R&D expenditure credit transferred to current tax
\u2014
0.7
Items recognised in equity and in other comprehensive income
(3.9)
(26.2)
Arising on acquisition
(1.3)
5.5
Exchange differences
\u2014
3.0
At 31 December \u2013 asset
(184.8)
(190.4)
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2023
32.8
\u2014
\u2014
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
IFRS 16
0.8
18.6
(22.1)
\u2014
\u2014
\u2014
\u2014
\u2014
2.7
\u2014
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)
Charged/(credited)
to income
(0.4)
(2.4)
3.6
(0.9)
0.1
(0.2)
\u2014
8.0
3.0
10.8
statement (note
14a)
Arising on
acquisition of a
subsidiary
(1.3)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(1.3)
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
\u2014
\u2014
0.5
(4.2)
\u2014
(0.2)
\u2014
\u2014
(3.9)
and 14c)
Exchange
(2.9)
(0.8)
0.9
1.6
\u2014
\u2014
\u2014
0.1
1.1
\u2014
differences
31 December
29.0
15.4
(17.6)
(36.8)
7.1
(1.0)
(0.1)
(157.5)
(23.3)
(184.8)
2023
Other temporary differences include amounts such as provisions and accruals which, under certain tax laws, are only allowable when expended. The movement in deferred tax (assets)/liabilities during the previous year was as follows:
Temporary Share-based
differences payment and Retirement Onerous Derivative Other
on assets/ employee benefit contract financial Tax temporary
intangibles benefits schemes provisions instruments losses
differences
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2022
19.9
(34.5)
36.2
(0.8)
\u2014
(166.0)
(28.8)
(174.0)
Credited to income
statement (note
1.7
(0.5)
0.2
0.1
\u2014
0.8
(1.7)
0.6
14a)
R&D expenditure
credit transferred to
current tax
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
0.7
0.7
Arising on
acquisition of a
subsidiary
5.5
\u2014
0.1
\u2014
\u2014
(0.1)
\u2014
5.5
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
(1.2)
(25.1)
\u2014
0.1
\u2014
\u2014
(26.2)
and 14c)
Exchange
5.7
(1.8)
(0.2)
(0.1)
\u2014
(0.3)
(0.3)
3.0
differences
31 December 2022
32.8
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
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:
2023
2022
\u00a3
\u00a3
Deferred tax liabilities
50.9
53.8
Deferred tax assets
(235.7)
(244.2)
(184.8)
(190.4)
As at the balance sheet date, the UK has a potential deferred tax asset of \u00a3238.4m (2022: \u00a3253.6m) available for offset against future profits. A UK deferred tax asset has currently been recognised of \u00a3179.9m (2022: \u00a3186.9m). Recognition has been based on the improved performance in the underlying UK business indicating a sustained return to profitability which will enable accumulated tax losses within the UK to be utilised. The return to profitability is as a result of onerous contracts ending and new profitable long-term contracts being entered into, as well as a significant reduction in exceptional restructuring spend following the strategy review in 2015, which also reduced the level of overhead spend within the UK business. No deferred tax asset has been recognised in respect of the remaining asset (net \u00a358.5m) 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, as revenue losses made before April 2017 are more restricted in their use. On 24 May 2021, legislation which increases the UK tax rate from 19% to 25% from April 2023 was substantively enacted. These measures increase the Group\u2019s future current tax charge accordingly. The deferred tax balance at 31 December 2023 has been calculated reflecting the increased rate of 25%. Outside of the UK, there is a further \u00a320.5m (2022: \u00a339.5m) of deferred tax assets which have not been recognised. \u00a319.8m (2022: \u00a338.8m) 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 will pay tax from January 2024. The Group continues to work with local advisers to ascertain the implications on filing requirements and tax payment, however, current expectations are that the introduction of this new tax will not have a material impact on the Group\u2019s 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 to bring this framework into UK law from January 2024. Work undertaken to date suggests that the introduction of this minimum tax will also 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 \u00a37.0m (2022: \u00a31.6m) expire within 5 years, losses of \u00a345.7m (2022: \u00a34.1m) expire within 6-10 years, losses of \u00a34.8m (2022: \u00a311.8m) expire within 20 years and losses of \u00a3887.7m (2022: \u00a31,072.6m) may be carried forward indefinitely. 23. Contract liabilities, trade and other payables
2023
2022
Contract liabilities: Current
\u00a3m
\u00a3m
Deferred income
35.8
60.5
2023
2022
Contract liabilities: Non-current
\u00a3m
\u00a3m
Deferred income
59.3
36.3
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 2022 which did not unwind during the year. Total trade and other payables held by the Group at 31 December 2023 amount to \u00a3567.2m (2022: \u00a3629.3m).
2023
2022
Trade and other payables: Current
\u00a3m
\u00a3m
Trade payables
99.3
108.3
Contingent consideration payable
\u2014
11.2
Other payables
140.0
166.2
Accruals
318.7
337.1
558.0
622.8
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 20 days (2022: 21 days).
2023
2022
Trade and other payables: Non-current
\u00a3m
\u00a3m
Other payables
9.2
6.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-531": { "value": "15. 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:
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
At 1 January \u2013 asset
(190.4)
(174.0)
Income statement charge/(credit)
10.8
0.6
R&D expenditure credit transferred to current tax
\u2014
0.7
Items recognised in equity and in other comprehensive income
(3.9)
(26.2)
Arising on acquisition
(1.3)
5.5
Exchange differences
\u2014
3.0
At 31 December \u2013 asset
(184.8)
(190.4)
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2023
32.8
\u2014
\u2014
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
IFRS 16
0.8
18.6
(22.1)
\u2014
\u2014
\u2014
\u2014
\u2014
2.7
\u2014
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)
Charged/(credited)
to income
(0.4)
(2.4)
3.6
(0.9)
0.1
(0.2)
\u2014
8.0
3.0
10.8
statement (note
14a)
Arising on
acquisition of a
subsidiary
(1.3)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(1.3)
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
\u2014
\u2014
0.5
(4.2)
\u2014
(0.2)
\u2014
\u2014
(3.9)
and 14c)
Exchange
(2.9)
(0.8)
0.9
1.6
\u2014
\u2014
\u2014
0.1
1.1
\u2014
differences
31 December
29.0
15.4
(17.6)
(36.8)
7.1
(1.0)
(0.1)
(157.5)
(23.3)
(184.8)
2023
Other temporary differences include amounts such as provisions and accruals which, under certain tax laws, are only allowable when expended. The movement in deferred tax (assets)/liabilities during the previous year was as follows:
Temporary Share-based
differences payment and Retirement Onerous Derivative Other
on assets/ employee benefit contract financial Tax temporary
intangibles benefits schemes provisions instruments losses
differences
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2022
19.9
(34.5)
36.2
(0.8)
\u2014
(166.0)
(28.8)
(174.0)
Credited to income
statement (note
1.7
(0.5)
0.2
0.1
\u2014
0.8
(1.7)
0.6
14a)
R&D expenditure
credit transferred to
current tax
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
0.7
0.7
Arising on
acquisition of a
subsidiary
5.5
\u2014
0.1
\u2014
\u2014
(0.1)
\u2014
5.5
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
(1.2)
(25.1)
\u2014
0.1
\u2014
\u2014
(26.2)
and 14c)
Exchange
5.7
(1.8)
(0.2)
(0.1)
\u2014
(0.3)
(0.3)
3.0
differences
31 December 2022
32.8
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
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:
2023
2022
\u00a3
\u00a3
Deferred tax liabilities
50.9
53.8
Deferred tax assets
(235.7)
(244.2)
(184.8)
(190.4)
As at the balance sheet date, the UK has a potential deferred tax asset of \u00a3238.4m (2022: \u00a3253.6m) available for offset against future profits. A UK deferred tax asset has currently been recognised of \u00a3179.9m (2022: \u00a3186.9m). Recognition has been based on the improved performance in the underlying UK business indicating a sustained return to profitability which will enable accumulated tax losses within the UK to be utilised. The return to profitability is as a result of onerous contracts ending and new profitable long-term contracts being entered into, as well as a significant reduction in exceptional restructuring spend following the strategy review in 2015, which also reduced the level of overhead spend within the UK business. No deferred tax asset has been recognised in respect of the remaining asset (net \u00a358.5m) 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, as revenue losses made before April 2017 are more restricted in their use. On 24 May 2021, legislation which increases the UK tax rate from 19% to 25% from April 2023 was substantively enacted. These measures increase the Group\u2019s future current tax charge accordingly. The deferred tax balance at 31 December 2023 has been calculated reflecting the increased rate of 25%. Outside of the UK, there is a further \u00a320.5m (2022: \u00a339.5m) of deferred tax assets which have not been recognised. \u00a319.8m (2022: \u00a338.8m) 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 will pay tax from January 2024. The Group continues to work with local advisers to ascertain the implications on filing requirements and tax payment, however, current expectations are that the introduction of this new tax will not have a material impact on the Group\u2019s 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 to bring this framework into UK law from January 2024. Work undertaken to date suggests that the introduction of this minimum tax will also 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 \u00a37.0m (2022: \u00a31.6m) expire within 5 years, losses of \u00a345.7m (2022: \u00a34.1m) expire within 6-10 years, losses of \u00a34.8m (2022: \u00a311.8m) expire within 20 years and losses of \u00a3887.7m (2022: \u00a31,072.6m) may be carried forward indefinitely. 21. Contract assets, trade and other receivables
2023
2022
Contract assets: Current
\u00a3m
\u00a3m
Accrued income and other unbilled receivables
287.6
334.4
Capitalised bid costs
2.1
2.3
Capitalised mobilisation and phase in costs
5.6
7.3
Other contract assets
1.3
1.0
296.6
345.0
The Group\u2019s Consolidated Balance Sheet includes capitalised bid and phase-in costs that are realised as a 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:
2023
2022
Capitalised other contract assets, bid and phase-in costs
\u00a3m
\u00a3m
At 1 January
10.6
12.5
Additions
0.8
0.8
Amortisation
(2.2)
(3.1)
Exchange differences
(0.2)
0.4
At 31 December
9.0
10.6
Total trade and other receivables held by the Group at 31 December 2023 amount to \u00a3343.8m (2022: \u00a3390.7m).
2023
2022
Trade and other receivables: Non-current
\u00a3m
\u00a3m
Prepayments
0.4
1.3
Other receivables
14.4
14.8
14.8
16.1
Other non-current receivables include long-term employee compensation plans, advances and other non-trade receivables.
2023
2022
Trade and other receivables: Current
\u00a3m
\u00a3m
Trade receivables
219.1
266.8
Prepayments
55.2
63.8
Amounts owed by joint ventures and associates
1.1
3.1
Other receivables
53.6
40.9
329.0
374.6
Other receivables includes cash transferred to purchase shares for the Employee Share Ownership Trust where the shares are yet to be received, and advanced deposits to suppliers. 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 16 days (2022: 22 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\u2019s customers have a sovereign credit rating as a result of being government organisations. Of the trade receivables balance at the end of the year, \u00a343.5m is due from agencies of the UK Government, the Group\u2019s largest customer (2022: \u00a355.8m); \u00a343.6m from the Australian Government (2022: \u00a365.5m); \u00a335.7m from the US Government (2022: \u00a333.1m); and \u00a315.2m from the Government of the United Arab Emirates (2022: \u00a318.3m). 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. 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 was \u00a32.8m as of 31 December 2023 (2022: \u00a33.3m). An Expected Credit Loss (ECL) is recognised against contract assets only when it 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 2023 was \u00a3nil (2022: \u00a3nil).
2023
2022
Ageing of trade receivables
\u00a3m
\u00a3m
Not due
168.6
202.1
Overdue by less than 30 days
31.3
31.8
Overdue by between 30 and 60 days
11.0
6.2
Overdue by more than 60 days
11.0
30.0
Allowance for doubtful debts
(2.8)
(3.3)
219.1
266.8
Of the total overdue trade receivable balance, 61% (2022: 63%) relates to the Group\u2019s four major governmental customers (being the governments of the UK, US, Australia and the United Arab Emirates).
2023
2022
Movements on the Group allowance for doubtful debts
\u00a3m
\u00a3m
At 1 January
3.3
4.4
Arising on acquisition
\u2014
1.3
Net charges and releases to income statement
(0.4)
(0.4)
Utilised
\u2014
(2.3)
Exchange differences
(0.1)
0.3
At 31 December
2.8
3.3
Included in the current other receivables balance is a further \u00a31.2m (2022: \u00a31.5m) due from agencies of the UK Government.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-511": { "value": "15. 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:
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
At 1 January \u2013 asset
(190.4)
(174.0)
Income statement charge/(credit)
10.8
0.6
R&D expenditure credit transferred to current tax
\u2014
0.7
Items recognised in equity and in other comprehensive income
(3.9)
(26.2)
Arising on acquisition
(1.3)
5.5
Exchange differences
\u2014
3.0
At 31 December \u2013 asset
(184.8)
(190.4)
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2023
32.8
\u2014
\u2014
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
IFRS 16
0.8
18.6
(22.1)
\u2014
\u2014
\u2014
\u2014
\u2014
2.7
\u2014
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)
Charged/(credited)
to income
(0.4)
(2.4)
3.6
(0.9)
0.1
(0.2)
\u2014
8.0
3.0
10.8
statement (note
14a)
Arising on
acquisition of a
subsidiary
(1.3)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(1.3)
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
\u2014
\u2014
0.5
(4.2)
\u2014
(0.2)
\u2014
\u2014
(3.9)
and 14c)
Exchange
(2.9)
(0.8)
0.9
1.6
\u2014
\u2014
\u2014
0.1
1.1
\u2014
differences
31 December
29.0
15.4
(17.6)
(36.8)
7.1
(1.0)
(0.1)
(157.5)
(23.3)
(184.8)
2023
Other temporary differences include amounts such as provisions and accruals which, under certain tax laws, are only allowable when expended. The movement in deferred tax (assets)/liabilities during the previous year was as follows:
Temporary Share-based
differences payment and Retirement Onerous Derivative Other
on assets/ employee benefit contract financial Tax temporary
intangibles benefits schemes provisions instruments losses
differences
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2022
19.9
(34.5)
36.2
(0.8)
\u2014
(166.0)
(28.8)
(174.0)
Credited to income
statement (note
1.7
(0.5)
0.2
0.1
\u2014
0.8
(1.7)
0.6
14a)
R&D expenditure
credit transferred to
current tax
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
0.7
0.7
Arising on
acquisition of a
subsidiary
5.5
\u2014
0.1
\u2014
\u2014
(0.1)
\u2014
5.5
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
(1.2)
(25.1)
\u2014
0.1
\u2014
\u2014
(26.2)
and 14c)
Exchange
5.7
(1.8)
(0.2)
(0.1)
\u2014
(0.3)
(0.3)
3.0
differences
31 December 2022
32.8
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
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:
2023
2022
\u00a3
\u00a3
Deferred tax liabilities
50.9
53.8
Deferred tax assets
(235.7)
(244.2)
(184.8)
(190.4)
As at the balance sheet date, the UK has a potential deferred tax asset of \u00a3238.4m (2022: \u00a3253.6m) available for offset against future profits. A UK deferred tax asset has currently been recognised of \u00a3179.9m (2022: \u00a3186.9m). Recognition has been based on the improved performance in the underlying UK business indicating a sustained return to profitability which will enable accumulated tax losses within the UK to be utilised. The return to profitability is as a result of onerous contracts ending and new profitable long-term contracts being entered into, as well as a significant reduction in exceptional restructuring spend following the strategy review in 2015, which also reduced the level of overhead spend within the UK business. No deferred tax asset has been recognised in respect of the remaining asset (net \u00a358.5m) 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, as revenue losses made before April 2017 are more restricted in their use. On 24 May 2021, legislation which increases the UK tax rate from 19% to 25% from April 2023 was substantively enacted. These measures increase the Group\u2019s future current tax charge accordingly. The deferred tax balance at 31 December 2023 has been calculated reflecting the increased rate of 25%. Outside of the UK, there is a further \u00a320.5m (2022: \u00a339.5m) of deferred tax assets which have not been recognised. \u00a319.8m (2022: \u00a338.8m) 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 will pay tax from January 2024. The Group continues to work with local advisers to ascertain the implications on filing requirements and tax payment, however, current expectations are that the introduction of this new tax will not have a material impact on the Group\u2019s 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 to bring this framework into UK law from January 2024. Work undertaken to date suggests that the introduction of this minimum tax will also 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 \u00a37.0m (2022: \u00a31.6m) expire within 5 years, losses of \u00a345.7m (2022: \u00a34.1m) expire within 6-10 years, losses of \u00a34.8m (2022: \u00a311.8m) expire within 20 years and losses of \u00a3887.7m (2022: \u00a31,072.6m) may be carried forward indefinitely. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-480": { "value": "15. 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:
2023
2022
Year ended 31 December
\u00a3m
\u00a3m
At 1 January \u2013 asset
(190.4)
(174.0)
Income statement charge/(credit)
10.8
0.6
R&D expenditure credit transferred to current tax
\u2014
0.7
Items recognised in equity and in other comprehensive income
(3.9)
(26.2)
Arising on acquisition
(1.3)
5.5
Exchange differences
\u2014
3.0
At 31 December \u2013 asset
(184.8)
(190.4)
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2023
32.8
\u2014
\u2014
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
IFRS 16
0.8
18.6
(22.1)
\u2014
\u2014
\u2014
\u2014
\u2014
2.7
\u2014
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)
Charged/(credited)
to income
(0.4)
(2.4)
3.6
(0.9)
0.1
(0.2)
\u2014
8.0
3.0
10.8
statement (note
14a)
Arising on
acquisition of a
subsidiary
(1.3)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
(1.3)
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
\u2014
\u2014
0.5
(4.2)
\u2014
(0.2)
\u2014
\u2014
(3.9)
and 14c)
Exchange
(2.9)
(0.8)
0.9
1.6
\u2014
\u2014
\u2014
0.1
1.1
\u2014
differences
31 December
29.0
15.4
(17.6)
(36.8)
7.1
(1.0)
(0.1)
(157.5)
(23.3)
(184.8)
2023
Other temporary differences include amounts such as provisions and accruals which, under certain tax laws, are only allowable when expended. The movement in deferred tax (assets)/liabilities during the previous year was as follows:
Temporary Share-based
differences payment and Retirement Onerous Derivative Other
on assets/ employee benefit contract financial Tax temporary
intangibles benefits schemes provisions instruments losses
differences
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
1 January 2022
19.9
(34.5)
36.2
(0.8)
\u2014
(166.0)
(28.8)
(174.0)
Credited to income
statement (note
1.7
(0.5)
0.2
0.1
\u2014
0.8
(1.7)
0.6
14a)
R&D expenditure
credit transferred to
current tax
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
0.7
0.7
Arising on
acquisition of a
subsidiary
5.5
\u2014
0.1
\u2014
\u2014
(0.1)
\u2014
5.5
Items recognised in
equity and in other
comprehensive
income (notes 14b
\u2014
(1.2)
(25.1)
\u2014
0.1
\u2014
\u2014
(26.2)
and 14c)
Exchange
5.7
(1.8)
(0.2)
(0.1)
\u2014
(0.3)
(0.3)
3.0
differences
31 December 2022
32.8
(38.0)
11.2
(0.8)
0.1
(165.6)
(30.1)
(190.4)
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:
2023
2022
\u00a3
\u00a3
Deferred tax liabilities
50.9
53.8
Deferred tax assets
(235.7)
(244.2)
(184.8)
(190.4)
As at the balance sheet date, the UK has a potential deferred tax asset of \u00a3238.4m (2022: \u00a3253.6m) available for offset against future profits. A UK deferred tax asset has currently been recognised of \u00a3179.9m (2022: \u00a3186.9m). Recognition has been based on the improved performance in the underlying UK business indicating a sustained return to profitability which will enable accumulated tax losses within the UK to be utilised. The return to profitability is as a result of onerous contracts ending and new profitable long-term contracts being entered into, as well as a significant reduction in exceptional restructuring spend following the strategy review in 2015, which also reduced the level of overhead spend within the UK business. No deferred tax asset has been recognised in respect of the remaining asset (net \u00a358.5m) 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, as revenue losses made before April 2017 are more restricted in their use. On 24 May 2021, legislation which increases the UK tax rate from 19% to 25% from April 2023 was substantively enacted. These measures increase the Group\u2019s future current tax charge accordingly. The deferred tax balance at 31 December 2023 has been calculated reflecting the increased rate of 25%. Outside of the UK, there is a further \u00a320.5m (2022: \u00a339.5m) of deferred tax assets which have not been recognised. \u00a319.8m (2022: \u00a338.8m) 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 will pay tax from January 2024. The Group continues to work with local advisers to ascertain the implications on filing requirements and tax payment, however, current expectations are that the introduction of this new tax will not have a material impact on the Group\u2019s 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 to bring this framework into UK law from January 2024. Work undertaken to date suggests that the introduction of this minimum tax will also 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 \u00a37.0m (2022: \u00a31.6m) expire within 5 years, losses of \u00a345.7m (2022: \u00a34.1m) expire within 6-10 years, losses of \u00a34.8m (2022: \u00a311.8m) expire within 20 years and losses of \u00a3887.7m (2022: \u00a31,072.6m) may be carried forward indefinitely. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-439": { "value": "
16. 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:
2023
2022
Number of shares
millions
millions
Weighted average number of ordinary shares for the purpose of basic EPS
1,110.2
1,192.2
Effect of dilutive potential ordinary shares: Shares under award
18.4
22.6
Weighted average number of ordinary shares for the purpose of diluted EPS
1,128.6
1,214.8
Earnings per share
Per share Per share
Earnings
amount
Earnings
amount
2023
2023
2022
2022
Basic EPS
\u00a3m
pence
\u00a3m
pence
Earnings for the purpose of basic EPS
202.4
18.23
155.4
13.03
Effect of dilutive potential ordinary shares
\u2014
(0.30)
\u2014
(0.24)
Diluted EPS
202.4
17.93
155.4
12.79
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-440": { "value": "
17. Goodwill
Accumulated
impairment
Cost
losses
Carrying amount
\u00a3m
\u00a3m
\u00a3m
1 January 2022
1,180.2
(327.5)
852.7
Acquisitions
20.9
\u2014
20.9
Exchange differences
97.8
(26.4)
71.4
At 31 December 2022
1,298.9
(353.9)
945.0
Acquisitions - revision of provisional fair value estimates
3.1
\u2014
3.1
Disposals
(0.1)
\u2014
(0.1)
Exchange differences
(55.1)
13.8
(41.3)
At 31 December 2023
1,246.8
(340.1)
906.7
Movements in the balance since the prior year end can be seen as follows:
Goodwill Acquisitions - Goodwill Headroom on Headroom on
balance 1 revision of Exchange balance 31 impairment impairment
January provisional fair differences December analysis analysis
2023
value estimates
Disposals
2023 2023 2023 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK & Europe
203.8
3.1
\u2014
(0.3)
206.6
1,051.1
811.1
North America
592.2
\u2014
\u2014
(32.7)
559.5
644.3
360.9
Asia Pacific
137.8
\u2014
\u2014
(7.6)
130.2
110.0
281.0
Middle East
11.2
\u2014
(0.1)
(0.7)
10.4
285.5
119.5
945.0
3.1
(0.1)
(41.3)
906.7
2,090.9
1,572.5
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, there is sufficient headroom available which is consistent with 2022.
The key quantifiable assumptions applied in the impairment review are set out below:
Terminal Terminal
Discount Discount growth growth
rate rate rates rates
% % % %
2023
2022
2023
2022
UK & Europe
10.2
10.3
2.0
2.0
North America
11.4
12.1
2.3
2.3
Asia Pacific
12.3
13.4
2.2
2.2
Middle East
12.0
13.5
2.5
1.2
Discount rate
Pre-tax discount rates derived from the Group\u2019s 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.
Discount rates used in 2023 have decreased compared with 2022. This is due to a reduction in risk-free rates following significant
market volatility experienced in late 2022 and the adoption of a more relevant risk-free rate for the Middle East CGU in 2023.
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 2022.
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\u2019s 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 a level of judgement is applied to expected
changes in both. 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 8, Management considers 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\u2019s transport contracts. Currently, no adjustment to existing contracts is required, although Management will continue to
monitor the potential impact of environmental risks.
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.
Sensitivity analysis has been performed by applying a 1% movement in discount rates and a 1% movement in terminal growth rates
which are considered to be reasonably possible. Both individually and combined, the impact of these changes in key assumptions
does not lead to an impairment in any CGU (2022: no impairment in any CGU).
A sensitivity analysis has been performed in respect of short-term growth rates within the Board-approved five-year plan. The
sensitivity applied has been to assume no growth to cash flows outside of the two year budget period of the five-year plan. No
impairment results from these changes, even when combined with the additional 1% increase in discount rates and 1% reduction in
terminal growth rates, with the exception of the Asia Pacific CGU (2022: Asia Pacific CGU) for which additional sensitivities have
been performed below. Given the visibility of pipeline available, a no growth scenario is unlikely and would require win and rebid
rates to fall below the five-year averages seen within the business. In order to deliver revenue growth, amongst other things, the
Group continues to invest in bidding activity in order to ensure it remains competitive within the markets in which it operates.
Management has also considered the sensitivity of cash flows in the terminal year for all CGUs and has determined that a reduction
in cash flows of up to 10% in the final year of the plan is reasonably possible. No impairment results from this scenario even when
combined with an additional 1% increase in discount rates and a 1% reduction in terminal growth rates though this is not deemed
reasonably possible. Cash flows in the terminal year would need to reduce by 91% in the Middle East (\u00a332.4m), 32% in Asia Pacific
(\u00a39.8m), 68% in North America (\u00a356.5m) and 79% in UK & Europe (\u00a3102.3m), before an impairment would need to be recognised.
Asia Pacific CGU
The risk adjusted Board-approved five-year plan for the Asia Pacific Division supports the headroom held against the CGU. The key
judgements in respect of the divisional plan are as follows:
\u2013 Win rates by value improve from the current levels experienced by the Division in 2023 of 2% for new business and 24% for
rebids, to the five-year average which are 15% for new business and 63% for rebids.
\u2013 The immigration rebid, for which the tender outcome is expected in the first half of 2024, delivers cash flows beyond 2024.
\u2013 There is no significant deterioration within the outsourcing market in the region.
Having performed a review of the market, made local management changes and identified areas where the business could be more
efficient, the Directors believe that sufficient opportunities exist to deliver the five-year plan and that win rates can be improved.
Whilst tangible cost savings are expected in the short term, it may take a longer period for an improvement in pipeline and win rates
to be observed. In addition, the Directors believe on balance that the immigration contract is likely to be retained given the Group\u2019s
experience in delivering the existing contract, and the general rebid rates it achieves. However, a loss would impact the Division\u2019s
ability to deliver the five-year plan if no opportunities are secured to replace the cash flows delivered by the contract.
In respect of scenarios within the Asia Pacific CGU:
a. Whilst the base case scenario, which assumes win rates returning to the long-term five-year average outlined above,
results in no impairment, the Directors note that sustained win rates at the level observed over the last year combined with
the inability to identify sufficient credible opportunities could lead to an impairment of the entire goodwill balance of the
CGU. Win rates by value would independently have to reduce to 11% for new business and 46% for rebids over the five-
year period to result in no headroom.
b. An unsuccessful outcome in respect of the immigration rebid could result in an impairment in isolation. However, given
the scale of this contract to the CGU, a fundamental restructuring of the Division may be required to improve profitability
and would mitigate the risk of impairment.
As noted above, win rates not improving, or the loss of the immigration rebid, would require a review of the efficiency of the Asia
Pacific Division and may result in a review of the overhead and support structures in place to ensure that they are appropriate for the
scale of business and opportunities available . Any costs or benefits of restructuring are not included in the five-year cash flows.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-481": { "value": "17. Goodwill
Accumulated
impairment
Cost
losses
Carrying amount
\u00a3m
\u00a3m
\u00a3m
1 January 2022
1,180.2
(327.5)
852.7
Acquisitions
20.9
\u2014
20.9
Exchange differences
97.8
(26.4)
71.4
At 31 December 2022
1,298.9
(353.9)
945.0
Acquisitions - revision of provisional fair value estimates
3.1
\u2014
3.1
Disposals
(0.1)
\u2014
(0.1)
Exchange differences
(55.1)
13.8
(41.3)
At 31 December 2023
1,246.8
(340.1)
906.7
Movements in the balance since the prior year end can be seen as follows:
Goodwill Acquisitions - Goodwill Headroom on Headroom on
balance 1 revision of Exchange balance 31 impairment impairment
January provisional fair differences December analysis analysis
2023
value estimates
Disposals
2023 2023 2023 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
UK & Europe
203.8
3.1
\u2014
(0.3)
206.6
1,051.1
811.1
North America
592.2
\u2014
\u2014
(32.7)
559.5
644.3
360.9
Asia Pacific
137.8
\u2014
\u2014
(7.6)
130.2
110.0
281.0
Middle East
11.2
\u2014
(0.1)
(0.7)
10.4
285.5
119.5
945.0
3.1
(0.1)
(41.3)
906.7
2,090.9
1,572.5
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, there is sufficient headroom available which is consistent with 2022. The key quantifiable assumptions applied in the impairment review are set out below:
Terminal Terminal
Discount Discount growth growth
rate rate rates rates
% % % %
2023
2022
2023
2022
UK & Europe
10.2
10.3
2.0
2.0
North America
11.4
12.1
2.3
2.3
Asia Pacific
12.3
13.4
2.2
2.2
Middle East
12.0
13.5
2.5
1.2
Discount rate Pre-tax discount rates derived from the Group\u2019s 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. Discount rates used in 2023 have decreased compared with 2022. This is due to a reduction in risk-free rates following significant market volatility experienced in late 2022 and the adoption of a more relevant risk-free rate for the Middle East CGU in 2023. 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 2022. 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\u2019s 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 a level of judgement is applied to expected changes in both. 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 8, Management considers 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\u2019s transport contracts. Currently, no adjustment to existing contracts is required, although Management will continue to monitor the potential impact of environmental risks. 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. Sensitivity analysis has been performed by applying a 1% movement in discount rates and a 1% movement in terminal growth rates which are considered to be reasonably possible. Both individually and combined, the impact of these changes in key assumptions does not lead to an impairment in any CGU (2022: no impairment in any CGU). A sensitivity analysis has been performed in respect of short-term growth rates within the Board-approved five-year plan. The sensitivity applied has been to assume no growth to cash flows outside of the two year budget period of the five-year plan. No impairment results from these changes, even when combined with the additional 1% increase in discount rates and 1% reduction in terminal growth rates, with the exception of the Asia Pacific CGU (2022: Asia Pacific CGU) for which additional sensitivities have been performed below. Given the visibility of pipeline available, a no growth scenario is unlikely and would require win and rebid rates to fall below the five-year averages seen within the business. In order to deliver revenue growth, amongst other things, the Group continues to invest in bidding activity in order to ensure it remains competitive within the markets in which it operates. Management has also considered the sensitivity of cash flows in the terminal year for all CGUs and has determined that a reduction in cash flows of up to 10% in the final year of the plan is reasonably possible. No impairment results from this scenario even when combined with an additional 1% increase in discount rates and a 1% reduction in terminal growth rates though this is not deemed reasonably possible. Cash flows in the terminal year would need to reduce by 91% in the Middle East (\u00a332.4m), 32% in Asia Pacific (\u00a39.8m), 68% in North America (\u00a356.5m) and 79% in UK & Europe (\u00a3102.3m), before an impairment would need to be recognised. Asia Pacific CGU The risk adjusted Board-approved five-year plan for the Asia Pacific Division supports the headroom held against the CGU. The key judgements in respect of the divisional plan are as follows: \u2013 Win rates by value improve from the current levels experienced by the Division in 2023 of 2% for new business and 24% for rebids, to the five-year average which are 15% for new business and 63% for rebids. \u2013 The immigration rebid, for which the tender outcome is expected in the first half of 2024, delivers cash flows beyond 2024. \u2013 There is no significant deterioration within the outsourcing market in the region. Having performed a review of the market, made local management changes and identified areas where the business could be more efficient, the Directors believe that sufficient opportunities exist to deliver the five-year plan and that win rates can be improved. Whilst tangible cost savings are expected in the short term, it may take a longer period for an improvement in pipeline and win rates to be observed. In addition, the Directors believe on balance that the immigration contract is likely to be retained given the Group\u2019s experience in delivering the existing contract, and the general rebid rates it achieves. However, a loss would impact the Division\u2019s ability to deliver the five-year plan if no opportunities are secured to replace the cash flows delivered by the contract. In respect of scenarios within the Asia Pacific CGU: a. Whilst the base case scenario, which assumes win rates returning to the long-term five-year average outlined above, results in no impairment, the Directors note that sustained win rates at the level observed over the last year combined with the inability to identify sufficient credible opportunities could lead to an impairment of the entire goodwill balance of the CGU. Win rates by value would independently have to reduce to 11% for new business and 46% for rebids over the five- year period to result in no headroom. b. An unsuccessful outcome in respect of the immigration rebid could result in an impairment in isolation. However, given the scale of this contract to the CGU, a fundamental restructuring of the Division may be required to improve profitability and would mitigate the risk of impairment. As noted above, win rates not improving, or the loss of the immigration rebid, would require a review of the efficiency of the Asia Pacific Division and may result in a review of the overhead and support structures in place to ensure that they are appropriate for the scale of business and opportunities available . Any costs or benefits of restructuring are not included in the five-year cash flows. 18. Other intangible assets
Acquisition
related
Other
Internally
generated
Customer development
relationships
Software and IT
expenditure
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 January 2023
219.5
137.5
54.4
411.4
Acquisitions - revision of provisional fair value estimates
(6.9)
\u2014
\u2014
(6.9)
Additions - internal development
\u2014
\u2014
3.4
3.4
Additions - external
\u2014
5.4
\u2014
5.4
Disposals
\u2014
(7.1)
\u2014
(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
\u2014
8.2
Amortisation charge - internal development
\u2014
3.3
0.6
3.9
Amortisation charge - external
22.8
3.8
\u2014
26.6
Disposals
\u2014
(6.5)
\u2014
(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
Acquisition
related
Other
Internally
generated
Customer development
relationships
Software
expenditure
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 January 2022
176.4
128.8
55.8
361.0
Arising on acquisition
24.9
0.4
1.1
26.4
Additions - internal development
\u2014
0.4
0.8
1.2
Additions - external
\u2014
5.8
\u2014
5.8
Disposals
\u2014
(2.0)
(4.2)
(6.2)
Exchange differences
18.2
4.1
0.9
23.2
At 31 December 2022
219.5
137.5
54.4
411.4
Accumulated amortisation and impairment
At 1 January 2022
60.3
100.9
55.8
217.0
Impairment charge
\u2014
0.1
\u2014
0.1
Amortisation charge - internal development
\u2014
6.4
0.3
6.7
Amortisation charge - external
21.6
3.3
\u2014
24.9
Disposals
\u2014
(1.6)
(4.2)
(5.8)
Exchange differences
6.6
3.0
0.9
10.5
At 31 December 2022
88.5
112.1
52.8
253.4
Net book value
At 31 December 2022
131.0
25.4
1.6
158.0
During the year ended 31 December 2023, the Group has recognised an impairment charge on customer relationships of \u00a38.1m.
The customer relationship arose on acquisition, however, the unexpected loss of key contracts and lack of visible opportunities with
the relevant customer has resulted in an impairment of the intangible asset.
The net book value of internally generated intangible assets as at 31 December 2023 was \u00a34.4m (2022: \u00a31.6m) in development
expenditure and \u00a3nil (2022: \u00a31.8m) in software and IT.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-441": { "value": "18. Other intangible assets
Acquisition
related
Other
Internally
generated
Customer development
relationships
Software and IT
expenditure
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 January 2023
219.5
137.5
54.4
411.4
Acquisitions - revision of provisional fair value estimates
(6.9)
\u2014
\u2014
(6.9)
Additions - internal development
\u2014
\u2014
3.4
3.4
Additions - external
\u2014
5.4
\u2014
5.4
Disposals
\u2014
(7.1)
\u2014
(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
\u2014
8.2
Amortisation charge - internal development
\u2014
3.3
0.6
3.9
Amortisation charge - external
22.8
3.8
\u2014
26.6
Disposals
\u2014
(6.5)
\u2014
(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
Acquisition
related
Other
Internally
generated
Customer development
relationships
Software
expenditure
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 1 January 2022
176.4
128.8
55.8
361.0
Arising on acquisition
24.9
0.4
1.1
26.4
Additions - internal development
\u2014
0.4
0.8
1.2
Additions - external
\u2014
5.8
\u2014
5.8
Disposals
\u2014
(2.0)
(4.2)
(6.2)
Exchange differences
18.2
4.1
0.9
23.2
At 31 December 2022
219.5
137.5
54.4
411.4
Accumulated amortisation and impairment
At 1 January 2022
60.3
100.9
55.8
217.0
Impairment charge
\u2014
0.1
\u2014
0.1
Amortisation charge - internal development
\u2014
6.4
0.3
6.7
Amortisation charge - external
21.6
3.3
\u2014
24.9
Disposals
\u2014
(1.6)
(4.2)
(5.8)
Exchange differences
6.6
3.0
0.9
10.5
At 31 December 2022
88.5
112.1
52.8
253.4
Net book value
At 31 December 2022
131.0
25.4
1.6
158.0
During the year ended 31 December 2023, the Group has recognised an impairment charge on customer relationships of \u00a38.1m. The customer relationship arose on acquisition, however, the unexpected loss of key contracts and lack of visible opportunities with the relevant customer has resulted in an impairment of the intangible asset. The net book value of internally generated intangible assets as at 31 December 2023 was \u00a34.4m (2022: \u00a31.6m) in development expenditure and \u00a3nil (2022: \u00a31.8m) in software and IT.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-442": { "value": "
19. Property, plant and equipment and right of use assets
Leasehold
Land & Buildings Land & Buildings Improvements Other Assets Other Assets
Owned Leased Owned Owned Leased TOTAL
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 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 from/to property,
plant & equipment
\u2014
8.2
\u2014
\u2014
(8.2)
\u2014
Disposals
(0.6)
(74.4)
(1.1)
(18.7)
(49.6)
(144.4)
Exchange differences
\u2014
(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
At 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
\u2014
1.3
Charge for the year - depreciation
\u2014
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
\u2014
(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
At 31 December 2023
1.2
403.3
10.9
32.2
37.6
485.2
1
1
2
1. Other assets include machinery, vehicles, furniture and equipment.
2. The net book value is shown on the balance sheet as \u00a344.3m of owned assets in property, plant and equipment and \u00a3440.9m of leased assets in right of
use assets.
The additions for leased land and buildings include \u00a30.9m (2022: \u00a30.8m) for dilapidation provisions and \u00a3nil (2022: \u00a3nil) for non-
cash lease incentives.
Leasehold
Land & Buildings Land & Buildings Improvements Other Assets Other Assets
Owned Leased Owned Owned Leased TOTAL
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
1 January 2022
4.1
569.6
33.7
134.9
132.3
874.6
Arising on acquisition
\u2014
4.5
\u2014
1.1
8.6
14.2
Additions
\u2014
116.2
2.6
9.8
13.6
142.2
Reclassifications from/to property,
plant & equipment
0.1
\u2014
0.5
0.6
(1.2)
\u2014
Disposals
\u2014
(28.5)
(1.8)
(11.3)
(24.3)
(65.9)
Exchange differences
0.1
11.7
2.2
4.8
3.9
22.7
At 31 December 2022
4.3
673.5
37.2
139.9
132.9
987.8
Accumulated depreciation and
impairment
1 January 2022
2.8
204.4
19.0
95.4
80.8
402.4
Charge for the year - impairment
0.2
2.0
0.2
1.9
(3.8)
0.5
Charge for the year - depreciation
0.2
96.4
4.2
16.3
22.9
140.0
Reclassifications from/to property,
plant & equipment
\u2014
\u2014
\u2014
1.1
(1.1)
\u2014
Disposals
\u2014
(15.3)
(1.8)
(11.1)
(23.5)
(51.7)
Exchange differences
0.1
6.7
1.2
3.6
2.7
14.3
At 31 December 2022
3.3
294.2
22.8
107.2
78.0
505.5
Net book value
At 31 December 2022
1.0
379.3
14.4
32.7
54.9
482.3
1
1
2
1. Other assets include machinery, vehicles, furniture and equipment.
2. The net book value is shown on the balance sheet as \u00a348.1m of owned assets in property, plant and equipment and \u00a3434.2m of leased assets in right of
use assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-482": { "value": "19. Property, plant and equipment and right of use assets
Leasehold
Land & Buildings Land & Buildings Improvements Other Assets Other Assets
Owned Leased Owned Owned Leased TOTAL
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cost
At 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 from/to property,
plant & equipment
\u2014
8.2
\u2014
\u2014
(8.2)
\u2014
Disposals
(0.6)
(74.4)
(1.1)
(18.7)
(49.6)
(144.4)
Exchange differences
\u2014
(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
At 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
\u2014
1.3
Charge for the year - depreciation
\u2014
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
\u2014
(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
At 31 December 2023
1.2
403.3
10.9
32.2
37.6
485.2
1 1 2 1. Other assets include machinery, vehicles, furniture and equipment. 2. The net book value is shown on the balance sheet as \u00a344.3m of owned assets in property, plant and equipment and \u00a3440.9m of leased assets in right of use assets. The additions for leased land and buildings include \u00a30.9m (2022: \u00a30.8m) for dilapidation provisions and \u00a3nil (2022: \u00a3nil) for non- cash lease incentives. ", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-443": { "value": "
20. Inventories
2023
2022
\u00a3m
\u00a3m
Service spares, supplies, consumables and work in progress
24.1
22.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-444": { "value": "
21. Contract assets, trade and other receivables
2023
2022
Contract assets: Current
\u00a3m
\u00a3m
Accrued income and other unbilled receivables
287.6
334.4
Capitalised bid costs
2.1
2.3
Capitalised mobilisation and phase in costs
5.6
7.3
Other contract assets
1.3
1.0
296.6
345.0
The Group\u2019s Consolidated Balance Sheet includes capitalised bid and phase-in costs that are realised as a 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:
2023
2022
Capitalised other contract assets, bid and phase-in costs
\u00a3m
\u00a3m
At 1 January
10.6
12.5
Additions
0.8
0.8
Amortisation
(2.2)
(3.1)
Exchange differences
(0.2)
0.4
At 31 December
9.0
10.6
Total trade and other receivables held by the Group at 31 December 2023 amount to \u00a3343.8m (2022: \u00a3390.7m).
2023
2022
Trade and other receivables: Non-current
\u00a3m
\u00a3m
Prepayments
0.4
1.3
Other receivables
14.4
14.8
14.8
16.1
Other non-current receivables include long-term employee compensation plans, advances and other non-trade receivables.
2023
2022
Trade and other receivables: Current
\u00a3m
\u00a3m
Trade receivables
219.1
266.8
Prepayments
55.2
63.8
Amounts owed by joint ventures and associates
1.1
3.1
Other receivables
53.6
40.9
329.0
374.6
Other receivables includes cash transferred to purchase shares for the Employee Share Ownership Trust where the shares are yet to
be received, and advanced deposits to suppliers.
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 16 days (2022: 22 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\u2019s
customers have a sovereign credit rating as a result of being government organisations. Of the trade receivables balance at the end
of the year, \u00a343.5m is due from agencies of the UK Government, the Group\u2019s largest customer (2022: \u00a355.8m); \u00a343.6m from the
Australian Government (2022: \u00a365.5m); \u00a335.7m from the US Government (2022: \u00a333.1m); and \u00a315.2m from the Government of the
United Arab Emirates (2022: \u00a318.3m). 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.
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 was \u00a32.8m as of 31 December
2023 (2022: \u00a33.3m).
An Expected Credit Loss (ECL) is recognised against contract assets only when it 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
2023 was \u00a3nil (2022: \u00a3nil).
2023
2022
Ageing of trade receivables
\u00a3m
\u00a3m
Not due
168.6
202.1
Overdue by less than 30 days
31.3
31.8
Overdue by between 30 and 60 days
11.0
6.2
Overdue by more than 60 days
11.0
30.0
Allowance for doubtful debts
(2.8)
(3.3)
219.1
266.8
Of the total overdue trade receivable balance, 61% (2022: 63%) relates to the Group\u2019s four major governmental customers (being
the governments of the UK, US, Australia and the United Arab Emirates).
2023
2022
Movements on the Group allowance for doubtful debts
\u00a3m
\u00a3m
At 1 January
3.3
4.4
Arising on acquisition
\u2014
1.3
Net charges and releases to income statement
(0.4)
(0.4)
Utilised
\u2014
(2.3)
Exchange differences
(0.1)
0.3
At 31 December
2.8
3.3
Included in the current other receivables balance is a further \u00a31.2m (2022: \u00a31.5m) due from agencies of the UK Government.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-483": { "value": "
2023
2022
Contract assets: Current
\u00a3m
\u00a3m
Accrued income and other unbilled receivables
287.6
334.4
Capitalised bid costs
2.1
2.3
Capitalised mobilisation and phase in costs
5.6
7.3
Other contract assets
1.3
1.0
296.6
345.0
2023
2022
Trade and other receivables: Current
\u00a3m
\u00a3m
Trade receivables
219.1
266.8
Prepayments
55.2
63.8
Amounts owed by joint ventures and associates
1.1
3.1
Other receivables
53.6
40.9
329.0
374.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-484": { "value": "
2023
2022
Trade and other receivables: Non-current
\u00a3m
\u00a3m
Prepayments
0.4
1.3
Other receivables
14.4
14.8
14.8
16.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-512": { "value": "
2023
2022
Trade and other receivables: Non-current
\u00a3m
\u00a3m
Prepayments
0.4
1.3
Other receivables
14.4
14.8
14.8
16.1
Other non-current receivables include long-term employee compensation plans, advances and other non-trade receivables.
2023
2022
Trade and other receivables: Current
\u00a3m
\u00a3m
Trade receivables
219.1
266.8
Prepayments
55.2
63.8
Amounts owed by joint ventures and associates
1.1
3.1
Other receivables
53.6
40.9
329.0
374.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-445": { "value": "
22. Cash and cash equivalents
Sterling
Other currencies
Total
Sterling
Other currencies
Total
2023
2023
2023
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Customer advance payments
\u2014
\u2014
\u2014
\u2014
1.4
1.4
Other cash and short-term deposits
38.2
56.2
94.4
3.5
52.3
55.8
Total cash and cash equivalents
38.2
56.2
94.4
3.5
53.7
57.2
1
2
1. Customer advance payments totalling \u00a3nil (2022: \u00a31.4m) are encumbered cash balances.
2. Restricted cash of \u00a3nil (2022: \u00a34.0m) is included within other cash and short term deposits.
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 with a maturity of three months or less from the date of acquisition.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-485": { "value": "22. Cash and cash equivalents
Sterling
Other currencies
Total
Sterling
Other currencies
Total
2023
2023
2023
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Customer advance payments
\u2014
\u2014
\u2014
\u2014
1.4
1.4
Other cash and short-term deposits
38.2
56.2
94.4
3.5
52.3
55.8
Total cash and cash equivalents
38.2
56.2
94.4
3.5
53.7
57.2
1 2 1. Customer advance payments totalling \u00a3nil (2022: \u00a31.4m) are encumbered cash balances. 2. Restricted cash of \u00a3nil (2022: \u00a34.0m) is included within other cash and short term deposits. 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 with a maturity of three months or less from the date of acquisition.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-446": { "value": "
23. Contract liabilities, trade and other payables
2023
2022
Contract liabilities: Current
\u00a3m
\u00a3m
Deferred income
35.8
60.5
2023
2022
Contract liabilities: Non-current
\u00a3m
\u00a3m
Deferred income
59.3
36.3
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 2022 which did
not unwind during the year.
Total trade and other payables held by the Group at 31 December 2023 amount to \u00a3567.2m (2022: \u00a3629.3m).
2023
2022
Trade and other payables: Current
\u00a3m
\u00a3m
Trade payables
99.3
108.3
Contingent consideration payable
\u2014
11.2
Other payables
140.0
166.2
Accruals
318.7
337.1
558.0
622.8
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 20 days (2022: 21 days).
2023
2022
Trade and other payables: Non-current
\u00a3m
\u00a3m
Other payables
9.2
6.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-486": { "value": "
2023
2022
Contract liabilities: Current
\u00a3m
\u00a3m
Deferred income
35.8
60.5
2023
2022
Trade and other payables: Current
\u00a3m
\u00a3m
Trade payables
99.3
108.3
Contingent consideration payable
\u2014
11.2
Other payables
140.0
166.2
Accruals
318.7
337.1
558.0
622.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-513": { "value": "
2023
2022
Contract liabilities: Current
\u00a3m
\u00a3m
Deferred income
35.8
60.5
2023
2022
Contract liabilities: Non-current
\u00a3m
\u00a3m
Deferred income
59.3
36.3
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 2022 which did not unwind during the year. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-487": { "value": "
2023
2022
Contract liabilities: Non-current
\u00a3m
\u00a3m
Deferred income
59.3
36.3
2023
2022
Trade and other payables: Non-current
\u00a3m
\u00a3m
Other payables
9.2
6.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-532": { "value": "Trade and other payables: Current \u00a3m \u00a3m Trade payables 99.3 108.3 Contingent consideration payable \u2014 11.2 Other payables 140.0 166.2 Accruals 318.7 337.1 558.0 622.8 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 20 days (2022: 21 days).
2023
2022
Trade and other payables: Non-current
\u00a3m
\u00a3m
Other payables
9.2
6.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-447": { "value": "
24. Leases
Management estimates that the fair value of the Group\u2019s 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 2023 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\u2019s view of the reasonably certain
lease term in line with current operational requirements.
No lease liability is recognised in respect of leases which have a lease term of less than 12 months in duration at the point of
entering into the lease, or where the purchase price of the underlying right of use asset is less than \u00a35,000.
The total cash outflow for leases, excluding short-term leases and low-value leases, in the year was \u00a3137.5m (2022: \u00a3128.4m). This is
presented in the Consolidated Cash Flow Statement as \u00a3124.4m (2022: \u00a3120.5m) relating to the principal element of the lease
liability payments, with the remaining balance of \u00a313.1m (2022: \u00a37.9m) presented within interest paid.
Minimum lease Minimum lease
payments payments
2023
2022
Amounts payable under leases
\u00a3m
\u00a3m
Within one year
149.0
150.6
Between one and five years
277.1
263.2
After five years
45.8
51.5
471.9
465.3
Less: future finance charges
(18.2)
(19.3)
Present value of lease obligations
453.7
446.0
Less: amount due for settlement within one year (shown under current liabilities)
(140.0)
(144.4)
Amount due for settlement after one year
313.7
301.6
The following amounts are included in the Group\u2019s Consolidated Financial Statements in respect of its leases:
Restated
2023
2022
Note
\u00a3m
\u00a3m
Additions to right of use assets
19
148.5
129.8
Depreciation charge on right of use assets
19
(125.4)
(119.3)
Net (impairment)/release of impairment on right of use assets
19
(0.7)
1.8
Net disposal of right of use assets
19
(13.1)
(14.0)
Net reclassification from right of use assets
19
\u2014
(0.1)
Net exchange differences on right of use assets
19
(2.4)
6.2
Carrying amount of right of use assets
19
440.9
434.2
Current lease liabilities
24
140.0
144.4
Non-current lease liabilities
24
313.7
301.6
Capital element of lease repayments
(124.4)
(120.5)
Interest expense on lease liabilities
13
(13.1)
(7.9)
(Loss)/Profit on early termination of leases
10
(0.6)
0.2
Expenses relating to short term or low value leases
10
(3.7)
(4.2)
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-448": { "value": "
25. Loans
Total
Total
2023
2022
\u00a3m
\u00a3m
Loans are repayable as follows:
On demand or within one year
51.0
44.5
Between one and two years
38.5
54.1
Between two and five years
61.9
106.3
After five years
54.8
58.0
206.2
262.9
Less: amount due for settlement within one year (shown in current liabilities)
(51.0)
(44.5)
Amount due for settlement after one year
155.2
218.4
Included within amounts repayable within one year is \u00a3nil (2022: \u00a3nil) related to the draw down on the revolving credit facility.
Fair value of loans
Carrying amount
Fair value
Carrying amount
Fair value
2023
2023
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans
206.2
189.2
262.9
241.5
The fair values are based on cash flows discounted using a market rate appropriate to the loan. All loans are held at amortised cost.
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
At 31 December
Exchange Non-cash
2023
Cash flow
Acquisitions
differences movements 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(262.9)
44.5
\u2014
13.1
(0.9)
(206.2)
Lease obligations
(446.0)
124.4
\u2014
3.1
(135.2)
(453.7)
Liabilities arising from financing
activities
(708.9)
168.9
\u2014
16.2
(136.1)
(659.9)
Cash and cash equivalents
57.2
39.8
\u2014
(2.6)
\u2014
94.4
Derivatives relating to net debt
1.8
\u2014
\u2014
1.3
\u2014
3.1
Net debt
(649.9)
208.7
\u2014
14.9
(136.1)
(562.4)
1
2
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
At 31 December
Exchange Non-cash
2022
Cash flow
Acquisitions
differences movements 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(377.0)
149.3
(6.5)
(30.1)
1.4
(262.9)
Lease obligations
(430.3)
120.5
(13.1)
(8.0)
(115.1)
(446.0)
Liabilities arising from financing
(807.3)
269.8
(19.6)
(38.1)
(113.7)
(708.9)
activities
Cash and cash equivalents
198.4
(151.1)
6.2
3.7
\u2014 57.2
Derivatives relating to net debt
0.6
\u2014
\u2014
1.2
\u2014
1.8
Net debt
(608.3)
118.7
(13.4)
(33.2)
(113.7)
(649.9)
1
2
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-533": { "value": "25. Loans
Total
Total
2023
2022
\u00a3m
\u00a3m
Loans are repayable as follows:
On demand or within one year
51.0
44.5
Between one and two years
38.5
54.1
Between two and five years
61.9
106.3
After five years
54.8
58.0
206.2
262.9
Less: amount due for settlement within one year (shown in current liabilities)
(51.0)
(44.5)
Amount due for settlement after one year
155.2
218.4
Included within amounts repayable within one year is \u00a3nil (2022: \u00a3nil) related to the draw down on the revolving credit facility. Fair value of loans
Carrying amount
Fair value
Carrying amount
Fair value
2023
2023
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans
206.2
189.2
262.9
241.5
The fair values are based on cash flows discounted using a market rate appropriate to the loan. All loans are held at amortised cost. 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
At 31 December
Exchange Non-cash
2023
Cash flow
Acquisitions
differences movements 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(262.9)
44.5
\u2014
13.1
(0.9)
(206.2)
Lease obligations
(446.0)
124.4
\u2014
3.1
(135.2)
(453.7)
Liabilities arising from financing
activities
(708.9)
168.9
\u2014
16.2
(136.1)
(659.9)
Cash and cash equivalents
57.2
39.8
\u2014
(2.6)
\u2014
94.4
Derivatives relating to net debt
1.8
\u2014
\u2014
1.3
\u2014
3.1
Net debt
(649.9)
208.7
\u2014
14.9
(136.1)
(562.4)
1 2 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
At 31 December
Exchange Non-cash
2022
Cash flow
Acquisitions
differences movements 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(377.0)
149.3
(6.5)
(30.1)
1.4
(262.9)
Lease obligations
(430.3)
120.5
(13.1)
(8.0)
(115.1)
(446.0)
Liabilities arising from financing
(807.3)
269.8
(19.6)
(38.1)
(113.7)
(708.9)
activities
Cash and cash equivalents
198.4
(151.1)
6.2
3.7
\u2014 57.2
Derivatives relating to net debt
0.6
\u2014
\u2014
1.2
\u2014
1.8
Net debt
(608.3)
118.7
(13.4)
(33.2)
(113.7)
(649.9)
1 2 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. 29. Financial risk management 29 (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 2023 and the comparison fair values for loans, are all considered to fall into Level 2, with the exception of contingent consideration which is 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. 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 Amortised
cost Fair value cost Fair value
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
2023
2023
2023
2022
2022
2022
Financial assets
Financial assets \u2013 current
Cash and bank balances
94.4
\u2014
94.4
57.2
\u2014
57.2
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
4.8
4.8
\u2014
3.0
3.0
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
0.1
0.1
\u2014
0.3
0.3
Receivables
Trade receivables (note 21)
219.1
\u2014
219.1
266.8
\u2014
266.8
Amounts owed by joint ventures
1.1
\u2014
1.1
3.1
\u2014
3.1
and associates (note 21)
Financial assets \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
\u2014
\u2014
\u2014
0.3
0.3
Financial liabilities \u2013 current
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
(1.6)
(1.6)
\u2014
(1.1)
(1.1)
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.1)
(0.1)
\u2014
\u2014
\u2014
Financial liabilities at fair value (Level
3)
Contingent consideration (note 23)
\u2014
\u2014
\u2014
\u2014
(11.2)
(11.2)
Financial liabilities at amortised cost
Trade payables (note 23)
(99.3)
\u2014
(99.3)
(108.3)
\u2014
(108.3)
Loans (note 25)
(51.0)
\u2014
(50.7)
(44.5)
\u2014
(44.3)
Financial liabilities \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.2)
(0.2)
\u2014
\u2014
\u2014
Financial liabilities at amortised cost
Loans (note 25)
(155.2)
\u2014
(138.5)
(218.4)
\u2014
(197.2)
1 1 2 1 2 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. 2. In 2022, disclosed within financial liabilities were the amortised cost of lease obligations (non-current \u00a3144.4m and current \u00a3301.6m) and the fair value of lease obligations (non-current \u00a3143.3m and current \u00a3300.5m). These have been removed from this table in the current year as there is no requirement to disclose these under IFRS 7 or IFRS 13. The following table shows the development of financial assets and liabilities categorised as level 3:
Financial Financial
liabilities current liabilities current
contingent contingent
consideration consideration
2023
2022
\u00a3m
\u00a3m
Balance at 1 January
(11.2)
\u2014
Arising on acquisition
\u2014
(12.2)
Acquisitions - revision of provisional fair value estimates
1.0
\u2014
Cash settlement
10.2
1.0
Balance at 31 December
\u2014
(11.2)
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. (ii) Fair value of derivative financial instruments The fair value of derivative financial instruments results in a net asset of \u00a33.0m (2022: \u00a32.5m) comprising non-current assets of \u00a3nil (2022: \u00a30.3), current assets of \u00a34.9m (2022: \u00a33.3m), current liabilities of \u00a31.7m (2022: \u00a31.1m) and non-current liabilities of \u00a30.2m (2022: \u00a3nil).
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
2.5
(0.8)
1.3
3.0
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 2022 relationships relationships 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
0.6
0.6
1.3
2.5
The fair value of financial liabilities recognised at fair value through profit and loss is \u00a31.7m (2022: \u00a31.1m) 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. 29 (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\u2019s 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. 29 (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\u2019s committed bank credit facilities and corresponding borrowings were as follows:
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2023 2023 2023 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2022 2022 2022 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
The Group has available a revolving credit facility with a maximum capacity of \u00a3350m and a five year term ending November 2027. In addition, the facility provides an accordion facility of \u00a3100m which is uncommitted. At 31 December 2023, the Group had \u00a3208.8m (2022: \u00a3266.4m) of US private placement loan notes which will be repaid as bullet repayments between 2024 and 2032. (ii) Maturity of financial liabilities The Group\u2019s 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 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
99.3
\u2014
\u2014
\u2014
99.3
Obligations under leases
1
(note 24)
149.0
119.0
158.1
45.8
471.9
Loans (note 25)
51.9
39.2
62.8
54.9
208.8
Future loan interest
6.5
5.4
10.5
6.0
28.4
Derivatives settled on gross basis:
Outflow
1,094.7
0.7
\u2014
\u2014
1,095.4
Inflow
(1,097.9)
(0.4)
\u2014
\u2014
(1,098.3)
303.5
163.9
231.4
106.7
805.5
2 1 The present value of lease obligations is \u00a3453.7m after deducting \u00a318.2m 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 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
108.3
\u2014
\u2014
\u2014
108.3
Obligations under leases
1
(note 24)
150.6
113.9
149.3
51.5
465.3
Loans
(note 25)
45.4
54.9
108.0
58.1
266.4
Future loan interest
11.2
7.3
15.2
8.9
42.6
Derivatives settled on gross basis:
Outflow
1,284.0
7.6
8.1
\u2014
1,299.7
Inflow
(1,286.2)
(8.1)
(8.6)
\u2014
(1,302.9)
313.3
175.6
272.0
118.5
879.4
2 1 The present value of lease obligations is \u00a3446.1m after deducting \u00a319.2m 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 \u00a31,097.9m (inflow) and \u00a31,094.7m (outflow) on demand or within one year (2022: \u00a31,286.2m (inflow) and \u00a31,284.0m (outflow) on demand or within one year). 29 (d) Foreign exchange risk (i) Transactional It is the Group\u2019s 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 2023, 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 29 (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\u2019s 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:
2023
2022
\u00a3m
\u00a3m
Sterling
(15.1)
(32.9)
US Dollar
0.9
12.7
Indian Rupee
14.2
21.7
All derivatives designated as cash flow hedges are highly effective and as at 31 December 2023, \u00a30.9m net fair value loss (2022: \u00a30.6m net fair value gain) has been deferred in the hedging reserve. During the year to 31 December 2023, \u00a30.6m of net fair value loss (2022: \u00a30.9m gain) were transferred to the hedging reserve and \u00a30.2m fair value gain (2022: \u00a30.4m gain) were reclassified to the Consolidated Income Statement. (iv) Currency sensitivity The Group\u2019s currency exposures in respect of monetary items at 31 December 2023 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 rate. 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)
2023
2023
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
US Dollar
(1.0)
0.1
(0.1)
1.3
Euro
\u2014
\u2014
(0.1)
\u2014
Indian Rupee
\u2014
1.4
\u2014
2.1
(1.0)
1.5
(0.2)
3.4
29 (e) Interest rate risk The Group\u2019s 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
2023
2023
2023
2022
2022
2022
Financial assets
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
Cash and cash equivalents
94.4
\u2014
4.3
57.2
\u2014
1.2
Weighted Weighted
average average
Floating rate
Fixed rate
interest rate
Floating rate
Fixed rate
interest rate
2023
2023
2023
2022
2022
2022
Financial assets
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
US Dollar loans
\u2014
208.8
4.0
\u2014
266.4
4.2
\u2014
208.8
\u2014
\u2014
266.4
\u2014
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 2024 and 2032. Excluded from the above analysis is \u00a3453.7m (2022: \u00a3446.0m) 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 \u00a30.9m increase in pre- tax profit for the year to 31 December 2023 (2022: increase of \u00a30.6m). 29 (f) Credit risk The Group\u2019s 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\u2019s principal exposure is to cash and cash equivalents, derivative transactions and trade receivables. The Group\u2019s 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 relating to credit risk during the year ended 31 December 2023 (2022: none). The Group\u2019s Treasury function primarily transacts with counterparties that comply with Board policy. Where exceptions are approved due to local requirements, the Group\u2019s 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\u2019s policy is to provide guarantees for joint ventures and associates only to the relevant proportion of support provided by the partners. At 31 December 2023, the Company has issued guarantees in respect of certain joint ventures and associates as per note 28. 29 (g) Capital risk Management\u2019s objective is to maintain a capital structure that supports the Group\u2019s strategic objectives. The Group\u2019s target leverage is 1x-2x net debt to EBITDA which enables execution of the Board\u2019s 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:
2023
2022
\u00a3m
\u00a3m
Cash and cash equivalents
(94.4)
(57.2)
Loans
206.2
262.9
Obligations under leases
453.7
446.0
Equity
1,033.7
1,029.7
Capital
1,599.2
1,681.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-514": { "value": "25. Loans
Total
Total
2023
2022
\u00a3m
\u00a3m
Loans are repayable as follows:
On demand or within one year
51.0
44.5
Between one and two years
38.5
54.1
Between two and five years
61.9
106.3
After five years
54.8
58.0
206.2
262.9
Less: amount due for settlement within one year (shown in current liabilities)
(51.0)
(44.5)
Amount due for settlement after one year
155.2
218.4
Included within amounts repayable within one year is \u00a3nil (2022: \u00a3nil) related to the draw down on the revolving credit facility. Fair value of loans
Carrying amount
Fair value
Carrying amount
Fair value
2023
2023
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans
206.2
189.2
262.9
241.5
The fair values are based on cash flows discounted using a market rate appropriate to the loan. All loans are held at amortised cost. 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
At 31 December
Exchange Non-cash
2023
Cash flow
Acquisitions
differences movements 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(262.9)
44.5
\u2014
13.1
(0.9)
(206.2)
Lease obligations
(446.0)
124.4
\u2014
3.1
(135.2)
(453.7)
Liabilities arising from financing
activities
(708.9)
168.9
\u2014
16.2
(136.1)
(659.9)
Cash and cash equivalents
57.2
39.8
\u2014
(2.6)
\u2014
94.4
Derivatives relating to net debt
1.8
\u2014
\u2014
1.3
\u2014
3.1
Net debt
(649.9)
208.7
\u2014
14.9
(136.1)
(562.4)
1 2 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
At 31 December
Exchange Non-cash
2022
Cash flow
Acquisitions
differences movements 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(377.0)
149.3
(6.5)
(30.1)
1.4
(262.9)
Lease obligations
(430.3)
120.5
(13.1)
(8.0)
(115.1)
(446.0)
Liabilities arising from financing
(807.3)
269.8
(19.6)
(38.1)
(113.7)
(708.9)
activities
Cash and cash equivalents
198.4
(151.1)
6.2
3.7
\u2014 57.2
Derivatives relating to net debt
0.6
\u2014
\u2014
1.2
\u2014
1.8
Net debt
(608.3)
118.7
(13.4)
(33.2)
(113.7)
(649.9)
1 2 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-488": { "value": "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
At 31 December
Exchange Non-cash
2023
Cash flow
Acquisitions
differences movements 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(262.9)
44.5
\u2014
13.1
(0.9)
(206.2)
Lease obligations
(446.0)
124.4
\u2014
3.1
(135.2)
(453.7)
Liabilities arising from financing
activities
(708.9)
168.9
\u2014
16.2
(136.1)
(659.9)
Cash and cash equivalents
57.2
39.8
\u2014
(2.6)
\u2014
94.4
Derivatives relating to net debt
1.8
\u2014
\u2014
1.3
\u2014
3.1
Net debt
(649.9)
208.7
\u2014
14.9
(136.1)
(562.4)
1 2 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
At 31 December
Exchange Non-cash
2022
Cash flow
Acquisitions
differences movements 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans payable
(377.0)
149.3
(6.5)
(30.1)
1.4
(262.9)
Lease obligations
(430.3)
120.5
(13.1)
(8.0)
(115.1)
(446.0)
Liabilities arising from financing
(807.3)
269.8
(19.6)
(38.1)
(113.7)
(708.9)
activities
Cash and cash equivalents
198.4
(151.1)
6.2
3.7
\u2014 57.2
Derivatives relating to net debt
0.6
\u2014
\u2014
1.2
\u2014
1.8
Net debt
(608.3)
118.7
(13.4)
(33.2)
(113.7)
(649.9)
1 2 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-449": { "value": "
26. Provisions
Employee
related
Property
Contract
Claims
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2023
82.5
19.6
11.6
24.2
70.5
208.4
Acquisitions - revision of provisional
\u2014
\u2014
\u2014
\u2014
0.4
0.4
fair value estimates
Disposals
(1.2)
(0.9)
\u2014
\u2014
(0.3)
(2.4)
Charge capitalised in right of use
\u2014
0.9
\u2014
\u2014
\u2014
0.9
assets
Charged to income statement
18.3
9.7
8.8
9.7
7.7
54.2
Released to exceptional items
\u2014
\u2014
\u2014
\u2014
(43.9)
(43.9)
Released to income statement
(2.1)
(1.6)
(0.6)
(3.1)
(7.7)
(15.1)
Utilised during the year
(9.2)
(4.2)
(3.2)
(5.2)
(5.4)
(27.2)
Exchange differences
(4.4)
(0.3)
0.1
\u2014
(0.4)
(5.0)
At 31 December 2023
83.9
23.2
16.7
25.6
20.9
170.3
Analysed as:
Current
54.0
5.9
10.7
5.4
16.9
92.9
Non-current
29.9
17.3
6.0
20.2
4.0
77.4
83.9
23.2
16.7
25.6
20.9
170.3
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\u2019s service users, claimants for vehicle-related incidents or the Group\u2019s 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 is \u00a320.9m related 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. The Group released from
other provisions indemnities given on disposed businesses of \u00a343.9m during the year predominantly due to the claims period
ending.
Individual provisions are only discounted where the impact is assessed to be significant. Currently, the effect of discounting is not
material.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-489": { "value": "26. Provisions
Employee
related
Property
Contract
Claims
Other
Total
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2023
82.5
19.6
11.6
24.2
70.5
208.4
Acquisitions - revision of provisional
\u2014
\u2014
\u2014
\u2014
0.4
0.4
fair value estimates
Disposals
(1.2)
(0.9)
\u2014
\u2014
(0.3)
(2.4)
Charge capitalised in right of use
\u2014
0.9
\u2014
\u2014
\u2014
0.9
assets
Charged to income statement
18.3
9.7
8.8
9.7
7.7
54.2
Released to exceptional items
\u2014
\u2014
\u2014
\u2014
(43.9)
(43.9)
Released to income statement
(2.1)
(1.6)
(0.6)
(3.1)
(7.7)
(15.1)
Utilised during the year
(9.2)
(4.2)
(3.2)
(5.2)
(5.4)
(27.2)
Exchange differences
(4.4)
(0.3)
0.1
\u2014
(0.4)
(5.0)
At 31 December 2023
83.9
23.2
16.7
25.6
20.9
170.3
Analysed as:
Current
54.0
5.9
10.7
5.4
16.9
92.9
Non-current
29.9
17.3
6.0
20.2
4.0
77.4
83.9
23.2
16.7
25.6
20.9
170.3
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\u2019s service users, claimants for vehicle-related incidents or the Group\u2019s 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 is \u00a320.9m related 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. The Group released from other provisions indemnities given on disposed businesses of \u00a343.9m during the year predominantly due to the claims period ending. Individual provisions are only discounted where the impact is assessed to be significant. Currently, the effect of discounting is not material. 28. 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 2023 was \u00a3214.4m (2022: \u00a3222.7m). Following the announcement during 2020 that the Group has received a claim seeking damages for alleged losses as a result of the reduction in Serco\u2019s share price in 2013. As the claim progresses, the Group has continued to assess the merit, likely outcome and potential impact on the Group of any such litigation that either has been or might potentially be brought against the Group. Any outcome is subject to a number of significant uncertainties. The Group does not currently assess the merits as strong, especially given the legal uncertainties in such actions. 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\u2019s insurance arrangements, that it is unlikely that these matters will, in aggregate, have a material effect on the Group\u2019s financial position. The Group has guaranteed overdrafts, finance leases and bonding facilities of its joint ventures and associates up to a maximum value of \u00a35.7m (2022: \u00a35.7m). The actual commitment outstanding at 31 December 2023 was \u00a35.7m (2022: \u00a35.7m).", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-450": { "value": "
27. Capital and other commitments
2023
2022
Capital expenditure contracted but not provided
\u00a3m
\u00a3m
Property, plant and equipment
9.3
5.7
Intangible assets
0.4
0.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-515": { "value": "27. Capital and other commitments
2023
2022
Capital expenditure contracted but not provided
\u00a3m
\u00a3m
Property, plant and equipment
9.3
5.7
Intangible assets
0.4
0.2
28. 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 2023 was \u00a3214.4m (2022: \u00a3222.7m). Following the announcement during 2020 that the Group has received a claim seeking damages for alleged losses as a result of the reduction in Serco\u2019s share price in 2013. As the claim progresses, the Group has continued to assess the merit, likely outcome and potential impact on the Group of any such litigation that either has been or might potentially be brought against the Group. Any outcome is subject to a number of significant uncertainties. The Group does not currently assess the merits as strong, especially given the legal uncertainties in such actions. 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\u2019s insurance arrangements, that it is unlikely that these matters will, in aggregate, have a material effect on the Group\u2019s financial position. The Group has guaranteed overdrafts, finance leases and bonding facilities of its joint ventures and associates up to a maximum value of \u00a35.7m (2022: \u00a35.7m). The actual commitment outstanding at 31 December 2023 was \u00a35.7m (2022: \u00a35.7m).", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-451": { "value": "
28. 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 2023 was
\u00a3214.4m (2022: \u00a3222.7m).
Following the announcement during 2020 that the Group has received a claim seeking damages for alleged losses as a result of the
reduction in Serco\u2019s share price in 2013. As the claim progresses, the Group has continued to assess the merit, likely outcome and
potential impact on the Group of any such litigation that either has been or might potentially be brought against the Group. Any
outcome is subject to a number of significant uncertainties. The Group does not currently assess the merits as strong, especially
given the legal uncertainties in such actions.
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\u2019s insurance arrangements, that it is unlikely that these matters will, in aggregate, have a material effect on
the Group\u2019s financial position.
The Group has guaranteed overdrafts, finance leases and bonding facilities of its joint ventures and associates up to a maximum
value of \u00a35.7m (2022: \u00a35.7m). The actual commitment outstanding at 31 December 2023 was \u00a35.7m (2022: \u00a35.7m).
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-452": { "value": "
29. Financial risk management
29 (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 2023 and the comparison fair values for
loans, are all considered to fall into Level 2, with the exception of contingent consideration which is 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.
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 Amortised
cost Fair value cost Fair value
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
2023
2023
2023
2022
2022
2022
Financial assets
Financial assets \u2013 current
Cash and bank balances
94.4
\u2014
94.4
57.2
\u2014
57.2
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
4.8
4.8
\u2014
3.0
3.0
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
0.1
0.1
\u2014
0.3
0.3
Receivables
Trade receivables (note 21)
219.1
\u2014
219.1
266.8
\u2014
266.8
Amounts owed by joint ventures
1.1
\u2014
1.1
3.1
\u2014
3.1
and associates (note 21)
Financial assets \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
\u2014
\u2014
\u2014
0.3
0.3
Financial liabilities \u2013 current
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
(1.6)
(1.6)
\u2014
(1.1)
(1.1)
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.1)
(0.1)
\u2014
\u2014
\u2014
Financial liabilities at fair value (Level
3)
Contingent consideration (note 23)
\u2014
\u2014
\u2014
\u2014
(11.2)
(11.2)
Financial liabilities at amortised cost
Trade payables (note 23)
(99.3)
\u2014
(99.3)
(108.3)
\u2014
(108.3)
Loans (note 25)
(51.0)
\u2014
(50.7)
(44.5)
\u2014
(44.3)
Financial liabilities \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.2)
(0.2)
\u2014
\u2014
\u2014
Financial liabilities at amortised cost
Loans (note 25)
(155.2)
\u2014
(138.5)
(218.4)
\u2014
(197.2)
1
1
2
1
2
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.
2. In 2022, disclosed within financial liabilities were the amortised cost of lease obligations (non-current \u00a3144.4m and current \u00a3301.6m) and the fair value of
lease obligations (non-current \u00a3143.3m and current \u00a3300.5m). These have been removed from this table in the current year as there is no requirement to
disclose these under IFRS 7 or IFRS 13.
The following table shows the development of financial assets and liabilities categorised as level 3:
Financial Financial
liabilities current liabilities current
contingent contingent
consideration consideration
2023
2022
\u00a3m
\u00a3m
Balance at 1 January
(11.2)
\u2014
Arising on acquisition
\u2014
(12.2)
Acquisitions - revision of provisional fair value estimates
1.0
\u2014
Cash settlement
10.2
1.0
Balance at 31 December
\u2014
(11.2)
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.
(ii) Fair value of derivative financial instruments
The fair value of derivative financial instruments results in a net asset of \u00a33.0m (2022: \u00a32.5m) comprising non-current assets of \u00a3nil
(2022: \u00a30.3), current assets of \u00a34.9m (2022: \u00a33.3m), current liabilities of \u00a31.7m (2022: \u00a31.1m) and non-current liabilities of \u00a30.2m
(2022: \u00a3nil).
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
2.5
(0.8)
1.3
3.0
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 2022 relationships relationships 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
0.6
0.6
1.3
2.5
The fair value of financial liabilities recognised at fair value through profit and loss is \u00a31.7m (2022: \u00a31.1m) 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.
29 (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\u2019s 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.
29 (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\u2019s committed bank credit facilities and corresponding borrowings were as follows:
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2023 2023 2023 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2022 2022 2022 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
The Group has available a revolving credit facility with a maximum capacity of \u00a3350m and a five year term ending November 2027.
In addition, the facility provides an accordion facility of \u00a3100m which is uncommitted. At 31 December 2023, the Group had
\u00a3208.8m (2022: \u00a3266.4m) of US private placement loan notes which will be repaid as bullet repayments between 2024 and 2032.
(ii) Maturity of financial liabilities
The Group\u2019s 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 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
99.3
\u2014
\u2014
\u2014
99.3
Obligations under leases
1
(note 24)
149.0
119.0
158.1
45.8
471.9
Loans (note 25)
51.9
39.2
62.8
54.9
208.8
Future loan interest
6.5
5.4
10.5
6.0
28.4
Derivatives settled on gross basis:
Outflow
1,094.7
0.7
\u2014
\u2014
1,095.4
Inflow
(1,097.9)
(0.4)
\u2014
\u2014
(1,098.3)
303.5
163.9
231.4
106.7
805.5
2
1
The present value of lease obligations is \u00a3453.7m after deducting \u00a318.2m 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 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
108.3
\u2014
\u2014
\u2014
108.3
Obligations under leases
1
(note 24)
150.6
113.9
149.3
51.5
465.3
Loans
(note 25)
45.4
54.9
108.0
58.1
266.4
Future loan interest
11.2
7.3
15.2
8.9
42.6
Derivatives settled on gross basis:
Outflow
1,284.0
7.6
8.1
\u2014
1,299.7
Inflow
(1,286.2)
(8.1)
(8.6)
\u2014
(1,302.9)
313.3
175.6
272.0
118.5
879.4
2
1
The present value of lease obligations is \u00a3446.1m after deducting \u00a319.2m 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 \u00a31,097.9m (inflow) and \u00a31,094.7m (outflow)
on demand or within one year (2022: \u00a31,286.2m (inflow) and \u00a31,284.0m (outflow) on demand or within one year).
29 (d) Foreign exchange risk
(i) Transactional
It is the Group\u2019s 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 2023, 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 29 (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\u2019s 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:
2023
2022
\u00a3m
\u00a3m
Sterling
(15.1)
(32.9)
US Dollar
0.9
12.7
Indian Rupee
14.2
21.7
All derivatives designated as cash flow hedges are highly effective and as at 31 December 2023, \u00a30.9m net fair value loss (2022:
\u00a30.6m net fair value gain) has been deferred in the hedging reserve. During the year to 31 December 2023, \u00a30.6m of net fair value
loss (2022: \u00a30.9m gain) were transferred to the hedging reserve and \u00a30.2m fair value gain (2022: \u00a30.4m gain) were reclassified to
the Consolidated Income Statement.
(iv) Currency sensitivity
The Group\u2019s currency exposures in respect of monetary items at 31 December 2023 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 rate. 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)
2023
2023
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
US Dollar
(1.0)
0.1
(0.1)
1.3
Euro
\u2014
\u2014
(0.1)
\u2014
Indian Rupee
\u2014
1.4
\u2014
2.1
(1.0)
1.5
(0.2)
3.4
29 (e) Interest rate risk
The Group\u2019s 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
2023
2023
2023
2022
2022
2022
Financial assets
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
Cash and cash equivalents
94.4
\u2014
4.3
57.2
\u2014
1.2
Weighted Weighted
average average
Floating rate
Fixed rate
interest rate
Floating rate
Fixed rate
interest rate
2023
2023
2023
2022
2022
2022
Financial assets
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
US Dollar loans
\u2014
208.8
4.0
\u2014
266.4
4.2
\u2014
208.8
\u2014
\u2014
266.4
\u2014
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 2024 and 2032. Excluded from the above analysis
is \u00a3453.7m (2022: \u00a3446.0m) 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 \u00a30.9m increase in pre-
tax profit for the year to 31 December 2023 (2022: increase of \u00a30.6m).
29 (f) Credit risk
The Group\u2019s 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\u2019s principal exposure is
to cash and cash equivalents, derivative transactions and trade receivables.
The Group\u2019s 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 relating to credit risk during
the year ended 31 December 2023 (2022: none).
The Group\u2019s Treasury function primarily transacts with counterparties that comply with Board policy. Where exceptions are
approved due to local requirements, the Group\u2019s 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\u2019s policy is to provide guarantees for joint ventures and associates only to the relevant proportion of support provided by
the partners. At 31 December 2023, the Company has issued guarantees in respect of certain joint ventures and associates as per
note 28.
29 (g) Capital risk
Management\u2019s objective is to maintain a capital structure that supports the Group\u2019s strategic objectives. The Group\u2019s target leverage
is 1x-2x net debt to EBITDA which enables execution of the Board\u2019s 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:
2023
2022
\u00a3m
\u00a3m
Cash and cash equivalents
(94.4)
(57.2)
Loans
206.2
262.9
Obligations under leases
453.7
446.0
Equity
1,033.7
1,029.7
Capital
1,599.2
1,681.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-490": { "value": "29 (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 2023 and the comparison fair values for loans, are all considered to fall into Level 2, with the exception of contingent consideration which is 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. 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 Amortised
cost Fair value cost Fair value
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
2023
2023
2023
2022
2022
2022
Financial assets
Financial assets \u2013 current
Cash and bank balances
94.4
\u2014
94.4
57.2
\u2014
57.2
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
4.8
4.8
\u2014
3.0
3.0
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
0.1
0.1
\u2014
0.3
0.3
Receivables
Trade receivables (note 21)
219.1
\u2014
219.1
266.8
\u2014
266.8
Amounts owed by joint ventures
1.1
\u2014
1.1
3.1
\u2014
3.1
and associates (note 21)
Financial assets \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
\u2014
\u2014
\u2014
0.3
0.3
Financial liabilities \u2013 current
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
(1.6)
(1.6)
\u2014
(1.1)
(1.1)
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.1)
(0.1)
\u2014
\u2014
\u2014
Financial liabilities at fair value (Level
3)
Contingent consideration (note 23)
\u2014
\u2014
\u2014
\u2014
(11.2)
(11.2)
Financial liabilities at amortised cost
Trade payables (note 23)
(99.3)
\u2014
(99.3)
(108.3)
\u2014
(108.3)
Loans (note 25)
(51.0)
\u2014
(50.7)
(44.5)
\u2014
(44.3)
Financial liabilities \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.2)
(0.2)
\u2014
\u2014
\u2014
Financial liabilities at amortised cost
Loans (note 25)
(155.2)
\u2014
(138.5)
(218.4)
\u2014
(197.2)
1 1 2 1 2 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. 2. In 2022, disclosed within financial liabilities were the amortised cost of lease obligations (non-current \u00a3144.4m and current \u00a3301.6m) and the fair value of lease obligations (non-current \u00a3143.3m and current \u00a3300.5m). These have been removed from this table in the current year as there is no requirement to disclose these under IFRS 7 or IFRS 13. The following table shows the development of financial assets and liabilities categorised as level 3:
Financial Financial
liabilities current liabilities current
contingent contingent
consideration consideration
2023
2022
\u00a3m
\u00a3m
Balance at 1 January
(11.2)
\u2014
Arising on acquisition
\u2014
(12.2)
Acquisitions - revision of provisional fair value estimates
1.0
\u2014
Cash settlement
10.2
1.0
Balance at 31 December
\u2014
(11.2)
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. (ii) Fair value of derivative financial instruments The fair value of derivative financial instruments results in a net asset of \u00a33.0m (2022: \u00a32.5m) comprising non-current assets of \u00a3nil (2022: \u00a30.3), current assets of \u00a34.9m (2022: \u00a33.3m), current liabilities of \u00a31.7m (2022: \u00a31.1m) and non-current liabilities of \u00a30.2m (2022: \u00a3nil).
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
2.5
(0.8)
1.3
3.0
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 2022 relationships relationships 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
0.6
0.6
1.3
2.5
The fair value of financial liabilities recognised at fair value through profit and loss is \u00a31.7m (2022: \u00a31.1m) 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-516": { "value": "(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 2023 and the comparison fair values for loans, are all considered to fall into Level 2, with the exception of contingent consideration which is 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. 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 Amortised
cost Fair value cost Fair value
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
2023
2023
2023
2022
2022
2022
Financial assets
Financial assets \u2013 current
Cash and bank balances
94.4
\u2014
94.4
57.2
\u2014
57.2
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
4.8
4.8
\u2014
3.0
3.0
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
0.1
0.1
\u2014
0.3
0.3
Receivables
Trade receivables (note 21)
219.1
\u2014
219.1
266.8
\u2014
266.8
Amounts owed by joint ventures
1.1
\u2014
1.1
3.1
\u2014
3.1
and associates (note 21)
Financial assets \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
\u2014
\u2014
\u2014
0.3
0.3
Financial liabilities \u2013 current
Derivatives designated as FVTPL
(Level 2)
Forward foreign exchange contracts
\u2014
(1.6)
(1.6)
\u2014
(1.1)
(1.1)
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.1)
(0.1)
\u2014
\u2014
\u2014
Financial liabilities at fair value (Level
3)
Contingent consideration (note 23)
\u2014
\u2014
\u2014
\u2014
(11.2)
(11.2)
Financial liabilities at amortised cost
Trade payables (note 23)
(99.3)
\u2014
(99.3)
(108.3)
\u2014
(108.3)
Loans (note 25)
(51.0)
\u2014
(50.7)
(44.5)
\u2014
(44.3)
Financial liabilities \u2013 non-current
Derivative instruments in designated
hedge accounting relationships
(Level 2)
Forward foreign exchange contracts
\u2014
(0.2)
(0.2)
\u2014
\u2014
\u2014
Financial liabilities at amortised cost
Loans (note 25)
(155.2)
\u2014
(138.5)
(218.4)
\u2014
(197.2)
1 1 2 1 2 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. 2. In 2022, disclosed within financial liabilities were the amortised cost of lease obligations (non-current \u00a3144.4m and current \u00a3301.6m) and the fair value of lease obligations (non-current \u00a3143.3m and current \u00a3300.5m). These have been removed from this table in the current year as there is no requirement to disclose these under IFRS 7 or IFRS 13. The following table shows the development of financial assets and liabilities categorised as level 3:
Financial Financial
liabilities current liabilities current
contingent contingent
consideration consideration
2023
2022
\u00a3m
\u00a3m
Balance at 1 January
(11.2)
\u2014
Arising on acquisition
\u2014
(12.2)
Acquisitions - revision of provisional fair value estimates
1.0
\u2014
Cash settlement
10.2
1.0
Balance at 31 December
\u2014
(11.2)
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. (ii) Fair value of derivative financial instruments The fair value of derivative financial instruments results in a net asset of \u00a33.0m (2022: \u00a32.5m) comprising non-current assets of \u00a3nil (2022: \u00a30.3), current assets of \u00a34.9m (2022: \u00a33.3m), current liabilities of \u00a31.7m (2022: \u00a31.1m) and non-current liabilities of \u00a30.2m (2022: \u00a3nil).
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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
2.5
(0.8)
1.3
3.0
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 2022 relationships relationships 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Forward foreign exchange contracts
0.6
0.6
1.3
2.5
The fair value of financial liabilities recognised at fair value through profit and loss is \u00a31.7m (2022: \u00a31.1m) 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-491": { "value": "29 (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\u2019s committed bank credit facilities and corresponding borrowings were as follows:
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2023 2023 2023 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2022 2022 2022 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
The Group has available a revolving credit facility with a maximum capacity of \u00a3350m and a five year term ending November 2027. In addition, the facility provides an accordion facility of \u00a3100m which is uncommitted. At 31 December 2023, the Group had \u00a3208.8m (2022: \u00a3266.4m) of US private placement loan notes which will be repaid as bullet repayments between 2024 and 2032. (ii) Maturity of financial liabilities The Group\u2019s 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 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
99.3
\u2014
\u2014
\u2014
99.3
Obligations under leases
1
(note 24)
149.0
119.0
158.1
45.8
471.9
Loans (note 25)
51.9
39.2
62.8
54.9
208.8
Future loan interest
6.5
5.4
10.5
6.0
28.4
Derivatives settled on gross basis:
Outflow
1,094.7
0.7
\u2014
\u2014
1,095.4
Inflow
(1,097.9)
(0.4)
\u2014
\u2014
(1,098.3)
303.5
163.9
231.4
106.7
805.5
2 1 The present value of lease obligations is \u00a3453.7m after deducting \u00a318.2m 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 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
108.3
\u2014
\u2014
\u2014
108.3
Obligations under leases
1
(note 24)
150.6
113.9
149.3
51.5
465.3
Loans
(note 25)
45.4
54.9
108.0
58.1
266.4
Future loan interest
11.2
7.3
15.2
8.9
42.6
Derivatives settled on gross basis:
Outflow
1,284.0
7.6
8.1
\u2014
1,299.7
Inflow
(1,286.2)
(8.1)
(8.6)
\u2014
(1,302.9)
313.3
175.6
272.0
118.5
879.4
2 1 The present value of lease obligations is \u00a3446.1m after deducting \u00a319.2m 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 \u00a31,097.9m (inflow) and \u00a31,094.7m (outflow) on demand or within one year (2022: \u00a31,286.2m (inflow) and \u00a31,284.0m (outflow) on demand or within one year). ", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-517": { "value": "(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\u2019s committed bank credit facilities and corresponding borrowings were as follows:
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2023 2023 2023 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
Utilised Total
for bonding facility
Amount Drawn facility available
Currency 2022 2022 2022 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Syndicated revolving credit facility
Sterling
350.0
\u2014
\u2014
350.0
The Group has available a revolving credit facility with a maximum capacity of \u00a3350m and a five year term ending November 2027. In addition, the facility provides an accordion facility of \u00a3100m which is uncommitted. At 31 December 2023, the Group had \u00a3208.8m (2022: \u00a3266.4m) of US private placement loan notes which will be repaid as bullet repayments between 2024 and 2032. ", "dimensions": { "concept": "ifrs-full:DescriptionOfManagingLiquidityRisk", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-537": { "value": "(ii) Maturity of financial liabilities The Group\u2019s 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 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
99.3
\u2014
\u2014
\u2014
99.3
Obligations under leases
1
(note 24)
149.0
119.0
158.1
45.8
471.9
Loans (note 25)
51.9
39.2
62.8
54.9
208.8
Future loan interest
6.5
5.4
10.5
6.0
28.4
Derivatives settled on gross basis:
Outflow
1,094.7
0.7
\u2014
\u2014
1,095.4
Inflow
(1,097.9)
(0.4)
\u2014
\u2014
(1,098.3)
303.5
163.9
231.4
106.7
805.5
2 1 The present value of lease obligations is \u00a3453.7m after deducting \u00a318.2m 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 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
108.3
\u2014
\u2014
\u2014
108.3
Obligations under leases
1
(note 24)
150.6
113.9
149.3
51.5
465.3
Loans
(note 25)
45.4
54.9
108.0
58.1
266.4
Future loan interest
11.2
7.3
15.2
8.9
42.6
Derivatives settled on gross basis:
Outflow
1,284.0
7.6
8.1
\u2014
1,299.7
Inflow
(1,286.2)
(8.1)
(8.6)
\u2014
(1,302.9)
313.3
175.6
272.0
118.5
879.4
2 1 The present value of lease obligations is \u00a3446.1m after deducting \u00a319.2m 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 \u00a31,097.9m (inflow) and \u00a31,094.7m (outflow) on demand or within one year (2022: \u00a31,286.2m (inflow) and \u00a31,284.0m (outflow) on demand or within one year). ", "dimensions": { "concept": "ifrs-full:MaturityAnalysisForDerivativeFinancialLiabilities", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-518": { "value": "(ii) Maturity of financial liabilities The Group\u2019s 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 2023
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
99.3
\u2014
\u2014
\u2014
99.3
Obligations under leases
1
(note 24)
149.0
119.0
158.1
45.8
471.9
Loans (note 25)
51.9
39.2
62.8
54.9
208.8
Future loan interest
6.5
5.4
10.5
6.0
28.4
Derivatives settled on gross basis:
Outflow
1,094.7
0.7
\u2014
\u2014
1,095.4
Inflow
(1,097.9)
(0.4)
\u2014
\u2014
(1,098.3)
303.5
163.9
231.4
106.7
805.5
2 1 The present value of lease obligations is \u00a3453.7m after deducting \u00a318.2m 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 2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade payables (note 23)
108.3
\u2014
\u2014
\u2014
108.3
Obligations under leases
1
(note 24)
150.6
113.9
149.3
51.5
465.3
Loans
(note 25)
45.4
54.9
108.0
58.1
266.4
Future loan interest
11.2
7.3
15.2
8.9
42.6
Derivatives settled on gross basis:
Outflow
1,284.0
7.6
8.1
\u2014
1,299.7
Inflow
(1,286.2)
(8.1)
(8.6)
\u2014
(1,302.9)
313.3
175.6
272.0
118.5
879.4
2 1 The present value of lease obligations is \u00a3446.1m after deducting \u00a319.2m 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 \u00a31,097.9m (inflow) and \u00a31,094.7m (outflow) on demand or within one year (2022: \u00a31,286.2m (inflow) and \u00a31,284.0m (outflow) on demand or within one year). ", "dimensions": { "concept": "ifrs-full:MaturityAnalysisForNonderivativeFinancialLiabilities", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-492": { "value": "29 (d) Foreign exchange risk (i) Transactional It is the Group\u2019s 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 2023, 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 29 (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\u2019s 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:
2023
2022
\u00a3m
\u00a3m
Sterling
(15.1)
(32.9)
US Dollar
0.9
12.7
Indian Rupee
14.2
21.7
All derivatives designated as cash flow hedges are highly effective and as at 31 December 2023, \u00a30.9m net fair value loss (2022: \u00a30.6m net fair value gain) has been deferred in the hedging reserve. During the year to 31 December 2023, \u00a30.6m of net fair value loss (2022: \u00a30.9m gain) were transferred to the hedging reserve and \u00a30.2m fair value gain (2022: \u00a30.4m gain) were reclassified to the Consolidated Income Statement. (iv) Currency sensitivity The Group\u2019s currency exposures in respect of monetary items at 31 December 2023 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 rate. 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)
2023
2023
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
US Dollar
(1.0)
0.1
(0.1)
1.3
Euro
\u2014
\u2014
(0.1)
\u2014
Indian Rupee
\u2014
1.4
\u2014
2.1
(1.0)
1.5
(0.2)
3.4
29 (e) Interest rate risk The Group\u2019s 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
2023
2023
2023
2022
2022
2022
Financial assets
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
Cash and cash equivalents
94.4
\u2014
4.3
57.2
\u2014
1.2
Weighted Weighted
average average
Floating rate
Fixed rate
interest rate
Floating rate
Fixed rate
interest rate
2023
2023
2023
2022
2022
2022
Financial assets
\u00a3m
\u00a3m
%
\u00a3m
\u00a3m
%
US Dollar loans
\u2014
208.8
4.0
\u2014
266.4
4.2
\u2014
208.8
\u2014
\u2014
266.4
\u2014
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 2024 and 2032. Excluded from the above analysis is \u00a3453.7m (2022: \u00a3446.0m) 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 \u00a30.9m increase in pre- tax profit for the year to 31 December 2023 (2022: increase of \u00a30.6m). ", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-519": { "value": "(iv) Currency sensitivity The Group\u2019s currency exposures in respect of monetary items at 31 December 2023 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 rate. 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)
2023
2023
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
US Dollar
(1.0)
0.1
(0.1)
1.3
Euro
\u2014
\u2014
(0.1)
\u2014
Indian Rupee
\u2014
1.4
\u2014
2.1
(1.0)
1.5
(0.2)
3.4
29 (e) Interest rate risk The Group\u2019s 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. (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 \u00a30.9m increase in pre- tax profit for the year to 31 December 2023 (2022: increase of \u00a30.6m). ", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-493": { "value": "29 (f) Credit risk The Group\u2019s 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\u2019s principal exposure is to cash and cash equivalents, derivative transactions and trade receivables. The Group\u2019s 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 relating to credit risk during the year ended 31 December 2023 (2022: none). The Group\u2019s Treasury function primarily transacts with counterparties that comply with Board policy. Where exceptions are approved due to local requirements, the Group\u2019s 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\u2019s policy is to provide guarantees for joint ventures and associates only to the relevant proportion of support provided by the partners. At 31 December 2023, the Company has issued guarantees in respect of certain joint ventures and associates as per note 28. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-494": { "value": "29 (g) Capital risk Management\u2019s objective is to maintain a capital structure that supports the Group\u2019s strategic objectives. The Group\u2019s target leverage is 1x-2x net debt to EBITDA which enables execution of the Board\u2019s 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:
2023
2022
\u00a3m
\u00a3m
Cash and cash equivalents
(94.4)
(57.2)
Loans
206.2
262.9
Obligations under leases
453.7
446.0
Equity
1,033.7
1,029.7
Capital
1,599.2
1,681.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-453": { "value": "
30. Retirement benefit schemes
30 (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% (2022: 98.5%) of scheme assets and 99.6% (2022: 98.1%)
of scheme liabilities. They consist of eight pre-funded defined benefit schemes and an 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 \u00a30.2m (2022: \u00a30.2m).
Contract specific schemes
These schemes represent 0.4% (2022: 1.5%) of scheme assets and 0.4% (2022: 1.9%) of scheme liabilities. They consist of one pre-
funded defined benefit schemes in the UK and up until 25 June 2023, the Group sponsored a section of the RPS as part of the
Caledonian Sleepers contractual arrangement which was transferred back to the Scottish Government. There was no residual
liability to fund any deficit at the end of the franchise period.
The Group also 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 respective
scheme actuary and as detailed in each scheme\u2019s schedule of contributions. In addition, the Group may be required to pay some or
all of any deficit (as determined by the respective 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\u2019s joint venture Merseyrail Services Holding Company Limited (Merseyrail) sponsors a
section of the RPS, an industry-wide defined benefit scheme, 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 6 and reflected in the share of profits in joint ventures in the income statement and therefore the disclosure in this note do
not include Merseyrail.
Scheme funding
The normal employer contributions expected to be paid during the financial year for all schemes ending 31 December 2023 are
\u00a310.7m (2022: \u00a38.9m).
The assets of funded schemes are held independently of the Group\u2019s 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\u2019s
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.
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:
\u2013 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\u2019s investment strategy aims to reduce volatility risk by better matching assets to liabilities and is
based on the actuarial funding basis. 48% of the scheme\u2019s 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),
40% Buy and Maintain Credit and 15% Private Debt. 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\u2019s liabilities.
Private debt investments are less volatile to the market conditions and therefore the allocation of these investments were higher
than the scheme\u2019s benchmark at 31 December 2023, with 49% Liability Driven Investments (LDIs), 21% Buy and Maintain Credit
and 30% Private Debt. The Trustees of SPLAS have been working closely with the Group and investment consultants to ensure the
investment objectives of the scheme are maintained.
\u2013 Interest risk. The present values of the defined benefit schemes\u2019 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\u2019 liabilities. This
will be partially offset by an increase in the fair value of the schemes\u2019 debt investments.
\u2013 Longevity risk. The present values of the defined benefit schemes\u2019 liabilities are calculated by reference to the best estimate of the
mortality of the schemes\u2019 participants, both during and after their employment. An increase in the life expectancy of the schemes\u2019
participants will increase the schemes\u2019 liabilities.
\u2013 Inflation risk. The present values of the defined benefit schemes\u2019 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\u2019 liabilities.
\u2013 Salary risk. The present values of the defined benefit schemes\u2019 liabilities are calculated by reference to the future salaries of the
schemes\u2019 participants, as such, an increase in the salary of the schemes\u2019 participants will increase the schemes\u2019 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 \u00a370.0m. 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.
Pension obligations are valued separately for accounting and funding purposes and there is often a material difference between
these valuations. As at 31 December 2023, the estimated actuarial deficit on a funding basis for SPLAS was \u00a323m (2022: \u00a327m)
whereas the accounting valuation resulted in an asset of \u00a330.5m (2022: \u00a347.5m). 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 \u00a36.6m 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 that 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
During the year there continued to be a high degree of volatility in the pensions market. Discount rates and short-term inflation rates
had been rising since 31 December 2021. Concerns over high global inflation, recession, rising interest rates and sharp rises in
bond yields continued through to the third quarter of 2023 and, as inflation fell and interest rates rose, bond yields fell slightly below
the levels at 31 December 2022.
Despite the volatility, Serco\u2019s pension schemes remain in a strong funding position and have an accounting surplus, before tax, the
decrease in the net retirement benefit asset of \u00a326.3m is primarily due to the Group\u2019s largest scheme, Serco Pension and Life
Assurance Scheme (SPLAS), and is as a result of the following:
\u2013 Discount rates being lower than prior year resulting in an increase in pension obligation
\u2013 Actual inflation in 2023 was higher than prior year assumptions resulting in an experience adjustment increasing pension obligations
\u2013 Updated mortality assumptions to reflect the latest available actuarial projections resulting in a reduction to pension obligations
\u2013 Reductions to long term RPI inflation assumptions have resulted in a decrease to pension obligations
\u2014
Discount rates being lower than prior year resulting in an increase in pension obligation
\u2014
Actual inflation in 2023 was higher than prior year assumptions resulting in an experience adjustment increasing pension
obligations
\u2014
Updated mortality assumptions to reflect the latest available actuarial projections resulting in a reduction to pension obligations
\u2014
Reductions to long term RPI inflation assumptions have resulted in a decrease to pension obligations
On 25 June 2023, the contract for Caledonian Sleepers was transferred back to the Scottish Government which included the transfer of
obligations under the section of the share costs pension scheme under the franchise agreement. In line with the accounting under IAS
19, the Group held no liability for this scheme on the balance sheet and therefore there is no gain or loss through the income statement.
(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:
2023
2022
Recognised in the income statement
\u00a3m
\u00a3m
Current service cost \u2013 employer
5.3
5.9
Past service cost \u2013 employer
\u2014
0.8
Settlement gain recognised
\u2014
(0.3)
Administrative expenses and taxes
2.0
2.4
Recognised in arriving at operating profit
7.3
8.8
Interest income on scheme assets \u2013 employer
(50.4)
(28.3)
Interest on franchise adjustment
\u2014
(0.2)
Interest cost on scheme liabilities \u2013 employer
47.3
25.8
Finance income
(3.1)
(2.7)
Total recognised in the income statement
4.2
6.1
2023
2022
Included within the SOCI
\u00a3m
\u00a3m
Actual return on scheme assets
41.4
(539.8)
Less: interest income on scheme assets
(50.4)
(28.3)
Net return on scheme assets
(9.0)
(568.1)
Effect of changes in demographic assumptions
24.3
21.2
Effect of changes in financial assumptions
(22.7)
530.3
Effect of experience adjustments
(21.7)
(77.2)
Remeasurements
(29.1)
(93.8)
Change in franchise adjustment
(1.8)
(7.0)
Change in members\u2019 share
(1.2)
(5.3)
Actuarial loss on reimbursable rights
(3.0)
(12.3)
Total recognised in the SOCI
(32.1)
(106.1)
(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)
2023
2023
2023
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
SPLAS
917.0
(886.5)
30.5
925.3
(877.8)
47.5
ORS
68.5
(80.5)
(12.0)
49.8
(54.9)
(5.1)
RPS
66.7
(60.8)
5.9
68.4
(59.7)
8.7
Other Schemes in surplus
3.8
(2.8)
1.0
3.3
(2.5)
0.8
Other schemes in deficit
1.1
(2.0)
(0.9)
1.0
(2.1)
(1.1)
Scheme under Franchise agreement
\u2014
\u2014
\u2014
11.9
(14.9)
(3.0)
Total
1,057.1
(1,032.6)
24.5
1,059.7
(1,011.9)
47.8
Franchise adjustment
\u2014
1.8
Members\u2019 share of deficit
\u2014
1.2
Net retirement benefit asset
24.5
50.8
1
2
2
3
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 franchise adjustment represents the amount of scheme deficit that is expected to be funded outside the contract period and therefore no additional
funding will be required by the Group.
3 The net retirement benefit asset (before tax) is split in the balance sheet between schemes in surplus totalling \u00a337.4m (2022: \u00a357.0m) reported in retirement
benefit assets and schemes in deficit totalling \u00a312.9m (2022: \u00a36.2m) reported in retirement benefit obligations.
(v) Pension asset values
The schemes asset values at 31 December are:
2023
2022
Scheme assets at fair value
\u00a3m
\u00a3m
Equities
31.6
45.2
Bonds except LDIs
136.5
151.4
Pooled investment funds
145.0
140.0
LDIs
235.8
217.7
Property
0.3
1.3
Cash and other
9.1
13.4
Amounts held by insurance companies
498.8
490.7
Fair value of scheme assets
1,057.1
1,059.7
1
1 There are no investments in the Group\u2019s 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.
\u2013 Equity and Bonds all have quoted prices in active markets and are classified as level 1, except for the unitised equity and bond
fund investments in the non-contract specific section of the Railways Pension Scheme which are Level 2 or Level 3 based on the
Net Asset Value provided by the fund administrator.
\u2013 Pooled investment 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.
\u2013 LDIs are valued at fair value which is typically the Net Asset Value provided by the fund administrator. The LDIs are comprised of a
mix of Level 1 and Level 2 instruments, including corporate/government bonds priced at their quoted bid price, derivatives made
up of interest rate/inflation swaps and payables in respect of repurchase agreements.
\u2013 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.
(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)
2023
2023
2023
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
1,059.7
(1,011.9)
47.8
1,592.9
(1,459.1)
133.8
Current service cost \u2013 employer
\u2014
(5.3)
(5.3)
\u2014
(5.9)
(5.9)
Past service costs \u2013 employer
\u2014
\u2014
\u2014
\u2014
(0.8)
(0.8)
Administration expenses \u2013 employer
(2.0)
\u2014
(2.0)
(2.4)
\u2014
(2.4)
Plan settlement
\u2014
\u2014
\u2014
(8.0)
8.3
0.3
Net interest on scheme assets and
liabilities
50.4
(47.3)
3.1
28.3
(25.8)
2.5
Total recognised in the income statement
48.4
(52.6)
(4.2)
17.9
(24.2)
(6.3)
Return of plan assets
(9.0)
\u2014
(9.0)
(568.1)
\u2014
(568.1)
Effect of changes in demographic
\u2014
24.3
24.3
\u2014
21.2
21.2
assumptions
Effect of changes in financial assumptions
\u2014
(22.7)
(22.7)
\u2014
530.3
530.3
Effect of experience adjustments
\u2014
(21.7)
(21.7)
\u2014
(77.2)
(77.2)
Total recognised in the SOCI
(9.0)
(20.1)
(29.1)
(568.1)
474.3
(93.8)
Contributions by employer
10.5
\u2014
10.5
19.9
\u2014
19.9
Total recognised in the cash flow
10.5
\u2014
10.5
19.9
\u2014
19.9
statement
Contributions by employees
5.1
(4.9)
0.2
1.7
(1.4)
0.3
Current service cost \u2013 employees
\u2014
(0.3)
(0.3)
\u2014
(0.9)
(0.9)
Net Interest cost \u2013 employee
0.1
(0.1)
\u2014
0.1
(0.2)
(0.1)
Change in member share
5.2
(5.3)
(0.1)
1.8
(2.5)
(0.7)
Arising on acquisition
\u2014
\u2014
\u2014
46.7
(51.7)
(5.0)
Benefits paid
(50.3)
50.3
\u2014
(52.1)
52.1
\u2014
Insurance premiums for risk benefits
(2.0)
2.0
\u2014
(0.7)
0.7
\u2014
Transfer in of accrued benefits
4.1
(4.1)
\u2014
\u2014
\u2014
\u2014
Transfer out of benefits
(12.2)
12.2
\u2014
\u2014
\u2014
\u2014
Foreign exchange
2.7
(3.1)
(0.4)
1.4
(1.5)
(0.1)
Other movements
(57.7)
57.3
(0.4)
(4.7)
(0.4)
(5.1)
At 31 December
1,057.1
(1,032.6)
24.5
1,059.7
(1,011.9)
47.8
2023
2022
Changes in the franchise adjustment
\u00a3m
\u00a3m
At 1 January
1.8
8.6
Interest on franchise adjustment \u2013 recognised in income statement
\u2014
0.2
Other changes \u2013 recognised in the SOCI
(1.8)
(7.0)
At 31 December
\u2014
1.8
(vii) Actuarial assumptions: SPLAS
The assumptions set out below are for SPLAS, which reflects 86% of total liabilities and 87% 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 2022 and at 31 December 2023.
The average duration of the benefit obligation at the end of the reporting period is 12 years (2022: 12 years).
2023
2022
Significant actuarial assumptions
%
%
Discount rate
4.80
5.00
Rate of salary increases
2.85
2.85
RPI Inflation
3.05
3.15
CPI Inflation
2.35
2.35
2023
2022
Post-retirement mortality
years
years
Current pensioners at 65 \u2013 male
20.9
21.5
Current pensioners at 65 \u2013 female
23.6
24.1
Future pensioners at 65 \u2013 male
22.8
23.6
Future pensioners at 65 \u2013 female
25.6
26.2
1
1 The mortality assumptions have been updated to reflect the latest available mortality tables 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 2023 where the defined benefit obligation is estimated using the Projected Unit
Credit method. Under this method each participant\u2019s benefits are attributed to years of service, taking into consideration future
salary increases and the scheme\u2019s 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 2023 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.
2023
2022
Increase/(decrease) in defined benefit obligation of SPLAS
\u00a3m
\u00a3m
Discount rate \u2013 1.0% increase
(93.8)
(93.4)
Discount rate \u2013 1.0% decrease
114.1
113.8
Inflation \u2013 1.0% increase
74.1
68.0
Inflation \u2013 1.0% decrease
(69.1)
(68.1)
Rate of salary increase \u2013 1.0% increase
1.5
1.6
Rate of salary increase \u2013 1.0% decrease
(1.3)
(1.4)
Mortality \u2013 one-year age rating
26.6
25.4
Management acknowledges that the method used of presuming that all other assumptions remaining constant has inherent
limitation given that it is more likely for a combination of changes 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\u2019s assets. A 1% change in the long-term gilt yields consistent with the discount rates would result in an
approximate offsetting movement of \u00a390m (2022: \u00a3100m) in the scheme\u2019s LDI investment and a 1% change in long term inflation
expectation would result in an approximate offsetting movement of \u00a360m (2022: \u00a370m) in the scheme\u2019s LDI Investment.
(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 1.40%% to 5.72% (2022 2.40% to 5.45%).
Assumptions in respect of the expected return on scheme assets are required when calculating the franchise adjustment for the
contract-specific plans. These assumptions are based on market expectations of returns over the life of the related obligation. Due
consideration has been given to current market conditions as at 31 December 2023 in respect to inflation, interest, bond yields and
equity performance when selecting the expected return on assets assumptions.
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 \u2018equity risk premium\u2019) 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 4.6% (2022: 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.
30 (b) Defined contribution schemes
The Group paid employer contributions of \u00a397.9m (2022: \u00a396.7m) 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\u2019s 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-495": { "value": "30. Retirement benefit schemes 30 (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% (2022: 98.5%) of scheme assets and 99.6% (2022: 98.1%) of scheme liabilities. They consist of eight pre-funded defined benefit schemes and an 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 \u00a30.2m (2022: \u00a30.2m). Contract specific schemes These schemes represent 0.4% (2022: 1.5%) of scheme assets and 0.4% (2022: 1.9%) of scheme liabilities. They consist of one pre- funded defined benefit schemes in the UK and up until 25 June 2023, the Group sponsored a section of the RPS as part of the Caledonian Sleepers contractual arrangement which was transferred back to the Scottish Government. There was no residual liability to fund any deficit at the end of the franchise period. The Group also 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 respective scheme actuary and as detailed in each scheme\u2019s schedule of contributions. In addition, the Group may be required to pay some or all of any deficit (as determined by the respective 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\u2019s joint venture Merseyrail Services Holding Company Limited (Merseyrail) sponsors a section of the RPS, an industry-wide defined benefit scheme, 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 6 and reflected in the share of profits in joint ventures in the income statement and therefore the disclosure in this note do not include Merseyrail. Scheme funding The normal employer contributions expected to be paid during the financial year for all schemes ending 31 December 2023 are \u00a310.7m (2022: \u00a38.9m). The assets of funded schemes are held independently of the Group\u2019s 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\u2019s 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. 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: \u2013 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\u2019s investment strategy aims to reduce volatility risk by better matching assets to liabilities and is based on the actuarial funding basis. 48% of the scheme\u2019s 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), 40% Buy and Maintain Credit and 15% Private Debt. 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\u2019s liabilities. Private debt investments are less volatile to the market conditions and therefore the allocation of these investments were higher than the scheme\u2019s benchmark at 31 December 2023, with 49% Liability Driven Investments (LDIs), 21% Buy and Maintain Credit and 30% Private Debt. The Trustees of SPLAS have been working closely with the Group and investment consultants to ensure the investment objectives of the scheme are maintained. \u2013 Interest risk. The present values of the defined benefit schemes\u2019 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\u2019 liabilities. This will be partially offset by an increase in the fair value of the schemes\u2019 debt investments. \u2013 Longevity risk. The present values of the defined benefit schemes\u2019 liabilities are calculated by reference to the best estimate of the mortality of the schemes\u2019 participants, both during and after their employment. An increase in the life expectancy of the schemes\u2019 participants will increase the schemes\u2019 liabilities. \u2013 Inflation risk. The present values of the defined benefit schemes\u2019 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\u2019 liabilities. \u2013 Salary risk. The present values of the defined benefit schemes\u2019 liabilities are calculated by reference to the future salaries of the schemes\u2019 participants, as such, an increase in the salary of the schemes\u2019 participants will increase the schemes\u2019 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 \u00a370.0m. 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. Pension obligations are valued separately for accounting and funding purposes and there is often a material difference between these valuations. As at 31 December 2023, the estimated actuarial deficit on a funding basis for SPLAS was \u00a323m (2022: \u00a327m) whereas the accounting valuation resulted in an asset of \u00a330.5m (2022: \u00a347.5m). 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 \u00a36.6m 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 that 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 During the year there continued to be a high degree of volatility in the pensions market. Discount rates and short-term inflation rates had been rising since 31 December 2021. Concerns over high global inflation, recession, rising interest rates and sharp rises in bond yields continued through to the third quarter of 2023 and, as inflation fell and interest rates rose, bond yields fell slightly below the levels at 31 December 2022. Despite the volatility, Serco\u2019s pension schemes remain in a strong funding position and have an accounting surplus, before tax, the decrease in the net retirement benefit asset of \u00a326.3m is primarily due to the Group\u2019s largest scheme, Serco Pension and Life Assurance Scheme (SPLAS), and is as a result of the following: \u2013 Discount rates being lower than prior year resulting in an increase in pension obligation \u2013 Actual inflation in 2023 was higher than prior year assumptions resulting in an experience adjustment increasing pension obligations \u2013 Updated mortality assumptions to reflect the latest available actuarial projections resulting in a reduction to pension obligations \u2013 Reductions to long term RPI inflation assumptions have resulted in a decrease to pension obligations \u2014 Discount rates being lower than prior year resulting in an increase in pension obligation \u2014 Actual inflation in 2023 was higher than prior year assumptions resulting in an experience adjustment increasing pension obligations \u2014 Updated mortality assumptions to reflect the latest available actuarial projections resulting in a reduction to pension obligations \u2014 Reductions to long term RPI inflation assumptions have resulted in a decrease to pension obligations On 25 June 2023, the contract for Caledonian Sleepers was transferred back to the Scottish Government which included the transfer of obligations under the section of the share costs pension scheme under the franchise agreement. In line with the accounting under IAS 19, the Group held no liability for this scheme on the balance sheet and therefore there is no gain or loss through the income statement. (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:
2023
2022
Recognised in the income statement
\u00a3m
\u00a3m
Current service cost \u2013 employer
5.3
5.9
Past service cost \u2013 employer
\u2014
0.8
Settlement gain recognised
\u2014
(0.3)
Administrative expenses and taxes
2.0
2.4
Recognised in arriving at operating profit
7.3
8.8
Interest income on scheme assets \u2013 employer
(50.4)
(28.3)
Interest on franchise adjustment
\u2014
(0.2)
Interest cost on scheme liabilities \u2013 employer
47.3
25.8
Finance income
(3.1)
(2.7)
Total recognised in the income statement
4.2
6.1
2023
2022
Included within the SOCI
\u00a3m
\u00a3m
Actual return on scheme assets
41.4
(539.8)
Less: interest income on scheme assets
(50.4)
(28.3)
Net return on scheme assets
(9.0)
(568.1)
Effect of changes in demographic assumptions
24.3
21.2
Effect of changes in financial assumptions
(22.7)
530.3
Effect of experience adjustments
(21.7)
(77.2)
Remeasurements
(29.1)
(93.8)
Change in franchise adjustment
(1.8)
(7.0)
Change in members\u2019 share
(1.2)
(5.3)
Actuarial loss on reimbursable rights
(3.0)
(12.3)
Total recognised in the SOCI
(32.1)
(106.1)
(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)
2023
2023
2023
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
SPLAS
917.0
(886.5)
30.5
925.3
(877.8)
47.5
ORS
68.5
(80.5)
(12.0)
49.8
(54.9)
(5.1)
RPS
66.7
(60.8)
5.9
68.4
(59.7)
8.7
Other Schemes in surplus
3.8
(2.8)
1.0
3.3
(2.5)
0.8
Other schemes in deficit
1.1
(2.0)
(0.9)
1.0
(2.1)
(1.1)
Scheme under Franchise agreement
\u2014
\u2014
\u2014
11.9
(14.9)
(3.0)
Total
1,057.1
(1,032.6)
24.5
1,059.7
(1,011.9)
47.8
Franchise adjustment
\u2014
1.8
Members\u2019 share of deficit
\u2014
1.2
Net retirement benefit asset
24.5
50.8
1 2 2 3 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 franchise adjustment represents the amount of scheme deficit that is expected to be funded outside the contract period and therefore no additional funding will be required by the Group. 3 The net retirement benefit asset (before tax) is split in the balance sheet between schemes in surplus totalling \u00a337.4m (2022: \u00a357.0m) reported in retirement benefit assets and schemes in deficit totalling \u00a312.9m (2022: \u00a36.2m) reported in retirement benefit obligations. (v) Pension asset values The schemes asset values at 31 December are:
2023
2022
Scheme assets at fair value
\u00a3m
\u00a3m
Equities
31.6
45.2
Bonds except LDIs
136.5
151.4
Pooled investment funds
145.0
140.0
LDIs
235.8
217.7
Property
0.3
1.3
Cash and other
9.1
13.4
Amounts held by insurance companies
498.8
490.7
Fair value of scheme assets
1,057.1
1,059.7
1 1 There are no investments in the Group\u2019s 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. \u2013 Equity and Bonds all have quoted prices in active markets and are classified as level 1, except for the unitised equity and bond fund investments in the non-contract specific section of the Railways Pension Scheme which are Level 2 or Level 3 based on the Net Asset Value provided by the fund administrator. \u2013 Pooled investment 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. \u2013 LDIs are valued at fair value which is typically the Net Asset Value provided by the fund administrator. The LDIs are comprised of a mix of Level 1 and Level 2 instruments, including corporate/government bonds priced at their quoted bid price, derivatives made up of interest rate/inflation swaps and payables in respect of repurchase agreements. \u2013 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. (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)
2023
2023
2023
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
1,059.7
(1,011.9)
47.8
1,592.9
(1,459.1)
133.8
Current service cost \u2013 employer
\u2014
(5.3)
(5.3)
\u2014
(5.9)
(5.9)
Past service costs \u2013 employer
\u2014
\u2014
\u2014
\u2014
(0.8)
(0.8)
Administration expenses \u2013 employer
(2.0)
\u2014
(2.0)
(2.4)
\u2014
(2.4)
Plan settlement
\u2014
\u2014
\u2014
(8.0)
8.3
0.3
Net interest on scheme assets and
liabilities
50.4
(47.3)
3.1
28.3
(25.8)
2.5
Total recognised in the income statement
48.4
(52.6)
(4.2)
17.9
(24.2)
(6.3)
Return of plan assets
(9.0)
\u2014
(9.0)
(568.1)
\u2014
(568.1)
Effect of changes in demographic
\u2014
24.3
24.3
\u2014
21.2
21.2
assumptions
Effect of changes in financial assumptions
\u2014
(22.7)
(22.7)
\u2014
530.3
530.3
Effect of experience adjustments
\u2014
(21.7)
(21.7)
\u2014
(77.2)
(77.2)
Total recognised in the SOCI
(9.0)
(20.1)
(29.1)
(568.1)
474.3
(93.8)
Contributions by employer
10.5
\u2014
10.5
19.9
\u2014
19.9
Total recognised in the cash flow
10.5
\u2014
10.5
19.9
\u2014
19.9
statement
Contributions by employees
5.1
(4.9)
0.2
1.7
(1.4)
0.3
Current service cost \u2013 employees
\u2014
(0.3)
(0.3)
\u2014
(0.9)
(0.9)
Net Interest cost \u2013 employee
0.1
(0.1)
\u2014
0.1
(0.2)
(0.1)
Change in member share
5.2
(5.3)
(0.1)
1.8
(2.5)
(0.7)
Arising on acquisition
\u2014
\u2014
\u2014
46.7
(51.7)
(5.0)
Benefits paid
(50.3)
50.3
\u2014
(52.1)
52.1
\u2014
Insurance premiums for risk benefits
(2.0)
2.0
\u2014
(0.7)
0.7
\u2014
Transfer in of accrued benefits
4.1
(4.1)
\u2014
\u2014
\u2014
\u2014
Transfer out of benefits
(12.2)
12.2
\u2014
\u2014
\u2014
\u2014
Foreign exchange
2.7
(3.1)
(0.4)
1.4
(1.5)
(0.1)
Other movements
(57.7)
57.3
(0.4)
(4.7)
(0.4)
(5.1)
At 31 December
1,057.1
(1,032.6)
24.5
1,059.7
(1,011.9)
47.8
2023
2022
Changes in the franchise adjustment
\u00a3m
\u00a3m
At 1 January
1.8
8.6
Interest on franchise adjustment \u2013 recognised in income statement
\u2014
0.2
Other changes \u2013 recognised in the SOCI
(1.8)
(7.0)
At 31 December
\u2014
1.8
(vii) Actuarial assumptions: SPLAS The assumptions set out below are for SPLAS, which reflects 86% of total liabilities and 87% 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 2022 and at 31 December 2023. The average duration of the benefit obligation at the end of the reporting period is 12 years (2022: 12 years).
2023
2022
Significant actuarial assumptions
%
%
Discount rate
4.80
5.00
Rate of salary increases
2.85
2.85
RPI Inflation
3.05
3.15
CPI Inflation
2.35
2.35
2023
2022
Post-retirement mortality
years
years
Current pensioners at 65 \u2013 male
20.9
21.5
Current pensioners at 65 \u2013 female
23.6
24.1
Future pensioners at 65 \u2013 male
22.8
23.6
Future pensioners at 65 \u2013 female
25.6
26.2
1 1 The mortality assumptions have been updated to reflect the latest available mortality tables 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 2023 where the defined benefit obligation is estimated using the Projected Unit Credit method. Under this method each participant\u2019s benefits are attributed to years of service, taking into consideration future salary increases and the scheme\u2019s 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 2023 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.
2023
2022
Increase/(decrease) in defined benefit obligation of SPLAS
\u00a3m
\u00a3m
Discount rate \u2013 1.0% increase
(93.8)
(93.4)
Discount rate \u2013 1.0% decrease
114.1
113.8
Inflation \u2013 1.0% increase
74.1
68.0
Inflation \u2013 1.0% decrease
(69.1)
(68.1)
Rate of salary increase \u2013 1.0% increase
1.5
1.6
Rate of salary increase \u2013 1.0% decrease
(1.3)
(1.4)
Mortality \u2013 one-year age rating
26.6
25.4
Management acknowledges that the method used of presuming that all other assumptions remaining constant has inherent limitation given that it is more likely for a combination of changes 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\u2019s assets. A 1% change in the long-term gilt yields consistent with the discount rates would result in an approximate offsetting movement of \u00a390m (2022: \u00a3100m) in the scheme\u2019s LDI investment and a 1% change in long term inflation expectation would result in an approximate offsetting movement of \u00a360m (2022: \u00a370m) in the scheme\u2019s LDI Investment. (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 1.40%% to 5.72% (2022 2.40% to 5.45%). Assumptions in respect of the expected return on scheme assets are required when calculating the franchise adjustment for the contract-specific plans. These assumptions are based on market expectations of returns over the life of the related obligation. Due consideration has been given to current market conditions as at 31 December 2023 in respect to inflation, interest, bond yields and equity performance when selecting the expected return on assets assumptions. 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 \u2018equity risk premium\u2019) 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 4.6% (2022: 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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedBenefitPlansExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-520": { "value": "(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)
2023
2023
2023
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
SPLAS
917.0
(886.5)
30.5
925.3
(877.8)
47.5
ORS
68.5
(80.5)
(12.0)
49.8
(54.9)
(5.1)
RPS
66.7
(60.8)
5.9
68.4
(59.7)
8.7
Other Schemes in surplus
3.8
(2.8)
1.0
3.3
(2.5)
0.8
Other schemes in deficit
1.1
(2.0)
(0.9)
1.0
(2.1)
(1.1)
Scheme under Franchise agreement
\u2014
\u2014
\u2014
11.9
(14.9)
(3.0)
Total
1,057.1
(1,032.6)
24.5
1,059.7
(1,011.9)
47.8
Franchise adjustment
\u2014
1.8
Members\u2019 share of deficit
\u2014
1.2
Net retirement benefit asset
24.5
50.8
1 2 2 3 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 franchise adjustment represents the amount of scheme deficit that is expected to be funded outside the contract period and therefore no additional funding will be required by the Group. 3 The net retirement benefit asset (before tax) is split in the balance sheet between schemes in surplus totalling \u00a337.4m (2022: \u00a357.0m) reported in retirement benefit assets and schemes in deficit totalling \u00a312.9m (2022: \u00a36.2m) reported in retirement benefit obligations. ", "dimensions": { "concept": "ifrs-full:DisclosureOfNetDefinedBenefitLiabilityAssetExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-521": { "value": "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 2023 where the defined benefit obligation is estimated using the Projected Unit Credit method. Under this method each participant\u2019s benefits are attributed to years of service, taking into consideration future salary increases and the scheme\u2019s 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 2023 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.
2023
2022
Increase/(decrease) in defined benefit obligation of SPLAS
\u00a3m
\u00a3m
Discount rate \u2013 1.0% increase
(93.8)
(93.4)
Discount rate \u2013 1.0% decrease
114.1
113.8
Inflation \u2013 1.0% increase
74.1
68.0
Inflation \u2013 1.0% decrease
(69.1)
(68.1)
Rate of salary increase \u2013 1.0% increase
1.5
1.6
Rate of salary increase \u2013 1.0% decrease
(1.3)
(1.4)
Mortality \u2013 one-year age rating
26.6
25.4
Management acknowledges that the method used of presuming that all other assumptions remaining constant has inherent limitation given that it is more likely for a combination of changes 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\u2019s assets. A 1% change in the long-term gilt yields consistent with the discount rates would result in an approximate offsetting movement of \u00a390m (2022: \u00a3100m) in the scheme\u2019s LDI investment and a 1% change in long term inflation expectation would result in an approximate offsetting movement of \u00a360m (2022: \u00a370m) in the scheme\u2019s LDI Investment. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSensitivityAnalysisForActuarialAssumptionsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-496": { "value": "30 (b) Defined contribution schemes The Group paid employer contributions of \u00a397.9m (2022: \u00a396.7m) 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\u2019s 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.", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-454": { "value": "
31. Share capital
2023
2022
2023
Number
2022
Number
Issued and fully paid
\u00a3m
Millions
\u00a3m
Millions
1,218,008,788
(2022: 1,218,008,788) ordinary shares of 2p each at 1
24.4
1,218.0
24.4
1,218.0
January
Cancelled: 114,462,822
(2022: nil) ordinary shares of 2p
(2.3)
(114.5)
\u2014
\u2014
1,103,545,966
(2022: 1,218,008,788) ordinary shares of 2p each at
22.1
1,103.5
24.4
1,218.0
31 December
During the year 114,462,822 (2022: nil) shares were cancelled.
The Company has one class of ordinary shares which carry no right to fixed income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-497": { "value": "31. Share capital
2023
2022
2023
Number
2022
Number
Issued and fully paid
\u00a3m
Millions
\u00a3m
Millions
1,218,008,788
(2022: 1,218,008,788) ordinary shares of 2p each at 1
24.4
1,218.0
24.4
1,218.0
January
Cancelled: 114,462,822
(2022: nil) ordinary shares of 2p
(2.3)
(114.5)
\u2014
\u2014
1,103,545,966
(2022: 1,218,008,788) ordinary shares of 2p each at
22.1
1,103.5
24.4
1,218.0
31 December
During the year 114,462,822 (2022: nil) shares were cancelled. The Company has one class of ordinary shares which carry no right to fixed income.
32. Share premium account
2023
2022
\u00a3m
\u00a3m
At 1 January and 31 December
463.1
463.1
33. Reserves
33 (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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2022
(91.0)
95.8
(1.2)
\u2014
(0.1)
(27.5)
0.4
(23.6)
Total comprehensive
(loss)/income for the
year
(78.9)
\u2014
\u2014
\u2014
0.4
60.1
0.1
(18.3)
Shares purchased and
held in own share
\u2014
\u2014
(15.9)
\u2014
\u2014
\u2014
\u2014
(15.9)
reserve
Shares purchased and
held in Treasury
\u2014
\u2014
\u2014
(91.2)
\u2014
\u2014
\u2014
(91.2)
Shares transferred to
award holders on
exercise of share awards
\u2014
(9.3)
9.4
\u2014
\u2014
\u2014
\u2014
0.1
Expense in relation to
share-based payments
\u2014
15.6
\u2014
\u2014
\u2014
\u2014
\u2014
15.6
Tax credit on items taken
\u2014
3.4
\u2014
\u2014
\u2014
\u2014
\u2014
3.4
directly to equity
At 1 January 2023
(169.9)
105.5
(7.7)
(91.2)
0.3
32.6
0.5
(129.9)
Total comprehensive
(26.0)
\u2014
\u2014
\u2014
(0.6)
(38.4)
\u2014
(65.0)
loss for the year
Shares purchased and
held in own share
\u2014
\u2014
(22.9)
\u2014
\u2014
\u2014
\u2014
(22.9)
reserve
Shares purchased and
held in Treasury
\u2014
\u2014
\u2014
(88.8)
\u2014
\u2014
\u2014
(88.8)
Shares committed to be
purchased and held in
Treasury
\u2014
\u2014
\u2014
180.0
\u2014
\u2014
2.3
182.3
Shares transferred to
award holders on
exercise of share awards
\u2014
(15.6)
15.6
\u2014
\u2014
\u2014
\u2014
\u2014
Expense in relation to
share-based payments
\u2014
13.5
\u2014
\u2014
\u2014
\u2014
\u2014
13.5
Tax credit on items taken
\u2014
0.5
\u2014
\u2014
\u2014
\u2014
\u2014
0.5
directly to equity
At 31 December 2023
(195.9)
103.9
(15.0)
\u2014
(0.3)
(5.8)
2.8
(110.3)
33 (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.
33 (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.
33 (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\u2019s share plan schemes. At 31 December 2023, the ESOT held 11,351,967 (2022: 9,144,275) shares equal to 1.0% of the current allotted share capital (2022: 0.8%). The market value of shares held by the ESOT as at 31 December 2023 was \u00a318.4m (2022: \u00a314.2m). 33 (e) Treasury shares The Treasury shares reserve represents amounts paid to repurchase ordinary shares. On 28 February 2023, the Group announced its intention to repurchase ordinary shares with a value of up to \u00a390m. The buyback programme took place between 3 March and 22 June 2023. During this period, the Group repurchased 58,956,118 shares at an average cost of \u00a31.506 for total cost including fees of \u00a388.8m. All shares held at 31 December 2022 and those purchased in 2023 have been cancelled. 33 (f) Hedging and translation reserve The hedging and translation reserve represents foreign exchange differences arising on translation of the Group\u2019s overseas operations and movements relating to cash flow hedges.", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-455": { "value": "32. Share premium account
2023
2022
\u00a3m
\u00a3m
At 1 January and 31 December
463.1
463.1
", "dimensions": { "concept": "sercogroupplc:DisclosureOfSharePremiumAccount", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-456": { "value": "33. Reserves 33 (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
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2022
(91.0)
95.8
(1.2)
\u2014
(0.1)
(27.5)
0.4
(23.6)
Total comprehensive
(loss)/income for the
year
(78.9)
\u2014
\u2014
\u2014
0.4
60.1
0.1
(18.3)
Shares purchased and
held in own share
\u2014
\u2014
(15.9)
\u2014
\u2014
\u2014
\u2014
(15.9)
reserve
Shares purchased and
held in Treasury
\u2014
\u2014
\u2014
(91.2)
\u2014
\u2014
\u2014
(91.2)
Shares transferred to
award holders on
exercise of share awards
\u2014
(9.3)
9.4
\u2014
\u2014
\u2014
\u2014
0.1
Expense in relation to
share-based payments
\u2014
15.6
\u2014
\u2014
\u2014
\u2014
\u2014
15.6
Tax credit on items taken
\u2014
3.4
\u2014
\u2014
\u2014
\u2014
\u2014
3.4
directly to equity
At 1 January 2023
(169.9)
105.5
(7.7)
(91.2)
0.3
32.6
0.5
(129.9)
Total comprehensive
(26.0)
\u2014
\u2014
\u2014
(0.6)
(38.4)
\u2014
(65.0)
loss for the year
Shares purchased and
held in own share
\u2014
\u2014
(22.9)
\u2014
\u2014
\u2014
\u2014
(22.9)
reserve
Shares purchased and
held in Treasury
\u2014
\u2014
\u2014
(88.8)
\u2014
\u2014
\u2014
(88.8)
Shares committed to be
purchased and held in
Treasury
\u2014
\u2014
\u2014
180.0
\u2014
\u2014
2.3
182.3
Shares transferred to
award holders on
exercise of share awards
\u2014
(15.6)
15.6
\u2014
\u2014
\u2014
\u2014
\u2014
Expense in relation to
share-based payments
\u2014
13.5
\u2014
\u2014
\u2014
\u2014
\u2014
13.5
Tax credit on items taken
\u2014
0.5
\u2014
\u2014
\u2014
\u2014
\u2014
0.5
directly to equity
At 31 December 2023
(195.9)
103.9
(15.0)
\u2014
(0.3)
(5.8)
2.8
(110.3)
33 (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. 33 (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.
33 (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\u2019s share plan schemes. At 31 December 2023, the ESOT held 11,351,967 (2022:
9,144,275) shares equal to 1.0% of the current allotted share capital (2022: 0.8%). The market value of shares held by the ESOT as at
31 December 2023 was \u00a318.4m (2022: \u00a314.2m).
33 (e) Treasury shares
The Treasury shares reserve represents amounts paid to repurchase ordinary shares. On 28 February 2023, the Group announced
its intention to repurchase ordinary shares with a value of up to \u00a390m. The buyback programme took place between 3 March and 22
June 2023. During this period, the Group repurchased 58,956,118 shares at an average cost of \u00a31.506 for total cost including fees
of \u00a388.8m. All shares held at 31 December 2022 and those purchased in 2023 have been cancelled.
33 (f) Hedging and translation reserve
The hedging and translation reserve represents foreign exchange differences arising on translation of the Group\u2019s overseas
operations and movements relating to cash flow hedges.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-522": { "value": "33 (e) Treasury shares The Treasury shares reserve represents amounts paid to repurchase ordinary shares. On 28 February 2023, the Group announced its intention to repurchase ordinary shares with a value of up to \u00a390m. The buyback programme took place between 3 March and 22 June 2023. During this period, the Group repurchased 58,956,118 shares at an average cost of \u00a31.506 for total cost including fees of \u00a388.8m. All shares held at 31 December 2022 and those purchased in 2023 have been cancelled. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-457": { "value": "
34. Share-based payment expense
The Group recognised the following expenses related to equity-settled share-based payment transactions:
2023
2022
\u00a3m
\u00a3m
Long-Term Incentive Plan
10.7
13.8
Deferred Bonus Plan
0.9
1.0
Equity Settled Bonus Plan
0.6
0.6
MyShareSave Plan
1.3
0.2
13.5
15.6
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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
30,284
nil
31,014
nil
Granted during the year
11,305
nil
10,543
nil
Dividend equivalent granted during the year
588
nil
598
nil
Exercised during the year
(9,013)
nil
(9,365)
nil
Lapsed during the year
(4,823)
nil
(2,506)
nil
Outstanding at 31 December
28,341
nil
30,284
nil
The awards over shares outstanding at 31 December 2023 were all unvested and had a weighted average contractual life of 1.0
years (2022: 1.0 years).
In the year, 13 grants were made, of which 9 were non-performance related. The remaining 4 awards were performance-based
awards, with 75% of the award split equally between Earnings per Share (EPS), Total Shareholder Return (TSR) and Return on
Invested Capital (ROIC) performance conditions, 15% linked to ESG Scorecard Objectives and 10% linked to improvements in order
book. 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 awards subject only to non-market-based performance conditions (such as the EPS and
ROIC conditions) the Black-Scholes model was used. The Black-Scholes model was also used for the awards made with no
performance conditions attached to them.
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.
The Monte Carlo and Black-Scholes models used the following inputs:
2023
Weighted average share price
\u00a31.48
Weighted average exercise price
nil
Expected volatility
35.1 %
Average expected life (years)
2.95
Risk-free rate
1.58 %
Expected volatility was determined by calculating the historical volatility of the Group\u2019s share price over the previous three years.
The expected life used in the model has been adjusted, based on Management\u2019s 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 \u00a31.37 (2022: \u00a31.43).
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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
6,455
0.02
9,337
0.02
Exercised during the year
(2,098)
0.02
(2,877)
0.02
Lapsed during the year
\u2014
nil
(5)
nil
Outstanding at 31 December
4,357
0.02
6,455
0.02
Of these awards, 4,356,603 (2022: 6,453,743) were exercisable at the end of the year. The awards outstanding at 31 December
2023 had a weighted average contractual life of 2.9 years (2022: 4.5 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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
2,075
nil
1,806
nil
Granted during the year
473
nil
741
nil
Dividend equivalent granted during the year
40
nil
33
nil
Exercised during the year
(613)
nil
(505)
nil
Lapsed during the year
(100)
nil
\u2014
nil
Outstanding at 31 December
1,875
nil
2,075
nil
None of these awards were exercisable at the end of the year (2022: nil). The awards outstanding at 31 December 2023 had a
weighted average contractual life of 0.7 years (2022: 1.4 years).
There were 472,852 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 Black-Scholes model used the following inputs:
2023
Weighted average share price
\u00a31.52
Weighted average exercise price
nil
Expected volatility
31.1 %
Expected life (years)
3.00
Risk-free rate
3.25 %
Expected volatility was determined by calculating the historical volatility of the Group\u2019s share price over the previous three years.
The expected life used in the model has been adjusted, based on Management\u2019s 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 \u00a31.52 (2022: \u00a31.46).
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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
1,443
nil
1,257
nil
Granted during the year
361
nil
476
nil
Dividend equivalent granted during the year
24
nil
23
nil
Exercised during the year
(619)
nil
(313)
nil
Outstanding at 31 December
1,209
nil
1,443
nil
None of these awards were exercisable at the end of the year (2022: none). The awards outstanding at 31 December 2023 had a
weighted average contractual life of 0.6 years (2022: 0.4 years).
There were 360,760 new awards granted under the Equity Settled Bonus Plan in the year. The awards were valued using the Black-
Scholes model.
The Black-Scholes model used the following inputs:
2023
Weighted average share price
1.54
Weighted average exercise price
nil
Expected volatility
33.4 %
Expected life (years)
3.00
Risk-free rate
3.28 %
Expected volatility was determined by calculating the historical volatility of the Group\u2019s share price over the previous three years.
The expected life used in the model has been adjusted, based on Management\u2019s 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 \u00a31.54 (2022: \u00a31.45).
UK and International save as you earn (MyShareSave)
MyShareSave scheme was introduced to UK employees in October 2022. In September 2023 this was extended to employees in
and 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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
5,536
1.26
\u2014
nil
Granted during the year
6,306
1.25
5,556
1.26
Dividend equivalent granted during the year
\u2014
nil
\u2014
nil
Exercised during the year
(28)
1.26
\u2014
nil
Lapsed during the year
(908)
1.26
(20)
1.26
Outstanding at 31 December
10,906
1.25
5,536
1.26
Of these awards 72,310 (2022: none) were exercisable at the end of the year. The awards outstanding at 31 December 2023 had a
weighted average contractual life of 3.0 years (2022: 3.4 years).
There were 6,306,439 new awards granted under the UK MyShareSave plan in the year.
The fair value of the options was based on the assumptions for awards granted during the year as follows:
28 September 2023
Closing share price
\u00a31.52
Exercise price
\u00a31.23
Expected volatility
33.0 %
Dividend yield
2.0 %
Expected life (years)
3.68
Risk-free rate
4.8 %
The weighted average estimated fair value of awards granted under this scheme in the year was \u00a30.43 (2022 \u00a30.53).
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-498": { "value": "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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
30,284
nil
31,014
nil
Granted during the year
11,305
nil
10,543
nil
Dividend equivalent granted during the year
588
nil
598
nil
Exercised during the year
(9,013)
nil
(9,365)
nil
Lapsed during the year
(4,823)
nil
(2,506)
nil
Outstanding at 31 December
28,341
nil
30,284
nil
The awards over shares outstanding at 31 December 2023 were all unvested and had a weighted average contractual life of 1.0 years (2022: 1.0 years). 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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
6,455
0.02
9,337
0.02
Exercised during the year
(2,098)
0.02
(2,877)
0.02
Lapsed during the year
\u2014
nil
(5)
nil
Outstanding at 31 December
4,357
0.02
6,455
0.02
Of these awards, 4,356,603 (2022: 6,453,743) were exercisable at the end of the year. The awards outstanding at 31 December 2023 had a weighted average contractual life of 2.9 years (2022: 4.5 years). 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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
2,075
nil
1,806
nil
Granted during the year
473
nil
741
nil
Dividend equivalent granted during the year
40
nil
33
nil
Exercised during the year
(613)
nil
(505)
nil
Lapsed during the year
(100)
nil
\u2014
nil
Outstanding at 31 December
1,875
nil
2,075
nil
None of these awards were exercisable at the end of the year (2022: nil). The awards outstanding at 31 December 2023 had a weighted average contractual life of 0.7 years (2022: 1.4 years). 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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
1,443
nil
1,257
nil
Granted during the year
361
nil
476
nil
Dividend equivalent granted during the year
24
nil
23
nil
Exercised during the year
(619)
nil
(313)
nil
Outstanding at 31 December
1,209
nil
1,443
nil
None of these awards were exercisable at the end of the year (2022: none). The awards outstanding at 31 December 2023 had a weighted average contractual life of 0.6 years (2022: 0.4 years). UK and International save as you earn (MyShareSave) MyShareSave scheme was introduced to UK employees in October 2022. In September 2023 this was extended to employees in and 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
2023
2023
2022
2022
thousands
\u00a3
thousands
\u00a3
Outstanding at 1 January
5,536
1.26
\u2014
nil
Granted during the year
6,306
1.25
5,556
1.26
Dividend equivalent granted during the year
\u2014
nil
\u2014
nil
Exercised during the year
(28)
1.26
\u2014
nil
Lapsed during the year
(908)
1.26
(20)
1.26
Outstanding at 31 December
10,906
1.25
5,536
1.26
Of these awards 72,310 (2022: none) were exercisable at the end of the year. The awards outstanding at 31 December 2023 had a weighted average contractual life of 3.0 years (2022: 3.4 years). ", "dimensions": { "concept": "ifrs-full:DisclosureOfNumberAndWeightedAverageExercisePricesOfShareOptionsExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-499": { "value": "
35. Related party transactions
Transactions between the Company and its wholly-owned 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
outstanding at outstanding at
Transactions 31 December 31 December
2023
2023
2023
\u00a3m
\u00a3m
\u00a3m
Sale of goods and services
Joint ventures
15.4
1.1
\u2014
Other
Loan to joint venture
\u2014
10.0
\u2014
Dividends received \u2013 joint ventures
21.1
\u2014
\u2014
Receivable from consortium for tax \u2013 joint ventures
9.9
3.7
9.4
Total
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.
Current Non-current
outstanding at outstanding at
Transactions 31 December 31 December
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
Sale of goods and services
Joint ventures
10.5
3.1
\u2014
Other
Loan to joint venture
10.0
\u2014
10.0
Loan to pension scheme
60.0
\u2014
\u2014
Dividends received \u2013 joint ventures
7.3
\u2014
\u2014
Dividends received \u2013 associates
1.8
\u2014
\u2014
Receivable from consortium for tax \u2013 joint ventures
3.2
0.9
3.2
Total
92.8
4.0
13.2
The Group made a short-term temporary loan of \u00a360.0m to Serco Pension and Life Assurance Scheme (SPLAS) in 2022 in order for
the scheme to be able to liquidate assets to meet collateral calls required to ensure that the LDI hedge was maintained; this loan
was repaid in 2022.
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\u2019 liability insurance.
The remuneration of the key Management personnel of the Group is set out below:
2023
2022
\u00a3m
\u00a3m
Short-term employee benefits
7.7
8.6
Post-employment benefits
0.3
\u2014
Termination benefits
0.2
\u2014
Share-based payment expense
4.1
7.1
12.3
15.7
The key Management personnel comprise the Executive Directors, Non-Executive Directors and members of the Group Executive
Committee (2023: 18 individuals, 2022: 17 individuals).
Aggregate Directors\u2019 remuneration
The total amounts for Directors\u2019 remuneration were as follows:
2023
2022
\u00a3m
\u00a3m
Salaries, fees, bonuses and benefits in kind
3.1
3.4
Amounts receivable under long-term incentive schemes
2.5
3.0
Gains on exercise of share awards
0.9
2.7
6.5
9.1
None of the Directors are members of the Company\u2019s defined benefit or money purchase pension schemes.
Further information about the remuneration of individual Directors is provided in the audited part of the Directors\u2019 Remuneration
Report on pages 115 to 138.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-458": { "value": "35. Related party transactions Transactions between the Company and its wholly-owned 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
outstanding at outstanding at
Transactions 31 December 31 December
2023
2023
2023
\u00a3m
\u00a3m
\u00a3m
Sale of goods and services
Joint ventures
15.4
1.1
\u2014
Other
Loan to joint venture
\u2014
10.0
\u2014
Dividends received \u2013 joint ventures
21.1
\u2014
\u2014
Receivable from consortium for tax \u2013 joint ventures
9.9
3.7
9.4
Total
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.
Current Non-current
outstanding at outstanding at
Transactions 31 December 31 December
2022
2022
2022
\u00a3m
\u00a3m
\u00a3m
Sale of goods and services
Joint ventures
10.5
3.1
\u2014
Other
Loan to joint venture
10.0
\u2014
10.0
Loan to pension scheme
60.0
\u2014
\u2014
Dividends received \u2013 joint ventures
7.3
\u2014
\u2014
Dividends received \u2013 associates
1.8
\u2014
\u2014
Receivable from consortium for tax \u2013 joint ventures
3.2
0.9
3.2
Total
92.8
4.0
13.2
The Group made a short-term temporary loan of \u00a360.0m to Serco Pension and Life Assurance Scheme (SPLAS) in 2022 in order for the scheme to be able to liquidate assets to meet collateral calls required to ensure that the LDI hedge was maintained; this loan was repaid in 2022. 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\u2019 liability insurance. The remuneration of the key Management personnel of the Group is set out below:
2023
2022
\u00a3m
\u00a3m
Short-term employee benefits
7.7
8.6
Post-employment benefits
0.3
\u2014
Termination benefits
0.2
\u2014
Share-based payment expense
4.1
7.1
12.3
15.7
The key Management personnel comprise the Executive Directors, Non-Executive Directors and members of the Group Executive Committee (2023: 18 individuals, 2022: 17 individuals). Aggregate Directors\u2019 remuneration The total amounts for Directors\u2019 remuneration were as follows:
2023
2022
\u00a3m
\u00a3m
Salaries, fees, bonuses and benefits in kind
3.1
3.4
Amounts receivable under long-term incentive schemes
2.5
3.0
Gains on exercise of share awards
0.9
2.7
6.5
9.1
None of the Directors are members of the Company\u2019s defined benefit or money purchase pension schemes. Further information about the remuneration of individual Directors is provided in the audited part of the Directors\u2019 Remuneration Report on pages 115 to 138.", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-523": { "value": "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\u2019 liability insurance. The remuneration of the key Management personnel of the Group is set out below:
2023
2022
\u00a3m
\u00a3m
Short-term employee benefits
7.7
8.6
Post-employment benefits
0.3
\u2014
Termination benefits
0.2
\u2014
Share-based payment expense
4.1
7.1
12.3
15.7
The key Management personnel comprise the Executive Directors, Non-Executive Directors and members of the Group Executive Committee (2023: 18 individuals, 2022: 17 individuals). ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-459": { "value": "
36. Notes to the Consolidated Cash Flow statement
2023 2022
Non Non
2023 underlying 2023 2022 underlying 2022
Underlying items Reported Underlying items Reported
Year ended 31 December \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Profit before tax
224.1
22.9
247.0
216.6
(19.8)
196.8
Net finance costs
24.6
\u2014
24.6
20.4
20.4
Operating profit for the year
248.7
22.9
271.6
237.0
(19.8)
217.2
Adjustments for:
Share of profits in joint ventures and
associates
(29.0)
\u2014
(29.0)
(12.0)
\u2014
(12.0)
Share-based payment expense
13.5
\u2014
13.5
15.6
\u2014
15.6
Impairment of intangible assets
0.1
8.1
8.2
0.1
\u2014
0.1
Amortisation of intangible assets
7.7
22.8
30.5
10.0
21.6
31.6
Impairment of property, plant and
equipment
0.6
\u2014
0.6
2.3
\u2014
2.3
Net impairment/(reversal of
impairment) of right of use assets
0.7
\u2014
0.7
2.4
(4.2)
(1.8)
Depreciation of property, plant and
equipment
17.3
\u2014
17.3
20.7
\u2014
20.7
Depreciation of right of use assets
125.4
\u2014
125.4
119.3
\u2014
119.3
(Profit)/Loss on disposal of intangible
assets
(0.8)
\u2014
(0.8)
0.4
\u2014
0.4
Loss/(profit) on early termination of
leases
0.6
\u2014
0.6
(0.2)
\u2014
(0.2)
Profit on disposal of property, plant
(0.6)
\u2014
(0.6)
(0.5)
\u2014
(0.5)
and equipment
Other non-cash movements
(1.5)
\u2014
(1.5)
\u2014
\u2014
\u2014
Increase/(decrease) in provisions
12.6
(44.6)
(32.0)
4.0
(0.6)
3.4
Total non-cash items
146.6
(13.7)
132.9
162.1
16.8
178.9
Operating cash inflow/(outflow)
395.3
9.2
404.5
399.1
(3.0)
396.1
before movements in working capital
(Increase) in inventories
(2.4)
0.1
(2.3)
(1.5)
\u2014
(1.5)
Decrease in receivables
63.1
\u2014
63.1
1.2
\u2014
1.2
(Increase)/decrease in payables
(30.7)
\u2014
(30.7)
(24.0)
0.1
(23.9)
Movements in working capital
30.0
0.1
30.1
(24.4)
0.1
(24.3)
Cash generated by operations
425.3
9.3
434.6
374.7
(2.9)
371.8
Tax paid
(41.1)
\u2014
(41.1)
(44.2)
\u2014
(44.2)
Non-cash R&D expenditure
(0.4)
\u2014
(0.4)
(0.4)
\u2014
(0.4)
Net cash inflow/(outflow) from
operating activities
383.8
9.3
393.1
330.1
(2.9)
327.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "fact-460": { "value": "
37. Post balance sheet events
Acquisitions
On 14 December 2023, Serco agreed to acquire 100% of the share capital of European Homecare (EHC), a specialist provider of
immigration services to public sector customers in Germany. The business will be acquired from Korte-Stiftung for \u20ac40m (\u00a334m)
subject to final fair value assessments. Subsequent to the balance sheet date clearance has been obtained from the competition
authority and the acquisition completed on 1 March 2024. Due to the timing of completion and 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.
On 14 December 2023, Serco agreed to acquire 100% of the share capital of Climatize, a small but fast-growing business that
operates in the United Arab Emirates and the Kingdom of Saudi Arabia offering \u2018zero-carbon\u2019 advisory and related engineering
services. The acquisition completed on 31 January 2024 for cash consideration of AED 9.0m (\u00a31.9m) and contingent consideration
of up to AED 51.0m (\u00a310.9m), payable on achieving certain financial targets. Due to the timing of completion, 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.
US Private Placement Loan Notes
On 27 February 2024, Serco Group plc issued $150m (\u00a3118m) of US Private Placement loan notes. The notes are equally split into
two series of $75m each with maturities of 5 and 10 years, giving an average maturity of 7.5 years. The average interest rate on the
new loan notes is fixed at 6.58%, which compares to a blended rate of 3.97% for the existing notes.
Serco share buyback
The Group has announced its intention to commence a share buyback of up to \u00a3140m. Consistent with the Group\u2019s capital allocation
policy, the objective of the programme is to provide additional returns to shareholders as well as aid the Group in meeting its
medium-term leverage targets. The buyback programme is expected to complete by 31 December 2024 with the shares either held
in treasury or cancelled.
Employee Share Ownership Trust
Subsequent to the year end, the Group\u2019s Employee Share Ownership Trust completed the purchase of 9.3m shares at the cost of
\u00a316.2m. These shares will be held in the own share reserve until they are transferred to award holders on the exercise of share
awards.
Dividends
Subsequent to the year-end, the Board has recommended the payment of a final dividend in respect of the year ended 31
December 2023 of 2.27p. 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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:549300PT2CIHYN5GWJ21", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }