Two Regions New Tender

Contract Awarded for Two Regions of the new Asylum Accommodation and Support Services Contract AASC being the North West of England and the Midlands East of England.For the two regions in aggregate the total contract value is estimated to be around 1.9bn over a 10-year term and this value will be initially added to our order book the final contract value will reflect the actual Service User volumes and indexation adjustments over the life of the contract.AASC is the successor framework for the current COMPASS Commercial and Operational Managers Procuring of Asylum Support Services contracts which were awarded in 2012. Of the current COMPASS regions Serco is responsible for two North West of England and Scotland Northern Ireland and we are currently looking after some 17000 asylum seekers.Under AASC Serco will be responsible for the provision of properties for initial and dispersed accommodation requirements for transportation to and from properties and for a range of other services to support the welfare of asylum seekers. In the two regions for which Serco has been selected there are currently approximately 20000 asylum seekers living in more than 5000 properties. Serco will ensure all accommodation is safe and habitable and in accordance with the Decent Homes Standard. We will use our extensive experience of working with the communities local authorities suppliers and other specialist organisations to achieve strong partnerships and excellent service delivery.While the core service lines are similar between the COMPASS and AASC contracts there have been a number of improvements for Service Users and changes to contract terms including the introduction of volume caps and certain other protections for surge events greater graduation of volume charging bands improved inflation protection and mechanisms for handling certain other risk scenarios and change events.In 2020 the first full financial year of Sercos new AASC contracts the annual revenue is anticipated to be approximately 150m which compares to revenue in 2018 on our COMPASS contracts of approximately 70m. The COMPASS contracts incurred a loss of approximately 15m in 2018 which has been offset by utilisation of an Onerous Contract Provision OCP. In 2019 the new AASC contracts are expected to have a negligible effect on profitability as mobilisation and transition costs will be expensed as they are incurred in the year but in 2020 and thereafter we expect the AASC contracts to be materially positive to both profitability and cash flow.Commenting on the award of the contracts to Serco Rupert Soames Serco Group Chief Executive stated by We are very pleased to have been awarded contracts for two large regions by the Home Office together these will be the largest contracts by value ever awarded to Serco. Over the last six years Serco has cared for many tens of thousands of people whilst their asylum claims were being