* Serco selected as preferred bidder to renew contract
* It was company's biggest contract last year
* Revenue from it set to fall due to immigration crackdown
(Adds details, shares, background)
LONDON, Sept 4 Serco has been selected
as preferred bidder to continue running Australia's onshore
immigration detention services, some rare good news for the
British company after a disastrous year.
Serco's share price is down 40 percent on a year ago after
it was hit by a six-month ban on new UK government work in July
2013 for overcharging on a tagging contract, while a raft of
other deals have hit problems, forcing the firm to raise cash
and begin costly reviews and restructuring.
The loss of the Australian immigration services would have
been another major blow for the firm, which posted a 59 percent
fall in first-half operating profit last month.
It was its biggest contract in 2013, accounting for almost a
tenth of its revenue.
Serco said on Thursday that it had been chosen as the
preferred bidder and that a new contract would be signed over
the next few months, pending commercial negotiations.
Shares in the firm, which runs services in over 30 countries
from prisons and air traffic control centres to healthcare
services, were up 4.2 percent to 326 pence at 0835 GMT.
Serco has operated Australia's network of onshore
immigration detention centres - which also includes the Indian
Ocean territory of Christmas Island - since 2009.
Revenue from the contract depends on the number of migrants
Serco deals with. It was worth about $260 million in its first
year, but that figure rose significantly as more asylum seekers
arrived in Australia, exceeding $740 million in 2013.
REVENUE SET TO FALL
However Serco has warned the work is likely to be less
lucrative in future after the Australian government announced in
January it was starting to close down some mainland detention
centres as it pushes ahead with tough policies to deter refugees
arriving by boat. They include turning back boats and detaining
asylum seekers in remote centres offshore.
While still viewed by analysts as a key contract, Serco have
said revenues could fall by half in 2014 due to lower volumes.
Immigration remains a polarising political issue in
Conservative Prime Minister Tony Abbott won an election last
September after campaigning heavily on tough immigration
policies, which have been criticised internationally but which
polls show are popular with voters. The government says such
measures are needed to stop dangerous people-smuggling ventures.
About 16,000 asylum seekers came to Australia on 220 boats
in the first seven months of 2013, but the government says its
policies have proved successful with just one "illegal" boat
arrival since December.
The government has been criticised by human rights groups
for its immigration policies, including turning back asylum
seeker boats and detaining children for long periods of time.
Asylum seekers held on remote Christmas Island are suing the
government for failing to provide adequate healthcare, while a
public inquiry has heard that children in detention are
suffering from widespread mental illness caused by their
(Reporting by Neil Maidment in London and Jane Wardell in
Sydney; Editing by Sonya Hepinstall and Pravin Char)