Serco sheds 16pc on tagging-related profit warning
Disgraced government contractor Serco has seen its shares plunge 16 per cent this morning, after it issued a profit warning.
Serco announced that it’s expecting a fall in operating profit of up to 20 per cent in 2014, because of less work being secured and the "attrition" from lost contracts, including the government's electronic tagging contract.
The market consensus for operating profit is currently £277m.
The firm was found to have overcharged the taxpayer on contracts dating back to 2005 and was accused of tagging criminals who were in jail, overseas, or dead. Last month it agreed to repay the government £68.5m.
It’s also expecting organic revenues to fall by a “mid-single digit percentage”.
But there is some sunnier news for Serco. The government yesterday deemed its business overhaul as on the right track to meet its expectations as a customer, clearing it to win future contracts.
However, the estimate for loss of earnings does include assumptions over securing further bids, the company said.
Serco runs services across the UK from hospitals to car parks, and holds more than £4bn contracts for the MoD alone, according to figures seen by the FT.
Shares initially climbed on the news the government ban had been lifted, but are now down over 11 per cent.
