Member Article

Profits fall dramatically at troubled Serco

The troubled FTSE 250 services provider Serco has revealed a dramatic 44% fall in profits due to £110 million costs associated with Government reviews of its work.

Serco reported operating profits had fallen from £272.2 million to £143.8 million in 2013 given the impact of the scandal surround its UK Ministry of Justic contract and the electronic tagging of criminals.

The firm were reprimanded for over-charging the Government for tagging criminals - a mistake that has cost Serco £90 million in settlements.

A number of US contract wins improve the longterm outlook for Serco while a reduction of Australian immigration work posed a challenge in the short term.

Ed Casey, Acting Group CEO, said: “We have been through a difficult year and there remains much to be done to ensure the agreed programme of corporate renewal is successfully implemented. However, the work we have completed and the undertakings we have made demonstrate our commitment to achieve this.

“The events of 2013 absorbed management’s focus and, therefore, interrupted the normal process of improving efficiency and developing our business into new areas. Over the second half of 2013 and until the end of January 2014 we were not able to be awarded new contracts by UK Central Government, which also had an impact on the development of our business in certain other sectors.

“Our focus is clear, to ensure that the Group has stable operations, appropriate operational controls and differentiated capabilities to make the most of the breadth of our offering across frontline and middle and back office services, and our referenceability from one country to another. I am confident that these attributes will enable Serco’s return to growth in what remain fundamentally attractive service markets around the world.”

This was posted in Bdaily's Members' News section by Tom Keighley .