Serco Shares Down 17% On Profit Warning
Troubled outsourcing firm Serco has seen its shares drop 17% after it issued a profit warning.
The company said its 2014 profit may be 20% lower than market forecasts, due to implementation of a business overhaul following contract disputes with its biggest revenue stream, the UK Government.
The dramatic fall comes just minutes after the Government said it could bid for future contracts, provided it continued with reform plans.
Serco added it was in the final phases of appointing a new chief executive.
The share drop eased in late morning trades but worsened to more than 17% in late trades. Here is the latest share price.
The firm was restructuring its UK division and bolstering expertise on its board following political pressure over a series of contractual blunders.
City analysts had forecast an average 2014 adjusted pre-tax profit of £277m, but Serco said it may only reach £221m.
Last month Serco agreed to repay the Government £68.5m for overcharging for the tagging of convicted criminals.
Both Serco and rival G4S were found to have charged the taxpayer tens of millions of pounds too much for monitoring criminals in a contract dating back to 2005.
The Serious Fraud Office (SFO) opened a criminal investigation after it emerged the companies were paid for supposedly electronic tagging of offenders - some of whom turned out to be dead, back in prison or overseas.
Last year, Sky News also revealed that both Serco and G4S, the firm embroiled in the Olympic security staff disaster, had pulled out of bidding for lucrative probation service contracts in the wake of the overcharging scandal.
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