Financial News

  • 3 July 2014, 18:51

Serco Writes Down Value Of Asylum Contract

Troubled outsourcing firm Serco is to write down the value of some of its biggest contracts, amid a review of its business strategy.

The writedown, which comes as it was forced to raise more cash following a plunge in profit, will be calculated into its next half-year results.

The company said its Compass programme, which provides accommodation and other services for asylum seekers, would be reassessed.

A clinical healthcare contract would also be written down.

Serco was the centre of scandal last year when revealed that it overcharged the UK Government through its contract to tag prisoners.

The Serious Fraud Office opened a criminal investigation after it emerged Serco and outsource rival G4S overcharged for the electronic tagging of offenders, some of whom were found to be dead, back in prison or overseas.

In December it agreed to repay 68.5m of taxpayers' money.

A temporary ban on new government work was announced and its long-standing chief executive Chris Hyman departed the company.

Serco is now run by former Aggreko chief executive Rupert Soames.

It has downgraded 2014 profit forecasts three times and sought to raise 170m through a share sale.

It is due to report its half-year results on August 12.

Mr Soames said: "Whilst difficulties continue on some contracts, overall our trading and financial position is in line with the expectations on which we updated the market two months ago.

"There are many challenges ahead, but I am confident that we can build a strong future for the business; I look forward to providing further updates in due course."

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