Serco share price dips as outsourcing firm writes down value of some contracts

 
Suzie Neuwirth
Rupert Soames took over as chief executive of Serco in May
Beleaguered outsourcing firm Serco yesterday warned that it would have to write down the value of several large loss-making contracts, which could hamper its full-year results.

Shares in the FTSE 250-listed company dipped almost one per cent on the news, with UK contracts for asylum seeker housing and clinical healthcare set to be among the impairments.

Serco has battled to restore its reputation after allegations of fraud on a prisoner tagging contract, which resulted in a temporary ban on winning new government work. The firm issued a profit warning in April and launched a £160m share placing in May to avoid defaulting on debts.

The group has also overhauled its management, with former Aggreko boss Rupert Soames taking over as chief executive in May. Soames, who is wartime leader Sir Winston Churchill’s grandson, has implemen­ted a nine-month strategic review of the firm that will consider asset sales, future debt levels and dividend policy.

“To the extent that there are further financial consequences of the strategy review, including analysis of our contract base, these may in turn impact our previously stated expectations for the financial year,” said the company.

It expects to report flat first-half revenue of £2.4bn and warned that margins would be significantly lower.

Shares closed down at 363p.

Related articles