Troubled outsourcing company Serco reported plunging profits for 2013 and expects a further 20% fall this year following a series of scandals that left its reputation in tatters.
Profit before tax fell by 62% to £106m in 2013, a year that Serco's acting chief executive, Ed Casey, described as "probably the toughest in Serco's 25-year history". Serco is braced for two more tough years.
It reiterated today that adjusted operating profits would fall to £220m-£250m in 2014, from £285m last year.
Profits next year could also be hit after the group overcharged for government work in the UK, which makes up about a quarter of its business. Serco lost a £40m-a-year government contract for electronic tagging after it continued to charge for offenders who were dead or in prison.
Serco is still being investigated by the Serious Fraud Office, and was temporarily banned from being awarded new contracts by the UK government until the end of January. It laid off 400 staff and took a £90m charge, most of which related to a financial settlement with the government.
There could be more job losses this year, Casey said. He said the reputational damage was largely limited to the UK, even though the scandals received a lot of press coverage in Australia.
"In the [UK] private sector we are already beginning to see those issues fade," he said.
In a statement, Serco's chairman Alastair Lyons said the electronic tagging scandal "should never have happened and we have apologised unreservedly … We are doing everything in our power to make sure that such issues cannot reoccur anywhere in our business around the world."
The company sought to draw a line under its debacles when it appointed the well-regarded Aggreko boss Rupert Soames as its new chief executive last week following Chris Hyman's departure in October.
Hyman had transformed the company into a major international group employing more than 100,000 people in 30 countries to run services including defence establishments, prisons, railways and hospitals.
Serco also appointed three new heavyweight non-executive directors to its board on Monday – former Bank of England deputy governor Rachel Lomax, former BAA boss and HMRC chairman Mike Clasper and WPP executive Tamara Ingram.
Lomax will chair Serco's new corporate responsibility committee. The firm has agreed plans with the government to overhaul its internal ethics.
Cantor Fitzgerald analyst Sam Thomas said Soames, who will take the reins on 1 June, "will have his work cut out", as "Serco is in need of serious repair."
Casey, who has been with Serco since 2005 and until recently headed the Americas division, said he had an "easy rapport" with Soames and hopes to stay on at the company.
Despite its well-publicised woes, Serco won £3.7bn of new contracts around the world last year, including running the Docklands Light Railway in London and a new US healthcare contract for Medicare & Medicaid. Its order book was worth £17bn in December, down £2bn on a year earlier.
theguardian.com
Profit before tax fell by 62% to £106m in 2013, a year that Serco's acting chief executive, Ed Casey, described as "probably the toughest in Serco's 25-year history". Serco is braced for two more tough years.
It reiterated today that adjusted operating profits would fall to £220m-£250m in 2014, from £285m last year.
Profits next year could also be hit after the group overcharged for government work in the UK, which makes up about a quarter of its business. Serco lost a £40m-a-year government contract for electronic tagging after it continued to charge for offenders who were dead or in prison.
Serco is still being investigated by the Serious Fraud Office, and was temporarily banned from being awarded new contracts by the UK government until the end of January. It laid off 400 staff and took a £90m charge, most of which related to a financial settlement with the government.
There could be more job losses this year, Casey said. He said the reputational damage was largely limited to the UK, even though the scandals received a lot of press coverage in Australia.
"In the [UK] private sector we are already beginning to see those issues fade," he said.
In a statement, Serco's chairman Alastair Lyons said the electronic tagging scandal "should never have happened and we have apologised unreservedly … We are doing everything in our power to make sure that such issues cannot reoccur anywhere in our business around the world."
The company sought to draw a line under its debacles when it appointed the well-regarded Aggreko boss Rupert Soames as its new chief executive last week following Chris Hyman's departure in October.
Hyman had transformed the company into a major international group employing more than 100,000 people in 30 countries to run services including defence establishments, prisons, railways and hospitals.
Serco also appointed three new heavyweight non-executive directors to its board on Monday – former Bank of England deputy governor Rachel Lomax, former BAA boss and HMRC chairman Mike Clasper and WPP executive Tamara Ingram.
Lomax will chair Serco's new corporate responsibility committee. The firm has agreed plans with the government to overhaul its internal ethics.
Cantor Fitzgerald analyst Sam Thomas said Soames, who will take the reins on 1 June, "will have his work cut out", as "Serco is in need of serious repair."
Casey, who has been with Serco since 2005 and until recently headed the Americas division, said he had an "easy rapport" with Soames and hopes to stay on at the company.
Despite its well-publicised woes, Serco won £3.7bn of new contracts around the world last year, including running the Docklands Light Railway in London and a new US healthcare contract for Medicare & Medicaid. Its order book was worth £17bn in December, down £2bn on a year earlier.
theguardian.com
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