28th Apr 2014 17:32
LONDON (Alliance News) - Serco Group PLC Monday said that after a more challenging 2014 so far, it is reviewing its performance and may have to revise its expectations lower.
The outsourcing company said that ahead of its upcoming Annual General Meeting on May 8 and the arrival of its New Chief Executive Rupert Soames on May 1 it is reviewing its performance so far this year, noting that performance has been more challenging than previously expected.
Soames, who Serco poached from Aggreko in February is tasked with the revival of the business.
The company said it has become evident that due to problems with performance it may have to reassess the level of risk in the assumptions underlying its forecasts and this "may lead to a material downward revision of expectations."
Serco said it will now consult with its shareholders regarding the possibility of strengthening its balance sheet through an equity placing.
In March the firm reported a sharp drop in 2013 pretax profit due to its well-publicised issues with certain UK government contracts and the reputational damage that inflicted, and it said its outlook for 2014 remains challenging too, particularly due to issues with an Australian immigration contract.
The sharp drop in the company's 2013 performance had been well flagged after it was banned from winning new UK government work in the wake of issues with two contracts. The company reported a pretax profit of GBP106.6 million, down from GBP281.1 million in 2012, even though revenues rose to GBP4.29 billion, from GBP4.06 billion.
Serco shares closed up 0.5% at 405.54 pence Monday.
By Tom McIvor; [email protected]; @TomMcIvor1
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