THE scale of the challenge awaiting Aggreko chief executive Rupert Soames at his new employer Serco will be spelled out this week when the outsourcing giant reveals the impact of the scandal over the criminal tagging contract.
The group – which named Soames as its new chief executive on Friday – has been rocked by the affair after it erupted last July, alleging that Serco and rival G4S overcharged for tagging offenders, some of whom were found to be dead, back in prison or overseas.
Last month, Serco agreed to repay the UK government £68.5 million for over-charging on criminal tagging contracts, as well as paying back £2m of past profits from a prisoner escorting contract.
It is also co-operating with investigations by the Serious Fraud Office and the City of London Police, which is looking into the actions of staff working on the court escorting service.
Serco, which runs a vast range of services from prisons to rail services, has lost a third of its stock market value in the last six months alone. The group has already braced the City to expect last year’s profits to be close to 2012’s haul of £307m, which was lower than the £325m expected in the market, when it reports on Tuesday.
At the end of January it also sounded the alarm over 2014 earnings, saying the time needed to rebuild its bid pipeline and overhaul its business will leave this year’s profits between 10 per cent and 20 per cent short of current City expectations of around £277m – indicating between £222m and £249m.
This is despite it being cleared by the Cabinet Office to resume bidding for public sector contracts.
It had been temporarily barred from bidding for lucrative government contracts, although Serco said in January it received a “positive assessment” of its corporate renewal plan from the Cabinet Office. This means it can now be considered on an equal basis to other suppliers for current bids, rebids and extensions.