Serco’s annus horribilis continues

Today’s announcement has seen the price of the already embattled share drop by more than 10% in the first hour of trading.

It has been a rollercoaster year for Serco, and the shares currently stand roughly 100p off the year-to-date price at 457p. In the intermediate time they have also been as high as 690p. There has been quite a fall from grace after those early-July highs.

Serco stands accused of overcharging its largest client, the UK government. As things stand now, at best the board looks negligent, and at worst… well.

These reputation-ruining stories, combined with the consequent management changes, have shaken confidence in the firm badly. Serco also confirmed that operating margins had tightened and the outlook for the year-end figures had worsened, with profits set to fall below those set in 2013.

Until the current review over the company’s handling of a number of UK government contracts is out of the way, Serco is unable to sign up any fresh work with the government. Add to this the costs of £12 million incurred since July, and the possibility of a further £15 million one-off accounting charge, and things could get worse before they get better.   

Serco Group plc chart

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