Serco Profits Plunge and Warn of Tough 2014 on Government Tagging Contract ScandalReuters

Serco posted a plunge in profits for last year and warned of a tough 2014 as the troubled security group battles the aftermath of the government contract tagging scandal.

Serco revealed in its latest financial results that 2013 adjusted pre-tax profit failed to meet analyst expectations and fell to £254.4m (€309m, $425m), from the forecasted £257m.

Serco's debt also swelled by 21%, reaching £701m in 2013.

It said this year will be particularly difficult as it will bear the costs of restructuring the company and winning back contracts after it was found to have overcharged the Ministry of Justice (MoJ) for security deals.

Serco, alongside its main rival G4S, was found to have charged the MoJ for tagging criminals who were dead, still in prison, or where no tag had actually been put on the offender. It paid a hefty fine for this and was stripped of its lucrative contract.

In a bid to turn around the company and gain the trust of the British public and investors, Serco replaced its long standing employee, Chris Hyman, with Aggreko boss Rupert Soames as chief executive.

In a statement, Serco said it is focusing on rebuilding its business after a British government investigation found that it, and rival G4S, had wrongfully charged for work that was not carried out.

Soames will take up the post as of 1 June this year and interim leader, Ed Casey, will continue to lead the company in the meantime.

"It is has been an extremely difficult decision for me to leave Aggreko after 11 enjoyable and successful years," said Soames, who is also the brother of former Conservative Party government minister Nicholas Soames.

It also recently announced that snapped up three heavyweight British executives to join its board of directors; Mike Clasper, Tamara Ingram and Rachel Lomax.

Clasper CBE, 60, was previously the BAA group chief executive of from 2003 to 2006 and Chairman of Her Majesty's Revenue and Customs (HMRC) from 2008 to 2012.

Ingram OBE, 53, is executive vice president at WPP, where she is managing director at Grey Group and CEO, Team P&G.

Lomax, 68, was deputy governor of the Bank of England from 2003 to 2008 and has been permanent secretary at both the Department for Transport.