Embattled outsourcing group Serco (LON:SRP) will have to shell out at least £104.5 million as part of the government overcharging scandal.
The company revealed in a trading statement it has set aside £36mln in advisory and auditing costs, up from the previous estimate of £27mln.
Justice Secretary Chris Grayling also revealed that Serco will have to repay £68.5mln to the government for overcharging it for electronic tags.
Serco had warned that the amount owed could run into tens of millions of pounds and already had a £24mln settlement rejected.
The company, along with G4S, has been suspended from winning new contracts since the government decided to review its operations after it charged for tags on criminals not being monitored, still in prison or even dead. It also lost work on three prisons in Yorkshire in the wake of the scandal.
The Serious Fraud Office’s (SFO) investigation into the allegations is still ongoing.
While Serco looks to have drawn a line under the scandal, G4S was told two more contracts have been referred to the SFO for review.
Serco’s share price spiked 7.5% to 482p, while G4S fell 2.3% to 248p.
“We anticipate the audits and reviews to provide a route to rehabilitation and lift the restriction on Serco winning new central government contracts,” said Oriel Securities.
“But we expect wins – beyond extensions – will prove elusive and hence growth rates weak and uncertain.”