THE new boss of a private security firm has been warned the company is in a worse state than feared.

A review of Serco’s performance ahead of Rupert Soames’ arrival as chief executive found it needs a material downward revision to profit forecasts.

Shares fell after the revelation, with bosses confirming they are in talks with shareholders over City fundraising to strengthen its balance sheet.

Serco, which operates the International Fire Training Centre (IFTC), at Durham Tees Valley Airport, said market conditions were more challenging than predicted.

In March, it reported a 62 per cent fall in annual profits after a scandal-hit year.

The company was forced to refund the Government £68.5m for overcharging on criminal tagging contracts and repay £2m of past profits from a prisoner-escorting contract.

However, it is now clear to bid for public sector contracts.

It has appointed Mr Soames, the former boss of temporary power firm Aggreko, to lift its corporate renewal plan.

Earlier this year, Serco told The Northern Echo it was not looking to leave the North- East and its IFTC division, having invested £1m in the site.

Gary Watson, IFTC business operations manager, said: “We remain committed to the IFTC, which has a healthy and growing order book from clients in the UK and overseas.

“In the past three months alone, the company has invested more than £1m into the business.

‘‘We are continuing to actively engage with Peel Holdings, the owners of Durham Tees Valley Airport, about our long-term commitment to the site.

“Both organisations share real confidence about the future.”

Last year, Serco agreed to repay £68.5m to the Government for overcharging on criminal tagging contracts.

The Serious Fraud Office opened a criminal investigation after it emerged Serco, and rival outsourcing firm G4S, overcharged for tagging offenders, some of whom were found to be dead, back in prison or overseas.