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Serco to take $28 million charge on UK health contracts

LONDON (Reuters) - Serco will take a 17-million-pound ($28 million) exceptional charge this year related to three loss-making contracts in its UK clinical health business, the British outsourcing company said on Friday.

Under criminal investigation for overcharging the government on a contract to electronically tag offenders, Serco is undergoing a revamp, including a search for a new chief executive.

On Friday it announced it would end two healthcare contracts early, including work at Braintree Hospital in Essex in December, 2014, due to lower-than-anticipated patient referrals.

It will also end its provision of GP out-of-hours services in Cornwall in May 2015 after facing operational challenges including implementation of a new IT system.

The 17-million-pound non-cash charge covers estimated losses in future years on the two deals, and a third loss-making contract to provide community health services in Suffolk.

Serco posted revenues of 4.9 billion pounds last year, more than half of it from UK contracts.

The company is awaiting the outcome of a number of reviews into its business following contract problems with the British government, its biggest customer.

In the last six months, group chief executive Chris Hyman and UK and Europe boss Jeremy Stafford have both stepped down in a bid to restore the government's trust in Serco, whose share price has shed 27 percent of its value.

The government decided against contracting Serco to run three prisons last month and has told the company it must show sufficient corporate change before it can win new government work.

(Reporting by Neil Maidment; editing by David Goodman and Jason Neely)

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