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Spectacular reversal failed appease investors, the largest shares FTSE 100 faller, knock over 100 m ￡ off the coast of Serco market value. Analysts said it feared relations that her with its key customers were damaged by the incident.

New Serco wrote to its main suppliers requesting a refund in cash on the work done for the group this year 5pc 2 came as Francis Maude, the Minister of the Government oversees contracts of Serco, said that he would "continue" treatment of small and medium size suppliers fairly pay invoices from four of the five in five days.

Serco, which operates prisons, schools and nuclear facilities and offer to run the first NHS hospital to be entrusted to an independent contractor, cited the Cabinet Office to save 800 m drive ￡ this year of the central Government as the reason behind its cash requirements contracts.

However, a press release published yesterday, Serco said that he had "retracted" application after its plans to improve its procurement process had "evolved".

The company said: "We [have] decided not seek or accept any contributions from our suppliers, who had recently received letters requesting discounts."

As a company that values our relationship with all our partners supply chain, large and small, we deeply regret this action and apologize unreservedly to them to concern a causé.Nous are now this contact to our partners in the supply chain and retract the letters.

Letters, sent last month by the Chief Financial Officer Andrew Jenner, explained how the Government for efficiency gains drive has influenced his decision.

Mr Jenner wrote: "as the Government, we seek to determine that our real partners are that we can rely on."Your response will no doubt be indicate your commitment to our partnership but will also be something that I will consider seriously in our working relationship as Serco continues to grow.?

Dr. Maude, a Minister of the Cabinet Office said that other service providers should not repeat Serco error.

"They need to effectively run their supply chains, but don't expect to abuse it", he said. "We said there are two ways in which we get these volume buyer contrats.Un costs, we intend to take a shot in the marge.Et we expect them to help us in scope and in-spec contracts.

Dr. Maude expressed particular concern that Serco has used its negotiations with the Cabinet Office to request a refund in cash, the work carried out in the first half of this year. ""We just started talking about them in July", he said.

City analysts said margins of Serco could come under pressure, if she could go on pain to his fournisseurs.Dans a note to clients, Numis Securities said: "reputation is a powerful competitive advantage in all industries and revelations that reflect poorly on Serco.Le Government UK is larger customer group and the case should put some strain on this relationship."

Shares of Serco closed 27 587 p.

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