Outsourcing firm Serco said full-year revenue fell to £3.95bn, down from £4.28bn a year earlier. The company also made a £1.35bn operating loss, compared to a £146m operating profit in 2013.
Shares in Serco fell as much as 16 per cent to 174p in mid-morning trade as investors reacted to the results.
Why it's interesting
Serco's woes began in 2013 after a review found it had charged the government for electronically tagging criminals who were either dead, in prison, had left the country or had never been tagged.
The troubled outsourcer had issued a profit warning in November which sent its shares down around 33 per cent. The company announced it was looking to raise up to £550m with a rights issue in the first quarter of 2015, while reducing its profit forecast for 2015 by around £20m, meaning it expected to make between £130m and £140m.
It also said that reviews had identified likely impairments and onerous contracts totalling around £1.5bn. This all means that today's results, while disappointing, weren't a huge surprise.
Serco today outlined its turnaround plan, starting by shrinking group debt with proceeds from its £555m rights issue. It also intends to focus on five "pillars", or market sectors such as justice & immigration, defence, transport, citizen services and healthcare; as well as across four regions which are the UK & Europe, North America, Middle East and Australia/New Zealand.
What Serco said
2014 has been an extremely difficult year for Serco, and the magnitude of the provisions, impairments and other charges reflects the scale of the challenges we have had to face. However, there is a real sense that, having confessed our sins and in taking the punishment, we are now ready to start on the path to recovery.
2014 was a torrid year for Serco, and this shows in its full-year results, however the company will now focus on its turnaround plan.