Serco slumps after £1.4bn loss
SERCO boss Sir Rupert Soames has waived a £908,000 bonus after the outsourcing firm reported a loss of £1.35bn for 2014, compared with a profit of £108m the year before.
Shares tumbled by 15 per cent as the market reacted to a set of results the company described as “very poor”.
According to Serco, the business encountered “critical operational difficulties” during 2014 on some large contracts, which led to an “unexpected increase in costs to levels far above those seen in 2013”.
The company also blamed the fact that, due to significant changes in senior management, the business was “operating for a number of months in a strategic vacuum” as the new team worked to develop a “new strategic direction” for the group.
As part of the new strategy, Serco is attempting to reduce its debt and bolster its balance sheet.
It announced yesterday that it is to carry out a rights issues, with the aim of raising around £550m. Up to £450m of the proceeds raised will be used to repay the company’s debt. The business is also suspending a final dividend for 2014. The group’s chief executive said 2014 had been “an extremely difficult year for Serco”.
However, Soames added: “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. We have all we need: a good plan, strong management to execute it, and, following the successful completion of our proposed rights issue and refinancing, a balance sheet that is an appropriate foundation on which to implement our new strategy.”