Serco boss Rupert Soames warned today that the Government would struggle to secure bidders for major new outsourcing contracts as his own company wrote off £1.3 billion, mostly because of loss-making deals it signed with the state.
Shares in Serco sank 16% or 32p to 174p as it fell to a £1.35 billion loss for 2014 and fired the starting gun on a £555 million rights issue.
Soames said: “Of the five large contracts on which we’re losing most of the money in this write-down, four of them are with the UK Government.”
The Boris bike and Woolwich ferry-operator said losses on one asylum seeker contract were more than £150 million.
“It’s a huge transfer of value from Serco shareholders to the Government. We will take our beating. We will take the pain. But certainly there are aspects of contracts that we wouldn’t sign up to today,” Soames said.
“There are at least eight companies that have lost tens of millions on contracts with the Government, and in the future they will all be a bit more gun-shy. Some have been put off.”
Serco — which paid back millions to the government last year after being discovered electronic-tagging criminals who were actually dead or still in prison — admitted it was unlikely to return to growth for another three years.
“We are hoping we will be able to make our future results more boring,” Soames added.
