Fallen outsourcing behemoth Serco Group PLC (LON:SRP) was back to its old ways of disappointing the market, reporting an 11% organic decline in 2016 revenue.
Revenue from continuing operations in 2016 slipped to £3.01bn from £3.18bn in 2015. Including discontinued operations, revenue fell to £3.05bn from £3.51bn, marginally ahead of the company's guidance of £3bn.
Assuming exchange rates remain unchanged, the group left its revenue guidance for the current year unchanged at around £3.1bn.
The group returned to the black with a pre-tax profit of £29.6mln, compared to a loss the year before of £69.4mln, but an £18mln loss from discontinued operations meant the bottom line stayed red, with a loss of £1.1mln, versus a loss in 2015 of £153.1mln.
Free cash flow was negative at £33mln, much the same as in 2015 when £36mln flowed out the door.
The group ended the year with net debt of £109mln, which was £46mln higher than the level it started the year at.
"Our view of likely performance in 2017 remains unchanged from previous guidance. The road back to prosperity was always going to be long and winding, with many potholes and boulders, but we are making good progress,” claimed Rupert Soames, Serco's chief executive.
Liberum Capital Markets responded to the update by cutting its recommendation from 'hold' to 'sell' and chopping the target price to 210p from 135p, as it said recovery is taking a little longer than expected.
“Near term contract news could be supportive, with news expected soon on DFRMO and Middle East Rail. There is a big spike in –re-bids in H1 18, which adds uncertainty into the investment case,” it said.
The market was pretty certain about the short-term investment case, the shares were off 12.5% to 129.3p in the first 20 minutes of trading, having fallen below 120p at one point.