Outsource specialist Serco (LON:SRP) saw annual profits halve as management continue to grapple with underpriced contracts.
Rupert Soames, chief executive, also called for a new dialogue with government over outsourcing of public services.
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Serco has taken £1.3bn in write-offs on unprofitable work over the past four years and only avoided the fate of now–bust Carillion (LON:CLLN) through shareholder and bank support, he added.
In future, Serco wants greater transparency in public sector contracts; break-fees for both sides; a living will or orderly hand-back plan on sensitive contracts and a mutually agreed code of conduct with the government.
Trading profit in 2017 slumped to £54mln from £100.3mln, though Serco had already flagged the lower earnings and more optimistically said the underlying outturn of £68.8mln was at the top end of guidance.
Looking ahead
Soames added that the company was now looking forward rather than backwards and would grow profits in both 2018 and 2019.
Guidance for the current year was unchanged at £80mln on revenues of between £2.8-2.9bn compared to £2.95bn, down 2% in 2017.
Broker Liberum added it is concerned Serco’s order book is not growing fast enough, up from £9.9bn last year to £10.7bn, with no growth from the first half.
A dramatic reduction in the pipeline from £8.4bn last year to £4.4bn and significant re-bid risk remains, it added.
Shares rose 5% to 95.3p.