Troubled outsourcing company Serco has blamed "poor trading" after it recorded a major loss in the first half of 2014.
The firm reported a pre-tax loss of £7.3 million, a 107 per cent drop from the same period 12 months earlier. It highlighted reorganising costs and loss-making contracts as the primary reasons why it had experienced a downturn of this ilk. While it announced plans to raise £170 million through the sale of new shares in May, this was compounded by two profit warnings and has resulted in a significant drop in revenue.
Rupert Soames, Serco's chief executive, explained there are a number of obstacles for the company to overcome it is going to get back on track. Mr Soames, who was previously chief executive at engineering firm Aggreko, conceded the first half of the year produced some disappointing results but there were plans to rectify the situation.
Serco's chief executive said: ""As expected, trading was poor in the first half. Many challenges remain, and we have a lot of work to do, but I am confident that, in time, we can restore the company's fortunes."
The firm, alongside G4S, was involved in an investigation from the Serious Fraud Office after being accused of overcharging the government for its electronic tagging contract. There were calls for the two companies to be barred from bidding for public sector contracts during the investigation, which was launched in May.
Serco had previously won a government deal after the Cabinet Office lifted a ban in February while G4S was allowed to bid for contracts since April.
In July, the company lost out to French transport group Keolis for control of London's Dockland's Light Railway. Serco had been operating the route since 1997 but was beaten by Keolis which will now be responsible for the franchise until April 2021.
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