Serco swings to annual loss amid rising costs, set to raise £555m

12th Mar 2015 08:04

Serco swung to an annual pre-tax loss as asset impairments and expensive contract provisions weighed on results.The group, which said revenue and profitability were in line with lowered expectations, reported a pre-tax loss of £1.35bn from a previous profit of £108.3m, while revenue fell 7.47% to £3.96bn.The FTSE 250 group has also announced a fully underwritten, one-for-one rights issue of 549m new shares at 101p each as it aims to raise about £555m and refinance its existing lending facilities in order to reduce debts by £450m.Serco reported operating losses of £1.32bn, including £661m of exceptional items, driven by impairment of goodwill and other balance sheet charges together totalling £541m."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," said group chief executive Rupert Soares, who described 2014 as an "extremely difficult" year for the company.Analysts at Shore Capital said they expected restructuring to continue through the current year, but guidance remained unchanged."Disposals will impact the group's revenue and profit guidance," they said in a note on Thursday, reiterating their 'hold' rating on the stock."Clearly the immediate outlook remains challenging, but we expect the group to emerge from the restructuring better placed for emerging opportunities."Serco shares slumped 15.26% to 174.90p at 08:37 on Thursday.