Shares in Serco (SRP) fell an initial 10 per cent after management announced underlying trading profit and revenue for 2016 would be below expectations. Turnover and underlying trading profit are expected to be £2.8bn and £50m, respectively, next year. This is lower than analysts had been expecting - Peel Hunt had forecasted £68m underlying trading profit. However, the group's underlying trading profit for the current financial year is expected to be £5m more than originally thought at £95m.
Revenue attrition in 2016 is estimated to be £150m more than the £350m estimated at the time of the group's first-half results due to contract attrition, primarily from the Americas. In total, net revenue in FY2016 ending 31 December is expected to be £700m lower than 2015. Just under half of this reflects the exit of private sector business process outsourcing operations.
