More misery for Rupert Soames as Serco loses DLR contract

The embattled outsourcer is not having a happy week: it announced only yesterday it was writing down the value of some contracts.

by Rachel Savage
Last Updated: 17 Nov 2014

It’s not been a happy first couple of months at the helm of Serco for Rupert Soames. Not only did it issue a profit warning and launch an emergency share issue at the end of April to avoid defaulting on debts, but just yesterday it said it was writing down the value of some of its ‘larger onerous contracts’. All that and the outsourcer is still trying to repair its reputation after the prisoner tagging debacle. (To be fair, this could be a case of it trying to get all the bad news out at once so Soames can concentrate on what's important - turning the company around).

Today, then, was pretty much the cherry on a cake of misery, as Serco announced it had lost the contract to run the Docklands Light Railway, after 17 years of making passengers feel like they were flying through Canary Wharf. Instead, Transport for London has given the nod to French transport group Keolis.

The DLR added £90m to Serco’s revenues in 2013, 2% of its total sales, although the company rather pointedly noted it was ‘at a margin that was significantly below the average level the Group achieves on its contracts’.

It wasn’t the only company to be disappointed either, as fellow FTSE-250er Stagecoach also lost out on the bid.

Shares opened 2.2% down today and then ticked up to 0.75% below yesterday’s closing price in mid-morning trading. They have still fallen more than 27% this year though – Churchill’s grandson Soames still has many battles to fight if he’s going to win the war.

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