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UK public sector outsourcer Serco reported full-year revenues in line with forecasts as it said it was making headway on reducing its loss-making contracts and producing the first “fruits” of its transformation plan.

The FTSE 250 group said its full-year revenues came in line with its estimates at £3.05bn – a 13 per cent fall in 2016. Underlying profits fell to by £14m to £82m last year, despite a positive currency windfall of around £9m.

Serco benefited from better than expected trading conditions at the start of 2016 and managed to end the year with a 30 per cent increase in its pipeline of bidding opportunities to £8.4bn.

The company is in the middle of a five-year turnaround plan introduced after a series of government outsourcing scandals hit in 2014.

Serco has since struggled to win new work while losing a series of flagship contracts including a deal to manage the Docklands Light Railway in London and managing a New Zealand prison amid allegations that staff were running “fight clubs”.

Late last year Serco announced it had won its biggest contract in two years to manage facilities at Barts NHS Trust for £600m.

Rupert Soames, chief executive, said the company’s “road back to prosperity was always going to be long and winding, with many potholes and boulders, but we are making good progress.”

“Our view of likely performance in 2017 remains unchanged from previous guidance.”

The company added that it had reduced operating costs by £450m last year. Serco shares up more than 80 per cent over the last 12 months.

More reading: Serco – less cheap, more cheerful (Lex)

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