The new boss of Serco today outlined the scale of the challenge facing the outsourced services giant as it posted a first-half loss of £7.3million.

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The figure, which compares with a profit of £106.1m for the same period last year, reflects the loss of contracts including its criminal tagging deal − amid an overcharging controversy − and one-off charges from restructuring and the cost of dealing with Government reviews.

Rupert Soames, who joined as chief executive in May, said the group had won just two out of 10 major contract bids during the first half.

“We have had a poor first half, and we have not won as many new contracts as we would have liked, but there is some good news,” he added. “We expect financial performance in the second half to be much stronger than in the first.”

Serco, whose contracts include running community health services in Suffolk, was last year forced to refund the Government £68.5m for overcharging on criminal tagging contracts and also repaid £2m of past profits from a prisoner escorting contract.

Mr Soames said the events surround the prisoner escort and electronic monitoring contracts had resulted in a number of senior managers leaving the UK business.

“Serco has always emphasised its values-based approach to management, and most employees of Serco were proud that they worked for a company they believed always operated to the highest ethical standards,” he said.

“To discover that this had not always been the case came as a profound shock, and it was no consolation that the misbehaviour discovered was limited to two out of more than 700 contracts. It will take time to heal these wounds and restore self-confidence, and as always, actions will speak louder than words.”

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