Serco (SCGPY)  shares plunged to the lowest level since August Wednesday after the British public sector outsourcing group posted a bigger-than-expected decline in profits and kept its 2017 outlook unchanged.

The FTSE 250 company said revenues for 2016 came in at £3.05 billion ($3.8 billion), a figure largely in-line with analysts' estimates, as underlying profits fell to £82 million despite a positive currency headwind.

Serco shares fell more than 14% in the opening of trading in London, the biggest single-day decline in two years, to change hands at 126.5 pence each and wiping out all of the gains recorded over the past three months. 

Serco expects revenue of approximately £3.1 billion in 2017 and underlying trading profits of between £65 million and £70 million while the pipeline of larger new bid opportunities ended the year at £8.4 billion, a year-on-year increase of £1.9 billion or 30%, the company said.

"These results show that the execution of our five-year plan remains on track," CEO Rupert Soames said. "Trading in 2016 was better than we expected at the start of the year, although this was in large part due to the resolution of a number of commercial matters in the first half, which will not recur; trading in the second half was in line with the guidance we gave at the time of our half-year results."

"Our view of likely performance in 2017 remains unchanged from previous guidance," he added. "The road back to prosperity was always going to be long and winding, with many potholes and boulders, but we are making good progress."

The group is in the middle of a five-year turnaround plan. Operating costs were reduced by more than £450 million, and in proportion to the scale of revenue reduction.

In 2013, Serco was the center of a scandal when it emerged it had overcharged the government for electronically tagging criminals, some of whom were back in prison, overseas or dead.

As a result of this and other scandals Serco was temporarily banned from bidding for government projects.

Last year, the company announced it had won its biggest contract in two years to run a National Health Service trust for £600 million.

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