THE boss of a firm behind a North-East fire safety business has warned the company faces two difficult years as it battles to rectify mistakes.

Rupert Soames has cut Serco’s profits guidance for this year and next and written down the value of the business by £1.5bn.

He said he wants the company to focus on being a provider of services to governments in justice and immigration and defence and transport, while looking to sell the majority of its business outsourcing operations.

The plan will be financed by a £550m cash call to investors early next year, on top of the £165m raised in a share placing in the summer.

Serco operates the International Fire Training Centre (IFTC), at Durham Tees Valley Airport, which has trained thousands of people, including staff from German and Polish airports.

Mr Soames, who took over after Serco was forced to refund the Government £68.5m for overcharging on criminal tagging contracts, said: “While it is a bitter pill, it is better for all concerned that we swallow it now and establish a really solid foundation on which to build Serco's future.

“The next two years are going to be difficult, and we expect our revenue to reduce over this period through disposals and exiting loss-making contracts.

“Our transformation will take time, but will be worthwhile.”

In the latest downgrade to profits guidance, Serco said it expects a figure of between £130m and £140m this year, against a previous forecast of not less than £155m.

Earlier this year, Serco told The Northern Echo it remained fully committed to the IFTC, having invested about £1m into the facility.