28th Feb 2014 10:59
LONDON (Alliance News) - Struggling outsourcing company Serco Group PLC Friday said it had poached the chief executive of Aggreko PLC to be its next boss, tasking him with the revival of the business after its recent government contract woes.
In a statement, Serco said Rupert Soames, one of Winston Churchill's grandsons, will take the helm June 1, with acting CEO Ed Casey continuing in the role until then.
The move is a coup for Serco. Soames has been head of Aggreko for 11 years, overseeing the temporary power unit company's steady but relentless growth over that period. It does particularly well in years where there are big events, providing the temporary power units to run events like the Olympics or football World Cups, but has also been reporting strong growth outside those peak use events.
Aggreko separately said Soames will step down at company's annual general meeting April 24, and it has started looking for a permanent successor. Chief Financial Officer Angus Cockburn has been appointed interim CEO, with Carole Cran stepping up to be interim CFO.
"I have loved every minute of my time with Aggreko," Saoames said in the Aggreko statement. "But there comes a time when all CEOs need to move on and now, with a new five year strategy in place and an exceptionally strong executive team running the business, that time has come."
Soames is leaving a FTSE 100-listed company and joining a company that has seen its shares slide in the wake of its well-publicised UK government contract issues, dropping down to the FTSE 250.
Just last month, Serco warned that 2014 profits will be well below current expectations as recent unfavorable currency moves and a bigger-than-expected drop in volumes in its Australian immigration contract added to the ongoing costs of its corporate renewal in the wake of its UK government contract issues.
On a more positive note, the UK government said it will allow it to bid for new contracts after a six month ban, as Casey led a significant restructuring and "corporate renewal" programme at the company.
The plan, which includes improving governance, management and transparency, creating a separate unit for its UK government work, establishing an ethics organisation that reaches throughout the company, and re-training employees, was brought in after issues were found with two contracts Serco had with the government.
Serco and rival G4S PLC were placed under investigation by the UK government in July and all their government contracts were placed under review, after details from an audit emerged showing that they had been over-charging on criminal tagging contracts, claiming for people who were dead, who had never been to prison, or never tagged in the first place. In November, the Serious Fraud Office opened a criminal investigation into the tagging contracts.
Additionally, the government in August then called in police to examine claims of fraudulent misreporting of data on Serco's contract to transport prisoners to court in London and East Anglia.
In December, the UK Government said Serco would repay GBP68.5 million for the charging errors it made on a criminal tagging contract.
The issues hit the company hard, preventing it from moving forward on potential new UK government contracts and weighing on potential business elsewhere as its reputation took a battering.
"I am aware that the company has experienced significant recent difficulties but the work that Serco does is important to the lives of millions of people and I believe that we can find a way through to a bright future. I am greatly looking forward to working with my new colleagues to deliver the quality of services that will impress our customers, shock our competitors and please our investors," Soames said in the Serco statement.
"Rupert Soames is a highly experienced FTSE100 chief executive with a significant track record of success, leading a substantial and complex international support services business. He and his team have driven growth in Aggreko by developing customer-focused strategies and consistently delivering against them," Serco Chairman Alastair Lyons said in a statement.
"Rupert is a passionate believer in public services, highly respected by customers, governments, employees and investors, and I am absolutely delighted that he has chosen to join Serco and lead the company's future development," he added.
Soames is a grandson of Winston Churchill and brother of current Conservative MP Nicholas Soames. He took over at Aggreko when previous CEO Philip Harrower died when his car collided with a train in the US.
Serco shares were up 8.6% at 445.5 pence Friday morning, the biggest gainer on the FTSE 250. Aggreko, meanwhile, was the second-biggest decliner on the FTSE 100, falling 3.3% at 1,577 pence.
By Steve McGrath; [email protected]; @SteveMcGrath1
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