28th May 2015 13:51
LONDON (Alliance News) - Outsourcing company Serco Group PLC on Thursday confirmed media reports overnight by appointing Roy Gardner as its new non-executive chairman as it works to shore up its accounts following the massive pretax loss it posted for 2014 due to provisions and writedowns it had to book on onerous contracts.
Gardner will take up the role on July 1 and will join the board from June 1 to enable a handover period with existing chairman Alistair Lyons, who will then step down. Gardner is the former chief executive of energy firm Centrica PLC and is the former chairman of catering and outsourcing company Compass Group PLC. He also served in the past as the chairman of Manchester United Football Club and currently serves as a senior independent director at bookmaker William Hill PLC.
"I am greatly looking forward to working with Roy, whose broad experience in areas relevant to our business will be extremely valuable. I would also like to thank Alastair Lyons for all his hard work and support, particularly over the last 12 months, as we have developed a new direction for the company and put it on a solid financial footing," said Rupert Soames, Serco's chief executive.
Serco shares were up 0.2% to 137.30 pence on Thursday afternoon.
Lyons' departure was initially announced in November last year, when he said he would leave the role following a strategic review headed by Soames, who took the helm of the company in June 2014. Soames was tasked with turning the company around after it was hit hard by the fall out related to two UK government contracts which led to it being banned from winning any new UK government work for several months in 2013.
The review led by Soames revealed the extent of the problems on Serco's books, including the scale of the provisions and writedowns it was then forced to book in its 2014 results. Ultimately, it ended up taking GBP1.31 billion in charges for the year, pushing it to a GBP1.35 billion loss in combination with a fall in revenue, the first the company had posted as a listed company. It also said it expects revenue to fall further in 2015.
Following the initial results of the review in November, Lyons said the findings "point to strategic and operational mis-steps at Serco for which, as chairman of the board since 2010, I take ultimate responsibility", adding it was the "right thing" for the company to identify a replacement for him in light of the review's findings.
In its full-year results announcement, Serco said it had completed the strategic review of the business and will, in the future, focus on the provision of services to the public sector market. The group said it will focus on five market sectors, comprising Justice & Immigration, Defence, Transport, Citizen Services and Healthcare. Serco said it thinks the markets it has chosen to focus on have "compelling long-term structural growth drivers" and that it is well-positioned to benefit from this growth.
As part of the strategic review, Serco also confirmed its plans to dispose of a number of non-core businesses, with the resulting proceeds to contribute to a reduction of its net debt. This will include its Environmental Services and Leisure businesses in the UK, the Great Southern Rail business in Australia, and the majority of its private sector outsourcing businesses. The sale of the Great Southern Rail arm was sealed in late March, when Serco offloaded the business to Australian private equity house Allegro Funds for GBP2.5 million in cash.
By Sam Unsted; [email protected]; @SamUAtAlliance
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