Serco chief hails turnaround but warns on Brexit
The boss of government contractor Serco on Wednesday praised the progress of his turnaround but warned civil servants may be slow to issue future contracts while they manage the “challenges of Brexit”.
Rupert Soames explained: “The civil service is having to deliver on large cost savings, and there is not a lot of new stuff going on while they figure Brexit out.”
He expects the Government to award fewer new contracts over the next few years. However, Soames, a grandson of Sir Winston Churchill, said that once Britain leaves the bloc, there will be new work opportunities because “they will have to do more government work with as many as 34 regulatory services needing to be repatriated”.
The chief executive’s comments came as outsourcer Serco — which runs the Santander bike scheme and NHS catering services — said underlying trading profit for 2017 would be around the top end of a previous guidance range of between £65 million and £70 million. Shares rallied 9% to 103.8p.
Revenues will be just under £3 billion, short of previous expectations, partly because of currency headwinds.
Serco is in the midst of a turnaround after a succession of profit warnings and a litany of disasters, including charging the Government for tagging some criminals who were dead, imprisoned or non-existent.
Soames said: “We are a good way into the recovery but it’s going to be a long-haul journey.”
During the year it was boosted by wins including a £1.5 billion deal to run the biggest prison in Australia, Grafton. The firm also signed an agreement to acquire part of troubled Carillion’s UK healthcare facilities management business. The £47.7 million deal will see Serco work at a number of NHS sites.
