Serco’s extended annus horribilis claimed yet another victim this morning. Chairman Alastair Lyons said he would resign early next year, after taking ‘ultimate responsibility’ for Serco’s recent failings.
The decision comes after the initial findings of Serco’s rather innocuous-sounding Strategy Review and Contracts and Balance Sheet Reviews (didn’t the Spanish Inquisition have a name like that?) placed the blame for the company’s woes on two strategic ‘mis-steps’: diversifying too widely and focusing too much on new contracts rather than looking after the old ones. Essentially, Serco got greedy.
The consequences have been clear. In the last year there have been lost contracts, an SFO investigation that’s still ongoing despite a £68.5m settlement and profit warnings aplenty. In the latest blow, the battered outsourcing firm wrote down £1.5bn worth of assets last week, a sizeable chunk of which was to its ‘goodwill’, or the intangible value of its brand.
Long-time chief executive Chris Hyman left last year, eventually to be replaced by beach-fighting Churchill descendant Rupert Soames. If anyone thought Hyman would be the only one to fall for this mess, however, they may have been mistaken.
‘The initial findings of the Strategy and Balance Sheet Review point to strategic and operational mis-steps at Serco for which, as Chairman of the board since 2010, I take ultimate responsibility,’ Lyons said. ‘It is also the right thing for Serco to select a new Chairman, to take the helm for the future.’
Lyons added that his colleagues asked him not to leave, but confirmed that he’s going in the first half of 2015, while looking to produce an ‘orderly succession’. Exactly how heartfelt his colleagues’ request for him not to go was is only for them to know. Somehow, it seems doubtful they were on their knees, begging for him stay.
Soames put on record that Lyons had done ‘an outstanding job stewarding the Company through the travails of the last twelve months’. He surely will find it easier, however, to claim Serco’s turned over a new leaf once all the old branches have gone.
Investors appear to agree - Serco shares jumped 2.7% to 215.1p in early morning trading.
