Rupert Soames is taking his company’s turnaround very seriously indeed. His plan to pull Serco up by its socks after it plunged into the abyss in 2013 sounds more like a military manoeuvre than something dreamt up in a civilian boardroom. Phase one – 'stabilisation' – is over. Phase two – ‘transformation’ is well under way. ‘Our plan,’ said Soames, ‘has survived first contact with the enemy.’
It’s true the outsourcer is looking in far better health now than it was a year ago. Serco’s pre-tax loss for 2015 was £69.4m, down 93% from 2014. Its once crippling debt, meanwhile, was reduced 87% to £78m thanks to a rights issue last year.
Just as promisingly, after the ‘the ‘significant disruption to our customer relationships with UK Central Government’, if that’s what you call being temporarily banned from bidding for all-important new government contracts, Serco said ‘we now believe that our relationships with our UK customers are on a firmer footing. We believe that a number of major opportunities will emerge over the next two years.’
Indeed, ‘major bids’ for the Defence Fire and Risk Management Organisation and the Clyde and Hebrides Ferries services are already under consideration. But it’s not out of the woods yet. Revenues fell 11.1% to £3.2bn as old contracts such as London’s DLR expired, and this trend is set to continue – at least until Soames’ phase three (‘growth’) commences in 2018.
Perhaps tired of channelling his famous grandfather Winston Churchill, Soames decided to quote another British military great to express how he felt about that. ‘To paraphrase the Duke of Wellington at Waterloo, we know that much hard pounding lies ahead.’ Indeed.