Serco chief sells £3mn of shares

Rupert Soames’ sale of £3mn of shares in outsourcer Serco (SRP) on 9 November is “part of prudent financial planning and portfolio management” ahead of his retirement at the end of this year, the company said.

Soames, a grandson of Sir Winston Churchill, will be replaced as chief executive by Serco’s UK and Europe head, Mark Irwin. His nine-year spell in charge has been eventful, but then a company that deals so closely with governments is going to attract scrutiny. Soames was appointed in February 2014 following a scandal whereby Serco was found to have been overcharging the public purse for monitoring offenders fitted with electronic tags. It recorded a £1.35bn loss during Soames’ first year in charge, due to write-downs, lost contracts, and a temporary inability to win new work until the case was settled.

Recovery efforts since have been both prolonged and patchy, but the Covid-19 pandemic helped, as Serco secured several multi-million-pound contracts related to the NHS’s Test and Trace scheme. Serco only lost money in the first two of eight annual financial periods overseen by Soames and its 2021 pre-tax profit of £192mn was double the amount made just two years earlier. Chairman John Rishton credited Soames with turning around the group, describing it as “unrecognisable” from when he took over.

For shareholders, Soames’ success will be judged on when they bought in. Those that invested at its 2016 lows will have doubled their money, but longer-term holders will be less pleased. Since his appointment, the company has provided a negative total return of 53.6 per cent, compared with a ain of 50.8 per cent for the FTSE All-Share index over the same period, according to FactSet.