The grandson of former prime minister Sir
During his 11 years at
In contrast, Soames has now joined a company which employs 120,000 but which has a rapidly shrinking stock market value – currently just £1.6bn – resulting in its ejection from the
As Soames said the business, whose operations also include the
In reality he has already been working behind the scenes with City investors to gauge support for the urgent fundraising which is needed if the business is to avoid becoming "uncomfortably close" to the borrowing terms stipulated by its lenders. Last month the company admitted its debt had increased by 21% to £700m but it now expects this will reach £800m by the end of this year as a result of shrinking cash flows caused by the loss of the contract for tagging prisoners, a fall in contract volumes from the Australian immigration service and rising costs on other contracts.
Even after the £170m share placing – the most that can be raised under stock market convention without a full-blown rights issue – some analysts questioned whether the share placing would be enough to placate lenders.
"We are not convinced that this will be sufficient given the downward spiral the company seems to be in," analysts at
Soames described the £170m fundraising as "pragmatic and necessary exercise to give use the headroom to get through a strategy review unscathed by our lenders".
Thursday's early morning call with analysts followed two unscheduled, late night announcements in 48 hours. On Monday it issued a profits warning and warned of the need to tap shareholders for cash. On Wednesday night it put a size on the fundraising, £170m, and a figure on the scale of profit fall – perhaps as much as £80m – in an announcement that also included the resignation of the finance director
Taking questions from analysts as he launched the placing of 50m shares, Soames admitted that morale at the company was "not as good as it should be" as a result of an overhaul of the business which began in the wake of the scandal and departure of the long-standing chief executive
The decision to split the
Soames is replacing the temporary boss
Soames said the strategy review was going to look at every aspect of the business, which has operations spanning government contracts and private sector work across many parts of the world.
"I'm conscious nine months might seen like a long time but this a large and complex business." He indicated one of his key measures would be amount of profit being generated from the working capital employed. Identifying the trend for margins will be key, he said, as the business is winning fewer highly profitable contracts and more less profitable ones.
He likened the events of last year – and the opportinities they might provide – as similar to those faced by
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