Serco Gropu plc Annual Review and Summary Financial Statement ...

Business Review
I m p o r t a n t l y, w e c o n t i n u e t o w i n n e w c o n t r a c t s t h a t t a k e u s f u r t h e r u p t h e s i z e a n d c o m p l e x i t y c u r v e – i n t o a r e a s w h e r e Se r c o i s m o r e
Sales growth continues worldwide
In the UK, the largest contract win of the year – in fact, our largest ever – was for the management of the UK’ s
Atomic Weapons Establishment at Aldermaston. The contract includes a 25-year Public Private Partnership (PPP)
option to add private finance to accelerate development of the site. This is in addition to the 10 other Pr i v a t e
Finance Initiative (PFI) opportunities that we are currently pursuing. We were shortlisted for the STEPS programme,
under which the contractor will assume ownership of the entire Inland Revenue and HM Customs & Excise
property portfolios and provide office facilities to meet both organisations’ requirements. We also made a
breakthrough into infrastructure maintenance for Railtrack. As the first new entrant to this market we believe we
have opened the door to an area with considerable potential. These are all exciting developments, but they should not
overshadow the strong underlying growth that we achieved in our traditional business.
business
In Continental Europe we built on a well established base in Italy, France, Belgium, the Netherlands and Sweden.
We are also making our mark in Germany, and in 1999 we acquired Elekluft Elektronik und Luftfahrtgeräte GmbH,
a German company providing engineering and facilities management services to military, aerospace and other
commercial customers. This business has now been renamed Serco GmbH & Co. KG.
In Asia Pacific business was buoyant, particularly in the Australian and New Zealand
defence sectors. We also had significant wins in the transport sector and acquired the
remaining 50.8% of shares in Great Southern Railway, which operates three interstate
passenger rail services in Australia.
We made good headway in North America, where state and local governments are
becoming increasingly alert to the value of outsourcing and new large-scale strategic
opportunities are emerging.
Growing in Asia Pacific
Stephen Ell has been one of
the prime movers of our rapid
expansion in Asia Pacific since
he joined Serco from our joint
venture partner AWA in 1993.
To d a y, as chief executive of Serco
Asia Pacific, he heads a company
of some 6,000 people which, he
says, is ‘capable of participating
in just about any government or
industry opportunity that involves
organisational change and
development’. He is proud
of the company’s high growth
rate, which ‘stretches people’s
capabilities and gives them many
opportunities for advancement’.
Central and local government
We continued to make good progress in PPP and PFI projects. In the UK the contract
for a new prison in Staffordshire brought our total signed contracts to 12: our share
of the total operating turnover will amount to more than £80 million a year.
The new contract is for an 800-bed unit which will be the UK’s first private-sector
prison to incorporate a therapeutic community. It is the fifth PFI contract won by
Premier Prison Services (PPS), our joint venture with Wa c kenhut Corrections, to design,
construct, manage and finance custodial facilities. In addition to the five PFI projects,
PPS manages HM Prison and Young Offenders Institution, Doncaster (where we have
been awarded preferred bidder status of a further 10-year contract), has two prisoner
escort contracts handling 250,000 prisoners a year, manages two of the UK’s four
electronic tagging contracts and provides over 60% of the equipment for electronic
tagging used in the UK.
Building great teams
John Jeffery, who runs our Serco Services business in the UK, sees his principal
contribution as ‘building great teams that will continue to grow a successful
business for Serco, its customers and shareholders’. John joined us in 1990
from a company we were in the process of acquiring, and spent two years
growing our UK local authority business. He ran our UK health business and
chaired our Swedish joint venture before taking charge of Serco Services,
which operates contracts for local and central government, the health service
and the commercial sector in the UK. ‘At Serco I’ve been able to develop my
management skills in a supportive environment,’ he says. ‘And I’ve worked with
some tremendous people whose values and enthusiasm have made it fun to
be part of the team.’
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