Serco in Brief
What is Serco?
Serco is passionate about services, we work in partnership with customers who want their services to be efficient and effective; organisations that understand that continual improvement is needed for future success. Consistently delivering this performance, in many different fields, has made us one of the world’s largest outsourcing businesses. Our core products are the skills and processes for organisational design and change management. In partnership with our customers and staff we aim to enhance service levels and operational efficiency by shortening decision-making chains, reducing bureaucracy and achieving continuous improvement.
We apply our skills in an extraordinary diverse range of fields. We run world-class scientific establishments and railways, maintain offices and operational IT systems for satellites, manage schools, prisons and motorway systems, test military assets and control air traffic. In every case, our job is to make our customers’ services more efficient. We can do this by managing existing facilities, projects and systems. Or we can create entirely new facilities – raising finance, designing and procuring them, then operating them.
Since Serco’s floatation in 1988 on the London Stock Exchange we have averaged over 20% annual growth in both sales and profits. We have achieved this largely by organic growth rather than by acquisition. 57% of our €2,333.3m (or £1,555.5m) turnover in 2003 came from our existing contract base. Our contracts run typically for 5 – 10 years, and in practice our high renewal rate means they can last for decades. In 2003 we maintained our 90% success rate at rebid, including our largest ever contract extension valued at €1.5bn (or £1.0bn) over 15 years. We were awarded a record €3.6bn (or £2.4bn) of new contracts. Our forward order book currently stretches to 2031.
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What do we do and where?
One of our greatest business strengths is our diversity – we apply our management skills across a broad range of activities and geographic markets around the world.
In addition to maintaining our current business, we continue to extend our capabilities, winning new contracts and forming new partnerships across our principal markets in the private sector, transport, civil government, science and defence.
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Private Sector
Our existing business consists mainly of multi-service facilities management contracts for blue-chip clients. GlaxoSmithKline, for example, recently added three years to our facilities management contract covering its Ware site in the UK, which we have held since 1995. Building on this relationship, we were also awarded the catering services for the site taking the total contract value to €3.9m (or £2.6m).
In Germany, Audi awarded us a five-year contract to train dealers’ service engineers for its A8 and A3 models. We took just eight weeks to establish the training centre, train the trainers and set up the administration.
We won our first facilities management contract in Italy, covering the external areas of Rome’s EUR business district. The customer is a recently privatised public entity owned by the Treasury and the City of Rome. The wide-ranging contract includes parks and gardens maintenance and a call centre operation; it has an initial value of €1.7m (£1.3m).
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Transport
The transport sector has been a strong source of growth for us in recent years, in 2003 it accounted for 27% of turnover. We have particular strength in light rail and traffic management systems and are the UK leader in both markets.
In the UK we are completing the design, build and implementation stages of the national Traffic Control Centre, which goes live in November 2004. It collects real-time information on network conditions from sources including CCTV cameras, automatic number plate recognition cameras and vehicle detection loops. Whilst in July 2003 we began our largest-ever contract, valued at €5.4bn (or £3.6bn), to run Merseyrail Electrics contract for 25 years in partnership with Dutch rail operator Ned Railways.
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Civil Government
This is our most rapidly-evolving market, with opportunities emerging in sectors such as justice, education and healthcare where outsourcing is relatively new. In 2003, civil government contracts (excluding transport and science) accounted for 32% of turnover.
Within the Justice market Serco maintain and support a critical national intelligence system serving the UK’s 66 police forces and other agencies. We are the market leader in providing road safety cameras and are developing the National Crime Squad (NCS) Operations and Intelligence Management System.
Serco’s Education business has developed an extended range of services for schools to enhance our market position. In the UK we are one of the sectors’s leading service providers, whilst in the state of North-Rhine/Westphalia we have been awarded one of Germany’s first private public partnerships to manage a group of schools in Monheim.
Within the Health sector Serco now operate two hospitals providing both clinical and non-clinical services. We have a new solutions business that combines a strengthened consultancy and advisory practice with participation in clinical and non-clinical support service partnerships.
Serco’s IT support business is well established with customers such as the European Commission (EC), where we now have over 150 staff providing IT support. The European Parliament chose us to provide IT services to its members and their offices in Brussels and Strasbourg. Whilst for the EC’s Directorate General for Regional Policy we provide ‘complete life cycle’ computer services support.
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Science
Our science contracts now account for 7% of sales. We are focused on three market segments created by demands of UK and international governments and agencies: management and operation of scientific and technical organisations (where we are the UK market leader), strategic technical services, and management of individual science and innovation programmes.
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Defence
The defence sector is our longest-established market and accounted for 26% of turnover in 2003. We currently hold over €4.4bn (or £2.9bn) worth of defence contracts.
In Germany we won the contract to manage the Gefchtsübungszentrum (GÜZ) Army Combat Training Centre. Valued at over €50m to Serco, it requires a complex combination of technical maintenance, operations support and systems management.
Whilst in the Middle East we have been selected as preferred bidder for the first PFI in Oman. The contract is to design and build a joint technical college and operate it for 30 years.
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