Signing of Marine Services Contract
Date : 14 December 2007
Serco Group plc (Serco) today announces the award of a contract with the UK Ministry of Defence, to deliver marine services to the Royal Navy. Serco's joint venture with Denholm Shipping and Infrastructure Investors (I2) has been selected for a 15-year private finance initiative (PFI) contract valued at around £1bn, of which Serco's operating contract represents £750m. This is a sizeable increase on Serco's previous operating contract, under which it has provided marine services to the Royal Navy since 1996.
Under the operating contract, Serco will manage, operate and maintain a fleet of around 110 vessels, providing services that enable the Royal Navy to put to sea. These include moving ships in and out of port, transferring passengers and crew, loading and unloading ships and protecting the environment from oil and other spillages. In addition, around 240 staff and the services of the Royal Maritime Auxiliary Service will transfer to Serco in April 2008. These services include the provision and maintenance of buoys and moorings and support to deep-water training services.
The joint venture will also bring over 30 new vessels into service during the early years of the contract, enhancing service flexibility and responsiveness and helping to meet the Royal Navy's demanding operational requirements.
Serco selected I2 in 2006 to become its strategic partner for financing and investment in PFIs. In this project, I2 will provide all the subordinated debt and the largest proportion of the equity (49%). Serco retains 41% of the equity as well as day to day management of the joint venture, so as to implement the successful transition of the project over the next 18 months.
Christopher Hyman, Chief Executive of Serco said: "We are delighted by this award, which reflects the strength of our relationship with the Royal Navy. We look forward to working with our customer and our partners to deliver the high-quality services necessary for the Royal Navy to put to sea."