Serco Northern Rail joint venture awarded £530m two year franchise extension
Date: 13 May 2010
Serco Group plc (Serco) the international service company, announces that Northern Rail, its 50:50 joint venture with Abellio, has secured a two year extension to its train operating franchise on the same terms as its existing contract.
The UK Department for Transport has now confirmed that Northern Rail will run the franchise until September 2013. The two year extension, which is valued at approximately £530m, follows the significant performance improvements that Northern Rail has achieved since the franchise began in December 2004. Since 2004, punctuality has improved by nearly 8% to 91.6%, meaning that on average 200 more trains each day now arrive on time than in 2004, while passenger numbers have increased by 34% to 85 million in 2009.
Christopher Hyman, Chief Executive of Serco Group, said: "We have a strong record of providing high quality rail services in the UK and internationally. Our award winning services are recognised for high levels of performance, punctuality and passenger care, and owe much to the commitment and dedication of our people. We are delighted that the strong performance of our partnership with Abellio has been recognised with this two year extension of the Northern Rail franchise."
Separately, an industry-wide review by the Office of the Rail Regulator has led to reductions in track and other access charges levied by Network Rail on Train Operators, and the matching and equal subsidy revenue. These changes will have no effect on the profits or cash flow generation of either our Northern Rail or Merseyrail franchises. However, Serco's current share of both the Network Rail charges and the matching and equal subsidy revenue of these 50% owned joint ventures will reduce by approximately £35m in 2010, and approximately £55m per annum thereafter. This change has been accounted for in calculating the approximate £530m value of the Northern Rail franchise extension as above.
For further information please contact Serco:
Charles King, Head of Investor Relations T +44 (0) 208 334 4122
Dominic Cheetham, Director of Corporate CommunicationsT +44 (0) 208 334 4334
Marcus De Ville, Head of Media RelationsT +44 (0) 208 334 4388
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