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Tuesday, 4 September, 2001, 12:16 GMT 13:16 UK
Serco reaps PPP rewards
RAF Fylingdales early warning station, North Yorkshire Moors
RAF Fylingdales is a key contract for Serco
One of the contractors at the forefront of the booming public private partnership industry has reported a massive increase in pre-tax profits.

Serco, which earlier this year failed in its bid to land the National Air Traffic System (NATS) contract, saw profits jump 31% in the six months to June, on a 16% increase in turnover.

The company made 24.4m profit, compared to 18.6m in the same period last year, on a turnover of 531m.

Founded 1929 as a subsidiary of RCA
Management buy-out in 1987
Listed on stock exchange 1988
Employs 17,000 worldwide
Two thirds of turnover within the UK
Started out as defence contractor
Branching out into education services

It put its success down to the rapidly expanding market in public service contracts with local authorities and government.

Last month, construction giant Balfour Beatty reported a 17% jump in profits on the back of public private partnership projects.

Pole position

Serco is planning a big expansion in education services, defence, justice and science.

Earlier this year, it signed 20m and 10m contracts in Walsall and Bradford respectively, to provide "education improvement services".
Interests include...
Air traffic control
Docklands Light Railway
Atomic Weapons Establishment, Aldermarston
Ballistic Missile Early Warning System, Fylingdales
Police speed cameras

It said the British government was leading the world in the privatisation of public services - putting it in pole position to land contracts around the globe.

Executive chairman Richard White said: "We remain confident that we are well placed to benefit from significant growth opportunities as the trend towards private sector involvement in public services continues to gather impetus internationally."

Serco is already involved in a vast range of public service contracts, from the national rail enquiry system to the Atomic Weapons Establishment at Aldermarston.

The company said extensions to its contracts at the UK's National Physical Laboratory and Docklands Light Railway and personnel services with the Royal Australian Airforce, had been its "major successes" over the past six months.

Other nations have shown great interest in the UK's innovative approach to delivering public services


It also signed new contracts totalling 950m, including the provision of an immigration detention centre, in South Lanarkshire, Scotland, and a 160m contract for a national road traffic control centre for England.

"Our proven public service ethos and sound relations with staff and unions...will stand us in good stead when we bid for projects with a higher public profile, for example in education, arising from the government's new policy direction," Serco said in a statement.

International markets

"These developments are in the UK are likely to have a substantial influence on our international markets," it added.

Serco Gatso Meter speed camera
Serco operates speed cameras for police forces
"Other nations have shown great interest in the UK's innovative approach to delivering public services.

"The spread of these ideas has already created new markets for us in Asia Pacific, North America and mainland Europe.

"Private Finance Initiatives (PFIs) based on the UK experience and focused on social infrastructure are developing in all these regions.

"We believe the development of PPP models will not be far behind."

Government influence

Serco started out as a defence contractor and still has strong interests in this area, providing safety services at the Atomic Weapons Establishment, in partnership with Lockheed Martin and British Nuclear Fuels.

The RAF early warning centre, at Fylingdales, was one of its key early contracts.

In the 1990s it has expanded rapidly, becoming involved in facilities management across a range of public services, including leisure centres, private prisons and a range of NHS and privatised utility contracts.

It is also involved in a 65m partnership with the National Crime Squad and, in January, it was called in to sort out problems with the police's national intelligence system.

It is also involved in bidding for the London Underground public-private partnership.

The company has earmarked 'justice' as a major growth area, along with defence and education.

Serco part-funded a highly influential report by left-leaning think tank the Institute of Public Policy Research (IPPR) on public-private partnerships, which is thought to be a major on influence on government policy.

See also:

15 Aug 01 | Business
Balfour Beatty's profits up 17%
04 Sep 01 | UK Politics
Byers puts safety first for Tube
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