Serco Group Plc · LSE:SRP
Serco — Investor Presentation (June 2005)
57 slides from Serco's investor presentation, Jun 16, 2005
Slide 1: Transport Seminar
Serco Group plc 16 June 2005 transport seminar
Slide 2: Agenda
Agenda Introduction Kevin Beeston Overview Andrew Smith Northern Rail Heidi Mottram Q&A Break Urban Transportation Overview Andrew Smith Light rail John Taylor Transport management systems Chris Screech Conclusion Kevin Beeston Q&A
Slide 3: Introduction
Introduction Delivering managed public services for over 40 years Track record of strong organic growth Market shifting to bundled and integrated services Increasing barriers to entry – track record and financial strength important Political and economic imperatives are expanding addressab
Slide 4: Track record of growth in transport
Track record of growth in transport 423 23.3 21.5 362 353 15.8 280 14.4 219 11.3 00 01 02 03 04 00 01 02 03 04 Turnover £m Operating profit £m Including joint ventures
Slide 5: Part of a balanced portfolio
Part of a balanced portfolio 2004 turnover £1,637m including joint ventures Civil government 33% Defence 30% Private sector 8% TRANSPORT 22% Science 7%
Slide 6: Overview
overview Andrew Smith Chief Executive Officer Serco Integrated Transport
Slide 7: Serco's transport vision
Serco’s transport vision to be the first choice for delivering operations, technology and infrastructure services for road and rail, shaping and supporting the implementation of governments’ transport policies
Slide 8: Our operating principles
Our operating principles Focus on safety of customers and staff Treat staff with respect Consult and involve stakeholder communities Deliver operating performance improvement Innovate through technology Devolve decision making as far as possible
Slide 9: Serco's transport operations
Serco’s transport operations A high quality portfolio Overseas (29%) UK (71%) Rail Urban Transportation Light rail Traffic management systems Air 2004 turnover £362m including joint ventures
Slide 10: Serco Integrated Transport - organisation
Serco Integrated Transport - organisation Andrew Smith Chief Executive John Taylor Mike Lockyear Ops Dev & Safety Advisor Mobilisation Doug Gillespie Matt Stevens Chris Screech Brian Burdsall Martin Kirke Strategy & Finance & Urban Rail HR & Change Business Commercial Transportation Development
Slide 11: Trends in the transport market
Trends in the transport market Mature economies looking for value for money in addressing transport issues Congestion Cost of public transport Social inclusion Restrictions on road building Emerging economies view transport as a driver for growth
Slide 12: Opportunities
Opportunities Mature economies moving to integrated transport policies Change management Use of technology Financing (e.g. PFI) for asset refurbishment Emerging economies looking to enhance transport through technology Capitalise on our recent acquisitions Using Serco North America’s (
Slide 13: Transport – global view
Transport – global view Attractive areas for Transport UK, USA, Germany, China, Australia, Western Europe, Canada, UAE Opportunistic areas for Transport South Africa, India, Middle East, Eastern Europe Focusing to deliver the strategy
Slide 14: Serco's transport strategy
Serco’s transport strategy Build on track record of delivery Increase share of rail market Secure position as integrator of urban transportation projects Technology Continue to move up the value chain Leverage technology to win more operating contracts Deepen relationships with regiona
Slide 15: Rail
Rail Lower revenue risk, high cash flow Operate and maintain Merseyrail and Northern Rail in UK Great Southern Railway in Australia Pipeline opportunities Potential Central break-up Silverlink Metro and Silverlink County South West Trains Vertical integration of Merseyrail German
Slide 16: Urban Transportation – light rail
Urban Transportation – light rail Operate and maintain Docklands Light Railway, Manchester Metrolink and Copenhagen MetroService DLR is best performing light rail system in UK Pipeline opportunities RAVP (preferred bidder) Dubai Tyne and Wear Integration and Early Operator Involvement
Slide 17: Urban Transportation - transport management
Urban Transportation - transport management A leader in UK traffic management Deliver road technology maintenance, traffic management services and software Pipeline opportunities Lorry Road User Charge Active Traffic Management (ATM) Regional control centres Traffic management overseas
Slide 18: Air
Air Major provider of air traffic control (ATC) services Aviation services joint venture in South Africa Pipeline opportunities Volume growth in Middle East Increase scope of services to existing clients ATC deregulation Leverage ATC capabilities and Serco North America infrastructure
Slide 19: Leveraging technology central to our business
Leveraging technology central to our business Automatic train operations DLR, Copenhagen Systems integration NTCC, Stockholm, Sydney Testing Railtest Unattended Track Geometry Measurement (UTGM)
Slide 20: Summary
Summary High quality integrated transport business Continue to seek operation and maintenance opportunities Drive higher value services Expand overseas
Slide 21: Northern Rail
northern rail Heidi Mottram Managing Director Northern Rail
Slide 22: The Serco-NedRailways JV
The Serco-NedRailways JV Formed in 2001 A well-balanced partnership NedRailways experienced in Fleet engineering Timetabling Serco experienced in Transport management and logistics Mobilisation Change management The UK commercial and rail environments
Slide 23: Background
Background Serco’s largest ever contract, valued at around £2bn Commenced December 2004 and runs for eight years nine months Combines two franchises into one, covering the North of England Five of UK’s seven Passenger Transport Executives are co-signatories Earnings and cash positive to Se
Slide 24: Key statistics
Key statistics 4,600 staff, 472 stations, 1,675 miles of track, 577 carriages 60m passengers per annum 2,500 trains per day - UK’s largest train operating company
Slide 25: Northern's financials
Northern’s financials Revenue Other revenue Around two thirds of revenue is subsidy payments Subsidy payments Passenger More than one quarter of costs are revenue pass-through to Network Rail Rolling stock costs are fixed for contract life Costs Other costs Staff costs Network Rail Rolling sto
Slide 26: Delivering value for money
Delivering value for money Merger creates operating efficiencies Fleet Traincrew Support Creating a strong Northern brand based on performance and quality Growth Pricing Developing off peak Partnership Opportunity for external funding Joint promotion
Slide 27: Delivering performance
A pr 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% -0 Ju 1 n- Percentage A 01 ug - O 01 ct -0 D 1 ec -0 Fe 1 b- 0 A 2 pr -0 Ju 2 n- A 02 ug - Target O 02 ct -0 N 2 ov -0 Ja 2 MAA n- M 03 ar - M 03 ay Delivering performance PPM -0 3 Ju l-0 Period Se 3 p- N 03 ov -0 D 3 ec -0 Fe 3 National Trend b 0 A
Slide 28: Delivering performance
Delivering performance PPM Moving Annual Average to Period 13 04/05 100% 50% 70% 80% 90% 60% Merseyrail Electrics c2c Chiltern Railway Co WAGN One Midland Mainline Wessex Gatwick Express NORTHERN RAIL South Eastern Trains Silverlink Train Services Thameslink Rail ScotRail Railways First Great Wester
Slide 29: Delivering performance
Delivering performance Delivery through detail Area performance management and accountability System wide best practice and overview Fleet innovation Partnership with Network Rail – Joint Performance Improvement Plan
Slide 30: Delivering a great company
Delivering a great company Challenge of two cultures Union relationships Area Director Structure Communication and involvement Stakeholder endorsement
Slide 31: Where next?
Where next? Consolidate new organisation Focus on culture change Continued performance improvement Enhancement through partnership Franchise remapping
Slide 32: Questions and answers
questions ane answers serco bringing service to life
Slide 33: Urban transportation – overview
urban transportation – overview Andrew Smith Chief Executive Officer Serco Integrated Transport
Slide 34: Urban Transportation - overview
Urban Transportation - overview Market moving towards greater integration Serco Light rail Road – congestion management and buses DfT in UK will only finance integrated policies in cities Serco one of few companies with breadth of experience to act as integrator Targeting major conurba
Slide 35: Urban transportation – light rail
urban transportation – light rail John Taylor Director Operations Development & Mobilisation
Slide 36: Our experience
Our experience Operator of two fully automated systems (Docklands Light Railway and Copenhagen) and Manchester’s street running tram Maintain all three systems and both automatic and non-automatic vehicles Successful service integration Lewisham Extension in Docklands Manchester Metrolink
Slide 37: Docklands Light Railway
Docklands Light Railway Annual revenue approx £35m Fully responsible for the turnkey operation and maintenance of DLR since 1997 Winner of 5 national rail awards, demonstrating continuous improvement in performance and customer satisfaction year on year Passenger numbers have risen from 18m
Slide 38: Manchester Metrolink
Manchester Metrolink Annual revenue approx £18m Performed turnkey operations and maintenance since 1997 Service integrator for the Phase 2 extension Passenger numbers have risen from 12m to 20m in 7 years (Phase 2 line added some 4m passengers) Seeking to further assist our customer (Great
Slide 39: Copenhagen Metro
Copenhagen Metro Annual revenue approx £18m Brand new automatic, driverless system opened on time in October 2002 Serco through its Metro Service brand is providing all operations and maintenance in support of systems contractor, Ansaldo Metro is key to development for the Orestad ‘new town’
Slide 40: What next?
What next? Finalise the RAVP contract Obtain agreement with GMPTE over ‘New Metrolink’ and new works Secure the DLR re-bid (late 2005) Obtain the 3 year extension of Metro Service through to 2010 Expect to tender for operations and maintenance of the new Dubai Metro
Slide 41: Richmond-Airport-Vancouver Project
Richmond-Airport-Vancouver Project 50:50 JV with SNC-Lavalin is preferred supplier for operation and maintenance of fully automatic rapid transit system 35 year concession worth approx C$20m per annum to Serco Serco will have an early operator involvement contract during 4-5 year construction
Slide 42: Dubai Metro
Dubai Metro Invitation by Dubai Municipality to bid for Metro operations and maintenance Possible opportunity for operation of regulated buses and water taxis Strategy to have earnings from early operator involvement in partnership with Dubai Municipality or selected infrastructure consortium
Slide 43: The future
The future Position our business to Provide operations, maintenance and integration of high-quality light rail and bus operations Deliver programme management and system integration expertise to light rail projects in key growth markets
Slide 44: Urban transportation - traffic management systems
urban transportation - traffic management systems Chris Screech Managing Director Urban Transportation
Slide 45: Examples of existing operations
Examples of existing operations National Traffic Control Centre Telephone service 08700 660 115 www.traffic-england.com
Slide 46: Examples of existing operations
Examples of existing operations Electronic System for the delivery of Abnormal loads (ESDAL) Shenzen Western Corridor Hong Kong Sydney Public Transport Info Priority System and New South Wales partnership US and Hong Kong parking meter operations Enhanced managing agent contractor (EMAC)
Slide 47: Technology is essential
Technology is essential Snapshot of the UK but similar all over the world Congestion costs UK economy £15bn each year (source: RAC Foundation) Providing driver information in response to a major incident on M1 can save £1m in lost time and wasted fuel Highways Agency Traffic officers deal wi
Slide 48: Our objectives and cornerstones for growth
Our objectives and cornerstones for growth Productise and globalise our software Grow our UK highways business Win Lorry Road User Charge contract and enter road user charging market Build our international capability
Slide 49: New product from existing development
New product from existing development Twenty years of project based work New focus on products Launched first product “Transport Information Management Systems” (TIMS) at Traffex April 2005 – good targeted interest Global launch October 2005 at ITS World Congress, San Francisco
Slide 50: New product from existing development
New product from existing development
Slide 51: Key opportunities
Key opportunities Global lorry road pricing market valued at up to $40bn Opportunities identified in Czech Republic Sweden Netherlands USA UK – Lorry Road User Charge
Slide 52: Key opportunities - Lorry Road User Charge
Key opportunities - Lorry Road User Charge Client – HM Revenue & Customs From 32 companies to 3 bidders per contract Charging Data Services Central Services Enforcement Services Competition Siemens, Capita, Autostrade TRACS (Logica, Marconi, Kapsch) T Systems (Deutsche Telecom)
Slide 53: Key opportunities - Lorry Road User Charge
Key opportunities - Lorry Road User Charge Our partners FELA – providers of the Swiss LRUC scheme IBM – providers of the Stockholm congestion charging system Timescale Final submission October 2005 BAFO December 2005 Contract award March 2006
Slide 54: Summary
Summary Unique platform for growth, long history with good skills World first with NTCC, generating interest globally Positioned well for road charging Migrate road technologies into other transport operations e.g. rail Benefit from recent acquisitions Serco North America into transport
Slide 55: Conclusion
conclusion Kevin Beeston Executive Chairman
Slide 56: Conclusion
Conclusion Expanding market High quality transport portfolio Large technology requirement Low capital intensity Underpins continued strong growth
Slide 57: Questions and answers
questions ane answers serco bringing service to life