£450m contract for Northern Isles Ferry Services
Serco awarded £450m contract for Northern Isles Ferry Services
20 September 2019
Serco Group plc
Serco Group plc ('Serco' or 'the Group'), the international service company, has been selected as preferred bidder to continue managing and operating the lifeline Northern Isles Ferry Services for passengers and freight between the Scottish mainland and the Orkney Islands and Shetland Islands, providing essential access and supplies for the islanders. The outcome of the tender was announced by the Minister for Energy, Connectivity and the Islands to The Scottish Parliament this morning.
There is currently a mandatory standstill period following the appointment decision. The new contract will ensure continuity of service, is anticipated to start in the fourth quarter and has a total estimated revenue value to Serco of approximately £450m over the initial six-year term. There is an option for Scottish Ministers to extend the contract for a further two years, valued at a further £160m.
Serco will build on the strengths and experience gained over the past seven years of operating the NorthLink Ferries franchise. Key features and improvements will include:
· continuing to undertake the planned maintenance and dry docking of the vessels in Scotland, to ensure strong levels of resilience with reduced time away from service;
· improvement of the terminal facilities at Hatston, Kirkwall in the Orkney Islands, and enhanced passenger information systems at all the terminals;
· a new smart ticketing system for foot passengers;
· a new demand analysis and forecasting model to inform and improve accuracy and confidence in passenger and freight requirements; and
· a new 'Green Travel' campaign aimed at customers and employees, together with a new Carbon Reduction strategy to reduce emissions.
Rupert Soames, Serco Group Chief Executive, said: "We are delighted to have been awarded this contract by Scottish Ministers. We are very proud of our track record over the past seven years, during which time we have improved almost every aspect of the lifeline service for the communities and businesses of the Northern Isles, while also reducing materially the annual subsidy and thereby reducing the burden on the Scottish taxpayer. We look forward to further improving the service in the coming years."
Since Serco first began managing the service in 2012, all aspects have been improved in terms of customer satisfaction, reliability, safety and community support. Passenger numbers have increased by 18%, vehicle traffic by 38% and freight volumes by 24%. Reliability performance is 99.97%. Employment of people from the local communities has increased by 18% and Serco NorthLink Ferries is the first Scottish ferry company to achieve Investors in People Gold rating. Furthermore, Serco sources over 80% of food, beverage and retail services from within a 50-mile radius of the operating ports, an increase from 12% since 2012. Since 2013 the vessels have undergone significant upgrade and improvement including: new and additional reclining pod seats; upgraded premium cabin facilities; new locally sourced Glencraft mattresses for all cabins; and the new Magnus lounge and shower facilities for those not travelling in a cabin.
For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 7738 894 788
Marcus De Ville, Head of Media Relations T +44 (0) 7738 898 550
Serco is a leading provider of public services. Our customers are governments or others operating in the public sector. We gain scale, expertise and diversification by operating internationally across five sectors and four geographies: Defence, Justice & Immigration, Transport, Health and Citizen Services, delivered in UK & Europe, North America, Asia Pacific and the Middle East.
More information can be found at www.serco.com
This announcement contains statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. All statements other than statements of historical fact are forward-looking statements. Generally, words such as "expect", "anticipate", "may", "could", "should", "will", "aspire", "aim", "plan", "target", "goal", "ambition", "intend" and similar expressions identify forward-looking statements. By their nature, these forward-looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Factors which may cause future outcomes to differ from those foreseen or implied in forward-looking statements include, but are not limited to: general economic conditions and business conditions in Serco's markets; contracts awarded to Serco; customers' acceptance of Serco's products and services; operational problems; the actions of competitors, trading partners, creditors, rating agencies and others; the success or otherwise of partnering; changes in laws and governmental regulations; regulatory or legal actions, including the types of enforcement action pursued and the nature of remedies sought or imposed; the receipt of relevant third party and/or regulatory approvals; exchange rate fluctuations; the development and use of new technology; changes in public expectations and other changes to business conditions; wars and acts of terrorism; and cyber-attacks. Many of these factors are beyond Serco's control or influence. These forward-looking statements speak only as of the date of this announcement and have not been audited or otherwise independently verified. Past performance should not be taken as an indication or guarantee of future results and no representation or warranty, express or implied, is made regarding future performance. Except as required by any applicable law or regulation, Serco expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in Serco's expectations or any change in events, conditions or circumstances on which any such statement is based after the date of this announcement, or to keep current any other information contained in this announcement. Accordingly, undue reliance should not be placed on the forward-looking statements.
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