Companies Update - October 2004

This month's edition include information on Accord, Adecco, Amey, Anite, Apcoa, Balfour Beatty, Bovis, British Energy, Bupa, Capgemini, Capita, Carillion, Catering Alliance, Compass, DC Leisure, EDS, Education Leeds, Enterprise, Group 4, Itnet, Interserve, Innisfree, ISS, Jarvis, Kajima, Leisure Connection, Mears Group, NCP, Nord Anglia, Patient Choice Partners (PCP), Sodexho, Vertex, United Health Group and VT Group.

DC LEISURE

DC Leisure has been selected to refurbish and operate Ferndown Leisure Centre for Dorset County Council. The contract is expected to last 10-15 years with refurbishment starting in 2005. Running costs will be shared between the county and Ferndown Town Council.

EDS

EDS, the second largest information technology services company, intends to cut as many as 20,000 jobs over the next two years. New CEO Michael Jordan said costs must be cut by 20%. EDS’ workforce fluctuates according to how many employees are transferred in from new contracts. On top of the usual fluctuation, 5,000 jobs have been cut this year. Company debt, a long running problem for EDS, has been cut largely by the sale of the software business and Mr Jordan plans to cut all debt by the end of 2004.

EDUCATION LEEDS

Education Leeds failed to include two schools on the list of choices for parents selecting a secondary school for their children. Education Leeds will attempt to minimise the damage by writing to the parents and carers of all year six students in Leeds to make them aware of this. As well as extending the deadline for all admissions Education Leeds will take out adverts in the local press to alert parents and carers.

ENTERPRISE

Enterprise plc has bought MRS Environmental Services Ltd and its subsidiaries for £14.2m. MRS provides street cleansing and refuse collection services to local authorities in London and the South East including St Albans City Council, the London Borough of Redbridge, East Herts Council, Waverley District Council, the London Borough of Wandsworth and the City of London Corporation. Enterprise views this acquisition as a means of expanding geographically and following the trend in the public sector of outsourcing contracts based on a wide range of services. Enterprise also has contracts in the water industry with Thames Water Utilities, Three Valleys Water and the Northern Ireland Water Service.

Support services company Enterprise, has £25m funding from the Royal Bank of Scotland to enable it to make further acquisitions. Prior to the purchase of MRS, Enterprise bought JMPC, an educational services company for £4.2m.

GROUP 4

Group 4 Securicor says it is on the way to achieving £30m worth of annual savings from the merger. Savings will be made by cutting overheads, closing national and regional offices, reducing manned security and cash service branches and merging control and monitoring centres in the UK and overseas.

An independent inquiry into the use of physical restraint and strip-searches in child jails will be held by the Howard League for Penal Reform. The inquiry follows the death of a 15-year-old boy in Rainsbrook Secure Training Centre in Northamptonshire while being restrained by three staff. The three STCs in England are run by private companies. A subsidiary of Group 4, Rebound ECD, runs Rainsbrook and Medway in Kent. Premier Training Services Ltd (Serco) runs Hassockfield in County Durham, where 14-year-old remand prisoner Adam Rickwood was found hanged last month.

ITNET

Itnet is taking legal advice on its claim to compensation arising from the cancellation of its £83m contract with the Cabinet Office contract in June. A half-yearly loss of £11.9m pounds, compared to a profit of £5.5m in the same period in 2003 is said by the company to be due to an exceptional provision of £24.4m to the cost of the cancellation.

Long after departing from Cadbury Schweppes, Itnet continues to provide IT services to the food processor. The current contract has been extended for a further two years.

INTERSERVE

Refurbishment works at the Friarage Hospital in Northallerton, have risen to an estimated £19.7m, £7.5m above projected costs. The funding gap will be closed in part by drawing on the development budget for James Cook University Hospital, in Middlesbrough, which is also managed by South Tees Hospitals NHS Trust. Critics say that this merely shifts the funding crisis from one hospital to another. Lead by Interserve, this was the first NHS construction project agreed under the ProCure21 scheme.

Interserve says the trend for outsourcing services such as security, cleaning and building maintenance, has helped push up sales so far this year. More than £770m worth of contracts have been won and the value of future work at the end of the first half year was £4.3bn, compared to £3.9bn the previous year.

INNISFREE

Private investment firm, Innisfree has raised £360m to invest in new PFI and PPP projects to take advantage of continuing opportunities in the UK and increasing opportunities in continental Europe. Chief Executive David Metter said the fund would support investment in projects with a capital value, including all equity and debt, of £4bn to £7bn. Funding for PFI projects typically comprises 10% equity and 90% debt, and Innisfree usually take between 50% and 75% of the equity in projects. About £105m of the funds raised were already committed to projects such as the redevelopment of Barts hospital in London, projects in St Helens and Mansfield, an MoD accommodation project in Devonport, and school PFIs in Clacton, Exeter, Leeds, Barnsley and North Lanarkshire.

ISS

A strike by hospital porters has been threatened if 18 staff suspended by ISS Mediclean are not reinstated. Eighteen specialist theatre porters issued a protest over plans to move staff facilities into a corridor, and were supported by more than 40 general porters. A strike would seriously affect services at Swansea's Morriston, Singleton and Cefn Coed hospitals. The issue of suitable facilities for the porters has been under discussion for three years.

JARVIS

Troubled group, Jarvis has paid its directors bonuses withheld after the fatal Potters Bar rail crash that killed seven people. Retrospective bonuses totalling £807,000 have been paid even though Jarvis has not been cleared of responsibility for the accident. Paris Moayedi, chief executive at the time of the accident, got £260,000, and Kevin Hyde, got £137,000. Victims’ families were outraged when Moayedi was paid performance-related bonuses within weeks of the crash. At the time Jarvis said no more bonuses would be paid until the cause of the accident was established. This year Jarvis admitted joint liability for compensation with Network Rail but has not admitted responsibility.

Kevin Hyde, Chief Executive of Jarvis plc has unexpectedly stepped down from the board and is leaving the company.

Jarvis has put its accommodation services division up for sale. The service, which mainly maintains schools and university halls of residence, was viewed as Jarvis’ new core business but problems with existing contracts have made it difficult to attract new clients. Construction projects still in progress are being completed. Several other firms are said to be interested. The problem will be in convincing prospective purchasers to take on the problematic as well as the profitable projects.

Jarvis has already sold the bidding and administration team from its University Partnerships Programme, part of its accommodation services division. UPP was bought by Alma Mater, a joint venture between 3i and Barclays Private Equity Partnership. UPP will concentrate on new build rather than schools refurbishment contracts, which is where Jarvis came unstuck.

A deadline of 8 October 2004 has been imposed on Jarvis to provide Norfolk County Council with "a reasonable level of certainty" that it can find another building contractor to takeover the £263m schools PFI contract. The contract is still unsigned, awaiting confirmation of the appointment of builders and other contract detail. For Jarvis, securing this contract is essential as part of its agreed recovery plan. In August Fife council pulled out of a £177m schools PFI with Jarvis.

Jarvis faced another set back as it lost its school PFI contract with Kirklees Metropolitan Borough . The council decided not to pursue the PFI with its preferred bidder Jarvis, following concerns over the future ownership of Jarvis' accommodation services arm.

Jarvis once again faced difficulties as construction workers on its schools PFI in Twickenham stopped work as they had not been paid by the firm. The project to upgrade Trafalgar Junior School is the last remaining project in the company's PFI contract for education with the council. Jarvis has assured the council the work will be completed.

The new Gateshead £30m PFI fire station being built by Jarvis has hit problems. A wall at the station was built using the wrong colour bricks. Planning officials ordered the wall to be dismantled and rebuilt using the right bricks.

KAJIMA

More than 1,000 secondary school students are being given half-day lessons in a community centre because their school is still not been finished. Haverstock School in Camden, which is being rebuilt by Kajima under a PFI contract, will not be ready until 4 October. The building contractor blamed the very heavy rains of last month for the delay.

LEISURE CONNECTION

Uttlesford District Council has issued a warning to Leisure Connection, the company running the Great Dunmow Leisure Centre and the Mountfitchet Romeera Leisure Centre. Penalities could result if improvement targets are not met by January. A public survey has revealed problems including poor customer awareness and hygiene, lack of staff knowledge, expensive membership, a shortage of courses and the need for repairs. Some steps have already been taken by the contractor to address these issues.

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