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UNISON DOCUMENT

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Company Update December 2002

This bulletin provides the latest reported developments over the month on companies in which UNISON is interested. The information is mainly taken from press reports and does not necessarily represent UNISON’s views.

AMEY

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• Amey scrapped its interim dividend, causing shares to fall a further 15% and triggering London Underground to push back the signing of the Tube PPP contract.

• Amey held crisis talks with bankers Barclays, HBOS and Royal Bank of Scotland over relaxing the terms of its banking covenants. Following the cancellation of £2.9m in dividend payments, Amey appointed the corporate advisory firm Hawkpoint Partners to work alongside existing adviser Deutsche Bank to consider ways of "rebuilding the value of the group," which includes the possibility of putting the firm up for sale.

• Vinci, Bouygues and Skanska are thought to be considering bidding for Amey. Around a third of Amey shareholders want chief executive Brian Staples to resign next March, after the completion of an expected restructuring.

• Amey selected Laing Investments Limited as preferred bidder for the prospective purchase of its PFI/PPP interests (although this does not include the London Underground PPP or any service contracts related to its PFI investments).

• Transport for London launched an appeal to ask the European commission to block the Tube PPP after it emerged that Amey has raised £11.4m for the project on the strength of government guarantees that it would refund £35m of bidding costs irrespective of whether contracts are signed. Transport for London is arguing that the refund represents an illegal subsidy under EU rules.

• The Financial Reporting Review Panel will consider whether to scrutinise the next set of accounts from Amey, in line with the government watchdog’s role to investigate companies suspected of failing to adhere to financial reporting rules.

• Redcar & Cleveland Council revoked Amey’s status as preferred bidder for a £375m outsourcing contract. The council then asked Amey and rival bidder Liberata to re-tender. Redcar & Cleveland claimed that the decision had been made because "significant features of the original bid have proved to be unachievable."

ANITE

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• Anite invited a fresh wave of attacks over its heavily criticised remuneration policy when it announced that it would pay former finance director Simon Hunt £750,000 as "compensation" for loss of office. This is in addition to payment of £640,844 in the year to April 30, including a 10% pay rise and a £323,000 bonus.

• Anite cut 70 jobs in Glasgow and Cheshire, as part of a drive to save £3m, mainly in its public sector division. The redundancies added to the 30 job losses announced over recent months.

• Anite parent company Anite Group Plc says that orders from the public sector were up 50% over this time last year, mainly thanks to a £11m contract in Australia. However, the company, which has recently experienced problems related to its high number of acquisitions and its method of payment, says that it has no plans for further purchases in the next six months.

• Anite Public Services signed a £2.7m contract with Kingston upon Thames, Hounslow, Richmond upon Thames and Merton to place cross borough service information on the web.

BALFOUR BEATTY

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• A joint venture between Balfour Beatty and Seeboard won preferred bidder status for the Sunderland Council street lighting and highway signs PFI maintenance contract. The deal, which is worth £100m over 25 years, involves the maintenance of 45,000 streetlights and 13,500 highway signs.

• Balfour Beatty announced that it would integrate its gas and water utility services businesses (John Kennedy and Kentons) to form Balfour Beatty Utilities. The new company will have a turnover of £200m and will be run by Kentons managing director Diarmaid Kelly. The firm’s principal customers will include Transco, Yorkshire Water, South West Water, Northumbrian Water, United Utilities, Scottish Water, Severn Trent Water and Mid-Kent Water.

BT

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• BT Group chief executive Ben Verwaayen admitted that the firm had set excessively aggressive revenue growth targets. The statement came as he announced second quarter revenue growth of 2%, far below the 6-8% average annual growth that he had promised in April. However, share price rose due to a 55% rise in pre-tax profits, progress on debt reduction and an increased dividend.

CAPITA

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• The Whitehall investigation into the failure of the Individual Learning Accounts (ILA) system, which was set up and administered by Capita, could take another two years to complete to allow time to assess the full scale of fraud committed against the system. The National Audit Office reported that the £273m scheme had not been planned adequately, while the contract with Capita to administer it was "deeply flawed" and lacked proper security measures. As a result, Capita would receive "quite a bit less" than the agreed £55m fee.

• The government ditched Capita as its partner to develop a successor to the crisis-hit ILA system. A source close to the Department for Education said that the decision had been prompted by a National Audit Office report that was highly critical of ILAs. The source said: "Capita was sacked." Capita, which denied that there was any connection between the report and the government's decision, still had three years of its original contract to run.

• Capita has transferred council tax queries from Blackburn with Darwen residents to its Coventry call centre. The decision was made because council tax staff at Blackburn with Darwen have been redeployed because of a huge benefit payment backlog caused by growing delays since Capita took over the contract.

EDS

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• EDS is considering closing final salary schemes to new members and transferring staff to money purchase plans. Shares in EDS have fallen 80% this year.

JARVIS

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• Kirklees headteachers sent a dossier of evidence to the government complaining about the performance of Jarvis in conducting a PFI schools refurbishment programme. They pinpointed substandard work, schools opening late, unnecessary disruption and a lack of communication. One headteacher also insisted that the disruption caused a significant drop in GCSE results. In September, 4,500 Kirklees pupils had to stay home at the start of term, while hundreds of Bridlington children also had an extended holiday due to delays in building work. Liberal Democrat council deputy leader John Smithson wrote to Jarvis attacking "a steadily increasing catalogue of poor work, dangerous practices, late hand-overs, inadequate standards of cleanliness and woeful consultation and liaison with headteachers which has caused substantial disruption to teaching." The Department for Education has asked for an urgent report into the problems, but asserted that the situation demonstrated the strength of the PFI process, as the heads had the chance to challenge their "partner" Jarvis, whereas they would have little redress against the LEA .

• Jarvis chief executive Paris Moayedi said that he would seek to "protect shareholders" from legal action by London Mayor Ken Livingstone over the London Underground PPP. Moayedi refused to say whether this meant asking the government to indemnify its costs over an appeal by the mayor to the European Court of Justice. The statement came as Jarvis announced an increase in pre-tax profits from £16.3m to £19m and a rise in turnover from £424.9m to £534.4m in the half year to September 30.

LEISURE CONNECTION

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• Swimmers at the Five Rivers Leisure Centre and Pool run by Leisure Connection in Salisbury have complained about grubby floors left unwashed for hours, waste-water filters clogged with hair and paper, cold showers and broken-down thermostats. The new pool cost £6m to build and was opened in July 2002.

• Cheltenham Borough Council decided not to renew its contract with Leisure Connection when it runs out in April and will bring the running of leisure facilities back in house. The decision followed a council-commissioned users' survey, which found that 40% judged the centre's cleanliness as poor or very poor and complained that there were too few staff.

SERVICETEAM

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• A disabled war veteran living in Birmingham council housing had to wait six months to have his rotten windows replaced because Serviceteam had placed such work on hold in order to make economies. The tenant was told that the firm had no money for the work and the situation was only resolved when a third party organisation intervened on his behalf.

SODEXHO

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• Sodexho Alliance announced a 33% rise in net profits to €183m for the 12 months to the end of August, while sales rose 6% to €12.6bn. Two-thirds of UK revenues are in the business and industry segments, but the fastest growing sectors are education and healthcare, which produced revenue rises of 5 and 6% respectively last year. Due to three profit warnings, the company’s shares have fallen 48% since the start of the year.

• Three hundred and twenty porters, caterers and domestic staff employed by Sodexho at Liverpool’s Royal Liverpool and Broadgreen hospitals voted for a series of one-day strikes every Friday. The staff, who are paid £4.15 an hour, rejected an offer of £4.50. GMB regional organiser Jackie French said: "These low-paid workers within the NHS are only asking for a reasonable increase in pay in line with local authority workers."

• A 97-year-old woman was left without a meal for two days when Sodexho took over Merton's meals on wheels service in August last year.

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