Sharechat Logo

Serco reaps modest profit from first full-year running Mt Eden jail

Monday 10th June 2013

Text too small?

Serco New Zealand, the local unit of the UK's Serco Group, reaped a modest profit in the first full year of its $300 million, 10-year contract to run Mt Eden/Auckland Central Remand Prison for the Department of Corrections.

Profit was $368,623 in calendar 2012, from about $1 million in 2011, when it took over full management of the facility mid-way through the year. Sales climbed to $32.5 million from $22.5 million. The biggest expense was its wages bill, which climbed to $21.8 million last year, from $12.8 million in the previous part year.

Serco won the contract in December 2010, beating out two rival bidders for the work, after the National government reinstated the right to contract out management of prisons. It is also part of the Fletcher Building-led group that last year won the contract to design, build and operate Auckland's new 960-bed Wiri prison in South Auckland, which is due to open in 2015.

Mt Eden had been run under contract between 2000 and 2005 before the previous Labour government changed the law to prohibit private involvement. Under Serco's contract, it must meet 37 performance measures and 11 key performance indicators set by Corrections. It can be fined for breaches including prisoner escapes.

The local Serco unit hasn't paid a dividend to its parent since the contract began. It paid tax of $207,186 last year.

"The parent company, Serco Group, has not been paid a dividend to date," a spokeswoman for the local unit said. "We have focused our resources on supporting our existing and future work in New Zealand. The parent company and other subsidiaries have been reimbursed for services provided."

In the latest performance assessment by Corrections, for the July-September quarter last year, Serco met almost 100 percent of its performance measures. For the full-year, notes to Serco's accounts show a $174,136 Crown asset remediation provision. Two prisoner escapes were recorded in the year, the second of a man who escaped from a health clinic during an eye check.

The Wiri prison was the first of the government's so-called public-private partnerships, or PPPs, where the private sector is allowed to invest in what has traditionally been a public sector role of providing health, education and other facilities.

Shares of Serco Group last traded at 592 pence on the London Stock Exchange and have gained about 9 percent in the past year.

BusinessDesk.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar falls as China's yuan depreciates
COMMENT: ANZ still doesn't get it
FMA says ANZ should have reported Hisco house sale in financial statements
ANALYSIS: Another new head for Xero's American dream
Jetstar losing money on regional NZ services, watching market 'closely'
A2 Milk says rising environmental costs not a 'big risk'
Cavalier Corp shares fall 16% as it announces write-down
Twyford's choice: NZTA or Super Fund for Auckland light rail
Auckland Airport boss upbeat about future but warns against complacency
NZ Shareholders' Association to oppose Stride's directors' fee bump

IRG See IRG research reports