Serco Internal Northern Ireland Presented by Gurbux Singh & Martin Eves 16 October 2012

Serco Internal Who are we?  Serco is a global 100 FSTE public services company with 50 percent of business outside of the UK  We work for national and local government across public services in health, education, transport, science and defence  50 years' experience of helping our customers achieve their goals We run:  Prisons  Railways  Electronic Monitoring  PECS  Immigration  Leisure  Defence  Health  Education  Environmental Services  BPO  Transportation We work with Governments:  UK  European Union  US  Australia  India  Africa

Serco Internal Serco Ireland Presence & Capabilities  Integrated Facilities Management including:  Belfast Roads Service  State Street Bank  Pfizer Ireland  Deloitte Ireland  Invest Northern Ireland  Retail  Aldi Ireland – Facilities Management Contract  Boots Retailers – Hard Services Facilities Management  Northern Ireland Civil Service – Cleaning & Catering Services  Northern Ireland Water – Water Quality Sample & Transport

Serco Internal Welfare Services Overview  Entered in to welfare-to-work market October 2009 through FND  Introduced a new model of delivery with 100% subcontracting  Delivered 25,000 people in a year in to work  Entered Work Programme supporting 45,000 long-term unemployed individuals  Outcome based contract with approximately 40 subcontractors  We also deliver two NOMS and ESF Contracts

Serco Internal Key Features of Serco Model  Service Integrator  Prime / subcontracting  100% supply chain management  Combined strength of 100 FSTE company with expertise of local providers and key stakeholders  Build a network with a wide range of providers including – Voluntary third sector, charitable, private and public organisations  Payments by results, outcomes focused  Front loaded payment method to ensure case flow to the supply chain  Building capabilities and capacities  Open and transparent  Single case management system  Invested in an IT Solution to actively support our supply chain  Three phase delivery model  To enable change and to support our customers  Encouraging competition at local level

Serco Internal Key Features of Serco Model  Quality  Provide assurances to DWP, Risk management methodology, Quality Improvement Framework  Evaluating provider processes  Project management of all audits  Market share shift  Compliance  Protection of the public purse  Prevent and detect inaccurate performance  Minimise the risk of fraud  Integrity of data  Information Security  Protection of DWP data  Support the network with information security matters  Report all breaches to DWP

Serco Internal Welcome Direction of Travel – DEL NI  Focus on employment outcomes rather than prescribed processes  Target those most in need  Create stronger incentives for helping those participants who are further from work  Ensure that participants get the support they need  Deliver value for money for the taxpayer  Reduce prescription for providers  To build the right market for the future

Serco Internal Shifting Dynamics of Service Procurement Steps 2 Success is a procurement that is different to the shape of existing delivery models: –Milestones are changing; –Geographies are increasing; –Diversity of service delivery will be enhanced; –Innovation will be pivotal to success. All of this means more pressure on working capital: –Revenue streams are pushed to the right; –Investment in solution and delivery methodology is required.

Serco Internal Moving Towards Payment by Results As services providers we face new challenges: –Uncertainty:  Payment is based on future performance;  Little or no performance history;  Future economic activity is unknown. –Risks:  There will be a funding gap;  If we don’t perform the gap will widen;  How do we know our forecasts are correct? –Structure:  Business might not be set-up for the change;  Working capital (and access to it) is critical;  How long since we really addressed our overhead?

Serco Internal 9 Payment From Future Milestones – Cashflow Management is Critical CASHFLOWCASHFLOW 0 TIME START FEE JOB START SUSTAINMENT START FEE INTERVIEWS TRAINING TRAVEL OVERHEADS MEETINGS SUPPORT OVERHEADS SUPPORT OVERHEADS

Serco Internal 10 Payment From Future Milestones CASHFLOWCASHFLOW 0 TIME START FEE JOB START SUSTAINMENT INTERVIEWS TRAINING TRAVEL OVERHEADS MEETINGS SUPPORT OVERHEADS

Serco Internal 11 Addressing These Changes Good News: –There will be funding albeit a different nature; –We will have time to deliver; –Milestone recognition gives us more opportunities to achieve; –Upfront service fee or engagement fee will help; –Over achievement will be incremental. But we MUST: –Innovate our solution; –Deliver performance; –Look at new sources of funding.