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VT Group Plc Annual Report & Accounts 2008
VT Education & Skills Simon Withey Managing Director We achieved solid overall performance with improved margins and significant contract wins. Financial Highlights Turnover (£m)
2008
124.9
2007
112.1 0
100
110
120
130
140
8
10
Underlying Operating Profit (£m)
2008
5.6
2007
3.8 0
2
4
6
Underlying Operating Profit Margin (%)
2008
4.5
2007
3.4 0
1
2
3
4
5
Strategy
2008 has been a good year. We achieved solid overall performance with improved margins and significant contract wins. VT Education and Skills (VTE&S) has grown to be one of the largest companies in the UK Education and Skills sector, and, with the proposed integration of Flagship following the expected completion of the shipbuilding joint venture, it will become the clear market leader, positioning us well for further expansion.
What we do VTE&S employs over 2,000 people and has a unique breadth of capabilities encompassing education, training and guidance services. In education we support over 500 schools providing school improvement, education consultancy, staff development, ICT solutions and facilities management. We also have two Building Schools for the Future (BSF) contracts which will, in due course, cover about 25 secondary schools. In training we are one of the UK’s leading providers in work-based learning, offering vocational qualifications in engineering, automotive, hospitality, retail, care and leisure. We typically have over 18,000 apprentices at any one time in a large number of locations across the UK. In guidance services this year we supported over 400,000 adults and young people across 19 local authorities with information, advice and guidance on careers and other key life decisions.
2008 performance Despite challenging market conditions and budgetary pressures suffered by our major customers, VTE&S achieved solid operating performance, increasing margin from 3.4% to 4.5% on a higher turnover. This was driven mainly by achieving financial close on the BSF contract in Lewisham, and improved efficiency, processes and controls across the rest of the business.
Our vision is to be the number one provider in the UK education and skills market. In line with the Group’s strategy to work in partnership with government customers to deliver businesscritical assets, our aim is to develop more long-term relationships, such as local authority school improvement contracts; and long-term customer training programmes within high technology environments such as engineering and automotive. Our increased use of IT to offer e-learning will provide a key differentiator for us.
Customers and markets Our major customers for our education and guidance services are local authorities and the Learning and Skills Council (LSC). Key local authorities are the London Boroughs of Greenwich and Lewisham for BSF; Surrey County Council and Waltham Forest for school support services; and East and West Sussex plus several London boroughs for our information, advice and guidance (IAG) work. Until March 2008 our IAG services for young people were provided through the Connexions service but this has now been devolved to local authorities. The major customer for our vocational training and assessment services is the LSC in England, but we also have similar services in Scotland, Wales and Northern Ireland. These services, which are predominantly Government-funded, are delivering apprenticeships at levels 2 and 3 to a wide range of UK-based employers. Our clients include many leading companies such as Whitbread, Sodexho, BAA, Compass and Virgin Mobile in the hospitality and retail sector; and Volkswagen and Subaru in the automotive sector. We also have a training contract with the British Army’s REME organisation which was successfully renewed last year.
Education Our key schools support contract across 400 schools in Surrey continues to progress well. This is delivered through our joint venture with Surrey County Council, VT FourS. Against strong competition, VTE&S won the £30m contract for school support services for the London Borough of Waltham Forest. The contract lasts four years and began on 1 April 2008.