Business Review
Vertex is a leading provider of business process outsourcing and one of the UK’s major customer management service suppliers. It provides services to clients in the private enterprise, financial services, utility, central and local government sectors.
Turnover increased by 7.6 per cent to £396.4 million in 2004/05, predominantly due to the increase in volumes on public sector contracts and the first full-year impact of the North American debt collection activity. Operating profit* has improved by 5.2 per cent to £26.4 million, reflecting increased external contract activity, offset by higher bid costs in securing new business.
Key facts:
2004/05 2003/04
Turnover £396.4m £368.5m
Operating margin* 6.7% 6.8%
Vertex has four key target markets:
Energy and utilities in the UK and North America;
Public sector - central and local government in the UK;
The service segment of the UK private enterprise sector - primarily home shopping and telecommunications; and The UK and North American financial services sector.
In order to accommodate the growth and broader business base of the company, Vertex has recently restructured from a functionally based organisation to a divisionalised structure, which better reflects the markets in which it operates. It now operates through four distinct lines of business. This positions us for further growth and enables greater responsiveness to our clients’ requirements.
In the public sector, we are successfully pursuing our strategy of growing business in both local and central government. Using the flagship Westminster City Council contract as a blueprint, we have developed a fresh approach - called Citizen First - to deliver local authority services.
Vertex has applied this framework methodology to the successful bid for Thurrock Unitary Council. This contract, secured in November 2004, is worth £427 million over 15 years. We are working with United Utilities Contract Solutions and the council to manage and re-engineer a number of Thurrock’s business processes, ranging from administration and customer services to procurement and highways maintenance.
Vertex has signed a new seven-year contract, with a review point after four years, with Powergen Retail Ltd, part of E.ON UK. This amends its current agreement, which began in 2003. The new longer-term contract will redistribute work on a functional basis to enable both companies to maximise economies of scale.
In November 2004, United Utilities acquired Capgemini’s 14.6 per cent equity stake in Vertex for £47.7 million in cash.
Vertex revenue 2004/05
Vertex revenue in 2004/05, split by target market. This excludes financial services as the Marlborough Stirling acquisition was not completed until May 2005.
Energy & utilities 53%
Public sector 28%
Enterprise 19%
Performance
Operating profit* in Vertex increased by 5.2% to £26.4 million in 2004/05.
Increase in operating profit* 5.2% (2003/04: 33.5%)
(Source: United Utilities Stakeholder Report 2005)