Shareholder Executive

Partnerships UK

Purpose

Partnerships UK's mission is to assist governments (local and national) and public bodies in the better delivery of public services. This is done through developing programmes, projects and companies, often in partnership with the private sector.

Legal Status and Ownership

Partnerships-UK is a public limited company, and is itself a PPP jointly owned by the public (49%) and private (51%) sectors.

Description of Rights

The principal rights that the Government has in addition to its voting rights are:

1. the right to nominate two nonexecutive directors. The two Treasury nominees in 2007-08 were Claudia Arney (until February 2008) and Peter Schofield
2. the right to appoint the individual members of the Advisory Council, which reviews the effectiveness of Partnerships UK in fulfilling its public sector mission.

Government's Objectives

Vision

To support and accelerate the delivery of infrastructure renewal, high quality public services and the efficient use of public assets through better and stronger partnerships between the public and private sectors.

Objectives

• contribute to making the public sector a more effective client in PFI/PPP projects by engaging directly in procurement and supporting development of policy and standardisation work
• ensure that PUK is the leading organisation in PFI/PPP market expertise, and that it recruits and retains top-quality practitioners so that advice to public sector customers is of the highest quality
• make a positive financial return (after payment of interest on Convertible Unsecured Loan Stock) whilst recognising that profit maximisation is not the objective
• adhere to best practice standards in corporate governance that are appropriate to its objectives, scale and nature of its operations and ownership.

Financial Performance

£m	2008	2007	2006
Turnover	19	17	16
Operating Profit	(0)	(0)	1
Operating Profit including JVs	(0)	(1)	1
Profit/(Loss) for the year	(1)	12	1
Net Cash flow	(11)	46	(10)
Net Operating Assets	12	12	38
RONA	(2.8)%	(3.1)%	1.4%
Shareholders' Funds	18	23	11
Dividends	5	-	-

Commentary

Partnerships UK (PUK) consolidated its financial performance of the previous year. Revenues in 2007-08 increased to £19.1m, primarily reflecting the increased contribution from Partnerships for Schools. In 2007-08 PUK made an operating loss of £0.5m including joint ventures, compared with an operating loss of £0.8m in 2006-07, reflecting the smaller losses on joint ventures. The Group made an overall loss for the financial year of £1.1m, reflecting a write-down on the value of the portfolio investments of £0.8m.

Income from other support activity was £12.5m, 25% up on the previous year and included a wide range of work across the public sector. PUK's historic core of Development Partnership Agreement (DPA) revenues continued to decline to £0.8m, £1.7m lower than the previous year as a result of fewer projects being pursued under DPA arrangements.

An important area of PUK's work is its Joint Ventures: Partnerships for Schools (PfS) is now firmly established as is the Building Schools for the Future (BSF) programme. PfS contributed £4.7m of revenue in 2007-08. A total of 19 BSF deals have now been signed, worth over £2.5bn, and 13 BSF schools are now open nationwide. Looking forward, it will be important to ensure that joint ventures continue to make a strong contribution.

There were a number of changes at board level during the year. Christina McComb joined the Board in July 2007. David Goldstone resigned as Finance Director in September 2007 and was replaced in May 2008 by Craig Anderson. Nico Lethbridge died on 16 August 2007. Claudia Arney resigned as an HMT nominee in February 2008, but was reappointed as an independent non-executive director in March 2008.In April 2008 Stephen Lovegrove joined the Board as the second HMT nominee. Sir Steve Robson resigned in May 2008.