Shareholder Executive

Working Links

Purpose

Working Links operates nationally, bidding for and managing regional and local contracts from a wide range of funding bodies to promote greater equality of opportunity for disadvantaged people, families and communities, supporting their journey towards economic self sufficiency through, whenever appropriate, access to sustainable work.

Legal Status and Ownership details

Working Links (Employment) Ltd is a limited company registered in England and Wales. Mployment Limited, a wholly owned subsidiary of Mission Australia, and the Secretary of State for Work and Pensions each own one-third of the share capital, with Manpower plc and CapGemini UK plc holding a sixth each.

Objectives

The Government is clear that there is a strict division between its interests as a customer and contract provider (principally through the Department for Work and Pensions (DWP)) and its interests as a shareholder. As a shareholder, the Government's interest is to maintain and enhance the long-term value of Working Links. To this end the Government's objectives are to:

• grow the value of the business as measured by the Board’s agreed suite of valuation metrics
• see sustained growth in profits and free cash flow based on a level of margins that allows for the costs and risk of the contracts undertaken, while recognising the need for significant further investment in the business
• respect the founding public-private culture and values of the business
• preserve and respect the entrepreneurial vigour of Working Links.

Financial Performance

£m	2009	2008	2007
Turnover	86	77	64
Operating Profit	1	1	1
Profit/(Loss) for the year	1	1	1
Net Cash flow	6	0	(0)
Net Operating Assets	0	3	10
RONA	1825.9%	49.0%	14.9%
Shareholders' Funds	5	4	4
Dividends	-	0	-

Dividend policy

The current policy is to distribute 50% of retained net profit to shareholders, 20% to the Links Foundation, and retain 30% in the Company, subject to certain criteria.

Performance targets

Targets are based on financial measures such as revenue, profits, asset values and gearing. Other non-financial targets focus on areas such as quality of service and employee related measures.

Commentary

During the year,Working Links helped 16,700 disadvantaged or long-term unemployed people into employment, an increase of 1,190 (8%) on the previous year, even in the challenging economic climate. It also helped 6,300 people achieve a qualification.

Working Links’ performance in the year reflected its strategic intent to grow and diversify its operations by generating new business.Turnover increased 11% to £85.7m.This included £12m of revenue from new business won during the year. However, the improvement in turnover was offset by increased operating costs (up 11% to £84.3m).This was driven by the cost of setting up and initially running the new contracts. Overall profit for the year rose slightly from £716k to £770k.Working Links donated £250k to the Links Foundation, a charitable foundation that provides or assists in the provision of facilities or services to improve the conditions of life, primarily in the communities Working Links operates. In order to maintain a prudent cash balance, the Board agreed to waive the dividend declared in 2007-08. A dividend was not declared in 2008-09.

Working Links’ ongoing investment in its growth and diversification strategy continues to pay off and has led to new business wins totalling around £100m, of which 22% was outside its core employment market. At year end,Working Links’ estimated total future turnover from its existing contracts was around £200m. After year-end,Working Links was announced the preferred bidder in four of the Government’s flexible New Deal areas.

In October 2008, Sir Anthony Cleaver stood down as Non-Executive Chair at the end of his second three- year term. Keith Faulkner was appointed Non-Executive Chair in his place, and Breege Burke Managing Director.

Looking forward,Working Links will continue to focus on growing and diversifying the business by bidding for new DWP contracts and expanding further into skills, social justice and communities. It is also developing plans to diversify internationally.