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Shares soar 47p on Serco results

Topaz Amoore
Tuesday 02 March 1993 19:02 EST
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SHARES in Serco soared to 810p yesterday, up 47p, after the management contracting group announced a 37.2 per cent increase in pre-tax profits to pounds 7.2m in the year to 31 December 1992, writes Topaz Amoore.

An important factor in Serco's growth is maintaining or re-winning existing long-term contracts. Interests range from traffic speed cameras to ballistic missile early warning systems and the maintenance of Marks & Spencer stores.

Richard White, managing director, said: 'Our financial and management strength means we have won a number of contracts where we haven't been the cheapest but they are confident we can implement the proposals.'

An eight-month contribution from International Aeradio (IAL), the air traffic control company bought for pounds 12.25m from BT in April, accounted for pounds 26m of the pounds 149.6m turnover, which was up by 42.6 per cent overall.

Defence's contribution to turnover has fallen from 48 per cent to 40 per cent. But Mr White said defence cuts worked in Serco's favour, as the Ministry of Defence used it to help to reduce costs.

Serco has designs on future National Health Service contracts as well as the newly privatised Strangeways jail. It also hopes to run whole stations for the privatised British Rail.

Earnings per share rose by 22.5 per cent to 37p. A final dividend of 9.5p gave a total of 14p, against 11.9p last time.

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