Investment column: Vosper Thornycroft

MARTIN JAY, chief executive of Vosper Thornycroft, the warship yard, was a little premature earlier this year when he let it seep out that Vosper had a deal with the Ministry of Defence to build the new Type 45 destroyer. He later backtracked, saying the group was just hopeful it would have a role in the destroyer's construction. Yesterday it said only that the MoD was yet to decide how to divide the contract between it and rivals.

It is as unlikely Vosper will be asked to design and construct all 12 warships as it will be asked to build none. Whoever wins, it is almost certain that Vosper will be involved in some of the design. However, the group faces a gap in its ship orderbook until it receives revenues from a deal with the Greek government in 2002. The group's marine business, though enjoying healthy enquiries, is suffering the effects of former weakness in its offshore markets because of the vagaries of the oil price.

Vosper has a fast-growing defence services business, now accounting for 50 per cent of sales, to offset the uncertainty. That could soon be enjoying a pounds 200m contract to extend GCHQ, the spy centre. Analysts expect full- year pre-tax profits of pounds 36m and earnings of 72.4p per share, putting the shares, down 30p, on a multiple of 13 times. Given the uncertainties, the rating is fair and the shares look vulnerable.