Investment: Serco surge in world of plenty
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.WHAT DO London's Docklands Light Railway, the Young Offenders' Institute in Pucklechurch and Adelaide airport have in common? The answer is that Serco is involved with all of them. The services group, which has successfully ridden the outsourcing boom, yesterday issued its latest set of impressive results, reporting pre-tax profits up 20 per cent to pounds 12.7m.
There are few signs of the boom ending. True, contracts are becoming more complex. Intricate joint ventures to build and operate NHS hospitals are a far cry from simple outsourcing deals. But Richard White, Serco's chief executive, says the government's new drive for public-private partnerships is providing it with plenty of new projects. They include London Underground and the Defence Evaluation Research Agency, both likely to be sold off in the next few years.
Expansion in Australia and the US, where Serco recently made an acquisition, is fuelling further growth. Its balance sheet, with net cash of pounds 11.5m at the half-year, is a constraint on growth. But Serco will raise cash by selling its share holdings in mature private finance projects. It recently raised pounds 4.5m by selling its stake in the RAF's Helicopter Flying School.
Serco shares closed up 35p at 1227.5p but are down 15 per cent from their peak. Still, they still trade on a multiple of 44 times expected full- year profits. That may look expensive in volatile markets. But Serco's solid earnings base and attractive growth prospects means the shares are worth holding.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments