Securicor slide surprises City: The Investment Column

It is more than six months since Securicor, the security and Cellnet mobile phone group, swept away its archaic shareholding structure and entered the real world to the plaudits of the City. Since then, however, investors have experienced anything but the rosy outcome predicted by some brokers. The shares promptly slid from 318p to a low of less than 250p and, despite three attempts to recover over the summer and autumn, added just 1.5p to 261.5p yesterday.

Given the encouraging 8 per cent surge in pre-tax profits to pounds 107.4m reported yesterday for the year to the end of September, this is surprising. Hoare Govett raised its forecast for next year to pounds 120m from pounds 116m, pointing to the strong impact of a high street-led recovery on Securicor's diverse businesses, which include collecting cash from retailers, delivering goods to retailers and the mobile phone market.

One reason for the forecast rise in profits is that the group has apparently managed to sustain increases in prices in most of its key businesses. The price war that so damaged the mobile phone market early this year seems to have petered out, while Securicor has resisted matching price cuts in its security businesses.

But the company's earnings are dominated by the 40 per cent stake in Cellnet, which contributed pounds 76.6m to annual profits, an increase of 8.5 per cent. Since the Government blocked the sale of the Cellnet stake to BT last year, it gives investors a dilemma - Securicor is worth much more in pieces than it is as a whole.

The Cellnet stake could net as much as pounds 2bn, against Securicor's current market value of less than pounds 1.6bn. Directors have floated the idea of selling the Cellnet shareholding to an outside bidder, but without BT to bid up the price this is unlikely. Shareholders can hope for the boost from organic growth, but the big prize seems as far off as ever.