The Investment Column: Risky Government Contracts Make Serco One to Avoid

Article excerpt

WHO ARE we? We run world-class scientific establishments, manage parking meters, and operate tourist attractions. We run prisons, test nuclear weapons, maintain railways. And much, much more. We provide services that range from the management of facilities, through to the construction of entire new businesses. Our product is the management of change. We design it and we deliver it.

We are Serco.

Serco is one of the most significant of the UK's support service companies, beneficiary in countless areas when the Government and its agencies decide that the private sector is better able to manage its facilities or its services.

Its very anonymity is testament to its ability in avoiding embarrassing mistakes. Compare its profile to that of Group 4 or, latterly, Jarvis.

Yesterday, the company was taking analysts to two of its sites where it is managing scientific work: the Norfolk & Norwich University Hospital and the National Physical Laboratory. It also issued a soothing trading update, which said things were progressing in line with market expectations. More than four-fifths of this year's expected turnover is already in the bag, and there are a continuing flow of new opportunities to bid for work, the company said.

The government outsourcing market has been growing at 10 to 15 per cent a year and, with probably less than 20 per cent of the opportunities so far exploited, there is little sign that this cannot continue for years to come. …