Serco surges as it reveals surprise £17m profit rise
SHARES surged in the services provider Serco after it reported that the first four months of the year had been stronger than anticipated.
Contracts – including those with Virginia transport and the US Army – which were expected to end early in the year, have run on. Others which have ended, such as Northern Rail, concluded with better settlements than were budgeted for.
Serco raised its profit expectations for the year from £50m to £67m and said it now expects to achieve revenue of £2.9bn in 2016.
However the group warned that much of the improvement in the numbers came from items which the firm won’t benefit from again.
Chief executive Rupert Soames said that with margins of around 2pc that tiny movements between revenue and costs can lead to large leaps in profits. He added: ‘There remains much to do in order to complete our transformation this year and next, but we are continuing to make good progress.’
Buoyed by the results, shares gained 12.4pc, or 11.3p, to 102.8p.
Bank note and passport printer
De La Rue soared after reports that it was looking to branch out.
The firm, which makes 15m passports a year worldwide, has said that it is looking at making acquisitions in the personal ID market to grow the business.
It is also on the lookout for potential partners for its arm which makes paper for banknotes.
De La Rue is looking to reduce its paper production as part of costsaving plans.
On Monday, the firm announced it had sold its cash processing solutions business, which had been underperforming. De La Rue shares have so far gained more than 100p this week. Yesterday they climbed 7.5pc, or 40p, to 574p.
Elsewhere, office space supplier
Regus got a boost when RBC upgraded the stock.
The broker said Regus had an unrivalled market position and significant potential for expansion.
It increased its target price by £1 to 400p. Shares advanced 4pc, or 12p, to 315.4p. On the FTSE (up 0.7pc, or 43.6 points, to 6262.85) financials led the way. RBS was the biggest riser of the day, climbing 4.4pc, or 10.7p, to 256p despite policymakers at the Bank of England saying that banks need to change to rebuild trust with the public.
Standard Chartered advanced 3.5pc, or 18.6p, to 554.6p and HSBC rose 2.8pc, or 12.2p, to 446.4p.
M&S had the furthest to fall for the day, down 10.2pc, or 45.3p, to 399.4p after new boss Steve Rowe said he wouldn’t put a timeframe on the recovery of the firm’s flailing fashion business.
Polypipe had a good day after a trading update revealed revenues had grown 32.5pc.
Strong performance in the commercial and infrastructure piping systems area of the business, where revenue increased 53.8pc in the first four months of the year, had helped things along. The group said merchant customers had restocked ahead of price increases while exports to the Gulf region had performed well and good progress is being made setting up a manufacturing unit to produce products in Dubai. Shares piped up 2.9pc, or 9p, to 324p.
Angle shares pointed right up after it announced a tie up with Cancer Research UK Manchester Institute. The medical company is focused on cancer diagnostics and foetal health.
Yesterday the firm revealed that the institute would be using its parsortix system (a blood test for cancer diagnosis) for routine use within clinical trials.
Parsortix is a cell separation system which can spot tumour cells in the blood.
It is being used in 10 current trials at the institute with a further four being planned. Angle also announced it had raised £10.2m by placing new shares.
It will use the money in clinical studies to demonstrate parsortix’s use in different cancers as well as to strengthen the firm’s balance sheet. Shares finished 6.2pc, or 4p higher at 68.5p.