Sir Ernest sees `more shareholder value' in Racal break-up

THE FINAL break-up of Sir Ernest Harrison's Racal Electronics empire came a step closer yesterday after the group unveiled plans to float its vehicle tracking business and placed a three-month timescale on the sale of its defence activities.

Sir Ernest also hinted that Racal's security arm, which provides services to banks and other financial institutions, could be spun off from the industrial electronics division with a price-tag of up to pounds 1bn.

The flotation of Racal's satellite vehicle tracking business, Global Telematics, is scheduled for the second half of next year and could raise around pounds 200m. The company is a 50:50 joint venture with European Telecom and operates in the UK and South Africa under the brand name Orchid.

Global Telematics deals only with fleet car customers such as Avis, Parcelforce, Imperial and Allied Pickfords and has revenues of just pounds 4m.

It made a loss of pounds 1m in the first half of this year but a similar sized Aim-listed company, Minor Planet Systems, is valued at pounds 180m. Sir Ernest, who has presided over the demerger of Vodafone and Chubb and the sale of the telecom division during his 33 years at the helm of Racal, said he had not yet set a retirement date.

He added: "I am sure there is more shareholder value to be realised."

The sale of the defence business, which accounts for just under half group sales, is to be completed in the first quarter of next year. It will be sold to an overseas defence supplier with Thomson CSF of France seen as the favoured buyer.

Prospects for the division, which has an order book of pounds 500m, could be boosted by a breakthrough with the troubled Bowman battlefield communications system which Racal is developing for the British Army along with BAe Systems and ITT.

The contract is two years behind schedule and now forecast to cost pounds 3bn - making it pounds 800m over budget. The Ministry of Defence has told the consortium, known as Archer, that it will not pay any more than pounds 2.2bn.

Racal has proposed a solution involving substituting its Panther VHF radio which is already commercially available in place of the radio being developed jointly with ITT. If the solution is accepted then Racal, which has a 30 per cent stake in Archer, would see its workshare rise.

Pre-tax profits for the half year ended 15 October were down 40 per cent at pounds 23.4m but Sir Ernest said he was confident of an improved outlook for the group's remaining businesses.

The pounds 1bn sale of Racal Telecom to Global Crossing has enabled the group to pay a pounds 491m special dividend to shareholders and wipe out all its debt.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins win the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
Arts and Entertainment
tvPoldark, TV review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor