GEC sets sight on IT growth with relisting

GEC is to seek a relisting in the highly-rated information technology sector of the Stock Exchange following the demerger of its defence activities and Marconi Electronic Systems. GEC, now listed in the electricals and electronics sector, announced the move as part of its strategy to transform itself from an industrial conglomerate to a high-growth IT […]

GEC is to seek a relisting in the highly-rated information technology sector of the Stock Exchange following the demerger of its defence activities and Marconi Electronic Systems.

GEC, now listed in the electricals and electronics sector, announced the move as part of its strategy to transform itself from an industrial conglomerate to a high-growth IT company.

It hopes the move will breathe new life into its share price. GEC also plans a listing in New York and has set itself a target of boosting sales by 12-14% over each of the next five years.

Chief executive Lord Simpson told a meeting of analysts and fund managers that the plan was to double the group’s value within the next three to five years.

Marconi Communications, the driving force of the restructured GEC, is expected to increase its revenues by up to 15% a year by 2004.

This is to be achieved through launching products, exploiting a strong position in a fast-growing market, and entering the US market for the first time, Simpson said.

`We plan to re-grow the company to its pre-merger size both in terms of sales and market capitalisation,’ he added.

The Marconi Systems division, including GEC’s industrial and medical/electronics businesses, is aiming for average revenue growth of 7-10% over five years.

The group’s third division covers a combination of operations, including a 24% stake in Alstom and a 50% holding in General Domestic Appliances. This division will enter other joint ventures and exploit new revenue streams.

Finance director John Mayo said the group would have made £602m operating profits in the year to the end of March, on sales of £4.67bn – compared with pre-exceptional profits of £954m last year and a £10.4bn turnover. This figure includes contributions from joint ventures.

Analysts at the meeting said they believed the group’s targets could be achieved, with some of the businesses `easily capable’ of forecast revenue increases.