Serco wins £100m extension to Docklands Light Railway work

SERVICES company Serco has won an 18-month extension to its Docklands Light Railway (DLR) contract, worth around £100m, following a landmark summer for the transport system.

The extended contract will run from April this year to September 2014 and will involve Serco operating, maintaining and marketing the DLR, which connects the City and the Docklands.

The light railway, which is the busiest of its kind in the UK, carried 7.2m passengers – more than double typical levels – through last year’s Olympic Games, making it a record summer for the line.

Overall, the DLR has carried more than 830m passengers over the past 15 years.

The FTSE 100-listed outsourcing company, which also maintains the Boris Bike scheme, has operated the DLR since 1997 under two separate contracts.

Last week, investment bank Espirito Santo upgraded Serco from “neutral” to “buy”, adding that the group’s shares had opportunity to outperform this year.

“We expect modest improvement in organic growth and cash generation,” analysts from the bank said in a note.

The shares fell 0.09 per cent yesterday to close down at 551.5p.