Investors Chronicle articles from August 2006

Investors Chronicle archives from August 2006

Rights and wrongs.
August 4, 2006... The British love their rituals - think of all that stuff such as Trooping The Colour, The State Opening of Parliament and dishing out Maundy money. And maybe it's because we cling to pointless ritual that, in the capital markets, we cling to...

Pensions crisis.
August 4, 2006... With many FTSE 100 companies facing yawning pension deficits, the subject is a hot topic in company boardrooms across the country. So, this week, at Lane Clark & Peacock we published our annual Accounting for Pensions survey. Our research shows...

The double agency problem.
August 4, 2006... The Agency Problem is well-known to every saver, even if the term is unfamiliar. It refers to the problem that can arise when anybody - lacking the experience, skill or time required to perform a job - calls in a professional or, "agent". The...

On the defensive.
August 4, 2006... Of all the investment theorists I've turned to in recent weeks, in search of a reliable steer on the direction of markets and sectors in the coming months, British centre-left politicians and American post-situationist conceptual artists are...

Greener profits.
August 4, 2006... There's more to business expansion than simply securing the finance, building a factory and then belching fumes into the air. Nowadays, firms have to think beyond the cost of capital when weighing up major infrastructure projects - the...

A not so sweet hereafter.
August 4, 2006... Insurance companies currently pay out GBP156m more in pensions each day than the government. And the problem they face is that there's simply not enough new money being paid in. We all know we need to save for our retirement, yet apathy and the...

Mining consolidation to continue at pace.
August 4, 2006... Consolidation in the mining sector is heating up, as high commodities prices continue to underpin strength in the sector. And lately, all of the big action has been in nickel, where Xstrata is emerging triumphant in a complicated battle for...

Psion warns on profits.
August 4, 2006... Psion has issued a profit warning blaming tough competition and adverse exchange rate movements for lower-than-expected earnings. Management said operating profits, excluding restructuring costs, would be around GBP1m in the first half. The...

Aerobox' ghost in the machine.
August 4, 2006... Aerobox shares slumped 52 per cent after the company admitted unreliable machinery had caused production of its aviation cargo containers to fall well below expectations. This could jeopardise its $3m debt facility with Laurus Master Fund,...

Carnegie Minerals sets sights on Aim.
August 4, 2006... Carnegie Minerals, which has mineral-sands assets in the Gambia and Senegal, will list on Aim within the next two weeks, following a GBP2m placing through Corporate Synergy. The company already has a mining licence for its Gambia asset and an...

Freeport in shopping centre revaluation.
August 4, 2006... Freeport has slashed the value of its European shopping centres by 12.5 per cent to GBP188m. The revaluation follows the departure of the group's founder, Sean Collidge, who is now trying to sue Freeport. Colin Kingsnorth, a partner at...

TEG Environmental announces shell deal.
August 4, 2006... Composting specialist TEG Environmental has announced a deal with oil giant Shell to assess its technology's suitability for turning oil-soaked mud cuttings from drilling into non-hazardous waste. Laboratory tests have been positive and a...

Week Ahead...
August 4, 2006... News Thursday 10 August Insurance giant Royal & Sun Alliance announces its half-year figures on Thursday and attention is likely to focus on the troubled US side of the business. True, chief executive Andy Haste has worked wonders in...

How to spot a scam.
August 4, 2006... Robert Welham does not know how the conmen who scammed him out of GBP5,000 got his name and telephone number. But, as a longstanding investor, his name would no doubt have shown up on share registers. That's the most likely explanation for the...

Recession watch.
August 4, 2006... Economists agree that there's a possibility - some say probability - of a US recession next year. High oil prices, the downturn in the housing market and higher official interest rates could all cause this. But would this be bad for...

Credit quality concerns overshadow banks' bumper profits.
August 4, 2006... With most of the UK's banks having now reported half-year figures, credit quality remains a key issue facing the sector. So far, virtually all lenders have reported some level of credit-quality deterioration, with even the mortgage lenders -...

Picture looks bleak for ITV chief.
August 4, 2006... The outlook continues to worsen for Charles Allen, the under-siege head of ITV. Amid a tough advertising recession, the company's audience is melting away. ITV1's audience share plummeted 17 per cent in July. Its World Cup coverage was...

FTSE 100 beats the small caps.
August 4, 2006... Small stocks have had a tough time. Since it peaked on 9 May, the FTSE Small Cap Index has dropped 7.9 per cent, underperforming the FTSE 100 by 5 percentage points. In fact, it is now close to a three-year low relative to the FTSE 100 - just...

Ryanair's winter of discontent.
August 4, 2006... Despite posting a 66 per cent rise in profits before tax for the first quarter, shares in Ryanair fell 3 per cent after chief executive Michael O'Leary warned that the company expects to see tough trading conditions in the winter months. The...

OFT investigates Hays.
August 4, 2006... Hays has announced that its construction recruitment businesses is one of several that is being investigated by the Office of Fair Trading (OFT) over possible breaches of competition law. Hays has said the investigation only relates to a small...

Smith & Nephew's rogue e-mail.
August 4, 2006... The US Department of Justice' investigation into uncompetitive practices in the orthopaedic sector took a new twist, after Smith & Nephew admitted a former salesman had sent an e-mail that failed to comply with internal competition policy. ...

Mixed signals for shares.
August 4, 2006... There were mixed signals for shares in this week's figures from the Bank of England. The good news is that the ratio of financial institutions' cash holdings to market capitalisation has risen to its highest level since early 2003. This has...

Fed funds rate set to rise.
August 4, 2006... Next Tuesday's rise in US interest rates could be the last for some time. Although economists expect the Fed funds rate to rise a quarter-point to 5.5 per cent, futures markets think this will be a peak for rates. However, Nouriel Roubini of...

GLAXOSMITHKLINE (GSK).
August 4, 2006... Encouraging results from trials of GlaxoSmithKline's (GSK) pandemic 'flu vaccine formed the centrepiece of the group's half-year results. This new product for the virulent H5N1 strain produced a strong immune response in 80 per cent of...

DATAMONITOR (DTM).
August 4, 2006... Business information analysis group Datamonitor is going from strength to strength, and chief executive Mike Danson sees no reason why this shouldn't continue. He argues that there's plenty of room for further growth as the group only has 5 per...

Gamingking.
August 4, 2006... Aim. Lottery ticket vending machines

Hidong Estate.
August 4, 2006... Main market. Natural rubber and palm oil

Independent Int. Inv. Research.
August 4, 2006... Aim. Online financial analysis

Network Technology.
August 4, 2006... Computer software and hardware

PKL.
August 4, 2006... Aim. Food services and healthcare

Projects Distribution.
August 4, 2006... Plus-quoted. Clothing, footwear and skateboards

Sheba Exploration (UK).
August 4, 2006... Plus-quoted. Mineral exploration

ROYALBLUE (RYB).
August 4, 2006... Royalblue has continued to invest heavily in the development of its product range. The company has traditionally sold its Fidessa trading software to 'sell-side' brokers. However, it is now targeting 'buy-side' investment companies with its...

ULTRA ELECTRONICS (ULE).
August 4, 2006... "If you fight a war, it's a good idea to know where your friends and the enemy are," says Ultra Electronic's chief executive Douglas Caster. He's referring to how battlespace IT systems are driving growth at the company. In fact, in the first...

In for a penny.
August 4, 2006... Wednesday 21 June: Penny stocks, pounding losses Sat outside at the Ring O'Bells for the share club meeting, soaking up this rare heat. However, the club portfolio is clearly wilting. Billiton, bought at GBP11.55 is still down at GBP10 or...

FILTRONIC (FTC).
August 4, 2006... In May, Filtronic announced the sale of its wireless infrastructure division, which accounts for 78 per cent of group revenues, to US antenna and base station manufacturer Powerwave Technologies for GBP81m in cash and 20.7m shares worth around...

FLYING BRANDS (FBDU).
August 4, 2006... Despite what it says on the tin, the Jersey-based retailer's brands were not exactly flying in the first half. But the company, formerly known as Flying Flowers, still performed well in a tough retail climate, thanks to diversifying into...

Fidelity Systems.
August 4, 2006... Plus-quoted. Computer software

Monster bidding war for McCarthy & Stone.
August 4, 2006... McCarthy & Stone has withdrawn its support for a takeover bid at 1,030p a share from Mars Bidco, a consortium led by Barclays Capital and private-equity boutique Permira. The retirement-home builder is now recommending a rival 1075p offer from...

ST JAMES'S PLACE (STJ).
August 4, 2006... St James's Place saw a 55 per cent rise in new business in the first half of the year, due to strong demand for pension products in the wake of regulatory changes earlier this year. So the company easily achieved its twin objectives: 15-20 per...

STANLEY GIBBONS (SGI).
August 4, 2006... Shares in Stanley Gibbons took a dive in May when news broke of a stamp investment fraud (totally unrelated to the company) in Spain. But Stanley Gibbons stressed that it had nothing to do with the companies involved and that the affair was...

PRUDENTIAL (PRU).
August 4, 2006... There is both good and bad news from Prudential. The good news is that operating profits on an embedded-value basis rose 17 per cent during the period to GBP980m, while the asset-management business saw total net inflows jump 138 per cent to...

ALLIANCE & LEICESTER (AL.).
August 4, 2006... Alliance & Leicester's profits slipped after the bank incurred GBP14m of redundancy costs as part of a cost-cutting reorganisation, and reported a 56 per cent rise in the bad debt charge from GBP30m to GBP46.9m. So the period's reported EPS...

LEGAL & GENERAL (LGEN).
August 4, 2006... Legal & General's (L&G) headline figures struck all the right notes, with global new business - on an annual premium-equivalent basis - up 37 per cent to GBP896m, and UK individual new business ahead by 46 per cent to GBP754m. Business growth...

BRADFORD & BINGLEY (BB.).
August 4, 2006... Bradford & Bingley's slide in profits during the period reflects a further GBP89.4m provision to cover claims for endowment mortgage and investment product mis-selling, which was rather larger than the City had been expecting. But chief...

HSBC (HSBA).
August 4, 2006... HSBC's new chairman, Stephen Green, and chief executive, Michael Geoghegan, are keen to boost the bank's corporate and investment banking operations. And they've had a good start - pre-tax profits there jumped 37 per cent, year on year, to...

RAB CAPITAL (RAB).
August 4, 2006... RAB Capital did everything right in the first half of the year, even though trading conditions in May and June were less than helpful. Assets under management jumped from $2.3bn in June 2005 to $4bn, while management fees more than doubled from...

MISYS (MSY).
August 4, 2006... Misys announced management buyout plans in June, that flushed out bid interest from a number of other players. So the company, which provides software to the banking and healthcare industry, has now received several indicative offers, and some...

WOLFSON MICROELECTRONICS (WLF).
August 4, 2006... Wolfson continues to tap into the rapid growth of the consumer electronics market. The company supplies chips for products such as multimedia mobile phones, and serves clients including Apple, Microsoft, Sony and Toshiba. So revenues from the...

AUTONOMY (AU.).
August 4, 2006... Autonomy is benefiting from the deluge of information that companies are being forced to manage. Its technology helps sort and categorise data from text messages, e-mails, voice calls and video, so that it is easier to access and use. And it is...

SMITH & NEPHEW (SN.).
August 4, 2006... A solid first-half performance in tough markets pushed Smith & Nephew shares up 7 per cent on the day of these interim results. Trading profits rose 7 per cent to $138m in the second quarter on revenues up 6 per cent to $686m, despite a weak...

RENISHAW (RSW).
August 4, 2006... Renishaw, which manufactures precision instruments, has had a good year, with profits and revenues both rising to record levels. Growth was particularly strong in the Far East, where revenues rose by 23 per cent, and in North and South America,...

GAMES WORKSHOP (GAW).
August 4, 2006... Tom Kirby, Games Workshop's founder, chairman and chief executive, says it's too early to "call the turn" on the group's falling sales. That said, there are signs that it may finally be recovering from the hangover caused by the Lord of the...

RATHBONE BROTHERS (RAT).
August 4, 2006... Rathbone Brothers has been enjoying the buoyant growth in equity markets, and celebrated with a 52 per cent increase in pre-tax profits, which included a one-off gain of GBP1.9m from the sale of shares in the London Stock Exchange. Funds at...

ASTRAZENECA (AZN).
August 4, 2006... AstraZeneca's tactic of growing profits by trimming costs and relying on its "five key products" continues to pay dividends. These products are stomach ulcer drug Nexium, psychiatric product Seroquel, cholesterol-lowering drug Crestor, asthma...

ITM POWER (ITM).
August 4, 2006... ITM Power is probably the only fuel- cell developer whose chief executive, Jim Heathcote, admits that fuel cells are "completely useless" without easy ways to refuel them, or store that fuel. So ITM is developing low-cost, high-capacity...

ZETEX (ZTX).
August 4, 2006... Zetex had a disastrous 2005 after management became overly optimistic and manufactured too many analogue chips, which were never sold. So the company brought in new management, appointing former TSMC Europe executive Hans Rohrer as chief...

WORLD GAMING (WGP).
August 4, 2006... Last year's acquisition of Sportsbetting.com has been a mixed blessing for World Gaming. It transformed the business, boosting sales and profits, and providing scope for real growth. But the shares have drifted, as fears about the legality of...

MICROGEN (MCGN).
August 4, 2006... Microgen has been busy integrating the three acquisitions it made last year, and its focus now is to drive forward organic revenues. To this end, the group stepped up investment in software products by a fifth, to GBP3.6m, and software...

TDG (TDG).
August 4, 2006... Property sales and the impact of restructuring costs in 2005 flattered TDG's interim figures this time around. Excluding these items, adjusted pre-tax profits actually fell from GBP6.1m to GBP4.9m, which reflected the loss of two big retail...

CENTRICA (XCNA).
August 4, 2006... Centrica, the owner of British Gas, has been clobbered by a thumping 71 per cent rise in wholesale gas prices over the past 12 months, and plans to hike its prices to try to rectify an "unacceptable" GBP143m loss from its residential business....

ROYAL DUTCH SHELL (RDSA).
August 4, 2006... Shell's results were a mixed bag this time around. Capital and operational costs are on the up, and the company's unwillingness to be specific on this may be storing up trouble. There are also concerns that detailed exploration won't take...

LIBERTY INTERNATIONAL (LII).
August 4, 2006... Liberty International, the owner of the GBP1.2bn Lakeside shopping centre, looks particularly well placed to weather any storm caused by the weak retail environment. During its first half, the attractions of its long leases and upward-only...

CRODA (CRDA).
August 4, 2006... "It's Noah's ark syndrome - we ended up with two of everything," says chief executive Mike Humphrey when speaking about Croda's challenge in integrating ICI's oleochemicals business, Uniqema. Croda is paying GBP410m for the division, funded by...

BRITISH SKY BROADCASTING (BSY).
August 4, 2006... It's been a busy few weeks for BSkyB. The satellite broadcaster announced a broadband internet strategy and then handed down a better-than-expected set of results. The company added 77,000 subscribers in the final quarter - well above the...

AMVESCAP (AVZ).
August 4, 2006... Amvescap enjoyed a much better first half and managed to achieve a net inflow of long-term funds of $3.8bn, as inflows of $46.6bn outweighed outflows of $42.8bn. This boosted assets under management to GBP413.8bn and helped to push net...

ALLIED IRISH BANKS (ALBK).
August 4, 2006... With a booming Irish economy to keep the wind in Allied Irish Banks' (AIB) sails, it's little wonder that management pushed up its full-year EPS growth guidance to over 20 per cent. In fact, the Irish operation's pre-tax profit jumped 19 per...

ALLIANCE BOOTS (AB.).
August 4, 2006... After a long gestation period, Alliance Boots, the offspring of Alliance Unichem and Boots, has emerged. So, this week, the newly formed company released a trading statement for Boots along with half-year results for Alliance Unichem. ...

ELEMENTIS (ELM).
August 4, 2006... "These are the best results I've announced since I was appointed finance director," admits Elementis's Brian Taylorson. So it seems that turnaround specialist Hanover Partners, which took control of the company last year, is working its magic....

GEORGE WIMPEY (WMPY).
August 4, 2006... Wimpey has reported a 28 per cent rise in operating profits from its US operations in the first half. This reflects the buoyant conditions that have characterised the market there over recent years and led to Wimpey's strong forward selling...

PZ CUSSONS (PZC).
August 4, 2006... Consumer goods group PZ Cussons, which sells household brands such as Imperial Leather and Carex, continues to benefit from strong growth in Nigeria, where the booming oil industry is buoying consumer demand. Its white goods and milk-product...

HUVEAUX (HVX).
August 4, 2006... Huveaux's acquisitions of JBB Sante and Epic appear to have paid off handsomely, as both new businesses contributed to a strong first-half performance. So management has similar hopes for this week's GBP4.9m acquisition of political monitoring...

WILLIAM HILL (WMH).
August 4, 2006... William Hill had a good World Cup, generating a total gross win of GBP17.5m, of which GBP10.5m was booked in the first half. This was well above the GBP13m grossed during the last World Cup - which is notable, given that there were few upsets...

PLUSNET (PNT).
August 4, 2006... PlusNet is one of the major victims of the brutal price war in the broadband market. A number of operators including Carphone Warehouse and British Sky Broadcasting have launched 'free' broadband services, which has forced PlusNet to cut its...

LLOYDS TSB.
August 4, 2006... Lloyds TSB's impairment charge rose 20 per cent on the year to GBP800m and was a contributory factor in the pedestrian profit growth. Although, at 0.88 per cent of average lending, that increased charge doesn't signal a credit-quality collapse,...

UNIVERSAL SALVAGE (UVS).
August 4, 2006... Two years into Universal Salvage's three-year turnaround plan and the group has managed to return to the black. Under new chief executive, Avril Palmer-Baunack, Universal has been attempting to re-establish itself in the insurance marketplace...

XP POWER (XPP).
August 4, 2006... As XP Power broadens its supply chain into Asia, it is seeing the disadvantages of its five-year transition from power-supply reseller to designer and manufacturer of its own equipment. Gross margins fell back slightly to 35.8 per cent as, like...

JARVIS (JRVS).
August 4, 2006... Troubled support services group Jarvis has made some significant steps towards its rehabilitation, but the future still looks uncertain. It managed to make an GBP11.1m operating profit last year, compared with a GBP75.3m loss in the preceding...

GATEKEEPER SYSTEMS (GKR).
August 4, 2006... California-based Gatekeeper Systems joined Aim via a placing at 48p a share in December 2004. It supplies shopping-trolley wheels that lock when they receive a digitally encoded signal, which stops thieves wheeling them away without paying....

BEXIMCO PHARMA. (BXP).
August 4, 2006... Beximco Pharmaceuticals joined Aim in October 2005 and produces generic drugs from a 20-acre site in Dhaka, in addition to undertaking contract manufacturing for GlaxoSmithKline and Novartis. Before flotation, the company spent GBP25m building...

SYMPHONY PLASTIC TECHNOLOGIES (SYM).
August 4, 2006... Symphony Plastic is hoping for a quieter and more profitable 2006. Last November, it ended its mammoth contract with supermarket group Somerfield to provide 800m degradable plastic bags a year. In 2005, that contract accounted for more than...

METAL-TECH (MTT).
August 4, 2006... Metal-Tech employs scientists, many of which emigrated to Israel from the Soviet Union. It now has operations in Israel as well as joint ventures in Uzbekistan and Mongolia. In all three countries, it produces tungsten and molybdenum powder...

NWD (NWD).
August 4, 2006... A former chief executive once predicted that NWD would turn into "a bigger Creston". Some hope, as the new management team had had "a lot of sorting out" to do. Some recent acquisitions were clearly too high-risk, while core businesses turned...

SOLANA RES. (SORL).
August 4, 2006... Why, might you ask, are the share prices of some overseas-based, but UK listed, oil minors so weak when the oil price is at a peak? One factor to take into account is the way investors in different countries have different views on the same...