Investors Chronicle articles from March 2007

Investors Chronicle archives from March 2007

It happens...
March 2, 2007... Why did world stock markets plummet on Tuesday, causing the US Dow Jones index to suffer its biggest fall since 11 September, 2001? Answers on a postcard, and the author of the best entry will receive index-linked gilts to the value of the...

The new PE ratio.
March 2, 2007... With one in five private-sector employees now working for private-equity-owned companies, the moment had to arrive when this emerging colossus was forced to account for itself to the everyday media. So, step forward the previously invisible...

Silly prices and greater fools.
March 2, 2007... The theory of the greater fool is an entertaining little adjunct to financial markets theory. Actually, it's a bit of an exaggeration to call it a theory - more of a notion, really. All it says is that, no matter how foolish a price someone...

Under milk float.
March 2, 2007... Thursday 25 January: Diversification attempt A single inch of snow once again maims Britain's motorway network. Crawl round to Isleworth for lunch with Dot at the local Baker's Oven, again trying to cajole her to sell BAe shares. If world...

Debt trouble?
March 2, 2007... Banks are making increased provisions against bad consumer loans. But I don't think real people should worry about consumer debt.Sure, the aggregate numbers look scary. There's now GBP1.3 trillion of personal debt, equivalent to 18 months'...

Wealth warning.
March 2, 2007... This year looks like an interesting one for UK biotechnology. However, interesting means that investors may lose a lot of money on UK biotechnology companies. Two sobering facts of pharmaceutical development are that it takes a long time to...

Worrying too much.
March 2, 2007... The break-even inflation rate - the gap between conventional 10-year gilt yields and their index-linked counterparts (linkers) - is close to a seven-year high, at just under 3.6 percentage points. Why? Here's a surprise. A handful of economic...

Mostly useless.
March 2, 2007... Most stock-market sectors are useless, in the sense that they have no place in efficient portfolios - those that maximise returns for given volatility. The chart (right) shows an efficient frontier of portfolios drawn from the 33 main UK...

Radio Ga Ga.
March 2, 2007... Video may not have killed the radio star, but the internet could yet do it. Internet advertising, whether it is in the form of display ads or search advertising, is increasing as a proportion of total UK advertising spend. And this is having a...

The oil thieves.
March 2, 2007... In a blaze of publicity over Christmas, the Russian government effectively expropriated from Shell and its Japanese partners a majority share in their flagship Sakhalin Energy liquefied natural gas (LNG) project. At the same time, Chinese...

Consumer debt holds back banking sector.
March 2, 2007... With most UK banks having reported their full-year results, credit quality again emerged as a major theme. HSBC issued a surprise profit warning last month (its results are due on 5 March) indicating that its bad debt charge would be 20 per...

Cairn Energy.
March 2, 2007... Cairn Energy will return GBP481m to shareholders from the Indian flotation of new subsidiary Cairn India - the amount is in line with analyst expectations, but earlier than expected. The cash return will be structured as a B-share issue...

New contracts fire Polyfuel's ambitions.
March 2, 2007... Fuel-cell-component specialist Polyfuel has won two more design contracts from consumer electronics manufacturers to include its membrane technology in trial products. Polyfuel is now working with 19 of the world's fuel-cell developers...

All-share hits low.
March 2, 2007... The All-Share index has fallen to close to an 18-year low relative to the world index. This is good evidence that UK equities are underpriced, at least relative to global ones. Since 1980, there has been a strong correlation between the...

Corin celebrates with hip or jump.
March 2, 2007... Shares in Corin jumped 43 per cent to 414p after the company announced that its hip-resurfacing product, Cormet, had been favourably received by US regulators. The US Food and Drug Administration's Advisory Panel recommended that Cormet be...

Eurozone interest rates to rise.
March 2, 2007... The gap between UK and eurozone official interest rates is expected to narrow next week, when the European Central Bank (ECB) raises its repo rate while the Bank of England leaves rates unchanged. Some economists suspect it might continue to...

Down-to-Earth approach for Treatt.
March 2, 2007... Treatt, supplier of essential oils and ingredients to the flavour and fragrance industries, has acquired a 50 per cent stake in Earthoil, which supplies the organic and cosmetics markets. The GBP2.55m deal, under which Treatt will buy the...

Week Ahead...
March 2, 2007... News Wednesday 7 March ITV, which unveils full-year results on Wednesday, has recently been much in the limelight. In November, a bid from NTL was scuppered after BSkyB amassed a stake in the company, although there have been rumours...

Consolidated minerals set for takeover.
March 2, 2007... Consolidated Minerals, the Australian manganese and nickel miner, is to be taken over by former BHPBilliton boss Brian Gilbertson, along with AMCI, a large privately owned coal company. The deal values Consolidated at A$625m (GBP251m), or 92p a...

Galahad sells stakes.
March 2, 2007... Mining investment company Galahad Gold has sold its stake in Canadian mining company Northern Dynasty for GBP47.9m to American investment bank BMO Capital Markets. The deal follows the earlier sale of a stake in Northern Dynasty to Rio Tinto...

Vertu Motors revs up for bristol deal.
March 2, 2007... Vertu Motors is to buy Bristol Street Group for GBP40m in cash and shares, its first deal since coming to Aim in December. Vertu was formed by ex-Reg Vardy executives to consolidate the lower reaches of the UK's motor dealers sector, and...

Chinese New Year brings interesting times.
March 2, 2007... The market turmoil earlier this week showed that the link between miners and the metals they produce is one-way traffic. While the large-cap mining sector has moved almost in lockstep with metals' prices through 2006, the precipitate mining...

Private investors predicted market woe.
March 2, 2007... Private investors have proved themselves to be canny predictors of the stock market. After Tuesday's 2.5 per cent fall in the FTSE All-Share, a survey from Capita Registrars revealed that private investors were net sellers of shares in December...

888's French connection.
March 2, 2007... 888, the internet casino group, has said its non-executive director and former chief executive, John Anderson, has been asked to attend an interview with the French authorities. Analysts believe this is in connection with the sponsorship of...

Associated British Food's profits sweeten.(Financial report)
March 2, 2007... In a pre-close trading statement, Associated British Foods has announced that first-half operating profits were in line with analysts expectations. Profits from the group's sugar business were strongly ahead of the same period last year, while...

C&C's shares lose their sparkle.
March 2, 2007... Shares in C&C dropped by 9 per cent to ?10.52 after the Irish beverages group announced that marketing spend will be significantly higher than expected in 2007-08. This took the shine off a sparkling performance from its cider division, which...

Eckoh gets entangled.
March 2, 2007... Automated telephony specialist Eckoh has been caught up in a scandal over premium-rate calls to the Richard and Judy and Saturday Kitchen television shows, where viewers appear to have been mis-led about the veracity of the phone-ins. Eckoh...

International Power to benefit from TXU cuts.
March 2, 2007... International Power has been boosted by news that the private-equity bidders for Texan electricity generator TXU will scrap eight of its 11 planned new coal power stations. Analysts said the move would underpin the recovery in US power prices....

Jessops' sales slump.
March 2, 2007... Trading has gone from bad to worse at photographic retailer Jessops. Falling demand for digital compact cameras, memory cards and camcorders has led to a 3.4 per cent fall in like-for-like sales. Jessops has decided to boost volumes by cutting...

Limbo risk for pensioners.
March 2, 2007... If you invest in a self-invested personal pension (Sipp), you should check to ensure that your provider has sought authorisation from City regulator the Financial Services Authority (FSA). You might have only a month to switch to a new...

Building a property portfolio.
March 2, 2007... We're increasingly a nation of landlords, turning to real estate to shore up our paltry pensions. But are canny investors still taking the plunge into buy-to-let property? The good news is that, by buying shrewdly and manipulating finances, it...

One-stop shops.
March 2, 2007... The post-millennium bear market taught investors the risk of investing in a single-asset class, rather than having a diversified portfolio. Holding several non-correlated assets should smooth returns, reducing volatility and protecting you...

Last chance for tax relief.
March 2, 2007... The end of the tax year - 5 April - is the deadline for investing in the latest crop of VCT launches. It is also the deadline for using this year's EIS allowance, although not everyone need be in such a hurry. VCTs and EISs offer tax...

Small is beautiful.
March 2, 2007... I Love making a big profit on a share but, for me, the real priorities are wealth preservation and absolute returns. That means making a profit using some kind of asset class, no matter how bad or good the market. This noble but frequently...

PEARSON (PSON).
March 2, 2007... Pearson reported record adjusted earnings per share of 40.2p - at the top end of market expectations and up 18 per cent on the year - helped by stronger margins and double-digit profit growth in all businesses. Chief executive Dame Marjorie...

DAVIS SERVICE GROUP (DVSG).
March 2, 2007... Davis Service is doing the best it can in a tough UK market. With manufacturing declining, financial problems in the NHS (a major customer), as well as rising wage and energy costs, the textile-management specialist faces an uphill struggle to...

ABCAM (ABC).
March 2, 2007... Online antibody provider Abcam put in a strong half-year performance, growing sales by more than one-third compared with the previous half-year. Chief executive Jonathan Milner says: "We're really pleased." At its flotation, the company...

COLT TELECOM (COLT).
March 2, 2007... An almost 10 per cent drop in Colt Telecom's shares marked another day of disappointment for shareholders. The group sells voice, data and managed services to corporate clients. And although data revenues were up 7 per cent in the year to...

CSR (CSR).
March 2, 2007... CSR's shares got a much-needed boost from better-than-expected guidance for the first quarter of 2007 - taking them above the price they were at prior to November's profit warning, but not September's. This suggests that even if the inventory...

ZETEX (ZTX).
March 2, 2007... The City was surprised to see semi-conductor maker Zetex actually selling down inventory, rather than stockpiling it in the manner that dented 2005's figures. This news, and the return to growth in these results, saw the shares rise over 10...

XP POWER (XPP).
March 2, 2007... Like many electronics suppliers, XP Power's future is in Asia. But while this in itself is nothing new, XP is going one step further by relocating its headquarters to Singapore, to be closer to customers, suppliers and its many competitors. So,...

SPECTRIS (SXS).
March 2, 2007... As flagged in January's trading statement, Spectris had a good year. The group makes control systems and instruments that boost productivity for manufacturers, and it managed to grow its own operating margin from 11.2 per cent in 2005 to 12.5...

CRODA (CRDA).
March 2, 2007... Croda underwent something of a transformation last year when it bought consumer-care business Uniqema - an operation about twice its size - for GBP410m from ICI. And the good news is that, although rising raw material prices have weighed on...

BUNZL (BNZL).
March 2, 2007... Bunzl's shares jumped sharply on these results, which reported profit improvements across all four divisions and came in somewhat above market expectations. Clearly, the benefits of recent acquisitions, costing GBP162m over the past year, are...

GLOBAL OCEANIC CARRIERS (GOC).
March 2, 2007... Greece-based Global Oceanic Carriers (GOC) has had a stormy time since floating on Aim in May 2005. An approach from shipping company Globus sparked a boardroom shake-up and a new chief executive and chairman took control, with the backing of...

WPP (WPP).
March 2, 2007... global advertising and marketing giant WPP released results that were ahead of expectations, helped by a lower tax charge and lower interest payments. The key driver of this performance was the group's focus on emerging markets and digital...

ROBERT WALTERS (RWA).
March 2, 2007... "It's a very benign environment," says chief executive Robert Walters. He's referring to the worldwide shortage of professionals that's fuelling impressive growth at the company. The recruitment specialist unveiled record results thanks to its...

LEADCOM INTEGRATED SOLUTIONS (LEAD).
March 2, 2007... Leadcom designs and builds telecoms networks, mainly in emerging markets in South America, Asia and Africa. And revenue growth of 40 per cent for the fourth successive year is testament to the rapid growth of the telecoms industries in these...

ORPAK (ORPK).
March 2, 2007... Aim's international companies have had a torrid time, but Orpak continues to deliver solid long-term growth. In fact, the last quarter of 2006 was the 14th consecutive quarter of revenue and profit growth as the company reaped the benefits of...

NXT (NTX).
March 2, 2007... NXT has struggled to live up to the promise of its flat-panel loudspeaker technology. The main problem has been revenue growth - the company is simply not shifting enough of its units to break even. And the current financial year holds little...

RAYMARINE (RAY).
March 2, 2007... Raymarine, which makes whizzy marine electronics products such as fishfinders and navigation aids, seems on course for continued growth. Finance director Tony Osbaldiston says the transfer of manufacturing operations from Portsmouth to a...

ULTRA ELECTRONICS (ULE).
March 2, 2007... In January, Smiths Group sold its aerospace division to US defence giant General Electric. That put the spotlight on the whole aerospace and defence sector as the market scrambled to pinpoint possible future bid targets. Ultra was high on the...

BAE SYSTEMS (BA.).
March 2, 2007... Free of its minority stake in Airbus - which was sold in October for GBP1.8bn - BAE reported a solid performance across all of its divisions. Adjusting for the movement in the valuations of various non-cash items, underlying EPS grew 29 per...

CERAMIC FUEL CELLS (CFU).
March 2, 2007... For a 'pre-revenue' company such as Ceramic Fuel Cells (CFC), financial performance is almost meaningless compared with technological progress and the flow of deals with future partners. And the good news for CFC's shareholders is that the past...

SMALLBONE (SML).
March 2, 2007... Smallbone has issued a set of results as smart as its bespoke kitchens. Crucially, the group, which also sells stone floors, appears to be laying the foundations for a bright future. Particularly promising was the opening of a Smallbone...

DAVENHAM (DAV).
March 2, 2007... Davenham lends money to small businesses so that they can finance their assets, property or trade. And its loan book grew by 14 per cent to GBP214m in the first half, reflecting new products and geographic expansion. A move into buy-to-let and...

CENTRICA (CNA).
March 2, 2007... Centrica's reported numbers were blighted by exceptional items and remeasurements of forward energy contracts. But, on an underlying basis, the group beat its previous guidance and analysts' forecasts. Underlying EPS came in at 19.4p, up 7 per...

PERSIMMON (PSN).
March 2, 2007... Persimmon surprised the market with a forecast-busting 50 per cent hike in its full-year dividend. That crowned an impressive set of results, with the acquisition of Westbury in January last year driving the company's 11th successive year of...

HAMMERSON (HMSO).
March 2, 2007... Hammerson converted to real-estate investment trust (Reit) status at the start of 2007, which means it will no longer pay corporation tax on rental income or on capital gains from its UK properties. And shareholders will reap some of the...

MCINERNEY (MCI).
March 2, 2007... News of another strong performance from Irish housebuilder McInerney was overshadowed by the announcement of a fully underwritten one-for-five rights issue at E13 (GBP8.73) per share and the proposed acquisition of Lancing Homes, a...

TERRACE HILL (THG).
March 2, 2007... This year has been fantastic for property developer Terrace Hill. Indeed, the group has seen its adjusted net asset value (NAV) per share rise by 63 per cent to 89p. Management was able to boast a number of impressive deals during the...

ASHMORE (ASHM).
March 2, 2007... Ashmore's investment performance has been strong, attracting net subscriptions into existing funds of $1.7bn and growing assets under management (AuM) by 33 per cent to $26.8bn, since June last year. However, progress has not been good enough...

BEN BAILEY (BBC).
March 2, 2007... Full-year figures from Yorkshire-based Ben Bailey were released only days after the company put itself up for sale, and it is easy to see why the Bailey family - which controls around a third of the share capital - may be tempted to bail out....

ELEMENTIS (ELM).
March 2, 2007... "The results speak for themselves," boasts Elementis's finance director, Brian Taylorson. Certainly, a benign trading environment, coupled with the benefits of the recent restructuring programme, culminated in impressive full-year results....

GKN (GKN).
March 2, 2007... GKN's sales may have been pretty static, but profitability certainly wasn't. Finance director Nigel Stein attributes this to the restructuring programme undertaken during the past three years, which has lowered costs. He also points out that...

MAXIMA (MXM).
March 2, 2007... Maxima's shares have had a strong run of late, rising by 70 per cent since the full-year results in August as the market digested the impact of two earnings-enhancing acquisitions. In October, the company bought construction software business...

HBOS (HBOS).
March 2, 2007... Underlying pre-tax profits at HBOS's retail arm grew just 4 per cent last year due to increased competition in the buy-to-let market and a more cautious approach to unsecured lending. And while the bank grabbed a 17 per cent slice of net new UK...

RENTOKIL (RTO).
March 2, 2007... The challenges Rentokil's management faces in turning the ailing conglomerate around aren't getting any easier. Profits are now expected to be flat this year rather than rising modestly, and fourth-quarter organic revenue growth dropped to 2.2...

DATAMONITOR (DTM).
March 2, 2007... Datamonitor - which mainly provides electronic business information in sectors such as consumer goods, the food industry and pharmaceuticals - is providing some striking data of its own, with across-the-board performance improvements. The group...

BARRATT (BDEV).
March 2, 2007... Barratt is in the process of acquiring Wilson Bowden in a deal that will see it leapfrog Persimmon and regain its position as the UK's largest housebuilder. Barratt announced a GBP2.2bn recommended cash and shares offer for its smaller rival in...

GOALS SOCCER CENTRES (GOAL).
March 2, 2007... Goals Soccer Centres (GSC) opened five new centres last year, bringing its total to 22, and like-for-like sales rose by 9 per cent as its existing centres were used more heavily. But from 2008, the company is planning to accelerate the rate of...

DECHRA PHARMACEUTICALS (DPH).
March 2, 2007... "It's looking great," says Dechra chief executive Ian Page when talking about the outlook for the UK's only quoted veterinary pharmaceutical company. And while it might not be the cat that got the cream, Dechra is certainly making solid...

HAYS (HAS).
March 2, 2007... Recruitment specialist Hays continues to reap the benefits of its overseas investments, with this division reporting a 36 per cent increase in net fee income (NFI) on a like-for-like basis. Germany, the group's largest international business,...

VICTORIA OIL & GAS (VOG).
March 2, 2007... It's slightly alarming for a loss-making oil and gas company to be carrying over $22m (about GBP11m) of debt on its balance sheet. And there were no earnings to cover the $364,000 interest charge this time around, so that charge turned a...

AVIS EUROPE (AVE).
March 2, 2007... Avis' shares sank 13 per cent on the day these results were released as news that the car-hire group was abandoning its margin target overshadowed its first underlying profit growth for five years. The group had hoped to be able to lift its...

BBA AVIATION (BBA).
March 2, 2007... BBA completed the demerger of its materials technology division, Fiberweb, in November and the group is now focused on aviation services. Its flight support division provides re-fuelling and de-icing services while its aftermarket division...

DORI MEDIA (DMG).
March 2, 2007... Is Britain the last bastion of television culture to fall to the delights of telenovela, described as being a serialised fictional melodrama television programme? Israel-based Dori Media Group (DMG) hopes so. It is negotiating with the BBC and...

COSALT (CSLT).
March 2, 2007... It's turnaround time at Cosalt. In September 2006, the company issued a profits warning - five months later, its share price hit a 12-month high following the publication of its 2005-06 results. And the results themselves are certainly up to...

CAPITA (CPI).
March 2, 2007... White-collar outsourcing giant Capita enjoyed another great year in 2006. And, even after winning a record GBP1.37bn-worth of business, the group is confident there is more to come. In fact, the bid pipeline is bulging at GBP2.6bn, which is...

AVINGTRANS (AVG).
March 2, 2007... Avingtrans's interim results to end-November were solid though unspectacular, so good current-half figures are required to justify this year's hike in the share price. If acquisitions are ignored, turnover fell from GBP15.7m to GBP14.62m as...

PALMARIS CAPITAL (PMS).
March 2, 2007... History has not been kind to Palmaris. However, there is now some hope that past misadventures are finally behind it. The company's woes included a flood in March 2002, which closed its deep and loss-making Longannet mine under the Firth of...

TRISTEL (TSTL).
March 2, 2007... At a conservative estimate, superbugs killed more than 5,000 people in the UK in 2005. So, Tristel should have a captive market for its proprietary chlorine dioxide biocides, which break down bacteria, fungi and virus cell walls. The company...

MANPOWER SOFTWARE (MNS).
March 2, 2007... Manpower Software cleverly sells the same product to three quite different markets: the military, NHS hospitals and cruise liners. All use its software to try to ensure that their staff are in the right place at the right time with the right...

IBS OPENSYSTEMS (OPN).
March 2, 2007... IBS Opensystems achieved strong sales of its public-sector IT systems last year - but how long can it sustain that pace? Analysts at Altium Securities have warned that a slowdown in IT spending among local authorities will catch up with the...