Investors Chronicle articles from May 2003

Investors Chronicle archives from May 2003

Stocks and Sars.
May 2, 2003... Students of stock markets should take a close look at Sars (severe acute respiratory syndrome), the flu-like mutant that is spreading alarm across much of south-east Asia and beyond. In general, it shows how people - from the man on the Kowloon...

The FTSE pays off.
May 2, 2003... t last, an excuse for celebration. I have finally made some money out of the stock market. The other day, I sold my FTSE 100 iShares - basically a straightforward punt on the Footsie - and banked a GBP659 profit in my self-invested personal...

M&A - reasons to be cheerful.
May 2, 2003... Make no mistake, the UK market is entering a critical phase. The bulls want a surge through 4000 points on the FTSE 100 to blast away any remaining bears even thinking about a return to the dark days of March. The technical analysts want a...

Shared values.
May 2, 2003... Managers who invest in their own funds share the risks with you Should you be influenced when fund managers take stakes in their own funds, suggesting confidence in their own abilities and the prospects for their sector? Independent...

JUST REWARDS.
May 2, 2003... These are stirring times. I cannot recall a City revolt as strong as the current rebellion over bosses pay. Nor can I remember a time when small and large shareholders made such common cause over a single issue. The two sides lined up at Shell...

FAT CATS: A DEFENCE.
May 2, 2003... Criticisms of"fat cat" salaries are headline news once again. Quite aside from being an insult to natures finest creations, these attacks are wrong. There is a case for paying top executives big money. Such packages can be a great, and...

Frodo and friends boost Games Workshop.
May 2, 2003... Games Workshop, which sells miniature metal orks and goblins to teenage boys (and those who never grew up), has revealed that a Lord of the Rings spin-off has resulted in sales shooting up. Last year, the company sold a Lord of the Rings board...

PowderJect shares soar on bid approach.
May 2, 2003... PowderJect shares soared this week after the vaccines specialist confirmed that it has received an informal bid. US biotech Chiron is said to be the interested party. The two first held discussions last year, and Chiron made a 450p-a-share...

Asthma setback leaves Celltech breathless.
May 2, 2003... The new chief executive of Celltech, Goran Ando, has his work cut out. For a start, hell have to oversee the integration of Oxford Glycosciences into the business, which, as a heavily loss-making entity, comes with considerable risk. But now it...

S&P dog shares become star performers.
May 2, 2003... The US stock market is so inefficient that investors can sometimes make big money. If you had followed our advice on 4 October last year, and bought the 11 worst performers in the S&P 500 in the previous three years, you would have doubled...

Manufacturing suffers triple blow.
May 2, 2003... Investors in UK manufacturers suffered a triple blow this week. On Monday, the Confederation of British Industry reported the biggest drop in manufacturing confidence since October 2001. Then, on Tuesday, official statisticians in France...

Pharma giants ride out generic threat.
May 2, 2003... This weeks first-quarter results from GlaxoSmithKline (GSK) and AstraZeneca were expected to be hit hard by competition from cut-price copies of their drugs. In the event, both rode out the storm far better than expected. At GSK, pre-tax...

SARS threat to trading at Cookson.
May 2, 2003... Engineering conglomerate Cookson warned this week that the severe acute respiratory syndrome (Sars) outbreak in Asia and war in Iraq had contributed to an uncertain trading outlook. Cooksons first-quarter operating profits totalled GBP7m -...

BP braced for oil price falls.
May 2, 2003... Is this as good as it gets? Many are suggesting that, after a heady first quarter, its all downhill for big oil companies. They say oil prices have been artificially inflated by one-off factors, like war in the Gulf and the strike in Venezuela,...

Chrysalis to sell TV arm.
May 2, 2003... Chrysalis has announced that it is in talks to sell its TV division to a management team led by Steve Morrisson, formerly chief executive of Granada. While the division has a good reputation, stemming from programmes such as Midsomer Murders...

Be your own analyst.
May 2, 2003... The UK may not have produced any scandals equivalent to the Henry Blodget/Merrill Lynch debacle in the US, but retail investors on this side of the Atlantic shouldnt be complacent about the dangers of relying on brokers recommendations. ...

End in sight for Cordiant.
May 2, 2003... Cordiant shares slumped 60 per cent this week as the advertising groups disintegration gathered pace. Allied Domecq, a customer that accounted for 3.4 per cent of group revenues, announced that it was severing all ties with the group. ...

Orange tries to walk two paths at once.
May 2, 2003... Orange shares continued their strong run this week, as the mobile phone operator announced its first-quarter revenue figures. Overall revenues were up 9 per cent to E4.26bn. New chief executive Sol Trujillo said that the results of his...

Legal & General suffers sales slump.
May 2, 2003... Legal & General (L&G) has become the latest player in the life sector to suffer falling sales, reporting a 4 per cent decline in its first-quarter figures. Late last month, Prudential said that first-quarter sales had fallen 7 per cent, while...

Egg fails to hatch in France.
May 2, 2003... While web bank Egg is now managing decent UK profits - up to GBP17.3m in the first quarter from last years GBP5m - its a different story in France. With its first-quarter figures, Egg reported a GBP23.3m loss at its French unit, prompting a...

Morse sends brighter message though gloom.
May 2, 2003... IT hardware distributor and services supplier Morse remains mired in the current IT spending downturn, but indicated this week that better times were on the way. The company blamed a weak six-week period for a 37 per cent drop in sales in the...

Torex and iSOFT report healthy trading.
May 2, 2003... Rival healthcare IT specialists Torex and iSOFT this week provided bullish trading updates. The two firms have benefited from the governments commitment to modernising the NHS. Torex declared that its health division had traded ahead of...

Music and books avoid consumer downturn.
May 2, 2003... Two of the UKs leading entertainment retailers have signalled that the consumer slowdown has yet to hit the music or book markets. HMV Group, which owns Waterstones as well as the music chain, said that earnings in the year just ended are...

DFS (DFS).
May 2, 2003... DFS is suffering the fate that befalls many mature retailers: cannibalisation. Namely, when it opens a store on one side of town, sales plummet at the store on the other side. Now that it has 63 stores in the UK, it is likely that every new...

Asdas Safeway bid attacked.
May 2, 2003... Asdas attempt to buy Safeway was attacked from all sides during the Competition Commissions open hearing on Safeways future this week. Union officials, pig farmers, environmental groups and rival bidders all attacked Asdas proposed bid. Asdas...

Strong rand to hit Anglo American.
May 2, 2003... Practically every foreign exchange analyst agrees the South African rand is overvalued - but it continues to defy predictions of a tumble, creating increasing problems for the countrys mining industry. Sir Mark Moody-Stuart, new chairman of...

SOLITAIRE (STG).
May 2, 2003... Despite the worries surrounding the housing market, management agency Solitaire continues to fire on all cylinders. The group manages 26,000 properties - an increase of 2,000 on last year, despite shedding 900 loss-making contracts. So far,...

PPL THERAPEUTICS (PTH).
May 2, 2003... Dolly the sheep is dead, and her progenitor, PPL, may not be far behind. Although new chief executive Geoff Cook has rung the changes, there may not be time for his rescue plan to take effect. So far, research and development costs have been...

ALEXANDRA (AXD).
May 2, 2003... The shift from UK manufacturing to overseas procurement appears to be doing the trick at Alexandra. Ten years ago, the group employed 1,300 machinists, now the number is just 14. These are mainly involved in quality control and product samples....

NUMIS CORPORATION (NUM).
May 2, 2003... Unlike many of its peers, Aim-listed Numis appears to have avoided being hit too hard by grim equity markets. That largely reflects April 2000s decision to sell the private client stockbroking and investment management operations. Its income is...

AMBIENT (ABI).
May 2, 2003... Strip out GBP3.2m from discontinued operations plus a GBP2m exceptional charge on a services contract that may become a cash liability, and Ambients operating losses fall to around GBP8m. The companys key asset is its 60.1 per cent stake in...

ATRIUM UNDERWRITING (AUW).
May 2, 2003... Atrium is the last group in the Lloyds sector that reports on a three-year accounting basis, due to its participation in non-managed syndicates. That meant the numbers partly reflected conditions in 2000, and took no account of underwriting...

CLINICAL COMPUTING (CLC).
May 2, 2003... Clinical Computing continues to rely on the US market, which accounts for 81 per cent of sales, while it is hoping that it can benefit from growing installation of its clinical information system, Clinic Vision 4.0 (CV4). But the extended...

HITACHI CREDIT, UK (HCU).
May 2, 2003... Hitachis retail operation is on the mend after exiting the problematic buy now, pay later sector. Despite an 8 per cent decline in the UK installment credit market, Hitachi boosted its market share from 10.1 per cent last year to 11.2 per cent,...

BEAZLEY (BEZ).
May 2, 2003... Beazley braved grim equity conditions last November and floated at 73p. It wasnt ideal timing, but the GBP150m raised will come in handy in todays booming insurance market. And Beazley can also boast a GBP30m letter of credit facility to help...

BROWN & JACKSON (BRJK).
May 2, 2003... While some value-for-money retailers, such as Matalan and Woolworths, are finding it hard to increase sales, Poundstretcher has had no such trouble. A massive clear-out of poor-quality stock has left the chain free to sell a better range of...

KILN (KIN).
May 2, 2003... With a combined ratio of 91 per cent, Kiln is one of the most profitable players in the Lloyds market. And the insurer is expecting solid premium rate rises to drive profitability for a while yet. For example, management thinks rate hikes of...

MALCOLM (MAL).
May 2, 2003... The logistics industry is pretty depressed right now. And even though Malcolm isnt exactly bucking this trend, it is putting up a good fight. Strip out the contribution of the Edinburgh Woollen Mills shops, sold in 2001, and operating profits...

LOKN STORE (LOK).
May 2, 2003... Lokn Stores managers expect commercial property prices to continue their downwards slide, so theyre holding back on new site acquisitions until they can get a better deal. That will mean the company opens just two or three new sites this year,...

REGUS (RGU).
May 2, 2003... After seemingly falling into terminal decline, Regus has found time to pause and re-group, and now seems to be managing a recovery of sorts. It has strengthened its balance sheet by selling 58 per cent of its UK business to venture capitalists,...

FORBIDDEN TECHNOLOGIES (FBT).
May 2, 2003... Boys and their toys look set to underpin growth at Forbidden Technologies. The group, which makes software to stream video to hand-held computers and mobile phones, has announced that online business broadcaster Cantos Communications is...

CHARACTER (CCT).
May 2, 2003... Characters huge increase in profits should help dispel the doomsters that wrote off the companys chances of survival. A decision to chase Star Wars merchandise failed miserably in 2000, when retail demand faltered but, since then, the recovery...

ALLIED DOMECQ (ALLD).
May 2, 2003... Allieds reputation as the poor mans Diageo wasnt helped by a mild profit warning in February. That was due to a combination of a weakening dollar, higher pensions costs, and the effect of de-stocking in Spain. The company certainly still has a...

WHITBREAD (WTB).
May 2, 2003... These results were as good as the City could have hoped for. Its Whitbreads longer-term outlook thats more worrying. The groups Marriott hotels chain maintained its operating profits in a tough trading environment. But its doubtful how much...

PUNCH TAVERNS (BUY).
May 2, 2003... A few years ago, local pubs were regarded as the poor relation of glitzy high-street brands. Not anymore. Since Punch floated at 230p last May, Old Monk and SFI have effectively gone bust, and former sector darling JD Wetherspoon has been...

BODY SHOP (BOS).
May 2, 2003... The Body Shop was once a go-go stock, but theres not much to get the pulse racing in these results. Global retail sales slipped 1 per cent, on a like-for-like basis, as the company and its franchisees felt the pinch of the slowdown. Underlying...

BLACKS LEISURE (BSLA).
May 2, 2003... The sale of the poorly-performing sportswear chain, First Sport, has meant Blacks is no longer at the cut-throat end of the sports fashion market. It is now focused on two niche areas: camping gear and surfing clothes. While First Sport...

McCARTHY & STONE (MCTY).
May 2, 2003... McCarthy & Stone should be a long-term beneficiary of an ageing population. But that doesnt mean it isnt producing excellent results now. The companys return on capital increased by five percentage points to 36 per cent, not bad for a business...

BPB (BPB).
May 2, 2003... BPBs management may well want to forget the past few years. Firstly, the companys big entry into the US wallboard market - via the GBP230m acquisition of Celotex in 2000 - came at the top of the pricing cycle. Oversupply forced prices down from...

WESTBURY (WBY).
May 2, 2003... Dont be too impressed by Westburys figures, as GBP156m of revenue came from Prowting, acquired last June for GBP248m. That deal has paid off, despite not always having been a popular move. One-off reorganisation costs totalled GBP4.3m and...

OXFORD GLYCOSCIENCES (OGS).
May 2, 2003... With Celltechs offer now declared unconditional, these results were something of a swan song for Oxford Glycosciences (OGS). While the figures may have been issued simply"as a matter of record", they offer some insight into the task that lies...

FERRARIS (FER).
May 2, 2003... Ferraris is developing a habit of dishing out nasty surprises - and this months first-half results were no different. For a start, management bowed to recent criticism and changed its accounting treatment of research and development (R&D)...

iTOUCH (ITU).
May 2, 2003... Exciting new markets are dangerous places. At the start of the 20th century, hundreds of motor car manufacturers sprang into life. By the end of the first decade, only a handful remained. Plus ca change, plus cest la meme chose. It all...

Life assurance hopes for third time lucky.
May 2, 2003... The life assurance sector has reached an inflection point. It bounced quite easily off its lows, but there has also been a good deal of selling that has thwarted the development of a proper uptrend. The February high of 3255 has not been...

Advertising an upturn.
May 2, 2003... When youve got used to shares trading on 25 times earnings, they start to look very tempting when they come down to 15 times. Thats especially true when the weak share prices are explained by a cyclical depression - from which we should...

EUROPEAN MOTOR (EMH).
May 2, 2003... EMH chief executive Richard Palmer believes there is more gas left in the new car sales boom, despite a recent slowdown in London. Around 85 per cent of EMHs business is based outside the capital, predominantly in the north-west and the...

What matters, what doesnt?
May 2, 2003... Will the consumer boom turn to bust? With house price inflation and retail sales growth both slowing sharply, this fear is occupying many investors minds. But it shouldnt. A steep or prolonged drop in consumer spending is unlikely, unless...

SCOTTISH & NEWCASTLE U-TURN SHOCKS CITY.
May 2, 2003... Pubs and brewing group Scottish & Newcastle (S&N) made one of the sharpest strategic U-turns in recent British corporate history this week when it unveiled plans to sell its entire estate of 1,450 UK pubs. In a trading update that stunned the...

Support higgs all the way.
May 2, 2003... The views of Terry Arthur, the professional non-executive director who was"appalled" by my support for the Higgs proposals for reforming his profession (his letter is on page 6 of last weeks issue), remind me of the advice received by the...

HALMA (HLMA).
May 2, 2003... Halma has an unrivalled reputation in the UK engineering sector for delivering consistent earnings, high returns on capital and strong cash-generation. Indeed, at a time when many UK engineers have seen profits collapse as capital spending has...

AMERSHAM (AHM).
May 2, 2003... Amersham is looking to exit its cancer treatment business, to focus purely on diagnostics and life sciences research tools. The UK healthcare firm is merging what is known as its brachytherapy arm with the urology division of Galil Medical,...

The dangers in a safe asset.
May 2, 2003... The Bank of Englands monetary policy committee (MPC) could cut interest rates next Thursday. Investecs David Page expects a quarter-point cut in the repo rate to 3.5 per cent, which would take it down to its lowest level since 1955. Many...

LONRHO AFRICA (LAF).
May 2, 2003... Lonrho Africa is a rarity. its a company with a healthy defined-benefit pension scheme. Indeed, the scheme is so healthy that the company is trying to claim a GBP8.5m post-tax refund. But success will entail a second application for a...

INTERNATIONAL POWER (IPR).
May 2, 2003... Its main markets may be depressed, but International Powers expansion is relentless. Last week, a consortium led by the company agreed to take stakes in power and water plants in the Middle East state of Abu Dhabi. Electricity demand is rising...

WOLSELEY (WOS).
May 2, 2003... Wolseley got back on the acquisition trail last week with a GBP390m deal for Pinault Bois & Materiaux (PBM), a French heavyside building materials distributor. Wolseleys interim results, announced in March, showed that the first half was fairly...

AQUILO.
May 2, 2003... Aquilo (formerly Accidentcare group) reduced 2002 losses substantially by cutting costs, notably marketing. As a result, the cost of sales almost halved to GBP808,000. Aquilo has also changed its business model: previously it operated as a...

PRIVATE & COMMERCIAL FINANCE (PCF).
May 2, 2003... P&C has postponed securitising any of its installment credit contracts. It had two offers to securitise GBP50m-worth, but up-front costs were enormous. Instead, it will wait until those contracts (GBP63.83m at end-December) exceed GBP100m....

MARK KINGSLEY (MKP).
May 2, 2003... Mark Kingsley is the new, off-the- shelf, name for Soundtracs, now shorn of its audio equipment interests. The main audio-mixing console business was sold just under a year ago and, at end-October, the company consisted of GBP2.81m cash and two...

ATHELNEY TRUST (ATY).
May 2, 2003... Last year was Athelneys annus horribilis. Still, NAV there fell less than the one-quarter fall experienced by the main market indices, and the 30 per cent fall seen on Aim. The annual accounts are full of gloom -"the global economy is in a...

HEAVITREE BREWERY (HVTA) (HVT).
May 2, 2003... Heavitrees DEFINED BENEFIT pension problem is not just the size of its deficit, but also the fact that it has been advised by three actuaries within a year. Last year, the first one suggested contributions of 72 per cent of relevant pensionable...

GIBBS & DANDY (GDYO).
May 2, 2003... Following a"tentative" first half, Gibbs & Dandy (G&D) sparkled in the second six months of 2002, and has celebrated by paying a 30p-a-share special dividend. Margins also improved. G&D now has eight freehold and long-leasehold outlets. It...

ENACT PHARMA.
May 2, 2003... Enact Pharmas potential big drug winner is Voraxaze, used to treat bad toxicity during cancer therapy, particularly in children. Following clinical trials that started in 1997, the company was awarded EU orphan drug status in February, giving...

PNC CALLS IT A DAY AND ACCEPTS HARTHALL OFFER.
May 2, 2003... Troubled telecoms company PNC has accepted a GBP2m cash offer for its remaining assets from Harthall, signifying the end of a remarkable fall from grace for a group that was once valued at close to GBP200m. A boardroom struggle at the end of...

BRADSTOCK (BDK).
May 2, 2003... If stock markets stay dull, more firms will have to negotiate a deal over their defined-benefit pension black holes. Bradstock seems to be the first company to have such a deal ratified by the High Court. So big was the FRS 17 deficit (GBP21.8m...

Say it with Flying Flowers.
May 2, 2003... Mothers Day proved a big success for Flying Brands, with the Jersey-based retailer shipping more than 100,000 bouquets. The company confirmed at its recent annual general meeting that trading is in line with market forecasts for the current...

Tridelta prepares for flotation.
May 2, 2003... The first Ofex biotech initial public offering of 2003 has arrived - in the form of Tridelta. The veterinary diagnostics group is raising E1m via an offer for subscription priced at E0.85 a share. The companys primary focus is on Acute...

KBC forced to issue profit warning.
May 2, 2003... Tough trading in the oil refinery industry has forced KBC to issue a profit warning. Its software, which helps identify inefficiencies, oil loss and bottlenecks, has proved to be of little interest to the majors as they seek to cut spending...

Victoria set to beat all expectations.
May 2, 2003... Victoria, the manufacturer of carpets and carpet yarns, has told investors that it is likely to beat market expectations in full-year results due on 17 June. In its latest trading update, the company says that all divisions are performing well,...

FOUNTAINS (FNT).
May 2, 2003... Fountains is the UKs leading supplier of vegetation control services to the likes of National Grid and Scottish Power. Unfortunately, due to its tiny market value, the group falls below the radar screen of many investors. But for those willing...

Dairy Brands tables offer for Hemscott.
May 2, 2003... Following a special meeting of its shareholders, New Zealand-based investment vehicle Dairy Brands - long rumoured to have been stalking financial data provider Hemscott - has tabled a formal offer. As was widely speculated, Dairy Brands is...

INTERIOR SERVICES GROUP (ISG).
May 2, 2003... Diversification a shift of focus away from a declining London market have helped occupancy services group Interior (ISG) protect itself from the market downturn. Only last month, it strengthened its links with its Asian partner, CityAxis...

Large Company Tips Update.
May 2, 2003... DIXONS (DXNS) BUY Dixons shares rose 11p to 111p last week, following chief executive John Clares impressive performance at the Competition Commissions public hearing on the extended warranty market. We recommended the shares as a buy...