Shares news is good at Smiths
WHAT a turn up for the books. Smiths News is to shift further away from its core business and expects half of its profits to come from books and educational supplies by 2016.
Together with excellent annual results, news of its diversification plans to reduce dependence on newspaper and magazine distribution which contributed 75pc of underlying profits in 2012, helped the shares climb 8.25p to a 52-week peak of 141.5p.
Pre-tax profits jumped 14pc to £36.6m, with sales up 4pc at £1.8bn in the year-to- end August. The dividend is hiked 8pc to 8.6p. Chief executive Mark Cashmore said that the London Olympics, the Diamond Jubilee and Euro 2012 football tournament helped sales of newspapers and magazines.
Oriel Securities has a target price of £2. The broker says the new cost-savings forecasts all but ensure that the core Smiths News business will make around £40m four years out, and it doesn’t take a genius to work out that management expects group profits of £80m in that period. The shares have almost doubled from the depressed level reached after the turmoil caused by the phone-hacking scandal, which brought about the closure of the News of the World.
Haynes Publishing, famous for its car manuals, closed flat at 188p after launching its first ebooks. The 50-year- old publisher now offers a wide list of non-fiction enthusiasts’ titles and is the first UK publisher to sell its ebooks independently.
The first titles, which include TV sports commentator Steve Rider’s My Chequered Career, are available from a new website accessible via Haynes’ UK homepage.
The story elsewhere was bullish but the overall volume of business was nothing to write home about. The Footsie rose 64.93 points to 5,870.54 amid speculation that Spain is moving closer to agreeing a bailout which would see the European Central Bank and bailout funds buying Spanish debt in order to drive yields lower and allow them to borrow at sustainable rates.
Helping sentiment in London was betterthan-expected third-quarter earnings from US giants Johnson & Johnson, Coca-Cola and Goldman Sachs. Wall Street jumped more than 100 points in early trading.
According to the latest Bank of America/ Merrill Lynch fund managers’ survey, global investors bought more stocks in October as growth expectations improved and concerns over the EU crisis receded, with US fund managers turning bullish on domestic banks for the first time in six years.
Lloyds Banking Group, in which UK taxpayers own 40pc, rose 2.44p to 42.76p on further consideration of the green light given by the FSA for it to proceed with a plan to bolster its finances by swapping assets with its Scottish Widows life insurance arm. Speculation yesterday also suggested that Lloyds has sold a £460m portfolio of shipping loans to US private equity firm Oaktree Capital.
A regurgitation of the ancient Pfizer takeover story helped Shire advance 62p to 1856p. The drug group’s third-quarter figures are due on October 25.
International Airlines Group dipped 2.4p to 155.6p after Liberum Capital advised clients to disembark. It warned the restructuring of Iberia Airlines will take time and a hangar-load of money. It sees a 30pc downside risk for the shares, while there is also the problem of the Bankia overhang. It has a 12pc stake, which it is required to sell by the EU.
Nervously sold of late on growing competition concerns, chip-maker Imagination Technologies bounced 34.9p or 8pc to 478.9p after Numis upgraded to buy from hold with a target price of 590p.
The broker believes that should Amazon buy Texas Instrument’s mobile chip business, it expects Imagination to become an important partner in developing an integrated smartphone and tablet platform to rival Apple.
Housebuilder Bellway erected a gain of 30p to a 52-week peak of 980p after reporting a 57pc rise in full-year profits to £105m and a 59pc dividend increase to 14p a share. The order book stands at a healthy £441.4m.
Communications and sports market group Chime rose 7p to 233p following the £6.92m acquisition of pH Associates, a provider of market access and data to the pharmaceutical industry. Still responding to Russian billionaire Roman Abramovich’s £8.7m investment in the low-cost alkaline fuel cell systems developer, AFC Energy soared a further 8p or 17pc to 54.25p.
Despite reporting a better-than-expected 98pc leap in full-year profits to £3.09m and 28pc increase in revenues to £19.71m, oil and gas services company Plexus eased 2.5p to 169p. Landore Resources edged up 0.12p to 6p following a drilling update on its Canadian operations. ÷ MORE than 78m shares in African miner Firestone Diamonds, 0.5p better at 4.38p, changed hands as excited punters responded to news it has recovered a rare type 2B blue diamond and type 2A diamonds at its Liqhobong mine in Lesotho. The world’s diamond production comprises approximately 98pc of type 1A diamonds, while less than 2pc produces the high quality, white and colourless type 2 stones.