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24-Feb-11 - Citigroup - Hold - 2.15 - DownGrade

24-Feb-11 - Panmure Gordon - Hold - 1.50 - DownGrade

24-Feb-11 - Credit Suisse - Outperform - 4.45 Upgrade

24-Feb-11 - Panmure Gordon Reiteration BUY 9.40

National Express reinstates dividend Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Rail and bus operator National Express returned to profit for the year, restored its dividend payment and said it was confident in the year ahead. The transport group, which expects to complete its Business Recovery programme in 2011, said it made a pre-tax profit of £40.2m for the year ended 31 December 2010 compared with loss of £83.5m the year before. Revenue decreased 22% to £2,125.9m. Normalised pre-tax profit rose 38% in 2010 to £160.5m after growth in its UK coach and rail businesses and North American yellow school bus operations. Chief executive Dean Finch said, "This is a renewed company. Our much improved financial performance provides a platform to drive further growth, continue targeted investment and restore a dividend. With a clear focus on our strategy we are confident in the year ahead." The group saw an improvement in UK bus profitability, with operating profit up 36% during the year. "Our cost improvement plans are proceeding, with particular focus on North America and UK Bus, and investment in improved customer services in UK Coach is now underway. Spain continues to deliver a strong performance, with limited adverse impact from the domestic economy," the group said in a statement. National Express has proposed a final dividend payment of 6p per share. Looking ahead the group expects 2011 will bring a number of challenges, with "tough economic and fiscal conditions prevailing in most markets." Increased fuel duty and reduced concessionary income in the UK is expected to impact the group by a net £10m per annum from late 2011 onwards but National Express is hoping to offset this adverse effect. The group is hedged for fuel usage through 2011 and beyond.

Sportingbet clicking with punters Date: Thursday 24 Feb 2011 LONDON (ShareCast) - The growth rate of wagers at online sports betting firm Sportingbet tapered off towards in the group’s second quarter, but the group still saw a healthy improvement in punters putting their money where their mouse is. Amounts wagered in the three months to 31 January rose 10.6% to £555.3m from £502.3m a year earlier, down from a 10.9% growth rate in the preceding three month period. For the six month period, amounts wagered totalled £1,069.2m, up from £965.5m the year before, and ahead of the £1,050m predicted by house broker Daniel Stewart. Net gaming revenue in the November to January quarter improved to £56.8m from £52.6m the year before, pushing the six month figure up to £107.9m (2009: £101.2m), which was again ahead of Daniel Stewart’s forecast of £104m. Quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) climbed to £14.5m from £13.6m, despite the European sports margin being below its long term average. Half-year EBITDA was up to £25.8m (Daniel Stewart predicted £23.5m) from £23.3m the year before. “Strong growth in Australia, Emerging Markets and Turkey more than offset the recessionary weakness of Europe, particularly notable in our larger markets of Greece and Spain,” said Andrew McIver, group chief executive of Sportingbet. Within sports, association football continues to drive underlying growth, with in-play basketball, volleyball and handball also delivering particularly strong results during the quarter. The popularity of the group’s mobile phone offering is growing, with active customers using this medium now accounting for 10% of total customers. The take up of the mobile product is expected to continue to grow significantly as smart phone penetration, a key driver in uptake, is expected to reach over 50% in the UK over the next three years, the company said. Countries such as Italy and Spain are anticipated to have even higher smart phone penetration, with Germany following closely behind. “The third quarter has started well and in particular we have seen a rebound in the softer European margin experienced in the second quarter,” McIver said. The company has declared an interim dividend of 0.6p, up from 0.5p at the interim stage last year.

Soaring commodity prices to hurt Britvic Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Soaring commodity prices will hurt soft drinks group Britvic’s results this year. The company behind Tango and Robinsons, which also distributes Pepsi in the UK and Ireland, has increased its cost inflation guidance for 2011 to 9% to 11% from a previous estimate of 5% to 6%. “We have been adversely impacted by sharp recent increases in the price of PET (a plastic product derived from oil), steel and sugar,” the company said. Britvic said the escalation in input costs comes after the completion of price negotiations with customers. “Since our last update to the market we have witnessed a rapid and unprecedented uplift in the cost of key raw materials,” chief executive Paul Moody said. “This has been driven by a shortage of supply to the market, where, for example, we have seen prices for PET, derived from oil, surge by around 20% in the last month alone.”

Mouchel in advanced talks, shares jump Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Shares in Mouchel jumped after the outsourced services provider said it is in ‘advanced discussions’ with a potential bidder. Engineer Costain has bid for Mouchel, whose activities include providing CCTV-equipped cars used by local authorities to nab traffic offenders, twice in the past three months, but said today that it is not in discussions with Mouchel. Mouchel has not named the potential bidder, though broker Panmure Gordon named engineering and construction group Balfour Beatty, support serves group Interserve and outsourcers Mitie or Serco as possible bidders. The broker expects that any deal to be above the 153p a share last offered by Costain. “The board is pleased to confirm that it is now in advanced discussions with one potential offeror and has signed a co-operation agreement with that preferred trade purchaser in relation to a potential offer being made for the company,” Mouchel said. “Although the board of Mouchel considers that the company has a strong future as an independent business, it believes that the strategic logic of a combination of Mouchel and the preferred possible offeror would provide the best option to deliver value to shareholders.”

Mouchel in advanced talks, shares jump Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Shares in Mouchel jumped after the outsourced services provider said it is in ‘advanced discussions’ with a potential bidder. Engineer Costain has bid for Mouchel, whose activities include providing CCTV-equipped cars used by local authorities to nab traffic offenders, twice in the past three months, but said today that it is not in discussions with Mouchel. Mouchel has not named the potential bidder, though broker Panmure Gordon named engineering and construction group Balfour Beatty, support serves group Interserve and outsourcers Mitie or Serco as possible bidders. The broker expects that any deal to be above the 153p a share last offered by Costain. “The board is pleased to confirm that it is now in advanced discussions with one potential offeror and has signed a co-operation agreement with that preferred trade purchaser in relation to a potential offer being made for the company,” Mouchel said. “Although the board of Mouchel considers that the company has a strong future as an independent business, it believes that the strategic logic of a combination of Mouchel and the preferred possible offeror would provide the best option to deliver value to shareholders.”

SEGRO's NAV growth fails to impress Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Property company SEGRO saw net asset value (NAV) per share grow 3.4% in 2010 and trimmed its vacancy rate to 12.0% at the end of the year from 13.5% at the end of 2009. NAV per share rose from 354p at the end of 2009 to 366p at the end of 2010. Adjusted NAV per share – calculated using the European Public Real Estate Association (EPRA) methodology – advanced 2.5% to 376p from 367p the year before. Net rental income climbed 4.7% to £282.1m from £269.4m, while profit before tax was £197.2m, compared to a loss of £248.1m in 2009. “The full year results from SEGRO were as expected. Good gains in occupancy have meant voids have narrowed. However the valuation performance has significantly underperformed other majors that have reported recently,” reckoned broker Peel Hunt. The departure of Ian Sutcliffe, managing director of SEGRO’s UK operations, was also unexpected, the broker added. “The departure, to some extent, means there are questions over the senior property expertise at the company. That said, David Sleath, new chief executive, we think will be calculated in a new appointment or may restructure the overall property division,” Peel Hunt speculated. The company, which has barely got over digesting its 2009 acquisition Brixton Estates, said gearing has been reduced to 80% while the loan to value ratio is now 46%. Chief executive Ian Coull, who is set to retire in April, said: “Enquiry levels remain robust and we have a very healthy pipeline of attractive pre-let projects. We remain focused on our key priorities to increase occupancy, improve the portfolio and prudently manage our financial position. Although we expect many of the challenges in 2010 to continue into 2011 we are confident that, given our high quality portfolio and strong team, SEGRO is well positioned to continue to make progress and to benefit from the emerging recovery.”

Sinclair Pharma’s revenues increased by 28% to £14.1m in the half-year to December. Like-for-like revenues increased by 9%, while the operating loss reduced to £2.6m from £13.7m. “The recent announcement regarding a possible merger with IS Pharma demonstrates the board's intention to improve critical mass and create substantial shareholder value" Sinclair said.

Heart monitoring equipment supplier LiDCO expects revenues for the full year to be up by approximately 16% to £6.2m, with in excess of 500 monitors sold / placed in the year. Cash at the year end was £1.4m (2009/10: £1.85m), and the company continues to have no bank borrowings.

Avation ponders ASX listing Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Aircraft leasing company Avation says that it is considering a listing on the Australian Stock Exchange as it seeks to raise cash to purchase additional aircraft. Avation needs to buy more aircraft so that they can be leased to Virgin Blue. This is part of a tie-up between Virgin Blue and Skywest Airlines (Australia) which could lead to the provision of up to 18 aircraft. The cash will have to be raised via a share issue. Avation is holding a general meeting on 18 March in order to gain shareholder permission to issue new shares and to change the Articles of Association so that Avation will be able to apply to the ASX for a listing. Avation moved from Plus-quoted to a standard listing last year.

Divi hike reflects Hansard's confidence Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Specialist long-term savings provider Hansard Global saw assets under administration rise to £1.30bn at the end of 2010 from £1.13bn six months earlier. The company said the present value of new business premiums in the six months ended 31 December rose to £114.5m from £73.5m in the corresponding period of 2009. “I am delighted that our continued investment in distribution infrastructure and focus on particular growth markets has delivered new business growth of 50% over the previous year,” said Leonard Polonsky, the company’s chairman. Operating profit after tax on a European Embedded Value (EEV) basis improved to £9.7m from £7.1m the year before, but on an international financial reporting standards basis (IFRS) profit after tax dipped to £8.4m from £9.2m. The interim dividend has been hiked to 5.75p from 5.50p the year before, reflecting the group’s confidence in its future prospects. The group has had a good start to the financial year reflected in improved new business flows, continued positive operating cash flows and increased assets under administration. “The covered and growing interim dividend reinforces the attractiveness of the business as an income play but in our view following the strong new business figures Hansard is once again a growth story,” declared broker Panmure Gordon. “The shares are currently trading at a 13% discount to 31 December embedded value which in our view incorrectly implies no value in the ongoing business. This is despite a 2011E dividend yield of 8.2%. We have increased our target price to 230p/share (215p) to reflect the increase in embedded value to 191p/share from 180p at 30 June 2010,” the broker added, reiterating its “buy” recommendation.

Microgen shows enterprise growth Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Software provider Microgen produced strong figures thanks to the growth of its enterprise software business. Revenue from continuing operations rose 16% to £33.7m in 2010 but all of the growth came from the Microgen Aptitude Solutions division. The core customer base is in the financial, media and commercial sectors. A number of projects are continuing in 2011. The financial systems software division’s revenue fell but it remains the main profit contributor. This part of the group supplies a mature market and there are fewer opportunities for growth. Recurring revenues account for 86% of total revenues for the division and operating margins are 48% - three times those of the Microgen Aptitude business. Underlying pre-tax profit increased from £5.91m to £8.11m. The comparative figure does not include the billing services business that was sold in November 2009. The final divided was bumped up from 1.5p a share to 2.1p a share, making a total of 3p a share for the year. There was a 4p a share special dividend in 2009. The business is strongly cash generative. Net cash was £23.4m at the end of December 2010.

Acquisitions pay off for Wilmington Date: Thursday 24 Feb 2011 LONDON (ShareCast) - The government’s comprehensive spending review (CSR) continues to hang over publishing and training outfit Wilmington, but the company is quietly confident about its prospects as trading conditions improved in the second half of 2010. Revenue in the six months to 31 December climbed 7.4% to £39.67m from £36.95m at the interim stage the year before, with like for like sales (excluding acquisitions) up 3.25% year on year. Reported profit before tax eased to £2.47m from £2.66m in the second half of 2009 but adjusted profit before tax, which strips out non-recurring items, improved 10.3% to £6.1m. The Training & Events division put on a good show, growing profit by 10.1% to £3.1m on revenues that climbed 5.4% to £21.9m. Recent acquisition Matchett is looking like a wise purchase; the company, which provides graduate entry training to international investment banks, showed significant growth though trading conditions in the legal sector remained difficult. The showing by the Publishing & Information arm was described by the group as “solid”, with profit up by 6.7% to £4.8m on revenues that grew 9.9% to £17.7m, largely as a result of the acquisition of Axco, the provider of compliance and regulatory information to the insurance world. “We expect underlying trading conditions in the second half of our financial year to be broadly similar to the same period in the prior year. Our investment plans are on target and we anticipate that investment will continue in the second half of the current financial year. It is pleasing to report that the group continues to generate strong cash flows,” said Wilmington chairman David Summers. Singer Capital Markets said the interim results were “on track” but said the company valuation looks “quite demanding given the outlook” and predicts that the shares “look likely to remain volatile near term.” Peel Hunt, however, noted that the outlook statement was “less specifically cautious” than the interim management statement, but conceded that it would need to revise its 2011 or 2012 numbers to reflect “continued CSR pressure, legal weakness and a management that is choosing to invest for the future.” Peel Hunt rates the shares a “hold” and has a target price of 155p. The interim dividend has been maintained at 3.5p.

Filtrona ahead of expectations Date: Thursday 24 Feb 2011 LONDON (ShareCast) - Plastic and fibre products supplier Filtrona increased its pre-tax profit by two-fifths in 2010. Underlying profit rose from £46.2m to £64.6m, which was slightly better than expected. These figures strip out amortisation and restructuring costs. Revenues grew by 10% to £489.6m. The growth has come across the business and this is expected to continue in 2011. The fastest profit growth was in the protection and finishing products division, which increased operating profit by 81% to £28.8m. This division makes injection-moulded and adhesive-coated foam and metal products for the oil and gas, hydraulics and controls sectors. Increased marketing spending pushed sales higher. The bonded fibre and hydrophilic foam components business replaced lower healthcare revenues with increased printer systems business. Higher spending on security was behind the growth of the division supplying self-adhesive tear tape and technologies for brand protection. The cigarette filter division showed the lowest profit growth rate as revenues were flat. Panmure Gordon forecasts 2011 earnings of 22.83p a share.

24 February 2011 Tata Steel signs definitive agreement with SSI for sale of TCP Tata Steel UK Limited (Tata Steel) has today signed a definitive sale agreement to sell certain assets of Teesside Cast Products (TCP) to Sahaviriya Steel Industries UK Limited (SSI), a subsidiary of Thailand's largest steel producer, in a deal valuing the business at $469 million. The agreement is the most significant achievement in the 22 months since Tata Steel began an exhaustive search for an alternative future for TCP, after the illegal withdrawal by a consortium of offtakers from a 10-year supply agreement. The next step will be the completion of the transaction, which will take place by the end of March. Karl-Ulrich Köhler, MD & CEO of Tata Steel in Europe, said: "I am very encouraged that after all our efforts we have been able to reach this agreement, which is good news for the highly skilled and dedicated Teesside workforce. "I commend SSI, the government and the trade unions for their roles in bringing about this agreement, and in particular the people of Teesside for the spirit and fortitude they have shown throughout the last, difficult two years. "I should point out that Tata Steel intends to retain a major presence in Teesside. After the successful completion of this transaction, Tata Steel will remain one of the largest private-sector employers in the area with more than 1,800 employees."

cont. Mr Win Viriyaprapaikit, President of SSI, said: "This is a historic moment for both Teesside and SSI, one that would not have been possible without the local community's passion for steel-making and the help of the UK Government. We look forward to resuming production of the top quality slab for which the plant is renowned as soon as possible. "Owning Teesside Cast Products will enable us to achieve our long-standing ambition of becoming a fully integrated steel producer. This transaction will give us a strong platform for future growth, increase our resilience to industry cycles and give us opportunities to diversify into new markets and products." The UK Business Secretary, Vince Cable MP, said: "This deal is very good news for workers at the Teesside plant and the region. I welcome the return of steelmaking to this historic steel site later this year. Coming just over a year after the plant was mothballed, it is a tribute to both companies involved - Tata Steel and SSI. "Both parties have worked hard since August to reach a successful outcome on what has been a complex negotiation. This is a significant inward investment by SSI which will help to sustain the 700 jobs at the plant and create new ones at the site and the wider local economy." The assets covered by the sale include the Redcar Blast Furnace, the Redcar and South Bank coke ovens, TCP's power generation facilities and sinter plant, and the Lackenby steelmaking and casting facilities. The deal will also result in Tata Steel and SSI entering into a joint venture to operate Redcar Wharf (TCP's bulk terminal), giving Tata Steel the flexibility to use Teesside to serve its other steelmaking operations, while also meeting SSI's requirements on Teesside. Tata Steel will continue to operate two large-diameter tube mills in Hartlepool, the Skinningrove special sections mill, Teesside Beam Mill and Teesside Technology Centre.

http://www.investegate.co.uk/Article.aspx?id=201102241640078313B