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Office2office trading in line, despite 43% fall in profits By Benjamin Chiou Date: Thursday 24 Mar 2011 LONDON (ShareCast) - Office2office, the business supplies group, has maintained the same final dividend as 2009, despite a 43% plunge in profits last year after falling volumes in public sector sales. Shares were higher Thursday after the group confirmed that it is trading ‘in line’ during the first quarter of 2011, with further opportunities to grow the business in the private sector. The 2010 final dividend was kept at 11.4p, as the group said it is optimistic about “opportunities in the longer term and recommends that the final dividend is maintained at the same level as last year.” Meanwhile, pre-tax profit dropped from £8.1m to £4.6m due to a reduction in its managed procurement activity, after public sector cutbacks were announced last year. Office2office currently generates around a third of its sales from the government and has undergone measures in the past three years to shift its reliance on sales of office products to the private sector. The firm said that profits were exacerbated by order intake shortfall and delivery difficulties caused by the severe winter weather. Revenues increased from £187.5m to £207.6m, “reflecting the impact of acquisitions primarily to expand our business critical services activity,” said chairman David Callear. The firm acquired the business process outsourcing division of The Print Factory and DSR Group for £0.7m in February 2010. Basic earnings per share fell 30% to 12.1p, from 17.2p previously.

Today's first half results from PureCircle (PURE) show that sales to get things right are massively deferred and certainly not booked. Stocks have shot up. I reckon losses announced today are going to increase and that this stock should be well below 100p. An extract from the diaries of infamous bear raider Evil Knievil

An extract from the diaries of infamous bear raider Evil Knievil 888 Holdings (888) has done a deal whereby it acquires Wink Bingo for c.GBP25m where well over half is payable over the next year or so. As a result Wink Bingo has agreed restrictions upon management and restricted distributions for the duration. This seems perfectly reasonable to me. However, the market seems to think that Ladbrokes cannot take over 888 in the interim. This is nonsense and if it is the case that 888's share price has been depressed as a result, 888 is a buy. Ladbrokes might pay as much as 70p per share. It is worth remembering that the acquisition of Wink Bingo has not entailed new shares being issued by 888 - so recent dealings in 888 signify nothing.

http://www.investegate.co.uk/Article.aspx?id=201103240700115223D

Falling sales at Clinton Cards set to continue By Benjamin Chiou Date: Thursday 24 Mar 2011 LONDON (ShareCast) - Declining sales at Clinton Cards are expected to continue as challenging retail conditions have led to a 41% plunge in half-year profits. Like-for-like (LfL) sales fell by 2.7% in the 26 weeks ended 30 January and the group warned that “In the absence of a significant improvement in trading, we believe Group LfL sales performance could be a low single digit percentage decline for the second half.” Pre-tax profit dropped to £11.7m, from £19.9m in the same period last year, on sales that fell 7% from £222.8m to £206.9m. The total number of stores fell from 830 to 806 over the six month period. The group had 861 stores as of 31 January 2010. These include both the ‘Clinton Cards’ and ‘Birthdays Retail’ chains. The Irish unit of the Birthdays business is expected to make a loss of £1.4m for the full year and the board has decided to dispose of the operation accordingly. Clinton petitioned to appoint a liquidator to instigate a winding up of Birthdays (Ireland) Ltd on 1 March. Meanwhile, revenues from the UK unit of Birthdays totalled £28.6m for the half year, down from £31.7m in the period as the business traded from 156 stores, down from 172 at the same time in 2010. Basic group earnings per share from continuing operations decreased to 4.08p, from 6.94p last year. The group did not reinstate an interim dividend.

Healthcare Locums FD resigns Date: Thursday 24 Mar 2011 LONDON (ShareCast) - Diane Jarvis has resigned as finance director of Healthcare Locums following an investigation into financial irregularities at the AIM-quoted health care staffing firm. The financial irregularities occurred while Jarvis was in her job and according to the company “she has accepted responsibility” for them. At least this announcement has been made during trading hours. Healthcare Locums announced the dismissal of founder Kate Bleasdale as an employee at 6pm on Friday 11 March. Healthcare Locums has a habit of slipping out news after 6pm. Last month, Peter Sullivan was appointed as chairman and David Henderson as a non-executive director. They have already presided over a clear-out of the board, which included Alan Walker resigning as chairman and Bleasdale stepping down from the board prior to her dismissal as an employee. Trading in the shares was suspended on 25 January when the company warned that results for 2010 were much worse than expected. These figures have not been published and no date has been set. The fact that the investigation has ended should be a sign that the publication is getting nearer. The audit of the 2010 results started last week.

Mike Biggs, Chairman of Resolution Limited, said: "2010 was an important year for the Company. The acquisitions we have made and the clear strategic plans we are implementing underpin the Board's confidence that the project will deliver its targeted mid-teens returns." John Tiner, CEO of Resolution Operations LLP, said: "The delivery of cash in 2010 shows early value for shareholders. The non UK businesses are performing well and generating value. In the UK our restructuring and strategic repositioning continues. As we deliver operationally these businesses will generate valuable growth and cash rewards for shareholders."

http://www.investegate.co.uk/Article.aspx?id=201103240712135375D

http://www.investegate.co.uk/Article.aspx?id=201103240715015228D

Resolution churning out cash By John Harrington Date: Thursday 24 Mar 2011 LONDON (ShareCast) - Insurance firm Resolution is to rebase its final dividend, and for once the use of the term “rebase” refers to an increase not a cut. With the numbers now in for 2010 the board has decided that it can afford to be more generous with its dividend payments, and has proposed a final dividend of 12.57p, up 15% on a year earlier, taking the full year dividend up to 18.03p, compared to a previously indicated full year payment of 16.39p. In 2011 the board expects to pay a full year dividend of 18.85p. Operating profit before tax on an international financial reporting standards (IFRS) basis soared to £275m from a restated £6m, while on a Market Consistent Embedded Value (MCEV) basis it jumped to £412m from £41m, with the 2010 result including an £87m contribution from the AXA UK life business which was part of the Resolution empire for the final four months of 2010. IFRS profit after tax fell to £820m from £1,308m in 2009, while on an MCEV basis it climbed to £460m from £71m the year before. With the £55m contribution from associate interests stripped out, IFRS post-tax profit falls to £765m, but that was comfortably ahead of market expectations of £536m (median estimate). Group embedded value on an MCEV basis rose to £6,515m in 2010 from £3,488m the year before. Available shareholder cash more than doubled to £1,067m from £510m. "The delivery of cash in 2010 shows early value for shareholders. The non UK businesses are performing well and generating value. In the UK our restructuring and strategic repositioning continues. As we deliver operationally these businesses will generate valuable growth and cash rewards for shareholders,” said John Tiner, chief executive officer of Resolution Operations LLP. The company has a reputation for being acquisitive but reaffirmed it is not currently contemplating any takeovers that would dilute project returns. The company is focused on the continued integration of the businesses and the delivery of the announced targets on cost synergies, new business strain, cash flow per annum and returns from its product strategies. To date, the company has completed three acquisitions: Friends Provident plc in November 2009 for £2.01bn; AXA UK Life Business in September 2010 for £2.75bn; and BHA in January 2011 for £168m. “We continue to follow closely the activities of other life assurers in the UK market, since the company has a responsibility to shareholders to bring them acquisition opportunities which would be clearly accretive to the group's project returns. It follows naturally that any such transactions would need demonstrably to add to the mid-teens return on the [UK Life] project that we are already confident of achieving,” the company said. The compa

Commenting, Ron Marsh, RPC's Chief Executive Officer, said: "It is very pleasing to see that the overall performance of the Group has improved and is ahead of our expectations despite the headwind we have faced this financial year in terms of rising polymer prices. Margins will be enhanced going forward as the sales mix continues to move towards higher added value products. The Superfos acquisition will further strengthen the enlarged Group as we continue the integration and benefit from the synergies that exist. I am confident in the Group's growth prospects based on leading market positions, good technological capabilities and exciting new product initiatives, supported by a strong financial position."

http://www.investegate.co.uk/Article.aspx?id=201103240700095168D

RPC passes on higher plastics prices By Benjamin Chiou Date: Thursday 24 Mar 2011 LONDON (ShareCast) - Higher selling prices and increased volumes at plastic packaging supplier RPC mean that revenues in the 2010/11 financial year will be well ahead of last year. The group said that it was able to pass through rising polymer prices to customers and saw significant growth in the higher added value sectors of pharmaceutical, personal care, long shelf-life and coffee capsules. However, a time lag on passing on these increases has had a significant negative impact on full year margins. “The group is confident in its capability to pass through both the most recent and any future polymer price increases,” the statement said. While polymer prices have surged by 20% since January and reached record levels, operating profit and adjusted pre-tax profit should still exceed management’s expectations. Last month, RPC acquired European injection moulded plastic packaging firm Superfos Industries for €240m, and expects the cost and revenue synergy potential of the enlarged group to be around £5m in 2011/12, and in the range of £15-25m per annum from the third full year after the acquisition. “It is very pleasing to see that the overall performance of the Group has improved and is ahead of our expectations despite the headwind we have faced this financial year in terms of rising polymer prices,” said chief executive officer Ron Marsh.

There are always concerns when a boss leaves in case there has been a boardroom dispute over direction, results etc - hopefully not the case here and he leaves for personal reasons

Invensys boss leaves abruptly By John Harrington Date: Thursday 24 Mar 2011 LONDON (ShareCast) - There has been an abrupt change of leadership at engineering firm Invensys, where Ulf Henriksson is to step down with immediate effect after almost seven years as the company’s chief executive officer. He will be succeeded by Wayne Edmunds, previously the group’s chief financial officer. Edmunds’s basis salary will he hiked from £425,000 to £650,000 as a result. David Thomas, who joined Invensys in 2002 as group controller, having previously been a senior partner in Ernst & Young specialising in long-term industrial contracting businesses, takes over as acting chief financial officer. A permanent appointment will be made in due course after consideration of internal and external candidates. No reason for the departure was given, though it appears that trading performance is not behind the split, as the group said its performance in the current financial year, which ends on 31 March, is “on track” and that it continues to expect to deliver improved performance. Full year results will be published on 19 May, and will be broadly in line with market expectations. Market consensus is currently for profit before tax of £226.2m on revenue of £2,444.5m.

BAA puts aside £50m to cope with snow By Benjamin Chiou Date: Thursday 24 Mar 2011 LONDON (ShareCast) - Airport operator BAA is to invest £50m to avoid a repeat of the weather-related chaos seen at Heathrow this winter. The move comes in response to the ‘Heathrow Winter Resilience Enquiry’ headed by BAA non-executive director David Begg, following the worst winter in 100 years that crippled the major airport for almost an entire week in mid-December. “Passengers were unable to travel at an important time of the year; over 4,000 flights were cancelled, causing significant impact to airline schedules globally; and Heathrow Airport's reputation was damaged,” Begg said. The enquiry listed a total of 14 recommendations to improve the preparation, planning and control of the airport if the UK was to encounter these severe weather conditions again. The suggestions include greater collaboration in snow preparation, strengthening BAA’s crisis management process and providing better communication with passengers. “The panel concludes that BAA and the airlines need to work closely together to ensure that changes in airport status can be quickly and accurately communicated to passengers in order to establish a single and authoritative source of information available globally on the status of Heathrow and its airlines,” the report said. BBA’s chief executive Colin Matthews responded: "Following December’s disruption, we invested in new equipment, people and training to enable us to respond better to snow in future. We are now putting together a comprehensive action plan to implement all 14 Begg recommendations.” The group has also secured agreement from the heads of British Airways, Virgin Atlantic, NATS and the CAA, to establish a Heathrow partnership for passengers “to make every passenger’s journey better than the last one,” Matthews said. “Heathrow is among the most congested airports in the world and the lack of spare capacity means that unlike every other British or European airport, we have literally no room to move when disruption occurs,” Matthews explained. BAA manages six UK airports, including Heathrow, Stansted and Glasgow.

WPP set to return to UK Date: Thursday 24 Mar 2011 LONDON (ShareCast) - Sir Martin Sorrell, chief executive of ad agency giant WPP, has dropped his heaviest hint yet that yesterday’s Budget changes to company taxes will encourage the firm to re-locate back to Britain. Sir Martin told the BBC this morning “There has to be legislation enacted but I think it looks as though we will make that recommendation.” Chancellor George Osborne delighted UK businesses with his Budget proposal to cut mainstream corporation tax from 28% to 23% over four years beginning with an immediate 2% cut to 26%. Tax on inter-company loans to overseas subsidiaries has also been slashed, a move seemingly aimed at multi-national firms such as WPP. The ad group shifted its tax domicile to Ireland in 2008 because of the impact of UK taxation on its overseas profits. It makes 90% of its profits outside of the UK. Chancellor George Osborne said: "We have got big companies like WPP coming back to the UK, that is going to help us with the growing economy." pw

Plexus profit bounces back Date: Thursday 24 Mar 2011 LONDON (ShareCast) - POS-GRIP wellhead equipment supplier Plexus increased its interim revenues by 16% to £7.5m and this helped profit to bounce back but North Sea tax changes could create uncertainty. Last year’s Gulf of Mexico oil spill from BP’s offshore field and other spills have increased the focus on wellhead safety and blow out preventers, such as POS-GRIP. Revenues grew from £6.47m to £7.54m in the six months to December 2010, with most of the money coming from rental services. Increased exploration activity in the North Sea has helped and there have been contract wins in Australia and in Surinam. Profit jumped from £131,000 to £1.1m. That was better than expected. AIM-quoted Plexus had net cash of £676,000 at the end of 2010. There are bank facilities of £6m. There was a strong cash inflow in the first half but Plexus needs the facilities to cope with the volatility of working capital and increased R&D spending on a new POS-GRIP friction-grip subsea wellhead called HGSS. This will have higher performance and testing standards. The existing POS-GRIP technology is compliant with API Spec 6A wellhead standards and the equivalent ISO 10423. Plexus made a profit of £1.9m in 2007-08 and it is well-placed to return to that level of full year profit. There could be some short-term uncertainty, though, because of the North Sea tax changes in the Budget. Prior to the Budget, a survey suggested that capital investment in the North Sea could reach £8bn a year and carry on at that level for five years. Oil companies may have to recalculate their figures following the proposed tax changes. Westhouse reckons that the “unpredictability of fiscal conditions, and the worsening field economics the tax will create, is likely to deter investment and stimulate the search for oil and gas elsewhere”. If there is less exploration in the North Sea and more elsewhere that is not necessarily bad for Plexus, though.

http://www.iii.co.uk/articles/14864/oil-firms-rail-against-osbornes-north-sea-tax

Oil and gas exploration company Salamander Energy reported a 102% rise in EBITDAX to $177m from $87.6m for 2010 on revenue up 106% to $323m from $157m, reflecting increased production and higher commodity prices. Salamander said the first half had seen some disappointments as it drilled high-risk frontier wells in Laos and Vietnam and experienced a reserve downgrade on the Kambuna field. The company had started 2011 positively, delivering reserves upgrades on the Bualuang field. Chief executive James Menzies said, 'Entering 2011, Salamander has passed several key milestones. Group production has grown to over 20,000 boepd, delivering cash flows that permit the group to comfortably self-finance its extensive capex programme”. Salamander Energy PLC (LON:SMDR) share price was +2p at 287.50p