The Week In Review: Regent Inns cheers up after hot summer

Regent Inns has seen its first-half profits slide after the shake-up in the licensing laws. The owner of the Walkabout pub chain and Jongleurs comedy clubs yesterday blamed the extension of opening hours at community pubs for keeping customers drinking in their locale for longer and arriving later at the com-pany's high-street venues.

Regent Inns has also been enforcing the Challenge 21 policy to clamp down on underage drinkers. Its doormen are asking for ID from younger-looking customers, and analysts say the company turns away 5,000 customers a week.

These factors, combined with the long, warm summer, have eaten into operating profits, which fell to £6.7m during the six months to 30 December, compared with £8.5m a year ago. However, sales picked up over the Christmas and New Year period, with like-for-like sales up by 3.1 per cent at Walkabout and 4.9 per cent at Jongleurs.

Analysts are looking to see if the company succeeds in turning around Old Orleans, the 31-strong restaurant chain it acquired from Spirit for £27.6m last August. New menus and entertainment programmes have been launched.

With the company forecasting another 50 sites across the country, there is still plenty to keep investors excited. Buy



DIC ENTERTAINMENT

DIC Entertainment, the children's character group, issued its second profits warning in three months this week, sending its shares down to historic lows. To blame were weak audience figures for new shows on the CBS channel it runs. For those new to DIC, now is no time to be buying into the group. For existing shareholders, it's probably best to stick with the stock, although the road to recovery looks set to be a long one.

SMITHS NEWS

The theory behind the demerger of the Smiths News magazine and newspaper distribution business from WH Smith was that it would be able to work with publishing companies that would not have dealt with an operation attached to a bookseller like WH Smith. There has already been evidence that this strategy is working. The past six months has seen profits warnings from both of the group's main rivals, Dawson and John Menzies. Against this background, the trading statement Smiths News put out at its first shareholder meeting this week, revealing a 6 per cent rise in sales for the first five months of its financial year, is rather good. Hold.

POLAR CAPITAL

Polar Capital became the latest specialist asset manager to list on the Alternative Investment Market this week. A little less than half of the $3.3bn it manages is in hedge funds, which aim to make money for investors irrespective of how the wider stock market performs. The rest is invested in traditional long-only funds run by Polar - they make money only when the market is going up. Key to growing the business is increasing its funds under management. In the past nine months alone, this figure has risen by 34 per cent to $3.3bn, and analysts are convinced this positive trend will continue for the foreseeable future. Pre-tax profits at Polar are tipped to come in at £6.7m in the year to 31 March 2007 and rise to £9.2m in 2008. Buy.

DICOM

After a very disappointing first quarter, Dicom looks to be on the growth path once again. The software group has made up for a slow start to its financial year as it reported a 52 per cent rise in interim pre-tax profits to £6m. All the orders it had hoped for at the end of its first quarter came through in the second, and City analysts expect profits at Dicom to hit £16m by the end of the year. Clearly, the group operates in a fast-growing sector, but it has disappointed investors on several occasions, mainly because the timing of its revenues can be difficult to predict. Nevertheless, at 18 times forward earnings, its shares are worth holding.

SOLID 888

888 Holdings played its cards better than most of its competitors when the US authorities called their bluff by introducing new legislation designed to frustrate the activities of online gaming groups. Having focused more of its efforts on building up a substantial non-US business than rivals, it was always going to be less affected by a disaster like this. 888 could make an attractive partner for another online gaming operation given that, with the US in effect closed for business, there are too many companies competing for a smaller pool of players. Buy.

PACE MICRO

The year 2006 was a terrible one for Pace Micro Technology. Delays in developing, testing and shipping products to the US led to a string of profits warnings and a loss of nearly £30m. But Pace looks to be on the mend. It has issued a forecast-busting set of interim results, which heralded a return to profitability. For the six months to 2 December, pre-tax profits came in at £1.4m, compared with a loss of £8.9m last time, thanks to a jump in shipments to the US. Investors should expect momentum at Pace to start to build in 2007. At 11 times next year's earnings, the group's shares do not adequately reflect this. Buy

CHRYSALIS

If you believe the latest gossip, Chrysalis is mulling a strategic review that could lead to the sale of its radio business. Such a scenario is possible, but investors should not bet on it. The group's management has always resisted calls for a disposal and the recent improvement in the radio market takes the pressure off them in a big way. This week, Chrysalis issued a trading statement at its annual shareholder meeting that showed a 5 per cent rise in sales during January. Analysts expect this trend to continue into February. Buy.

RECKITT BENCKISER

Reckitt Benckiser has outperformed its peers for seven straight years and judging by this week's annual results from the consumer goods giant this trend is unlikely to be reversed any time soon. For the year to 31 December 2006, sales rose 18 per cent to £4.9bn, helping net income soar 19 per cent to £786m. Margins were up, debt down and cashflow jumped a staggering 26 per cent to £953m. Reckitt was able to raise the amount of cash it returned to shareholders (including both dividends and share buybacks) to £600m from £565m in 2006. Hold.

ALPHAMERIC

2006 is a year that software developer Alphameric wants to forget. Pre-tax profit collapsed to £735,000 from £7.1m after sales slipped 7 per cent to £66m. Even its broker Investec called the full-year result, "disappointing". Rodney Hornstein, its well-regarded chairman, has also decided to leave this year after more than a decade with the business. Still, the company insists it has surmounted the problems it experienced last year and expects to benefit from cost cutting during 2006. A joint venture with Racecourse Media Services, a consortium of 30 UK racecourses, is also potentially lucrative. Worth a punt.

TELEPHONETICS

Telephonetics, the speech recognition group, this week issued its third profit warning in four months sending its shares crashing to an all time low. The latest setback is the news that its results for the year to 30 November 2007 will be significantly weaker than expected. Despite the problems, however, valued at just £9.7m and boasting a cash pile of £3m, Telephonetics stock is probably worth holding on to in the hope that the business will recover. But you will need to be patient - it is likely to be a long haul.

BA shares could fly even higher

British Airways shares have soared 415 per cent over the past four years. In fact, in the past year alone they have risen 77 per cent. From a distance, it seems pointless investors buying into the airline; surely all the gains have already been had? Not true, says Merrill Lynch, which has moved its clients into the stock.

Key to the US broker's bullish stance on BA is the opening of London Heathrow's Terminal 5 in March of next year. By then, about 90 per cent of BA's operations will have been transferred from three terminals into the new T5. Merrill is convinced this move will lead to significant revenue and cost-savings opportunities for the airline.

First, the revenue opportunities. By working from three Heathrow terminals, BA finds itself at a competitive disadvantage to other carriers. This is because of the significant time its passengers need to make connecting flights. Merrill estimates that passengers with connecting flights account for about 35 per cent of BA's total traffic.

Now for the cost side of the equation. Although the US broker admits that BA will face one-off expenditures because of the move, it also points out that it will be able to save a lot. Potential savings include no longer having to bus passengers between terminals, and being able to reduce check-in staff numbers.

Meanwhile, the airline should receive a boost in the coming quarters from lower fuel prices. A takeover offer for BA should not be ruled out.

These recommendations are taken from the daily Investment Column

m.jivkov@independent.co.uk

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
News
people
PROMOTED VIDEO
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Sport
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
football
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
Sport
Rhys Williams
commonwealth games
News
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
i100
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Travel
travel
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears