The Week In Review: Soap operas can produce sheds of cash

Click to follow
The Independent Online

While fans of Footballers' Wives were agonising over whether Lucy would escape the suicidal Giles when the fourth series of the show finished last week, the management of the production company behind the show was counting its riches.

While fans of Footballers' Wives were agonising over whether Lucy would escape the suicidal Giles when the fourth series of the show finished last week, the management of the production company behind the show was counting its riches.

The drama sensationalising the antics of overpaid footballers and their stiletto-toting superbitch girlfriends helped Shed Productions almost quadruple its profits.

Will Shed be able to win more commissions? Or will the evil broadcasters thwart its plans? It's a cliffhanger.

It ought to turn out well, though. The fifth FW series has now been commissioned, and Shed is also behind the long-running Bad Girls and The Fugitives for kids. A new Army drama, Bombshell, is due on our screens this year.

Previously tied solely to ITV, Shed can now offer its ideas to other networks thanks to the new Communications Act, which forces broadcasters to use more independent producers. It also means indies can hold on to their intellectual property, giving them greater opportunity to generate revenue from DVDs and international sales. With no long-term debt, high cash generation from its existing successes and a strong reputation, Shed is a dependable character.

Shed shares are now below their March flotation price at a more reasonable level. So down a few glasses of finest Chardonnay, put on your tightest, most revealing outfit and splash out on a few shares.

SPEEDY HIRE

It is a performance worthy of Speedy Gonzales. At Speedy Hire, sales, profits and the share price have all zoomed ahead over the past three years.

The UK's number one tool hire company opened its 300th outlet a few weeks back and Steve Corcoran, its chief executive, is as enthusiastic about the future as the cartoon character.

The company has invested a record £60m in new tools and a wider range of equipment over the past 12 months. Although Corcoran can see consumer confidence coming off the boil like everyone else, at this stage his construction and support services customers still see strong orders across their industries. Resist the temptation to take profits.

PEACOCK

Peacock Group is confident it can put the bon back into Bonmarche. The company's core Peacocks discount clothing chain is accustomed to both soaring like-for-like sales and profit growth, but it is having a trickier time with Bonmarche, aimed at women over 55. It is making less money now than when it was acquired three years ago.

Richard Kirk, group chief executive, thinks the answer lies in making Bonmarche clothing more fashionable. If he doesn't succeed, there is every chance that the private equity bidder sniffing around the group earlier this year will return, not least because the shares are on an undeserved discount to the sector. That makes the firm a long-term buy.

COLLINS STEWART TULLETT

Despite, or perhaps because of, its chief executive's aggressive style, Collins Stewart has grown first into a significant force in stockbroking and, most recently, into the world's second largest inter-dealer broker. Terry Smith has fought and won a battle over the firm's integrity in the face of allegations of insider dealing, and wrestled the Financial Services Authority down to a modest settlement over mis-selling of split capital investment trusts.

Collins Stewart bought the inter-dealer broker Prebon last year and bigger-than-expected cost savings will offset weakness in several other markets. Inter-dealer brokers act as go-betweens for dealers and banks that want to trade stocks, bonds and other financial instruments, and further growth here looks certain. Keep buying.

SPRING GROUP

Spring Group, the IT recruitment specialist, sprung a nasty surprise on its investors this week, saying its customers are delaying technology investment and hiring decisions. Spring's response to its diminished confidence in the outlook? To delay decisions on hiring its own new staff.

The announcement doesn't bode well for the rest of the year for recruitment as a whole. New investors will want to steer clear till the economic gloom lifts.

UNITED UTILITIES

United Utilities' promise to raise its dividend by at least the rate of inflation comes with a couple of provisos, the first being that it meets the water industry regulator's efficiency targets over the next five years. It would be a shock if it didn't, as UU is so confident of its abilities as a manager of utility assets that it is selling its services beyond the North to other utility owners.

This infrastructure management business has further potential, as does Vertex, which started life processing UU customer bills but which has expanded to run finance operations for other companies. That brings us to the second proviso: that these two non-regulated business maintain current profit levels. That also looks assured. Hold.

The above are recommendations from the daily Investment Column

Northern Foods cooking well but far from ready to taste

Pat O'Driscoll has spent 12 months searching for the right recipe to salvage Northern Foods from the City compost bin. The now not-so-new chief executive reckons she's found it:

take 15 decentralised biscuit-to-pizza-making divisions and mix well; sell some, combine others, till you emerge with three separate divisions (ambient, which is mainly sweet things; frozen, which is burgers etc; and chilled, as in the ready meals it makes for supermarkets).

Leave for three years to churn out enough cash to trim £333m of debt and fund a £116m pension deficit, while you beat suppliers hard to get better buying terms. In the absence of substantial sales growth, this should help you improve operating margins. Don't check progress too often - you might be disappointed. Should be ready for general consumption by April 2007.

That's what Northern's turnaround programme, "Get Fit", comprises. The City, though, isn't betting O'Driscoll can stay head chef unless she manages to get the company through at least one Christmas without a profit warning.

She failed this year. The company's chilled division fared the worst, mainly because it caught a cold from Marks & Spencer, its single biggest customer.

With its 6 per cent yield potentially under threat, the shares are not ready to put on the menu yet.

s.foley@independent.co.uk

Looking for credit card or current account deals? Search here

Comments