The Investment Column: Conference deal puts Informa in demand

Laura Ashley's worth staying with; Smiths detects growth in global uncertainty
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The Independent Online

Informa, the media group formed 18 months ago through the merger of business-to-business player Informa and science publisher Taylor & Francis, seems to be firing on all cylinders.

Over the summer it completed the acquisition of conferences group IIR, which will start to deliver benefits in the second half of the financial year.

For the six months to the end of June, there was a 20 per cent organic rise in pre-tax profits, at constant currencies, to £42.5m. Turnover grew 6 per cent on the same basis, to £258.6m.

The company is also able to point to firm results from the T&F deal, with cost savings of £9m and revenue synergies, also of £9m - Informa has used its conferencing expertise on T&F's publishing interests, producing new conferences on subjects such as workplace stress and religious terrorism.

Informa is lucky in taking just 6 per cent of group revenues from advertising - though specialist advertising seems to be holding up. The trade shows are doing well and journal subscriptions are performing solidly. The business-to-business publications include Lloyd's List, the maritime and insurance title. Other areas include telecoms.

The only negative issue in yesterday'sresults was a downturn in scientific/academic books. This is a result of bookshops ordering less stock in response to consumers buying on the internet. Over the medium term Informa should sell the same number of books, but it must go through a temporary period of adjustment.

Informa shares have already risen 20 per cent this year but the IIR deal means that a further re-rating is likely. At 390p, buy.

Laura Ashley's worth staying with

Fittingly for a company that sells chintz and cushions, Laura Ashley is mid-makeover. The company that shoppers forgot is trying to banish its long-standing reputation as a bastion of all frocks floral and frilly.

Instead, Lillian Tan, the chief executive (its 11th in 14 years), wants to assert the company's credentials as a chichi home furnishings specialist. She is rightly excited about what Laura Ashley has to offer the discerning home decorator, given the vast archives at its disposal.

Her decision to draw back from fashion, reducing the division's contribution to UK retail sales to 16 per cent from 25 per cent a year ago, largely reflects the trouble her predecessors had with trying to woo new customers. Various attempts to appeal to more youthful/less rich/more trendy clientele all failed.

Unfortunately for Ms Tan, home furnishings is no longer the safe haven it once was for retailers. The collapse in the housing bubble and explosion of consumer debt has snuffed out the Changing Rooms flame - for the time being. Total UK sales for the six months to 30 July fell 15.6 per cent, 11.8 per cent on a like-for-like basis. Within this, furniture (the new-look company's biggest division) saw an 8 per cent drop in underlying sales and decorating an 8.7 per cent fall. An intensive efficiency drive helped pare losses, excluding property profits, to £400,000 from £2.3m the previous year on sales 14.7 per cent weaker at £100.7m. Without a recovery in consumer confidence the prospects for the second half look equally bleak.

As ever, bid speculation contrives to keep the share price aloft. There is every chance that one day its controlling shareholder, Malaysia's MUI, will take the group private. So, at 13.25p, hold.

Smiths detects growth in global uncertainty

Smiths, the aerospace, detection and medical supplies group, is thriving in the post-September 11 world as governments invest heavily in detection equipment to ward off terrorist threats.

Smiths attributes its competitive edge to its broad range of detection technology, which can trace anything from metal and explosives to narcotics, and gets most of its detection business from the US Department of Homeland Security. Smaller countries such as Nigeria and Ecuador also use Smiths X-ray scanners to try to prevent smuggling. Meanwhile its aerospace business, which makes components for Boeing and Airbus jets, has benefited from the recovery in the civil aviation market.

Smiths posted double-digit earnings growth yesterday in all fourdivisions and predicted that growth would continue. It unveiled underlying pre-tax profits of £413m in the year to 31 July, up 18 per cent from the previous year, and was confident of meeting market forecasts of £500m for the current year. Smiths has continued to build the business through selective acquisitions, worth £595m over the past year. It announced yesterday the acquisition of Millitech, a US millimetre wave and antenna company. At 935p, its shares are a hold.