The Week Ahead: Ashtead to be lifted by profits and rights issue
Monday 04 July 2005
According to the Square Mile rumour mill, it is also very possible that accompanying Ashtead's numbers will be news of a sizeable rights issue. Given its hefty debt burden, the group could certainly do with some new money and now is a great time for it to ask investors for cash. The company is said to benefiting from the booming US housebuilding market and the increase in demand triggered by the record four hurricanes that struck America last autumn.
The bulk of Ashtead's operations are across the Atlantic, leaving the group very exposed to fluctuations in the dollar exchange rate. However, the latest trend in the foreign exchange markets - which has seen the greenback appreciate in value against sterling - is also great news for Ashtead and will help boost its profits.
TODAY: Britannic shares return from suspension. They were halted at the start of last month at 508p, when the life assurer announced plans to tie up with Resolution Life via a reverse takeover, and are expected to return at somewhere between 523p and 532p. The alliance, subject to due diligence, should be complete by the end of September and will see Britannic shareholders allocated 54.5 per cent of the combined group and Resolution Life investors given 45.5 per cent. The new company will be branded as Resolution and should be able to generate significant cost savings.
Results: Full year - Total Systems. Interims - None.
TOMORROW: Given the soaraway oil and gas price at present, BP's second-quarter trading update should be an upbeat affair. Most brokers are forecasting another record quarter for the oil giant, with production likely to have registered a modest rise from the 3.97 million barrels per day the company enjoyed a year ago. Few predict the price of crude, which touched $60 per barrel last week, to lose significant ground over the coming months given the buoyant demand and limited spare production capacity. Investors can therefore look forward to seeing BP set new records with its quarterly results for some time to come.
Results: Full year - Alphameric. Interims - Northgate. Trading statements - BP; William Hill.
WEDNESDAY: Somerfield's annual results are forecast to see the convenience store group deliver a 55 per cent leap in profits but the figures are likely to be overshadowed by the ongoing takeover talks at the company. The negotiations have dragged on for four months and those betting on a deal received a setback last week when the Co-op decided to abandon its quest to buy the food retailer.
This now leaves a consortium which includes the tycoon Robert Tchenguiz and Apax Partners in the bidding. One consortium partner, Baugur, is on the point of pulling out of the group, which is battling against the Livingstone brothers, a secretive pair who specialise in property investments.
Of course, as the number of parties interested in Somerfield falls so will the price its shareholders can expect from a takeover offer. Analysts now expect any offer to be pitched somewhere between 195p and 210p. Somerfield's main attraction to the likes of Mr Tchenguiz and the Livingstone brothers is its extensive property portfolio, which makes raising the finance for a buyout significantly easier.
As for Somerfield's financial performance, the expected jump in profits will be largely thanks to the ongoing store refit programme at the retailer. Analysts believe it has shielded the group from the consumer downturn in the UK and intense competition from rivals such as Tesco and Sainsbury's.
Results: Full year - Clarity Commerce; DTZ Holdings; Greene King; Kleeneze; Somerfield; Vega. Interims - Access Intelligence. Trading statements - JJB Sports; Game Group.
THURSDAY: Given how tough things are for retailers these days, if Matalan manages to put out a benign trading statement at its AGM the group's shares will most probably make some progress in its wake. However, this is progress from a very low base. The 180.5p level at which the stock closed on Friday is a far cry from the 800p it saw in 2000 or more recently the 240p level of a few months ago. For the first half of this year, analysts expect Matalan to register a 7 per cent fall in like-for-like sales, and hope things will improve during the second half so the group finishes with a 5 per cent reduction for the year as a whole.
Results: Full year - Ashtead Group; Kensington Group. Trading statements - Matalan; Diageo.
FRIDAY: Results: None expected. Trading statements - Taylor Nelson Sofres.
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