The Week Ahead: Cadbury's disastrous year leaves a bitter taste

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The Independent Online

Tomorrow's trading statement from Cadbury Schweppes might shed light on what is going wrong at the UK's largest confectioner. The shares have been dismal this year, falling by 5.4 per cent in the last 12 months during a period when the FTSE 100 has risen more than 10 per cent.

Takeover rumours have been fuelled by the company's poor performance - many traders believe it is only a matter of time before a private equity house attempts a bid for Cadbury's, with the aim of splitting the company up. Deals at Premier Foods, RHM and Northern Foods have added to the hope that someone will bid for Cadbury's. The recent discovery of questionable accounting practices at its Nigerian subsidiary is thought to have come about through due diligence taking place. The broker Goldman Sachs has downgraded its stance on the shares to "sell", and does not foresee any reason to change that in the short term. A decision on whether or not to prosecute the company over the summer's salmonella scare is due shortly, and Cadbury, which derives 50 per cent of turnover in the US, is likely to be damaged by the weak dollar.

TODAY: It is make or break time for iSoft Group, the troubled healthcare software provider. The company opened its books to potential bidders nearly two months ago, and there are few signs of potential buyers clambering over one another to make a formal offer. Regardless of today's results, a full bid for the company is unlikely, while the accounting watchdog probe into iSoft's accounting practices remains open. Analysts find themselves in a difficult position as regards forecasts, and most are unwilling to put pen to paper given the uncertainty surrounding the company. Given what has gone on in the past, anything could happen.

Northgate Information Solutions finds itself in a slightly different position to iSoft. Things were looking bleak a year ago after the company's head office burnt down in the Buncefield fire, but like a phoenix from the flames the shares have recovered impressively. The group was involved in takeover talks, but those ended in October without a deal being struck. Even so, full-year pre-tax profits are expected to be in line with forecasts, and the broker Shore Capital expects interim pre-tax profits of some £22m.

Results: Full year - Shaftesbury; Southern Cross Healthcare. First half - iSoft Group; Northgate Information Solutions.

TOMORROW: Another phoenix is Ashtead Group, the plant hire operator that three years ago looked on the brink of going under. A combination of excess debt and rapid expansion saw the shares collapse to less than 5p in 2003, before a spectacular recovery chased the shares up to more than 220p by May. Since then, the company has spent $1bn on NationsRent, a US rival, and this will be the first set of results to include a full NationsRent contribution. Analysts are upbeat about the results despite a slowdown in the US housing market, and consensus forecasts are for first-half pre-tax profits of £52.3m, up from £40.5m in the first half of 2005.

Debut results from the business travel agency Hogg Robinson might make interesting reading. The company was floated in October at 90p per share, a huge discount to the original level that the private equity group Permira hoped to achieve. The results represent a period prior to the float, so analysts have little to go on, and there are no forecasts for the first half.

Results: Full year - Civica; RWS Holdings; Theratese. First half - Anite Group; Ashtead Group; Carpetright; Hogg Robinson Group; La Tasca.

WEDNESDAY: First-half results from the baker RHM may be of academic interest only now that the board has accepted a £1.23bn takeover from Premier Foods. That said, if the company beats market forecasts, another bidder could come out of the woodwork. The broker Goldman Sachs has upped its price target for RHM shares to 403p, indicating that it believes that the bidding may not be finished just yet.

Accident Exchange, the non-fault vehicle replacement group, should report a strong set of first-half numbers after telling investors that it processed a record number of claims in October. The company specialises in executive vehicles like Porsche, BMW and Lexus, and although there are concerns about margins at the top end of the market, volumes should be impressive.

Results: First half - Accident Exchange; RHM Group; Slimma; Telecom Plus; Zytronic.

THURSDAY: Results: Full year - MyTravel. First half - Heath (Samuel).

FRIDAY: No results expected.

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