The Week Ahead: MFI investors to focus on disposal of retail arm

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The Independent Online

In a light week for corporate news the spotlight will shine on MFI, the struggling kitchen maker that is today sifting through final bids for its retail arm.

Its interim figures on Thursday will be of less interest than the auction and how many hundreds of millions of pounds MFI has had to cough up to persuade a bidder to take the struggling retail division off its hands. MFI's bill will be at least £100m and could be up to double that. Merchant Equity Partners, a new private equity fund set up by a veteran banker, Henry Jackson, is believed to be in pole position to acquire the kitchen business with financial backing from Goldman Sachs and Cerebus, a hedge fund. The new owner is expected to be informed on Wednesday.

The other unknown is what will happen to Howden's, the builders' merchant. Matthew Ingle, MFI's chief executive, ran the successful Howden's arm before his promotion so he has a close attachment to the profitable chain. Howden's profits last year were obliterated by £85m of losses at the MFI chain. For the past six months, excluding one-off losses, MFI's interim figures are expected to show pre-tax losses of about £5m.

TODAY: Few chief executives have acquired more companies than Wolseley's Charlie Banks. Since he took the top job in May 2001 the plumbing and heating group has made 127 acquisitions, with 50 coming in the last eleven months alone. An initial spending target of £250m for the year has been exceeded by £650m. The company expects the deals to add £1.4bn to total revenues.

Mr Banks's final act before handing the reins to Chip Hornsby on 31 July will be to deliver a pre-close trading update. He can expect keen questioning about the state of the US housing market given that the company makes almost two-thirds of its profits across the Pond.

Results: None due.

TOMORROW: The sub-prime lender London Scottish Bank reports first-half numbers based on IFRS accounting procedures for the first, and possibly the last, time as a quoted company. Switching from GAAP is likely to have a negative impact on the numbers but investors will pay results little attention, since the company received an offer from the private equity group Prome-thean Investments in early May. Due diligence seems to be taking a long time and some traders fear that the talks may not now lead to an offer. Analysts expect the debt collection side to be of interest to venture capitalists but there is a lot of nervousness on the consumer credit division. The company made £10.5m in pre-tax profit in the first half of last year based on GAAP.

The Aim-listed information technology assurance company NCC Group is best known for its Software Escrow product, which holds the source code to software applications on behalf of users in the event of the application failing or the licensor going into receivership. Out of the FTSE 100, 91 companies are customers of NCC.

The group is also involved in specialist IT and web security testing and consultancy. Analysts expect the group to report pre-tax profits of £6.5m on revenue for the full year of £20.9m.

Results: Full year - NCC Group. First half - London Scottish Bank; WPP Group.

WEDNESDAY: A trading statement from the pubs operator JD Wetherspoon may make interesting reading. The company recently acquired the Belhaven pub estate in Scotland and analysts will be looking to see if the smoking ban north of the border follows the same pattern as it did in Ireland - an early increase in trade followed by a steep decline.

With a smoking ban in English pubs due to take effect in 2007, news from Wetherspoon could have a big impact on the sector.

Northern Foods holds its annual general meeting amid a sea of troubles. Profits fell by 27.5 per cent last year, and the company - which makes Goodfella's pizzas, Bowyers sausages and Fox's biscuits - has warned on profits three times in the last 12 months. Pat O'Driscoll, the chief executive, recently confirmed that the group plans to sell off operations that generate 40 per cent of group profits for about £200m, and investors will be hoping for further news on restructuring.

Results: No results due.

THURSDAY: Analysts are not expecting any nasty shocks in first quarter results from the Indian copper producer Vedanta Resources, a month after the company won a place in the FTSE 100. Copper prices hit a five-week high last week and the long-term bull market in commodities looks like it has not run out of steam just yet. Consensus forecasts are for 198p of full year earnings in 2007, and any bad news, particularly on energy, staffing and capital goods costs could see brokers trim those numbers.

Results: Full year - Stanley Leisure. First half - Capita Group; MFI Furniture. First quarter: Colt Telecom; Vedanta Resources.

FRIDAY: Results: None due.

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