The Week Ahead: Show us the money, say GW Pharma investors

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The Independent Online

There is really only one figure of interest to investors from today's GW Pharmaceuticals interim results and that is the biotech's exact cash balance. Earlier this month, the group said it had lost an appeal over a regulatory decision against approval of its Sativex drug. GW will now have to complete an expensive extra trial of the cannabis-based treatment for multiple sclerosis to get it on the UK market.

There is really only one figure of interest to investors from today's GW Pharmaceuticals interim results and that is the biotech's exact cash balance. Earlier this month, the group said it had lost an appeal over a regulatory decision against approval of its Sativex drug. GW will now have to complete an expensive extra trial of the cannabis-based treatment for multiple sclerosis to get it on the UK market.

This failure pushes out the likely launch of Sativex to late 2006 and delays a milestone payment of £17m from its marketing partner Bayer.

GW is believed to have about £16m of cash left, and with a burn rate of more than £1m a month this will run out in 2006. City analysts will want to know exactly how GW's management team plans to deal with this issue. They are sceptical that plans to sell the marketing rights to Sativex in continental European countries will raise enough cash.

GW shares tumbled in the wake of the setback and they are likely to fall further unless the group's executives can come up with a remedy.

TODAY: Results: Full year - UBC Media. Interims - GW Pharmaceuticals; IDN Telecom.

TOMORROW: Results: Full year - WS Atkins; James Cropper; Cybit; iSoft; Photo-Me International; Tribal Group; XKO Group. Interims - None.

WEDNESDAY: These days when it come to results from retailers all the City is interested in is their comments on current trading. Figures from Dixons will be no exception. The group is expected to deliver a full-year pre-tax profit of £335m, up slightly on the previous year, but its comments about conditions on the high street are likely to be cautious at best.

The main bright spot of the figures will probably come from Dixons' international operations. Second half like-for-like sales growth is believed to be running at 7 per cent, a big improvement on the 1 per cent registered during the first half of the year. Dixons without doubt impressed the City with its recent move into Russia, but investors are very unlikely to pile into the stock as long as the company remains exposed to earnings downgrades because of the weak conditions on the UK's high streets.

There was some speculation over the weekend that the company may unveil a new group name, since its PC World and The Link businesses are seen as being overshadowed by the less successful Dixons format.

In Stagecoach's pre-close update the bus and rail operator boasted that its annual results would exceed expectations. Basically, its rail division is performing strongly while the group has been able to stabilise its troublesome US business. Stagecoach's South West Trains franchise, the UK's largest, is benefiting from last December's introduction of a new timetable and improved punctuality.

For the year just gone, Investec Securities expects Stagecoach to deliver a pre-tax profit of £122m, up from £120m last time.

Going forward, investors will want an update on the progress of the company's bids for the Greater Western and Thameslink/Great Northern franchises and the new Integrated Kent franchise for which it has joined forces with Danish State Railways.

Credit Suisse First Boston is expecting a bullish trading update from Brambles Industries in which the group will re-affirm that its pallets business in both the Americas and Europe is on track. However, the Swiss broker urges investors to take profits from the stock's strong gains before the statement. It believes all this good news is now more than adequately reflected by the company's current valuation.

Results: Full year - Dixons; Stagecoach; Trifast; Vectura. Interims - Compass Finance. Trading statements - Brambles Industries.

THURSDAY: Results: Full year - Computerland UK; Dyson; Avesco; OMG; Victoria. Interims - OMG; Bede.

FRIDAY: Has the luxury homes builder Berkeley decided to delay the construction on a key part of its flagship redevelopment of the Royal Arsenal at Woolwich because of the uncertainty surrounding the property market?

This is without doubt a question investors will want answered in the wake of the group's full-year results. According to reports earlier this month, work due to begin in September, to convert part of a 19th-century building into flats, will now not start until next year or later.

As for Berkeley's financial performance, the focus of the company is now on cash generation. So the fact that pre-tax profits for the year are likely to have fallen to £200m from £230m last year will not worry analysts. Berkeley has pledged to return £12 per share to shareholders in the years to 2010 and, given the company's present performance, some brokers believe this target may prove to be too conservative.

Results: Full year - Berkeley Group; James Latham. Interims - None expected.

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