Bottom Line: Extended Holliday

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THE market has been remarkably forgiving of Holliday Chemicals, the industrial dyes producer.

Holliday was floated in the spring of last year, and its shares jumped to a healthy 16 per cent premium when trading started. Within six months, however, Holliday had issued a profits warning and the shares fell by 35 per cent. Yesterday, on the back of an unexpectedly strong rise in interim profits, shares added 7p to close at 250p. They are now at an all-time high - 60 per cent above the all-time low.

Taxable profits rose by 74 per cent from pounds 5.7m to pounds 9.8m for the six months to 30 June. After a one-for-four rights issue to fund an acquisition from Reckitt & Colman in March, growth in earnings per share was a more modest 34 per cent. The dividend was lifted by 25 per cent to 2p - giving a projected gross yield of 2.5 per cent.

Holliday also stressed yesterday that it was well on the way to sorting out the problems that prompted it to issue the profits warning. Spain is improving, and a short-term glitch in its hair dye business has been cleared up.

Analysts also increased full- year profit forecasts. If Holliday makes pounds 21m, compared with pounds 13.1m, the shares trade on a forward p/e of 17 - below the sector average.

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