Bottom Line: The two identities of Invesco MIM

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The Independent Online
INVESCO MIM, the UK-based fund management group, seems to enjoy a Jekyll- and-Hyde reputation among investors.

On the one hand it is seen as a troubled company, just recovering from a pounds 2.3m fine and costs imposed by the City watchdog Imro over 55 rule breaches, some of which concerned the Mirror Group pension funds.

From this viewpoint Invesco MIM is still viewed coolly, since an outstanding legal claim for pounds 11m from Mirror Group Pension Fund remains to be dealt with.

From the other viewpoint, and one increasingly favoured in the City, Invesco MIM is a worldwide fund management group that has just announced resurgent pre-tax profits of pounds 22.98m for the six months to 30 June compared with pounds 926,000 last time.

Fully pounds 22.09m of this was contributed by the US operations, a tribute to the success in his Florida base of Charles Brady, original founder and recently installed chairman. But the European and Pacific regions are also well placed for growth.

On this view Invesco MIM has well-developed relationships in both regions, where pension funds are being deregulated. This promises a further boost to its funds under management, which grew by pounds 12bn to pounds 43bn over the year.

There is an argument that Invesco MIM, on a prospective price-earnings ratio of 13.8 for 1994, is unfairly rated below competitors such as Mercury Asset Management, which sells on 15 times earnings.

Mr Brady himself seems sanguine about the group's prospects for the rest of the year, saying that subject to markets and currencies there is no reason to suggest that second-half results will differ materially from the first - in other words, a continuing mini-bonanza in the US.

So the argument seems to come down to whether continuing bad publicity in the UK concerning the hangover from the group's entanglement with the late Robert Maxwell should continue to damage an otherwise excellent global performance.

It is difficult to understand why Mr Brady does not quietly settle with Mirror Group pensioners, via Sir John Cuckney's good auspices, and let Invesco MIM enjoy a really clean break from the past in the UK. This would reassure potential pension fund customers of Invesco MIM and give the group a real break from the past.

Until then, stay cautious. Bad Maxwell- related publicity can provide a tenacious drag on shares.

Luck deserts Graseby

ANNE DIAMOND'S recent campaign has halved the number of cot deaths. Excellent news, says Graseby, but not for sales of the electronics company's high-margin baby monitor.

This encapsulates much of Graseby's recent history - every silver lining comes fully equipped with a cloud.

In almost four years since Paul Lester took over as chief executive, he and his team have got rid of most of the old Cambridge Electronic Industries and built up interesting medical, food monitoring and environmental businesses.

But, for all the potential and all the restructuring work, something always seems to go wrong.

The latest clouds are the impending closure of London hospitals, hitting orders of Graseby's drug delivery devices, and delays with Bill Clinton's environmental programme, which have forced the company to postpone a planned pounds 15m flotation of Graseby Andersen, its air pollution monitoring business.

This disappointment has prompted Graseby to cut its dividend by 39 per cent - it has held the interim payment at 3.3p but will only pay the same, instead of 7.6p, for the second half.

The market certainly took yesterday's cut well, shaving Graseby's share price by only 6p to 179p.

Half-year pre-tax profits of pounds 4.9m were 18 per cent up on 1992 and sales from the continuing businesses were 22 per cent ahead.

A sharp fall in profits from the three core divisions of medical, product monitoring and environmental was offset by its erratic chemical weapon detectors business.

The 40-50 per cent drop in profit margins in the core businesses looks worrying, but Graseby is confident it can restore good margins.

With a little luck running its way Graseby could make pounds 10.5m this year and pounds 15m next.

Buy the shares for the recovery potential.