Cash provides buffer for Wilson

THE INVESTMENT COLUMN

The curious thing about Wilson Connolly's figures yesterday was the share price reaction - pushing the shares just 2p lower to 157p was a strangely generous reaction to a fall in margin at the core housebuilding operation from 12.5 to 8.5 per cent.

It was almost as if the City had factored in the company's legendary caution and taken its gloomy prognosis with a pinch of salt. Either that, or a single buyer in what is a pretty tight market had kept the price artificially high.

Pre-tax profits of pounds 10.0m were a third lower than in the first half of 1994 and well below analysts' expectations - brokers had pencilled in a slight improvement to perhaps pounds 14m. Earnings per share slipped from 4.7p to 3.5p while the interim dividend was held at 1.36p.

Analysts may have been taken by surprise, but really they should not have been. The reasons for the decline were nothing new and will be repeated ad nauseam over the next few weeks as the rest of the building sector's reporting season unfolds.

During the half-year, Wilson's sales amounted to 1,680 houses compared with 1,750 last time, a drop of 4 per cent. House prices also fell during the period while the costs of building the homes increased. Margins moved accordingly.

Amid the gloom, Wilson pointed to some rays of hope. Unlike many of its peers, the company avoided the temptation to buy overpriced land in the silly bull market in building land last year. A net seller in 1994, it still enjoys cash in the balance sheet.

The other encouraging development of the summer has been the decision by many of the largest players in the industry to cut their losses and withdraw.

The departure of the diversified groups eases the industry's over-capacity for the specialists who remain to grab a share of what has become a seriously depleted new-house market.

Whether those slender pieces of good news and the company's reputation are enough to justify a forward price-earnings ratio of 13 next year, a small premium to the market, is hard to say.

But with an unexciting prospective yield of only 4 per cent the shares look vulnerable.

Christies back

in the frame

Christies International is riding the back of a revival in the art market after five years in the doldrums. Renewed confidence is reflected in the auction house's sales for the first six months to June, up 18 per cent to pounds 460m. That took the first half of 1995 to a record, excluding two exceptional periods in 1989 and 1990, and the improved background fed through to a 24 per cent rise in interim pre-tax profits to pounds 10.1m.

The auction figures were swollen by the sale of some chunky US collections built up over decades, such as that of Mr & Mrs Ralph Colin, which fetched $40.6m (pounds 25.7m), highlighting the importance of pictures "fresh" to the market. As in the the last boom, impressionist and modern art is leading the market up, with auction sales soaring 68 per cent to pounds 111m in the latest period. Prices of pictures such as Van Gogh's Jeune Homme a la Casquette, sold in New York for $13.2m, are reminiscent of the heady 1980s.

But Christies is confident this time that demand is more soundly based. Its view is underpinned by several consignments already in hand ahead of the key sales later this year. They include a European collection of modern pictures and sculptures expected to fetch between $16m and $22m.

Christies will have to work hard to better last year's exceptional second- half sales, however, which included the $30.8m Leonardo da Vinci, Codex, sold to Microsoft's Bill Gates. More important is likely to be an easing of the margin slide caused by intense competition with Sotheby's, following the introduction of new seller's commission rates by both houses. That alone could give an pounds 8m uplift to next year's figures, according to broker Beeson Gregory.

But even if profits top pounds 20m this year, the shares, up 3p to 211p, are high enough on trading grounds on a prospective multiple of almost 30. The only prop is the presence of 16 per cent stakeholder Joseph Lewis, although he dampened bid speculation when he said he was a long-term investor. Hold.

COMPANY RESULTS

Turnover pounds Pre-tax pounds EPS Dividend

Anglo Eastern (I) 7.28m (5.00m) 4.1m (1.7m) 9.2p 4.0p - (-)

Fortnum & Mason (F) 30.2m (27.6m) 3.47m (2.31m) 541p (368p) 58p (24p)

Hornby Group (I) 10.7m (8.5m) -0.40m (-0.73m) -0.4p (-0.7p) nil (nil)

Thomas Jourdan (I) - (-) -0.20m (-4.41m) -1.11p (-24.5p) 0.5p (0.5p)

Litho Supplies (I) 33.3m (30.2m) 3.28m (2.46m) 8.3p (6.1p) 2.96p (2.73p)

Molins (I) 123m (98.6m) 11.2m (8.8m) 25.6p (22.2p) 5.9p (5.3p)

Perry Group (I) 217m (176m) 2.97m (2.56m) 7.7p (6.6p) 2.9p (2.75p)

Platignum () 18.8m (21.3m) -2.6m (0.21m) -9.93p (1.09p) nil (nil)

Thomas Walker (F) 4.27m (3.99m) 0.16m (0.22m) 2.02p (2.80p) 0.625p (0.50p)

Vinten (I) 54.4m (46.7m) 13.9m (9.1m) 24.8p (18.4p) 2.8p (2.4p)

(Q) - Quarterly (F) - Final (I) - Interim

PROMOTED VIDEO
News
i100
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
News
i100
Sport
Yaya Toure could leave Manchester City in the summer, claims his agent
transfers
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
tv
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
News
media
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Client Services Associate (MS Office, Analysis, Graduate)

Negotiable: Harrington Starr: Client Services Associate (Microsoft Office, Ana...

Graduate Data Operations Analyst (Graduate, Analysis, SQL)

Negotiable: Harrington Starr: Graduate Data Operations Analyst (Graduate, Anal...

Dynamics CRM Developer (C#, .NET, Dynamics CRM 2011/2013, SQL)

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: Dynamics...

Front-end Web Developer/Designer (JavaScript, HTML5, CSS3)

£4000 - £30000 per annum + benefits+bonus+package: Harrington Starr: Front-end...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz