City talk: The great spring share sale

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The Independent Online
The data on directors' share sales and purchases continued to highlight some interesting themes last week. Yet again, a director of Marston Thompson Eversheds was a seller, a W Brown, who disposed of 4,360 shares at 282p, which does not bode well for the share price.

There was an apparent clearing of the decks at United News & Media, the media conglomerate formed out of the merger between Lord Hollick's MAI and Lord Stevens' United Newspapers, publisher of the Express titles.

Lord Stevens sold 224,369 shares at 739p, almost half his holding. Whether this signifies anything more than the over-used euphemism for "personal reasons" or whether Lord Stevens reckons his money could be better invested elsewhere is hard to say.

Another brewer to public house group, Wetherspoon's, whose shares trade on a premium rating against the market, saw its A Lowrie sell 100,000 shares at pounds 11.821/2. It still leaves him with a hefty 1.29 million shares, but again it suggests a company in which the peak may have been reached.

In another sector which has shown signs of overheating, M Sutherland sold about a fifth of his holding in Border Television, or 10,000 shares, at 375p each.

Still on the media trail, Scottish Radio Holdings is one of those unassuming regional companies that are often the envy of its larger metropolitan brethren. Stockbroker Bell Lawrie White has reiterated a buy recommendation, and now sees pre-tax profits of pounds 8m for the current year, when results are announced in early May.

SIG, or Sheffield Insulation Group as was, produced a sparkling set of results. Tipped here previously, the shares have had a good run since January, and it is fair to suppose that more of the same is on offer for the immediate future. After announcing pre-tax profits 25 per cent higher at pounds 30m, the chief executive, Bill Forrester, said further acquisitions were likely, probably in continental Europe. The group has cleared the decks for further add- ons, after it sold its under-performing hardware business, SIG Architectural Products, last month. Despite a pounds 5.1m exceptional loss on the sale, it cuts gearing at the group to nil.

Policyholders of Scottish Amicable appear to be doing better out of the offer from the Prudential Corporation, which provides a pounds 1,400 windfall payout for an average policyholder.

However, the ScotAm payout of pounds 300 mooted in January, when it unveiled plans to demutualise, is not necessarily a fair comparison. The Pru will realise some of its payout through selling off ScotAm assets. Either way, the deal has served to highlight the value of insurance companies. The Pru's shareholders are shelling out a mere pounds 485m to acquire ScotAm's new business stream, which values it at just 10 times its income. If it sounds like a bargain, it probably is.

However, the average ScotAm policyholder will find the documentation for the deal completely incomprehensible - but then nobody warned them when they took out policies that they should also expect to be able to value the companies they use to insure their life, or provide them with a pension.

As a tail-piece to the aborted Krupp Hoesch and Thyssen merger, British Steel remains in the dog house. Krupp and rival Thyssen are instead looking at forming a joint steel company, but this will barely dent over- capacity in the European steel market. There is talk of the company's dividend being under threat, while sterling's strength against the mark is a further drag on the shares. Analysts have cut their estimates for the year to March 1998 from pounds 350m of pre-tax profit, to pounds 150m-pounds 200m.

Pilkington once again warned of lower profits - the third time in 12 months. It blamed collapsing glass prices and overcapacity, especially in Germany. Profits, it said, would be not less than pounds 130m.

Despite the cost-cutting of the past few years, it is clear Pilkington needs to tackle its German cost base with far greater urgency. Yet again, sterling's strength against the mark has also hindered profits.

Of course, it all adds fuel to the debate over European Monetary Union - most companies would be relieved if they could stop worrying about where sterling might be in 12 or 18 months' time. But that will only be achieved at a price - which may rebound on the likes of Pilkington and British Steel with even greater consequences.