Small Talk: Chinese shipbuilder sets course for a listing on Aim

 

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The Independent Online

Alternative investment market (Aim) investors have a host of options when it comes to putting money in oil and gas and mining. Up to now we've not been able to think of any shipbuilding options. But that is about to change: China's Dongfang Shipbuilding Company is due to announce its intention to float today, with dealings expected to commence on Thursday.

The company – named as one of China's top 500 manufacturing companies last year – makes a variety of small and medium-sized vessels at its shipbuilding yards in the country's Anhui and Zhejiang provinces. So far, it has focused on chemical tankers, bulkers and multi-purpose container ships.

Between 2008 and 2010, it built 12 chemical tankers, ranging in size from 5,000 to more than 9,000 dead weight tonnes, and five multi-purpose container ships. The company seems to be on a promising course as its order book stood at around $89m at the end of June.

Encouragingly, the local industry is vast and growing. A recent OECD report showed that, in terms of annual output, China was the world's third largest shipbuilder in 2007, "a rank that it has held for over a decade".

The same report highlighted statistics from the Commission of Science, Technology and Industry for National Defence, which showed that China had more than 2,000 shipbuilding companies in 2005. These firms employed about 400,000 people, and 315,000 of these worked for the 480 largest companies.

In terms of growth, the OECD pointed to figures published inChina. The data showed that during the period of the country's 10th national five-year economic plan (which ran from 2000 to 2005) the industry booked an impressive average annual growth rate of 29 per cent.

It's also important to note that the Government has been vigorous in supporting the industry, whose growth has been "closely linked to the Government's macroeconomic policies", according to the report.

Turning back to Dongfang, it's not all about making ships. The company is also active in the shipping business itself. It expanded into this area in 2009, after the cancellation of some contracts left it with five vessels on its books. This was the result of the global economic crisis, which meant that the customers in question could not pick up the ships.

Rather than selling them, it decided to make the most of the fleet, which was bolstered with the two new vessels, and moved into the shipping arena. A further two ships are under construction and are scheduled to join the fleet this year, taking the total to nine.

Taken together, the two businesses – shipbuilding and shipping – employ around 530 people.

"The group's admission to Aim is a significant step in our development, as it will raise Dongfang's profile to potential customers across Europe and enhance the group's standing with its partners," the firm's chief executive, Chen Tongkao, said.

"There are considerable opportunities in our sector, and with access to capital markets the group will be well placed to make acquisitions in the future."

Allanfield set to list this week

The real estate insurance broker Allanfield is also readying itself for its market debut this week. The shares are due to begin trading on Aim on Thursday.

The business brings together two specialist real estate insurance brokers: Allanfield Property Insurance Services (API) and Industrial & Commercial Property Insurance Consultants (ICP). Between them, they manage more than £14m in insurance premiums, according to estimates supplied by the company.

The combination is the result of API's acquisition of Real Estate Property Brokers, the holding company of ICP. Besides this deal, which is being partly funded with the proceeds from the listing, Allanfield, which is led by Gary Field, has also been boosted by an investment from CV5, a vehicle advised by Capricorn Capital Partners UK.

Mr Field, who has been the head of API since it started in 2007, has a long track record in the insurance sector. Before API, he led the management buyout of ARG, the brokerage, and headed the sale of the company to Towergate in 2005. His team at Allanfield includes the executive director, Timothy Allan, and the finance director, Darryl Noik, who used to be chief operating officer at Stenham, an asset management firm with more than $6bn under management.

SMEs overlook energy savings

Steep energy price rises from the large utilities are continuing apace. More the pity, then, that so many small and medium-sized enterprises (SMEs) seem to be missing the chance to save money by managing their energy consumption more efficiently.

New research from the energy firm Npower shows that 53 per cent of the nearly five million SMEs in the UK have "no methods in place to manage energy efficiency".

Many of these companies could be overlooking an opportunity to make sizeable savings. Indeed, when the researchers looked more closely at firms that do monitor energy efficiency, they found that 50 per cent reported "savings of up to 10 per cent", indicating the potential benefits.

If that isn't enough to convince managers, consider figures from the Carbon Trust showing that SMEs could save as much as 20 per cent if they reduced their emissions, against 8 per cent for larger businesses.

Such savings would make a big difference at the best of times, but they are all the more important in light of the prevailing economic backdrop, with many companies struggling to deal with the tough trading environment.

On the upside, the survey's results weren't all bad. They also showed that efficiency is working its way up the agenda for SMEs and that the level of importance small companies attach to energy management and efficiency stands at its highest level since 2005.

Still, Patrick Harvey, the head of customer loyalty at Npower, says many more firms needed to wake up to the potential for savings.

"More businesses need to realise that, through simple-to-implement or no-cost measures, they canlower their bills by around 10 per cent," he said. "In today's tough operating environment this is a saving that SMEs can't afford to overlook."

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