Investment: Shy Anglo sidles into the market light
No Pain, No Gain: Our Man's Portfolio
Wednesday 26 May 1999
The last profits of what really is an Anglo-Australian group were pounds 2.3m, with Australia and the UK, or to be more precise Scotland, making similar contributions.
North of the border, Anglo runs a sand quarry in Fife and a marble quarry in Sutherland. It also embraces a talc deposit in Shetland. The Australian spread involves two Queensland coal mines where it collects royalties on sales. There is also a 3.9 per cent interest in quoted Brancote Holdings which has a promising gold prospect in Argentina.
The company's activities are not perhaps particularly exciting in these high tech days when a loss-making venture plugged in to the right connections can enjoy a dizzy stock market following.
Yet Anglo offers encouraging signs of improving prospects. The Fife quarry sells sand to bottle-makers and overall sales are "robust", with higher value sales growing. The marble operation supplies materials for road making as well as higher margin decorative stone to garden centres and the building industry.
At the talc site there is talk of joint developments or even a sale. There have been rumours that the RTZ mining giant is interested.
And in Australia the income from coalmining should be growing. One of the two mines was out of commission for most of 1998 - Anglo's last reported financial year - due to an industrial dispute. It has since been sold by Atlantic Richfield to RTZ and should now be working at full production.
Anglo's recently published accounts cover 1998; the delay in producing them is largely due to the Australian connection. Chairman Peter Boycott expects the group to produce higher profits and, like many company heads with quoted shares for takeover ammunition, is on the lookout for acquisitions.
But he would not have to rely on offering shares. Anglo's Australian royalty income provides a steady cash flow and its return to the dividend list, with a token 0.1p a share payment, cost only pounds 84,000.
Besides trading prospects, there are other signs of developments at so- shy Anglo. The company, which arrived on the old Unlisted Securities Market in 1984, has changed financial advisers and stockbrokers and its biggest shareholder, the South African Standard Bank, has picked up just more than one million shares, lifting its interest to 15.9 per cent. Directors have also added to their shareholdings.
Anglo came under new management three years ago. Since then overheads have been cut and the group operations tidied up.
The shares topped 100p in Anglo's early stock market days. The intervening years have been unkind and the price started this year at 12.25p, despite share buybacks.
The results and dividend payment have pushed the shares to 17.5p highest for a couple of years but still a shade below the signalled price of directors' options.
On some yardsticks they look expensive, selling at more than 30 times last reported earnings but a more realistic calculation puts them on historic earnings of around eight; the shares should be a solid addition to the no pain, no gain portfolio.
the portfolio so far
Share Date tipped Price Price now
Allied Domecq 3/3/99 482.5p 551.5p Galliford 5/5/99 20p 21.5p Global 19/5/99 20p 20.25p Gowrings 7/4/99 103.5p 127.5p Montana 17/3/99 182.5p 219.5p Paramount 21/4/99 15p 21.5p Regal Hotel 24/2/99 29.5p 26p Safeway 14/4/99 248.5p 255p
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