Monetary union looms. Give us details, Mr Blair

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The Independent Online
While the Tories under William Hague seem to be in a muddle on most matters, Labour continues to draw away, leaving a comfortable gap between themselves and the rest of the pack.

What this means for financial markets is yet to be fully discerned. Labour has continued to enjoy a honeymoon period with the City, and the markets, following the lead of the US, have blissfully ignored Labour's historical baggage.

But one area where there has been little given away is European Monetary Union. Tony Blair cannot ignore this pending upheaval, which flies in the face of efforts to devolve power away from Whitehall.

The UK is on a completely different cycle to most of the Continent, yet we must continue to make progress towards the economic criteria of Maastricht. Whatever shape monetary union takes, it will have profound implications for the stock market, and for quoted companies. Some of that change will be good news, but no one should discount the possibility of bad news emerging at some stage - and sooner, rather than later.

From economic convergence to the electronic variety, and the notion of a world where telecoms, computing, mobile phone networks and the media all converge into a seamless whole. You can be sure there will be losers as well as winners. One example comes with the news that Orange, the mobile phone operator, will provide its subscribers with information services: sports, news and the like. Cable operator Comcast has become bogged down in falling rates of penetration for its cable TV services. Churn - where subscribers leave the service - is also running high, at 41 per cent for TV, and 27 per cent for residential telephony. With these sorts of figures, Comcast looks like a loser, but Orange, which should show a profit in 1999, is on course to be a winner.

Ultraframe has a fairly specialised construction business, making conservatory- style roofing systems, for domestic through to commercial clients. It was started by John Lancaster in 1983, and a pathfinder prospectus issued last week said the company was now the European leader for complete roofing systems. For a construction business it has remarkable gross margins: 37.6 per cent in the year to September 1996, and 42.8 per cent for the 44 weeks to 1 August this year. On sales of pounds 44m for the latest period, that translates into a pre-tax profit of pounds 8.4m. Growth in sales and profits over the past four years look to have been consistent. Broker BZW will be handling a placing of the shares. Full details will be announced next month, but despite the doubts overhanging the sector, this deal should attract a ready following. A market capitalisation north of pounds 100m looks achievable.

North of the border, celebrations may be continuing over Scotland's Yes, Yes vote. By contrast, euphoria around Scottish Media Group has been distinctly lacking. Yes, the share price was grossly overblown when it reached a peak of 797p last year, buoyed by takeover speculation. But doubts over the wisdom of becoming a cross-media player, through its purchase of newspaper publisher Caledonian Publishing, are slowly dispersing. As well as sharing editorial resources, the group can also cross-sell. There is still one big question to be answered: how much will the ITC raise the licence fee? But with the group looking healthy elsewhere, this should not be overburdensome.

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