Pub depreciation plans add froth to brewing shares

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The Independent Online
The rare sight of brewers toasting accountants had the stock market on the hop.

The property depreciation proposals put forward by the Accounting Standards Board were far less onerous than many had expected and shares of the major brewers moved ahead strongly.

Bass frothed 16.5p higher to 795p; Scottish & Newcastle 10p to 651p and Whitbread 20p to 718p. Greenalls, the pub chain, added 7p to 570.5p.

The beerage has been weak in the past few weeks on worries that profits could be hit particularly hard by new accountancy requirements on pub depreciation. As they stand, the proposals, put forward in a discussion paper, could, some estimate, reduce brewing profits by up to 15 per cent.

But the market took the view such a setback would be tolerable and, more importantly, there was a strong possibility the changes could be abandoned or at least watered down considerably. Sentiment was also smoothed by the feeling that any change would not take place for some years and the proposals were partly cosmetic and would not impact on such fundamentals as a company's cash flow.

Allied Domecq, which enjoyed a heady run in late trading on Wednesday, missed the latest party. The shares fell 4.5p to 478p on the failure of any corporate action to materialise but Credit Lyonnais Laing duly rolled out the promised buy circular with analyst Peter Lucas saying the market was underestimating the potential of the group's retail spread.

Shares recaptured their upward momentum with Footsie climbing 17.7 points to 4,042.1 and the supporting Mid Cap index gaining 5.9 to 4,444.1. The market would have ended on a much firmer note if the power struggle in the Kremlin had not created late hesitancy.

Tomorrow is the ninth anniversary of Black Monday when Footsie crashed almost 250 points and went on to slump more than 700 points in a few weeks to 1,565.2 before starting its long, often tortuous recovery.

There had been fears memories of the crash would produce another round of jitters but, apart from occasionally looking a little tired, shares have not acknowledged the happenings of nine years ago.

Drug shares were among those on a high, with Zeneca turning in another outstanding performance, up 38.5p to 1,726p.

Analysts again had an impact. James Capel sent Argos down 9p to 787.5p after cutting its profit forecast by pounds 13m to pounds 137m and lifted Dixons 11p to 569p with a profit upgrade by pounds 10m to pounds 185m.

PowerGen, ahead of figures and enjoying Yamaichi buy advice, put on 3.5p to 469p and Guinness rose 4.5p to 457.5p following Societe Generale Strauss Turnbull support. NatWest Securities clipped Imperial Tobacco 4p to 382p.

Reuters improved 18.5p to 791.5p with Goldman Sachs on the buy tack but the appointment of little-known Marjorie Scardino as chief executive of Pearson lowered the shares 11.5p to 676.5p.

An investment presentation left Barclays 10.5p higher at 986p and a meeting, thought to have been with Charterhouse Tilney, produced a 3.5p lift to 161.5p for WM Morrison, the supermarket chain.

The much bigger Asda supermarket group was heavily traded with early deals of 120p coming to light after the market closed. But the price ended up 1.25p at 113.5p.

Seaq put turnover at more than 30 million. A 5 million deal at 114p on Tradepoint helped the fledgling market to its highest day's volume, worth pounds 9.6m.

Acorn Computer fell 5p to 197.5p as Panmure Gordon placed 2.2 per cent of the capital at 195p with institutions. The shares came from the US. There is speculation Olivetti's 31.2 per cent interest will soon be sold to one of Acorn's US trading partners, probably Oracle.

Polypipe, the building materials group, slipped 2.5p to 205.5p after Kevin McDonald, chairman, sold 3 million shares at 202p. He still has 17.7 per cent.

Quality Software, the accountancy software group, riding at more than 700p early this year, rose 17.5p to 205p. There are suggestions it is likely to have a positive message for institutions today.

Its stockbroker, ABN Amro Hoare Govett, recently cut its year's profit forecast to pounds 500,000. Earlier this year it was looking for pounds 4m.

Victory Corporation, formed to buy stakes in joint ventures with Virgin, made a subdued market start, closing at 55p against a 58p placing.

Another newcomer, Fitness First, remained at 90.5p. It was sold at 80p.


Wembley scored a 9p gain to a 12-month high of 403.5p. The shares are strong on stories the home of English football is in line for a pounds 120m injection, courtesy of the National Lottery, after being chosen by the Sports Council as Britain's new national stadium in preference to Manchester. The Lottery cash will be pumped in to produce a futuristic venue. The stadium has not looked back after last year's revamp. It is expected to make around pounds 26m this year.

The clamour at Verity, which has developed a wafer thin speaker, is growing louder. UBS was said to have lunched institutions to discuss the company and James Capel made favourable noises. Stockbroker JM Finn said the risk\reward ratio was, despite the recent share strength, "extremely favourable". The price is 32.5p.