Reputation keeps Holliday down

Holliday Chemicals continues to suffer from the tarnished reputation it picked up after issuing a profits warning just eight months after going public in 1993. The shares slipped 5p to 195p despite a 59 per cent leap in pre-tax profits to £19.3m for last year.

The company conceded that it would be a "longish time" before it rebuilt the confidence of investors. But it remains unrepentant about its acquisition- led strategy, which provided the biggest element of last year's profits advance.

Reckitt & Colman's Colours business, acquired for £52m in April, chipped in almost all of the £4.18m contribution from acquisitions last year, with a "tiny" addition from the small German operation picked up in October. In all, operating profits rose from £14.3m to £21.9m.

The chairman, Michael Peagram, who is also the largest private shareholder with 18 per cent, said: "We continue to be offered acquisition opportunities, but the board's policy is to be particularly discriminating in searching for good value... further acquisitions should link closely with existing product and market positions."

The target range was £20m-£50m, he said, which could mean a further fund-raising after last year's £36m rights issue. But he emphasised that shareholders would only be tapped if a larger buy was in Holliday's sights.

Mr Peagram said: "We don't want to be seen as a company which every year goes back to shareholders."

Turnover jumped from £105m to £133m, despite reduced worldwide demand for dyestuffs, which it attributed to a switch in fashions towards paler colours. Among the new products on Holliday's horizon is a new type of photochromic dye that offers improved performance from sunglasses that change colour in the sun. A whackier application could be a hair dye with similar properties.

Fully diluted earnings per share grew from 10.9p to 13.9p; a final dividend of 3p took the total to 5p.

Lucas Herrmann at the brokers James Capel is now looking for £23m before tax for the current year.