The Investment Column: Investors should steer clear of IVA provider Accuma

Oilexco; African Diamonds


Our view: Sell

Share price: 14p (-2p)

It is just as well that indebtedness is no longer a criminal offence in the United Kingdom. If it were, the prisons across the land would be a lot fuller than they already are.

The country has relied, in recent years, on the plethora of cheap money allowing everyone to buy on credit. It is little wonder that some get into trouble. But the problem now is that those who say they can help are having trouble of their own.

Accuma, a group that repackages debt in various ways, including through Individual Voluntary Agreements (IVA), has endured a miserable year after feeling the squeeze from banks no longer willing, and in some cases able, to lend money.

Its chief executive Charles Howson blames the acquisition of a loan brokerage in 2006, which after returning a profit of £1.7m for the year to July 2007, made a loss of £375,000 in the second half of last year.

He also points to the wider trouble in the IVA market. He argues that banks have fallen out of love with them because IVAs force them to write off the entire debt, even though in practice the banks tend to recover more of the original debt than through other systems. The rise in bankruptcy will harm the banks even more, argues Mr Howson.

The group's figures were, "dreadfully disappointing," by Mr Howson's own admission. The only part of the business that turned a profit was its Informal Debt Management arm, which allows customers to cut monthly payments and pay off several creditors on a pro-rata basis.

The company argues that after a period of instability, it is on the way to recovery and stresses the group would listen to offers for its IVA business. Investors may prefer to wait a little longer. Sell.

Oilexco

Our view: Buy

Share price: 633p (-63p)

According to Art Millholland, the chief executive of production and exploration group Oilexco, the UK churns out more barrels of the black stuff each year than the whole of Nigeria.

And with the price of oil resolutely staying above $100 a barrel, this is particularly good news for the company, which operates exclusively in the North Sea and is getting very excited about a field it operates there, known as Huntington.

"We estimate that Oilexco is targeting resources in the Huntington area of up to 500 [million barrels of oil]. Whilst still at an early stage, drilling results so far suggest that the Huntington field could be the largest UK discovery for almost 10 years," analysts at Credit Suisse said.

Mr Millholland is refusing to get that excited, saying he does not know how much oil the site will yield. But he does say the firm is now set for a growth phase after posting 2007 net profits of $76.3m (£38.4m), up from a loss of $14m the year before.

There are a number of risks that investors should be aware of. The group has no hedges in place against a fall in the price of oil, except to cover bank facilities, and further falls in the value of the dollar versus sterling will only lead to a dent in profitability.

But Mr Millholland has little worry about all that. "I don't see a price collapse," he said. Rather, it is the credit crunch that keeps him awake at night. He argues that it is not getting access to capital that he views as a problem, but how much his firm will have to pay for it as investment banks ratchet up the cost of borrowing.

Merrill Lynch has few worries for the group and the advice to clients is to buy the stock. Analysts at the bank also reckon that one of the bigger boys in the oil industry will bid for the group. "We continue to see a 2009/2010 corporate sale as highly likely," they say. Mr Millholland, unsurprisingly, claims to know nothing about it. Buy.

African Diamonds

Our view: Hold for now

Share price: 78p (+1p)

Diamonds, so they say, are a girl's best friend, and not just in Europe and the United States. Increasingly, the betrothed of China and India are showing off engagement rings, to the extent that, in spite of the credit crisis, the diamond market is staying buoyant.

That is the view of John Teeling, the chairman of African Diamonds, which mines its rocks in Botswana – "the Switzerland of Africa", he says. The company is just "weeks away" from securing licences from the Bots-wana government to mine for diamonds, which will hit the market in 2009. If the permits are forthcoming – and Mr Teeling reckons it is a matter of dotting Is and crossing Ts – the company could meet plans to be one of the five most profitable hard rock kimberlite miners in the world. That may be ambitious, especially for a group that posted a pre-tax loss of £200,000 yesterday, compared with £180,000 in 2006.

On the other hand, the company benefits from joint ventures in Botswana with De Beers, which helps it to secure financing and gives it more clout in negotiations.

There is always the danger that the Botswana government might have a change of heart, which would leave the group in a pickle. And that is perhaps why Mr Teeling cautions against rushing headlong into African Diamonds, suggesting the firm is a better long-term punt for buyers. Hold for now.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
Rob Lowe
peopleRob Lowe hits out at Obama's snub of Benjamin Netanyahu
Sport
football
News
Davies (let) says: 'Everybody thought we were having an affair. It was never true!'
people'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Arts and Entertainment
Over their 20 years, the band has built a community of dedicated followers the world over
music
News
Staff assemble outside the old City Road offices in London
mediaThe stories, the writers and the changes over the last quarter of a century at Britain's youngest paper
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us