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.

Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Sport
There were mass celebrations across Argentina as the country's national team reached their first World Cup final for 24 years
transfersOne of the men to suffer cardiac arrest was 16 years old
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
PROMOTED VIDEO
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
News
Detail of the dress made entirely of loom bands
news
Life and Style
beauty
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Sport
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
film
News
peopleMario Balotelli poses with 'shotgun' in controversial Instagram pic
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
tv
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
tech
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
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

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Network Engineer (CCNA, CCNP, Linux, OSPF, BGP, Multicast, WAN)

£40000 per annum: Harrington Starr: Network Engineer (CCNA, CCNP, Linux, OSPF,...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice