The name's dull, the dividends won't be

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The Independent Online
UNITED Utilities is the prosaic name that management of the recently merged electricity supplier Norweb and North West Water have chosen to proclaim their business to the world. Dull it may well be, but there is plenty of scope in the business for continued strong dividend growth.

United has said it will sell off four non-core businesses over the next year to allow it to concentrate on pure utilities-related enterprises. The only non-regulated business left is a facilities management division, which will supply customer and IT training. Controversially, as well as billing customers, it will also seek outside billing contracts for council- tax payments and the like.By the year 2000, the company hopes to achieve projected annual cost savings of pounds 140m and the shares remain a strong buy. With likely pre-tax profits of around pounds 430m before exceptionals this year, the shares, at 595p, trade on an undemanding price/earnings multiple of 11.

A NEW financial adviser, and a placing to raise pounds 2.6m, sets the next stage of growth for fledgling multimedia concern Omnimedia (53p). The CD-Rom company last week revealed eight new distribution agreements, along with its preliminary figures, where turnover more than doubled to pounds 275,275. Losses also rose sharply to 6p a share, from 3.8p the previous year.

This is the fourth time the company has tapped shareholders for more money and any investor can expect to see more fundraisings before the company hits paydirt. But the latest news suggests that management knows what it is doing, and how it intends to get there. A buy, if you like high risk situations.

PHARMACEUTICALS and diagnostics business Amersham International has not been much in favour recently, with the stockmarket dragged down by discontent with the sector as a whole. However, the company continues to enjoy healthy margins, is strongly cash-generative and has a good product portfolio. On that basis, the currently depressed share price, of 939p, must be a buying opportunity.

It has a diagnostic product for Alzheimer's disease which may also be able to detect Parkinson's and, topically, Creutzfeldt-Jakob disease. Slow but steady seems to be the message, with pre-tax profits for the year to 31 March, set to reach pounds 51m, up from pounds 47.1m. Buy.

HIGHLAND Distillers reported disappointing half-way figures last week and the shares (361p) are definitely a sell. Turnover fell 4 per cent, to pounds 101.8m, mainly through a 12 per cent decline in sales of Famous Grouse. Profit before tax was off 6 per cent to pounds 22.2m.

Although there are signs the spirits market is reviving in the UK, retailers still have the upper hand. The group's near 19 per cent stake in Remy Cointreau, is likely to prove a source of unhappiness and Highland may have to inject capital into the business. Avoid.

EVANS Halshaw, the new-and used-car distributor, remains a recovery situation, says stockbroker Henry Cooke, Lumsden, but the shares are attractive on an income basis. Their current yield of 6.2 per cent, is set to climb to 7.1 per cent by 1997, forecasts analyst David Buxton. The shares, at 319p, remain 30 per cent below where they stood at the time of their profits warning last year. Pre-tax profits are only likely to inch ahead over the next few years, from pounds 13.6m in 1995, to pounds 16.9m in 1997. But over the longer term, new chief executive Alan Smith could bring home the bacon. Buy.

A TINY new issue this week, in the rare shape of an EIS - or Enterprise Investment Scheme, the Government's replacement for the BES. HarleyScreen is a clinical-testing provider for the pharmaceutical industry. It looks to be well-established, although it remains a loss-maker, with an operating loss of pounds 278,776 in 1994, up from pounds 104,633 in 1993. However the big change in the company's fortunes came with the acquisition of Ravenscourt, a specialist clinical-trials laboratory, in 1994. After losses the business is now almost in profit.

HarleyScreen is looking to raise pounds 1.8m, with the shares priced at 125p. Tax relief was available in 1995/96 and is in the current year. The company has plans to apply for admission to the AIM sometime in the future. With well-qualified management, this could prove an interesting investment.

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