Wilkes' rise puts onus on predators

SPECULATION that any predator will have to move quickly to acquire James Wilkes grew yesterday after the building and engineering group returned to profit at midway.

The shares rose 11p to 118p when the company unveiled pre-tax profits of pounds 1.1m for the six months to 30 June, against a pounds 5.6m loss last time, after heavy cost-cutting.

'James Wilkes is an attractive purchase,' one analyst said. 'But the company's management are gradually taking away the upside from any bidder and they may have to act soon.'

David Abell, chairman of Suter, has been slowly stake-building and holds 18.5 per cent of Wilkes. Stephen Hinchliffe, former chairman of Wilkes, and the American lawyer and businessman Edward Gottesman both own about 10 per cent. About 66 per cent of the equity is held by 10 shareholders.

Douglas Rogers, who became Wilkes' non-executive chairman in April, said yesterday he had never discussed a takeover with the three shareholders. 'I have no reason to think that their intentions are anything but friendly,' he said. Others think differently and say Mr Abell believes Wilkes would fit perfectly with Suter.

Mr Rogers also said Wilkes was strengthening its team of advisers with the appointments of Albert E Sharp as joint stockbroker with SG Warburg, and the City public relations firm Citigate. The move is ostensibly to promote the company, although both could play a crucial role in a bid defence.

Wilkes' businesses in the US, Floform and Peter Stubs, were the best performers within the group, benefiting from the weakness in sterling. Dollars have been sold forward until March 1994 to cover the group against further currency movement. Redundancies continued in the UK engineering operations, although Mr Rogers expected an upturn in orders in the second half.

Gearing has been cut to 92 per cent from 160 per cent last year, and borrowings now stand at pounds 17m. The sale of Wilkes' Trax business and disposal of property and surplus plant should generate about pounds 1.5m. Earnings were 4p, compared with a loss per share of 31.2p. The interim dividend is 1.5p, and Mr Rogers said the total payout for the year should be at least the 1992 level of 3.5p.