Mighty Mears leads the way
SOCIAL housing contractor Mears showed the rest of the beleaguered support services sector how to win friends and influence people by wheeling out excellent interim results and a prediction that full-year figures will again be at the top end of market expectations.
It had analysts busily upgrading their profit forecasts for this year and next and sent the shares 7¾p higher to 278p.
Since joining Aim at 10p almost ten years ago, the group has reported compound annual profits growth of 42%. Pretax profits for the half year to end of June jumped to £5.3m from £4.3m on turnover 22.5% higher at £118m. The interim dividend is lifted 28.6%.
Increased government spending on social housing continues to line Mears' coffers. Over the last six months, four key contracts have been mobilised and £170m of contracts won. Its order book now stands at a stonking £1.1bn, up from £960m in 2005. Incredibly, it has 78% of forecast turnover for 2007 already secured and 64% of 2008's.
Amid rumours that it will soon be beefing up its corporate adviser team, Investec's Guy Hewitt reiterated his bullish stance and forecast pretax profits of £12.2m for this year and £14.6m for next year. Francesca Raleigh at Numis upgraded her forecasts to £12.5m for this year and expects £15m in 2007. Her target price is 345p.
Glotel hit the headlines earlier this year when Sean Yazbeck, director of business development at the IT and telecommunications recruitment company, won the US version of The Apprentice. He is probably in no danger of being fired following yesterday's profit warning but the surprise statement left the shares 16¼p down at 66¾p.
Glotel warned that profits for the year to March 2007 are likely to be slightly lower than last year's £4m. Broker Bridgewell had pencilled in £5m and immediately downgraded to overweight from buy and slashed its profits forecast to £3.7m from £5m.
Analyst Ian Jermin said the prime factor for the warning has been the effect of the weak dollar on translated US earnings which last year accounted for 60% of group operating profits. Its UK and Australian businesses have also suffered from margin pressures.
Nervous selling on talk of a cautious trading statement today left property support services group Connaught 6½p cheaper at 201¼p.
Interserve, which shocked followers recently by revealing a £25m black hole and the suspension of six senior managers in its industrial services division, fell 4¼p more to 285½p.
The Footsie found the going tough as the volume of business again left a lot to be desired. It drifted 36.8 points lower before closing 12.6 off at 5902.6.
Wall Street retrieved an early 13-point fall to trade 38 higher on reports that Iran is willing to start serious talks with the United Nations over its nuclear enrichment programme.
New chairman Sir John Bond's purchase of 90,000 shares at 110½p helped mobile phone giant Vodafone buzz ½p higher to 110½p.
Almost 42m Lloyds TSB shares changed hands amid a regurgitation of an ancient rumour that Bank of America is sniffing around. The shares touched 530½p and closed 1p dearer at 523p. Dealers believe a bidder will only pounce once new chairman Sir Victor Blank can line up a buyer willing to pay £7bn-plus for Scottish Widows.
Broadgate property developer British Land, which will become a tax-efficient Real Estate Investment Trust next year, advanced 17p to 1362p. Profit-taking following last week's strong rise on the back of the Saudi order for Eurofighter Typhoon jets left BAE Systems 9¼p down at 356¼p.
A Charles Stanley strong buy recommendation in the wake of a positive trading update prompted a 5¼p rise to 71¾p in Character Group. The developer and distributor of toys, in which 3i recently acquired a 24.1% stake, said it has a strong order book as it approaches the year-end and is bullish about the run up to the crucial Christmas trading period.
Active capital investor Addworth eased 1/8p to 27/8p but should be buoyed by today's announcement that First Equity Nominees now holds 5.3m shares, or 8.1%.
Placed on Aim at 1½p by broker WH Ireland, mobile communications firm Crimson Tide closed at 2¼p.
The day's other newcomer Aurelian Oil & Gas closed at a small discount to its placing price of 55p.
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