Yesterday's trading: Swann's way wins out
There were many disbelievers around in the City when Kate Swann took over the reins at WH Smith more than three years ago. They never ever expected her to revive the 200-year-old loss-making book and newspaper retailer.
But against all the odds, she has proved herself to be the ultimate turnaround specialist and last year WHS reported profits of £49m on turnover of £1.3bn. She has successfully overseen the demerger of its wholesale news division which has left her running a business two-thirds its former size.
Ironically, fears now that she could jump ship and join a high street rival have depressed the WHS share price. Currys-to-PC World electricals retailer DSG International (1.4p off at 168.1p) is now looking for a chief executive following John Clare's decision to step down and Kesa Electricals (6p down at 352p) is also after a retail heavyweight to replace departing chief executive Jean-Noel Labroue.
But according to Oriel Securities, Swann is going nowhere. The shares rallied 14½p to 440p after the broker advised clients to buy. Ms Swann is two-and-a-half years into her five year recovery programme and WHS is now moving into a more interesting phase of growth. Swann also has a significant amount of wealth tied up in the firm.
The Management Incentive Plan could pay out as much as £4m should WHS achieve earnings per share of 29p for the year to end August 2007. She also stands to make over £1m on the exercise of various options. Oriel's target price is 520p.
Other retailers were friendless, knowing that even if UK interest rates are this week kept on hold at 5.5%, they will be raised a further quarter point before the end of the summer. Kingfisher shed 5½p to 245p and Next 52p to 2194p. After watching the wobbly Chinese market rally from 7% down to 2.6% up, London retreated from a firm start. The Footsie lost a 22 point gain to close 31.3 points off at 6,632.8.
Wall Street put a spanner in the works just before the London close, falling 77 points on US Federal Reserve chairman Ben Bernanke's proclamation that the Fed currently has little reason to lower US interest rates.
BHP Billiton advanced 21p to 1282p after Citigroup upgraded to buy from hold and raised its target price to £15 to £12-50p.
In a late but probably vain attempt to stave off relegation from the Footsie, Britain's largest coal-fired power station Drax firmed 10½p to 786½p. Mortgage bank Bradford & Bingley cheapened 2¾p more to 420p on expectations it will follow Drax through the trap-door and be replaced by housebuilding giant Barratt Developments (5p up at 1069p) and British Energy (7¾p better at 544¾p).
Ahead of the payment of a special dividend of 220p a share to shareholders on June 15, Intercontinental Hotels retreated 43p to 1370p. Chief executive Andrew Cosslett also pooh-poohed the idea of cash-rich private equity groups forking out for a hotel group.
Buying in response to a Merrill Lynch recommendation helped life insurer St James's Place climb 20¾p to 457p.
Shrugging off the pain inflicted by Frankie Dettori's Derby win on Authorized, betting shop giant Ladbrokes cantered 6½p forward to 413¼p on revived talk of a private equity bid.
The cautious statement which accompanied better-than-expected annual results sparked heavy selling of Intermediate Capital. Shares of the mezzanine finance group plummeted to 1655p before closing 162p down at 1738p. Management said that the first quarter of the year had seen decent growth in the loan book but judging the year as a whole was difficult due to the current uncomfortable market conditions.
Toledo Mining soared 86½p to 432½p on confirmation that the Department of Environment and National Resources of the Philippines has approved a Mineral Production Sharing Agreement for the company's 288 hectare Berong nickel project. Investika, which holds 11.6% of Toledo, jumped 38½p in sympathy to 312½p.
TEG, a company which converts organic wastes into natural fertiliser, lost 6½p to 135½p. The company warned it is experiencing slower-than-expected growth in waste capacity sales at its plant in Perthshire, Scotland.
Torotrak accelerated 4¾p to 46¼p after agreeing a licensing deal with manufacturer Xtrac to develop transmission systems for Formula One motor racing. Chief executive Dick Elsy said the system could be used in mainstream road vehicles.
• Record annual profits and dividends that were 60% ahead of expectations helped Telecom Plus buzz 5¼p higher to 202p. The group plans to ask shareholders at the forthcoming AGM for permission to buyback its owns shares. It has £26m in the bank to buy a shed load. KBC Peel Hunt is positive and says that after a tumultuous year to March 2006, management has returned to form for the year to March 2007.
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