This year looks like ending on a high note. The FTSE 100 index closed yesterday at its highest point for 17 months. It has risen for eight consecutive trading days, its best performance for more thanfour years.
The doomsayers and short-sellers were warning yesterday that all will come to a shuddering halt next week and, anyway, there’s no real trading going on. But those dealers who had bothered to come into the office seemed optimistic about the first quarter of 2004.
The FTSE 100 closed yesterday up 12.9 points at 4470.4. Many strategists expect it to be sitting at 4500 at the end of today’s shortened trading session as hedge funds close positions and the year is squared off.
Volume was light with just over 1.1bn shares changing hands and the main risers in the market were something of a ragbag. Rolls- Royce added 3.5p to 177p on hopes that the US economy will not be the basket case next year that some have predicted, while Royal & SunAlliance gained 1.5p to 87.5p as insurers came back into fashion.
Market attention was focused on Shire Pharmaceuticals in early trading as the drugs group embarked upon a legal fight in the US against Impax Laboratories’ generic version of its crucial Adderall XR treatment for attention deficit and hyperactivity disorder. Sales of the drug in the US topped $500m last year. But by the end of trading the profit-takers had knocked the stock’s early rise to leave the shares down 2.5p at 540p.
It was a mixed day for retailers with Dixons gaining 2.75p to 138.5p – the biggest gainer in the FTSE 100 – on talk that the company’s stores have been flooded with shoppers looking for bargains in the sales. WH Smith eased 0.5p to 287.5p on fears that its sale season is not going so well.
Book shop chain Ottakars also lost ground, down 7p at 393p, as profit-taking set in after the stock’s solid pre-Christmas run.
Among the smaller stocks, Warthog gained 2.75p to 5.5p as the computer games group’s interim results came out in-line with what the market had forecast following a dire profit warning just over a month ago. Since the warning Warthog shares have dropped more than 75%.
Sales for the six months to end-September were just shy of pounds 5m, down from pounds 5.4m, but the real pain was a pounds 2.2m exceptional charge which contributed to an overall pre-tax loss of pounds 2.6m, against a small profit in the previous year. On November 28 the Cheshire-based company warned that it would report a loss of about pounds 2m because of the failure of a number of small publishers for which it was developing games, coupled with delays to new contracts and exchange rate losses suffered on existing US dollar-denominated deals.
Excel Airways soared 60.5p to 192.5p as the charter airline reported a near-300% rise in annual profits and said it might pay an interim dividend next year. While profits for the year to end- October of pounds 13.4m, compared with pounds 3.4m last time, were flattered by pounds 8m of exceptional charges in 2003, there is no doubt that underlying performance was better than expected in a trading environment that other airlines have found very hard.
The company, which operates its own small fleet as well as providing seats for tour operators, appears to have benefited from a number of capacity deals it has done with other carriers. These mean that during periods of high demand it can serve its 75 European destinations with about 18 planes but this drops to just a handful of aircraft during the quieter winter months, reducing the group’s overheads.
McBride gained 1p to 129p on talk that the personal care and household products group had a very good end to the year, while Avocet Mining chalked up a rise of 3.5p to 73.5p on rumours that its Malaysian gold mining operation is performing very strongly.
But Imagestate eased 0.02p to 0.45p as the digital-based stock photography company warned that while trading since the end of the year is improving its performance in the US is still below expectations and the group has failed to meet its banking covenants. Although annual pre-tax losses were slashed to pounds 3.5m from pounds 22m in the previous year, sales were pounds 5.5m, down from pounds 7m because of the weak advertising market.
The group is reliant on the support of its remaining funding shareholder, called OVP 2, and its bankers. At the end of June it had net current liabilities of pounds 10.3m, including a bank loan of pounds 4m and a further pounds 4.4m of loans from OVP 2.
The bank loan is repayable on demand and subject to a number of covenants which the group has not met. The group’s banks have not demanded repayment and the directors anticipate the covenants to be reset “in due course”. The convertible loan facility from OVP 2 expires at the end of March.
Shares in Parkwood Holdings gained 4p to 43p as the municipal parks operator revealed that finance director Charles Bithell bought 25,000 shares on Monday at 38.5p each.
Transware lost 0.12p to 1p as shareholders approved the company’s decision to delist from AIM. Transware believes cancelling its listing will improve chances of getting funding from the US. Earlier this month the company said poor trading had left it needing funds, but potential US investors “regard the company’s quotation on AIM as a liability rather than an asset”.
Shares in Voss Net dropped 0.12p to 1.5p as the AIM-listed IT firm’s capital reorganisation plans were given the go-ahead by shareholders at an extraordinary general meeting.
