Pre-tax profit grew 49.1 per cent to £200.7m in the 12 months to 31 December at Ladbrokes, as the chain's betting shops - of which there are almost 2,200 in the UK - continued to draw in punters. The bookie yesterday declared a final dividend of 4.6p a share, taking the full-year payout to shareholders to 8.9p, up 14.1 per cent. With the long-awaited launch of the new website just around the corner and a lot of football results still going the bookies' way in January, there is plenty of cause for optimism. Ivor Jones, an analyst at Numis, points out that, with net debt - which stood at £386.9m at the end of the year, down £67m - now at 1.5 times earnings before interest, taxes, depreciation and amortisation, Ladbrokes is in a position to "at least" carry on raising the dividend.
That said, there are headwinds blowing the way of UK bookmakers. The government earlier this month introduced a 20 per cent tax on profits from gaming machines and Ladbrokes has also reported signs that the machines market "is becoming more competitive". While Mr Glynn is optimistic on the digital business, he also includes the caveat that there is "much still to do" in order to transform that division. Ladbrokes' shares, which trade on a current price-to-earnings multiple of 13, are at a discount to its rival William Hill. However, Questor doesn't yet feel confident enough to shorten the odds and upgrade to buy. Hold, Questor says (last IC view: Buy, 8 Jan 2013).
CSR yesterday released higher-than-expected numbers, and the decision to return $50m to investors by means of a share buyback sent the shares racing ahead by 47.25p to 432.75p. The chipmaker also put out a forecast for first-quarter revenues of $215m-$235m, again ahead of expectations. All of the above is in large part the result of the recent restructuring of the company, the effects of which are not yet all in the figures. Analysts expect to see another large rise in operating profits this year to just under $100m.
The question now is what CSR does with its strong cash flow. The last big deal, the $233m purchase of Zoran, was in mid-2011 and, although there is probably the odd technology business that CSR wouldn't mind picking up, there is no sign of another such on the horizon. Since it started buying back shares in 2010, the company has returned $416.4m before the latest exercise. Yet it had $333m in the bank at the year end. CSR says it will review the situation once the latest buyback is completed. The reckoning must be that more will be returned. The shares have had a good run; on about 15 times earnings they look like good long-term value, but no reason to chase for now. Buy on the (inevitable) weakness, says The Times's Tempus (last IC view: Buy, 21 Feb 2013).
Centamin is seen as a one-asset company, a mine in the eastern desert of Egypt that has suffered various upsets over the past few months, including a couple of strikes, some mechanical problems and a court case that questions its right to operate there under an Egyptian government licence. The chances are that the court case will be settled in its favour because it is not in the authorities' interest to discourage foreign investors. But if ever a company needed a diversification strategy it is Centamin.
The outfit also has four licences to explore for gold in neighbouring Ethiopia, but these are at an early stage. It is taking part in a cash raising by the Aim-quoted Nyota Minerals, with more developed assets in that country, which will raise its holding to nearly 20 per cent. In due course these assets will need more capital, and Centamin is in a good position to take a more active part. But it does not look like a game changer at this stage. The shares are still a punt and should be approached with caution, Tempus writes in The Times (last IC view: Sell, 14 Dec 2012).
Business press headlines:
Sterling is falling. Hurrah! The needed rebalancing of the UK economy calls for a further depreciation of the real exchange rate. If the call by Sir Mervyn King, governor of the Bank of England, for £25bn in asset purchases at the February meeting of the monetary policy committee delivers a significant decline in sterling, he has delivered a lucky policy strike, despite being outvoted. The big challenge, however, is to connect monetary and fiscal policy more closely, in an effort to promote demand, while enhancing underlying supply. This cannot be done without a rethink of policy towards public investment at a time of historically low real interest rates. The onus is on the government. It must act soon, says Martin Wolf at The Financial Times.
The Bank of England has a case for restarting its asset purchase programme, and may need to increase it by up to £175bn if the economy is running substantially below capacity, a senior policy maker has said. David Miles, in a speech on Thursday, gave a detailed model of how policy should respond to the amount of slack in the economy - something the central bank has generally avoided before, and which moves in the direction of policy guidance favoured by incoming central bank governor Mark Carney. Miles is an external member of the bank's monetary policy committee, and until this month he was alone in voting for an extra £25bn of asset purchases. But his views appear to be gaining momentum, The Telegraph says.
Motorists face unprecedented financial pain as petrol prices are driven to their highest ever levels by market speculation and the sliding pound. The cost of filling a family car has already gone up £3.12 this year and petrol is expected to rise by at least another 3p per litre before Easter when higher wholesale prices work through to the pump. The increase has raised the pressure on George Osborne as campaigners urge him to use the Budget on March 20th to cancel a duty increase planned for September 1st and to begin cutting the Treasury’s tax take. They claim that Sir Mervyn King, Governor of the Bank of England, is inadvertently adding to motorists’ woes because policies designed to kick-start the economy are weakening the pound and making commodities denominated in dollars more expensive, writes The Times.
The 'Big Four' audit firms will on Friday be accused of a serious breach in alignment with shareholder interests as the Competition Commission reveals the findings of its landmark investigation into their dominance. The watchdog, which will publish its report on Friday, will chastise PwC, Ernst & Young, Deloitte and KPMG, for a deep “misalignment” with shareholder interests. The Commission will make clear that auditors are accountable to shareholders first and foremost, but will claim that in many instances auditors and company executives have acted as a cabal to their mutual benefit, and to the exclusion of the interests of investors. The investigation will claim that the relationship between auditors and management has been too cosy and needs to be overhauled, The Telegraph reports.
