Royal Dutch Shell's fourth-quarter results were a mixed bag. In the final quarter of last year, profits on a current cost of supply basis - which strip out the effect of movements in the oil price on inventories – rose 15 per cent to $5.58bn (£3.5bn), lower than a consensus view of £6.2bn. This was down to weaker US fuel prices and higher production costs. Europe's largest oil group also said it would spend more than expected in its capital investment programme in 2013, at $33bn compared with $30bn in 2012.
Longer term, the reserve replacement ratio of just 44 per cent is also a slight concern. Shareholders can look forward to an improved dividend payout over coming months after the fourth-quarter payout was increased by 4.7 per cent to 43 cents. The group's cash flow, which hit $42.7bn in the full year, should continue to grow. The shares are trading on a 2013 earnings multiple of 8.4, falling to 8.3 next year. The prospective yield is an attractive 4.8 per cent rising to 5per cent. The income is good, but Questor feels a buy rating after such a sharp rally in the shares and the wider market is not appropriate. The shares are now a hold, down from buy, The Telegraph's Questor team says (Last IC rating: Buy, 27 Jul).
"BTG was one of my tips for the year as offering, in the biotech area, a good spread of proven compounds and drugs under development," The Times' Tempus begins by telling readers this morning. The company eschews large-scale and expensive R&D, preferring to buy in promising smaller businesses and take their discoveries to market.
Yesterday's positive trading statement, which forecast revenues for the year to end-March at the top end of guidance at about £215 million, shunted the shares up 11.5p to 332p, but they are still where they were at the start of the year. The danger with the BTGs of this world is some catastrophic failure of one of its key compounds under trial. There are no obvious candidates for this, though, and on that basis the shares still look undervalued, Tempus adds (Last IC rating: Hold, 8 Nov).
The discovery of horse meat in supermarket beefburgers is likely to make consumers think twice about buying cheap meat. This can only be good for quality pork producer Cranswick. It now supplies some of the major UK supermarkets; it has recently been awarded an export licence to China; and it is on the verge of being given approval to sell its offerings in Australia. Cranswick also sells ribs into the US market. On top of this, the company recently struck a £30m-a-year deal to be Asda's main pork supplier.
The shares are currently trading on a 2013 earnings multiple 12.4, falling to 11.5 next year. The prospective yield is 3.2 per cent. Questor is getting concerned about market valuations after the recent strong run in equities. It is probably a good time for investors to consider taking profits in some of their holdings by selling a proportion of their shares - or bank gains in cyclicals. However, despite the strong run in Cranswick shares Questor does not feel inclined to recommend taking profits in this case, given the export outlook and Asda contract, so keeps a hold rating (Last IC rating: Buy, 26 Nov).
Business press headlines:
UK authorities are probing an allegation that Barclays loaned Qatar money to invest in the bank as part of its cash call at the height of the financial crisis in 2008, which enabled the bank to avoid a UK government bailout. While the terms of Barclays' emergency fundraising have been under the scrutiny of the Financial Services Authority and the Serious Fraud Office since the summer - with a particular focus on fees paid for the deal - allegations over a loan to the Qataris is a new thread of the investigation. Two sources familiar with the situation have independently told the Financial Times of the investigation into the alleged loan. [Financial Times]
The Chinese economy paused for breath at the start of 2013 according to a survey that showed a dip in growth in its manufacturing sector last month. The official purchasing managers' index, a gauge of the industrial sector, edged down to 50.4 in January from 50.6 in December. In remaining above the midpoint of 50 for the fourth consecutive month, the reading still signalled an expansion in activity but at a slightly reduced pace. [Financial Times]
The Dragons' Den entrepreneur Peter Jones is to run Jessops as an online-only retailer after buying the brand of the collapsed camera business from administrators. PricewaterhouseCoopers, the administrators to Jessops, said that Mr Jones is among a "number of buyers" to have purchased assets from the retailer, including its remaining stock and intellectual property. [The Telegraph]
Thousands of small businesses that were mis-sold interest rate hedging products may run out of time to make a claim unless they make rapid contact with their bank. The Financial Services Authority's decision to force Britain's four biggest banks to review thousands of past sales of swap products to small businesses and pay compensation in a "significant" number of cases may catch out some customers, experts said.
Barclays, HSBC, Lloyds and Royal Bank of Scotland will conduct the review within a year, with most cases resolved in six months. The banks will start writing to customers next week. However, under contract law, businesses have six years to bring a claim. As many of the swaps were sold in 2006 and 2007, thousands that wait for banks to contact them may find that the statute of limitations runs out. [The Times]
The UK head of tax at Ernst & Young, the accountancy firm that audits Google, Amazon and Facebook, has admitted that international guidelines that allow online firms to pay much lower corporation tax than their rivals are outdated and in need of urgent reform. John Dixon told a committee of MPs that the Organisation for Economic Co-operation and Development (OECD), which drafts the politically contentious rules, was facing a "difficulty … [it] needs to address" because the codes established decades ago never envisaged an explosion in online commerce. [The Guardian]
There was intense speculation in the City last night about the future of Seymour Pierce, the stockbroker led by football deal maker Keith Harris. Mr Harris, the Square Mile's "Mr Football", has brokered some of the biggest deals in the game, and is often linked to many others that do not come to fruition.
Rumours that Seymour was in some difficulty have been the talk of the City for some months, with low levels of takeover activity and little appetite from investors to take risks hitting earnings at all but the biggest brokers. The firm is known to have been seeking a cash injection from an outside investor for some time. City sources say that administration is a possibility but insist that it is not imminent. Mr Harris is said to be seeking funds of perhaps £3m. [The Independent]
The US has stepped in the middle of Anheuser-Busch Inbev's (ABI) $20bn (£13bn) deal to buy up the Mexican brewery business Grupo Modelo, with federal lawyers filing a suit claiming the move would hit competition in the American beer market. The deal would bring together two of the most successful beer brands in the US, namely ABI's Bud Light, and Grupo Modelo's Corona Extra. [The Independent]
