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From UK-Analyst.com: Wednesday 23rd January 2013
The Markets Days after a group of prominent business leaders in the UK warned that exiting the EU would damage the already fragile economy, Prime Minister David Cameron announced he will give the public a black or white referendum choice on whether to stay in the Eurozone. The vote, which will take place sometime between 2015 and 2018, will raise fears for the long-term prospects of large businesses which sell a substantial portion of their products to the EU market of 500 million people. However, the Prime Minister argued, "It is time for the British people to have their say. It is time to settle this European question in British politics." Staying in the UK, the unemployment rate fell to its lowest level for 18 months in November according to the Office for National Statistics. The number of unemployed dropped by 37,000 to 2.49 million people, while the number of people in work hit a record high of 29.7 million. Employment minister Mark Hoban commented, "These are very positive figures, showing employment rising for 15 months despite difficult economic circumstances. Unemployment is lower than when this government took office." Data from the EU statistics office Eurostat suggested that although debt levels in the Eurozone have virtually reached their forecast peak, a huge divide has emerged between the richer north and the southern Mediterranean countries whose economies are ridden with debt. This divide exists between countries such as Germany and France in Northern Europe, whose debt actually fell in the third quarter of 2012, and Greece, Portugal and Italy in the South, whose debt-to-GDP ratio increased over the same period. EU Economic and Monetary Affairs Commissioner Oli Rehn said, "When public debt levels rise above 90 percent they tend to have a negative impact on economic dynamism."
At the London close the Dow Jones was up by 44.65 points at 13,756.86 and the Nasdaq fell by 14.15 points to 2,760.34. In London the FTSE 100 increased by 18.47 points to 6197.64; the FTSE 250 finished 23.74 points down at 12,934; the FTSE All-Share gained 7.34 points to 3248.62; and the FTSE AIM Index crept up by 2.36 points to 737.28.  Broker Notes Cannacord Genuity downgraded its "hold" stance on Severfield-Rowen (SFR) to a "sell" recommendation, with a 34% drop in target price to 70p. The broker cited a delay in completion of the group's primary project (122 Leadenhall) as a result of unexpected costs. Subsequently, Cannacord has forecast an adverse impact of 10 million pounds, which would imply a loss of 8 million pounds for FY 12/13. The uncertainty in the wake of the departure of the group's CEO, Tom Haughey, is further reason for Canaccord's downgraded stance. The shares plummeted by 41.875p to 78p. Westhouse Securities upgraded its "add" recommendation to a "buy" stance on haulage company Hargreaves Services (HSP) with a target price of 927p. The shares are currently trading at a 40% discount to the broker's conservative "sum of the parts" valuation, which makes the firm an attractive play in the eyes of Westhouse. Furthermore, the broker has adjusted its net debt forecasts as a result of the firm's recent "reassuring" trading update and thus believes the shares are primed to outperform. The shares slipped by 0.5p to 670.5p. Panmure Gordon reiterated its "buy" recommendation on Qatar Investment Fund (QIF) with a target price of $1.05. The broker believes that the fund is in a prime position to capitalise on the general large growth potential in the Qatar region as the national government pours large amounts of money into infrastructure projects. Additionally, the broker points to the PNAV of 0.91x as too wide a discount given the huge market potential. The shares remained flat at $0.95. 
Blue-Chips Suppliers of accounting software Sage Group (SGE) announced that trading has remained in line with expectations since 1st October last year. Trading in the UK exhibited good growth in the period but trade in Europe has remained subdued, with markets continuing to be challenging. A particular highlight for the period was the group's acquisition of Brazilian group EBS Brasileira de Sistemas, as it looks to strengthen a market leading position in the region. The shares fell by 3.8p to 313p. Consumer goods group Unilever (ULVR) revealed an increase in turnover of 10.5% to 51.3 billion euros (43.07 billion pounds) in 2012 as well as a 7% increase in pre-tax profits to 6.9 billion euros (5.8 billion pounds). The world's third largest consumer goods group attributed this growth to a robust trading performance from emerging markets; areas which now make up 55% of turnover. The company insisted that it will experience another year of good growth in 2013 but warned of challenging economic conditions characterised by rising commodity prices and intense competition. The shares climbed by 75p to 2,526p.
Mid Caps High street retailer WH Smith (SMWH) revealed a 5% drop in like-for-like sales for the 20 weeks ended 20th January 2013. The group's travel division was symptomatic of the group's performance as like-for-like sales fell by 4% over the period. The group went on to warn that the high street trading environment will remain challenging in the coming months as wages continue to be squeezed by inflationary pressures. The trading update comes a week after broker Seymour Pierce reiterated its "buy" recommendation on the stock, while Panmure Gordon has WH Smith as a "hold", with a target price of 700p. The shares lost 2p to 650p. Drinks supplier Britvic (BVIC) posted a 4.8% hike in group revenue to 302.2 million pounds in the three months ended 31st December, boosted by a 5.4% pick up in UK-sourced revenue. The firm, which is still waiting on approval from the Office for Fair Trading on its merger with A.G. Barr, went on to confirm that it will accelerate distribution of its troubled Fruit Shoot brand later this year. The shares were up by 1.8p at 430.1p. Financial services group Close Brothers (CBG) declared that widespread low trading volumes have impacted performance in its securities division, as retail investors' confidence in the market is still relatively low. However, the group's asset management division has continued to do well and grew its assets under management by 3% to 8.5 billion pounds in the five months to 31st December 2012. The shares were down by 3.5p at 968.5p. 
Small Caps & AIM Agricultural group Wynnstay (WYN) announced a 9% increase in revenues to 375.78 million pounds for the year ended 31st October 2012, while pre-tax profits climbed by 13% to 7.82 million pounds. In reaction the shares gained 3.5p to 475p. This success was helped by several acquisitions of small agricultural supplies businesses but was especially boosted by a full year contribution from acquired firm GrainLink. Wynnstay took a number of steps to diversify its production and location in 2012, a further reason cited for its success. The firm will pay a full year dividend of 8.5p for 2012, a 9% rise on the previous year. Online gaming company 32Red (TTR) posted a 28% increase in revenues to 32.1 million pounds for the year ended 31st December 2012, primarily driven by an increase in casino-sourced revenue. The gaming operator managed to recruit 41,918 players over the year, representing a 52% increase on the previous year. Initial results for its new operations in Italy were said to look promising, with further expansion planned during the year. On the back of the update broker Numis Securities reiterated its "buy" recommendation on the gaming group with a target price of 100p.The shares increased by 0.75p to 43.375p. Resources company Centurion Resources (CEN) announced positive results from a preliminary mapping and sampling programme at its wholly owned 33sq km Mitterberg Copper Exploration site in Austria. The team collected 40 samples of ore and the best 3 results returned copper levels of 7.08%, 5.11% and 4.10% respectively. Centurion went on to state that it intends to undertake further geochemical sampling and mapping once the current snow cover dissipates. The shares remained flat at 0.8p. 
Finsbury Food Group (FIF) announced a 1.3% increase in revenues to 103.3 million pounds for the 6 months ended 31st December 2012. Divisionally, the group's Bread and "Free From" division grew revenues by 7% as demand for its produce increased. Additionally, the firm re-affirmed its intentions to accelerate efficiency investments in its cake business this year and will use part of the proceeds of November's 3.9 million equity raise to implement this. The shares were up by 0.5p at 42.25p. Provider of risk management solutions Brady (BRY) announced a 40% increase in EBITDA to 5.2 million pounds on a 47% increase in revenue for 2012. These year-on-year increases were driven by positive impacts from the acquisitions of Navita, Syseca and SAI, all similar companies of a smaller scale. The group went on to say that although 2012 revenue was slightly weighted towards licensing revenue, the group's long-term strategy remains focused on a rental model. The shares gained 4.5p to 98.5p. Medical device manufacture Surgical Innovations (SUN) has been given clearance from the US Food and Drug Administration for its reusable 3mm PretzelFlex device (below). The approval will allow the product to be used in the US health market in operations which involve organ and tissue retraction. This product approval for the 3mm PretzelFlex product follows approval of the 5mm version back in March 2012. The shares inched up by 0.375p to 7.5p. 
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