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From UK-Analyst.com: Monday 25th February 2013
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Competition Congratulations to Stuart Nisbet whose caption (below) has been voted the funniest and has won the UK-Analyst Friday competition. Look out for another contest at the end of the week. 
'I'll get Cameron's head off that fairground stick even if it kills me'
The Markets Sterling slumped to a two-and-a-half year low versus the US dollar after ratings agency Moody's demoted the UK's AAA credit rating to AA1 over the weekend. The cut in the UK's debt rating was not a surprise for the markets and it was in fact hoped that the announcement would help to clear uncertainty and halt Sterling's slide in the currency markets. Sterling was already on shaky ground as last week it emerged that policy makers including Sir Mervyn King, Governor of the Bank of England, were supportive of another round of quantitative easing, a measure which inevitably puts pressure on the currency's value. Kathleen Brooks, researcher at Forex.com said, "The rating cut reinforces the perilous economic position the UK is in. It supports the unwinding of the safe haven trade too." Oil and gas exploration investment in the North Sea is at its highest level for 30 years and rising according to trade body Oil and Gas UK. Over 320 exploration and production companies invested 11.4 billion pounds in the region in 2012, with forecasts predicting this to rise to 13 billion pounds this year. The increase in investment has been partly attributed to new relief measures passed by Chancellor George Osborne, which make gas fields in shallow waters exempt from a 32% tax on the first 500 million pounds of income. Malcolm Webb, Chief Executive of Oil and Gas UK, commented, "The recent introduction of targeted tax allowances to promote the development of a range of difficult projects..has prompted global companies and independent businesses alike to take another look at the UK as an investment destination." Over in Asia, manufacturing growth in China is expanding at its slowest pace in four months, according to HSBC, as the world's second-largest economy continues its slow recovery. The bank's preliminary Purchasing Managers Index (PMI) stood at 50.4 for the month (a reading above 50 indicates expansion) which represented a fall from 52.3 in January. It is thought that the figure may reflect uncertainty in overseas economies and a lack of clarity in China's fiscal policies at present. However, the fall is not seen as disastrous by economists with Qu Hongbin, an Economist at HSBC, maintaining the drop was merely a blip saying, "The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth." At the London close the Dow Jones was down by 5.45 points at 13,995.12 and the Nasdaq was up by 7.30 points to 2,720.79. 
In London the FTSE 100 increased by 19.67 points to 6,355.37; the FTSE 250 finished 16.84 points up at 13,685.70; the FTSE All-Share grew by 9.66 points to 3,345.84; and the FTSE AIM Index crept up by 0.01 points to 746.79.  Broker Notes Canaccord Genuity retained its "buy" recommendation on oil exploration and production group Afren (AFR) with a target price of 200p. The broker is impressed with how the firm has outperformed its peers since the start of 2013 with its shares rising by 15% - ahead of the average 5% growth for similarly sized exploration groups. Furthermore, Canaccord is of the opinion that there is significantly more value to be added in Kurdistan through proving up the asset base and a clearer resolution regarding oil exports. The shares slipped by 0.1p to 145.2p. N+1 Singer re-iterated its "buy" recommendation on fast food group Domino's Pizza (DOM) with a target price of 605p. The broker is impressed with the group's full year results which show "solid resilience", with the e-commerce strategy proving to be very successful. Significantly, in the mid/long term the broker feels that the current German expansion programme will boost shareholder value as it takes up the growth baton from the UK. The shares fell by 12p to 525.5p. Cantor Fitzgerald maintained its "buy" recommendation on orange plantation owner Asian Citrus (ACHL) despite an expected drop in year-on-year production. Cantor is encouraged by the commitment the Chinese government has shown towards agricultural communities and believes the increased focus on the sector will stand Asian Citrus in good stead. The broker looks beyond 2012's disappointing results and cites the firm's 67% capacity increase in fruit processing as further reason to be positive about the shares. The shares were up by 1.5p at 31.75p. 
Blue-Chips Bunzl (BNZL), the consumer product manufacturer, posted revenues of 5.36 billion pounds for 2012, 5% higher than 2011, while pre-tax profits grew by 6% to an above expected 323.9 million pounds. The growth was a result of both organic growth and the impact of the firm's 272 million-pound spend on acquisitions. Geographically, underlying profit at the group's North American business, which accounts for over half its sales, was up by an impressive 8%, which more than offset margin pressure from its European operations. The shares increased by 4p to 1,225p. Diversified food and retail group Associated British Foods (ABF) expects results for the six months ended 2nd March 2013 to be higher than expected, driven by a robust trading performance from its Primark business. Primark's first half sales were up 23% on the comparative period, with increased margins reflecting the benefit of lower cotton prices and increased sales. The increase in profitability at Primark more than offset lower profits from the group's sugar business, which suffered from unusually low sales in China. The shares were down by 15p at 1,815p. Engineering giant Rolls Royce (RR.) has been awarded a $40 million (26.46 million pounds) contract to supply gas extracting equipment and related services at the Uzbekistan section of the Turkmenistan-China natural gas pipeline. Under the agreement Rolls Royce will provide Asia Trans Gas three gas turbine driven compressor units for operation at a compressor station on the Uzbekistan section of the pipeline. This is the latest in a string of contracts won by the engineering group and the general sentiment around the stock has been positive of late with Citigroup, for example, retaining its "buy" stance on the stock last week, increasing its target price from 1,070p to 1,200p. The shares lost 9p to 1,029p. 
Mid Caps Premier League football club owner Arsenal Holdings (AFC) posted a pre-tax profit of 17.8 million for the six months to November 2012, down from 49.5 million in the comparable period. A near halving of profits from player trading to 23.2 million pounds was to blame, along with amortiation charges of 19.9 million pounds. Nevertheless, the firm ended the period with cash of 123.3 million pounds, which gives manager Arsene Wenger much required funds to invest in trophy seeking. The fact remains that fourth division Bradford City have been to more cup finals than Arsenal in recent memory. The shares grew by 500 pounds to 16,000 pounds. 
Wembley - a sight more fresh in the minds of Bradford fans than Arsene Wenger's Engineering group Senior (SNR) posted a 14% increase in revenues to 729.8 million pounds for 2012 while pre-tax profits grew by 19% to 86.7 million pounds. The growth was boosted by record demand for aircraft parts, with both Airbus and Boeing posting record aircraft production rates during the period. The increase in profitability was also significantly helped by the 54 million pound purchase of UK aircraft wing and seat producer Weston back in 2011 and the company said it is actively seeking similar bolt-on takeovers. The shares gained 15.7p to to 237p. Insurance group Hiscox (HSX) reported a surge in pre-tax profits to 217 million pounds in 2012, up from 17.3 million pounds in 2011, despite being hit by claims from Hurricane Sandy which devastated the Caribbean and the US back in October last year. The firm attributed the rise in profits to a "good underwriting performance" as well as an excellent return on its investments. The encouraging results have prompted broker Espirito Santo Execution to re-iterate its "buy" stance on the group with a target price of 492p. The shares jumped by 16p to 514.5p. Solid state lighting group Dialight (DIA) announced a 26.7% increase in pre-tax profits to 19.7 million pounds for 2012 as lighting revenues grew by an impressive 72.7% to 45.5 million pounds. The Cambridge-based business capitalised on the shift of the industrial; lighting market towards solid state lighting and have had to double its sales-force to keep up with the demand for its technology. Solid state technology has the potential to save more than 50% of the energy bill and guarantee up 10 years in uninterrupted lighting. The shares climbed by 34p to 1,199p. 
Small Caps & AIM Recruiters Staffline (STAF) reported a 13% increase in pre-tax profits to 8.5 million pounds for 2012, while revenues grew by 27% to 367 million pounds. The company cited the continued growth of its OnSite Platform which grew by 16 sites during the reporting period to 179 and the impact of four acquisitions, including Select Appointments Limited, as reason for its success over the year. The shares were down by 7.5p at 330p. Oil and gas producer Nostra Terra Oil and Gas (NTOG) revealed that it surpassed a break-even position last month as a result of greater than expected production from its wells in the Chisholm Trail prospect and solid production from the rest of its portfolio. The company went on to say that it now expects revenues generated in January to be $110,000 (73,000 pounds), more than double the November 2012 figure. Broker HB Markets retained its "speculative buy" stance back in January. The shares were up by 0.015p at 0.55p. Litebulb Group (LBB), which helps to bring products to market, has received exclusive UK distribution rights for the BLINK mints confectionery product range and has since secured a purchase order from WH Smith for the product. Under the agreement Litebulb will supply 315 WH Smith stores with the mints which have already proven popular in Europe, Asia and the Middle East. The shares grew by 0.01p to 0.7p. 
Platinum producer Jubilee Platinum* (JLP) has completed transactional agreements to acquire Platinum Australia (PLA). Under the terms of the agreement, PLA shareholders will be offered one Jubilee share for every 2.593 Platinum Australia shares held. Jubilee argues that the enlarged group will significantly increase its presence in South Africa giving it strong prospects for expansion via the development of its near surface resources. The shares slid by 1.25p to 10.125p. Clean energy firm AFC Energy (AFC) has delivered its first fuel cell electricity generating system to Industrial Chemicals Limited, a UK commodity chemicals producer. AFC IS currently installing the world's largest alkaline fuel cell energy system at ICL's plant in Essex UK. A European Union grant of 6.1 million euros will support the project from April when the first beta fuel cell system is predicted to be completely installed. The shares fell by 1p to 32.5p. Arcontech (ARC), the real-time software specialist, announced a 22% increase in turnover to 848,000 pounds for the six months ended 31st December, helping operating losses to fall by 23% to 262,850 pounds. The group attributed the progress made towards profitability to an increased level of recurring revenues (which now cover 82% of the cost base) and tight control of operating costs. The shares remained flat at 0.08p. * Jubilee Platinum is a corporate client of Rivington Street Holdings, the ultaimte owner of UK-Analyst. | 
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