08_09_GCI_Nov_09.qxp 30/10/09 16:09 Page 9
GROWTH COMPANY INVESTOR NOVEMBER 2009
UIpauseCOMPANY WATCH NEWS
SDL well worth
Costain: focused
SHARES HELD BY
sticking with
and delivering
GCI STAFF
3i Group, Allergy Therapeutics,
AssetCo, Autonomy, BlackRock
L
anguage translation specialist SDL, our
company profile pick in June 2008, has B
y focusing on blue-chip clients
Commodities Income IT, BP,
with long-term investment
‘the order book
BT Group, Close European
flagged up the fact that both revenues and programmes, engineering and
Accelerated Fund, CustomVis,
profits are running ahead of last year. construction group Costain is
has increased
Diageo, Finsbury Food Group,
The fully listed venture, whose interim delivering defensive growth.
to £2.7 billion –
Inland, Just Car Clinics Group,
results in August showed sales up 10 per Back in August, the company,
Lloyds, M&S Group, Mears
Group, Morrison (Wm)
cent and operating profits ahead 20 per cent, which targets customers with
a new record’
Supermarkets, OPG Power
has informed the market that both measures legislation- or regulation-backed
Ventures, Peter Hambro Mining,
are at the moment ‘slightly ahead of 2008’, spend or ones whose projects remain high-priority despite Prudential, Regal Petroleum,
with general performance ‘in line with recessionary pressures, unveiled strong half-year results to June.
Royal Dutch Shell, RWS
consensus expectations’. Chief executive Profits from operations grew by 11 per cent to £8.3 million, on
Holdings, Sinosoft, TEG Group,
Templeton Emerging Market IT,
Mark Lancaster added that cash flow improved turnover of £508.2 million (2008: £467.5 million), enabling a
Thompson Reuters, Trinity
remains ‘strong’.
CEO Mark Lancaster
10 per cent increase in dividends to 0.275p. In addition, the company
Mirror, Vitesse Media
The larger of its two main segments, kick-started its second half with a record order book and a balance
Significant shareholders in Vitesse
translation services, is still bearing the scars of the downturn sheet flush with more than £100 million in net cash.
Media, the parent company of
in certain sectors, although overall it is described as ‘stable’. In his latest market missive CEO Andrew Wyllie delivered the Growth Company Investor Ltd:
The technology arm, bolstered by the acquisition of ‘dynamic heartening news that Costain has traded in line with expectations in
Sara Williams
publishing solutions’ provider XyEnterprise in the first half, has the second half. Following some bumper contract wins, among them
executive chairman, and
remained more impervious to external economic conditions and an extension to its water sector work with United Utilities, the order
Peter Williams
is portrayed as being ‘robust’. book has increased from £2.5 billion at the end of June to £2.7 billion
non-executive director 32.66%
The company points to some notable contract wins in recent – a new record.
Artemis Fund Managers 14.02%
months, including Vestas Wind Systems, American Heart Levels of tendering activity in established sectors such as water
Chris Ingram 10.06%
Association, Nexway and De Nederlandse Bank, and concludes and infrastructure and in newer markets such as nuclear and waste
that it has the ‘potential for stable short-term performance and remain ‘strong’. And visibility of earnings continues to mount, with
Robert Morton 8.63%
long-term value creation’. more than £800 million of sales already in the bag for 2010, well Unicorn Asset Management 6.53%
Analyst George O’Connor at independent broker Panmure ahead of the revenues already booked for 2009 at this time last year.
Brewin Dolphin 4.23%
agrees, arguing that SDL’s future ‘is software’, after raising its Encouragingly, Costain also unveiled no significant borrowings
Octopus Investments 3.67%
game ‘dramatically’. The City consensus is that full-year earnings and a cash pile of more than £100 million, with its average month-
should come in at around 26.4p, putting the shares, which end cash balance this year ‘running slightly ahead of the average
Clive Hall 3.45%
slumped from our 328.25p recommendation but have since for 2008’. Overall, we remain confident about near- and long-term
Total shares – 24,505,577
bounced back to a premium of 397.75p, on a forward p/e of 15.1 prospects for Costain, recommended by Growth Company Investor
While SDL offers no immediate prospects of a dividend, it should recently at 27.75p. The shares, now slightly higher at 28.5p, should
continue to offer steady growth and the shares are a firm hold. have further to go. Buy/hold.
GCI’s
INVESTMENT POLICY
Vertu Motors – driving profitable growth
1
GCI recommends long-term
investment. Chopping and
changing your shareholdings is
expensive and increases your
investment risk. This is fine if
C
ar dealership consolidator Vertu Motors improved performances. Helped by lower analysts across the City have increased their
you wish to adopt a higher-risk
boosted profits by 47 per cent in the costs and higher volumes and values of used (previously downgraded) earnings forecasts
strategy and hope for a higher
first half to August, aided by rising used cars, margins were lifted from 11.1 per cent to for the full year.
return, but the magazine’s
car values and the government’s new 12.5 per cent, driving pre-tax profits 47.4 per Vertu’s shares, originally recommended on
recommendations are made
on the basis that you are a long-
scrappage scheme. cent higher to £2.8 million. these pages at 77.5p in 2007 and now a rather
term investor.
In a buyer’s market of lower property prices Post the period end, the government’s new disappointing 42p, should outperform
and recessionary pressures, Vertu raised up a scrappage scheme gave a boost, helping to indebted peers in the short and medium
GCI recommends that you invest
in a broad spread of shares. The
near £30 million war chest in June to capitalise deliver 1,686 sales of new cars. In the key term, although 2
success of Company Watch
on these conditions. So far this year it has month of September, when the new
CEO Robert
sector
should be assessed across its
Forrester:
spent around £15 million on buying ten ‘sales registration number is released, Vertu’s new
range. GCI can make mistakes
trading is
sentiment
just like all professional investors
outlets’ in six locations, which contributed car retail volumes rose by 41.3 per cent and ahead of admittedly
and analysts, but we are confident
£14.1 million to the interim top line. like-for-like new retail volumes rose 16.3 per
expectations
remains poor.
that investing in a good spread of
However, with the UK market for new cent, though sales were still down 7.2 per cent Risk-averse
our tips should enhance your
investment performance.
vehicles suffering amid the recession, group on a like-for-like basis. readers that
revenues were reduced by 5.2 per cent to To accelerate its acquisitive run, the group remain invested
If you are not a long-term
£401.3 million in the first half. But lifting the has £21 million of net cash to purchase new should profit by
3
investor, set yourself a stop-loss
on your investments. Establish
bonnet on the results reveals that Vertu is dealerships and buy out its leaseholds. With averaging down
a share price level (say 30 per
managing to polish up some historically chief executive Robert Forrester revealing that at current
cent below the recommended
underperforming businesses and engineer current trading is ahead of expectations, levels. Add.
purchase price) at which you will
sell. This allows you to protect
yourself against news and events
HOW THEY HAVE PERFORMED
that emerge between publication
dates and lowers the risk of you
Caretech Costain Northbridge SDL Tristel
making large losses on individual
Vertu Motors
shares. As share prices rise, lift
your stop-loss price so that you
can lock in gains if you wish.
4
Investors looking to trade
more frequently should ask
for details of our weekly
email service (call 020
7250 7016).
www.growthcompany.co.uk 9
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