Company news 

July 2008

British Airways Q1 results - 31 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘There is always a higher element of risk investing in airlines, and in the current uncertain economic environment, BA seems particularly short of admirers.

Today's numbers reflect the difficulties of a combination of weak consumer confidence, some ongoing geopolitical tension and, of course, historically high oil prices. With the recent opening of T5 hardly inspiring confidence and the industry facing consolidation due to falling profits, the medium term future looks equally challenging.

The one bright note - the proposed merger with Iberia - may provide a boost in the longer term, but for the moment the market is deserting the shares, with the general view being a sell, even after a 36% dip in the share price over the last year.’

BT Group Q1 results - 31 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘For a perceived defensive stock, BT is really testing investors' nerves, and now of course, without the aid of the safety net, given the recent termination of its share buy-back scheme. The earnings figures are at the low end of analysts' forecasts, although new management are suggesting that investors hold their faith, given its estimate that full year guidance will be met.

In particular, the wholesale division appears to be suffering, although management has in the past suggested that profits generated here remain relatively small when set against the wider group picture.

On the positive, the group's Global IT services division again made progress, whilst retail customer numbers at the group's internet broadband division continued to grow. Overall, the group's strong cashflow remains attractive, supporting a lucrative dividend yield, however, on balance, today's figures are more likely to see a tentatively cautious market consensus opinion coming under pressure.’

HBOS interim results - 31 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘The current trend in global banking stocks diametrically to oppose the news continued again with HBOS, posting a 51% decline in profits whilst seeing an 8% spike in its share price in early trade.

There was a Merrills type reaction to the numbers, in that there were no negative surprises and therefore another contribution to the beginning of the end of the credit crunch may have been made. The actual profit figures were slightly ahead of expectations, and the recent rights issue will help shore up the capital ratio to one of the healthiest in Europe, according to the bank's management.

Concerns still linger in the form of the group's exposure to the UK environment and, in particular, the buy to let market in which Halifax is a major player. Further disposals of assets have not been ruled out if the price is right, and if the economic landscape deteriorates sufficiently. Despite a 71% drop in the share price over the last year, the existence of better value in the sector leaves the shares as a weak hold in market consensus terms.’

Next trading update - 30 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Today's statement again underlines the retrenchment which UK consumers are suffering, further compounded by the increasingly erratic weather. Group like-for-like sales continue to fall, with management understandably remaining highly cautious in relation to the outlook.

However, the statement does also offer some reassurance to increasingly nervous investors, with both earlier management guidance being achieved and confidence being expressed in relation to current full year profit estimates.

Overall, retailing is an extremely difficult place to be, with the clothing arena looking particularly vulnerable to consumer 'belt tightening'. Nonetheless, Next shares have already declined by over 40pc over the last 12 months and the company did have the strength of character to recover from a near terminal experience in its earlier years. On balance, market consensus opinion is neutral in tone.’

Lloyds TSB interim results - 30 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘These numbers represent a cautious opening to the UK banks' interim reporting season, with profits largely pegged back by a hit in investment writedowns.

Whilst the group's exposure to the US sub-prime fallout is negligible compared to some of its peers, it nonetheless remains exposed to the UK consumer and the level of defaults is expected to increase, albeit on a manageable basis. It appears that Lloyds have not totally discounted an overseas acquisition to achieve greater diversification, even though the reported German approach recently came to nothing.

Lloyds has not, of course, been totally immune to the wider credit crisis and the shares have dipped some 40% over the last year. Nonetheless, concerns regarding the sustainability of the dividend have been firmly quashed, with the clear attractions of a near 12% dividend yield remaining intact. On balance, the general market view towards the shares remains neutral for the time being.’

BP Q2 results - 29 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘These are another set of exceptionally strong numbers, echoing the first quarter performance.

Given the tailwind of historically high energy prices, this is somewhat to be expected, although such a strong successive quarterly performance could signal a marked turnaround in the group's fortunes. Despite the strength of the current operating performance, the situation in Russia has cast something of a shadow and the shares have not particularly lived up to their promise, dropping 10% over the last three months, albeit against a wider FTSE100 decline of 13%.

However, the defensive nature of this cash generating machine and its ample 4.3% yield gives investors hope for the future. Royal Dutch Shell is marginally the preferred play in market consensus terms, but opinion on BP nonetheless remains positive.’

Reckitt Benckiser Q2 results - 28 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Once again, Reckitt Benckiser has delivered a solid set of results, supplemented by a confident outlook statement.

A potent combination of shrewd acquisitions - the benefits of the Boots Healthcare International (BHI) purchase are still filtering through - and successful product innovation continue to underwrite growth. Furthermore, an element of relief may also be evident in today's initial positive share price reaction, given recent disappoints from consumer goods companies on the continent, such as L'Oreal.

On balance, whilst some element of caution is still sensible, given pressurised consumers across the globe, a 28pc increase in the dividend payment summarises both the group's strength of cashflow and confidence in the future. For now, market consensus opinion remains resolutely positive in tone.’

Rolls Royce interim results - 24 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Following cautionary comments expressed by management of Boeing yesterday, investors may well be breathing a sigh of relief given the relative optimism encapsulated within today's results.

Management has reassured, remaining confident that profitable growth and positive cash flow can be delivered over the course of the full year. In an era of increased demand for fuel efficiency, the group's order book continues to rise. Even more importantly, the group's push towards recurring service revenues continues to show momentum, with the figure up another 12pc and now representing over half of group sales (53pc).

On balance, despite today's encouraging results, concerns will remain - the highly cyclical airline industry is back in another downturn and fears for the mothballing of aircraft remain. However, management have learnt harsh lessons from previous downturns, from which, the business model has been made more robust. On balance, market consensus opinion currently denotes a hold stance.’

Kingfisher trading update - 24 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘The sharp spike in early trade follows a solid share price performance yesterday, as Kingfisher reported a reasonably solid set of trading figures.

The new strategic plan, typified by cost cutting and margin improvement measures, is still in its infancy but showing some signs of progress, whilst B&Q has shown resilience in the last quarter. Furthermore, the dividend yield is providing a healthy near 6% return and the company seems focused on tightening its belt wherever possible.

Nonetheless, the European economic environment is providing a distinct headwind, whilst the performance of the Chinese operation is currently ailing. There are no signs of recovery in the nearer term for broad prospects and consumer sentiment is likely to weigh further on sales. On balance, and despite a 48% drop in the share price over the last year, the general market view on the company tends towards a weak hold.’

GlaxoSmithKline Q2 results - 23 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘GlaxoSmithKline continues to entice investors with the possibility of potential new drugs and a growing focus on the emerging markets, but for now, underlying trading continues to deteriorate.

Whilst sales of the group's asthma drugs and vaccines progress, the decline in sales for the group's major diabetes drug Avandia remains worrying (-46pc overall and -54pc in the USA). Furthermore, the Consumer Healthcare division, which has remained a positive counterweight to the declining Pharmaceutical division, has also disappointed. Sales of the group's smoking cessation products are suffering growing competition.

In conclusion, the results are likely to disappoint, with only the new management's strategy vision offering some consolation. Whilst shares in GSK have remained something of a safe port in a storm (-4pc over the last 12 months against -19pc for the wider FTSE-100 index) over the last year, declaring a long term recovery in the group's fortunes (-2.5pc over the last 5 years and -36pc over 10 years) still appears a somewhat distant prospect. On balance, market consensus opinion is neutral in tone.’

Vodafone trading update - 22 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘The CEO would not have wished for these numbers as a swansong, nor the accompanying share price performance, with a dip of over 10% in early trade.

The economic environment has taken its toll on Vodafone, and full year revenue is now likely to be at the lower end of estimates. There remain positives within the statement, such as the ongoing revenue growth in emerging markets, whilst the yield is attractive at nearly 6%.

The stock had tended to show its defensive qualities, with a 7% drop over the last year (prior to today) as compared to 20% for the wider FTSE100. The strong cashflows which the company enjoys provides it with a very positive market consensus, although this may come under some pressure following today's guidance.’

Mothercare trading statement - 17 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Mothercare continues to evade the gloom sweeping across UK high streets - like-for-like sales were up 1pc. Furthermore, the group's march overseas also retains considerable momentum, with overall adjusted sales up by 35.7pc and like-for-like sales up 9pc.

The UK business has been broadened via the acquisition of Early Learning, internet sales continue to grow and progress at the international business remains highly impressive. In addition, product sourcing initiatives via the likes of China and India have been helping to enhance profit margins.

On balance, as with the wider economy, some investor caution is prudent at the current time. However, the group's recent track record suggests management have the pedigree to provide long term progress, as denoted by a highly favourable market consensus opinion.’

JD Wetherspoon trading update - 16 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘Despite the many headwinds which the company is facing, this update is very creditable given the circumstances.

The fact that pubs have had to realign their offerings to include more food, with the associated higher costs, the increased tax on beer, the rise in the minimum wage and the smoking ban have all conspired to make life difficult for the industry - let alone the wider economic slowdown.

Wetherspoon has chosen to go on the front foot with food and drink promotions and has seen some benefit from this strategy. At the same time, the company remains satisfied with its immediate prospects, despite the difficulties it will continue to encounter. Much of this has been priced into the stock, which has seen a 69% decline over the last year, and along with its supportive near 7% yield, this update will do little to harm the current cautiously positive view on the shares.’

Wolseley trading update - 16 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Slumping property markets are clearly taking their toll. The fallout from the housebuilders is rippling out to the secondary building and plumbing merchants such as Wolseley.

Management has been taken decisive action in order to offset the expected decline in profits, including axeing some 6000 jobs since August 2007.  Furthermore, like their housebuilding counterparts, a significant focus is being placed on both reducing debt and concentrating on cashflow, including cutting the dividend payment. However, with Wolseley having ratcheted up it debt levels to over £2.5 billion via a series of bolt-on acquisitions in years gone by, investor nerves remain frayed.

Overall, the update is broadly in line with expectations. However, set against still tightening credit conditions and deteriorating property markets, there is little comfort management can offer in relation to the outlook. For now, market consensus opinion remains negative in tone.’

Redrow trading update - 9 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Profits are expected to materialize in-line with already dramatically reduced estimates, whilst profit margins continue to be squeezed, pressurized by a potent combination of falling revenues and increased costs via the need for growing sales incentives.

Furthermore, it is worth noting that although selling prices have only declined by 1.8pc (£157,000 versus £159,900) the reality of the decline is likely to have been much higher if sales incentives are removed.

Overall, the picture across the housebuilding sector is bleak. Sales revenues have taken a dramatic downturn, whilst the overall financial picture is further complicated by the need for just about all the builders (including Redrow) to write-down the value of previously purchased land.
Banking convenants are now coming dangerously close to being breached and managements across the board are switching their focus from profits to cashflow - heightening investor concerns that the fight has now become one of survival. For now, and despite an 80pc plus fall in the share price over the last 12 months, market consensus opinion for Redrow is still an outright sell.’

Greene King FY results - 3 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Greene King's results may add just a glimmer of cheer to an already downtrodden pub and leisure sector - whilst overall like-for-like sales appear to be on a downward trajectory, the group's experience in Scotland suggests that the initial overhang from the imposed smoking ban is beginning to lift. Both revenues (+6pc) and operating profits (+16pc) at the group's Scottish Belhaven subsidiary improved.

Overall, like just about every consumer facing business, management at Greene King remain cautious regarding the near term future. However, Greene King is a far more diverse business - both via product and location - than that which traded just ten years ago and management remain confident that the group will continue to out-perform rivals - confidence which is expressed via a 14pc increase in the dividend payment. Market consensus opinion is currently positive in tone.’

M&S Q1 trading update - 2 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘In this environment, any negative news is likely to be seized upon. For M&S, today's effective profit warning has sent the shares into freefall, dropping over 20% and bringing the figure for the last year to down 59%.

The fact that the Food division has seen a drop in like-for-like sales of 4.5% has also resulted in a change of management in that area. Of particular disappointment is that food had previously been regarded as something of a flagship product, whereas consumers are clearly beginning to downgrade their shopping habits. M&S's comments have also pulled others down with it, both in terms of upper end food retailing (Sainsbury down 6%) and clothing (Next down 7.5%).

Perhaps in an effort to ‘kitchen sink’ the news, management have also issued a very cautious statement about nearer term prospects, despite continuing to do what they can to improve operational efficiency and bring forward some strategic ideas. Nonetheless, this news will take some digesting and the current market consensus of a hold on the shares is likely to come under some pressure over the next few days.’

HMV Group FY results - 1 July 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘The figures are, in themselves, decent enough but the company remains embattled in its field.

The increase in revenue, largely due to a boost in video games sales, is promising enough. Similarly, the company has booked the sale of its Japanese unit and the company's recovery is proceeding well given the circumstances. The revamp at some of their stores has begun, with the offer of more diverse products and a slightly punchier image. Almost inevitably HMV remain cautious about the road ahead, even though maintaining the healthy 6% dividend yield shows some sign of confidence.

Nonetheless, digital downloads are firmly taking hold and, in any event, the presence of online retailers and the supermarkets is exerting severe pressure on their business model. Not surprisingly, the shares have had a rollercoaster ride, but have held up well, rising 10% over the last six months alone, thereby outperforming the wider FTSE250 by some 21%. On balance, the market view recognises a small glimmer of hope, maintaining a general hold rating.’

Carpetright FY results - 1 July 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Carpetright has today announced full year profits broadly in line with analysts' estimates, but management comments guiding down profit forecasts for the year ahead, whilst not surprising, will not prove welcome.

Furthermore, when a retail veteran such as Lord Harris is warning that conditions ahead may prove to be some of the most difficult that he has seen, then all retail investors need to take note.

The story at Carpetright has been the same for some time - although overall group sales continue to grow, underpinned by store expansion, like-for-like sales in the UK and Ireland have remained under pressure. In addition, whilst like-for-like sales on the Continent have remained positive, the rate of progress has been declining. However, despite this, company profit progression has been underwritten by ongoing improvements in group operating efficiency. The concern is now that sales deterioration will outpace efficiency gains.

On balance, whilst the still progressive dividend and management's significant share stake in the company hold some positive sway, Carpetright, like its retailing rivals, is rapidly falling victim to the credit crunch. Market consensus opinion is currently negative in tone.’

June 2008

Carillion trading update - 30 June 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘On a day when the housebuilding sector is displaying its vulnerabilities via Taylor Wimpey, a name once synonymous with the volatility of construction (Carillion) is highlighting its relative stability.

Carillion has again proved a reassuring trading statement and management continues to demonstrate the virtues of its diversification into the support services arena. Steady cashflows and a growing order book fortify the group's current position. Furthermore, the company's acquisition record is again being underlined, with McAlpine now looking likely to join Mowlem in the archives of success.

On balance, risks are still inherent - debt remains, but is being reduced and the Office of Fair Trading's ongoing investigation into competitive practices remains a concern, although Carillion already looks to have been granted some leniency via its cooperation to date. In essence, with the company now providing exposure to a mixture of business theatres such as government health, transport and defence, along with still growing areas such as the Middle East, market consensus opinion is currently resolutely positive in tone.’

Standard Chartered trading update - 26 June 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘Standard Chartered has for some time now been the darling of the UK banking sector and this reassuring update will do the cause no harm whatsoever.

The bank has had the dual boost of a major exposure to the booming Asian regions, whilst having a relatively light presence in the more difficult European and US economies. This in turn has meant that the US sub-prime fallout has had limited (and indirect) impact, whilst the performance from the wholesale banking division in Hong Kong and India in particular has further bolstered performance. Indeed, the bank remains well capitalised and will be looking towards strategic acquisitions as they arise, resulting from the dislocations of various global markets.

Over the last year, at a time when the UK banks' share prices have been severely downtrodden, Standard has dropped just 5%, even outperforming the wider FTSE100 by 11%. Unlike the majority of its UK listed peers, the company remains positively viewed by the market.’

DSG Intl FY results - 26 June 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘All of the sting accompanying these results was removed in the group's mid May profits warning, with investors today breathing a sigh of relief, given no further bad news.

On the positive, cashflow is being conserved via the substantial cut to the dividend, underperforming businesses are being cut and customer service skills are to be sharpened. Furthermore, the group's online operations continue to grow, with company achieving the milestone of £1 billion of sales.

However, the negatives still remain considerable. Achieving the balance of cutting costs whilst honing customer service skills, both in the face of potentially aggressive new competition from the USA's Best Buy stores, will be difficult. Furthermore, unlike rival Kesa, DSG is potentially attempting to sell underperforming/non core businesses in a much tougher environment, adding pressure to achieving acceptable prices. On balance, most of the hard work is yet to be done, and all against the backdrop of a deteriorating consumer environment - market consensus opinion remains sell.’

Barclays share issue - 25 June 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘The announcement itself is of little surprise, but has nonetheless been warmly received by the market, with the shares having risen over 6% in early trade.

Clearly Barclays' decision that patience was a virtue - as opposed to announcing a full-blown rights issue following the lead of its competitors - has resulted in a rather more measured outcome. Further Sovereign Wealth Fund investment will stabilise the shareholder base, whilst allowing Barclays to shore up its capital ratio and position it more strongly for future growth. The continued lack of an announcement of further writedowns will also provide support to the shares.

Within the UK banks, this may well herald the end of the capital raising round for now. Whilst it remains premature to call an end to the sub-prime fallout in its entirety, this step will nonetheless provide a level of comfort for jittery investors.’

Thomas Cook interim results - 24 June 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘These are sturdy half year results, with the normal seasonal loss having been reduced and the group so far appearing to remain relatively unaffected by the consumer retrenchment.

Management appear to have learnt some harsh lessons from the past - capacity (available holidays) has been reduced, leaving fewer holidays to sell, available hedging tools in relation to both jet fuel and currency movements have been used to the full, whilst industry consolidation is underwriting considerable cost savings. Furthermore, spending on holidays has either moved from discretionary to essential in the minds of consumers - as appeared to be the case in the downturn of the early 1990s - or an attitude of 'one last binge' is being taken.

On balance, investors still need to tread carefully. However, the shares have already retreated from earlier highs this year (over 300p back in April 08) and today's solid results continue to support the positive consensus market opinion.’

Kesa FY results - 24 June 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘Given the wider European economic backdrop, these are a respectable set of numbers, helped along by some continuing strength in sales of laptops and flat-screen TVs.

There is some debate as to the company's prospects. The bulls will point to the potential for a share buyback scheme and selective acquisitions following the sale of the BUT unit earlier in the year, whilst the European operations provide some diversification to the business model. Nonetheless, the management themselves have unsurprisingly set a cautious tone for nearer term trading, whilst weakening economies in different pockets of Europe cannot be dismissed.

On balance, the general market view of the shares has become a very cautious buy, now at levels some 45% lower than a year ago.’

Sainsbury trading update - 18 June 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘Whilst Sainsbury's cautious comments about the consumer environment simply echo those of all around it, the company is having an equal challenge from its immediate rivals.

The rise in underlying sales and the company's continued high profile advertising campaign have provided something of a fillip. That is not to say Sainsbury has escaped a mauling - the 6% rise in the share price over the last three months cannot mask the 21% decline over the last six months, or the 43% drop over the last year. The real story, however, is the strength of growth shown by its competitors over this period, during which time Sainsbury has certainly lost ground.

With the extremely large holdings overhanging the stock after the withdrawal of the Qatari bid in November and rumours of Tchenguiz looking to relinquish his shares, it is difficult to identify a catalyst in the short term. In addition, the recent strength of competitors' performances has left the perception that there is much better value elsewhere within the sector. On balance, the current market view tends towards a weakening hold.’

Woolworths trading update - 18 June 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Today's trading update is broadly in line with expectations, but the details provide few catalysts for long term recovery hopes.

Sales are being achieved, but the question for investors is at what cost to margins. Unfortunately, despite the warmth which the company's brand generates in the hearts of UK consumers, the group continues to be slowly pushed to the edge of the UK retailing scene. A 139pc underperformance of the supermarket sector (Woolworths -74pc / Food & drug retailer +65pc) over the last five years, summarises just how the supermarkets have now stepped into the casual general retail arena. Furthermore, the entertainment business continues to migrate online and the content provides remain the dominant partners in this relationship, whilst the sale of video games is now a very competitive place to be.

On the positive, the group's sale of four stores to Waitrose does highlight value within the group's store portfolio, a pending sale of the company's stake in its joint venture with the BBC (2 entertain) should yield some additional short-term value, whilst hopes that a new management could herald a change of fortune has now become a prospect - as difficult a challenge as that would be. On balance, and given the shares significant downturn over recent years, market consensus opinion is currently neutral in tone.’

UK Inflation for May 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘The letter from the Bank of England to the Chancellor will have arrived, explaining the overshoot of inflation from the stated target.

When the previous letter was sent last April, UK interest rates stood at 5.25% and two further rate rises followed in quick succession, before being eased back to the current 5% level. Whether or not the latest interest rate cuts have had time to wash through to the economy, the fact remains that the plan has been overtaken by the "super spikes" in both energy and food prices. If the MPC's major focus is on inflation, then this news will put some considerable pressure on hiking interest rates - and perhaps as early as next month. In addition, the remainder of the year promises to be equally challenging since the majority of economists expect inflation to peak at around 4% in the Autumn.

The initial market reaction to the announcement was relatively stolid, with the majority of the inflationary increase having been priced in. The Chancellor's response to the letter and the next set of economic numbers will now take on more significance.’

Whitbread trading update - 17 June 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Whitbread continues to prove that there is still life in the consumer sector, although frugal corporate spending has also played its part.

The group's pub restaurant business appears to be benefiting from an element of 'trading down' by cost conscious consumers, whilst aggressive expansion and brand awareness look to be underlying momentum at Costa. As for Premier Inns, in conjunction with a marked expansion policy - 3400 rooms were added over the last fiscal year - cost awareness on behalf of both consumers and corporate travellers is underwriting impressive progress.

On the flip side, management have understandably added a cautionary footnote to the statement, given the difficult economic backdrop, whilst rising input costs - predominantly food costs at the pub restaurant division - remain a concern. However, the group's positioning at the cost conscious end of the market is evidently the place to be, and as such, market consensus opinion remains positive in tone.’

Home Retail trading update - 12 June 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘This is a creditable performance by Home Retail, set against a backdrop of deteriorating consumer confidence and unfavourable spring weather conditions.

The story remains much the same, with sales at Argos proving resilient, but with profit margins under pressure, whilst Homebase continues to see sales deteriorate, but with management duplicating supply chain efficiencies developed at Argos and thereby continuing to improve profit margins. The big concern for investors is that Argos continues to generate the lion's share of group profits. Furthermore, the group's relegation from the FTSE-100 index also adds to near term selling pressure.

Overall, given the extremely challenging outlook for fortunes on the UK high street, prospective buyers continue to hold fire, although given the group's financial and management strengths, the shares remain high on the potential recovery watch list. Market consensus opinion remains favourable in tone.’

RBS trading statement - 11 June 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented;
‘Today's statement does not particularly add any new news, which in itself has not been greeted negatively given the wider economic picture.

Trading reportedly remains satisfactory, if somewhat muted by the ongoing credit squeeze. The ABN integration is proceeding slightly ahead of plan, whilst the sale of the insurance arm will continue to cast a shadow on the stock, dependent on the eventual outcome and the amount received. The success of the rights issue will relieve some pressure in the shorter term, whilst management will be aware that the clock is now ticking.

On balance, whilst market consensus has recently migrated from a weak hold to a hold on the stock - and despite a 45% dip in the share price over the last six months alone - the shares are likely to be pegged back as long as there still remain questions to be answered.’

Tesco Q1 trading statement - 10 June 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘Compared to its own exacting standards, Tesco may have fallen slightly short with this update.

British sales were in line although towards the lower end of expectations, whilst the accompanying statement was noticeably less upbeat than the comments made a couple of months ago at the time of the annuals.  Nonetheless, the business as a whole remains one which is robust and as well equipped as any to weather the turbulent times ahead. The benefits of its international operations - where sales again rose well in excess of 25% - along with its sheer economies of scale, means that any ongoing economic pain will be felt faster (and perhaps harder) by its competitors.

On balance, the general market view towards the company remains positive, although not perhaps to the extent it has been in the recent past. A 16% drop in the share price over the last six months may tempt buyers of the longer term story, whilst the company's defensive qualities should continue to shield it nearer term.’

Halfords FY results - 5 June 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘These are sturdy results from Halfords, underpinning the group's defensive qualities in a hard hit retail sector whilst also highlighting opportunities for growth.

The group's trusted brand name continues to generate momentum in car maintenance sales, whilst a retrenchment by UK consumers may be adding to the attractions of lower cost camping holidays, again playing into the group's hands. Furthermore, high fuel prices and environmental trends give weight to the company's strength in bicycle sales.

On balance, a combination of current positive trading, the prospects for store expansion, particularly overseas, and still lingering takeover speculation, provide for a positive market consensus opinion.’

May 2008

Deloitte football review - 29 May 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"On the face of it, the figures represent a picture of rude health for the top clubs, underpinned by TV monies and general merchandising income.

There are, however, a couple of red flags which emerge from the report. First of all, the current trend for all Premiership clubs is to be (net) negative for player transfers, something which has not happened in the recent past. This will clearly put an additional burden on the cost structure.

Secondly, after a few years of having reached a plateau, players' wages have again begun a slight upward trend. Without getting to the impasse which nearly crippled baseball in the US leading to a cap on players' salaries, clubs nonetheless need to keep a close eye on their biggest item of expenditure.

For some, the very idea of a business model is somewhat redundant, since the presence of a benefactor to dig clubs out of financial trouble is always there. Clubs which find themselves without this subsidy in future could face a very challenging time."

Shanks Group FY results - 29 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented: "These are solid underlying full year results, driven by a combination of continental acquisitions and an improving performance back in the UK, although higher financing charges may overshadow short term. Management confidence in the outlook has been expressed via a 5pc increase in the dividend payment over the full year.

Furthermore, a review of the business by the new chief executive should be broadly well received, proposing relatively low risk organic expansion, based on extending existing waste processing technologies throughout its three core geographical regions.

In addition to company specifics, there is also the wider business environment to consider. The European waste management arena has been undergoing a period of consolidation over the last few years. Since early 2006, a series of takeover bids have been launched for rival UK or European waste management concerns, including a recent bid for UK rival Biffa. Furthermore, along with takeover speculation, currency movements have also been working in the company's favour and the broad move by governments globally to improve waste dispose remains an underpinning factor. Allowing for a near 20pc jump in the share price over the last six months - largely thanks to takeover hopes - market consensus opinion currently denotes a cautiously positive stance."

Vodafone FY results - 27 May 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"Just two years ago Vodafone was in the thick of it. During 2006, the share price languished following a £30 billion goodwill write off from the previous acquisition of Mannesmann, its Verizon stake was in question and the dividend policy was unclear, resulting in calls for the head of the CEO.

Having surmounted these problems one by one, the CEO has now decided to quit while ahead. The Verizon stake has long since confounded the doubters, the dividend policy has become progressive (with a further 11% hike today to an already healthy yield) and the ability of the company to find further areas for growth has contributed to a current customer base of some 250 million.

The succession planning which was clearly in place has not unsettled the shares, whilst the numbers themselves have fallen bang in line with expectations. The company's ability to generate cash, along with an increasing exposure to emerging markets, have combined to push the shares ahead, having already risen 9% over the last year whilst the wider FTSE100 has retracted 7% over the same period. The results are not likely to dent the currently positive market opinion of the company."

Mothercare FY results - 22 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
"Mothercare continues to brush aside the gloom sweeping across the high street, with all of its key financial metrics moving in the right direction, including like-for-like sales on both a domestic (+2.9pc) and international basis (+12pc).

The UK business has been broadened via the acquisition of Early Learning, internet sales continue to grow and progress at the international business remains highly impressive. In addition, product sourcing initiatives via the likes of China and India are enhancing profit margins.

On balance, as with the wider economy, some investor caution is required and the company's outlook statement duly highlights the fact, particularly in relation to the UK. However, the group's recent track record suggests management have the pedigree to provide long term progress, duly denoted via a highly favourable market consensus opinion."

Wolseley trading update - 21 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
"Today's statement reflects comments coming from the major US DIY companies in recent days. US consumers are still retrenching, with any potential enhancement of value being gained via DIY improvements being washed away via falling home prices i.e. they are unwilling to 'throw good money after bad'.

Furthermore, the statement also confirms how the downturn in the US housing market has spread to Europe, the UK in particular, as a marked slowdown has been witnessed in April.

Wolseley management have not been slow in trying to mitigate the problems - a series of restructurings and job losses have already taken place and management have today confirmed further short-term pain as a £50m hit is taken in order to generate £70m annual cost savings. However, given the group's rapid expansion over recent boom years via acquisitions, concerns now linger as to the overall strength of group finances going forward.

Overall, despite the near 60pc drop in the share price over the last 12 months, with the group's markets increasingly in retreat, market consensus remains negative in tone."

Imperial Tobacco interim results - 20 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
Imperial has undergone a major transformation over recent years, adding geographical spread to its existing product diversity - strength in the roll-up tobacco arena via ownership of Golden Virginia and Rizla dovetailed with more traditional cigarettes.

The acquisition of Spain's Altadis provides additional continental European and Latin American market share, adding to the group's still relatively recent move into North America via the acquisition of Commonwealth Brands.

On the negative, today's figures may be marginally short of some analysts' best expectations, the already flagged rights issue is nearer the top end of earlier management estimates and the shares have already enjoyed a stellar performance over the last 12 months - outperforming the FTSE-100 index by just under 24pc. Furthermore, a rights issue tends to satisfy any short-term institutional buying appetite for the shares. On the positive, cost savings, management confidence for the outlook reflected in a 14pc increase in the dividend, along with the shares perceived defensive qualities, all combine to provide a positive market consensus opinion."

Barclays trading update - 15 May 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"Overall, Barclays seems relatively relaxed with its current trading position, noting that Barclays Capital remained profitable in the year to date. In addition, it advised that profit for the first quarter would be below the 2007 number, which was a strong comparative.

However, the real crux of the market's interest remains the group's capital position. Today's statement does little to assuage any concerns regarding the likelihood of a rights issue, with the company insisting on keeping the door ajar. It maintains that it will continue to monitor all options and will clearly not be drawn on speculation as to what form this capital injection might take.

With this uncertainty prevailing and a generally cautious view pervading the UK banking sector at present, the general market view still tends towards a hold for Barclays."

DSG International business review - 15 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
"Probably the only real surprise in today's review is that profit forecasts have not been shaved further. The oversize dividend yield has been suggesting that a cut is likely for some time and the troublesome Italian business had to be high on the agenda.

Furthermore, new management do appear to be admitting that previous management had been complacent in relation to the UK business. Added momentum is being given to internet sales via the group's PIXmania business and the whole experience of buying electrical goods is to be moved forward via greater interaction with the products themselves.

On the positive, DSG owns brands which consumers trust and its store format lends itself to the touch, feel and trial experience of buying electrical goods. On the negative, competition is already intense, let alone America's giant Best Buy Group now coming to the table, and this at a time when disposable consumer income is already on the decline. On balance, market consensus opinion suggests that the mountain may just be too big for DSG to climb, denoting a negative stance."

Bradford & Bingley rights issue comment - 14 May 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"The announcement is not a total surprise and follows the decisions of RBS and HBOS to launch rights issues, and for similar reasons.

The B&B capital ratio was in reasonable health even before this announcement, so the company is playing safe by shoring up the balance sheet further. It may also allow the company an opportunity to cherry pick lending in its biggest market, buy to let, on a selective basis given the currently difficult economic environment.

However, the 8% dip in the share price in early trade is further proof of the general disposition towards the company at present. Quite apart from the general caution surrounding the banking sector, the company remains somewhat beleaguered and the read-across from A&L's announcement yesterday is very much in evidence. For the private investor, the question is whether to commit further capital to B&B at this time, whilst the market consensus remains an outright sell on the shares."

Sainsbury FY results - 14 May 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"On the face of it, these are a fine set of numbers but the initially negative share price reaction reflects concerns over the company's next steps.

The positives are certainly in evidence - the previous announcement of the property joint venture with British Land designed to enhance shareholder value, an increasing investment in non-food sales in-store and online, a 28% hike in profits, continued cost control and the final completion of the recovery plan. In addition, the shares remain underpinned by the property portfolio and management have signalled some confidence with a near 25% increase in the dividend.

Nonetheless, the company is understandably cautious about the impending consumer environment and, quite simply, Sainsbury continues to face extremely strong competition from its peers. Even though the six month offer period imminently reopens, there is no guarantee of a further bid, and the extremely large holdings overhanging the stock after the withdrawal of the Qatari bid in November and rumours of Tchenguiz looking to relinquish his shares remain. The more recent in-line performance of the shares over the last three months, up 5%, cannot mask a 31% drop in the share price over the last year, and the general market view is that it is difficult to identify a catalyst for the shares in the short term. On balance, the current market view tends towards a weak hold."

Compass interim results - 14 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
"The recovery at Compass group remains on track. Organic revenues (+5pc), operating profits (+21pc) and the key profit margin (+0.6pc) have all progressed, aided by ongoing management initiatives and earlier downsizing.

Acting for negative investor considerations, rising food prices are providing something of a headwind, whilst the shares out-performance of the FTSE-100 index by 11.5pc over the last six months looks to have left the shares already looking up with events.

Overall, whilst investors cannot afford to become complacent, given the challenging economic backdrop, Compass is still building on progress made to date. The shares retain defensive qualities in uncertain times and existing management have strong track records in sculpting both performance recoveries and takeovers. On balance, market consensus opinion remains positive in tone."

Next trading update - 8 May 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"The shares have entered a strong relief rally in early trade, set against a sustained period of underperformance. There is a general view that perhaps the shares have been oversold and today's statement could lead to upgrades.

The comments from Next, whilst understandable given the wider economic limitations, were not especially bullish and it seems that even though full year profits should be in line with expectations, this is largely due to cost control rather than an increase in sales. These underlying trends, along with the company's cautious comments, have provided little scope for optimism in the recent past.

Nonetheless, the general market view is to be strong holders of the shares, helped along no doubt by a 36% dip in the share price over the last six months alone, and down 49% over the last year. In addition, the progressive dividends and previous share buybacks have been made possible by some strong cashflows and the company predicts a significantly stronger second quarter, underpinned by a solid Directory contribution."

Unilever Q1 results - 8 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
"This is an extremely encouraging start to 2008 with sales continuing to outpace expectations, profit margins still improving and management remaining optimistic for the outlook. The positives are further cemented by the broad balance of growth being achieved across geographical regions - both developed and emerging markets - and the costs savings which have been accomplished via the group's major restructuring programme.

Taking a step back, it would appear that the group's newly acquired taste for bringing in fresh external management is paying considerable dividends and whilst Unilever still has a long way to go in acquiring the status which fellow consumer goods group Reckitt Benckiser has achieved, today's results mark another big step in the right direction. Overall, given the group's still chequered history, market consensus opinion is to date only cautiously positive in tone, although today's results may well see a further assessment being made."

BATs Q1 results - 7 May 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"These are another extremely strong set of numbers from BATS.
Even though the company is not getting carried away with prospects for the remainder of the year, there is no question that this performance provides a strong platform.

Not only is the group increasing sales in the emerging economic regions to counterbalance the threats to its traditional marketplaces (and at generally higher prices), it is also looking to use the lower cost wages of such regions. Its cost saving programme remains firmly on track, whilst it has also benefited from favourable foreign exchange movements. For the moment at least, the 17% earnings growth is comfortably ahead of its own targets.

BATS' marketing ability, the sheer size of its operations and a keen eye for cost containment are all underlying positives. The shares are supported by an ongoing buyback programme and of course retain their defensive qualities, which has been a help over the last year in turbulent markets, with the shares putting on some 22%. The general market view is that the company is a buy and comfortably the most preferred play in the sector."

easyJet interim results - 7 May 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
"These are clearly turbulent times for easyJet, with the rising cost of oil severely impacting on profits. That said, underlying trading remains reassuring, with the volume of passengers travelling holding up and forward bookings marginally improving over this time last year.

The outlook for easyJet remains extremely difficult to call, with the results coming a day after prospects for $200 per barrel of oil being aired. Furthermore, there may also be an element of reluctance on the part of consumers to give up the luxury of travel, despite the deteriorating outlook, although whether this will last remains to be seen. On balance, with the shares already down by over 50pc in just the last six months and underlying trading remaining solid to date, market consensus opinion is currently favourable in tone."

April 2008

BSkyB Q3 results - 30 April 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"Sky is continuing to fight its corner in an increasingly competitive marketplace.

Whilst there was a net loss for the quarter largely due to an impairment charge in its ITV stake, average revenues per user, net new subscribers and customer churn are all continuing to move along in the right direction.

Ongoing investment in the broadband offering and vague speculation surrounding a European acquisition should lend some further support to the company's aims. The shares have had a reasonable last three months (in line with the broader index, adding 3%) although over the last six months the shares have shed some 16%.

Nonetheless, the overall picture from a market perspective is still broadly positive. Sky's stated aim of 10 million customers by 2010 continues to look eminently achievable, and the success of the broadband offering in little under two years is proof of Sky's ambition and marketing prowess."

Home Retail Group FY results - 30 April 2008

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
"Today's results look likely to mark a high in the group's fortunes, with deteriorating consumer confidence likely to take its toll on future profits.

A commendable set of results has been achieved in a tough consumer environment, with management concentrating on cutting costs via improved supply chain management initiatives and reduced advertising spend. However, over time, sales remain key and management guidance suggesting that Argos may have recently joined Homebase in suffering negative like-for-like sales does not bode well.

Argos has been the driver of the business over recent years, with its home shopping format, growing internet sales and extended home delivery services providing group momentum. But with Argos providing high exposure to consumer discretionary areas such as electricals and jewellery and Homebase's ties to a deteriorating UK housing market self evident, the future looks far more uncertain.

Overall, strong management and strengths in distribution channels, particularly at Argos, line themselves up against fierce retail competition and deteriorating consumer confidence. On balance, and allowing for a 40pc plus fall in the share price already over the last six months, market consensus opinion is neutral in tone."

HBOS rights issue - 29 April 2008

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
"The share price has very much taken the ann