City Watch

Dividend surge excites Tolent's share price
Tolent's shareholders were fired up by the group's interim results, reported on the Stock Exchange on 5 August. As a result, the group's share price jumped by 20%, leaving the rest of the construction sector players in its wake.

Andrew Emmott, analyst with stockbroker Brewin Dolphin, said: "There's nothing revolutionary going on. It was all in that statement."

What that document revealed was an operating profit of £1.8m in the first half of 2006 on turnover of £76m. The comparable figures for the same period last year were £1.7m operating profit on a £65m turnover.

Dividend, however, dramatically improved, jumping 62% to 5.25p. "It means that for every £100 you have invested in Tolent shares, you get more back by way of dividend," said Emmott. "That makes the shares worth more. Also, the higher dividend shows that the board is confident going forward."

Accounting worries drag down Interserve
Interserve's share price plunged by more than 24% in August as accounting irregularities triggered investors' concerns. Interserve's interim results, due on 4 September, were put on ice as a result of accounting irregularities in the industrial services division. An independent forensic review is now underway. Six senior employees have been suspended after allegations of irregularities (CJ 16 August). Auditors had failed to spot the differences between bank statements and false electronic invoices.

Interserve believes the group's construction division's financial figures are sound. Stockbroker Citigroup is less comfortable with concerns that "further irregularities may be identified as a result of the review of the other divisions".

Citigroup adds: "It is not clear how debtors could have been overstated for so long without affecting the divisional cash flow or without highlighting some particularly old debtors. Management has indicated there is no cash impact, which we find hard to understand since debtors will not be recoverable."

August

• Does Interserve's industrial services division have a future? Closure is seen as being a possibility as margin pressure shows no sign of easing.
• Anyone willing to offer £1 for Amec's infrastructure business? Despite the 'For Sale' sign being hung out nine months ago, no trade buyer has stepped forward as yet. So what's the worry? Perhaps it's Amec's track record of £200m of exceptionals in the past five years. Also, delaying the group's restructuring until the year-end allows for another round of provisions. Even so, Amec's PFI portfolio must be a tasty carrot for someone.

If you're in the know contact john.leitch@rbi.co.uk.
Source: Thomson DataStream

[Contract Journal, 13 September 2006, p12]