The Observer from London, Greater London, England • 17

17 BUSINESS OBSERVER CITY THE OBSERVER, SUNDAY 21 SEPTEMBER 1980 Willis Faber joy ew -growth share market on the hop as Willis Kabcr demonstrated last week. News nf the L1.H8 mil I ion rise to 11.94 million in half-yearly pre-tax profits and higher interim dividend brought forth a 34p rise to 2fil)p in Willis's Ordinary shares, and put the spotlight nil the 6.1 per cent yield. It also gave a fillip to shares nf insurance brokers generally. One Willis Faber, nf course, does not make an entire season of happy statements. But ii is bound to stimulate a more hopeful view of insurance brokers' prospects.

All that is missing is for insurance brokers to start ia. VK. A NEW growth share has emerged to titillate stock ket interest, li is Aeronautical General Instruments, whose name does not do it full justice. A is really an electronics company, specialising in telecommunications equipment, reconnaissance cameras and general optics. has come to the forefront primarily because of the Post Office's major programme for replacing its telephone coin box system.

A is a favoured Post Office supplier of many years' standing, and has already secured some sizeable orders for new electronic mechanisms far coin boxes, which it is making under licence from a Swiss company. And it expects plenty more orders from the same source in the years ahead A has also just won a large order from the US for sophisticated aerial camera equipment, and has plenty of specialised defence work on its hands. Chairman Dearlove is keeping his cards close to his chest but he does admit that TONY McGHATH De La Rue chairman Sir to slim the shares. need to slim i i i i .1 jtw.il 1 cViaroc hnarc Httlp Quilter's Novo coup Arthur Norman: Time Dinloma is to nca enn Why stock market jumbos CTnrt' maikpt pa ivivni eh Keith Wickenden fulfilled. Ambiiion direction at the top, he will also be able to put EF's considerable cash flow and pro perty assets behind Singer v- uiuiuoij resemblance to the underlying assets employed these days in the business.

Other notable stock market jumbos are Sun Alliance London Insurance (Ordinary shares 808p), Electrocomponents (714p) and Guthrie Corporation (818p). Perhaps even more noteworthy is that a number of stock market heavyweights are companies which pride themselves on being small investor-oriented. Great Universal Stores (Ordinary shares 476p), J. Sains-bqry (510p), GEC (530p), and BP (362p) are just four cases in point. Nor is it only in particular sectors of the stock market that jumbo shares are herding.

They arc to be found all over the place, although the banks, insurance, property and oil sectors seem to breed most. The shares of the clearing banks are particularly prone to heavyness, with Barclays (Ordinary shares 43Sp) to the fore. It is a regrettable trend, for the stock market is already polarised far too much for comfort around the big institutions. go in for a slimming exercise, aiming to become more appealing to investors at large. Not that it has been doing at all badly in winning support.

But the current 515p price of Diploma Ordinary shares is offputting to small investors. Marketability, too, is not as good as it ought to he for a group with a 53J million stock market valuation. The share split to be made will result in the number of shares in circulation rising from 10.4 million to 26 million, trimming the price back to 206p. The end result should be a better two-way market, with less jerky movements in the share price, and hopefully many more shareholders in due course for this broadly-based holding company. There are many other companies who could take a leaf out of Diploma bopk and slim down their shares.

De La Rue, in particular, could gain much from such act Its Ordinary shares are not, a mighty 875p. a reflection of the fact that its share capital all in all, a pretty powertul combination. International (up 62 .8 per But it will take time for cent) (up 58.2 per this deal to show its paces, cent) and Boots (up j.J per Meanwhile EF will continue cent). to be heavily dependent on Also to the fore at this its ferries and property ex- stage are Dunlop (up pertise for growth. These are per cent), Blue Circle Indus-still doing their stuff, and tries (up 46.3 per cent), providing good support for Bcccham Group (up 3 per the Ordinary shares which cent), London Brick (up 35.

are at 169p to yield 4.4 per per cent) and Marks cent. Spencer (up 34.2 per cent). THURSDAY'S disappointing half-yearly results from Guest Keen and Nettlefolds, featuring a 58 per cent proits fall and lower interim dividend, have proved an ill wind thai has blown stockbrokers Hoare Govett some good. The brokers readily accommodated sellers of around I million Ordinary shares and had no difficulty at all in re-housing the shares among their many influential institutional clients. the order book is substantial and that the group is expanding much faster than ever before.

There are not many companies which can boast such a happy state of affairs just now, which is why the Ordinary shares have been moving ahead rapidly. They have more than doubled in the last few weeks alone, and are now 565p. For all that, they may only just have begun their real success story. The point is that the shares are a narrow market, with only 1.6 million in issue and nearly half of these in the hands of various point, and here brokers Quil-ter, Hilton Goodison have done particularly well. QHG have, for instance, managed to get United Kingdom buyers into 5 per cent of the share capital of growth share Novo Industri in the past three weeks alone, a major development for a stock market that usually sees little excitement.

The fact that the big UK institutions are becoming more international in their outlook is, of course, helping firms like QHG. For it provides them with considerable financial firepower. In the second quarter of 1980 alone, institutions increased their foreign exposure by 200 million. All the same, most institutions still have only a modest overseas investment exposure so we can expect plenty more excitement. there is 120p of net asset backing for each Ordinary share, and even that is conservative as the property revaluation now in progress will prove.

Mean-ivhile, there is an S.7 per cent yield to sleep on. THERE should be plenty of activity in the new 91 per cent convertible unsecured loan stock of Rio Tinto-Zinc when dealings get under way on Tuesday, liven at this early stage market men arc talking confidently about a handsome premium over I tie price (par) at which the stock is being offered (o Ordinary shareholders. The big attraction of the stock is that it is convertible into Ordinary shares in the years 1984-1999 at the rate of 20 shares for every 100 of stock. This implies a conversion price of 500p for the shares, only marginally higher than the current 475p market price. DAVY CORPORATION'S acquisition in mid-1978 of 29.95 per cent of civil engineers and building contractor A.

Monk was none too clever. Davy paid 3.316 million for the stake, whereas the whole of Monk is now capitalised at only 3.1 INSURANCE brokers, once the dariings of the stock market, have had a hard time of it since sterling began to give other leading currencies, notably the dollar, a run for it. With so many of their fees earned in foreign currencies, the brokers have had to run much faster merelv to maintain profits, a feat that not all have managed to pull olf. But just as the stock market got too starry-eyed when things were going well for the brokers, so it has been taking far too jaundiced a view of late. The result is that brokers can catch the slock A new dawn for Singer MERCHANT bank Singer Friedlander has, 1 predicted here last week, found itself a new, powerful parent and one that believes in giving enterprise a free run.

And for buyer Keith Wickenden, chairman of European Ferries, the purchase fulfils a long-held ambition. is not Wickendcn's first choice merchant bank, however. He had previously eyed up Rea Brothers, buying a near 5 per cent slake, as I But Walter Salomon, the Rea Brothers chairman and guiding spirit, would have no truck with Wickenden, leaving the EF chairman free to seize on the opportunity presented to him last July when one of the Singer directors paid him a social visit. From that chance meeting in Wickenden's office has emerged a 23i million cash deal, and a sale of the Rea Brothers stake at a nice It has also led to an instant friendship between Wickenden and Singer's leading light Tony Solomons. Singer has lost some of its entrepreneurial sparkle in recent years, but Wickenden is just the sort of man to rekindle the flames.

And as well as giving entrepreneurial Birmingham B3 SEN, JpaSaBIH rD To: The Manager, Naticmal'WestnunstwBank limvesttinnieinit AccoMintts companies linked with merchant bankers Rea Brothers. While this tightness has helped the share price, it has also been a handicap in that the big institutional investors have not been able to exploit A G. But marketability should be improved with the one-f crone scrip issue that 5s in the pipeline, and one can also see a rights issue on the horizon, if only because the group is going to need a lot more working capital if it is to grasp all the opportunities that lie ahead. Provided A delivers the growth which its heavy order book suggests, the shares should become an institutional favourite. Although the share price has run ahead of itself, particularly on yield considerations (the yield is a tiny 0.9 per cent), the group's market capitalisation is still only 9 million, leaving plenty of scope for further advance.

AiG has, indeed, the look of a budding Racal Electronics and the more evidence we get about its capability, particularly in profit terms, the more that sort of comparison is going to be made by City men. All of which has favourable implications for the various Rea Brothers companies that hold stakes in A G. particularly Fashion General Investment. owns 115.000 shares, worth 650,000. This is only one of many investments held by which recently had a 1.8 million capital windfall from the takeover bid for Furness Withy, in which it had a stake.

The market capitalisation of is currently 3.5 million, which represents a big discount on the value of the underlying assets. The last asset figure that the board, headed by Dearlove, produced (for the year ended March) put the break-up value of each Ordinary share at 279p, but it is now probably well over 300p, putting the 235p market price of the shares in a most favourable light. million. But with Davy's own Ordinary shares in good form (they hit a new 1980 high of 120p last week) an opportunity presents itself to mop up the balance of Monk on the cheap. Monk's Ordinary shares, currently 3Up, are backed by net assets of 66jp.

ROYAL Bank of Scotland is now beginning to get the appreciation It deserves. The Ordinary shares, 81p on 10 August when I rated them the bargain buv in banks, moved up to a 1980 high of 96p last week. But that still leaves plenty to go for. THE ORDINARY shares nf bullion dealers and metal refiners Johnson Matthey are riding high on takeover speculation, putting on 29p to 2SSp last week alone. This is not the first time that JM has been subjected to such speculation, although there are more grounds for expecting a bid now that Charter Consolidated has built up a 28.1 per cent stake.

The fact that Charter's own shares arc also firm at 257p has added fuel to the flames as has Charter's need to find a new home for the 104 million cash to Co. Reports Service, Business Observer. 8 St Andrew's Hill. London EC4V SJA. AAH.

Holding company with interests in fuel distribution, builders' supplies, pharmaceutical supplies, engineering, road haulage, and agricultural products. Mixture has proved a happy one, with growth for 'many years now. topped off in 1979-80 with record pre-tax profits of 9.1 million. But current year has shown no growth to date. Lcp Group.

Internationa! freight forwarders with ancillary services in export packing, insurance and travel. In brilliant form last year, lifting pretax profits by "50 per cent to 6.8 million, which means that profits have doubled in the last hve years alone. Has Rothschild Investment Trust aboard with a 20.7 per cent stake, which could always lead to still closer links. Jones, Stroud (Holdings). Makes fabrics, accessories and materials for the textile and electrical industries.

Has been undertaking a major capital expenditure programme but has so far had little to show for it. Pre-tax profits last year were-down from 2.8 million to 2.1 million and a further setback is expected in the first half of the current year. But at least bank borrowings, shown at 5.6 million, are expected to fall markedly (last vear interest charges took Has a 22 per cent stake in Fothergill Harvey, which could always bring about still grander things. lioardman (K.O.) International. Engaged in importing and wholesaling of garments, converting imported textile piece goods, and commercial printing and stationery.

Has been reorganising in an endeavour to get back to profitability after last year's substantial loss. The moves are having their desired effect for a profit is expected this year. Centreway. Holding company with manufacturing interests in footwear, metal pressings, and rubber products; also in motor and truck distribution, leasing and property. Blotted its good record last year with a drop in pre-tax profits from 1.6 million to 1.4 million and says current year lacks promise.

But reckons it can seize any opportunities that come its way. THE CITY has always seen the ending of foreign exchange controls last November as a heaven-sent opportunity to sell its expertise more widely. Now we are beginning to see some of the results. One example is the stream of successful foreign company share dotations in London of which Mitel Corporation and Sea Containers are the latest examples. Even the hitherto reluctant Japanese are now looking at the London market with new interest, and next month will see the giant Toshiba Corp.

have its shares quoted here. Another benefit that the is deriving froir the new freedoms is in activating hitherto sleepy overseas markets. Denmark is a case in THE CHANCES of Algy Cluff merging Cluff Oil with CCP North Sea Associates have further improved with Cluff advancing its stake another notch to 2S.2 per cent, a development that helped CCP Ordinary shares put on 7p to 257 last week. WOODWORKING machinery specialist Wadkin is certainly having its problems, as the half-yearly loss and reduced interim dividend announced last week show. But the Ordinary shares, now languishing at 76p, als have plenty of assets supporting them and that could well lure a takeover bidder.

In the past Wadkin has been eyed up by 600 Group, which might well think llic 240p-per-sliarc net asset backing appealing enough to make a move now, CHUBB SON looks more and more like a taken ver prospect. The group, a leader in security svstems, has not been short of suitors and its pull-out from cash registers, which had given it lot of headaches, could reactivate interest. The big draw is the net asset strength. Against a share price of 89p, Dixons' AFTER a 4,732 per cent rise in pre-tax profits in just 10 years any business can be excused for taking a breather. But Dixons Photographic, which attained this breathtaking growth during the 1970s, is far from sitting on its laurels.

The group has an extensive programme of positive explains chairman Stanley. Kalnis in the 1979-80 report, adding for spice that this involves different concepts of marketing and product Dixons, which specialises in leisure products, currently has 225 branches but Kalms reckons that its proven formula is capable of being successfully sus- SHARE SPOTLIGHT Willis Faber chairman Ronnie Taylor Getting the breaks. getting the currency break: again, and that day may uoi be all that far off. Winning with Plessey lilt 1'RUNICS group Plcs- sev is the share that no competitor in our popular Investor nf the Year competition can really afford to be without. The competition may still have 31 months to run, but such has been the mileage clocked up by Plessey that nothing short of a miracle will displace it as the top share.

Competitors were asked at the beginning of 981) to nominate the live shares which they thought would show the biggest capital gain in the year. Plessey has so far amassed a handsome gain of 132.4 per cent. This puts it well ahead of its nearest nnr sum of 1 I written notice of withdrawal I I i amnTirttTuirnnrawnwiiimmaaciorCTervijiuuum hidden promise that has just come its way as a result of the BP takeover ot Selection Trust, wlucli Charter had a big stake. IN GOOD form just now arc the Ordinarv shares of international traders Steel Brothers Holdings, up 20p lo 165p last week alone. What the buyers are counting on is a downward drift in sterling in the months ahead, which would make me group's large foreign earnings that much more appealing, tor spice there is that 38.2 per cent stake in the bands of British Commonwealth Shipping, which could always lead lo takeover developments.

A. CAPITAL raising operation mav well be on the horizon for Booker McConnell. tne international food, engineering and trading company. Not onli arc borrowings expected to rise oy a further 20 million this year, but it seems that acquisitional appetites have not been sated bv last week's 7 million grocery deal- The fact that tne Ordinary shares have stood up remarkably well to disappointing halt-vearlv results (they have actually risen 4p to 54p since) must also be giving the board plenty of food for thought. Lord Weinstock: Practising what he Why GEC is tops ELECTRICAL giant GEC has won more than its fair share of accolades over the years but winning the latest of 'The Observer's' Report of the Month prizes has given chief executive Lord 'VVein-stock special pleasure.

Weinstock believes fervently that if business is to succeed it needs good communications channels, particularly with employees and shareholders. And not onlv does he practise what lie preaches, but he does it in such a way as to command attention. The Tact that GEC's 1979-80 report has been one of (he most popular of all time in our Company Reports Service, with S27 requests, testifies to that. Thai is not to say that GEC did not have some stiff competition for the Report of the Monlb prize. RedJantf, Plessey, Baker Perkins.

Piikinglon Bros, Racal Electronics. Halma and Scottish Newcastle Breweries were others to catch my attention. But none could quite match the GEC report for getting its corporate message across, and for style and inno-valiveness. With (he accolade for winning goes a special gallon bottle of 12-year-old Chivas Regal whisky kindly donated by Seagrams UK. 4S iiS0pia.

6 months' notice of withdrawal 3monthsTnoticeot witnarawai i NatWest Investment Accounts Office, I For people with fTfi05i 1 We wish to open a NatWisfc Investment: Account with a (Mirurnura 2,500. Maximum ipu.uuu. jvminpies ol jyvu CheqMesshouldbeTnadepayabktoNatwnalWestminsterBank be fl IWe wish the interest to (tick appropriate box): JO IWe undertake to give (tick appropriate box): I I 3 calendar 1 COMPANY REPORTS SERVICE taincd in at least twice as many outlets. And he stresses that the group has the financial strength to support such ambitions. All uf which suggests that plenty more excitement lies ahead for this high street retailer which ended the last decade with sales and pre-tax profits of 219 million and 10.9 million respectively.

If you want a copy of the Dixons report, or any of the others featured below, simply follow instructions in the coupon and return this within 14 days London W1 6HN Profit 3,443 Turnovarm 23,512 2-3 Op 10'49p 1-841p 7-94p 2.559 18,306 23,512 19,306 3,443 2,559 32B ZOO 3.115 2,359 I 1 months 6 calendar months accurauiatea an myour NatWest Investment Account paid six-monthly into my bank account as unden the foresight I I I I I 1 your cneque. to put meir money iu atleast three months' notice of withdrawaJ.and we'll give you a bank account with a difference-areally competitive rate of interest. You can keep your money invested firaslongas you like. Interest will be calculated on a daily basis from the day your cheque is cleared to the day you withdraw your money. This interest will be paid to you every six months without deductioa of tax, or if you prefer you can leave the interest to accumulate in.

your account.VVe will send you a statement every six months. Interest rates may be varied from time to time according to market conditions. The current rates are shown above. Changes will be published in the national press and will take effect on your I nvestment Account immediately. We intend to keep our Investment Account interest rates above our 7-day notice deposit rate.

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You don't have to bank with NatWest-just complete this simple Sank. 33ranch Address. JWc'imdcrs tand th at all rate cf interest quoted" are correct at time of going to press but that they may iMvariedfromtimctotime.AnyvariationswilL iccome effective immediately. JAVetrnderstandlhatiflliCKquuTtlpBriorlor" notice is not eiven a charge equal to 34S6 of the i 1 921 Great Portland St, have more than doubled over two years." Turnover Trading Profit Taxation Tadino profit aftertax Dividends persharo Earn lings parfihare 1976 1977 Yefto6thAprJ ACnumberf III''' paidsix-monthlybychequesentto jfexinSetmiAwbikmnaiSmaffXi a the address below mustbetnamtair at all times. 1373 1979 1330 1980 1979 E'OOOs '000s 1 CAPITALS OB2V9SO application form and send it with Usual gi-rt'f) (In the caseoj joint accounts all applicants mistiign) NatWest Investment Accounts are particularly beneficial for non-taxpayers, because interest is paid without deduction of tax.

THE OBSERVER'S CO. REPORTS SERVICE (1 enclose a large lasl 1irv 12m. self-addressed envelope for each report wanlerj) Duons Photographic Jones Stroud r- aah Boardman IK. O.J Lep Group Centreway NAME ADDRESS National Westminster Bank.