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By By Damian May

Date: Monday 09 Sep 2002

LONDON (ShareCast) - Construction and support services group Carillion warned two months ago that changes to the accounting of pre-bid costs would lower operating profits by £6m this year and next. The warning sent its shares down 17.5p to 151.5p, and they now trade at 159p. The company is seen making a profit of £50.3m for the full year, in a sector whose performance is coming under increasing scrutiny.



WEDNESDAY: A&J Mucklow has full-year figures. The property development company have made a recovery from last November when they languished below 200p, which at the time led to speculation the company might become a bid target. The company is expected to have a year end NAV of 313p and earnings per share of 14.7p.

The Mail on Sunday said that with good growth opportunities aplenty, drug distributor Alliance Unichem is scheduled to enter the FTSE 100 from this week. The Mail on Sunday has much to praise about the healthcare group. Its share tipster is especially keen on opportunities in Eastern Europe. The company's interim results could provide more sparks, it is expected to make a full-year profit of £179m.

The City is expecting Sir Stanley Kalms, the retiring chairman of Dixons, to report like-for-like sales gains of between 3% and 4% in the UK on Wednesday, with computer games performing strongly after the recent launches of Sony's PlayStation 2 and Microsoft's Xbox consoles. However, any sales increases will come against weak comparatives from last year when the PC and mobile phone markets were particularly sluggish.

In mid-July, Carillion, the construction and support services group, warned that changes to the way it accounts for pre-bid costs would lower operating profits by £6m this year and next. The move came amid rising concern over accounting practices used by support services companies, in the aftermath of revelations at WorldCom and Enron. The sector has under-performed the market by 16% this year. Carillion's changes, which accord with the UITF Abstract 34 regulation to improve transparency of accounting in the construction sector, forced analysts to revise down their earnings estimates for the group. Carillion's warning sent its shares down 17.5p to 151.5p, they now trade at 159p. At the time of the warning, the Independent rated the stock a strong buy, but added a note of caution about poor sentiment in the sector because of Amey's problems. The Independent said that Carillion does not suffer from the same problems with its accounting. Questor of the Telegraph said buy, as did the Times. So with all that support, surely investors can't go wrong. Interim results may prove otherwise and the company is seen making a profit of £50.3m for the full year.

A safe haven in uncertain times, Development Securities has a history of delivering to investors said the The Sunday Times back in May. The paper was especially taken with the group's ahead-of-schedule Paddington construction project in London. Trading at a near high of 441p, the shares were worth a look, they are now down to 382p. Anyway, people can't always be right and there could be worse places to have your money. The company has interim results which could boost the stock and has a year-end NAV target of 454p and EPS of 41.1p.

Insurer Friends Provident had the dubious honour of making Merrill Lynch's list of 'least attractive' stocks recently. Sector stable mates have also been suffering in less than happy times for the stock markets. If interim results don't prove to be a banana skin for the company it may be able to stick two fingers up at Merrill. If not, expect a slide. The company is seen making a full-year profit of £338m.



Outsourcing and construction services firm Interserve said overall results in the first three months of the year showed a satisfactory advance on the same period last year. It said whilst there has been a delay in the commencement of some contracts, the company regard that as "purely a timing issue." So, everything should be fine at its interims. The company is also looking for a new chief executive. Forecast profits for the full year are £61.7m.

Shares in the animal breeding biotechnology group Sygen International rose after it said in July that performance for the year had continued in line with the company's expectations with unit volume and gross profit higher in the second half than in the first. The company is seen making a full-year profit of £12.3m.

AGMs for Merrill Lynch Asset All, Reliance Securities Group, Stanley Leisure. No EGMs scheduled.

Economics:

UK:

9:30am - Average earnings in July are expected to have risen 0.2% on the month and by 3.9% on the year.

9:30am - August unemployment figures are forecast by HSBC analysts to show a rise of 2,500 in the number of people out of work and claiming benefits to bring the rate to 3.2%, up from 3.1% last time.

US:

5pm our time - The Beige Book, a comprehensive collection of anecdotal evidence about the state of the American economy, is expected to paint a mixed and patchy picture. Cars and house sales should have done well in August but manufacturing and non-domestic property transactions are expected to have suffered. In short, little change from the previous month.

THURSDAY: BAE Systems, the aerospace engineer, gives its half-year results. NatWest Stockbrokers predicts pre-tax profits of £385m, down 12% on the same period last year. The broker said headline figures are likely to be uninspiring because of a slowdown in growth at the commercial aerospace division. Despite the woes facing the international aviation industry, European aircraft builder Airbus, in which BAE is a major shareholder, has seen better-than-expected demand.

The Mail on Sunday said that with good growth opportunities aplenty, drug distributor Alliance Unichem is scheduled to enter the FTSE 100 from this week. The Mail on Sunday has much to praise about the healthcare group. Its share tipster is especially keen on opportunities in Eastern Europe. The company's interim results could provide more sparks, it is expected to make a full-year profit of £179m.

Deutsche Bank expects net rental income for the year from Canary Wharf Group to rise from £126m to £152m, while pre-tax profits for the year are expected to show an increase from £42m to £50m. The company, which gives its annual report on Thursday does not pay dividends, but has promised to return £2bn to shareholders over four years, largely through share buy-backs

Corus gives its half-year results and analysts predict operating losses of £200m to £250m from the steel maker. However, of much more interest to the market will be management's update on the merger with Brazil's CSN. The all-share transaction was announced in July and is expected to be completed by the first quarter of 2003. Reports in the Brazilian financial press have suggested that CSN's management may be looking to secure a bigger part of the enlarged entity.

Next has interim results. After giving a poor trading update in May, the City can't decide whether the slowdown in same-store sales growth was a result of a general downturn in consumer spending or perhaps, more disturbingly, a loss of market share. Stockbroker KBC Peel Hunt expects chief executive Simon Wolfson to unveil another solid performance. It is forecasting pre-tax profits of £109m, up from £93m last year, giving earnings of 23.5p per share and a halfway dividend of 10p.

A coffee war is about to break out, warned The Times and The Guardian recently. Caffe Nero has just taken out a £7m loan and is said to be staging a bid for rival Coffee Republic. The speculation has helped boost both retailers. The Daily Telegraph thinks differently. Its sources reckon Nero is not the bidder, however the broadsheet adds that Richer Sounds (the owner of Starbucks) could be a suitor while analysts reckon Coffee Republic could be valued at 7p a share. Anyway, maybe Caffe Nero will tell us what's going on when it issues full-year figures. The company is expected to make a £1.36m profit for the year.

Whittard of Chelsea is expected to make a pretax profit of £0.91m for the full year versus a loss of £0.91m a year ago.

Shares in food producer Geest rose 5p Monday to 503.5p helped by WestLB Panmure upgrading the shares to buy from neutral and its target price to 585p from 500p. The investment bank said the recent concerns over its salad business concerned weather more than company problems and suggests the shares should be trading closer to 14 times earnings, hence the upgrade in price target to 585p. The company's first-half figures are due on Thursday and it is expected to make a full-year profit of £40.4m.

Interims from: Alkane Energy, Atlantic Global, BATM Advanced Communicatons, Chime Communications, Coats, Ennstone, Intelligent Environments, JKX Oil & Gas, Kingfisher, Medical Solutions, Marlborough Stirling, Music Choice Europe, P&O Steam, Peterhouse Group, Pharmagene, Premier Farnell, Trafficmaster, ukbetting, Yule Catto.

AGMs for DTZ, Leopold Joseph. No EGMs scheduled.

Economics:

Eurozone:

12:45pm our time - The European Central Bank holds a press conference after its meeting to decide interest rates but will probably announce continued inaction, much the same as happened in Britain last week.

US:

1:30pm our time - Weekly jobless claims are expected to have continued to rise, roughly in line with the trend over the previous four weeks, and an average figure of about 400,000 is forecast by analysts.

1:30pm our time - The second-quarter current account deficit is predicted by HSBC analysts to be $129.8bn, compared with $112bn in the previous quarter.

If correct, this would give President George Bush the richly deserved honour of helping America's deficit attain the giddy height of 5% of gross domestic product, a new record and significantly more than the 4.3% achieved in the first quarter.

Hopes are high, though, that the deficit could grow more impressive yet over the next few quarters and, if capital inflows start to dry up, possibly cause the dollar to sink still further.

3pm our time - Federal Reserve chairman Alan Greenspan, another example of a rapidly fading currency, will go on about the economy in front of the House Budget Committee. Despite recent stock market falls, rising unemployment and poor manufacturing performance, Greenspan is thought unlikely to announce an interest rate cut - unless the Fed reckons that there's a good chance that growth will collapse entirely in the fourth quarter.

FRIDAY: Interims from Axon Group, Geest, Orange.

AGMs for Aston Villa, AstraZeneca, Intelek, William Ransom. No EGMs listed.

Economics:

US:

1:30pm our time - Retail sales for August are widely expected to have risen another 1%, but strong car sales fuelled by criminally cheap credit are likely to have masked a fall of 0.2% elsewhere. Any nasty surprises in the form of lower sales figures will increase fears that the consumer spending currently supporting the economy will collapse under the weight of public anxiety about the state of the nation.

2:45pm our time - The preliminary reading of September's Michigan sentiment survey might well show that stock market losses, a failing labour market and preparations for a war unwinnable by Americans have taken their toll. Analysts forecast a reading of 86, down from the previous month's 87.6 and compared with the average 88.