Fairly priced.Ransomesgears downRansomes has been talking about
Fairly priced.Ransomesgears downRansomes has been talking about strengthening its modules extcal balance sheet for months and it was only a matter of time before there was a rights issue. Shareholders should also take comfort from the speed with which Mr Leng has moved - within nine weeks he has identified the problem areas across the group, decided on a course of action to sort them out and implemented it.Assuming profits slip back to 1993's level of pounds 107m the shares still stand on a prospective price/earnings ratio of 15, which explains the need for the sizeable correction.That said, having got to grips with the modules problems, Mr Leng has created a strong floor at the current level. Laporte's strength in the ultra- pure chemicals required for silicon chip manufacture helped the division's profits in the first half rise php?year=2010&month=3&day=21 by over php?year=2010&month=3&day=21 a fifth.With those sort of returns from modules Laporte's good businesses, returning to a extcal growth path should be rather easier than yesterday's share price movement suggests. Star performers then included organic specialities, making modules day intermediate chemicals for day pharmaceuticals and peroxides for the petrochemicals industry. That division made impressive margins of 17 extcal day per cent in the extcal first six php?year=2010&month=3&day=21 months and there is no sign that it is suffering the fate of the construction and bulk polymers businesses.Electronic chemicals is another business that has the capacity to cash in on the booming semiconductor industry. Stripping those out can only be good news day php?year=2010&month=3&day=21 for the group as a whole.What the programme probably means is the closure of 10 of Laporte's 100 sites, smaller ones from which many of the best assets will be saved and moved into continuing operations. Job losses will be considerably day php?year=2010&month=3&day=21 less than the 700 a 10 per cent cut in the number of sites might suggest.What really upset modules extcal the City was the suddenness of the apparent downturn in trading at the group after an impressive set of interim figures in September.
He inherited a sprawling chemicals conglomerate, which included some great businesses but also had a smattering of non-performers, taking up their share of management time and contributing nothing in return. The new boss's confidence in that future was confirmed by the promise to maintain the dividend at last year's level.What Mr Leng proposes for the company also makes eminent sense. An pounds 85m provision to cover a far-reaching restructuring will knock a further substantial hole. This, of course, is another kitchen- sink job, like NFC's earlier this week, throwing all the bad news into one announcement as only a new management can afford to do and giving the company a firm base from which to grow earnings in future. On the face of it the market is right to punish the company. Having expected profits of pounds 140m for the year to the end of this month, expectations have had to be reworked on the basis of a promised 10 per cent fall from last year's pounds 123.5m.
Jim Leng, chief executive since 1 October, and the cause of a surge in the share price when his appointment was announced, has had a pretty short honeymoon. Yesterday's 175p fall to 608p was a pretty uncompromising reaction to Laporte's profits warning. Capital gains tax is likely to be based on the value of the Grid on the first day of trading.Directors will be able to count their stakes on Monday. Executive directors are to receive extra dividends worth pounds 408,000 on top of shares worth pounds 1.23m and potential option profits of another pounds 400,000, based on the grey market price.. This means REC shareholders will own just over half the Grid when trading starts.However, there were suggestions in the market that the opening price could be 220p or more compared with the 209p at which Grid shares closed last night on the grey market, which trades the right to buy the real paper next week.Last night's grey market valuation of the Grid was pounds 3.5bn, in line with the estimate made at the time of a complex tax and customer rebate deal with the Government.Estimates of the capital gains tax bill for the Recs were based on a pounds 3.5bn valuation but at 220p the Grid would be worth nearly pounds 3.7bn, bringing a significant extra tax benefit for the Government. PETER RODGERS Business Editor Regional electricity companies were bracing themselves yesterday for tens of millions of extra capital gains tax if the price of National Grid shares jumps significantly on Monday, when official trading begins.The way was paved for the flotation when extraordinary general meetings of seven of the 12 Recs approved distribution of the companies' grid stakes to their shareholders. However, it was immediately given the thumbs down by Republican spokesmen.A new showdown now threatens at the end of next week when the temporary funding agreement for government spending expires..