THEY were once shunned by polite society and regarded as a stain on the better establishments on the high street. Nowadays, bookies shops are brightly lit, smoke-free entertainment outlets that are attracting customers who no longer see gambling as a
sinful pursuit.
However, it's not been an easy ride in recent months as punters cashed in on a string of favourable sporting outcomes. Every chain reports a fall in profits and two of the biggest – Ladbrokes and William Hill – cut their dividends. But the short and longer term outlook remains positive.
Irish bookmaker Paddy Power yesterday announced a dip in profits but said it was on track to meet its full-year target, sending its shares up, helped by the firm's decision to increase its dividend.
Strong growth in the amounts being staked by customers and the Irish government's decision to postpone a 2 per cent betting tax is expected to offset the impact of paying out on a string of punter-friendly results, including eight Irish winners at the Cheltenham horse racing festival.
It has warned that a potential taxation on online and telephone betting would be difficult to fairly and successfully implement.
According to the company it is reasonable to speculate that the dividend will rise by the same for the full year, and that the group will return to profit growth. Brokers point to Paddy Power emerging as one of the strongest in the sector. In fact, its results this time round compare favourably with what it described as bonanza sporting results this time last year. It was hit hard by Irish rugby's most successful season ever, the stubborn consistency of the English Premier League's "big four" clubs and jockey Ruby Walsh's record seven winners at the Cheltenham festival.
But it increased market share across all divisions, gaining three percentage points to hold 29 per cent of the Irish retail market.
Growth accelerated in its online division – responsible for two-thirds of group profit but presence in towns and cities remains important. In the UK it opened 15 shops to move beyond 80 and remain on target to have at least 150 units over the next two years. It intends up to 30 of these to be in Scotland where it currently has five.
The company has identified the current malaise on the high street and in commercial property as a good time to strike good rental deals.
The pain game
SCOTLAND'S life sciences and medical products sectors have suffered their fare share of pain during the downturn, writes Scott Reid.
Body blows have included the administration of Edinburgh-based pharmaceutical group Ardana and the decision of Stem Cell Sciences to shut its headquarters in the Scottish capital in favour of a base in Cambridge. Against this challenging backdrop, Dundee-based Axis-Shield has been quietly going about its business, developing a range of diagnostic testing kits for use in health centres and surgeries.
Its technology promises near-laboratory quality results in minutes from a single pinprick of blood.
Yesterday's half-time report card from the firm certainly made for healthy reading.
Profits, both on an underlying basis and at the bottom line, up significantly with sales almost a fifth higher at £50.6 million. Most forecasts have full-year revenues knocking on the door of £100m.
While not second-guessing that goal, management were bullish yesterday on the medium-term prospects for the business, highlighting its recession resilience. Chief executive Ian Gilham believes Axis can benefit from the global "squeeze" on healthcare costs, with a greater emphasis placed on cost- efficient diagnosis.
The firm was also keen to play down the threat from unlicensed competition in some of its key markets, saying it was winning back business previously lost to unregulated players.
During the first half, Axis placed a further 1,000 of its highly regarded Afinion test kits, taking the worldwide installed base to 5,000. That total is expected to swell to 6,500 by the year-end.
Afinion is a crucial product for the firm, bringing with it the potential for repeat business generated by new cartridges and test markers.
There was overwhelming support for Axis-Shield in the City yesterday, with both Nomura and Brewin Dolphin saying "buy" and Piper Jaffray citing the stock as a key pick in the UK med-tech sector. There appears little reason to go against the flow. A strong buy.
Bryan Johnston of Brewin Dolphin
ONE TO WATCH
Centamin Egypt
85p unch
Scotsman says BUYCENTAMIN Egypt is a mineral exploration and development company. The company's principal asset is its interest in the Sukari project, located in the eastern desert of Egypt.
Centamin recently confirmed an increase in its indicated gold reserves to a little under 10 million ounces. This news was well received as it underlined the potential of this site, even though it is still early days.
However, the company has a target of producing an annual production of around 500,000 oz of gold by 2012. Centamin has raised some $30 million (£18m) to fund the development of its operations and production expectations are high. Evolution Securities is forecasting the group to being an annualised production rate of 200,000 oz by the last quarter of this year, following company confirmation of its first gold pouring in June.
Investing in any as yet untested mining project obviously has speculative dimensions. Furthermore, gold, the traditional funk hole of the world, is itself a highly volatile commodity. Quoted in dollars, its value is sensitive to the American currency, which is currently under siege on concerns over the outlook for the US economy as a whole, and the country's reliance on enormous inflows of funds from regions such as China to finance its staggering deficits.
Any prospective investor in sentiment must understand the risks but gold has a totemic appeal for many and, notwithstanding the periodic outrageous assaults on tourists, Egypt is a pretty stable political arena, at least by the standards of the Middle East. This is an investment only for those with their eyes wide open but such an attitude should avoid the risk of bumping into something unexpected.
• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.
Stagecoach rumour shakes market
SCOTS STOCKS STAGECOACH, the bus and train operator, dropped yesterday on rumours that it was mulling an independent bid for National Express, its troubled rival.
The Perth-based group is understood to be in the running to snap up parts of National Express if a rival consortium buys it, but talk Stagecoach may attempt to buy the lot sent shares down 3.7 per cent to 142.1p.
Wood Group reported marginally better-than-expected first-half revenues but said recovery in oil services spending could take a year. The Aberdeen-based firm's shares fell 5.2 per cent to 308.4p.
Sliding crude oil prices sent Cairn Energy down 4.1 per cent to 2,479p, despite its Indian business confirming that first oil from its giant fields in Rajasthan will be drawn on Saturday.
Melrose Resources, which reported a 97 per cent fall in first-half profits yesterday, eased 13p to 340p, despite the FTSE-250 oil explorer increasing its production target for the full year.
Medical diagnostic testing group Axis-Shield jumped 29p to 374p after revealing a strong rise in performance in both its laboratory and point-of-care testing divisions.
ProStrakan surged to an all-time high after signing an out-licensing deal for Fortigel, its testosterone cream, for the United States, which could see it receive more than $200 million (£124m) in milestone payments.
Shares, which were trading about 4 per cent lower when the deal was announced, closed up 15.75p or 12 per cent at 148.75p.
Temporary power provider Aggreko, which jumped to an 11-month high on Tuesday's interim results, eased 2.6 per cent to 652.5p.
Shares surge, but no evidence of Apple deal
SMALL BUT BEAUTIFULMESSAGING International, the Aim-listed communications technology firm, yesterday poured cold water on market speculation it was on the verge of a deal with iPod-maker Apple.
Shares in the penny stock had surged by as much as 250 per cent to levels last reached during late 2006, with trading volumes the highest since early 2007 and at more than 100 times their 30-day rolling average.
A spokeswoman for Messaging International yesterday said: "There's various comments about Apple. To our knowledge there's no evidence (of a deal]."
On the Interactive Investor bulletin board, private investors were discussing whether the company would be signing an agreement with software giant Apple.
One trader at Winterfloods said: "Maybe someone… on a website got the rest of the punters excited, but I've seen no reason for them (the shares] to go better at all."
Last week, Messaging International issued a trading update to say that the company "continues to trade in line with management expectations".
The company, which has a market cap of about £1.2 million, is due to release its interim results next month.
