MARKET COMMENT
The Week Ahead: Black Holes and Watering Holes

By David Kuo (TMFDragon)
December 6, 2002

As Christmas draws near there are relatively few companies reporting results.

We will find out on Monday if there are indeed any black holes in Mitie Group's (LSE: MTO) accounts. Is never a good sign when a finance director leaves suddenly, just weeks before delivering results. And the resignation of Mitie's bean counter last month forced the company to defend its accounting practices. Mitie was unable to provide a trading update at the time because of stock market regulations concerning close period disclosures. However it did reveal that there was £55m in the bank and that cash flows were fine. 

The leisure sector took a battering following the shock profit warning from JD Wetherspoon (LSE: JDW) last week. Wolverhampton & Dudley Breweries (LSE: WOLV) and Greene King (LSE: GNK) will hope to steady the ship when they report results next week. W&D reports full-year figures on Monday. In October the regional brewer and pub operator said trading would be in line with expectations. The focus however will be on the company's cash generation, which W&D said would provide it with "significant opportunities". Another popular watering hole, Greene King, reports interims on Tuesday. It is also expected to report results in line with expectations. However the company warned in August that sales growth at its managed pubs had slowed. Belhaven Group (LSE: BHG), the Scotland-based beer distributor, reports on Thursday.

The housing sector moves into the fore with results from the upmarket housebuilder Berkeley Group (LSE: BKL). The booming house market in the UK has boosted profits at the housebuilders. Berkeley said at the time of its full year results in June that reservations in the first five months of 2002 were at record levels. However Berkeley warned that the housing market was already showing signs of moderating. Berkeley reports on Thursday.

On Wednesday the mortgage specialist Alliance & Leicester (LSE: AL.) will provide a trading update. The bank has benefited from low interest rates, which has increased demand for home loans. On a less positive note, the Competition Commission dented Alliance & Leicester's plans to expand into the small business market. The payment of interest on credit balances was its key differentiator in the SME market. However the recommendation by the regulator over price controls has effectively removed this differentiator.

Third-quarter figures from Kingfisher (LSE: KGF) are also due on Wednesday. Today the retailer announced that Geoff Mulcahy had resigned from its Board. Mulcahy stepped down as Chief Executive last month. The company has now taken full control of the French home improvement group, Castorama, prompting speculation about what it may do about its electrical division, which owns Comet and Darty.

Notable results

Monday: Mitie Group, Medisys and Wolverhampton & Dudley Breweries.
Tuesday: First Technology, Greene King, Glotel & Securicor.
Wednesday: Anite Group, Alliance & Leicester (trading update), Kingfisher (trading update), BAA (traffic figures), RAC, First Choice Holidays, Severn Trent.
Thursday: Alba, WS Atkins, Berkeley, Belhaven Group & Bespak.
Friday: Teather & Greenwood Holdings.