Market Report: Schroders' astonishing profits progress

SCHRODERS, the old established City investment house, could be preparing to delight the stock market.

Like others it is reaping rich rewards from the increased activity in the securities industry that has stemmed from the rebirth of investor confidence following Britain's ousting from the exchange rate mechanism.

Profit expectations for the likes of Smith New Court and SG Warburg have been increased sharply. But the progress being forecast for Schroders borders, at least on the surface, on the astonishing.

Last year it announced profits of pounds 67m. But the figure was struck after undisclosed transfers to reserves. When Schroders produces this year's profits, probably in March, it will have to fall in line with EC legislation and reveal its true figures. Already Credit Lyonnais Laing is suggesting pounds 117m. Others, who wish to remain anonymous, think it could be even higher.

At the interim stage Schroders, still family-controlled, continued to cling to the secrecy it has enjoyed for so long. Although it is one of Britain's top companies and a constituent of the FT-SE 100 index it issued the briefest statement - profits were higher and the dividend was up from 3p to 4p. It was accused of treating shareholders with contempt.

If Schroders is trading as well as some believe, the shares, despite their heady progress, are clearly still undervalued.

There is also talk that Schroders is planning another share split. The last was announced in March.

Since Whitbread, the brewer, said this week that it was equalising its voting structure Schroders is the most obvious Footsie constituent with two-tier shares. Forte has a protective arrangement that it could invoke if an unwanted takeover bid appeared.

Schroders' voting and non-voting shares were unchanged at 1,288p and 1,173p. Warburg rose 5p to 840p and Smith New Court 2p to 376p.

The rest of the market was again in confident form. The FT- SE 100 index jumped 16.2 points to 3,108.6, yet another closing peak. The second-line FT-SE 250 index improved 6.8 to 3,477.3.

Properties were firm, with James Capel recommendations helping sentiment. British Land advanced 15p to 413p and Land Securities 9p to 703p. Peel Holdings put on 3p to 328p as the scheme of arrangement over Manchester Ship Canal took effect. MSC gained more than 400p to pounds 34.

Lucas Industries, due to report year's profits on Monday, slipped 2p to 155p. There are hopes that a new chief executive will be announced. Talk is that George Simpson, chairman of Rover and deputy chief executive of the British Aerospace parent, has the job. Profits are likely to be pounds 41.5m against a pounds 67.5m loss.

BAe recovered 11p to 404p as talks over its Taiwan jets deal laboured on.

After Thursday's excitement Guinness edged ahead 2p to 409p. Matthew Clark, buying the Grants of St James's drinks business, jumped 25p to 523p.

Tiphook remained under the whip of its latest trading statement, down another 46p to 123p after touching 116p. The shares have fallen 116p since the announcement.

Automated Security plunged 30p to 102p on its profit warning and row with Barclays de Zoete Wedd.

ADT, the controversial car auction and security group run by Michael Ashcroft, was under pressure. The shares fell 44p to 579p on worries that Laidlaw, the Canadian group, will sell its 24 per cent stake.

The speculation arose following the apparent ousting of Laidlaw's chief executive. The waste disposal group Attwoods, where Laidlaw has 35 per cent, was unchanged at 128p.

Lonrho slipped 3.5p to 121p on the possible boardroom dispute over non-executive directors.

Micro Focus, the computer group that has been doing the City rounds, remained under pressure, falling 160p to 1,450p. Trace, the computer group hit by the Taurus debacle, dropped 11p to 42p.

Manchester United's spectacular performance continued although the shares ended below their best. They touched 600p, closing 11p up at 591p. The shares were sold at 385p in June 1991, and went to a 262p low last year.

British Syphon fell 12p to 83p as terms of the Graystone bid became known. The electrical group Bennett & Fountain lost 1.5p to 2.5p on the 2p a share cash bid from Marlowe.

Storm, the animation and merchandising group that has the rights for a new toy-making material and characters, jumped 4p to 15p.

Hobson, where Richard Thompson, chairman of Queens Park Rangers, is in charge, ticked 2p higher to 19p. Talks are on for a 'substantial' acquisition.

The FT-SE 100 index hit another peak, up 16.2 points at 3,108.6. The FT-SE 250 index was up 6.8 at 3,477.3. Turnover was 477.4 million with 29,311 bargains. The account ends on 15 October with settlement on 26 October. Gilts made headway.

Proteus is the first of the new breed of biotech stocks to attract UBS, the securities house. Its arrival as financial adviser and joint stockbroker pushed the shares 30p higher to 479p. The company hopes to have a drug on sale in the next 15 months that could prevent infection by the HIV Aids virus. Allied Provincial continues as a broker.

Action could be near at the armoured car maker Alvis. It has about pounds 12m cash and is seeking acquisitions to provide work for its Coventry factory. At 42p it is capitalised at pounds 23m, less than the value of its 51 per cent interest in the Singapore-quoted Avimo. It is unable to sell any Avimo shares until after the Singapore group reports figures, probably in December.