September 1st 2008

Cambridge Index Rises 5.7%

The Cambridge Index edged up 5.7% or 300 points during the week to close at 5,567.3, finishing the month with a gain of 5.3%. The Index reversed its previous week’s losses as all but one of its top ten weighted stocks finished in the black. Johnson Matthey was up 2.7% to 1628.0p, Autonomy Corp. closed higher by 4.0% at 1150.0p, Arm Holdings gained 1.6% to 111.5p and DS Smith rallied 14.0% to 128.3p. Aveva Group climbed 4.8% to 1471.0p, after a broker upgraded the stock stating that the company’s structural growth drivers retain strong upward momentum. Greene King gained 4.7% to settle at 536.0p, despite another round of broker downgrades for the sector and the company, prompted by the slowdown in consumer spending and inflationary pressures. A total of 18 stocks advanced while 14 stocks declined and 10 stocks remained unchanged.

The best Cambridge Index performer was home builder Artisan UK, which gained 18.6%. Other big winners, Sepura, Vernalis, CSR and Domino Printing Science closed higher by 9.4%, 9.0%, 7.8% and 5.7% respectively. Vernalis climbed after posting first half pretax profit of £15.6 million, compared to a loss of £8.6 million recorded in the same period a year ago. ANT advanced 3.2% in anticipation of better-than-expected first half results.

Shares of Alizyme sank 17.7% to 6.5p, making it the worst performer on the Cambridge index, as its cash reserves dropped sharply. Adding to the downward pressure, the company stated that the timing of the Marketing Authorisation Application (MAA) for its ulcerative colitis treatment Colal-Pred is now uncertain. Among other leading fallers, Cyan Holdings, ITM Power, Meldex and Brady were weaker by 8.3%, 7.9%, 6.7% and 6.1% respectively.

The FTSE 100 Index added 2.4% this week to close at 5,636.6, buoyed by gains in banking and energy stocks. Energy stocks rallied as crude prices traded higher and Tullow Oil and Petrofac reported a strong growth in first-half net profits. Banking stocks rebounded strongly amid expectations of an interest rate cut by the Bank of England and as investor sentiments were lifted after data showed that the U.S. economy unexpectedly grew by 3.3% in the second quarter, driven by strong export growth and consumer spending. During the week, the FTSE techMARK 100 Index rose 2.4% to 1,613.6 while the FTSE AIM 100 Index was up 0.8% at 4,076.3.

U.S. markets shed value during the week, with the Nasdaq easing 2.0% to 2,367.5, and the Dow Jones declining by 0.7% to 11,543.6, amid persistent credit market and global growth concerns. Financials stocks lost ground after IMF reduced world economic growth forecast for 2008 to 3.9% and Federal Deposit Insurance Corporation FDIC stated that 117 U.S. banks were on its troubled banks list at the end of the second quarter. The closure of Columbian Bank & Trust Co. and downgrading of AIG also weighed on the financials. Technology shares suffered after Dell warned of a reduced technology spending worldwide. Market losses were somewhat restricted due to better-than-expected growth in U.S. economy and orders for durable goods.

Index Movers

Alizyme PLC

Shares of Alizyme PLC, a biopharmaceutical development company specialising in products for the treatment of obesity and diabetes, sank 17.7% to 6.5p, making it the top loser on the Cambridge index following disclosure that its cash reserves have dwindled to £7.7 million as of end June from £19.1 million in the same period last year. Adding to the downward pressure, a company statement said that the timing of the Marketing Authorisation Application (MAA) for its ulcerative colitis treatment Colal-Pred was uncertain.

The company, in its interim results for the six months ended 30 June 2008, announced that its revenues stood at £0.05 million (six months ended 30 June 2007: nil). Net loss after tax narrowed to £8.9 million (six months ended 30 June 2007: £12.3 million). On the outlook front, CEO Tim McCarthy said “Alizyme looks to build on the commercial and clinical progress achieved during the first half of the year as discussions with potential partners in relation to all products in our portfolio continue. Further license opportunities are being pursued with the objective of building multiple revenue streams and leveraging off the virtual business model.”

Artisan (United Kingdom) PLC

House builder and commercial business park developer, Artisan (United Kingdom) PLC was the top performer among the leading risers on the Cambridge Index, closing higher by 18.6% at 41.5p.

Brady PLC

Shares of Brady PLC, a provider of transaction and risk management solutions for metals and commodities, eased 6.1% to settle at 38.5p.

CSR PLC

CSR PLC, a company engaged in designing single-chip wireless devices, climbed 7.8% to 328.5p. Company CFO, Mr. Will Gardiner will provide an overview of CSR’s strategy, worldwide trends influencing its business, and the company’s value proposition at the Citigroup 15th Annual Global Technology Conference in New York.

Cyan Holdings PLC

Cyan Holdings PLC, a fables semiconductor company providing configurable application software, pared its previous week’s gains, tumbling 8.3% to 1.4p. The company stated that as on 22 August 2008, Rensburg Sheppards Investment Management Limited had a notifiable interest in the company of 6,827,000 ordinary shares, representing 4.56% of the company’s current issued ordinary share capital.

DS Smith PLC

Shares of DS Smith PLC, a manufacturer and distributor of paper and plastic packaging products, climbed 14.0% during the week to end at 128.3p.

ITM Power PLC

Shares of ITM Power PLC, a company focused on new technologies using hydrogen as a fuel, slipped further by 7.9% to 52.8p.

Meldex International PLC

Specialist pharma company, Meldex International PLC, formerly known as BioProgress, shed 6.7% to close at 28.0p, marking its sixth consecutive weekly decline. The company announced the appointment of FinnCap as nominated adviser and broker with immediate effect.

Sepura PLC

Sepura PLC, a supplier of network-independent Terrestrial Trunked Radio terminals and digital radios, rose 9.4% to 73.0p. Leicestershire Constabulary, one of Sepura’s first-ever major customers, has renewed its contract to replace nearly 2,500 hand-held TETRA radios and, for the first time, to add Sepura vehicle radios to its fleet of communication equipment.

Vernalis PLC

Biotech firm Vernalis PLC gained 9.0% and settled at 4.5p, after the company announced that it has posted a pretax profit of £15.6 million for the six months ended 30 June, compared to a loss of £8.6 million recorded in the same period a year ago. The company also announced the successful completion of the phase IIa study with V10153, a potential treatment for ischaemic stroke.

During the first half of 2008, Vernalis restructured its business in the UK, divested Apokyn® and the US commercial operations, settled the loan due to Endo and raised finance from Paul Capital Healthcare. The company, however, still expects to incur further losses which are likely to exceed its existing cash balances.

Revenue for the period increased to £47.9 million from £8.5 million. This included exceptional revenue of £44.6 million, resulted from the early settlement of the loan due to Endo in February. Operating profit climbed to £16.8 million (including an exceptional profit of £26.4 million) as compared to a loss of £9.2 million recorded in the same period a year ago.

Other Movers in the Index

ANT PLC, a provider of embedded application software and support services, increased 3.2% to 32.5p in anticipation of better-than-expected first half results.

Autonomy Corp. PLC, an infrastructure software company, gained 4.0% to 1150.0p. The company has entered into an agreement with Kadaster, the Dutch Land Registry Office and travel company Thomas Cook, to license its Intelligent Data Operating Layer software.

The company mentioned that its pan-enterprise search platform, Intelligent Data Operating Layer, was chosen by KMWorld magazine as a ‘2008 Trendsetter’ for its ability to simultaneously meet an organisation’s litigation and knowledge management requirements.

Engineering technology company Aveva Group PLC rose 4.8% to 1471.0p, after a broker upgraded the stock stating that the company’s structural growth drivers retain strong upward momentum.

Domino Printing Sciences PLC, a provider of ink jet and laser technologies, advanced 5.7% to 295.0p. The company stated that leading pencil manufacturer Faber-Castell tremendously improved the quality of coding on its range of cosmetics pencils through installation of Domino’s DSL laser coding systems.

Brewery and pub operator Greene King PLC gained 4.7% to 536.0p despite another round of broker downgrades for the sector and the company, amid a slowdown in consumer spending and inflationary pressures. A broker downgraded the company citing poor outlook for household spending in 2009, while another stated that UK pub profitability will continue to be under pressure over the next 12 months due to a slowdown in consumer spending and inflationary pressures.