Key week at Cairn as Indian pipeline progress updated

CAIRN Energy’s efforts to develop its main reserve assets in India will become clearer this week when the Edinburghbased explorer gives an update on the progress to a 580 KM pipeline to develop its Rajasthan fields.

Cairn, which was catapulted from relative obscurity into the FTSE100 big time after huge discoveries at exploration assets unwanted by the majors, is yet to tap its largest fields in India, and the pipeline required to transfer the pipeline to refineries on the coast appears increasingly troubled.

While Cairn India, in which Cairn Energy has a majority stake, has been awarding contracts on for the project in recent weeks, there have been threats that work will be cancelled, amid fears by the Rajasthan government that a pipeline out of the province will see it will miss out on sales tax.

Negotiations are believed to have been aiming to have an announcement out in time for annual results today.

Cairn is expected to report a pretax profit of around £30 million on increased oil production, but profits are set to increase to £165m after production from Rajasthan comes on stream, expected in 2009.

Investors in Scottish Media Group will be hoping for good news on the progress of a of sale Virgin Radio, with UTV Media group, which has previously mulled full takeovers, believed to be close to securing an agreed offer.

SMG, owner of the ITV franchise for Scotland, will reveal annual results on Thursday, and while a deal for Virgin Radio may not be completed by then, the deal is believed to be the most likely catalyst for shares, which have fallen to 11p.

SMG bought Virgin for £225m in 2000, but radio assets have fallen out of favour recently.

Analysts now predict the company will not even raise the £85m which SMG now values the business on its balance sheet.

But recent corporate activity – most notably the takeover of GCap, Britain’s largest commercial radio business, by Global Radio – has shown those in the sector value assets substantially above the market as a whole.

At group level, SMG is expected to reveal losses of around £45m, but this includes writedowns worth close to £50m.

Woolworths, which seems to struggle even in boom times on the high street, is reportedly planning to slash its dividend despite an increase in profits this year as it struggles to achieve sustainable profitability. The century old department store reveals annual results on Wednesday, but is expected to reveal troubles from a "very challenging" Christmas, amid ongoing gloom on Britain’s high street.

The current consensus analysts’ forecast for fullyear pretax profit stands at around £23.5m, a rebound of some 47 per cent from last year’s lows.

Management said in January that the operation, which has around 800 stores, was likely to post a small profit after slumping to a £12.9m loss in the previous year.

The turnaround reflects a focus on cost controls and the sale of more profitable items. The 3.2 per cent fall in likeforlike sales in the 49 weeks to 12 January saw a move away from electrical goods such as flatscreen TVs which have seen fierce discounting.

But how far this revival can be sustained in the current bleak trading environment remains to be seen.

Landsbanki analyst Mark Photiades said: "Management’s aim of returning the retail business to sustained profitability looks a tough ask given the current consumer climate, and a potential worsening of macro (economic] conditions."

Bloomsbury, publisher of the Harry Potter Series, set the scene for a strong fullyear results in its most recent trading statement in January, when it delivered the news that profits were set to beat expectations.

The group is now forecast to deliver pretax profits of £17m for 2007, following a boost from the seventh and final instalment in the Harry Potter series, Harry Potter and the Deathly Hallows, which was one of the year’s bestsellers.

But analysts continue to raise concerns for the group postPotter, despite its attempts to show that there is more to the business.

In 2007, the firm also saw success of titles such as A Thousand Splendid Suns by Khaled Hosseini and The River Cottage Fish Book.

Investec Securities is warning it expects pretax profits will fall by more than a third to £10.5m this year as the Potter effect drops out.