So Mouchel had to shout to get noticed. And its full year results announcement on Tuesday gave it a fair crack: revenue up 46%; profit up 27%; the dividend increased by a fifth. That’s a good result from a Credo favourite.

But did anyone notice? Not to judge by the press - there wasn’t any to speak of - but the shares are up 40p (+13%), so someone’s buying.

[Source, The Daily Mash].

And with that, Credo’s stance of real-economy optimism (see previous posts) is put on hold. We’re OK, so are (most of) our clients; we’ll just have to wait and see

• Bovis Homes might be considering a bid, says the FT;
• Redrow will merge with Barratt, says the Independent;
• Toscafund, a hedge fund with 27% of Redrow, also has a long position in Washington Mutual, a US bank subject to swirling rumours of its own. According to this alternative theory, also cited in the Indpendent, takeover speculation about Wa-Mu is driving the price in Redrow. [Quite how wasn’t explained];
• The Daily Telegraph quotes a trader as saying that Lehman Brothers had loaned out Redrow shares to short-sellers and, having (ahem) troubles of its own, was now having to call these in, driving up the price;
• More prosaically, The Daily Telegraph also suggests that Redrow has been approached by Persimmon, or maybe Bellway, about a takeover.

One British builder, one day, five different market rumours. It’s that kind of market at the moment.

Is Jarvis, with borrowings of £42m weighing on its £35m market cap, now a suitable home for widows’ and orphans’ savings? We doubt it. More likely, yesterday’s rise was further evidence that Richard Entwistle’s efforts to turn the railway engineer into a ‘normal’ company are not done yet.

Yesterday was one of those days where Jarvis might have preferred to fall with the crowd.

“In facilities management revenues were 51.6% lower at £23.2 million after a major customer took work in house.”

Ouch.

Both businesses have much to boast about. Both are complex beasts that take a lot of explaining. Each has a similar obligation to pad their reports out with formulaic nods to the various regulatory regimes. But why is Serco so much more prolix in getting out its message?

Our pet theory is managerial. Serco, strangely for a company that operates a ‘lean’ and decentralised model, somehow finds itself with a Director of Corporate Communications and a Head of Investor Relations. Put each down for a bit of job-justifying hackery and you quickly have a 50 page half-year review.

Earnings ahead 21% is bang in line with historic performance. Serco’s done this for most of its twenty years on the stock market. Keep it up for another twenty and Chris Hyman will have over a million colleagues (and even less free time).

Our cavil is Serco’s historic success is built on organic top-line growth. It’s been bidding and winning new contracts that has driven shareholder value.

But in this half-year, Serco relied as much on margin enhancement (ROS, 4.9% to 5.2%) as old-fashioned business development. In one sense, this is welcome - other postings here have been sniffy about Serco’s margins - but this blogger prefers Serco as a growth stock. Serco will have to mature one day, but surely not yet.

To these credits, add this latest pugnacious response to the crystallisation of a £l;15m trading loss and closure costs at Rok’s development arm.

“Rok will use funds from the closure of its property business to make acquisitions” [Unattributed briefing, FT]

It brings to mind Marshal Foch, the WWI general:

“My centre is giving way, my right is in retreat; situation excellent. I shall attack”

And it’s worth remembering that, after a scrape or two, Foch won.

So here’s how the interim statement describes Rok’s closing of its property division:

“Rok’s strategy remains unchanged but our business mix is evolving”

That’s one way of putting it.

The PCT in question is North Lancashire; the accusation is that it is trying to provide GP access through expanding the remit of current practices rather than allowing in new GP operators. New providers bring competition and can help raise the bar on service, that might be Mr Johnson’s point. But there’s no harm in allowing existing providers to have a pop, if they don’t overreach themselves.

Choice on the buses
eHealthInsider; 11th August 2008
Solihull NHS Care Trust and Birmingham East and North Primary Care Trust have launched a four month advertising campaign for patient choice and Choose and Book. The campaign, which started this week, will see advertisements placed on 124 buses, 85 bus stops and 48 billboards along major bus routes in the area.

Marketing begins in a big way – go choice!

£550m set aside to fund Darzi
Source: HSJ; 7th August 2008
The Department of Health has set aside £150m from next year’s NHS budget and £400m in 2010-11 to pay for the commitments set out in health minister Lord Darzi’s review

There are some structural changes required by Darzi that do require investment. For the other stuff, there should be some effort for PCTs and acute trusts to self fund changes. Perhaps then, the number of change projects will be kept tight, as will the money chasing them.

Accounting rule changes to cost hospitals £146m
Source: HSJ; 7th August 2008
New accountancy rules will bring up to £16bn of extra debt onto the NHS balance sheet and cost hospitals £146m a year.

This has important implications for NHS Trusts with PFI schemes.

Credo comment

How much healthcare does the NHS purchase from the private sector?

The 2008-09 NHS revenue settlement is £93bn. A Panorama documentary back in July (link to issue 12) asked the question ‘how much is spent on private sector providers?’. The answer was not conclusive but the sentiment was that increasingly larger sums were being spent on private sector provision.

We like a challenge, so we set out to answer the question and concluded that it’s somewhere between 2% and 6%. Read on for the full analysis..