Unlocking the Vantis/Tenon puzzle

The fortunes of AIM-listed accounting firms Tenon and Vantis were pulled in
radically opposite directions last week. Vantis continued its love affair with
the stock market, while Tenon acknowledged that it may have to go private.

On Wednesday, Vantis reported a 79% increase in turnover to £33.2m for the
six months ended October 2005. The group’s share price responded accordingly,
rising 6.5p to a high of 226.5p as Vantis’ market cap surged past the £100m mark
for the first time.

Two days later, Tenon announced that a team led by chief executive Andy
Raynor and FD Lesley Spencer was proposing a manage-ment buy-out in an attempt
to spark an underperforming share price.

After reporting final results, an increase in turnover from £80.6m to £100m
in October 2005, Tenon lost two senior executives and saw its share price fall
17.1% to 27.7p.

The reasons why Vantis, which is ranked 14th in the Accountancy Age Top 50,
should perform so well while Tenon, four places higher at 10th, has stumbled
along, remains puzzling. Vantis’s organic growth has been similar to that of
Tenon’s, at around 25%, but it has yet to match Tenon’s annual turnover of

Simon Brett, an analyst at Edison Investment Research, said the fact that
Vantis had listed after Tenon may be one explanation for the differing fortunes
of the two groups.

‘Vantis started later than Tenon and Numerica, and was the last accounting
specialist to list. It had a couple more years to prepare, which may have helped
a bit,’ said Brett. ‘Vantis has also proven that it is very good at integrating
acquisitions, as it showed when it acquired Numerica.’

However, Stuart Duncan, an analyst at Numis, warned that it was important to
distinguish between Tenon’s business performance and its share price.

‘Tenon is a good business, and has grown, although it has not grown as
quickly as Vantis, and this increase has not been reflected in the share price,’
said Duncan. ‘Since Vantis listed, it has made acquisitions and integrated these
well. These actions have acted as catalyst for its share price. It is difficult
to buck that kind of momentum.’

Tenon chairman Neil Johnson said the question of why Vantis was on the up
while Tenon’s stock had remained flat was one the company had been asking itself
for some time.

‘The business has transformed and stabilised, and we feel this value is not
reflected in the share price. There is no point in complaining about it, we are
where we are,’ Johnson said.

‘An MBO could show that the business is worth more and crystallise that value
for internal and external shareholders.’


Rank clears boards for a potential buyout, as Langbar and Sanctuary
Groupstruggle with finances

Anglo-African mining giant Anglo American is believed
to be deep in negotiations with the South African government over the tax
implications of demerging its packaging business Mondi. Anglo American is
planning to focus on its mining operations, but as a South African company it
could incur tax penalties for moving the money tied up in Mondi offshore.

Glynn Burger, finance director at investment bank
Investec, pocketed £531,256 last week after selling a
substantial tranche of shares. Burger sold 12,000 shares at a price of 2,662.4p
per share and 8,000 shares at the price of 2,647.1p per share.In its last set of
results, Investec reported a 58.2% increase in pre-tax operating profit to
£152.8m in the six months ended 30 September 2005.

Gaming company Rank Group moved one step closer to being
acquired, with final confirmationof the sale of subsidiary Deluxe Film to DX III
Holdings Corporation. Rank has been the subject of much buy-out speculation, but
potential suitors have been waiting for the company to dispose of some of its
non-core businesses.

Embattled music company Sanctuary Group confirmed the details
of its refinancing last week, announcing that its bankers had agreed to extend
its banking facilities to £134.1m, in addition to its current facilities. The
group acknowledged that its debt was high and confirmed that it was considering
an equity raising by Evolution Securities, which would be used to reduce debt

Langbar International, the beleaguered cash shell under
investigation by the SFO, is scheduled to hold an ‘informal’ meeting in early
February to update shareholders on the progress it has made tracking down a
missing £365m cash deposit in Brazil. The group also revealed that it had
appointed Lovells as its corporate legal advisers and had called in law firm,
Jones Day, to work on the recovery of the missing cash asset.

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