RAMSEY CROOKALL & CO

MIDDAY REPORT 28 February 2011

London has opened lower on fears of unrest contagion in the Middle East and the possible impact that will have on global oil supplies. A cautious trading update from AB Foods and poorly received results from HSBC have added to the poor start.

HSBC doubled its profits to over $19bn last year as bad debts tumbled and every trading division improved its performance. The UK’s largest bank posted a pre-tax profit of $19bn, an increase of $12bn, or 169%, on 2009's $7.1bn, even though net interest income fell 3.2% to $39.4bn. The figure came in shy of market expectations of around $20.4bn.

Elsewhere, Associated British Foods, the foods group that also owns the Primark clothing retailer, said its interim results will be in line with market expectations, but warned that UK consumer demand is slowing and margins will be under pressure from rising cotton prices in the second half as well as the first.

Publishing giant Pearson is doing better. Profits before tax rose 28% to £670m from £523m the year before on sales that grew 10% to £5,663m from £5,140m in 2009. Revenue was up 8% using constant exchange rates, with growth seen in all of Pearson’s businesses (Education + 9%, Penguin +2% and the FT Group +12%).

Finally, international recruitment firm Hays shrugged off a workaday performance back in Blighty to post a sharp increase in interim profits. “18 countries around the world grew net fees by more than 25%,” noted Hays chief executive Alistair Cox. Profit before tax and exceptional items jumped 60% to £48.6m from £30.4m.

THE FTSE 100 AT NOON IS DOWN 19 @ 5981

THE DOW JONES CLOSED UP 61 @ 12,130

THE NASDAQ COMP CLOSED UP 43 @ 2781

Exchange Rates

GBP – USD 1.6185 GBP - EURO 1.1708