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January 30th. 2008 - Australasian Investment Review – (AIR)

Another stablemate of the Australian Foundation Investment Company group has reported a solid result in the December half.

Amcil Ltd reported a 50% jump in annual earnings after taking into account the proceeds of share sales.

Like AFIC’s other companies, Mirrabooka and Djerriwarrh Investments, Amcil has expressed caution about the current market turbulence which it says could temporarily hurt the share prices of good quality companies.

The listed investment company booked a 49.5% lift in net profit to $7.14 million for the six months to December 31 but net operating profit, which excluded gains on sales from its stock portfolio, rose a more sedate 9.3% to $1.69 million.

During the period, Amcil sold its entire holdings in Transurban Group, Asciano Group, St George Bank, Santos and Patties Foods, while major additions to the portfolio included BHP Billiton, Brambles, Mitchell Communications, Commonwealth Bank and Amcor.

Amcil said it tried to invest in companies that represented good value over the medium and long term.

“In this context, continuing volatility and uncertainty in the market driven by concerns about global growth and the short term earnings outlook may mean good companies become temporarily out of favour,” Amcil said.

“Such times can provide attractive opportunities for investment.”

Amcil’s top five holdings are in BHP Billiton, Rio Tinto, Queensland Gas Corporation, Telstra and ConnectEast Group.

Amcil shares rose 2.5c to 75.5c yesterday

Australian Foundation’s interim result will be out later today.

Meanwhile there’s a silver lining in the gathering housing and renovations boom for household blind and curtain retailer, Kresta Holdings.

It upgraded its half year profit forecast yesterday, saying it now expects net profit after tax for the six months to the end of December to be 45% above that for the same period of 2006-07.

And Kresta promised shareholders the improvement would be reflected in the company’s interim dividend.

Kresta says it expects net profit for the period now to be $3.5 million when the half year results are announced after a board meeting on February 21.

Kresta said the improvement in profit came from management initiatives, a store rollout program, capital management and new products.

Kresta also has revalued its property assets, with an independent valuation return coming in $8.7 million above book value.

The higher values will be included in the balance sheet for the half year, Kresta says.

“The improved trading performance of the group is the result of a number of initiatives taken by management and the board over the past two years,” Kresta said in a statement to the ASX.

These included a store rollout program, new products, improved gross profit margins, working capital management, and cost control initiatives.

Kresta says it also “continues to benefit” from the 2006 acquisition of Curtain Wonderland.

“Subject to the finalisation of the half year results, the board expects that the lift in profit will be reflected in its interim dividend to be announced with the half year report in February,” the company said.

The shares rose 12% or 4c to 31c yesterday.

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