>> If you’re confused by an aspect of your money or need help with a more specific financial matter why not ask Jo direct and email her at Jo.Thornhill@fmwf.com.

YH writes: I am in the process of buying a new house and need to get buildings insurance in place. There is a large lime tree in the street outside the property. Do I need to declare this on my insurance application and will insurers cover me if the tree causes subsidence? There are some cracks in the pavement around the tree and I am a bit concerned.

Jo Thornhill replies:

When you apply for buildings insurance all insurers will ask if there are any signs of subsidence at the property. If you haven’t already you should get a full structural survey done on the property for your own peace of mind and find out if it has been underpinned due to subsidence.

Scott Oliver, senior underwriter for Direct Line home insurance, says: ‘The structural survey will determine whether the house has already suffered any structural movement caused by the tree. Such movement may not be visible to the naked eye. The survey will help the purchaser to decide whether to proceed in buying the home and will also provide answers to any questions an insurer may have.

‘A solicitor should also be able to find out whether the property has been underpinned in the past or suffered structural damage.’

If there has not been subsidence some insurers will still ask about trees which are in close proximity to the house. You may need to measure the exact distance and it is important to be honest and disclose all information when asked. There is no point withholding information from any insurer as this only renders any insurance policy invalid.

Not all insurers will ask questions about trees. If you are not specifically asked about trees you do not need to disclose the information.

Graeme Trudgill, spokesman at the British Insurance Brokers Association (BIBA), the trade body which represents brokers, says the consumer watchdog the Financial Ombudsman Service would uphold any claim in your favour as the insurer should ask questions that are material to them at the point of sale.

But that said, Trudgill advises that if you have serious concerns about the tree it will probably give peace of mind to disclose the information to the insurer.

An independent broker can help with any concerns and BIBA’s Find a Broker service (0870 950 1790) can locate specialists in this field and those who have experience in the area.

If the tree is in the street outside your house and is on local authority land it is worth finding out if the tree is in a conservation area or under a protection order.

This could cause problems later if the tree is found to be causing movement or undermining the property. Ask how often the council maintains the tree, known as pollarding. For a large lime tree this should probably be done every one to two years to control growth.

According to Facebook’s flotation prospectus last week, its users have registered 100 billion ‘friendships’ since the social network was founded in 2007.

This was just one of a large number of figures contained in documents it filed in preparation for its listing. That will take place in the US, probably on the New York Stock Exchange or Nasdaq, and so will not at least initially attract the attention of many British investors.

But the listing, expected to value the group at about $100 billion, may prove a crucial bellwether for the confidence of the world’s financial markets and their willingness to believe in a second internet revolution.

Setting aside the figures of billions of ‘friendships’ or hundreds of millions of ‘monthly active users’, the hard financial numbers make its valuation look rather stretched.

Revenues last year were $3.7 billion, up 87 per cent on 2010, in turn up 154 per cent on 2009. Profits after tax in 2011 were a round $1billion, up 65 per cent on the previous year, which in turn were up 164 per cent on 2009.

These are impressive growth rates, but they have to be to justify the valuation being touted.

If it can double its profits every year for next three to four years, earnings will pass the $10billion mark. That starts to more than justify the mooted valuation.

Given Facebook’s record, it would be a brave observer who said such growth could not happen. But there are a lot of unknowns involved. Can user numbers keep growing at recent rates?

Will advertisers, who are the source of the vast bulk of revenues, see enough real return to keep spending more?

But most crucially, will Facebook keep its preeminent position or will another social network or some other phenomenon take its place?

Few would have dreamed four years ago that it would become what it has. That is the fastmoving and unpredictable nature of the internet. By the same token, it is a gamble to try to predict the twists and turns the internet will take over the next four years. Can Facebook grow at 100 per cent or so every year for three years? Maybe. But equally, maybe not.

The cautionary tale came last week with internet retailer Amazon’s latest figures, which showed sales up ‘only’ 35 per cent in the fourth quarter of 2011. The shares fell seven per cent in a day on the news.

In the world of dotcom 2.0, expectations seem to be dizzying. The stock market cost of failing to hit those expectations is likely to be equally high.

If Facebook floats at anything like the values suggested, it will have to meet some very high hopes. If it fails, founder and chief executive Mark Zuckerberg will need every friend he can get.

Most dramatically, the first attempt in 2000 to merge drug giants Glaxo Wellcome and America’s SmithKline Beecham fell victim to a spectacular personality clash between Sir Richard Sykes and Jan Leschly.

So we must listen a bit more seriously to the merger plans of Glencore – the Swiss-based commodities trading house that listed somewhat controversially last year and whose shares have floundered ever since, reflecting market nerves about the number of billionaires on the board, substandard governance and drift in the commodities cycle.

As part of the deal, chief executive Ivan Glasenberg is offering to allow his opposite number at mining group Xstrata – his old South African school chum Mick Davis – to become boss of the combined group. By many standards of leadership, both men are in the top bunch. Both are forceful characters whom it is hard to see coexisting happily in the same boardroom, let alone with one able to boss the other around. (Read our story here)

The one sensible conclusion we can draw (other than that Glasenberg plans to knife Davis in the back as soon as he gets close enough) is that Glasenberg is convinced of the synergies and long-term business prospects in combining the groups and is willing to count his money rather than exert his power.

Which leaves just a couple of questions. If the case for the merger is so compelling, why is Glencore not paying a premium to buy the 70-odd per cent of Xstrata it doesn’t already own?

And if the deal gets under way, which could be as early as this Tuesday by some accounts, will Sir John Bond, the Xstrata chairman and a veteran of HSBC, be strong enough to keep the peace in the boardroom?
>>>
AT THE risk of Luddism, I cannot see Facebook as a persuasive investment. With a putative price tag of £65billion, it appears the only reason this business is being brought to market is to make its employees and some early backers very rich indeed.

Mark Zuckerberg, its young founder whose paper wealth will total nearly $30billion, has come up with not one project he needs to raise money for: indeed Facebook, unlike many other high-tech launches, has quite enough cash to do whatever it wants.

There are many reasons to fear this one. Zuckerberg will retain a controlling stake – in perpetuity, it appears – as he has given himself the right to name a successor, and his friends have given him voting rights over their shares, so if he goes potty no one can get rid of him.

But while he knocks around for ever, many of the bright young things running this business might decide to cash in their chips now they have a currency to trade.

Don’t forget, too, that there is evidence Facebook usage has peaked in Britain and the US. Though the business has been doubling the number of its users every year, there is a limit. With one billion this year such expansion can continue only for the next two or three years before the entire planet is covered.

Advertisers will, I am sure, be happy to pay nominal sums to pry into the private habits of billions. But many Facebook users are young and do not have the affluence of Zuckerberg, rendering them of limited use to brands offering more than burgers or inexpensive coffees.
>>>

WHY all the hand-wringing at BAE’s failure to land a big contract to supply Typhoon jets to India when our own Ministry of Defence has just given notice that it no longer intends to favour domestic manufacturers of equipment for the Armed Forces?

Procurement at the MoD is a joke, but without launch orders, our contractors will find it hard to convince other countries to buy their wares.

By all means stress the need for free markets – just not so crudely that it is at the expense of our national champions.

ZincOx set to fire up Korean production – Process turns toxic dust into valuable metal

The rag and bone man used to be a familiar figure on British streets, calling out for ‘any old iron’ and selling it on to scrap metal merchants.

These days, scrap is a far bigger business. Metal prices have shot up and the theft of electric cables, manhole covers and lead from church roofs has become common.

Buying scrap for cash is being banned under Government proposals and fines increased for trading in stolen metal. But even if legislation reduces theft, it will not affect the scrap industry, where conditions have been bolstered by increased demand for metal and a global recycling push.

About a third of all the steel used today is recycled and the percentage is likely to increase as people in emerging markets get richer and buy more goods.

Steel can be made from scrap in several ways but one of the most effective involves the use of electric arc furnaces, which melt metal using electric currents. The process is highly effective, but it produces electric arc furnace dust (EAFD), a hazardous material containing lead and cadmium.

It also contains zinc, a valuable metal that boosts steel’s durability.

Steel producers regard EAFD as a nuisance. Many treat it as toxic waste, placing it in special bags and sending it to landfill sites, a process that is wasteful, environmentally questionable and costly. Others send it to be recycled in special kilns, but the operators can charge at least £50 a ton to remove the dust from steel furnaces and the zinc produced is relatively low grade.

ZincOx Resources, by contrast, has pioneered a way of recycling EAFD to produce good quality zinc, using technology it says is environmentally friendly and which costs the steel mills almost nothing. The process produces some iron too, as well as lead and cadmium in a non-toxic state, suitable for use in batteries.

ZincOx started as a straightforward miner chaired by Andrew Woollett, a geologist with 30 years’ experience. He realised that the potential behind the recycling of EAFD and turned ZincOx from a miner to a recycler. Now, after spending several years perfecting the technology, the company is within weeks of turning dust into commercially viable metals.

Woollett has built a processing plant in South Korea and signed a contract with a group of the country’s steel makers that will provide all the dust he needs. Korea is one of the world’s largest producers of arc furnace steel, creating 400,000 tons of dust a year.

ZincOx’s technology is so effective that every 100 tons of dust creates 22 tons of zinc and the quality is higher than if mined from the ground. Woollett has also signed an agreement with Korean Zinc, a leading producer that will buy the recycled metal.

ZincOx has not had the smoothest of rides over the past few years. Its first plant was due to be operational three years ago in the US but the financial crisis reduced demand for steel and the project was mothballed.

Now the company is in a far stronger position. The Korean plant will initially be able to process around 200,000 tons of dust a year, but expansion plans are under way and the group is in talks about plants in Thailand, Turkey and the US.

Midas verdict: ZincOx has been loss-making until now but analysts forecast profits of more than £5million this year, rising rapidly in 2013 and beyond. The shares are 71p and supporters believe they could be worth triple that. Buy.

Traded on: Aim   Ticker: ZOX   Contact: zincox.com or 01276 450100

MIDAS UPDATE – Potential soars at Hummingbird as reserves estimates quadruple

Hummingbird Resources is a gold explorer based in Liberia. The country has not been associated with good fortune, but this company’s prospects look extremely promising.

Hummingbird was admitted to the Alternative Investment Market in December 2010, at which point official estimates suggested it could possibly produce just over 800,000 ounces of gold in total. Little more than a year later, estimates have increased to 3.8million ounces.

Gold exploration is normally a slow process so quadrupling estimates in 13 months is remarkable, especially as the company has spent less money than expected on it. The new figures, announced last week, also mean large investors, bankers and fellow miners will start to take Hummingbird more seriously.

Estimates of total gold reserves should continue to increase as chief executive Paul Betts and his team continue drilling. The group will also update investors soon about the quality of its gold and the indications are good.

Midas verdict: Midas recommended Hummingbird in March 2011 when the shares were 1431/2p. Today they are 11 per cent higher at 1591/2p and should continue to climb.

Hummingbird has exploration rights over an area half the size of Wales and it has only begun to tap the surface, so the potential is huge. There are many hurdles to overcome but early signs have been good so existing investors should sit tight while new investors may find value at current levels.

Traded on: Aim   Ticker: HUM   Contact: hummingbirdresources.co.uk or 0121 233 2566

Even President Sarkozy saw this as an unacceptable breach of sovereignty, which, given France’s usual Europhiliac stance, is akin to the late Oliver Reed suggesting that someone ought to ease off the drink.

But maybe German Chancellor Angela Merkel was playing the oldest negotiating trick in the book, asking for more than was ever likely to be given and, when the time came, cheerfully disowning the budget tsar.

After all, everyone seems to have been too busy fretting about the ‘special commissioner’ (the correct title) to pay much attention to Germany’s real achievement at the summit – the inclusion in the fiscal compact of what amounts to a balanced budget rule on eurozone countries.

Perhaps achievement is not quite the word, as it suggests such a rule is a good idea.

It is not.

If implemented (a big if) it would be a cast-iron guarantee of permanent austerity.

True, most American states have such a rule. But they were freely chosen, not imposed by Washington, and, after all, the states are merely states, not countries.  True, Germany itself has such a rule. But – and this goes to the heart of the eurozone’s travails – this works because it is part of a complex economic and social machine in which all the moving parts mesh smoothly together.

It is possible to run a very different piece of machinery with similar success: France has not had a budget surplus since 1974 yet remains one of the world’s largest economies, with education and infrastructure that are universally admired.

Since the eurozone crisis became potentially critical in early 2010, many analysts and others have asserted, with the world-weariness of Claude Rains in Casablanca, that ‘everyone knows’ that the Germans will have to come round in the end, open up their chequebook and allow the European Central Bank to engage in large-scale money creation in the vein of that in Britain and America.

This last has not come to pass (the ECB’s admittedly generous liquidity scheme for banks is something rather different) and the balanced-budget rule suggests it is the rest of the eurozone that is being dragged round to the German viewpoint, rather than vice versa.

For a country whose brightest are notably capable of clear, forensic thinking, it is remarkable that Germany seems yet to twig that its model works because it is in Germany.

Perhaps uniquely, this is one German product that is not for export.

>> If you’re confused by an aspect of your money or need help with a more specific financial matter why not ask Jo direct and email her at Jo.Thornhill@fmwf.com.

HM writes: My boyfriend and I are going to California for an extended trip over Easter. I’m planning to take debit and credit cards to use while we are away but I know the fees could be high. Which are the best cards to use when abroad?

Jo Thornhill replies:

Holidays are expensive enough so it makes sense to reduce costs as far as possible by using the right plastic. There is nothing worse than worrying about being stung for high card fees whilst you are away on your dream vacation – or worse arriving home to a nasty bank statement.

On average the charge on a credit card when used abroad is 2.76 per cent, according to research by independent data compiler Defaqto. The vast majority of credit cards charge between 2.75 per cent and 2.99 per cent. It means that if you paid a £75 restaurant bill you would be charged an extra £2.24 on top just for paying with plastic.

But there are a number of cards that don’t charge any fees for overseas spending including the Halifax Clarity card, Post Office credit card, Saga Platinum card (only for the over-50s) and Metro Bank credit card. The Sainsbury’s Gold credit card also charges no fee but this card has a £5 monthly charge. For this cardholders get annual family worldwide travel insurance.

Be aware also that drawing out money from cash machines overseas will also incur charges – in the same way as it does if you withdraw cash from an ATM with a credit card in the UK. The only exceptions are Halifax Clarity, Metro and Sainsbury’s, which impose no fee on cash withdrawals anywhere in the world.

There are also a range of debit cards that do not impose fees for use overseas, but getting hold of one of these will mean switching your current account, which you may not want to do. Switching to a new current account will probably take about six weeks so factor this in if you want to go down this route. The best cards are with Metro Bank, the Santander Zero current account, Norwich and Peterborough Gold account and Cumberland Building Society Plus account.

David Black, banking expert at Defaqto, advises holidaymakers take a range of currency options on holiday for convenience and to spread risk: ‘It’s advisable to take a mix of cash currency, which you can exchange at home before you go, and then a credit card which does not impose foreign exchange charges – and perhaps a prepay card, which can be loaded with currency in advance. Ideally keep the cash and cards separate in case of theft of a handbag, for example.’

Prepay cards are the modern-day equivalent to travellers cheques. Money is loaded on to the card in advance in the currency you need – for example euros or US dollars. This can be done online or over the phone. You can then use the card to spend in shops and restaurants abroad or to withdraw currency from ATMs.

Prepay cards have the added security that if they are stolen the thief cannot spend more than is on the card – there is no line of credit as with a credit card. But the usage fees can be high so check the small print before you sign up. The Fair FX, Post Office, Travelex and Caxton FX cards are among the best.

By way of example the Post Office travel money card is free to open but has a two euro charge on cash withdrawals in Europe, $2.50 in the US and £1.50 in the UK. There is no fee on purchases.

>> Or why not take a look at our Managing Staff or Management Development sections where there’s a host of expert advice on hand.

A reader asks: “Three of my staff have got volunteer positions at the Olympics, but we can’t afford for all of them to be off at the same time. How do we choose who should participate? And should the leave be paid?

Caroline Noblet, partner at law firm Squire Sanders Hammonds, responds:

About  78,000 people will be volunteering between July 27 and August 12 for the Olympics and August 29 and September 9 for the Paralympics.

The 70,000 ‘Games Makers’ were asked to volunteer for a minimum of ten days (20 days if volunteering for both events) and attend three days’ training. The 8,000 London Ambassadors will volunteer for at least six days in a row, also with three days’ training.

Volunteers may not be told which days they are required until April, so now is a good time to think about how to deal with requests for time off.

If your company has no policy on the issue, there are many methods to ensure fair selection.

You might do it on a first-come, first-served basis or hold a draw. Or you could decide which employee will gain most from the opportunity.

This discretion should be exercised carefully, to avoid allegations of discrimination.

Staff have no legal right to take time off for volunteering or be paid for it. That is up to you.

Some employers recognise the business benefits of volunteering and encourage staff to pursue opportunities, though without pay. Other employers go further and may offer a number of paid days off for that specific purpose.

If you do give employees time off to volunteer, any days over and above the agreed volunteering ‘allowance’ can be taken as part of the employee’s holiday entitlement or as unpaid leave. Short-term flexible working arrangements may be another option.

>> For more advice and issues raised speicifically by the Olympics, for employees and managers at SMEs, click here

>> Or take a look here for Mark’s other exclusive columns for FMWF’s Enterprise Zone.

I would like to do some networking to create more business but am quite a shy person, can you give me some useful tips on how to approach people?

Mark Lovell replies:

Networking is simply telling other people what you do and it doesn’t have to be in front of large crowds of people. You’re the expert; you know more about your business than anyone else so how could you be wrong?

However, that doesn’t stop many of us feeling nervous or ill at ease at the thought of approaching people. So here are a few useful hints and tips to consider when planning on networking.

Firstly, who is in your network already? We all have existing networks of friends, family, ex-colleagues etc, but have you had a close look at who is already in your network? How many of the people you already know could be your potential customers, suppliers, business advisers, consultants, market researchers?

Some further points to note. Choose your networking event wisely. Make sure the events you are attending will actually give you the opportunity to access target customers or relevant links to your industry. It’s very easy to end up going to many events, without making a significant connection.

Ensure you listen carefully and focus on that listening, rather than talking. If you listen carefully you will be able to establish a connection or interest that will help you tailor make your offer according to who you are talking to.

Another important point is that ‘people buy people’; it is often about establishing a relationship and not immediately focusing on what you want to sell. On that point, some people are afraid of the word ‘selling without’ realising that every day, in every interaction, we are selling ourselves. We present a different side of our personalities depending of who are we talking to.

It is a good idea to acquire business cards from the people you are interested in dealing with. This means you are taking control of any future engagement, and the power rests in your hands to establish further contact instead of waiting for the person to contact you. A tip is to jot down a ‘note to self’ on the business card – to remind you in the future why it was that you wanted to remain in contact.

Ask yourself a few questions to help you frame what you want to say and how. If you only had 60 seconds, how would you introduce yourself, your business/product/service? What would you say? How would you say it? Create a story. Not too much detail.

Practice, practice, practice

>> For more expert advice on Networking click here

Talk of capping bonuses, binding shareholder votes, putting employees on remuneration committees and obliging companies to publish the ratio between the highest and lowest paid staff was just that – talk. The innermost doll offered little more than calls for greater transparency, clarity and pursuit of ‘best practice’.

Cable has addressed the symptom – exorbitant pay that appears unjustified and unfair – but failed to address the source of the problem of what I call ‘the ownerless corporation’.

Company ownership is now so dispersed among thousands of investment institutions that no one feels obliged or empowered to represent the owners of the business in their negotiations with executives.

This has been exacerbated by the decline in the number of private shareholders and their disenfranchisement by holding shares in nominee accounts.

Politicians have only limited influence. Issues of general fairness and economic utility are matters primarily to be addressed through tax policy. Otherwise the Government’s only real challenge is to ensure the processes for setting pay work effectively, particularly if the taxpayer is an investor.

Cable has missed the point that institutional investors could already have demanded more information on executive pay. They could have insisted on clawbacks for bad performance and binding votes on exit payments. They haven’t because they are not much interested – they don’t see executive pay as a major cost.

And they are not much bothered about inequality, perhaps because they are pretty well paid themselves.

Nothing much will change if the same people and processes used in conducting advisory votes on remuneration reports, 99 per cent of which are passed, are used for new binding votes. The box-tickers will still be in the ascendency.

Fundamental change will start only when shareholders become actively involved in ensuring that the right non-executive directors are appointed – drawn from a wider field of experience and determined to put the best interests of the company first. This means investors must join board nominations committees, breaking the dominance of appointments by the chairman and a cosy circle of friends.

Cable concludes correctly that controlling excess must lie with shareholders, but fails to say why they are not already doing this. He has ducked the question of ‘the ownerless corporation’.

There are, though, a number of good ideas in his proposals, including putting greater transparency around the role of the pay consultants who have played such an important role in ratcheting up executive pay.

Yet more vital is his emphasis on relative remuneration, where differentials have widened markedly in the past 20 years. Few remuneration committees focus on this or ask questions about the message they send to employees and the wider world.

Russian dolls were originally based on fairy tales. At least Cable has not disappointed us on that. The proposals were generally welcomed by employer bodies. Say no more.

Customers turn to Secure Trust Bank for budgeting aid – Loans to the hard-pressed rise by 60%

The cost of living is rising, incomes are static or falling and it is becoming increasingly hard to manage the bills.

Customers of High Street banks spent at least £2billion on unauthorised overdrafts last year, while about a million people took out expensive short-term ‘payday’ loans to tide them over from one month to the next.

The figures highlight the problems caused by a period of prolonged economic weakness, but they also provide a stark reminder that growing numbers of people simply cannot cope with budgeting for their monthly expenses.

Secure Trust Bank was founded 60 years ago in the Midlands and made its name providing families with accounts to help them to budget.

When factory workers were handed their wages on a Friday, they would immediately give a proportion of their cash to the bank, which would take over responsibility for paying bills, such as gas, electricity and water, as well as local taxes and other utility-type expenses.

Some money would go to the wife to feed and clothe the family. The rest of the wage would stay in the worker’s pocket.

The system worked and it still does. Customers know essential bills will be paid when they fall due and they also benefit because the bank uses its superior buying power to negotiate cheaper prices with the utility companies.

About 30,000 people use Secure Trust’s budget accounts to help them with a range of household expenses. The bank has no branches of its own so customers have traditionally used Post Offices, designated retailers or Barclays, with whom Secure Trust has a formal arrangement. In recent years, however, Secure Trust has made the budget account available online, an option that has become increasingly popular.

Chief executive Paul Lynam is keen to improve the bank’s internet offer and expects to deliver an upgraded account towards the end of 2012.

The account is not cheap – costing £16.50 a month – but customers seem happy to pay it in exchange for peace of mind and discounted utility bills.

Secure Trust charges for its current account too – £12.50 a month. However, the number of customers with this account doubled in 2011 and the bank is taking on 1,000 more every month.

Many of these people are being turned away by the High Street banks, which are increasingly picky about who they will accept as customers. Some people also choose Secure Trust because, even though it charges for current accounts, there are no hidden costs and it will not let customers go overdrawn, so they are never hit by bank fees for unauthorised overdrafts.

The bank is unusual in other ways, too. Unlike most High Street lenders, it does not rely on funding from the international financial markets and lends its customers less than it takes in through deposits, making it an extremely safe institution.

Although Secure Trust has been around since the Fifties, it was a division of private bank Arbuthnot for many years. It floated on the Alternative Investment Market last November as an independent entity, largely because it is keen to expand.

This seems logical.

High Street banks are reluctant to take on all but the choicest customers, while payday loan businesses charge high interest rates.

Customers turned away by the clearers used to have a range of other options, including overseas banks, but many of these are in financially constrained circumstances so they are effectively closed for new business. This leaves a clear opportunity for Secure Trust. The bank increased its lending by more than 60 per cent to £145million last year and substantial growth is forecast over the next three years as people who need to borrow money seek alternatives to the High Street or unscrupulous lenders.

Lynam is ambitious, but not recklessly so. He is determined to retain Secure’s reputation for caution and late last year he walked away from an acquisition at the last minute because the risks appeared to be too high.

That said, he is keen to build the bank through acquisitions, particularly at a time when many banks are keen to offload non-core businesses at reasonable prices.

Growth should deliver a steady increase in profits over the next three years and the bank is also expected to be reasonably generous with its dividends. It is forecast to pay at least 40p for the year ending December 31, 2012 and more than 60p the year after.

Midas verdict: Secure Trust shares made a strong debut on Aim and are trading at 935p. They should rise substantially as Lynam develops the business. Buy and be patient.

Traded on: Aim   Ticker: STB   Contact: 0121 693 9100 or securetrustbank.com

MIDAS UPDATE – It might be time to sell as Afren shares double

MIDAS recommended Afren in January 2007 when it was an oil and gas minnow trading at 56p. The business has since been transformed into a FTSE 250 stock producing more than 50,000 barrels of oil a day.

Chief executive Osman Shahenshah announced this month a significant new discovery in Nigeria, close to where it is already in production. The news was welcomed by the company’s followers and the shares rose more than ten per cent to 131p.

Just a few days later, it admitted that production in 2012 was likely to range between 46,000 and 52,000 barrels of oil a day, lower than many had expected.

This combination of good and bad news is nothing new for Afren.

The price rose to 173p last spring, only to fall below 100p later after disappointing half-year figures.

The company operates principally out of Nigeria but has operations across Africa and last year spent £380 million expanding into the Kurdistan region of northern Iraq.

Shahenshah said this neatly complements the company’s existing portfolio of assets. However, some analysts believe that it was an unnecessary diversification.