Smaller companies spotlight

EACH week, former Fleet Street City Editor

If the cap fits
ANDREW Garner is one of those people who just can't stop getting ideas; the difference is that he makes his work while others spin around in circles. Still only 37, he has already been involved in building five companies, all of which he has sold at a profit in trade sales or to the management teams. For example, he formed fire safety company IFTE in 1995 and left just before it went to AIM in 1999. It is now worth £29m.

He is staying on board his latest venture, 1st Dental, however. The dental laboratory group, which has raised £2m via an institutional placing through Corporate Synergy and Hoodless Brennan, started dealing at a 20% premium to its launch price of 27p on AIM today.

'This is one of the biggest opportunities in which I have been involved,' Garner said.

Having left school in his teens to take an engineering apprenticeship, Andrew started his own engineering business at the age of 23. By the time he was 30 he had made his first £1m and had an eye for an opportunity. That eye sparkled when a young dental engineer approached him wanting to sell a business with a turnover of £500,000 and making a net profit margin of 30%.

'I started looking at the market section and found there are currently 2,600 dental laboratories in the UK and the majority are independent,' says Garner. 'They are ripe for consolidation to make cost savings by centralising core functions such as administration, purchasing, finance and management. Dentists themselves are beginning to merge into larger groups, such as Oasis, and they need larger groups to service their needs.'

Having studied the market, his next move was to buy Aesthetic Dental Services in December 2000. It was one of the largest groups in the country, with laboratories in Harrogate, Blackpool and Scarborough and, more recently he bought GAC, a smaller laboratory based in Eastbourne.

The biggest coup so far, however, has been winning a contract from the Ministry of Defence to supply its dental services and products for a minimum of three years from last July. Garner has plans to buy at least a further five laboratories in the next 18 months and demonstrate to his institutional backers that the system works, and then go back and ask for larger sums to move forward even faster.

Sirius investment
I KNOW I shouldn't do it, but every once in a while it pleases the ego to mention a particular success. On 21 February I wrote: 'Word in the market is that investors should start getting serious about Sirius, the group which provides software for the insurance industry.'

The shares were then trading around 90p each; now they are up to 145p and that is ex-dividend. In the heady days they once touched £5.

Abinger success
I KNOW it will please at least one reader to have an update on Abinger Investments, the financial services group which bought City Financial Associates and Galleon Assets Management last year.

Results for 2001 show a loss before tax of £290,000, which included start up costs. Total net assets, less current liabilities, amounted to £2.9m with group cash at bank of more than £1.2m.

Chairman Stephen Barclay says: 'This has been an extremely productive period for us and we have achieved our initial key objectives since listing on AIM last June. We are quickly developing a management team which works together in an effective and collegiate basis to meet and service our clients needs. We continue to consider further acquisitions.'

The company is now planning to change its name to CFA Capital Group, and a proposal will be put to shareholders at the annual meeting.

Some you may have missed
IT HAS been a 'successful year' for Vitesse Media, the AIM-listed print and online publisher, says chief executive Sara Williams. With turnover up 49% to £1.37m in the year which ended on January 31, and losses reduced to just £45,000 from £638,000 in the previous 12 months, she probably has a point.

The company, which raised £995,000 from Artemis Aim VCT and serial entrepreneur Bob Morton during the year, has more than £500,000 in the bank and deferred revenues of £262,000 already secured for the current year.

INSENSIA, the financial media group, has launched Insensia Capital, an 'unquoted angels' service network and has made application to the FSA for a licence to act as a Corporate Finance Adviser.

GOLDHSORE Holdings is raising up to £1m by an offer for subscription at 50p a share and will seek a listing on Sharemark. The company operates Staff Shop, an employee benefits programme offering them a wide range of popular consumer products and services from leading brand manufacturers at factory prices. It expects to have 320,000 customers by the end of this year.

RETAIL Decisions, the supplier of payment card fraud prevention services, has linked with e-business security firm Arcot Systems to provide Arcot‘s Transfort Merchant Software to businesses worldwide which subscribe to Visa‘s Internet payment authentication service.

SERCO Group has formed a joint venture facilities management company with the Jebel Ali Free Zone Authority in Dubai to be known as Serco Gulf. The company will deliver a range of engineering and other support services to the Dubai Port Authority and Dubai Customs.

NEWLANDS Scientific is seeking permission to transfer from Ofex to Aim and is raising up to £7m through a placing.

IT HAS been another year of profitable growth and substantial development for Multi Group the equipment rental and event hire group. Sales were up 47% at £12.69m and pre-tax profits 27% higher at £1.34m. The final dividend is 6% up at 0.18p a share.

Some to look out for
SFI Group, the outfit that runs the Slug & Lettuce, Litten Tree and Bar Med chains, has become a hot tip from Paul Hickman at brokers Peel Hunt. The current price (183p) is 'absurd', he says, adding 'recent price falls are totally misplaced.'

Making his case, Mr Hickman says: 'This is a company growing earnings at 22% over the next two years and which is improving interest cover from 3.6 times to 4.2 times next year.

'SFI has the best return on capital employed - 16.5% – of any traditional bar operator; it has the highest gross margin at 76.5% as well as the highest operating margin at 19%.' The shares are a 'strong buy', he says.

A REPORT by Equity Growth Research suggests that shares of Chime Communications are undervalued relative to its peers. It says that much of the benefit of recent cutbacks is still to flow through.

RICHARD Ratner at brokers Seymour Pierce is encouraged by the sales increases reported by supermarketeer Budgens, but says the real key to the group is the Musgrave situation. 'The longer the Irish wait before bidding for Budgens, then the more they will have to pay,' he reckons. He says the shares are a 'buy.'

HOUSEBUILDER Westbury has firm foundations for growth, says James Follows, analyst at web research group, Moneyguru. Having recommended the shares at 232p last September, he says they are still a buy at 337p and sets a target price of 404p.

SOMEBODY has obviously seen me looking around for carpet. Peter Jones at KBC Peel Hunt is recommending Carpetright shares as a 'buy' and is looking for a 15% rise in pre-tax profits for 2002/2003.

SOME enthusiasm from the team at Teather & Greenwood this week, with Peter Ashworth making a 'strong buy' recommendation for Proactive Sports Group which has just announced its first interim results since flotation last year.

COLLEAGUE Ben Archer joins in with a recommendation for Mears Group, an old favourite of this column. He also gives the nod to Hardy Underwriting. However, he points out that Mears shares seem to be reluctant to go through the 100p barrier and that Hardy, while a longer term buy, may suffer a short-term fall, given the discount on the new shares being issued through a placing and open offer.

Stephen Thomas, from the same house, has reduced his 'strong buy' recommendation for Auto Indemnity to a 'buy' but only because they shares have appreciated 27% since we wrote about them a month ago. The company announces its prelims next week.