Smaller companies spotlight

EACH week, former Fleet Street City Editor

Green shoots

THERE'S clearly something in the air. After months when we wondered where the next new issue was coming from, there appears to be a queue developing to join Ofex. This week there are details of three such hopefuls and already I have whispers of more next week. It must be spring.

Branching out

AN offer for sale is a thing of beauty for individual shareholders, the more so because of a rarity value. So welcome to Oak Media, which is offering its own brand of acorns next week with 2m ordinary shares at 37p each to raise £740,000 before expenses. It plans an Ofex listing in mid-April.

Oak already has three strings to its bow, not least of which is its control of Laurence Pollinger, one of the oldest-established literary agencies in the country controlling the estates of DH Lawrence, HE Bates and Martin Luther King among some 80 authors. 'The opportunities for promoting these estates are enormous,' says Paul Woolf, chief executive.

Its other interests include a 30% stake in Digital Spa, an animation business, and a major stake in Mini Chefs, a Jersey-based operation that will be helped in extending its brand throughout the UK. Several other acquisitions are under discussion.

Woolf is a corporate lawyer who has spent nearly 30 years specialising in entertainment and copyright law and dealing with intellectual property rights and business management. A fellow director is Ben Schofield, formerly with iRegent.

Their plan is to take stakes in private companies that generally own rights but lack the capital and business expertise to exploit them. Although Oak has still to secure the Ofex quote, it expects to move to the Alternative Investment Market within nine months.

Copies of the prospectus are available from DWA Securities on 0207 628 3989.

Teeing up

A MORE accurate putter and Michael Phelps might be challenging Tiger Woods this summer. Sadly for him, but perhaps good news for investors, his dreams of becoming a professional golfer foundered after a couple of seasons and he fell back on his entrepreneurial skills to make his fortune.

Now 41, he and brother Stuart, 39, have teamed up and will shortly be bringing their bonded warehouse business EHD, to Ofex, raising £500,000 in the process.

Even this may not have been the chosen route to a fortune if only Christmas had come more than once a year. For a time the brothers had a business, Effects Group, which supplied hotels and businesses with plants and flowers, and virtually cornered the Christmas tree market.

Every year they would take the Christmas trees out of storage - 99% were artificial - and set them up in such prestigious sites as Heathrow, Gatwick and Stansted airports, as well as top hotels and company offices. The rental paid for a comfortable living, but it was only once a year, and the warehouse was standing idle.

It was a short step to seeking permission and converting the warehouse into a bonded warehouse with a contract to store and re-pack Jack Daniels, and have a sales operation for ten months of the year. Other contracts followed, including an Italian wine and food importer, and then in August 2000 came the big break.

A 35,000 square foot warehouse became available in Twickenham with the option on a further 35,000 square foot next door. Having proved to Customs & Excise that they could run a bonded premises, the brothers took the plunge on the vast open spaces.

'When we moved in we stored just 12 pallets in the first 35,000 square feet,' says Michael. 'It made our bank manager nervous, I can tell you.' However, within 12 months it was filled with more than 120,000 cases and the option on the second warehouse was taken up.

One of the reasons for the Ofex launch is to acquire another company, which will include transport and distribution operations and boost earnings. The brothers expect to break even this year on a turnover of £1.1m and be in profit in 2003.

EHD received confirmation this week that national off-licence chain Oddbins was signing up to use its bond for additional warehousing. If he keeps working this hard Michael Phelps may find his handicap slipping even lower than its current eight.

Healthy prospects

A HYPCHONDRIAC'S dream company could also prove to be the answer to an investor's prayer. Wellbeing Screening provides self-test health screening kits so that folk can test themselves for conditions such as bowel disorders, diabetes, cystitis, menopause, prostate cancer, digestive disorders, bacterial sore throat and bacterial vaginosis.

The kits are currently on sale at 540 Boots stores across the country as well as on its own web site and the directors believe within two years national coverage will extend to 4,000 retail outlets. First, however, the business is coming to Ofex and is raising £1.2m net of expenses by issuing up to 2.4m ordinary shares at 56p each.

DWA Capital is corporate adviser to the float and copies of the prospectus are available by calling 0870 162 3100

SAM gets its man

TO THE Carlton Club this week to meet Howard Hughes, who has been appointed chief executive of Raphael Tutton and Saunders, the main subsidiary of Savoy Asset Management where former chancellor Kenneth Clarke is chairman.

Hughes, formerly chief executive of SG Investment Management and chief investment officer of SG Hambros Bank & Trust, has been an adviser to Littlewoods pools winners and to those picking up £1m Premium Bond prizes.

Clarke and the SAM team hope Hughes will be able to weave some of his magic, following a tough six months when the group's attempts to expand into the Middle East failed and the shares dropped significantly.

New additions

A HEARTY welcome to telecoms firms Energis and Thus who have this week joined the ranks of 'small cap' stocks. There was a time when both were members of the exalted FTSE 100, but times have changed.

Others to move into the 'small cap' sector following changes to the FTSE Indices on 18 March include computer games firm Eidos - home to Lara Croft - office space company Regus, biotech group Oxford Glycoscience, TV set-top maker Pace Micro Technology and Henderson Small Companies Investment Trust.

Some you may have missed

HIT Entertainment, which owns the rights to Bob the Builder, has reported profits of £11.2m for the half year to end December. That compares with £3.1m in the same period a year ago. The company also has Barney the Dinosaur in its stable and there are high hopes for Angelina Ballerina, a dancing mouse that has sold nearly 2m books since its relaunch in September 2000 and is about to receive a TV boost.

HENDERSON Morley, the drug discovery company, now has sole and exclusive rights to develop, make and market the PREPS herpes vaccine, following an assignment agreement with the Medical Research Council.

SOFTWARE and computer services provider Harrier Group - out of the Bob Morton stable of companies - has made major progress in the past year as it evolved from a product-led business to a consultancy/services-based business. Turnover in this new section virtually doubled to £6.26m and the group has turned a £414,000 loss in 2000 into a profit of £32,462 in 2001.

RETAIL Decisions, the supplier of payment card fraud prevention services, has bought Paymentplus, a US-based card-not-present processing software provider, for £1.6m.

IT HAS been a good year for Serco, which provides management services to government and industry, from controlling satellites and operating computer networks for the European Space Agency to running Docklands Light Railway.

With turnover up 19% to £1.1bn, pre-tax profits rose 23% to £46.4m and shareholders gained from a 14% rise in annual dividend totalling 1.86p a share.

Highlights of the year were 120 new contracts awarded and 140 contracts re-bid or extended. The order book now totals £6.2bn and strong growth is being recorded in continental Europe. Chairman Richard White says: 'We are currently evaluating contract opportunities worth a total of some £15bn.'

LUCKY 13 for software supplier VI Group, which has just recorded its 13th consecutive year of profit growth and third consecutive year of rising profits. Sales rose 14% to £6.5m and pre-tax profits 56% to £726,000.

AT TIMES it seemed the Flying Scotsman was going to be stuck in the station, but at last the Ofex float planned last year is with us. Shares in the famous steam locomotive and all the operations which go with the brand name are to start dealing on 13 March. Nobody particularly superstitious there then.

Some to look out for

THE analytical team at brokers Teather & Greenwood has been active this past week, sorting out some goodies as the market starts to rise.

Ben Archer believes Universe Group has been oversold and with the dividend yield at 5.4% 'also attractive' believes the shares are a 'buy'. AIM-listed Interior Services Group gets a 'buy' recommendation from Peter Ashworth who says 'the outlook remains positive given its strong order book and prospects'.

Longmead Group gets the blessing of Stephen Thomas following its successful share placing and is a 'buy'. The group is expected to return to the dividend list with a final payment for the current year.

Finally, Mark Reed says 'buy' Holidaybreak, a group that 'has excellent opportunities in the year ahead to take the business to the next level through further organic growth and strategic acquisitions'.

WEB research group MoneyGuru has also been positive in its assessments this week, with 'buy' recommendations for consulting engineer WSP and a target price of 419p (346p) and for aerospace and defence group Meggitt, which has been insulated somewhat from the worst downturn in the commercial aircraft market. A target price of 260p (208p) is put on the shares.

The Guru also believes the market is undervaluing Northern Foods' medium-term potential and under-appreciating its attractions as a yield play. The target price is 199p (167p).