Smaller companies spotlight

EACH week, former Fleet Street City Editor Patrick Lay keeps This Is Money readers up-to-date with a neglected, but exciting sector of the stock market - smaller companies.

A sporting bet

SHAREHOLDER perks took on a whole new meaning for William Frewen this week when, as an 8% shareholder in sports information technology group InterClubNet, he joined the directors in a smoked salmon and roast beef Press lunch at London's Dickensian hostelry, the George & Vulture.

One can only presume that he will soon become a director, or a precedent has been set that might have other shareholders feeling left out.

Frewen was head of Playsport New Media, a company providing similar software to the England and Wales Cricket Board and the Lawn tennis Association as InterClubNet provides for the soccer authorities. As I revealed a fortnight ago, Playsport has been bought by InterClubNet for a maximum of £900,000 (and a free lunch).

The occasion was to announce the half-time results for InterClubNet, which showed turnover of £2.8m for the six months ended November, six times higher than a year earlier, and pre-tax losses narrowing to £222,000 from £879,000.

The directors believe that with most competition falling out in the recent bad times, they are now in a strong position to grow the client base. In the past few months they have signed up the Botswana, Malawi and Zambian football associations and signed an initial four-year agreement with the Asian Football Confederation, a deal that will benefit from the additional interest created by the World Cup this year.

The Playsport deal widens the target market area, which now includes chess, basketball, rugby, ice hockey and gymnastics - even fishing is mentioned.

According to SQC Research, the 'small interim loss should be turned into a full-year profit, then into even greater profits over the next two years.' It suggests pre-tax profits should be £5.5m in the year ending May 2004.

Perhaps all shareholders will be invited to lunch then.

Cheer for Mears

ANY business that doubles the size of its order book at a stroke deserves attention, so we return again to support services group Mears, where chairman Bob Holt has just announced a £130m contract with Richmond Housing. That raises the group's forward order book to £280m.

The 10-year contract is to provide day-to-day repairs and planned maintenance services to the Richmond Housing Partnership's 6,500 rented homes and 1,500 leasehold properties. It is one of the largest contracts in the social housing sector. It allows for around £40m for reactive maintenance and voids repairs, and £90m to upgrade the general quality of the homes through kitchen and bathroom renewal, window and door replacement, re-roofing and environmental improvement.

Some you may have missed

COUNTRYSIDE Properties has been selected as preferred developer by the National Trust to create a 'new greener sustainable housing development' on the site of the former Canadian Red Cross Hospital at Cliveden, near Maidenhead in Buckinghamshire.

Subject to planning permission, the project will comprise a mixed-tenure development of 198 contemporary houses and apartments to be built in line with the National Trust's environmental principles. The completed development value is expected to be £80m and will regenerate a 14 acre 'brownfield' site that will help local housing needs and provide an income to enable the National Trust to continue to care for Cliveden.

SPRUE Aegis's FireAngel plug-in smoke alarm has found space on the Homebase shelves for an eight-week promotional campaign.

WATERMARK Group, which provides support services to the international travel industry, has opened an office in Shanghai, giving the group a foothold in northern China. Chief executive John Caulcutt says: 'We believe that China's entry into the World Trade Organisation will lead to greater interest in the region from foreign business and we want to ensure that Watermark is well positioned to benefit from the increase in associated travel over this vast area.'

LO-Q, the Ofex company that provides theme parks with a virtual queuing system, has completed surveying on the first three of the new ten-park contract it recently signed with Six Flags Over Georgia. The NYSE-listed client is the world's biggest regional theme park operator, owning and operating 39 parks throughout North America, Latin America and Europe.

Installation is expected to begin this month at the rate of three parks a month with the intention of having most of the parks fully operational by this year's peak season.

CONGRATULATIONS to Insensia Group, operators of Unquoted.co.uk, which is a nominee for the Best Financial Media Coverage of the Year at the Ofex Awards. It faces stiff opposition - other nominees include the Daily Mail and Mail on Sunday, sisters to This Is Money.

SUPPLYING medico-legal reports to solicitors and insurers engaged in personal injury cases has made LitComp a hot property. Its offer for subscription to raise £500,000 was so successful that it raised £750,000 - and the shares have gone to a premium in early dealings.

Some to look out for

THE stock market may still be going through a rough patch, but that just means that there are more bargains about. Why else would the analytical team at brokers Teather & Greenwood have issued three 'strong buy' recommendations and a similar number of 'buy' tips in one week?

In the first category, Auto Indemnity, which works with the insurance industry, arranging cars for those who have been involved in accidents, is seen a 'strong buy' with its shares (27 1/4p) at a substantial discount to others in the sector. Analysts Stephen Thomas says the company should record a 30% growth in volumes in both 2002 and 2003.

Belhaven Brewery may be a niche player in the Scottish drinks market, but Nigel Popham believes the stock to be undervalued, standing on a price/earnings ratio well below half that of the market - another 'strong buy.'

And BioFocus, the pharmaceuticals group, 'is currently trading at an unjustified discount to its peers,' says Howard Miller, who also adds 'strong' to 'buy'.

Those rating a straightforward 'buy' recommendation are: Home Entertainment Group, LPA , which plans to move from a full listing to the Alternative Investment Market and Park Group, which has 'a strong net cash position'.

PETER Jones at brokers Peel Hunt advises keeping an eye on the support services sector which - subject to political wrangling - should eventually benefit from the large scale of contracts likely to be awarded on the Public Private Partnership relating to London Underground.

CONSULTING engineers Waterman has a 'buy' recommendation from research web site MoneyGuru. It says the group's long-term order book is at record levels. Current projects include the Greenwich Millennium Village, the Bull Ring Redevelopment at Birmingham, HM Treasury Building in London, refurbishment of the MoD headquarters in Whitehall and the Ballymena regeneration project in Dublin.