Smaller companies spotlight

EACH week, former Fleet Street City Editor

Spring is in the air

WHAT better way to greet the new tax year than to report a feeling of optimism in many sectors of the market. Let‘s start with David Ascott, partner in Grant Thornton Corporate Finance, who says confidently: 'The UK economy should witness increasing investing activity by the third quarter as deals are currently in the pipeline and venture capitalists are finding themselves under increased pressure to come off the fence to revitalise their activities and maintain healthy portfolios.'

He continues: 'There are many reasons to remain optimistic for a full economic recovery that many analysts predict will be achieved by the end of the third quarter.

'Private equity firms raised a large amount of funds in recent years and have significant sums still to invest . . . It is not in the nature of venture capitalists to sit on the fence for too long.'

At the same time, Neil Austin, head of new issues at KPMG Corporate Finance, says: 'The market is showing some signs of an upturn,' although he warns this does not mean the recovery will be quick or certain, adding: 'It is likely to be autumn before we see any sustained increase in volume' – the third quarter again.

And then Tom Bartlam, joint managing director of Intermediate Capital Group, a provider of mezzanine finance, has predicted a 'possible pick-up in flotations as well as mergers and acquisitions, this year'.

Already pencilled in for this year are Burberry, the luxury goods group, Focus, the DIY retailer, and Yell, the BT spin off.

Others are not going to wait for the rush. Harry Coe, former managing director of Airtours, brings his Leisure Ventures to AIM today; Leapfrog, a chain of children‘s day nurseries has announced it is making its entrance in the next few weeks, and Astucia, which provides revolutionary types of cat‘s eyes to enhance road safety, is planning a £100m-plus main market float in the next few months.

This degree of activity does not take place unless markets are reckoned to have recovered; there are many analysts who are beginning to say that share prices may not be as cheap again – barring an all out Middle East war.

Mears supporter

THIS column has been a big fan of Aim-listed support services Mears Group, and that has not been dented by this week‘s 30% rise in pre-tax profits to £2.5m and news that the order book now stands at a record £260m.

Chairman Bob Holt was totally unfazed by the forecast by house broker Old Mutual Securities of £3.5m pre-tax being made this year and £4.5m in 2003. These estimates should please the institutions, which now hold 50% of the company.

But the question other shareholders want answered is how long will it be before the shares break through the £1 barrier? Twice in the past twelve months they have climbed to 98 1/2p only to fall back. Even on the current results they rose only 1/2p to 91 1/2p.

Old Mutual have set a target price of 110p before the end of this year.

MultiMedia soothes nerves

ITV Digital's move into administration is not bad news only for the Football League, but also for the launch of MultiMedia Television, whose offer for subscription was launched on March 15 and is due to close on April 16. Not that the company has been badly affected. ITV Digital offers full interactivity to only 2.6% of MultiMedia‘s current reach into the digital TV audience, but potential investors may not realise that.

Sponsors Grahame H Wills have issued a statement to try to calm nerves explaining: 'MultiMedia Television would need only 200,000 subscribers, out of their 1.2m total base, to transfer to other digital platforms, to maintain their current reach.'

Let's hope the message gets across.

Some you may have missed

AS A world market leader in its major products (magnesia powders and zirconia powders), UCM Group has not been immune to the effects of the downturn in demand that occurred last year. As predicted at the interim stage, the second half of 2001 saw more difficult trading conditions than in the very good first half and, as a result, pre-tax profit for the year at £3.3m was £1.4m lower than in the year 2000. Nevertheless the board is recommending an unchanged final dividend of 5p a share.

Chairman John Gordon says trading so far in 2002 has been better than in the last months of 2001 but he thinks it unrealistic to expect the outcome for this year to be materially different from 2001. 'For 2003, however, the group‘s investment plans should deliver greater profits, even at present levels of turnover,' he says.

THE Eye Company has asked Henderson Morley, the AIM-listed specialists in herpes, to carry out additional efficacy studies on Henderson‘s platform technology, Ionic Contra Viral Therapy. Subject to successful results, licensing talks should be in the offing.

SMITHS Group has been appointed strategic co-marketing partner to Medisys for the Futura Safety Syringe and other safety products. Medisys received a $1m cash payment on signature; in addition, the agreement provides for a further $3.95m in lump-sum tranches associated with the full commercial launch of the syringe as a co-branded product.

IN the year in which Infast Group completed its reconstruction into a 'focused inventory management services business' and disposed of its remaining non-fastener operations, sales on continuing operations rose 8% to £134m. Operating profit was down to £4.6m from £7.1m in the year 2000. Chairman Roger Leverton says trading in the current financial year has started satisfactorily and sales and profits to date are ahead of the previous year.

PHILIP Roscoe has resigned as a director of Insensia Group 'to pursue other interests.' By all accounts his departure left boardroom colleagues stunned. Mr Roscoe joined Insensia when it bought Company Eye.

AIM-listed digital software development company Interactive Digital Solutions is to provide furniture retailer Courts with its Showtime software. The three-year agreement to install and maintain the in-store point-of-sale software, covers all Courts‘ 95 stores.

Some to watch out for

OAK Media, which is heading for an Ofex quote through an offer of shares to raise £740,000, made an impressive presentation to 94 potential investors this week. Chairman and chief executive Paul Woolf was said to have gained an 'excellent response' from his address to the Guild of Shareholders, an independent group brought together by former MP Tom Benyon.

Mr Benyon has held eight such meetings for his members since January, but the others were a shop window for already-quoted companies. 'This was a one off. We are not 'angels' helping companies to raise funds, just a shop window where they can display their wares,' said Mr Benyon.

On this occasion Paul Woolf highlighted Oak Media‘s latest investment with chef Claire Lyons who runs the Minichef school in Jersey providing basic cooking instruction and healthy eating to five- to 11-year-olds. Oak is backing the company to franchise the idea nationwide, to develop a children‘s cookery TV programme and launch Minichef kitchen equipment.

Oak also owns 50% of literary agent, Pollinger, which manages the estates of DH Lawrence, HE Bates and 30 other leading authors.

Oak is sponsored by DWA Capital (Tel: 020 7628 3989).