Smaller companies spotlight

EACH week, former Fleet Street City Editor

Cleaning up

NOT many companies on Ofex can claim a FTSE 100 company as a near-10% shareholder, but that is the boast of Chores Group, the domestic cleaning group that starts life on the junior market on 7 January. 'Big brother' is multinational soap to frozen food giant Unilever, which sold a subsidiary to Chores in October for cash and shares, and has kept a 9.09% stake.

Chores was founded 10 years ago by Russell O'Connell, an Aussie who spent several years in South East Asia as a consultant to small to medium-sized companies providing strategic management and marketing advice.

Deciding it was time to develop a business of his own, he researched the market in the US and Australia and noted 'a growing trend towards complete household management directed at cash-rich, time-poor clients living in high-value properties'. In essence, in homes where both partners had highly paid jobs, neither was keen to pick up a duster or floor cleaner when they came home. O'Connell thought providing Mrs Mopp's on a professional basis would prove popular and profitable.

He has not been wrong. In ten years the business has built up a clientele of some 1,400 regular clients (using the service at least once a fortnight, some even daily) around Surrey and Kent, and has handled more than 30,000 one-off cleans.

Confidentiality agreements protect the names of some of the top clients. But O'Connell hints that there is more than one showbusiness name included and that the office wall covered with thanks for jobs well done includes more than one bearing the crest of the House of Lords.

Chores made a pre-tax profit of £135,000 in the year ended September and pencilled in for the current year is £448,000. The jump marks not only plans to extend its coverage throughout London and the Home Counties over the coming 12 months, but also benefits from the purchase of myhome, the Unilever subsidiary it bought in October for £325,000.

Unilever had invested £500,000 in developing its own version of the home service company before deciding its priorities lay elsewhere and selling out to Chores.

Research by Unilever showed this could be a £4bn-a-year market, taking in everything from the basic regular cleaning service, to carpet and curtain cleaning, laundry, ironing, dry cleaning, gardening and security - everything in fact that is a 'chore'.

As well as expanding organically, Chores plans to develop through franchising. It has five shop-front service centres that offer a collection and delivery service for laundry and dry cleaning - at Jeeves of Belgravia standard rather than a High Street cleaners - and will expand this side of the business.

The Ofex quote, which is to raise £200,000 through the issue of 1m shares at 20p each, values the company at £2.2m. But raising cash is not the main object. 'It builds our credibility among clients, after all we are going into their homes, and it will help us attract new talent who will be incentivised through share options,' says O'Connell.

It will also put a value of £1.76m on the 81% of shares O'Connell retains in the business. Now that's what I call really cleaning up.

Some you may have missed

THE placing and open offer of shares in IQE, the Cardiff-based maker of specialist epitaxial wafers and services for the semiconductor industry, has been successful and raised more than £27m.

THE Medical House, which produces medical equipment, is placing 2.5m shares at 52p each to raise £1.27m (net). It will use the proceeds to extend its range of needle-free injection devices for the delivery of insulin.

THERE has been a series of announcements for shareholders of Retail Decisions, the credit card protection group, to absorb.

First it plans to acquire Motorcharge, an Australian corporate vehicle charge card operator, for £5.4m. As the company believes this presents 'an ideal opportunity to restructure the current financing arrangements' it is raising £9.65m through a rights issue at 15p. The shares traded on Thursday at 20 1/4p. It has also announced a placing to reduce current indebtedness to bondholders by converting around 85% of the outstanding convertible bonds.

The company also unveiled contracts with Walmart.com in the US to help protect its e-commerce transactions from fraud, Sainsbury's in the UK for the continued provision of services, and Paymate Pty in Australia for the provision of the group‘s ebitGuard service.

SIGMA Technology Investments - part of Sigma Technology Group - has raised its stake in SecuriVox, a voice biometrics company, to 32.2%. It already owns an option to acquire a further 4.2%.

'MONDAS' solutions for the financial sector are gaining credibility,' says Tim Simon, chief executive of Mondas, confident following a 96% rise in sales to £1.7m in the six months to end October. Nonetheless, the group, which provides management software for banks and stockbrokers, still turned in a loss of £1.1m before tax for the period.

THE national operator of late night bars and nightclubs with the ridiculous name, Po Na Na Group, has turned in a fine set of results for the 27 weeks to end September. Sales were up 30% to £17.2m and operating profit was 27% higher at £1.4m. The group also reports a 'very promising turnaround of the performance at Hammersmith' - so Na Na de Na Na to me, I suppose.

PRIZE for understatement of the week goes to Ross Macdonald, chief executive of CapitalTech, the AIM-listed property investment group. 'The business is now looking far more healthy,' he tells shareholders, having reported operating profits of £595,000 for the six months ended October compared with a loss of £238,000 a year ago. Even the loss of £697,000 at the pre-tax stage was substantially less than either half of the previous year. The company says that highlights its 'more focused strategy of creating a solid and valuable asset base by constructing a sound residential property portfolio'.

COUNTRYSIDE Properties is buying 31.5 acres of land from the Department of Health at Withington Hospital in South Manchester. It wants the land for a mixed-use redevelopment, which will be worth more than £150m when completed. Plans for the site include commercial space, a 150-bedroom hotel and some 380 new homes and apartments.

Some to watch out for

THERE'S a trio of selections from the analysts at brokers Teather & Greenwood this week.

Peter Ashworth says 'buy' IFTE, the AIM-listed fire protection group. He says the group's interim profits recently demonstrate the substantial progress achieved over the last year and that the outlook remains positive with a strong order book and excellent prospects.

Rowan Morgan says 'roll up roll up' for Carpetright, despite the carpet retailer not quite hitting the half-time profit target set for it of £22.5m. Any setback in the share price provides a buying opportunity, says Morgan.

Mike Reed believes Holidaybreak, the tour operator, will 'be in a good position to take advantage of opportunities' if there is increased merger activity on a pan-European basis in 2002.