Smaller companies spotlight

High-tech survivor

MY attention has been drawn to Internet Business Group, a company that has survived the traumas of the high tech sector and now seems to be on the point of moving ahead.

When the business was launched in May 2000 the shares were offered at 40p each and the company had a market value of around £20m. Today the shares are trading around 3p each and the company is worth less than £2m - but at least that is double their value a year ago.

What has cheered the punters are the figures for the year to end-October 2003, published in March, showing a 92% leap in sales to £2.664m and losses nearly halved to £182,000.

It also helps that chairman and chief executive Maziar Darvish went on record at the same time committing the company to 'making the transition to operating profitability, before depreciation and amortisation, in the current trading year'.

But what sways me into believing this could be a company on the up is that Mr Darvish confided to me that he intends to appoint a financial public relations company in the next month or two. In my experience, companies only make such appointments when there is something positive to say.

Although IBG operates on several fronts, its performance-advertising subsidiary, Affiliate Future, is growing rapidly year on year, and is expected to double in size again this year.

In essence, Affiliate Future acts as an agency between clients who wish to advertise on the internet and web publishers who receive a commission on sales. The business has 200 clients and operates through 1,300 sites.

Even more important, however, is the management who have pulled the company through the difficult times. Many times I have written that the most important asset in any company is its management and according to Steven Whitehead of Altium Capital, IBG's nominated adviser and broker, 'this company has high management ability that has the respect of bigger rivals in the field'.

Allowing for a degree of adviser sycophancy, that would be natural in the circumstances, it is quite a testimonial.

My guess is that the City and financial Press will have plenty of opportunity to make up their own minds on Mr Darvish before the end of the year.

Cardpoint

THE reverse takeover of HBOS by Cardpoint this week is not only a 'significant leap forward for the company', as is claimed by chief executive Mark Mills, but also for the whole of the rapidly growing cash-machine sector.

The £75m deal makes Cardpoint the biggest player in this market and adds 816 cash machines situated in locations away from bank and estate agency branches.

As my colleague Andrew Oxlade wrote on this site a fortnight ago, nearly £54m will be spent on cash machine charges this year. That is 18% up on 2003.

Research by Sainsbury's Bank estimates that 43m cash withdrawals will be made from automatic teller machines run by independent operators such as Cardpoint, and they charge between £1 and £1.50 for every withdrawal.

The rise in the usage of these so-called 'convenience machines' placed in pubs, clubs and village shops is highlighted by the four-fold increase in turnover to £13.8m recorded by Cardpoint in the six months to end March, and the increase in gross profit to £3.8m from £400,000 over the same period.

The current deal is being funded by a placing of 24m shares and an open offer of 4m shares, all at 125p a share, and by £25m of debt financing provided by the Bank of Scotland.

This is an enormous vote of confidence in a company that came to market only two years ago when its shares were quoted at 43p. Today they are trading at 136p, just below their highest ever.

But the success of Cardpoint might cause investors to take another look at close rival Moneybox which came to Aim in March and whose shares have slipped back from a peak of 55p to 45p.

Moneybox, with 2,500 cashpoints under its wing, raised £20m at its launch to pay for expansion plans particularly in Germany and the Netherlands, and last year turned in a profit of £2m for the 11 months to end December.

Mike Allen, the Liverpool-based analyst at house brokers Numis, believes the shares may have been slightly overvalued at the listing price, but have been oversold since.

He could be right.

Eden

A WEEK ago I criticised Eden Research for being coy in announcing a possible move from Ofex to Aim. Deputy Chairman Ken Brooks even accused me of trying to get him into trouble with the Financial Services Authority because I pressed for an answer.

Just four days later chief executive, Tim Griffiths, announced the directors have now decided in favour of such a move believing 'the positive development and imminent commercialisation of our product means that a move to Aim is in the best interests of the company and its shareholders.'

Now that wasn't hard to admit, was it?

Some you may have missed

Acquisitor Holdings
Acquisitor Holdings (Bermuda) has bought 12m shares in Nettec, raising its stake in that company to 23.45%.

DawMed Systems
DawMed is to start installation of its new 'Clinic' benchtop washer-disinfector dryers next week. Scottish Healthcare Supplies has already approved the Clinic WDD for use throughout Scotland and similar approval is anticipated in respect of the NHS in England.

Arbuthnot Securities
Arbuthnot is to become a market-maker in investment trusts with the appointment of James Simpson who arrives from Close Winterflood.

UCM Group
James Gordon, chairman of UCM Group, told shareholders at the yearly meeting that 'the group is performing in advance of the same period last year with some operating benefits now being seen'.

Futura Medical
Futura Medical, the Aim-quoted pharmaceutical drug and medical device group, has achieved positive initial results following the completion of its most recent clinical trial on angina patients taking regular oral nitrates. Test doses of MED2001, Futura's rub-on cream for treating erectile dysfunction, were found to be safe and well tolerated without any clinically significant changes in blood pressure.

Vislink
Although both MRC, Vislink's US broadcast business, and Hernis, its Norwegian marine safety CCTV business, are trading in line with expectations, the slower than planned recovery in the UK will adversely impact on the group‘s first half results which are expected to be below those of last year, chief executive Ian Scott-Gall told shareholders at the yearly meeting. He added, however, 'given a satisfactory recovery in the UK business and the potential of the new market opportunities for the group, the board remains cautiously optimistic for the prospects for the year as a whole'.

Celsis International
Celsis, the rapid diagnostic testing systems group, reports a 22.5% rise in pre-tax profits to $4.83m in the year to 31 March. The group has also announced a maiden dividend of 0.86 cents a share.

Pilat Media Global
Pilat, the supplier of business management software to broadcasters, reports revenues up 86% to £2.60m in the first quarter of this year and pre-tax profits of £52,000 against a loss of £595,000 in the first quarter of 2003.

Widney
Window specialist and toolmaker, Widney, reports pre-tax profits of £472,000 for the six months to 3 April, some £68,000 more than in the corresponding period a year ago. The interim dividend is doubled to 0.5p a share.

Systems Union
Systems Union has bought Lasata Software for £10m in cash, shares and options. Lasata is based in Perth, Australia and is an important supplier to Systems Union.

BKN International AG
BKN, the maker of children‘s animated tv programmes has reported a pre-tax profit of e292,000 (£195,000) for the six months end 31 March. In the corresponding period a year ago there was a loss of e1.34m (£890,000). The company has also announced a one-for-three rights issue to raise up to e18m (£12m), the proceeds of which will be used to fund production of 'Ali Baba and the Forty Thieves: the Lost Scimitar of Arabia' its new animated series for 2005, to repay existing debt and to expand operations in Asia.

Teleunit SpA
Daniel Stewart Securities has raised e15m (approx £10m) for Teleunit SpA, the Italian telecoms company that has just been launched on Aim.

Ardana
Ardana, the emerging pharmaceutical company has raised £9m in an extension to its recent Series B financing. New investors are DVC Deutsche Venture Capital, Albany Venture Managers and 3i Bioscience Investment Trust. Chief executive Simon Best says the group will be launching shortly in the UK a new testosterone replacement therapy for men with hypogonadism and launches in other European countries are planned for next year.

Cambrian Mining
Cambrian has appointed Williams de Broe as its nominated adviser and broker.

Knowledge Technology Solutions
KTS has raised around £1.9m through the placing of 28.5m shares with institutional and other investors at 7p a share. The proceeds will accelerate the roll-out of Market Terminal and strengthen the company‘s working capital position.

Pixology
Pixology, the digital photographic software group has launched Embedded Pixology IRISS, an automatic solution for removing the problem of red-eye as the image is taken in a digital camera. The new product has been developed six months ahead of schedule.

Chepstow Racecourse
Chepstow Racecourse (the company) has changed its name to Northern Racing. At the yearly meeting chairman Sir Stanley Clarke said: 'Although we have suffered seven abandonments to date, trading remains in line with the board's expectations and the planned investment programme continues. The company hopes to make an announcement in the very near future on the progress made with a new media deal.'

Some to watch out for

BSS
Construction group BSS reported results for the year to end March that were ahead of expectations and have caused Stephen Rawlinson at Arbuthnot Securities to raise his forecast for the current year. He says the shares are cheap at the current price of 679p and adds that they are a 'buy'.

Wolverhampton & Dudley
His colleague, Alan Millar, believes there is a 10% upside in Wolverhampton & Dudley shares and says they, too, are a 'buy' at 802p with a target price of 900p.

South Staffordshire Water
Andrew Nussey, analyst at Altium Securities, has raised what he considers 'fair value' for South Staffordshire Water shares to 705p from 660p previously. The shares are currently trading at 740p but are a 'hold'.

For more news and interactive graphs for these stocks, click on the company names in the left-hand margin. Or for our Tips and Tactics relating to larger-cap shares and sharedealing, click on the link on the right.