Smaller companies spotlight

__________________________________
Click here for more smaller companies coverage. Or here for our tips section.
__________________________________

It is a policy that is obviously paying dividends. Alan Millar of house brokers Arbuthnot Securities and Peter Ashworth of Charles Stanley have both rushed out 'buy' recommendations for the shares and a figure of £3.1m has already been pencilled in for current year profits.

Good bet for a bid

IT IS only a fortnight or so since NETeller successfully launched on AIM raising some £35m, but already questions are being asked about how long before this unique company is snapped up by one or another of the major credit card operators.

This is no loss making, high-tech, operation, but a company with 800,000 customers on its books – almost all in the US at present - and signing up 1,800 new folk every day of the week; its first quarter results out on Wednesday show revenues up 161% on the first quarter of last year at $15.4m (£9m approx) and earnings before tax 35% higher at $9.3m (£5.5m), and it has hardly started operating in Europe yet, with Asia, Eastern Europe and South America still to be brought into the net.

NETeller operates an 'e-wallet' system allowing individuals to deposit cash on line through which they can pay for goods and services as well as deposit further funds, or transfer or withdraw money on-line.

It is a facility that plays particularly well with on-line gambling companies says Canadian-born, now Isle of Man resident, Gord Herman who is president and chief executive officer. He explains that there is a growing tendency in world markets for some normal credit card holders not to honour losing bets, often claiming their card details were being used illegally, and refusing to pay up.

The resulting arguments have been causing huge expense to the main credit card companies; the secret of the NETeller, operation, however, is that it carries out stringent checks on its customers at the sign up and Mr Herman claims its members are 99.9% identifiable and, therefore, liable for their own debts.

This is the sort of assurance that the gambling companies seek and why 1,500 of the world‘s 1,800 on-line gambling operations are promoting the NETeller scheme as the payment system of choice.

The punters also see their returns in their account within minutes of a result without any delays or expense for currency exchanges, and they are free to transfer money anywhere in the world.

The size of NETeller is such that every day a further $1.4m (£800,000) is deposited into the system, all protected in secure and segregated accounts. At any one moment in time there is some $40m (£23m) on deposit earning interest for NETeller.

It does not take much vision to see a time when a major card operator would want to bring this lucrative and secure operation under its own wing – my guess is probably within two years.

The shares, which were placed at £2 each have slipped back to around £1.90p but are unlikely to stick at that level for long as the company plans a series of announcements of joint ventures and acquisitions over the next few weeks.

Baltimore shambles

PITY the poor shareholders of Baltimore Technologies who will not be impressed by the sloppy nature of the bid by Acquisitor Holdings, the Bermuda-based company, to try to oust their board at an extraordinary meeting today.

There is no reason to support Baltimore, whose board has failed to cover itself with glory in recent years, but what of Acquistior‘s plans to put its own team in place of the incumbents thrown out because of a 'technical breach'.

It seems that Acquisitor has been so busy trying to score points over the past two months that it failed to notice its nominees were supposed to write letters stating their intention to stand as directors before the extraordinary meeting was called.

It means that if Acquisitor is successful in sacking the existing Baltimore board their nominees cannot be elected at the meeting meaning there will be no directors running the company.

Shambles is a word that comes to mind.

Some you may have missed

Petra Diamonds
Petra Diamonds has identified two distinct diamondiferous deposits in the Camambeia valley of its Alto Cuilo concession where it has been drilling for the past two months and is now carrying out further drilling in the area. Chairman and chief executive, Adonis Pouroulis, says: 'These initial results are highly encouraging.'

Red squared
Following the purchase of a further 200,000 shares, John Story now holds 900,000 shares in Red Squared representing 4.46% of the company.

Bright Things
Corporate Synergy has raised £4.5m with Kelton International for Bright Things, which has been admitted to AIM.

Hot Group
AIM-listed recruitment company Hot Group, has bought JobsFinancial.com and Gisajob.com for a total of £1,230,000 in cash and shares, so developing their online recruitment operations.

Surface Transforms
Surface Transforms has placed more than 4 million new shares at 70p, raising £2.7m after costs to increase its capital investment programme and to expand its management and technical team.

Oak Holdings
The newly created consultancy service set up by the AIM-listed property development group, Oak Holdings, has signed its first contract to manage the property portfolio of a significant overseas investor – details of which remain confidential.

Dana Petroleum
Dana Petroleum is starting the Banff field gas injection project in the UK North Sea and the F16-E gas field development offshore the Netherlands.

Terrace Hill
Property development and investment group Terrace Hill has raised around £8.3m of new funds through a placing with institutional investors. The proceeds of the placing will be used as general working capital.

Corin Group
Corin Group has formed a direct sales operation in Australia, following the launch of three direct sales subsidiaries in Western Europe, Japan and the US last year.

Enhance Technology
Enhance Technology has been awarded exclusive distribution rights in the UK and Republic of Ireland for beauty treatment equipment maker Starbene, based in Cordoba, Argentina. The contract is for the supply of Starbene's entire product range of 20 systems grouped into five main lines.

Lapp Plats
Ofex-listed platinum and nickel exploration company Lapp Plats has submitted four claims to the mining inspectorate of Sweden over areas in central and northern Sweden.

Smith & Nephew
Liz Hewitt, formerly director of corporate affairs for 3i Group has joined Smith & Nephew as group director of corporate affairs.

Destini
IFA consolidator Destini Financial Services Group has bought City IFA London and Barnet-based Redwood Financial Services for a mixture of cash and shares.

Southern African Resources
Southern African Resources has expanded its prospecting contract to the 4,600 hectare Leeuwkop 402JQ property on the Western limb of the Bushveld Complex. International mining consultants Snowden Group say the extension could add 13m oz of platinum elements and gold resources.

Home Entertainment
Michael Riding, managing director corporate banking at Lloyds TSB Bank has been appointed a non-executive director of Home Entertainment Corporation.

Richmond
For the first time, Richmond, the ice-cream specialist, has made profits in the first half of its financial year, producing a pre-tax profit of £2.1m for the six months ended March 31 against a loss of £200,000 in the same period last year. In the period the company increased its market share in take-home ice-cream from 31.5% to 33.7%, making it the leading supplier of ice cream to the retail market.

NeuTec Pharma
Drug company NeuTec Pharma is starting phase III clinical trials on Aurograb, which targets hospital superbug MRSA. Eight centres are active in three countries.

BKN Animation
BKN International, producers of animated children‘s television programmes, has won a major North American contract with Good Times Entertainment, a home video/DVD distributor in the US, to release Kong – King of Atlantis in September 2005, ensuring a minimum guaranteed shipment of 150,000 units with BKN earning around $3 to $3.50 per unit.

Some to watch out for

Costain
Stephen Rawlinson, analyst at Arbuthnot Securities, says that Costain is attractively priced at 45p and the shares are a 'buy'.

Punch Taverns
Rawlinson's colleague, Alan Millar, likes the look of Punch Taverns and in a 'buy' recommendation sets a 12-month target price of 630p against the current 538p.

Forth Ports
There is no doubting the enthusiasm of Alastair Gunn, analyst at Arbuthnot Securities for Forth Ports, which he says is a 'strong buy' at its current level of 1175p, claiming that “the only risks to our 1799p valuation is on the upside.”

Blacks Leisure
His colleague, Gillian Hilditch, is equally excited by Blacks Leisure, recommending the shares as a “strong buy” at 397p and placing a target price on them of 450p.