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.

Gold star

NO company involved in mining is ever going to make me throw my hat in the air, but I raise my small cap to Cambrian Mining, a small, but growing London-based mining finance house, which seems to be making a better fist of it than most.

Chief executive John Byrne was in London to coincide with news that it is raising its stake in Deepgreen Minerals Corporation from 39% to 100% and to reveal plans for seeking AIM quotes for two further investments, Western Canadian Coal and Asia Energy next February.

This, at least, is a company that does more than talk about potential four or five years down the road.

I can do no better than steal the words of Emil Morfett, analyst at Phillip Securities (UK) who says: 'Cambrian Mining is a small mining finance company with a core of world-class coal assets and a halo of exciting gold projects . . . Management is set to transform the company from a dog‘s breakfast of cross-holdings stretching around the world to an integrated mining finance group with coal, gold and base metal divisions.'

Mr Byrne spread the message to financial journalists on Monday and to nearly 40 private client brokers on Tuesday; telling them: 'This merger (the Deepgreen share acquisition) will complete the first 18 months of Cambrian‘s five-year plan to establish itself as a significant junior mining finance house in London.'

Cambrian moved from Ofex to AIM last August when the shares were trading at 30p. This past week they were changing hands at 54p.

Creston on the prowl

NEWS that will get some of my readers excited is that Creston, the marketing services group that bought London-based PR agency Nelson Bostock Communications in October, is looking to add a financial public relations company to its expanding empire.

Chief executive Don Elgie tells me this is an area in which Nelson Bostock is keen to expand, and he wants to keep the new partners happy. However, he points out that it took 18 months to nail Nelson B and potential new partners should not expect a quick deal.

Creston, itself is moving fast, with turnover up 64% to £12.95m in the half-year to end September compared with the same period a year ago, and pre-tax profits are a staggering 247% higher at £750,000.

This was a performance which brought forth a 'buy' note from brokers Charles Stanley at 109p, advice that Mr Elgie has followed, adding a further 224,500 shares (at 126p) to his self-invested pension fund and raising his beneficial interest to 787,174 shares.

'I am a very committed buyer and will be buying further shares on a regular basis, investing any cash bonus I have in the company,' Mr Elgie says. He adds that it is better than giving cash to a faceless fund manager and allowing his pension to be invested in a range of unit trusts. Makes sense to me.

High-flier

TAKE advantage of a travel promotion offered by the Daily Mail (or other newspaper), or a High street major, and the chances are that the company behind the scheme is Landround, which has built its business on travel vouchers.

The company has been profitable since the 12th week of its existence and, although growth was stifled by events following 9/11, it has taken off again in a manner that would have left Concorde gasping. This week chairman Michael Crompton announced profits of more than £2m for the year to end September, against £862,000 in the previous 12 months, and shareholders have seen a 6.5p leap in the yearly dividend to 10.5p.

The company has top names involved in its voucher business, including Coca-Cola, Gallahers and Spar, but excitement for the future is in the 'buy and fly' incentive market, a challenge to Air Miles and already making inroads.

I first wrote about Landround 18 months ago when the shares were 114p. This week they were traded at 420p and have been set a target price of 490p by Evolution Beeson Gregory, and 500p by SQC Research.

Support for Mears

WHILE patting myself on the back, I bring to your attention support services group Mears, an old favourite of this column since the shares were 64p. They are now 125p and, I hear on the grapevine, that US fund managers are now looking at the company.

This coming week, I shall be sharing Christmas turkey with chairman Bob Holt, now back from watching the rugby in Australia, and will try to tempt him into telling me how the talks went.

Some you may have missed

SALES up £2.5m to £13m, pre-tax profits up £325,000 to £12,625,000, and gearing down 2% to 42%, makes good reading for shareholders in Planit Group which is benefiting from the upturn in business on both sides of the Atlantic. Chairman Michael Jackson (no this is another) says: 'We have a proven formula for acquiring companies, integrating them into our business and quickly making them earning enhancing, and it is our intent to continue this process so as to achieve our objectives.'

FIREANGEL smoke alarm group Sprue Aegis is boosting production ahead of a commercial launch in North America and Continental Europe, by entering a new manufacturing agreement with AEA Technology.

GOLD and silver exploration group Minco, has raised £1m by the issue of 12.5m new shares at 8p each to speed up its current exploration programmes on what it describes as 'a number of very promising precious metal prospects in both Mexico and Ireland'.

AS predicted here, CMS Webview is seeking to raise £2.5m through a placing to help increase the marketing of its main Transactional Data Interface product, including in the US market. Meanwhile, Nidera UK, a leading supplier of cereals, oilseeds and proteins to domestic and international markets, has become a subscriber to ProphetX the group‘s market price display system.

CITY LOFTS, the group that converts city centre buildings into luxury pads, is coming to AIM in a move that is expected to enhance its own image.

BIOPROGRESS, which provides the covering that helps pills go down easier, is raising £6.6m through a placing and open offer of shares at 50p each.

ACQUISITOR Holdings has raised its stake in Baltimore Technologies to 2,843,736 by the purchase of 475,000 shares. It now holds 5.29% of Baltimore.

AIM-listed property group Terrace Hill has swapped a portfolio of flats in London and Aberdeen with the Nationwide Building Society for 24 flats in Paisley and cash, leading to an overall gain of £1.6m.

PALADIN Resources has been offered participation in three production licences in the Norwegian North Sea.

EQUIPMENT rental group Vp saw sales rise 10% to £40.9m in the six months to end September, and a £100,000 rise in pre-tax profits to £4.1m.

ICE CREAM maker Richmond Foods enjoyed the sweltering summer days more than most, with sales up 9% to £127m in the year to end September and pre-tax profits 28% better at £10.5m. 'We look forward to continuing to grow market share over the next 12 months and to make further progress towards our strategic goal of being the UK‘s leading ice cream manufacturer by value,' says chairman Ross Warburton.

WIDNEY, which makes windows for specialist vehicles and metal press tools for the motor industry, has bounced back to profits of £1,183,000 in the year to end September after producing an £18,000 loss in the previous 12 months. Chairman Joe Grimmond says: 'Our current trading levels and order books lead me to believe we will make further progress this year.'

OXFORD BioMedica is to receive funding from the US Foundation Fighting Blindness for pre-clinical studies for the company‘s vision-loss product RetinoStat.

Some to watch out for

ARBUTHNOT Securities is initiating coverage on Belhaven, the Scottish brewer, and analyst Alan Millar rates the shares a 'buy' with a target price of 495p against the current 429p.

STEPHEN Rawlinson, analyst at Arbuthnot Securities, is a strong fan of Carillion, a company that plans to make a special dividend to shareholders from a windfall profit. He says the shares are 'too cheap' at 145p and should be bought.

TELECOM Plus has impressed Max Royde at KBC Peel Hunt with its results for the six months to end September, showing pre-tax profits 96% higher at £4.9m and the interim dividend 80% better at 4.5p. He says the shares (currently 369p) 'will continue to outperform'.

THE 'Ofex Specialist' writing on UK-Analyst.com says that Ofex-quoted Eyeconomy Holdings could 'provide an excellent and cheap opportunity to buy shares in this undervalued company'. This is despite the recent profit warning from the company. He says: 'The company is making a mountain of money, has loads of cash and valuable assets and is trading at just 5.75p,' adding they are certainly worth 15p.