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.

Ofex independence

ET tu Daniel! Daniel Stewart Securities, the broker who has successfully introduced several clients to Ofex, has announced that it is, itself, withdrawing from that market on October 15 and that its shares will be quoted on Aim from October 18.

This is just the latest defector from the struggling third market but carries greater implications in that if a broker and nominated adviser deems it preferable to move on, it is unlikely to recommend the market to future clients.

Confirmation that Zyzygy - a specialist in investing in early stage technology and biotechnology companies – is considering making an offer, boosted the Ofex share price this week, and it seems others might be similarly interested. Also it seems the company has come close to raising the £2m it needed to keep operating.

So Ofex will survive, but any rescue will come at a price, and that price is almost certainly going to be an insistence that the Jenkins‘ family severs its connection, or at least reduces its stake to a level of no influence.

A few weeks ago I wrote here that founder John Jenkins, who has just stepped down as chairman, should be honoured for his role in setting up and developing this third market.

They cannot take that achievement away from him, but if his baby is to survive, it needs its independence.

Black's the man for Bob

AS promised a month ago, Bob Holt, the dynamic head of the ultra-successful Mears Group, has now introduced the man with the golden baton. Stuart Black takes on the role of chief operating officer from November 15.

As I wrote on September 2: 'Whoever the newcomer is, he has a huge act to follow.' Few company bosses have been so easily identifiable with the success of a company as Mr Holt and, while he intends to still play a hands-on role, investors will recognise that you do not appoint a potential successor unless you expect him to succeed.

Mr Black, it appears, has more than 20 years' experience in support services organisations, and has clearly impressed Mr Holt with his abilities; now he has to similarly impress the City; to that end he has made a good start by convincing Robert Sanders at Arbuthnot Securities who has taken the appointment as an opportunity to re-iterate his 'buy' recommendation for the shares at 184p.

Grand Vitesse

IT is not just because Vitesse Media, through its Growth Company Investor magazine, is coming up to the time when it names award winners among those involved with smaller companies, that I write favourably about them.

Chairman and chief executive Sara Williams has done a great job in developing this print and on-line publisher over the years through organic and acquisitional growth. In the six months to end-July revenues were 8.6% higher at £1,043,000 and pre-tax profits £12,000 against only £2,000 at this stage a year ago, and results for the full year are expected to show an improvement over last year.

Meanwhile the company continues to expand and is close to buying One Events, an events management company, whose owner Anita Howard will join Vitesse Media.

While the company‘s publications include some award-winning writers themselves, perhaps it is time for Ms Williams to pick up a prize of her own.

On the block

A company chief who is prepared to stick his neck out and make a genuine forecast is a rare sight these days. Most tend to check twice before admitting that Thursday is the day before Friday. So welcome Dr Pier Antoniucci, chief executive and president of Block Shield Corporation, the US-based, Aim-quoted company that offers a solution to electronic interference.

Without hesitation, Dr Pier, says: 'We will be profitable in the next financial year (beginning next March),' which is good news for the fewer than 100 current shareholders, and hopeful for any other investors who might be tempted aboard following the visit to these shores by Dr Pier and his non-executive chairman Michael Fitzgerald.

Despite a lengthy discussion with both I am still not too certain what it is the company does, but it has something to do with a new process of shielding one lot of electronic equipment in a machine from interfering with the electronics in another part of the same machine.

It affects every walk of everyday life from mobile phones, computers and washing machines to cars and medical and military equipment. Until now the shielding has been controlled by individual small metal or plastic casings keeping emissions from one piece of equipment apart from another, but new EU regulations come into force next July saying certain metals included in a shield must be recyclable.

Not only do Block Shield‘s patented solutions meet the new criteria, the process for applying them is 30-50% cheaper than traditional methods.

SQC Research has put a six-month target price of 150p on the shares (currently 106.5p), but beware, although there is no need for the company to raise further capital at present, Dr Pier admits it may be necessary to make a cash call to build capacity next Spring.

Laser beaming

UNLIKE me, who wasted my days in the Royal Navy, Dale Robertson did not. As part of his training as a weapons engineer he was introduced to lasers, an experience he later turned to more peaceful activities such as medical lasers, often used in cosmetic surgery.

Now Mr Robertson is chief executive of Enhance Technology, an Ofex-quoted supplier of equipment for the health and beauty industry, and Mark Sheppard at Midas Investment Management believes the half-time results showing sales up 27% and pre-tax profits a soaring 131% better at £43,310, make the shares attractive. He expects the full year to produce profits of £105,000 rising to £150,000 next year.

This is a fast-growing company, he says, and the shares 'deserve a re-rating to 8p (currently 5p) or we believe it will become a target for other health and beauty distributors'. He does, however, give a rating of 'very high risk buy'.

New issue alert

Begbies
Shares in Begbies Traynor Group, the independent insolvency, corporate rescue and recovery specialist, have started trading on the Aim following the raising of £5.3m through a placing by Teather & Greenwood, the group‘s nominated adviser and broker.

Some you may have missed

Alexandra
Although turnover was down 1.8% as a result of lower prices, uniform and workwear maker Alexandra, improved pre-tax profits by 1.6% to £1,900,000 in the six months to end July. Chief executive Julian Budd says: 'With a healthy order book and tight control of costs maintained, the company is well positioned to build on its first half performance.'

PlaneStation
Legal & General Investment Management has bought 5m shares (3.22%) of PlaneStation, and Artemis Fund Managers has raised its stake to 11.5% with the purchase of a further 3,343,382 shares.

Altracell
Bio-pharmaceutical research and development company, Altracell Pharmaceuticals, says revenues in the third quarter of the current year were euros700,000, making euros2.7m for the first nine months against euros600,000 in the corresponding period last year.

SectorGuard
Profits for the year to end September are expected to 'be in line with market expectations' a trading update from SectorGuard reveals. Results will be announced on January 11.

Central African Mining
A near trebling of profits nearly trebled profits to £1.72m in the year to end March was reported by Central African Mining and Exploration. The company had £5.6m cash in the bank at the end of March.

Southern African
FMR Corp., the parent holding company of Fidelity Management & Research and one of the leading North American institutional investors, has revealed a 44m share holding (13.3%) in Aim-listed Southern African Resources.

BioProgress
BioProgress has raised £5m through a placing with an institutional investor of 4% unsecured convertible bonds due 2009. Brokers Collins Stewart are also subscribing for warrants over 3.5m shares and the institutional investors has an option to subscribe for up to a further £5m of convertible bonds within the next two years.

BTG
IN an update for the six months to end September, BTG, the technology commercialisation company, says: 'A similar operating loss as for the same period last year is anticipated as a result of additional costs in respect of Provensis. As in previous years, the company anticipates that revenues in the second half will be higher than in the first.' Interim results and a full half-year update will be published on November 11.

Apointments

Christopher Philips, managing director of Colliers Capital UK, has been appointed a non-executive director of Abraxus Investments.

Chris Rhodes has been appointed chief executive of Centurion Electronics.

Shirley Chick and Martin Chick have joined Monkleigh, as managing director and divisional director respectively, having sold their Pro Motions Event Management for £255,000 in cash.

Sarah Byrne-Quinn has joined Smith & Nephew as Group Director, Strategy & Business Development.

Dr Peter Collins, operations director of Sondex, has been appointed managing director of Sondex Wireline, the main operating company within the oilfield technology group.

Roy Lander, former president of the Chamber of Mines in Zimbabwe, has been appointed a non-executive director of Southern African Resources.

Some to watch out for

Surgical Innovations
Medical equipment group Surgical Innovations, now has adequate capacity to meet demand for its product range, says Bruce Jones at Westhouse Securities. He adds: 'There is substantial future profit potential,' although warning that 'as a small company, Surgical Innovations remains vulnerable to pressure from larger competitors'.

Wolverhampton
Following a year-end trading update, Alan Millar at Arbuthnot Securities, says brewers, Wolverhampton & Dudley, are a 'buy' at 888p, and sets a target price of 950p on the shares.

Mr Millar‘s colleague, James Mitchell, says that following the winning of a distribution contract with Sun Microsystems by a subsidiary, shares of Fayrewood, the hardware and software distributors, are a 'buy' at 127p.

Tanfield
David Johnson, analyst at Daniel Stewart, says shares of Tanfield, a provider of assembly and technical engineering services, are a 'buy' at 9p.

Hightower
SQC Research has set a target price of 17p on the shares of Hightower Construction against the current 11p claiming: 'This Aim-quoted cash shell is about to establish its future business course.'

The same research group also says that Designer Vision Group, the provider of in-car audio visual entertainment, is 'set to become a leading player in its niche market' and sets a target price of 15p on the shares against the current 9p.