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.

One to watch

SECURITY cameras in stores these days are no longer just about trying to spot shop-lifters.

Digital video networking designed by Quadnetics Group means marketing men sitting in offices miles away can study, on their desk-top computers, the route customers take through a store and watch which merchandise draws attention. It could alter store layouts and change group-buying policies.

Quadnetics also has a central control room in Manchester watching over 23 separate car parks, improving customer service while reducing overhead costs.

The firm has invested heavily in this new technology over the past three years. It seems about to reap the rewards as confidence returns to the business community. Demand is rising and some of the effects will be evident when Quadnetics reports in a couple of weeks with figures for the year ended May.

Quadnetics said in July that the results would be better than the market had expected. Chief executive Russ Singleton said pre-tax profits would be 'not less than £1.35m.'

Brokers predict the final figure will be nearer £1.5m. Singleton also could deliver an upbeat report on the current trading.

Don't just take my word for it

MANAGEMENT, management, management...this column has been a strong supporter of Intellexis, the education and training services company since Ken Scott moved in as chief executive and started shaking things up.

Now the company has attracted the support of Johnathan Barrett at broker Teather & Greenwood. He says: 'Based on the company's aim to make earnings-enhancing acquisitions, and thereby being a broader, stronger business, it is not unreasonable to expect the shares will outperform if positive news flow is delivered.'

On the road

FEW companies would expect to raise their profile with investors by becoming second-hand car dealers. Private & Commercial Finance, however, is convinced this is the way ahead.

To be fair, it plans to deal in new and nearly new cars as well as second-hand trades, and will launch five car supermarkets over the next four years. It's hardly original, but nonetheless it's a potentially lucrative venture.

Private & Commercial is looking at the success of Carcraft, a soon-to-be-floated, company in the North East. It has made pre-tax profits of £29m from a turnover of £210m with just three such outlets. The owners are said to have taken out some £20m in dividends in the past two years.

Until now, Private & Commercial's main activity has been offering hire-purchase finance on cars and on plant and equipment for business and local authorities.

It's facing growing competition. Most of the business came from those whose credit rating was less than A1, and who were prepared to pay a little more for the privilege. Other lenders have been attacking this market, offering rates that chief executive, Tony Nelson, says are untenable.

Each car supermarket will have some 300 cars on the lot. It will have the facility to target selected vehicles and any special requirements buyers may want. The supermarket will also offer finance to the buyer.

Nelson reckons this will give him the edge, because he will be able to offer a better deal on the cars. 'Even if the profit on the vehicle is nil, the earnings from the loan will be lucrative,' he says. 'For a start, we will save the 8% commission we currently pay more than 100 agents who act for us.'

It plans to open the first car supermarket before Christmas and to have five operating within four years.

Finance director Scott Maybury says loan arrangements from just three car supermarkets would more than double the company's existing motor finance deals.

Private & Commercial has just reported first-half profits of £606,000. That's down £150,000 on the year-earlier period, reflecting the growing competition in the HP market. Showing confidence, however, the firm raised the interim dividend by 5% to 1.1p a share.

Happy convert

PETER Hewitt, chairman of support services and property refurbishment group Wigmore, is a happy man.

His biggest outside shareholder, Artisan (UK), has in one week sold convertible loan stock in the firm worth £600,000. It was all placed with institutional and private shareholders without affecting the Wigmore share price, steady at 2 1/2p.

He feels he is now able to concentrate on running his business without having to wonder what a major investor may have in mind. Hewitt seems comfortable with forecasts of Wigmore breaking even in the current year and a maiden profit in 2004.

An SQC Research note suggesting a target price of 3 1/2p by the year-end does not seem extreme.

Some you may have missed

OIL and gas exploration and production company Paladin has delivered record results for the half-year ended June. Pre-tax profits rose 41% to £44.7m and turnover climbed 61% to £121.8m. Chairman Malcolm Gourlay says recent acquisitions are making a 'significant contribution and we anticipate that our current investment programme will generate further growth'.

OXFORD Biomedica is raising £20.4m through a rights issue. It is offering 27 new shares for every 50 held at a price of 17p a share. The market price currently is 22 1/2p. The biotech says it wants the cash to develop products to a stage where they can generate significant revenues.

ACQUISITOR, the AIM-listed investor group, has bought a further 1.2m shares in Nettec, the corporate website designer and operator. That lifts its interest to 12.05m shares or 9.96%.

MEDICAL Solutions, the supplier of services for drug developers and healthcare providers, has bought Histopathology & Specialty Laboratory in Dubai for £275,000 in shares and cash. It bought another private laboratory in Dubai in July. Medical Solutions also posted a profit of £500,000 for the six months to June, from a loss of £400,000 in the year-earlier period.

PAUL Holland has been appointed UK and European marketing manager for Sprue Aegis, the FireAngel smoke alarm system makers.

MINING group MinMet is paying up to £3.1m for the worldwide rights to a new method of processing gold. It says the process, which uses advanced biotechnology, can cut operating costs by 70% compared with established pressure-leach methods.

BIOPROGRESS is having a busy week. The AIM-listed company, which has developed a way of coating pills with vegetable-based substance rather than gelatine, reported a pre-tax loss of £400,000 for the period from 22 May to 30 June. It also said that a major international supplier to the pharmaceutical industry has signed a letter of intent for an exclusive global licence for one of its technologies. Bioprogess also is in late-stage talks about an alliance with Harro Hoefliger, the German pharmaceutical production machine-builder.

FUSION is in a stronger position than at any time in the past three years, says managing director Alan Stein. The African oil exploration company posted pre-tax profits of £3.22m for the year ended June. That compares with a loss of £920,000 last time.

INDEPENDENT oil and gas production group Premier Oil has 'an exciting drilling programme now underway' says chairman Sir David John, in a statement with the half-year figures. These showed operating profit up 54% to £81m in the six months ended June.

MINERAL exploration company Southern Africa Resources has raised £400,000 through a private placing of 10m shares. The placing was taken up in full by a Bermudan-based company representing Thomas Kaplan. The same company is being issued with three tranches of 25m warrants exercisable at 4p, 5p, and 6p respectively. AIM-listed Southern Africa currently trades at 5 1/2p.

KNOWLEDGE Technology Solutions has recruited stockbroker Seymour Pierce as a subscriber to its QuoteTerminal financial data and news service.

ARC Risk Management has won a contract to provide its red24 security advice system to a minimum 30,000 private clients of Hiscox, the Lloyd's insurer. Hiscox covers everything from homes to film production, race horse and kidnap and ransom risks.

HENDERSON Morley has won regulatory approval to begin Phase II studies of its treatment for genital warts in men. Chairman Andrew Knight expects initial results in the first half of 2004.

TELECOM Plus says profitability is substantially ahead of budget for the period ended 31 August, and that it expects to top City forecasts for the full year ending March 2004. It expects to raise the interim dividend by 80% to 4.5p a share.

Some to look out for

ANOTHER strong batch of buy recommendations this week as stock markets move to fresh year highs.

Carillion: Following interims, the shares are recommended by Stephen Rawlinson of Arbuthnot and David Taylor of Teather & Greenwood. The services company took a £10m hit on the Nottingham Express Transit contract. But with an order book of £5bn - Carillion is on the short-list for £3bn of work in the health sector - this is a medium-term investment.

City Centre Restaurants: Although short-term price gains may be limited, Alan Millar at Arbuthnot says the shares are attractive on a one-to-two-year view and says 'add'.

Galliford Try: The builder is looking at progress through to 2005, says Rawlinson at Arbuthnot. The shares are a buy at 39p.

Interserve: The firm has transformed from a project-based builder into one with a more integrated offering across facilities services, industrial services and equipment services. The stock provides 'good value at these levels' (245p) says Michael Morris at Arbuthnot.

Mayborn Group: The babycare products and fabric dye company is a 'buy', says Mark Watson-Mitchell on his Watshot website. That's despite a 25% rise in the price since the interims were released on Tuesday. The shares are still cheap, he says.

Whatman: The filter specialist's interims confirm its restructuring and refocusing are on track, says Mark Paddon at Teather & Greenwood, rating the stock a buy.