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.

Adventis thinks big

THERE is no doubting the enthusiasm of Charles Phillpot, managing director of Adventis, the multi-media marketing and advertising agency that came to the Alternative Investment Market in July.

In announcing a 33% jump in turnover in the first six months of this year (when it was still an unquoted company, of course) he revealed an even more impressive 75% leap in pre-tax profits to £319,000.

But I wonder if he might have gone a bit over the top in describing his business as a 'mini WPP' – still very mini, I would suggest.

With the advertising market picking up, according to much recent research, and plans to diversify into different, but related, business streams, Mr Phillpot has reason to be 'confident about prospects for the second half,' but I should point out that an increase in profit margins in the first half owes something to his claim to 'making sure his property works'.

With an expensive 5,000 sq. ft of space just behind Selfridges, his aim is to ensure that the manpower is 'economically distributed' and even now he is re-planning the office space to fit in the current 48 people who are working there and leaving space for others who may join.

Mystery play

MOST analysts would fight to get credit for identifying a vastly undervalued share, but not the mysterious writer of a research note on York Pharma that boosted the share price by more than a third (to 69p).

York is a corporate client of brokers J M Finn & Co who, not having a pharmaceutical specialist of their own, commissioned the work to be done outside by a person described to me as 'a former pharma analyst with West LB Panmure'.

A PR spokesperson said: 'Finn are happy to put their name to the research, but the author is moving to another job and she does not wish to be identified.'

Such was the bullish nature of the note that I asked for, and got, an assurance that the new job was not to be with York.

York is described as 'an emerging biopharmaceutical company focused on dermatology'. It came to AIM in April raising £735,000; its initial product is Abasol, an antifungal and antibacterial agent, due to be launched in 2006.

The market for this product and its future potential causes the author of the research note to put a value on York Pharma of £158m, compared with the market value at the time of writing of £3.7m and today‘s value, following publication of the note, of more than £5m.

Chief executive of York Pharma is Terry Sadler, the man who took Bioglan, another dermatology company, into a FTSE 250 company with a value of more than £800m in the early days of the millennium but, sadly, the shares crashed from £9 each to just 6p with Bioglan owing banks £112m after auditors made it restate its accounts.

New issue alert

Mercator
Mercator Gold is the latest gold exploration group to come to AIM. Phillip Securities is acting as broker and Beaumont Cornish nominated adviser to the company that is raising £510,000 in a private placing of 8.5m units to include one fully paid share and one free 'piggy back warrant' that will be listed and tradable.

Some you may have missed

Northern Racing
It‘s not only the bookies who are making money from racing, as Northern Racing, formerly The Chepstow Racecourse and one of Britain‘s leading racecourse operators, can testify. For the six months to end June the group has reported turnover of £13.7m, an operating profit of £1.2m and a pre-tax profit of £700,000.

Ennstone
It has been a good first half for Ennstone, particularly in the US and with Scotland firmly on track and England performing creditably in a difficult market, says the board. Sales of aggregates, ready-mixed concrete, asphalt, natural stone and reconstituted building products were up 15% at £53m and pre-tax profits nearly 16% higher at £2,010,000.

Avesco
Avesco Group, the provider of services to corporate presentation, entertainment and broadcast markets, has made 'an excellent start to the year', chairman Ian Martin told shareholders at the yearly meeting. He said: 'Both our revenue and profit figures for the five months ended August were ahead of the same period last year and considerably better than our expectations at the start of the year. We expect to announce very satisfactory results for the six months to September 30.'

Richmond Foods
Ice-cream maker Richmond Foods expects to exceed market expectations for the financial year ending September 26, says chief executive James Lambert in a trading update. A full pre-closing statement will be made on September 23.

Forbidden Technologies
Forbidden Technologies is to launch FORscene, a proprietary video editing and publishing tool at the IBC2004 media trade show in Amsterdam on Friday. FORscene allows professional editing to be carried out over the internet on personal computers without any software or hardware installation.

Griffin Mining
Griffin Mining, whose shares have been moving steadily ahead this past week has reported pre-tax profits of $138,000 for the six months to end June compared with a loss of $247,000 in the previous year.

Calgary
Initial results from the drilling of an exploration well in Algeria has proved 'excellent' says Richard Anderson, president and chief executive of First Calgary Petroleums.

Petra Diamonds
Sparkling news from Petra Diamonds who have recovered a significant number of gem quality diamonds from the Alto Cuilo project in North Eastern Angola. Chairman Adonis Pouroulis says: 'The grade and quality of these initial results are very promising and, although the sample is small, this is an indication of the quality stones and grades we are hopeful will come when we commission the dense media separation plant in October.'

Thomson Intermedia
Thomson Intermedia has formed a joint venture with Media Control, one of Germany‘s leading media groups, to launch its advertising solutions into the German market. The official launch of the new product will be on September 17 in Frankfurt, just four days before Thomson Intermedia announces its interim results for the period to end July.

Paladin Resources
With sales up £13m to £134.1m in the first half of this year, and pre-tax profits £2.6m better at £47.3m, it is another record start for Paladin Resources, the oil and gas exploration and production company.

Urbium
Nightclub operator Urbium saw sales rise five% to £32m in the six months to June 27 but pre-tax profits were basically unchanged at £2.5m after pre-opening costs of £600,000, which compared with £3.1m with nil pre-opening costs in the first half of last year.

Enterprise
AIM-listed support services company Enterprise has bought London and South East street cleansing and refuse collecting group, MRS Environmental Services for £14.2m in cash.

BTG
Alison Wood, currently group managing director of BAE Systems and General Manager of NITEworks, has been appointed a non-executive director of BTG, the intellectual property and technology commercialisation company.

Checkout
XN Checkout Holdings, the provider of electronic point of sale solutions to the leisure, retail and hospitality markets has produced a pre-tax profit of £907,000 for the six months ended June. This compares with a loss of £1,151,000 in the corresponding period a year ago.

Advatech
Computer Software group is buying Advatech Computer Systems and Pinnacle Computer Systems for a total of £4.5m in cash and shares. A placing of shares to raise £3.5m to provide cash for the acquisitions is proposed.

SOCO International
Soco International, the oil and gas exploration company, reports net profits of £2m for the first six months of the year, some £500,000 lower than in the corresponding period a year ago. However, President and chief executive, Ed Story, says: 'Following an extended period of quiet preparation, the results coincides with the start of a very active drilling programme for SOCO, one that I believe has company transforming potential.' Mr Story also announced the appointment of Martin Roberts as a non-executive director and a member of the audit and remuneration committee.

British Vita
After including a £28.4m profit from the sale of Spartech, pre-tax profits at British Vita were £55.8m in the six months to end June, compared with £28.9m in the first half of last year. Chief executive David Campbell says the board intends to extend the current share buy-back programme.

Star Energy
Star Energy Group, the gas storage group that came to AIM in May, has not yet seen the benefit of oil price increases 'due to a conservative hedging policy' says chief executive Roland Wessel. He reports pre-tax profits of £100,000 for the six months to end June, down from £600,000 in the corresponding period and before one-off costs of £2.2m.

Henderson Morley
The Swiss-based private investment group, Billam AG, has bought a further 1.25m shares in Henderson Morley, raising its stake to 10,611,111 representing 4.02% of the capital.

Arakis
Meanwhile, AIM-listed Billam plc (no direct affiliation with the company above) has announced that Arakis , the privately-owned biotech company in which it has a major investment, has completed a £29m third round financing, to help carry it through clinical trials. Do not be surprised if Arakis soon announces plans to come to market.

Some to watch out for

ASOS
While regretting the decision of John Morgan to step down as finance director of ASOS, the online fashion retailer, Rhys Williams at Arbuthnot Securities, welcomes the appointment of Jon Kamaluddin in his stead. Mr Kamaluddin trained at Arthur Anderson and has spent three years at Marks & Spencer in a number of finance positions, including head of finance for the Per Una Brand. Mr Williams says ASOS, whose shares have risen from around 6p when we first wrote about them a year ago, are still a 'buy' at 61.5p.

Debt Free
Debt Free Direct, the company that helps those heavily in debt to find a solution to their problems, is a 'buy' at 86p say analysts Neil Welch and Eamonn Flanagan at Shore Capital. We highlighted the shares last October when they stood at 60p each – hopefully, the rise since may have alleviated some of our followers‘ debts.

Greene King
Brewer Greene King shares are a 'strong buy' says Alan Millar at Arbuthnot Securities following an upbeat statement at the company's yearly meeting. His colleague, Stephen Rawlinson, says that shares in house builders, Galliford Try, are too low and therefore a 'buy'.

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