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.

Daniel leads the exodus

PETER Shea is one of those old-fashioned 'my word is my bond' type of City characters who doesn't try to blind you with management-speak and sticks to the traditional, managing director title (rather than chief executive officer) at Daniel Stewart Securities, the smaller company adviser he helped found 15 years ago.

So, although he doesn't attempt to flout the Financial Services Authority with anything as crude as a profits forecast, there is no doubting from the glimmer in his eyes. And noting the enthusiasm in his plans for the future, that the financial year to next March is likely to be something special.

In fact, if market activity continues at its recent pace, the magic seven-figure pre-tax profit looks a possibility.

It has been a good start to the year that ends March 2005. On Monday Mr Shea announced a return to profitability in the first quarter, and he revealed the business was substantially ahead of budget in both financial performance and new client additions.

The company has recently acted as nominated adviser and broker for the first Italian company to join Aim, has successfully applied to the London Stock Exchange to become a nominated adviser and has attracted the first institutional interest through the Marlborough Special Situations Fund.

But that was Monday's message. On Tuesday, Mr Shea revealed the company had been appointed nominated adviser and broker to Pubs 'n' Bars, the Aim-listed managed pubs group. And on Wednesday he launched a trio of his clients on Aim following successful fund-raising for each: Libertas Capital (a niche financial services company), Gold Oil (natural resources), and Playgolf (Holdings).

In the Autumn Daniel Stewart plans to join the exodus from Ofex to Aim, which will not make happy reading for Jonathan Jenkins at Ofex. Mr Jenkins should make every effort to talk them into staying.

The Ofex roadshow

THERE is a perception outside of London that, like some wines, City advisers do not travel well, and when they do they become very expensive.

That may (or may not) be the case, but there is no doubt that there is a mountain of smaller, entrepreneurial companies that are failing to attract the capital they require to grow because they do not feel they have access to, or do not trust, City-based advisers.

Ofex is seeking to change things by the appointment of Nemone Wynn-Evans as the friendly face of the exchange in the regions. As head of Regional Business Development she will build a network of local representatives, using local advisory professionals to establish a regional presence throughout the UK, and encourage smaller companies in these areas to take their first steps as public companies.

Ms Wynn-Evans has been working as the London Stock Exchange's Regional Manager for the Midlands for the past three years, and will join Ofex in mid-October 'hitting the ground running' says Ofex joint managing director Jonathan Jenkins.

He points out that Ofex has now put together a team that includes the former head of Aim, its top salesman, its regulator and now one of its key regional staff. His next task is to stop the drift from Ofex to Aim.

Daniel Stewart would be a great place to start.

Silvermines rich in promise

SO Silvermines Media, the company founded to buy and invest in media, marketing and advertising companies, has been successful in raising £655,750 in its offer for subscription.

As this is a company without history or assets, and the cash raised will be used to finance due diligence on potential target companies, that is a considerable sum to have collected on a promise.

Chief executive, Paul McGroary, has something to prove.

Terrace Hill

A WEEK ago I wrote on plans for Terrace Hill, the property development company, to try to buy out as many of its 1,200 small shareholders as possible by offering them 28p a share (and no dealing cost).

I should just point out to those long-term smaller shareholders that - following a joint venture announced with Lithgows of Port Glasgow this past week on more than 94 acres of land worth an estimated £15m - that the Terrace Hill share price rose to 30p.

I should also draw your attention to the statement by Ross Macdonald, joint managing director, saying: 'This deal gives us access to excellent residential sites – all brownfield – capable of development over the years ahead, and further enhances our prospects of adding to shareholder value.'

NEW ISSUE ALERTS

OF 92 Stock Exchange new issues in the second quarter of this year, 76 were for quotations on the Alternative Investment Market. Only 16 were on the main market. The trend seems set to continue in the second half of the year.

Begbies

BEGBIES Traynor is one of those organisations that no self-respecting company wants to meet. It is the UK's largest independent solvency, corporate rescue and recovery specialists and it is a tribute to the success of most British business that, according to Graham McInnes the chief financial officer, not many people realise its role in society.

However, that is about to change. Begbies is going public, raising up to £12m of funds and moving on the Aim.

Although the practice currently comprises a network of 23 nationwide offices with more than 240 operatives and operates from Lands End to John O'Groats, it has not the profile of some others in the field, and it expects an Aim quote to help it get recognised as a 'leading player'.

I must say that I like the style of the board who clearly do not want anybody to think this is anything to do with a necessity to raise funds. The message is: 'Although the group is prepared to accept up to £12m of new money through the offer, its core growth objectives can be achieved with considerably smaller sums.'

I like that 'prepared to accept'.

Greystar Resources

I MAKE no secret of my admiration for the enthusiasm of those involved in gold exploration, most of whom seem to follow the thinking of Robert Louis Stevenson that 'to travel hopefully is a better thing than to arrive'.

By the same token, I am totally amazed at the number of punters prepared to back the long-term plans of these hopefuls. For their sake let me introduce Greystar Resources 'an emerging exploration and mineral development company' that plans to float on Aim by the end of this month.

The company is looking to raise up to £10m via a placing with Ocean Equities acting as broker and Insinger de Beaufort acting as nominated adviser.

Greystar claims a resource of 6.3m ounces of gold that it plans to scrape off the top of the ground at the rate of 500,000 ounces a year, at a cash cost of around $130-150 an ounce.

That all sounds fine. However, it may not be that easy. The money being raised will be used 'to complete a feasibility study on the project by early 2006 with first production planned for late 2007'.

There is another factor for potential investors to consider – the project, known as Angostura, is in Colombia, best known for coffee, cocaine and bandits. It may be better to wait until the feasibility study is complete if you don't want to feel bitter.

Tanzanite

TANZANITE One, a producer of the violet-blue colour gemstones, is seeking an Aim quote early next month. Nominated adviser and broker is Williams de Broe.

Nipson

DEALINGS in Nipson Digital Printing System shares are expected to start on Aim next Friday (23 July).

Some you may have missed

Paladin Resources
Paladin Resources has announced its third Tunisian oil discovery and expects field production to start within the next few weeks.

Whatman
In a pre-close trading statement, Bob Thian, chairman of Whatman, the supplier of separations technology to the life sciences industry, said: 'The strong results for the first half clearly demonstrate that the turn around in Whatman's performance is continuing apace. With margins and profits increasing significantly over the corresponding period last year we remain confident about the long-term prospects for the company.'

Baltimore Technologies
KBC Peel Hunt has been appointed broker to Baltimore Technologies.

BioProgress
Graham Hind, chief executive of BioProgress says he is extremely confident about the prospects for the business and 'I look forward to giving a detailed update when we announce our interim results in September.'

Business Post
Peter Kane, chairman of Business Post Group, told shareholders at the yearly meeting that: 'trading for the group in the new financial year has been very satisfactory. Volumes and yields in the first quarter were ahead of the equivalent period last year, service levels remain high and costs remain tightly controlled. The board expects further progress in the current year.'

Britannia Finance
With sales up 50% to £3.69m, pre-tax profits of Britannia Finance Holdings rose 142% to £746,792 in the past year.

BBI Holdings
Aim-listed BBI Holdings has signed an exclusive five-year contract with the US arm of Biokit SA for the distribution of QuickCards, BBI's herpes simplex virus type 11 detection test.

Acambis
David Lawrence, currently vice president of finance for Chiron Vaccines, has been appointed chief financial officer for Acambis.

Some to watch out for

Mears
Following the announcement this week that Mears Group has been selected as preferred partner for a seven-year contract worth up to £200m with Sheffield City Council, Robert Sanders at Arbuthnot Securities has issued another 'buy' recommendation for the shares. Mears order book now stands at more than £750m and extends until 2019.

Chaucer
Dilip Shah at Arbuthnot Securities says a fair value for Chaucer Holdings is 61p a share, against the current 46p, and suggests the shares are a 'strong buy'.