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.

Right said Fred

THE late and great Fred Ellis was the father of modern-day financial journalism, the man responsible for introducing the mysteries of the City to the masses in the 1960s as City Editor of the once-proud Daily Express.

There are some in the City who credit Patrick Sergeant, City Editor of the Daily Mail in the same era, with that honour, but really Fred came first.

Both had the ability to cut through City jargon and help the nation build a better understanding of what life in the financial world was all about, well before Maggie Thatcher did her best to turn us into a nation of small shareholders.

Both also surrounded themselves with journalists who would describe a 'sharp instrument for delving below the surface of the undergrowth' as a 'spade'. If one of his team should for a moment relapse into jargon, or tried using seven or eight words where one would do, they would suffer a very basic, four-letter tirade from the great Fred, who would end by telling them: 'Mister, this needs ******* rewriting, do it NOW mister.'

One of Fred's most talented operatives was James Perry who later moved from journalism to merchant banking and then industry. I have a feeling James would be in for a bit of a dressing-down if Fred could see his latest offering.

In his role as chief executive of Transense Technologies, an Aim-listed company, involved in torque and pressure measurement, James issued a press release announcing that Honeywell International has 'entered into a worldwide licensing agreement to use Transense's surface acoustic wave technology for torque and pressure/temperature sensing systems in vehicles and aircraft, with certain limitations.'

That will not mean a thing to the majority, nor does the press release tell us what the deal means to Transense Technologies in terms of current or future earnings. And you know Fred wouldn't have given it the time of day.

James learned one thing from his days in Fleet Street, and that was never to talk to journalists. But using some of the tactics that he would have been proud of in his prime, I have delved - and established that this is the most important deal that Transense has done since the company was set up by James in 1991.

I understand it is worth more than £1m (though not as much as £2m) payable in three chunks, a third of which was paid on signing.

And it does appear that, at last, all the bits of the jigsaw at Transense are coming together. Why else would a company the size of Honeywell be doing a deal with an Oxfordshire-based tiddler valued at around £35m?

I do not pretend to understand the technicalities of 'surface acoustic wave technology' or 'torque sensing', but I do understand basic figures and growth potential and this could be the breakthrough that investors have been waiting for.

James - there's a ******* story here mister, next time make certain we get the ******* facts up front.

New issue alerts

DAT Group
DAT Group, which provides software that helps even more detail to be pumped on to your mobile phones, is raising £7m through a placing of shares and is seeking an Aim quote.

Chief executive David Hayes says that going public will 'raise DAT's profile and provide the finance to fund the ongoing development of core technology.'

African Copper
African Copper is to float on Aim tomorrow through a placing of nearly 20m shares to raise £15m. Numis Securities and Royal Bank of Canada are acting as joint managers and joint underwriters of the placing and Numis is acting as broker and nominated advisor to the company.

African Copper owns a substantial near-production copper asset in Botswana, along with additional neighbouring mineral rights over a project area of just under 4,000 sq km which contains two known copper deposits and numerous base metal exploration targets.

Falkland Gold and Minerals
Having successfully floated Falklands Oil & Gas on Aim in September, Falkland Islands Holdings is now floating on the same market, Falkland Gold and Minerals through an £8m placing.

The holding company has a 22.5% stake in the gold operation, which owns the exclusive mineral prospecting rights to the whole of the Falkland Islands where the geology is said to be the same as the south-eastern coast of South Africa.

Phoenix IT Group
Phoenix IT Group is raising around £26.5m through a placing of shares in a global offer to institutions. At the offer price of 235p a share the market value of the group will be just over £132m; dealings are expected to start on the Stock Exchange on 16 November.

Some you may have missed

Aquilo
Aquilo is in advanced talks with ABS Bodyshop Services which, if successful, could lead to a bid from Aquilo that would be classed as a 'reverse takeover'. Meanwhile, Mike Dean has been appointed managing director of Aquilo's property claims division.

Mercator Gold
Mercator Gold has lodged prospecting permits totalling around 2,800 sq km in the North Island of New Zealand over areas prospective for the discovery of large, high-grade gold and copper deposits.

Billam
Following the purchase of 59,738 shares, William Weston now holds 850,000 shares in Billam, representing 4.2% of the company.

Huntleigh Technology
Huntleigh Technology has won two major contractors that together are worth some £10m. It has been awarded a 15-year contract, worth £6.5m, with the Lothian University Hospitals Division in Edinburgh.

It will supply and manage more than 1,700 electric beds and pressure reducing mattresses, and a complete range of therapy mattress systems for the prevention and treatment of pressure ulcers.

In addition, it has won a 7-year consortium contract valued at more than £3.5m for 1,500 of the same type of beds for the Hertfordshire and Bedfordshire hospital groups.

Bioprogress
Bioprogress is to install a film manufacturing line in Custom Pharmaceutical's new contract manufacturing facility being built at Moulescoombe, near Brighton. Custom, a private company, makes prescription and over-the-counter medicines, vitamins and herbal supplements under contract.

Associated Network Solutions
At the yearly meeting of Associated Network Solutions on 9 December, a special resolution will be proposed to buy back up to 2m ordinary shares.

Envesta Telecom
Lyndon Chapman, in his final appearance as chairman of Envesta Telecom, told shareholders at the yearly meeting that sales were up 66% in the three months to end September when compared with the same period last year, and that gross margins are being maintained at more than 20%.

Mr Chapman goes on to become full-time chairman of Formjet, the Aim-listed alternative software group, and is being succeeded at Envesta by Kevin Jauncey, a man with long experience in the telecoms industry.

BTG
With sales up 6% to £20.3m, BTG the intellectual property and technology commercialisation company, has reduced losses by 2% to £13.1m in the six months to end September. New chief executive (he joined on October 19) Louise Makin says his aim is to 'set the course to unlock BTG's full potential by creating a more commercially focused company, capable of delivering profitability and sustainable growth.'

Vectura Group
Vectura Group, the newly Aim-listed drug development company, reports a doubling of revenues to £2.6m in the six months to end September with gross profits up 176% to £1.8m. Chief executive Dr Chris Blackwell said: 'With our two lead products now poised to enter Phase 11b trials, we look forward with confidence to the remainder of our first full year as a public company.'

Appointments

Nick Cosh, a non-executive director of Bradford & Bingley, Computacenter, Hornby and ICAP, is joining the board of Kiln and will take over as chairman next March on the retirement of Professor Ian Percy.

Shai Hill, previously head of Pan-European Beverage, Leisure and Tobacco research at HSBC, has joined Arbuthnot Securities as Head of Research.

Fraser Searle has been appointed finance director of Polaron from 4 January following the resignation of Jon Clough at the end of this year 'to pursue other interests'.

Some to watch out for

Whatman
Following news that Whatman is buying Schleicher & Schuell GmbH, another separations company, for £34.6m, David Adlington at Cazenove says the shares will outperform the market and puts a 12-month price range of 220.5–150.5p on the shares that are currently trading at 203p.

Red Squared
David Johnson at Daniel Stewart maintains a 'buy' rating at 16.25p for Red Squared following the £780,000 fund raising through an institutional placing. He has also initiated coverage of Torex Retail with a 'buy' recommendation at 68p, setting a target price of 80p, and sets a 15p price target on Tanfield Group against the current 12p.

Sportingbet
Colleague James Hollins has set a target price of 175p on the shares of Sportingbet (currently 138p) following the purchase of Paradise Poker, and Roger Tejwani sees 'no reason to alter our stance' on buying Glisten at 278p having initially recommended the shares at 258p six weeks ago.

Forth Ports
Alastair Gunn, at Arbuthnot Securities, is undeterred by reports of property prices softening in Leith and says that more than one developer is interested in land owned by Forth Ports. He says the shares of Forth are a 'strong buy' at 1,148p.

He adds: 'Forth has ten residential/commercial sites available for disposal in the second half of its trading year, which could collectively produce what we previously described as an 'embarrassingly large' profit if completed.'

He has also been talking with Chris Moyes, chief executive designate of Go-Ahead Group and believes the aviation division may be sold off which, says Mr Gunn, 'would almost certainly prompt a return of capital'. The shares are a 'buy' at 1,327p.