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.

Clean up with Mears

NOT many of us can guess what we will be doing next week, let alone in a year's time. Bob Holt, however, has been telling City analysts that Mears, the support services group where he is chairman, will still be replacing locks and windows and repairing council houses in Wigan in 2019.

He knows this because Wigan council has just signed a 15-year partnership agreement with Mears. This is powerful testimony to the success this company is having with local authorities around the country.

Business has been brisk since the Government made a commitment to bring all council housing up to a decent standard by 2010 and maintain it thereafter.

Mears revealed this week that its current order book is now £550m, having just delivered yet another set of record results with turnover up £33m to £112m in 2003. Profits are showing a 39% leap to £5.24m, and the market can predict with some certainty that this year will see turnover rise to £150m and profits climb to £6.5m.

Looking as far ahead as 2007, some say turnover will be £300m and profits £14m-£15m.

With a compound growth of 43% a year since the company came to AIM some six years ago, Bob Holt has not let investors down yet, and there is no reason to believe he will in future. Although the market is beginning to ask bigger and bigger questions of him.

Analyst Mark Watson-Mitchell in his WatsHot.com web site says the shares, still available at 65p less than a year ago and now 157p after an 8p rise this week, will top 200p 'within months'.

Sinclair opus

IT IS not only politicians who take a long time to say nothing: increasingly companies with the least to say seem to take the longest to get their message across.

Take, for instance, Sinclair Pharma, a company that produces niche, patented products in the pharmaceutical arena.

It has just produced its first set of interim figures since coming to AIM last December and the main message is that the first half performance – to end December – was in line with the board's expectations, which is just as well, because if it hadn't have been the prospectus issued in December would have been pretty useless.

The hard facts are that turnover in the period was £900,000 and there was an operating loss of £1.4m. Nothing unexpected there, so why does the company need 19 pages of A4 to outline an unremarkable set of results? Masterpieces of literature have taken less.

I hope that Steve Harris, chairman, does not think I am targetting him particularly. It just so happens this is one of this week's best examples of a growing trend. No doubt he will argue that full disclosure is necessary now he is a public company and he is acting on the advice of brokers and bankers.

All I know is that Mears (see above), a very successful and profitable company, manages to say all it has to say in just seven pages, one of which contains all essential details plus a comment from chairman Bob Holt.

Sorry, Mr Harris, if I have overlooked a particular point of interest, but there just isn't time to plough through this tide of words.

Ofex opens doors

THERE is no longer any excuse for quoted companies on the main boards of Canadian, Australian or New Zealand stock exchanges not to have their shares listed in London as well.

Ofex, the market for junior companies, is opening its doors to such companies with the launch of an international marketing service, which these overseas groups can join free of charge.

It appears that many international companies have been deterred from obtaining a European quotation due to costs generally associated with dual listings, but the new powers-that-be at Ofex recognise that such companies already comply with developed regulatory standards and believe they can be fast-tracked within 48 hours.

The new international marketing service is expected to start in May or June so providing those who take advantage of the service with access to European liquidity and increased trading hours.

Baltimore's Bermuda triangle

THE board of Baltimore Technologies has not turned green not yellow at the thought of being ousted by Acquisitor Holdings, the Bermudan-based group that is pushing for its own representatives to be put in charge.

True, chief executive Bijan Khezri, is moving up to non-executive chairman and handing over his role to David Weaver, former head of BP's gas, power and renewals arm, but that is because the company is planning to sell 'green energy' services to businesses, a plan that involves making an acquisition.

Acquisitor is not convinced, however, and having raised its stake in Baltimore to 12.5%, intends to continue with its campaign for board changes.

New issue alert

THE success that brokers Seymour Pierce has had in placing shares in Titan Europe is a sure sign that the new issue market is picking up. The maker of wheels for agricultural and earthmoving equipment is currently a wholly-owned subsidiary of Titan International, a New York Stock Exchange quoted company.

Some £33.5m is being raised through the placing of 26.7m shares at 125p each, right at the top of the expected price range. It will value Titan at around £56m, which is not bad for a company that started life in 1989 as the New Warrington Wheel Company.

Since then it has grown by a number of acquisitions to a position where it is now recognised as one of the top two companies in its field in Europe. The client list is a a 'Who's Who' of agricultural giants such as AGCO, Caterpillar, CNH, John Deere, Liebherr, Renault and Volvo Construction.

It has manufacturing plants in the UK, Italy and France, with assembly plants in Germany and Australia, and has a 35.9% stake in Wheels India, an Indian wheelmaker quoted on the National Stock Exchange of India.

Dealings are expected to start on AIM next Thursday.

Newport taking AIM

NEWPORT Networks, whose technology will allow telephone calls to be made through the internet, is planning to raise £15m and to come to AIM.

The company was founded in September 2000 by Sir Terry Matthews, chairman, and John Everard, chief executive, and they are a team that has a proven track record in network technology.

Sir Terry developed Newbridge Networks and Mitel, and these companies were sold to Alcatel and BT for $7.1m and £350m respectively.

Evolution Beeson Gregory is acting as nominated adviser and nominated broker.

Some you may have missed

Minorplanet Systems
THIS firm, whose technology enables fleet managers to keep an eye on their commercial vehicle movements, is raising £12.4m through a one-for-seven placing and open offer of shares.

The company reported last December that it was running out of cash, and has just reported a pre-tax loss of £2.9m for the six months to end February, compared with a loss of £7.3m in the corresponding period last year. The second half is expected to see the company break even.

Henderson Morley
YEARS of research is paying off for AIM-listed drug discovery company, Henderson Morley, which has been granted the European patent for its in-house developed platform technology Ionic Contra Viral Therapy. The patent runs until December 2020.

Billam
VICTOR Beamish, chairman of investment group Billam, told shareholders at the yearly meeting that the board 'believes, providing the economic climate and stock market conditions are maintained, there is good cause to believe that the portfolio companies, will increasingly prosper and there will continue to be opportunities for flotations.

'This should allow Billam to hold the majority of its portfolio in quoted shares by the end of 2004.'

Petra Diamonds
IT IS well known that diamonds do not sparkle until they are cut and polished, but Petra Diamonds, the company, looks in need of some vigorous elbow grease. The company has announced losses of £1.8m for 2003 against £198,790 the year before, mainly due to spending on Alto Cuilo, the main exploration site.

Media Square
STEVE Haithwaite has been appointed chief executive of Media Square's retail marketing division.

Arc
ROBERT Whiting, chief executive of Arc Risk Management, has bought 500,000 shares in the company and now holds 10,499,221 shares, roughly 4.79%.

Phytopharm
PHYTOPHARM has launched Phytopica, its lead veterinary dermatology product after two successful clinical trials in canine dermatology.

Abingdon Capital
TURNOVER at Abingdon Capital soared 131% to £1,759,000 last year and group losses before tax fell 46% to £592,000.

Chairman Oliver Vaughan says: 'With the encouraging early performance of the repositioned Corporate Synergy and the imminent launch of the new Mountcashel hedge fund, we believe Abingdon Capital should continue to progress positively in 2004.'

Meanwhile, Gavin Cassidy, former chief executive of the London Stock Exchange and already chairman of Abingdon subsidiary, Corporate Synergy, is to join the board of Abingdon itself.

MinMet
GOLD mining and exploration company, MinMet is selling Exploration & Discovery Latin America (Panama), the holding company for its Dominican Republic exploration assets, to Ontario-based Wellington Cove Explorations in return for 92% of Wellington's issued share capital.

On completion, it is intended to raise C$1.5m for further exploration and corporate expenses, and list Wellington on the Toronto Stock Exchange.

BTG
TECHNOLOGY group BTG says in a trading update that total revenues are expected to increase significantly and the operating loss, and loss before tax, are expected to fall.

Clinton Cards
A 'congratulations' card to Don Lewin, chairman of Clinton Cards, for yet another great set of results in the year to 1 February. Turnover was 7.1% higher at £394.9m and pre-tax profits were up 8.5% at £27m.

Mr Lewin reports the number of stores rose 31 to 730 in the year and that the group is on target to achieve 800 stores during 2005. He looks forward to reporting further progress during the current year and beyond.

Vitesse
PUBLISHING and media group, Vitesse Media is buying the rights to one of the city's most prestigious annual investor award ceremonies, the Investor All-Stars, from GP Capital. Cost is £33,000 that could rise to £100,000 depending on future performances.

Sherwood Group
SHERWOOD Group, who design and supply lingerie, swimwear and nightwear, is finding margins under pressure, says chairman Noel Jervis. The company, which has been restructuring its lace business, has reported a group loss after tax of £2.3m for last year compared with a profit of £1.4m in 2002.

TripleArc
TRIPLEARC has signed a £4.5m print management contract with BMI Healthcare, extending over three years and covering all the print requirements for BMI Healthcare's 47 private hospitals in the UK.

Watermark Group
ANOTHER set of record results from Watermark Group, the supplier of in-flight products to the world's airlines. Sales were up 15% to £41.22m and pre-tax profits up 11% at £3.32m.

Chief executive John Caulcutt, looking to the future, says: 'The International Air Transport Association has forecast airline passenger growth of 7-8% for 2004 against a reduction of 3-4% last year. Our focus for the coming year, therefore, will be to leverage our extensive cross-selling programme opportunities across the group.'

Oxford BioMedica
OXFORD BioMedica has been awarded £500,000 from the Department of Health, sufficient to undertake the clinical trials at the Oxford Haemophilia Centre at the Churchill Hospital that had been planned for Requinate the company‘s proprietary Lenti Vector-based construct.

Countryside Properties
COUNTRYSIDE Properties and Bank of Scotland Corporate Banking have formed a 50-50 joint venture for the development of large-scale mixed-use, mixed-tenure projects. The joint venture will have access to around £120m of capital.

Cheerful Scout
CHEERFUL Scout, the AIM-listed multi-media and animations specialist, has won two gold awards for its work with leading management consultancy, McKinsey & Co, in the annual ceremony held by the International Visual Communications Association.

3DM
3DM worldwide has signed a development licence agreement with Geomatric of Michigan USA to develop a number of products in North America, beginning with lattice fence panelling, decking, trim boards, door windows and trim mouldings used in residential home construction.

Arbuthnot
A WHOLE host of Easter present ideas from analysts at Arbuthnot Securities this week. In alphabetical order they are:

Chelford Group, which already has been one of the top performing shares on the London market this year, but which George O'Connor believes has further to go and says 'buy' at 2.2p a share.

LA Fitness, which Alan Millar, says is a 'long distance runner' and the shares are a 'buy' at 183p. Although he feels the shares may find a ceiling around 200p, the relatively low but growing yield provides for a total shareholder return of more than 10%.

Staffware celebrates its tenth anniversary in business process management with a banner set of financial results, says George O'Connor, and he expects another strong year ahead. The shares are a 'buy' at 595p with a target price of 774p.

Wellington Underwriting have been elevated from a 'buy' to a 'strong buy' by Dilap Shah who says a fair value is 107p against the current 90p.

Bema Gold
ALTHOUGH Bema Gold reported a $30.6m loss for 2003, John Meyer, analyst at Numis, rates the shares a 'strong buy' at 206p.

He says: 'At the Association of Mining Analysts meeting Bema reiterated its ambitious growth plans which should see production exceed 1m oz a year by 2007, making Bema one of the fastest growing gold producers in the world.

Jubilee Platinum
CHARLES Kernot, at Seymour Pierce says 'buy' Jubilee Platinum at 31p. He says: 'We like the company which has a range of interesting exploration projects.

With £3.4m in the bank the company has sufficient cash to continue with its exploration programme for now, and results from the Sierra Leone joint venture with Golden Prospect are imminent.

Gyrus Group
IT IS time to 'buy' Gyrus Group shares, says Sebastien Jantet, analyst at Investec Securities, following results that showed a seven% rise in revenue to £78m in 2003 and a 19% leap in underlying pre-tax profits at £8.1m, despite weakness of the US dollar.