Smaller companies spotlight

EACH week, former Fleet Street editor Patrick Lay keeps This is Money readers up-to-date with a neglected, but exciting sector of the stock market – smaller companies.

Get off your horse and ...

THERE was a moment when I contemplated a career change: the advertisement was seeking 'self-employed field technicians' who would travel round farms recording milk quantity and quality – 'training will be given', the advertisement promised.

I was living in the country at the time and felt that buzzing around my local parish, with a lap-top computer to send data to a distant processing centre, would still allow me plenty of time to continue with my writing.

As with all seemingly good ideas, there was a snag. On this occasion it involved me getting out of bed at 4am, driving more than 30 miles for my first appointment and not finishing work until noon at the earliest.

I decided this was not the career change I was seeking.

I am reminded of this near folly because NMR, once a division of the Milk Marketing Board and the company that nearly tempted me, has just listed its shares with JPJL, the junior trading service recently set up by John Jenkins, founder of the Ofex market.

This enables its 28,000 shareholders, mainly farmers or those associated with the dairy industry, to trade in their shares. One of them might have been me had I not appreciated my bed so much.

NMR claims that herds monitored by them earn an additional £28,000 a year compared with non-recorded herds, simply by allowing farmers to make informed decisions on individual cow performance. It also provides data to more than 35 companies involved in the industry, including milk-buyers, co-ops and dairy breed societies.

The company made a profit of more than £700,000 last year following two years of losses, and is now looking at a number of acquisitions. It is also thinking of investing in new services to capitalise on increased demand for animal traceability, used in disease surveillance and farm assurance.

Some 700 self-employed technicians around the country are doing the job I refused, recording data on one million individual cows. Managing director Andy Warne says the business is now well placed to continue to grow earnings, and finance director Chris Hughes aims to reward shareholders through 'a progressive dividend policy'.

At 40p each, the shares value the business at around £3m.

New on the market

NMR is not the only new company on the markets this week. Sovereign Reversions, a company that helps pensioners and others to release a percentage of the value of their home, is raising more than £18m by a placing and open offer and has started trading on Aim.

The directors believe the net proceeds, together with the availability of bank proceeds 'should place the company in a strong position to implement a programme of acquiring new home reversions and bid for further portfolios in the secondary market if suitable opportunities arise'.

Then there is Belgravia Telecom, a Jersey-based company formed only last January to look into suitable acquisition targets in the low-cost telecommunications services. After expenses the company has raised £235,000 through a private placing and has started trading on Aim.

Directors Duncan Hickman and Fikry Hemaya, both experienced in corporate finance and M&As, say they aim to make their first investment or acquisition as quickly as possible although they qualify this by adding 'in any case within two years'.

Asia Energy has also started trading on Aim having raised £11.2m, the proceeds of which will be used to conduct feasibility studies on coal resource in Bangladesh.

And finally, I introduce you to Projects Distribution Group, a marketing company for clothing for extreme sports and their associated lifestyle and leisure markets.

This company is raising £500,000 by an offer for sale of 5m shares at 10p each and is seeking a quote on Ofex. The company is sole distributor in the UK for five imported brands: Osiris Shoes and Clothing, 88 Footwear and Clothing, Option Snowboards, NFA Technical Outerwear and Ezekiel Clothing. In addition it has its own brand called Minute Skateboards and Clothing.

The offer opens on 26 April and a prospectus is available from Ruegg & Co by telephoning 0207 584 3663.

Some you may have missed

British Vita
David Cotterill, chairman of British Vita, told shareholders at the yearly meeting the improvement in profitability that showed in the fourth quarter of last year has continued throughout the first quarter of 2004.

Cyprotex
Sales at drug discovery company, Cyprotex jumped 62% to £1.05m last year when compared with the previous 14-month period, and pre-tax losses were down 42% to £2.05m.

South African Resources
South African Resources has reported positive results from its drilling programme at its Leeuwkop platinum project. Chairman Phil Edmonds says: 'These are great results and contribute to our belief that we have a very significant Platinum Group Element resource'.

Shire Pharmaceuticals
Shire Pharmaceuticals is selling its vaccines business to ID Biomedical Corporation, a Canadian-based biotechnology company for a total of US$120m payable over the next two years.

Hemscott
Michael Grade, chairman of Hemscott told shareholders at the yearly meeting 'during the first quarter of the year, Hemscott has continued to reap the benefits of returning confidence in the markets in which it operates'.

Corin Group
Corin Group has signed a collaboration agreement with the Acrobot Company, a research and development company spun out of Imperial College, London.

Some to watch out for

CMS WebView
CMS WebView, the financial data group, reports a 35% rise in turnover to £1.63m for 2003, and has reduced pre-tax losses by 20% to £543,000, figures that encourage Luke Ahern at Corporate Synergy to recommend the shares as a buy and set a target price of 18p against the current 11.5p.

Caldwell Investments/Clarity Commerce Solutions
SQC Research is offering two shares for growth this week. Caldwell Investments, manufacturer of the NinaSun sunlounger and canopy system, is ready for lift-off. SQC has set a target price of 100p before the year-end against the current 45.5p.

Clarity Commerce Solutions, the software group which SQC says 'is clearly moving at a more profitable and faster pace' has 'an easy target price' of 90p by the year end against the current 68.5p.

Carpetright
Gillian Hilditch, analyst at Arbuthnot Securities, is still a buyer of Carpetright despite the fact the shares have risen 40% since she first recommended them and are now on a premium to the sector.

'Buys'
Meanwhile, James Mitchell says 'buy' Fayrewood at 123p, Stephen Rawlinson says 'buy' McAlpine at 310p and Michael Blogg says 'buy' Vitec Group at 355p.