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.

Berkeley: Loud and clear

JON Pardoe started his Berkeley Morgan Group insurance operation, in a small office on board HMS President, one of those old vessels moored on the Thames just down river from Blackfriars Bridge.

And although this Ofex-quoted company is now based in Blackburn, Lancashire, he likes to return to his roots when he has good news to tell.

He was there again this week, hosting a presentation followed by a barbeque on the poop deck to celebrate pre-tax profits of £1,274,555 in the year to end April, following losses of £2,706,648 in the previous 12 months.

Jon Pardoe, in the words now made famous by Michael Winner is ?an insurance salesman and proud of it,‘ and somebody obviously once told him that if you are selling the message then say it loud and say it clear.

Pardoe was very loud and very clear that major changes had taken place in the Berkeley Morgan organisation in the past year and that things were going to get even better.

However, before anybody gets too carried away, it is useful to point out that much of the improvement in the past year might be difficult to repeat this time around. Admin costs were trimmed by more than £1.1m last year. An exceptional loss of £2.17m in the 2002/2003 year compared with exceptional losses of only £200,000 in the year just ended.

While Pardoe says he is pleased ?but not complacent‘ about the year‘s achievements, he admits: ?I think we could have done even better.‘ But he also struggles to identify in which areas.

A year ago analysts were forecasting profits for the current year to reach £1.7m. My guess is that Pardoe would be more comfortable with a target nearer £1.5m.

Breaking into US market

APPIAN Technology, the Ofex-listed company that helps police forces around the country spot stolen cars – or those used in criminal activities – has broken into the US market by winning orders to equip a California highway patrol force with its automatic number plate recognition systems.

Appian already supplies 43 police forces in the UK and was credited by the Merseyside Police with being responsible for 60 arrests and the recovery of some £370,000 worth of goods in the first six months after they installed the system.

In essence, the cars are fitted with two main pieces of equipment – a computer on which number plates of cars being sought by the police are logged, and highly efficient cameras facing front and back capable of reading 3,00 number plates an hour, including even the most muddied of number plates.

The cameras relay the numbers to the computer, and ?in milliseconds‘ if there is a match then a bleep alerts the driver.

Job done.

Bend it like Beckham

VODAFONE has signed two major contracts this past week; it has agreed to a one-year, £6m contract with David Beckham to help sell more of its mobile phones, and another with CRC Group to repair and service them when they go wrong.

Starting early next year CRC will be the single supplier of technology repair services for Vodafone UK's business and consumer markets, including fast turnaround repairs and in-store repair services.

I wonder if CRC will earn as much as Becks from the deal?

Deal with 'secret' bank

INVESTORS in mining companies need to take a lot on trust, so presumably those backing the Arizona Star Resource Corp, of Vancouver Canada, are happy to learn that 'a major international bank' has presented an indicative term sheet for an underwritten project loan of up to US$1bn for the development of the Cerro Casale Project.

The trouble is that nobody will say what 'major international bank' this is.

The announcement says: 'In the Arizona Star's opinion, this bank proposal confirms that Cerro Casale is financeable under the terms of the Cia Minera Casale Shareholders‘'Agreement - which is Arizona Star 25%, Bema Gold 24% and Placer Dome 51%.

Significantly, Placer Dome continues to review various financing alternatives for Cerro Casale.

Watch this space.

New issue alert

Billam

Physiomics, who produce computer simulation technology to understand and predict patient responses to pharmaceuticals, is planning to come to the Alternative Investment Market later this year, and has appointed Hoodless Brennan as broker.

This is good news for Billam, the investor in technology companies, who backed Physiomic‘s early progress and which owns 39% of the company that is expected to have a £6m price tag.

This is the fourth of eight Billam investments to have floated - an indication that Angus Forrest, Billam‘s chief executive, and his team are working on the right lines for themselves, their shareholders and their investee companies.

River

River Diamonds says it will move from Ofex to Aim on August 26, having successfully raised its minimum £1m with nominated adviser and broker WH Ireland. The company expects to raise further funds beyond its minimum.

Listing

The financial services group with the impossible name, iimia, has listed on Aim with a value of around £17m. Iimia Investment Group is the newly combined business of iimia plc and the Exeter Investment Group and claims nearly £500m in funds under management and £3bn in funds under administration.

Some you may have missed?

Real
The Aim-listed direct marketing and communication group, is buying Holly Benson Communications, a corporate marketing specialist, in a deal worth £2.3m in cash and shares, after two years of discussions. Holly Benson advises a list of blue chip clients, including BP, Npower, Emap and Unipart on a broad range of communication and marketing issues.

Progress
The provider of dissolve-in-the-mouth products for the pharmaceutical industry, has pulled off a major coup, by buying two complete film casting production lines from Valence Technology BV, who are closing their production facility at Newtownabbey, Northern Ireland.

The two lines, which are in virtually new condition, cost BioProgress a total of US$450,000 (£259,000) when one purpose-built line in the UK would normally cost more than £1m says chief executive Graham Hind.

Abingdon
The company whose principal operating subsidiary is Corporate Synergy, has made a major return to profits in the first half of this year with pre-tax profits of £270,000 comparing with a loss of £228,000 in the same period a year ago. Sales were 132% higher at £1,722,000. Chairman Oliver Vaughan says the board looks forward to the rest of the year with confidence.

Aminex
The oil and gas company has signed a memorandum of understanding with Liquefied Natural Gas, an Australian company, for co-operation in the exploration and development of natural gas in East Africa, on shore and offshore.

Systems
A successful acquisition strategy has driven growth at Systems Union Group, a provider of software to the financial markets in the first half of this year. Sales were 50% higher at £51m and pre-tax profits 37% better at £2.7m.

Some to watch out for

Arbuthnot
THE market may be in its summer doldrums but that has not stopped those busy analysts at Arbuthnot Securities finding some attractive shares to buy. In particular, Stephen Rawlinson has picked Ennstone, at 34p, following its bid for the Johnston group and Dilip Shah goes for underwriters, Amlin, setting a target price of 175p against the current 146p.

Nomura
Erling Refsum, analyst at Nomura, does not hold back on his praise for Phytopharm which has just started offering shares in the US market. 'This exposure to US investors should lead to higher demand for the shares generally and we think that it could reset the price range for the shares upward significantly,' he writes.

He goes on to say: 'The market value of £60.6m appears too small for a company with a major obesity product (presumably he means anti-obesity) within three years of launch and an Alzheimer‘s treatment in Phase 11 trials.'

His net, present value, estimate is 736p a share, which compares with the market price of 140p.

Read the latest gossip on small caps in Talking Point or Companies A-Z.

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