City wakes up to latest Net player

No Pain No Gain
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The Independent Online

The stock market has at last woken up to the Internet attractions of City of London PR, a little investment and public relations group I slipped into the no pain, no gain portfolio in August at 117.5p.

The stock market has at last woken up to the Internet attractions of City of London PR, a little investment and public relations group I slipped into the no pain, no gain portfolio in August at 117.5p.

If it had been a start-up web adventure instead of embracing businesses that actually make profits and pay dividends, its shares I suspect would have taken off months ago. As if making up for lost time, they have in the past week soared from around 130p to 387.5p yesterday morning.

Probably, if City of London had added a to its name last year or something about e-commerce to its rather staid title, it would have joined the Internet craze much earlier.

But it is a rather reticent business, and anyway City of London likes to make progress rather than just talk tantalisingly about its ambitions. Not surprisingly, it has contented itself with outlining the headway its fledgling Internet venture has so far made.

Last summer it took a stake in CBSH which developed a web-based service linking companies around the world with existing Internet sites. The idea was to provide details of buy and sell offers on a variety of products and also list details of companies operating in specific fields.

Well, CBSH seems to be on a winner. Since its autumn launch its operation has performed ahead of expectations. It has attracted 3,500 business members and 5,600 advertised offers have appeared on its web site which has been visited nearly 50,000 times. The average visit is 21 minutes.

Besides owning what it claims is Europe's leading business-to-business e-commerce site, CBSH takes in the URL2T trade directory which ranks world trade sites and offers short cuts to business-to-business resources on the web. It is due to go online in the spring.

Like any Internet business CBSH is hungry for cash. City of London has spent £60,000 exercising an option which, with its existing interest and a £175,000 convertible loan stock, takes its stake to 49.9 per cent. But more cash is needed. Talks about further financial injections are going on and thebusiness might be floated before long although City of London is expected to remain deeply involved.

But the public relations group is nursing another hi-tech venture and is on the verge, I believe, of taking a stake in the company which is backing a team developing a software archiving operation.

The shares joined the no pain, no gain portfolio when its Internet ambitions were emerging. Those ambitions are now being appreciated. As befits an Internet company the shares are a narrow market with founder-chairman John Greenhalgh sitting on a controlling stake. The capitalisation is now around £32m.

What I like about City of London is that it has two relatively reliable income flows and would not be devastated if its Internet ambitions should come to grief. Mr Greenhalgh has made sure its exposure to the brave - and dangerous - new hi-tech world is well covered.

Although its public relations operations, heavily involved in mining, are unlikely to be booming, City of London's investment portfolio should be performing well and it is likely to now be worth something like 100p a share.

Profits for the year ended March should emerge at around £800,000, against £1m the previous year. Still, the year's dividend should be increased again. A standstill payment would leave the yield at nearly 2 per cent.

Global is another portfolio constituent making headway, not because of Internet involvement but on the back of its traditional meat business. The shares, tipped in May at 20p, are now 31p, with stockbroker Williams deBroe suggesting profits in the year just ended could nearly double to £6.4m, with earnings per share advancing 100 per cent. For the current year the broker is looking for £7.75m .

Last year Global acquired Sims Foods, and its food manufacturing business is achieving 13 per cent underlying sales growth; further food takeovers are likely. And cash is being pulled in by the sale of peripheral businesses, such as the fork-lift truck operation which should be worth some £7m.

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