Improving TripleArc is looking undervalued

Small Companies Notebook
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The Independent Online

Things look to be coming together nicely for TripleArc, one of the UK's largest providers of print management services. Earlier this month, the group posted annual results which saw it come within a whisker of profitability. It should easily break into the black during the current year and major contract wins for its services are set to start coming in thick and fast.

The first of these is tipped to be unveiled today. It is a deal with BMI Healthcare, a private company which runs a series of hospitals, and is believed to be worth up to £4.5m to TripleArc over three years. Analysts estimate that the market in which TripleArc operates is worth more than £1.2bn a year and that the group greatly increased its reach last year when it bought Access Plus, a fellow AIM listed printing group.

The broker Canaccord is expecting rapid growth from the enlarged group during the next two years. It forecasts TripleArc revenues to soar from £20m to £55m by the end of this year and then rise to £62m in 2005. By this time the broker believes TripleArc should be generating about £4.5m of free cash flow. Not bad for a company valued at just £29m by the stock market.

Going for gold

About two weeks ago Medal Entertainment & Media raised £3.5m via a placing and today the group is tipped to show investors that it is putting the cash to good use. The AIM listed media player is set to announce that it has taken a 30 per cent stake in Maximum Entertainment, a DVD publisher, with an option to raise its holding to 50.1 per cent at any time in the next three years.

Maximum won something of a coup when it recently secured exclusive rights to distribute some of the most successful children's titles from the Fox Kids library on video and DVD. Products planned for release over the coming months include Action Man, Ninja Turtles, Dennis the Menace and Inspector Gadget.

Mortgage payments

Trading in AttentiV Systems, which supplies financial software to the banking industry, is set to kick-off on Wednesday. The group had little trouble raising the £33.3m it wanted, thanks to a highly visible revenue stream which has allowed AttentiV to identify more than 80 per cent of this year's budgeted sales with the financial year less than half way gone. The group boasts a strong customer base and claims that 40 per cent of the UK's leading building societies use its software to process mortgage applications. More than 40 different institutional investors have subscribed to the issue, which, at 55p, was comfortably oversubscribed.

Italian oil

Punters should keep an eye on JKX Oil & Gas this week. The oil explorer will update the market on how drilling has gone at its Civita prospect in Italy and stock market gossips reckon it will not disappoint. The group is developing the site via a joint venture with the Italian oil giant ENI. JKX shares have been an outstanding performer over the past 12 months - they have soared by 300 per cent - and if the latest gossip proves to be correct they should continue to gain ground.

A legend returns

Legendary investments is active again. The AIM listed investment group, run and 40 per cent owned by Shami Ahmed, the Joe Bloggs entrepreneur, has been lying low over the past few years but now that the appetite for equities has well and truly returned it is again on the hunt for deals.

Last week Legendary raised £500,000 via a placing at 0.5p, leaving it with cash of more than £1m. It already has a collection of assets, including an 18 per cent stake in Legends Surf Shops and a 5 per cent holding in Accessory People, a mobile phone accessories company estimated to be worth more than £200m. Such assets can be leveraged, giving Legendary extra fire power. So where is the group going to invest? According to a company source, it is looking to get involved in early stage ventures and IPOs and is particularly interested in being involved in the security and defence sectors, given the current global climate.

Moving up a rung

For those on the hunt for a small-cap value play, take a look at HC Slingsby. The Bradford-based ladder maker is valued at just £6.5m but has cash of more than £3.5m on its balance sheet and a robust portfolio of freehold property which has not had a revaluation for some time. According to whispers from one corner of the City, business has started to pick up at Slingsby, after a difficult start to the year, and when the group posts its annual figures next month it should unveil a profit of about £1.2m. That translates into earnings per share of 80p and, at Friday's closing price of 650p, means the stock is trading at eight times earnings.

Nanotech newcomer

Polaron, the nanotechnology company which starts trading this Wednesday, has raised £10.3m through its AIM listing. The share offer will net £7m for the company's founder, Dr Isidore Stelzer, with a further £2.6m earmarked for the expansion of the business which was established 40 years ago. The company's main product is an atom probe developed by two Oxford scientists 17 years ago.