Small Talk: Photo-Me faces uncertain future amid credit crunch

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The Independent Online

The pain continues at Photo Me International. After an already traumatic year, the beleaguered group has become the latest victim of the credit crunch, with investors predicting an uncertain future should the rumours of an unlikely buyer for its flagship division prove unfounded.

Photo Me's board launched a strategic review of its three principal businesses – vending, mini-lab manufacturing and wholesale lab manufacturing – in November, to work out a way of returning capital to its shareholders. The vending division was the most saleable and received a number of indicative offers earlier this year. When these failed to firm up into offers "at an acceptable level", the company pulled the sale blaming the turbulent credit markets.

One investor said: "The predicted 75p per share for the vending division won't happen now. If it can be done at even 10p cheaper there would still be some upside, but it doesn't look likely." There were rumours doing the rounds last week of Icelandic money coming into the stock, and some were hoping this meant a sale could be resurrected.

The investor wasn't holding his breath as the deal's collapse became the latest in a long line of disappointments for the company. The share price has halved in the past 12 months, and one market participant said it would probably have sunk below 50p on the latest news if it wasn't so tightly held, with 65 per cent of the stock held by eight people.

The decline in the shares sparked the emergence of rebel shareholders in the form of the hedge funds Cycladic Capital and Principal Capital Holdings. The funds said the leadership "has suffered from unsatisfactory operational performance, a badly managed strategic review process and a lack of credibility with investors" and called for the resignation of the chairman and chief executive.

This month the group was forced to bow to investor pressure. Vernon Sankey stepped down as chairman and the chief executive, Serge Crasnianski, is to leave within two months. The collapse of the deal overshadowed its interim management statement, which piled on the bad news. Sales were down 7 per cent, with its main locations – UK & Ireland, France and Japan – performing poorly because of a weak retail market, high site owner commissions and the management upheaval.

The new management has a lot to do, and anything is possible as it regroups and looks to face the challenges the market presents. Yet one investor even questioned what the company was doing on the market at all: "I don't see the value of its listing now – it should be taken private."

Commoditrade

The market is expecting a stellar performance from Commoditrade, when it announces its results this week. While strong numbers will be encouraging, investors will be more interested in the progress of the takeover talks that have dragged on for nine months.

Since the group flagged active discussions were ongoing with a number of unnamed suitors it has updated the market in February, May and August, though facts have been few and far between. In May, a statement said the "diverse range of parties involved has added time to the discussions," and three months later it added it was also in discussions with potential financial partners to secure extra capital for the company.

There is still no bid on the table, but good results could force the bidders' hands. One investor said: "The results will probably be excellent. The company will want to put as much pressure on the potential buyers and drive up the price as much as they can."

Commoditrade, which listed on AIM in March 2005, was designed to build a group focusing on the commodities sector, through investment and acquisition. The share price peaked at 58.25p in June and has since slid to a 12-month low of 34p. Solid results and solid news on the merger might just have it soaring again.

A small-cap mobile content player that could offer a winning formula

Looking for a WINner among the small-cap mobile content players? WIN could prove a good bet.

Despite some problems during 2006, the mobile content platform provider is in good shape, is profitable and has kicked off an acquisition spree by snapping up the Swiss-based Quattrocomm. With more acquisitions expected over the coming months, the company looks set to garner more attention.

To go with its new-found confidence, the company has overhauled its website. Yet visitors expecting to see images of Crazy Frog-like characters or snazzy mobile poker applications will be surprised to find numerous videos of the chief executive Graham Rivers doing a Barry Scott (of Cillit Bang fame) impression.

Dressed in a tight black T-shirt, Mr Rivers effuses over "new and exciting content" and invites customers to become "part of the WIN family" while performing hand gestures that would make Tony Blair blush.

As a sign-off, Mr Rivers – who is credited with turning the company around since joining late last year – points at the viewer and invites them to "discover new ways in which WIN can help you grow your business".

You'll be tempted to ask for a free set of steak knives!

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