Bottom Line: More jam tomorrow

IT WAS always inevitable that some new issues would go badly wrong, given the scale of activity at the beginning of the year.

The market was so frothy that virtually any business, no matter how esoteric, young - or, in the case of biotechnology stocks, loss- making - could find a buyer.

The eagerness to climb on the small company bandwagon meant that deficiencies in management or business prospects could all too easily be overlooked.

Compared with the new issue disasters, such as Maid, the 36p decline in Nottingham Group's share price to 119p looks modest enough - although, as the first new issue sponsored by Goldman Sachs, it is hardly an auspicious start.

It is also little consolation to those who were tempted in at 155p on the promise that schools were about to unlock the pounds 400m purchasing reserves they had built up. Less than six months later, it appears the purse strings have, if anything, tightened and it is once again promising jam tomorrow in the hope that the pent-up demand will be released next year.

Pre-tax profits were down from pounds 3.9m to pounds 3.6m, and earnings from 5.12p to 4.6p, but the dividend was maintained at 1.84p, equal to last year's notional payout.

Operating margins are still a healthy 15.6 per cent, vindicating the group's claim that a small rise in volumes - or, as it turned out, a fall - could have a significant impact on profits.

The problem is predicting when that volume will come. With the national curriculum changing almost monthly, it is hardly surprising that schools are reluctant to spend too much on equipment lest it soon become obsolete.

And the Government doubtless counted on local managers of schools being rather more prudent in their spending than local authorities when it instituted its education reforms.

Both these problems should resolve themselves eventually and the market start growing again. It could, however, be a long and uncomfortable wait.

(Graph omitted)