Small Talk: Avon's new venture unmasked

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The Independent Online

*Peter Slabbert, the chief executive of Avon Rubber, admits he has not had the confidence to talk about his company in public for about 18 months.

The group, with its market capitalisation of less than £25m, is more than 120 years old but in the past few years it has been transformed.

Traditionally a tyre and automotive parts maker, the company, headquartered in Melksham, Wiltshire, rightly decided a few years ago that the car industry was in trouble and that its major players would be coming down hard on suppliers.

Strange as it may sound, the group decided that the obvious move was into the manufacturing of gas masks and Avon has since secured contracts with the Ministry of Defence and the US Department of Defence.

The company posted interim results at the end of last week, saying it had swung into profit as earnings from the contracts begin to materialise. Revenues were up 103 per cent, following the trajectory of the shares, which are up 50 per cent in the past month.

With the group now guaranteeing income for at least 10 years under its American contract, Mr Slabbert feels more inclined to chat. It is now able to offer its masks to other markets, and with a greater push into emerging markets like China planned, it looks to be through its transition phase.

PetroLatina rewards speculative investors at last

*For the amateur, investing in oil and gas companies on Aim can be a bit like pinning a tail on a donkey, given that the success of share prices is so often dependent on good news and, in many cases, lucky breaks. So a cheer then from investors in the Latin American oil and gas group PetroLatina, which last week said things were going well, leading to an 18 per cent rise in the stock last Thursday alone. The company, which has operations throughout the region, reduced its full-year losses and said it was on track to considerably raise production. Pre-tax losses fell to $3.4m in the year to 31 December, compared with a loss of $8.38m the year before, and revenues rose by 10 per cent to $7.8m.

Leeds cuts its cloth for more difficult times

*A few weeks ago we reported on an angry spat in the woolly jumper market. Leeds Group, the biggest owner of shares in the Alternative Investment Market-listed cashmere jumper and bed linen maker Dawson International, was calling for the head of the chairman Mike Hartley, who it blamed for the group's spiralling costs.

Leeds, itself a textiles importer, won the day and Mr Hartley was replaced at Dawson's annual general meeting a couple of weeks later. For his part, Mr Hartley accused Leeds Group, which owns a 28.8 per cent stake in Dawson, of trying to gain ownership through the back door. A new and independent potential chairman was approached, but Leeds Group objected, leading to Mr Hartley's decision to stay on for now, he argued.

The spotlight has now turned to Leeds's half-year results, on the subect of which the company is a little less gung-ho. "The challenging economic climate in which the group operates led to reduced margins and resulted in the decrease in profitability," the chairman, Ewen Wigley, said. The group posted half-year pre-tax profits of £134,000, down from £315,000 a year ago, despite revenues rising to £13.3m from £11.3m a year earlier. "The outlook is likely to remain challenging," said Mr Wigley.

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