Arlington Group, the AIM-listed investment company headed by financier Nick Barham that lost £10 million two years ago, lifted pre-tax profits from £357,000 to £4.3 million in the year to March and has embarked on a continental European property venture with the French Groupe Leonard Da Vinci (LDV). Robert Tyerman reports.

The value of Arlington's investments rose from £3.1 million to £14.5 million in 2003-04, as markets recovered some of the ground lost in the previous bear phase, while cash fell from £23 million to £14 million. The company, a former dotcom investor now focused elsewhere, proposes to reorganise its holdings into four separately managed funds: for Eurozone property, Asian debt and equities, long and short positions in natural resources and public and private equity, debt and 'structured financial products'.

The European property fund, Arlington Aerium 111, has been negotiating with LDV about forming a joint venture to target commercial and retail properties mostly in France, but also in Germany, Italy, Spain and Switzerland. The idea is to take advantage of 'good quality, high-yielding properties with investment-grade tenant covenants' through a limited partnership aiming for 15 to 25 per cent compound annual growth.

Arlington recently paid £2.7 million for 70 per cent of AIM-listed aggregates company Enneurope and £1.5 million for a stake in Aussie gold miner Archipelago Resources, also on AIM, which is developing gold prospects in Indonesia and has share swap group Ocean Capital as another key shareholder. The company has also asked its bankers for a multi-currency revolving facility to hedge its non-sterling investment and 'introduce a modest level of gearing into the balance sheet'.

This reflects a degree of bullishness on the part of Barham and his colleagues, though they are not proposing to pay a dividend. That must wait until Arlington has completely realigned its activities and raised more cash by selling some assets.

Arlington's shares have nearly doubled over the past 12 months from a 21.5p low to 38p, up 3.5p today, valuing the company at £23.5 million.