A £41.2 million cash pile, new management and a new strategy at Emess should re-ignite warm feelings in investors for a lighting group whose attractions had dimmed in recent times.

Emess's profits slumped from £10.5 million in 1998 to just £3 million in 1999. The group then recorded a loss of £2.6 million in the half-year to end-June 2000.

Under new chief executive Nigel Singer, who moved up from finance director in August, the company is on the lookout for potentially highly profitable, innovative businesses in the UK - both quoted and privately-owned - on 'realistic earnings multiples'.

'We took the view that the lighting sector was consolidating with companies such as Sylvana and Coopers dominating the market. It needs a company much bigger than us to compete internationally. We felt it would become increasingly difficult to remain viable', Singer comments.

He is cagey about the specific type of businesses he has in mind, preferring to rule 'out' rather than 'in'. 'We are not looking at the retail or property sector, or traditional manufacturing, unless it is in a particularly innovative area, perhaps in electronics', he says.

For the time being, the company retains two UK consumer lighting operations, Poole and Cresswell, which supply customers such as B&Q, Marks & Spencer, British Home Stores and Argos. Turning over around £30 million, the two traditionally make most of their profits in the second six months. They made a modest £100,000 in the first half.

The well-publicised move by the big retailers to squeeze suppliers has put pressure on their margins and Singer concedes that they are 'not necessarily core to the new strategy'. If a buyer offered the right price it would be 'seriously considered'.

So when can we expect the first acquisition? Singer says: 'I don't want to commit myself to a strict timetable, but hope it will happen before not too long. I am prepared to be cautious because we want it to be right'.

His approach has the backing of Emess's major shareholders, the privately-owned investment companies, Colmar and Chapman International, which have over 57 per cent between them. 'I am working closely with them', says Singer.

One fly in the ointment is a dispute over the valuation of assets of a former Emess business, JSB Electrical, sold to Cooper (UK) for £38 million - an issue which could take years to resolve. Emess is 'fiercely resisting' Cooper's claim and has made no provision in its accounts.

Emess looks an interesting two-way bet. Either Singer and team will find acquisitions to drive profits back up, or an entrepreneurial predator will do the job.

At 30p the shares are 9p off their year's low, but the company is still valued at just £32.4 million. Even after allowing for £3 million of preference shares, the shares don't get close to reflecting the £41 million cash pile - which could rise even further with the sale of the remaining lighting operations.