Companies: AVM    BIE    DET    ETQ    GLO    LCT    PHTM   

More often than not, London's small cap companies are missed by the radar of institutions and private investors alike. However, following major accounting concerns across the pond and rumours that skeletons may be found in the cupboard of many a FTSE favourite, now could be the time to wade back into smaller company waters.

The Small Cap Index currently trades at 2,218.6 – a far cry from 2,779.7 a year ago. But, at the very least, there should be greater transparency in the balance sheets of its constituents, and value to be found, given that many are oversold.

For instance, in July two outfits pleased followers with signs of a turnaround. Fledgling construction and building firm Birse turned £2.1 million of pre-exceptional losses into a £5.2 million pre-tax profit in the year to April, with no exceptional costs. This compares with £29.7 million losses in a torrid 2000-1, when years of bad practice came home to roost. The shares currently trade at 15.5p, compared to a year ago when they were closer to 10p.

Energy Technique – now a Surrey-based manufacturer of heating and air-conditioning equipment after restructuring last year – cheered followers with a 78 per cent underlying profits rise for the year to March. The engineer rapidly returned to solid profitability after ditching its last loss-making business in summer 2001. The shares are now trading on a 12-week high of 7.5p.

Elsewhere, Avocet Mining advanced 25 per cent to 16.25p after announcing better-than-expected gold production at its Penjom mine in Malaysia in the quarter to June. Small cap followers must say farewell to Avocet on 26 July because the company intends to migrate to Aim to focus on its Asian gold-mining interests.

Depressed Deltron Electronics shares danced 4p higher to 64p after support services-listed rival Acal announced it was taking a 4 per cent stake through subsidiary Centre Industries. Deltron, an electromechanical components firm, is still well off its 12-month high of 108.5p, while telecoms equipment and IT parts play Acal slipped 5p to 580p.

Another firm in the support services sector to close lower was telecoms recruitment outfit Glotel. It shed 2.5p to 50p after plunging into the red for the year to March.

Full-year fallers

A coterie of ventures floundered on poor full-year figures. Beverages group HP Bulmer, famed for its Strongbow cider, unveiled what chief executive Mike Hughes describes as 'pretty awful' numbers to April. Profits waned from £28.6 million to £21.1 million and the shares are currently priced at just 307.5p – against 52-week extremes of 463p and 280p.

Also lurching lower was photo-booth operator Photo-Me International. Pre-tax profits fell from £23.7 million to just £2.5 million and the group reneged on a full-year dividend. The shares were marked down 18 per cent to 14.75p.

Profit warnings poked their heads above the parapet yet again. Brewer Eldridge Pope was pulled 36p lower to a 52-week low of 211.5p after warning on full-year profits. After a strong first half in which like-for-like sales growth reached 2.5 per cent, trading in the quarter from April to June was disappointing, with like-for-like sales 4 per cent lower than last year.

In the engineering sector, catering equipment manufacturer Lincat lost 50p in a single session. The shares finished at a 52-week low of 269p. UK trading was weaker-than-expected in the second half, while trading profits for the year to June will be lower than market expectations.

The small cap ranks were rocked by several share suspensions. More than 1,300 jobs hang in the balance at steel group ASW after the debt-laden group called in the receivers. Its shares were suspended at 2.5p after bankers withdrew their backing.

Also in a suspended state is Claims Direct – the infamous 'no win, no fee' play that was running out of cash. Its directors called in administrators after fresh-funding talks collapsed. With the shares inert at 3.3p, the business is valued at just £6.5 million.

Looking forward

Fledgling support services firm Parkwood, which recently signed its third PFI deal (valued at £55 million), will unveil its first-half figures to June on 2 September. This will provide an opportunity for analysts to assess whether the Preston-based venture is on track to meet full-year expectations. Last time out it made a £1.3 million profit on £40.9 million sales – a strong recovery from a disappointing 2000. House broker Beeson Gregory expects profits of £1.5 million, with £1.7 million to follow in 2003.