New Issues Examined by Ben Jaglom

Activity is picking up on AIM, where recent diverse new entrants include a pizza franchise, a Scottish shopfitter and a digital marketing agency

A somewhat unusual newcomer is DP Poland, holder of the master franchise for Domino’s pizza in Poland, which came to AIM by way of a placing that raised £6.5 million at 50p. DP is led by executive chairman Richard Warrington and marketing director Peter Shaw, who were previously involved in creating coffee chain coffeeheaven international in Poland, before its sale to Costa Coffee this year in a £36 million deal.
 
With the Polish economy growing, DP believes there is a market for a high-quality delivery service, tailored to local tastes, in the country and plans to offer pizzas that include traditional Polish sausage, regional cheeses and local vegetables, in addition to providing classics such as pepperoni and margherita pizzas.
 
Armed with the float funds, DP will look to roll out approximately 50 stores in the capital, Warsaw, over the next four to five years. The board says the reason there is not a bigger home delivery pizza market already is that ‘food quality is important to Poles’ and the pizza home delivery business currently has a reputation for poor quality in the country. Hoping to change that image with the introduction of Domino’s, DP shares have warmed up to 56p already and could be worth tucking into.  

Market mover
Moving from a newly established company to a much older one, biodegradable plastics and radio frequency equipment concern Biome Technologies, previously known as Stanelco, moved to AIM from the Main Market this month.

Chief executive Paul Mines says Biome, which has two divisions – Biome Bioplastics, which makes biodegradable plastics, and Stanelco RF technologies, which builds and services equipment for the radio frequency industry – came to AIM as it is ‘a growing, commercially driven technology group, which will be much better suited to the AIM market’.

The Stanelco name dates back over 60 years and has had a turbulent past few years, with shares that traded around the 20p mark in 2006 having plummeted to 0.12p, giving the newly monikered Biome a lowly £7.1 million market cap, a substantive plunge from earlier peaks of around £200 million.

Having recently won a court battle against competitor Novamont over allegations of patent infringement, Biome is hoping that the move to AIM will lead to an upsurge in fortunes. Having lost money for the past five years, most recently posting a £3.6 million deficit for the year to December, the shares are not for widows or orphans.  

Executive search
Another Main Market refugee, Fife-based shopfitter Havelock Europa, recently announced the resignation of interim CEO David Hurcomb and is still searching for a replacement. Like Biome, Havelock, whose major clients include Marks & Spencer and John Lewis, has had a troubled time, with reduced spending by major retailers contributing to its £5.9 million loss last year.
 
Havelock Europa, which also has a sizeable ‘educational interiors’ business, is likely to face challenging trading conditions as the new coalition government implements spending cuts. Accordingly, Investec forecasts shrivelled profits of £100,000 for December 2010, a tiny return for a company that made profits of £6.6 million and £7.68 million in 2007 and 2008. Until a new CEO is installed and prospects improve, the shares are best avoided.
 
Also worth following are two companies that switched from PLUS to AIM last month. Headed by chief executive Nigel Hunter, digital marketing specialist Fuse 8 reversed into investment company Award. Founded in 2000, Fuse has offices in Leeds and Russia and is worth following if you are excited by prospects in the digital marketing sector.
 
Another to have shifted its listing from PLUS to AIM is cancer vaccine developer Scancell Holdings. The group, which joined PLUS last September, says it has since ‘strengthened its financial position’ and as a result, views a listing on AIM as ‘a natural transition for the company’.