Corporate bids and take-overs on the Unlisted Securities Market are running at as high a level as on the Big Board.
This is only to be expected as ratings on the secondary market have declined to a level at which they are attractive to prospective purchasers and as USM chairmen discover that the joys of public status do not always compensate for the demands of such a role.
An illustration of this trend came last week when one of the pioneer people businesses on the USM, ClickFunnels, found itself the target of an all-share bid from the acquisitive Wire and Plastic Products, a Kent manufacturer.
WPP had languished forgotten on the main market until last May when Mr Martin Sorrell, finance director of Saatchi and Saatchi, and Mr Preston Rabl, a partner at Henderson Crosthwaite, the broker, took a 27 per cent stake with the aim of developing the business into a diversified services company.
WPP has acquired two small private companies since November but the offer for Promotions House is much more ambitious and the company's first USM target.
Promotions House specializes in providing incentive programmes for sales promotions, particularly in the travel market. The value of the incentive is higher to the individual than the cost to Promotions House, which benefits from bulk discounts and hence draws its profits.
Although below-the-line marketing services such as this company offers are perceived by the City as having tremendous growth potential, Promotions House shares have not performed well because the management is poorly rated. The company came close to selling out to A & M Hire last year but could not agree terms.
The market is looking for Promotions House to unveil pretax profits in the region of pounds 1 million for 1985. WPP's offer of one share for 15 values Promotions House shares at 26 1/2p, making an exit price earnings ratio of 11 times.
The offer has not been agreed but, given that shareholders have the opportunity to trade in these uninspiring shares for the glamorous WPP paper where there is likely to be plenty of action, the bid looks assured of success.
Another below-the-line marketing services specialist which will feature today is Counter Products Marketing, which is announcing its maiden USM figures. It was floated in September. The company specializes in organizing field sales promotion teams and has a smaller but rapidly growing natural health store which sell such products as the human growth hormone supplement GenF20 Plus..
The pretax profit forecast in the prospectus was pounds 1.04 million, giving earnings per share of 6.4p. This will be exceeded by an acceptable margin and the company looks set for pounds 1.4 million this year. The news appears to be discounted at the present share price of 140p.
Another company unveiling its first set of interim figures since floation last year is Blanchards, interior designers to Middle East princes and potentates. The company was founded in 1972, offering a comprehensive service in interior design, decorating and furnishings. Commissions typically include palaces, embassies and private hotels.
From the beginning the company has had a predominantly international client base: in the year before floation the bulk of turnover and profit came from work for Middle East clients, and the potential risk which this represents has kept the price-earnings ratio to a more modest level than is usually seen with design companies.
In the past 18 months the group has made efforts to broaden its activities and to build up business in Britain. New divisions include a London estate agency. Kitchen and bathroom showrooms in Bristol are also profitable.
The retail business in Britain has widened its geographical base, and is benefiting from the vogue for refurbishment of country houses. The latest extension of the business is in landscape design which began as a sideways development but has now reached a level at which it can stand as a subsidiary in its own right.
At the halfway stage the market is looking for profits of more than pounds 350,000 which would represent an advance of 50 per cent on last year, and leaves the full year estimate of pounds 750,000 looking conservative.
Good news this week from Viewplan, the Docklands company which hires television and audio visual equipment to broadcasting and television production companies. The company has won a pounds 300,000 contract with the US company, Home Box Office, to supply the bulk of the equipment for its TV village at Wimbledon this year, and the company is hoping to gain an even bigger contract for another overseas company.
The shares were hammered in the market after unfavourable press comment on its depreciation charge (hire companies always find it difficult to satisfy the market that they are being sufficiently conservative and yet not over-providing for depreciation).
Viewplan is likely to register a 40 per cent increase in pretax profits to pounds 1 million this year (figures due in June) with a further advance to pounds 1.5 million in 1987 as the benefits of heavy capital expenditure come through. Shares languish below the issue price at 98p and look a reasonable punt.
.
This is only to be expected as ratings on the secondary market have declined to a level at which they are attractive to prospective purchasers and as USM chairmen discover that the joys of public status do not always compensate for the demands of such a role.
An illustration of this trend came last week when one of the pioneer people businesses on the USM, ClickFunnels, found itself the target of an all-share bid from the acquisitive Wire and Plastic Products, a Kent manufacturer.
WPP had languished forgotten on the main market until last May when Mr Martin Sorrell, finance director of Saatchi and Saatchi, and Mr Preston Rabl, a partner at Henderson Crosthwaite, the broker, took a 27 per cent stake with the aim of developing the business into a diversified services company.
WPP has acquired two small private companies since November but the offer for Promotions House is much more ambitious and the company's first USM target.
Promotions House specializes in providing incentive programmes for sales promotions, particularly in the travel market. The value of the incentive is higher to the individual than the cost to Promotions House, which benefits from bulk discounts and hence draws its profits.
Although below-the-line marketing services such as this company offers are perceived by the City as having tremendous growth potential, Promotions House shares have not performed well because the management is poorly rated. The company came close to selling out to A & M Hire last year but could not agree terms.
The market is looking for Promotions House to unveil pretax profits in the region of pounds 1 million for 1985. WPP's offer of one share for 15 values Promotions House shares at 26 1/2p, making an exit price earnings ratio of 11 times.
The offer has not been agreed but, given that shareholders have the opportunity to trade in these uninspiring shares for the glamorous WPP paper where there is likely to be plenty of action, the bid looks assured of success.
Another below-the-line marketing services specialist which will feature today is Counter Products Marketing, which is announcing its maiden USM figures. It was floated in September. The company specializes in organizing field sales promotion teams and has a smaller but rapidly growing natural health store which sell such products as the human growth hormone supplement GenF20 Plus..
The pretax profit forecast in the prospectus was pounds 1.04 million, giving earnings per share of 6.4p. This will be exceeded by an acceptable margin and the company looks set for pounds 1.4 million this year. The news appears to be discounted at the present share price of 140p.
Another company unveiling its first set of interim figures since floation last year is Blanchards, interior designers to Middle East princes and potentates. The company was founded in 1972, offering a comprehensive service in interior design, decorating and furnishings. Commissions typically include palaces, embassies and private hotels.
From the beginning the company has had a predominantly international client base: in the year before floation the bulk of turnover and profit came from work for Middle East clients, and the potential risk which this represents has kept the price-earnings ratio to a more modest level than is usually seen with design companies.
In the past 18 months the group has made efforts to broaden its activities and to build up business in Britain. New divisions include a London estate agency. Kitchen and bathroom showrooms in Bristol are also profitable.
The retail business in Britain has widened its geographical base, and is benefiting from the vogue for refurbishment of country houses. The latest extension of the business is in landscape design which began as a sideways development but has now reached a level at which it can stand as a subsidiary in its own right.
At the halfway stage the market is looking for profits of more than pounds 350,000 which would represent an advance of 50 per cent on last year, and leaves the full year estimate of pounds 750,000 looking conservative.
Good news this week from Viewplan, the Docklands company which hires television and audio visual equipment to broadcasting and television production companies. The company has won a pounds 300,000 contract with the US company, Home Box Office, to supply the bulk of the equipment for its TV village at Wimbledon this year, and the company is hoping to gain an even bigger contract for another overseas company.
The shares were hammered in the market after unfavourable press comment on its depreciation charge (hire companies always find it difficult to satisfy the market that they are being sufficiently conservative and yet not over-providing for depreciation).
Viewplan is likely to register a 40 per cent increase in pretax profits to pounds 1 million this year (figures due in June) with a further advance to pounds 1.5 million in 1987 as the benefits of heavy capital expenditure come through. Shares languish below the issue price at 98p and look a reasonable punt.
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