Alice reviews proceedings at Osmetech, Chime Communications, Healthcare Locums and Northbridge Industrial Services.
In homage to Delia Smith, CBE, here are some meals that I prepared earlier, I mean here are a few AGMS that I have attended in the last month.
Osmetech
Do you know anyone who has to take Warfarin, and who spends half their time having blood tests because their dosage of Warfarin is wrong? Osmetech (LSE: OMH) is at the forefront, admittedly in the States, in ensuring that the dosage given is correct.
Osmetech's 2009 AGM took place on 5 May in central London. The directors were very pleased to see a few private investors in the audience, and a presentation of Osmetech's flagship machine was given. All in all, an excellent AGM. Osmetech was going to list in the States last year at a price in double figures (in sterling terms). But its current share price is just 3p, giving a market value of £26m.
Unfortunately the proposed listing coincided with the collapse of Lehman Brothers. Not surprisingly, the listing got shelved.
Many announcements have been made since the 2009 AGM, including:
- Osmetech's eSensor XT-8 platform with Medical Design Excellence Award
- Osmetech submits a test to be used to screen for swine flu virus.
- Osmetech chosen as principal supplier for a major clinical trial.
There is only one small fly in the soup is that the company, partly as a result of the aborted US listing, is running out of money. It is interesting to note that the two largest shareholders, Efficacy Capital and Gartmore, have been increasing their shareholdings in the recent past, up to 33.6% and 21.2% respectively. Is dilution for the smaller shareholders on the horizon?
Chime Communications
Do you like rubbing shoulders with names appear who from time to time in the business press?
If so, I recommend attending the AGMs of Chime Communications (LSE: CHW) and Healthcare Locums (LSE: HLO).
I was particularly keen to attend the Chime AGM because I heard a rumour earlier this year that Lord Bell was unwell. Lord Bell is one of the 'three wise men' of the company (the other two are Piers Pottinger and Christopher Satterthwaite). If Lord Bell departed from Chime, I think it's likely that the share price would fall, at least in the short-term.
Chime is the holding company for Bell Pottinger, the UK's leading public relations group, and Opinion Leader, the UK's leading research and engagement group.
Although this PR company has a market cap of £70m and the share price has doubled in 2009, for the second year running, I was the only private investor who attended the AGM. The location was Chime's Mayfair Head Office. Lord Bell was in good form and, as usual, dominated the meeting. The formal resolutions took less than five minutes to complete. Lord Bell's remuneration package was over a £1m for 2008 -- fingers crossed that he buys a few shares in 2009.
Healthcare Locums
Another strong character is Kate Bleasdale, CEO of Healthcare Locums. Google Kate and you will soon be reading about a sexual harassment case that took place seven years ago. She was forced out of a company that she had founded, but Kate is now again CEO of a fast growing recruitment company called Healthcare Locums. With a market value of over £200m, the share price has risen impressively over the course of this year.
Good results announced for 2008 showed turnover up 23%, adjusted operating profit up 44% and adjusted EPS up 51%. Kate and her team are optimistic about the future too.
If you want to know whether Kate is still driven, I recommend you come along to the 2010 AGM and ask her whether she is slowing down. The 2009 AGM was very well attended. The directors gave a presentation, and were more than happy to answer questions.
Finding out about AGMs
Before turning to Northbridge Industrial Services (LSE: NSI), an observation that I hear often about AGMs is: "I never can find out when the AGM will take place". The approach I adopt is to start looking out for the date, time and location of the AGM about three or four weeks after the preliminary announcement has been made.
First stop is the RNS announcements, some companies will issue a Notice of AGM announcement, others 'hide' the information either in the preliminary announcement itself or within a Posting of Report & Accounts announcement.
Failing that, I have a look at the company's website, look in the investors or corporate section of the website. Sometimes there will be a separate Notice of AGM, but more usually, the AGM details are contained in the report and accounts.
If all other avenues fail, I will phone up the company secretary and enquire.
Northbridge Industrial Services
And now the Northbridge AGM, held in mid-May in central London.
Three general knowledge questions:
- What is the connection between Northbridge and Finsbury Foods?
- What is the name of the finance director who is contracted to spend one day a month working for an AIM-listed company?
- What is the name of the company whose second highest paid director is a non-executive director?
And here are the answers:
- Western Selection. It's a substantial shareholder in both Northbridge Industrial and Finsbury Foods (LSE: FIF), plus David Marshall of Western Selection sits on both boards as a non-executive director. (The more one spends looking at AIM-listed companies, the more one realizes how many companies are interconnected. For example, if you want to find out something about the history about Andrews Sykes (LSE: ASY), you can ask Eric Hook, CEO of Northbridge as he used to work for that company).
- Ash Mehta, the finance director of Northbridge, is contracted to spend one day a month working for the company. Per the 2009 AGM, he spends much more than one day a month on Northbridge's business.
- Northbridge Industrial Services. The founder and general manager of Crestchic, Northbridge's largest acquisition to date, is Jim Gould. At 74 years young, he sits on the main board as a non-executive director.
Northbridge was a good AGM though. Three private investors asked questions and the directors were friendly. Everyone was nonplussed as to why this company was so unloved with a market value of just £9m. Earnings per share was 25p for 2008. There are forecasts of 22p and 24p for 2009 and 2010 respectively.
The company has minimal borrowings and the share price is currently around 120p.
Northbridge does attempt to engage with the private investor community. The company had a stand at the Master Investor Show, which took place last Wednesday. Per the website Northbridge "was incorporated for the purpose of acquiring companies that hire and sell specialist industrial equipment supplying a non-cyclical customer base including utility companies, the public sector and the oil and gas industries."
The problem with a business plan where acquisitions play a central part increasing market share is if the share price tanks you are scuppered. A high level of debt is out of fashion, and issuing paper is difficult without hitting earnings per share, unless the potential acquiree is very very cheap. One method of breaking out the impasse is to issue new shares to existing shareholders, using the proceeds to acquire additional fixed assets.
Last Friday, Northbridge announced an open offer of one new share for every four held at 110p per share, net proceeds £2m. The chairman commented as follows:
"We intend to use the proceeds of this fundraising to expand our hire fleet in line with our strategy of acquiring and developing our rental assets to further complement our existing hire equipment activities.
Following the recent strengthening of our business in the Middle East we are confident that there is a significant opportunity to further expand our operations and become a key supplier of industrial hire equipment in the Middle East.
Additionally, given the current economic market constraints further opportunities exist to acquire industrial equipment that would expand its rental fleet in the UK. As such the proceeds of the Open Offer will be used to both acquire and develop additional industrial rental equipment."
One mystery about the open offer which I cannot answer is the news that the nominated adviser, Charles Stanley (LSE: CAY), is resigning in the near future and a new nominated adviser has yet to be announced. The changeover could have been better handled.
The market seems to have been spooked, as the share price finished the week at a 12-month low. When Northbridge listed on AIM in March 2006, the placing price was 100p. So although Northbridge has demonstrated a reasonable trading record, there has been little reward, to date, for shareholders. Perhaps the future will be more rewarding.
More of Alice's AGMs:
At the time of writing, AliceInWonder owned shares in Northbridge.
