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Don Elgie, chief executive of marketing services group Creston, is in a much more bullish mood than one might expect given the company’s 33 per cent fall from its one-year high to a recent low. But he is hiring an investor relations consultant to convey his message to the City.

Having increased annual pre-tax profits 72 per cent to £13.3 million on turnover 60 per cent ahead at £69.7 million, acquisitive Creston is expanding in America under its newly appointed US chief Steve Blamer, and scouting for new investments either in healthcare or integrated marketing communications.

‘We are risk averse,’ insists Elgie, whose company boasts blue-chip clients such as Halifax, British Airways, Morrisons and General Motors’ Opel and Vauxhall divisions. If the economy slows because of higher interest rates, he argues, Creston’s clients will still need to spend money on marketing.

‘Most tend to spend in fair weather or foul,’ he continues, ‘and the car market actually spends more in a downturn.’ Creston’s sector is consolidating and more acquisitions are on the cards, but ‘we have no plans to come back to the stock market to fund purchases’.

Creston will use bank finance and its own cash to pay for acquisitions, says Elgie, adding: ‘We are well within our banking covenants and have £20 million headroom.’ He blames small-scale selling by retail investors for Creston’s share price weakness.

‘It’s one thing taking [share price lows] on the chin for operational reasons, but it’s another matter coping with the vagaries of the stock market,’ he reflects with feeling. ‘But we are big boys.’

What a disappointment
It is a different story at Whatman, which supplies a range of products including filter papers and DNA archiving technology to the life sciences industry and has seen its shares lose nearly a third of their value over the past year. ‘We have disappointed the market,’ admits chief executive officer Kieran Murphy.

With a strong market position, ‘this is fundamentally a lovely business, with good products and good people’, he maintains. But the company ‘has not been getting the best out of it’.

After lifting pre-tax profits 62 per cent to £34 million last year on a modest four per cent turnover gain to £121 million, Whatman began 2007 with orders down 22 per cent and turnover fell eight per cent in the first half. Murphy, who points out the order book has recovered, blames problems in the supply chain at the company’s bioscience division and concedes there has been ‘neglect of the process of keeping the company running smoothly and converting financial forecasts into manufacturing’.

Whatman, which had £15 million cash and less than £10 million borrowings at the end of last year, has ‘a lazy balance sheet’, according to Murphy, and is conducting a strategic review of its options. These include ‘returning cash to shareholders or making an acquisition’.

Painful restructuring
Shares in Europe-focused vehicle parts group Wagon are beginning to show flickers of life after losing over 70 per cent of their value in a year following 2006’s £128 million acquisition of complementary concern Oxford Automotive. This deal created one of Europe’s leading metal automotive components groups, with £710 million annual turnover.

However, it also necessitated selling non-core operations and the ticklish business of shedding 1,000 employees including 600 in France. The whole process gave rise to £102 million restructuring and impairment costs, which sent the company into the red to the tune of £99.4 million in the year to March.

Finance director Richard Cotton says there were delays in some of the French disposals but argues Wagon, having taken its hit, is now back on track for sustainable growth. He suggests cost savings, chiefly through job cuts, should be worth £15 million this year and does not quarrel with broker ABN Amro’s estimate of a near-doubling in underlying operating profit to £29 million.

The European car market is flat, Cotton concedes, but relative shares between companies ‘vary with the model cycle’. He says Wagon hopes to outperform by winning outsourced business from the major vehicle groups.

The company hopes to benefit from consolidation in the sector and, despite the post-Oxford deal pain, ‘we are looking for another suitable acquisition target in Europe’. Wagon envisages using shares for such a takeover, especially since the company is currently highly geared – though ‘we will burn that off’.

One person who seems to believe in Wagon’s recovery strategy is Wilbur Ross, the celebrated US contrarian investor, who likes to load up his portfolio with unfashionable items such as steel mills and textile plants. His WLR Fund came on board at the time of the Oxford acquisition and now holds some 15 per cent of Wagon.

A more conservative climate
Merchant banking group Close Brothers has recently been testing new lows 23 per cent off its one-year high. This is despite a brisk 28 per cent increase in first-half pre-tax profits to £76.5 million, helped by a 126 per cent surge in asset management profits to a record £43 million.

Chief executive Colin Keogh is disappointed but philosophical about the market’s reaction, though the shares have perked up modestly of late. ‘We have had an unexpectedly large number of private equity fund investments,’ he points out.

‘These have favourably distorted our asset management results. But the market wonders how to disentangle the underlying growth.’ Analysts believe, however, that it will be ‘fine’.

Keogh suggests Close Brothers’ ‘very solid core of asset-based, high-margin banking’ might be hard to push above its long-term growth rate of ten to 12 per cent a year. Part of the company’s banking activities is financing insurance premiums and, since commercial insurance premiums have been ‘deflating’, the banking loan book has been flat.

Close Brothers owns Winterflood, the leading retail market maker on the stock exchange. However, of late, ‘retail activity has not been as great as institutional’.

Contrary to what many would assume, Keogh suggests rising interest rates should be ‘good news’ for the company. ‘People have been mis-pricing risks,’ he says, and a consequent shake-out in banking could lead to a more conservative climate.

That could provide Close with ‘acquisition opportunities’. At present, valuations are hard to justify, so, if rate rises do impose some cold realism, ‘hopefully the market will move in our favour’.

Trying to rebuild
In a very different part of the market, bombed-out mobile communication device specialist Synchronica languishes only slightly above its recent one-year AIM low of 8.12p, though its German chief executive Carsten Brinkschulte is striving to restore its fortunes. The company, which he originally founded in Berlin, became part of mobile service outfit DAT Group, which hit 530p a share in 2005 before losing its way.

Later renamed Synchronica, the company, which lost a daunting £6.5 million last year on £1.1 million turnover, recently won a licensing deal worth £650,000 for its Mobile Manager Suite with SmartTrust AB of Sweden, a ‘leader in mobile device management solutions’ backed by the Carlyle group. Brinkschulte says Synchronica is also working on deals for the company’s Mobile Gateway product.

This uses Microsoft’s core Outlook Web Access to retrieve emails from corporate exchange servers and deliver them directly to built-in email clients of the Apple iPhone. Brinkschulte is enthusiastic about prospects and particularly about a surprisingly high level of interest from Bangladesh and other developing countries in introducing mobile-mail services.

Getting a grip
In contrast to many favoured mining counters, KazakhGold is producing quantities of the yellow metal from its projects in central Asia and has plenty of cash after a recent £100 million Eurobond issue. Headed by the formidable Dr Kanat Assaubayev, the company claims an estimated seven million measured indicated oz of gold at Alksu, Bestobe and Zholymbet in Kazakhstan, plus eight million inferred oz, and has acquired other assets from Oxus Gold in Kyrgyzstan and Romania.

Assaubayev has set a company target of becoming a one million oz a year gold producer. So far, KazakhGold has been producing at a rate of less than 140,000 oz a year. However, the tightly held shares at 988p are only a touch up from their one-year low and 35 per cent off their one-year high.

Company advisers blame over-ambitious and unrealistic early production plans and the fact that the bond issue was not followed by a swift acceleration for the market’s disappointment. But they argue June’s appointment of Darryl Norton from Oxus as chief operating officer might signal a new urgency and efficiency in the company’s approach to the task of exploiting its assets as advantageously as possible.

If he and Assaubayev can do it, the market should respond. But, if the problems remain insuperable, it will be another story.

This story is from Growth Company Investor, the independent voice on fast-growing companies. Subscribe today for the latest AIM recommendations.