LONDON (Thomson Financial) - UK small caps fell to a session low at midday,
matching blue chip losses, with 1st Dental Laboratories staying hard-hit
following a first-half profits warning.
At 11:44 a.m., the FTSE Small Cap index was 14.5 points down to 2,707.9 -- a
session low -- while the FTSE 100 index dropped 26.7 points to 5,449.9.
1st Dental Laboratories shares fell nearly 25 percent, down 2.125 to 6-3/4,
following the group's warning that first-half results will fall short of
directors' expectations, due to some business disruptions that led to a roughly
12 percent decline in revenues. In reaction, Seymour Pierce cut the stock to
'outperform' from 'buy', also lowering its 2008 full-year revenue forecast to
10.6 million pounds from 11.5 million pounds and pretax prediction to 400,000
pounds from 500,000 pounds.
Zamano also came under the cosh, sliding 3-3/4 to 17-3/4, as its first-half
performance came in below the company's expectations due to several factors,
including the weakness of sterling and the delayed full integration of Red
Circle. The company now expects EBITDA of at least 2.3 million euros and
adjusted diluted EPS of 2.0 cents for the six months to end-June.
Reacting, Seymour Pierce reduced its FY EBITDA forecast to 5.5 million euros
and now looks for EPS of 4.5 cents. The broker expects it will take time for
investors to regain confidence in the stock, with the acquisition track record
dented. It cut its stance on the stock to 'outperform' from 'buy', re-setting
its price target to 35 pence, implying a multiple of eight times revised
full-year 2008 earnings.
Aga Rangemaster fell 4 to 154-3/4, as Panmure Gordon cut its price target on
the stock to 140 pence from 150 and left a 'sell' rating, following the group's
first-half numbers. Reducing estimates by 13-19 percent, the broker said it
thinks further estimate cuts for what it considers is a high fixed-cost business
are inevitable, as the consumer environment continues to weaken.
Elsewhere, Minorplanet Systems drifted 5 to 26 as the vehicle management
provider confirmed that bid talks had ended.
Fortune Oil was 0-3/4 penny down at 10 after completing the placing to Kerry
Holdings.
However, strong among risers was TETRA standard digital radio maker Sepura,
climbing 19-1/2 to 74-1/2 -- or 35 percent. In June, the group signed an
agreement to supply digital radios and accessories to the wireless systems
business of Tyco Electronics.
Nord Anglia Education surged 68 to 446-1/2 following the agreed 190 million
pounds, or 460 pence a share, cash bid from Baring Private Equity Asia.
Elsewhere, an upbeat production update underpinned Meridian Petroleum, 1.125
higher at 9-3/4. The U.S.-focused oil-and-gas exploration and production company
said its Orion 36 well in Michigan set a new daily gas production record of 5.57
million cubic feet per day on June 28.
A quarterly activities statement took Cape Lambert Iron Ore up 3 to 36.
In numbers news, a swing to full-year profits from losses lifted online
endowment exchange provider TEP Exchange Group 0.025 penny to 0.275.
Deal news bolstered TDG 19-3/4 to 243-1/2 as Laxey Partners' acquisition
vehicle LIT made a formal agreed offer valuing the logistics company at around
203 million pounds. TDG shareholders are being offered 250 pence cash per share
or 200 pence plus 6.625 LIT shares.
TMN Group took on 2-1/2 to 42 after the online marketing and market research
service provider confirmed it is in talks regarding the previously announced
indicative cash offer for the company by August Equity, working together with
TMN executive directors Mark Smith and Craig Dixon. On May 19, TMN said it
received an indicative cash offer of 70 pence per share from funds advised by
August Equity.
A 'buy' recommendation in the Investors Chronicle lifted speciality
chemicals Dyson Group 8 to 103-3/4.
Finally, a 'buy' initiation from Evolution Securities took Neteller 2-1/2
higher to 55-1/2.
hannah.benjamin@thomsonreuters.com
hmb/cmr
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