LONDON (Thomson Financial) - UK small caps were lower in early deals,
mirroring weakness in the wider market, with 1st Dental Laboratories down in the
mouth following a first-half profits warning.
The FTSE Small Cap index stood 5.20 points down at 2,717.20 by 9.05 am,
while the FTSE 100 was 46.50 off at 5,430.10.
1st Dental Laboratories suffered pain, dropping 1.875 pence to 7.00 pence as
the health-care company warned its first-half results will fall short of
directors' expectations due to some business disruptions that led to a roughly
12 percent decline in revenues.
It believes the disruptions are a one-off and appear not to be getting
worse.
In light of the update, Seymour Pierce cut 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. The stock is thus trading on a 2008
prospective P/E of 7.8 times.
The broker believes there is still a potential upside. However, until it
sees evidence that the problem experienced in the first half is indeed out of
the way, its does not expect the shares to make strong progress. It moved its
recommendation to 'outperform' from 'buy'.
Zamano also came under the cosh, sliding 4 pence to 17-1/2 pence after the
provider of interactive applications and services to mobile devices warned its
first-half performance was 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.
Following the warning, 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.
Consequently, it is shifting its stance on the stock to 'outperform' from
'buy' and re-setting its price target to 35 pence, implying a multiple of eight
times revised FY08 earnings.
Minorplanet Systems drifted 4-1/2 pence to 26-1/2 pence as the vehicle
management provider disclosed that talks with a third party regarding an offer
for the company have been terminated and added it is not in discussions with any
other party over a potential offer.
On May 5, the company outlined a conditional proposal from a third party for
a cash offer at 40 pence per share, but Minorplanet Systems believes that this
offer "materially undervalues" the company.
Also heading south, Fortune Oil eased 3/4 of a penny to 10 pence after
completing the placing to Kerry Holdings.
On a brighter note, TETRA standard digital radio maker Sepura claimed top
spot among small-cap gainers, climbing 17 pence to 72 pence following the
signing of an agreement to supply digital radios and accessories to the wireless
systems business of Tyco Electronics.
And shares in Nord Anglia Education, the training and education provider,
surged 76-1/2 pence -- or 20.2 percent -- to 455 following the agreed 190
million pounds, or 460 pence a share, cash bid from Baring Private Equity Asia.
An upbeat production update underpinned Meridian Petroleum, 1.375 pence
higher at 10 pence. 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.
Meridian said $4 million in capital expenditure on the well has now been
fully recovered and, as a result, the company's net revenue interest from the
well's output will fall to 54.589 percent from 72.785 percent.
A swing to full-year profits from losses provided a fillip to TEP Exchange
Group, the online endowment exchange provider, whose shares ticked up 0.025 of a
penny to 0.275 of a penny.
A 'buy' recommendation in the Investors Chronicle lifted speciality
chemicals Dyson Group 5 pence to 100-3/4, while TMN Group moved up 2-1/2 pence
to 42 pence 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.
Finally, TDG jumped 19-1/4 pence to 243 pence 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.
tf.TFN-Europe_newsdesk@thomsonreuters.com
fjb/ejb
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