Beyond the Footsie: Weds close

12 April 2012

SHARES in smaller companies finished weaker once again today after another batch of profit warnings weighed on the minnows. At the close, the FTSE Small Cap index was 19.2 points lower at 2,218.6, its low point for the session, having only reached a high at 2,231.3.

The mood in the market continued to be dominated by fears over corporate governance standards and uncertainties over second quarter earnings reports for the US due over the next few weeks, and another round of small cap profit warnings did nothing to help sentiment.

Bogod Group was one of the biggest fallers, shedding 27% in value with a drop of 20p to 52 1/2p after the firm revealed that the trend of declining demand for its industrial sewing products has continued as the British clothing industry continues to contract.

Reporting full year results, Bogod said the domestic sewing machine market has become more erratic in recent months, while the recent weakness of sterling against the euro and Swiss franc is having a negative impact on margins.

The group posted a rise in full year pre-tax profits to £216,000, up from £278,000 last year, with sales up 12%.

Catering equipment group Lincat saw its shares lose 40p to 279p after warning that it expects its trading profits for the year ended 30 June will be below market expectations, although not less than £4m.

Human resources firm Glotel slipped 2 1/2p to 50p after reporting a drop to a full year pre-tax loss after exceptionals of £4.45m against a profit of £757,000 last year. The company highlighted 'the most difficult market conditions' in its history.

DDD Group shares shed 2p to 7p, having reversed early gains as news that the 3D film developer has confirmed the award of a US patent covering its core 'Dynamic Depth Cueing' technology failed to excite.

Shares in Claims Direct were suspended at 3 1/4p, up 1/4p, on news it has petitioned the High Court to grant an Administration Order, and it expects to decide within a few days on a restructuring or disposal of the company as a going concern. An Administration Order will allow Claims Direct to continue to trade whilst the administrator assesses the company's position.

Yesterday's biggest faller, debt-laden telecom firm Energis, recouped some of its decline, adding 0.24p to 0.85p in a technical correction after a mis-executed sell order during Tuesday's closing auction. Commentators yesterday had attributed the drop to worries that a possible rescue bid for the firm could be scuppered by its bankers.

Fellow telecoms minnow Thus firmed 3/4p to 12p after it issued a reassuring AGM trading update. Thus said it did not expect current tough trading conditions to change for the rest of the year, although it said it is on track to achieve full year-on-year sales growth of 20-25% and EBITDA of between 7-9% of total sales.

Other digital economy minnows rallied after recent sharp falls, with Baltimore adding a penny at 6p, and Marconi firming 0.51p to 3.61p.

Among the day's news, GB Railways shares steamed 16p higher to 71 1/2p, extending an unexplained rise yesterday, after Management Consortium Bid (MCB) said it is considering ways in which a combination of its railfreight business with that of GB Railways might be achieved.

MCB said this could involve a standalone acquisition of GB Railways' railfreight business or MCB combining with another party in a proposal which might lead to an offer for GB Railways.

MCB added that preliminary discussions were held recently with GB Railways in relation to the railfreight business but these discussions were terminated, and exploratory discussions have also been held between MCB and a small number of potential partners.

Elsewhere, Kingspan Group saw its shares advance 7 1/2p to 133p after saying its results for the first half to June 30 are expected to be in line with expectations.

In a trading update ahead of the first half results, Kingspan said it is not aware of any reason for the recent volatility in its share price and that it would expect to buy back shares should the share price weakness continue.

Avocet Mining took on 3 1/4p at 16 1/4p following news that results from a Malaysian goldmine were better than expected, while Cyprotex added a penny to 18 1/2p after announcing a deal with Swiss drugs giant Roche to support new product research.

Specialist mortgage provider Kensington Group was lifted by news of solid interim results, with pre-tax profit up 28% to £13.3m. Its shares gained 7 1/2p to 200p.

Kleeneze also moved higher after saying it is optimistic of steady growth in the year ahead, after reporting a fall in full year pre-tax profits to £6.3m from £10.8m last year. Kleeneze shares added 15p to 125.

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