Smaller companies report: Friday close

By This Is Money
Updated: 12:42 EDT, 3 March 2006

SMALL caps closed lower following a strong day's trading with the U-turn led by interactive speech response systems manufacturer, Poly Information.

At the close, the FTSE small cap index was down 1.9 points at 3590.8, while the FTSE 100 was 25.7 points ahead at 5858.7.

Leading the losers was Poly Information, down 0.22p at 0.10p, after it said its Israeli unit, Poly Information, ceased trading following a breakdown of discussions to raise additional working capital for the company.

In a statement, the company said it is currently in talks with a number of third parties, including one led by an executive director, to sell its interest in PIL. PIL has given termination notices to all its employees effective March 31, the statement added.

Narrowing half-year losses failed to support Pipehawk, 2.5p down at 22p.

Coral Products, off 2p at 20p, was also downbeat after reporting a first-half drop in pretax profits to £3000 from £556,000.

The manufacturer and supplier of media packaging for DVDs, Videos and CDs said the hoped-for growth in the DVD market has not materialised and general trading conditions remain poor, exacerbated by increases in power costs.

Elsewhere, drinks vending machine group In Cup, lower by 0.37p at 4p, fell following a downgrade to 'hold' from 'buy' by Daniel Stewart on news it might need additional financing and on disappointing full-year numbers.

Daniel Stewart said the figures were broadly in line, with revenues of £174,000 versus its estimates of £190,000.

The broker said the downgrade was prompted by potentially value-dilutive news that the group is likely to require a further fund raising in the future as its cash at the year end had fallen to £691,000.

On a more positive note, Carpathian Resources put on 2.75p to hit 5.62p following news that a recent pressure test on the Ja3a producing well indicated that the estimated gas-in-place has increased by some 250% on previous estimates to be in the range of 3.8-4.0 bln cubic feet.

It also indicated that as much as 80% of this could be recovered over the life of the field.

Buyers were also about in Stanley Gibbons Group, 21¾p better at 110¾p, after the philatelist cranked up the dividend total by 50% hike on the back of record breaking full year results.

Chairman Paul Fraser said: 'We have maintained high levels of demand for our financial-based investment products since the year end as we start 2006 with an ever increasing momentum.'

Pretax profit rose to £2.8m from £1.7m, which excludes profit on the sale of Provide Commerce Inc. If the Provide Commerce sale is included, the comparative pretax figure will be £3.7m.

Following the numbers, Seymour Pierce analyst Richard Ratner stepped up his current year estimate to £3.75m from £3m and for the year after he now looks for £4.9m. Ratner advised clients to continue to buy the stock.

Meanwhile, marketing services group, Real Affinity put on 0.03p to go to 0.19p after it said its wholly-owned sports and leisure marketing unit, Navigator, has entered into a multi-year agreement with the International Offshore Team Association (IOTA).

Under the deal, effective March 1, Navigator will be IOTA's sole and exclusive worldwide representative responsible for securing partners, sponsors, suppliers, licensing and merchandising for the UIM Class 1 World Powerboat Championship.

Elsewhere, shares in Flomerics Group, a supplier of virtual prototyping software to the electronics industries, rose 5p to 98½p in response to a 49% increase in full-year pretax profits.

A 'buy' recommendation in the Investors Chronicle triggered strength in NCC Group, 20p higher at 269½p. The weekly financial magazine pointed out that the weakness in NCC's consultancy business has affected its share price since the start of the year.

However, the IC reckons that now provides a good entry point for investors, with the shares trading on 17 times forecast earnings for 2005-06, falling to just 13 times for 2006-07. That, said the IC, is well below the average rating for software companies.

Finally on the new issue front, Betex Group staged a solid Aim debut, climbing from a placing price of 34p to 41¾p in volume of 3.6m. Betex is the holding company for a group of companies whose activities are focused principally on lottery and gaming activities in China and the Asia region.