Smaller companies report: Tuesday close

By This Is Money
Updated: 05:46 EDT, 14 June 2006

UK SMALL caps closed sharply lower today, mirroring the heavy falls on the more senior indices as fears about rising inflation and the prospect of higher interest rates sent equities tumbling.

By the close, the FTSE Small Cap index was 82.7 points lower at 3,263.9, while the FTSE 100 finished down 101.3 points at 5,519.6.

Investors were unsettled by news that UK inflation was up 2.2% on the previous year, its highest rate of increase since October 2005, lifted by higher domestic energy bills.

It was also the first time since November 2005 that the CPI was above the Bank of England's 2% target, prompting fears of an interest rate increase in August.

Among shares in the news and on the move, hospital bedside communications provider Patientline slumped after the company said its pre-tax loss in the full-year narrowed slightly to £11.3m from £11.5m, while sales rose 12% from a year earlier to £55.4m.

The group said ward closures and empty beds have reduced the number of terminals being used. The announcement of an Ofcom investigation into Patientline's call charges -- the final report is expected by end of June – also halted hospital investments on its terminals and curtailed the growth in the number of terminals installed. The shares fell more than 46%, or 8¼p to 9½p.

Monstermob was hammered, down 42p at 153p, after the ringtone download company said it expected its full-year earnings for the UK to fall £1.5m below previous forecasts and break even. Its forecast of full-year earnings is in line with market expectations.

Meanwhile, Niccolo de Masi has been appointed group chief executive of Monstermob with immediate effect, replacing Martin Higginson, who has been asked to stand down. The management change reflects Monstermob's decision to focus on international markets, where it plans to expand organically and through 'selective acquisitions'.

Steam pump specialist Pursuit Dynamics fell 16½p to 100p as its half-year losses widened, while news of the equity issue saw Rotala ease 0.25p to 1.62p.

On the upside, a confident statement offset interim losses at Glen Group, the Edinburgh-based provider of integrated IT and communication services, and the shares hardened 0.25p to 1.375p.

Ithaca Energy ticked up 2½p to 101p after news that the company has secured the rig it will use to drill the first well at the Athena gas field in the North Sea. Drilling at the field, in which Ithaca holds a 90% stake, will start in August and will take about 30 days to complete.

Separately, Ithaca said Research Capital and CIBC World Markets will exercise their 2.66 mln-share over-allotment option provided under the terms of the company's initial public offering.

Speculators pursued Hardys & Hansons, 76p higher at 841p, after yesterday's late announcement that the brewer and pub company has received a number of preliminary approaches. It said it is in discussions that may or may not lead to an offer being made for the company.

Paul Hickman of KBC Peel Hunt advised clients to 'add' the stock to their holdings. The analyst expects the valuation to be based on prospective EBITDA which he estimates at 18.4 mln stg.

Shares in Austin Reed were higher after the fashion retailer posted improved first-half sales and margins, which led Seymour Pierce to reiterate its 'outperform' rating on the stock. The shares added 7p to 115p.

From the end of this week, we shall no longer be running our daily small-caps report. However, you will always be able to find our invaluable weekly round-up of the best of the small-caps action here: thisismoney.co.uk/columnists.