Wednesday January 9, 02:25 PM
Mecom moves to clarify trading update after broker downgrade prompts sell-off
LONDON (Thomson Financial) - Mecom Group PLC sought to clarify its current trading prospects after an earnings downgrade by house-broker Numis Securities prompted a mass sell-off yesterday following the company's pre-close update.
In a statement to the market today, the European regional newspaper publisher confirmed press reports that it will be forced by anti-trust authorities to sell off De Trompetter in Holland which will likely impact earnings before interest, depreciation and amortisation by around 4 mln stg in the current year.
It also clarified that current estimates for its 2008 depreciation charges are around 55 mln stg, and interest charges for the same year are seen at approximately 40 mln stg.
The clarification of its trading statement yesterday, which said the company expects full-year 2007 results to fall within analysts' range of forecasts, follows press reports that downgrades by Numis and other brokers were based on information provided in telephone calls with analysts after the statement was issued.
The Financial Times said the details discussed on the telephone included the forced disposal of De Trompetter, increased depreciation costs and higher-than-expected interest charges, which were not mentioned in the initial trading statement.
Numis said yesterday that the cut in Mecom's 2008 earnings estimates to 105 mln from 118 mln stg, and consequent target price change to 75 pence from 95p, reflected issues like margins, disposals, depreciation and interest charges, none of which featured in the initial trading statement.
Mecom today reiterated expectations 'that profit margins for the financial year 2008 should improve towards the level of its initial expectations,' which was included in yesterday's trading update.
Yesterday, Mecom closed down over 30 pct after nearly halving in morning trade.
At 13.57 pm, Mecom was up 3.70 pct, or 1-1/4 pence, at 35 pence.
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