Shares in Maiden Group dropped 7 per cent yesterday after the outdoor advertising company warned that profits for the year would miss market forecasts.
The company, which runs roadside billboards, said the current year had got off to a good start with first-quarter trading showing "a continuation of the recovery in UK outdoor" from the previous quarter.
It warned, however, that it now expected profits for 2003 would be between £5.3m and £5.5m after trading in the fourth quarter failed to live up to expectations. Shares in the company plunged 20p to close at 257.5p.
"As indicated in September, the fourth quarter was key to the group's performance and although revenues strengthened considerably, they did not entirely mitigate the poor performance in the middle of the year," Maiden said, adding that the benefits of a cost-cutting programme would have minimal impact on the 2003 figures. City analysts, who had been looking for a profit of closer to £6.5m to £7m for 2003, also cut their profit forecasts for 2004 for the company yesterday.
Analysts at Investec raised concerns that Maiden was in danger of breaching its banking covenants. "Where this statement is silent is on debt and on the banking arrangements. The company was in breach of net debt/Ebitda covenant at the end of the half-year. If the same covenants apply at the year-end we believe that the covenants will again have been breached," they said.
Maiden said yesterday that as of the beginning of the last week of January, its first-quarter booked revenue was more than 95 per cent of the total revenue level achieved in the same quarter a year ago.
It also said it was making progress on the renewal of train operating company contracts.