Fibernet into red

The telecoms group Fibernet yesterday signalled the market was improving despite its plunge into the red for the first six months of the year. "Since our trading statement in January, Fibernet has started to see improvements in customer signings," its chief executive, Charles McGregor, said.

Shares in the business moved up 4p to close at 122.5p after Fibernet said it had won £17.5m of new contracts with groups including Fujitsu and Deloitte & Touche.

It said its UK business was showing "improvement", its French operation was "making progress" while there was a "healthy pipeline" in Germany.

In the six months to 28 February, the company reported a £10.2m loss, compared with a £3.2m profit in the same period a year earlier, on sales down 12.6 per cent to £21.5m.

The company, which has some £60m of cash remaining, blamed the general economic slowdown for the fall in sales, saying trading in the first half of the year had been "more difficult" than previously expected.

In addition, Fibernet took a depreciation charge on its German network in the first half and said it would take further charges for both the German and French networks in the second half of the year.

Despite the upbeat picture the company painted, however, analysts at Altium Capital took a more cautious stance. "If Fibernet is able to convert its order book into contracts, then the operational leverage of its business will become apparent and profitability will rise. In light of the trading outlook painted by the company at today's meeting, we feel that this is unlikely to happen, certainly in the short term," they said.