Tadpole spawns a muddle of forecasts

Investors in Tadpole Technology have waited almost a year for the company's broker to publish a financial forecast for the group – and then two came along at once.

Evolution Beeson Gregory's investment note on Tadpole, one of the most frequently traded penny shares on the stock market, was replaced yesterday, three days after publication. The company demanded a string of minor changes, giving an insight into the trade-offs between house broker research and the companies it covers.

Tadpole's army of private investors – known as Tadders – have been analysing the note on bulletin boards since its release last week, but the new version consistently increases estimates of group overheads and shaves forecasts of future sales.

Lorne Daniel, the EVBG analyst, also originally wrote that an equity draw-down facility, which is covering Tadpole's working capital at the expense of diluting investors shareholding, will be a price worth paying "if it allows the company to survive long enough to see the benefit of its research and development". In the new version, he writes, "if it allows the company to reap the benefit of its R&D investment".

A list of utility groups using the company's mapping software was deleted in order to avoid giving the impression that Tadpole's products are widely used in the organisations listed.

Last year's sales of this software, which are not split out in the Tadpole results, were £1.8m in the first EVBG note, but down to £1.7m in the second. Forecasts for overheads in this division were upped from £2.4m to £2.7m, while forecast annual operating expenses in a second business division, Endeavors, were increased from £3m to £3.6m.

Mr Daniel's main forecasts for sales and profits have not been altered, nor has the general thrust of the note. It does not conclude with the normal recommendation, of "buy", "outperform" or "hold" on house stocks. The company said the first EVBG note was a draft published by mistake. The broker declined to comment.