Market Report: Phorm out of favour after loan note shock

Laura Chesters@LauraHChesters
Friday 22 March 2013 00:03

Punters in AIM-listed Phorm, a one-time tech wonderstock once touted as a British Google, were left reeling after shares in the online ad targeting specialist more than halved. Phorm rose to fame in 2008 when it signed deals with BT, Talk Talk and Virgin Media to install its advertising system that can track internet searches. But the move led to one of the UK's biggest internet scandals amid fears of privacy breaches.

But the internet snooper is a long way from the heady days of 2007 when its shares were close to 3,250p. Its remaining investors were checking out of the stock – it sank more than 57 per cent, or 8.88p, to 6.62p.

Since the scandal Phorm has focused on markets in China and Turkey. On Wednesday – Budget day – it said it had raised £3m through convertible secured loan notes with a new investor at an extortionate interest rate of 20 per cent a year.

The share price reaction was so bad – it was the worst performing stock of the day – that it issued another statement to clarify that it is currently restructuring "to enable it to focus operationally on Turkey and China", which will significantly reduce its cost base.

But it said it "knows no reason for the recent movement" in its share price.

Over on the blue-chip index, investors were still nervously watching the outcome of talks with Cyprus amid eurozone concerns. The FTSE 100 was down for fifth day and ended 44.15 points weaker at 6,388.55 as poor PMI data from France and Germany also weighed on investors minds.

The retailer Next was the star performer on the benchmark index, up 167p to 4,314p, after reporting pre-tax profits up by 9 per cent to £621.6m.

Mid-tier listed Premier Farnell, the electronic components distributor and maker of the credit-card sized computer called Raspberry Pi, reported a fall in full-year earnings but said 2013 is looking stronger, and the shares added 6p to 224.7p.

The oil explorer Premier Oil said it planned to make a dividend payment, its first since 1998, after 2012 profit soared by nearly 50 per cent. The shares jetted up 8p to 396p.

Rockhopper Exploration has been facing pressure from Crispin Odey, whose Odey Asset Management owns 10 per cent of the group. Mr Odey has been piling pressure on Rockhopper to share its £150m windfall from a payment from joint venture partner Premier Oil last year. But it emerged that Rockhopper would not bow to the pressure, and its shares spurted up 9p to 160p.

A profit warning from the cleaning goods maker McBride left the share price washed up as investors were unimpressed with news that Europeans haven't been spending as much on cleaning products as before, causing McBride to warn that its full-year sales will be 3 per cent lower than forecast and profit will be below estimates.

The small-cap maker of own-label oven cleaner, dishwasher tablets and shower gel issued the profit warning at its trading update, but said it is taking "decisive action … to accelerate existing cost reduction plans".

Scribblers at Panmure Gordon reckon the shares are still worth buying, and said: "Despite [the] downgrade, which we regard as being related to a short-term issue, we believe that the recent strategic actions by McBride will ultimately result in significantly improved margins and returns." They reduced their price target to 130p and the shares slipped 21.25p to 116.75p.

The oil rig engineer Lamprell appears to be in recovery after a dire 2012 when more than 65 per cent was knocked off its market value. It said it had a good pipeline of projects for 2013, and Bank of America Merrill Lynch, which rates the shares a buy with a 180p price target, said "following a most challenging year, for the company to be able to deliver on its November profits warning with little deviation is a very positive result." The shares added 3.75p to 145p

The AIM listed pottery group Portmeirion reported profits up 6.6 per cent last year to £6.8m on revenues up 3.6 per cent at £55.5m, and the shares packed in a 5p rise to 542.5p.

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