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Mid and small cap news: Rentokil Initial, Inmarsat, Spirent, Wood Group, Cape, Mouchel, MBL Group, Wasabi Energy


On Friday, Rentokil Initial (LON:RTO) and Inmarsat (LON:ISAT) were among the top risers in the FTSE 250 index after reporting their interim results.

The report from satellite telecommunications firm Inmarsat revealed that its core mobile satellite services (MSS) business has returned to growth in the first half to June 30 2012, while pest control specialist Rentokil reported improved results at its troubled City Link business.

Inmarsat Global MSS revenue rose 1.4 percent from the previous first half to US$367 million, while total revenue was virtually unchanged at US$684 million.

Group pre-tax profit in the first half came to US$223 million, down from US$255 million in the previous first half.

“Despite a poor macroeconomic environment and a continuing loss of revenue from government users in Afghanistan, we have made solid progress in returning our Inmarsat Global MSS business to growth,” said chief executive of Inmarsat Rupert Pearce.

Furthermore, the group, which raised its dividend by 10 percent to 16.94 cents per share, is seeing sustained take-up and usage growth for its key services, FleetBroadband, IsatPhone Pro, and SwiftBroadband.

Fellow FTSE 250 constituent Rentokil’s City Link saw revenues climb 5.3 percent in the June quarter, while operating losses dropped 18.3 percent.

Group revenues rose 2.3 percent to £649.2 million at constant exchange rates in the second quarter, while pre-tax profits soared 52.1 million. For the first half of the year, Rentokil posted revenues of £1.3 billion and profits of £50.8 million, up 2.9 percent and 75.2 percent respectively from a year earlier.

Rentokil said the surge in half-yearly profits was due to a reduction in one-off and reorganisation costs of £5.4 million and a reduction in amortisation of £11.1 million.

Spirent Communications (LON:SPT) also released its interims this week

The communications group said pre-tax profits climbed to US$57.3 million in the first half of the year from US$55.8 million in the same period of 2011 and earnings per share rose 10 percent to 6.89 pence.

However, Spirent said its expectations of growth in the full year have “moderated” due to macroeconomic uncertainty.

“We believe that there will be some growth in Asia Pacific and the United States, however, the level of demand is expected to remain weak in Europe,” Spirent told the markets.

Overall growth during the second half-year may reduce to mid to low single digit increase compared to the same period in 2011, the group added.

Fellow midcap, oil and gas services company John Wood Group (LON:WG.) has bought Duval Lease Services and Freer Iron Works to strengthen its foothold in the US Eagle Ford shale region in Texas.

Duval, a Houston-based maintenance, installation and fabrication services company, will now operate as Wood Group Duval within Wood Group PSN (Production Services Network).

Wood Group said the new company would complement PSN’s existing onshore US production facilities support services.

“The acquisition of Duval provides us with a robust platform for growth in the key Eagle Ford shale region and increases our overall exposure to the US onshore unconventional oil & gas markets,” said Derek Blackwood, president-Americas of Wood Group PSN.

“Duval's values are similar to Wood Group's, with a strong focus on safety, customers and employees.”

In other news in the FTSE 250, Cape (LON:CIU) fell sharply on Wednesday after revealing that trading performance of its onshore business in Australia had deteriorated "sharply" in Q2 and that it will be below management's previous expectations for the remainder of the year.

"The deterioration in performance in the Far East/Pacific Rim Region will have a significant effect on overall group performance in the near term," the firm told investors.

"The group is therefore unlikely to meet previous expectations for the year to 31 December 2012 and, whilst steps are being taken to restructure the region's business unit, the challenging conditions in the Far East/Pacific Rim Region are expected to persist into 2013."

Outside of the FTSE 350, outsourcing group Mouchel Group (LON:MCHL) also fell sharply this week after revealing that its lenders will take a majority stake in return for writing off £87 million of its debt.

Mouchel said its shareholders will receive a special dividend of one percent, after which it will buy back its shares at no cost.

The £87 million reduction agreed with RBS (LON:RBS), Lloyds (LON:LLOY) and Barclays (LON:BARC) will leave the group with a £60 million debt.

“Mouchel is currently dependent upon the support of its lenders and a default is expected under the terms of its existing borrowings on 30 August 2012 unless it restructures its existing borrowings,” the group said.

“The board believes that the restructuring will provide a sustainable capital structure for Mouchel to operate its business.”

Elsewhere in the markets, MBL Group (LON:MUBL) said its full year losses will be higher than the £7.2 million loss posted for the first half of the year.

In its interim report in December, the media distribution firm revealed that it incurred substantial losses as a result of the loss of its major customer contract in April 2011.

In this week’s report, MBL also noted that that the ongoing winding down of operations has reduced the losses during the second half of the fiscal year.

During the year, MBL has laid off 74 percent of its staff, while the executive directors’ salary has been slashed by 53 percent, which has resulted n significant cost savings.

The downsizing of the group has largely been completed with a number of subsidiaries either disposed or wound down.

“The consequent dramatic reduction in volume, combined with the well publicised financial impact, resulted in a significant adverse effect on customer and supplier confidence and Music Box Leisure's trading activities no longer being commercially viable,” MBL told investors.

In biotech, Alliance Pharma (LON:APH) is taking its first major steps into Europe after acquiring a trio of antimalarial brands from pharmaceutical heavyweight AstraZeneca (LON:AZN). 

Alliance’s wholly owned subsidiary Alliance Pharmaceuticals will sell Paludrine, Avloclor and Savarine, mainly in the UK and France, after paying £4.2 million for the set.

Finance Director Richard Wright said: “It’s a very important day for us because it brings us into new territories and marks our first significant steps onto the continent.

"We’ve been thinking for a while now about replicating our business model in France and Germany.”

Together the drugs are expected to generate approximately £1.1 million profits per year, before financing costs. 

Alliance added it may have to pay a further sum, less than £1 mln, over the next three years dependant on sales of the brand.

In IT, StatPro Group (LON:SOG) reported a solid set of interim results and said it is on track to meet market expectations for the full-year. 

The provider of portfolio analytics and data software for the global asset management industry posted revenues of £16.08 million for the six months ended June 30 2012, a 3 per cent rise on the same period last year.

Pre-tax profits before exceptionals rose 29 percent year-on-year to £2.68 million, and it has continued to make good progress with StatPro Revolution, its cloud-based portfolio analysis platform launched last year, the company said in a statement.

Annualised recurring revenue contract value at constant currencies rose 7 per cent from the previous half to £30.21 million, and the percentage of recurring revenue within total revenue has remained stable at 94 percent.

Meanwhile, Wasabi Energy (LON:WAS ASX:WAS) has made a breakthrough in China after state oil company Sinopec signed a design agreement for Kalina technology at one of its chemical plants.

Sinopec is one of China’s top integrated petrochemical companies with 45 major petrochemical facilities across the country.

John Byrne, Wasabi’s executive chairman, said the contract with Sinopec marked the beginning of “many commercial opportunities within China where there is accelerated development of energy efficiency and clean industrial development”.

Wasabi’s Kalina cycle technology utilises waste heat to generate power and cut energy usage and emissions and is especially useful in intensive industrial sectors such as cement, steel, oil refining and chemicals.

Sinopec’s agreement is for the design of a 4.0 Mw Kalina Cycle power plant at its Hainan petrochemical plant.

The Kalina plant at Hainan will capture waste heat from the paraxylene (PX) process stream and turn it into zero emission electricity as well as reducing the overall greenhouse gas emissions from the petrochemical plant.

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