Last minute small caps go out with a whimper

The mid-year reporting season has seen a generally even performance from small and micro-caps, but you wouldn’t know it looking at the rush of results put out late last Friday evening.

For many of these companies, the reporting season is a time to focus on the hard-work still to be done rather than a celebration of booming profits and good times ahead.

For example, VOIP company Queste Communications reported a revenue decline of 71%, from $15.37 million in second half 2006 to $4.39 million in second half 2007, highlighting the volatility in a sector that has been characterised by some recent very good and very bad performance.

Troubled online player BlueFreeway announced its $4 million loss for the second-half of 2007 a bit earlier, at 7.24pm on Friday evening. There is currently a trading halt on BlueFreeway shares.

Financial administration provider APA Financial reported a net loss for the second half of 2007 of $1.05 million, 206.7% more than was lost in second half 2006.

And cancer treatment company Polartechnics announced a 73.33% drop in revenue for the second half of 2007 to just under $600,000, down from $2.24 million in the corresponding period of 2006.

Cygnet Capital managing director Jonathan Rosham says while we did see some negative results pushed out late in final day of the formal half-yearly reporting period, they are not representative of the overall performance of the small and micro-cap sector.

“In general the results have been quite positive – we’ve seen companies in the mining services sector continue to do pretty well even with the higher dollar, and companies around the tech and telco space have been pretty sound, so most companies that we’ve seen have been OK,” Rosham says.

But, Rosham says, the negative market sentiment has meant decent results haven’t always translated through to support for small cap and micro-cap shares.

“The overall tone of the market has been pretty savage, some have held their ground but they have drifted lower with much buying interest, so in a lot of cases the baby is going out with the bath water,” Rosham says.