Monday 22 January 2018 ShareProphets: The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares

SpaceandPeople – as warned, profit warning ahoy!

By Steve Moore | Monday 9 January 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Updating on the previous announcement from SpaceandPeople (SAL), I warned that half-year results suggest it’ll be profit warning ahoy! And now…

… The company has updated that “trading during the key month of December was poorer than expected”, with Retail Merchandising Unit sales “significantly lower than had been anticipated” and Mobile Promotion Kiosk business “lower than had been budgeted as the roll out of units to new venues was delayed from the fourth quarter of 2016 into 2017 due to site availability”.

The net result is that “the group expects the results for 2016 to be close to break even before non-recurring costs and discontinued operations and a loss of circa £650k after recognising all costs… The net cash position at the year-end was £250k (2015: £723k)”.

It though seeks to emphasise that restructuring and recent new contract wins, despite also admitting that not all of “a few venues whose contracts are due to be renewed during 2017” may be renewed, “provides the board with sufficient confidence that the group will not only return to profitability in 2017 but will also meet existing broker expectations for 2017”.

Hmmm. Amidst a self-admitted “challenging” market landscape, we’ll see (for the record, expectations for 2017 were for a pre-tax profit of circa £0.8 million). Currently, at 18p the market cap is £3.5 million so the PE looks low but the risks to estimates must be on the downside and the cash buffer looks slim. So, I’d continue to avoid.

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