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Aeorema Communications – 1:01pm “Trading Update” announcement. Uh oh…

By Steve Moore | Tuesday 23 May 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.

Aeorema Communications (AEO) has followed a 12:43pm profit warning ah sorry, “Trading Update” announcement, in December with a 1:01pm “Trading Update” announcement today. I’ll give you whatever odds you want on this being good news…

“Aeorema Communications plc, the AIM-traded live events agency, provides a trading update.” Not ‘pleased’ to provide then?

“As outlined in the company's Interim Results in January 2017, it was anticipated that trading in the second six months of the year would remain challenging; this has proven to be the case.” Hmmm.

“Consequently, the board of Aeorema expects profit to the year ended 30 June 2017 to be not less than £200,000. This figure remains subject to audit. The company is in a strong cash position but the board believes it is prudent to review its dividend policy.” Oh dear.

It isn’t deemed necessary to specify whether the noted profit is pre or post tax – the interim results announcement emphasising “pre-tax profits of £77,180”, though that £52,333 post-tax and the prior full-year saw £340,165 pre-tax and £273,502 post-tax.

At the most recent half-year stage, the balance sheet showed cash (net) of £1.15 million and net tangible assets of £1.13 million. This comparing to dividends paid in the prior year of £0.54 million (half as a special dividend) and the full-year payout then reduced by 33% to 2p per share (£0.18 million). I.e. the dividend policy review ain’t going to be favourable for shareholders!

The shares have fallen below 25p, capitalising the company at sub £2.3 million, though with self-admitted “challenging” trading, a dividend policy ‘review’ and still wary of erosion of the balance sheet, I’d currently continue to avoid.

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