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Servision - (lack of) profits warning and surely market abuse & breach of AM Rules?

By Tom Winnifrith, The Sheriff of AIM | Thursday 15 June 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.


Servision (SEV) the AIM listed POS has today slipped out a horrible calendar 2016 profits warning but the fact that it has waited five and a half months to do so is surely market abuse. AIM Regulations state that price sensitive information must be anounced as soon as it is known. How on earth can the company's hapless Nomad, Allenby, tolerate this state of play? Or does it not care as long as it is paid?

Servision states:

The Company has previously stated that they were cautiously optimistic of an improved result for the 12 months ended 31 December 2016 when compared to the comparative period in 2015. Unfortunately, December 2016 was a disappointing month for the Company. A number of sales that had been anticipated for the period, some of which the Company had received pre-payments for, have not been recognised in 2016 and slipped into 2017.

However, costs had already been incurred by the Company against their expected delivery. In addition, the Company has incurred a number of non-cash accounting adjustments. The result of reduced sales and increased costs meant that the company is expected to report a total comprehensive loss for the year that is marginally worse than 2015. Overall, revenues for 2016 were slightly ahead of 2015 but slippages of orders into early 2017, a lower gross margin and the higher costs referred to above has led to the increased loss.

Ends.

Hang on a second? The previously stated optimism was on September 30th with interims. We are now told that sales anticipated in December "slipped into 2017". At what point did the company know that this slippage had occurred? How about December? Certainly by January.

FFS it is now June 15th? Surely Servision was aware of this before issuing loan note convertible at 11p on February 22nd? This is just crackers in that it is clearly a massive breach of AIM Rules?

For what it is worth it means that Servision will bank a loss of more than $2.5 million for 2016. What are the odds that 2017 will see another loss? I suggest to you that thiis is a slam dunk cert and thus however much funny money it gets from Cascade, cash will again be an issue soon.

This company is not fit to be on AIM and if Allenby had a shred of principle it would quit as Nomad at once. It does not and will not. But the shares are univestable trash and a sell at 3.75p


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