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Universe Group – interims argue “a solid platform from which to drive future growth”, BUT…

By Tom Winnifrith & Steve Moore | Monday 2 October 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.

Point of sale, payment and on-line loyalty systems developer and supplier Universe Group (UNG) has announced results for the first half of 2017 and boardroom change…

The statement notes “delays in certain planned customer deployments” and the results show a pre-tax profit reduced from £0.48 million in the first half of 2016 to £0.17 million on revenue 4% lower at £8.7 million. Net cash edged higher to £2.4 million and current assets over liabilities to £3.5 million. Chairman Robert Goddard adds;

“The financial results for the full year are, as in past years, second half weighted and this year's result is more than usually dependent on a small number of high value projects. Delays to these would mean that the company performs materially below current market expectations in the current financial year.”

Hmmm. It is also stated “we have continued to invest in our next generation point-of-sale, back office and head office software products (EPOS), which we fully expect will provide a solid platform from which to drive future growth in both the fuel and convenience store market places” and forecasts are for a full-year pre-tax profit of more than £2 million, generating earnings per share heading towards 0.90p (2016: 0.79p) – and then 1p next year.

However, the combination of delays being experienced and a more than usual dependence on a small number of high value projects concern and Robert Goddard now departs “to pursue other business interests”.

The shares have slipped to a current 8p to sell, though this still compares to a 7.5p offer price initial recommendation and, whilst we may be back here in the future, present fears of a profit warning see it for now seem most prudent to apologise for not advising to sell earlier at a higher price but to still sell now and bank a small gain.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve shortly and a new shorting piece from Lucian later this week click HERE

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