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By Steve Moore | Monday 12 February 2018
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.
A Trading Update and Notice of Results announcement from consumer goods company UP Global Sourcing (UPGS) including “it should be noted that H1 2017 was an unusually strong period for the group” - this in an update for its half year ended 31st January 2018. Uh oh…
It was though on the back of that half-year that the company listed in March at 128p, updating soon after “we feel well placed to deliver further growth in the remainder of this year and continue to be confident in the long-term prospects”. However, by September it was a profit warning – ‘well placed’ and ‘confident’ hey!?! At least though there was November reassurance that “current trading is in line with expectations”.
Now; “As anticipated, revenue decline during the period... the board's previous expectation was for revenue growth in H2 2018, as it anticipated that order placing by retailers would normalise post-Christmas in response to cleaner inventory positions, and that the group would start converting its pipeline of new business opportunities with a number of UK supermarkets and other major UK retailers. However,”… Uh oh…
… “while the group is pleased with the strength of its pipeline of new business opportunities, many of the resulting orders are now falling in FY 2019, rather than H2 2018. This is due to specific circumstances that are particular to each customer, rather than any one underlying trend”. Hmmm. But then… “retailer sentiment with regard to placing general merchandise orders in the short-term has not improved to the extent that the board previously expected. Furthermore, the continuing lower volumes available to non-food suppliers, along with retailers' desire to minimise increases in retail prices, has created an even more competitive environment than normal”.
The result is that the company now anticipates a further “below current market expectations” performance – including “full year underlying EBITDA performance within a range of £6.0m to £7.0m”. The shares have currently sunk to circa 36p, capitalising the company at sub £30 million.
However, the noted recent record and company-stated ‘underlying EBITDA’ of course equating to bullshit earnings means I’ll review the greater detail of 30th April-scheduled half-year results before considering this other than a bargepole stock. Currently it’s another for an…
IPO roll-call of shame: CEO - Simon Showman, Brokers - Shore Capital & Cenkos, PR - Bell Pottinger.
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