LONDON (Alliance News) - Shares in SpaceandPeople PLC dropped 29% Thursday after it lowered its forecast for 2014, citing issues in its UK and German promotions and retail businesses.
The company lowered its profit forecast by GBP1.4 million to GBP1.5 million, including one off costs of GBP150,000. It lowered its forecast for revenues to GBP18.2 million from GBP18.6 million, despite lifting its forecast for its S&P+ business by GBP1.25 million and its S&P India business by GBP50,000.
This is due to the increase in revenue from S&P+ is at a lower gross margin than the retail and promotional sales division.
The company saw a shortfall in revenues of 12% in the quarter ended March 31, it said.
In its UK promotions division sales traction in new venues has been slower than anticipated, and in its retail division there was increased restrictions on come of the categories available for it to sell.
In Germany, the promotions division was hit by delays in local authority permits to trade in new centres, meaning it lost sales opportunities, and the retail division was hit by lower-than-expected occupancy in the first-half and delays of its roll-out plan.
Revenue for the combined UK and German businesses will be GBP1.7 million lower than budget as a result of these issues, the company said.
Despite these concerns, SpaceandPeople expressed confidence that the core businesses would return to growth towards the end of 2014 on new business wins.
It forecast modest revenue growth for 2015, and this combined with its reorganisation and cost reduction plan is expected to result in a pretax profit of between GBP2 million and GBP2.5 million in 2015.
SpaceandPeople forecasts that it will have net cash as at December 31, 2013 of over GBP1 million. As a result, its ability to pay its proposed dividend is unaffected, it said.
Shares in SpaceandPeople were trading down 29% at 94.55 pence Thursday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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SpaceandPeople (SAL)