Good morning!

Spaceandpeople (LON:SAL)

Share price: 43.5p
Market Cap: £8.5m

There are two announcements from this company today. It operates the kiosks in shopping malls & other spaces (such as railway stations), and is the market leader in the UK and Germany. It also does face-to-face marketing campaigns in similar venues.

As you can see from the share price below, it's been a disaster this year - due to a profit warning that came completely out of the blue in Apr 2014, following several years of excellent performance, rising earnings & dividends, etc. Profit warnings are an occupational hazard with small caps - you can't avoid them, so there's no point in getting stressed, you just have to weigh up the new information and make a decision whether to stick with the company (knowing that a recovery might take 6-18 months), or to just bail out - if you can, as liquidity often dries up on bad news.

After an initial bounce, the share price has continued to grind down, because of a complete information blackout from the company. No news is ALWAYS bad news, so I've been expecting another profit warning, but balancing that up with the fact that the market cap has now fallen so low, that anything other than disastrous news has already been priced in.

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Profit warning - sure enough we have the next profit warning today. Helpfully, the company gives its best estimate of profit for the current year. Brokers were expecting profit of just under £2.2m for calendar 2014 before the Apr 2014 profit warning.

(Hint: you can look back in time by clicking on the "Print" button on the StockReport, and a drop down menu appears which allows you to select a previous StockReport - so in this case I can check the StockReport in Apr 2014 to see what the forecasts were before the profit warning).

The warning in Apr 2014 guided the market down to £1.65m pre-exceptional profit for 2014. This has turned out to be too optimistic. Today the company guides the market down again, as follows;

We now forecast 2014 profit before tax and non-recurring items to be £800k, with an upside of potentially a further £200k, and profit before tax but after non-recurring costs of between £500k and £700k. We…

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