LONDON (Alliance News) - Vending machine company SnackTime PLC lost a quarter of its value early Thursday after it issued a profit warning for its last financial year, blaming a change in the estimated stock and cash in its machines and a more prudent approach to doubtful debt provision in its Snack in the Box brand, and also said that trading so far this year had been behind the prior year.
The company also said it had called off the planned sale of its Drinkmaster business after potential buyer interest waned when the unit lost some of the business it had with its largest customer, William Hill PLC.
In April, the company had predicted that earnings before interest, tax, depreciation and amortisation would be about GBP1.3 million in the financial year to end-March, 2014. In a trading update Thursday, it said it now expects the figure to be about GBP1.1 million.
That would still be a 60% increase on the GBP0.7 million of Ebitda it reported in its previous financial year, on revenue of GBP19 million, down from GBP20.5 million.
It also warned about trading so far this year, although it is hopeful of a pickup.
"Trading in the first five months of the current financial year has been behind the same period last year due mainly to disappointing cash takings through the group's vending machines and the loss of business at Drinkmaster. However, franchise sales have been stronger than a year ago and the machine sales pipeline for the next few months is encouraging," it said in its statement.
SnackTime expects to publish full results for the year to march 31, 2014 at the end of this month.
It said exceptional costs for the year are expected to be GBP7.2 million. Of that, GBP6.6 million will be related to intangibles writedowns across the business. It will book a GBP2.8 million writedown in its Drinkmaster business, reflecting reduced future profitability due to the revised trading arrangements with William Hill. It will also book GBP2.8 million for a reduced performance and number of machines in the vending division, and GBP1.0 million for a revaluation of the Snack in the Box brand.
"Other exceptional costs of GBP600,000 are GBP150,000 higher than indicated by the company in its April announcement due to an out of court settlement arising from a dispute with a franchisee dating back to 2011," it said, without giving further details.
SnackTime had been trying to sell its Drinkmaster business, which provides pods and capsules and other drinks machines for work places and travel locations. However, it said interest in buying the business has waned since April due to the lowered business with William Hill, which had reduced profitability "materially".
"As the Board no longer has an acceptable offer for the business, it has decided that it is in the best interests of the company and shareholders as a whole to suspend the sale process," it said.
SnackTime shares were down 25.9% at 10.00 pence early Thursday, having been down a third at the open, the stock's lowest level since late June. It was the biggest faller on the AIM All-Share index.