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Imagination Technologies (IMG) – Another ‘impacted’ company
Imagination Technologies Group (IMG) is prepared to admit to a disappointing first half but seems reluctant to go further despite the fact that last years adjusted half term profit of £5m has been transformed into a thumping loss of £7.3m. and the reported loss has doubled to £20m. But you must understand that this is not the fault of the board. It is because the company has been (yes – that dreaded word again) impacted both in royalty revenue and in a ramp down of customer’s legacy chip. Somewhere someone in the company will know what a customers legacy chip is.
The profit warning appears last of the 7 items in the company’s half year overview – no point in giving it too much prominence and it admits that adjusted operating profit for the year to 30th April next will be below previous expectations.
I still wonder why companies are never impacted by anything favourable. Well I dont really – it is so that the CEO and the board can take full credit for success and blame the bad times on impacts for which they hope not to be held responsible.
Despite its problems the company has a pipeline of size and quality, with the added benefit of a backlog and fundamental medium term demand drivers remain strong. I am sure that will impress them in Barnsley where they still speak something like English.
As for the poor shareholders they have been impacted by a fall in the share price from 226p to 163p in just a month and it has gone down another 8p so far this morning.
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Hornby (HRN) Signals Yet Another Warning
Not only has Hornby issued yet another profits warning, it is caused by the same old reason which has plagued the company for years – supplies. They introduced a new Enterprise Resource System ( as these things are now grandly called ) in the UK in June & July and it had a significant adverse impact on trading, as Hornby’s new systems tend to do but lessons have been learnt and over the 10 weeks to 8th November, UK revenue was up by 9% over last year and a strong end to quarter 3 is expected.
But why couldn’t they get it right in the first place. Which particular bit of management got it wrong and what has been done about it.
The Board then decided to hurry up and implement the new system in Spain in October and in Italy, Germany and France in November. And surprise, surprise no lessons had been learned. They got it all wrong again but on a much greater scale.
The disruption in Europe has been significantly greater than expected and adding in the UK mess up, revenue and profits for the current financial year will be lower than market expectations. What Hornby is really trying to say is that this years profit will not be a lower profit at all, it will actually be an underlying loss of £2.0m
Shareholders need not fear however, profits will recover next year which in Hornbyspeak presumably means the losses will get bigger..