We have been quietly following this international payment services company, Earthport, for some time now, as rumours of a profits warning and a failed strategic review have swirled round the market.
Yet each time FT Alphaville has contacted the company or its representatives we have been told the speculation was false.
Indeed, Earthport went on the record to say as much with this official stock exchange statement on September 1.
The Board has noted, with regret, recent negative press speculation surrounding the Company and the Review, which the Board herewith confirms is both ill informed and incorrect.
So imagine our surprise when the following hit the screens on Friday lunchtime:
Earthport, the global payments utility, announces that it has yet to receive the £2m debt due from its Middle East Partner pursuant to the partnership agreement announced on 7 January 2009. The Company understands that this is due to the impact that the downturn in the global economy has had on that partner’s business.
The absence of this receipt is likely to result in the Company’s revenue and profit for the year ending 30 June 2009 being materially less than market expectations.
This has not affected the day-to-day operations of Earthport Middle East Ltd., a wholly owned subsidiary of Earthport Plc which is continuing to demonstrate good potential.
The Company will provide a further update with its preliminary results, which are due to be announced on 20 October 2009.
Clearly, the company has only just found out about this and the chatter in the market was coming from clairvoyant sources.
For the record, Earthport’s financial year end is June 30 and the brokers who follow the company were expecting revenues of around £4m. So, a £2m hit is, as the company says, “material”.
And what of the strategic review? Is there an offer for the company or not? Apparently we are supposed to find out next week.
From a statement issued on September 30.
Earthport, the global payments utility, continues to review its options under the previously announced Strategic Review.
Discussions are ongoing with a number of parties and as such the Company is still deemed under the Takeover Code to be in an ‘Offer Period’. A further announcement will be made in the week commencing 12th October when such discussions are expected to conclude.
The Company will also be in a position to present the results of the Strategic Review at that time.
Given Friday’s huge profits warning, the omens can’t be good.
Here’s today’s price action.