Glasgow shopping centre marketing specialist SpaceandPeople (SAL:AIM) falls 29.1% to 28.1p as it confirms alongside interims that, for the first time since joining AIM in 2005, it will not pay a dividend.

The news shows the risk of blindly buying a company for a high yield. Based on Friday's close and the previous consensus dividend estimate the stock was yielding a generous looking 5% but anyone buying for the income now faces an unwelcome pause in the payout and a big capital loss.

SALchart

Problems in its German business are the main culprit with the outlook statement accompanying the numbers effectively a soft profit warning noting the 'need to perform strongly over the remainder of the year in order to meet our expectations'.

The first half was also hit by one-off costs associated with the closure of its non-core S&P+ unit.

House broker Cantor Fitzgerald downgrades from 'buy' to 'hold', slashes its price target from 55p to 28p and is already taking the axe to its forecasts, cutting earnings per share estimates for 2016 by 30% and for the following two years by 50% apiece.

The business, which sells temporary shopping and promotional space in retail outlets, is transitioning from being reliant on its Retail Merchandising Units (essentially souped-up market stalls) to Mobile Promotion Kiosks (a pop-up with screens enabling the promotion of a product).

In Germany the company is facing delays on contracts as it awaits the conclusion of contract negotiations with its main partner ECE.


Issue Date: 26 Sep 2016