House broker Peel Hunt has slashed its 2011 profit forecast for marketing services provider Hasgrove from £3m to £1.2m and cut its target share price to 25p.
The share price has slumped by 14p to 31.5p, which values Hasgrove at £7.51m. The dividend could still increase from 0.5p a share to 1p a share - less than the 2p a share originally expected.
The design businesses continue to find trading difficult and there have been overruns on two other projects. Delays in spending by clients account for the rest of the trading shortfall with an additional £300,000 write-off of previously capitalised software development costs.
During the summer, Hasgrove sold its European public affairs and strategic communications business Interel to its management for £9.25m in order to focus on its digital businesses. Excluding the pre-sale contribution from Interel, hasgrove says it will make a pre-exceptional operating profit of £1.5m.
Management is hopeful that trading will pick up in 2012. Peel Hunt has still cut its 2012 profit forecast from £2.9m to £1.2m. Peel Hunt says that net debt is £1m.
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