Stock price revival post a significant dip: Smart Parking Ltd.’s stock that was down by over 42 per cent on 17 May 2018 as the group unveiled some breaches of company policies by its UK Managing director and CFO; was seen to buck the trend on May 18, 2018. A business update teleconference took the stock of the situation and helped in curbing the nosedive. In fact, the clarifications provided by the group helped investors regain their confidence and the stock recovered by 17.3% on May 18, 2018.

Particularly, group CEO Paul Gillespie while talking about the group’s business update on UK operations and trading performance, admitted that UK Managing Director and CFO were not acting in good faith and breached employment conditions. Further, CEO clarified that UK operations in the second half of FY18 are below expectation but group’s long term, confident growth outlook for SPZ is still intact. The group still eyes UK parking management and enforcement market and will recruit new management to look after this. The automatic number plate recognition (ANPR) roll out program of 15 new sites per month is on track. Its high-quality customer base and working partnership with the British Parking Association and DVLA, stay resilient. Given the present challenges, numbers published in the last presentation of 83,000 breach notices issued in Q3 were up by 40% on prior corresponding period, but below group’s expectations. Further, Q4 is expected to be 10% ahead of prior period but about 20-25% below expectations. Additionally, poor weather conditions in the UK have continued to adversely affect the use of Smart Parking UK’s car parks and the issuance of parking breach notices with an impact due to delays in the roll out and live process for new sites. Nonetheless, the management has flagged for making changes to deliver high levels of recurring revenue.

Through the latest discussions, it has come into light that Smart Parking UK operates in a highly regulated industry and any breach of company policy is viewed as unacceptable by the SPZ Board. In consequence of this, the Board acted swiftly and decisively, terminating the employment of both the UK Managing Director and Finance Director.


Financial Performance (Source: Company Reports)

The Group’s UK business is still said to be well positioned to grow through the acquisition and installation of ANPR systems to new locations each month. In last six months, the share price climbed up by 69.81 per cent and by 91.49 per cent in three months. Given the scenario, we put a “Hold” on the stock at the current price of $ 0.305.

 
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