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SQS - Soggy statement creates a buy opportunity

February 2013

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

SQS has put out a bit of a soggy pre-close announcement ahead of full year results on 6 March but creating a Buy opportunity. Although revenues are slightly up, profits will come in €1m below forecast due to delays in its managed services side in the last working week of 2012. It says that the profit shortfall is down to “deferrals of higher-margin managed services work by clients, which had already significantly exceeded their minimum contracted spending commitments.” That said, managed services continues to grow as a proportion of revenue (now 34%) and gross margins in this area have also progressed further. Meanwhile, order intake in the year was strong with orders worth €101m (vs. €67m in 2011 ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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