SnackTime, an AIM-listed vending company, has admitted that its trading performance since November has fallen significantly short of market expectations, due in part to sales in its VMI subsidiary missing expectations.

The group said that despite making "considerable progress" in its turnaround over the past six months, including the stabilisation of sales in three out of four divisions, tough market conditions have continued and the revised routing plan at VMI took longer than planned.

The group said cost savings in the business were beginning to show through, but the ancillary cost savings around vehicle leases will not materialise until the next financial year due to contract terms.

It also revealed that it has changed its accounting policy in relation to recognition of brand support income to a more prudent approach than in prior years.

"In August 2012, cognisant that the company might breach one of the covenants of its banking facility in December 2012, we approached our bank with a request to extend the term of our loan and revise our banking covenants," SnackTime said.

"Discussions are still ongoing and expected to conclude before the end of March 2013. The company is operating within its facilities and is confident of a satisfactory outcome to these discussions.

"The company is in discussions with certain of its larger shareholders regarding the proposed issue of £800k of five-year convertible loan notes to provide funds for the company."

The update prompted Westhouse Securities to cut its target price on the stock from 50p to 20p.

The share price plunged 40.91% to 6.50p by 13:47.

NR

Related share prices
SnackTime (SNAK) share price