Here’s why UK shares Appreciate and D4t4 are sinking!

UK shares D4t4 Solutions and Appreciate Group have collapsed following the release of fresh trading news. Here are the key points.

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The Appreciate Group (LSE: APP) share price has taken a sharp hit following the release of fresh financials. In fact, only UK engineer share Lamprell has endured a bigger fall during the course of Tuesday business.

Appreciate’s share price sunk to its lowest since early January, at 31.25p in early morning trading. It’s since pared losses but, at 33.9p, remains 15% lower from Monday’s close.

Crimbo crumbles

Appreciate is a UK financial services share which provides gift vouchers to consumers and businesses. And it warned today trading has been tough during the first 12 weeks of its current financial year (to March 2022). It said its recovery “has been slower than anticipated and continued to be impacted by the pandemic, as customer buying and spending patterns take time to return to normal levels.”

The company has seen its Christmas Savings order book take a hit from Covid-19 restrictions, which have curtailed face-to-face sales during the “crucial” renewal and recruitment period.  Around 350,000 families use Appreciate’s Christmas Savings plans to budget for the festive period.

Meanwhile, Appreciate also said higher levels of unspent paper vouchers have damaged trading of late. The amount of unused tokens is £6.4m higher than it was during the same 12 weeks of financial 2020. Appreciate expects customers to use these vouchers towards paying for this Christmas instead of taking up new savings plans.

While the AIM-listed company is stepping up attempts to recruit savers for Christmas, Appreciate predicts its order book will be down around 14% year-on-year. This is worse than the forecast 11% decline back in April.

Appreciate said today pre-tax profits tanked to £1.3m in the 12 months to March, from £7.7m a year earlier. Group billings dipped 3.2% year-on-year to £406.5m, due to Covid-19 lockdowns and the closure of its hamper-packing business. Consequently, revenues dropped 5.2% to £106.8m.

Another sinking UK share

D4t4 Solutions (LSE: D4T4) is another AIM-quoted stock that has fallen sharply following a frosty reaction to new financials. At 348p per share, the UK information technology share was trading 12% lower from Monday’s close.

D4t4’s share price has collapsed after the firm announced a profits slip for the last financial year. Coming in at £4.45m, adjusted pre-tax profits slumped 11.9% year-on-year during the 12 months to March.

This reversal came despite revenues at the tech company — which provides data services to businesses — rising 4.6% to £22.8m. The UK share also enjoyed a healthy uptick in gross margins, thanks to greater revenues from its Celebrus Customer Data Platform. These improved to 62.4% from 60.7% in fiscal 2020.

D4t4’s bottom line took a smack from increased operating expenses, it said. As a percentage of revenues, these rose to 49% last year, from 38% previously. This was caused by higher labour costs, share-based payments and foreign exchange expenses.

In the current year, D4t4 is trading in line with expectations, it said, adding that it’s enjoying “strong levels of both existing and new client activity.”

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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