Part of the problem has been the lumpy nature of OpSec's revenue stream, notably from banknote and high security documents, where turnover fell 30 per cent to £7m. This was because of the cyclical order patterns from an Asian currency customer, although delivery this year will have a significant positive impact on sales. Sales in ID Solutions were also significantly down, falling 22 per cent at £4.1m, reflecting the loss of government contracts and this unit is to be merged with the banknote division. On a positive note, Brand Protection revenues rose 8 per cent to a record £27.2m, reflecting strong sales to the Chinese tobacco industry and US sports leagues.
OpSec made two acquisitions during the financial year, picking up software development specialist Advantics in May 2011 and brand protection label specialist Delta in a £12.5m deal last month part funded by a £7.8m placing at 45p a share.
There are currently no analyst forecasts for the company.
|OPSEC SECURITY (OSG)|
|ORD PRICE:||38p||MARKET VALUE:||£38m|
|TOUCH:||36-40p||12-MONTH HIGH:||57p||LOW: 36p|
|DIVIDEND YIELD:||nil||PE RATIO:||na|
|NET ASSET VALUE:||36p*||NET DEBT:||24%|
OpSec's ability to turn pipeline business into real orders has been disappointing and investors backing the placing last month are well under water on their shares. Until the company consolidates into two operating units and digests recent acquisitions, the shares are no better than a hold.
Last IC view: Buy, 20.25p, 7 December 2009