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Pre-tax losses at electromagnetic shielding group Block Shield widened as customers postponed decisions on new contracts because of worsening economic conditions.
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US sales have more than halved over the year to just $4.4m, with the company blaming a slowdown in the medical devices market there. Management is now pinning its hopes on "multi-year" contracts with US military subcontractors to offset the shortfall, and signed two such deals late in the year. Initial production has begun, and the contracts could generate annual revenue of between $1m and $3m when fully ramped up.
The group also made the first sale of its Dedivol radio frequency identification (RFID) antenna manufacturing machine after completing development last January. Unfortunately, the $1.5m sale to Korean components distribution group Hyundai RFmon couldn't be recognised in these accounts, but Block Shield expects to book it in the first six months of this year as performance milestones are reached.
Block Shield also acquired California-based RFID producer and developer Mu-Gahat for £9.8m last May. The deal is intended to allow the group to provide fast end-to-end RFID manufacturing solutions. Broker Ambrian Capital hasn't yet issued updated forecasts, but earnings estimates are likely to be downgraded.
BLOCK SHIELD CORPORATION (BLS) |
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|---|---|---|---|---|
| ORD PRICE: | 37p | MARKET VALUE: | £28m | |
| TOUCH: | 37-40p | 12-MONTH HIGH: | 95p | LOW: 31p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 2.6¢ | NET DEBT: | 135% | |
| Year to 29 Feb | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2005 | 2.3 | -6.34 | -0.29 | nil |
| 2006 | 3.9 | -4.94 | -0.17 | nil |
| 2007 | 10.6 | -3.01 | -0.09 | nil |
| 2008 | 6.4 | -4.72 | -0.14 | nil |
| % change | -39 | - | - | - |
Ex-div:na Payment:na *Includes intangible assets of $1.16m or 1.5¢ a share |
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New products have edged closer to commercial launch, but new contracts are unlikely to make up for the shortfall in its key markets. High enough.
Last IC view: Fairly priced, 37.5p, 5 March 2008
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
