Providing anti-counterfeiting technology and brand protection should be a growth industry. Unfortunately, the customers tend to be rather large and, following two good quarters, they stopped buying late in December 2008. As a result an expected 5 per cent or so fall in Opsec Security’s sales in the three months to end-March 2009 suddenly became a 35 per cent fall. Particularly significant was a fall in demand for brand protection, which includes tagging luxury clothing and tracking it through the supply chain. With the help of two acquisitions this business increased last year's sales from £14.57m to £22.57m but that was clearly much less than expected. There was also a sharp decline in high-security documentation revenue when one unnamed Middle East country ended a contract to add a hologram-based tax duty to cigarette packets.
So, how does any company react to being duffed up by its customers? The first move is to cut costs - and notably employees - which could save Opsec £1.5m this year as part of its "restructuring and cost reduction measures”". But, as the company admits, such actions won't have a major impact until the second half. The latest results include £857,000 for redundancy costs and a similar number for intangible impairment - nil for both in 2007-08. Last year's trading figures are also adversely affected by tax issues as the 2007-08 results included a £2m tax credit followed last year by an impairment of the same tax asset: there's no end to the wonders of international accounting.
OPSEC SECURITY (OSG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 10.5p | MARKET VALUE: | £5.6m | |
| TOUCH: | 9-12p | 12-MONTH HIGH: | 47p | LOW: 7.675p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 60p | NET DEBT: | 29% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 33.0 | 2.65 | 9.2 | nil |
| 2009 | 39.3 | -0.78 | -3.3 | nil |
| % change | +19 | - | - | –100 |
Aim: support services | ||||
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