Ever since Digital Barriers (DGB) joined Aim three years ago - and now 13 acquisitions later - the company has followed a well-known game plan. Namely, develop top-notch surveillance products and then ramp up sales of them around the world.
Nor is there any doubt that this strategy is working, on one level at least. Last year the main products division reported pro-forma sales up by a third to £16.6m while international revenues doubled to £6.7m. The company now sells to more than 20 countries with Asia and the Middle East particularly welcoming markets.
But such expansion has come at a cost, with the underlying pre-tax loss of £7.6m still significant, even after allowing for all sorts of adjustments. Clearly a lot of money has been spent on product development, sales and marketing, but an administration cost of £20.8m is daunting when it continues to run close to total sales. Something has to give soon: either sales rocket or costs must be cut.
Broker Investec Securities reckons that the company's sales successes, and move into both commercial and government-funded surveillance, suggests that Digital Barriers' business model "is finding material traction". Analysts forecast a fall in reported losses to £5.2m this financial year and a loss of £1.3m the year after.
DIGITAL BARRIERS (DGB)
|ORD PRICE:||186p||MARKET VALUE:||£94.8m|
|TOUCH:||184-188p||12-MONTH HIGH:||197p||LOW: 120.5p|
|DIVIDEND YIELD:||nil||PE RATIO:||na|
|NET ASSET VALUE:||90p*||NET CASH||£4.46m|
|Year to 31 Mar||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Aim: Support services *Includes intangible assets of £30.5m, or 60p a share †13 months