News blog
Stadium Group
- BY: Andrew Hore |
- POSTED: 07/09/2011 |
Contract electronics manufacturer Stadium Group reported flat interim revenues even though there was no repeat of a £1m roadside lighting order fulfilled in the first half of 2010.
New contract manufacturing business and growth in the power systems division made up for that one-off contract. Revenues were £23.2m in the year to June 2011 and pre-tax profit improved 9% to £1.58m. The improvement in profit all came from the power supplies division, with a lower contribution from contract manufacturing. The interim dividend has been increased from 0.95p a share to 1.05p a share.
Selling the surplus property that housed the company’s former plastics business boosted the cash position and net cash was £3.7m at the end of June 2011. The net pension liability was £4.7m and the switch from RPI to CPI for inflation-based increases should help to reduce the liability.
New chief executive Stephen Phipson joined at the beginning of September so it is still early days. Phipson has spent the past 14 years with Smiths Group.
Phipson is keen to grow the power supplies division by acquisition, which is the same strategy as the previous management, but he wants to go further and acquire intellectual property in other technologies. He also plans to invest in development staff so more products can be designed by Stadium and possibly sold under its own brand.
There is always a risk investing money in new product development but the margins will also be higher if the products are successful. Technology is a very wide description and it is not yet clear exactly what Phipson has in mind. It appears unlikely, though, that it will be unproven, highly risky technology. There is plenty of scope to develop businesses where existing technology can be improved and adapted.
Stadium believes that it is running at around 50% of capacity so there is scope to improve profit by adding more new business. Weaker demand from some existing customers is being more than offset by new business wins this year.
House broker Brewin Dolphin forecasts that profit will edge up from £2.9m to £3m this year.
At 65.5p a share, Stadium is valued at £19.2m.
© 2024 Aim Micro. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
- Browse by issue
- All issues
- Popular tags
- All tags
- AIM Micro feeds
Keep up to date with articles published at AIMMicro.com. Subscribe to AIM Micro RSS Feeds
|