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Stadium Group

  • BY: Andrew Hore |
  • POSTED: 28/07/2014 |

Electronics manufacturer Stadium Group is acquiring machine-to-machine (M2M) wireless connectivity business United Wireless and this will significantly earnings enhancing in 2015.

Stadium is paying up to £8m in cash and shares for United Wireless. The initial payment is £5m in cash and £1m in shares, which will be retained by the former owners for at least two years. The rest of the consideration depends on the achievement of targets.  The main management is staying with the business.

In the most recent nine month period, Cheshire-based United Wireless made an operating profit of £900,000 on revenues of £6m. The customer base is made up of telematics, automotive, asset tracking, vending and industrial equipment. The business fits well with the existing contract manufacturing, power supplies and displays operations.

The M2M wireless device market is forecast to grow at an annual rate of 24% a year for the next five years.

House broker N+1 Singer has upgraded its 2015 pre-tax profit forecast by 31% to £4.2m, while earnings per share have been increased from 8.4p a share to 10.5p a share.

At 73p a share, up 7p, Stadium is valued at £21.6m. Net debt is forecast to be £4.1m at the end of 2014.

The shares are trading on less than eleven times 2014 forecast earnings, falling to seven in 2015.

The interim results will be reported on 9 September.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFJuly2014_58.pdf

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