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Stadium Group

  • BY: Andrew Hore |
  • POSTED: 13/09/2009 |

Contract electronics manufacturer Stadium Group is more optimistic than it was six months ago.

Cost reduction was the focus in the first half but demand has stabilised. One of the positive effects of the recession has been an improvement in demand for the company’s UK activities, including last year’s acquisition Zirkon.

Revenues declined 3% to £22.3m in the six months to June 2009 but the corresponding period did not include Zirkon. Although admin costs look similar to the first half of 2008 this masks and underlying reduction of nearly one-fifth. Interim profits fell from £1.4m to £877,000 - after £160,000 of reorganisation costs.

There was a sharp fall in the profit contribution from the power products business but the plastics division increased its contribution. The contract manufacturing business has won contracts for traffic management systems and water meters.

Cash flow was strong in the first half as stock levels were reduced and there was little in the way of capital expenditure. Net debt was £687,000 at the end of June 2009. Ther will be more capital spending in the second half - including £250,000 spent on the Hartlepool site. The pension deficit was £3. 34m. The interim dividend has been cut from 1.25p to 0.8p a share in order to reflect the lower profits.

Much of the competition is small, owner managed businesses. Many of these are financially stretched so it makes more sense to win business from them than to acquire them. Stadium is still looking for acquisition opportunities, though.

At 40p a share, Stadium is valued at £11.5m. 

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