Norbain Group has struggled with consecutive pre-tax losses for the past five years – interrupted only by its financial performance in the year ending 30th April 2010.
In 2007 it lost nearly £11m, followed by £11.7m in 2008. The pre-tax loss in 2009 was £98.8m, though in 2010 a £114.3m profit was recorded on the balance sheet – owing to a £135m exceptional item contribution. However, in the last trading year recorded (2011), the Group again made a £2.1m loss – owing to interest payments of £3.1m.
The story so far:
- Norbain goes into administration, sold by administrators in prepack
- After Norbain’s rescue, when the dust settles, what will be different?
- Industry reels at Norbain administration amid warnings contagion may spread
Analysis by business information specialist Plimsoll Publishing points out that Norbain Group’s formal debt was high, representing 36% of total sales, though total sales had increased by 5.5% in the latest year – well above the industry average of 2.9%. Sales per employee in the year ending April 2011 were £373,000 – also significantly higher than the industry average of £113,000.
With the industry considering the potential ‘contagion’ effects of Norbain’s administration, Plimsoll’s analysis of Dedicated Micros Group reveals that DM made a pre-tax loss of almost £1.6m in the year to 30 June 2009 and £9.1m in the year to June 2011 (the last recorded figure to date). Plimsoll comments that DM also suffered a significant fall in sales in the latest year.
Last week, Plimsoll warned that one in four companies in the UK security industry is making a loss, as economic conditions continue to take their toll. A new study reveals how many of these 272 loss making companies have simply had an isolated bad year and how many are burying their heads in the sand. Author David Pattison says: “More and more companies are making a loss for the first time in their history. Many can rightly claim to be victims of difficult trading conditions. A quick refocus on profitability would ensure this an isolated occurrence”
However, overall conditions are no excuse for a band of serial loss makers in the market, Pattison adds: “135 companies are making a loss for the second, even third year running and are simply selling at prices their business cannot sustain. They have put off making the painful decision that more prudent companies made a while ago. No one wants to trim costs, lay off staff, cancel dividend payments and the like but carrying on regardless is now unviable. They can no longer bury their heads in the sand.
“I congratulate management teams that have made the often difficult and unpopular decisions. They have cut their cloth according to the market conditions and are more stable for it. Those failing to do so are running out of time and cash. Without a big increase in demand they cannot support their pricing strategy much longer. Watch out for a number of failures among the companies we have identified.”
