Security firm sees results slip into the red.
ANTI-counterfeiting group OpSec Security has plunged into the red as the effects of the recession begin to bite into its brand protection business.
The US company, which employs around 85 people at its North East base in Washington, revealed a pre-tax loss of pounds 781,000 in the year to the end of March, compared to a pounds 2.6m profit during the previous 12 months.
The group was also hit with a pounds 0.9m tax charge, compared to a pounds 2m tax credit the previous year.
But its new acquisitions helped it to boost its revenues by 19% to pounds 39.3m and its adjusted operating profit was pounds 3.1m, compared to pounds 3.6m in 2008.
OpSec, which paid pounds 9m for Surrey-based Light Impressions and German firm P4M during the year, said it had been hit by the global recession, pexchange rate instability and the loss of a major contract.
Chairman David Mahony said: "During the first quarter of the current year the general economic position has continued to have an adverse impact on the company; particularly on our brand protection business.
"We are pursuing a number of large ID and BNHS (bank note and high security documents) projects, mainly outside of Europe and the US, and to the extent that these contracts are secured, they will benefit both the second half and future years."
The company, which works on items including passports, driving licences, and national ID cards for governments worldwide and international corporations, lost one "significant" customer, which had previously been a Light Impressions client.
But Mr Mahony said: "The group was successful in winning other contracts, extending its contractual relationships both with three of the US Sports Leagues and other large customers."
The group has also agreed new arrangements with its banker RBS, including revised covenants relating to its borrowings from them. In March, it was revealed that OpSec had been forced to breach one of its banking covenants with RBS, which helped to fund the purchase of Light Solutions and P4M.
A range of cost-cutting measures have also been introduced as OpSec incorporates its new acquisitions into the main business. It faced an exceptional cost of pounds 857,000 for the "significant headcount reductions" that have taken place and will continue to do so this year.
The number of employees was slashed from 325 at the end of March last year to 280 at the same date this year. That figure has fallen further to below 260 with the closure of one of OpSec's US bases and the decision to move its work to Lancaster.
HARD TIMES Mike Angus, Finance Director at OpSec Security.