Last year’s half year figures from Electron House Plc covered a period of constructive turmoil at the company as it completed its restructuring with the sale of its low-end systems distributor Bytech Computers Ltd in a management buyout. It is this sale that is partly responsible for the disparity between turnover and profit this time – the flat turnover figures hide the fact that box-shifter Bytech contributed UKP10.5m of turnover to last year’s interim figures. The continuing businesses made up on this shortfall, with sales there growing by 29%. At the same time, the jump in profits has been heightened by a UKP275,000 loss on the disposal of Bytech, which hit last year’s interim figures.
Systems companies
Ignoring this, the growth in pre-tax profits and earnings per share were 89% and 123% respectively, which the company describes as a fairer measure of overall performance. The business splits into two parts – electronic component distribution and its two UK systems companies, CEM Computers Ltd of Belfast and Bytech Systems Ltd, of Bracknell which distributes high-end personal computers and workstations. CEM has seen its profits drop a little as the Northern Ireland education market has fallen on hard times, but Bytech Systems has done very poorly, so that the systems division as a whole reports a loss of UKP296,000 compared with a UKP268,000 during the same period in 1992. Sales fell 13% to UKP10.6m. In an effort to turn things around, 10% of the workforce at Bytech has gone, and only one of the five senior managers who were there last year, remain, says chairman Robert Leigh. Many of Bytech’s problems have been caused by IBM Corp and Digital Equipment Corp vacillating over their marketing channels, he says. On the IBM side the company has found itself selling to value-added resellers, where it was previously selling to end users, while on the DEC side, exactly the opposite has happened. Leigh admits that selling the Bytech Systems business is a temptation that we are currently looking at but says that the option is not being actively pursued at the moment. Instead he believes that the company can be turned around in 12 months – assuming that the suppliers don’t change their strategies yet again. The picture is much rosier over at the components distribution side, where the Reigate, Surrey-based company’s own estimates show that its share of the market is growing. The electrical component market as a whole has enlarged by 25%, it says, while Electron’s sales are up by 50%. Specifically in the UK Electron House says that the semiconductor distribution market has grown by 35%, and passive and electro-mechanical products have grown by 13%, some of this being attributable to the price increases that followed the fall in the value of sterling after it tumbled out of the Exchange Rate Mechanism. Sales of Intel Corp microprocessors have been particularly strong. Sales at the Ausstralian and New Zealand companies grew by 121% to 794,000 and 103% to 477,000 respectively. It believes component growth will slow this year, but that its overall position will continue to strengthen. It published an interim balance sheet for the first time, showing net assets at UKP35m and cash in the bank doubling to UKP4m. The directors propose to raise the interim dividend by 14% to 1.20 pence a share.
