Interim profits at office equipment supplier Gestetner Plc have suffered due to provisions for heavy restructuring in the six months ahead. The London-based group has charged a total of UKP48.3m to its accounts to cover redundancies and asset write-downs, but also had to fork out for selling properties and businesses. This has led to a reduction in shareholders funds to UKP205m from UKP262m the previous year. As a result of all this, Gestetner turned in pre-tax losses UKP45.4m compared with UKP7.8m profits last time. And while turnover rose 13.2% to UKP498m, in constant sterling terms, the increase was more like 2%. Working capital requirements at constant exchange rates and minus exceptional costs also grew by UKP35m, which led to a UKP53m increase in net debt to UKP148m – so, gearing now stands at 72%. Nonetheless, the board is declaring an unchanged dividend of 1.8 pence per ordinary share, reflecting what it calls its underlying strength. Despite all the current pain, chairman Basil Sellers said he will continue to implement the organisational restructuring required – mainly in Europe – as the industry continues to rationalise and consolidate. For example, the new digital technology base is driving the need for change in the office automation marketplace. And here, reduced sales of high margin products and margin pressures in major European markets – particularly France and Spain – as a result of recession, meant that trading profit fell to UKP14.5m from UKP23.3m last time. The operation did manage to keep expenses down to last year’s levels, however.
Fell through
Turnover increased 3.9% to UKP14.5m, and recurring service and supply revenues now make up 48% of the total. While geographically, the US market remained steady, both Latin America and South East Asia continued to show strong growth. And the loss-making graphic arts business in the Benelux countries was sold during the interim period at a loss. The photographic division has likewise continued to experience difficult trading conditions in Europe, with revenues down 5% to UKP85m. But improved margins and a reduced cost base led to a UKP1.3m increase in trading profits to UKP1.8m. The conditional sale of the camera distribution business fell through, but Gestetner said it is currently in discussion with another potential buyer. Finally, the company has appointed two Inchcape Plc directors and two Ricoh Co directors and a senior executive to its board as non-executive directors. Deputy chairman Greg Melgard has become managing director, while chairman Basil Sellers says he intends to stay on only until an independent successor is appointed.
