Reporting interim pre-tax profits 44% ahead at UKP854,000, components distributor Electron House Plc takes the improvement as evidence that restructuring is paying off, and is particularly encouraged that the performance has continued to improve during a prolonged period of depressed economic conditions. The company completed sale of its computer wholesaling business in August, taking in UKP5m for UKP4m of net assets, while the purchaser also assumed UKP5m of bank borrowings, dramatically reducing Electron’s gearing and interest costs. The new accounting rules require the company to transfer the remaining goodwill of UKP750,000 previously written off to reserves on the acquisition of the computer wholesaling business to the profit and loss account, leaving a net charge of UKP148,000 offset by the gain on the disposal of UKP602,000. The company claims to be continuing to increase market share while maintaining tight control of overheads, with every sector of the group increasing its sales and profits in local currency over the same period last year. The UK market for electronic components is estimated to have grown about 4% in 1992, with semiconductors leading the way at 6% while demand in passive and electro-mechanical components was flat – yet Electron’s UK component companies increased sales by 18%, with the emerging market of components for upgrading computers now representing significant business. The Australian and New Zealand companies performed well, the company says, with Australian results strong in the local currency, although weakness in the Australian dollar reduced them on translation by 20% in the first quarter. The company says that both its computer systems businesses hold strong positions in niche markets and that a programme of investment in enlarged resources is under way with the aim of broadening their customer base, but that the improvement in profitability does not so far meet expectations for a business using people’s skills to provide complete computer systems to customers. For the immediate future, the company says that order intake was even further ahead of last year than sales, which promises good things for the second half, and it is pinning further hopes on the widespread forecasts that the semiconductor market will be string this year. It also has number of new products to push into existing and new markets, although shortages of some key products may hamper short-term growth.
