Despite a drop in sales, Trace Computers Plc has returned to modest levels of profitability due to increased gross margins and cost-cutting. For the year ending May 31, pre-tax profits were UKP502,000 against losses of UKP471,000 last time, while turnover fell 2% to UKP19.3m. Because of reduced overheads, operating profit improved from UKP44,000 in 1991 to UKP1.1m in 1992. The proposed final dividend was maintained at 0.9 pence, making a total of 1.5 pence for the year. A scrip dividend alternative, introduced last year, is to be offered again – this provides shareholders with the option of taking extra shares in the financial software and services company instead of cash. Apparently well-received last year, the scheme means that shareholders obtain shares at a cheaper rate, while internal cash flow is improved. Performance at the individual Trace businesses was mixed. Despite difficult market conditions, the core businesses of insurance broking systems, property systems, distribution systems, stockbroking systems and custom software all saw improved profitability levels. In particular, the distribution software division, Proteus, acquired in August 1990 (CI No 1,499), saw last year’s losses turn into significant profits this time round. Pink, the networking technology division, also returned to profit, while contributions from the bureau operations division improved too. However, the recruitment and consultancy company, Prospect, suffered from low demand. This situation was worsened by the bankruptcy of a major client with bad debts. Nonetheless, chairman Robert Carefull is hoping for a return to profitability in the coming year. Computer supplies also did much worse than last year, and continued to produce major losses, and priority is being given to reducing overheads here. During the year, the remaining shares in Recordata Ltd were purchased. Based in the same London offices as Trace, Recordata is a property systems business and trades under the name of Trace Solutions. In addition, the remaining minority interest in Wespac Ltd, based in Shoreditch, was acquired at no cost, making it a wholly-owned subsidiary. A recruitment software house, Trace Alexander Ltd was bought out too, and relocated from Tunbridge Wells to London. Trace spent UKP1.3m on research and development in the year, with the move to open systems still top of the agenda. Although the group is operating at low margins, resulting in volatile results that are particularly susceptible to the timing of major contracts, Carefull is confident that stringent cost controls are working, putting Trace in a strong position to take advantage of economic recovery, when it comes.
