Racal Electronics Plc yesterday posted a set of results for the year to March 31 on track with City expectations and revealed new glimpses – albeit tantalisingly few – of the Vodafone flotation. Pre-tax profits took a 38% jump to UKP138m on turnover up just 6% to UKP1,400m. The Telecommunications group was the star performer of the year with an operating profit of UKP50m to its credit on UKP140m turnover after mopping up start-up costs of UKP4m in paging and private mobile radio. As an analyst with Hoare Govett pointed out however, this figure held no surprises for the City given prior publicity of the cool UKP50m profit, nearly one third of turnover, generated by the Vodafone operation. Racal is also looking to its Data Communications division for high profile performance of up to 15% growth over the coming year on the calculation that the world market is growing at a rate of 10%. Chairman Sir Ernest Harrison said that Racal would act to stake out a larger slice of the market by making acquisitions in Europe and the US. Strong performances by Communications, Tele and Data, and the Security business, helped offset disappointments in other quarters, chiefly in Racal’s specialised defence radio businesses and overseas. Vadic was hit badly by the October crash while the US arm of computer-aided design systems shop Redac fell short in the last quarter. Business in Canada, Australia and Indonesia was generally slack – and Racal warned that it will dispose of businesses that fail to perform. Sir Ernest is also keen to boost Racal’s profile in the US where the image of small fish in big pond unable adequately to support products is putting a dampener on sales. He is putting out acquisition feelers as a partial remedy but cited the need to increase stature of the group across the Atlantic as a key reason for the proposed flotation of Vodafone shares in the US. Racal needs to raise cash to mop up the UKP267m of debt at March 31 following its investment in key businesses, and the US market will value Vodafone shares much higher than London would without guidance from over the water. Sir Ernie, on genial form as he sparred with the City the Press and God on the flotation of Vodafone, the biggest flotation yet to take place on the London Stock Exchange bar privatisation issues, confirmed a number of points: the new company, to be called Racal Telecommunications Group Plc, will be floated in early October; up to 25% will be sold through public offerings, mainly in the UK and US; Sir Ernest will be at the helm as chairman with the executive board to be drawn from the current board of the parent group, supplemented by several non-executive directors. But Sir Ernest refused to come clean on the exact ratio of shares to be sold in New York versus the London Stock Exchange although he conceded a substantial proportion would be set aside for UK investors – could be interpreted as enough to satisfy, one cynic commented.
