Electro-optics and flexible circuit board manufacturer Cambridge Electronic Industries Plc saw pre-tax profits drop 5% to UKP5m on turnover down 36% at UKP49m. The fall in turnover, reports chairman John Jackson – a disappointed man after losing the SD-Scicon Plc battle with Electronic Data Systems Corp (CI No 1,741), was mainly the result of the disposal of the electrocomponent businesses in June last year – excluding disposals, sales rose 14% and operating profit 18%. The acquisition of environmental control equipment maker Tace Plc, and its 51%-owned food-monitoring equipment company, Goring Kerr, is nearing completion – the former will be integrated into Cambridge’s Environmental & Defence division, the latter into the Instruments business. The company’s final offer for Tace, which outbid by UKP5m the cash offer from US company Thermo Electron last month, was eight new shares for every five Tace, valuing the latter at 306 pence per share, or just under UKP30m. Tace’s head office has been closed down, which will save UKP1.2m a year, and which has resulted in seven management redundancies, the pay-offs for which are still being calculated. There are to be no job losses in the operating businesses. For Cambridge, the coup opens a door into the US – Atlanta, North Carolina and Boston in particular. The Gulf War and its aftermath have caused some fluctuation in Cambridge’s profits, given its effect on the defence industry – the Environment and Health sales soared 92% with trading profits up by UKP2m. This was due largely to major contracts for the computer-aided manufacturing chemical agent monitor, which will be delivered next half – this product range will be boosted by the Tace acquisition. The medical business saw operating profits rise 3% on sales down 9%, as growth in the UK compensated for a poor performance in France. Controls suffered the continuing depression in the building and process control market, and cost reductions did little to relieve this declining business. Graseby Security came up trumps, though, due to increased sales of explosive detectors – this helped raise turnover in the Instruments division by 10% and trading profit by 8%, and the good performance is expected to continue in the second half. The Manufacturing Service division was, again, a victim of the recession, particularly in the machine tool business. Keltek Electronics, on the other hand, held its own and is expected to pick up in the second half, following a strong order intake. Further cost-cutting will be required in the second half, given that gearing hit 60% following the Tace acquisition – two non-core engineering businesses are expected to be sold to raise cash, as well as UKP25m-worth of land, though this will be a tough task in the current climate.
