Carlton Communications Plc, the London-based television, video and film media company, a recent victor in the television franchise bidding (CI No 1,782), is struggling to maintain profit levels in the ongoing recession; pre-tax earnings in 1991 slid 30% to just under UKP90m on turnover down 21% at UKP601m. Chairman Michael Green describes the 12-month period as a year for the maximisation of cash flow, consolidation and the vigorous control of costs. The group generated UKP130m cash from operations, of which UKP55m is left in the bank after tax, capital expenditure and dividends. The company has no debts, and reports net cash at the year end totalling UKP163m, up from UKP115m at the end of 1990. Shareholders’ funds amounted to UKP395m, up from UKP355m. While Video Cassette Production reported a return to growth in the second half, the Video and Sound Products division continued to be battered by the depressed economic climate worldwide: the division’s pre-tax profits plunged 63% to just under UKP14m on sales down 19% at UKP117m. Gross margins, however, were maintained. Case says that though a bulk of orders didn’t materialise during the year, the order book at the period end was up 30% on a year ago. This division, which is the group’s third largest contributor, accounting for 20% of Carlton’s revenues, comprises the Quantel business, which markets products such as Paintbox and Domino; Abakus; Solid State Logic; Digital Audio Research, which makes sound editing suites; and CableTime, which makes switch star system for cable television. Carlton’s Simon Case notes that, although the division has been through very difficult times, research and development spend at the division has been maintained, resulting in the introduction of more new products than during any other period – these include the Desktop Paintbox, which the company hopes has mass market potential: it interacts with the Apple Macintosh desktop publishing system. Some staff cuts have been made over the year, but as yet it hasn’t come down to heavy restructuring. Case says Carlton has no plans for its cash pile, other than to invest some of it in its newly-acquired London weekday Channel 3 licence, which the group will formally accept this month, for launch on air in January 1993.
