Anite Group Plc – formerly Cray Electronics Holdings Plc – is fighting its way back to health after a radical group reorganization. But the legacy left behind by the old, loss- making manufacturing divisions is still an Albatross hanging around the company’s neck. The Watford, UK-based networking and software company has reported a net loss for the year to April 30 of 50.3m pounds, compared to a loss last year of 19.8m pounds, on revenue that fell 26.4% to 193.4m pounds. But the headline losses mask the true state of affairs at what remains of the slimmed down Cray Electronics and the market reacted cautiously, with the shares trading down two pence at 32.5 pence by midday. Anite now operates as two divisions following the complete disposal of its hardware manufacturing capability earlier this year. The remaining business has been organized into Anite Systems, specializing in software for specific vertical markets and Anite Networks, a network integration and support services division. But in its bid to grow the remaining businesses, Anite has only been partially successful, with the group’s turbulent history still acting as a deterrent to potential customers. In one recent contract win, Anite’s UNISON, a manufacturing and distribution software package, was rated first for its technical supremacy but the company was second on the preferred suppliers list due to lingering doubts about its longer term future. Anite eventually won the contract (with Heitons builders Merchants) worth a reported #2m, but it took considerable reassurances from senior management about Anite’s current stability. Systems grew its turnover by just 1% this year to 77.3 pounds while the Networks division fell back 11% to 84m pounds, following the cancellation of a large contract with the Australian Air Force which Anite say was unprofitable. Despite the setbacks, Anite Group’s continuing operations traded profitably this year to the tune of 7m pounds.
Search for chief executive
Then the bad news weighs in to ruin the picture. The disposed of manufacturing businesses contributed a parting 26m pounds of losses. These will not be repeated, but of much greater concern to Anite and its future plans are the 34 properties or 600,000 square feet of unwanted commercial property left behind by the departing manufacturing businesses, most of which Anite failed to shake off responsibility for when they reorganized the group. Anite has taken a deep breath and made a provision of 34m pounds which it hopes will reflect the total cost of future obligations as the group gradually divests itself of the unwanted space. The profit and loss effect works out at a one off charge of 32m pounds, bringing the total operating loss for the period to 52m pounds. The company insists that the more onerous lease contracts have been dealt with following payments of 8m pounds and that remaining rental costs in excess of sub-letting income can be met from operating cash flows. Meanwhile the search continues for a new chief executive to replace Jon Richards, who resigned in March this year following the reorganization. But acting chief executive Alec Daly hinted that a successor will be announced very shortly. In common with last year, the company will not be paying a dividend.