Some unexpectedly poor results from Blick Plc’s most recent acquisition in Europe have caught the UK company by surprise, according to Chairman Alan Elliot. The Swindon, Wiltshire-based time recording and communications group has broken its 11 year streak of growth with the announcement that net profits for the six months to March 31 are down 16.7% at 4.2m pounds on revenue that rose 23.8% to 33.6m pounds. The main culprit is the Dutch company Teletechnicom Holdings BV which was purchased back in June 1996 for around 5.6m pounds. The idea was to buy a company which would give Blick a strategic base in continental Europe, but the tactic seems to have backfired. At the time, shareholders were told that the purchase would be earnings-enhancing in its first year. It seems now that Teletechnicom had a few surprises lurking under the covers, and the Dutch company has contributed an operating loss of 101,000 pounds at the half year stage. The losses have triggered an emergency review of operations and a complete revision of the Teletechnicom business plan, according to chief executive Ian Scott-Gall. At the time of purchase, Teletechnicom’s work in progress was valued at around 2.8m pounds. Once Blick had had a chance to look around however, it found an order book which was substantially less strong than it had anticipated and a work in progress valuation which had to be adjusted downward by 1.8m pounds. The amount of new business generated was also a long way short of the levels anticipated on acquisition. In the subsequent re-negotiation and revaluation Teletechnicom’s management team all lost their jobs, and the purchase price was reduced to approximately 5m pounds. ABI (Europe), Blick’s new 51% owned joint venture with Amano Corp of Japan, also contributed to the group’s problems with 162,000 pounds of losses in the period. These were less of a surprise to the board, who had forecast early losses caused by start-up costs. Blick’s main trading subsidiaries also had a mixed first half with subdued orders being experienced. While Chairman Elliot thinks he has fixed the various problems, he still warns that second half profits will not match those recorded last year. The board is recommending an interim dividend of 4.5 pence per share, the same level as it paid last year.
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