Steady progress but still no real cheer from CASE Group Plc, figures below, which managed to reduce the pre-tax loss for the six months to September to below UKP1m from the UKP4.7m loss reported this time last year. The haemorrhage is still all in North America, where losses were UKP1.7m – down from a whopping UKP5.7m last time – on turnover down 13% at UKP11.4m. But UK and export profits were dull, falling 11.5% to UKP7.1m on sales down 2.2% at UKP32.5m – but there was a bright spot Down Under, where the Australian associates moved to a profit of UKP21,000 from a loss of UKP191,000 last time. Most striking is the evidence of successful cost-cutting: sales and marketing costs were down 14%, and administrative expenses fell 7%, while interest charges were substantially reduced – UKP903,000 this time, UKP1.7m last. Net gearing is down to 31% from 49% at the year end in March. And in all this belt-tightening, the Watford data communications equipment company is not mortgaging the future: the one expense that is up is research and development, 6% ahead at UKP5.5m: since CASE has always traded on the excellence and innovation of its products, that should prove to be money well spent – and a number of completely new lines are promised for 1988 launch. The US market has been a severe disappointment almost from the time that CASE aquired its former US partner Rixon there – a key problem having been that a new line of high-speed diagnostic modems had to be completely redesigned. The next white hope will be the packet-switching products starting to generate significant revenues in the UK, which are set for US launch next year. But should CASE get out of the US? Long-suffering shareholders may be inclined to say yes, but would a Japanese company pull out of a critical foreign market simply because it suffered five – or even 10 – years of set-backs and disappointments? Clearly it would not, and British high-tech companies have to model their strategies more closely on those followed by the Japanese if they are ever to make a mark on international markets. Is CASE a takeover candidate? Superficially, yes. But unless the present exceptionally long serving and experienced – management is ready to throw in the towel and call it a day, a hostile predator would still almost certainly be seen off by the promise that if CASE were to be taken over, most of the assets would walk out.
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