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July 11, 1991

CRAY ELECTRONICS RETURNS TO PROFIT, WITHDRAWS SD-SCICON BID, LOOKS FOR ACQUISITIONS

By CBR Staff Writer

Cray Electronics Holdings Plc says it won’t be returning to the ring following SD-Scicon’s reluctance to accept Electronic Data Systems Corp’s 45-pence-per-share bid. Although Cray has not withdrawn its offer – of a share exchange valuing SD-Scicon at 42 pence per share, the company does not consider itself still in the bidding, saying that its offer will soon expire anyway. Cray, as previously stated (CI No 1,694), has no intention of upping its bid, even if Electronic Data’s offer is rejected the company does not actually believe that this will happen. Cray’s financial results for the year to April 30 show pre-tax profits of UKP3.5m, against UKP2.8m losses, on turnover down 8.4% at UKP107.3m. Sales figures, says chairman Sir Peter Michael, reflect the disposals of non-core activities – on a like-for-like basis, revenues were up on the previous year. The return to profit, he boasts, is the direct result of improved margins and better trading, and does not reflect the release of provisions – our interest charge, he adds, was covered 1.5 times. Net current assets of UKP14.6m are reported, against UKP3.1m liabilities in the previous year, as the result of the disposals. Net borrowings at the year-end were reduced to UKP23m after the receipt of cash on the sale of GRP. Gearing at 120% is now half that of the previous year. Some UKP3.2m was ploughed into research and development during the year. Software house Marcol has been restructured into four focused divisions, serving the space, avionics, financial, and government and commercial markets. The European Space Agency was the biggest pull of the year, as well as contracts with the European Commission for supply of software including the National Server Programme for data distribution. In the telecommunications arena, Craycom has set up new headquarters in Frimley, Surrey and plans to open further sales offices throughout Europe this year. Contracts won include those from Mercury, Racal and British Telecom. Malvern Instruments also underwent restructuring during the year and steamlined its German operations. The French sales office had a good year, while the US and Japanese businesses both undertook an expansion programme. Although still reeling from having its fingers burnt a bit by SD-Scicon, Cray says the bid shows the group is ready, willing and able to expand by selective acquisition.

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