A year ago, Ferranti chairman and chief executive Eugene Anderson boldly predicted that the shrinking company would be able to report an operating profit within twelve months. Well, there has been a marked reduction in losses but not a complete turnaround. The company saw UKP5.3m operating losses in the half compared with UKP22.0m for the corresponding period last year but this included hefty exceptional charges of UKP11.3m. Turnover for the half was down 48.5% to UKP109.4m with UKP89.1m of this being accounted for by disposals from the previous year, according to Ferranti. Pre-tax losses fell to UKP10.9m from UKP28.8m last time. Borrowings, net of cash balances, have been reduced to UKP74.1m from UKP97.5m, and interest on borrowings is down to UKP5.6m from UKP6.8m last time. Restructuring has continued with 652 jobs cut in the half – a reduction of 12.1%. The company headcount is now 4,722. In the UK, the Moston, Manchester-based and Cairo Mill, Oldham components manufacturing business is to be concentrated on the Cairo Mill site. And head office has been transferred to the Concord Business Park near Manchester Airport – already the site for the Industrial Systems and Information Systems businesses. The restructuring programme will be focussed on US manufacturing activities in the future – with relatively few job losses. As expected, Ferranti International Controls Corp, placed under protection from its creditors under Chapter 11 of the US Bankruptcy Code in August 1991, is to be disposed of and negotiations to this end are currently in progress. The new streamlined Ferranti comprises the following self-contained units, supported by a central finance, personnel, legal and marketing staff organisation: Naval Systems; Systems Integration; Simulation and Training; Industrial Systems; Information Systems; Satellite Communications; Components and US Operations.
Emphasis on systems integration
The emphasis is very much on systems integration now, which accounts for around 80% of its business with manufacturing providing the remainder. Having completed most of the necessary surgery, the company says its is now keen to chase new contracts, recognising that additional business is required in order to achieve a net profit. It secured UKP90.7m orders this period including an air traffic control simulator for the Swedish Air Traffic Services Academy; the command, control and communication system for the Greater Manchester Fire Service; airport handling systems for Mozambique, Malaysia and Norway; an air defence simulator for Jordan; radar warning and electronic support equipment for the Royal Netherlands Navy; with additional training contracts and orders won by the joint Ferranti-Thomson Sonar Systems UK venture. The order book stood at UKP246.1m at September 30. A number of large cash rich contracts are also in the pipeline, which it is hoped might bring the company back to profit next time. Given the success of its sonar business the company says it will also be considering other partnerships in the future. Litigation against James Guerin of International Signal & Control Group Plc is continuing but significant recoveries are not expected. We will be lucky to get more than UKP45m, the Texan chairman said. We have already recovered about UKP42m, but in the most recent half we only got about UKP1m.
