Despite a drop in turnover, Instem Plc believes that, given the difficult trading conditions, the continued improvement in profitability levels is encouraging. At the pre-tax level, profits rose 8.7% to UKP551,000, while sales fell 10.3% to UKP7.1m. The reduction in revenues was said to be down to the nature of the company’s trading. Because the Stafford-based firm’s contracts are large and shipments tend to occur in big lumps or not at all, the payment cycle tends to be uneven. Instem comprises two divisions, computer systems and electronics. The computer systems branch specialises in the application of computer systems for control, monitoring and information management in industrial, technical and scientific markets. This side of the business did particularly well, and even won two new contracts. The first was with South Western Electricity to develop and supply 135 remote terminal units as an extension to South Western’s existing telecontrol system. The deal was valued at approximately UKP1m. The second contract was with Glaxo and involves supplying the company with Instem’s QLS laboratory system, which is used for research purposes. Financial terms were not disclosed. On the other hand, the electronics division did not do so well. It basically provides a contract electronics manufacturing service to various industrial partners. Poor performance here was blamed on a recession that is hitting the electronics industry increasingly hard. As Instem’s electronics business is largely dependant on the performance of its clients, lower market activity and reduced inventory levels were said to have taken their toll. Nevertheless, as the majority of the division’s customers operate internationally, the effects of the UK recession are not as bad as they could have been. So, on the whole, chairman David Gare is quite pleased with results at this interim stage. Convinced that Instem is going to continue developing positively, he feels that the group can expect a satisfactory outcome for the year-end.
