Profits at Instem Plc for the year ending December 31 were hit by three of its electronic manufacturing OEM customers going into receivership. It had to make provisions of UKP386,000 to cover bad debts. But the electronics and computer systems dealer is currently reorganising the structure of its business to make sure it can address changing demands in its markets. These comprise mainly privatised industry, such as British Nuclear Fuels, regional electricity and water boards, although pharmaceutical companies are also a well-established source of income. Pre-tax profits were below target, dropping 43.1% to UKP575,000. While chairman David Gare said the group performed well throughout the year, he had expected this year’s figures to be better than last. Unfortunately, even if the bad debt provision is ignored, profits were still slightly down, to UKP961,000 this time from UKP1m last. Nonetheless, in view of its ‘exceptional circumstances’, the board is recommending the final dividend be held at 1.8 pence, making 3.1 pence for the year – a rise of 3.3% on last year. Turnover likewise fell 9.7% to UKP14.3m, because, Gare said, order levels were below expectations. While some customers took a long time to make decisions, other very complicated projects took longer than anticipated to organise. In addition, the majority of Instem’s contracts consist of large operational management systems for data acquisition and control, which in some cases took longer than expected to complete. As payment comes in big lumps when the job is finished, income, Gare noted, tends to be uneven. To ensure that long-term, the Stafford-based company is still in a position to win business from those industries investing most in automation, it is reorganising its structure to become more market-focussed. First, Gare has set up customer and market groups for electricity transmission and distribution; power generation; nuclear fuel enrichment and reprocessing; and pharmaceutical research. Second, he has centralised resources such as electronics manufacturing facilities, and professional and materials management staff. Each of the groups has access to such resources, but only as and when required. No redundancies will result, Gare added, as this is a ‘forward-looking’ move. The idea is to prevent future overlap in terms of staff and office space as the company grows. Finally, Instem is keen to focus investment on developing its own products and expertise in the area of computer services, although it will continue to provide electronic manufacturing services to OEM customers.
