UK Electronics group Jasmin Plc has learned the hard way that winning new business often means spending more than you bargained for, and profits have plummeted as a result. The company says two major contracts which it describes as technically demanding needed resources thrown at them on a far greater scale than had been anticipated. This led to profits for the six months to September falling 66% to 52,000 British pounds on revenue that rose 14.5% to 3.4m pounds. Chairman Roger Plant says in his statement that he has commented in the past about the risks involved when undertaking contracts which require significant innovation at the design or manufacturing stages. He says the two contracts concerned contained a substantial element of innovative software engineering. As a result, the company has incurred a significant amount of unforeseen additional costs. It would appear to have fallen down on management of these projects, and says that in future, all executive directors will be more closely involved in management of individual contracts. Plant says the company has nevertheless made significant technical advances which have enabled it to produce expert systems using artificial intelligence and virtual reality. The company’s on- train management, communication and information system is due to commence operation on the Irish Cross Border Dublin to Belfast express service early in the new year. Jasmin has also implemented control, communications and detection systems on the UK’s M1, M4 and M40 motorways. The M4 system in Wales has been augmented to implement traffic control procedures depending on changes in the weather and local environment. In addition to a virtual reality-based training system for the UK Ministry of Defense (CI No 2,946), the company says it has also secured a long-term commitment from an overseas defense agency for the ongoing provision of environmental detectors for the military market. However, trouble may be looming again. Contracts for passenger information systems for the London Underground’s Northern and Piccadilly lines are both experiencing delays. Jasmin says this will affect the timing of future profits and cash flow. Also, Plant says the company’s markets are price sensitive. The company still has an order book of more than 10m pounds in its focus areas of transport, environmental and training systems. Jasmin will no doubt be hoping that these contracts will not incur any more unforeseen costs. It will not be paying an interim dividend.
