Newbury, Berkshire-based Cray Electronics Holdings Plc looks to be slowly recovering from the problems that have beset it since erroneous accounting practices were discovered to be the reason for its apparent success of the past, and its key areas of focus are now computer and communications businesses mainly acquired in the last four or five years. A year ago, the group reported profits of UKP17m; when the anomalies came to light, these were restated to a net loss of UKP3.7m, and the new board appointed last December has been trying to make a fresh start concentrating on software and systems, telecommunications and instrumentation. The results showed that turnover for this year was at UKP117.1m, 9% higher than in 1989, and during the second half the losses of the first six months were reduced to UKP2.8m before tax. However, extraordinary charges of UKP10.3m made as provisions against the profits falsely reported in 1989, and related to the closure and sales of businesses, meant that net losses were high at UKP12.8m. New chairman Sir Peter Michael said that the sale of non-computer businesses had gone ahead as planned, and disposals currently in negotiation were expected to bring the group a further UKP15m in cash next year. Of the three activities on which Cray will be concentrating, by far the largest is the telecommunications business CrayCom, which brings together the original operations of Eurotel, Master Systems and Ultranet; turnover for the period was around UKP40m, with sale of 2Mb and kilobit multiplexers leading the way. The software division accounted for about UKP20m, mainly coming from the Marcol Group, whose clients include the European and German space agencies, and City institutions for its financial software; other revenues in this area came from Bristol-based Avonicom, with its range of software for civil and military avionics and process control. The instruments division, mainly comprising Malvern Instruments, made up a further UKP20m. With an order book 10% up on last year’s and new and well motivated management, Sir Peter concluded that the Cray recovery was a matter of time and patience, but it was acknowledged that for a company staking its future on high technology products, the UKP3m spent on research and development this year was much too low; accordingly, Cray, whose share price fell off 3 pence from Monday’s close to 55 pence, will be making this a priority in the coming years.
