To a greater or lesser extent, Telemetrix Plc has completed the programme of rationalisation that has taken such a heavy toll on profitability at this interim stage. Profits at the pre-tax level were down 72.7% to UKP673,000, after charges of UKP2.9m related to restructuring within the High Wycombe, Buckinghamshire-based company’s Information Systems division. But by the time tax and minority interests had been removed, the meagre profits had dissolved into a loss of UKP1.4m against profits of UKP1.1m last time. Turnover rose 12.2% to UKP46.8m. However, chief executive Tim Curtis was quick to put the situation into some kind of perspective. Before exceptional costs ruined things, operating profit actually increased 29.1% to UKP3.9m. Borrowings were reduced too from UKP4.8m this time last year, or the equivalent of 28% of total equity, to UKP3.9m now, or 23% of total equity. The debt was incurred in the first place as a direct result of acquiring shares in GTI, of which Telemetrix owns 65%, but considering GTI’s level of profitability, it still is seen as a good investment. Of the UKP2.9m exceptional costs, some UKP2.3m was provision for Trend’s withdrawal from the shrinking defence market – defence spending has been cut dramatically in recent years, and since the Gulf War especially, this side of the business has seen major losses. The commercial sector, likewise, has shown little interest in the Tempest secure communications product, and so Trend is to return to its roots, concentrating on telecommunications services.

Telecommunications services

While sales of telecommunications testing products may have been less successful than services, Germany has been particularly responsive so strenuous efforts are to be made to build on the group’s presence here. Trend’s withdrawal from defence is to be completed by the end of December, resulting in closure of two sites in High Wycombe and about 65 redundancies. Profitability at Trend also suffered from devaluation of the Zimbabwean dollar, which caused lower sterling sales for the two subsidiaries in that country. While Rasterex in Norway turned in stable results, the Rasterex distribution companies in the UK and Germany lost money and have now been closed. Third party distributors have been appointed in both countries. Overall losses doubled to UKP200,000 on turnover about flat at UKP2.1m. Within the Information Systems division as a whole, sales fell 19% to UKP7.5m and operating profit before exceptional costs plunged 71% to UKP200,000. GTI, which comprises a distribution and electronics group as well as Valor, reported significantly better profits. Revenues were UKP27.7m up from UKP20.7m last time, while operating profit before exceptional costs doubled to UKP3.2m. Valor’s networking product sales rose 68% to UKP15.6m and the unit now makes up 56% of GTI’s business up from 45% last time. The benefits of rationalisation have been seen within GTI’s traditional electronic manufacturing business. Sales were up 17% to UKP7.4m. And finally Zetex, the components manufacturer, also grew in all markets, especially in the Far East. Sales rose 18.6% to UKP7m, while operating profit before exceptional costs doubled to UKP800,000. Order levels have continued to rise, particularly overseas, it says and foreign business now accounts for 70%, up from 64% at the end of the last fiscal year. With the benefits of eliminating loss-making activities already being felt and order levels encouraging, particularly in the communications market, where the company plans to expand, Curtis is confident about the second half.