Since Tim Curtis succeeded Roy Cotterel as chief executive of Telemetrix Plc last February, he has cut the whiskers off the company to make three clean and focussed businesses. These have turned in greatly enhanced profits for the year ending December 31. In the words of chairman Arthur Walsh, We have tried to present an organisation we can understand, that we couldn’t understand before. The workforce has been reduced from 600 to 480 non-GTI people’, but total headcount is approximately 4,500 staff, mainly Chinese, according to Walsh. The three businesses comprise 60.9%-owned San Diego-based subsidiary GTI Corp, which makes magnetic components for the local area network market; UK-based Zetex, a specialist analogue semiconductor manufacturer for the data storage market; and Trend, which has now completely moved out of defence to concentrate on dedicated telecommunications test equipment. Group pre-tax profits increased 137% to UKP9.8m, while turnover was up 17.3% to UKP98.2m.

Cash of UKP1.2m

But earnings per share almost trebled to 5 pence from 1.7 pence due to a doubling of attributable profit from GTI, and substantially improved results from the other wholly-owned companies. Net profits were hit by UKP900,000 exceptional charges, but also grew 19% to UKP4.4m. While the High Wycombe, Berkshire-based group spent UKP4.3m in closing loss-making businesses and selling surplus properties, this was partially offset by UKP3.4m gains following the sale of 329,000 common shares of GTI. A further UKP1.1m from the sale, together with the cash generated from group operations, combined to turn last year’s debt of UKP4.8m into cash of UKP1.2m this year. Because of this greatly improved performance, the board is recommending a 33% increase in dividend to 0.8 pence. As mentioned, GTI turned in pre-tax profits up 104% to UKP8.1m, while sales grew 37% to UKP60.9m. The company now makes up 62% of total group turnover, and has increased net cash balances from UKP500,000 to UKP1.6m. Major customers include Intel Corp, 3Com Corp, Synoptics Communications Inc and Hewlett-Packard Co. Margin on sales improved from 9% in 1991 to 13.4% as a result of increased volume sales of the Valor networking product range. Revenues from this were up 77% to UKP37.2m, while pre-tax profits grew 92% to UKP7.8. Order backlog also increased 56% to UKP10.6m. During the year, GTI added surface mount products for the mobile communications market as well as ISDN devices to its range of offerings, and opened a third manufacturing facility in China. A fourth plant will also be set up in the Philippines towards the end of 1993 to focus on surface mount technology. ISDN is one area of business that GTI is keen to develop – according to German market researcher MZA, the European market for ISDN telephone lines will grow in value from UKP200,000 now to UKP2.5m by the year 2,000. Curtis said that growth was more marked in Germany than the UK, with the number of lines having grown to between 60,000 and 70,000 in 1992 from 20,000 in 1991. He also reckons there are underlying growth trends in the market for connecting personal computers to networks. Figures from market researcher International Data Corp indicate that while 20% of all personal computers were networked in 1991, this will rise to 40% by 1995, so he feels that prospects are good here too. Zetex increased its pre-tax profits to UKP2.1m this time from UKP1.1m in 1991, while sales were up to UKP15.9m from UKP12.1m mainly due to doubled revenues from surface mount products. The company now generates 16% of total group turnover, and its biggest customer is Conner Peripherals Inc, although it also develops electronic components for the automotive industry. Exports increased to 69% this time from 64% of total sales last, but Curtis said that it didn’t benefit much from the movements in exchange rates. There was only a 1.8% differential between 1991 and 1992, he added. But he does expect the weakness of sterling to have a beneficial effect in the coming year. Since moving out of the unprofitable world of defence

, Trend has returned to profits of UKP900,000. In the second half of last year, it had made a loss of UKP1m, and broke even in the first half of 1992. It now accounts for 15% of total income, most of which is generated in Germany. Curtis said that Germany is currently spending a fortune on developing the telecommunications infrastructure in the east. Other major customers include British Telecommunications Plc, Siemens AG and Motorola Inc. The remaining 7% of group revenues comes from a couple of subsidiaries in Zimbambwe, ‘the dowry’ from South African investor, Johannesburg-based Allied Electronics Pty. One deals in telecommunications equipment and the other in lighting products. According to Curtis, strong action was taken at the group when it was needed, and this has now provided a springboard for growth. Telemetrix’s future aims are to grow both organically and by acquisition. It has identified markets that it believes will grow at above average rates, such as local area networks, ISDN, and mobile communications, and aims to focus attention on them. It is also interested in selective acquisition as a way of moving into new geographical markets or new up-and-coming product areas.