Those with shares in Telspec Plc need not have worried about their company’s performance after all. Back in May, the Rochester, Kent-based telecommunications equipment manufacturer warned of lower trading levels and an only marginal improvement in orders (CI No 2,662), causing the shares to drop. This all turned out to be true, but chairman Frank Hackett-Jones explained that the lumpy nature of its order books – they tend to be quite large – means that the second half should complete a strong year for the company. The shares jumped 33 pence, or 6% to 615 pence at the start of the day, before settling at 605 pence. Telspec turned in pre-tax profits up 70% at ú4.3m on turnover up 104% at ú27.9m in the six months to June 30. Orders were up just ú2m at ú64m compared to the end of last year, but Hackett-Jones said that this was a seasonal thing. Telspec has on-going contracts with British Telecommunications Plc, among others, where the customer operates a just-in-time ordering system. The call-off rates were low in the first half, but he said that they have returned to higher, healthier levels in the current period. This, together with international orders due to be shipped will result in a good year, according to Hackett-Jones. Telspec supplies analogue and digital pair gain equipment, which enables more than one – and up to 10 – logical telephone lines to be put on to one physical line. When much of the expense in telecommunications comes in the form of cabling and connecting customers, being able to add an additional connection for less than $300, as Telspec claims it can, proves popular, especially in fast-growing telecommunications markets. Telspec has recently added equipment that can provide two 64Kbps lines on a single ISDN connection. In terms of markets, the UK, although still the largest, is being caught by fast-growing international markets.
UK sales represented less than 40% of the total, down from 54% last time. Australia, where the company has been manufacturing for 10 years, had a very good first half, and now represents 18% of sales. The company won another contract with Deutsche Telekom AG in the half and completed previous ones. German sales were ú5.9m against nothing a year ago. Slovakian sales were similar to last time, around ú1m. Sales outside the UK and the rest of Europe were 26% of the total. The largest of these was ú5.6m from South Africa, which is served by the Australian base. The balance sheet has no gearing, with the cash position swinging from a ú277,000 overdraft to net cash of ú33,000 at the half-way stage. In terms of working capital, stocks have remained at around the level of the end of 1994; the company plans to improve on this in the second half according to finance director Russell Woolley. The plants in Scotland and Turkey will both be expanded in the current half to meet increased demand, the company said. The company expects to make further inroads into South America, which is served by the facility in Madrid. It has already won orders in Argentina, Chile, Brazil and Peru. Telspec is contemplating expanding its product range, while remaining firmly in telecommunications, but nothing specific has been decided yet. The expanding telecommunications market remains very competitive, but so does the company, said Hackett-Jones. The 1.8 pence interim is up 50% on the first half of last year.
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