There was much breast beating and soul-searching going on at telecommunications equipment maker Telspec Plc as the company turned in losses for the first time in 21 years of trading, in spite of, or perhaps because of seeing rapid growth in 1995. It would seem the company, which saw shares consistently fall last year (CI No 2,997), became seriously over-extended in its management structure and information systems as a result of rapid growth in many markets in 1995. In a statement it must have pained him to make, chairman Frank Hackett-Jones said our performance clearly did not live up to the potential of our technology, products and markets. He points to problems with the management of the company, its internal controls and material management practices as contributing considerably to first half losses, but says corrective action [has been] undertaken, and fourth quarter performance improved as a result. The ‘weakness’ in internal controls meant the company had to review and revalue its stock, and the year’s results were affected by inventory write-downs of 4.5m pounds. Telspec also found errors in stock calculations in 1995 and reckons stock may have been overstated by up to 1m pounds, resulting in the auditor’s qualifying the company’s accounts. The company has wheeled in some new management to help tackle the problem, with Jonathan Paget joining as chief executive in January from Motorola Inc, Donald Muir taking over as finance director, and a couple of non executive directors who joined in December. In spite of the turmoil, the company says it is seeing strong worldwide demand for its products, especially in Eastern Europe, Asia and South America. However, it is seeing increased competition, and what with delays in the completion of some new products, particularly capacity pair-gain products due in 1996, sales growth was not where it wanted it to be. At the end of 1996, gearing was up to 91%, but the company says it has agreement from the bank to secure facilities to January 31. Hackett-Jones says the company has achieved cost reductions, and the order book is fairly strong, so he believes the improvements shown in the fourth quarter will continue through this year. The City seems to have had confidence restored by this, and shares were up 30 pence at 227.5 pence, still a long way off the 605 pence they reached in 1995 (CI No 2,743). The company will pay a final dividend of 0.1 pence, down 99.7% on last year, to maintain its trustee status, but Hackett-Jones has done the decent thing and says he has waived his personal dividend on the 17 million ordinary shares he holds.