Anite Group Plc, formerly Cray Electronics Plc, is hoping its first half losses will be its last, now that it has rid itself of loss-making Case Technology. The company saw losses for the six months to October of 65m pounds, up from losses last time of 15m pounds on revenue that fell 5% to 77.4m […]
Anite Group Plc, formerly Cray Electronics Plc, is hoping its first half losses will be its last, now that it has rid itself of loss-making Case Technology. The company saw losses for the six months to October of 65m pounds, up from losses last time of 15m pounds on revenue that fell 5% to 77.4m pounds. It said back in September 1995 it would rationalize its product lines in the UK and Denmark (CI No 2,748) and a year later when the change of name to Anite did not include Case Technology Denmark or UK, it was obvious it was shaping up for a change of image. That change was to get out of the product manufacturing business altogether, and reshape itself as a software and network integration company. To that end, Anite has completed the sale of Case Technology Denmark to Intel Corp, for $72m in cash. The Danish operation designs, develops and manufactures inter-networking products including hubs, routers and Ethernet switches. Anite said the products were high quality, but needed substantial investment for international distribution. It therefore decided to sell the loss-making business and focus on software and network integration. Case Technology UK however, was judged to have an ageing product range and a poor development record, and the company decided it would not be viable to sell to a third party. It is therefore selling it for 1 pound to Nileband Ltd, a new company set up by a management team led by former Anite chairman Roger Holland. Anite will fund the venture with an initial 3m pounds working capital and a further 1m pounds in 12 months time. Nileband will also get to stay in its premises in Watford rent free for two years. The rationale is that if Anite had held on to the business, it would have incurred further 7m pound losses by year end. The effect of the disposals, Anite says, is to strengthen the company’s balance sheet and leave it free to develop its profitable software business, Anite Systems, and network integration business, Anite Networks. Systems turned over 39m pounds this year, up 5.4% on last year, with operating profits up 38% at 2.9m pounds. Networks saw revenue down 16% on last year at 38m pounds, but this was due to a one-off 8m pounds contract win in 1995. Profit was flat at 200,000 pounds.
To grow both sides
The network business will now concentrate on consultancy, design and implentation of networks, using the best products from vendors such as Cisco Systems Inc, US Robotics Inc, Stratacom Inc and Madge Networks Inc. The company also maintains and manages networks. Anite Systems offers software systems to vertical markets including travel, telecommunications, government, space and defence and finance. Chief executive Jon Richards said Anite will continue to invest in research and development to create new software products for its vertical markets. The group’s mission now, he said, is, without the loss-making businesses, to grow both sides of the business. The company is using the proceeds of the disposals to pay off bank borrowings and make provision for buying out some property lease agreements. The pro forma balance sheet shows 14m pound net assets with 17m pounds cash. Anite will not pay an interim dividend but it will consider a final if appropriate.