Troubled Enterprise Computer Holdings Plc has completed the reorganisation of its business after suffering a series of disasters last year (CI No 1,977). Chairman Shaun Dowling is cautiously optimistic that his company will return to profit by the year-end, believing that ‘all those steps which needed to be taken, have been taken, and that both […]
Troubled Enterprise Computer Holdings Plc has completed the reorganisation of its business after suffering a series of disasters last year (CI No 1,977). Chairman Shaun Dowling is cautiously optimistic that his company will return to profit by the year-end, believing that ‘all those steps which needed to be taken, have been taken, and that both the losses and the cash drain are behind us’. Pre-tax losses were flat at UKP3.4m because of restructuring charges and stock losses of UKP1.9m this time and UKP2m last time. Both losses and exceptional costs have taken their toll on shareholders funds – these have dropped from UKP6.2m this time last year to UKP4.4m now. Group turnover also fell 38.3% to UKP35.5m due partly to the disposal of the communications and maintenance division last year and partly because customers worldwide are delaying upgrading their computer equipment and are buying new software.
Enterprise has decided that ‘finances do not at the present time allow for an interim dividend’. The group has consolidated its 13 individual businesses into three key divisions: one at UK headquarters in Winnersh, Berkshire; one in Langen, Germany; and one in King of Prussia, Pennsylvania. The group has reduced headcount to 185 now from 203 this time last year, but is recruiting sales staff in the US, which is said to have ’10 times the market’ of the ‘very depressed’ UK. Reductions in fixed costs and salaries have cut overheads by an estimated UKP4m a year – so, even though operating losses as a whole increased by UKP329,000 to UKP1.4m for the first six months of this fiscal year, losses from continuing activities dropped by UKP127,000 to UKP819,000. Each of the new divisions provide technical services, such as maintenance, performance monitoring, and systems integration, one of the fastest growing areas of operation. They also supply software and hardware products ‘from mainframe to desktop networks’, although the focus is still on IBM Corp second-user mainframes. This particular activity generates a large level of sales, but only provides small profit margins, so Enterprise is concentrating more and more on services. Joint marketing and product sourcing agreements have been signed with companies in both Europe and the US to extend the group’s product ranges and improve access to these markets. Bleasdale Computer Systems Plc, in which the group has a 78.8% stake, is currently its main supplier of personal computers and mid-range systems. At the year-end, Enterprise said it intended getting rid of its shares in the company, which no longer formed part of core activities. This decision has been revised on closer examination, and Bleasdale’s systems integration and manufacturing skills are now marketed alongside Enterprise’s own. The group’s other associated company’s are SRH Plc and Systems International Ltd. Discussions are currently being held about SRH’s future, which was bought out by its management in May 1991 (CI No 1,678). Enterprise retained a 25% stake, and now intends to reinstate the full value of preferance shares, UKP1.4m, that were previously written off to reserves. Dowling says prospects for SRH are good. Enterprise also has a 50% equity interest in Systems International, the company it thought was a subsidiary when it wasn’t (CI No 1,977). The group’s status here remains unchanged – it is entitled to 75% of Systems International’s dividends until March 1993, 50% thereafter.