Another unsatisfactory year as far as Ferranti International Plc is concerned, the 12-month stretch to March 31 yielded pre-tax losses of UKP40m on revenues down 21% at UKP363m. While losses appear much reduced on the previous year (see below), it should be noted that last time’s figures included much heavier extraordinary costs related to restructuring […]
Another unsatisfactory year as far as Ferranti International Plc is concerned, the 12-month stretch to March 31 yielded pre-tax losses of UKP40m on revenues down 21% at UKP363m. While losses appear much reduced on the previous year (see below), it should be noted that last time’s figures included much heavier extraordinary costs related to restructuring and business disposals, both above and below the line. Despite the still glaring red on the P & L sheet, however, Ferranti claims that considerable achievements have been made in eliminating and mitigating the major problems which have dogged the company’s progress. Some headway has been made in reducing group gross borrowings, which at March 31 stood at UKP90m, down from UKP99m, resulting in a lower interest charge of UKP13.5m. Net debt amounted to UKP66.5m, down from UKP95m. Following the sale of the Aerospace Systems Missile Business, Ferranti has abolished its divisional structure: business unit managers now report directly to the central operations director. The remaining US companies have now been banded together to form USA Operations, and in the UK Manufacturing has been merged with Aerospace Components to form Ferranti Components. Though there were many, the most significant business disposal during the year to March was seen as being the sale of the US Missile business to General Electric Co back in February (CI No 1,867). This relieved Ferranti’s significant short-term cash commitment to the business and released the group from $228m of banking commitments. As reported, the transaction also helped settle the old score between Ferranti and GEC over the 1990 sale of Ferranti Defence Systems. Just to re-cap, other disposals during the year included the sale of the PABX business to Siemens Communications Ltd, Ferranti International Engineering Ltd to Bridgetest Ltd and Ferranti ORE Ltd to Geocoustics Ltd, all in April 1991. Then in May, Voice Systems was passed on to Brite Voice Systems, the Road Traffic business sold to Peek Plc in July, and Ferranti’s shares in Ferranti Creditphone sold off to its minority shareholders. In the US, MA Acquisition Corp, created for the purpose, bought Ferranti’s Marquandt Ordnance business and Manufacturing business in August, and in September Cardion Electronics was sold to Siemens Inc. Finally, Kaiser Aerospace and Electronic Corp bought Ferranti’s Marquandt Propulsion business in December. In total, asset disposals generated UKP73.2m cash, and reduced contingent liabilities by UKP144.3m. Since the year-end, Industrial Components and Ferranti Infographics, including the Metrology Service and Maintenance business in Scotland have been sold to ServiceTec International (CI No 1,930), and the bankrupt US healthcare business, has been sold to Keane Inc for $1.8m (CI No 1,911). And a settlement in April with US electrical utility company Potomac Electric Power looks set to lead to the disposal of Ferranti International Controls Corp, FICC. The last was placed in Chapter 11 bankruptcy protection last August, under which it is still operating, in order to reorganise and restructure claims against the firm. Ferranti’s shrink programme has cut the Ferranti group headcount by 41% to 5,380 – with further staff reductions, Ferranti’s working population stood at 5,050 at the beginning of June. Chairman Eugene Anderson claims Ferranti has won UKP250m of new business, bringing the total outstanding order book to UKP272m at the year-end, not including a contract to supply active dipping sonar for the EH101 Merlin helicopter, which was won by Ferranti-Thomson Sonar Systems UK Ltd last September. In addition to defence-related projects, contracts won include one to supply Brussels airport with a message switching systems and meteorological database and one for an electronic mail network for HM Customs and Excise.
15 years in jail
Also, West Yorkshire Police has ordered an incident-based information system, and Amerada Hess in the North Sea has ordered platform communications links. Litigation arising from the fraud discovered in 1989, foll
owing Ferranti’s acquisition of International Signal & Control Group Plc, is dragging on in the US – James Guerin has been sentenced to 15 years in jail, and Lawrence Resch and Robert Shireman also pleaded guilty to the fraud allegations. Ferranti has just received $1.2m from the US government, as proceeds of assets recovered. Proceedings have also been issued in the UK, meanwhile, against Stuart Pindell, a former director of International Signal, and jurisdiction was upheld in March. Pindell has since filed in the US for protection under Chapter 11. Ferranti has agreed to a full litigation settlement with Peat Marwick, which assisted in Ferranti’s acquisition of International Signal – Peat Marwick has paid Ferranti UKP40m compensation. In conclusion, Anderson points to ample scope for even more improvement which should move (Ferranti) towards profit; in the meantime, senior management focus will be on securing cash positive and profitable business.