In a year which the company has devoted to finding its feet, Ferranti International Plc has turned in pre-tax losses of UKP20m for the six months to September 30, up from UKP15m losses for the same period last year, on turnover down 40% to UKP251m. Ferranti is the first to admit that its problems extend […]
In a year which the company has devoted to finding its feet, Ferranti International Plc has turned in pre-tax losses of UKP20m for the six months to September 30, up from UKP15m losses for the same period last year, on turnover down 40% to UKP251m. Ferranti is the first to admit that its problems extend beyond the alleged James Guerin fraud and is focusing on building an advanced systems company for business, defence and the community. Guerin, along with several of his associates, has been ordered by the UK court to pay the company $190m, though whether he has the money to pay up is another matter, and Peat Marwick McLintock, the auditors to International Signal & Control, has replied to Ferranti’s UKP600m claim, served earlier in the year, with a defence and counter claim – the battle continues. Company borrowings have reduced to UKP85.3m from UKP275m over the six month period, after the sale of businesses and the proceeds of the rights issue which didn’t come through until August, leaving liquidity tight and restructuring plans restricted. It seems Ferranti was wise to set aside UKP25.8m to cover its asset sales, with GEC demanding a refund for Ferranti Defence Systems (CI No 1,509). A dispute is growing here – GEC hasn’t completed its account and the two companies’ accountants are squabbling about the terms of the contract – Ferranti is considering calling in an independent accountant to sort out the mess. Three new divisions have replaced the previous five and 17 sites have been closed. Another 432 jobs have been lost, meaning that by the year end the company will have shed 20% of its staff in total, with a strong possibility of more to go – says chairman Eugene Anderson, the rationalisation process has only just begun. Ferranti is still having no luck getting rid of its 64% stake in Ferranti Creditphone and blames the lack of interest on the uncertainty which currently pervades the Telepoint and mobile communications industry. While the company waits for a buyer, it has restricted its cash commitment to the subsidiary to a minimum. Securicor Communications has bought Ferranti Business Communications’ telephone keysystems business and the voice messaging operations are also under contract for sale. The Strategic Management Systems division has been awarded a contract to supply upgraded computer processes to the Royal Navy for use in nuclear submarines. Over the next 12 months growth in this sector is anticipated to occur outside the UK, since the Ministry of Defence is having cash problems. Ferranti’s plans for restoring the company’s position include more asset sales, consolidation of UK sites and more staff reductions. Choosing his words carefully, Anderson says he hopes the company will be in the black on a month-by-month basis by the year end – aside from exceptional charges from contracts and stocks, operating losses are only UKP1.4m, he notes.