The computer services group Pericom Plc which is based in Milton Keynes has broken back into profit with pre-tax of UKP125,000 for the half year, up from a loss last time of UKP828,000. The shift from red to black has been aided, as the company predicted it would be (CI No 1,099), by the completion of the sale and leaseback of the Linford Wood factory which produced an extraordinary profit of UKP987,000. For, although this sum is not included in the profit figures it has enabled Pericom to cut its borrowing. Turnover is now on target for UKP20m by the end of the financial year, and the Group hopes that its roller-coaster profit ride will stabilise with the reduction of its manufacturing base. Company chairman Ron Cragg explained yesterday that the return to profitability was sustainable thanks to the restructuring of the UK business, which now operates under the name Pericom Plc as a total manufacturing, distribution and service division of the parent company. Under this restructuring, manufacturing has been reduced to about 36% of Group turnover while the expanding service and distribution sides now account for 26% and 36% of turnover respectively. This compares with the company’s activities two years ago when 80% of its turnover came from manufacturing and 70% of its manufactured products were exported. Nowadays, the company is focussing on the UK and has a new office opening in London to symbolise this new British identity. In an effort to grow these high margin service activities, Pericom acquired the third party service business of Delta Data Ltd in January, but the profits from this acquisition are not yet visible in the present results. As regards operations overseas, the Singapore subsidiary which manufactures colour VDUs and graphics terminals has moved into profit and will be expanded to become more of an assembly and labelling plant. The UK manufacturing side solely produces monochrome products and it is expected that this part of the business will gradually fade away, leaving the Group with approximately a quarter of its turnover derived from manufacture. In the US, Pericom Inc is still not performing well but is reported to not be losing so much, and the situation is being addressed via the curtailment of overheads while an announcement concerning a strategy change in its organisation is due at the end of the financial year. It will not be closed down or sold off, however, as it has a large corporate base which Pericom wants to keep. Meanwhile, the French subsidiary, Monterey Technology has broken even with turnover up 33%, and is becoming a mirror image to Pericom’s UK organisation. Talk of a start up operation in West Germany is on hold at the moment because the Group can’t presently afford the losses that such a venture would necessitate, and also for fear of treading on the toes of its German distribution base. Aside from the fostering of a central service base for the company, Pericom is also moving away from the manufacture of hardware to that of software by developing customised applications for clients around Intergraph’s Microstation for computer aided design. To this end it has a mechanical designer product and a product for the concrete industry. Another part of its plan for growth is the penetration of new geographical markets. The Soviet Union is on its shopping list, and it has a Russian delegation visiting its UK and Singapore plants this year, while the country of glasnost has already ordered UKP42,000 of personal computers and is negotiating a contract for graphics terminals. At this half year stage it would be foolhardy to describe Pericom’s performance as bullish, but under the tighter financial control of its new finance director Graeme Presswell it is looking forward to slow, steady organic growth on which it forecasts a turnover of UKP25m by 1990.
