The Touchstone Group Plc, London N1, the surviving quoted entity from the big bang that disintegrated MBS Plc, has reported pre-tax operating losses of UKP562,000 for the six months ending June 30, against losses of UKP5.8m for the same period in 1989. Sales slumped 85% following the discontinuation of Microtex Ltd and the personal computers product sales business last year. Group chairman Owen Williams says that trading for the first half has been difficult and operating profits have been eroded by falling margins. Last month, Touchstone finalised last year’s sale of its product sales business, receiving a further UKP10.5m. The combination of that settlement and other sums realised on last year’s disposal of Microtex has resulted in an extraordinary gain of UKP733,000. In March, Touchstone acquired the business of VISIsystems Ltd, and the Exchange Telegraph Company Ltd in May. VISIsystems’ business is seasonal, says Williams, with the first quarter of the calendar year being its best period. Exchange Telegraph was acquired to strengthen the maintenance business carried on by the group’s subsidiary, First point Plc. On acquiring these two businesses, Touch stone set up provisions – UKP4m – to cover the cost of rationalising the Exchange Telegraph company and the group’s write-off of purchased goodwill in respect of VISIsystems. Williams continues that the general downturn in the British economy has impacted badly on the information technology sector and, he says, Touchstone is competing in the maintenance market with a number of companies that, in the interests of their own cash flow, have reduced margins to win con tracts. As a consequence of these difficult trading conditions, Touchstone has made significant cost savings, but anticipates that further losses will be incurred in the second half. Williams reckons that it is in the best interests of the company to seek permission of the shareholders, loan stockholders and the High Court to write-off the deficit on distribut able reserves against the share premium account, to begin accumulating distributable reserves. Looking to the future, the chairman claims that the diff icult decision taken last year to withdraw from the sale and distribution of personal computers has been vindicated. With the completion of that disposal, the group can now concentrate on the development of its existing businesses, and also to consider the future shape and direction of the shell company.
