Graseby Plc, the medical, product monitoring, environmental and technology group, has made a net profit of UKP3.017m, following net losses last year. Pre-tax profit was unaffected by net exceptional costs – which last year were substantial at UKP4.3m and rose from UKP1.0m to UKP9.6m. Operating profit increased by 40% from UKP7.9m to UKP11.0m. The company said that it has not yet fully reaped the rewards of its recent investments in research and development and marketing. Nevertheless, it says, its sustained growth in its continuing businesses – up 22% – combined with the last two years’ cost-cutting measures should in future bring higher margins and a better return on net operating assets. The group showed less reliance on the UK market in 1993: it achieved substantial growth in international sales for its continuing businesses – up 21%, excluding the benefits of exchange rate movements, to UKP71.3m. This represented 72% of 1993’s total sales, compared with 65% in 1992. To support this growth, Graseby spent an extra UKP2.2m on marketing and UKP700,000 on research and development. During the year, Graseby Keltek Ltd and Graseby Plastic Systems were sold for a total of UKP3.5m. The UKP400,000 profit on this offset losses of UKP400,000 on property sales in the UK. Further disposals and property sales are planned, although the company declined to discuss this. Borrowing was reduced to UKP15.9m from UKP20.7m, and gearing to 66% from 99%. Interest cover was eight times. Graseby has in the past been dependent on the volatile defence and component sectors. This dependence is now decreasing, says the company; nevertheless, it was a good year for the company’s defence business. Several major orders were completed, including a CAM chemical agent monitor design for the US Army. Technology sales rose by 24% to UKP34.3m from UKP27.6m, and the company managed a trading profit of UKP4.2m compared with UKP0.6m in 1992. However, Graseby warned that the continuing decline in defence markets meant that the Technology business is unlikely to show similar growth and profitability next year.
Environmental flotation
The company’s Product Monitoring operations cut back activity in the UK last year, but sales still increased by 8% to UKP19.4m thanks to a growth in international sales and favourable exchange rate movements. Medical sales rose 15% to UKP15.4m, including a 41% increase in international sales. In the environmental area, sales increased by UKP7.4m to UKP29.6m. However, margins were squeezed in the company’s continuous emission monitoring business and the depressed state of some US markets meant trading profit in this division fell to UKP3.3m from UKP3.6m. The company still plans to go ahead with the flotation of its Environmental business – announced in March last year – but has delayed this due to poor stock market conditions for environmental companies. It plans to go ahead when market conditions are better, and direct the extra finance into its Medical, Product Monitoring and Technology businesses. Other plans include a series of new product launches and continued expansion of international marketing operations. As for final dividends, the board announced back in August that it would recommend a reduction, to allow more investment in growth opportunities. It has therefore now recommended a final dividend of 3.3 pence per share. This, along with the interim dividend of 3.3 pence, will be paid on May 17.
