Kode Plc was disappointed with its year-end results yesterday despite profit and turnover up on last time, the firm lamented a slow second half. Kode, which bought maintenance firm DCM Services for UKP3.17m in July 1992, (CI No 1,961), is feeling the effects of competition in the latter’s native maintenance market. This means that Kode’s pre-tax profit rise of 115% in the first half wasn’t upheld in the second half. This should come as little surprise to the industry, which was warned by Kode in January that profits wouldn’t meet expectations (CI No 2,334). At full time, group net profits were still up 2.8% at UKP654,000 while turnover climbed 19.1% to UKP24.9m, and it was still heartened enough to offer a final dividend of 6p, up 9.1% on last time. In spite of better profits, the firm saw earnings per share fall 18.6% to 7 pence following the rights issue in 1992 to finance the DCM purchase. The group doesn’t break down turnover or profits in its three subsidiaries, which are DCM Services, and printed circuit board manufacturers Kam Circuits in the UK and Kamtronics in the Far East. Even so, DCM seems to have been the fly in the ointment given the present competitiveness in the maintenance market. To spread the risk, Kode is slowly expanding into facilities management with DCM, and has already won a few customers it won’t name. It has also negotiated longer contracts of up to four years in its maintenance business to increase stability. Kam Circuits, which manufactures complex circuit boards, installed new equipment at its Calne, Wiltshire plant, to increase productivity. Chief executive Stephen Day said that the capital spend on Calne in the year was UKP900,000. Kamtronics, which takes boards from a number of plants in China, Malaysia, Tiawan and Korea, saw supply problems from the plant in China, but managed to source what it needed from the other plants. It also struck a sourcing deal with a second Malaysian manufacturer in the second half of the year. Margins have gone a little flat in Kamtronics, but the firm is hoping to boost them again in the long term. Kode has managed to force down its gearing ratio to 39.4% to 46.2% despite its capital expenditure, and looks for growth in the circuit board businesses. It will be a while before it breathes easy again in the maintenance market, though.
