Another company that has survived the economic slowdown that haunts several parts of the world is Gestetner Plc, the London W1-based office equipment company, with pre-tax profits up 44% at UKP52m on turnover that rose 63% to UKP862m. Much of the company’s growth is attributed to the acquisition of Nashua Office Systems in April (CI No 1,399) and the first full year contribution of the photographic division. The expanded office systems division accounted for UKP655m of total revenue, up 40% on last year, but organic growth was below company expectations, accounting for UKP52m – 11% of total revenue – chairman Basil Sellers reports that this was mainly due to lower than anticipated growth in the UK, the US and Australia (CI No 1,454). But this was counterbalanced by better than anticipated performance in Italy, Holland and France – continental Europe accounted for UKP402m of group revenue, up 50% on last year. Photographic sales – mainly through retail distribution accounted for UKP207m of total revenues, 10% down on last year’s annualised rate. Trading margins continued to improve in the office products division, but overall margins were reduced to 7.7%, from 8% last year, due to the inclusion of the lower margin photographic division. Reduction in working capital, as a percentage of sales, contributed towards the reduction in bank debt to UKP39m, from UKP108m last year – and Sellers says Gestetner is aiming to eliminate bank debt during the current financial year. He isn’t very optimistic for the outcome of this year because of the toughening economic conditions, and says sales growth will be largely dependent on the inclusion of a full year from Nashua. But he does say that any adverse affects incurred from the economic deterioration should be buffered by service and supplies revenue which is less vulnerable to the climate and accounts for 45% of total turnover. The company will be focusing on generating cash by continuing to reduce working capital levels, gith a view to taking advantage of any business oppurtunities as they emerge. A final dividend of 6.4 pence is proposed, up 14% on last year.
