ASH's profits tumble by 74% after closures: Security group concentrates on alarm checking system after restructuring

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The Independent Online
RESTRUCTURING and closure costs of pounds 6.3m led to a 74 per cent fall in pre-tax profits at Automated Security Holdings to pounds 11.8m in the year to 30 November.

The security group has cut staff in its core businesses by 700 during the past 18 months and has made disposals to concentrate on alarm verification. During 1993 it began marketing TVX, a miniature camera for checking alarm calls. ASH said trials had resulted in several arrests. Operating profits on continuing business increased from pounds 21.6m to pounds 24.4m, with turnover 21 per cent higher at pounds 153.5m.

Trading conditions were difficult. ASH said the UK had been weak during the first nine months, but showed a marked recovery in the final quarter of its financial year. Fourth-quarter operating profits were 23 per cent higher than a year earlier. Telecom Security, bought from BT in February 1993, had installed more residential burglar alarms than any other company in Britain during the year.

Tom Buffet, chairman, said: 'With the UK economy now coming out of recession, the restructuring action taken during the past 18 months is proving positive.'

He said the economic environment in California, where the group's US businesses are concentrated, was the toughest in recent history. ASH cut costs at API, its electronic security systems business, consolidating its monitoring stations into one unit in Los Angeles. Sonitrol, an US-wide acoustic alarm verification business acquired in September 1992, made higher profits than API last year. ASH said expanding Sonitrol would be a priority.

Gearing was 152 per cent at the year-end - 300 per cent, including convertibles - despite a pounds 1m cash inflow from the continuing businesses. ASH is making a 1-for-48 scrip issue instead of paying a final dividend. At the half-way stage it offered an enhanced scrip dividend of 4.575p as an alternative to the 3.05p in cash, although a subsequent profits warning and 23 per cent fall in the shares made this controversial.

This year ASH reversed the relative size of the interim and final dividend. The company said future dividend policy would be closely linked to the future growth of continuing businesses.

Bob Carpenter, an analyst at Kleinwort Benson, said: 'The high gearing is disappointing. But the scrip issue makes sense because it has been a cash-consuming business while it rolled out new products.'

Earnings per share fell from 25.8p to 2.4p. Shares fell 11p to 97p.

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