European advance helps Scantronic: Still increasing market share despite recession

A STRONG performance in Europe helped to drive Scantronic's pre-tax profits forward by 22 per cent to pounds 3.1m last year. The burglar alarm company said it was still increasing market share in Continental European countries going into recession.

Profits were, however, just below market expectations because of a pounds 444,000 exceptional item. Had the results been prepared under FRS3, the new accounting standard, pre-tax profits in the year ended 31 March would have been lower still.

Using an accounting policy that will not be available to the company when it next reports, Scantronic declared a pounds 1.5m extraordinary item below the line for the cost of litigation in the US against the former owners of its Arrowhead sensor division.

Chris Brookes, chief executive, said he was hopeful that both the lawsuit and the exceptional item, a provision for a doubtful trading debt, would be resolved in the company's favour.

Group operating profits were up by 30 per cent to pounds 3.85m in mixed market conditions. New products launched in Europe, such as low cost medical alert systems, helped to boost turnover from pounds 26.1m to pounds 30.3m and the company is looking to develop markets in Eastern Europe.

Last year the US operations moved from a loss into a break-even position and generated pounds 1m of cash through cost savings and efficient management. Most of Scantronic's pounds 311,000 interest bill - down from pounds 422,000 - stems from borrowings in dollars.

But US sales fell from pounds 9.9m to pounds 8.7m and Mike Kennedy, president of Scantronic (USA), said he could not detect any improvement in current economic conditions. 'Commercial real estate is seriously down as is new housing and demand for larger alarm systems,' he reported.

Mr Brookes said demand for burglar alarms should go up in the summer. 'May, June and July are traditionally good months because people think about protecting their houses while they go on holidays,' he said. They also became more safety- conscious during shorter winter days.

Gearing stayed at 20 per cent, with interest covered 10 times. Earnings per share rose by 85 per cent to 4.05p. The final dividend was 2.3p, up from 2.2p, giving a total of 3.1p, up 5 per cent. The shares gained 4p to 68p.