Holmes may drop expensive lawsuit

HOLMES PROTECTION, the US security group listed in the UK, is close to abandoning a costly legal dispute begun after a failed share placing earlier this year, writes Russell Hotten.

Richard Hickson, the chief executive who yesterday unveiled a sharp drop in interim profits, said the expense of seeking damages might preclude further action.

Signs that the recent recovery at Holmes had stalled emerged yesterday when the company saw half-year figures to 30 June tumble from dollars 1.4m (pounds 927,000) to dollars 133,000 on turnover of dollars 27m. Again there is no dividend.

Sir Ian MacGregor, the former British Coal chairman who chairs Holmes, said reorganisation had taken longer than expected, raising operational costs and delaying the purchase of new contracts. But he added: 'Actions to improve the company's operations continue, orders for the half-year remain above the level of recent years and the rate of subscriber cancellations continues to decline.'

Administrative costs have been cut following a decision to delay expansion in Continental Europe. And planned growth of the franchise operation has been scaled back.

In February Holmes completed a lengthy debt restructuring programme. But a placing failed when an unnamed Swiss investor refused to honour an agreement to pay for 1 million shares, hitting the share price.