Loss-maker Wace hangs on to its US 'jewel': Property write-downs drive company into red

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The Independent Online
PROPERTY write-downs and restructuring costs plunged Wace Group, the debt-laden pre-press and printing concern, into losses of pounds 28.4m in 1992.

The group is passing its final dividend, although the figures were not as bad as anticipated when Wace issued a profits warning in December.

Wace made pre-tax profits of pounds 9.8m in 1991. Its former chief executive, John Clegg, resigned in January last year amid a DTI investigation into dealings in the company's shares.

Property write-downs of pounds 17m related just to investment properties and not, as had been expected, to the group's operational sites. There were further restructuring costs of pounds 11.5m, including a pounds 5m provision against vacant leasehold properties.

Trevor Grice, chief executive, said that Wace's auditors had insisted the company did not write down the premises occupied by the group.

Wace also announced that it had reversed its decision to sell its US business. The proposed sale had been announced in December.

Mr Grice, brought in last November, said that he realised it was wrong to sell the US operation after looking at the group more closely.

Wace has a two-to-one ratio of debt to net assets but Mr Grice said he had persuaded the group's bankers that Wace should not sell the US arm.

Louise Barton, analyst at Henderson Crosthwaite, welcomed the decision. 'It's very positive, because the US business really is the jewel in their crown and they probably would have got only dollars 100m for it. A sale would have diluted earnings.

'Although that leaves the balance sheet fairly stretched, they can trade out of it with cash generation and property sales a bit down the line.' She thought that a rights issue was a possibility and was likely to be well- received by investors.

Wace's trading profits fell from pounds 23.4m to pounds 19.1m. Mr Grice said the fall related largely to the downturn in the advertising industry. He said he expected the trading performance to improve substantially this year.