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OFT sales inquiry damages Eurocopy

EUROCOPY, the photocopier company that ran into trouble after making an acquisition from Sketchley, the dry cleaning group, yesterday cut its dividend and warned it could still see no signs of an end to the recession, writes Paul Durman.

The final dividend was slashed from 2.9p to 0.5p, cutting the total payout from 4p to 1.6p a share. Pre-tax profits for the year to 30 September fell from pounds 7m to pounds 1.7m while turnover tumbled 22 per cent to pounds 34.2m.

Eurocopy blamed the fall in sales in the first half on negative publicity that accompanied the Office of Fair Trading's investigation into unfair selling methods at Purdie & Kirkpatrick and Equipu, which it bought from Sketchley in 1989. The company continues to be hit by the recession, as leasing companies refuse finance to a growing number of potential customers because of fears over their ability to meet commitments.

Eurocopy is suing Sketchley for pounds 7m over 200 warranty claims, and has already incurred legal costs of pounds 800,000. Michael Armitage, the financial director, said the case was unlikely to come to court for at least another year.

Copy volumes were 6 per cent down in the second half, although Eurocopy said they seemed to have stabilised since September.

Eurocopy paid out pounds 2.9m to settle disputes with about 650 customers. This and other extraordinary costs were covered by a pounds 7.7m provision made last year.