Racal dips on 'surprise' loss: Chairman says market was forewarned

Click to follow
SIR ERNEST Harrison, the chairman of Racal Electronics, reacted angrily yesterday as the stock market knocked the company's shares 27p lower to 162p after it published unexpected half-year losses of pounds 388,000, compared with pre- tax profits of pounds 23.2m.

The results were stated after pounds 25.1m of losses from discontinued activities. These concerned Racal-Redac, the electronic design automation subsidiary whose disposal was announced in October. The interim dividend is held at 1.5p.

The pounds 25.1m item reflected trading losses of pounds 4.9m and a pounds 20.2m provision for losses on disposal. This included a pounds 13.9m write-back, compulsory under new accounting rules, of goodwill previously written off on Racal-Redac.

'The trading losses and reorganisation costs at Racal- Redac were all known about. We didn't mention the goodwill write-back in October because it has no impact whatsoever on Racal's shareholders' funds,' Sir Ernest said.

''You could say that it shows Racal-Redac was not a very good acquisition, and that is true. If there is a disappointment in the figures, it is radio communications.'

Radio profits fell by pounds 4.5m, accounting for the bulk of a fall from pounds 31.6m to pounds 27m in profits on continuing operations, as sales weakened in the face of military cuts and increased US competition in the Middle East following the Gulf war.

Profits fell in data communications and marine and energy, although this was offset by improvements in military radar and specialised businesses.

Bottom Line, page 38