Recall of products draws blood at Fii: Pay-out maintained despite profits plunge

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The Independent Online
THE RECALL of a line of ladies' shoes and a piece of blood-testing equipment caused a fall in pre-tax profits at Fii Group, the shoes and medical equipment group, from pounds 3.5m to pounds 551,000 in the six months to November.

The group warned in November that profits would be hit by the blood-testing equipment recall, together with the loss of a research and development contract. These pushed the division into a pounds 1.24m loss, up from pounds 290,000 last time, after a pounds 650,000 exceptional charge for the recall.

Monty Sumray, chairman, said the rectification process should be completed next month and he hoped the division would be profitable next year.

The problem arose because a customer had used the machine constantly. He did not expect Fii to lose business because of the recall; one of its largest customers had indicated it would place a large order when rectification was complete. But Mr Sumray did hint that the group would consider selling the division when it returned to profit.

New management is reviewing the business. The group has had offers for the division, but 'at the moment, we are not considering that'.

Profits from the footwear business - which owns the Lotus brand and is a big Marks & Spencer supplier - dropped pounds 500,000 to pounds 1.52m, largely because of a pounds 440,000 provision for the shoe recall and redundancy costs. Mr Sumray said the fault, in the heel of a line of ladies' shoes, arose because of a mistake in sending the specification.

The group has pounds 13m in cash, and would be keen to acquire more shoe brands. Last year, it failed in a bid for C&J Clark, the family-owned manufacturer.

The cash balance helped it to maintain its dividend at 6p a share despite a drop in earnings per share from 15.3p to 2.2p.