Proudfoot halves final dividend

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The Independent Online
ALEXANDER Proudfoot, the management consultant, slashed its final dividend yesterday, six months after stating its intention of maintaining the payout. A Swedish subsidiary, acquired 18 months ago and loss-making ever since, is to be closed at a cost of pounds 25m.

John Prosser, the chief executive, blamed 'a reduction in new orders caused by uncertainty within the company and poor world economic conditions'. Second-half profits were only a quarter of those achieved by the interim stage and the first quarter of 1993 has been disappointing.

Pre-tax profits of pounds 25.2m compared with pounds 50.1m in 1991. Thanks to a full year's contribution from acquisitions, sales were almost maintained at pounds 172m ( pounds 176m) but a sharp rise in costs cut margins. The final dividend was reduced from 13.5p to 6p, making a total for the year of 12p (19.5p).

Mr Prosser said the decision to acquire Indevo, a Scandinavian consultancy, had been made by Thomas Huhn, the former chief executive who retired last year. Indevo lost pounds 5.7m last year on turnover of pounds 13.8m.

The 1991 acquisition of Indevo cost Proudfoot pounds 15.7m, since when pounds 7.2m has been spent supporting it. In the current year, a pounds 17m charge will be taken against the profit and loss account to cover goodwill previously written off reserves. There will also be a pounds 1.8m closure cost provision and a further loss of about pounds 1.2m.

Trading was also weak in the rest of the world. Turnover in North America fell 27 per cent to pounds 42.7m, leading to a 54 per cent fall in operating profits to pounds 7.1m. In the Far East profits collapsed from pounds 7.4m to pounds 900,000 and in Europe, Africa and Latin America profits were lower. A tax settlement cost an exceptional pounds 2.3m.

Until unexpectedly bearish noises at last June's annual meeting and the sudden departure of Mr Huhn in July, Proudfoot appeared to have shrugged off the recession. Those two events pushed its shares into freefall from a peak of almost 400p to a low of 69p. They are currently 115p, where they yield almost 14 per cent.