LONDON Steve Sydes, head of the Acal plc. electronics division, will be leaving the group during June 2009 with Nick Jefferies, who became chief executive in January 2009, assuming responsibility for the division in the short-term. Jefferies was previously global head of electronics at Electrocomponents plc.
Sydes joined the Acal (Guildford, England) board in September 2008 and prior to joining the company, he worked for the Sedgemoor Group as the managing director of one of its subsidiary companies, Gothic Crellon Ltd. The Sedgemoor Group was acquired by Acal in 1999.
The news came as Acal plc, which operates three divisions providing technology products and services for electronics, supply chain and medical, reported that its revenue had risen 3.7 percent to £165.4million (about $270million) in the financial year ended March 31.
However profit before tax and exceptional items fell to £0.5million (about $0.8million) compared to £6.1million (about $10million) in 2008. The loss before tax from continuing operations was of £32.6million (about $54million) compared to a profit of £2.6m (about $4.3million) in 2008. The was provided by impairment of goodwill £41.8million (about $69million) and associate investments £5.4m (about $9million) while there was a profit on the disposal of investment in MessageLabsGroup of £15.9million (about $26million).
Jefferies said, “With the significant deterioration in market conditions in the second half, we have been focused on reducing costs and tight management of working capital. This was reflected in a strong net cash balance of £24.5 million [about $40million] at the year end.”
The company reacted to loss of management and from losses on a major new contract that started in May 2008 in the supply chain (formerly Parts Services) division by buying 75 percent of Service Source Europe Ltd in January 2009, a benefit of which, according to chairman Richard Moon, was the strength of their management team. The management of SSE have taken over management of the enlarged division and have established a business plan for the stabilization and growth of the business. The remaining 25 percent of SSE was acquired on on April 9, 2009.
Within the electronics division, Moon said “The deteriorating economic conditions have had an increasing impact on order levels and reported margins have been reduced by the abrupt strengthening of the US dollar. Whilst we anticipate recovery in our electronics margins as exchange rates stabilize and we focus on higher margin business, we continue to review operating costs.”
The division saw revenue up 1 percent £103.7 million (about $170million) but operating profit went down 72 percent to £0.9 million (about $1.5million). Reported revenue benefited from a strengthening in the Euro against sterling. At constant exchange rates, revenue declined 7.4 per cent by £8.3 million (about $14million).
In February, one of Acal's major semiconductor suppliers decided to terminate its contract from the end of April. At the time Acal said the product line represented approximately 4 percent of group revenue and 3 percent of gross margin.
Despite the actions taken over recent years to centralise operations, Acal has continued to suffer losses in mainland Europe. Cost reduction actions have been implemented – headcount reduced by 19 percent over the course of the financial year – and the company says further actions will be taken to realign the European cost base further.