IT firm profits tumble 45.7%

Computer services group Fayrewood saw profits tumble in a difficult trading environment last year. Operating profits fell 45.7 per cent to £4.12 million sterling (€6.39 million) in what executive chairman Mr Pierce Casey described as "the exceptionally difficult global information technology market".

Sales were up 19 per cent on £310.5 million, 7 per cent on a like-for-like basis.

The Irish entrepreneur, who now holds 10 per cent of the company, said the firm was maintaining its margins and increasing market share.

The company, which is listed in London, was hit particularly by losses at its UK niche distribution unit, Interface Solutions International.

It also wrote off the value of a £950,000 investment in two e-business related companies, one of which has since folded.

Computerlinks, the Neuer Markt-listed company in which Fayrewood holds a 51 per cent stake, saw a 10 per cent rise in turnover, though operating profits fell 35 per cent to £5.2 million amid growing competition.

Trading at Computerlinks was in line with expectations in the current year and was profitable, according to the chairman, who added it was well-placed to benefit from any market upturn.

Profits in continental Europe grew with the acquisition of Spanish company UMD last December. The £22 million cash and shares deal saw UMD's Mr Mario Legorburu become the second- largest shareholder in Fayrewood with a 7.2 per cent stake.

Mr Casey said Fayrewood had taken action to address the problems at its British operations and believed Fayrewood was wellpositioned to make solid progress in the current year.

"To get up to €10 million operating profit [before goodwill amortisation] is something we consider good," he said.

"It is worth noting that, in a very difficult environment, all bar one of our businesses remains in profit."

He said the board still intended to distribute Computerlinks shares to Fayrewood shareholders to overcome the anomalous valuations for the companies in different markets, which has seen the subsidiary valued more highly than the holding company.

Moves to do so last year had been deferred because of volatile capital markets but it would be pursued when market conditions allowed, Mr Casey added.