Fayrewood, the computer services group in which Irish entrepreneur Mr Pierce Casey has a 15 per cent stake, has bucked the trend among technology companies and reported strong growth in the year to the end of April.
Turnover was up 54 per cent to £260 million sterling (€433 million) and earnings per share up 31 per cent to 10.9 pence.
Bottom-line profits at £6 million were actually less than half the previous year, although the 2000 results included an exceptional gain of £8.5 million on the sale of a business. When this exceptional gain is excluded, profits actually rose to £6 million from £4.6 million. Operating profits almost doubled to £10 million.
Mr Casey told The Irish Times that while the group was cautious about the current year, trading in the first seven weeks since the beginning of May had been strong, with like-for-like sales up 17 per cent on the same period last year.
One of Fayrewood's main assets is its 51 per cent stake in the Neuer Markt-listed computer services group Computerlinks, whose shares have doubled in value since it floated two years ago. Fayrewood's stake in Computerlinks is currently valued at €129 million (£77 million sterling) even though Fayrewood itself is valued at less than £50 million on the London market.
In effect, the Frankfurt market is putting a higher value on a portion of Fayrewood business than the London market puts on the entire company.
Mr Casey said the group was acutely aware of this remarkable disparity and has developed a strategy that could see all or part of Fayrewood's 15 per cent of Computerlinks distributed directly to Fayrewood shareholders.
"We have a solution now if we want to use it but there are practical considerations, such as liquidity, that we have to consider before we decide whether we should distribute any shares.
"Fayrewood currently has 4,000 shareholders and, while it might be good to have more liquidity in Computerlinks shares, we would like to see an orderly market." Mr Casey added that Fayrewood would probably make a decision on a distribution of Computerlinks' shares during the current financial year.
If Fayrewood opts for such a share distribution, it could produce some windfall gains for its shareholders. Against that, having a smaller stake in Computerlinks could affect Fayrewood's capitalisation on the London market and the value of its shares.
Mr Casey said he expected the European technology sector to remain under pressure in the current year but this might present opportunities for Fayrewood.
"We're in good shape to make acquisitions," he said.
