Glen Dimplex buys loss-making fridge company

Glen Dimplex has bought Lec Refrigeration from the Malaysian conglomerate Sime Darby Group. The company refused to divulge the purchase price but Lec has been struggling financially for many years.

A well-known brand in Britain, its most recent accounts to June 2004 show that it had pre-tax losses of £1.442 million (€2.09 million). This compared to losses of almost £3.7 million in 2003. Turnover was £22.87 million, compared to £23.89 million in 2003. Net assets are £3.8 million, up from £2.6 million in 2003.

The auditor's notes to the accounts draw attention to the fact that the company's parent, Sime Darby Far East Ltd, intended to provide Lec with whatever finances it needed to meet its liabilities and continue to trade until the end of January 2006.

"In view of the significance of this fundamental uncertainty, we consider that the dependency of the company on this financial support should be drawn to your attention," it says. However, it adds that they (the auditors) did not qualify their opinion, in this respect.

Glen Dimplex chief executive Mr Seán O'Driscoll said that, in the early 1990s, Lec had around 20 per cent of the domestic refrigeration market in Britain. This had since fallen to around 4 per cent.

He believes that the company, which employs around 300 people at its plant in Bognor Regis in West Sussex, can be turned around but that it needs substantial investment and restructuring.

Mr O'Driscoll said that, in the 1990s, one in four homes had a Lec fridge.

"We are confident that, within three years, we will be able to increase market share again to around 15 per cent," he said.

Apart from the domestic market, Lec also sells its technical products through commercial and other channels, including refrigeration for bars and boats.

Last December, it emerged that Sime Darby, which is Malaysia's biggest diversified group, was contemplating selling Lec. It took Lec private in 1994.

It subsequently invested around £34 million in the firm. Some estimates put its total investment at £55 million as it tried to try to turn around the loss-making company.