Computer services group Reflex has suffered a sharp deterioration in its trading in the first half of the year with pre-tax profits falling to £149,000 (€189,000) from £161,000.

Indeed, the figures would have been substantially worse had Reflex not included a tax writeback of £70,000 in respect of a tax provision that is no longer necessary.

Excluding this tax writeback, underlying profits fell to £79,000 from £206,000 in the first half of 1998.

Turnover in the half-year was largely unchanged at £1.52 million but increased competition and tighter margins as well as higher operating costs meant that operating profits fell to £63,000 from £187,000.

While the half-year results from Reflex are unaudited, accountants Arthur Andersen carried out an independent review of the group at the company's request.

This review is substantially less than an audit, but the accountants said they were not aware of any material modifications that should be made to the half-year figures.