Second-half surge eases Scholes' decline

SCHOLES GROUP, the maker of fuseboxes and other electrical equipment, staged a robust recovery in its second half, but the improvement was not enough to prevent a sharp fall in annual profits and earnings.

Pre-tax profits fell from pounds 4.6m to pounds 3.2m in the year to 30 June, hit by the slump in domestic housing and commercial property, the company's two main markets. Sales shrank from pounds 67m to pounds 62m.

However, analysts were expecting a worse result and the shares rose 2p to 94p, one of the few risers in an otherwise plunging stock market. Net borrowings fell from pounds 7.4m to pounds 3m, cutting net gearing from 32 per cent to 13 per cent.

Earnings per share slipped from 8.5p to 5.9p. However the final dividend was held at 3.4p, making an unchanged 5p total.

Bill Riches, chairman, said operating profits had fallen in each of the four main operating businesses. The biggest, Wylex, makes consumer units - the box of circuit-breakers that has replaced the fusebox in most houses.

It was hit by the downturn in housing, although there was some demand as homes were refurbished or rewired.

Dorman Smith, which makes industrial switchgear, is beginning to feel the benefit of the end to hostilities in the Gulf, where it has two factories. Its profits and margins both improved in the second half.

Mr Riches, who took over as chairman after the death of Reg Harrington, warned there was no visible sign of any upturn in demand. However the group was budgeting for an improved performance this year and achieved its targets in the first two months of the new financial year.