MAY 27th, 1997. The objective of the restructuring is the disposal of the non core businesses, the narrowing of Crean's strategic base from three core divisions to two and the reallocation of funds to developing the retained businesses". And negotiations were continuing on the "planned disposal of our paper, print and packaging division (Inishtech)", so said chief executive, Mr Ray McLoughlin, in his annual review to shareholders.

While he noted that overall trading was "slower than expected", he expressed confidence by declaring an increase in the Final dividend from 8.65p to 9.0825. Taken with the reduced interim, it represented a 5 per cent increase in the total.

Yet less than one month later, June 20th to be precise, the company issued a profit warning, sending shivers down the spines of its long suffering shareholders with the decree that dividends would be more than halved. And to cap it all, Crean confused its disorientated shareholders further by telling them their company would have three divisions after all.

If the correct strategy was to have two divisions (described as "core"), why is it the correct strategy to have three divisions (also described as "core"), a minute, or more correctly a month, later? Is it any wonder that Crean watchers are becoming even more baffled - if that is possible - about the group's direction?

As has been widely reported, Crean's disposals included the print and packaging company, Kartoncraft, Master Products Manufacturing, and its 27.8 per cent stake in United Beverages. The group is now left with the bulk of the Inishtech companies and it claims that the remaining structure now gives it "increased flexibility".

This is how it justifies the changed strategy. The "directors have now concluded that it is in the best interests of shareholders to proceed with a part disposal of the PPP [paper, print and packaging] division. A part disposal will cause less e.p.s. dilution for shareholders than a disposal of the entire division. The retention of the core [there's that word again!] will allow Crean to access the substantial development opportunities in the PPP industry both in the UK and in the US". Whew! - that was a mouthful. And the market has not been impressed since that announcement the shares have fallen by 19 per cent to 190p (before recovering 5p on Friday).

Shareholders, and potential investors, and creditors, will want to know if that sentiment is a smokescreen. Or will this really be a sustainable new strategy?

Given its record, it will be hard not to be cynical. A brief resume of the last four annual reports, and this year's statement, tells it all:

1993: it was considering buying the 28.7 per cent minority share holding in Inishtech;

1994: decided not to buy the minorities;

1995: bought the minorities for £28 million, with the intention of selling the whole of Inishtech;

1996: strategy to sell Inishtech;

1997: keeping virtually all of Inishtech.

The decision to buy the minority shareholders in Inishtech with the intention of selling off the whole group always looked like a questionable strategy. Reliable industry sources say Crean had indicated offers, but decided not to proceed presumably because the offers were somewhat less than what it paid for the minorities. That would have cast it in a bad light. Does the decision not to sell mean it paid too much for the minorities? Crean shareholders will probably never know the answer.

The most curious episode has been the development, or more correctly non development, of its electrical division. Crean has never admitted that it was trying to sell this division. All it would say is that there have been suitors for a number of its companies. However, industry sources are adamant that agreement had been reached in principle for the sale to Senate, an electrical components company. However, the French parent, CDME, decided to pull out at the due diligence stage, according to the sources.

After the disposals, Crean's balance sheet will be healthier with a gearing of only 30 per cent and the cut in dividends will push the cover up from twice to around four times. Davy Stockbrokers, its broking firm, has sharply reduced its estimates for this year. A review circulated to its clients over the weekend predicts pretax profit at £6.8 million (against £15.7 million) and e.p.s. at 20.0p (against 31.3p). E.p.s. is expected to recover by 10 per cent in 1998.

Crean is now left with the electrical division which is operating in a weak market, a mixed food business and a static (recording to Davy, growing according to Crean) PPP division. This latter business, however, is understood to have lost 16 division managers because of the uncertainty surrounding the ownership of Inishtech. Yet this division is the one earmarked for development through acquisitions.

Crean justifies the cut in dividends because it now describes itself as a development" company. That must surely beg the question: what is next?