As the transformation of Electronic Data Processing Plc from a hardware to a software and services company continues apace, the impact could be clearly seen in its figures released yesterday. The situation was exacerbated by what chief executive Richard Jowitt said was a tough year for new business. Pre-tax profits for the year to September 30 fell 25% to ú3.1m, on turnover that was also down 10% to ú12.6m. Jowitt said the profits and revenue falls were as expected, but the shares were down 11 pence, or 7.2%, at 141 pence yesterday. During the year, the Sheffield-based wholesale distribution and database management software company acquired BML (Office Computers) Ltd (CI No 2,694), and Jowitt said growth through acquisitions is the plan for the current financial year as well. BML contributed revenues of ú1.1m and operating profits of ú125,000 in the year, which chairman Michael Heller said was in line with expectations. Electronic is still looking to buy our competitors, according to Jowitt, especially now that some of the prices being asked are more realistic than a few years ago. But the company will continue to use cash rather than shares for the purpose. Cash balances were a healthy ú9.4m at the year-end, reduced from ú12.2m last year as a result of the initial consideration being paid over for BML. Some ú4.9m of revenues came from software and systems, down ú1.0m, and ú7.3m came from support services, including hardware and software maintenance, down from ú7.8m last time. Jowitt said two orders won after the year-end will be worth around ú1.25m.
Seismic change
The company recently released version 5.0 of its Merchant package for the wholesale distribution industry, which was complemented by BML’s Cobol-based Charisma, which is aimed at the tool merchant and food distribution industries. The next version of the Univision database management system is due in January, and is dubbed the open server version, as it supports a wide variety of databases. WinLink, the Open Data Base Connectivity-compliant Windows-to-database integration software continued to progress well, according to the company. Jowitt predicted another seismic change for the company over the next few years. By 1997-98 he reckoned that network terminals, such as the one envisaged by Oracle Corp’s Larry Ellison for Internet access and IBM Corp for banks and airlines will be the order of the day. It will be particularly suited to the distribution and retail industries, where there is no real need for a powerful desktop personal computer with expensive technical support costs, when a terminal linked to a central server will be ideal for the task. Jowitt envisages significant revenues from this as customers come to Electronic Data to supply them with the necessary systems. Research and development costs of ú1.7 were up from ú1.6m last time, all of which is written off in the year it is incurred. The company maintains a dividend rise to reflect confidence in its future, with the final dividend of 1.48 pence added to the interim of 0.67 pence, to make 2.15 pence, a 7.5% increase on last year.
