Hull-based systems house Radius Plc blames its plummeting profits on the declining margins to be found through hardware distribution nowadays. Pre-tax profits fell 31% to to UKP2m on turnover up 62% to under UKP29m. However, the root cause of the group’s ailing profits would seem to be its subsidiary MGB, an ICL software distributor. This subsidiary overran costs on a big software contract which has resulted in an exceptional loss of UKP503,000. MGB also invested heavily in the sales and marketing of an unsuccessful and unnamed third party production management system which led to group costs of UKP250,000. This subsidiary is currently investing heavily in the development of Retail Systems Architecture which is an advanced Ingres fourth generation language based system for the central control of large retail networks – the group warns that significant early returns should not be relied on… However, the wayward subsidiary has now been merged with its former rival Systemsolve which Radius acquired last March (CI No 1,314) and which is described as trading well above expectations. Consequently, Radius now trades in the ICL distribution and software markets solely under the name Radius Computer Services which is the group’s core business. Radius Systems which supplies turnkey systems has had an unsatisfactory year which is blamed on the cost of training developers conversant in the vagaries of proprietary operating systems how to program Unix systems. The business of Radius Commercial Systems, which declined rapidly as Data General continually put off the launch of its AViiON hardware, has now been terminated. The maintenance business has performed well, probably due to ICL users rejuvenating its System 25s before moving to Unix. While Radius is not prepared to predict when its profit margins will improve, it is moving away from hardware distribution (its current scapegoat) and into software services – shareholders may note that this business will now be subject to a disciplined approach to acceptance of business to minimise its riskiness.