McDonnell Information Systems Group Plc’s chairman, Ian Hay Davison was suitably elegiac in his statement accompanying the group’s results. It is a matter of great regret to the board to report lower than originally expected profits he began, as the Hemel Hempstead, Hertfordshire company undercut even the pessimistic forecasts made last month (CI No 2,578). Pre-tax profits plunged 57% to ú9.1m on turnover that was virtually static at ú148.9m. Orders have amounted to just three for the PRO-IV International Banking System, and contrary to earlier reports, the group intends to cut back on research and development, which stood at ú19.2m last year, by some 20%. The group claims that the level was unexpectedly high, due mainly to increased investment in PRO-IV IBS and health systems. Jobs are also going, a redundancy programme having been initiated that will reduce the headcount by around 100. McDonnell is still experiencing hardware delivery problems with Motorola Inc, but hopes to have these ironed out by the end of March. The group is also blaming a local government review for delays occurring to public sector orders due to the uncertainty it has apparently caused. However, 15 new customers have been added to its base of approximately 170 local authorities. Public sector revenues crept up 0.6% to ú86.6m as operating profits fell 10.8% to ú22.4m. Falling hardware prices have been more than offset by software sales and services, resulting in slight increases in turnover and profit for the commercial and industrial sector. The PRO-IV Chess business that was acquired from Xerox Corp last October has been fully integrated into the group. The group believes it has strong potential in the Far East, and distribution agreements have been signed with Fujitsu Ltd in Japan, China, Hong Kong and south east Asia for PRO-IV Chess. As a result of the redundancy programme, the integration of PRO-IV Chess and the cut in research and development, the company has made a ú1.1m provision in the 1994 accounts. The reorganisation programme has included farming out the completion of the remaining modules of PRO-IV IBS as well as management changes, and McDonnell intends to push the product in 1995 to expand its market. Chief executive Jerry Causley hopes that cost and headcount reductions will enable the group to take full advantge of its potential. The lack of any real forecasts is testament to the disappointment of the results of McDonnell’s first year as a public company. The board recommends a final dividend of 3.95 pence per share, making a total of 6.25 pence for the year.
