We are the cradle-to-grave communications company, says Mike Burden, chief executive of EIT Group Plc, the tiny 18-month-old Reading, Berkshire firm which bought up UKP29m-a-year Sintrom Plc in December (CI No 1,823). The group, which is traded on the Unlisted Securities Market, has now made its fourth acquisition and considers itself a force to be reckoned with in the European communications-based systems integration business. This is not the first time that Burden has tried to launch a computer company – in 1982, he helped start up Optim Computer Group Plc, a turnkey systems house based in Letchworth, Hertfordshire, which in 1984 ran into severe trading difficulties, following the decision to get into 68000-based microcomputer manufacture with Armstrong Micro Electronics (CI No 969). It was at about this point that Burden resigned from the company, going into early retirement and jetting abroad to get away from it all. Four years ago, bored by the life of luxury, Burden came back to the UK, and spent a lot of time talking to institutional investors, evaluating companies, with a view to setting up a new communications company.

Three Mikes

Then, two years ago, Burden got together with Mike Dart, of the renowned Dart family in the US, and started looking seriously at starting up EIT Group. The third founder of EIT is Mike Rydell, a man with a history of involvement with UK public companies. The three Mikes finally bought up photographic company Maxiprint Plc, stripped it of its loss-making photographic activities, and prepared to build a communications business from its ashes. The company, which adopted the bland name EIT only last June, made its first acquisition – Intercom MS Ltd – in November 1990 – a telecommunications software company with a proprietary office communications and message-handling system, Office Link. Intercom’s largest installation is a telephone system at Siemens AG’s headquarters in Munich, serving 4,000 internal users. Besides Germany where, as a result of the Siemens installation, a joint marketing agreement was reached whereby Siemens would distribute Intercom’s products locally, Intercom has representation in the Netherlands and Iberia. Last June, EIT acquired Mortlake, London-based Decisionware Ltd, a five-year-old Unix software house, with an applications generator called Dynamo. Decisionware also sells computer hardware via its 70%-owned subsidiary, Decisionware Systems Ltd. Like Intercom, Decisionware brought EIT a strong continental distributor network – with distributors in the US and in nine European countries – aiding EIT in its quest to become a premier European communications-based systems integrator. The 24-year-old Sintrom, with its 4,000-strong customer base in the UK, brings EIT expertise in wide and local area networks, cabling and design of networks, maintenance, systems integration and, very important to EIT for the future, document image processing. Winchester-based Software Networks Ltd is the fourth company to make it into EIT’s books. The business, for which EIT offered a maximum consideration of UKP500,000, is 36 years old. Its sole trading subsidiary, Automatic Switching Ltd, specialises in call management and voice mail, with 2,000 UK customers. Burden says he’s taking a rest from buying at the moment, and will be concentrating on consolidating EIT as it now stands; Sintrom, Intercom, Decisionware and Automatic Switching will be merged into one company, adopting the EIT name.

By Sue Norris

For Sintrom’s part, EIT’s purchase offer presented the way out that chairman Tom Dalzell had been seeking. About to turn 70, the big boss retired once the decision was made to turn the company over to EIT. EIT paid a generous amount for the company, raising the UKP1.7m capital from the 14 institutional investors by which the three Mikes are backed – 65% of EIT is owned by City investors. Bernard Fisher has joined the board of EIT from Sintrom, having been brought in at the director-level at Sintrom last May. Fisher, an old colleague of Dalzell, was also in retirement (from his

position as chairman and managing director of Alphameric Plc’s Financial Trading Technologies), when he was called in to see Dalzell, and asked to step in and help turn the loss-making company around. Not long afterwards, Fisher was appointed managing director, the third man to fill the post in just two years – Terry Cave left the position in January 1990 after a dispute about Sintrom’s growth policy, and Ian Hillier-Brook threw in the towel in early 1991 after just a year in the job, to pursue other interests. Fisher, who doesn’t seem to have come out too badly after seven months working for Dalzell, says he doesn’t know what happened between the former chairman and his predecessors. In his capacity as managing director of Sintrom, Fisher worked alongside new financial director Edward Lane – who will also join the board of EIT – to integrate all Sintrom’s operations into a single trading entity controlled from the company’s Reading headquarters. According to Fisher, no Sintrom staff have lost their jobs since EIT took over the company, and EIT is apparently actively recruiting sales and marketing staff. But changes will no doubt be made when EIT begins to organise the four acquisitions into one consolidated company. Being merged into EIT was also considered strategic to Sintrom, insofar as Sintrom had begun trying to position itself as a systems integrator of communications, and was seeking integrated voice and data technology and a Unix environment on which to base new applications software. In addition, Sintrom wanted to get into continental Europe in a big way. EIT promised to give the company all this, as well as a much sought-for change of image, change of chairman, and re-distribution of company shares. When EIT came along, Fisher reports, it took just two meetings before Sintrom jumped at the offer. Fisher, a very charitable man, says EIT was friendly and not at all hostile in making its bid. All in all, the picture being painted is rather rosy. But there are bound to be some obstacles to be overcome – merging four newly-acquired businesses is, in itself, going to be quite a task. In conjunction with the offer for Sintrom, EIT has raised around UKP2.3m cash, by placing new shares and 12% convertible redeemable unsecured loan stock. So the directors have a bit of money to play with. In the year to March 31, EIT Group made a pre-tax loss of UKP246,000 on sales of UKP485,000.

Sintrom losses

Fisher notes, however, that the losses were related to the Maxiprint businesses which have now been shed. And of course the figures do not account for EIT’s most recent acquisitions. While Burden claims that EIT is now profitable again, Sintrom’s losses must surely have put a strain on the group’s financial position – the company, down to 182 employees at the last count, made a pre-tax loss of UKP274,000 on sales of UKP28.6m for the year to December 31, 1990, at which time Sintrom’s net assets were just under UKP3m. In the six months to June 30, Sintrom’s losses, after reorganisation costs, reached UKP1.9m, on revenues of UKP11.6m. Mike Burden has no reservations about predicting that EIT will be double its current size to be a UKP50m-a-year business within just two years. And this, he says, will be achieved by organic growth. Any acquisitions between now and then will be small ones. Asked what he would be looking for in a future purchase, Burden said he wants to build up a portfolio of Unix-based communications applications, to add to the range acquired with Decisionware. EIT is currently in the process of choosing a Unix hardware environment, and Burden says the group is a matter of months away from an agreement with a major manufacturer. Burden also seeks to expand further across the continent, broadening EIT’s activities particularly in France. As to whether EIT will seek a full listing on the London Stock Exchange, Fisher, now deputy chairman of EIT, says that the group has no immediate plans in that direction.