After a hectic year of seemingly random acquisitions, Systems Reliability Holdings Plc is finally beginning to take shape as a group of companies held together by the common goal of serving the IBM corporate mainframe market. The group now has four divisions: communications, personal computers, mainframe services and maintenance, all of which are profitable. Indeed at year-end Systems Reliability saw pre-tax profits zoom up 477% to just under UKP8m on turnover rocketing up 459% to a little under UKP135m. This was helped a bit by a change in accounting policy which meant that 1988 results were restated with a pre-tax profit reduced by UKP62,000. The change means that spare parts will now be written off over two years rather than in the year of purchase. The largest division of Systems Reliability is now mainframe services, made up of Enterprise Computer Services and Chase International Computer Services which were both acquired in the first half of 1989. After joining the group the two produced a turnover of nearly UKP69m and an operating profit of UKP3.7m. The division serves the IBM mainframe market, providing installation, upgrades and software consultancy. More than 75% of its business comes from outside the UK, being derived from France, Germany, Australia and the US. Systems chairman Robert Evans believes that 1990 growth for this division lies with leasing, end-user sales and maintenance. Currently of a comparable size is the group’s personal computer division with a turnover of UKP50.6m and an operating profit of UKP3.1m. However, a big chunk of this division, Corporate Computers is now up for sale. The reason given is that it does not fit in with the group’s direction which is to move towards higher-margin mainframe activities. Once this has been sold, South East Computers, acquired in April, will dominate the division. It has a stay of execution because it possesses networking skills which are of use to the mainframe services division. Meanwhile Evans has severed the maintenance services division from the telecommunications business, creating SR Computer Services with a turnover of just under UKP8m and an operating profit of UKP2m which largely came from the hardware maintenance of desktop computers. However, a new senior management team has already been brought in to specialise in the third party maintenance of mainframe sites. This reorganisation leaves the communications division, once the core, shivering in the cold, for without its mainten ance operation its profit margins look a bit minimal. Over the year it managed to squeeze an operating profit of UKP503,000 from a turnover of UKP15.2m. Furth ermore, its activities are centred around telephone management systems and personal computer systems and do not stretch to mainframes. Could it too be for sale soon? Evans warned that 1990 will be a tough year because of the economic climate but said he is on the prowl for further complementary acquisitions in high margin (read mainframe) areas. – Katy Ring
