London-based microelectronics manufacturer and software developer Psion Plc – best known for its Psion Organiser II hand held computers – is to join the Unlisted Securities Market with a placing of 3.1m ordinary shares at 97p each. Of the shares, 1.4m are new, raising about UKP1.7m for the company after expenses. Psion says it wants the cash to to finance its drive into the US and continental Europe. The share placing represents 18% of the enlarged share capital and will give the company a market capitalisation of UKP16.59m. Directors are selling just over 1m shares but they retain 79% of the enlarged equity, another 1.5m shares are being placed for existing outside shareholders. In 1987 UK sales accounted for 69% of the company’s UKP11.81m turnover compared with just 6% in the US and the most of the rest on the continent. The company stresses that it is a high value added, high gross margins operation – margins were 48% last year. One product But future investors may still be concerned about its dependence on one product, the Organiser II, which Psion reckons now accounts for about 90% of its business, built from ground zero when the firm, previously entirely a software operation, launched the original Organiser in 1984. This figure includes sales of peripherals and software for the Organiser, about half the total Organiser business, implying a healthy after-market. Almost all manufacturing and assembly is handled by subcontractors, Radamec Group Plc doing the Organiser in Andover, Hampshire, Ablex Audio Video Ltd doing software copying and packaging in Telford. Psion makes low volume items at its Park Royal base in West London. Small business software accounts for the other 10% of Psion’s turnover, in particular the integrated and stand-alone packages: Quill word processor, Archive database manager, Abacus spreadsheet and Easel business graphics package for which the company claims 160,000 users worldwide. Psion says it aims to reduce its dependence on the Organiser with new products and software to be released in about a year, but won’t go further than to say the products will apply the underlying technology used to develop its current offerings – the prospectus hints at adding some kind of speech processing technology to variants of the Organiser. It also wants to make acquisitions in related areas. Psion was set up in 1980 as a games software company and four years latter launched the Organiser I and business applications software, which was the basis of the integrated software in the ill-fated Sinclair QL and in the ICL One Per Desk. Launch of the Organiser led to a big hiatus in the company’s business, and after pre-tax profits of UKP1.6m on sales of UKP4.8m in 1983, in 1984 it plunged to a loss of UKP1.4m on UKP4.6m sales. The 1983 level of profitability has never been repeated: 1985 saw UKP441,000 on UKP4.2m sales, 1985 saw profits fall to UKP383,000 on UKP5m sales, and in the year to December 1987, pre-tax profits climbed to UKP1.9m on sales of UKP11.8m. Brokers to the placing are Chase Manhattan Securities, banker is Charterhouse Bank. On a notional 35% tax charge, the shares are being offered on a price-earnings multiple of 12.48, which would have looked cheap before Meltdown Monday, but now looks about right, although there are no exactly comparable firms. Trading starts Monday, March 14.
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