Dealings in shares of Learmonth & Burchett Management Systems Plc are scheduled to start next Wednesday, June 24. The computer methods and consultancy company is coming to the Unlisted Securities Market by way of a placing through County NatWest Securities Ltd that will value the ten year old Oxford Street-based outfit at UKP21.3m. In total, 1.67m shares are being offered – 13.7% of the total equity – at 175p a share, but only 171,500 of these represent new money. The UKP300,000 that is raised will cover the cost of the placing and supplement working capital. Originally dependent on the competitive programming project work market, Learmonth now concentrates on the business of bringing discipline to what has traditionally been a very ill-disciplined area: namely, the development of computer systems and software. Stories of late, badly-documented spaghetti code, written by now-departed staff, and hardware that is either inapplicable or inadequate for the task in hand are easy to find in almost every site with a computer. Learmonth attempts to tackle these problems using a series of tools. These divide into two main categories: methods and software relating to the methods. The methods cover strategic planning through LEAP, LMBS Enterprise Analysis and Planning Method; management disciplines through PROMPT, a project and product management method; and efficient development of computer systems. In the latter field, Learmonth has three tools; Structured Development Method, which covers the activities required to specify and agree user needs, and to design a computer system to satisfy them; Database Design Method, which is specifically concerned with analysis and design of the information in the system; and Office Technology Analysis Method, which covers the activities required before introducing office automation into an organisation. On the back of these methods, Learmonth has built growing training and consultancy arms, and a software products division that, the directors believe, has some of the most advanced Computer-Assisted Software Engineering – CASE – tools on the market. A new version of the main CASE tool, Auto-Mate Plus, a rival to James Martin Associates’ Accelerator and Arthur Young’s Information Engineering Workbench has just been released.
Deal with Cullinet
It was recently the subject of a deal with Cullinet because of its ability to generate database management system code automatically. For the year to April 30, Learmonth produced pre-tax profits of UKP1.45m from a turnover of UKP7.6m. This represented a substantial improvement on 1986 when the company made UKP774,000 on UKP4.9m and was achieved in spite of rapidly escalating development expenditure on new methods and software. UKP1.9m of turnover in 1987 came from the UK public sector and around UKP1.8m from the US. Learmonth is certainly a company to watch, at least for the short to medium term. In the long run, it is likely to find itself competing with the still-to-be-introduced CASE products that some of the industry leaders are undoubtedly developing, but, if current progress if maintained, its methods and software will attract attention from those leaders so the added visibility from the public listing is likely to leave it the target for bids. Obviously, with only 13.7% of the equity being placed, no predator can swoop without the permission of Rainer Burchett and Roger Learmonth but the founders could find themselves tempted by big money in the not too distant future. On an historic price-earnings ratio of 23 calculated on actual tax charge of 37%, Learmonth is coming on a similar rating to that at which Admiral Computing entered the fray recently. A buy, as despite the limited nature of the aftermarket for the shares, the downside is small and the potential large.