Learmonth & Burchett Management Systems Plc has reported disappointing interim results with a pre-tax loss of UKP618,000 including an exceptional item of UKP202,000 on turnover of UKP9.6m. Compared to the same period last year, turnover is up from UKP8m, but the company has reported a loss after taxation of UKP402,000, down from a UKP333,000 profit in the six months to October 31 1989. Learmonth & Burchett acknowledges that 1990 has been difficult, and it started the year with a UKP202,000 rationalisation exercise, followed by a profits warning in March and 69% fall in pre-tax profits for its last fiscal, reported in June. According to chairman Rainer Burchett, UK business was affected by the recession, and seasonal demand was exacerbated by an overall decline in market demand. The flagship software product, LBMS Systems Engineer, is said to have achieved market acceptance, but profits have been insufficient to compensate for earlier delays and the consequent shortfall in revenue. The company says this has been particularly disappointing since autumn is normally a strong trading period. Although core business in the US is claimed to be holding its own, this was not reflected in overall results. The recently acquired Meta Systems saw a sharp fall in demand from government and defence sectors, and the fall has been much more severe than anticipated. The company says that heavy investment has been necessary to accelerate product development, and development costs stand at over UKP1.6m, well up on the first half. These costs are expected to rise, but the company is attempting to recoup by establishing new distribution channels and marketing agreements. LBMS Systems Engineer has notched up some UKP1m in sales, but customer delays and cutbacks are taking their toll and causing concern. Learmonth raised UKP1.5m from a consortium of investors in October (CI No 1,533), representing 12% of the company’s enlarged share capital, and believes that the cash provides the resources to ride the economic downturn as well as strengthening the balance sheet by cutting gearing.
