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October 25, 1988

MELTDOWN MONDAY MELTS NMW’s PROFITS

By CBR Staff Writer

Commenting on the company’s disappointing half-year results, E B Bibby, chairman of NMW Computers Plc, blamed a pre-tax loss of UKP428,000 on the depressed condition of the securities industry since last October’s crash. One hundred jobs have been axed in the last six months and employment levels are back to pre Big Bang levels at the City software and settlements bureau specialists. The company’s core Capital Service product, a traditional back-office service for stockbrokers which accounted for 90% of turnover last year, represented a mere 30% this time. Mr Bibby claimed stock market activity was only half that of the comparable period last year and that income from the X25 communications network for securities industry services had been severely affected. Broker Services Ltd, a clearing services operation for the securities industry set up with Barclays Bank on a 49% – 51% basis, was responsible for 40% of the loss and Mr Bibby said that the board is seeking ways to reduce NMW’s exposure to further losses there. NMW has recently broadened its range of activities in an effort to reduce its dependence on the City. A contingency standby service for large computer sites was launched last September and the company is now marketing the X25 communications network outside the securities industry. Mr Bibby said action has also been taken to reduce company expenditure and monthly costs are expected to be cut by one third by the end of the year, the results of which will be seen during the second half. On the plus side sales of Trade, an automatic order routing and execution service developed in association with Barclays De Zoete Wedd, are said to be going well. Credit Suisse First Boston Ltd and Yamaichi International (Europe) Ltd have joined the Capital Service this year, while sales have been reported of the Equity Market-Maker System and the Prima Investment Management Product, where no sales were achieved last year. Finally Mr Bibby predicted that the clearing member concept will continue to grow as the deregulated market matures, and claimed NMW is now more capable than ever of supporting the securities industry when market conditions improve.

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