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December 16, 1987


By CBR Staff Writer

An Irish IBM computer leasing company which recently reported half year turnover of less than UKP1m is joining the Unlisted Securities Market. As reported briefly last week (CI No 830), Reflex Investments Plc is joining the secondary market by way of a placing of 2.3m shares – 20% of its equity – at 48 Irish pence a share by DCC Corporate Finance Ltd. The estimated UKP840,000 – sterling – proceeds from the placing will help reduce bank borrowings, currently standing at just over UKP900,000. Some of the money will, however, be put towards expanding the leasing portfolios. Unusually, no money is being raised by the placing. Based in Dublin, Reflex had revenues of just UKP976,000 at yesterday’s exchange rate for the six months to October 1987. Pre-tax profits of UKP188,000 in the half are forecast in the prospectus to result in UKP448,000 for the year to April 1988. Started in early 1984 by former IBM Ireland managers Aidan Farrell and Martin Fullam as a supplier and financer of new and used IBM equipment, Reflex has this year branched out into computer disaster recovery for small-to-medium installations and into general sales-aid leasing of items such as cars and office equipment. The directors are confident that the latter at least will be a major profit contributor in years to come. Overseas trade currently accounts for 15% of group revenue and is expected to grow – helped by acquisitions – as a percentage. The board, headed by James Flavin who is also chairman of Printech Plc and Flogas Plc, and a director of banana people Fyffes Plc, say that the listing will provide the group with greater flexibility for financing future growth and will increase the company’s status. Not if it turns out like CPS Data Systems Plc and IBL Plc it won’t. CPS and IBL both ran into trouble soon after their flotations and are now owned by Inspectorate International. Their problems compounded the City’s scepticism about computer leasing companies, much of which was caused by the lessors’ accounting policies. Happily, Reflex seems to have fairly easy-to-understand procedures in that area, taking no residual values into its books until equipment is re-sold or re-leased. The profits forecast for the full year puts the company on a prospective price-earnings ratio of 10.4, the same multiple that Atlantic Computers Plc currently enjoys. Perhaps high considering the chequered history of listed leasers.

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