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December 8, 1987

SMALL INTERIM PROFIT AS ITL PLC LINES UP ACQUISITIONS TO FURTHER UNIX THRUST

By CBR Staff Writer

The stemming of losses from its office workstation activities, now closed, helped ITL Information Technology Plc turn in an interim profit in its first set of results since going public in July (CI No 717). The half time pre-tax figure of UKP352,000 compares with a loss of UKP532,000 for the same 28 week period last year. Turnover rose 3.6% to UKP14.5m. ITL has traditionally done the majority of its business and made all of its profits in the shorter second half, in particular in the final quarter, but future prospects are not very clear at the moment. A UKP3m order from British Telecom International for a turnkey fault-tolerant network and X400-conformant software to replace the existing Telemessage and International Telegram switching system, and a major increase in customers for ITL’s broadband Cablestream local area network are more than balanced, at least in the short-term, by the rapid drop off in trade with very long-standing OEM customer ICL Plc. Sales of front-end communications processors to ICL accounted for 12% of turnover last year but are not expected to be a significant factor in future. The impact of ITL’s move into Unix with Sequoia Systems and Motorola Inc kit (CI No 819) is unquantifiable. Group executive director Bob Finch says that the company has been preparing for the move for two years, and that the training department is already up to speed on Unix. ITL also has considerable expertise in C, the result of its now abandoned attempts to establish itself in the office market. Finch claims the switch to Unix is in direct response to customer demand. He is forecasting that the Professional Services software and training arm and the Momentum hardware divisions could with luck grow at 30% per annum. Stripping out the office workstation business from last year’s figures, the growth in the first half was barely 20%, so luck may well be necessary unless the recent Unix announcements lead to a surge in demand. Finch’s levels of growth may rely on acquisitions and news on that front may be forthcoming soon. Managing director Doug Gemmell estimates the chances of one particular deal under consideration coming off at 50%. Ideal targets are Unix software houses in the same vertical market areas as ITL with turnover of around UKP5m. Despite the newfound commitment to Unix, the existing Momentum range will be supported for several years to come. A new, faster top-end machine will be launched during 1988. The shares fell 1p on the results to 74p, against a flotation price of 105p.

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