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January 6, 1988


By CBR Staff Writer

Zygal Dynamics Plc still looks on course for ?2m pre-tax for the year to April (CI No 757) after reporting interim profits of ?722,000. Direct comparison with the same time last year is difficult due to two major purchases and one major sale in the intervening period and the inclusion of seven, rather than six, months in the previous results. The company’s own merger accounted figures, which add this year’s purchases, Coulson Heron Associates Ltd (CI No 779) and Base-Sys Group Plc (CI No 652) in to last time’s figures, show pre-tax profits up 108%, despite the absence this time of both the maintenance arm sold to Thorn EMI Plc in January (CI No 608), and of the seventh month. When Zygal announced its first half results to October 1986, it reported pre-tax profits of ?206,000 (CI No 575), less than 30% of the new figure. Base-Sys, which competes directly with listed insurance quotations computer systems supplier, Misys Plc, is going well but the main advance has come from Coulson Heron despite a substantial drop in the DEC OEM’s turnover. Coulson Heron’s performance reflects DEC’s continued attempts to supply as much as possible of its hardware direct to end-users, cutting out the resellers (CI No 827). Software carries a higher profit level than DEC hardware – hence, Coulson’s increased margins – but the DEC strategy has already pushed Apricot Computers Plc into the hands of Sequent Computer Systems Inc and other OEM customers, including Coulson, could follow it away from DEC. Zygal’s original printer distribution business remains buoyant. Chairman Con Driscoll describes the order book as healthy, and says the balance sheet is strong. With ?2m cash and a share price that rose 10 pence on the results to 106p, further acquisitions cannot be ruled out. The shares look very cheap on the prospective single figure price earnings ratio indicated by the ?2m pre-tax target.

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