MDIS crashes as pounds 40m loss declared
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Your support makes all the difference.Shares in McDonnell Information Systems, the crisis ridden computer software group, fell a further 7 per cent yesterday when the company sank to a pounds 40m loss after heavy exceptional charges. The company also scrapped the final dividend.
The losses continue a disastrous run by the company whose shares were floated at 260p two years ago. They closed another 6p lower yesterday at 79p.
Chairman Ian Hay Davison admitted that 1995 had been difficult but said prospects were brighter. He added: "1995 has been a year of challenge and fundamental strategic change. But the board believes that the actions which have been taken will reduce the group's exposure to higher risk and loss-making activities."
The losses for the year to 31 December were exacerbated by pounds 23m of exceptional charges relating to the closure of some loss-making businesses and redundancy costs.
Almost pounds 16m of the exceptional charges related to disposals. They included the sale of the international banking systems business which made a pounds 8m loss last year and the closure of the Spanish operations which made a loss of pounds 1m. Other write-offs cost pounds 3m.
The re-organisation of existing businesses cost a further pounds 7.5m, which covered redundancies and professional fees.
Mr Hay Davison said that 1996 had started as planned. "The directors expect that the group will build its existing strong business in its core UK markets. In the US the group will continue to invest in the development of Chess, the manufacturing software product, to meet strong international demand."
Sales from continuing operations were flat at pounds 137m. The losses of pounds 40m compare to pounds 7m profits last time. Of the remaining businesses, Commercial Solutions saw revenues rise by 40 per cent to pounds 38m though profits were dented by product development.
Revenues in the systems and application development business were also lower. The facilities management business offered a glimmer of hope with a 22 per cent sales increase due to new contracts from industry and government.
Revenues in the public sector were pounds 8m lower at pounds 61m due to poor performances from the healthcare sector and the Australian business.
MDIS has been one of the worst new listings of recent years, provoking fierce criticism of those responsible for bringing it to market. Barings acted as the company's merchant bank with NatWest Wood Mackenzie the broker. The backing of these institutions and the presence of Mr Hay Davison attracted many investors to the issue.
The company had been a management buy-out from McDonnell Douglas, the US giant. But profits and sales had declined in the three years prior to flotation. Seventeen senior staff who had invested in the company at the time of the buy-out cashed in half their shares. Collectively, their pounds 1m invested in the 1993 buyout was worse pounds 21m on flotation.
The company issue its fourth profits warning in December.
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