IBL Plc’s shares tumbled to 63 pence from Friday’s close of 125 pence before recovering to 85p yesterday, after the IBM lessor announced devastating 1986 results. As last year, its first full year as a quoted company, IBL’s figures were way below market expectations. Instead of the widely expected UKP11m pre-tax profit, the company unveiled […]
IBL Plc’s shares tumbled to 63 pence from Friday’s close of 125 pence before recovering to 85p yesterday, after the IBM lessor announced devastating 1986 results. As last year, its first full year as a quoted company, IBL’s figures were way below market expectations. Instead of the widely expected UKP11m pre-tax profit, the company unveiled just UKP4.5m, and even that figure was only reached due to a change in accounting policy, not included in City forecasts, that added UKP1.38m to the total. Seemingly on the basis that attack is the best form of defence, chairman and 55%-owner Phil Coussens yesterday laid into auditors Binder Hamlyn for not allowing further changes in accounting policy that would have added an extra UKP5m, in addition to the UKP1.38m, to profits, thus producing the coveted UKP11m. He agreed with Atlantic Computer Plc chairman John Foulston’s recent assertion that IDC’s – International Data Corp’s – residual value forecasts, which form the basis for both companies’ residual value accounting, bear little relation to what is happening in the European mainframe leasing market, and said that, if anything, the IDC figures were becoming more out of line with reality every day. Foulston at least has the compensation that his group is growing turnover and profits at an impressive rate while Coussens does not. And if IBL’s figures do not on their own contain enough to scare off potential investors, finance director Ashley West warns that the current half’s results may be disappointing. He blames margin pressure on IBM 3090s, 3081s and 3083s and says that there are also likely to be further extraordinary losses in the next set of accounts. In 1986, IBL wroteoff UKP1.8m net – losses of UKP3.8m in the US, and UKP2.5m on the high volume Personal Computer operations in France and West Germany were only partially balanced by a gain of UKP4.4m from the sale of residual interests acquired when it bought ICC.
Failed to deliver
As a result of the losses, IBL has switched the focus of its US activity from leasing to broking and pulled out of micros in West Germany. Patrice Courbey’s first action as managing director and chief executive, roles he took over quietly from Phil Coussens who has relinquished day-to-day responsibility, was to cut the US staff from 35 to 16,and he promises further cuts in overheads during 1987. This should not be too difficult to achieve. Throughout most of 1986 IBL continued to show the lack of financial control that led to its much-delayed disastrous 1985 results. Granted, Ashley West only took up the post of financial director office in September, but there should surely have been enough experience and vigilance within existing senior management to prevent the 50% increase in overheads, from UKP20m to UKP30m, during 1986, especially after the warning of those French troubles in 1985. The one bright spot on the IBL horizon is a joint venture, in which it will hold 49%, with Olivetti, to provide third party maintenance to large systems users in Italy. Courbey says, however, that this does not mean that IBL will be entering the IBM-plug-compatible market, at least for 1987, and, if Courcey has his way – he quit Itel in the late 1970s when Itel started selling its own plug-compatible mainframes from National Semiconductor and Hitachi, probably not for a long time beyond. Apart from the Olivetti deal and the obvious good sense of Courbey, there is little to recommend IBL until it actually starts to deliver. So far, its public career has been one disappointment after another and there is no reason to suggest any major change is about to occur. Even the deal to buy CSC Europe BV, which when announced in February, lifted the share price from its low in the mid-50s to near 120p has failed to materialise.