Anger over MDIS

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institutional shareholders in McDonnell Information Services, the computer software group, are angry that it has taken four months for the company to accede to demands to force the resignation of Ian Knox, the finance director.

"Almost all the large shareholders wanted him replaced in September,'' one shareholder said last week. "The lack of financial controls at the company has been alarming,'' he alleged.

Mr Knox resigned last week after MDIS announced its second profits warning in four months. This knocked 32p - about 30 per cent of the company's value - off the share price, taking it to 74p.

A source close to the company said MDIS had started interviewing candidates for Mr Knox's position through headhunters around four months ago, but a decision to part company had to be delayed until year-end accounts were completed.

A spokesman denied there had been a lack of financial controls or that management were not of the highest calibre. "There have been a few problems with delayed orders and projected business not coming up to expectations, but this company is still successful and still making profits," he said.

Some shareholders contacted by the Independent on Sunday, however, were critical of the company and its City advisers: Barings, the merchant bank, and County NatWest, the brokers, who brought the company to a stock market flotation last year at 260p a share, only to see the price plunge.

Barings' merchant banking arm advised MDIS on the value the company should place on its shares when it floated. Its development banking arm, Barings Capital Investors, was part of an institutional grouping that sold 29.1 million shares at the time of theflotation. Those institutions now own 19.3 million shares, with Barings Capital Investors holding 10.8 million.

MDIS, one of the largest of a recent string of new issue flops, had been predicted to make £17m, but analysts have scaled down their estimates to between £8-10m after last week's warning.

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