McDonnell removes 'visionary' boss

DAVID HELLIER

McDonnell Information Systems, the computer-services company, has decided to part with both its chief executive and its banking advisers, Barings, following the third profits warning since it was floated last March.

Shares in MDIS fell in value yesterday from 90p to 62.5p as chairman Ian Hay Davison warned that results for the full year were likely to be substantially below market expectations. NatWest Securities' analyst Paul Morland, in common with other watchers of the company, immediately reduced his full-year profits forecast from pounds 13m to pounds 2m.

He said that although he was recommending clients to buy the shares at their current level, he realised that "some people will never trust the company again".

MDIS said that Jerry Causley, who led the team that bought the firm in a pounds 100m management buyout from US aerospace company McDonnell Douglas, was leaving the group with compensation for his pounds 150,000-a-year two-year contract as chief executive.

"He is a visionary," Mr Hay Davison said yesterday, "but I am confident that we can run the company without him. We have to concentrate more on the delivery of the vision now."

Mr Causley still holds more than 2.39m shares in the company. At the time of the flotation, he said that he thought a stock-market listing would benefit the company's credibility in expanding its public-sector customer base. He said then that some potential customers had been put off by the large borrowings the group had taken on after its buyout from McDonnell Douglas.

Morgan Grenfell will replace Barings as MDIS's merchant-banking advisers, Mr Davison said. He said he thought that it was "appropriate" to make a fresh start with new advisers now that the company had also put a new management team in place.

During the first half of the year three new executive directors and three senior managers were appointed. The company says the new management team believes MDIS's core businesses can deliver substantial profits, provided they are not held back by underperforming sectors.

Some investors who bought shares when the company was floated have noted that Barings' venture-capital arm was among the largest institutional sellers of MDIS stock at the time of the flotation. Barings is believed to have netted around pounds 50m from the sale of two-thirds of its holding when the company was launched.

Yesterday's interim statement said that MDIS had lost pounds 1.7m in the first half of the year, although turnover increased 16% to pounds 79.1m. The interim dividend has been reduced from 2.3p to 1.2p.

The company said that a number of factors adversely affected its results, including an exceptional charge of pounds 1.1m, disappointing results in several of its international businesses, and losses in the health business arising from costs associated with the completion of two major contracts.

Last year the group made a full-year profit of pounds 9.1m, well below estimates that had ranged up to pounds 26m when the company came to the market. Then, the shortfall was blamed on a slippage in orders, together with an increase in research and development costs.

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

Voices
Left: An illustration of the original Jim Crowe, played by TD Rice Right: A Couple dressed as Ray and Janay Rice
voices

By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen

Arts and Entertainment
music
Life and Style
fashion
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The benefits of Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes