Watford, Hertfordshire-based Star Computer Group is selling its hardware maintenance business, Star Computer Services, to Misys Plc for UKP2.7m, to pay off its bank debts. After doubling pre-tax losses to UKP2m for the full year to June 30, the company had decided to focus on its two core activities – Pinnacle Computer Systems and Star Computers – and dispose of its other businesses in an attempt to get the company back on its feet. This plan seems to have been effective so far – pre-tax losses for the half-year to December 31 were reduced by 60% from the UKP649,000 losses reported for the same period in 1989, on sales that rose 26% to UKP8m, and the two core activities are reported to have been trading profitably by the end of 1990. The intention had been to sell the UKP3.5m-a-year Computer Services arm – which reported UKP1m pre-tax profits in 1989 – to a mangement buy-out team, but, says chairman David Blechner, when Misys read of this intention in Star’s annual statement in December (CI No 1,578), it outbid the management buy-out team, and the UKP3m deal was clinched late on Tuesday. Blechner says all 65 Star staff are initially being kept on, and is happy that the change of hands will provide Star customers with the added benefits of a company well experienced in Unix maintenance. Star Computer Services is to be merged with Misys’ TIS maintenance operation, which has 100 staff and turned over UKP8m last year. Says Misys’ Kevin Lomax, Star’s maintenance business overlapped with that of TIS Maintenance, so the two companies will merge relatively easily and complement each other. As part of the pact, Misys has agreed not to compete with Star’s continuing businesses, and will pay Star commission on the introduction and renewal of maintenance contracts over a five-year period. In January, Star Computer Group implemented a programme to reduce costs in the continuing businesses by UKP670,000 per year, and in February, the business and assets of Connect Data were sold for a consideration of UKP68,000, after which the company ceased trading. Connect Data turned in pre-tax losses of UKP436,000 on sales of UKP1.9m for 1989. Inteq also ceased trading in February after turning in UKP35,000 losses for the year, on sales of UKP850,000. Star expects to show a positive cash position following the sale to Misys, and is confident that this, in addition to market acceptance of its latest version of its Practice Management Software packages, and the establishment of a new sales division last summer will help to put Star Computer on a strong footing for the future.
