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Usually when a computer dealer begins to call itself an e-business consultancy, it is time to look for a large vat of salt to pinch.

But not in Business Systems Group's case. Once a major UK reseller shifting tin to all sorts of corporates, BSG is now an almost fully-fledged consultancy-cum-Web applications software house.

But when you're a consultancy you need to book out your staff time. Keep the staff idle too long, and you end up losing money. As has BSG, which didn't pull in enough customers for the first half of its financial year and made a loss of £148,000 on £37.7m turnover for the year to March 31. This resulted in lower than expected gross margins of 18.1 per cent. Consultancy business picked up again in the second half of the year, but the company reports that current levels are more like the first half of last year.

The loss includes £1.6 million of operating expenses incurred by Webgenerics Limited, BSG's Web application unit. Also there was £219,000 of costs related to a group re-organisation.

BSG made its LSE debut in July last year, raising £15 million net of expenses to fund development of its Web Generics business. The company retains net cash balances of £14.9 million net of expenses at March-end 2001.

Last week, the company bought the Experience Design Team of Atomic Tangerine, a Web development agency for £932K upfront. It will pay up to another £5.75m over the next year, depending on sales levels. ®

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