Mike Love was walking in the valleys of Nepal when he decided to postpone his retirement. For the executive chairman of IT systems specialist, SciSys plc, choosing to return to sort out an ailing company was a tough call.

“I had been out of the business for about five years and it was a very balanced decision to return,” Love says. “It was either re-engage and sort it out or just walk away. There was a substantial loyalty factor.

“My wife and I were in Nepal at the time, working with a charity on various projects for six weeks. It was fairly clear what needed to be done with SciSys, but we’d put off the decision until then – at which point I thought I’d better do it.”

In November last year Love returned to the SciSys boardroom and to a company that had lost its way in recent years. He had played a part in starting the business back in 1980 and seen it through a listing on the Alternative Investment Market in 1997. Today the company’s staff and management still hold around 30pc of the shares.

“The seeds of discontent were really sown in 2005,” he says. “In 2000 Science Systems, as it was, acquired a business called Coda and rebranded as Coda SciSys. I became non-executive chairman a few years later on and effectively retired.

“Four or five years on we demerged from Coda and floated it back on to the stock exchange, leaving SciSys where it was. What we floated was a radically different company to the one we bought.

But according to Love, dividing the business meant splitting up the management team, and it was here that SciSys hit problems.

“Most of the established management team went with the Coda part of the business, leaving a smaller and newer part of the management team with SciSys along with just a few old hands,” he says. “And gradually over two or three years things seemed to go off the boil.”

By the middle of 2007 it was clear that there were big problems at the company. Four profit warnings during the year left Love with grave concerns about its future. “They were just not on top of or in control of the activities around them,” he says.

“Following the first profits warning around about March, of course you ask the questions: “Is this the extent of it? What else is happening?” Another profits warning followed in April/May, and we said: “Hang on, we thought we’d bottomed this out last time around, what’s going on?” Another profits warning six weeks later, and we said: “You can’t convince us you’re on top of all this, get to grips with it.” Another profits warning in September: “Enough is enough, there has to be a change.

“Fundamentally it was that the management was stretched, management had taken its eye off the ball and there were some complex business issues.”

Weak management had caused some key contracts to slip and the core essentials of contract ownership and control within the business along with wayward financial management over profit margins caused major disruption.

Those problems meant that in the year to December 2007, revenues grew just 1pc to £25.6m and pre-tax losses came in at £2.7m from a profit of £0.4m a year earlier.

Chief executive Mark Hampson left the business, replaced by Love as executive chairman. Elsewhere, David Jones switched from non-executive to executive and former director John Haynes, returned to the business.

And with the change in personnel came a change in fortune. In April this year, AIM peer Microgen plc bought a slice of SciSys shares at a rock bottom price of around 22p. Talk of a deal reached fever pitch but discussions ended after Love’s team rejected an offer. The share price topped around 50p and has hovered at around 40p ever since.

But Love thinks a second approach by Microgen is unlikely. “Will they come back and offer a higher price? I just don’t know. We didn’t recommend their offer and I see no reason why we’d change our thinking unless they came along with a much higher offer. I have to say that they would probably look at the business and say the synergies don’t justify a higher offer.”

But while the Microgen deal came to nothing, acquisitions and, more importantly, leveraging SciSys’ AIM listing to do them has been critical, according to Love.

“Fundamentally I’m a big supporter of AIM,” he says. “We would not have been able to buy Coda had we not been on AIM. More recently we would not have been able to buy VCS, because the deal was partly cash and partly shares. It’s a bit of a pain having to deal with share prices rising and falling as they do, and market expectations are always for sparkling performances - which keeps you under pressure that at times you’d rather not have. But on the whole AIM has been very good for us.”

It was amid last year’s upheaval that SciSys managed to pull off the acquisition of German IT systems business VCS AG for £13.2m in cash and shares. It was a deal that some analysts judged as ill-timed, particularly in view of the chaos Love was trying to sort out already.

But some high impact contract wins since then – with clients including Deutsche Welle and Thales Alenia Space Antwerp – have helped to make the deal look a good move.

“We had a workshop over here last December where we brought over the VCS and SciSys executive teams together and went through areas where we saw synergies between the businesses. And if you saw that team working together you’d have thought they’d been colleagues for years – the culture fitted very well.”

Indeed, according to Love one of the key selling points on the acquisition was how well VCS fitted with SciSys’ existing Media Broadcasting operation.

“Media is a growth market,” he says. “There is a lot of opportunity there as broadcasters adapt and look at the efficiency of their operations, so that market looks pretty encouraging for us.”

Elsewhere, he sees the growth of Media counter-balanced by the company’s steady, long-term markets in Space and Government. Those divisions offer what he calls “markets where we can earn a healthy living”.

With VCS bedding in, Love looks to have arrested the contract problems and begun the financial repairs. However, his presence in the business, while committed, is finite. “I’ll be here now for as long as necessary,” he says. “Realistically I’d hope that within 18 months and two years we can get the succession planning sorted. Pleasingly, there are some managers that are starting to come through.”

Ben Hobson, SmallCapNews.co.uk