Final Results
Gresham Computing PLC
16 April 2003
Embargoed until 07.00 16 April 2002
GRESHAM COMPUTING plc
('Gresham', the 'Group' or the 'Company')
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002
Financial Highlights
2002 2001
Turnover - continuing operations £11.6m £18.3m
Operating loss £3.5m £3.9m
Profit before tax £1.1m £(1.0)m
Earnings per share 2.51p (3.32)p
Gresham Computing plc, provider of enterprise software and
solutions, announces its preliminary results for the year ended
31 December 2002. The main results highlights are as follows:
• Disposal of remaining interest in SIM Group Ltd completed in
April 2002 for £7.4m
• The Real Time Nostro ('RTN') service is expected to produce
first revenue in H2 2003 and roll-out across the industry in the
medium term
• New version of Casablanca has generated significant market
interest, although the market remains difficult
• Significant long-term growth potential
• Period-end cash balances of £4.0m (2001: £0.5m)
Andrew Walton-Green, Chief Executive Officer of Gresham,
commented:
'RTN is now a major banking industry focus. While it has been a
long haul to get us to this point, I now believe that we have
every reason to expect a significant upturn in out fortunes in
the medium and long term, as a result of having this unique real
time solution. I expect the initial roll-out of RTN will only
result in modest additional revenue in 2003, as the banking
industry absorbs the impact of real time Nostro information.
Thereafter, I would expect revenues to grow considerably as the
banks reap the full benefit of the RTN service provided by our
partner, Cable & Wireless.'
Sid Green, Chairman of Gresham, commented:
'We consider that RTN has the potential to deliver the most
significant returns in the Group's history.'
For further information, please contact:
Gresham Computing plc 020 7653 0228
Andrew Walton-Green, Chief Executive Officer
Weber Shandwick Square Mile 020 7067 0700
Tim Jackaman
Christian Taylor-Wilkinson
Embargoed until 07.00 16 April 2002
GRESHAM COMPUTING plc
('Gresham', the 'Group' or the 'Company')
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002
Results
I am pleased to report the Group's final results for the year
ended 31 December 2002. Comparative figures are for the 14
months to 31 December 2001 following our change in financial
year-end in 2001.
The Group's turnover for the period was £11.6 million (2001:
£18.3 million from continuing operations). The operating loss
was £3.5 million (2001: £3.9 million). Profit before taxation
was £1.1 million (2001: £1 million loss) with retained profits
for the period of £1.2 million (2001: £1.5 million loss). The
resultant basic earnings per share is 2.51 pence (2001: 3.32
pence loss).
Trading conditions throughout the period have remained difficult
across all areas of the business. Notwithstanding this, we have
continued to invest in the development of the business in line
with our objective of generating long term growth.
On 15 April 2002 the Group completed the disposal of its
remaining interest in SIM Group Limited for proceeds of £7.4
million resulting in a profit on disposal in the year of £4.9
million. Overall the disposal of SIM Group realised £13.3
million with a profit on disposal of £7.5 million.
From the date of the disposal of the first tranche of shares on
25 June 2001 until the disposal of the remaining shares, SIM
Group Limited was included in Gresham's results as an associated
undertaking. The profit before tax for the year includes a £0.4
million loss related to the trading activities and goodwill
amortisation of SIM Group Limited (2001: £0.4 million profit).
The Group's financial position has been strengthened during the
period with a net funds position at 31 December 2002 of £3.9
million (2001: £0.5 million).
Strategy
We have continued our strategy of focusing on the areas of the
business that we consider to have the potential to deliver
substantial shareholder returns over the medium and long term;
Finance and Banking, Integration and Storage Management. We
have continued to invest in the business and we have made
considerable progress towards our strategic objectives.
Banking
The utilisation of nostro information in real time has
increasingly become a major banking industry initiative. This
is highlighted by the announcement, in March 2003, of the merger
of the Cable & Wireless and SWIFT working parties forming the
Real Time Nostro Account Information Steering Group consisting
of 18 major banks. The International Payments Conference held in
London this month further demonstrated the importance of this
initiative.
Our primary focus in this area continues to be the delivery of
the Real Time Nostro ('RTN') service to the market with Cable &
Wireless. Although it is taking longer to bring the service to
market than we initially expected, we believe that RTN is well-
placed to take advantage of the increased banking focus in this
area. Considerable progress has been made towards the
implementation of the service in the past few months. The
product is undergoing operational testing in preparation for
full user acceptance testing. RTN has been well received by
the market and discussions are advanced with a number of major
financial institutions regarding the utilisation of the service.
We expect the service to commence revenue generation in the
second half of the year. Your Board believes that revenue from
RTN will build significantly over time as the service is rolled
out.
Integration
Through our continued investment in our flagship integration
product, Casablanca has developed into a leading offering with
world-class potential. Casablanca facilitates the rapid and
effective integration of legacy and open systems without the
need for large-scale system redevelopment. These capabilities
combined with the proven ability to enable the rapid deployment
of a Single Customer View are generating considerable interest,
particularly in the Finance and Banking sector. Although these
opportunities are yet to result in significant revenue, we
expect that the competitive advantages of Casablanca will enable
the level of opportunities to be sustained and that these will
be converted into an increasing revenue stream as the year
progresses.
Storage
The market for storage products remains highly competitive with
price competition being one of the key differentiators. The
results achieved by our Storage division have been
disappointing. Our development programme seeks to rationalise as
well as expand the scope and functionality of our range of
storage products in order to enhance our offering to the wider
storage market. A key success factor for this enhanced
streamlined product offering will be the establishment of
effective routes to market. Consequently we are actively
seeking to develop partnership arrangements with the largest
application and storage vendors in the market.
Outlook
Over the past year considerable progress has been made towards
our objective of providing the group with a platform for
sustainable long term growth. We consider that RTN has the
potential to deliver the most significant returns in the Group's
history. The next twelve months will be pivotal in achieving
our objectives. Although market conditions remain difficult, we
are encouraged by the increasing market interest in RTN and
Casablanca. Our focus will be to realise the interest that we
have generated in order to deliver the significant medium and
long term growth that we believe is achievable.
The progress of the past few months has only been possible as a
result of the enthusiasm, dedication and loyalty of our staff
and the support of our shareholders. To all of them I extend my
heartfelt thanks and look forward to seeing their confidence in
the Company fully justified during the next twelve months.
Sid Green
Chairman
15 April 2003
For further information, please contact:
Gresham Computing plc 020 7653 0228
Andrew Walton-Green, Chief Executive Officer
Weber Shandwick Square Mile 020 7067 0700
Tim Jackaman
Christian Taylor-Wilkinson
GRESHAM COMPUTING plc
Group Profit and Loss Account
for the year ended 31 December 2002
Before Before
goodwill Goodwill Total goodwill Goodwill Total
amortisation amortisation group amortisation amortisation group
Year ended 31 December 14 months ended 31 December
Notes 2002 2002 2002 2001 2001 2001
£'000 £'000 £'000 £'000 £'000 £'000
----------------------------------------------------------------------------------------------------------
TURNOVER
Continuing operations 11,578 - 11,578 18,321 - 18,321
Discontinued operations - - - 6,440 - 6,440
----------------------------------------------------------------------------------------------------------
Group turnover 2 11,578 - 11,578 24,761 - 24,761
Cost of sales 6,707 - 6,707 13,988 - 13,988
----------------------------------------------------------------------------------------------------------
GROSS PROFIT 4,871 - 4,871 10,773 - 10,773
----------------------------------------------------------------------------------------------------------
Administrative expenses - pre-
exceptional items 8,052 108 8,160 12,643 627 13,270
Administrative expenses -
exceptional items 3 252 - 252 260 1,155 1,415
----------------------------------------------------------------------------------------------------------
Administrative expenses 8,304 108 8,412 12,903 1,782 14,685
----------------------------------------------------------------------------------------------------------
OPERATING LOSS (3,433) (108) (3,541) (2,130) (1,782) (3,912)
----------------------------------------------------------------------------------------------------------
Continuing operations (3,433) (108) (3,541) (3,034) (1,533) (4,567)
Discontinued operations - - - 904 (249) 655
Share of operating (loss)/profit in
associate (342) (56) (398) 450 (88) 362
----------------------------------------------------------------------------------------------------------
TOTAL OPERATING LOSS: GROUP AND
SHARE OF ASSOCIATE (3,775) (164) (3,939) (1,680) (1,870) (3,550)
Profit on disposal of
tangible fixed assets
(continuing operations) 3 - - - 84 - 84
Profit on sale of operations
(discontinued operations) 3 4,881 - 4,881 2,647 - 2,647
----------------------------------------------------------------------------------------------------------
PROFIT/(LOSS) ON ORDINARY
ACTIVITIES 1,106 (164) 942 1,051 (1,870) (819)
BEFORE INTEREST AND TAXATION
Interest receivable 234 - 234 53 - 53
Interest payable (28) - (28) (207) - (207)
----------------------------------------------------------------------------------------------------------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES
BEFORE TAXATION 1,312 (164) 1,148 897 (1,870) (973)
Taxation on profit/(loss) on
ordinary activities (27) - (27) 444 - 444
----------------------------------------------------------------------------------------------------------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES
AFTER TAXATION 1,339 (164) 1,175 453 (1,870) (1,417)
Dividends - non-equity interests - - - 66 - 66
----------------------------------------------------------------------------------------------------------
RETAINED PROFIT/(LOSS) FOR THE
YEAR/PERIOD 1,339 (164) 1,175 387 (1,870) (1,483)
----------------------------------------------------------------------------------------------------------
Basic earnings per share (pence) 4 2.86 (0.35) 2.51 0.87 (4.19) (3.32)
Diluted earnings per share (pence)4 2.79 (0.34) 2.45 0.87 (4.19) (3.32)
----------------------------------------------------------------------------------------------------------
GRESHAM COMPUTING plc
Group Balance Sheet
at 31 December 2002
2002 2001
£'000 £'000
-----------------------------------------------------------------------------
FIXED ASSETS
Intangible assets 1,121 1,274
Tangible assets 1,556 1,832
Investment in associate - 2,865
-----------------------------------------------------------------------------
2,677 5,971
-----------------------------------------------------------------------------
CURRENT ASSETS
Debtors 4,861 4,008
Cash at bank and in hand 4,009 958
-----------------------------------------------------------------------------
8,870 4,966
-----------------------------------------------------------------------------
Creditors: amounts falling due within one year 3,498 4,146
-----------------------------------------------------------------------------
NET CURRENT ASSETS 5,372 820
-----------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 8,049 6,791
-----------------------------------------------------------------------------
Creditors: amounts falling due after more than one year 742 763
-----------------------------------------------------------------------------
7,307 6,028
-----------------------------------------------------------------------------
CAPITAL AND RESERVES
Called up share capital 2,350 2,332
Share premium account 5,701 5,614
Special reserve 313 313
Merger reserve 726 726
Profit and loss account (1,783) (2,957)
-----------------------------------------------------------------------------
SHAREHOLDERS' FUNDS - equity interests 7,307 6,028
-----------------------------------------------------------------------------
GRESHAM COMPUTING plc
Group Statement of Cash Flow
for the year ended 31 December 2002
Year 14 months
ended 31 ended 31
December December
2002 2001
Note £'000 £'000
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 (3,223) (848)
------------------------------------------------------------------------------
DIVIDEND RECEIVED FROM ASSOCIATED UNDERTAKING 79 -
------------------------------------------------------------------------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 232 39
Interest paid (28) (207)
Dividends paid to preference shareholders (66) (132)
------------------------------------------------------------------------------
138 (300)
------------------------------------------------------------------------------
TAXATION
Corporation tax paid (38) (154)
Overseas tax received - 10
------------------------------------------------------------------------------
(38) (144)
------------------------------------------------------------------------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (194) (477)
Receipts from sale of tangible fixed assets 3 442
------------------------------------------------------------------------------
(191) (35)
------------------------------------------------------------------------------
ACQUISITIONS AND DISPOSALS
Disposal of subsidiary undertaking - 5,850
Disposal of associated undertaking 6,751 -
Costs of disposal (173) (434)
Net cash disposed of with subsidiary undertaking - (363)
------------------------------------------------------------------------------
6,578 5,053
------------------------------------------------------------------------------
NET CASH INFLOW BEFORE FINANCING 3,343 3,726
------------------------------------------------------------------------------
FINANCING
Issue of share capital 105 -
Repayment of long-term loans - (2,500)
Receipt of short-term loans - 250
Repayment of short-term loans (250) (219)
Repayments of finance leases (130) (216)
------------------------------------------------------------------------------
Net outflow from financing (275) (2,685)
------------------------------------------------------------------------------
INCREASE IN CASH IN THE YEAR/PERIOD 3,068 1,041
------------------------------------------------------------------------------
Reconciliation of Net Cash Flows to Movement in Net Funds
Increase in cash 3,068 1,041
Cash inflow from increase in loans - (31)
Repayments of loans 250 2,500
Repayments of capital element of finance leases 130 216
------------------------------------------------------------------------------
Change in net funds resulting from cashflows 3,448 3,726
Finance lease obligations disposed of with subsidiary - 109
undertaking
Inception of finance leases (19) (105)
Exchange differences (14) -
------------------------------------------------------------------------------
MOVEMENT IN NET FUNDS 3,415 3,730
NET FUNDS/(DEBT) AT 1 JANUARY/1 NOVEMBER 513 (3,217)
------------------------------------------------------------------------------
NET FUNDS AT 31 DECEMBER 3,928 513
------------------------------------------------------------------------------
GRESHAM COMPUTING plc
Group Statement of Total Recognised Gains and Losses
for the year ended 31 December 2002
Year 14 months
ended 31 ended 31
December December
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Profit/(loss) for the financial year/period 1,175 (1,417)
Exchange difference on retranslation of net assets of
subsidiary undertakings (1) (2)
------------------------------------------------------------------------------
Total recognised gains and losses relating to the year/
period 1,174 (1,419)
------------------------------------------------------------------------------
Reconciliation of Group Shareholders' Funds
for the year ended 31 December 2002
Year 14 months
ended 31 ended 31
December December
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Total recognised gains and losses 1,174 (1,419)
Dividends - (66)
Issue of shares 105 -
------------------------------------------------------------------------------
Total movements during the year/period 1,279 (1,485)
Opening shareholders' funds 6,028 7,513
------------------------------------------------------------------------------
Closing shareholders' funds 7,307 6,028
------------------------------------------------------------------------------
GRESHAM COMPUTING plc
NOTES TO THE PRELIMINARY RESULTS ANNOUNCEMENT
FOR THE YEAR ENDED 31 DECEMBER 2002
1. The above financial information does not constitute statutory accounts
as defined in section 240 of the Companies Act 1985. The results for the year
ended 31 December 2002 and the balance sheet at that date are extracted from the
statutory accounts (on which the auditors have given an unqualified opinion),
which will be filed with the Registrar of Companies. The comparative financial
information is extracted from the statutory accounts for the 14 months ended 31
December 2001 (on which the auditors have given an unqualified opinion), which
have already been sent to shareholders and filed with the Registrar of
Companies.
2. Turnover and segmental analysis
Analysis of turnover
by segment:
Inter Inter
Turnover segment External Turnover segment External
turnover turnover turnover turnover
Year ended 31 December 14 months ended 31 December
2002 2002 2002 2001 2001 2001
£'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------------------
Solutions 2,549 - 2,549 4,748 (2) 4,746
Specialist contract
staff 3,456 (55) 3,401 6,167 (1,291) 4,876
--------------------------------------------------------------------------------------------
Enterprise solutions 6,005 (55) 5,950 10,915 (1,293) 9,622
Enterprise software 5,628 - 5,628 8,699 - 8,699
--------------------------------------------------------------------------------------------
Continuing operations 11,633 (55) 11,578 19,614 (1,293) 18,321
SIM Testing(discontinued) - - - 6,449 (9) 6,440
--------------------------------------------------------------------------------------------
11,633 (55) 11,578 26,063 (1,302) 24,761
--------------------------------------------------------------------------------------------
Geographical analysis of turnover by source:
Inter Inter
Turnover segment External Turnover segment External
turnover turnover turnover turnover
Year ended 31 December 14 months ended 31 December
2002 2002 2002 2001 2001 2001
£'000 £'000 £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------------------
United Kingdom-
continuing operations 7,755 (3) 7,752 12,742 (1,244) 11,498
United Kingdom-
discontinued operations - - - 6,449 (9) 6,440
North America 2,799 (751) 2,048 4,710 (226) 4,484
Rest of World 2,764 (986) 1,778 2,765 (426) 2,339
--------------------------------------------------------------------------------------------
13,318 (1,740) 11,578 26,666 (1,905) 24,761
--------------------------------------------------------------------------------------------
Geographical analysis of turnover by destination:
Year 14 months
ended 31 ended 31
December December
2002 2001
£'000 £'000
--------------------------------------------------------------------------------------------
United Kingdom-continuing operations 7,006 10,002
United Kingdom-discontinued operations - 6,440
Europe 1,049 1,730
North America 1,918 4,498
Rest of World 1,605 2,091
--------------------------------------------------------------------------------------------
11,578 24,761
--------------------------------------------------------------------------------------------
Common costs comprise the costs of all central group services.
Analysis of profit/(loss) on ordinary activities before taxation by segment
Profit/ Profit/
(loss) (loss)
before Goodwill Total before Goodwill Total
goodwill amortisation Group goodwill amortisation Group
Year ended 31 December 14 months ended 31 December
2002 2002 2002 2001 2001 2001
£'000 £'000 £'000 £'000 £'000 £'000
-----------------------------------------------------------------------------------------------------
Enterprise solutions (2,626) (60) (2,686) (2,106) (72) (2,178)
Enterprise software 339 (48) 291 737 (1,461) (724)
-----------------------------------------------------------------------------------------------------
Continuing operations (2,287) (108) (2,395) (1,369) (1,533) (2,902)
SIM Testing (discontinued) - - - 904 (249) 655
-----------------------------------------------------------------------------------------------------
(2,287) (108) (2,395) (465) (1,782) (2,247)
Common costs (1,146) - (1,146) (1,665) - (1,665)
-----------------------------------------------------------------------------------------------------
Operating loss (3,433) (108) (3,541) (2,130) (1,782) (3,912)
Share of operating
(loss)/profit of associate (342) (56) (398) 450 (88) 362
-----------------------------------------------------------------------------------------------------
Total operating loss:
group and share of associate (3,775) (164) (3,939) (1,680) (1,870) (3,550)
Non-operating exceptional
items 4,881 - 4,881 2,731 - 2,731
Net interest receivable/
(payable) 206 - 206 (154) - (154)
-----------------------------------------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before taxation 1,312 (164) 1,148 897 (1,870) (973)
-----------------------------------------------------------------------------------------------------
Analysis of profit/(loss) on ordinary activities before taxation by source:
£'000 £'000 £'000 £'000 £'000 £'000
-----------------------------------------------------------------------------------------------------
United Kingdom (1,835) - (1,835) (238) - (238)
North America (491) - (491) (977) (1,411) (2,388)
Rest of World 39 (108) (69) (154) (122) (276)
-----------------------------------------------------------------------------------------------------
(2,287) (108) (2,395) (1,369) (1,533) (2,902)
United Kingdom (discontinued) - - - 904 (249) 655
-----------------------------------------------------------------------------------------------------
(2,287) (108) (2,395) (465) (1,782) (2,247)
Common costs (1,146) - (1,146) (1,665) - (1,665)
-----------------------------------------------------------------------------------------------------
Operating loss (3,433) (108) (3,541) (2,130) (1,782) (3,912)
Share of operating
(loss)/profit of associate (342) (56) (398) 450 (88) 362
-----------------------------------------------------------------------------------------------------
Total operating loss:
group and share
of associate (3,775) (164) (3,939) (1,680) (1,870) (3,550)
Non-operating
exceptional items 4,881 - 4,881 2,731 - 2,731
Net interest
receivable/(payable) 206 - 206 (154) - (154)
-----------------------------------------------------------------------------------------------------
Profit/(loss) on
ordinary activities
before taxation 1,312 (164) 1,148 897 (1,870) (973)
-----------------------------------------------------------------------------------------------------
3. Exceptional items
Year 14 months
ended 31 ended 31
Recognised in arriving at operating loss: December December
2002 2001
£'000 £'000
-------------------------------------------------------------------------------
Reorganisation and restructuring costs 252 263
Provision for impairment in value of goodwill - 1,155
Reversal of previous provision for impairment in value of
freehold property - (125)
Provision for impairment in value of leasehold property
improvements - 122
-------------------------------------------------------------------------------
Total exceptional costs 252 1,415
-------------------------------------------------------------------------------
Recognised after operating loss:
Profit on disposal of tangible fixed assets - 84
Profit on sale of 50.01% interest in SIM Group Limited - 2,647
Profit on sale of 49.99% interest in SIM Group Limited 4,881 -
-------------------------------------------------------------------------------
Total exceptional profits 4,881 2,731
-------------------------------------------------------------------------------
4. Earnings per share
The calculations of earnings per share are based on the following profits and
numbers of shares.
Year 14 months
ended 31 ended 31
December December
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Profit/(loss) for the year/period 1,175 (1,483)
------------------------------------------------------------------------------
Year 14 months
ended 31 ended 31
December December
2002 2001
number of number of
shares shares
------------------------------------------------------------------------------
Weighted average number of shares:
For basic earnings per share 46,816,200 44,625,110
Potential ordinary shares 1,197,072 -
------------------------------------------------------------------------------
Diluted weighted average number of shares 48,013,272 44,625,110
------------------------------------------------------------------------------
For the period ended 31 December 2001, the loss attributable to ordinary
shareholders and weighted average number of ordinary shares for the purpose of
calculating the diluted earnings per ordinary share are identical to those used
for basic earnings per ordinary share. This is because the potential diluting
events would have the effect of reducing the loss per ordinary share and are
therefore not dilutive under the terms of FRS 14.
5. Dividends
The directors do not propose the payment of an ordinary dividend in respect of
the year ended 31 December 2002.
6. Reconciliation of operating loss to net cash flow from operating
activities
Year 14 months
ended 31 ended 31
December December
2002 2001
£'000 £'000
------------------------------------------------------------------------------
Operating loss (3,541) (3,912)
Depreciation 467 887
Amortisation 153 1,903
(Increase)/decrease in creditors (286) 1,150
Decrease in creditors (16) (876)
------------------------------------------------------------------------------
Net cash outflow (3,223) (848)
------------------------------------------------------------------------------
7. This preliminary statement of results will not appear as an
advertisement in any newspaper but the annual report is being sent to all
shareholders by 25 April 2003 and copies will be available to members of the
public from the company's registered office: Sopwith House, Brook Avenue,
Warsash, Southampton SO31 9ZA.
This information is provided by RNS
The company news service from the London Stock Exchange
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