Interim Results

RNS Number : 9457B

Gresham Computing PLC

26 August 2008

 

Embargoed until 07.00 HRS (BST)

26 August 2008

Gresham Computing plc

('Gresham', the 'Group' or the 'Company')

Interim results for the six months ended 30 June 2008

GRESHAM RIDES THE CREDIT CRUNCH WAVE REPORTING STRONG GROWTH AND A RETURN TO PROFIT

Gresham, the specialist provider of real-time financial solutions and storage solutions, today announces 

un-audited interim results for the six months ended 30 June 2008.

Highlights

• Adjusted EBITDA profit of £0.03m (£1.28m loss H1 2007)

• Real Time Financial Solutions Revenues up 24%

Eric Sepkes, Chairman of Gresham, commented:  

'I am very pleased to report a much improved first six months of 2008 arising from significant growth in our core business and tight cost control. 

I believe that the credit crunch is a contributory factor to our success, forcing a re-think on how to achieve more with less. The financial services technology market is seeing very large projects (£100m plus) being slimmed down or deferred. Conversely, there appears to now be a greater emphasis on smaller, customer focused projects that can demonstrate rapid results in a short timescale. Our proven technology, rapid deployment and agile solutions enable our customers to reap measurable returns on their expenditure in the same financial period as the decision. As a result, we are experiencing strong demand, especially in the financial services market. We have a firm pipeline of work for the second half and a growing list of new opportunities which play to our core strengths.'

For further information please contact:

Gresham Computing plc

Andrew Walton-Green                [phone]

Eric Sepkes                                   [phone]

                                                                                                                                                                                        26 August 2008

GRESHAM COMPUTING plc

('Gresham', the 'group' or the 'company')

Interim results for the 6 months ended 30 june 2008

Gresham, provider of real-time financial solutions and storage solutions, announces its un-audited interim results for the 6 months ended 30 June 2008. 

Financials

Trading improved markedly in the first six months of 2008 with revenues growing by 12% to £7.2m (6 months 2007: £6.4m) and a return to adjusted EBITDA profit of £0.03m (6 months 2007: loss £1.28m). Revenues in our core real-time financial solutions business were up 24% on the prior period. 

Our focus on securing new core business and reducing costs is self evident from our results. The improvement to trading seen in the first half has so far continued into the second half and we have a strong confirmed order book for the remainder of 2008. 

Clareti Cash Reporting 

Ten years ago, Gresham began discussing the concept of doing business based on real-time information, as opposed to 'out of date' batch information, with a collection of the world's largest banks. Over a period of time, these discussions gave rise to Gresham's Real-Time Nostro service, designed to provide banks with real-time information about their cash positions with other banks; referred to in the banking world as their Nostro positions. Over a relatively short period of time, in banking terms, many of the most influential world banks agreed to provide data into the Real Time Nostro service, which moved from concept to reality when it went live in 2004 with Barclays and Royal Bank of Scotland as initial users. The legacy systems and legacy thinking of some banks has been a hurdle in bringing this to market, however, as is now only too apparent, failure to manage risk and liquidity in real-time is no longer a viable option for a 21st century financial institution. The relevance to banks of improving their management of both liquidity and risk has never been stronger. Our technology enables us to deliver highly cost effective solutions from a proven service, in real-time. 

Today we are operating a multi-currency service between some of the largest banks in the world. In aggregate, we are currently providing real-time cross border payment information of circa $140 trillion per annum, and growing. While this is a big number and something we are justifiably proud of, we have still barely scratched the surface of this market. However, we have proven, without doubt, our capability to provide an outsourced key business process for the global banking community and our intention is to build on this solid base. 

As the service has become established, new opportunities to extract value continue to present themselves. This has led us to provide additional services to banks that better enable them to deliver improved cash and treasury management services to their customers and acquire new cash deposits. These types of services are proving to be very important to banks as their focus moves to customer retention and acquisition through better service in an increasingly competitive market for deposits and transactions.

In 2002, we indicated that the Real Time Nostro service was the first tactical implementation of Gresham's longer term strategic goal: to improve the security and stability of the world's financial markets by creating technology that provided aggregated, real-time financial information. That strategy is now coming to fruition with several services now live based around this core goal.

To reflect the wider uses of our technology the bank specific 'Nostro' label was replaced by the Clareti branding. Clareti Cash Reporting hence provides 'clarity' around cash, treasury and liquidity management to both banks and their corporate customers globally.

Our cash reporting service is gathering momentum and our bank to corporate cash management solution continues to show strong customer and revenue growth. 

Clareti Supply Chain Financing

Our supply chain finance platform went live towards the end of last year and we have been working alongside our banking partner to roll out the solution. 

We now have five committed corporate 'buyers', the first two of which are live on the platform. We anticipate further growth in live buyers during the remainder of 2008. The annualised value of payments passing across the platform is building towards US$1bn per annum with continued growth expected as more buyers join the service.

Supplier adoption is well under way with a growing number now accessing real-time information on the platform and taking early payments. The 'credit crunch' has increased the attractiveness of our early payment service as most companies, large and small, are keen to access liquidity in a cost effective manner.  

The service started as a single currency solution almost a year ago. It now meets stringent compliance / security requirements and is fully enabled to provide multi-currency cross border payments in over 100 currencies. 

Clareti Storage Director

Gresham has been a technology leader in offering a rich portfolio of solutions in the IBM Tivoli Storage Management (TSM) market and in the high performance backup / restore environments of major enterprises for many years.

Our original product, Clareti EDT, is installed in over 90 of the Fortune 500 globally. A combination of this success and customer feedback led us to expand our product capabilities from the TSM / SUN StorageTek niche to focus on also encompassing HP NonStop and, more recently, Open Systems. We continue to see solid validation of our unique solutions in these markets.

In the first half, we significantly improved our product portfolio and strengthened our enterprise data storage technology by validating and releasing the Clareti Storage Director series of appliances. These new appliances are gaining momentum and being tested in Electronic Vaulting and Disaster Recovery / Business Continuity environments addressing customers' needs from remote sites to primary data centers. 

Clareti Storage Director enables cross platform and cross backup-software virtualisation of an enterprise's storage needs, hugely reducing the cost of managing complexity and the ever increasing volumes of data. We have been recognized for creating award winning technology beating many of the largest storage technology companies in the world.

Clearly this opens up many new opportunities and we are now focused on expanding our routes to market via channel partners.

The general business slow down in corporate America has resulted in a broadly flat revenue line for this business segment in the first half, taking into account a planned reduction in our French storage business. However, we have a strengthening pipeline for the second half and are broadening our routes to market to expand our exposure to new customers. We have a number of exciting opportunities and a highly capable team hence we are working hard to improve on the first half performance, notwithstanding the economic conditions.

Outlook

The trend of improved results has continued into the second half of 2008 and we are currently delivering against a solid confirmed order book and have a growing number of prospects in the pipeline.

Our preferred approach is to secure long term relationships with customers through provision of high quality solutions to business critical issues rather than target pure discretionary spend. We are currently working on a number of such solutions that if secured would add significantly to the current trend of profitability and to the result for the year as a whole.

We will continue to work hard at building our core business while maintaining tight control of costs. The demand for our solutions has strengthened based on our proven capabilities to consistently deliver solid value for money services and products to our customers.  I expect our cost base to increase with revenue as we hire new excellent professional services staff to add to our team to meet the growing demands of our clients.  

I look forward to updating shareholders on our progress over the coming months.

Andrew Walton-Green

Chief Executive

25 August 2008

  Group income statement

For the period ended 30 June 2008

		6 months	6 months	12 months
		ended	ended	ended
		30 June	30 June	31 December
		2008	2007	2007
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
Revenue	2	7,172	6,436	13,423
Cost of goods sold		(3,648)	(3,152)	(7,192)
Gross profit		3,524	3,284	6,231
Administrative expenses		(3,990)	(4,850)	(9,184)
Trading loss	2	(466)	(1,566)	(2,953)
Finance revenue		31	70	107
Finance costs		-	(12)	(23)
Loss before tax	2	(435)	(1,508)	(2,869)
Taxation	3	50	240	449
Attributable to equity holders of the parent	6	(385)	(1,268)	(2,420)
Loss per share (total and continuing)
Basic loss per share - pence	4	(0.73)	(2.52)	(4.74)
Diluted loss per share - pence	4	(0.73)	(2.52)	(4.74)

Group statement of recognised income and expense

For the period ended 30 June 2008

	6 months	6 months	12 months
	ended	ended	ended
	30 June	30 June	31 December
	2008	2007	2007
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Exchange differences on translation of foreign operations	51	2	68
Net income/(expense) recognised directly in equity	51	2	68
Attributable loss for the period	(385)	(1,268)	(2,420)
Total recognised income and expense for the period	(334)	(1,266)	(2,352)

  Group balance sheet

At 30 June 2008

		At	At	At
		30 June	30 June	31 December
		2008	2007	2007
		Unaudited	Unaudited	Audited
	Notes	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		1,314	1,362	1,327
Intangible assets		6,403	6,036	6,086
		7,717	7,398	7,413
Current assets
Trade and other receivables		3,629	3,711	3,650
Inventories		100	-	100
Income tax receivable		440	464	374
Other financial assets		-	20	20
Cash and cash equivalents		996	1,116	2,300
		5,165	5,311	6,444
TOTAL ASSETS		12,882	12,709	13,857
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Called up equity share capital	6	2,643	2,518	2,643
Share premium account	6	12,564	10,037	12,564
Other reserves	6	1,039	1,039	1,039
Foreign currency translation reserve	6	5	(130)	(64)
Retained earnings	6	(8,966)	(7,639)	(8,761)
	6	7,285	5,825	7,421
Non-current liabilities
Deferred income		565	1,081	715
Provisions		200	90	-
		765	1,171	715
Current liabilities
Trade, other payables and deferred income		4,766	5,713	5,460
Income tax payable		66	-	61
Provisions		-	-	200
		4,832	5,713	5,721
Total liabilities		5,597	6,884	6,436
TOTAL EQUITY AND LIABILITIES		12,882	12,709	13,857

  Group cashflow statement

For the period ended 30 June 2008

		At	At	At
		30 June	30 June	31 December
		2008	2007	2007
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Cashflows from operating activities
Loss before taxation		(435)	(1,508)	(2,869)
Depreciation and amortisation		321	276	741
Share based payment expense / (credit)		180	12	42
(Increase) in inventories		-	-	(100)
Decrease/(Increase) in trade and other receivables		21	(166)	(188)
(Decrease)/Increase in trade and other payables		(868)	(603)	(1,151)
Movement in provisions		-	-	110
Net finance income		51	58	84
Cash (outflow)/inflow from operations		(730)	(1,931)	(3,331)
Net income taxes received		-	101	474
Net cash (outflow)/inflow from operating activities		(730)	(1,830)	(2,857)
Cash flows from investing activities
Interest received		(51)	(71)	(107)
Purchase of property, plant and equipment		(94)	(252)	(324)
Payments to acquire intangible fixed assets		(445)	(305)	(662)
Net cash used in investing activities		(590)	(628)	(1,093)
Cash flows from financing activities
Proceeds from issue of ordinary share capital		-	-	2,750
Share issue costs		-	-	(98)
Interest paid		-	13	11
Net cash used in financing activities		-	13	2,663
Net (decrease)/increase in cash and cash equivalents		(1,320)	(2,445)	(1,287)
Cash and cash equivalents at beginning of period		2,300	3,557	3,557
Exchange adjustments		16	4	30
Cash and cash equivalents at end of period		996	1,116	2,300

  Notes to the condensed interim financial statements

1 Basis of preparation 

These condensed interim financial statements are unaudited and do not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The condensed interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and the Listing Rules of the Financial Services Authority ('FSA'). The accounting polices applied in these interim financial statements are consistent with those applied in the Group's most recent annual financial statements. The condensed interim financial statements were approved on behalf of the Board by C Errington and A Walton-Green on 25 August 2008 and will be forwarded to shareholders shortly.

The financial statements for the year ended 31 December 2007, which were prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union ('IFRS'), and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on those financial statements was unqualified and did not contain a statement made under s237 (2) or (3) of the Companies Act 1985.  

2 Segmental information

Primary reporting - Geographical segments

Revenue by source	Period ended 30 June 2008			Period ended 30 June 2007
	Segment revenue	Inter-segment sales	Sales to external customers	Segment revenue	Inter-segment sales	Sales to external customers
	£'000	£'000	£'000	£'000	£'000	£'000
Asia Pacific	1,707	(165)	1,542	876	(338)	538
EMEA	3,843	(11)	3,832	3,883	-	3,883
North America	1,798	-	1,798	2,015	-	2,015
	7,348	(176)	7,172	6,774	(338)	6,436

Result by segment	Period ended 30 June 2008				Period ended 30 June 2007
	Asia	EMEA	North	Total	Asia	EMEA	North	Total
	Pacific		America		Pacific		America
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Segment result	(50)	357	(90)	217	(254)	(435)	69	(620)
Unallocated expenses				(683)				(946)
Trading loss				(466)				(1,566)
Net finance revenue				31				58
Loss before income tax				(435)				(1,508)
Income tax credit				50				240
Net loss for the period				(385)				(1,268)

Secondary reporting - Business  segments

Revenue by business segment		Period ended		Period ended
		30 June 2008		30 June 2007
		£'000	£'000	£'000	£'000
Real Time Financial Solutions	Real Time Financial Solutions	4,568		3,676
	IT Staff placement business	1,515		1,445
			6,083		5,121
Storage Solutions			1,089		1,315
			7,172		6,436

Result by business segment	Period ended 30 June 2008				Period ended 30 June 2007
	RTFS	Storage		Total	RTFS	Storage	Total
	£'000	£'000		£'000	£'000	£'000	£'000
Segment result	47	170		217	(809)	189	(620)
Unallocated expenses				(683)			(946)
Trading loss				(466)			(1,566)
Net finance revenue				31			58
Loss before income tax				(435)			(1,508)
Income tax credit				50			240
Net loss for the year				(385)			(1,268)

3 Taxation

	Period	Period	Year
	ended	ended	ended
	30 June	30 June	31 December
	2008	2007	2007
UK tax
Research and development credit	(72)	(265)	(541)
Foreign tax
Corporation tax	22	-	37
Witholding tax charge	-	25	55
Tax credit	(50)	(240)	(449)

4 Loss per ordinary share

Basic loss per share amounts are calculated by dividing net loss or profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted loss per share amounts are calculated by dividing the net loss or profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. 

The following reflects the loss and share data used in the basic and diluted loss per share computations:

	Six months ended	Six months ended	Year ended
	30 June	30 June	31 December
	2008	2007	2007
	£’000	£’000	£’000
Net loss attributable to equity holders of the parent	(385)	(1,268)	(2,420)
	Number	Number	Number
Basic weighted average number of shares	52,850,890	50,350,890	51,042,671
Dilutive potential ordinary shares:
Employee share options	-	-	-
Diluted weighted average number of shares	52,850,890	50,350,890	51,042,671

The employee share options are not dilutive because they would reduce the loss per share in both years.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of this interim statement.

5 Dividends paid and proposed

No dividends were declared or paid during the period or comparative periods.

6 Reconciliation of movements in equity

	Share	Share	Other	Currency	Retained	Total
	capital	premium	reserves	translation	earnings
				reserves
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2007	2,518	10,037	1,039	(132)	(6,383)	7,079
Exchange differences on translation of foreign operations	0	0	0	2	0	2
Share based expense recognised in the income statement	0	0	0	0	12	12
Issue of shares	0	0	0	0	0	0
Attributable loss for the period	0	0	0	0	(1,268)	(1,268)
At 30 June 2007	2,518	10,037	1,039	(130)	(7,639)	5,825
Exchange differences on translation of foreign operations	0	0	0	66	0	66
Share based expense recognised in the income statement	0	0	0	0	30	30
Issue of shares	125	2,527	0	0	0	2,652
Attributable loss for the period	0	0	0	0	(1,152)	(1,152)
At 31 December 2007	2,643	12,564	1,039	(64)	(8,761)	7,421
Exchange differences on translation of foreign operations	0	0	0	69	0	69
Share based expense recognised in the income statement	0	0	0	0	180	180
Issue of shares	0	0	0	0	0	0
Attributable loss for the period	0	0	0	0	(385)	(385)
At 30 June 2008	2,643	12,564	1,039	5	(8,966)	7,285

7 Principal risks and uncertainties

The principal risks and uncertainties facing the Group are disclosed in the Group's financial statements for the year ended 31 December 2007, available from www.gresham-computing.com. Other than Economic Risk outlined further below, the principal risks and uncertainties remain unchanged.

Economic Risk

The financial risk management approach adopted by the Group has been modified to take into account the current market conditions facing all companies, arising primarily from the potential impact on financial risk management of the so called 'credit crunch'. Examples of the modified approaches adopted are:

• Excess cash balances are deposited with tier one banks to reduce the risk of loss;

• Liquidity of funds is kept under review with a focus on increasing the overall liquidity of assets available to the Group; and

• Credit control procedures have been modified through an assumption that there is greater credit risk in the current market.

8 Adjusted EBITDA reconciliation

Adjusted EBITDA is calculated as EBITDA before non-cash share option charges, reconciled as follows:

	6 months	6 months
	ended	ended
	30 June 2008	30 June 2007
	£'000	£'000
Profit/(Loss) before tax	(435)	(1,508)
Amortisation and depreciation	321	276
Share option charges	180	12
Interest net	(31)	(58)
Adjusted EBITDA profit / (loss)	35	(1,278)

 

END

 

 

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