27th Apr 2005 07:00
Gresham Computing PLC27 April 2005 Embargoed until 07.00 27 April 2005 GRESHAM COMPUTING plc ("Gresham", the "group" or the "company") Preliminary results for the year ended 31 December 2004 Gresham, provider of enterprise software and solutions, announces itspreliminary results for the year ended 31 December 2004. The main resultshighlights during the year were as follows: • Turnover up by 21%, operating losses reduced by 35% and retained loss after tax for the year reduced by 54%; • Significant progress with the Cable & Wireless Real Time Nostro ("CWRTN") service; and • Solid progress in our Integration and Storage businesses during the year. Financial Highlights 2004 2003Turnover £12.4m £10.2mOperating loss £(1.4)m £(2.2)mLoss before tax £(1.2)m £(2.0)mRetained loss after tax £(0.9)m £(1.9)mLoss per share (1.81)p (4.05)p Andrew Walton-Green, Chief Executive Officer of Gresham, commented: "2004 was a year of solid progress across all three divisions in the group, withrevenues up overall by 21%. The CWRTN service went live in April 2004 and sincethen we have earned first revenue from the service and seen an increase in thenumber of data providers, which now include 4 of the 10 largest banks in theworld. The CWRTN service is now a reality and our efforts are now focussed onmaking further advances in 2005. Progress in Integration included a contract inthe bank to corporate market involving a major UK bank and in Storage we sawcontinued growth from our partnership with world class companies. Overall, theBoard believes that the business is now well placed to capitalise on thestrength of opportunities developed in order to deliver continued growth in 2005and beyond." For further information, please contact: Gresham Computing plc +44 (0)207 653 0228Andrew Walton-Green, Chief Executive Officer Financial Dynamics +44 (0)207 831 3113James Melville-RossCass Helstrip Embargoed until 07.00 27 April 2005 GRESHAM COMPUTING plc ("Gresham", the "group" or the "company") Preliminary results for the year ended 31 December 2004 Chairman's statement I am pleased to report: • Turnover up by 21%, operating losses reduced by 35% and retained loss after tax for the year reduced by 54%; • Significant progress with the Cable & Wireless Real Time Nostro ("CWRTN") service; and • Solid progress in our Integration and Storage businesses during the year. Financial performance for the year ended 31 December 2004 • Turnover for the year up by 21% to £12.4m (2003: £10.2m); • Operating loss reduced by 35% to £1.4m (2003: £2.2m loss); • Loss before tax reduced by 39% to £1.2m for the year (2003: £2.0m loss); • Retained loss after tax reduced by 54% to £0.9m for the year (2003: £1.9m loss); and • Net funds of £3.0m at 31 December 2004. Banking Progress with the Cable & Wireless Real Time Nostro ("CWRTN") service during theyear and in the first part of 2005 has been significant. The CWRTN service went live and the first subscription revenue from the servicewas earned in the year. This was a major step forward since it demonstrated thatthe technology works and that the service is of commercial value. Since then wehave seen continued progress. Citibank, Commonwealth Bank of Australia, National Australia Bank and StandardBank of South Africa agreed to become data providers, joining: ANZ, Barclays,Bangkok Bank, JP Morgan Chase, Mizuho Corporate Bank and RBC Financial Group. More recently, in April 2005, Bank of America also signed up as a data providerto the service, bringing the number of "top 10" banks1 that have agreed toprovide data to the service to 4 and the total number of data providers to 11. 8 of these 11 data providers, including 3 of the "top 10" largest banks in theworld1, are now live as providers to the service. In addition, a number ofother banks are considering providing data to the service. The ongoing addition of new data providers is important as the Board believesthat the speed of roll out of CWRTN to subscribers will be determined by thevalue users can extract from the service. That value increases in line with thenumber of data providers that sign up to the service since this broadens thecurrency coverage and value of funds over which subscribers can obtain real timeinformation. As of today, 2 banks are subscribers to the browser service. 1 further bank hasagreed to be a subscriber to the browser service and several other banks arecurrently trialling the browser service. October 2004 saw the launch of RTNdirect at SIBOS, in Atlanta, with Barclays as the first signed user. The RTNdirect service differs from the browser service in that data can be streameddirectly into a bank's systems from the RTN hub, with data delivered as soon asthe transaction information is available on the service. This allows the userbank's IT systems to receive a 'pushed' information feed and immediately processthe transaction data in their back office systems. Barclays went live assubscribers to the direct service in early 2005 and a number of other majorbanks are currently evaluating the direct service. Most recently, in late April 2005, we were pleased to see the announcement byTietoEnator, a leading global provider of IT services and solutions for thefinance industry in Northern Europe, who agreed to support the RTN directservice, enabling users of TietoEnator's new ProLiquidity Bank solution tocalculate liquidity positions in real time utilising account data from CWRTN. Cable & Wireless have advised the market that the preferred method of datadelivery to and from the CWRTN hub is via the SWIFTNet IP infrastructure. SWIFTis the industry-owned co-operative supplying secure, standardised messagingservices and interface software to 7,600 financial institutions in 200countries. Co-operation with SWIFT is key, enabling banks to maximise the valueof their investment in the SWIFTNet IP infrastructure. During the year, we were also pleased to see a significant increase in thenumber of participants in the Real Time Nostro User Group, chaired by BarclaysBank. This group continues as a forum for sharing CWRTN service ideas andexperiences as well as key issues associated with cash management. The forumreinforces Real Time Nostro as a global industry initiative. Notes 1 Measured by Capital (Source: The Banker: "Top 1000 World Banks at 31 December2003", July 2004). Integration We experienced solid revenue growth in our Integration business during the year.The most significant single contract was a bank to corporate contract with amajor UK bank. This contract, announced in April 2004, was to licenceCasablanca, our flagship integration software, in conjunction with a thirdparty's application software to provide a working capital "straight throughprocessing" solution between the bank and its major corporate customers. We havenow successfully deployed and delivered the software for the first project underthis contract, involving one of the bank's larger customers and anticipatebuilding on this success in the near future. The working capital area is becoming a significant focus for us and we havecontinued to make good progress with a number of potentially significantopportunities for the group in this area. We are currently developing asolution in the bank to corporate market, which we initially intend to deliverin Asia alongside a local leading communications group. In addition, our Casablanca Java Integration Broker has been chosen by HP tosupport their Real Time Financial Services architecture and Single Customer Viewsolution, because of its ability to interoperate seamlessly with HP's Non Stopplatform to create a new generation large integration hub. While thisparticular relationship has yet to produce first revenues, this new opportunityhelps to underline the increasing value we believe will be derived fromCasablanca. Casablanca is an integral part of our offerings both in our bank to bank andbank to corporate initiatives giving our clients and partners a significantadvantage over more traditional integration products or approaches. Casablancais increasingly giving us access to significant opportunities in our chosenmarkets, typically alongside major partners, from which we expect business todevelop over time. Storage The upturn in market conditions for storage seen towards the end of 2003continued into 2004, with Storage revenues up significantly in the year comparedto 2003, despite increasing market competition and a weak dollar. We have also continued to invest in the development of our storage products inorder to expand their market reach and are currently engaged in alpha testing anentirely new product range designed to address the growing market for secondarystorage consolidation. The new product complements our current EDT (EnterpriseDistributape) product and provides interoperability of all back-up applicationsand associated library storage devices as well as providing an excellentplatform for enabling storage consolidation. The technology underpinning thisnew product is patent pending, and is being developed utilising our extensiveknowledge of tape resource management. It has received an early positivereception within our chosen markets. On satisfactory completion of testing, weanticipate taking this product to market in the second half of 2005. Future Outlook The business has made significant advances in the past year. Our strategy continues to be to build on short and long term opportunitiesgenerated in our chosen markets and delivered by utilising our specialistindustry knowledge, know-how, technology and skills. In particular our strategyis to pursue our core business areas of banking, integration and storage. Wewill continue to focus on these areas and seek to divest our non-core activitiesat appropriate times in order to maximise shareholder value. Market acceptance for CWRTN continues to grow. During 2005, we expect to seegrowth in the number of data providers and subscribers of both the browser anddirect service. While revenues are initially relatively small and, aspreviously indicated, will take a number of years to build to their fullpotential, we believe that CWRTN is our most significant market opportunity andhas the potential to deliver the largest returns in the Group's history.Progress in 2004 has moved us considerably closer to realising this potentialand we expect to make further advances in 2005. In our Integration business, we also anticipate realising some of thesignificant opportunities that we have developed, particularly from our workingcapital solutions, integration capabilities and strengthened relationship withHP. Many of these opportunities require significant strategic definition andanalysis, as well as involving a fairly lengthy decision making process. Whilstprogress towards realising these opportunities has so far this year been slowerthan we would have liked, we expect to grow revenues in 2005. Established relationships with world class companies such as StorageTek and IBM,together with the development of exciting new technology, places our Storagedivision in a good position to build on its 2004 performance. Overall, the Board believes that the business is now well placed to capitaliseon the strength of these opportunities in order to deliver continued growth in2005 and beyond. Alan Howarth Chairman 26 April 2005 Gresham Computing plcGroup Profit and Loss Accountfor the year ended 31 December 2004 Notes 2004 2003 £'000 £'000 TURNOVER 2 12,398 10,245Cost of sales (5,796) (4,535)GROSS PROFIT 6,602 5,710Administrative expenses (8,012) (7,868)OPERATING LOSS (1,410) (2,158) Interest receivable 217 209Interest payable (5) (6) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,198) (1,955)Taxation credit on loss on ordinary activities 305 12LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (893) (1,943) RETAINED LOSS FOR THE YEAR (893) (1,943) Basic loss per share - pence 3 (1.81) (4.05)Diluted loss per share - pence 3 (1.81) (4.05) Gresham Computing plcGroup Balance Sheetat 31 December 2004 2004 2003 £'000 £'000FIXED ASSETSIntangible assets 1,137 1,043Tangible assets 1,241 1,336 2,378 2,379 CURRENT ASSETSDebtors 7,640 6,301Cash at bank and in hand 3,016 4,923 10,656 11,224 Creditors: amounts falling due within one year 4,293 3,820NET CURRENT ASSETS 6,363 7,404TOTAL ASSETS LESS CURRENT LIABILITIES 8,741 9,783 Creditors: amounts falling due after more than one year 268 477 8,473 9,306 CAPITAL AND RESERVESCalled up share capital 2,479 2,464Share premium account 9,713 9,639Special reserve 313 313Merger reserve 726 726Profit and loss account (4,758) (3,836)SHAREHOLDERS' FUNDS - equity interests 8,473 9,306 Gresham Computing plcGroup Statement of Cash Flowfor the year ended 31 December 2004 Notes 2004 2003 £'000 £'000 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 5 (2,011) (3,083) RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 199 225Interest paid (5) (6) 194 219TAXATIONCorporation tax paid - (21)Overseas tax received (40) 12 (40) (9)CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPayments to acquire intangible fixed assets (278) -Payments to acquire tangible fixed assets (234) (167) (512) (167)ACQUISITIONS AND DISPOSALSDisposal of associated undertaking in prior years 387 (25) 387 (25) NET CASH OUTFLOW BEFORE FINANCING (1,982) (3,065) FINANCINGIssue of share capital 91 4,184Share issue costs (2) (132)Repayments of finance leases (5) (76)Net inflow from financing 84 3,976(DECREASE) / INCREASE IN CASH (1,898) 911 Reconciliation of Net Cash Flows to Movement in Net Fundsfor the year ended 31 December 2004 Increase in cash (1,898) 911Repayments of capital element of finance leases 5 76Change in net funds resulting from cashflows (1,893) 987 Exchange differences (9) 3MOVEMENT IN NET FUNDS (1,902) 990NET FUNDS AT 1 JANUARY 4,918 3,928NET FUNDS AT 31 DECEMBER 3,016 4,918 Gresham Computing plcGroup Statement of Total Recognised Gains and Lossesfor the year ended 31 December 2004 2004 2003 £'000 £'000 Loss for the financial year (893) (1,943)Exchange difference on retranslation of net assets of subsidiary undertakings (29) (110)Total recognised gains and losses relating to the year (922) (2,053) Reconciliation of Group Shareholders' Fundsfor the year ended 31 December 2004 2004 2003 £'000 £'000 Total recognised gains and losses relating to the year (922) (2,053)Issue of shares (net of associated costs) 89 4,052Total movements during the year (833) 1,999 Opening shareholders' funds 9,306 7,307Closing shareholders' funds 8,473 9,306 GRESHAM COMPUTING plc NOTES TO THE PRELIMINARY RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER2004 1. The above financial information does not constitute statutory accountsas defined in section 240 of the Companies Act 1985. The results for the yearended 31 December 2004 and the balance sheet at that date are extracted from thestatutory accounts (on which the auditors have given an unqualified opinion),which will be filed with the Registrar of Companies. The comparative financialinformation is extracted from the statutory accounts for the year ended 31December 2003 (on which the auditors have given an unqualified opinion), whichhave already been sent to shareholders and filed with the Registrar ofCompanies.The financial information has been prepared in accordance with UK generallyaccepted accounting practice and on the basis of accounting policies consistentwith those applied in previous periods. 2. Turnover and segmental analysis The group's principal areas of activity, which are continuing, are the provision of solutions, softwareand specialist contract staff. Analysis of turnover by segment: Inter Inter Turnover segment External Turnover segment External turnover turnover turnover turnover 2004 2004 2004 2003 2003 2003 £'000 £'000 £'000 £'000 £'000 £'000Solutions 4,350 - 4,350 2,842 (16) 2,826Specialist contract staff 2,359 (11) 2,348 1,789 (21) 1,768Enterprise solutions 6,709 (11) 6,698 4,631 (37) 4,594Enterprise software 5,704 (4) 5,700 5,658 (7) 5,651 12,413 (15) 12,398 10,289 (44) 10,245 Geographical analysis of Inter Interturnover by source: Turnover segment External Turnover segment External turnover turnover turnover turnover 2004 2004 2004 2003 2003 2003 £'000 £'000 £'000 £'000 £'000 £'000United Kingdom 7,968 - 7,968 6,302 (31) 6,271North America 2,654 (577) 2,077 3,058 (828) 2,230Rest of World 3,097 (744) 2,353 2,686 (942) 1,744 13,719 (1,321) 12,398 12,046 (1,801) 10,245 Geographical analysis ofturnover by destination: 2004 2003 £'000 £'000United Kingdom 7,052 4,908North America 1,595 1,641Rest of World 3,751 3,696 12,398 10,245 2. Turnover and segmental analysis (continued) Common costs comprise the costs of all central group services.Analysis of loss on ordinary activities before taxation by segment: 2004 2003 £'000 £'000Enterprise solutions (1,732) (1,998)Enterprise software 1,248 669 (484) (1,329)Common costs (926) (829)Operating loss (1,410) (2,158)Net interest receivable 212 203Loss on ordinary activities before taxation (1,198) (1,955) Analysis of loss on ordinary activities before taxation by source: 2004 2003 £'000 £'000United Kingdom (318) (976)North America 75 (125)Rest of World (241) (228) (484) (1,329)Common costs (926) (829)Operating loss (1,410) (2,158)Net interest receivable 212 203Loss on ordinary activities before taxation (1,198) (1,955) 3. Earnings per share The calculations of earnings per share are based on the following earnings and numbers of shares. 2004 2003 £'000 £'000Loss for the financial year (893) (1,943) 2004 2003 Number of Number of shares sharesWeighted average number of shares:For basic earnings per share 49,407,419 48,022,384Potential ordinary shares - share options - -Diluted weighted average number of shares 49,407,419 48,022,384 For the years ended 31 December 2004 and 2003, the loss attributable to ordinaryshareholders and weighted average number of ordinary shares for the purpose ofcalculating the diluted earnings per ordinary share are identical to those usedfor basic earnings per ordinary share. This is because the potential dilutingevents would have the effect of reducing the loss per ordinary share and aretherefore not dilutive under the terms of FRS 14. 4. Dividends The directors do not propose the payment of an ordinary dividend in respect ofthe year ended 31 December 2004. 5. Reconciliation of operating loss to net cash flow from operating activities 2004 2003 £'000 £'000 Operating loss (1,410) (2,158)Depreciation 323 390Amortisation 159 132Increase in debtors (1,318) (1,586)Increase in creditors 235 139Net cash outflow (2,011) (3,083) 6. This preliminary statement of results will not appear as anadvertisement in any newspaper but the annual report is being sent to allshareholders by 13 May 2005 and copies will be available to members of thepublic 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 ExchangeRelated Shares:
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