22nd Sep 2005 07:03
Gresham Computing PLC22 September 2005 Embargoed until 07.00 22 September 2005 GRESHAM COMPUTING plc ("Gresham", the "group" or the "company") INTERIMS RESULTS FOR THE PERIOD ENDED 30 JUNE 2005 Gresham, provider of enterprise software and solutions, announces its interimresults for the period ended 30 June 2005. The main results highlights duringthe year were as follows: • Turnover for the period up by 8% to £6.63m (2004: £6.14m); • Loss before tax £0.7m for the period (2004: £0.6m loss); • Loss after tax £0.6m for the period (2004: £0.6m loss); • Net funds of £2.1m at 30 June 2005; • Continuing positive progress with Cable & Wireless Real Time Nostro (" CWRTN") service with the 4 largest banks in the world now data providers; • Disappointing performance from Integration; and • Storage business performing well. Andrew Walton-Green, Chief Executive Officer of Gresham, commented: "Our strategy is increasingly built around the provision of real time solutionsand continues to be targeted at medium to long term opportunities, in particulararound our core business areas of banking and integration. Whilst the first halfshows a disappointing performance from the Integration business we have beenparticularly encouraged by the progress that the business is making with theCable and Wireless Real Time Nostro service and anticipate improved trading inthe second half of 2005 and thereafter." 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 International Financial Reporting Standards ("IFRS") These interim financial statements have been prepared under the new IFRSaccounting regime, which came into force this year. Comparatives have beenrestated and a full analysis of the differences between UK Generally AcceptedAccounting Practice ("UK GAAP") and IFRS, together with reconciliations ofpreviously issued financial statements from UK GAAP to IFRS was issued by theCompany today. For the period ended 30 June 2005: • Turnover for the period up by 8% to £6.63m (2004: £6.14m); • Loss before tax £0.7m for the period (2004: £0.6m loss); • Loss after tax £0.6m for the period (2004: £0.6m loss); • Net funds of £2.1m at 30 June 2005; • Continuing positive progress with Cable & Wireless Real Time Nostro (" CWRTN") service with the 4 largest banks in the world now data providers; • Disappointing performance from Integration; and • Storage business performing well. International Financial Reporting Standards ("IFRS") These interim financial statements have been prepared under the new IFRSaccounting regime, which came into force this year. Comparatives have beenrestated and a full analysis of the differences between UK Generally AcceptedAccounting Practice ("UK GAAP") and IFRS, together with reconciliations ofpreviously issued financial statements from UK GAAP to IFRS was issued by theCompany today. Real Time Nostro Progress with the Cable & Wireless Real Time Nostro ("CWRTN") service continuesto be very positive. This months Sibos conference in Copenhagen saw CWRTNgather further momentum with new interest in the service coming from manyparties. A pleasing and important aspect has also been the closer collaborationwith SWIFT in recent months, something that we believe is evident from theupdates provided by Cable and Wireless plc ("Cable & Wireless"). CWRTN Data providers Data providers are vital to the service because they provide the paymentinformation that subscribers can utilise and view. In April 2005, I reportedthat 11 banks had agreed to provide data to the service, including 4 of the "top10" largest banks in the world. At Sibos this month, Cable & Wireless providedan update on CWRTN confirming that the number of banks having now agreed to bedata providers has increased from 11 to 18. Significantly, with the addition ofHSBC and ABN Amro, the provider banks now include the 4 largest banks in theworld (Citibank, JP Morgan, HSBC and Bank of America) and a total of 7 banksfrom the top 20 banks (Mizuho, Barclays and ABN Amro making up the 7). HSBC has agreed to provide data from 42 currencies, representing all of itsclearing branches worldwide. This will significantly increase the currencycoverage of the service. The addition of ABN Amro as a data provider furtherenhances currency coverage with data from a major Euro clearer available tosubscribers. It is our belief that the speed of roll out of CWRTN tosubscribers is directly related to the number of currencies covered by theservice. The recent announcements of new data providers will significantlyenhance the value of the service to subscribers. CWRTN subscribers The RTN Browser service allows subscribers real time access to internationalpayment information from provider banks published from the RTN hub. As of today,more than 10 banks are using the service. The RTN direct service differs from the browser service in that data istransferred directly into a bank's systems from the RTN hub, data beingdelivered as soon as it is received. This allows the user bank's systems toreceive a 'pushed' information feed and to process the transaction data in realtime. Barclays went live as the first subscriber to the direct service in early2005 and a number of other major banks are currently evaluating the service witha view to adoption. The number of application vendors, signed up by Cable & Wireless as partners,continues to grow and now totals eleven. These vendors are important becausethey provide software that allows banks to utilise the direct service and toextract maximum value from the real time information feed provided by the CWRTNservice. SWIFTNet Cable & Wireless' preferred method of data delivery to and from the CWRTN hub isvia the SWIFTNet IP infrastructure. SWIFT is the industry-owned co-operativesupplying secure, standardised messaging services and interface software to7,600 financial institutions in 200 countries. Co-operation with SWIFT is key,enabling banks to maximise the value of their investment in the secure SWIFTNetIP infrastructure. Real Time Nostro User Group This group continues as a forum for sharing CWRTN service ideas and experiencesas well as key issues associated with cash management. The user group consistsof both banks that have already joined the service and those that anticipatejoining at some future point. The forum reinforces Real Time Nostro as a globalindustry initiative. It is notable that SWIFT has recently become a member ofthis group. Integration In the first half of 2005, progress towards realising opportunities in theIntegration business has been slower than expected, however trading has improvedin the second half. Progress with our Integrated Client Money Solution between a major UK bank andits larger corporate customers was slower in the first half of 2005 than hoped.However, we now expect progress in the second half to be stronger, with theaddition of several more customers for the service and an increasing pipeline. We continue to invest in developing our patent pending payables financingsolution, Gresham Payables Financing Solution ("GPFS"). GPFS provides suppliersof large buyers the opportunity for early drawdown of receivables in real time,making the service analogous to electronic receivables factoring. Our preferredmethod of delivery for GPFS is now as a service offering as opposed to a licenceonly model. As a result, we expect the rewards to be higher. We are currentlyin contractual discussions with a number of parties regarding taking GPFS tomarket, with a model of building recurring revenues over time. In early 2005, we acquired the intellectual property of a business developingsolutions in the instant messaging market. This technology has now been marriedwith our Casablanca(R) integration technology and we are now taking this newlydeveloped Real Time Secure Communications ("RTSC") solution, demonstrated at ourAGM in June 2005, to market in partnership with BT. Our RTSC solution integratesthe functionality of instant messaging, such as 'presence' and delivery of realtime information, with existing core systems and facilitates collaborativeworking. Although it has taken longer to take the RTSC solution to market thanwe initially anticipated, with a consequential adverse impact on 2005 revenue,RTSC is now progressing well. RTSC is available in the BT technology centre andinitial customer reaction during the market testing phase has been positive. Weare now pursuing a number of significant opportunities with BT. Casablanca(R) remains a core element of our integration business giving ourclients and partners a serious alternative to more traditional integrationproducts or approaches. It has increasingly given us access to significantopportunities, typically alongside major partners, from which we anticipatelong-standing business to develop. Our continued investment in Casablanca(R)remains considerable, however revenues, particularly through our premium channelpartner, have to date fallen well short of expectations. Storage The upturn in market conditions for storage continued into 2005, with Storageperforming strongly in the period compared to 2004, despite increasing marketcompetition. We have continued to invest in the development of our storage product line inorder to expand our market reach. I am pleased to announce the release of ournew, patent pending, Storage Consolidation Platform. This new platform willprovide an unprecedented level of interoperability between storage applications,centralise management of available tape storage resources and will greatlyfacilitate the increasing demands for storage consolidation. In addition, theability of users to implement specific business rules and policies will enhanceboth visibility and control of mainstream storage applications. Thefunctionality and flexibility of our platform will prove particularly useful tolibrary vendors but it also has wide market applicability for the enterpriseuser and to all concerned in the Storage Area Network (SAN) arena. Contract staff business Our staff placement business grew strongly during the period, with revenuesincreasing significantly compared with the first half of 2004. The growth arosefrom the provision of temporary staff, with higher margin permanent staffrevenues remaining at modest levels. Future Outlook Our strategy is increasingly built around the provision of real time solutionsand continues to be targeted at medium to long term opportunities, in particulararound our core business areas of banking and integration. In addition togrowing organically, where appropriate, we will seek to divest non-coreactivities and also consider acquisitions that accelerate our growth within corebusiness areas. Building a significant base of major bank data providers is central to thestrategy for CWRTN since this broadens the currency coverage over whichsubscribers can obtain real time information. Interest in CWRTN was high atSibos this month and the Board believes that a critical mass of data providersis fast approaching. Looking ahead, we expect to see further growth in thenumber of data providers to the CWRTN service. While revenues are relativelymodest and, as previously indicated, will take a number of years to build totheir full potential, we expect to see increased growth in the number ofsubscribers as the service moves into a wider user adoption phase. Our beliefis that CWRTN can be of assistance to banks in meeting increasing regulatorypressures around international payments and this factor should encourage take upof the service. Integration work in the second half has picked up and significant opportunitiescontinue to be identified. Direct sales of Casablanca(R) remain disappointinglyslow and, as a result, we intend establishing further channels to market tobroaden our reach. We expect further development of our real time solutions, GPFS, RTSC and ourStorage Consolidation Platform, in the remainder of 2005, with operationaldeployment of these solutions expected in the first half of 2006. Taking into account all these factors, we anticipate improved trading in thesecond half of 2005 compared to the first half, with a more significantimprovement in 2006. Alan HowarthChairman21 September 2005 Note: Size of bank is measured by Capital (Source: The Banker: "Top 1000 WorldBanks at 31 December 2004", July 2005). Gresham Computing plc Group Income Statementfor the period ended 30 June 2005 Notes Unaudited Unaudited Unaudited 6 months ended 6 months ended 12 months ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Revenue 2 6,634 6,136 12,398Cost of goods sold (3,471) (2,789) (5,796) Trading profit 3,163 3,347 6,602 Administrative expenses (3,946) (4,014) (7,867)Finance income 49 118 217Finance costs (8) (10) (19) Loss before tax (742) (559) (1,067)Taxation 3 110 0 305 Attributable loss for the period (632) (559) (762) Earnings per share 4Basic loss per share - pence (1.27) (1.13) (1.54)Diluted loss per share - pence (1.27) (1.13) (1.54) Gresham Computing plcGroup Balance Sheetfor the period ended six months ended 30 June 2005 Notes Unaudited Unaudited Unaudited At At At 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 1,278 1,442 1,400Intangible assets 1,560 1,156 1,245 2,838 2,598 2,645Current assetsTrade and other receivables 7,793 7,541 7,640Cash and cash equivalents 2,105 3,411 3,016 9,898 10,952 10,656 TOTAL ASSETS 12,736 13,550 13,301 EQUITY AND LIABILITIESEquity attributable to equity holders of the parentCalled up equity share capital 6 2,490 2,470 2,479Share premium account 6 9,937 9,670 9,713Foreign currency translation reserve 6 (85) (32) (29)Retained earnings 6 (4,489) (3,687) (3,875) 7,853 8,421 8,288Non-current liabilitiesFinance leases 38 43 40Deferred income 118 394 268 Current liabilitiesFinance leases 37 67 61Trade and other payables 4,690 4,625 4,644 Total liabilities 4,883 5,129 5,013 TOTAL EQUITY AND LIABILITIES 12,736 13,550 13,301 Gresham Computing plc Group Cash Flow Statementfor the period ended six months to 30 June 2005 Notes Unaudited Unaudited Unaudited At At At 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Net cash outflow from operating activitiesLoss before tax and financing (783) (667) (1,265)Depreciation and amortisation 189 203 392Share based payment expense 18 14 29Increase in trade and other receivables (371) (1,240) (1,318)Increase in trade payables and provisions 32 489 241 Cash outflow from operations (915) (1,201) (1,921)Interest paid (8) (10) (19)Net income taxes received / (paid) 259 (26) (40) Net cash inflow from operating activities 251 (36) (59) Cash flows from investing activitiesInterest received 49 103 199Disposal of associated undertaking 24 0 387Capital expenditure (307) (361) (512)Disposal of property, plant and equipment 0 3 0 Net cash (used in) / generated from investing (234) (255) 74activities Cash flows from financing activitiesNet proceeds from issue of ordinary share capital 33 37 89Decrease in obligations under finance leases (38) (40) (81) Net cash (used in) / generated by financing activities (5) (3) 8 Net decrease in cash and cash equivalents (903) (1,495) (1,898)Cash and cash equivalents at beginning of period 3,016 4,923 4,923Exchange adjustments (8) (17) (9)Cash and cash equivalents at end of period 2,105 3,411 3,016 Gresham Computing plc Group Statement of Recognised Income and Expensefor the period ended six months to 30 June 2005 Unaudited Unaudited Unaudited 6 months ended 6 months ended 12 months ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Exchange differences on translation of foreign operations (56) (32) (29) Net expense recognised directly in equity (56) (32) (29) Attributable loss for the period (632) (559) (762) Total recognised income and expense for the period (744) (623) (820) NOTES TO THE INTERIM FINANCIAL STATEMENTS at 30 June 2005 1 These unaudited interim financial statements have been prepared under International Financial Reporting Standards ("IFRS") that are expected to be in issue for the year ending 31 December 2005 and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The accounting policies applied in preparation of these financial statements together with reconciliations of previously issued financial statements from UK Generally Accepted Accounting Practice ("UK GAAP") to International Financial Reporting Standards ("IFRS") are set out in the announcement issued by the Company today entitled: Restatement of Financial Information under International Financial Reporting Standards ("IFRS"). These interim financial statements were approved by the Board on 21 September 2005. The statutory accounts for the year ended 31 December 2004, prepared under UK GAAP, received an unqualified auditor's report and have been delivered to the Registrar of Companies. The interim report will be sent to shareholders. Further copies may be obtained from the Company Secretary, Gresham Computing plc, Sopwith House, Brook Avenue, Warsash, Southampton, SO31 9ZA. 2 Segment reporting All revenue relates to continuing operations. Analysis of revenue by business segment Six months ended 30 June 2005 Six months ended 30 June 2004 Segment Inter-segment External Segment Inter-segment External revenue revenue revenue revenue revenue revenue £'000 £'000 £'000 £'000 £'000 £'000 Solutions 1,828 - 1,828 2,280 - 2,280Specialist contract staff 1,654 (10) 1,644 950 - 950Enterprise Solutions 3,482 (10) 3,472 3,230 - 3,230Enterprise Software 3,162 - 3,162 2,910 (4) 2,906 6,644 (10) 6,634 6,140 (4) 6,136 Analysis of loss before tax by business segment: Six months ended Year ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Enterprise Solutions (1,313) (831) (2,035)Enterprise Software 1,070 738 1,754 (243) (93) (281)Common costs (540) (574) (984)Net interest receivable 41 108 198Loss before tax (742) (559) (1,067) Common costs comprise the costs of all central group services. 3 Taxation Six months ended Year ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Adjustments in respect of prior periods:UK Corporation tax research and development credit 110 - 305 110 - 305 4 Earnings per share Earnings per share has been calculated using the following earnings and weighted average shares outstanding: Six months ended Year ended 30 June 30 June 31 December 2005 2004 2004Earnings £'000 £'000 £'000 Basic and fully diluted earnings (632) (559) (762) (632) (559) (762) For basic weighted average 49,646,035 49,310,700 49,407,419Potential ordinary shares - - -Diluted weighted average number of shares 49,646,035 49,310,700 49,407,419 Diluted earnings per share are identical to basic earnings per share in all cases because potential diluting events would have the effect of reducing the loss per ordinary share. 5 Dividends No interim dividend has been paid or proposed for the period ended 30 June 2005 and no dividends were paid or proposed in the comparative periods. 6 Group Statement of Changes in Equity Share Share Currency Retained Total capital premium translation earnings reserves £'000 £'000 £'000 £'000 £'000 At 1 January 2004 2,464 9,639 0 (3,142) 8,961 Exchange differences on translation of foreign 0 0 (32) 0 (32) operations Share based expense recognised in the income 0 0 0 14 14 statement Issue of shares 6 31 0 0 37 Attributable loss for the period 0 0 0 (559) (559) At 30 June 2004 2,470 9,670 (32) (3,687) 8,421 Exchange differences on translation of foreign 0 0 3 0 3 operations Share based expense recognised in the income 0 0 0 15 15 statement Issue of shares 9 43 0 0 52 Attributable loss for the period 0 0 0 (203) (203) At 31 December 2004 2,479 9,713 (29) (3,875) 8,288 Exchange differences on translation of foreign 0 0 (56) 0 (56) operations Share based expense recognised in the income 0 0 0 18 18 statement Issue of shares net of expenses 11 224 0 0 235 Attributable loss for the period 0 0 0 (632) (632) At 30 June 2005 2,490 9,937 (85) (4,489) 7,853 7 IFRS differences To aid comparison, the following table summarises the key differences between the IFRS loss after tax presented in these financial statements and the loss after tax that would have been presented under UKGAAP. Six months Year ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Attributable loss as reported under IFRS 30 June 2005 (632) (559) (762) Goodwill amortisation reversal (54) (54) (108) Residual value of property (29) (29) (58) Lease incentives (15) (15) (30) Holiday pay 45 56 36 Share options 18 14 29 Research and development expenditure capitalised (250) 0 0 Loss under UK GAAP 30 June 2005 (917) (587) (893) These unaudited interim financial statements have been prepared under International Financial Reporting Standards ("IFRS") that are expected to be in issue for the year ending 31 December 2005 and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The accounting policies applied in preparation of these financial statements together with reconciliations of previously issued financial statements from UK Generally Accepted Accounting Practice ("UK GAAP") to International Financial Reporting Standards ("IFRS") are set out in the announcement issued by the Company today entitled: Restatement of Financial Information under International Financial Reporting Standards ("IFRS"). These interim financial statements were approved by the Board on 21 September 2005. The statutory accounts for the year ended 31 December 2004, prepared under UK GAAP, received an unqualified auditor's report and have been delivered to the Registrar of Companies. The interim report will be sent to shareholders. Further copies may be obtained from the Company Secretary, Gresham Computing plc, Sopwith House, Brook Avenue, Warsash, Southampton, SO31 9ZA. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
GHT.L