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 Â£11.6m Â£18.3m Operating loss Â£3.5m Â£3.9m Profit before tax Â£1.1m Â£(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: â€¢ Disposal of remaining interest in SIM Group Ltd completed in April 2002 for Â£7.4m â€¢ 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 â€¢ New version of Casablanca has generated significant market interest, although the market remains difficult â€¢ Significant long-term growth potential â€¢ Period-end cash balances of Â£4.0m (2001: Â£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 Â£11.6 million (2001: Â£18.3 million from continuing operations). The operating loss was Â£3.5 million (2001: Â£3.9 million). Profit before taxation was Â£1.1 million (2001: Â£1 million loss) with retained profits for the period of Â£1.2 million (2001: Â£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 Â£7.4 million resulting in a profit on disposal in the year of Â£4.9 million. Overall the disposal of SIM Group realised Â£13.3 million with a profit on disposal of Â£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 Â£0.4 million loss related to the trading activities and goodwill amortisation of SIM Group Limited (2001: Â£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 Â£3.9 million (2001: Â£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 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'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 Â£'000 Â£'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 Â£'000 Â£'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 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'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 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'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: Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'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 Â£'000 Â£'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 Â£'000 Â£'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 Â£'000 Â£'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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