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Gresham Computing (GHT)

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Thursday 22 September, 2005

Gresham Computing

IFRS Statement

Gresham Computing PLC
22 September 2005

For immediate release                         22 September 2005


                             Gresham Computing plc
                          ('Gresham' or 'the Company')

Restatement of Financial Information under International Financial Reporting
Standards ('IFRS')

The Company provides the following unaudited restatement of previously issued
financial information resulting from the transition to IFRS.

Interim financial statements for the period ended 30 June 2005 have been
prepared under IFRS, together with IFRS comparatives, and will be announced
separately today.

                                     -ends-

For further information, please contact:

Gresham Computing plc                                        +44 (0)1489 555500
Chris Errington, Finance Director

Financial Dynamics
James Melville-Ross                                          +44 (0)207 831 3113
Cass Helstrip



GRESHAM COMPUTING PLC
RESTATEMENT OF FINANCIAL INFORMATION UNDER IFRS
 
INDEX


General information
Presentation of financial information
Primary statements restated under IFRS
      Group income statement
      Group balance sheet
      Group cash flow statement
      Group statement of recognised income and expense
      Group statement of changes in equity
Reconciliation of income statement from UK GAAP to IFRS
      Period ended 30 June 2004 summary
      Period ended 30 June 2004 analysis
      Year ended 31 December 2004 summary
      Year ended 31 December 2004 analysis
Reconciliation of balance sheet and equity from UK GAAP to IFRS
      At transition, 1 January 2004 summary
      At transition, 1 January 2004 analysis
      At 30 June 2004 summary
      At 30 June 2004 analysis
      At 31 December 2004 summary
      At 31 December 2004 analysis
Notes to the restatement of financial information under IFRS
      1.      First time adoption of IFRS
      2.      Summary of significant accounting policies
      3.      Brief explanation of adjustments from UK GAAP to IFRS





GRESHAM COMPUTING PLC

GENERAL INFORMATION

Gresham Computing plc (the 'Company') is a public limited company incorporated
in the United Kingdom under the Companies Act 1985.  In these financial
statements, 'Group' means the Company and all its subsidiaries.  Gresham
Computing plc has prepared its primary financial statements under UK generally
accepted accounting principles ('UK GAAP').  From 2005 the Group is required to
prepare its consolidated financial statements in accordance with International
Accounting Standards ('IAS') and International Financial Reporting Standards ('
IFRS') as adopted by the European Union.  References to IFRS throughout this
document refer to the application of both IAS and IFRS that are expected to be
in issue for the year ending 31 December 2005.

The first Annual Report under IFRS will be for the year ending 31 December 2005
and the first interim results reported under IFRS accounting policies expected
to be in place at year end will be for the period ended 30 June 2005.  This
document explains how the Group's reported performance and financial position
are affected by this change.

PRESENTATION OF FINANCIAL INFORMATION

The Group financial statements have been prepared in accordance with IFRS that
are expected to be in issue for the year ending 31 December 2005, and are
presented in UK Sterling.

This restatement document has been prepared on the basis that all IFRS's,
International Financial Reporting Interpretation Committee ('IFRIC')
interpretations, current IASB exposure drafts will be issued as final standards
and adopted by the European Commission.  The failure of the European Commission
to adopt these standards in time for financial reporting in 2005, or the issue
of further interpretations by IFRIC in advance of the reporting date, could
result in the need to change the basis of accounting or presentation of certain
financial information from that presented in this document.

As permitted under IFRS 1, first time adoption of IFRS, management has elected
to restate comparative information for the Financial Instrument standards IAS 32
and IAS 39.

The UK GAAP financial information contained in this document does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.  The
auditors have issued unqualified opinions on the Group's UK GAAP financial
statements for the years ended 31 December 2003 and 31 December 2004, which have
been delivered to the Registrar of Companies.  The restatement of IFRS financial
information contained in this document has not been audited.


GRESHAM COMPUTING PLC

NOTES TO THE RESTATEMENT OF FINANCIAL INFORMATION UNDER IFRS


1          FIRST TIME ADOPTION OF IFRS

In 2005 the Group will adopt IFRS for the first time. Previously the Group
reported under UK generally accepted accounting principles ('UK GAAP').

The Group has applied IFRS 1 First Time Adoption of International Financial
Reporting Standards to provide a starting point for reporting under IFRS. The
Group's date of transition to IFRS is 1 January 2004 and all comparative
information in the financial statements is restated to reflect the Group's
adoption of IFRS, except where otherwise required or permitted under IFRS 1.

IFRS 1 requires an entity to comply with each IFRS effective at the reporting
date for its first IFRS financial statements. As a general principle, IFRS 1
requires the standards effective at the reporting date to be applied
retrospectively. However, retrospective application is prohibited in some areas,
particularly where retrospective application would require judgements by
management about past conditions after the outcome of the particular transaction
is already known. A number of optional exemptions from full retrospective
application of IFRSs are granted where the cost of compliance is deemed to
exceed the benefits to users of the financial statements. Where applicable, the
options selected by management are set out in the explanatory notes below.

The adoption of IFRS 1 has resulted in the following changes to the Group's
accounting policies:

Cumulative Translation Differences

Translation differences arise from the consolidation of the results of foreign
operations at average rate and the balance sheet at year-end rate of exchange.
UK GAAP does not require these translation differences to be separately
identified and accounted for in subsequent disposals of foreign operations.
Under IFRS the translation differences arising are separately recorded in
equity, net of any movements on related hedging instruments. On disposal of a
foreign operation, the cumulative translation differences for that foreign
operation are transferred to the income statement as part of the gain or loss on
disposal.

Under IFRS 1, the Group is not required to record cumulative translation
differences arising prior to the transition date. The Group has utilised this
exemption and all cumulative translation differences are deemed to be zero as at
1 January 2004.  All subsequent disposals will exclude any translation
differences arising prior to the date of transition.

Business Combinations

Under IFRS 1, the Group may elect not to apply IFRS 3 Business Combinations
retrospectively to transactions occurring prior to the date of transition to
IFRS and management has elected to take this exemption. The Group has utilised
this exemption and the carrying amount of goodwill in the opening IFRS balance
sheet is that recorded under UK GAAP at the date of transition. As from the date
of transition, goodwill is not amortised but subject to annual tests for
impairment. Goodwill set off against reserves or amortised prior to the date of
transition ceases to exist under IFRS and is therefore not recycled to the
income statement on any subsequent disposal of the business to which it relates.

Derivative Financial Instruments

The IFRS standards relevant to the accounting for, and presentation of,
financial instruments are IAS 32 Financial Instruments: Disclosure and
Presentation, and IAS 39 Financial Instruments: Recognition and Measurement. The
differences between IFRS and UK GAAP which may be most relevant to the Group in
future periods are the requirement to recognise all derivatives on the balance
sheet and the detailed requirements that have to be met to qualify for hedge
accounting.

The Group retains a policy of giving due consideration to hedging the net
investment position of foreign subsidiaries and covering the transactional risk
of foreign currency purchases but undertook no such hedging activity in any
period under review.  The stricter designation, documentation requirements and
effectiveness testing needed to qualify for hedge accounting under IFRS means
that any future transactions undertaken as hedges may not qualify for the same
treatment under IFRS as they would have done under UK GAAP.

Share-based Payment

IFRS requires the cost of all share-based payments to be charged against profits
over their respective vesting periods. Share based-payments include executive
and employee share option schemes. The accounting cost is the fair value at the
date of grant calculated using an option pricing model. Under UK GAAP, the costs
of share awards are charged against profits over the vesting period based on
their intrinsic value, if any.

Under IFRS 1, the Group is required to restate its comparative years for all
grants of equity instruments made on or after 7 November 2002 that have not
vested by 1 January 2005. The Group has not applied IFRS 2 to grants made before
this date.

2       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the Group's
IFRS financial statements are set out below:

Basis of Preparation

The financial statements have been prepared on the historical cost basis other
than derivative financial instruments that have been measured at fair value.

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of current events and
actions, actual results ultimately may differ from those estimates.

Consolidation

The Group financial statements include the financial statements of the Company
and all the subsidiaries during the years reported for the periods during which
they were members of the Group.  Intercompany balances between group businesses
are eliminated on consolidation.  Adjustments are made to bring into line any
dissimilar accounting policies that may exist.

On acquisition, assets and liabilities of subsidiaries are measured at their
fair values at the date of acquisition with any excess of the cost of
acquisition over this value being capitalised as goodwill.

Revenue

Revenue comprises sales of products and services to third parties at amounts
invoiced net of trade discounts and rebates, excluding sales taxes, when, the
significant risks and rewards of ownership of the products and services have
passed to the buyer and can be reliably measured and reasonably assured of
recoverability.

Revenue on software licences is recognised when all of the following criteria
are met:

o       Persuasive evidence of an arrangement exists, such as a signed contract
        or purchase order;
o       Delivery has occurred and no future elements to be delivered are
        essential to the functionality of the delivered element;
o       The fee is fixed or determinable; and
o       Collectibility is probable.

Revenue from the provision of professional services, such as implementation,
training and consultancy, is recognised as the services are performed.

Revenue from subscription services and maintenance is recognised rateably over
the period of the contract.

Larger contracts for the delivery of solutions with multiple elements, typically
involving licence, professional services and maintenance, are unbundled and
revenue is recognised based on the accounting policy applicable to each
constituent part.

Revenue is recognised on long-term contracts as that proportion of the total
contract value which costs incurred to date bear to total expected costs for
that contract.  Profit is recognised on long-term contracts, if the final
outcome can be assessed with reasonable certainty, by including in the income
statement revenue and related costs as contract activity progresses.

Long-term contracts

Cumulative costs incurred net of amounts transferred to cost of sales, less
provision for contingencies and anticipated future losses on contracts, are
included as long-term contract balances.  The long-term contract balances are
recognised as costs in the income statement in line with the recognition of
income from the associated contracts.

Foreign Currencies

The presentational and functional currency of Gresham Computing plc is £
Sterling.  Balance sheet items of overseas companies are translated into
Sterling at the year-end rates of exchange. Profit and loss items and the cash
flows of overseas subsidiary undertakings are translated at the average rates
for the year.

Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.

Monetary assets and liabilities denominated in foreign currencies are
retranslated at the functional currency rate of exchange ruling at the balance
sheet date.

The following are recorded as movements in the currency translation reserves:
exchange differences on the translation at closing rates of exchange of overseas
opening net assets and the differences arising between the translation of
profits at average and closing exchange rates.

Goodwill

Goodwill recognised under UK GAAP prior to the date of transition to IFRS is
stated at net book value as at this date. Goodwill recognised subsequent to 1
January 2004, representing the excess of purchase consideration over fair value
of net assets acquired, is capitalised. Goodwill is not amortised but is
reviewed for impairment annually.

Intangible Fixed Assets

Purchased intangibles, including purchased patents, know-how, trademarks,
licences and distribution rights are capitalised at cost and amortised on a
straight line basis over their estimated useful economic lives. The amortisation
of those intangibles acquired as part of a business combination is presented
separately after trading profits. The estimated useful life of an intangible
asset ranges between 3 and 20 years depending on its nature.

Research and Development Expenditure

The Group considers that the regulatory, technical and market uncertainties
inherent in the development of new products and technologies means that internal
development costs should not be capitalised as intangible fixed assets until
commercial viability of a project is demonstrable and appropriate resource is in
place to launch the product. Research and development expenditure prior to this
point in time is expensed as incurred.

Property, Plant and Equipment

Property, plant and equipment is stated at cost less depreciation and provision
for impairment where appropriate. Freehold land is not depreciated. Freehold
buildings are depreciated down to their residual value on a straight-line basis
at 2% per annum. Short leasehold land and buildings (leases of less than 50
years) are depreciated by equal annual instalments over the term of the lease.
Plant and equipment is depreciated over lives ranging between 1 and 10 years by
equal annual instalments to write down the assets to their estimated disposal
value at the end of their working lives.
Residual values and useful lives are reviewed on an annual basis.

Impairment of Assets

Goodwill arising on acquisition is allocated to cash-generating units
(equivalent to the reported primary business segments). The recoverable amount
of the cash-generating unit to which goodwill has been allocated is tested for
impairment annually or when events or changes in circumstance indicate that it
might be impaired.

The carrying values of property, plant and equipment, and intangible assets with
finite lives are reviewed for impairment when events or changes in circumstance
indicate the carrying value may be impaired. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of
impairment loss. Where it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which it belongs.

Leasing Commitments

Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the Group. All other
leases are classified as operating leases.

Assets held under finance leases are capitalised as property, plant or equipment
and depreciated accordingly. The capital element of future lease payments is
included in borrowings and interest is charged to profit before taxation on a
reducing balance basis over the term of the lease.

Rentals payable under operating leases are charged to income on a straight line
basis over the term of the relevant lease.

Taxation

The charge for current taxation is based on the results for the year as adjusted
for items which are non-assessable or disallowed. It is calculated using rates
that have been enacted or substantively enacted by the balance sheet date.

Deferred taxation is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax bases used in computation of taxable profit.

Deferred tax liabilities are recognised for all taxable temporary differences
except in respect of investments in subsidiaries where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future and on the
initial recognition of non-deductible goodwill.

Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary difference can be
utilised. Their carrying amount is reviewed at each balance sheet date on the
same basis.

Deferred tax is measured on an undiscounted basis, and at the tax rates that are
expected to apply in the periods in which the asset or liability is settled. It
is recognised in the income statement except when it relates to items credited
or charged directly to equity, in which case the deferred tax is also dealt with
in equity.

Deferred tax assets and liabilities are offset when they relate to income taxes
levied by the same taxation authority and when the Group intends to settle its
current tax assets and liabilities on a net basis.

The Group operates in multiple tax jurisdictions around the world and records
provisions for taxation liabilities and tax audits when it is deemed probable
that a tax charge will arise and the amount can be reasonably estimated.

Post Retirement Benefits

Contributions to defined contribution plans are charged to operating profit as
they become payable.

Share-based Payments

The Group operates executive and employee share schemes. For all grants of share
options, the fair value as at the date of grant is calculated using an option
pricing model and the corresponding expense is recognised over the vesting
period.  The expense is recognised as a staff cost and the associated credit
entry is made against equity.

Contingencies and Provisions

Provision is made for contingencies when it is deemed probable that an adverse
outcome will occur and the amount of the loss can be reasonably estimated. Where
the Group is the plaintiff in pursuing claims against third parties legal and
associated expenses are charged to profit and loss account as incurred.

3       BRIEF EXPLANATION OF ADJUSTMENTS FROM UK GAAP TO IFRS

Goodwill amortisation reversal

Under UK GAAP, amortisation is charged to the profit and loss account so as to
write off goodwill over its estimated life.  Under IFRS, goodwill is not
amortised but is reviewed for impairment annually.  This adjustment adds back
goodwill previously charged in reported financial statements in reconciling UK
GAAP to IFRS.

Residual value of property

Under UK GAAP, depreciation is charged to the profit and loss account so as to
write freehold property down to its residual value, as at the date capitalised,
over its estimated life.  Under IFRS, the residual value has been reassessed
and, because the residual value of the freehold property exceeds the recorded
net book value at transition, the resulting depreciation charge is nil.  This
adjustment adds back depreciation previously charged in reported financial
statements in reconciling UK GAAP to IFRS.

Lease incentives

Under UK GAAP, rent free periods are amortised over the period from the date of
grant to the next rent review.  Under IFRS, rent free periods are amortised over
the period from the date of grant to the end of the lease.  This adjustment
spreads the benefit of rent free periods over the longer period to the end of
the lease compared to that reported under UK GAAP in financial statements in
reconciling UK GAAP to IFRS.

Holiday pay

Under UK GAAP, provision for holiday pay is a matter of accounting policy and
the Group policy was not to provide for holiday pay.  Under IFRS, holiday pay is
required to be provided.  This adjustment reflects the changes in provision for
holiday pay in reconciling UK GAAP to IFRS.

Share options

Under UK GAAP, share option costs are not expensed and the costs of share awards
are charged against profits over the vesting period based on their intrinsic
value, if any.  IFRS requires the cost of all share-based payments to be charged
against profits over their respective vesting periods. Share-based payments
include executive and employee share option schemes. The accounting cost is the
fair value at the date of grant calculated using an option pricing model. The
expense is recognised as a staff cost and the associated credit entry is made
against equity.  This adjustment records the relevant charge for share based
payments in reconciling UK GAAP to IFRS.

Presentational changes

Under IFRS, the following presentational changes are required to the income
statement and balance sheet: (a) Convertible Bond Receivable to show the
non-current elements on the face of the balance sheet rather than in a note and
(b) Finance Leases where leases previously treated as operating leases under UK
GAAP are now presented as Finance Leases under IFRS with a reclassification of
costs to finance charges.  There is no change to reported income as a result of
either change.

Earnings per share

There is no difference between the earnings per share as calculated under UK
GAAP and IFRS, except for the change to the attributable loss for the period.




Gresham Computing plc
Restatement of financial information under IFRS
Group income statement
                                                                  Unaudited           Unaudited
                                                             6 months ended     12 months ended
                                                                    30 June         31 December
                                                                       2004                2004
                                                                      £'000               £'000

Revenue                                                               6,136              12,398
Cost of goods sold                                                  (2,789)             (5,796)
Trading profit                                                        3,347               6,602

Administrative expenses                                             (4,014)             (7,867)
Finance income                                                          118                 217
Finance costs                                                          (10)                (19)

Loss before tax                                                       (559)             (1,067)
Taxation                                                                  0                 305
Attributable loss for the period                                      (559)               (762)

Earnings per share
Basic loss per share - pence                                         (1.13)              (1.54)
Diluted loss per share - pence                                       (1.13)              (1.54)



Gresham Computing plc
Group Balance Sheet

                                                              Unaudited           Unaudited        Unaudited
                                                                     At                  At               At
                                                                30 June         31 December        1 January
                                                                   2004                2004             2004
                                                                  £'000               £'000            £'000
ASSETS
Non-current assets
Property, plant and equipment                                     1,442               1,400            1,453
Intangible assets                                                 1,156               1,245            1,043
Other receivables                                                     0                   0              394
Deferred tax assets                                                   0                   0                0
                                                                  2,598               2,645            2,890
Current assets
Trade and other receivables                                       7,541               7,640            5,907
Cash and cash equivalents                                         3,411               3,016            4,923
                                                                 10,952              10,656           10,830

TOTAL ASSETS                                                     13,550              13,301           13,720

EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Called up equity share capital                                    2,470               2,479            2,464
Share premium account                                             9,670               9,713            9,639
Foreign currency translation reserve                               (32)                (29)                0
Retained earnings                                               (3,687)             (3,875)          (3,142)
                                                                  8,421               8,288            8,961
Non-current liabilities
Finance leases                                                       43                  40               52
Deferred income                                                     394                 268              477

Current liabilities
Finance leases                                                       67                  61               65
Trade and other payables                                          4,625               4,644            4,165

Total liabilities                                                 5,129               5,013            4,759

TOTAL EQUITY AND LIABILITIES                                     13,550              13,301           13,720





                                                                           At              At
                                                                      30 June     31 December
                                                                         2004            2004
                                                                        £'000           £'000
Net cash outflow from operating activities
Loss before tax and financing                                           (667)         (1,265)
Depreciation and amortisation                                             203             392
Share based payment expense                                                14              29
Increase in trade and other receivables                               (1,240)         (1,318)
Increase in trade payables and provisions                                 489             241

Cash outflow from operations                                          (1,201)         (1,921)
Interest paid                                                            (10)            (19)
Net income taxes received / (paid)                                       (26)            (40)

Net cash outflow from operating activities                               (36)            (59)

Cash flows from investing activities
Interest received                                                         103             199
Disposal of associated undertaking                                          0             387
Capital expenditure                                                     (361)           (512)
Disposal of property, plant and equipment                                   3               0

Net cash (used in) / generated from investing activities                (255)              74

Cash flows from financing activities
Net proceeds from issue of ordinary share capital                          37              89
Decrease in obligations under finance leases                             (40)            (81)

Net cash (used in) / generated by financing activities                    (3)               8

Net decrease in cash and cash equivalents                             (1,495)         (1,898)
Cash and cash equivalents at beginning of period                        4,923           4,923
Exchange adjustments                                                     (17)             (9)
Cash and cash equivalents at end of period                              3,411           3,016


Gresham Computing plc
Restatement of financial information under IFRS
Group Statement of Recognised Income and Expense
                                                                           Unaudited            Unaudited
                                                                      6 months ended      12 months ended
                                                                             30 June          31 December
                                                                                2004                 2004
                                                                               £'000                £'000

Exchange differences on translation of foreign operations                       (32)                 (29)

Net expense recognised directly in equity                                       (32)                 (29)

Attributable loss for the period                                               (559)                (762)

Total recognised income and expense for the period                             (623)                (820)



Unaudited
                                                     Share        Share      Currency     Retained        Total
                                                   capital      premium   translation     earnings
                                                                             reserves
                                                     £'000        £'000         £'000        £'000        £'000

31 December 2003 as orginally stated                 2,464        9,639             0      (2,797)        9,306
Changes in accounting policy relating to the             0            0             0        (345)        (345)
first time adoption of IFRS

1 January 2004 - restated                            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

* The Statement of changes in Equity is not a primary statement but is included
here for clarity.  It will be presented as a note in the Group's full and
interim 2005 financial statements.



Gresham Computing plc
Restatement of financial information under IFRS

Reconciliation of Loss for the period ended 30 June 2004

The changes in accounting policies had the following effect on the loss reported
for the period ended 30 June 2004:


                                       As reported        Accounting
                                             under    policy changes
                                          UK GAAP*        under IFRS         IFRS
                                             £'000             £'000        £'000

Revenue                                      6,136                 0        6,136
Cost of goods sold                         (2,789)                 0      (2,789)
Trading profit                               3,347                 0        3,347

Administrative expenses                    (3,995)              (19)      (4,014)
Amortisation expense                          (54)                54            0
Finance income                                 118                 0          118
Finance costs                                  (3)               (7)         (10)

Loss before tax                              (587)                28        (559)
Taxation                                         0                 0            0
Attributable loss for the period             (587)                28        (559)



* the order and description of items presented as 'reported under UK GAAP' has
been adjusted to ease the direct comparison with IFRS presentation


Gresham Computing plc
Restatement of financial information under IFRS

Reconciliation of Loss for the period ended 30 June 2004
Analysis of Accounting Policy Changes
                                                                                                  Accounting
                        Goodwill   Residual         Lease   Holiday     Share   Presentational        policy
                    amortisation   value of    incentives       pay   options          changes       changes
                        reversal   property                                                       under IFRS
                           £'000      £'000         £'000     £'000     £'000            £'000         £'000

Revenue                        0          0             0         0         0                0             0
Cost of goods                  0          0             0         0         0                0             0
sold
Trading profit                 0          0             0         0         0                0             0

Administrative                 0         29            15      (56)      (14)                7          (19)
expenses
Amortisation                  54          0             0         0         0                0            54
expense
Finance income                 0          0             0         0         0                0             0
Finance costs                  0          0             0         0         0              (7)           (7)

Loss before tax               54         29            15      (56)      (14)                0            28
Taxation                       0          0             0         0         0                0             0
Attributable loss             54         29            15      (56)      (14)                0            28
for the period



The Accounting Policy Changes are explained in Note 3.


Gresham Computing plc
Restatement of financial information under IFRS

Reconciliation of Profit for the year ended 31 December 2004

The changes in accounting policies had the following effect on the loss reported
for the year ended 31 December 2004:

                                       As reported        Accounting
                                             under    policy changes
                                          UK GAAP*        under IFRS         IFRS
                                             £'000             £'000        £'000

Revenue                                     12,398                 0       12,398
Cost of goods sold                         (5,796)                 0      (5,796)
Trading profit                               6,602                 0        6,602

Administrative expenses                    (7,904)                37      (7,867)
Amortisation expense                         (108)               108            0
Finance income                                 217                 0          217
Finance costs                                  (5)              (14)         (19)
                                                                                0
Loss before tax                            (1,198)               131      (1,067)
Taxation                                       305                 0          305
Attributable loss for the year               (893)               131        (762)



* the order and description of items presented as 'reported under UK GAAP' has
been adjusted to ease the direct comparison with IFRS presentation




Gresham Computing plc
Restatement of financial information under IFRS

Reconciliation of loss for the year ended 31 December 2004
Analysis of Accounting Policy Changes


                              Goodwill  Residual       Lease  Holiday    Share   Presentational  Accounting
                          amortisation  value of  incentives      pay  options          changes      policy
                                                                                                    changes
                              reversal  property                                                 under IFRS
                                 £'000     £'000       £'000    £'000    £'000            £'000       £'000

Revenue                              0         0           0        0        0                0           0
Cost of goods sold                   0         0           0        0        0                0           0
Trading profit                       0         0           0        0        0                0           0

Administrative expenses              0        58          30     (36)     (29)               14          37
Amortisation expense               108         0           0        0        0                0         108
Finance income                       0         0           0        0        0                0           0
Finance costs                        0         0           0        0        0             (14)        (14)

Loss before tax                    108        58          30     (36)     (29)                0         131
Taxation                             0         0           0        0        0                0           0
Attributable loss for              108        58          30     (36)     (29)                0         131
the year



The Accounting Policy Changes are explained in Note 3.



Gresham Computing plc
Restatement of financial information under IFRS

Reconciliation of Balance Sheet and Equity at 1 January 2004

The effect of the changes to the Group's accounting policies on the equity of
the Group at the date of transition, 1 January 2004 was as follows:


                                                             As reported        Accounting
                                                                   under    policy changes
                                                                 UK GAAP        under IFRS          IFRS
                                                                   £'000             £'000         £'000
ASSETS
Non-current assets
Property, plant and equipment                                      1,336               117         1,453
Intangible assets                                                  1,043                 0         1,043
Other receivables                                                      0               394           394
Deferred tax assets                                                    0                 0             0
                                                                   2,379               511         2,890
Current assets
Trade and other receivables                                        6,301             (394)         5,907
Cash and cash equivalents                                          4,923                 0         4,923
                                                                  11,224             (394)        10,830

TOTAL ASSETS                                                      13,603               117        13,720

EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Called up equity share capital                                     2,464                 0         2,464
Share premium account                                              9,639                 0         9,639
Retained earnings                                                (2,797)             (345)       (3,142)
                                                                   9,306             (345)         8,961
Non-current liabilities
Finance leases                                                         0                52            52
Deferred income                                                      477                 0           477

Current liabilities
Finance leases                                                         0                65            65
Trade and other payables                                           3,820               345         4,165

Total liabilities                                                  4,297               462         4,759

TOTAL EQUITY AND LIABILITIES                                      13,603               117        13,720





                                     Goodwill  Residual       Lease  Holiday    Share   Presentational  Accounting
                                 amortisation  value of  incentives      pay  options          changes      policy
                                                                                                           changes
                                     reversal  property                                                 under IFRS
                                        £'000     £'000       £'000    £'000    £'000            £'000       £'000
ASSETS
Non-current assets
Property, plant and equipment               0         0           0        0        0              117         117
Intangible assets                           0         0           0        0        0                0           0
Other receivables                           0         0           0        0        0              394         394
Deferred tax assets                         0         0           0        0        0                0           0
                                            0         0           0        0        0              511         511
Current assets
Trade and other receivables                 0         0           0        0        0            (394)       (394)
Cash and cash equivalents                   0         0           0        0        0                0           0
                                            0         0           0        0        0            (394)       (394)

TOTAL ASSETS                                0         0           0        0        0              117         117

EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent
Called up equity share capital              0         0           0        0        0                0           0
Share premium account                       0         0           0        0        0                0           0
Retained earnings                           0         0       (122)    (223)        0                0       (345)
                                            0         0       (122)    (223)        0                0       (345)
Non-current liabilities
Finance leases                              0         0           0        0        0               52          52
Deferred income                             0         0           0        0        0                0           0

Current liabilities
Finance leases                              0         0           0        0        0               65          65
Trade and other payables                    0         0         122      223        0                0         345

Total liabilities                           0         0         122      223        0              117         462

TOTAL EQUITY AND LIABILITIES                0         0           0        0        0              117         117





                                                               As reported         Accounting
                                                                     under     policy changes
                                                                   UK GAAP         under IFRS              IFRS
                                                                     £'000              £'000             £'000
ASSETS
Non-current assets
Property, plant and equipment                                        1,303                139             1,442
Intangible assets                                                    1,102                 54             1,156
Other receivables                                                        0                  0                 0
Deferred tax assets                                                      0                  0                 0
                                                                     2,405                193             2,598
Current assets
Trade and other receivables                                          7,541                  0             7,541
Cash and cash equivalents                                            3,411                  0             3,411
                                                                    10,952                  0            10,952

TOTAL ASSETS                                                        13,357                193            13,550

EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Called up equity share capital                                       2,470                  0             2,470
Share premium account                                                9,670                  0             9,670
Retained earnings                                                  (3,416)              (303)           (3,719)
                                                                     8,724              (303)             8,421
Non-current liabilities
Finance leases                                                           0                 43                43
Deferred income                                                        394                  0               394

Current liabilities
Finance leases                                                           0                 67                67
Trade and other payables                                             4,239                386             4,625

Total liabilities                                                    4,633                496             5,129

TOTAL EQUITY AND LIABILITIES                                        13,357                193            13,550





                                Goodwill  Residual       Lease Holiday   Share  Presentational   Brought  Accounting
                            amortisation  value of  incentives     pay options         changes   forward      policy
                                                                                                             changes
                                reversal  property                                                        under IFRS
                                   £'000     £'000       £'000   £'000   £'000           £'000     £'000       £'000
ASSETS
Non-current assets
Property, plant and                    0        29           0       0       0             110         0         139
equipment
Intangible assets                     54         0           0       0       0               0         0          54
Other receivables                      0         0           0       0       0               0         0           0
Deferred tax assets                    0         0           0       0       0               0         0           0
                                      54        29           0       0       0             110         0         193
Current assets
Trade and other                        0         0           0       0       0               0         0           0
receivables
Cash and cash equivalents              0         0           0       0       0               0         0           0
                                       0         0           0       0       0               0         0           0

TOTAL ASSETS                          54        29           0       0       0             110         0         193

EQUITY AND LIABILITIES
Equity attributable to
equity holders of the
parent
Called up equity share                 0         0           0       0       0               0         0           0
capital
Share premium account                  0         0           0       0       0               0         0           0
Retained earnings                     54        29          15    (56)       0               0     (345)       (303)
                                      54        29          15    (56)       0               0     (345)       (303)
Non-current liabilities
Finance leases                         0         0           0       0       0              43         0          43
Deferred income                        0         0           0       0       0               0         0           0

Current liabilities
Finance leases                         0         0           0       0       0              67         0          67
Trade and other payables               0         0        (15)      56       0               0       345         386

Total liabilities                      0         0        (15)      56       0             110       345         496

TOTAL EQUITY AND                      54        29           0       0       0             110         0         193
LIABILITIES





                                                               As reported        Accounting
                                                                     under    policy changes
                                                                   UK GAAP        under IFRS              IFRS
                                                                     £'000             £'000             £'000
ASSETS
Non-current assets
Property, plant and equipment                                        1,241               159             1,400
Intangible assets                                                    1,137               108             1,245
Other receivables                                                        0                 0                 0
Deferred tax assets                                                      0                 0                 0
                                                                     2,378               267             2,645
Current assets
Trade and other receivables                                          7,640                 0             7,640
Cash and cash equivalents                                            3,016                 0             3,016
                                                                    10,656                 0            10,656

TOTAL ASSETS                                                        13,034               267            13,301

EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Called up equity share capital                                       2,479                 0             2,479
Share premium account                                                9,713                 0             9,713
Retained earnings                                                  (3,719)             (185)           (3,904)
                                                                     8,473             (185)             8,288
Non-current liabilities
Finance leases                                                           0                40                40
Deferred income                                                        268                 0               268

Current liabilities
Finance leases                                                           0                61                61
Trade and other payables                                             4,293               351             4,644

Total liabilities                                                    4,561               452             5,013

TOTAL EQUITY AND LIABILITIES                                        13,034               267            13,301






                             Goodwill  Residual       Lease  Holiday    Share  Presentational   Brought  Accounting
                         amortisation  value of  incentives      pay  options         changes   forward      policy
                                                                                                            changes
                             reversal  property                                                          under IFRS
                                £'000     £'000       £'000    £'000    £'000           £'000     £'000       £'000
ASSETS
Non-current assets
Property, plant and                 0        58           0        0        0             101         0         159
equipment
Intangible assets                 108         0           0        0        0               0         0         108
Other receivables                   0         0           0        0        0               0         0           0
Deferred tax assets                 0         0           0        0        0               0         0           0
                                  108        58           0        0        0             101         0         267
Current assets
Trade and other                     0         0           0        0        0               0         0           0
receivables
Cash and cash                       0         0           0        0        0               0         0           0
equivalents
                                    0         0           0        0        0               0         0           0

TOTAL ASSETS                      108        58           0        0        0             101         0         267

EQUITY AND LIABILITIES
Equity attributable to
equity holders of the
parent
Called up equity share              0         0           0        0        0               0         0           0
capital
Share premium account               0         0           0        0        0               0         0           0
Retained earnings                 108        58          30     (36)        0               0     (345)       (185)
                                  108        58          30     (36)        0               0     (345)       (185)
Non-current liabilities
Finance leases                      0         0           0        0        0              40         0          40
Deferred income                     0         0           0        0        0               0         0           0

Current liabilities
Finance leases                      0         0           0        0        0              61         0          61
Trade and other                     0         0        (30)       36        0               0       345         351
payables

Total liabilities                   0         0        (30)       36        0             101       345         452

TOTAL EQUITY AND                  108        58           0        0        0             101         0         267
LIABILITIES






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