Sherwood Computer Services Plc is about to embark on an aggressive acquisition programme to try and grow its customer base in the financial services and local government sectors. The Gloucester-based company, which currently has around 300 customers, says it has now successfully recovered from its 1988 crisis point and is now enjoying a state of ongoing profitability. Sherwood reports UKP500,000 net cash and says it is in talks with several companies with a view to their possible takeover. Pre-tax profits at the interim stage, however, were down 32% at UKP575,000, on sales down 2% at UKP12m, after UKP280,000 provisions made against potential losses in the Lloyd’s market. The board is dubious about this market and has written down work in progress by UKP700,000 to UKP420,000. Sherwood’s product for the Lloyd’s market, Sceptre, did not perform well, following implementation delays, though chief executive Richard Guy says he expects better sales in the second half. Meanwhile, hopes are pinned on the company’s new product for the wider companies insurance market, Senator, which is due to ship next year, and on Shares, a replacement business system for Managing and Members Agents at Lloyd’s, also due out next year. Threshold, Sherwood’s housing management system for the local government market, has achieved critical mass in terms of orders and installations. And, generally, Sherwood claims to have maintained recurring revenues generated by existing services and products – these now account for 50% of total turnover. Also included in the results is a UKP2m charge associated with the closure of offices in Manchester and Swansea (CI No 1,617). The Manchester office was acquired with Wootton Jeffreys Plc last year and was surplus to requirements, since Sherwood already had offices in the area; the Swansea facility belonged to a local government division that failed in 1988. Around 30 jobs have been cut in the first half, leaving 370 employees. The disaster standby joint venture with ICL Plc (CI No 1,664) was profitable in the first half, and Guy expects to reap from it UKP200,000 profits by the year end. ICL owns 75% of the venture, Sherwood the balance. In the first quarter this year, prior to the formation of the joint venture, Sherwood’s disaster recovery unit lost UKP160,000 which is included in the results. Guy says Sherwood currently has no intention of buying out of the venture, since ICL now picks up the tab for the costly re-investment in technology – without this expense, Sherwood’s net assets have risen to UKP2.6m from UKP100,000 at the last year end. The venture also contributed towards a reduction in tax charges to UKP127,000, from UKP255,000 last time. As to expansion across the continent, Sherwood is still in talks with its Dutch shareholder World Software Group BV towards a long-term collaboration on life assurance systems in its major market, mainland Europe. And World Software has just expanded into Australia and the US, and is about to broaden into Scandinavia, presenting Sherwood with a wealth of new opportunities abroad.
