Shares in Gresham Computing Plc slumped 8.5 pence to 36 pence as half-time profits dropped sharply and the chairman, managing director and sales director left the company. For the six months to April 30, pre-tax profits of this Southampton, UK middleware and data management company fell from 708,000 pounds to 487,000 pounds. Profits would have shown a modest rise but for the total payments of 354,000 pounds to settle a legal dispute and give large checks to two directors to cover service contracts. Revenues for the first half slipped from 4.58m pounds to 4.5m pounds and the company’s brokers have cut its full year forecast of pre-tax profits from 2.1m pounds to 1.3m pounds. Peter Bickerton, the new chairman, said there had been some disagreement as to how best move the company forward. It is in for a tricky period as a new management team takes over. But there are consolations for investors. The first is that the company is sitting on a 4m pound cash pile and is on the lookout for acquisitions. The second is that the new managing director is Trevor Read, who has an impressive track record. He is best known as the person who organized a management buy-out of AST Ltd in 1984 and, as managing director, steered the company from 100,000 pounds in revenues to 15m pounds in 1993 when it was bought by SHL Systemhouse Inc. Certainly, he needs to give the company a kick as the half-time statement is awash with complacency. To lose a managing director and sales director at the same time, suggests a degree of unhappiness in a company. But apparently, both men, having developed the company’s financial health and profitability have now decided that it is an appropriate time to step aside. And you will search in vain for a detailed explanation for the lackluster financial performance in the statement from outgoing chairman Hamish Donaldson. Sales of mainframe software products have continued to make an important contribution, generally through upgrades but there has been no particularly large order. Donaldson says they will use their leverage of a well-established customer base to promote two recently released open systems products. Divisions providing consultancy services, customer support and contract staff and placements have all performed well, he insists. He warns that in the second six months there may be some loss of momentum until the new team settles into place. Gresham may prove to be new managing director Read’s biggest challenge.
