Sherwood Computer Services Plc, back in the black, is now leaner and meaner, according to chief executive George Matthews, and the company is in pugilistic mood for 1995 after shedding a string of assets now deemed to be non-core. After taking a hit of ú1.3m, pre-tax profits for the Gloucester financial and insurance software and services company were ú79,000, against losses last time of ú2.0m, on turnover up 6% to ú25.1m. The charges comprise ú1.0m reorganisation provisions following the formation of the joint venture with CFM Group Ltd (CI No 2,614), ú449,000 redundancy costs and net gains on disposals of ú152,000. The company withdrew from the investment management market with the sale of Consort Data Ltd last July (CI No 2,465), and the loc al government market with the transfer of its loss-making business to Capita Group Plc (CI No 2,625), which Sherwood was especially happy to see the back of. These and other disposals leave the company to concentrate on the insurance market, the life and pensions market and stockbroking. Sherwood only entered the facilities management market in July 1993, but never managed to reach a critical mass of business in the finance arena. CFM Group Ltd, on the other hand had the critical mass, but not the financial expertise, according to Matthews, so the combination of the two made sense. Matthews envisages a cost-saving to Sherwood of ú750,000 from using CFM’s facilities. The venture has won a five-year agreement with Scottish Provident to provide life and pension administration services. Sherwood continues to pick off Lloyd’s syndicates with its Sceptre underwriting system, and another seven were added in the year. Sherwood developed the Syncom executive information tool set in 1994 to operate alongside Sceptre and two orders have been won thus far. In the insurance and reinsurance company markets, Sherwood won more orders for its Senator system, including one from the marine department of Guardian.
Bing bang in the insurance market
The imminent ‘big bang’ in the insurance market – when electronic transactions become mandatory on January 1 1996 – means that insurance companies will have to have make a decision by the end of the second quarter about whether they need to replace their current systems, and he believes that Sherwood is well placed with its Epsilon electronic placing system and Symbal insurance broking package to take advantage of what could be a chaotic situation. Sherwood acquired the UK rights to CIRIS, an Oracle-based open system for the commercial and general lines insurance industry in 1994 for Infoel SA and will launch it in the second quarter. The life and pensions market represented 29% of Sherwood’s turnover in 1994, during which it developed ACT-3. This product is designed to meet new actuarial and disclosure requirements brought in following the discovery various sharp practices over recent years. This legislation could cause turmoil in the market according to Matthews, which may be good or bad news for the company, though he’s not quite sure which yet. Sherwood won five orders for ACT-3 in the year. The company recently acquired its partner in the Sherwood International joint venture, Beta Computers Ltd (CI No 2,614), and the figures from the venture did not fully reflect the impact of orders gained late in the year for the Amarta tool set from Swiss Life in the UK and Avero in the Netherlands, according to the company. Further overseas expansion is planned for the product, with agreements already in place in Australia and the Netherlands. Sherwood’s only remaining toe in the investment services market is the City Deal execution-only stockbroking system. But in its first full year of trading, it has made a profit and gone from a staff of six to 66, as well as recruiting 14 third party clients. By the end of last month City Deal’s client base amounted to 50,000 and the company believes it has a promising future. Last year was a year of strict cash management for Sherwood, especially in the areas of property and staff. At the start of the ye
ar the company had quite a lot of empty property which it was reasonably succesful in letting out, but the reorganisation has created more empty space. Offices in London and Gloucester were cut from two to one, and property will be managed hard in 1995, says to Matthews. Staff costs were cut by 18% in the year. The shares leaped 11 pence to 132 pence at the news, and finance director Steve Bellamy said that profits of about ú2.1m, or 18 to 19 pence per share could be expected in 1995. The per share figure is higher than analysts’ forecasts because of a lower tax charge this year. A final dividend of two pence will be paid, a rise of 14.3% on 1993.
