Gresham sells storage business

Real-time financial software provider Gresham Computing is selling its Storage Director business for an initial $1.4m in staggered payments.Fully listed-Gresham will receive $600,000 - $500,000 after expenses - of the initial payment this year with the rest payable in two instalments in 2010. Gresham could receive a further $1.8m based on a minority share of future sales over the next five years. As well as the cash inflow, the disposal will enable Gresham to reduce costs by £900,000 a year. Gresham is in the process of matching costs to its recurring revenues, according to its interim management statement. The board says that Gresham is on course to reduce annual costs by £2.6m during 2009. Revenues in the first nine months of 2009 declined as the staff placement business was run down and a major contract in 2008 was not repeated. The loss after tax in the nine month period was £1.5m, compared with £1m in the first six months. The cash balance declined slightly from the £1.1m reported for the end of June 2009. Disposal proceeds will help to rebuild the cash balance. The long-term focus will be on the real-time financial software business. The company has already sold Gresham Software Labs. Gresham still owns the EnterpriseDistributape storage business. This is profitable and cash generative and Gresham says that the Storage Director disposal does not affect EDT, but broker FinnCap believes that it is non-core. Management is pinning its hopes on the recently won global banking group project which they believe will generate a pipeline of new business.