Gresham Technologies PLC Sale of VME mainframe software business (9382M)
14 January 2019 - 6:00PM
UK Regulatory
TIDMGHT
RNS Number : 9382M
Gresham Technologies PLC
14 January 2019
RNS
14 January 2019
Gresham Technologies plc
Sale of VME mainframe software business
Gresham Technologies plc (LSE: "GHT", "Gresham" or the "Group"),
the leading software and services company that specialises in
providing real-time data integrity and control solutions, is
pleased to announce that it has entered into a definitive agreement
(the "Agreement") with Fujitsu Services Limited ("Fujitsu") for the
sale of its VME mainframe software business for GBP2 million (the
"Transaction").
Background to the Transaction
The Virtual Machine Environment ("VME") operating system was
originally developed in the mid-1970's by UK company ICL, later
acquired by the Fujitsu group. Gresham responded to the
introduction of ICL mainframes by developing a portfolio of
complementary software development tools for the VME operating
system, some of which are currently still licenced, maintained and
supported for a small number of UK customers.
In recent years, many of Gresham's VME customers have
discontinued their use of Gresham's VME software tools, with a
residual base of 13 customers now remaining. As a consequence,
Gresham's VME revenues have been steadily declining. Furthermore,
the associated business risks to Gresham are increasing due to the
limited technical resources available to support the business, and
the investments in further software development that may be
required as Fujitsu develops a strategy to extend and enhance its
platform.
During the first part of 2018, Fujitsu and Gresham engaged in a
technical feasibility study regarding the compatibility of
Gresham's VME products with Fujitsu's successor platform and to
quantify the product upgrade requirements and associated benefits
and risks. This study led to strategic discussions regarding the
transfer of Gresham's VME business and assets to Fujitsu on the
terms of the Transaction.
Details of the Transaction
Under the terms of the Agreement, Gresham's VME customer
contracts will be assigned to Fujitsu and the intellectual property
rights in the relevant software products will be transferred to
Fujitsu with effect as of 31 January 2019 ("Business").
The consideration for the Transaction is GBP2 million which will
be settled in full in cash on completion, offset against advance
receipts, resulting in net cash inflow to the Group of
approximately GBP1.7 million which will be applied to further
support Gresham's Clareti-led strategy.
For the year ended 31 December 2017 ("2017"), the revenue and
profit attributable to the Business was GBP0.87m and GBP0.70m,
respectively. In-line with the declining trend in recent years, the
2018 revenue and profit attributable is expected to be lower than
2017. The consideration for the Transaction represents
approximately 2.3 times and 2.9 times the 2017 revenue and profit
attributable to the Business, respectively. The gross assets of the
Business subject to the Transaction are immaterial as the
intangible assets have been fully amortised.
The Transaction constitutes a Class 2 transaction for the
purposes of the UK Financial Conduct Authority's Listing Rules and,
as such, shareholder approval is not required. The Transaction has
been approved by the Gresham Board of Directors and will complete
on 31 January 2019.
Ian Manocha, CEO, commented:
"This sale continues the business transformation process
initiated several years ago towards establishing Gresham as a
global financial technology business, and also reflects the Board's
confidence in our longer-term Clareti-led growth strategy.
The ICL VME platform was an extraordinary British innovation in
its day and has been an important line of business for Gresham over
three decades.
Taking into account the evolving VME marketplace dynamics, our
ongoing customer support obligations, and the investment required
to support product upgrades and customer migrations, we believe
that it is in the best interests of our shareholders and our VME
customers that we transition our VME business to Fujitsu, as we
continue to focus our efforts and investments on Clareti-led
growth. Fujitsu is ideally placed to assist customers wishing to
migrate to their next generation service and provide good
continuity of operational software support and maintenance."
Enquiries
+44 (0) 207 653
Gresham Technologies plc 0200
Ian Manocha
Tom Mullan
+44 (0) 207 496
N+1 Singer (Joint Broker) 3000
Shaun Dobson / Lauren Kettle (Corporate Finance)
Tom Salvesen (Corporate Broking)
+44 (0) 207 894
Cantor Fitzgerald Europe (Joint Broker) 7000
Philip Davies
Catherine Leftley
Inside information
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
Note to editors
Gresham Technologies plc is a leading software and services
company that specialises in providing real-time data integrity and
control solutions. Listed on the main market of the London Stock
Exchange (GHT.L) and headquartered in the City of London, its
customers include some of the world's largest financial
institutions, all of whom are served locally from offices located
in Europe, North America and Asia Pacific.
Gresham's award-winning Clareti software platform has been
designed to provide financial institutions with complete certainty
in their data processing. Clareti is a highly flexible and fully
scalable platform for ensuring the integrity of data across an
enterprise. It is designed to address today's most challenging
financial control, risk management, data governance and regulatory
compliance problems.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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