Friday, 24 April 2009

Gladstone produces sound interim results

Gladstone, the supplier of software solutions and services to the leisure and education markets has announced a sound set of interim results today. Despite the current economic and financial environment, turnover has not reduced, and underlying operating profit was up 6% to £698k.

However, on the negative side, as predicted in my last post, Gladstone has incurred exceptional costs of £690,000 - primarily as a result of the costs associated with defending Constellation's hostile bid – and continued with capitalising the costs of development of its new product, £352k in the 6 months.

I was fortunate to have a meeting with Gladstone’s Chairman and Chief exec, Dr Said Ziai, last month and was impressed with his confidence in the business. As well as the significant exceptional costs incurred in fighting off Constellation, the fight and EGM undoubtedly deflected management time away from driving the core business forward, but Said was confident that the business would be successful as the Constellation issues reduced and the new developments came on stream.

I regard Gladstone as one of the “old style” of software houses – cash in the bank (available for funding development in a recession and/or acquiring distressed competitors) – clear market leader - and yet having realistic plans for growth over the coming years, recognising the current financial situation and not looking for excessive growth.

A prudent company that will, in my estimation, survive the recession and, once we see the green shoots of recovery, will power ahead.

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