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  • BY: Andrew Hore |
  • POSTED: 24/04/2008 |

Gladstone published strong interim results.

The health club membership and education software developer did better than expected in the six months to February 2008. The outcome also benefited from the fact that Gladstone hasn’t yet employed all the additional staff that it wants to.

Profits improved from £672,000 to £756,000 on turnover 3% ahead at £4.36m. There were £233,000 of capitalised development cost that didn’t go through the profit and loss account. Cash flow wasn’t as strong as normal because of the timing of payments. There was still more than £4m of cash in the bank at the end of February.

Management has organised company affairs so that it can take advantage of the £5m of tax losses relating to management charges. Just over £400,000 of this tax asset is included on the balance sheet.

Gladstone is developing its new software platform called Orbit. This will help it to sell software to smaller clubs and also in new geographic markets.

Educational software is still a small contributor to revenues. The software products include e-registration, cashless payments and access control and others are being developed. These are areas where there is expected to be significant spending, particularly under the government’s ‘Building Schools for the Future’ programme.

Analysts were expecting a small decline in profits this year. The interim figures suggest that Gladstone might do better than that but there is still some way to go so it is best to be cautious.

The shares rose 2.25p to 23.5p, against net tangible assets of 11.2p a share.

Management has declined the request of 28.95% shareholder Constellation Software Inc for a board representative. It is keen to point out how undervalued Gladstone is compared to Constellation’s rating. 

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