Gresham Technologies shares tank 13 per cent as it ditches weak business unit
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Shares in Gresham Technologies plonked over 13 per cent on Friday morning after it told markets it is discontinuing its low-margin legacy service, costing it £8.5m.
The software and services company said it has agreed with Australia and New Zealand Banking Group (ANZ), its largest customer by revenue, to “completely exit” the lower margin sub-contracting business, which provides IT freelancers to ANZ.
Gresham said it will leave the business behind from the start of next year but expects to lose £8.5m in revenue from the agreement.
But by focusing on its higher-margin Clareti software business, Gresham hopes to improve profit margins in the long run.
Aside from the £8.5m revenue deduction, the London-listed tech company said its revenue forecast for the financial year is staying the same, in line with expectations.
Gresham chief Ian Manocha said: “Discontinuing our IT contracting business will further accelerate our plan to become a pure-play subscription software company and enable us to focus on creating long-term value through our high-margin Clareti solutions.
“Whilst it has been a difficult year for financial markets, and customer budgets are expected to remain fairly tight, we have a solid pipeline of Clareti opportunities and a strategic plan aligned to customer priorities.”