City File: Sherwood Computer Services

Click to follow
ILL WIND department. The well-publicised troubles at Lloyd's have led to a new emphasis on proper controls. These involve new types of computer systems, and Sherwood Computer Services is only too happy to oblige with its Sceptre underwriting system. Although Sherwood's share price has doubled this year to more than 220p, the company's stock market reputation has not yet fully recovered from a couple of disastrous purchases in 1988 which led to an emergency rights issue the following year.

Since then Sherwood has done nothing wrong, and is in an excellent position to cash in on the steadily escalating demand for sophisticated software, not only from the financial sector, but also from county councils and housing associations. Sherwood is now a model of financial conservatism - it even writes off the development costs of new software from current profits. Despite the price rise the shares are still only on eight times prospective earnings for the year. There is some stock overhanging the market, and once this has been absorbed the company could be a prime beneficiary of any renewed interest in smaller companies.