Sherwood warns of first-half slide

SHARES in Sherwood Computer Services plunged 63p to 145p yesterday as the company warned first-half profits would be materially below the pounds 1.75m it made in the same period last year.

The warning came five weeks after Sherwood's half-year end. The company blamed an absence of expected orders on uncertainties in the Lloyd's of London insurance market and local government, two principal sources of business.

A big contract to supply its Sceptre underwriting system to Sturge Holdings, Lloyd's largest managing agent, failed to produce expected revenues after Sturge decided to close seven of its 22 syndicates.

Richard Guy, chairman, said other syndicate closures and concerns about shrinking underwriting capacity had also hit sales. The bulk of the income from software licences goes straight through to profits, exacerbating the impact. Mr Guy said the introduction of the council tax and the proposed reorganisation of local government had delayed orders for Threshold, a management system for public sector housing.

Sherwood is positive about its prospects for the second half and promised a satisfactory result for the year. It has won some new contracts for Threshold and Mr Guy believes the uncertainties at Lloyd's will reduce as underwriting capacity becomes clearer. He said there were signs of more capital coming into the market.

Sherwood will bring its interim results forward and will publish them later this month.

The company's shares reached a high of 350p in February but have been in steep decline since April. Sherwood has a chequered history - it suffered a big loss in 1988 after the acquisitions of Corporate Technology Group and Mitronix, and its recovery suffered a setback two years ago because of problems at Lloyd's.

Datasure, another computer business dealing with the insurance industry, disclosed a 44 per cent fall in profits to pounds 900,000 when CE Heath, the insurance broker that owns it, reported its results in June.