Finance industry software provider GBST Holdings (ASX:GBT) expects its United Kingdom-based securities transaction software division, Syn~, to return a profit in July 2012, after two years of restructuring, including the removal of the division's entire management staff.
GBST acquired UK company Coexis in late 2008, but said in a statement to the ASX that the company's software was not as advanced as it had been led to believe.
In August 2010, the company revealed in a financial statement to the ASX that it suffered an impairment charge of $5.5 million as a result.
GBST chief executive officer, Stephen Lake, said that once it had a close look at the Coexis business model it discovered that each customer had a different version of the software.
"A company tends to develop one version of the software and when enhancements get made to that software, all of the customers should be upgraded to the new release," Lake said.
"We’ve gone through the pain of migrating all those different code lines into one core application so we can manage it as one product,"
According to Lake, Syn~ version two was GBST's first attempt at bringing all the different versions of the software into one code line.
Since the acquisition it had removed all of the senior management and pursued legal action, which Lake could not talk about as it was still ongoing.
"We have put in a new management structure including a new head of development and CEO," Lake said. "At the moment, our main focus is developing a bigger pool of resources for the Syn~ business in Asia including a sales and marketing team."
While the software company was this year forecast to generate $8 million in cash, Lake said that all of the software acquisitions were "intangibles" so it needed to depreciate those acquisitions, which resulted in an accounting loss.
He added that the Syn~ business would make another loss this year, mainly because of the restructure.
“We expect that part of the business to become profitable during the second half of this financial year in July 2012."
However, the company had a number of plans in place to increase the Syn~ revenue including the extension of an existing agreement with ANZ to roll out the securities transaction platform for the ANZ Global Markets business in countries including Singapore and Australia.
ANZ planned to use the platform to process financial assets within one system, including fixed income, treasury, equities, and derivatives. The bank would also use the platform for central reference data management.
“What escalated the use of this [platform] for ANZ was when they bought the Royal Bank of Scotland (RBS) branch network in Asia which gave them more prominence in Asia," Lake said.
"It’s very high on their agenda in terms of a growth profile.
"In addition to the existing GBST clients already live in multiple markets in Asia on Syn~, we have a further three implementations underway in Asia as well as our first Syn~ implementation in Australia, all of which are due to go live within the next twelve months."
According to Lake, the roll out of Syn~ into the Australian market would commence in the first quarter of 2012, with four customers on its schedule at present. He would not name the customers, but GBST works with a number of financial institutions including Suncorp and the Commonwealth Bank of Australia (CBA).
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