RNS Number:9033R
Comino Group PLC
11 November 2003
COMINO GROUP PLC: INTERIM RESULTS
A significant increase in profits; An encouraging outlook for the Group
Comino Group plc ("Comino"), the provider of software based business solutions
for Social Housing, Local Government and Occupational Pensions administration,
announces Interim Results for the half year ended 30 September 2003.
In his Statement, David Quysner, Chairman, said:
"I am pleased to report that Comino Group continues to make satisfactory
progress, with results for the six months ended 30 September 2003 showing a
significant increase in profits compared with the first half of last year, in
line with expectations."
Financial Highlights
* PBT before amortisation of goodwill #804,000 (2002: #621,000).
* PBT #603,000 (2002: #420,000).
* Turnover slightly down at #11.3m (2002: #11.8m) reflecting ceased managed
services and an anticipated fall in Occupational Pensions which is
recovering.
* Gross profit margin maintained at 80%.
* Interim dividend of 2.2 pence per share (2002: 1.9p).
* Cash balances at 30 September 2003 #6.1m (2002: #5.2m).
* Adjusted earnings per share 4.1p (2002: 3.4p).
Operational Highlights
* Local Government produced its best ever first half reflecting Comino's
investment in this sector.
* Social Housing now has multiple live installations of its new transaction
system and the Group's CRM system, Contact Manager.
* The Local Government division continues to make progress in corporate
accounts and has improved its operating profit margin.
* Occupational Pensions has returned to new business after major development
and has clear and specific opportunities on its prospect list.
* Comino Connect returned a profit and continues to develop its
infrastructure and potential.
* Comino Techflow has reshaped its business and was very close to
break-even.
Enquiries
Comino plc Binns & Co PR Ltd
Garth Selvey, Chief Executive Tel: 020 7786 9600 on the day Peter Binns, Paul McManus
Paul Clifford, Finance Director Thereafter: 01628 525 433 Tel: 020 7786 9600
Editor's notes:
Comino provides software solutions for Social Housing, Local Government and
Occupational Pensions administration. Comino's products incorporate workflow,
computerised telephony and electronic document management. Comino has its own
technology in these areas and uses it to improve records management, customer
service and administration performance generally across a customer base in
excess of 400 organisations.
Case oriented workflow gives the user a complete picture together with access to
relevant records and documents that allow timely decisions to be made. Business
process reengineering defines and optimises the flow of information and the
result is a more seamless and responsive organisation.
Comino's operating companies are based near Maidenhead and in Leeds, Croydon and
the West Midlands.
Quotations referred to in the Chairman's statement
Social Housing
"We have found that Contact Manager has certainly changed the way we think and
work. The service centres have taken the burden of incoming calls away from our
back office staff, freeing up our Housing Management teams to enable them to
spend more valuable time out on their patch."
Colin Daine, Operations Director (ICT), Flagship Housing Group.
"Downland Affinity, the fifth largest independent provider of affordable housing
in England, is committed to providing high standards of customer service to our
30,000 residents. We have a reputation for innovation and continuous improvement
and as such are utilising Comino's Customer Relationship Management (CRM)
software. This provides us with significant benefits and our plan, with Comino's
help, is to further extend the functionality of CRM and widen its usage
throughout our Group."
Mark Perry, Assistant Director of Corporate Management, Downland Affinity Group.
Local Government
"Comino are providing Document Imaging, Case Management and Workflow capability
to a number of our major clients and greatly enhancing their service delivery
capability".
Mike Reynolds, General Manager for Local and Regional Government, BT Global
Solutions.
"This project is an important building block for our e-Government strategy. We
picked Comino following a competitive tender on the basis of price and quality.
Their solution and proposed approach was best value for the council."
Elma Murray, Director of e-Government at Glasgow City Council.
Occupational Pensions
"UPM has already helped us save #350,000 per year . . . ", Mike Woodall, West
Midlands Pensions.
"UPM DC (defined contribution) has given us the ability to take on new clients
with ease.", Sarah Sex, MNPA.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that Comino Group continues to make satisfactory
progress, with results for the six months ended 30 September 2003 showing a
significant increase in profits compared with the first half of last year, in
line with expectations.
Profits
Profit before tax and amortisation of goodwill was #804,000 (2002: #621,000) and
profit before tax was #603,000 (2002: #420,000) after goodwill amortisation of
#201,000 in each period.
Turnover and Overheads
Turnover for the half year of #11.3m ( 2002: #11.8m) was slightly down compared
with the same period last year but gross profit margin remained steady at 80%.
The slightly reduced turnover is not viewed as significant and largely reflects
the cessation of managed services and an anticipated fall in Occupational
Pensions which is now recovering. Overheads in the period, excluding
amortisation of goodwill, were #8.3m compared with #8.8m in 2002.
Cash and Dividend
At 30 September 2003, cash balances were #6.1m compared with #5.2m at the end of
the same period last year. An interim dividend of 2.2 pence per share (2002:
1.9p) will be paid on 29 January 2004.
Operational Review
The Social Housing division and the Local Government division were the principal
profit contributors. An improvement in operating profit margin resulted in Local
Government producing its best ever first half performance. Social Housing had a
less profitable first half in comparison to the same period last year but both
divisions are expected to have a strong second half.
The Occupational Pensions division is now able to focus on generating new
business, having completed its extensive next generation product development.
Commitments have been received to upgrade to this new product from existing
customers and there are a number of clearly defined opportunities for new
business.
Comino Connect continued to build its network bandwidth and customer base during
the first half of the year and reported a profit for the period.
Comino Techflow made further progress in its consultancy and management
reporting business and was on target at very close to break-even.
Social Housing
The division continues to enjoy broad success in the transformation and upgrade
of its customer base. There have been some customer losses throughout this
overall process but the great majority continue to work with Comino.
Specifically, there are 21 live installations of the new Universal Housing
Transaction system and 12 live installations of Contact Manager (plus numerous
others in the Local Government customer base).
The use of Contact Manager, the Group's Customer Relationship Management (CRM)
software, is gaining momentum within Housing. This product will operate with
either Comino back-office housing systems or with those from other suppliers.
This reflects a continuing and cost effective convergence of our Local
Government and Social Housing strategies. Contact Manager is being particularly
well received and some related customer comments are included within this
document.
Disappointingly, the division is in a contractual dispute with one of its
customers. Despite considerable efforts by Comino to resolve the situation,
litigation may not be avoided. The matter should be viewed against successful
implementation of similar systems and a record of no previous litigation. Legal
advice has been taken on the substance of the dispute and if a claim
materialises it will be vigorously contested. Amounts outstanding in respect of
the contract are not material in relation to the company's business.
Local Government
Local Government is achieving the right commercial balance with improved
resource utilisation and a higher proportion of revenues derived from recurring
support services. The division continues to win both departmental business and
corporate business including Ryedale District Council, London Borough of
Hillingdon and City of Edinburgh Council.
Comino systems help manage complex administration tasks, an example being
Glasgow City Council which administers over #350m of annual benefit payments. In
addition to working with end user customers directly, Local Government has
enjoyed considerable success working with partners such as BT Global Solutions.
New technology is also being applied to users of the Saffron Integrated Housing
Management System and Comino is delighted to be working with New Prospect
Housing Ltd on this important project.
The division continues to make a strong contribution to the IT agenda for Local
Government which is itself strongly supported by Central Government.
Occupational Pensions
The Universal Pensions Management product continues to gain widespread
recognition and the prospect list is looking increasingly healthy.
Following completion of new product developments, winning new business is being
helped by support from our existing customer base and a series of trade
advertisements endorsed by these influential customers.
Comino pension products produce annual savings in administration costs, reduce
case backlogs and allow ease of implementation of new schemes. The division is
now working hard to capitalise on its investment.
Comino Techflow
The company is successfully delivering business consultancy to the Group's
customers. In addition, Comino Techflow designs schemes for management
reporting. An agreement has been signed with Workbench, a New Zealand Software
company that produces project costing systems. A small number of these have
already been sold to the Group's housing customers for use on new housing
projects.
Comino Connect
Comino Connect sales are 30% up on the same period last year. Of particular note
is a contract with Railway Housing to remotely manage their housing system
delivering service via thin-client network technology, an ASP model which could
apply to many smaller organisations. In general, Comino Connect continues to
build its customer base and network services successfully.
Outlook
Comino has made clear and substantial progress in the first part of the current
year. This is reflected in current profitability and in sound order books. There
is an encouraging outlook across the Group as a whole.
Staff & customers
Once again, I would like to thank our employees for their continuing efforts and
our customers for their much appreciated business and support.
David Quysner
CHAIRMAN
10 November 2003
Consolidated Profit and Loss Account
6 months to 6 months to Year to
30 September 30 September 31 March
2003 2002 2003
# 000 # 000 # 000
Turnover
Continuing operations 11,323 11,426 23,235
Acquisitions - 377 1,269
11,323 11,803 24,504
Cost of sales (2,284) (2,394) (5,039)
Gross profit 9,039 9,409 19,465
Administrative expenses (8,528) (9,044) (18,349)
Operating profit
Continuing operations 511 383 1,134
Acquisitions - (18) (18)
511 365 1,116
Net interest receivable 92 55 93
Profit on ordinary activities before taxation 603 420 1,209
Profit on ordinary activities before taxation
analysed between
Profit on ordinary activities before taxation,
amortisation of goodwill 804 621 1,611
Amortisation of goodwill (201) (201) (402)
603 420 1,209
Tax on profit on ordinary activities (225) (145) 18
Profit on ordinary activities after taxation 378 275 1,227
Minority interest - equity (6) 16 14
Profit for the financial period 372 291 1,241
Dividends (305) (264) (819)
Retained profit for the period 67 27 422
2.7p 2.0p 8.9p
Earnings per share
Diluted earnings per share 2.6p 2.0p 8.9p
Adjusted earnings per share 4.1p 3.4p 8.3p
Dividend per share 2.2p 1.9p 5.9p
The dividend of 2.2 pence per share will be paid on 29 January 2004. The
dividend record date is 5 January 2004.
Consolidated Balance Sheet
30 September 30 September 31 March
2003 2002 2003
#000 #000 #000
Fixed assets
Intangible assets - goodwill 2,613 3,253 2,814
Tangible assets 2,711 3,199 2,968
5,324 6,452 5,782
Current assets
Stocks and work in progress 779 485 452
Debtors & prepayments 6,983 7,509 8,058
Cash at bank and in hand 6,079 5,208 8,322
13,841 13,202 16,832
Creditors falling due within one year (4,105) (4,980) (5,804)
Net current assets 9,736 8,222 11,028
Total assets less current liabilities 15,060 14,674 16,810
Deferred income (5,847) (5,698) (7,670)
9,213 8,976 9,140
Capital and reserves
Share capital 694 694 694
Share premium reserve 4,796 4,796 4,796
Shares to be issued 99 337 99
Profit and loss account 3,404 2,942 3,337
Equity shareholders' funds 8,993 8,769 8,926
Minority interest - equity 220 207 214
9,213 8,976 9,140
Consolidated Cash Flow Statement
6 months to 6 months to Year to
30 September 30 September 31 March
2003 2002 2003
#000 #000 #000
Net cash (outflow)/ inflow from operating activities (1,904) 245 3,923
Net returns on investments and servicing of finance
Net interest received 93 55 93
93 55 93
Tax received/(paid) 210 7 (202)
Capital expenditure
Purchase of tangible fixed assets (104) (282) (474)
Sale of tangible fixed assets 17 - 63
Net cash outflow from capital expenditure (87) (282) (411)
Acquisitions & disposals
Purchase of subsidiary undertaking - (131) (131)
Cash and overdrafts acquired - 305 305
- 174 174
Equity dividends paid (555) (152) (416)
(Decrease)/increase in cash (2,243) 47 3,161
Net cash inflow/(outflow) from operating activities
Operating profit 511 365 1,116
Amortisation of goodwill 201 201 402
Depreciation 357 387 761
Profit on sale of fixed assets (13) - (14)
(Increase) in stocks (327) (352) (319)
Decrease in debtors 1,051 699 563
(Decrease)/Increase in creditors (1,861) 106 603
(Decrease)/Increase in deferred income (1,823) (1,161) 811
Net cash (outflow)/inflow from operating activities (1,904) 245 3,923
COMINO GROUP plc Interim statement September 2003
Notes to the Interim Accounts
1. The charge for taxation is based on the expected rate for the financial year.
2. The calculation of earnings per share for the six months ended 30
September 2003 is based on the profit for the financial period of #372,000 (2002
- #291,000) and on 13,885,802 (2002 - 13,875,802) ordinary shares being the
average number of shares in issue during the period. The adjusted earnings per
share excludes the amortisation of goodwill and at March 2003 also excluded the
effect of setting up a deferred tax asset relating to prior periods.
3. The interim statement has been prepared on the same accounting basis as
set out in the financial statements for the year ended 31 March 2003 and was
approved by the board on 10 November 2003. The foregoing financial information
does not represent full accounts within S240 of the Companies Act 1985 and has
not been reported on by the auditors or delivered to the Registrar of Companies.
4. The above results for the year ended 31 March 2003 have been abridged
from the full Group accounts for that year, which received an unqualified
auditors' report and which have been delivered to the Registrar of Companies.
Independent Review Report to Comino Group plc
Introduction
We have been instructed by the company to review the interim financial
information for the six months ended 30 September 2003 which comprises the
consolidated profit and loss account, consolidated balance sheet, consolidated
cash flow statement and accompanying notes set out on pages 4 to 7. We have
read the other information which comprises only the Chairman's statement and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company, in accordance with the guidance
contained in APB Bulletin 1999/4 "Review of Interim Financial Information". Our
review work has been undertaken so that we might state to the company those
matters we are required to state to it in a review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume any
responsibility to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applies in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance in Bulletin 1999/4 'Review
of Interim Financial Information' issued by the Auditing Practices Board. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether accounting policies and presentation have
been consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of control and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than audit. Accordingly, we do not express an opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the interim financial information as presented for the six
months ended 30 September 2003.
Grant Thornton
Registered Auditors
Chartered Accountants
London
10 November 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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