RNS Number:4914Z
Total Systems PLC
03 July 2007
FOR RELEASE 7:00 AM 3 JULY 2007
TOTAL SYSTEMS plc
Preliminary results for the year ended 31 March 2007
Loss lower than market expectation
Total Systems plc ("Total" or "the Company"), suppliers of cost effective
flexible software systems for the financial services industry, primarily in the
insurance and warranty sectors, announces its preliminary results for the year
ended 31 March 2007.
Commenting on the Company's results Terence Bourne, Chairman, said:
"This has been an interesting year in the development of Total Systems. I am
delighted to state that we gained the rights to market the Invu document
management system in the general insurance sector and also to represent
PriceBuilder from Contemi in the UK. These products have fulfilled their promise
in gaining attention from insurers but their effect on the year's revenue has
not been significant.
At the beginning of the period Shell moved their pension fund management back to
Holland and Bluesure, the multi-product policy insurer, ceased operations for
reasons outside of our control. These two events resulted in a material loss of
revenue. Despite this our other customers have continued to develop and enhance
their applications, add new services and maintain their service level
agreements. Additionally we gained a commitment from Capita for Ultima in
respect of their plans for a general insurance platform but this did not have a
major impact on the year being reported on. This relationship should provide an
excellent base to grow our revenues in the future."
Financial Highlights
* Revenue # 3.36m (2006: # 3.49m)
* (Loss)/profit before tax # (530)k (2006: # 285k)
* Basic (loss)/earnings per
share (3.98)p (2006: 2.15p)
* Gearing Nil (2006: Nil)
* Net assets per share 35.45p (2006: 40.06p)
* Cash per share 22.62p (2006: 30.66p)
Product Summary
Ultima, the complete insurance and warranty solution, continues to bring
significant business benefits to clients including:
* Low cost of ownership.
* Integrated solution.
* Flexible and designed for change with Business Configurator.
* Easy integration with external systems.
* Service Oriented Architecture.
Regarding the Company's current trading and outlook, Terence Bourne added:
"Current trading is difficult for a number of reasons. The level of work from
Capita has not been as extensive as anticipated and our existing customers,
although supportive, have not made decisions on starting significant projects.
Invu and Contemi continue to generate interest with our clients and sales
prospects but there have been no sizeable orders at the time of writing.
The sales and marketing team are proactively seeking new opportunities in our
market place. We are seeing interest in all our products but the signature on
contracts is proving frustratingly elusive. Nevertheless, the Company is stable
and the Board is confident that the Company's strategy will bear fruit."
E-mail: ir@totalsystems.co.uk web site: www.totalsystems.co.uk
Enquiries:
Terence Bourne, Chairman Total Systems plc 020 7294 4888
Granville Harris, Finance Director Total Systems plc 020 7294 4888
Notes for Editors:
Based in the City of London Total provides cost effective flexible software
systems for the financial services industry, primarily in the insurance and
warranty sectors, as well as complementary IT consultancy, development,
integration and support services.
The Company has a full listing on the London Stock Exchange.
Significant investment has been made by the Company in developing Ultima
(General insurance system for personal and commercial lines).
Examples of Total's clients for Ultima include Axa Insurance Services (Denplan),
Bluesure, DSG International, HSBC Insurance and Zurich Insurance Company
(Navigators & General).
Chairman's Statement
SUMMARY
This has been an interesting year in the development of Total Systems. I am
delighted to state that we gained the rights to market the Invu document
management system in the general insurance sector and also to represent
PriceBuilder from Contemi in the UK. These products have fulfilled their promise
in gaining attention from insurers but their effect on the year's revenue has
not been significant.
At the beginning of the period Shell moved their pension fund management back to
Holland and Bluesure, the multi-product policy insurer, ceased operations for
reasons outside of our control. These two events resulted in a material loss of
revenue. Despite this our other customers have continued to develop and enhance
their applications, add new services and maintain their service level
agreements. Additionally we gained a commitment from Capita for Ultima in
respect of their plans for a general insurance platform but this did not have a
major impact on the year being reported on. This relationship should provide an
excellent base to grow our revenues in the future.
The Company also completed the internal refurbishment of our offices which has
provided further capacity and all our staff now have an improved working
environment.
RESULTS
Revenue for the financial year 2007 was down 3.7% while we made a loss for the
first time since 2000. For the year under review revenue was # 3,357,988 (2006:
#3,488,309) and the loss before tax was # 530,006 (2006: Profit #284,632)
resulting in a loss per share of 3.98p (2006: earnings per share 2.15p).
FINANCIAL
Zero gearing and net assets of 35.45p per share (2006: 40.06p), of which 22.62p
per share is represented by cash (2006: 30.66p), demonstrates our financial
strength. Our return on capital employed is (14.21)% (2006: 6.75%).
DIVIDEND
No dividend is proposed or payable.
STRATEGY
Your Company is committed to the financial services market. Our strategy is to
provide software, support and expertise to help management in financial services
companies achieve their objectives.
We continue to invest heavily on Research and Development spending # 794,327
(2006: #634,796) to maintain our position. The Ultima product has been enhanced
over the period and the Company has plans for further development over the
coming year which is supported by market intelligence.
The Company is monitoring the market for complementary products to sell in order
to give the sales and marketing team more touch points with potential customers.
In the longer term this will enhance sales and earnings and potentially lead the
Company into new areas for development.
MARKET PLACE
The market place for insurance systems is large but extremely competitive. There
are a number of companies using outdated systems and running inefficient
databases across disparate systems that would benefit from consolidation onto an
integrated system. The benefits of Ultima far outweigh any advantages offered
from developing alternatives overseas or moving processing offshore. The general
insurance market is consolidating and that may limit the potential for
independent systems sales within larger users in the long term. The Capita
relationship with its integration skills and leverage gives an opportunity for a
key market presence.
The insurance industry is changing due to the influence of aggregators, new
entrants and consolidation in the broking sector. Customer service is more
important than ever as is the ability to bring new and innovative products to
market quickly. Ultima can reduce IT costs and its integrated approach can
enhance customer service operations. The Business Configurator tool also offers
a fast route to market for new offerings. In addition the emergence of large
scale affinity relationships demands a system that can be flexible while coping
with enormous amounts of interdependent data. Ultima, with Business
Configurator, can meet these demands. The influence of these changes will create
further opportunities.
Document management systems of the type offered by Invu have great potential in
the insurance sector due to the amount of paperwork that is involved. However,
although we have had some success with existing customers, sales are proving to
have a longer lead time than originally anticipated.
Given the competitive nature of insurance the potential for maximising premium
income demonstrated by PriceBuilder from Contemi is compelling. There are few
competitors but underwriters seem to be taking some time to embrace this
technology to assist their processes.
ENVIRONMENTAL AND SOCIAL
The Company operates from an office in central London. Every care is taken to
ensure that the Company operates in an environmentally friendly way within the
limitations imposed by our location and the nature of our operations. In regard
to its employees and the local community the Company allows employees time to
take part in their own social responsibilities as necessary.
OPERATIONS
Operations have been satisfactory over the period. Our customers have continued
to enhance and develop their systems during the year and your Company has
provided full support to all aspects of their requirements. This focus has
enabled the Company to limit the fall in revenue despite the loss of two clients
during the year. Compared to the previous year the movement into loss is broadly
due to increased spend in sales and marketing, research and development and
investment in talented technical staff in anticipation of further orders
including work from Capita.
PERSONNEL
I would like to express my gratitude to staff who have shown their
professionalism and dedication to the Company. Our average length of service is
over eight years demonstrating the effectiveness of the retention policies in
place.
The wealth of experience such service brings ensures we have a pool of versatile
employees capable of handling a wide range of challenges within our market.
CURRENT TRADING AND OUTLOOK
Current trading is difficult for a number of reasons. The level of work from
Capita has not been as extensive as anticipated and our existing customers,
although supportive, have not made decisions on starting significant projects.
Invu and Contemi continue to generate interest with our clients and sales
prospects but there have been no sizeable orders at the time of writing.
The sales and marketing team are proactively seeking new opportunities in our
market place. We are seeing interest in all our products but the signature on
contracts is proving frustratingly elusive. Nevertheless, the Company is stable
and the Board is confident that the Company's strategy will bear fruit.
Terence Bourne
Chairman
2 July 2007
TOTAL SYSTEMS plc
Consolidated Income Statement
For the year ended 31 March 2007
Note 2007 2006
# #
Continuing operations
Revenue 2 3,357,988 3,488,309
------------- -----------
Operating (loss)/profit (670,349) 143,558
Interest receivable and similar income 140,626 141,080
Interest payable and similar charges (283) (6)
------------ -----------
(Loss)/profit before taxation (530,006) 284,632
Tax credit/(payable) 111,133 (58,110)
------------ -----------
(Loss)/profit after taxation for the year (418,873) 226,522
------------ -----------
Basic (loss)/earnings per ordinary share 4 (3.98)p 2.15p
Diluted (loss)/earnings per ordinary share (3.98)p 2.13p
There are no recognised income or expenses for the current or prior year other
than as stated above. As a consequence a statement of recognised income and
expenses is not presented.
All the Group's operations are undertaken by the Company.
Consolidated Balance Sheet
At 31 March 2007
2007 2006
# # # #
ASSETS
Non-current assets
Property, plant and equipment 1,040,102 822,074
Deferred tax assets 53,022 -
------------- ----------
Total non-current assets 1,093,124 822,074
Current assets
Trade and other receivables 845,810 853,752
Cash and cash equivalents 2,380,016 3,224,945
------------- -----------
Total current assets 3,225,826 4,078,697
------------- ------------
TOTAL ASSETS 4,318,950 4,900,771
------------- -----------
LIABILITIES
Current liabilities
Trade and other payables (590,027) (628,748)
Current tax liabilities - (52,567)
-------------- -----------
Total current liabilities (590,027) (681,315)
------------- -----------
Non-current liabilities
Deferred tax liabilities (-) (5,544)
------------- -----------
TOTAL LIABILITIES (590,027) (686,859)
------------ -----------
NET ASSETS 3,728,923 4,213,912
------------ -----------
Shareholders equity
Issued share capital 525,978 525,978
Share premium 83,010 83,010
Retained earnings 3,077,875 3,591,424
Stock option reserve 42,060 13,500
------------- -----------
TOTAL EQUITY 3,728,923 4,213,912
------------- -----------
Consolidated Cash Flow Statement
For the year ended 31 March 2007
Note 2007 2006
# # # #
Operating activities
Cash received from customers 4,101,042 3,987,797
Cash payments to suppliers (987,877) (667,571)
Cash payments to employees (1,787,743) (1,671,894)
Cash paid for PAYE and National Insurance
(1,118,556) (916,832)
Cash paid for VAT (663,419) (561,826)
Other business payments (45,869) (35,694)
----------- ------------
Cash (outflow)/inflow from operating
activities
7 (502,422) 133,980
Income taxes paid (52,567) (121,472)
------------ -----------
Net cash (outflow)/inflow from operating
activities
(554,989) 12,508
Cash flows from investing activities
Interest received 140,626 141,080
Receipts on sale of assets 327 -
Purchase of plant and equipment (335,934) (249,107)
------------- ----------
Net cash outflow from investing
activities
(194,981) (108,027)
Cash flows from financing activities
Share option receipts - 6
Interest paid (283) (6)
Equity dividends paid (94,676) (244,580)
----------- -----------
Net cash outflow from financing
activities
(94,959) (244,580)
----------- -----------
Net change in cash and cash equivalents
(844,929) (340,099)
Opening cash and cash equivalents 3,224,945 3,565,044
------------- ------------
Closing cash and cash equivalents 2,380,016 3,224,945
------------- -----------
All the Group's operations are undertaken by the Company.
General Notes:
1. The financial information contained in this statement does not
constitute the statutory accounts for the years ended 31 March 2007
and 2006, as defined in section 240 of the Companies Act 1985, but
is derived from those accounts. The statutory accounts for the year
ended 31 March 2006 have been delivered to the Registrar of
Companies and those for 31 March 2007 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on those
accounts; their reports were unqualified and did not contain statements
under Section 237 (2) or Section 237(3) of the Companies Act 1985.
2. The Group's revenue is derived from the writing and supply of its
computer software and supply of third party software both with related
support services in the United Kingdom. All activities derive from
continuing operations.
3. The announcement has been prepared on the basis of the accounting
policies as per the prior year and in accordance with International
Financial Reporting Standards (IFRS).
4. The calculation of basic earnings per share is based on a loss after
taxation of # (418,873) (2006: profit # 226,522) and a weighted average
of 10,519,553 shares (2006: 10,519,553) in issue during the period.
5. It is intended to post the Annual Report to shareholders on 6 July 2007.
Copies will then be available from the Registered Office of the
Group at 394 City Road, London, EC1V 2QA.
6. The Annual General Meeting will be held at 394 City Road,
London, EC1V 2QA on 13 August 2007 at 10 am.
7. Reconciliation of operating (loss)/profit to net cash
(outflow)/inflow from operating activities:
2007 2006
# #
Operating (loss)/profit (670,349) 143,558
Depreciation charges 117,906 87,873
Decrease/(increase) in receivables 60,509 (129,253)
(Decrease)/increase in payables (38,721) 18,302
Profit on sale of assets (327) -
Change in share based payments 28,560 13,500
--------- --------
Net cash (outflow)/inflow from operating activities (502,422) 133,980
------------ ---------
8. Changes in Company and consolidated equity shareholders' funds
Issued Share Retained Stock Total
share premium earnings option equity
capital reserve
# # # # #
As at 1 April 2005 525,978 83,004 3,609,482 - 4,218,464
Profit after tax for the year - - 226,522 - 226,522
Final dividend paid - - (189,352) - (189,352)
Interim dividend paid - - (55,228) - (55,228)
Funds received on grant of options - 6 - - 6
Share based payments - - - 13,500 13,500
---------- -------- ----------- -------- -----------
As at 31 March 2006 525,978 83,010 3,591,424 13,500 4,213,912
Loss after tax for the year - - (418,873) - (418,873)
Final dividend paid - - (94,676) - (94,676)
Share based payments - - - 28,560 28,560
As at 31 March 2007 525,978 83,010 3,077,875 42,060 3,728,923
---------- --------- ------------- --------- -------------
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
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