RNS Number:9529S
Total Systems PLC
08 December 2003
FOR RELEASE 7:00AM 8 DECEMBER 2003
TOTAL SYSTEMS plc
Unaudited Interim results for the half year ended 30 September 2003
Profit before tax up 36%; Dividend up 5%; Nil gearing
Total Systems plc ("Total" or "the Company"), suppliers of established software
products and services to the insurance, warranty and pension fund sectors of the
financial services market and related industries, announces its preliminary
results for the half year ended 30 September 2003.
Commenting on the Company's results, Terry Bourne, the Chairman, said:
"Performance for the half year has been broadly in line with the Board's
expectation. While turnover has been static, profit has been improved by
reducing costs and your Company continues to be cash positive."
Highlights
* Profit before tax #381,061 (2003: #280,033), up 36%.
* Earnings per share 2.51p (2003: 1.85p).
* Interim dividend of 1.05p per share (2003: 1.00p), up 5%.
* Nil gearing.
* Increased net assets of 36.96p per share (2002:34.93p), of which 33.42p
(2002:29.37p) is represented by cash.
* Continuing investment in ULTIMA keeps it at the forefront of fully
integrated, full cycle systems and more efficient and cost effective than
competitors' modular systems.
* Use of ULTIMA as the software behind new generation fully integrated and
fully functional systems opens up new business opportunities in other sectors
such as membership systems with associated member services and premium finance
administration.
* Interest in ULTIMA continues to expand, particularly in relation to
internet trading and international roll-out.
* Launch of Total Fund Manager, a new product for Investment Management,
Accounting and Administration for pension funds, in the latter half of 2004.
* Work with existing clients continues at a reasonable level.
Regarding the Company's current trading and outlook, Terry Bourne added:
"In my Chairman's Statement for the year ended 31 March 2003 it was anticipated
that the performance of this financial year would not show any improvement on
the previous year. This remains the case regarding turnover, but profitability
should improve as a result of reductions in our cost base. Continuing delays in
the signing of significant new business make it extremely difficult to forecast
future performance.
Current market conditions suggest that the level of IT investment is flat and
the indications are that this will certainly continue into the first quarter of
2004.
The Board takes comfort from the Company's strong financial position."
E-mail: info@totalsystems.co.uk web site: www.totalsystems.co.uk
Enquiries:
Terry Bourne, Chairman Total Systems plc 020 7294 4888
Granville Harris, Finance Director Total Systems plc 020 7294 4888
Jacqui Graves / Peter Binns Binns & Co. PR Ltd 020 7786 9600
Notes for City Editors:
Based in the City of London, Total Systems provides cost effective open software
systems for the financial services sector, primarily in the insurance, warranty
and pension fund management sectors, as well as relevant IT Consultancy and
General Support Services. The Company gained a Full Listing on the London Stock
Exchange in 1995.
Significant investment has been made by the Company in developing further both
ULTIMA (the General Lines Insurance System) and Total Fund Manager (the
Investment Management & Accounting System) such that each is regarded as an
established software product. Examples of Total System's clients in the
insurance/warranty market are: Axa Insurance Services (Denplan), Bluesure,
Dixons, Fortis, UIA and Zurich Insurance Company (Navigators & General); whilst
in the financial services market they include: Kvaerner Investment Management,
Shell Pension Fund and West Yorkshire Pension Fund.
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003
Chairman's Statement
RESULTS
Performance for the half year has been broadly in line with the Board's
expectation. While turnover has been static profit has been improved by reducing
costs and your Company continues to be cash positive. Turnover for the half year
was #2,000,586 (2002: #2,026,589), profit before tax #381,061 (2002: #280,033)
resulting in earnings per share of 2.51p (2002: 1.85p).
FINANCIAL
Nil gearing and net assets of 36.96p per share (2002: 34.93p), of which 33.42p
per share (2002: 29.37p) is represented by cash, demonstrate our financial
strength. Interim dividend is covered 2.4 times (2002: 1.8 times).
DIVIDEND
Your Board proposes the payment of an interim dividend of 1.05p per share, an
increase of 5% over last year's interim dividend of 1.00p per share.
The dividend will be paid on 21 January 2004 to all shareholders on the register
on 19 December 2003.
STRATEGIC DEVELOPMENTS
The Company's main focus continues to be on the UK insurance and warranty
sectors of the financial services and related industries. ULTIMA has been
developed further and we aim for this product to be the software system of first
choice in the provision of new generation fully integrated and fully functional
systems for the insurance industry and other sectors. It is our intention to
keep this product at the forefront of "wall to wall" insurance/warranty systems
that are so much more efficient and cost effective than competitors' modular
systems. Total Fund Manager (TFM), our new product for Investment Management,
Accounting and Administration for Pension Funds will be launched in the latter
half of next year.
PRODUCTS
Our products deliver a fast payback on investment and low cost of ownership that
comes from a consistency of IT platform and standards throughout an
organisation. We provide products that are comprehensive, reliable, respond to
clients' needs, combined with the benefit of reduced software maintenance and
integration costs. This is achieved through:
*Boosting developer productivity, reducing time to deployment, and accelerating
the realisation of business benefits.
*Enabling highly distributed deployment of applications.
*Simplifying the integration of applications across and amongst enterprises.
TOTAL SYSTEMS plc
Chairman's Statement (continued)
ULTIMA is now believed to be the most advanced insurance/warranty
system available today with one of the fastest "project start" to "live
implementation" cycles. An existing client will be deploying all their products
over the internet using the latest soft WEB enabled version over the next couple
of months. Another client is running ULTIMA to support tens of millions of both
agreements and customers.
Available on the latest Microsoft technology and all leading versions
of UNIX, ULTIMA is written in the most effective Relational Database and 4GL
Technology, and incorporates WEB and EDI capability. This product has a low cost
of ownership and negligible database administration costs due to the
incorporation of "near-lights-out" management tools. External system interfaces
enable ULTIMA to co-habit with a wide range of other platforms and applications.
It provides the ideal platform to enable companies to meet the prerequisites for
survival. Robust reliable technology and cost effectiveness are two compelling
criteria for choosing database technology. With a much lower cost of ownership
than any competitor for the underlying embedded database software, the way
forward is clear.
TFM is multi currency and has extensive performance measurement,
compliance and reporting facilities, external links for information about
securities, security prices and exchange rates. Information on the structure of
the standard index and benchmark portfolios is also provided. The rich
functionality of this product makes it one of the most user friendly,
comprehensive and completely integrated products of its type available in the
market today.
All our products can be integrated or interfaced with any other
software system running on any hardware platform and the new version of our
rapid product development tool, Business Configurator, enables users to upgrade
the functionality of their business systems quickly and cost effectively
irrespective of the currency and language.
Product investment continues to be a priority, to meet the
requirements of both existing and new clients, to maintain market advantage and
to increase market share. Total Systems "fast track" development process enables
us to rapidly translate original ideas into deliverable solutions and the modern
methodologies we adopt allow us to implement our fully integrated systems
quickly and efficiently.
The company is planning to launch a new Disaster Recovery service
in the second half of the financial year for both ULTIMA and TFM. This service
will enable Total's clients to rapidly resume operations of ULTIMA and TFM
following a catastrophic loss of their data centre, and will allow their users
to connect electronically from any remote location into the Total Systems
Disaster Recovery system.
MARKET PLACE
While many projects start on a wave of enthusiasm it is all too
frequently the case that they drown in a sea of despondency. Much publicised
failed IT projects by other companies have done little to inspire confidence in
our industry and have undoubtedly contributed to this caution. However, your
Company has an enviable record for successful projects and is gaining a growing
reputation for high levels of service. This success is attracting increasing
interest in our products but prospective clients continue to be cautious in
committing to investment and
Chairman's Statement (continued)
there have been no new contracts during the period being reported upon. Our work
with existing clients continues at a reasonable level.
We are reassured by the fact that more and more companies are now looking to
replace their systems. Gartner, an independent IT industry research
organisation, predicts infrastructure investment for the insurance industry will
be required to meet business demands whilst overcoming existing competitive
threats. Insurers are now facing a number of critical challenges such as
ballooning maintenance costs for rigid, antiquated technology. The average
policy system being used by insurance companies is now close to twenty years old
with insurers using anywhere between three and fifteen different systems. Claims
systems are on average more than ten years old. Around 60% of the systems in use
are bespoke with the original staff no longer available due to retirement or
reassignment. Such an environment extols the virtue of adopting a fully
integrated, flexible and cost effective insurance system with greatly reduced
ongoing costs. These companies will be looking for clearly definable value and
systems that do not place undue strain on their financial, human and
infrastructure resources. ULTIMA is the most comprehensive and modern product in
the market place to meet these needs providing fully integrated, full cycle
processing, while supporting all channels of distribution for insurance and
warranty products and membership systems. Interest in ULTIMA continues to
expand, both in relation to internet trading and international roll-out.
STAFF
In what has been a particularly tough market in the last couple of
years our staff have continued to make an outstanding contribution to the
business and have consistently demonstrated their dedication to our clients. I
would like to thank all our staff for their loyalty, dedication, enthusiasm and
commitment and recognise that they are the foundation of our future success.
CURRENT TRADING AND OUTLOOK
In my Chairman's Statement for the year ended 31 March 2003 it was
anticipated that the performance of this financial year would not show any
improvement on the previous year. This remains the case regarding turnover, but
profitability should improve as a result of reductions in our cost base.
Continuing delays in the signing of significant new business make it extremely
difficult to forecast future performance.
Some organisations have commented that the overall economic climate
appears to be improving, and it is possible that the much vaunted economic
recovery will manifest itself in 2004. Any improvement in IT spending is likely
to lag behind such a recovery and the pressure on pricing will continue for the
foreseeable future. Current market conditions suggest that the level of IT
investment is flat and the indications are that this will certainly continue
into the first quarter of 2004
The Board takes comfort from the Company's strong financial
position.
Terry Bourne
Chairman
8 December 2003
Consolidated Profit and Loss Account
for the half year ended 30 September 2003
Note Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
2003 2002 2003
# # #
TURNOVER 1 2,000,586 2,026,589 3,927,749
======== ======== ========
OPERATING PROFIT 323,632 223,855 488,810
Interest receivable 57,429 56,178 107,833
------------- ------------- -------------
PROFIT ON ORDINARY
ACTIVITIES BEFORE
TAXATION 381,061 280,033 596,643
TAX ON PROFIT ON (117,355) (86,128) (162,601)
ORDINARY ACTIVITIES
------------- ------------- -------------
PROFIT ON ORDINARY
ACTIVITIES AFTER
TAXATION ATTRIBUTABLE
TO SHAREHOLDERS 263,706 193,905 434,042
DIVIDENDS (110,406) (105,035) (283,787)
------------- ------------- -------------
RETAINED PROFIT FOR 153,300 88,870 150,255
THE PERIOD
=============== ============== =============
Earnings per ordinary 3 2.51p 1.85p 4.13p
share
Diluted Earnings per 2.50p 1.84p 4.12p
ordinary share
Dividend per share 1.05p 1.00p 2.70p
Notes:
1. The Group's turnover is derived from the writing and supply of computer
software and supply of third party software, both with related hardware, in
the United Kingdom. All activities derive from continuing operations.
2. Financial information contained in this statement does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
abridged information for the 12 months ended 31 March 2003 has been
extracted from the Company's statutory accounts for that period, which have
been filed with the Registrar of Companies. The auditors' report on the
Company's accounts for that period was unqualified and did not contain a
statement under either of sections 237(2) or 237(3) of the Companies Act
1985.
3. Calculation of earnings per share is based on a profit after taxation of
#263,706 (2002: #193,905) and a weighted average of 10,513,376 shares
(2002: 10,503,455) in issue during the period.
4. It is intended to post this Statement and Report to shareholders on 10
December 2003. Copies are otherwise available from the Registered Office of
the Group at 394 City Road, London EC1V 2QA.
Consolidated Balance Sheet
at 30 September 2003
Unaudited Unaudited Audited
as at as at as at
30 September 30 September 31 March
2003 2002 2003
# # #
Fixed assets
Tangible assets 658,103 687,207 650,517
Current assets
Debtors 713,015 961,184 680,820
Cash at bank and in hand 3,513,940 3,084,871 3,478,257
----------- ----------- -----------
4,226,955 4,046,055 4,159,077
Creditors: amounts falling
due within one year (998,925) (1,064,498) (1,079,445)
----------- -------------
Net current assets 3,228,030 2,981,557 3,079,632
-------------- -------------- --------------
Net assets 3,886,133 3,668,764 3,730,149
======== ======== ========
Capital and reserves
Called up share capital 525,744 525,173 525,173
Share premium account 82,302 80,189 80,189
Profit and loss account 3,278,087 3,063,402 3,124,787
----------- ----------- -----------
Equity shareholders' 3,886,133 3,668,764 3,730,149
funds
========== =========== ==========
Consolidated Cash Flow Statement
for the half year ended 30 September 2003
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
2003 2002 2003
Note # # #
Operating activities
Cash received from 2,231,264 2,654,853 5,347,590
customers
Cash payments to (325,066) (288,267) (503,642)
suppliers
Cash payments to (814,383) (1,086,147) (1,909,263)
employees
Cash paid for PAYE and (481,036) (738,474) (1,199,140)
National Insurance
Cash paid for VAT (379,608) (324,813) (588,935)
Other business payments (32,245) (44,308) (106,400)
---------- ---------- -----------
Net cash inflow from (a) 198,926 172,844 1,040,210
operating activities --------- --------- -----------
Return on investments and
servicing of finance
Interest received 57,429 56,178 107,833
-------- -------- ---------
Net cash inflow from
return on investments and
servicing of finance 57,429 56,178 107,833
-------- -------- ---------
Taxation
Corporation tax payment - - (419,085)
--------- -------- ---------
Capital expenditure and
financial investment
Purchase of tangible (44,604) - (1,515)
fixed assets
Sale of tangible fixed - 26 26
assets
--------- --------- ---------
Net (outflow)/inflow from
capital expenditure and
financial investment (44,604) 26 (1,489)
---------- ---- ---------
Equity dividends paid (178,752) (162,804) (267,839)
----------- ----------- -----------
Cash inflow before use of
liquid resources and
financing 32,999 66,244 459,630
Financing
Proceeds from exercise of (d) 2,684 - -
share options
------------ ------------ ------------
Increase in cash in the (c) 35,683 66,244 459,630
period
======= ======= =======
Notes to Cash Flow Statement
(a) Reconciliation of operating profit to net cash inflow from
operating activities
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
2003 2002 2003
# # #
Operating profit 323,632 223,855 488,810
Depreciation charges 37,018 43,557 81,762
Loss on sale of tangible - 319 319
assets
(Increase)/Decrease in (32,195) 262,706 543,070
debtors
Decrease in creditors (129,529) (357,593) (73,751)
-------------- -------------- --------------
198,926 172,844 1,040,210
======== ======== ========
(b) Reconciliation of net cash flow to movement in net funds
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
2003 2002 2003
# # #
Increase in cash in the 35,683 66,244 459,630
period and change in net
funds
Net funds at 1 April 3,478,257 3,018,627 3,018,627
-------------- -------------- --------------
Balance at 30 September 3,513,940 3,084,871 3,478,257
======== ======== ========
(c) Analysis of changes in net funds
Unaudited Audited Unaudited
6 Months 12 Months 6 Months
ended ended ended
30 September Change in 6 31 March Change in 6 30 September
Months Months
2003 2003 2002
# # # # #
Cash at 3,513,940 35,683 3,478,257 393,386 3,084,871
bank and in ----------- -------- ----------- --------- -----------
hand
(d) Analysis of changes in financing during the year
Share capital Share capital Share capital
(including (including (including
premium) premium) premium)
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
2003 2002 2003
# # #
Balance at 1 April 605,362 605,362 605,362
Cash inflows from employees 2,684 - -
exercising share options
-------- ------- --------
Balance at 30 September 608,046 605,362 605,362
======= ======= ========
ENDS
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