RNS Number:9043H
Staffware PLC
25 February 2003
25 February 2003
Staffware plc ("Staffware", "Group")
Preliminary results (12 months ended 31 December 2002)
Staffware returns to profitability in 2002
Staffware, a leader in Business Process Management (BPM) software, today
announces preliminary audited results for the 12 months ended 31 December 2002.
Highlights include:
Financial
* Return to positive EBITDA of #4.0 million (2001: #1.9 million loss)
* Profit before tax of #2.6 million (2001: #3.3 million loss)
* Record profit after tax of #1.6 million (2001: #3.7 million loss)
* Increase in annual revenue to #39.0 million (2001: #38.2 million)
* Cash resources continued to increase to #19.0 million (2001: #17.3
million)
* Significant increase in dividend: final dividend of 4.0p per ordinary
share; making a total of 5.0p for the year (2001: 1.0p)
* Continued high investment in new product development: #7.1 million
invested in 2002, 18% of sales (2001: #7.5 million). UK and global
software industry averages of 5.8% and 10.2% respectively.*
* Earnings per share pre goodwill 18.4p (2001: 18.5p loss)
* Record revenue in Q4 of #12.7 million representing 14% increase on Q4
2001.
Business Development
* Signed 22 #250,000 plus contracts in 2002 (2001: 19), including:
- UK: Government contracts DVLA, Environment Agency
- USA: ABN Amro and ABFS (diversified financial services)
- Hong Kong: PCCW has chosen Staffware to implement a workflow solution
in respect of the Smart Identity Card System for the Immigration
Department of the Government of the Hong Kong Special Administrative
Region
* Staffware identified number 1 BPM dedicated specialist by Aberdeen
Group (September 2002)
John O'Connell, Chairman and Chief Executive Officer, Staffware plc, said:
"We are delighted to report a return to profitability for the full year 2002 and
record sales levels. These strong results are due to the strength of the
Staffware offering and our focus on tight cost controls. Our blue chip customer
base and the solid financial state of the business - profitable, debt free and
cash generative - ideally position us to further strengthen our position in the
emerging BPM market.
"Going forward the Board will continue to manage the growth of the business both
organically and by acquisition to increase shareholder value."
*Source: The 2002 R&D Scoreboard; Department of Trade and Industry
Enquiries:
Staffware plc (www.staffware.com) +44 (0) 20-7638-9571
John O'Connell, Chairman and Chief Executive Officer (for today only)
Tim Perks, Chief Financial Officer
Citigate Dewe Rogerson +44 (0) 20-7638-9571
Peter Pender Cudlip, Sara Batchelor, Fiona Bradshaw
The 2002 preliminary results presentation will be accessible via a live webcast
at 9.00 am on the Staffware website, www.staffware.com
High resolution images are available for the media to view and download free of
charge from www.vismedia.co.uk
Chairman and Chief Executive Officer's Statement
We have delivered record sales and post tax profits for 2002 in continuing tough
trading conditions for IT companies. Encouragingly, we have achieved growth for
the last three quarters also, at a time when many software companies have
reported a major decline in their core software licence revenue.
We are also pleased to announce that the Group returned to profitability during
2002. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) is
#4.0 million for 2002, which compares to an EBITDA loss of #1.9 million for
2001.
We have been successful in keeping costs under tight control with the full year
benefit of actions taken in 2001 resulting in overall costs being 12% down on
2001 and principally reflecting a lower average headcount of 339 people in the
year (13% less than 2001).
Revenue
Overcoming the slow start, total sales increased for the year and finished the
year strongly. We achieved record revenue in the fourth quarter of #12.7
million, representing a 14% increase on the fourth quarter 2001 of #1.5 million.
The UK/SEEMA division led with a number of noteworthy deals in the period,
backed up by solid performances from most other business units, especially in
the Netherlands, Spain and the USA. Licence sales surged to #8.3 million, 65%
of total sales in the quarter.
Overall 65% of sales were overseas (2001: 70%). Staffware licence sales
accounted for a healthy 55% of total sales in the year (2001: 56%). The
Staffware Process Suite led our thrust into the Business Process Management
"BPM" market, and represented 34% of licence revenue in the year.
There was an increase of 27% in the average order value for licences, to #94
thousand, compared to #74 thousand last year, offsetting the lower number of 343
licence deals, compared to the 413 in 2001. Encouragingly, the proportion of
sales to existing customers, extending their use of Staffware also increased to
68% (2001:50%). I believe this is a positive reflection of the return our
customers are achieving from their investment in Staffware technology, in terms
of improved productivity, better customer service and heightened control.
Maintenance support revenue increased to #9.1 million, a 16% increase on 2001.
Deferred income increased 47% to #8.1 million (2001: #5.5 million), all of which
will be realised as revenue during 2003.
Professional services revenue, covering on-site technical consulting and
training fees was down by 9% for the year at #8.3 million (2001: #9.1 million)
due to a combination of timing of the software revenue, the deliberate
shortening of implementation timescales and the successful skills transfer to
both partners and customers.
In 2002 we signed 22 (2001: 19) #250,000 plus contracts. These included:
UK - A number of contracts in the government sector including DVLA,
Companies House and the Environment Agency, as well as the Insurance
and Investment Division of HBOS.
Germany - Deutsche BKK, a public health insurance company seeking to optimise
their core business processes for 1,500 employees with Staffware.
India - HDFC Bank using Staffware for account opening in the
retail sector and trade finance in corporate banking.
Holland - Thuiszorg Utrecht, a healthcare company; and ABN Amro.
Australia - AMP Financial Services where Staffware will provide end-to-end
visibility of all customer transactions; and Optus who selected
Staffware's iProcess Engine to further enhance its customer service
infrastructure.
USA - ABN Amro; ABFS, a national, diversified financial services
company using Staffware for its complex loan fulfilment processes.
Spain - Mapfre Seguros Generales, a major Spanish insurance company
implementing a new generation of claims processing systems.
Hong Kong - PCCW has chosen Staffware to implement a workflow solution in
respect of the Smart Identity Card System for the Immigration
Department of the Government of the Hong Kong Special Administrative
Region.
The Staffware Enterprise Partner (StEP) Programme continues to deliver
significant revenue and opportunities, and sales through partners, including Cap
Gemini Ernst & Young, EDS and Deloitte and Touche, accounted for 40% of total
sales in 2002 (2001: 28%), including noteworthy contracts in the UK and Hong
Kong. In addition another 20% of revenue came in association with Partners.
Geographically, sales by destination were distributed as follows:
% %
2002 2001
UK 35 30
Rest of Europe 32 30
Americas 13 16
Australia 11 14
Asia Pacific 5 3
Rest of world 4 7
Total 100 100
Our businesses in the UK and the Netherlands had outstandingly profitable
performances in the year. In Spain we achieved excellent sales and profit
growth and our North American business also attained profitability,
notwithstanding an extremely harsh trading environment.
There was again a good distribution of sales across vertical markets; the main
ones of which are detailed below:
% %
2002 2001
Finance 33 28
Insurance 16 8
Government 19 18
(Central and Local)
Telecommunications 11 9
Other 21 37
Total 100 100
Working Capital
The Group has an extremely strong balance sheet and is importantly very well
capitalised. Cash collections continued at a high level and as at 31 December
2002 cash resources were up by #1.7 million to #19.0 million (2001: #17.3
million). The Group had no indebtedness other than standard equipment/vehicle
leasing arrangements. Trade debtors stood at #12.3 million at 31 December 2002
(2001: #8.6 million) representing approximately 61 days of sales (2001: 45
days). There were record receipts in January 2003 of #8.1 million.
Product Development
During the year, we invested #7.1 million in Research and Development (2001:
#7.5 million), representing 18.1% of sales. This compares to the UK and global
software industry averages of 5.8% and 10.2% respectively. (Source: The 2002 R
& D Scoreboard; Department of Trade and Industry).
Following the release in late 2001 of Version 1 of the Staffware Process Suite,
this year we have been developing the new functionality of Version 2, a number
of components of which were delivered during the course of the year to selected
customers and partners, once again on time and under budget. These combined new
features further strengthen our appeal to IT professionals designing,
integrating, deploying medium to high volume mission critical process centric
applications in complex environments. The Staffware Process Suite has proven
its capability to enhance customers' investments in IT, such as Enterprise
Software, by streamlining interconnecting transactions, as the 'Independent
Process Layer'.
Dividend
The Board of Directors recommends that a final dividend for 2002 of 4.0p per
ordinary share, be paid on 14 April 2003 to shareholders on the register at the
close of business on 21 March 2003, subject to approval at the AGM on 11 April
2003. This makes a total of 5.0p for the year and marks a step change compared
with a total of 1.0p for the year 2001, recognising the improvement in our
performance in 2002.
Staff
Our management and staff rose to the challenge magnificently in 2002 by helping
us achieve a great turnaround in profits without sacrificing sales revenue in
the process. A 17% improvement in our productivity, in terms of revenue per
head, reflects the combined results of their skills, experience and commitment.
I am confident they can be relied upon to continue to perform at world class
levels, for which the board is truly appreciative.
Outlook
Notwithstanding the current downbeat tone of most commentators on the IT
industry, we do believe Staffware has carved out a unique position, which
positions it well. Our dedication has been the essence of our success. This
dedication is exemplified by a continued high investment in R&D, in both good
and not so good times, allied to unwavering management focus, historically on
workflow and in the last 18 months on its expansion as BPM.
During last year our technology has been acclaimed as world leading by
independent analysts such as Doculabs and Yphise. It was gratifying to note
that the Aberdeen Group identified Staffware as the number one BPM dedicated
specialist in the world in its September 2002 survey, despite the current debate
about the definition of BPM and the inclusion of 36 claimed vendors - both
public and private, specialist or otherwise. Such confusion about BPM,
commonplace in emerging technology markets, signals a real opportunity for
Staffware to be a dominant player in one of the few global IT markets forecast
to grow faster than GDP growth.
The planned launch of Version 2 of the Staffware Process Suite in April of this
year should strengthen our market and technology leadership in BPM. We plan to
re-double our efforts in the area of Process Frameworks, specifically targeted
at the financial services and telecoms markets. In addition we are launching
revitalised Customer and Partner programmes, plus continuing to pay significant
management attention to investing in our staff to build on the improvement in
productivity last year.
Our marketing is being targeted at creating a higher profile with both the
business and technology community interested in attaining the benefits being
achieved by our customers and partners around the world - at a time when there
remains deep scepticism about the claims being made by many other software
companies. In other words Staffware is now being seen as a 'must have' rather
than just a 'nice to have' technology by more and more organisations in business
and government.
Underlying all of the above will be the continued tight management of costs and
cash, which has especially stood us in good stead in the recent past, and we
look forward to making continued progress during 2003.
John O'Connell Chairman and Chief Executive Officer
24th February 2003
Consolidated Profit and Loss Account
for the year ended 31 December 2002
2002 2001
Note #'000 #'000
Turnover 1 39,031 38,230
Operating expenses (36,962) (42,001)
Earnings before interest, tax, depreciation and amortisation 4,032 (1,853)
Depreciation (918) (854)
Amortisation of goodwill (1,045) (1,064)
Operating profit/(loss) 2,069 (3,771)
Interest receivable and similar income 570 558
Interest payable and similar charges (31) (37)
Profit/(loss) on ordinary activities before taxation 1 2,608 (3,250)
Taxation on profit/(loss) on ordinary activities 2 (982) (456)
Profit/(loss) attributable to shareholders 1,626 (3,706)
Dividends payable (725) (145)
Retained profit/(loss) for the year 901 (3,851)
Basic earnings/(loss) per share 3 11.2p (26.0)p
Diluted earnings/(loss) per share 3 11.1p (26.0)p
Basic earnings/(loss) per share before
amortisation of goodwill 3 18.4p (18.5)p
Consolidated Balance Sheet
As at 31 December 2002
2002 2001
Note #'000 #'000
Fixed assets
Goodwill 7,670 8,722
Negative goodwill (13) (15)
Intangible assets 7,657 8,707
Tangible assets 2,315 2,129
9,972 10,836
Current assets
Debtors 4 13,840 10,114
Cash at bank and in hand 18,992 17,321
32,832 27,435
Current liabilities
Creditors: amounts falling due within one year 5 (12,791) (9,549)
Net current assets 20,041 17,886
Total assets less current liabilities 30,013 28,722
Creditors: amounts falling due after more than one year 5 (9) (60)
Net assets 30,004 28,662
Capital and reserves
Called up ordinary share capital 1,451 1,448
Share premium account 30,685 30,606
Profit and loss account (2,132) (3,392)
Equity shareholders' funds 30,004 28,662
Reconciliation of Movements in Group Shareholders' Funds
for the year ended 31 December 2002
2002 2001
#'000 #'000
Profit/(loss) for the year 1,626 (3,706)
Ordinary dividends paid and proposed (725) (145)
901 (3,851)
New share capital issued 3 41
Share premium on new share issues 79 1,265
Issue of deferred shares - (2,816)
Exchange difference 359 (221)
Net increase/(decrease) in shareholders' funds 1,342 (5,582)
Opening shareholders' funds 28,662 34,244
Closing shareholders' funds (equity) 30,004 28,662
Consolidated Statement of Group Total Recognised Gains and Losses
for the year ended 31 December 2002
2002 2001
#'000 #'000
Profit/(loss) for the year 1,626 (3,706)
Foreign exchange translation differences 359 (221)
Total recognised Profit/(loss) since last
annual financial statements 1,985 (3,927)
Consolidated Cash Flow Statement
for the year ended 31 December 2002
2002 2002 2001 2001
Note #'000 #'000 #'000 #'000
Net cash inflow from operating activities 6 2,589 3,480
Returns on investments and servicing of finance
Interest received 570 558
Bank interest paid (6) (4)
Interest paid on finance leases (25) (33)
Net cash inflow from returns on investment
and servicing of finance 539 521
Taxation (393) (608)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,170) (751)
Sales of tangible fixed assets 77 43
Net cash inflow from capital expenditure
and financial investments (1,093) (708)
1,642 2,685
Equity dividends paid (290) (281)
Cash inflow before financing 1,352 2,404
Financing
Issue of ordinary shares 82 680
Capital repayment on finance leases
and hire purchase (169) (248)
(87) 432
Increase in net cash for the year 7 1,265 2,836
Note 1
Segmental Reporting
Profit/(loss) on Net Assets
ordinary activities
Turnover before taxation
2002 2001 2002 2001 2002 2001
#'000 #'000 #'000 #'000 #'000 #'000
Geographical analysis by
origin
United Kingdom 15,481 14,854 593 (170) 34,588 34,664
Other European countries 11,369 10,271 606 (212) 211 (339)
Americas 5,181 5,330 373 (1,956) (4,447) (4,076)
Australia 4,268 5,206 379 (119) 133 (319)
Asia Pacific 1,161 1,199 563 (760) (472) (1,097)
Rest of World 1,571 1,370 94 (33) (9) (171)
39,031 38,230 2,608 (3,250) 30,004 28,662
Geographical analysis of
turnover by destination
United Kingdom 13,715 11,312
Other European countries 12,243 11,941
Americas 5,199 6,028
Australia 4,268 5,206
Asia Pacific 2,035 1,199
Rest of World 1,571 2,544
39,031 38,230
Note 2
Taxation
The Group is reporting a tax charge of #0.982 million. This represents an
effective rate of 37.7% post amortisation of goodwill, and 26.9% pre
amortisation of goodwill. The Group has unrelieved tax losses in excess of #3.0
million available to set off against profits in future years. The Group is
unable to relieve taxable profits in some jurisdictions against tax losses in
others.
Note 3
Earnings per Share
Basis of calculations
Basic earnings per share of 11.2p (2001: loss 26.0p) has been calculated on the
profit on ordinary activities after taxation, of #1,626,024 (2001: loss
#3,705,695) and the weighted average number of shares in issue during the period
of 14,503,286 (2001: 14,249,993).
Diluted earnings per share of 11.1p (2001: losses meant all share options were
anti dilutive), has been calculated on the profit on ordinary activities after
taxation of, #1,626,024. This has been applied to 14,684,434 being the weighted
average number of shares in issue (14,503,286), and the weighted average number
of options over ordinary shares (181,148).
Basic earnings per share before amortisation of goodwill 18.4p (2001: loss
18.5p) has been calculated on the profit on ordinary activities after taxation,
of #1,626,024 (2001:loss #3,705,695) adjusted by the goodwill amortised of
#1,044,952 (2001: #1,063,901) and the weighted average number of shares in issue
during the period of 14,503,286 (2001: 14,249,993). Amortisation decreases the
basic earnings per share by 7.2p.
Note 4
Debtors
2002 2001
#'000 #'000
Trade debtors 12,336 8,623
Other debtors 791 915
Prepayments 713 576
13,840 10,114
Note 5
Creditors
2002 2001
#'000 #'000
Amounts falling due within one year
Bank loans and overdrafts 3 4
Finance leases 70 173
Trade creditors 1,222 1,055
Corporation tax 1,006 349
Other taxation and social security 1,017 962
Accruals and deferred income 8,894 6,861
Proposed dividends 579 145
12,791 9,549
Amounts falling due after more than one year
Finance leases 79 233
Less: current instalments due on amounts due on finance leases (70) (173)
9 60
Amounts due between one and two years 9 58
Amounts due between two and five years - 2
9 60
Note 6
Reconciliation of Operating Profit to Net Cash Flow from Operating Activities
2002 2001
#'000 #'000
Operating Profit/(loss) 2,069 (3,771)
Depreciation 918 854
Loss on disposal of tangible assets 4 23
Net amortisation of goodwill 1,045 1,064
Decrease in stocks - 65
(Increase)/decrease in debtors (3,608) 7,354
Increase/(decrease) in creditors 2,205 (2,197)
Exchange movements (44) 88
Net cash inflow from operating activities 2,589 3,480
Note 7
Reconciliation of Net Cash Flow to Movement in Net Funds
2002 2001
#'000 #'000
Increase in cash in the period 1,265 2,836
Cash outflow from decrease in lease financing 169 248
Change in net funds resulting from cash flows 1,434 3,084
New finance leases (15) (42)
Translation difference 404 (309)
Movements in net funds 1,823 2,733
Net funds at 1 January 2002 17,084 14,351
Net funds at 31 December 2002 18,907 17,084
Note 8
Analysis of net funds
At 1 At 31
January Cash Non cash Exchange December
2002 flow changes movements 2002
#'000 #'000 #'000 #'000 #'000
Cash at bank and in hand 17,321 1,265 - 406 18,992
Overdrafts (4) - - 1 (3)
17,317 1,265 - 407 18,989
Finance leases (233) 169 (15) (3) (82)
17,084 1,434 (15) 404 18,907
Note 9
Financial Information
This preliminary announcement has been prepared on the basis of accounting
policies consistent with those adopted for the year ended 31 December 2001, as
set out in the financial statements of the Group, except for a change in the
accounting policy in respect of deferred taxation to comply with "FRS 19
Deferred Tax". Previously, the Group provided for deferred tax using the
liability method to the extent that it was probable that the liabilities would
crystallise in the foreseeable future. For the year ended 31 December 2002, full
provision is made for deferred taxation where it is more likely than not that a
liability or asset will be realised. The deferred tax asset or liability is not
discounted. This change in accounting policy has no effect on the current year
or prior year figures.
The figures and financial information for the year ended 31 December 2001 do not
constitute the statutory financial statements for that year. Those financial
statements have been delivered to the Registrar and include the auditor's report
which was unqualified and did not contain a statement either under Section 237
(2) of the Companies Act 1985 (accounting records or returns inadequate or
accounts not agreeing with the records and returns), or Section 273(3) (failure
to obtain necessary information and explanations).
The figures and financial information for the year ended 31 December 2002 do not
constitute the statutory financial statements for that year. Those financial
statements have not yet been delivered to the Registrar and include the
auditor's report which was unqualified and did not contain a statement either
under Section 237(2) of the Companies Act 1985 (accounting records or returns
inadequate or accounts not agreeing with the records and returns), or Section
273(3) (failure to obtain necessary information and explanations).
Copies of this announcement will be available to the public at the Company's
Registered Office, at Staffware House, 3 The Switchback, Gardner Road,
Maidenhead, Berkshire, SL6 7RJ for a period of not less than 14 days from the
date of this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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