RNS Number:4291O
Total Systems PLC
04 July 2005
Total Systems PLC
The issuer has made the following amendment to the preliminary results
announcement released 04 July 2005 at 07:00 under RNS NO 39860.
The date of the Annual General Meeting as detailed in note 6 should
read 8 August and not 5 August as previously shown.
All other details remain unchanged.
The full corrected version is shown below.
TOTAL SYSTEMS plc
Preliminary results for the year ended 31 March 2005
Profit ahead of market expectations
Total Systems plc ("Total" or "the Company"), suppliers of cost effective
flexible software systems for the financial services industry, primarily in the
insurance, warranty and pension fund management sectors, announces its
preliminary results for the year ended 31 March 2005.
Commenting on the Company's results Terence Bourne, Chairman, said:
"Turnover for the financial year 2005 was broadly in line with the Board's
expectations while profit was greater than anticipated due to strict cost
control."
Financial Highlights
* Turnover # 3.45m (2004: # 3.84m)
* Profit before tax # 496k (2004: # 716k)
* Basic EPS 3.56p (2004: 4.95p)
* Final dividend 1.80p (2004: 1.80p)
* Gearing Nil (2004: Nil)
* Net assets per share 38.30p (2004: 37.60p)
* Cash per share 33.89p (2004: 34.94p)
* A dividend has been declared for ten consecutive years.
Business Highlights
Ultima, the complete policy lifecycle solution, continues to bring significant
business benefits to clients including:
*Rapid translation of client needs into cost-effective solutions.
*Robust and reliable software with proven long-term support.
*Flexible and designed for change.
*Easy integration with external systems.
*Individual components of Ultima system available to meet niche
requirements.
Total Fund Manager, the multi-fund, multi-currency investment management and
administration system for pension and fund management industry was launched in
March 2005.
Regarding the Company's current trading and outlook, Terence Bourne added:
"Trading is continuing at a reduced level as a result of the near completion of
the contract with HSBC Insurance and reduced spending with other clients that
are partly due to the reliability and flexibility of our products. Although
business remains competitive the number of opportunities the sales team are
progressing are the most we have seen for a number of years. I am confident that
new client business will develop as the current year progresses but we will take
whatever measures are necessary to ensure the long term prospects of the Company
and this will include a review of our dividend payments."
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 sector, primarily in the insurance, warranty
and pension fund management sectors, as well as complementary IT consultancy,
development, integration and 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 the Ultima
(General insurance system for personal and commercial lines) and Total Fund
Manager (Investment management, accounting and administration system).
Examples of Total's clients for Ultima include Axa Insurance Services (Denplan),
Bluesure, Dixons, HSBC Insurance and Zurich Insurance Company (Navigators &
General).
TOTAL SYSTEMS plc
Chairman's Statement
Results
Turnover for the financial year 2005 was broadly in line with the Board's
expectations while profit was greater than anticipated due to strict cost
control. For the year under review turnover was #3,451,633 (2004: #3,843,856)
and profit before tax was #496,098 (2004: #715,938) resulting in earnings per
share of 3.56p (2004: 4.95p).
Financial
Zero gearing and net assets of 38.30p per share (2004: 37.60p), of which 33.89p
per share (2004: 34.94p) is represented by cash, demonstrates our financial
strength. The proposed dividend is covered 1.25 times (2004: 1.74 times) and
return on capital employed is 12.31% (2004: 18.11%).
Dividend
Payment of a final dividend of 1.80p per share is proposed. This makes the total
dividend for the year 2.85p per share (2004: 2.85p), unchanged from the previous
year.
The dividend will be paid on 3 October 2005 to all shareholders on the register
on 15 July 2005.
Strategy
Our strategy is to provide software, support and expertise to help financial
services companies achieve their objectives.
Despite the success in delivering products and services to our clients over the
past few years our recent sales and marketing performance has been poor with the
result that no major new orders were taken in the period under review. The Board
has taken action to improve the performance of the team. Our sales staff were
retrained in modern methods of selling and improvements were made to our
marketing including introducing a new web site, overhauling all of our marketing
materials and re-branding our products to give them a fresh new look. In order
to give impetus to our pursuit of new business further senior sales executives
are being recruited.
We continue to invest heavily in Research and Development spending #706,582
(2004: #776,218) to maintain our position at the forefront of technology.
Acknowledged as a leader in Research and Development and being ranked 536 out of
the top 700 companies for absolute R&D spend, is a remarkable achievement
considering the size of your Company.
Ultima has been upgraded over the past year to increase its flexibility and
improve its user-friendliness. A number of new functions and features have been
introduced including improved management information reporting. Ultima is a
flexible application that has been designed for change. A roadmap has been
developed showing the planned actions to keep the product as modern and flexible
as possible and this will guide the development over the coming years. An
enhanced version of Ultima will be launched towards the end of the year. In
addition, to take account of the risk averse nature of our target market, we
will be offering Ultima on a service orientated architecture (SOA) basis and
will promote a number of its key components as stand alone products, for example
claims and underwriting. This will enable customers to take a lower risk
approach to upgrading systems with greater flexibility in licensing the product
components.
Total Fund Manager (TFM) was launched at the end of the period under review and
continues our involvement in the broader financial services market. It is
intended that all our products will be made database independent in the medium
term.
Development of our industry expertise and enhancement of our project management
skills is part of our process of continuous improvement. Tailoring of products
to client requirements and the efficient delivery of these services through the
use of small and motivated teams remains core to our implementation strategy.
Our extensive experience of web development has proved extremely beneficial in
relation to incorporating relevant web functionality in both Ultima and TFM.
Your Board considers that it has adopted the right strategy to ensure that we
have the correct fundamentals in place to build a promising future.
Operations
Implementation of Ultima at HSBC Insurance has proceeded to time and budget. Our
service levels to all customers has been excellent during the year. Dixons has
produced a case study in collaboration with us and that is reproduced on page 3
(of the Annual Report and Accounts). The Company participated in a user group
meeting that confirmed the enthusiasm of our customers for the products.
Market place
The market place in all sectors has proved particularly tough during the period
under review. Competition in general insurance policy management systems is
intense with many software companies chasing a limited number of opportunities.
Insurance companies have been hesitant to invest in new systems, unless they
have no other choice, although there are indications that more investment is
beginning to be authorised. Many competitive products are previous generation
with little to offer the current market. Those companies continuing to outsource
and offshore their systems may find long term issues as systems will become
static and the difficult lines of communication will mean that market
opportunities are lost. This can be compounded by an increased risk of fraud. By
investing in modern systems companies can reap the benefits of increased
productivity and efficiency without the risk of losing control of their
business. This will ensure that insurance can remain profitable without the need
to pursue higher risk strategies.
Integration has become a priority for a number of organisations but it would
appear that most projects are failing to a significant extent. Making
investments in old systems that require large numbers of expensive staff to
maintain is inefficient and wasteful. Patching systems runs the danger of ending
up with an unmanageable muddle of quick-fix solutions. Ultima can be run with
very few support personnel, and is flexible, thus enabling management to react
quickly to changing market conditions. In addition Ultima, or any component of
it, can be interfaced to existing systems thereby providing a phased migration
and reducing implementation risk.
Insurance companies should move away from monolithic suites towards a component
based approach. Adopting a SOA allows IT to become an enabler of business change
and can deliver significant benefits. Components of Ultima, such as the rating
engine, can be rapidly deployed within a SOA, either in-house or on an
application service provider (ASP) basis, and create new market opportunities.
Considerable interest is building in the ASP model.
The self-managed pension fund market is contracting as funds are moving to using
third party investment managers. We are competing for business from the
remaining large funds and have recently conducted a review of the market to
identify new opportunities for TFM.
Many companies in all sectors of the financial services market are also pursuing
a technology led approach that is fundamentally flawed. The important point is
that the system must be able to effectively carry out the job required of it in
a cost effective and flexible manner. Ultima and TFM meet this requirement.
Overall the current financial services marketplace in the UK is still of a
significant size. With our revised strategy I believe we can win more orders and
achieve long term growth.
Staff
We have invested in training for our sales staff, general management courses for
our middle managers and also on specialist presentation skills courses to
enhance our approach. In addition we have continued to develop in-house skills
across all areas of the business.
I would like to thank the staff for their enormous contribution to the success
of the Company. Their dedication and commitment to the objectives set is a
source of constant amazement to me and I look to the future with confidence.
Current trading and outlook
Trading is continuing at a reduced level as a result of the near completion of
the contract with HSBC Insurance and reduced spending with other clients that
are partly due to the reliability and flexibility of our products. Although
business remains competitive the number of opportunities the sales team are
progressing are the most we have seen for a number of years. I am confident that
new client business will develop as the current year progresses but we will take
whatever measures are necessary to ensure the long term prospects of the Company
and this will include a review of our dividend payments.
Terence Bourne
Chairman
1 July 2005
Consolidated Profit and Loss Account
For the year ended 31 March 2005
Note 2005 2004
# #
Turnover: continuing operations 2 3,451,633 3,843,856
--------- -----------
Operating Profit: continuing operations 337,695 596,444
Interest receivable and similar income 158,403 122,314
Interest payable and similar charges - (2,820)
Profit on ordinary activities before taxation 496,098 715,938
Tax charge on profit on ordinary activities (121,472) (195,656)
--------- -----------
Profit on ordinary activities after taxation 374,626 520,282
for the financial year
Dividend paid - Interim (110,455) (110,406)
Dividend proposed - Final (189,352) (189,352)
--------- -----------
Retained profit for the financial year 74,819 220,524
--------- -----------
Basic earnings per ordinary share 4 3.56p 4.95p
Diluted earnings per ordinary share 3.56p 4.94p
General Notes:
1. The financial information contained in this statement does not constitute the
statutory accounts for the years ended 31 March 2005 and 2004, 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 2004 have been delivered
to the Registrar of Companies and those for 31 March 2005 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 turnover is derived from the writing andsupply of computer
software and supply of third party software both with related hardware 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.
4. The calculation of basic earnings per share is based on a profit after
taxation of # 374,626 (2004: # 520,282) and a weighted average of
10,518,579 shares (2004: 10,514,123) in issue during the period.
5. It is intended to post the Annual Statement and Report to shareholders on
6 July 2004. 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 8 August 2005.
Consolidated Balance Sheet
At 31 March 2005
2005 2004
# # # #
Fixed assets
Tangible assets 660,840 656,198
Current assets
Debtors 724,499 838,059
Cash at bank and in hand 3,565,044 3,673,867
----------- -----------
4,289,543 4,511,926
Creditors: amounts falling (921,271) (1,214,767)
due within one year ----------- -----------
Net current assets 3,368,272 3,297,159
----------- -----------
Total assets less 4,029,112 3,953,357
Current liabilities ----------- -----------
Net assets 4,029,112 3,953,357
----------- -----------
Capital and reserves
Called up share capital 525,978 525,744
Share premium account 83,004 82,302
Profit and loss account 3,420,130 3,345,311
----------- -----------
Equity shareholders' funds 4,029,112 3,953,357
----------- -----------
Consolidated Cash Flow Statement
For the year ended 31 March 2005
Note 2005 2004
# # # #
Operating activities
Cash received from 4,181,560 4,361,104
customers
Cash payments to (654,465) (472,416)
suppliers
Cash payments to (1,556,684) (1,542,989)
employees
Cash paid for PAYE and (1,025,857) (904,285)
National Insurance
Cash paid for VAT (604,865) (755,397)
Other business payments (33,017) (79,392)
----------- -----------
Net cash inflow from (a) 306,672 606,625
operating activities
Return on investments
and
servicing of finance
Interest received 158,403 122,314
Interest paid - (2,820)
---------- ----------
Net cash inflow from 158,403 119,494
returns on investments
and
servicing of finance
Taxation
Corporation tax paid (195,559) (165,722)
Capital expenditure
and
financial investment
Purchase of tangible (79,468) (78,313)
fixed assets ---------- ----------
Net cash outflow from (79,468) (78,313)
capital
expenditure and
financial investment
Equity dividends paid (299,807) (289,158)
---------- ----------
Cash (outflow)/inflow
before use of liquid (109,759) 192,926
resources and financing
Management of liquid
resources
Decrease/(Increase) in short 250,000 (150,000)
term deposits
Financing
Proceeds from exercise 936 2,684
of share options --- ---
Increase in bank (c) 141,177 45,610
balances and --------- --------
cash in hand in the
year
Notes to the consolidated cash flow statement
(a) Reconciliation of operating profit to net cash inflow from operating
activities
2005 2004
# #
Operating profit 337,695 596,444
Depreciation charges 74,826 72,279
Loss on sale of tangible assets - 353
Decrease/(increase) in debtors 113,560 (157,239)
(Decrease)/increase in creditors (219,409) 94,788
----------- --------
Net cash inflow from operating activities 306,672 606,625
--------- ---------
(b) Reconciliation of net cash flow to movement in net funds
2005 2004
# #
Increase in cash in the year 141,177 45,610
Net funds at 1 April 173,867 128,257
--------- ---------
Balance at 31 March 315,044 173,867
--------- ---------
(c) Analysis of changes in net funds
2005 Change 2004 Change 2003
in year in year
# # # # #
Bank balances and
cash in hand 315,044 141,177 173,867 45,610 128,257
Short term deposits 3,250,000 (250,000) 3,500,000 150,000 3,350,000
----------- ----------- ----------- --------- -----------
Cash at bank and in
hand 3,565,044 (108,823) 3,673,867 195,610 3,478,257
----------- ----------- ----------- --------- -----------
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
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