RNS Number:6549L
Comino Group PLC
29 May 2003
COMINO GROUP PLC: FINAL RESULTS
Profits in line with expectations; Excellent Prospects for 2004
Comino Group plc ("Comino"), the provider of software based business solutions
for Social Housing, Local Government (LG) and Occupational Pensions
administration, announces Final Results for the year ended 31 March 2003.
In his Statement, David Quysner, Chairman, said:
"I am pleased to report that results for the year ended 31 March 2003 are
substantially in line with expectations. The results were achieved in an
uncertain economic climate and in a difficult period generally for the 'software
and computer services' sector. Against this backdrop, the results are very
positive and demonstrate the potential for sustainable profitability and
growth."
Financial Highlights
* Operating profit in line with market expectations.
* PBT before amortisation of goodwill #1.61m (2002: Loss of #277,000).
* PBT #1.21m (2002: Loss #576,000).
* Turnover up 19% to #24.5m (2002: #20.6m).
* Gross profit margin of 79% (2002: 77%).
* Final dividend of 4.0p; Total dividend for the year 5.9p (2002: 3.0p).
* Cash balances at 31 March 2003 #8.3m (2002: #5.2m).
* Adjusted earnings per share (see note 1 on tax normalisation) 8.3p (2002:
Loss of 1.4p)
Operational Highlights
* Considerable progress in all divisions.
* Improved workflow, computerised telephony and electronic document
management.
* Social Housing division now has over 40 customers committed to
Universal Housing strategy.
* Local Government division achieving critical mass in 'corporate'
solutions for multiple departments of the same local authority.
* Both these divisions more than doubled their opening order books.
* Occupational Pensions has completed significant developments for
pensioner payroll, third party administration.
* Comino Connect is growing its business and profitable. Comino Techflow
reshaped, moving towards profitability.
Garth Selvey, Group Chief Executive, said:
"Comino's solutions are modern, progressive and attractive in what they offer.
They impact customer efficiency in a visibly effective way. Our core
technologies will continue to improve and widen to support these solutions as
they play an increasingly important role in customer organisations. Combined
with strong customer bases and recurring revenues, Comino starts the new
financial year with excellent prospects."
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.
Chairman's statement
I am pleased to report that results for the year ended 31 March 2003 are
substantially in line with expectations. The results were achieved in an
uncertain economic climate and in a difficult period generally for the 'software
and computer services' sector. Against this backdrop, the results are very
positive and demonstrate the potential for sustainable profitability and growth.
Results
Profit before tax and amortisation of goodwill is #1.61m compared with a loss of
#277,000 last year.
After amortisation of goodwill amounting to #402,000, the profit before tax is
#1.21m compared with a loss of #576,000 last year.
Turnover of #24.5m (2002: #20.6m) increased by 19% whilst overheads of #18.3m
(2002: #16.6m) increased by 10%. Figures include Comino Connect for the first
time. Gross profit margin is 79% (2002: 77%).
Cash balances at 31 March 2003 were #8.3m compared with #5.2m at the end of last
year.
Dividends
A final dividend of 4.0 pence per share (2002: 1.1p) will be paid on 25 July
2003 to shareholders on the register at 4 July 2003. This will take the total
dividend for the year to 5.9 pence (2002: 3.0p) and reflects Comino's continuing
confidence in its future.
Operations
All divisions made considerable progress, more detail of which is contained in
the operational review. Some key points are noted below.
Social Housing and Local Government each account for approximately 42% of the
turnover. Between them they account for nearly all of the operating profit. The
operating profit split between Social Housing and Local Government is currently
weighted towards Social Housing but will alter in Local Government's favour as
its recurring revenue grows and its operating profit margin further improves.
The Occupational Pensions division was adversely affected by the much publicised
problems within the pensions industry. The division also completed extensive
product development within this period. As a result of this combination of
factors, the division returned an operating loss, a shortfall which was
recovered by better than expected performance in the two main divisions.
The budgeted loss from Comino Techflow was contained at #234,000 and the
operation has been reshaped to provide business consultancy and reporting with
less than 20% of the activity now associated with Professional Services
Automation.
The Outlook
In addition to our strong recurring revenues, we start the year with order books
in both Social Housing and Local Government, that are up by 102% and 117%
respectively compared with the same time last year. Local Government will
benefit from new recurring revenues coming on stream and measures taken during
the last few months will produce substantial cost savings. In addition, the
division is achieving some critical mass in corporate penetration. There are now
at least ten customers where Comino's products are used in multiple departments
of the same local authority.
Occupational Pensions has excellent products and will be managed back to profit
in the coming year. The ever increasing scrutiny to which pensions funds are
subject will, over time, reinforce the need for the increased administrative
efficiency that our systems deliver.
Comino Connect continues to develop its bandwidth and network services
successfully and has a very high proportion of recurring revenue. Comino
Techflow, in its new form, is aimed at early break-even and profitability based
largely on the provision of consultancy to the Comino customer base.
Taking all of these factors, combined with strong customer bases and recurring
revenues, Comino starts the new financial year with excellent prospects.
Staff and Customers
Once again I would like to thank our staff and customers alike. Much hard work
contributed to this success.
David Quysner
Chairman
Review of Operations
Social Housing
The Social Housing division provides an enterprise solution to help manage
Housing Associations. The key achievement of the last three years has been to
modernise this solution under the banner of Universal Housing. This
modernisation uses technology established in Comino's other divisions.
Over 40 Social Housing customers are now committed to the Universal Housing
strategy. Of these, some 12 are implementing Contact Manager which is at the
heart of Comino's specialist CRM solution for the 'Business to Public'
environment. Contact Manager also works with third party housing systems as well
as those supplied by Comino, a factor which is important to housing groups that
make new acquisitions but retain a need for a common customer interface.
Contact Manager is a specific workflow product. However, once installed it
provides common infrastructure for the later introduction of other, more
specific, workflow processes. The product is also used widely by the other
Comino divisions. It has extensive links with both Electronic Document
Management and Computer Telephony Integration.
Many existing customers such as Shaftesbury, CDS and Flagship have entered into
long term contracts with Comino. The William Sutton Trust and Apex have recently
become partners, proof that our modernised product set is attracting new
interest outside our established customer base. Improved service delivery,
customer choice and internal efficiency are the goals of the Phoenix Project,
enabling excellence, a comprehensive new initiative by The William Sutton Trust
and Comino plc.
"Adaptability is the key to future organisational effectiveness for housing
associations," explains Stephanie Bamford, Director of Corporate Affairs for the
Trust. "Government policies, regulation, market conditions and customer
expectations can all change substantially. An organisation that has the
flexibility to change with them makes an attractive partner."
Social Housing now has fully modern systems for the CRM elements of the
front-office together with completely updated back-office systems. These
systems, in common with our earlier housing products, offer a long lifetime of
usage and the ability to achieve additional operational benefits throughout
their lifetime.
Paul Doe, Chief Executive of Shepherds Bush Housing Association said: "We are
committed to providing the highest possible service to our tenants and have put
a programme of ambitious targets in place, such as resolving 80% of calls at the
first pass and improving our rate of customer satisfaction beyond 75%. Our
adoption of Comino's Universal Housing system will allow us to meet these
objectives and enable us to make improvements in areas such as the repairs
process, rent collection and arrears management to help us offer a consistently
high level service."
Local Government
The Local Government division provides departmental and corporate solutions to
Local Authorities. Corporate, in this sense, means that the solutions are used
by multiple departments and driven by e-Government initiatives. Historically,
sales were to Revenue & Benefits and Housing departments and this is now
broadening into a full corporate suite.
Local Government has made marked progress during the year. This includes
numerous new contract wins, successful installations and a return to
profitability. Comino is now widely recognised as a credible supplier of
corporate e-government solutions.
Direct contract wins include Glasgow City Council, Argyll & Bute and Chelmsford.
Within our local authority base of over 100 we now have some 10 local
authorities that have adopted Comino as a corporate solution. This corporate
initiative is clearly producing results and builds on our general presence in
the major service areas of Revenues & Benefits and Housing.
"Our vision is to operate the council as a single, integrated business and
Comino is an essential partner in helping us achieve this," said Stephen
Ireland, Deputy Chief Executive and project Sponsor, Chelmsford Borough Council.
Contracts with Luton, Bexley and Rotherham have been won with facilities
management (FM) partners such as Steria and BT. The Norwich Connect contract is
proceeding successfully on schedule and will produce revenue in 2003-2004.
Comino's stance on partnering is 'open' in that it will partner any quality FM
company where the value of our software products is recognised by the customer.
This approach has been adopted rather than providing our own FM facilities,
where critical mass and infrastructure are essential in this fiercely
competitive business. The small amount of business that we had in this area has
been moved to our FM partners with resultant cost savings, whilst the customers
continue to use our software products.
The integration of what was once Saffron is now complete and its focus is
Housing within Local Government. Over half of the original customer base has
been upgraded to join the mainstream strategy, which further increases the
potential for our e-government products. Doncaster, for example, now provides
35,000 tenants with on-line access to tenancy information and tenants of
Bradford and Lincoln enjoy web access via kiosks to Choice-Based Lettings.
The opening order book for this year is 117% higher than a year earlier. In
addition, we have received orders from Merton and Amber Valley in the opening
weeks of the new period.
The operating profit margin in this division will improve for a number of
reasons: costs savings already made, new recurring revenue feeding through from
recent contract wins and factors generally associated with economies of scale.
Conversely, it remains important to sustain investment levels because the
implications of the e-government agenda extend well beyond 2005.
"The Comino system is fully e-GIF compliant and supports Liverpool City
Council's strategy to provide modern, accessible, customer focused services to
the citizens of Liverpool. These services will be available via on-line forms on
the Internet, as well as through traditional service channels such as e-mail,
fax, letter, telephone and personal visits to the office," said David
McElhinney, Chief Executive, Liverpool Direct Ltd.
Occupational Pensions
Universal Pensions Management (UPM) is a product for the administration of
Occupational Pensions schemes. This applies both to companies such as Ford and
British Airways and also to Local Authority pension schemes.
During the year the Occupational Pensions Division released new and significant
applications to the market including Defined Contribution (Money Purchase) and
Pensioner Payroll. Most importantly a Third Party Administrator version of UPM
was released and is now live at MNPA. Pensioner Payroll is also live at Reed
Elsevier and has been purchased by USS. These new applications provide a much
broader and deeper solution set to our clients and will allow advantage to be
taken of the dramatic swing towards Defined Contribution and more prevalent
outsourcing.
Development in the year was intensive but the load is now reducing. Potential
customers were waiting to see live performance of the new systems and proof of
these came too late in the year to influence their decision. Other decisions to
change administration systems were inevitably delayed by a focus on dwindling
pension fund values although ultimately this factor further reinforces the need
for cost effective administration systems.
The product collateral is now available to drive the business. Reed Elsevier has
a 17,000 strong pensioner payroll, the final process of which now takes a few
minutes rather than the eight hours taken by the previous system.
"We are benefiting from running the Universal Pensions Management Payroll in a
number of ways. The speed at which the payroll and associated processes run,
together with the comprehensive reports available, have given us far greater
efficiency and flexibility," said Peter Matthews, Payroll Manager, Reed
Elsevier.
MNPA, a third party pensions administrator, and winner of Pensions Scheme
Administrator 2003 are bidding for new business based on a combination of their
high service levels and Comino's UPM product.
"Our entry was built around our investment in Comino's Universal Pensions
Management system, a decision which will undoubtedly help us deliver what our
customers need - a consistent, accurate and reliable service. Clients and
independent consultants who have seen the system see the benefits of the
workflow approach and find the implementation of the system impressive," said
Sue Applegarth, Managing Director, MNPA.
Comino Techflow
Comino Techflow's business is now largely based on consultancy and management
reporting. The change has produced total revenues of #503,000 either directly or
through other divisions. Comino Techflow is now moving towards early
profitability with only a small remaining emphasis on the original activity
within Professional Services Automation.
The consultancy operation has produced high quality, on-line procedure manuals
for the Revenues & Benefit departments of eighteen local authorities. It has
carried out extensive Business Process Reengineering studies and has assisted
with a variety of other projects including improved leaseholder service charge
documentation, assistance with bid preparation to manage additional housing
stock and plans to optimise the usage of existing computerised systems.
High level management reporting becomes increasingly important as processes
refine and interact. "It's wonderful, that's all I have to say," said Tracey
Lees, Housing Director, Thames Valley Housing Association when asked her view of
their implementation of Minerva Analysis, an OLAP reporting suite. TVHA can view
detailed expenditure on repairing and maintaining properties by category,
supplier, location and period.
Comino Connect
Comino Connect continued to develop its network bandwidth and customer base. The
company produced total revenues of #1.3m and returned a small profit of #50,000.
The company also provided essential network services to the Comino Group itself.
Contract wins within the Group's customer base include USS, Doncaster and
Flagship representing each of the three main divisions. Other wins include a
packaging solution supplier, Braitrim, and an industrial products distributor,
Monks & Crane.
The prospect profile is increasingly towards higher value contracts, reflecting
an ability to offer a total solution. In particular, the integration of
broadband ADSL service with Virtual Private Network technology provides
affordable and reliable remote access to both outworkers and outsourced service
providers using systems that are presently too complex or diverse for browser
technology.
Jack Paddison, Braitrim Group E-Business Director, comments "Planning the move
to new servers at Comino began in mid 2002 with the site going live at the
beginning of 2003. The expertise and professionalism of Comino are now essential
to the running of our business. New eBiz staging sites have also been added to
the Comino portfolio as had a hosted sophisticated link to back office systems
in New York, London and Hong Kong."
Comino Connect will continue to focus on building its infrastructure and
customer base for a further period to achieve critical mass. Increased profit
will then be realised from improved supplier terms and bandwidth utilisation as
well as winning new accounts.
Summary
Comino's solutions are modern, progressive and attractive in what they
offer.They impact customer efficiency in a visibly effective way. Our core
technologies will continue to improve and widen to support these solutions as
they play an increasingly important role in customer organisations.
Garth Selvey
Group Chief Executive
Comino Group plc
Accounts to 31 March 2003
Consolidated Profit & Loss account
2003 2002
#'000 #'000
Turnover
Continuing operations 23,235 20,560
Acquisitions 1,269 -
24,504 20,560
Cost of sales (5,039) (4,692)
Gross profit 19,465 15,868
Administrative expenses (18,349) (16,566)
Operating profit/(loss)
Continuing operations 1,134 (698)
Acquisitions (18) -
1,116 (698)
Share of operating loss of associate - (34)
Interest receivable 100 156
Interest payable (7) -
Profit/(loss) on ordinary activities before taxation 1,209 (576)
Tax on profit/(loss) on ordinary activities 18 55
Profit/(loss) on ordinary activities after taxation 1,227 (521)
Minority interest 14 30
Profit/(loss) for the financial year 1,241 (491)
Dividends (819) (418)
Profit/(loss) retained for the financial year 422 (909)
Basic earnings/(loss) per share 8.9p (3.5)p
Diluted earnings/(loss) per share 8.9p (3.5)p
Adjusted earnings/(loss) per share 8.3p (1.4)p
Consolidated Balance Sheet
2003 2002
#'000 #'000
Fixed assets
Intangible assets 2,814 2,441
Tangible assets 2,968 3,077
Investment in associate - 987
5,782 6,505
Current assets
Stocks 452 130
Debtors 8,058 7,787
Cash at bank and in hand 8,322 5,161
16,832 13,078
Creditors: amounts falling due within one year (5,804) (4,424)
Net current assets 11,028 8,654
Total assets less current liabilities 16,810 15,159
Deferred income (7,670) (6,447)
9,140 8,712
Capital and reserves
Called up share capital 694 694
Share premium account 4,796 4,773
Shares to be issued 99 360
Profit and loss account 3,337 2,915
Shareholders' funds 8,926 8,742
Minority interest - equity 214 (30)
9,140 8,712
Consolidate Cash Flow Statement
2003 2002
#'000 #'000
Net cash inflow from operating activities 3,923 324
Returns on investments and servicing of finance
Interest received 100 156
Interest paid (7) -
Net cash inflow from returns on investments and servicing of finance 93 156
Taxation (202) (347)
Capital expenditure and financial investment
Purchase of tangible fixed assets (474) (2,325)
Sale of tangible fixed assets 63 43
Net cash outflow from capital expenditure and financial investment (411) (2,282)
Acquisitions and disposals
Purchase of subsidiary undertaking (131) (29)
Cash and overdrafts acquired 305 -
Net cash inflow/(outflow) from acquisitions and disposals 174 (29)
Equity dividends paid (416) (791)
Financing
Capital element of finance lease payments - (6)
Net cash outflow from financing - (6)
Increase/(decrease) in cash 3,161 (2,975)
Notes:
1. The earnings per ordinary share of 8.9p has been calculated on the
profit for the financial year of #1,241,000 after taxation and minority interest
and on 13,883,302 ordinary shares being the weighted number of ordinary shares
in issue during the year. The adjusted earnings per share figure of 8.3p
excludes amortisation of goodwill of #402,000 and the effect of setting up a
deferred tax asset relating to prior periods of #496,000. The majority of the
deferred tax asset relates to the recognition of prior years' tax losses of
Saffron Computer Services Limited, the utilisation of which are now more
certain.
2. The financial information set out above does not constitute the
statutory accounts for the period ended 31 March 2003 within the meaning of
Section 240 of the Companies Act 1985. Statutory accounts for the year will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
3. The annual report and accounts will be posted to shareholders on 4
June 2003 and will also be available on request from the company's registered
office, Comino House, Furlong Road, Bourne End, Buckinghamshire SL8 5AQ.
4. The directors are recommending a final dividend of 4p per share
which, if approved, will be paid on 25 July 2003 to shareholders on the register
on 4 July 2003.
5. The Annual General Meeting will be held at Binns & Co., 16 St Helen's
Place, London EC3A 6DF on Friday 4 July 2003 at 11.30 am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXSPASPDEFE