RNS Number:2369L
Marlborough Stirling PLC
19 May 2003

19 May 2003



                            Marlborough Stirling plc



                               2003 AGM statement



At the Annual General Meeting of Marlborough Stirling plc to be held today, Huw
Evans, Chairman and Chief Executive, will be making the following statement:



Results for 2002



"2002 was a year of contrast for Marlborough Stirling; although the group
underwent a major strategic transformation, our financial results fell below our
initial expectations.



The group was transformed by the successful completion of two key strategic
initiatives - the integration of Exchange FS into our portfolio of services and
strategy and securing the Sun Life Financial of Canada (SLFoC) outsourcing
contract. These developments build on Marlborough Stirling's established
strength in life and pensions and mortgage point-of-sale and back office
administration systems. As a result of these developments, the group now also
possesses the UK's leading intermediary trading platform in financial services
and is able to demonstrate large scale outsourcing expertise.



Our financial results reflected 65% growth in total turnover to #121.0m (2001:
#73.4m) including strong organic turnover growth of 38%.  However, our adjusted
operating profit declined by 22% to #11.5m (2001: #14.8m).



Current trading



Trading in the early months of Marlborough Stirling's 2003 financial year has
been reasonable but we continue to experience delays in the signing of new
customer contracts. The balance of activity to date has been biased towards our
outsourcing and portal services businesses although we expect activity in our
software and consultancy business to increase as the year progresses.  In the
first quarter, outsourcing, software and consultancy and portal services
accounted for approximately 50%, 35% and 15% of total revenues respectively.



In outsourcing, our main focus is on completing the migration of policies from
SLFoC's legacy mainframe systems onto Lamda. The migration of a further
portfolio of around 50,000 policies was completed on schedule in March 2003.
The final portfolio of approximately 250,000 policies is on schedule to complete
migration around the end of the third quarter of the year. This outsourcing
capability provides an excellent reference site and ensures we are well placed
to secure similar new contracts in the future.



Business review work for SLFoC has increased in the first half of 2003.
Elsewhere in outsourcing, performance in the early stages of the GE Pensions
contract is in line with our expectations and there have been other encouraging
developments that will have a modest but growing financial effect as the year
progresses. These include our selection as preferred supplier to provide our
first Isle of Man based outsourcing contract, to the offshore arm of a major UK
life and pensions company, using our Genesis Life software system. In addition,
the recent launch of Otter Risk Solutions extends our range of outsourcing
services to include underwriting and claims risk management.



Our portal services business has maintained a robust performance at a time of
particular difficulty for the IFA market. Revenues in 2003 to date have been
higher than in the second half of 2002 but slightly lower than the comparable
period in 2002. As at 30th April 2003 Exweb had 18,040 registered users (31st
December 2002: 18,270).



We have commenced the investment to develop Exweb into a broad service
electronic trading platform. This is expected to bring longer term returns with
an investment in 2003 of around #3m resulting in additional revenues from 2004
onwards. Exweb's capabilities are being extended to provide new services such as
more comprehensive electronic new business processing, online product
valuations, an integrated client database providing a single view of clients'
personal and policy details and a single password and entry point to all
participating product providers.  The new service will be branded Exweb Gold and
be available to IFAs at an increased subscription level.



We are in the final stages of securing formal support from a number of major
product providers for Exweb Gold. This support will be reflected through medium
term contracts relating primarily to both quotation and electronic new business
processing transaction services.



Our software and consultancy business has had a relatively quiet start to the
year. Although we have commenced a number of new pieces of work we have
continued to experience delays in the approval of certain new contracts. We are
experiencing strong interest in our recently developed straight through
processing solution for life and protection products, based on the combined
capability of Exweb and Lamda, and also for our Omiga mortgage software in
Canada. These two examples start to show the benefit of a more focused approach
to product marketing which we have introduced in the first quarter and which we
expect to improve revenues in the second half of 2003.



Outlook



Our visibility for 2003, in terms of contracted and recurring revenue, currently
amounts to approximately #95m, including over #50m in the first half of the
year. Our turnover mix should develop through the year such that outsourcing,
software and consultancy and portal services make full year contributions to
total turnover of approximately 45%, 40% and 15% respectively.  This is based on
expected growth in software turnover, in part reflecting a number of instances
where the group has started earning meaningful revenues prior to full contract
signature. It also reflects an expected reduction in outsourcing's contribution
as the year progresses as the migration phase of the SLFoC contract concludes
and the completion of certain pieces of business review work.



The previously announced relocation of employees based in our Halesowen office
will result in approximately 50 employees leaving the group by the end of June.
Further, as disclosed at the time of our 2002 final results, approximately 50
further employees are leaving the group by the half year as a result of a
voluntary redundancy programme implemented as a final stage in our recent
reorganisation programme. These processes are expected to lead to a
reorganisation charge of around #2m in the current half year and result in
annualised savings of over #3m from the second half of 2003.



The outcome and phasing of earnings for the year is expected to be influenced by
a number of factors. We expect somewhat higher revenues in the second half of
the year than the first half and software and consultancy revenues in particular
to grow as the year progresses. In addition, we expect cost reductions to
enhance our financial performance towards the end of the year as the effects of
our recent reorganisation and the conclusion of key aspects of our outsourcing
contract for SLFoC become evident. Taken together, these factors mean that
margins and profits will be biased substantially towards the second half of the
year.



We are confident that we remain at the heart of our clients' strategic
development and look forward to delivering value to our clients, shareholders
and employees based on this strong market position."







For further information

Marlborough Stirling                                               01242 547000
Huw Evans, Chairman and Chief Executive
Bob Beveridge, Finance Director

Citigate Dewe Rogerson                                            020 7638 9571
Toby Mountford                                                     07710 356611
Alex Brown                                                         07949 245956






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