RNS Number:7746M
Comino Group PLC
26 May 2005
26 May 2005
COMINO GROUP PLC: FINAL RESULTS
Profits in line with expectations
Comino Group plc ("Comino"), the provider of software based service delivery
solutions for local government, social housing and occupational pensions
administration, announces Final Results for the year ended 31 March 2005.
Financial Highlights
*Profit before tax, amortisation of goodwill and an exceptional item,
increased to #2.71m (2004: #2.21m) up 23%.
*PBT #1.95m (2004: #1.71m) up 14% after goodwill of #358,000 (2004:
#350,000) and the exceptional item of #407,000 (2004: #149,000).
*Group turnover of #25.5m (2004: #24.5m) up 4% overall.
*Turnover in LG up 18%.
*Strong turnover and order intake recovery in Social Housing in the
second half.
*Gross profit margin was 80%, operating profit margin, before goodwill and
exceptional item, improved to 9.6% (2004: 8.3%).
*PBT is after #100,000 expenditure on corporate fees relating to bid
activity.
*Final dividend of 5.0p; Total dividend for the year 7.5p (2004: 6.6p) up
by 14%.
*Cash balances at 31 March 2005 were #11.0m (2004: #10.7m).
*Adjusted earnings per share was 13.4p (2004: 10.3p).
Operational Highlights
* Significant progress made in further improving Comino's Service Delivery
Solutions.
* Major opportunity confirmed by the Gershon Report for enterprise-wide
solutions in Local Government.
* Social Housing claim settled and sector on track for new growth.
* Significant upgrade orders for the latest release of the Occupational
Pensions product.
* Strong year-end order book; 50% of turnover through recurring revenues.
In his Statement, David Quysner, Chairman, confirmed:
" . . .the Company has done well to achieve its target figures and to enter the
current year with a strong opening position. We are well placed to develop new
revenue opportunities, across the range of our business activities, particularly
in Local Government, and we look forward to a year of further growth."
Enquiries
Comino plc Binns & Co PR Ltd
Garth Selvey, Chief Executive Peter Binns, Paul McManus
Tel: 020 7786 9600 on the day Tel: 020 7153 1485
Paul Clifford, Finance Director Mob: 07980 541 893
Thereafter: 01628 525 433
Chairman's Statement
I am pleased to announce results for the year ended 31 March 2005, which show a
satisfactory level of profit that is in line with expectations.
Results
Profit, before tax, amortisation of goodwill and an exceptional item, was #2.71m
(2004: #2.21m). This represents an increase of 23 per cent over the previous
year.
After amortisation of goodwill of #358,000 (2004: #350,000) and after the
exceptional item of #407,000 (2004: #149,000), profit before tax was #1.95m
(2004: #1.71m), an increase of 14 per cent. The exceptional item relates to a
contractual dispute in Social Housing, on which I have previously reported, and
which was fully resolved in the first half of the year.
Turnover and margins
Turnover of #25.5m (2004: #24.5m) showed an overall increase of 4%. Within this
figure, our Local Government business grew substantially in the period and
turnover increased by #1.9m (18%). Social Housing turnover fell by #1.2m (12%),
largely reflecting uncertainties surrounding the claim but in the second half of
the year, there was a strong recovery in both turnover and order intake for this
part of the business.
Gross profit margin remained steady at 80%. Overheads were tightly controlled
and the operating profit margin, excluding the effects of goodwill and the
exceptional item, improved from 8.3% to 9.6%.
Cash
Cash balances at 31 March 2005 were #11.0m compared with #10.7m last year and
average month-end cash balances were #6.35m (2004: #5.46m). During the year, the
Company increased its level of capital expenditure to enhance the resilience and
effectiveness of its technical infrastructure.
Dividends
An increased final dividend of 5.0 pence per share (2004: 4.4p) will be paid on
22 July 2005 to shareholders on the register at 1 July 2005. This will take the
total dividend for the year to 7.5 pence (2004: 6.6p), an increase of 14%.
Operational progress
The majority of our Local Government work to date has been with individual
departments, such as Revenues and Benefits, Planning and Housing or in single
business activities. More recently, we have been addressing significant
opportunities in Social Services and a host of smaller departmental activities.
Growth from these areas will continue, but the opportunity also exists for far
more integration and enterprise-wide activity; the true 'joining-up' of Local
Government. As noted above, Social Housing is now moving forward again. Working
with our customers, we have invested to ensure that our products continue to
meet their needs for the foreseeable future. We are confident that we can offer
the best available solutions in this market. The service delivery solutions we
offer to Local Government are equally appropriate to Comino's Social Housing
business, which serves Housing Associations.
During the year, Occupational Pensions saw little activity in its market but won
a significant new end-user order for the latest version of its Universal
Pensions Management product, UPM2. Being more configurable and easier to
install, UPM2 is suitable for both third party service administrators and for
end users. Significant upgrade orders to UPM2 at the year end will ensure that
Occupational Pensions will make an increased contribution to the Company in the
current year.
Order book
The year-end order book was strong. The estimated gross profit on orders
(measured after third party costs but before internal staff costs) stood at #7m
up 20% on last year's equivalent. In addition, the Company continues to enjoy a
high level of recurring revenue from support contracts, which in the latest year
accounted for some 50% of revenues. Overall growth in support revenues was low
during the period, with growth in Local Government being partly cancelled out by
contract losses in housing. However, the strong second half improvement in
housing will help recover this position over the coming year.
Bid approach
Prior to the half year, Comino announced that it had received a bid approach
that might have led to an offer for the company. We viewed this as having an
opportunistic element, coming at a time when the share price was depressed, in
part as a result of uncertainty relating to the legal claim. In the event, the
bid process did not proceed and the share price remains significantly higher
than it was prior to the announcement of the approach.
Outlook
In the year under review, Comino continued to develop its business against a
background of some time-consuming distractions. In the circumstances, the
Company has done well to achieve its target figures and to enter the current
year with a strong opening position. We are well placed to develop new revenue
opportunities, across the range of our business activities, particularly in
Local Government and we look forward to a year of further growth.
The effort involved to get us to this point reflects the commitment and effort
of Comino's staff. On your behalf, I thank them once again for their valuable
contribution.
David Quysner
Chairman
Review of operations
Organisation
Comino plc, the main operating company, has just completed a full year of
trading as a single integrated unit. Our businesses in Local Government, Social
Housing and Occupational Pensions are now under common management and, with the
exception of Comino Connect and Comino Techflow, all development, marketing,
implementation, support and administration are now handled centrally. The
reorganisation has resulted in greater flexibility in the allocation of
resources and greater consistency across all our operations.
Comino's key strength is in delivering a true ability to join up complex
activities and customer services through many different media. Our business
processes, implemented using our Workflow product, enhance coordination between
the Customer Relationship Management (CRM) level and complicated back-office
transaction systems.
Workflow allows processes to communicate, as necessary, with CRM systems or
back-office transaction systems and with other processes. A process may be
commenced, for example, via an e-form completed on the web, a telephone call via
a CRM system or a letter scanned into an Electronic Document Management (EDM)
system.
We have expanded our established EDM into Records Management to meet the
requirements of the The National Archives, the Freedom of Information Act and
the Data Protection Act. The result is EDRM - a product which enables our
customers to fulfil legislative as well as case management requirements.
During the course of a busy year, we have made numerous, significant incremental
improvements in the way we market our products and serve our customers. The
benefits from these changes are starting to reflect in the bottom line.
Market sectors
Local Government
Local Government continues to be a major growth area for Comino. The environment
is changing; moving away from shorter term specialist initiatives to meet
specific government targets and towards longer term, more integrated, cost and
time saving approaches. The increasing emphasis on linking processes together
within Local Authorities is yielding exciting opportunities for products such as
Workflow. For instance, the Gershon Report, commissioned by central government,
anticipates that much of its recommended #6bn per annum savings will be made by
self-service over the web. A Comino process can be automatically initiated via
the web, deal with back-office complexities and keep any CRM system informed of
progress.
As part of our enterprise solution approach, we have made inroads into Social
Care. This is occurring both directly and through the establishment of strategic
partnerships with suppliers of change management and transactional systems. The
focus in Social Care is on the development of electronic records, effective case
management and efficient service delivery using Workflow. This is becoming a key
target area for improvement within Local Authorities and is a logical extension
of Comino's established capabilities in other large departments such as Revenues
and Benefits, Housing and Planning.
During the year we saw numerous new business wins in Local Government. Torbay
District Council and North Dorset selected us to implement our EDM and Workflow
solutions across the Council, and we also won contracts to provide these systems
to the Revenues and Benefits departments at Fife, West Dumbarton, Gwent and East
Staffordshire and (since the year end) West Devon Borough Councils. We are also
implementing EDRM and Workflow solutions for Spelthorne and Castle Morpeth.
Planning and Building Control is now a recognised Comino competency with Sefton,
Reigate and Banstead, and Wigan taking the total to 27 users.
The Metropolitan Borough of Wirral's Revenues and Benefits section received an
award from the Institute of Revenues Rating and Valuation for the Best Use of IT
and Excellence in Customer Service. The Council uses Comino's Workflow and EDM
solutions to improve service, information access and productivity.
Although principally driven by Local Government demands at present, other
sectors are likely to require EDRM expertise in the future. Where appropriate,
we will actively pursue these opportunities.
Social Housing
Many of the products we have developed for Local Government have applications
within the Social Housing sector.
We have continued to invest in this market and have improved the scope and
functionality of our Universal Housing product suite. Comprising Contact
Manager, Workflow and EDM, Universal Housing can be used with other suppliers'
transactional systems as well as our own, and several customers are appreciating
the benefits of this. As with our Local Government customers, Registered Social
Landlords are now able to make significant improvements to their service without
changing their underlying transaction systems.
Our Social Housing order book recovered strongly in the latter half of the year
and there were several significant new business wins. Golden Gates Housing
selected Comino, initially to provide Universal Housing, then subsequently to
replace the underlying transaction element as well. MHS Homes chose Universal
Housing to overlay their existing transaction system and Toynbee Housing
Association chose us to provide a complete front-to-back office solution. Seren
Group, whose considerable achievements were recognised in the National UK
Housing Awards 2004, selected Comino to replace their existing transactional
system; Canmore and Dunedin, Portsmouth and South Shropshire Housing
Associations have done likewise.
Occupational Pensions
The latter half of the year saw customers begin to transfer to Version 2 of
Universal Pensions Management (UPM). The industry is graduating away from legacy
administration systems toward third party systems, and Version 2 reflects this
change. It is also easier to configure, maintain and install than its
predecessor.
During the year Merchant Navy Pensions Administration (MNPA) completed the
migration of all its clients - over 150,000 scheme members - onto UPM. We are
also implementing a third party pensions administration system for Hymans
Robertson, a leading independent firm of actuaries and consultants.
Comino Techflow
Comino Techflow continued to deliver consultancy and high level reporting
expertise via on-line analytical processing (OLAP) to our customers. The
consultancy uses business process re-engineering and on-line procedures manuals
for managing benefits processing and housing development. OLAP is a business
intelligence tool used in a range of functions including, for example, arrears
recovery and repairs monitoring.
Comino Techflow also sells Workbench - a software system for project costing.
Most of our customers for Workbench are in the Social Housing construction
field, but we are looking at ways to broaden its market. The company supports a
number of large contracts within the Group and made a small profit in 2004.
Comino Connect
Comino Connect provides and hosts a range of business applications including
telecommuting solutions, email, internet and web hosting. This business had a
very good year increasing revenues by 27% and continues to show strong growth
potential. Over three quarters of the company's revenues are annually recurring,
and three quarters of its customers are outside the Group's traditional areas.
Our promotion of the Group's CTI software both to existing and new customers
will further the development of this business and may uncover further
opportunities for Contact Manager and Workflow in other sectors.
Outlook
Our key strengths lie in the development, using Workflow, of business processes
and our ability to integrate these within all areas of a service-oriented
organisation. Going forward, Comino will continue to focus on service delivery
solutions linked to specific sector expertise.
These business processes deliver consistent customer service as well as cost
savings. We have, over the course of the year, installed a large number of
processes with these benefits. This experience, putting our product and skills
to effective use, means that we are better placed than ever to turn
opportunities into concrete business cases. We look forward to the coming year
with confidence.
COMINO GROUP plc
Consolidated Profit and Loss Account
For the year ended 31 March 2005
2005 2004
# 000 # 000
Turnover 25,533 24,507
Cost of sales (5,012) (5,176)
------- -------
Gross profit 20,521 19,331
Administrative expenses (18,840) (17,787)
------- -------
Operating profit 1,681 1,544
Interest receivable 265 169
------- -------
Profit on ordinary activities before taxation 1,946 1,713
Tax on profit on ordinary activities (714) (692)
------- -------
Profit on ordinary activities after taxation 1,232 1,021
Minority interest (18) (40)
------- -------
Profit for the financial year 1,214 981
Dividends (1,046) (916)
------- -------
Retained profit for the period 168 65
======= =======
Basic earnings per share 8.7p 7.1p
======= =======
Diluted earnings per share 8.6p 6.9p
======= =======
Adjusted earnings per share 13.4p 10.3p
======= =======
Adjusted diluted earnings per share 13.1p 10.1p
======= =======
There were no recognised gains or losses other than the profit for the year.
All transactions arise from continuing operations.
COMINO GROUP plc
Consolidated Balance Sheet
As at 31 March 2005
2005 2004
#000 #000
Fixed assets
Intangible assets 2,480 2,765
Tangible assets 2,693 2,632
------- -------
5,173 5,397
Current assets
Stocks 857 852
Debtors 7,400 7,602
Cash at bank and in hand 11,029 10,739
------- -------
19,286 19,193
Creditors: amounts falling due within one year (6,373) (6,777)
------- -------
Net current assets 12,913 12,416
------- -------
Total assets less current liabilities 18,086 17,813
Deferred income (8,691) (8,667)
------- -------
9,395 9,146
======= =======
Capital and reserves
Share capital 697 694
Share premium reserve 4,855 4,796
Profit and loss account 3,570 3,402
------- -------
Shareholders' funds 9,122 8,892
Minority interest - equity 273 254
------- -------
9,395 9,146
======= =======
The financial statements were approved by the Board of Directors on 25 May,
2005.
COMINO GROUP plc
Consolidated Cash Flow Statement
For the year ended 31 March 2005
2005 2004
#000 #000
Net cash inflow from operating activities 2,668 4,130
Net returns on investments and servicing
of finance
Interest received 265 169
------- -------
Taxation (560) (491)
------- -------
Capital expenditure
Purchase of tangible fixed assets (778) (362)
Purchase of intangible fixed assets (250) (187)
Sale of tangible fixed assets - 18
------- -------
Net cash outflow from capital expenditure (1,028) (531)
------- -------
Acquisitions
Purchase of subsidiary undertaking (158) -
------- -------
Equity dividends paid (959) (860)
------- -------
Financing
Issue of shares 62 -
------- -------
Increase in cash 290 2,417
======= =======
Net cash flow from operating activities 2005 2004
#000 #000
Operating profit 1,681 1,544
Amortisation of goodwill 358 350
Amortisation of intangible fixed assets 100 100
Depreciation 716 693
Loss/(profit) on sales of fixed assets 1 (13)
Increase in stocks (5) (400)
(Increase)/decrease in debtors and prepayments (84) 236
Decrease in accrued income 215 92
(Decrease)/increase in creditors (338) 531
Increase in deferred income 24 997
------- --------
Net cash inflow from operating activities 2,668 4,130
======= ========
Notes:-
1. The basic earnings per ordinary share of 8.7p has been calculated on the
earnings attributable to ordinary shareholders of #1,214,000 divided by the
weighted average number of shares in issue during the year of 13,902,469.
The calculation of diluted earnings of 8.6p per share is based on the basic
earnings per share, adjusted to allow for the issue of shares and the post tax
effect of dividends and interest, on the assumed conversion of all dilutive
options and other dilutive potential ordinary shares.
An adjusted earnings per share of 13.4p has been calculated to provide a better
understanding of the underlying trading performance of the Group. It has been
calculated excluding the amortisation of goodwill of #358,000 (2004: #350,000)
and the exceptional item of #407,000 (2004: #149,000) less taxation and based
upon the weighted average number of shares in issue during the year of
13,902,469 (2004: 13,885,802).
2. The financial information set out above does not constitute the statutory
accounts for the period ended 31 March 2005 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 above results for the year ended 31 March 2005 have been abridged from
the full Group accounts for that year, which received an unqualified auditors
report. The results for the year ended 31 March 2004 have been abridged from the
full group accounts.
4. The annual report and accounts will be posted to shareholders on 3 June 2005
and will also be available on request from the company's registered office,
Comino House, Furlong Road, Bourne End, Buckinghamshire SL8 5AQ.
5. The directors are recommending a final dividend of 5.0p per share which, if
approved, will be paid on 22 July 2005 to shareholders on the register on 1 July
2005.
6. The Annual General Meeting will be held at Binns & Co., 9th Floor, Citypoint,
1 Ropemaker Street, London EC2Y 9HT on Friday 1 July 2005 at 11.30 am.
This information is provided by RNS
The company news service from the London Stock Exchange
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