RNS Number:4722A
Total Systems PLC
05 July 2004
FOR RELEASE 7:00 AM 5 JULY 2004
TOTAL SYSTEMS Plc
Preliminary results for the year ended 31 March 2004
Results in line with market expectations; dividend up 6%
Total Systems plc ("Total" or "the Company"), suppliers of cost effective open
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 2004.
Commenting on the Company's results Terry Bourne, Chairman, said:
"Performance for the financial year 2004 has been broadly in line with the
Board's expectations. While turnover has been stable both increased
profitability and a positive cash flow have been achieved by continuing strict
cost control disciplines."
Financial Highlights
* Turnover # 3.84m (2003: # 3.93m)
* Profit before tax # 716k (2003: # 597k)
* Basic EPS 4.95p (2003: 4.13p)
* Final dividend 1.80p (2003: 1.70p)
* Gearing Nil (2003: Nil)
* Net assets per share 37.60p (2003: 35.51p)
* Cash per share 34.94p (2003: 33.12p)
* A dividend has been declared for nine consecutive years.
Business Highlights
ULTIMA, the fully integrated, client driven, general insurance system, continues
to bring significant business benefits to existing and new clients including:
* Rapid implementation time with lower risk
* Low cost of ownership
* Fast product introduction
* Easy integration into external systems
* Excellent return on investment
Regarding the Company's current trading and outlook, Terry Bourne added:
"Current trading continues at an acceptable level with our existing customers.
However, our visibility of future prospects is less then we would like and steps
have been taken to address this issue.
In present market conditions it is unlikely that there will be any improvement
on the performance in the current financial year against the year being reported
on. The Company's finances remain sound with costs being held under strict
control. This strong position will enable us to take advantage of opportunities
as they occur."
E-mail: info@totalsystems.co.uk web site: www.totalsystems.co.uk
Enquiries:
Terry Bourne, Chairman Total Systems plc 020 7294 4888
Granville Harris, Finance Director Total Systems plc 020 7294 4888
Jacqui Graves / Peter Binns Binns & Co PR Ltd 020 7786 9600
Notes for Editors:
Based in the City of London Total provides cost effective open 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). Total
Fund Manager is planned for release at the end of the year. Both products are
recognised as being among the best in their sectors.
Examples of Total's clients for ULTIMA include Corinthian, Axa Insurance
Services (Denplan), Bluesure, Dixons and Zurich Insurance Company (Navigators &
General).
TOTAL SYSTEMS plc
Chairman's Statement
Results
Performance for the financial year 2004 was broadly in line with the Board's
expectations. While turnover has been stable, both increased profitability and a
positive cash flow have been achieved by continuing strict cost control
disciplines. Turnover for the year under review was # 3,843,856 (2003:
#3,927,749) and profit before tax was #715,938 (2003: #596,643) resulting in
earnings per share of 4.95p (2003: 4.13p).
Financial
Zero gearing and net assets of 37.60p per share (2003: 35.51p), of which 34.94p
per share (2003: 33.12p) is represented by cash, demonstrates our financial
strength. The proposed dividend is covered 1.74 times (2003: 1.53 times) and
return on capital employed is 18.11% (2003: 16.00%).
Dividend
Payment of an increased final dividend of 1.80p per share is proposed. This
makes the total dividend for the year 2.85p per share (2003: 2.70p) representing
a 6% improvement compared to the previous year.
The dividend will be paid on 1 September 2004 to all shareholders on the
register on 16 July 2004.
Strategy
Your Company focuses on the insurance, warranty and pension fund management
sectors of the financial services industry. During the year a considerable
investment was made in the enhancement and development of Total Fund Manager
(the investment management, accounting and administration system) and ULTIMA
(the general insurance system for personal and commercial lines of insurance).
Total Fund Manager should be ready for release at the end of 2004.
Such a concentration on development has been crucial to our success in keeping
these products at the forefront of new technology. Total Systems is acknowledged
as a leader in R&D being ranked 490 out of the top 700 UK companies for absolute
R&D spend. This is a remarkable achievement considering your Company's size
relative to those companies with which it has been compared.
Prospective parties are given a full choice of pricing options as well as the
usual support and upgrades. Added value facilities such as 24/7 support,
disaster recovery and business continuity are now available.
Effective and timely delivery is the key to the success of any project. This is
where Total Systems excels. Successful partnerships take work, trust, openness
and a "we are in this together" attitude. In order to maximise project
efficiency a co-operative culture built on teamwork, strong work ethics, a "can
do" approach and a focus on transforming information technology processes are
essential traits. Total Systems philosophy is to work beyond the need for cost
savings, being proactive in offering suggestions for improving business
processes and infrastructure to generate added value to client relationships.
Results are what really count.
Products
Our product set is complementary and consistent with our corporate objective to
be the software vendor of first choice for the new generation of systems for the
insurance, warranty and pension fund management sectors of the financial
services industry.
The key business benefits of implementing ULTIMA are:
* Short implementation timescales offering a lower risk solution. Rapid
development tools cut implementation times and resource requirements by
between 50% and 70% against comparable systems.
* Low cost of ownership resulting in a cost effective solution for a user base
from as little as 20 but scaleable up to thousands of users.
* Significant productivity improvements.
* Reduced effort required for key tasks such as claims processing and renewals.
* Negligible system down time due to robust reliable technology.
* Minimal database administration costs.
* Designed to facilitate cross selling of all general lines insurance products
and to enable bundled product offerings in a fully integrated business
solution.
* Flexibility to make changes to existing products and launch new products
quickly without specialist assistance.
* Places the full power of the most modern technology available in the hands of
the business user.
* Full integration enables complete customer service functionality and
processing that maximises economies of scale.
* Provides the catalyst for radical change using our experienced consultants to
re-engineer business processes to optimise performance.
* Excellent return on investment.
The key business benefits from implementing Total Fund Manager are:
* Short implementation timescales.
* Easy integration with industry standard systems.
* Extensive reporting capabilities to maximise portfolio performance.
* Integrated administration functions and multi-currency accounting system.
* Low in-house administration costs.
* Manage the whole range of investment vehicles.
* Regulatory compliance.
Our e-commerce product, total-e-now, enables high turnover web sites with
significant product lines to become operational very quickly. Customers can
easily interface with many other systems to ensure that integration issues are
kept to a minimum. It has a low cost of ownership and minimises IT staff
involvement in maintaining the system.
Market place
Delays anticipated last year in gaining new contracts have proven very real.
Many well established insurance companies continue to spend 80% or more of their
IT budget maintaining outdated systems. This leaves little room for growth or
innovation.
While we are involved in bidding for all available business the relatively flat
market experienced over the last couple of years looks set to continue, at least
for the short term. Much of this reluctance to invest in new technology is
undoubtedly a result of excessive non-productive IT expenditure relating to the
dot.com bubble and Y2K during the period 1999 - 2001. It is hardly surprising
that these two events greatly tarnished the credibility of the IT industry at
board and senior management level. Over time the credibility fallout from these
two events will diminish and investment will recover. The trend over the last
few years has been to spend on integration rather than new systems but once IT
capital budgets are taken off their current constraints matters should improve.
Mergers in the insurance sector and the consolidation of pension fund managers
are creating opportunities for our products. It is therefore of strategic
importance, in order to win a greater share of available business, that our
products remain at the forefront of technology in addition to your Company
building on existing customer relationships. Your Board is confident that recent
changes in management, and developments in our products, will result in more
significant business being won in the future.
According to recent press comments a number of larger companies are adopting a
myopic view of the future with regard to outsourcing and moving IT offshore,
ostensibly to improve their "bottom line". The undesirable ramifications of such
actions may be slow to materialise but the impact of such business models is
likely to be significant. Companies can avoid the adverse business issues
resulting from outsourcing and offshoring while obtaining all the benefits of
cost reduction, and also gain from better systems, by implementing leading edge
products. The number of people required to implement and operate our products is
far lower than for comparable systems with the result that they can be run very
cost effectively by customers in their local environment, or by Total Systems,
as an Application Service Provider.
Staff
Once again I express my gratitude to Total Systems staff who have shown their
professionalism and dedication to the Company. The average length of service
within the Company is over seven years, demonstrating the effectiveness of the
retention policies that have been put in place. Our staff are key in enabling
your Company to provide a cost effective, versatile and highly trained talent
pool capable of handling a range of IT challenges. I look forward to working
with them for many years to come. Development of staff into more senior
positions as well as the recruitment of high quality management to further
advance and grow the business, is an ongoing process.
Operations
Strong long term client relationships have enabled us to continue business at a
reasonable level of activity by closely meeting customer needs in an empathetic
manner. The Board has ensured that internal resources have been more closely
aligned with current activity levels. Towards the end of the year your Company
won a significant contract with Corinthian Insurance with a value of # 2.6
million.
New order intake during the year has been disappointing. In order to deliver the
historic level of profits, as well as to promote growth, significant contracts
need to be won on a more frequent basis.
The Board remains confident that your Company's strategy and product line up are
both strong and compelling.
Current trading and outlook
Current trading continues at an acceptable level with our existing customers.
However, our visibility of future prospects is less than we would like and steps
have been taken to address this issue.
In present market conditions it is unlikely that there will be any improvement
on the performance in the current financial year against the year being reported
on. The Company's finances remain sound with costs being held under strict
control. This strong position will enable us to take advantage of opportunities
as they occur.
Terry Bourne
Chairman
2 July 2004
Consolidated Profit and Loss Account
for the year ended 31 March 2004
Note 2004 2003
# #
Turnover: continuing operations 2 3,843,856 3,927,749
_________ _________
Operating Profit: continuing operations 596,444 488,810
Interest receivable and similar income 122,314 107,833
Interest payable and similar charges (2,820) -
_________ _________
Profit on ordinary activities before taxation 715,938 596,643
Tax charge on profit on ordinary activities (195,656) (162,601)
_________ _________
Profit on ordinary activities after taxation
for the financial year 520,282 434,042
Dividend paid & proposed (299,758) (283,787)
_________ _________
Amount transferred to reserves 220,524 150,255
_________ _________
Basic earnings per ordinary share 4 4.95p 4.13p
Diluted earnings per ordinary share 4.94p 4.12p
Dividend per ordinary share 2.85p 2.70p
General Notes:
1. The financial information contained in this statement does not
constitute the statutory accounts for the years ended 31 March 2004 and 2003,
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 2003 have
been delivered to the Registrar of Companies and those for 31 March 2004 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 and supply 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 # 520,282 (2003: # 434,042) and a weighted average of
10,514,123 shares (2003: 10,503,455) in issue during the period.
5. It is intended to post the Annual Statement and Report to shareholders on
7 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
30 July 2004.
Consolidated Balance Sheet
at 31 March 2004
2004 2003
# # # #
Fixed assets
Tangible assets 656,198 650,517
Current assets
Debtors 838,059 680,820
Cash at bank and in hand 3,673,867 3,478,257
_________ _________
4,511,926 4,159,077
Creditors: amounts falling
due within one year (1,214,767) (1,079,445)
_________ _________
Net current assets 3,297,159 3,079,632
_________ _________
Total assets less
current liabilities 3,953,357 3,730,149
_________ _________
Net assets 3,953,357 3,730,149
_________ _________
Capital and reserves
Called up share capital 525,744 525,173
Share premium account 82,302 80,189
Profit and loss account 3,345,311 3,124,787
_________ _________
Equity shareholders' funds 3,953,357 3,730,149
_________ _________
Consolidated Cash Flow Statement
for the year ended 31 March 2004
Note 2004 2003
# # # #
Operating activities
Cash received from customers 4,361,104 5,347,590
Cash payments to suppliers (472,416) (503,642)
Cash payments to employees (1,542,989) (1,909,263)
Cash paid for PAYE and
National Insurance (904,285) (1,199,140)
Cash paid for VAT (755,397) (588,935)
Other business payments (79,392) (106,400)
________ _________
Net cash inflow from
operating activities (a) 606,625 1,040,210
Return on investments and
servicing of finance
Interest received 122,314 107,833
Interest paid (2,820) -
_________ _________
Net cash inflow from
returns on investments and
servicing of finance 119,494 107,833
Taxation
Corporation tax payment (165,722) (419,085)
Capital expenditure and
financial investment
Purchase of tangible fixed assets (78,313) (1,515)
Sale of tangible fixed assets - 26
_______ ________
Net cash outflow from capital
expenditure and financial investment (78,313) (1,489)
Equity dividends paid (289,158) (267,839)
________ _______
Cash inflow before use of liquid
resources and financing 192,926 459,630
Financing
Proceeds from exercise of
share options (d) 2,684 -
________ ________
Increase in cash in the year (c) 195,610 459,630
________ _________
Notes to the consolidated cash flow statement
(a)Reconciliation of operating profit to net cash inflow from operating
activities
2004 2003
# #
Operating profit 596,444 488,810
Depreciation charges 72,279 81,762
Loss on sale of tangible assets 353 319
(Increase)/decrease in debtors (157,239) 543,070
Increase/(decrease) in creditors 94,788 (73,751)
________ _________
606,625 1,040,210
_________ _________
(b) Reconciliation of net cash flow to movement in net funds
2004 2003
# #
Increase in cash in the year and change 195,610 459,630
in net funds
Net funds at the beginning of year 3,478,257 3,018,627
_________ _________
Net funds at the end of year 3,673,867 3,478,257
_________ _________
(c) Analysis of changes in net funds
Change Change
2004 in year 2003 in year 2002
# # # # #
Cash at bank and in hand 3,673,867 195,610 3,478,257 459,630 3,018,627
_________ _______ __________ _______ _________
(d) Analysis of changes in financing during the year
Share capital (including premium)
2004 2003
# #
Balance at the beginning of year 605,362 605,362
Cash inflows from employees exercising
share options 2,684 -
_______ ________
Balance at the end of year 608,046 605,362
_______ ________
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
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