RNS Number : 1281J
Total Systems PLC
28 November 2008
28 November 2008
TOTAL SYSTEMS plc
Unaudited Interim Results for the half year ended 30 September 2008
Profitable and cash generative first half year with 31% increase in revenue
Total Systems plc ("Total" or "the Company"), suppliers of cost effective, flexible, software systems for the financial services
industry, primarily in the insurance and warranty sectors, announces its interim results for the half year ended 30 September 2008.
Commenting on the Company's results Terence Bourne, Chairman, said:
"During the first six months of the financial year the Company has continued to improve operating performance with a 31% increase in
revenue and a profit for the half year, mainly due to the Capita project. The sales and marketing team continues to identify new prospects
in the market and is pursuing a number of sales opportunities. Ultima and the development of the skills of our staff remain our key
investment areas."
Financial Highlights
* Turnover �2.141m (2007: � 1.635m)
* Profit/(loss) before tax � 202k (2007: �(163k))
* Basic earnings/(loss) per 1.39p
share (2007: (1.18p))
* Interim dividend Nil (2007: Nil)
* Gearing Nil (2007: Nil)
* Net assets per share 40.23p (2007: 34.37p)
* Cash per share 28.96p (2007: 22.07p)
Product Summary
Ultima, the complete insurance and warranty solution, continues to bring significant business benefits to clients including:
* Low cost of ownership.
* Integrated solution.
* Flexible and designed for change with Business Configurator.
* Easy integration with external systems.
Regarding the Company's current trading and outlook, Terence Bourne commented:
"The trading outlook for the second half of the financial year suggests an improvement over the first half. We continue to see a
reasonable level of business from our existing clients and although there is the risk that in the current business climate they may
temporarily freeze expenditure, the probability of new business wins outweighing the effect of any such actions is reasonable. We remain
optimistic about future orders.
The Company's finances remain robust with no debt and strong cash balances but the Board will continue to initiate all measures
necessary to ensure the long-term prospects of the Company."
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 and warranty sectors, as well as complementary IT consultancy, development, integration and support services.
The Company has a full listing on the London Stock Exchange.
Significant investment has been made by the Company in developing Ultima, the general insurance system for personal and commercial
lines. Examples of Total's clients for Ultima include Capita, Denplan (part of the Global AXA Group), DSG International, HSBC Insurance and
Zurich Insurance Company (Navigators & General).
Total Systems provide customer-centric systems for the General Insurance market.
Total's flagship product Ultima is a complete insurance back-office solution accommodating all lines of business and products. Ultima is
a truly multi-product, multi-company, multi-currency solution, proven over many years of successful implementations with Insurers and
Warranty providers.
One of the key factors differentiating Ultima from its competitors is the Business Configurator tool. This provides an unrivalled
capability to deliver new products to market without the need for IT development. Not only does Business Configurator dramatically reduce
the time it takes to introduce new products, or change existing ones, but it also significantly reduces cost of ownership. The level of cost
savings that can be made from the introduction of Ultima can be considerable. It is one of the few products available in the market place
that allows users to comfortably live with a constantly changing business environment in a cost effective manner while still providing a
robust and scaleable platform for future growth.
Our primary focus is to deliver exactly what the market needs when the market wants it, and we are constantly adapting and developing
our products to meet demand. In addition to listening to our customers and expanding our product roadmap, we continue to seek business
partners that add additional value through new technology and innovation.
insureTrac is the latest addition to the portfolio and is, in our opinion, the most innovative solution for motor insurance on the
market today. In association with one of the world's leading mobile communication providers and using the latest telematics technology,
insureTrac provides insurers with a comprehensive view of their customers' driving habits and driving styles as well as instant notification
of incidents. Fully integrated to the back office system, insureTrac facilitates automatic underwriting and claims handling. Typically,
insurers should expect a minimum 10% reduction in claims costs.
Chairman's Statement
Summary
During the first six months of the financial year the Company has continued to improve operating performance with a 31% increase in
revenue and a profit for the half year, mainly due to the Capita project. The sales and marketing team continues to identify new prospects
in the market and is pursuing a number of sales opportunities. Ultima and the development of the skills of our staff remain our key
investment areas.
Results
Revenue for the half year was � 2,141,054 (2007: �1,634,635) and I am pleased to report a profit before tax of �201,636 (2007 loss:
�163,356) resulting in a profit per share of 1.39p (2007: loss per share 1.18p). The improvement in operating profit against the previous
half year is �358,197.
Financial
Zero gearing and net assets of 40.23p per share (2007: 34.37p) of which 28.96p per share (2007: 22.07p) is represented by cash continues
to demonstrate our financial strength during this difficult trading period.
Dividend
Your Board does not propose a payment of an interim dividend.
Strategy
Total Systems is committed to the financial services market. Our strategy is to provide innovative software products together with
support and consulting services to enable financial services companies to rapidly launch new products, take advantage of new channels to
market, reduce costs and improve efficiency.
Products
Total Systems provide customer-centric systems for the General Insurance market. Ultima is a customer oriented policy management system
for insurance and warranty administration encompassing quotations, underwriting, claims, accounting, broker management, management
information and reporting. Targeted at insurers and warranty providers Ultima seeks to facilitate maximum efficiency while ensuring
regulatory compliance and enabling clients to quickly adapt to changing business conditions. Ultima can run in excess of 30 lines of
business concurrently and is noted for its flexibility and reliability. The Business Configurator facility enables clients to make their own
enhancements and launch new and original products without the need for programming. All these features combine to make Ultima easily
configurable to meet client's specific requirements, for both large and small scale applications, while delivering fast implementation
compared to our competitors.
Enhancements recently released include the latest credit card encryption, improved Business Configurator controls and workflow advances.
In addition innovative new features are in development. These include vehicle tracking & charging and customer service environments where
system flexibility is paramount. Plans are also underway for full internationalisation of the product making it multi-language to enable
swift worldwide roll out for local usage.
insureTrac is the latest addition to the portfolio and is, in our opinion, the most innovative solution for motor insurance on the
market today. In association with one of the world's leading mobile communication providers and using the latest telematics technology,
insureTrac provides insurers with a comprehensive view of their customers' driving habits and driving styles as well as instant notification
of incidents. Fully integrated to the back office system, insureTrac facilitates automatic underwriting and claims handling. Typically,
insurers should expect a minimum 10% reduction in claims costs.
A comprehensive, flexible and leading edge new rating engine product will be launched in the first quarter of 2009. The Company
continues to market Invu, an electronic document management solution.
Market place
The general insurance market place remains extremely competitive. The relationship with Capita continues and has been formalised with
the signature of contracts during the half year. We remain confident that the significant investment made in that relationship will bring
further success in the wider marketplace though this may now be delayed due to current macro economic factors. During the period we
participated in a number of events and held seminars to promote our portfolio. These actions have brought our products to the attention of a
wider audience. The sales pipeline looks healthy at this point in time and we are running a new integrated marketing campaign in the second
half of the financial year to further improve the number and quality of our sales prospects. As part of this process we have sponsored and
presented at a major conference in November with the result that Total's market profile has been considerably improved.
Environmental and social
The Company operates from a single site in premises it owns in central London. Every care is taken to ensure that the Company operates
in an environmentally friendly way within the limitations imposed by our location and the nature of our operations. In regard to its
employees and the local community the Company allows employees time to take part in their own social responsibilities as necessary.
Operations
Excellent support has been given to our blue chip clients and we continue to see real benefits from our account management strategy. Our
long term objective of increasing our recurring revenues is beginning to bear fruit with transaction and time based licence fees likely to
increase in future years.
Our technical team have supplied specific developments and general upgrades to all our customers in a timely and professional manner as
required. This team now contains high level Microsoft expertise to enable Ultima and its constituent components and modules to be offered to
the market on more than one operating system.
Your Company is now benefiting from its previous staff retention policy and recruitment is now being undertaken on a highly selective
basis in line with future known demand. Most importantly, with regard to our clients, we continue to provide cost effective solutions in a
timely manner.
Personnel
I would like to thank all our staff for their enthusiasm, dedication and professionalism. It is their versatility and in depth
experience of the insurance and warranty industries together with their proactive team spirit that provides a key Company differentiator.
Current trading and outlook
The trading outlook for the second half of the financial year suggests an improvement over the first half. We continue to see a
reasonable level of business from our existing clients and although there is the risk that in the current business climate they may
temporarily freeze expenditure, the probability of new business wins outweighing the effect of any such actions is reasonable. We remain
optimistic about future orders.
The Company's finances remain robust with no debt and strong cash balances but the Board will continue to initiate all measures
necessary to ensure the long-term prospects of the Company.
Terence Bourne
Chairman
27 November 2008
TOTAL SYSTEMS plc
Consolidated Income Statement
for the half year ended 30 September 2008
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
Note 2008 2007 2008
� � �
Continuing operations
Revenue 2 2,141,054 1,634,635 4,048,015
External charges (83,594) (93,829) (130,525)
Staff costs (1,562,894) (1,490,563) (3,025,664)
Depreciation (67,336) (72,205) (142,055)
Share based payments (16,489) (10,245) (25,423)
Other operating charges (279,881) (195,130) (422,936)
----------------- -------------- --------------
Operating profit/(loss) 130,860 (227,337) 301,412
Interest receivable and 70,776 63,981 129,178
similar income
-------------- ------------- -------------
Profit/(loss) before taxation 201,636 (163,356) 430,590
Taxation (55,541) 39,517 (115,793)
--------------- -------------- -------------
Profit/(loss) after taxation 146,095 (123,839) 314,797
--------------- --------------- -------------
Basic profit/(loss) per 5 1.39p (1.18)p 2.99p
ordinary share
Diluted profit/(loss) per 1.39p (1.18)p 2.99p
ordinary share
There are no recognised income or expenses for the current period or prior year other than as stated above.
As a consequence a statement of recognised income and expenses is not presented.
Consolidated Balance Sheet
at 30 September 2008
Unaudited Unaudited Audited
as at as at as at
30 September 30 September 31 March
2008 2007 2008
Note � � �
ASSETS
Non-current assets
Property, plant & equipment 871,261 974,770 921,181
Deferred tax assets - 92,539 -
------------- -------------- ---------------
Total non-current assets 871,261 1,067,309 921,181
------------- --------------- ---------------
Current assets
Trade and other receivables 1,388,699 873,268 1,627,666
Cash and cash equivalents 3,046,492 2,321,588 2,409,436
------------- -------------- ---------------
Total current assets 4,435,191 3,194,856 4,037,102
------------- --------------- ---------------
TOTAL ASSETS 5,306,452 4,262,165 4,958,283
------------- --------------- ---------------
LIABILITIES
Current liabilities
Trade and other payables (956,376) (646,836) (826,369)
Current tax liabilities (114,966) - (54,122)
------------- ------------ -------------
Total current liabilities (1,071,342) (646,836) (880,491)
------------- --------------- ---------------
Non-current liabilities
Deferred tax liabilities (3,346) - (8,649)
------------- --------------- -------------
TOTAL LIABILITIES (1,074,688) (646,836) (889,140)
------------- -------------- --------------
NET ASSETS 4,231,764 3,615,329 4,069,143
------------- --------------- --------------
SHAREHOLDERS EQUITY
Issued share capital 8 525,978 525,978 525,978
Share premium 8 83,047 83,010 83,010
Retained earnings 8 3,564,357 2,954,036 3,407,337
Stock option reserve 8 58,382 52,305 52,818
------------- --------------- ---------------
TOTAL EQUITY 8 4,231,764 3,615,329 4,069,143
------------- --------------- ---------------
Consolidated Cash Flow Statement
for the half year ended 30 September 2008
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
Note 2008 2007 2008
� � �
Operating activities
Cash received from customers 2,801,921 1,943,066 4,149,475
Cash payments to suppliers (454,227) (367,863) (833,114)
Cash payments to employees (924,097) (865,119) (1,705,056)
Cash paid for PAYE and (586,438) (569,768) (1,084,266)
National Insurance
Cash paid for VAT (238,759) (292,172) (620,886)
Other business payments (14,741) (16,248) (33,940)
------------- ------------- ---------------
Cash inflow/(outflow) from 7 583,659 (168,104) (127,787)
operating activities
Income taxes received - 52,567 52,567
------------- ------------- ---------------
Net cash inflow/(outflow) from 583,659 (115,537) (75,220)
operating activities
------------- ------------- --------------
Cash flows from investing
activities
Interest received 70,776 63,981 129,178
Purchase of plant and (17,416) (6,872) (24,538)
equipment
------------- ------------- ---------------
Net cash inflow from investing 53,360 57,109 104,640
activities
------------- ------------- --------------
Cash flows from financing
activities
Consideration for grant of 37 - -
share options
------------ ------------ -------------
Net cash inflow from financing 37 - -
activities
------------ ------------ -------------
Net change in cash and cash 637,056 (58,428) 29,420
equivalents
Opening cash and cash 2,409,436 2,380,016 2,380,016
equivalents
-------------- --------------- ----------------
Closing cash and cash 3,046,492 2,321,588 2,409,436
equivalents
------------- ------------- ---------------
Notes to the Interim Report
for the half year ended 30 September 2008
1. Basis of preparation
These condensed half year financial statements do not constitute statutory accounts as defined in section 240 of the Companies Act 1985
and have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial
Information. The abridged information for the 12 months ended 31 March 2008 has been extracted from the Group's statutory accounts for that
period, which have been filed with the Registrar of Companies. The auditors report on the Group's accounts for that period were unqualified
and did not contain a statement under Section 237(2) or Section 237(3) of the Companies Act 1985. Prior half year comparatives remain
unaudited.
The condensed financial statements have been prepared in accordance with International Accounting Standard 34 (IAS 34) "Interim
Financial Reporting". The accounting policies followed are in accordance with IFRS and are consistent with those applied in prior periods. A
full list of the accounting policies under IFRS was disclosed in the Group's statutory accounts for the year ended 31 March 2008. Copies of
the Annual Report are available from the Company's website (www.totalsystems.co.uk) or from the registered office.
This Interim Report was authorised for issue by the Directors on 27 November 2008.
2. Revenue
The Group's revenue is derived from the writing and supply of its computer software and supply of third party software both with related
support services. The origin and destination of revenue and profit are the same; wholly in the United Kingdom. A segmentation of major
revenue streams is shown below but a segmentation of operating profit is not meaningful and is not shown. All activities derive from
continuing operations.
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
2008 2007 2008
� � �
Time & materials 1,668,354 1,220,341 3,368,243
Own software licences and 302,233 286,123 477,511
maintenance
Third party software licences 170,467 128,171 202,261
and maintenance
--------------- ------------- --------------
Total revenue 2,141,054 1,634,635 4,048,015
-------------- ------------- -------------
3. Interim management report/business review
The Group's principal activities during the year were the writing and supply of its computer software and supply of third party
software, both with related support services.
Key performance indicators (KPI's) are used to monitor business performance. The level of chargeable hours as a percentage of total
available chargeable hours for all potential chargeable staff gives an indication of the level of efficiency being achieved. Efficiency was
41.3% for the half year (2007: 31.7%). Further the level of product development is monitored as a percentage of total available chargeable
hours for all potential available staff giving an indication of the effort placed on product development. This percentage was 28.9% for the
half year (2007: 30.7%). Taking both KPI's together a productivity percentage of 70.2% was achieved (2007: 62.4%).
In addition a traditional management accounts package is completed every month and includes a profit and loss statement with forecasts
for the next reporting period.
Given the nature of the business the Board believes that these KPI's are sufficient to ensure that appropriate action can be taken as
necessary.
Further analysis of the development and performance of the business is contained in the Chairman's Statement under the heading "Summary"
and "Operations". A review of the principal risks and uncertainties facing the group is contained in the Chairman's Statement under the
headings "Market place", "Strategy" and "Current trading and outlook". The section of the Chairman's statement headed "Environment and
social" should also be read in regard to the interim management report/business review.
4. Dividends
No interim dividend has been declared.
5. Earnings per share
The calculation of basic and diluted profit/loss per share is based on a profit after taxation of �146,095 (2007: loss �123,839) and a
weighted average of 10,519,553 shares (2007: 10,519,553) in issue during the period.
6. Interim report to shareholders
It is intended to post this Interim Report to shareholders on 28 November 2008. Copies of the Interim Report will also be available
from the Registered Office of the Group at 394 City Road, London, EC1V 2QA and the Company website.
7. Reconciliation of operating profit/(loss) to cash inflow/(outflow) from operating activities
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 September 30 September 31 March
2008 2007 2008
� � �
Operating profit/(loss) 130,860 (227,337) 301,412
Depreciation charges 67,336 72,204 142,055
Loss on sale of assets - - 1,404
Decrease/(increase) in receivables 238,967 (80,025) (834,423)
Increase in payables 130,007 56,809 236,342
Charge for share based payments 16,489 10,245 25,423
------------ ----------- -----------
Cash inflow/(outflow) from 583,659 (168,104) (127,787)
operating activities
------------ ------------ ------------
8. Changes in company and consolidated equity shareholders' funds
Issued Share Retained Stock Total
share premium earnings option Equity
capital reserve
� � � � �
---------- ---------- ---------- --------- -----------
As at 1 April 2007 525,978 83,010 3,077,875 42,060 3,728,923
---------- ---------- ---------- --------- ----------
Loss after tax for the half - - (123,839) - (123,839)
year
Share based payments - - - 10,245 10,245
---------- ---------- ------------ --------- ----------
As at 30 September 2007 525,978 83,010 2,954,036 52,305 3,615,329
---------- ---------- ---------- --------- -----------
Profit after tax for the half - - 438,636 - 438,636
year
Share options lapsed 14,665 (14,665) -
Share based payments - - - 15,178 15,178
--------- ---------- ------------ --------- ------------
As at 31 March 2008 525,978 83,010 3,407,337 52,818 4,069,143
---------- ---------- ---------- --------- ----------
Profit after tax for the half - - 146,095 - 146,095
year
Share options lapsed 10,925 (10,925) -
Share based payments - - - 16,489 16,489
Consideration for grant of - 37 - - 37
share options
---------- -------- ----------- --------- ------------
As at 30 September 2008 525,978 83,047 3,564,357 58,382 4,231,764
---------- ---------- ------------ --------- ------------
9. Directors' responsibility statement
The Directors confirm that, to the best of their knowledge:
i. The condensed set of financial statements have been prepared in accordance with IAS 34 as adopted by the European Union;
and
ii. The interim management report/business review includes a fair review of the information required by the
FSA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R).
The Directors of Total Systems plc and their functions are: T P Bourne (Chairman and Managing Director), G W Harris (Finance Director
and Company Secretary), Clive Dutton (Operations Director), Arthur Weber (Technical Director) and P J Delaney (Non Executive Director).
Forward-looking Statements
Certain statements in this announcement are forward-looking statements. By their nature, forward-looking statements involve a number of
risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by the
forward-looking statements. These risks, uncertainties or assumptions could adversely affect the outcome and financial effects of the plans
and events described herein. Forward-looking statements contained in this announcement regarding past trends or activities should not be
taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking
statements.
The Company is under no obligation to update or keep current the forward-looking statements contained in this announcement or to correct
any inaccuracies which may become apparent in such forward-looking statements.
ENDS
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END
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