26th May 2005 07:00
Comino Group PLC26 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 deliverysolutions for local government, social housing and occupational pensionsadministration, 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 thecurrent year with a strong opening position. We are well placed to develop newrevenue opportunities, across the range of our business activities, particularlyin Local Government, and we look forward to a year of further growth." Enquiries Comino plc Binns & Co PR LtdGarth 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 893Thereafter: 01628 525 433 Chairman's Statement I am pleased to announce results for the year ended 31 March 2005, which show asatisfactory 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 previousyear. After amortisation of goodwill of £358,000 (2004: £350,000) and after theexceptional 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 acontractual dispute in Social Housing, on which I have previously reported, andwhich 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 thisfigure, our Local Government business grew substantially in the period andturnover increased by £1.9m (18%). Social Housing turnover fell by £1.2m (12%),largely reflecting uncertainties surrounding the claim but in the second half ofthe year, there was a strong recovery in both turnover and order intake for thispart of the business. Gross profit margin remained steady at 80%. Overheads were tightly controlledand the operating profit margin, excluding the effects of goodwill and theexceptional item, improved from 8.3% to 9.6%. Cash Cash balances at 31 March 2005 were £11.0m compared with £10.7m last year andaverage month-end cash balances were £6.35m (2004: £5.46m). During the year, theCompany increased its level of capital expenditure to enhance the resilience andeffectiveness of its technical infrastructure. Dividends An increased final dividend of 5.0 pence per share (2004: 4.4p) will be paid on22 July 2005 to shareholders on the register at 1 July 2005. This will take thetotal 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 individualdepartments, such as Revenues and Benefits, Planning and Housing or in singlebusiness activities. More recently, we have been addressing significantopportunities in Social Services and a host of smaller departmental activities.Growth from these areas will continue, but the opportunity also exists for farmore integration and enterprise-wide activity; the true 'joining-up' of LocalGovernment. As noted above, Social Housing is now moving forward again. Workingwith our customers, we have invested to ensure that our products continue tomeet their needs for the foreseeable future. We are confident that we can offerthe best available solutions in this market. The service delivery solutions weoffer to Local Government are equally appropriate to Comino's Social Housingbusiness, which serves Housing Associations. During the year, Occupational Pensions saw little activity in its market but wona significant new end-user order for the latest version of its UniversalPensions Management product, UPM2. Being more configurable and easier toinstall, UPM2 is suitable for both third party service administrators and forend users. Significant upgrade orders to UPM2 at the year end will ensure thatOccupational Pensions will make an increased contribution to the Company in thecurrent 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 £7mup 20% on last year's equivalent. In addition, the Company continues to enjoy ahigh level of recurring revenue from support contracts, which in the latest yearaccounted for some 50% of revenues. Overall growth in support revenues was lowduring the period, with growth in Local Government being partly cancelled out bycontract losses in housing. However, the strong second half improvement inhousing will help recover this position over the coming year. Bid approach Prior to the half year, Comino announced that it had received a bid approachthat might have led to an offer for the company. We viewed this as having anopportunistic element, coming at a time when the share price was depressed, inpart as a result of uncertainty relating to the legal claim. In the event, thebid process did not proceed and the share price remains significantly higherthan it was prior to the announcement of the approach. Outlook In the year under review, Comino continued to develop its business against abackground of some time-consuming distractions. In the circumstances, theCompany has done well to achieve its target figures and to enter the currentyear with a strong opening position. We are well placed to develop new revenueopportunities, across the range of our business activities, particularly inLocal Government and we look forward to a year of further growth. The effort involved to get us to this point reflects the commitment and effortof Comino's staff. On your behalf, I thank them once again for their valuablecontribution. David QuysnerChairman Review of operations OrganisationComino plc, the main operating company, has just completed a full year oftrading as a single integrated unit. Our businesses in Local Government, SocialHousing and Occupational Pensions are now under common management and, with theexception of Comino Connect and Comino Techflow, all development, marketing,implementation, support and administration are now handled centrally. Thereorganisation has resulted in greater flexibility in the allocation ofresources and greater consistency across all our operations. Comino's key strength is in delivering a true ability to join up complexactivities and customer services through many different media. Our businessprocesses, implemented using our Workflow product, enhance coordination betweenthe Customer Relationship Management (CRM) level and complicated back-officetransaction systems. Workflow allows processes to communicate, as necessary, with CRM systems orback-office transaction systems and with other processes. A process may becommenced, for example, via an e-form completed on the web, a telephone call viaa CRM system or a letter scanned into an Electronic Document Management (EDM)system. We have expanded our established EDM into Records Management to meet therequirements of the The National Archives, the Freedom of Information Act andthe Data Protection Act. The result is EDRM - a product which enables ourcustomers to fulfil legislative as well as case management requirements. During the course of a busy year, we have made numerous, significant incrementalimprovements in the way we market our products and serve our customers. Thebenefits 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 environmentis changing; moving away from shorter term specialist initiatives to meetspecific government targets and towards longer term, more integrated, cost andtime saving approaches. The increasing emphasis on linking processes togetherwithin Local Authorities is yielding exciting opportunities for products such asWorkflow. For instance, the Gershon Report, commissioned by central government,anticipates that much of its recommended £6bn per annum savings will be made byself-service over the web. A Comino process can be automatically initiated viathe web, deal with back-office complexities and keep any CRM system informed ofprogress. As part of our enterprise solution approach, we have made inroads into SocialCare. This is occurring both directly and through the establishment of strategicpartnerships with suppliers of change management and transactional systems. Thefocus in Social Care is on the development of electronic records, effective casemanagement and efficient service delivery using Workflow. This is becoming a keytarget area for improvement within Local Authorities and is a logical extensionof Comino's established capabilities in other large departments such as Revenuesand Benefits, Housing and Planning. During the year we saw numerous new business wins in Local Government. TorbayDistrict Council and North Dorset selected us to implement our EDM and Workflowsolutions across the Council, and we also won contracts to provide these systemsto the Revenues and Benefits departments at Fife, West Dumbarton, Gwent and EastStaffordshire and (since the year end) West Devon Borough Councils. We are alsoimplementing 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 anaward from the Institute of Revenues Rating and Valuation for the Best Use of ITand Excellence in Customer Service. The Council uses Comino's Workflow and EDMsolutions to improve service, information access and productivity. Although principally driven by Local Government demands at present, othersectors 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 applicationswithin the Social Housing sector. We have continued to invest in this market and have improved the scope andfunctionality of our Universal Housing product suite. Comprising ContactManager, Workflow and EDM, Universal Housing can be used with other suppliers'transactional systems as well as our own, and several customers are appreciatingthe benefits of this. As with our Local Government customers, Registered SocialLandlords are now able to make significant improvements to their service withoutchanging their underlying transaction systems. Our Social Housing order book recovered strongly in the latter half of the yearand there were several significant new business wins. Golden Gates Housingselected Comino, initially to provide Universal Housing, then subsequently toreplace the underlying transaction element as well. MHS Homes chose UniversalHousing to overlay their existing transaction system and Toynbee HousingAssociation chose us to provide a complete front-to-back office solution. SerenGroup, whose considerable achievements were recognised in the National UKHousing Awards 2004, selected Comino to replace their existing transactionalsystem; Canmore and Dunedin, Portsmouth and South Shropshire HousingAssociations have done likewise. Occupational Pensions The latter half of the year saw customers begin to transfer to Version 2 ofUniversal Pensions Management (UPM). The industry is graduating away from legacyadministration systems toward third party systems, and Version 2 reflects thischange. It is also easier to configure, maintain and install than itspredecessor. During the year Merchant Navy Pensions Administration (MNPA) completed themigration of all its clients - over 150,000 scheme members - onto UPM. We arealso implementing a third party pensions administration system for HymansRobertson, a leading independent firm of actuaries and consultants. Comino Techflow Comino Techflow continued to deliver consultancy and high level reportingexpertise via on-line analytical processing (OLAP) to our customers. Theconsultancy uses business process re-engineering and on-line procedures manualsfor managing benefits processing and housing development. OLAP is a businessintelligence tool used in a range of functions including, for example, arrearsrecovery 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 constructionfield, but we are looking at ways to broaden its market. The company supports anumber 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 includingtelecommuting solutions, email, internet and web hosting. This business had avery good year increasing revenues by 27% and continues to show strong growthpotential. 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 customerswill further the development of this business and may uncover furtheropportunities for Contact Manager and Workflow in other sectors. Outlook Our key strengths lie in the development, using Workflow, of business processesand our ability to integrate these within all areas of a service-orientedorganisation. Going forward, Comino will continue to focus on service deliverysolutions linked to specific sector expertise. These business processes deliver consistent customer service as well as costsavings. We have, over the course of the year, installed a large number ofprocesses with these benefits. This experience, putting our product and skillsto effective use, means that we are better placed than ever to turnopportunities into concrete business cases. We look forward to the coming yearwith confidence. COMINO GROUP plcConsolidated Profit and Loss AccountFor the year ended 31 March 2005 2005 2004 £ 000 £ 000 Turnover 25,533 24,507Cost of sales (5,012) (5,176) ------- -------Gross profit 20,521 19,331Administrative expenses (18,840) (17,787) ------- -------Operating profit 1,681 1,544Interest receivable 265 169 ------- -------Profit on ordinary activities before taxation 1,946 1,713Tax on profit on ordinary activities (714) (692) ------- -------Profit on ordinary activities after taxation 1,232 1,021Minority interest (18) (40) ------- -------Profit for the financial year 1,214 981Dividends (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 plcConsolidated Balance SheetAs at 31 March 2005 2005 2004 £000 £000Fixed assetsIntangible assets 2,480 2,765Tangible assets 2,693 2,632 ------- ------- 5,173 5,397 Current assetsStocks 857 852Debtors 7,400 7,602Cash at bank and in hand 11,029 10,739 ------- ------- 19,286 19,193Creditors: amounts falling due within one year (6,373) (6,777) ------- -------Net current assets 12,913 12,416 ------- -------Total assets less current liabilities 18,086 17,813Deferred income (8,691) (8,667) ------- ------- 9,395 9,146 ======= ======= Capital and reservesShare capital 697 694Share premium reserve 4,855 4,796Profit and loss account 3,570 3,402 ------- -------Shareholders' funds 9,122 8,892Minority interest - equity 273 254 ------- ------- 9,395 9,146 ======= ======= The financial statements were approved by the Board of Directors on 25 May,2005. COMINO GROUP plcConsolidated Cash Flow StatementFor 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 servicingof financeInterest received 265 169 ------- ------- Taxation (560) (491) ------- ------- Capital expenditurePurchase 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) ------- ------- AcquisitionsPurchase of subsidiary undertaking (158) - ------- ------- Equity dividends paid (959) (860) ------- ------- FinancingIssue of shares 62 - ------- ------- Increase in cash 290 2,417 ======= ======= Net cash flow from operating activities 2005 2004 £000 £000 Operating profit 1,681 1,544Amortisation of goodwill 358 350Amortisation of intangible fixed assets 100 100Depreciation 716 693Loss/(profit) on sales of fixed assets 1 (13)Increase in stocks (5) (400)(Increase)/decrease in debtors and prepayments (84) 236Decrease in accrued income 215 92(Decrease)/increase in creditors (338) 531Increase 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 theearnings attributable to ordinary shareholders of £1,214,000 divided by theweighted 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 basicearnings per share, adjusted to allow for the issue of shares and the post taxeffect of dividends and interest, on the assumed conversion of all dilutiveoptions and other dilutive potential ordinary shares. An adjusted earnings per share of 13.4p has been calculated to provide a betterunderstanding of the underlying trading performance of the Group. It has beencalculated excluding the amortisation of goodwill of £358,000 (2004: £350,000)and the exceptional item of £407,000 (2004: £149,000) less taxation and basedupon the weighted average number of shares in issue during the year of13,902,469 (2004: 13,885,802). 2. The financial information set out above does not constitute the statutoryaccounts for the period ended 31 March 2005 within the meaning of Section 240 ofthe Companies Act 1985. Statutory accounts for the year will be delivered to theRegistrar of Companies following the Company's Annual General Meeting. 3. The above results for the year ended 31 March 2005 have been abridged fromthe full Group accounts for that year, which received an unqualified auditorsreport. The results for the year ended 31 March 2004 have been abridged from thefull group accounts. 4. The annual report and accounts will be posted to shareholders on 3 June 2005and 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, ifapproved, will be paid on 22 July 2005 to shareholders on the register on 1 July2005. 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 ExchangeRelated Shares:
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