RNS Number:5303P
Staffware PLC
09 September 2003
9 September 2003
Staffware plc ("Staffware")
Interim results (six months ended 30 June 2003)
STRONG GROWTH AND DIVIDEND INCREASE
Staffware, a leader in business process management (BPM)/workflow software,
today announces interim results for the six months ended 30 June 2003.
Highlights include:
Financial
* EBITDA of #2.0 million an increase of 76% - H1 2002: #1.1 million
* Profit before tax and pre goodwill amortisation of #1.9 million, up 103%
- H1 2002: #0.9 million
* Profit before tax #1.3 million, up 237% - H1 2002: #0.4 million
* Earnings Per Share (pre amortisation) 8.9p, up 123% compared with 4.0p
H1 2002
* R & D up 5% to #3.6 million (17% of sales compared with 19% H1 2002)
* Total revenue increased by 15% to #21.0 million - H1 2002: #18.2 million
- Revenue for Q2 2003 increased by 18% to #12.0 million - Q2 2002:
#10.1 million
* License revenues increased by 17% to #11.6 million - H1 2002: #9.9
million
* Cash increased to #21.3 million and no material debt - H1 2002:
#20.2million
* Cash generated in period was #2.3 million with significant collections
since 30 June 2003
* Interim dividend doubles to 2.0p per ordinary share - H1 2002: 1.0p
* Recurring support revenues increased by 40% to #6.0 million - H1 2002:
#4.3 million
Business Development
* 13 notable license contracts of over #250,000 signed (H1 2002: 10
contracts);
8 notable contracts in Q2 alone (Q2 2002: 6 contracts)
- Netherlands: ABN Amro, KPN, Nuon and a large government institute*
- UK: DEFRA, Global Home Loans and a major bank*
- USA: ADP Brokerage Services and a leading financial services
institution*
- South Africa: Mutual & Federal
- Spain: Winterthur and the Government of the Canary Islands
- India: Employees Provident Fund Organisation
John O'Connell, Chairman and Chief Executive Officer, Staffware plc, said:
"We have achieved these very strong results in a market which continues to be
cautious about making significant IT investments. This demonstrates the
strength of our BPM and workflow technologies. We are confident that the
combination of our proven technologies, our blue chip customer base and our
strong balance sheet will enable us to further build on the consistent success
of the last two years."
* Contract prohibits publicity
Enquiries:
Staffware plc (www.staffware.com) +44 (0) 20-7638-9571
John O'Connell, Chairman and Chief Executive Officer (for today only)
Tim Perks, Chief Financial Officer
Citigate Dewe Rogerson +44 (0) 20-7638-9571
Toby Mountford, Sara Batchelor, Fiona Bradshaw
The 2003 interim results presentation will be accessible via a live webcast at
10.15 am on the Staffware website, www.staffware.com.
Chairman's Statement
Following our update on 8 July, I am pleased to confirm an excellent set of
results for the six months ended 30 June 2003.
Sales Revenue
Total revenue for H1 increased by 15% to #21.0 million, a record for any half
year (H1 2002: #18.2 million). Total revenue for Q2 increased by 18% to #12.0
million (Q2 2002: #10.1 million) and increased by 32% over the previous quarter.
Staffware has now enjoyed five consecutive corresponding quarters of growth,
averaging 12% year on year. Financial services contributed 58% of total revenue
reinforcing our strength in this sector (H1 2002: 52%). This was split between
banking 40% and insurance 18%. Of the remaining 42% of total revenue, government
represented 14% (H1 2002: 12%), telecoms at 11% (H1 2002: 14%) and other sectors
approximately 17%.
License revenues for H1 increased by 17% to #11.6 million, representing 55% of
total revenue (H1 2002: #9.9 million, representing 54% of total sales revenues).
License revenues for Q2 increased by 21% to #7.0 million, representing 59% of
total sales revenues (Q2 2002: #5.8 million, representing 57% of total sales
revenues).
There were 13 notable license contracts of over #250,000 signed in the first
half (H1 2002: 10 contracts), including the largest in the company's history, 8
of which were signed in Q2 (Q2 2002: 6). The notable license contracts were:
* Netherlands: ABN Amro, KPN, Nuon and a large government institute*
* UK: DEFRA, Global Home Loans and a major bank*
* USA: ADP Brokerage Services and a leading financial services
institution*
* South Africa: Mutual & Federal
* Spain: Winterthur and the Government of the Canary Islands
* India: Employees Provident Fund Organisation
Staffware maintained its global progress in the period as evidenced by the fact
that 10 out of the 13 notable contracts in the period were outside of the UK.
Average order values per license customer were approximately #108,000 in the
period, an increase of 71% over the average last year as a result of increasing
sales of the higher value iProcess engine.
iProcess Engine of the Staffware Process Suite, our Business Process Management
offering, went from strength to strength with license revenues increasing by
155% to #9.0 million, compared with H1 2002, #3.5 million. This represents 78%
of our total license revenues (36% in H1 2002), accounting for 11 out of the 13
notable contracts in the period.
iProcess Engine license sales increased by 136% to #6.3 million in Q2 2003.
This represents 90% of total license revenues (Q2 2002: #2.7 million or 46% of
total sales revenues), accounting for 10 contracts. Since its launch in Q4
2001, we have sold #21.6 million of licenses of the iProcess Engine.
Recurring support revenues increased by 40% to #6.0 million and 36% to #3.1
million for the H1 and Q2 respectively, compared with the equivalent periods in
2002. On an annualised basis, recurring support revenues have increased by 40%
to #12.1 million since the beginning of the financial year (2002: #8.6 million).
Professional services were engaged in approximately 100 projects during the
period, varying in size from a few days to several man years. Due to greater
self-sufficiency of some customers and partners, together with some major
projects coming to a successful conclusion, revenues were #3.4 million in the
period compared with #4.0 million in H1 2002, a reduction of 15%. However Q2
2003 showed a comparative improvement, with revenues of #1.9 million - only 9%
down on Q2 2002. One such flagship project, successfully completed with our
partner PCCW, was the Smartics project for the Hong Kong Department of
Immigration.
Financial Performance
I am very pleased to report that our sales successes in the period have
translated into significant improvement at the EBITDA level, which was #2.0
million for H1 (H1 2002: #1.1 million), an increase of 76%. Q2 contributed #1.6
million (Q2 2002: #1.4 million), an increase of 13%. PBTA was #1.9 million
compared with #0.9 million in H1 2002.
Operating expenses increased by approximately #1.7 million, up 10% in the
period, compared with H1 2002, primarily as a result of increased sales
commission and other employment costs (#1.0 million) and increased marketing and
travel expenditure (#0.6 million). Average headcount increased by 7 to 341
compared with H1 2002 (334). The actual headcount at 30 June 2003 was 346.
R&D expenditure for H1 2002 increased by 5% to #3.6 million from #3.4 million in
H1 2002, but now represents a lower percentage of sales 17%, (H1 2002: 19%) as
expected following the release of the Process Suite.
Sales and organisational productivity on a revenue per head basis improved by
35% and 13% respectively in the period compared with H1 2002.
EBITDA converted into an improvement in cash balances of #2.3 million since the
end of December 2002 to #21.3 million at the end of June 2003. The group has no
material debt. In addition, there have been significant collections since the
end of June 2003 of over #8.0 million.
The value of unrecognised revenue in the balance sheet at the end of June 2003
was #6.4 million, an increase of 36% over June 2002, #4.7 million. The amount
to be released in H2 2003 is #4.6 million an increase of 31% over H1 2002, #3.5
million.
Product Development
We launched Version 2 of the Staffware Process Suite at the International
Staffware Conference in London in April. Since then we have been engaged in
making it available on Windows 2000, Linux and key Unix platforms, the benefit
of which, in terms of sales revenue, should be seen in the coming months as our
customers and partners begin to have access to its many new features and
functions. These include a number of unique Business Process Management
capabilities including 'Prediction', 'Orchestrator' and unrivalled throughput
capability, in a straight through processing environment. We believe these will
translate into tangible benefits in terms of productivity for the IT function
including:
* reduced development and deployment costs and timescales for BPM
projects
* lower on-going updating and support costs; and
* leveraging existing, under-performing, IT investments.
Ensuring business benefits include:
* greater organisational productivity from more streamlined processes
* better customer service by eliminating duplicate or non-added value
clerical and computer based tasks
* tighter and more assured governance and controls from automated procedures
complying with both internal and external policy and regulations.
The greater scalability and wider platform coverage of Version 2 of the
Staffware Process Suite facilitates enterprise wide benefits, helping to achieve
our vision of the over-arching 'Independent Process Layer'. The 'Independent
Process Layer' encapsulates in one repository all the process rules of all
applications helping to achieve an 'Agile Enterprise', which is better able to
respond rapidly to the need for changes in its processes.
Good progress has been made with our Process Frameworks, which have materially
assisted in sales successes particularly in retail banking and insurance. We are
also pleased with initial market reaction to the Process Framework for Complex
Order Management for Telecom companies, which we plan to develop further in the
coming months.
Board Development
As announced at the AGM in April, effective from 31st May, both Paul Fullagar
and Emrys Devonald retired from their positions as Non-Executive Deputy Chairman
and Non-Executive Director, respectively. My colleagues and I are extremely
appreciative of their many years of service to Staffware.
At the same time, I announced the appointment of Chris Conway and David Thorpe
who joined the Board on 1st June as Non-Executive Directors. Chris Batterham is
now the Senior Independent Non-Executive Director, chairing the Nomination
Committee; Chris Conway is chair of the Remuneration Committee and David Thorpe
is chair of the Audit Committee. All three serve on all three committees, I
serve on the Nomination Committee only.
Also as announced at the AGM, the board is engaged in the process of appointing
a CEO to segregate such duties from those of my role as Chairman and a further
announcement will be made at the appropriate time.
Strategy
We continue to be focused on being the undisputed 'best of breed' BPM player
globally in our chosen vertical markets. To this end we were delighted to be
identified by Gartner recently as one of the top BPM vendors, in terms of both '
Vision' and 'Capability to Execute'. Part of our plan to achieve our goals is to
engage more with Tier 1 Systems Integration and Outsourced Providers globally,
but especially in North America, which area we see as being the benchmark for
our global success going forward.
Dividend
In line with our previously stated commitment to a 'progressive dividend policy'
and in light of our ability to generate cash, the board is proposing to double
the interim dividend to 2 pence per ordinary share, compared with 1 pence this
time last year. This will be payable to shareholders on the register at the
close of business on 19 September 2003.
Outlook
In general, the market is still cautious about making any significant
commitments to Enterprise Software. However, Staffware is achieving sales
growth by consistently proving that its BPM and workflow technologies can
achieve real benefits and efficiencies for its customers. At the same time, we
have improved our own operational efficiency so that a greater proportion of
revenue flows through to profits and cash generation. Consequently we believe
that Staffware is well-positioned for further sustainable growth.
John O'Connell, Chairman and CEO
9 September 2003
Independent review report to Staffware plc
Introduction
We have been instructed by the company to review the financial information set
out on pages 8 to 15. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
PricewaterhouseCoopers LLP
Chartered Accountants
West London
9 September 2003
Consolidated Profit & Loss Account
for the half year ended 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Turnover 2 21,039 18,231 39,031
Operating expenses (20,016) (18,050) (36,962)
Earnings before interest, tax, depreciation, 2,021 1,147 4,032
and amortisation
Depreciation (462) (441) (918)
Amortisation of goodwill (536) (525) (1,045)
Operating profit 1,023 181 2,069
Interest receivable and similar income 335 225 570
Interest payable and similar charges (40) (15) (31)
Profit on ordinary activities before taxation 1,318 391 2,608
Taxation on profit on ordinary activities 4 (567) (340) (982)
Profit attributable to shareholders 751 51 1,626
Dividends payable 3 (290) (145) (725)
Retained profit for the period 461 94 901
Earnings per share 5 5.2p 0.4p 11.2p
Diluted earnings per share 5 5.1p 0.3p 11.1p
Earnings per share before amortisation 5 8.9p 4.0p 18.4p
of goodwill
Consolidated Balance Sheet
as at 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Fixed Assets
Goodwill 7,228 8,196 7,670
Negative Goodwill (11) (14) (13)
Intangible Assets 7,217 8,182 7,657
Tangible Assets 2,250 2,199 2,315
9,467 10,381 9,972
Current Assets
Debtors 6 14,697 9,899 13,840
Cash at Bank and in Hand 21,252 20,203 18,992
35,949 30,102 32,832
Current Liabilities
Creditors: amounts falling due within one year 7 (14,068) (11,335) (12,791)
Net Current Assets 21,881 18,767 20,041
Total Assets less current Liabilities 31,348 29,148 30,013
Creditors: amounts falling due after 7 (2) (22) (9)
more than one year
Net Assets 31,346 29,126 30,004
Capital And Reserves
Called up ordinary share capital 1,451 1,451 1,451
Share premium account 30,689 30,682 30,685
Profit and loss account (794) (3,007) (2,132)
Equity Shareholders' Funds 10 31,346 29,126 30,004
Consolidated Statement of Total Recognised Gains and Losses
for the half year ended 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit for the period 751 51 1,626
Foreign exchange translation differences 877 479 359
Total recognised profit since last annual financial statements 1,628 530 1,985
Consolidated Cash Flow Statement
for the half year ended 30 June 2003
Note Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Net Cash Flow From Operating Activities 8 2,813 3,019 2,589
Return on investments and servicing of finance 295 210 539
Corporation tax paid (587) (46) (393)
Capital expenditure (350) (509) (1,093)
Equity dividends paid (580) (145) (290)
Financing (49) (18) (87)
Increase In Cash 1542 2,511 1,265
NOTES
1. Preparation Of Interim Results
The unaudited interim results for the six months ended 30 June 2003 have been
prepared on the basis of accounting policies consistent with those adopted for
the year ended 31 December 2002, as set out in the financial statements of the
Group. The financial information does not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the
year ended 31 December 2002, incorporating an unqualified audit report, have
been filed with the Registrar of Companies.
The interim statements for the six months ended 30 June 2003 are unaudited.
These statements have been reviewed in accordance with the APB Bulletin 1999/4
"Review of Interim Financial information".
2. Turnover
Turnover is derived from the Group's principal activities of authoring and
distributing computer software and providing support and services in relation to
the software.
A geographical analysis is set out below.
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Geographical analysis of turnover by origin
United Kingdom 8,354 5,477 15,481
Other European Countries 6,474 5,733 11,369
Americas 2,052 3,174 5,181
Australasia 1,712 2,308 4,268
Asia Pacific 665 568 1,161
Rest of World 1,782 971 1,571
21,039 18,231 39,031
Geographical analysis of turnover by destination
United Kingdom 7,302 4,646 13,715
Other European Countries 6,629 6,130 12,243
Americas 2,052 3,174 5,199
Australasia 1,856 2,308 4,268
Asia Pacific 1,418 1,002 2,035
Rest of World 1,782 971 1,571
21,039 18,231 39,031
3. Dividend
An interim dividend of 2.0p per share will be paid on 10 October 2003 to those
shareholders on the register at close of business on 19 September 2003.
4. Taxation
The taxation charge for the period has been calculated by applying the estimated
effective rate for the full year in each tax jurisdiction in which the Group
trades to the results of the half year in those jurisdictions. The Group has
unrelieved tax losses in excess of #2 million available to set off against
profits in future years.
5. Earnings per share
(i) Basis of calculations
Basic earnings per share of 5.2p (30 June 2002: 0.4p) has been calculated on the
profit on ordinary activities after taxation, of #750,596 (30 June 2002:
#51,000) and the weighted average number of shares in issue during the period of
14,510,261 (30 June 2002: 14,497,164)
Earnings per share before amortisation of goodwill of 8.9p (30 June 2002: 4.0p)
has been calculated on the profit on ordinary activities, after taxation of
#750,596 (30 June 2002: #51,000) adjusted by the goodwill amortised of #536,046
(30 June 2002: #525,000) and the weighted average number of shares in issue
during the period of 14,510,261 (30 June 2002: 14,97,164).
Fully diluted earnings per share of 5.1p (30 June 2002: 0.3p) has been
calculated on the profit on ordinary activities after taxation, of #750,596 (30
June 2002: #51,000). This has been applied to 14,803,378 (30 June 2002:
14,763,412) ordinary shares being the weighted average number of shares in issue
14,510,261 (30 June 2002: 14,497,164) and the weighted number of options over
ordinary shares 293,117 (30 June 2002: 266,247).
6. Debtors
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Trade Debtors 13,021 8,511 12,336
Other Debtors 1,013 789 791
Prepayments 663 599 713
14,697 9,899 13,840
7. Creditors
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000
#'000
Amounts falling due within one year
Current instalments due on amounts due to finance company 25 130 70
Bank loans and overdrafts - - 3
Trade creditors 911 848 1,222
Corporation tax 1,253 554 1,006
Other taxation and social security 1,221 702 1,017
Accruals and deferred income 10,368 8,956 8,894
Proposed dividends 290 145 579
14,068 11,335 12,791
Amounts falling due after more than one year
Finance leases 27 152 79
Less: current instalments due on amounts due to finance companies (25) (130) (70)
2 22 9
Amounts due between one and two years 2 22 9
Amounts due between two and five years - - -
2 22 9
8. Reconciliation of Operating Profit to Net Cash Flow from Operating Activities
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Operating profit 1,023 181 2,069
Depreciation 462 441 918
Loss on disposal of tangible assets 3 12 4
Net amortisation of goodwill 536 525 1,045
(Increase)/decrease in debtors (593) 127 (3,608)
Increase in creditors 1,370 1,627 2,205
Exchange movements 12 106 (44)
Net cash inflow from operating activities 2,813 3,019 2,589
9. Reconciliation of Net Cash Flow to Movement in Net Funds
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Increase in cash in the period 1,542 2,511 1,265
Cash outflow from decrease in HP and lease financing 52 98 169
Change in net funds resulting from cash flows 1,594 2,609 1,434
New finance leases and HP - (18) (15)
Translation difference 721 374 404
Movements in net funds 2,315 2,965 1,823
Net funds at 1 January 2003 18,907 17,084 17,084
Net funds at 30 June 2003 21,222 20,049 18,907
10. Reconciliation of movement in consolidated shareholders' funds
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit for the Period 751 51 1,626
Ordinary dividends paid and proposed (290) (145) (725)
461 (94) 901
New share capital issue - 3 3
Share premium on new share issues 4 76 79
Exchange difference 877 479 359
Net increase in shareholders' funds 1,342 464 1,342
Opening shareholders' funds 30,004 28,662 28,662
Closing shareholders' funds (equity) 31,346 29,126 30,004
11. Copies of The Unaudited Interim Statement
Copies of the unaudited interim statement will be posted to Shareholders and
will be available to the public at the Company's registered office, Staffware
House, 3 The Switchback, Gardner Road, Maidenhead, Berkshire, SL6 7RJ, UK, for a
period of not less than 14 days from the date of this announcement. Further
copies of the statement can be obtained by writing to the Company Secretary, at
the registered office address, by calling the FT Annual Reports Services on
(804)-327-3450, or by visiting the Staffware web site at www.staffware.com.
END
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