Information  X 
Enter a valid email address

Computer Software (CSW)

  Print      Mail a friend

Tuesday 28 June, 2005

Computer Software

Final Results

Computer Software Group PLC
28 June 2005

28 June 2005

                          Computer Software Group plc

                              Preliminary results

Computer Software Group plc, ("CS Group" or the "Company"), the AIM-listed niche
IT software consolidator, is pleased to announce its preliminary results for the
year ended 28 February 2005, following a year of sustained progress.



Financial Highlights

•         Turnover up 125% to £14.07m (2004: £6.25m)
              o        £6.15m from acquisitions
              o        £4.12m related to revenue from recurring annual 
                       maintenance contracts
•         Gross profit margin improved to 80% (2004: 79%)
•         Profit before tax, finance costs and goodwill amortisation of £2.2m,
          up 264% (2004: £0.6m)
•         Maiden profit before tax of £0.9m (2004: loss of £0.3m)
•         Earnings per share rose six-fold to 3.25p (2004: 0.47p)
•         Net cash inflow from operating activities £1.2m (2004: £0.5m)

Operational Highlights

•         Focus on revenue generation and cost synergies
•         Company restructured into three divisions: Business Solutions, Not for
          Profit and Field Service
•         Five acquisitions completed for a total consideration of £13.1m,
          strengthening each division
•         New customers have been won across all three divisions and new
          customers include Glasgow Rangers Football Club, British Bankers' 
          Association and the British Computer Society.


Michael Jackson, Chairman of CS Group, said,

"I am pleased to report a very good year for the Company with significant
progress made towards our goal of becoming the software solution provider of
choice in our chosen markets.  We have continued to make strategic acquisitions
where we can realise significant cost synergies and cross-selling opportunities
and continue to focus on fragmented niche markets where we already have a strong
presence or have identified opportunities for consolidation."

Vin Murria, Chief Executive, commented,

"This has been an important year in the development of the Company and we now
have a portfolio of three inter-related divisions, delivering approximately 80%
of their combined revenue from non-new business, with strong cross-selling
opportunities to their respective customer bases.  Our acquisition policy of
targeting niche, fragmented markets, alongside our organic growth strategy, is
performing well, as evidenced by our strong financial performance with operating
profit increasing threefold.  We believe that, although the IT sector remains
relatively flat, given the market's size and our ability to generate our own
opportunities for organic or acquisitive growth, we are well placed and we look
forward with confidence to another year of growth."

Further details:


CS Group                                             020 8879 3939
Michael Jackson, Chairman
Vin Murria, CEO
Barbara Firth, CFO

Financial Dynamics                                   020 7831 3113
Giles Sanderson / Juliet Clarke





Chairman's Statement



I am pleased to report a very good year for the Group with significant progress
made towards our goal of becoming the software solution provider of choice in
our chosen markets.

We have continued to make strategic acquisitions where we can realise
significant cost synergies and cross-selling opportunities and have focused on
fragmented niche markets where we already have a strong presence or have
identified opportunities for consolidation.

The five acquisitions undertaken in the financial year ended 28 February 2005,
have helped to raise our turnover from £6,253,000 to £14,072,000 for the year,
with operating profit before goodwill amortisation increasing from £607,000 to
£2,208,000. Recurring revenue from our annual maintenance contracts has reached
£4,120,000, 29% of total turnover.

We now have 250 employees and have organised ourselves into three divisions each
with its own experienced divisional operating board, laying down strong
foundations for future sustained profitable growth and a framework for further
successful consolidation. Each division has a portfolio of products designed to
enable any prospective or existing customer's requirements to be fulfilled.

At Group level we have formally restructured into one trading/holding company,
by hiving up acquired businesses, to simplify management, administration and
accounting processes. Further details of these changes are given in the Chief
Executive's Report.

We have successfully applied to the Court for a reduction of capital, achieved
by the cancellation of our 4p Deferred Ordinary Shares and the setting of part
of the share premium account against the deficit on reserves.  This will enable
us to consider payment of a dividend in future years.

We have restructured the Board which now comprises myself as Chairman, Vin
Murria as Chief Executive, Barbara Firth as Finance Director and Rob Downey,
Richard Hargreaves and David Lowe as independent Non-Executive Directors.  We
plan to shortly strengthen senior management with the appointment of a Chief
Operating Officer and we believe that this Board, in conjunction with the three
divisional operating boards will enable the Company to efficiently manage its
business and concentrate on maximising shareholder value.

I have great confidence that the Company will continue to meet its growth and
development targets and would like to thank all my colleagues for their valued
and enthusiastic support over the past year and look forward to the next
exciting phase in the Company's development.


Michael Jackson

Chairman

27 June 2005





Chief Executive's Report



Introduction

The year has been one of sustained progress, with an improvement in trading
performance for the underlying businesses of the Group and very encouraging
performance from our new acquisitions.

Our focus for the year ended 28 February 2005 was the generation of both revenue
and cost synergies from acquisitions and to sharpen the strategic focus of the
group. However, we did not lose sight of our twin ambitions to improve
profitability and to take advantage of cross-selling opportunities.  We
continued to closely monitor our performance and I am pleased with the financial
results that we have achieved for the year.

Following the corporate transition, described further in the Chairman's
Statement, the Company today comprises three divisions:

The Business Solutions division has evolved from the original Talent product,
providing ticketing and customer relationship management (CRM) software
solutions on the IBM iSeries platform, to a complete and integrated iSeries
software solution covering CRM, financials, back office, manufacturing,
distribution, logistics and web applications. The Business Solution division
provides 44% of the Company's total turnover and 37% of its profit.

The Not for Profit division has developed as a result of the acquisition of
businesses specialising in membership, charities and learning management
applications on multiple platforms and covering both "packaged" and bespoke
solutions. The Not for Profit division provides 32% of the Company's total
turnover and 40% of its profit.

The Field Service division has developed through the acquisition of businesses
specialising in enabling service providers to maintain real-time contact with
operatives working in the field, each with a product in the various tiers of the
market.  Such acquisitions have given the Company a very strong market position
in what was previously a highly fragmented market and the opportunity to expand
the range of solutions provided to include mobile data and vehicle tracking
modules. The Field Service division provides 24% of the Company's total turnover
and 23% of its profit.

Financial Performance

Turnover for the year was £14,072,000 (2004: £6,253,000), an increase of 125% on
the prior year.  £6,155,000 of turnover was derived from acquisitions made
during the year and £4,120,000 related to revenue from recurring annual
maintenance contracts.

Gross profit margin improved to 80% (2004: 79%) primarily due to acquired
businesses' low dependency on third party embedded software licences.

Profit before tax, finance costs and goodwill amortisation increased 264% to
£2,208,000 (2004: £607,000) and reflects the continued tight control over
overheads for both underlying and acquired businesses.

Following Court approval, the balance sheet was strengthened by the cancellation
of the 4p Deferred Ordinary Shares and a corresponding reduction of £5,934,000
in the deficit on reserves.  £3,200,000 of the balance on the share premium
account has been also transferred to reserves. £3,158,000 of the total transfer
to reserves of £9,134,000 is held in a special non-distributable reserve to
protect the interests of the Company's creditors that existed at the date of the
Court approval.  This reserve will be released to distributable reserves over
the course of the next financial year as these creditors are satisfied.

The increase in net assets of £11,292,000 was largely due to the goodwill
arising from the various acquisitions during the year.

Cash at the year end was £455,000 (2004: £1,592,000) and reflected the outflow
of £5,473,000 for acquisitions during the year, net of the placing proceeds of
£3,228,000 received in September 2004.

The Group results include, from the date of acquisition, the results of the
businesses acquired during the year being JBS Computer Services Limited (30
April 2004), Advatech Computer Systems limited (30 September 2004), Pinnacle
Computer Systems Limited (30 September 2004) and Alveston Holdings Limited (31
December 2004).

Prolog Systems Limited was acquired on 28 February 2005.

By the year end, the trade and net assets of the acquired businesses had been
hived across to the Company.

The Directors have reviewed the acquisitions and concluded that no further
impairment adjustment to the carrying value of goodwill is required at the
present time.

The Group's profit after tax for the year amounted to £1,267,000 (2004:
£128,000).

Trading and Acquisitions

Trading across all divisions has been pleasing this year and we have added a
significant number of new customers to the base, boosting recurring revenue and
consolidating our position as a leading player in the various market sectors.

Business Solutions

We continue to develop new modules for the ticketing market based around web
applications and access control, both compelling reasons for choosing our
solutions. Major new customers for this sector include Glasgow Rangers Football
Club and Burnley Rovers Football Club.

We are seeing promising results from our cross-selling initiatives for our
financial, manufacturing and distribution products and have a stable base of
around 3,000 customers of which approximately 80% come from the mid-market.

In March 2004, the Company acquired JBS to strengthen the division's position.

Not for Profit

We are investing in keeping our products at the forefront of technology in this
sector by expanding our web-based offerings to cover all market tiers.  We are
confident that we can offer the best solution for any present or future customer
in the membership and learning management markets and we are also planning to
release a new functionally rich version of our charities product in the near
future.

New customers in this division include the Institution of Structural Engineers,
the British Bankers' Association and the British Computer Society.

In December 2004, the Company acquired Alveston and its trading subsidiary
Systems Team Limited to broaden its product offering.

Field Services

In 2004, the Board identified that an opportunity existed in the field services
sector and accordingly, the Company acquired Pinnacle and Advatech in September
2004 and Prolog in February 2005. We are pleased to be operating in this
exciting growth market and in a position to benefit from the current trend
towards increasing assembly, service and scheduling capability.  We are
confident that our products offer a complete solution across all tiers and we
are investing in promoting our in-house mobile data and vehicle tracking
solutions to give us competitive advantage and to maximise cross-selling
opportunities.

New customers for this division include Connaught plc and Moorlands Housing.

Subsequent Events

In April 2005, the Group raised £2,588,000 (before expenses) of acquisition
finance relating to Consensus Information Technology Limited and additional
working capital by placing 4,540,343 Ordinary Shares of 10p each.

The Group acquired Consensus Information Technology Limited in April 2005, for a
consideration of £1,619,000 comprising the issue of 640,000 Ordinary Shares of
10p each and £1,219,000 in cash plus expenses.  The trade of Consensus was hived
up into the Company on the date of acquisition.

Outlook

This has been an important year in the development of the Company and we now
have three inter-related divisions, delivering approximately 80% of their
combined revenue from non-new business, with strong cross-selling opportunities
to their respective customer bases.  Our acquisition policy of targeting niche,
fragmented markets, alongside our organic growth strategy, is working well, as
evidenced by our strong financial performance.



We believe that, although the IT sector remains relatively flat, given the
market's size and our ability to generate our own opportunities for organic or
acquisitive growth, we are well placed and we look forward with confidence to
another year of growth.



Vin Murria

Chief Executive

27 June 2005




Consolidated Profit and Loss Account

For the Year ended 28 February 2005

                                                                            2005                        2004
                                          Notes               £'000        £'000         £'000         £'000

Turnover - continuing                                                      7,917                       3,941
             - acquisitions                                                6,155                       2,312
                                            2                             14,072                       6,253

Cost of sales                               2                            (2,844)                     (1,342)

Gross profit                                                              11,228                       4,911

Sales and marketing costs                   2                            (2,505)                     (1,252)
Administrative expenses:                                    (7,974)                    (4,208)
Less goodwill amortisation                                    1,233                        944

Administrative expenses before goodwill     2
amortisation                                                             (6,741)                     (3,264)
Other operating income                      2                                226                         212
Operating profit before goodwill                                           2,208
amortisation                                                                                             607

Goodwill amortisation                                                    (1,233)                       (944)

Operating profit / (loss) before interest   2                                975                       (337)
Interest receivable                                                            9                           5
Interest payable and similar charges                                        (56)                        (11)
Profit / (loss) on ordinary activities                                       928
before taxation
                                                                                                       (343)
Tax on profit / (loss) on ordinary                                           339                         471
activities
Profit on ordinary activities after         4                              1,267                         128
taxation transferred to reserves

Earnings per Ordinary Share (pence)         3                               3.25                        0.47

Diluted earnings per Ordinary Share         3                               3.19                        0.47
(pence)



The group has no gains or losses other than those reported in the profit and
loss account

All amounts relate to continuing operations.


Consolidated Balance Sheet

As at 28 February 2005

                                                                          2005                        2004
                                               Notes          £'000        £'000        £'000        £'000

Fixed Assets
Intangible                                                                20,622                     4,791
Tangible                                                                     921                       650
                                                                          21,543                     5,441
Current Assets
Debtors                                                       6,245                     2,484
Cash at bank and in hand                                        455                     1,592
                                                              6,700                     4,076
Creditors
Amounts falling due within one year                         (4,777)                   (1,245)
Net Current Assets                                                         1,923                     2,831
Total Assets Less Current Liabilities                                     23,466                     8,272

Creditors
Amounts falling due after more than one year                             (1,263)                     (415)
Deferred income                                                          (4,626)                   (1,572)
Net Assets                                                                17,577                     6,285

Capital and Reserves
Called up share capital                          4                         4,985                     9,134
Share premium account                            4                         3,035                     3,436
Share reserve account                            4                           520
Merger reserve                                   4                         6,052                     1,131
Special reserve                                  4                         3,158                         -
Profit and loss account                          4                         (173)                   (7,416)

Shareholders' Funds                              4                        17,577                     6,285




Approved by the Board on

And signed on its behalf by

B A Firth

Director


Consolidated Cash Flow Statement

For the Year ended 28 February 2005

Reconciliation of operating profit/loss to net cash inflow from operating
activities

                                                                                          2005            2004
                                                                     Notes               £'000           £'000

Operating profit / (loss)                                                                  975           (337)
Depreciation charge                                                                        111              82
Profit on sale of fixed assets                                                             (4)               1
Amortisation of goodwill                                                                 1,233             944
Increase in debtors                                                                    (1,209)           (265)
Increase in creditors                                                                      107              33

Net cash inflow from operating activities                                                1,213             458

Cash Flow Statement
Net cash inflow from operating activities                                                1,213             458
Returns on investments and servicing of finance                                           (47)             (6)
Taxation                                                                                    50              68
Capital expenditure and financial investment                                             (108)            (52)
Acquisitions                                                                           (5,473)           (180)

Net cash (outlow)/inflow before financing                                              (4,365)             288
Financing                                                                                3,228           1,329

(Decrease)/increase in cash                                                            (1,137)           1,617



Reconciliation of net cashflow to movement in net debt
(Decrease)/increase in cash                                                            (1,137)           1,617
Cash outflow from decrease in net debt                                                     233             912
Loans and finance leases acquired with subsidiary                                      (1,477)         (1,318)

                                                                                       (2,381)           1,211
Net debt at 1 March 2004                                                                 1,159            (52)

Net (debt)/funds at 28 February 2005                                                   (1,222)           1,159





Notes to the Financial Statements

For the Year ended 28 February 2005



1    Status of information

The preliminary results for the year have not been audited by the Group's
auditors and do not constitute statutory accounts.  The comparative figures for
2004 have been abridged from the statutory accounts for the year ended 29
February 2004.  The auditors' opinion on these accounts was unqualified and did
not contain any statements under section 237(2) or (3) of the Companies Act.
The statutory accounts for the year ended 29 February 2004 have been filed with
the Registrar of Companies.



2    Analysis of Continuing Operations
                                                                                           2005            2004
                                                     Continuing    Acquisitions           Total           Total
                                                          £'000           £'000           £'000           £'000
Turnover                                                  7,917           6,155          14,072           6,253

Cost of sales                                           (1,487)         (1,357)         (2,844)         (1,342)

Gross profit                                              6,430           4,798          11,228           4,911

Sales and marketing costs                               (2,004)           (501)         (2,505)         (1,252)
Administrative expenses                                 (5,304)         (2,670)         (7,974)         (4,208)
Other operating income                                      226                             226             212
Less goodwill amortisation                                1,233                           1,233             944

Operating profit before goodwill amortisation               581           1,627           2,208             607

Goodwill amortisation                                      (577)           (656)         (1,233)           (944)

Operating profit/(loss)                                       4             971             975             (337)



3    Earnings per Ordinary Share

The calculation of basic earnings/(loss) per Ordinary Share is based on a profit
of £ 1,267,000 (2004:  £128,000) and on 38,997,000 (2004: 27,132,000) shares,
being the weighted average number of Ordinary Shares in issue during the year.

The diluted loss per share is calculated as below:
                                                                                                2005       2004
                                                                                               £'000      £'000
Basic post tax profit                                                                          1,267        128
Basic weighted average number of shares                                                       38,997     27,132
Dilution for employee share options, warrants and contingent shares                              666          -
Diluted weighted average number of shares                                                     39,663     27,132



4    Reconciliation of Movement in Shareholders' Funds and Reserves

                            Share      Share     Share   Merger             Profit                      2004 Total
                          Capital    Premium   Reserve  Reserve          and Loss                   Shareholders'      
                                     Account   Account                     Account      2005 Total           Funds
                                                                 Special             Shareholders'
                                                                 Reserve                     Funds
                            £'000      £'000     £'000    £'000              £'000           £'000           £'000
Group
Balance at 1 March 2004     9,134      3,436         -    1,131            (7,416)           6,285            2,505

                                                                                            
Profit/(loss) for the                                                        1,267           1,267             128
year

Shares to be issued                                520                                         520           
Shares issued               1,785      2,799              4,921                              9,505           3,652

Shares cancelled          (5,934)                                            5,934               -               -
Release of Share                     (3,200)                                 3,200               -               -
Premium
Transfer to  Special                                               3,158   (3,158)               -               -
Reserve
Balance at 28 February      4,985      3,035       520    6,052    3,158     (173)          17,577           6,285
2005


The Group's shareholders funds are analysed as:-
Equity Shareholders
Funds                                                                                 17,577           351
                                                                                      
Non-equity
Shareholders Funds                                                                         -         5,934
                                                                                           
                                                                                      17,577         6,285








5      Acquisitions

The Company acquired 100% of the issued ordinary share capital of five companies
during the year. The fair values of the net assets acquired were as follows:

                                 Total         JBS      Advatech        Pinnacle             Alveston             Prolog
                                 £'000       £'000         £'000           £'000                £'000              £'000
Fixed Assets                       278          55            68              29                   89                 37
Debtors                          2,127         842           248             398                  409                230
Cash                               803       (167)           501             294                   68                107
Creditors                      (7,166)     (2,252)         (536)         (1,057)               (2452)              (869)
Net Liabilities Acquired       (3,958)     (1,522)           281           (336)              (1,886)              (495)
Goodwill                        17,064       3,512         2,537           2,778                6,807              1,390
Consideration                   13,106       1,990         2,818           2,442                4,921                895

Consideration satisfied by
Shares                           6,044       1,000             0           1,620                3,150                274
Cash (including expenses)        6,284         990         2,778             203                1,771                542
Accrued Expenses/
Consideration                      778           0            40             619                    0                 79
(including Shares to be
issued)

Number of Shares Issued                  2,304,000             0       3,057,000            5,431,000            438,000
Date of Acquisition                      31/3/2004     30/9/2004       30/9/2004           31/12/2004          28/2/2005





6      Post Balance Sheet Event

On 5 April 2005, the Group raised £2,588,000 (before expenses) of acquisition
finance relating to Consensus Information Technology Limited and additional
working capital by placing 4,540,343 ordinary shares of 10p each

On 6 April 2005 the Company acquired Consensus Information Technology Limited
for a total consideration of £1,619,000 comprising £1,219,000 in cash plus
expenses and 640,000 ordinary shares of 10 pence each.

7    Annual Report and Financial Statements

Copies of the Annual Report and Financial Statements will be circulated to
shareholders shortly and may be obtained after the posting date from Barbara
Firth, the Company Secretary, Computer Software Group plc, Integra House,
138-140 Alexandra Road, London SW19 7JY.




                      This information is provided by RNS
            The company news service from the London Stock Exchange