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Computer Software (CSW)

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Tuesday 29 November, 2005

Computer Software

Interim Results

Computer Software Group PLC
29 November 2005

29 November 2005

                          Computer Software Group plc
                                Interim results

Computer Software Group plc, ("CS Group" or the "Company"), the AIM-listed niche
IT software consolidator, is pleased to announce its interim results for the six
months ended 31 August 2005.

Financial Highlights

•         Turnover up 106% to £10.97m (H1 2004: £5.33m) of which £1.04m is from
          acquisitions

•         Operating profit before goodwill amortisation rose 300% to £2.2m (H1
          2004: £0.54m)

•         Profit before tax rose ten-fold to £0.96m (H1 2004: £0.09m)

•         Earnings per share rose three-fold to 1.03p (H1 2004: 0.25p)

Operational Highlights

•         Not for Profit division strengthened by acquisition of Consensus
          Technology for £1.62m, broadening membership and learning management 
          software offering

•         Business Solutions division added Transoft Group for £2.53m, a
          provider of support, integration and modernisation services

•         Field Service division continued successful integration of three
          acquisitions made in the previous period

•         New customers have been won across all three divisions and include the
          Institute of Educational Assessors, the British Sub-Aqua Club, Dorma, 
          St Austell Brewery, Servowarm, eSpeed,Inc and the South Devon 
          Healthcare Trust


Michael Jackson, Chairman of CS Group, said:

"These results demonstrate the benefits of pursuing our goal of becoming the
software solution provider of choice in our chosen markets.  We have continued
to bolster the company with strategic acquisitions where we can realise
significant cost synergies and cross-selling opportunities, with the result that
we have seen significant, sustainable levels of growth in both revenues and
profits."

Vin Murria, Chief Executive, commented:

"We are very pleased with these results, which show strong growth across all
metrics, as well as clear evidence of the benefits of cross-selling within the
three divisions.  Continuing with our stated strategy of growth through
acquisition in niche IT markets, the Group now has an excellent base for
sustained profitability and growth. More than 80% of turnover is made up of
recurring revenues, and we are achieving healthy sales of new software licences.
The Group has shown its capability to successfully integrate acquisitions whilst
achieving organic growth in its established businesses.  The Group continues to
pursue an active acquisition strategy, seeking complementary products or new
markets to broaden the customer base and maximise cross-selling opportunities."

Further details:


CS Group                                                       020 8879 3939
Vin Murria, CEO
Barbara Firth, CFO
David England, COO

Financial Dynamics                                             020 7831 3113
Giles Sanderson / Juliet Clarke / Hannah Sloane



                              Chairman's Statement

I am very pleased to report the results of Computer Software Group plc ("the
Group") for the six months ended 31 August 2005, showing revenue growth of over
100% to nearly £11 million and profit before tax growth up eleven-fold to nearly
£1 million compared to the previous interim results.

These results demonstrate the success of our strategy of targeting niche,
proprietary software markets in which we can achieve a dominant position, which
supply a broad, high quality and sustainable customer base.  We expect to build
further on this success in the second half of the year through our strategy of
organic and acquisitive growth.

Financial Results and Dividend

The acquisitions made in the last financial year, plus the associated synergies,
and our organic growth have resulted in very significant increases across all
metrics. Turnover from software, services and support for the six months doubled
to £10,972,000 (2004: £5,328,000).

Operating profit before goodwill amortisation rose to £2,202,000 (2004:
£540,000) and profit before tax was £955,000 (2004: £86,000). Profit after tax
was £558,000 (2004: £86,000).  Earnings per share was 1.03 pence (2004: 0.25
pence). Earnings per share, adjusted for amortisation and deferred tax asset was
3.32 pence (2004: 1.54 pence).

The Board continues to believe that the Group's strategy provides significant
growth opportunities and accordingly does not recommend the payment of an
interim dividend.  However, it plans to review its dividend policy when
considering the results for the full year to 28 February 2006.

Operating review

Results across the Group have exceeded management expectations. We are seeing
considerable scope for cross-selling into our enlarged customer base and we
expect to gain further momentum in H2 as our sales teams become more familiar
with the enlarged product portfolio.

Acquisitions

In April 2005 we strengthened the Not for Profit division with the acquisition
of Consensus Information Technology Limited ("Consensus"), specialising in
membership and learning management application software, for a total
consideration of £1,619,000 excluding expenses.  We are encouraged by its
performance since acquisition and the integration has progressed as planned.

In August 2005 we added Transoft Group Limited ("Transoft") to the Business
Solutions division, for a total consideration of £2,533,000 excluding expenses.
Transoft is a provider of support, integration and modernisation services to
customers in both the UK and the US.    We anticipate the acquired business will
contribute significant turnover, a major proportion of which will be recurring
revenue from support and upgrades to the installed base, and profit to the Group
in the second half of the year following action taken both pre and post
acquisition to reduce the cost base and re-focus Transoft on relatively low risk
profitable contracts.

Business Solutions

The Business Solutions division has evolved from providing ticketing and
customer relationship management (CRM) software on the IBM iSeries platform to a
complete and integrated portfolio of solutions including CRM, financials,
manufacturing, distribution, logistics, ticketing and web applications and has
now expanded to include modernisation and integration services.  Recent new wins
include the St Austell Brewery for the integrated distribution, financials and
logistics applications, and eSpeed, Inc, a subsidiary of Cantor Fitzgerald, for
the Transoft modernisation software solution.

Not for Profit

The Not for Profit division developed from the acquisition of businesses
specialising in membership, charities and learning management applications
providing both "packaged" and bespoke solutions.   Recent new customers include
the Institute of Educational Assessors, the British Sub-Aqua Club and the South
Devon Primary Healthcare Trust.

The division was strengthened in April 2005 by the acquisition of Consensus,
adding further membership and learning management applications to the product
range.

Compliance management software, a sub-set of the Consensus product, has been
developed as a distinct application in its own right and the first deliverable
of this product, designed to open up a new market for the Group, is anticipated
in December 2005.

We have also combined the functionality of two existing membership and charities
applications to create a new product addressing the needs of medium-sized
charities. We believe there is considerable opportunity for our product and are
looking forward to the first deliverable later this year.

Field Services

The Field Service division was developed through the acquisition of three
businesses specialising in enabling service providers to schedule and maintain
real-time contact with engineers working in the field. These acquisitions have
given the Group a very strong market position in what is a highly fragmented
market.  Recent new customers for this division include Dorma UK and Servowarm.

During H1 we have focused on integrating these three businesses into the Group
and developing a complete product set providing industry-specific solutions,
which together cover the entire market. We have also completed the development
of new products including our own in-house mobile data solution.

Board development

David England was appointed to the Board as Chief Operating Officer on 1 August
2005.  David joined CS Group from Solution 6 Group, a leading global supplier of
software for the Accounting and Legal professions where he was Managing Director
Europe from June 2001. David has extensive experience of developing businesses,
marketing, mergers and acquisitions and the Board is confident that he will help
to grow the three divisions further, in particular driving integration,
synergies and cross-selling.

David joins non-executive Chairman Michael Jackson, CEO Vinodka Murria, CFO
Barbara Firth and non-executive directors David Lowe, Richard Hargreaves and
Robert Downey.

Outlook

The Board is confident that trading in the second half-year will continue at the
current level, leading to full year results in line with its expectations.

The Group now has an excellent base for sustained profitability and growth. 80%
of turnover is made up of recurring revenues from support fees, licences and
services sold into the existing customer base and we are achieving healthy sales
of new software licences. The results show our capability to successfully
integrate acquisitions whilst continuing to achieve organic growth in our
established businesses.

The Group continues to pursue an active acquisition strategy, seeking
complementary products or new markets to broaden the customer base and maximise
cross-selling opportunities.


Michael Jackson                                       November 2005
Chairman





                          Computer Software Group plc
                      Consolidated Profit and Loss Account

                                                            (Unaudited)         (Unaudited)            (Audited)
                                                          six months to       six months to           Year ended
                                                         31 August 2005      31 August 2004     29 February 2005
                                                                  £'000               £'000                £'000
Turnover
Continuing                                                        9,929               3,787                7,917
Acquisitions                                                      1,043               1,541                6,155
                                                                 10,972               5,328               14,072

Operating profit  before goodwill amortisation                    2,202                 540                2,208

Goodwill amortisation                                           (1,219)               (436)              (1,233)

Operating Profit                                                    983                 104                  975

Net interest payable                                               (28)                (18)                 (47)

Profit on ordinary activities before taxation                       955                  86                  928
Tax on profit on ordinary activities                              (397)                   -                  339

Profit on ordinary activities after taxation                        558                  86                1,267

Earnings per Ordinary share (pence)                                1.03                0.25                 3.25
Diluted Earnings per Ordinary share (pence)                        0.98                0.25                 3.19
Adjusted earnings per Ordinary share*                              3.32                1.54                 5.32
Adjusted diluted earnings per Ordinary share*                      3.16                1.50                 5.23
*pre amortisation and deferred tax asset


                          Computer Software Group plc
                           Consolidated Balance Sheet

                                               (Unaudited)           (Unaudited)               (Audited)
                                            31 August 2005        31 August 2004        29 February 2005
                                                     £'000                 £'000                   £'000

Fixed Assets

Intangible assets                                   27,016                 7,889                  20,622
Tangible assets                                        991                   701                     921

                                                    28,007                 8,590                  21,543
Current Assets

Debtors                                              8,847                 2,638                   6,245
Cash at bank and in hand                             1,944                   146                     455

                                                    10,791                 2,784                   6,700
Creditors:
amounts falling due within one year                (7,679)               (1,860)                 (4,777)

Net Current Assets                                   3,112                   924                   1,923

Total Assets less Current Liabilities               31,119                 9,514                  23,466

Creditors:
amounts falling due after more
than one year                                      (4,219)                 (383)                 (1,263)
Provision for liabilities and charges                (876)                     -                       -
Deferred income                                    (4,802)               (1,751)                 (4,626)

Net Assets                                          21,222                 7,380                  17,577

Capital and Reserves
Called up share capital                              5,621                 9,366                   4,985
Share premium account                                5,169                 3,443                   3,035
Share reserve account                                    -                     -                     520
Merger reserve                                       6,888                 1,901                   6,052
Special reserve                                        394                     -                   3,158
Profit and loss account                              3,150               (7,330)                   (173)

Shareholders' Funds (all equity)                    21,222                 7,380                  17,577



                          Computer Software Group plc
                       Consolidated Cash Flow Statement

                                              (Unaudited)           (Unaudited)               (Audited)
                                            six months to         six months to              Year ended
                                           31 August 2005        31 August 2004        29 February 2005
                                                    £'000                 £'000                   £'000

Reconciliation of operating profit to
net cash (outflow)/inflow from
operating activities
Operating profit                                      983                   104                     975
Depreciation charge                                   121                    56                     111
Profit on sale of fixed assets                          -                     -                     (4)
Goodwill amortisation                               1,219                   436                   1,233
Movement in debtors                               (1,195)                   688                 (1,209)
Movement in creditors                             (2,474)               (1,692)                     107
Net cash (outflow)/inflow from
operating activities                              (1,346)                 (408)                   1,213

Cash Flow Statement
Net cash (outflow)/inflow from
operating activities                              (1,346)                 (408)                   1,213
Returns on investment and
servicing of finance                                 (28)                  (18)                    (47)
Taxation                                            (212)                     -                      50
Capital expenditure and
financial investment                                 (68)                  (52)                   (108)
Acquisitions                                      (3,715)               (1,157)                 (5,473)
Net cash outflow before financing                 (5,369)               (1,635)                 (4,365)
Financing                                           6,395                 (207)                   3,228
Increase/(decrease) in cash                         1,026               (1,842)                 (1,137)

Reconciliation of net cashflow to
movement in net (debt)/funds
Increase/(decrease) in cash                         1,026               (1,842)                 (1,137)
Changes in net debt resulting
from cashflows                                    (3,807)                   215                     233
Loan note issued in period                          (250)                     -                       -
Loans and finance leases

acquired with subsidiary                            (718)                 (200)                 (1,477)
Movement in net debt in period                    (3,749)               (1,827)                 (2,381)
Opening net (debt)/funds                          (1,222)                 1,159                   1,159
Closing net debt                                  (4,971)                 (668)                 (1,222)



                          Computer Software Group plc

                       Notes to the financial statements

1.       Basis of preparation

a)       The interim financial statements have been prepared on the basis of the
accounting policies set out in the 2005 statutory accounts of Computer Software
Group plc.  The Interim statements were approved by the Board of Directors on
28th November 2005.

b)       The figures for the year ended 28 February 2005 have been extracted
from the statutory accounts of Computer Software Group plc as filed with the
Registrar of Companies.  The Auditors' report on those accounts was unqualified
and did not contain any statement under Section 237 of the Companies Act 1985.

c)       The half year figures to 31 August 2005 have not been audited by the
group's auditors and do not constitute statutory accounts.

2.       Earnings per share

The basic earnings per Ordinary share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of shares
in issue during the period. The diluted earnings per Ordinary share is
calculated by dividing the earnings attributable to ordinary shareholders by the
weighted average number of shares in issue during the period diluted for
employee share options and warrants.
                                                Six months to         Six months to            Year ended
                                               31 August 2005        31 August 2004      29 February 2005

Post tax profit (£'000)                                   558                    86                 1,267
Weighted average number of shares ('000)
Basic                                                  54,120                33,925                38,997
Diluted                                                56,945                34,720                39,663
Basic earnings per share                                 1.03                  0.25                  3.25
Diluted earnings per share                               0.98                  0.25                  3.19
Adjusted basic earnings per share*                       3.32                  1.54                  5.32
Adjusted diluted earnings per share*                     3.16                  1.50                  5.23


      *pre goodwill amortisation and deferred tax asset

3.       Analysis of Changes in Net Debt
                                              At                                                  At
                                         1 March                                Non-cash   31 August
                                                                               movements
                                            2005   Cash flow   Acquisitions                     2005
                                           £'000       £'000          £'000        £'000       £'000

Cash at bank and in hand                     455       1,489              -            -       1,944
Bank overdraft                                 -       (463)              -            -       (463)
                                             455       1,026              -            -       1,481
Debt due within one year                   (371)     (1,099)          (718)            -     (2,188)
Debt due after one year                  (1,254)     (2,715)              -        (250)     (4,219)
Finance leases                              (52)           7              -            -        (45)
                                         (1,677)     (3,807)          (718)        (250)     (6,452)
Total                                    (1,222)     (2,781)          (718)        (250)     (4,971)


4.       Deferred tax

The Group has trading tax losses of approximately £3,098,000 (2004: £3,937,000)
that give rise to a potential deferred tax asset of £929,000 (2004: £1,181,000).

The accumulated trading losses available to carry forward against future profits
may only be relieved against the profits chargeable to corporation tax of
certain of the Group's business units.  Consequently, the aggregate profits of
the Group as a whole are not directly representative of the extent to which the
losses might be utilised in the foreseeable future.  The Directors have
therefore undertaken a review of the profitability of each business unit and
considered the certainty of those profits.  As a result of this review, the
Directors consider the appropriate value of the deferred tax asset to be
£855,000.

5.       Acquisition of Consensus Information Technology Limited

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

To finance the acquisition, and provide additional working capital, the Group
raised £2,588,000 (before expenses) by placing 4,540,343 Ordinary shares of 10p
each.

6.       Acquisition of Transoft Group Limited

The Company acquired Transoft Group Limited on 31 August 2005 for a total
consideration of £2,533,000 excluding expenses comprising £2,166,000 in cash,
£250,000 in loan notes and 226,000 ordinary shares of 10 pence.

To finance the acquisition and repay £1,167,000 of Transoft indebtedness the
Group secured a facility of £4,000,000 from Barclays Bank.

7.       Dividends

No dividend has been proposed.

8.       Responsibility

The directors of the Company accept responsibility for the information contained
in this document and to the best of their knowledge and belief, (having taken
all reasonable care to ensure that such is the case), the information contained
in this document is in accordance with the facts and does not omit anything
likely to affect the import of such information.

9.       Availability of Interim Report

Copies of these results together with the Chairman's statement are being sent to
shareholders and will also be available from the company's registered office at
Integra House, 138 -140 Alexandra Road, London SW19 7JY.


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