RNS Number:0414Q
Sirius Financial Solutions PLC
23 September 2003
FOR IMMEDIATE RELEASE 23 September 2003
SIRIUS FINANCIAL SOLUTIONS PLC
2003 INTERIM RESULTS
CONTINUED UNDERLYING REVENUE GROWTH
Sirius Financial Solutions, the specialist supplier of software and services to
the insurance and financial services industry worldwide, today announces its
interim results for the half-year to 30 June 2003.
HIGHLIGHTS
* Total revenues of #10.4m (2002: 10.7m), which represent
underlying revenue growth of 7.3% after adjusting for revenues deferred
from 2001 into H1 2002
* Recurring revenues of #3.3m representing 31.3% of turnover
(2002: #3.1m and 28.5%)
* Operating profit before goodwill amortisation #486,000
(2002: #1.8m)
* An interim dividend of 1.0p per share (2002 interim: 1.0p)
* Gearing* remains low at 5.6% (31 December 2002: nil gearing)
* The Group's applications are now used by five of the top 10, and nine of
the top 50 of the UK's Insurance Brokers
* All three key products have continued to achieve run-rate license sales
in the period and each of them has a healthy prospect pipeline
* Completion of the development of a high-end version of Sirius for
Underwriting, which meets the requirements of the larger insurance
companies worldwide
* Transfer of stock market listing from the Official List to the Alternative
Investment Market (AIM) in June 2003
* Gearing is defined as debt net of cash reserves divided by net
assets excluding goodwill
Stephen Verrall, Chief Executive of Sirius Financial Solutions, said:
"We believe Sirius is well positioned within a sizeable and long-term market,
and our business model of combining significant recurring revenues with upgrade
and new business revenues provides a strong foundation for continued growth.
We are looking to achieve a strong second half sales performance, combined with
continued successful deliveries. A trend we will endeavour to continue
throughout 2004."
Enquiries:
Sirius Financial Solutions (0121 355 3567)
Stephen Verrall
Richard Bowser
Citigate Dewe Rogerson (020 7638 9571)
Martin Jackson
Daphne Claude
SIRIUS FINANCIAL SOLUTIONS PLC
2003 INTERIM RESULTS
CHAIRMAN'S STATEMENT
REVIEW OF FINANCIAL PERFORMANCE
For 2002, the Group reported a 30.6% increase in turnover and significantly
improved operating profits; an outstanding performance achieved against the
backdrop of difficult trading conditions in both the technology and financial
services markets.
Whilst the legacy of such high growth brings its own business challenges and our
markets continue to test the vendors that serve them, I am pleased to report a
satisfactory first half performance in 2003. Our three key products have
continued to achieve run-rate license sales in the period and each of them has a
healthy prospect pipeline. Importantly, we have also maintained our significant
ongoing investment in product development and new service offerings.
H1 revenues totalled #10.4m. Whilst reported turnover for the equivalent period
in 2002 was marginally higher at #10.7m, this did include some license revenues
deferred from 2001 (as previously reported). After adjusting for this deferred
revenue, there continues to be an underlying trend of turnover growth, which for
the period under review was 7.3%.
H1 operating profit before goodwill amortisation was #0.5m (H1 2002: #1.8m).
After charging goodwill, operating profit was #0.1m (H1 2002: #1.4m). This is in
line with the Board's expectation for the first half of 2003, which has been a
period of planned investment in people, product and the establishment of our
Managed Service Provider capability.
The Group continued to generate a positive operating cash inflow, albeit at a
reduced level, which helped sustain a low level of gearing at 30 June 2003 of
just 5.6% (31 December 2002: nil gearing).
The Board will pay a maintained interim dividend of 1.0p per share on 31 October
2003, to all shareholders on the register at the close of business on 3 October
2003.
BUSINESS AND PRODUCT REVIEW
Solutions
The Solutions business unit delivers enterprise systems based on our three
market leading products: Sirius for Underwriting, Sirius for Broking and Swift
for IFAs. These Solutions are aimed at larger customers who typically require a
higher degree of customisation and systems integration. In this part of the
Group, our H1 focus has been on completing a number of major projects and
bringing them to live operation. I am pleased to report that we have seen a
record number of our Solutions customers successfully go live this period,
including Becketts and AON, all of which will ensure a significant increase in
our recurring maintenance revenues going forward.
We enter H2 with the unit's recently appointed Chief Executive, Ian Bullen. Ian
brings to the role over 20 years of experience at a senior level within the IT
industry, principally in the financial services sector at companies including
Sherwood International, CSC, GE and Logica. Ian's appointment considerably
strengthens the Solutions team enabling Sirius to build both on its existing
industry relationships and the success of its products to date. His aim is to
continue to build on this high growth area of the business and capitalise on the
global opportunity for Sirius for Underwriting.
Sirius for Underwriting
A major milestone in the period has been the completion of development of a
high-end version of Sirius for Underwriting. This version supports our global
ambitions in the underwriting market as we believe it is a package that has the
functionality, flexibility and proven scalability to meet the requirements of
the larger insurance companies worldwide. The product is now in its final phase
of user testing for its launch customer IAG, who are Australasia's largest
insurance group. We are on target to meet a critical delivery milestone before
the year-end to enable them to go live.
The current version has seen H1 contracts secured from a further two African
underwriters and we are confident of further sales both in the UK and
internationally before the year-end.
Swift for IFAs
Swift continues to deliver strong performance. Good progress has been made with
the St. James's Place project which, with its planned roll-out to 1,600 users,
will be the largest Swift implementation to date. A new noteworthy Swift
contract has been secured in recent months, which will see the product used by a
further 500 IFAs. Swift currently has an impressive pipeline of prospective
customers and the Board is confident that Swift will achieve further major wins
before the year-end.
UK Systems
Our UK Systems business is responsible for the sale of our Sirius products as '
turnkey' systems and to the UK's SME size general insurance brokers and IFAs.
The unit also develops and distributes personal and commercial lines products
through the broker channel, for all of the UK's leading Insurance companies. UK
Systems is headed up by Mike Dodd, who joined the Group Board in May.
As planned, we significantly increased our Sirius for Broking marketing activity
in H1 and have grown our field sales team. We received a very encouraging
market response to our advertising and roadshow campaigns, which included the
themes of connectivity and FSA compliance. As a result, we secured many new
system sales to medium-sized provincial brokers and sales of our FSA module to
our installed base. We are confident that Sirius for Broking continues to both
outsell, and win existing customers from, all of its competitors.
Forthcoming FSA regulation is a key factor in prompting the UK's insurance
brokers to consolidate into groups and networks, and to consider the ability of
their IT systems to help them cope with the increased regulatory environment.
In the past two years we have been extremely successful in being the product
provider for the emergent 'movers and shakers' who are driving this
consolidation of the market. As these and our other larger Sirius for Broking
customers expand their businesses through acquisition, Sirius will continue to
benefit from their purchase of additional user licenses and professional
services.
Sirius for Broking
Our Sirius for Broking application has been a tremendous success and goes from
strength to strength. In the short time since the product was launched it has
established itself as the UK market leader with over 220 systems sold. It is a
strong endorsement of the product that Sirius is now being used by nine of the
UK's top 50 Insurance Brokers; and it is encouraging that we are actively
engaging in the sales cycle at an advanced stage with many others within that
classification.
Stargate and imarket
H1 has seen attention focused on our Stargate connectivity initiative for both
commercial lines insurers and financial services providers.
In the critical area of commercial lines connectivity, I am delighted to report
that roll-out took place this spring to AXA's Premier and Prime Broker partners
within the Sirius for Broking community, enabling them to transact
electronically with AXA. We now welcome Allianz Cornhill, Groupama, Markel,
Norwich Union, St Paul and Zurich to the Stargate insurer panel, a move that
will enable them to trade their commercial lines products electronically and
streamline their business placing processes with Sirius' brokers.
With the aim of giving our brokers the widest access to electronic trading
facilities, we have also formed a partnership with Polaris and their imarket
initiative. imarket is the general insurance industry's electronic trading
portal linking insurers and intermediaries, and is backed by a consortium of the
industry's leading insurers. This partnership is the first announced between
imarket and a software house providing broking systems.
Within financial services, a collaborative development is now underway with
Prudential that will give users of our Swift for IFAs software direct access to
Prudential's electronic services for both quotations and policy servicing.
Selestia, a provider of investment funds to intermediaries, has also committed
to the Stargate initiative. This will enable client portfolio valuation and
commission data to pass electronically between Selestia and it's IFAs.
MEDIAmaker
MEDIAmaker has continued to trade profitability into H1 2003. Whilst turnover
is up on the same period last year, sales levels within the New Media side of
the business are fairly static. To counter the challenging trading conditions
being experienced, a new team was formed to develop and rationalise MEDIAmaker's
web-enabled solutions specifically for the insurance and financial services
sector. The re-positioned offering, branded Sirius Interactive, has made a very
positive start.
The Established Media side of the business continues its strong growth, aided in
part by the three year outsourcing contract secured with Boots in 2002.
During the period MEDIAmaker appointed a Sales Director, a new role, which has
resulted in many well qualified sales opportunities. Whilst existing
supplier-customer loyalties are difficult to break within MEDIAmaker's specific
sphere of operation, the MEDIAmaker team are confident that the increased level
of professional sales activity should begin to deliver results in late 2003.
Support Services
In 2003, we have reaped the benefits of the new service management and support
structure that we implemented in 2002. This has sharpened our focus on the
different segments of our customer base and their differing needs, and has
improved both user satisfaction and revenue generation.
We have secured a significant long term service contract to support IAG in the
operation of Sirius throughout their New Zealand business. As a result of this
contract we have initiated the establishment of a support office in New Zealand,
which will be operational before the year-end. This contract and the live
roll-out of a number of larger systems across all three of our products over the
coming months will substantially boost our recurring revenues in 2004 and
beyond.
Managed Service Provider
As announced in our 2002 financial statements, H1 2003 has been a period of
investment in our Managed Service Provider (MSP) offering. Specialised skills
have been developed and a new team put in place to provide these services. The
first contract is operational and Managed Services have been provided since
March 2003.
MSP is now available for all of our Sirius and Swift products. It enables our
customers to outsource all of their IT needs including application hosting and
system management, application administration, connectivity and security
management. In addition, as part of our MSP strategy, we have developed the
capability to deploy our applications on an Application Service Provider (ASP)
basis. Our existing server based deployment methodologies across local and wide
area networks continue to be adopted by the majority of our customers, but ASP
provides us with the opportunity to attack new market segments as well as supply
to those customers for whom ASP is a preference.
I can report a high degree of interest for MSP from our larger existing and
prospective customers, and anticipate that this offering will open up a
significant new recurring revenue line for us as we move into 2004 and beyond.
PREMISES
Our plans to move our UK operation into larger, more suitable accommodation have
accelerated as suitable premises have recently become available to us on
favourable terms. Current planning is for relocation in December 2003. This
will be an important milestone for the Group as we move from our tired premises
of the last 13 years into a contemporary and well designed headquarters
facility. We believe the move will have a measurable and positive impact on
staff moral and productivity.
CORPORATE CHANGES
On 19 May 2003 we welcomed David Cox to the Board of Sirius Financial Solutions
Plc as a non-executive director. David is a strong addition to the Board,
having 34 years experience in the IT industry in sales and marketing roles,
including a long and successful career with IBM. Since leaving IBM, David has
had board level responsibility for IT with companies such as Royal Sun Alliance,
Barclays Bank and United Utilities. Two further appointments to the Board were
made on 19 May 2003, both previously announced in our 2002 financial statements.
Mike Dodd joined as an executive director after five years at Sirius and 25
years in the industry, and Michael Anstee joined as a non-executive director.
I can confirm that, for the reasons announced in our 2002 financial statements,
on 10 June 2003 the company's listing on the Official List was cancelled and its
shares were admitted for trading on the Alternative Investment Market (AIM) of
the London Stock Exchange.
PROSPECTS
Recent sales to influential and respected businesses reinforce our belief that
prospective customers continue to view Sirius as a stable and sound supplier,
with innovative and proven products that deliver demonstrable business value.
Our prospect list is strong, and we are progressing those opportunities that can
be converted into recognisable revenue in the balance of the year.
Overall, we believe that Sirius is well positioned within a sizeable and
long-term market, and that our business model of combining significant recurring
revenues with upgrade and new business revenues provides a strong foundation for
continued growth.
We believe Sirius will continue, through its proven market leading products, to
organically grow both its customer base and revenues.
We are looking to achieve a strong H2 sales performance, combined with continued
successful deliveries. A trend we will endeavour to continue throughout 2004,
coupled with the added advantage of our next version of Sirius for Underwriting
and strong growth in the Group's maintenance and MSP revenues.
Stephen Verrall
Chairman
23 September 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Turnover 2 10,404 10,698 22,683
Cost of sales (6,408) (5,792) (12,724)
Gross profit 3,996 4,906 9,959
Distribution costs (1,298) (1,082) (2,445)
Administrative expenses:
- goodwill amortisation (435) (436) (871)
- depreciation (220) (245) (457)
- other (1,992) (1,763) (4,259)
- total administrative expenses (2,647) (2,444) (5,587)
Operating profit before goodwill 486 1,816 2,798
amortisation
Goodwill amortisation (435) (436) (871)
Operating profit 51 1,380 1,927
Interest receivable 22 22 104
Interest payable and similar charges (35) (43) (137)
Profit on ordinary activities before 38 1,359 1,894
taxation
Tax on profit on ordinary activities 3 (24) (580) (896)
Profit on ordinary activities after taxation 14 779 998
Equity dividends on ordinary shares 4 (170) (183) (472)
Retained (loss)/ profit for the period (156) 596 526
Earnings per ordinary 1p share: 5
Basic 0.1p 4.7p 6.0p
Diluted 0.1p 4.6p 5.9p
Adjusted 2.9p 11.0p 16.7p
Dividends per share 1.0p 1.0p 2.7p
EBITDA 706 2,061 3,255
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 30 June 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit for the financial period 14 779 998
Exchange difference on retranslation of net assets
of subsidiary undertaking 1 1 (15)
Prior year adjustment - - 121
Total recognised gains and losses 15 780 1,104
CONSOLIDATED BALANCE SHEET
as at 30 June 2003
Unaudited Unaudited Audited
As at As at As at
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Fixed assets
Intangible assets 6,032 6,902 6,467
Tangible assets 1,611 1,403 1,663
7,643 8,305 8,130
Current assets
Stocks 22 54 16
Debtors 9,191 7,928 9,339
Cash at bank and in hand 522 1,300 1,044
9,735 9,282 10,399
Creditors: amounts falling due within one year (3,910) (3,216) (5,363)
Net current assets 5,825 6,066 5,036
Total assets less current liabilities 13,468 14,371 13,166
Creditors: amounts falling due after more
than one year (612) (1,434) (714)
Accruals and deferred income (993) (955) (436)
11,863 11,982 12,016
Capital and reserves
Called up share capital 172 172 172
Share premium account 4,165 4,163 4,163
Merger reserve 5,892 5,892 5,892
Profit and loss account 1,634 1,755 1,789
11,863 11,982 12,016
Shareholders' funds:
Equity 11,861 11,980 12,014
Non-equity 2 2 2
11,863 11,982 12,016
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2003
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Note #'000 #'000 #'000
Net cash inflow from operating activities 6 8 1,899 2,597
Returns on investments and servicing of finance (11) (21) (30)
Taxation paid (3) - (81)
Capital expenditure and financial investments (167) (126) (601)
Acquisitions: Deferred consideration paid - (119) (119)
Equity dividends paid (289) (255) (425)
Net cash flow before financing (462) 1,378 1,341
Financing (62) (211) (430)
(Decrease)/ Increase in cash (524) 1,167 911
NOTES TO THE UNAUDITED INTERIM REPORT
1. Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the statutory accounts for the year ended 31
December 2002.
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985, and has
been neither audited or reviewed. The figures for the year ended 31 December
2002 are extracted from the statutory accounts of Sirius Financial Solutions
Plc. The statutory accounts for that year have been reported on by the
company's auditors and delivered to the Registrar of Companies. The report of
the auditors was unqualified.
2. Analysis of turnover
Turnover is analysed by geographic destination as follows:
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
United Kingdom 8,382 9,124 19,269
North America and Caribbean 705 323 932
Europe and rest of world 1,317 1,251 2,482
10,404 10,698 22,683
3. Taxation
The charge for taxation for the six months ended 30 June 2003 reflects the
anticipated effective rate for the period.
4. Dividend on ordinary shares
An interim dividend of 1.0p per share is declared and will be paid on 31 October
2003 to shareholders on the register on 3 October 2003.
5. Earnings per share
The calculation of basic earnings per ordinary share is based on the profit
for the half year of #14,382 (June 2002: #779,062; December 2002: #997,965),
and on 16,999,994 ordinary shares (June 2002: 16,507,342; December 2002:
16,755,125), being the weighted average number of ordinary shares in issue
during the period.
The diluted earnings per ordinary share is based on the profit for the half
year of #14,382 (June 2002: #779,062; December 2002: #997,965), and on
17,219,292 ordinary shares (June 2002: 16,781,834; December 2002: 17,038,452),
calculated as follows:
June June December
2003 2002 2002
Basic weighted average number of shares 16,999,994 16,507,342 16,755,125
Dilutive potential ordinary shares:
- executive share options and employee SAYE scheme 219,298 274,492 283,327
17,219,292 16,781,834 17,038,452
Adjusted earnings per ordinary share
The adjusted earnings per ordinary share figure is based on the figure for
operating profit before goodwill amortisation of #485,737 (June 2002:
#1,816,481; December 2002: #2,797,956), and on 16,999,994 ordinary shares (June
2002: 16,507,342; December 2002: 16,755,125), being the weighted average number
of ordinary shares in issue during the period.
The directors have chosen to present this adjusted earnings per ordinary
share as they believe that it provides a better indicator of the performance of
the Group.
6. Reconciliation of operating profit to net cash inflow from operating
activities
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Operating profit 51 1,380 1,927
Depreciation and amortisation charge 655 681 1,328
Changes in working capital and other non-cash items (698) (162) (658)
Net cash inflow from operating activities 8 1,899 2,597
7. Circulation to shareholders
Copies of this interim report are being sent to all shareholders. Further
copies are available from the company's registered office: Sirius House,
Reddicroft, Sutton Coldfield, West Midlands, B73 6BN.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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