RNS Number:2588J
CODASciSys PLC
27 March 2003
For Immediate Release 27 March 2003
CODASciSys plc
PROFITS INCREASE 9.8% TO #7.5M FOR YEAR TO 31 DECEMBER 2002
CODASciSys plc ('CODASciSys') announces its preliminary audited results for the
year ended 31 December 2002. Quoted on AIM (stock code: CSY) CODASciSys is
headquartered in Chippenham and is a specialist supplier of IT services and CODA
financial software and solutions.
KEY POINTS:
* CODASciSys has maintained its record of unbroken profits growth since
admission to AIM in 1997
* Revenues increased 2.4% to #66.4m (2001 : #64.8m)
* Operating margins improved to 11.1% (2001 : 10.6%)
* Profit before tax and goodwill amortisation up 9.8% to #7.5m (2001 :
#6.8m)
* Basic Earnings per share up 36.2% to 17.3p (2001 : 12.7p)
* Final dividend proposed of 2.4p per share giving a total of 3.4p for
the year (2001 : 3.0p), an increase of 13.3%
* As a result of strong cash flow, year end net cash was #9.4m (2001 :
#3.3m)
* The order book remains healthy at over #50m. This includes one year's
worth of long term support and maintenance revenue, amounting to over
#22m
* SquareSum acquisition completed immediately after year end
On outlook, Chairman, Cliff Preddy said:
"Our positioning, spread and visibility of forward business encourages us to
anticipate that we will continue to deliver a good performance during 2003,
relative to the market sector in which we operate."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Mike Love, CEO, CODASciSys Today: 020 7466 5000 5000
Thereafter: 01249 466466 6466
Richard Darby/Isabel Petre, Buchanan Communications 020 7466 5000 5000
Barrie Newton, Rowan Dartington 0117 925 3377 3377
Background Information:
Delivering Services and Business Solutions to an International Customer Base.
The CODASciSys Group, based in the UK, provides IT services and business
solutions to a broad, worldwide base of clients. It comprises two main
divisions, the CODA Division (CODA) and the SciSys Division (SciSys), and is
committed to delivering quality services, solutions and consultancy that deliver
real business benefits.
CODA is focused on the delivery of financial intelligence through solutions
based around financial analytics and accounting. SciSys concentrates on
delivering professional software services and on designing and building systems
that incorporate third party packaged software.
Each Division addresses well defined markets and together they serve a large
international client base. The Group supplies solutions that include financial
accounting and intelligence systems, management information systems and
real-time control systems. It supplies services that include consultancy,
project management, system design, implementation and support and maintenance.
The market sectors in which the Divisions operate include Utilities, Defence,
Government, Communications, Retail, Business Services, Space, Transport, Banking
and Insurance. Clients are typically blue chip organisations, and large
government or quasi-government institutions.
Within the UK, the Group has offices in Chippenham, Harrogate, Bristol, Reading,
Nottingham and Haydock. It services clients internationally through a network
of direct offices in North America, The Netherlands, Belgium, Singapore,
Malaysia and Australia and partners throughout the rest of the world.
Chairman's Statement
The year to 31 December 2002 saw CODASciSys extend its record of achieving
growth, in both revenues and profits, in every year since our admission to the
Alternative Investment Market (AIM) in 1997. The results were especially
pleasing in a year when the IT industry as a whole has experienced some of the
most challenging market conditions ever seen. We see no signs of any imminent
change in market conditions. Nevertheless, our positioning, spread and
visibility of forward business encourages us to anticipate that we will continue
to deliver a good performance during 2003, relative to the market sector in
which we operate.
Profit before tax and goodwill amortisation increased by 9.8% to #7.5m (2001 -
#6.8m) on revenues that were 2.4% higher at #66.4m (2001 - #64.8m). Operating
margins continued on an improving path to 11.1% (2001 - 10.6%). After providing
#1.8m for amortisation of goodwill (2001 - #1.8m), profit before tax was #5.7m
(2001 - #5.1m). Basic earnings per share increased by 36.2% from 12.7p to 17.3p.
Operating cash flows were strong and the net cash position increased
considerably from #3.3m to #9.4m at the respective year ends. The recommended
final dividend of 2.4p per share is equivalent to a 13.3% dividend increase for
the full year.
During the year, we were pleased to welcome David Jones who joined the Board as
a Non-Executive Director. David was previously Operations Director at CMG
Admiral and has a wealth of experience in our industry. David became Chairman of
the Remuneration Committee on 1 January 2003. David Best resigned as a Director
in December 2002. I would like to thank David for his valued input and support
during his time on the Board. I have resumed Chairmanship of the Company's Audit
Committee, whilst the Board looks to appoint a third Non-Executive Director.
On a personal note, I am planning to step down as Chairman at the Annual General
Meeting in May, shortly after completing my second three-year term as a
Non-Executive Director and having been Chairman for almost all of my six years
on the Board. As a further step in our long-term development and succession
plans, it is intended that Mike Love becomes Chairman immediately following the
AGM. I have been offered a further extension to my appointment as a
Non-Executive Director and look forward to further participation in the
Company's continued success as the senior Non-Executive Director.
Mike led a management buy-in of the Company in 1986. Since then, under his
executive leadership, the business has grown and prospered to reach its current
size and respected market position and has also built a reputation for
delivering consistent steady earnings growth. It is the Board's intention to
announce the appointment of a Group Chief Executive Officer in due course.
Pending this announcement Mike will serve in the combined role of Chairman and
Group Chief Executive Officer.
Outlook
We remain cautious about the overall market conditions. It is possible that
there will be further price pressure and lengthening of sales cycles. However,
the Board believes that the outlook for CODASciSys continues to be encouraging
and our business plans for 2003 have assumed some modest growth. The Board
believes that the good visibility of forward revenues, our continued success at
winning new contracts and repeat business with existing clients, and the overall
market position and spread that has been established by the Company should lead
to a further year of good results relative to the sector in which we operate.
Cliff Preddy
Chairman
26 March 2003
Group CEO's Statement
Our continued growth stems predominantly from the established client
relationships that we have built up with associated long-term repeat revenue
streams. It also reflects our positioning in well defined markets with
best-of-breed product and service offerings that our clients continue to depend
on for their own success. The CODA Division's recently launched offerings and
our relatively high proportion of public sector revenues leaves us well
positioned to withstand the current economic pressures. As ever, our future
success depends on the quality, professionalism and continued commitment of the
team at CODASciSys.
Our prime long term strategy remains to focus on the continued organic growth of
the CODASciSys businesses in the market sectors in which we operate, and to use
our financial strength to accelerate our entry into complementary new markets
and to strengthen our market position through selective acquisitions.
The specific strategy that we set out for 2002 was to continue the investment in
improved services and product offerings, whilst remaining as flexible as
possible to respond to changing market conditions. With hindsight, the
reservations that we expressed concerning the outlook for our markets have
proven to be justified.
The CODA Division again delivered an excellent operating performance. Revenues
advanced by 6.5% to #40.3m (2001 - #37.9m) and operating profit by 25.4% to
#6.0m (2001 - #4.8m). This success flows from our strategy of combining a
strong consultancy services and projects capability with a leading-brand
software product-based business. We believe there is, further opportunity to
exploit the strength of the CODA brand to deliver innovative new products and
consultancy services to both our established client base and new clients.
Against this background, and in line with our long term strategy, CODASciSys plc
made an offer in December 2002 to acquire SquareSum Plc. SquareSum designs,
develops and supplies a Client/Server accounting system with accompanying
support and consultancy services. The Board believes that this company
represents an outstanding opportunity to obtain a quality, cash generative
business that is complementary to existing activities. We believe that there
will be considerable benefit from combining the award-winning SquareSum product
offering, to be renamed CODA-Dream, with our greater depth of resource, market
presence and financial strength. CODA-Dream broadens our offerings to cover the
top end of the small to medium enterprise sector, and will also facilitate our
drive to build a channel distributor network within the UK.
This transaction was completed successfully during January 2003. The
consideration paid was #8.1m cash plus 524,037 CODASciSys ordinary shares,
representing a total valuation of #9.3m. We are pleased to report good progress
on the cost reduction programme planned at the time of the acquisition and we
will continue to update shareholders on progress in future reports.
The SciSys Division continued to develop its presence in key accounts by
building on strong client relationships. Challenging market conditions and some
pressure on fee rates contributed to a slight decline in revenues by 3.3% to
#26.0m (2001 - #26.9m). Despite management action to control the cost base,
operating profit declined by 14.2% to #1.7m (2001 - #2.0m). This included a
one-off #0.3m charge (2001 - #nil) for redundancies. The four subsidiaries in
the SciSys Division have been realigned to sharpen the focus of our
technology-based business solutions within the following sectors: government,
utilities, space, defence, commerce and industry. Our objective in structuring
the business in this way is to achieve compound growth rates at or above the
sector average for similar companies. Early signs of progress are encouraging,
with significant success achieved in the second half of 2002 in opening new
opportunities in the sectors in which we concentrate.
The results for the year are a great testimony to the qualities and flexibility
of the whole team. The commitment involved in all the individual and team
contributions to the Company's reputation and success is highly appreciated. The
management and staff equity holding remains in excess of 30%, and is spread
across a wide range of team members. We continue to encourage and maintain a
culture that includes share ownership opportunity alongside employment.
The current economic environment is one where the emphasis in corporate and
public-sector IT expenditure has primarily been on rapid return from new
investments and the delivery of continued benefits from existing investments.
This is playing to the strengths of CODASciSys and, as a result, we see
continued demand for our services and products. Our order book of over #50m is
healthy (2001 - in excess of #50m). This includes only one year's worth of our
long term support and maintenance revenues which are currently in excess of
#22.0m per annum.
Mike Love
Group CEO
26 March 2003
Group FD's Statement
Our primary strategy remains the attraction of cash generative long term
revenues, combined with strong financial controls. Together with our prudent
accounting treatment with regard to the recognition of licence fee income, this
provides a healthy and sustainable platform to support our business plans and
execute our investment strategies. The recent SquareSum acquisition, financed
principally through cash reserves is evidence of the success of this strategy.
A healthy advance in the value of CODA licence sales to #9.5m (2001 - #7.6m)
masked the underlying shift during the year to the sale of a larger volume of
repeat and upgrade licences to our established base and a reduction in the
number of new licence sales to new users. As a result, there was a small
decline in consultancy revenues within the CODA Division, although revenues for
support and maintenance increased over the year. The changing market conditions
that led to this shift in licence fee sales had been anticipated and planned
into our product investment strategy.
Within SciSys, the best performance came from the Utilities business. However,
the strong performance seen in the first half of the year eased in the final
quarter. The Space and Commercial businesses showed steady contribution
patterns, whilst the Industrial business showed losses in the first half of the
year, returned to profit in the second half and recorded a net profit for the
full year.
Our prime investment within the SciSys Division was in strengthening its sales
capability and in re-branding and re-aligning the Division on its key markets.
We also took the decision to reduce personnel costs with the loss of 21 software
development posts in the second half.
Within the CODA Division, we increased product investment in 2002 to #8.8m
compared with #7.5m in 2001 with the focus on value-added offerings around the
core products. These included offerings in financial analytics, planning,
reporting and e-Finance. We made a strategic decision to centralise our product
development to focus on improved efficiency and quality and transferred 20
development posts from Nottingham to Harrogate.
Since the year end, good progress has been made in driving costs out of the
combined CODA and SquareSum businesses. The major areas of savings include
moving the SquareSum team into CODA offices, closing the SquareSum Harrogate
office, de-listing from OFEX, releasing a limited number of staff and combining
the two company's marketing activities.
Deferred income at the year end rose from #11.8m to #14.8m. This comprised
#10.6m (2001 - #6.3m) of maintenance income, deferred licence revenues of #3.2m
(2001 - #3.3m) and advance payments for projects / consultancy of #1.0m (2001 -
#2.2m). The #4.3m increase in deferred maintenance income reflects the fact
that CODA operations are now consistently invoicing for annual maintenance at
least one month before contract renewal dates. The slight decrease in the level
of deferred licence revenues reflects the changing profile of licence fee sales
to include more upgrade sales to existing clients (for which the income is
recognised when the sale is invoiced), as opposed to new licence sales to new
clients (where the income is deferred until the client's system goes live).
Operating cash flows have been strong and have led to a cash inflow from
operating activities of #11.5m (2001 - #10.3m). The year end net cash balance
of #9.4m compared with #3.3m at the end of 2001. This was achieved after the
purchase of #0.7m own shares by the Employee Share Trust to fulfil future
exercises of Executive Share Options, the purchase of #0.7m own shares for
cancellation and the repayment of long-term loans of #0.6m. Since the year end
#8.1m of cash has been used in the acquisition of SquareSum Plc.
As at the year end, the Employee Share Trust owned 1,870,881 shares with a
carrying cost of #7.1m and a market value of #4.6m. These shares are held
largely to satisfy outstanding positions on Executive share options. The Board
believes that the year end market value of the shares does not represent a
permanent diminution in value of the shares, and as such has not made a
provision against their carrying value.
During the year, the main foreign currencies in which the Group deals (the Euro
and the US$) moved in opposite directions relative to sterling. The Group had
net exchange gains for the year of #0.3m (2001 - #nil).
The effective tax rate for the Group, excluding goodwill amortisation, reduced
to 22.3% compared with 30.2% for 2001. This was partly as a result of the full
recognition of deferred tax assets within the Group accounts upon the adoption
of FRS 19 in the year. The tax charge was also reduced by #0.4m, being the
estimated level of Research & Development tax credits which the Group is seeking
to claim. These tax credits have been available from 1 April 2002, so 2003
should see the benefit of a further three months of reduced tax charge.
Final Dividend Payment
The proposed final dividend for the year ended 31 December 2002 of 2.4p per
share will be paid on 1 July 2003 to shareholders on the register at 4 April
2003.
Ruth McRitchie
Group FD
26 March 2003
CODASciSys plc
Group Profit and Loss Account
for the year ended 31 December 2002
2002 2002 2001 2001
#000 #000 #000 #000
Turnover 66,378 64,820
Staff costs (39,390) (37,637)
Depreciation (1,922) (1,939)
Amortisation of goodwill (1,776) (1,776)
Other operating charges (17,703) (18,370)
(60,791) (59,722)
Operating profit 5,587 5,098
Other interest receivable and
similar income 163 295
Interest payable and similar
charges (24) (339)
Profit on ordinary activities before taxation
and goodwill amortisation 7,502 6,830
Profit on ordinary activities before 5,726 5,054
taxation
Tax on profit on ordinary activities (1,675) (2,060)
Profit on ordinary activities after
taxation 4,051 2,994
Dividends paid and proposed (798) (707)
Retained profit for the year 3,253 2,287
Earnings per share
Basic 17.3p 12.7p
Diluted Basic 16.2p 11.9p
Adjusted Basic (excluding goodwill amortisation) 24.9p 20.3p
Diluted Adjusted Basic (excluding goodwill 23.3p 19.0p
amortisation)
All operations are continuing.
CODASciSys plc
Group Balance Sheet
at 31 December 2002
2002 2002 2001 2001
#000 #000 #000 #000
Fixed assets
Intangible assets 30,622 32,398
Tangible assets 9,650 10,033
Investments 7,145 6,459
47,417 48,890
Current assets
Debtors 21,879 20,914
Cash at bank and in hand 9,449 4,997
31,328 25,911
Creditors: amounts
falling due within one year (10,227) (11,182)
Net current assets 21,101 14,729
Total assets less current liabilities 68,518 63,619
Creditors : amounts falling due after more
than one year - (610)
Deferred income (14,810) (11,848)
Net assets 53,708 51,161
#000 #000
Capital and reserves
Called-up share capital 6,219 6,296
Share premium account 41,827 41,758
Other reserves 83 -
Profit and loss account 5,579 3,107
Equity shareholders' funds 53,708 51,161
The accounts were approved by the Board of Directors on the 26 March 2003 and
were signed on its behalf by:
Mike Love
Director
Ruth McRitchie
Director
CODASciSys plc
Group Cash Flow Statement
for the year ended 31 December 2002
2002 2002 2001 2001
#000 #000 #000 #000
Net cash inflow from operating activities 11,542 10,324
Returns on investments and servicing of
finance
Interest received 163 295
Interest paid (21) (338)
Interest element of finance lease
rental payments (3) (10)
Net cash inflow / (outflow) from returns
on investments and servicing of finance 139 (53)
Taxation
UK and overseas corporation tax paid (2,029) (2,096)
Capital expenditure and
financial investment
Payment to acquire tangible fixed assets (1,598) (1,896)
Payment to acquire investments (727) (1,079)
Receipts from sale of investments 41 207
Receipts from sales of tangible fixed assets 37 11
Net cash outflow from capital expenditure
and financial investment (2,247) (2,757)
Acquisitions and disposals
Purchase of CODA - 1,270
Equity dividends paid (706) (591)
Net cash inflow before financing and
liquid resources 6,699 6,097
Financing
Shares bought back and cancelled (737) -
Repayment long term loan (572) (143)
Capital element of finance lease rental
payments (67) (66)
Net cash outflow from financing (1,376) (209)
Increase in cash in the year 5,323 5,888
NOTES
1. Earnings per share
Basic earnings per ordinary share are calculated by dividing the profit after taxation attributable to the
shareholders of #4,051,000 (2001 - #2,994,000) by the weighted average number of shares in issue during the
year (excluding own shares held) of 23,364,551 (2001 - 23,548,827).
Diluted basic earnings per ordinary share are calculated by dividing the profit after taxation attributable
to the shareholders of #4,051,000 (2001 - #2,994,000) by the weighted average number of shares in issue
during the year (excluding own shares held, but after taking into account options outstanding during the
year) of 25,024,331 (2001 - 25,136,050).
Adjusted basic earnings per ordinary share excluding amortisation of goodwill are calculated by dividing
the profit after taxation excluding amortisation of goodwill attributable to the shareholders of #5,827,000
(2001 - #4,770,000) by the weighted average number of shares in issue during the year (excluding own shares
held) of 23,364,551 (2001 - 23,548,827).
Diluted adjusted basic earnings per ordinary share excluding amortisation of goodwill are calculated by
dividing the profit after taxation excluding amortisation of goodwill attributable to the shareholders of
#5,827,000 (2001 - #4,770,000) by the weighted average number of shares in issue during the year (excluding
own shares held, but after taking into account options outstanding during the year) of 25,024,331 (2001 -
25,136,050).
2 Extracts from the segmental analysis of turnover, profit before interest and taxation, and net assets
The Group provides services and business solutions based on IT technologies. It comprises two main
divisions:
* CODA - focused on the delivery of financial intelligence through solutions based around financial
analytics and accounting;
* SciSys - focused on the delivery of professional software services and the design and build of
systems incorporating third party packaged software.
2002 2001
Turnover #000 #000
CODA 40,332 37,886
SciSys 26,046 26,934
66,378 64,820
2002 2001
Profit / (loss) before interest and taxation #000 #000
CODA 5,988 4,776
SciSys 1,718 2,003
Other/group (343) 95
Amortisation of goodwill (1,776) (1,776)
5,587 5,098
3 Annual Report
The results do not constitute full accounts within the meaning of the Companies Act 1985. The 2001
figures are extracted from the audited accounts for the year ended 31 December 2001 upon which the
auditors expressed an unqualified opinion which have been filed at Companies House. The 2002 figures
are extracted from the audited accounts for the year ended 31 December 2002 upon which the auditors
expressed an unqualified opinion. A copy of the audited Annual Report for 2002 will be mailed to
shareholders in April and will also be available for collection from CODASciSys' offices at Methuen
Park, Chippenham, Wiltshire, SN14 0GB.
The Annual General Meeting will be held on Wednesday 21 May 2003 at 12 noon.
Further Information
For more information, please contact:
Mike Love
Group CEO
CODASciSys plc
Methuen Park
Chippenham
Wiltshire Tel: 01249 466466
SN14 0GB Fax: 01249 466658
Sarah Dyer
Investor Relations
CODASciSys plc
Methuen Park
Chippenham
Wiltshire Tel: 01249 466466
SN14 0GB Fax: 01249 466658
Richard Darby/Isabel Petre
Buchanan Communications Ltd
107 Cheapside
London Tel: 020 7466 5000
EC2V 6DN Fax: 020 7466 5001
Barrie Newton
Rowan Dartington & Co Ltd
Colston Tower
Colston Street
Bristol Tel: 0117 933 0010
BS1 4RD Fax: 0117 927 2067
This information is provided by RNS
The company news service from the London Stock Exchange
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