Interim Results

AttentiV Systems Group PLC 21 May 2004 ATTENTIV SYSTEMS GROUP PLC INTERIM REPORT FOR THE SIX MONTH PERIOD ENDED 31 MARCH 2004 AttentiV Systems Group plc is a leading developer and supplier of software to the financial services sector. HIGHLIGHTS • Six months turnover up 10.5% to £14.4 million (2003 £13.0 million) • Operating margin increased to 10.7% (2003 1.6%) • Six months operating profit increased to £1.5 million (2003 £0.2 million) • £1.6 million operating cash flow generated during the period (2003 £0.2 million) • Earnings per share advanced by 2.1p to 2.5p • Successful flotation on AIM raising £3.7 million net for AttentiV Commenting on the results, Peter Bertram, Chairman, said 'I am pleased to report on a period where the business has consolidated its position of strength as the premier software provider in the UK mortgage market and undertaken a successful flotation on AIM. These achievements and, in particular, the improvement in operating margin and significant new sales wins, positions the Group for future profitable organic growth.' ENQUIRIES AttentiV Systems Group plc Tel: 01582 863388 David Webber, Chief Executive Philip Wood, Finance Director ICIS Limited Tel: 0207 628 1114 or 07802 442486 Tom Moriarty Archie Berens WEBSITE A presentation in respect of the interim report for the period ended 31 March 2004 will be posted to the investor section of the AttentiV website ( www.attentiv.com) at 9.00 a.m. on 21 May 2004. CHAIRMAN'S STATEMENT INTRODUCTION This is the first financial statement published by AttentiV Systems Group plc since the Group was floated on AIM on 31 March 2004. On behalf of AttentiV I would like to thank our new shareholders for their support and we trust they will enjoy a long association with the development of the Group. TRADING RESULTS I am pleased to announce growth in both turnover and profits during the first six months of the financial year ending 30 September 2004. Turnover rose to £14.4 million (2003 £13.0 million), an increase of 10.5% over the same period in the previous year. Operating profits rose to £1.5 million (2003 £0.2 million) and earnings per share increased to 2.5p (2003 0.4p). Operating margins increased to 10.7% from 1.6% in 2003. The business generated operating cash flow of £1.6 million compared to £0.2 million in the same period of 2003. The growth in turnover was attributable to the Group continuing to secure new financial services customers and the contribution from associated implementation services, support & maintenance revenues and licence fees. The dividend of £1.3 million declared and paid during the period was made to Lynx plc the owner of AttentiV prior to the flotation on AIM. PERFORMANCE REVIEW The Group's sole trading subsidiary, Lynx Financial Systems Limited, is a provider of software solutions and associated services to the financial services sector. Lynx Financial Systems Limited will be re-branded as AttentiV Systems over the next six months. AttentiV has three offerings:- Portfolio Software solutions for organisations offering asset-backed finance products, personal loans and debt management. Revenue for the Portfolio product was £1.7 million (2003 £2.9 million). Since 1 October 2003 £1.1 million (2003 nil) of costs have been included in the movement of work in progress in respect of the project to develop the European retailing system for a global motor finance organisation. The work in progress will be released as a cost within operating charges, along with the associated revenue and profit, in future periods. During the period Toyota Financial Services (UK) plc completed the roll out of the AttentiV motor finance solution across their operations and London Scottish Bank plc commenced the roll out of the AttentiV personal loan and collection solution across their UK branches. Summit Summit is a software system that supports the selling and administration of mortgages, loans, savings, current accounts and associated services within the retail banking sector. Revenue for the Summit product was £10.1 million (2003 £6.8 million). During the period Britannia Building Society successfully migrated their 2 million savings accounts and 180 plus branches to the Summit savings and branch cashiering solution. This follows on from a successful migration of their mortgage accounts in August 2002. In a very rapid deployment of under six months Darlington Building Society, who operate 13 branches and have over 10,000 mortgage customers, have successfully taken Summit mortgages and application processing live and are well prepared for the onset of mortgage compliance in autumn of this year. Following the signing of a contract with The Royal Bank of Scotland plc earlier in the period, I am pleased to report that the implementation of Summit is progressing according to plan. On this basis, it is expected that, when all the mortgage accounts are fully migrated onto Summit during 2005, the bank will be the largest Summit user with some £35 billion of mortgage assets on the system. On 10 March 2004 Mortgages plc signed a five-year outsourcing contract with AttentiV for the Group to provide mortgage processing capability. This project is planned to commence live use this summer and is progressing well. Overall, we believe our success in this area is a clear endorsement of Summit, both in terms of the quality of the product and our service offering. Tailored Solutions Revenue for Tailored Solutions was £2.6 million (2003 £3.3 million). On 31 December 2003 Standard Life Bank Limited successfully completed their skills transfer from the AttentiV on site team and are now able to maintain the solution without assistance from AttentiV. Commencing on 1 January 2004 Intelligent Finance, the HBOS plc internet bank, commenced a five year support and development agreement for the bank's mortgage, savings and offsetting systems. Software licence revenues for the Group increased by 21.4% to £1.7 million (2003 £1.4 million). As at 31 March 2004 the Group has £8.5 million of contracted licences not booked to revenue. Services and third party revenues increased to £6.8 million (2003 £5.8 million) whilst maintenance and outsourcing revenues were £5.9 million (2003 £5.8 million). At 31 March 2004 maintenance and contracted recurring revenues covered 60% of the Group's fixed cost base. The combination of the high levels of contracted licences not yet booked to revenue, the maintenance & contracted recurring revenues and the existing client requirements for AttentiV services, results in 60% of expected revenue for the year ending 30 September 2005 being identified at 31 March 2004. DIVIDENDS As advised in the admission prospectus dated 26 March 2004, it is the intention of the Board to follow a progressive dividend policy, commencing in respect of the financial year ended 30 September 2005. STAFF AttentiV's business relies on the continued retention, development and recruitment of staff. The number of employees within the Group rose from 373 at 30 September 2003 to 391 at 31 March 2004 (2003 360) and I would like to take this opportunity to thank the staff for their commitment and professionalism. The Group does not plan any significant increase in headcount in the second half of the financial year as the management continues to focus on increasing efficiency and productivity within the business. However, the sales function is to be strengthened with the recruitment of additional experienced resource focusing on new business sales. AttentiV has recently recruited Lena Marsh as Head of Human Resources whose remit is to continue to improve the quality of staff training, recruitment and retention. OUTLOOK Trading since 31 March 2004 has continued in line with our business plans and the Board continues to be encouraged by the levels of sales activity within the UK and Ireland mortgage market for Summit as financial institutions continue to review their strategic plans following the adoption of the mortgage conduct of business in Autumn 2004. Additionally there are significant levels of interest from the existing customer base for additional software solutions to support the introducers of mortgage business. There continue to be a number of prospective future opportunities for the Portfolio product family and the Board expects to receive decisions on these projects over the forthcoming period. Operating costs will continue to be maintained in line with the level of business opportunities available for the product. We believe that the Group is well placed for profitable organic growth in the financial services sector with a continued focus on improvements in operational efficiency and margins. Peter Bertram David Webber Chairman Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT for the period ended 31 March 2004 Note Unaudited six Unaudited six Audited months to months to twelve months 31 March 31 March to 30 September 2004 2003 2003 £'000 £'000 £'000 Turnover 14,375 13,004 25,655 Operating costs (12,836) (12,796) (24,625) ----------- ----------- ----------- Operating profit 2 1,539 208 1,030 Net interest receivable 24 17 103 ----------- ----------- ----------- Profit on ordinary activities 1,563 225 1,133 before taxation Tax on profit on ordinary activities (289) - 1,866 ----------- ----------- ----------- Profit on ordinary activities 1,274 225 2,999 after taxation Dividends 3 (1,267) - (3,330) ----------- ----------- ----------- Profit/(Loss) for the 7 225 (331) period =========== =========== =========== Earnings per share - basic and diluted 4 2.5p 0.4p 5.9p CONSOLIDATED BALANCE SHEET at 31 March 2004 Unaudited Unaudited Audited 31 March 31 March 30 September 2004 2003 2003 £'000 £'000 £'000 Fixed Assets Tangible assets 2,154 2,351 2,146 ----------- ----------- ----------- Current assets Stocks and work in progress 511 - 50 Deferred tax asset 1,582 - 1,866 Debtors 6,648 9,698 5,357 Cash at bank and in hand 4,652 1,977 3,041 ----------- ----------- ----------- 13,393 11,675 10,314 Creditors: amounts falling due within one year (4,970) (8,964) (7,942) ----------- ----------- ----------- Net current assets 8,423 2,711 2,372 ----------- ----------- ----------- Total assets less current liabilities 10,577 5,062 4,518 Creditors: amounts falling due after more than one year (2) (10) (6) Accruals and deferred income (6,765) (4,353) (4,369) ----------- ----------- ----------- Net assets 3,810 699 143 =========== =========== =========== Capital and reserves Share capital 3,029 2,529 2,529 Share premium 3,281 121 121 Profit and loss account (2,500) (1,951) (2,507) ----------- ----------- ----------- Shareholders' funds 3,810 699 143 =========== =========== =========== CONSOLIDATED CASH FLOW for the period ended 31 March 2004 Note Unaudited six Unaudited six Audited months to months to twelve months 31 March 31 March to 30 September 2004 2003 2003 £'000 £'000 £'000 Net cash inflow from operating activities 5 1,601 163 2,706 ----------- ----------- ----------- Returns on investments and servicing of finance Interest received 25 18 105 Finance lease interest paid (1) (1) (2) ----------- ----------- ----------- Net cash inflow from returns on investments and servicing of finance 24 17 103 ----------- ----------- ----------- Taxation (3) - 184 ----------- ----------- ----------- Capital expenditure Purchase of tangible fixed assets (428) (221) (468) ----------- ----------- ----------- Net cash outflow from capital expenditure (428) (221) (468) ----------- ----------- ----------- Financing Net proceeds on issue of share capital 3,660 - - Net movement on loans - - (142) Capital element of finance lease rentals (4) (4) (7) ----------- ----------- ----------- Net cash inflow/(outflow) from financing 3,656 (4) (149) ----------- ----------- ----------- Dividends paid (3,239) - (1,357) ----------- ----------- ----------- Increase/(decrease) in cash 1,611 (45) 1,019 =========== =========== =========== RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS for the period ended 31 March 2004 Unaudited six Unaudited six Audited months to months to twelve months 31 March 31 March to 30 September 2004 2003 2003 £'000 £'000 £'000 Profit for the period 1,274 225 2,999 Dividends (1,267) - (3,330) Net proceeds from issue of shares 3,660 - - ----------- ----------- ----------- Net increase/(decrease) in shareholders' funds 3,667 225 (331) Shareholders' funds at start of period 143 474 474 ----------- ----------- ----------- Shareholders' funds at end of 3,810 699 143 period =========== =========== =========== NOTES TO THE INTERIM REPORT for the period ended 31 March 2004 1 BASIS OF PREPARATION The financial information for each of the six month periods ended 31 March 2004 and 31 March 2003 is unaudited and does not constitute statutory accounts within the meaning of section 240 the Companies Act 1985. The financial information for the year ended 30 September 2003 is based on an audited consolidation of the audited financial statements of the Company and the financial statements of the following subsidiary undertakings: Lynx Financial Systems Limited - audited financial statements AttentiV Systems Limited - dormant company accounts The accounting polices remain unchanged from those set out in the Accountants' report on the Group within the placing and admissions document to AIM for the year ended 30 September 2003. 2 OPERATING PROFIT The operating profit for the six months to 31 March 2004 is after a charge of £200,000 (2003 nil) representing a management fee paid to Lynx plc, the former parent of AttentiV Systems Group plc. In the six months to 31 March 2004 gross operating costs of £15.7 million (2003 £12.8 million) were reduced by £2.9 million (2003 nil), which represents a net increase in work-in-progress on long term contracts, resulting in the reported operating costs of £12.8 million (2003 £12.8 million). 3 DIVIDENDS Unaudited six Unaudited six Audited months to months to Twelve months 31 March 31 March to 30 September 2004 2003 2003 £'000 £'000 £'000 Interim - - 1,357 Final dividend of 2.5p per share paid 1,267 - 1,973 to Lynx plc ----------- ----------- ----------- 1,267 - 3,330 =========== =========== =========== 4 EARNINGS PER SHARE The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below: Basic earnings Dilutive effects Diluted earnings per share of options per share Six months to 31 March 2004 Earnings £'000 1,274 - 1,274 Weighted average number of shares 50,632,439 26,080 50,658,519 ----------- ----------- ----------- Per share amount pence 2.5 - 2.5 =========== =========== =========== Six months to 31 March 2003 Earnings £'000 225 - 225 Weighted average number of shares 50,577,794 - 50,577,794 ----------- ----------- ----------- Per share amount pence 0.4 - 0.4 =========== =========== =========== 12 months to 30 September 2003 Earnings 2,999 - 2,999 Weighted average number of shares 50,577,794 - 50,577,794 ----------- ----------- ----------- Per share amount pence 5.9 - 5.9 =========== =========== =========== 5 NET CASH INFLOW FROM OPERATING ACTIVITIES Unaudited six Unaudited six Unaudited Months to months to Twelve months 31 March 31 March to 30 September 2004 2003 2003 £'000 £'000 £'000 Operating profit 1,539 208 1,030 Depreciation 420 504 956 (Increase)/decrease in work in progress (461) 80 30 (Increase)/decrease in debtors (1,291) (1,286) 674 Increase in creditors 1,394 657 16 ----------- ----------- ----------- Net cash inflow from operating activities 1,601 163 2,706 =========== =========== =========== 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Unaudited six Unaudited six Audited months to months to twelve months 31 March 31 March to 30 September 2004 2003 2003 £'000 £'000 £'000 Increase/(decrease) in cash in the period 1,611 (45) 1,019 Cash flow from financing - - 142 Cash flow from finance leases 4 4 7 ----------- ----------- ----------- Change in net debt resulting from cash 1,615 (41) 1,168 flows Non-cash movements in financing - - 2,197 ----------- ----------- ----------- Movement in net funds/(debt) in the 1,615 (41) 3,365 period Net funds/(debt) at start of 3,027 (338) (338) period ----------- ----------- ----------- Net funds/(debt) at end of period 4,642 (379) 3,027 =========== =========== =========== 7 COPIES OF THE INTERIM REPORT Copies of the interim report will be sent to shareholders. Further copies will be available from the company's registered office at Gainsborough House, Houghton Hall Park, Houghton Regis, Bedfordshire, LU5 5XF for one month from the date of this announcement. INDEPENDENT REVIEW REPORT TO ATTENTIV SYSTEMS GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 31 March 2004 which comprises the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Consolidated Cash Flow, Reconciliation of Shareholders' Funds and related Notes 1 to 7. We have read the other information contained in the interim report which comprises only the highlights and Chairman's Statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Our responsibilities do not extend to any other information. This report is made solely to the company, in accordance with guidance contained in APB Bulletin 1999/4 'Review of Interim Financial Information'. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed. Directors' Responsibilities The interim report including the financial information contained therein is the responsibility of, and has been approved by, the directors. They are responsible for preparing the interim report and ensuring that the accounting policies and presentation applied to the interim figures are consistent with the those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of Interim Financial Information' issued by the Auditing Practices Board for use in the United Kingdom. A review consists primarily of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as test of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 March 2004. GRANT THORNTON Chartered Accountants Oxford, 21 May 2004 This information is provided by RNS The company news service from the London Stock Exchange

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