Interim Results

Comino Group PLC
09 November 2004

                            COMINO GROUP PLC:


              INTERIM RESULTS & TERMINATION OF OFFER TALKS


                   Significant increase in profits;

                   Encouraging outlook for the Group



Comino Group plc ('Comino'), the provider of service delivery solutions for
Local Government, Social Housing and Occupational Pensions, announces Interim
Results for the half year ended 30 September 2004.



During the period, the company was the subject of an approach and an
announcement to this effect was issued to the London Stock Exchange on 8
September 2004.  These discussions have now terminated.



In his Chairman's report, David Quysner said:



'I am pleased to report that the interim results of Comino Group for the six
months ended 30 September 2004 show a significant increase in trading
performance  compared with the same period last year.'



Financial Highlights



  • Turnover up 8% to £12.2m (2003: £11.3m)
  • PBT before goodwill and exceptional item up 42% to £1,142,000 (2003:
    £804,000).
  • PBT after goodwill and exceptional item of £560,000 (2003: £603,000).
  • Exceptional item of £407,000, the net cost to the company of litigation
    which is now fully resolved.
  • Gross profit margin maintained at 80%.
  • Operating profit margin (pre goodwill and exceptional) up to 8.2% from
    6.3%.
  • Interim dividend of 2.5 pence per share (2003: 2.2p).
  • Cash balances at 30 September 2004 of £7.3m (2003: £6.1m).
  • Adjusted earnings per share 5.6p (2003: 4.1p).



Operational Highlights



  • Local Government continues to be major growth area; LG orders up 39%.
  • Social Housing experiencing healthy recovery with recent contract wins.
  • Occupational Pensions sees steady customer upgrading to version two of
    UPM.
  • Comino Connect sales up 49% compared to the same period last year.



Referring to the outlook for Comino, David Quysner, Chairman, said:



'The Local Government market continues to provide opportunities for growth.
Social Housing is benefiting from a new approach that emphasises the service
delivery aspects of the product. Comino remains well placed to take advantage of
these major opportunities.'



Enquiries

Comino plc                                                                Binns & Co PR Ltd
Garth Selvey, Chief Executive        Tel: [phone] on the day        Peter Binns, Paul McManus
Paul Clifford, Finance Director      Thereafter: 01628 525 433            Tel: [phone]
                                                                          Mob: [phone]






Editor's notes:



Comino provides service delivery solutions for Local Government, Social Housing
and Occupational Pensions administration. Comino's products incorporate
workflow, computerised telephony and electronic document management. Comino has
its own technology in these areas and uses it to improve customer service and
administration performance generally across a customer base of some 400
organisations.



Case oriented workflow gives the user a complete picture together with access to
relevant records and documents that allow timely decisions to be made. Business
process reengineering defines and optimises the flow of information and the
result is a more seamless and responsive organisation.



Comino's operating companies are based near Maidenhead and in Leeds, Croydon and
the West Midlands.




CHAIRMAN'S STATEMENT



I am pleased to report that the interim results of Comino Group for the six
months ended 30 September 2004 show a significant increase in trading
performance  compared with the same period last year.



Profits



Profit before tax, the amortisation of goodwill and the exceptional item was
£1,142,000 (2003: £804,000) an increase of 42%.



The profit before tax was £560,000 (2003: £603,000) taking into account
amortisation of goodwill of £175,000 (2003: £201,000) and the exceptional item
of £407,000 (2003: Nil). The exceptional item is the net cost to the company of
the litigation referred to in previous reports and is now fully resolved. More
detail on this is given below.



Cash and Dividend



At 30 September 2004, cash balances were £7.3m compared with £6.1m at the same
time last year. An interim dividend of 2.5 pence per share (2003: 2.2p) will be
paid on 27 January 2005.



Turnover and Overheads



Turnover for the half year of £12.2m (2003: £11.3m) was up 8% compared with the
same period last year and the gross profit margin remained unchanged at 80%.
Overheads in the period, excluding amortisation of goodwill and the exceptional
item, were 6% up at £8.8m compared with £8.3m in 2003.



Exceptional Item



As first reported this time last year, the company was the subject of a claim
from one of its Social Housing customers with regard to a contract dating back
to 2001. This related to the development and installation of a new generation of
Housing software that is now working successfully at a number of locations. The
claim was settled amicably in June 2004. The company then sought recovery from
its Professional Indemnity Insurers and this was concluded in early September.
The exceptional item of £407,000 represents the net cost to the company of the
claim and legal fees less the amount recovered from insurers.



Orders



Against a backdrop of strong recurring revenues, order intake for products and
services increased by 9% compared with the same period last year. In particular,
Local Government order intake increased by 39% reflecting Comino's continuing
success in securing orders for enterprise systems. Social Housing orders
recovered towards the end of the period following the removal of uncertainty
surrounding the claim.



Operational Review



Comino plc



Since April 2004, Comino plc, the main operating company within the group, has
been trading as a fully integrated unit. The company's market sectors are now
under common management in all areas: development, marketing, sales, delivery,
support and administration. Within these areas, specialists are retained as
required by each market sector. The reorganisation is progressively resulting in
greater flexibility in the deployment of resources and more consistency in
operational activities.



Local Government business continues to be the major growth area for the company.
As part of our enterprise solution approach, inroads are being made into Social
Care departments, both directly and through the establishment of strategic
partnerships with suppliers of transactional systems and organisations
delivering change management. Focus is on the development of electronic social
care records, effective case management and efficiency in service delivery, with
process improvement through the use of workflow as a fundamental component.



Social Care is a key area for improvement in Local Authorities and presents
opportunities for Comino to build on its proven capabilities in Revenues &
Benefits, Housing, Planning and a number of other departments.



The Metropolitan Borough of Wirral's Revenues and Benefits section, a Comino
customer, has just received awards from the Institute of Revenues, Rating and
Valuation for Best Use of IT and Excellence in Customer Service.



Comino is now developing Records Management to meet the requirements of the
Public Records Office, the Freedom of Information Act and the Data Protection
Act. This extends the company's well established Electronic Document Management
software (EDM) to become Electronic Document and Records Management Software
(EDRM). As a result, the company will be able to offer customers the ability to
meet both case management and legislative requirements.



Records Management is principally driven by emerging Local Government demands
but is seen in the longer term as a requirement for many sectors.



Progress in Social Housing was hampered by the effects of the claim. Now that
this has been completely settled, prospect lists and order books are making a
healthy recovery with a number of recent contract wins. The company continues to
invest in this market and has been proactive in improving the robustness, scope
and functionality of its latest product suite, Universal Housing.



The company's service delivery software, comprising Contact Manager, Workflow
and EDM, is now available for use with transactional systems from other
suppliers as well as those supplied by Comino. Using these products, Registered
Social Landlords can make substantial improvements in service delivery without
going through the costly and time-consuming exercise of changing the underlying
transactional system, just as customers have already done in Local Government.



Web-based access and applications, initially developed for Local Government
housing, are also being incorporated into all Comino's Social Housing product
streams.



In Occupational Pensions, Comino plans steadily to transfer its customers to
version two of Universal Pensions Management (UPM).  Version two of UPM is more
easily configurable, maintainable and installable than its predecessor and also
meets the needs of the Third Party Administration market. There are signs that
the industry is gently moving towards replacing legacy administration systems.



Universities Superannuation Scheme (USS), an established UPM customer, has
recently been named Pensions Administrator of the Year by its industry.



Comino Techflow



Comino Techflow continues to deliver general business consultancy and high level
reporting expertise to the group's customers as well as selling its Workbench
project costing software. The company has returned a small profit at the half
year.



Comino Connect



Comino Connect sales are 49% up on the same period last year and its profits
continue to improve. The decision has been taken to make more of the group's
Computer Telephony Integration (CTI) software which is now a significant asset
and a team is being built up within Comino Connect to promote CTI further to
both group customers and to new customers.




Corporate Activity



During the period, the company was the subject of an approach and an
announcement to this effect was issued to the London Stock Exchange on 8
September 2004.  These discussions have now terminated.



Outlook



The Local Government market continues to provide opportunities for growth.
Social Housing is benefiting from a new approach that emphasises the service
delivery aspects of the product. Comino remains well placed to take advantage of
these major opportunities.



Staff & customers



Once again, I would like to thank our employees for their continuing efforts and
our customers for their much appreciated business and support.



David Quysner



CHAIRMAN



8 November 2004




Consolidated Profit and Loss Account


                                                                      6 months to     6 months to       Year to
                                                                     30 September    30 September      31 March
                                                                             2004            2003          2004
                                                                            £ 000           £ 000         £ 000

Turnover                                                                   12,229          11,323        24,507
Cost of sales                                                             (2,402)         (2,284)       (5,176)

Gross profit                                                                9,827           9,039        19,331
Administrative expenses                                                   (9,407)         (8,528)      (17,787)

Operating profit                                                              420             511         1,544
Net interest receivable                                                       140              92           169

Profit on ordinary activities before taxation                                 560             603         1,713

Profit on ordinary activities before taxation analysed between
Profit on ordinary activities before taxation, amortisation
of goodwill and exceptional item                                            1,142             804         2,212
Exceptional item                                                            (407)               -         (149)
Amortisation of goodwill                                                    (175)           (201)         (350)
                                                                              560             603         1,713


Tax on profit on ordinary activities                                        (207)           (225)         (692)

Profit on ordinary activities after taxation                                  353             378         1,021
Minority interest - equity                                                   (40)             (6)          (40)

Profit for the financial period                                               313             372           981
Dividends                                                                   (347)           (305)         (916)
Transfer (from)/to reserves                                                  (34)              67            65
Earnings per share                                                           2.3p            2.7p          7.1p
Diluted earnings per share                                                   2.2p            2.6p          6.9p
Adjusted earnings per share                                                 5.6 p            4.1p         10.3p

Dividend per share                                                           2.5p            2.2p          6.6p



The dividend of 2.5 pence per share will be paid on 27 January 2005. The
dividend record date is 7 January 2005.




Consolidated Balance Sheet


                                                            30 September          30 September        31 March
                                                                    2004                  2003            2004
                                                                    £000                  £000            £000
Fixed assets
Intangible assets                                                  2,540                 2,613           2,765
Tangible assets                                                    2,687                 2,711           2,632
                                                                   5,227                 5,324           5,397

Current assets
Stocks and work in progress                                          847                   779             852
Debtors & prepayments                                              6,895                 6,983           7,602
Cash at bank and in hand                                           7,336                 6,079          10,739
                                                                  15,078                13,841          19,193
Creditors falling due within one year                            (4,538)               (4,105)         (6,777)
Net current assets                                                10,540                 9,736          12,416
Total assets less current liabilities                             15,767                15,060          17,813
Deferred income                                                  (6,615)               (5,847)         (8,667)
                                                                   9,152                 9,213           9,146


Capital and reserves
Share capital                                                        694                   694             694
Share premium reserve                                              4,796                 4,796           4,796
Shares to be issued                                                    -                    99               -
Profit and loss account                                            3,368                 3,404           3,402
Equity shareholders' funds                                         8,858                 8,993           8,892
Minority interest - equity                                           294                   220             254
                                                                   9,152                 9,213           9,146




Consolidated Cash Flow Statement


                                                                          6 months to        6 months to        Year to
                                                                         30 September       30 September       31 March
                                                                                 2004               2003           2004
                                                                                 £000               £000           £000

Net cash (outflow)/ inflow from operating activities                          (2,129)            (1,904)          4,130

Net returns on investments and servicing
of finance
Net interest received                                                             140                 93            169
Tax received/(paid)                                                             (282)                210          (491)

Capital expenditure
Purchase of tangible fixed assets                                               (395)              (104)          (362)
Purchase of intangible fixed assets                                             (126)                  -          (187)
Sale of tangible fixed assets                                                       -                 17             18
Net cash outflow from capital expenditure                                       (521)               (87)          (531)

Equity dividends paid                                                           (611)              (555)          (860)

(Decrease)/increase in cash                                                   (3,403)            (2,243)          2,417



Net cash inflow/(outflow) from operating activities
Operating profit                                                                  420                511          1,544
Amortisation of goodwill                                                          175                201            350
Amortisation of intangible fixed assets                                            50                  -            100
Depreciation                                                                      341                357            693
Profit on sale of fixed assets                                                      -               (13)           (13)
Decrease/(Increase) in stocks                                                       5              (327)          (400)
Decrease in debtors                                                               691              1,051            328
(Decrease)/Increase in creditors                                              (1,759)            (1,822)            531
(Decrease)/Increase in deferred income                                        (2,052)            (1,862)            997
Net cash (outflow)/inflow from operating activities                           (2,129)            (1,904)          4,130




Notes to the Interim Accounts



1.       The charge for taxation is based on the expected rate for the financial
year.



2.       The calculation of earnings per share for the six months ended 30
September 2004 is based on the profit for the financial period of £313,000
(2003: £372,000) and on 13,885,802 (2003: 13,885,802) ordinary shares being the
average number of shares in issue during the period. The adjusted earnings per
share exclude the amortisation of goodwill of £175,000 (2003: £201,000) and the
exceptional item of £407,000 less taxation (2003: Nil) referred to in the
Chairman's Statement. The adjusted earnings per share for the year to 31 March
2004 has been restated to exclude the exceptional item of £149,000 less taxation
in addition to the amortisation of goodwill of £350,000.



3.       The interim statement has been prepared on the same accounting basis as
set out in the financial statements for the year ended 31 March 2004 and was
approved by the board on 8 November 2004. The foregoing financial information
does not represent full accounts within S240 of the Companies Act 1985 and has
not been reported on by the auditors or delivered to the Registrar of Companies.



4.       The above results for the year ended 31 March 2004 have been abridged
from the full Group accounts for that year, which received an unqualified
auditors' report and which have been delivered to the Registrar of Companies.



Independent Review Report to Comino Group plc



Introduction



We have been instructed by the company to review the interim financial
information for the six months ended 30 September 2004 which comprises the
consolidated profit and loss account, consolidated balance sheet, consolidated
cash flow statement and accompanying notes set out on pages 4 to 7.  We have
read the other information which comprises only the Chairman's statement and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.



This report is made solely to the company, in accordance with the 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 any
responsibility to anyone other than the company, for our review work, for this
report, or for the conclusions 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. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applies 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 in Bulletin 1999/4 'Review
of Interim Financial Information' issued by the Auditing Practices Board. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether accounting policies and presentation have
been consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of control and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than audit. Accordingly, we do not express an 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 interim financial information as presented for the six
months ended 30 September 2004.



Grant Thornton UK LLP

Registered Auditors

Chartered Accountants



London

8 November 2004




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