Monday, 27 July 2009

Total battles on

(By Anthony Miller – Monday 27th July 2009 8:30am).There is something rather comforting when you look at the management line-up on a company website and see faces staring back as old as mine! So it is with policy admin software firm, Total Systems, which is still led by its founder, Terry Bourne, and whose Tech Director joined in 1977, Ops Director in 1979, and the ‘new’ FD in 1993. I only tell you this because Total, one of the ‘Little British Battler’ brigade, reported its FY09 results today (see here) and they are still battling on.

As it happens, the numbers were pretty good (if a little tardy, given their FY ended on 31st March). Revenues grew 21% to £4.9m (all organic) and operating margins expanded from 7.4% to 10.1%. Why so ‘low’ for a software player? Because over 80% of revenues derives from time & materials services. Little more than 10% comes from sales of Total’s own products and the balance from third-party software. By the way, there’s none of this ‘exceptional’ stuff in the P&L – it’s all ‘clean’. They also have over £3m in the bank and no debt.

But bad news is already on the horizon, with orders sharply down this FY and no expectation of improvement. Total depends somewhat on Capita’s fortunes in the insurance market, supplying its Ultima product to the BPO player. This is not brilliant news as Capita’s insurance business was flat in 1H09 (and see Growth slows at Capita). I also noted Total’s website carrying the logo of document management firm and ‘development partner’, Invu, another ‘Little British Battler’ facing its own challenges (see Invu raises £1.5m as revenues plummet).

I’d have to say our commentary on Total, whom we have followed for many, many years, has not always been kind (for example, see Total recall). Indeed, the company is little bigger than it was a decade ago, when it had £3.3m in revenues but a market cap of nearly £11m (today around £3m). But they are a survivor and I guess Total seems at least to be making a decent living for Bourne, who holds nearly 50% of the stock in his own name with another 7-8% held by other Bournes. Some may take comfort from that.

No comments:

Post a Comment