Mixed year for Patsystems
08 February 2011 | 2870 views | 0
Results for the 12 months ended 31 December 2010.
* Total revenue £22.1 million (2009: £22.1 million)
* Adjusted pre-tax profit at £3.8 million (2009: £3.9 million)*
* Cash and cash equivalents increased to £9.3 million (2009: £8.9 million)
* Proposed full year dividend increased 29% to 0.55p per share (2009: 0.425p per share)
*adjusted for share option costs, marking to market of derivatives used to hedge cash flows and amortisation of intangibles other than internally developed software
* Continued expansion into new growth markets with sales success for exchange offering in Argentina and Vietnam
* Hosting centres established in Chicago, Hong Kong, Tokyo, Singapore and Sydney to deliver a fully-managed Application Service Provider ("ASP") to existing and new customers
* Business' global ASP offering promoted as Patsystems XConnect making anticipated contribution to trading systems revenue growth in 2011
* Bursa Malaysia Derivatives selected Patsystems as the provider of its new order management system
Richard Last, Chairman, of Patsystems, commented:
"2010 was a year with a mixed performance across the business. We saw some notable sales successes, such as the new customers for our exchange system offering, tempered against deferred sales opportunities for our risk product and marginal growth within our trading systems business.
The Group continues to demonstrate continued cash generation and profit resilience and we expect this to continue in 2011 and beyond. The continued payment and growth in the level of the dividend is an important statement by the Board of our continued confidence in the growth prospects for the business.
Patsystems commences 2011 with an encouraging sales pipeline that will provide opportunity to expand our geographical presence and grow the revenues for each of our product offerings."
2010 was a year with a mixed performance across the business. We saw some notable sales su some no some notable sales successes, such as the new customers for our exchange system offering, tempered against deferred sales opportunities for our risk product and marginal growth within our trading systems business. I am pleased that the business has continued to expand into new growth markets with sales success for our exchange offering in Argentina and Vietnam.
In 2010, Patsystems established hosting centres in Chicago, Hong Kong, Tokyo, Singapore and Sydney in order to deliver a fully-managed Application Service Provider ("ASP") offering to both existing and new customers. Further investment will be made in 2011 in establishing hosting centres in London and Sao Paulo and implementing a global wide area network between the centres.
The business' global ASP offering is being promoted as Patsystems XConnect and is expected to be an important contributor to trading systems revenue growth in 2011.
Adjusted pre-tax profit (being profit before tax after adjusting for share option costs, marking to market of derivatives used to hedge cash flows and amortisation of intangibles other than internally developed software) for the full year ended 31 December 2010 was £3.8 million compared to £3.9 million in 2009. Adjusted pre-tax profit is the definition of profit used by analysts to measure the performance of the Group.
Diluted EPS on this basis was 2 pence per share, the same as last year. Details of these calculations are set out in the Earnings per Share section of the Finance Director's Review.
Profit before income tax for the full year ended 31 December 2010 was £3.2 million compared to £4.5 million in 2009. Diluted EPS was 1.4 pence per share (2009: 1.8 pence).
Turnover for the year amounted to £22.1 million (2009 £22.1 million) of which £13.7 million (2009: £13.2 million) is annuity revenue that derives from a combination of the provision of trading screens and market access on a "software-as-a-service" rental model. When combined with revenue from contracted support and maintenance of our order routing technology, this means 77% of the turnover is on a recurring annual basis (2009: 82%).
The Asia Pacific region had a positive year with several significant new sales wins. The Patsystems' Exchange and Trading System was adopted by the newly launched Vietnamese Commodity Exchange (VNE) in Ho Chi Minh City and Bursa Malaysia Derivatives selected Patsystems as the provider of its new order management system. In addition NewEdge, a major existing customer and a number of new customers across the region adopted the Patsystems XConnect ASP solution. Sales in Asia Pacific account for 39% (2009: 37%) of Group revenues.
In Europe, we continued to grow the business during the year despite the increasingly long sales cycles. The long term project to replace the exchange, risk and trading systems for TurkDEX continued throughout 2010 and is progressing to plan. Macquarie Bank Limited in Europe selected Patsystems' post trade risk system, Risk Informer, for their exchange traded derivatives business. Sales in Europe account for 35% (2009: 34%) of Group revenues.
The Americas region had a challenging year with the revenue contribution from existing clients failing to recover from 2008 levels and the loss of £0.8 million revenue from Lehman Brothers Inc. The sales campaign into South America was rewarded by Mercado a Término de Buenos Aires (MATba) selecting Patsystems as its key technology provider as it prepares to extend electronic trading capability to its existing open outcry operations. Sales in the Americas account for 26% (2009: 29%) of Group revenues.
Patsystems has demonstrated continued cash generation and profit resilience and we expect this to continue in 2011 and beyond. As a result of this, together with our strong year end cash position, the Board is recommending the payment of a second interim dividend of 0.35p based on the results for 2010 as a whole, bringing the total dividend for the year to 0.55p per share, compared to a total of 0.425p for 2009. This gives a year on year growth of 29% in our dividend and the dividend remains well covered at 4 times. The continued payment and growth in the level of the dividend is an important statement by the Board of our continued confidence in the growth prospects for the business.
The second interim dividend will be paid on 8 April 2011 to shareholders on the register as at 8 March 2011.
Board, Management and Staff
On behalf of the non-executive Directors, I would like to thank the Executive Directors, the senior management team and all the Patsystems' staff for all their hard work and dedication during the year.
Steve Sparke resigned from the Board during the year due to increasing time commitments from his other executive business interests and on behalf of the Board I would like to thank Steve for his support and contribution since he joined the Board in 2006.
I am delighted to welcome Stewart Douglas-Mann back to the Board; Stewart retired from the Board in 2007 but has been operating as a consultant to the Board for the intervening period. On a personal note I should also like to thank John Priestley for his support during the year, his commitment and dedication to the business has been greatly appreciated.
Customers and shareholders
Many of our customers have endured significant market and business change during 2009 and 2010 and as such I am grateful for their ongoing support and for providing opportunities that enabled Patsystems to continue develop and grow its product and service propositions.
I would also like to thank our shareholders for their continued support during 2010.
In 2011, Patsystems expects that the significant investment in our global ASP offering, Patsystems XConnect, will stimulate recurring revenue growth within our trading systems business. We expect to see further opportunities to grow our exchange systems business across the globe with the additional functionality we developed as part of the project with TurkDEX. A number of opportunities exist to sell our risk product into major global banks, but as was experienced in 2010 a degree of caution must be exercised due to the long decision timescales and the change of strategic priorities that can take place within global banks during the product procurement process.
With offices in Singapore, Hong Kong, Sydney and Tokyo Patsystems is well placed in the Asian and emerging market areas to provide end-to-end solutions for commodity futures exchanges and promoting the Patsystems XConnect offering for trading system adoption. Within established markets promotion of our post- trade risk offering will continue and offering our trading solutions by way of Patsystems XConnect.
Patsystems commences 2011 with an encouraging sales pipeline that will provide opportunity to expand our geographical presence and grow the revenues for each of our product offerings.