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Released: 17 th May 2006 Market Announcement for Public Release by NZX
To: Listed Company Relations
New Zealand Exchange Limited
The Directors of Finzsoft Solutions Limited are pleased to report on the results of the Group for the year ended 31st March 2006. This was another year of substantial progress for Finzsoft Solutions Ltd and with further development of our Sovereign finance and banking software.
On our trading results, trading profit was up 73% at $1,242,799, ($716,171 in 2005), prior to tax and amortization. Finzsoft achieved this result while continuing to invest in market growth and product functionality.
Turnover was up 12% on the previous year, at $7,873,559 ($7,043,617 in 2005).
Our directors have announced a final dividend of 2 cents per share, fully imputed, and payable on 12 July 2006 based on shareholding as at 30 June 2006. This makes dividend payments of 3.5 cents per share for the full year.
These figures confirm that Finzsoft continues to balance our aims of software product growth, ongoing marketing, stability of service and staff, and return to our shareholders.
At the "Key Transaction" acquisition in 2001, the proposed plan was to raise extra capital in order to invest in more rapid expansion. While our more cautious approach is being maintained, the Directors continue to evaluate the merits of more active expansion plans.
As advised each year, accounting compliance requires Finzsoft to amortise down to a nil value our Key Transaction purchase of Finzsoft Solutions (NZ) Ltd, formerly Systems Support Group Ltd, being mainly the Sovereign finance and banking software package, over ten years at $268,349 pa. In reality this software suite continues to grow in value. After this adjustment, which does not affect cash flow or give a tax benefit, and does not reflect the increasing value of the software package, the reported results show an accounting profit for the year of $913,115 before tax compared with $386,489 in the previous year.
Principal Activities
The Group's principal activity is computer software development, sale and support. The nature of the Group's business has not changed during the year. The main product is the Sovereign finance and banking software. This software operates the core business for finance companies, building societies, mortgage lenders, credit unions and all finance institutions that lend money or take savings and deposits.
Significant events during the 20005/06 year include:
New Zealand Market
This market showed continued good growth with our client base of the larger non bank finance institutions increasing during the year. At year end there were a number of others considering implementation of our Sovereign finance and banking software.
The adaptation of our software to allow our clients to comply with the Credit Contracts Consumer Finance Act (CCCFA) had been a major task and came into force on 1 st April 2005. Currently the work to deliver to our client's compliance with international financial reporting standards (IFRS) is similarly a significant activity.
Our client base of larger non bank finance institutions exhibited strong growth during the year. The stability and growth capacity of our Sovereign software supported this growth. The four NZ companies in the top five most profitable finance companies in New Zealand, (NBR 21 April 2006) all operate on our software.
International Market
While New Zealand continues to be our major concentration, international marketing continues. Australia is our major focus for future international growth and we recognise it is a demanding market requiring considerable effort.
We have four operating clients there now, with St George Bank equipment finance (and shortly their automotive finance) across Australia now "live" and representing a substantial project. This included Australian compliances and taxation.
The Directors believe that we have additional growth opportunities for future years.
Our sale to a Barbados finance corporation has proceeded and full implementation is underway. This lead eventuated from our USA representative. Finzsoft continues a presence at selected USA trade events.
Finzsoft also aims to keep our Sovereign product as provided to our New Zealand clients as competitive as possible with international markets.
The marketing of our Sovereign finance and banking software in New Zealand and especially overseas brings us up against the international software products in our specialist field. The challenge of supplying a better solution to finance organisations is constantly addressed.
The growth in our product to these levels brings benefits to our existing user base, as well as to Finzsoft, our staff and investors.
Diamond Card
This is a Finzsoft product, being an ATM and EFTPOS card which is issued by our users of this service. The Diamond Card logos are starting to appear on Bank ATMs. Further promotions of this product continue.
Staff
Our staff is the main resource of the company, as it is their skills which develop and support our services. Finzsoft is fortunate having a strong team already in place and we are actively recruiting further appropriate people.
2006/7 Year
Many of our New Zealand clients have grown substantially while utilising our Sovereign software. Their requirements for solution levels have grown in proportion. This requires the equivalent growth by Finzsoft in structures and services to match those client needs.
The Directors are very pleased with the results to date in establishing our product as able to compete in New Zealand and overseas with international offerings. We remain aware of the need to continue to build those service structures that our growing client base requires in order for them to gain best advantages from our software.
The Directors anticipate maintaining our growth rate in the current year, as our investment in infrastructure, product, and people, results in increased revenues. We believe that the cautious financial approach taken to date is in the best interest of the company and shareholders.
The Directors have now commenced a policy of paying of a dividend to shareholders, after a cautious approach for the first three years after listing. We intend to continue this new policy subject to results and maintaining our policies of product developments. This dividend policy will be reviewed each six months.
For more information on our activities, please refer to our Investor Relations section of the web site.
The Directors
Finzsoft Solutions Limited |
