Wednesday, 4 July 2007

Total recall

As many readers know, I published the first “Holway Report” back in 1988. Also in 1988, a tiny UK S/ITS company called Total Systems launched into the USM (the forerunner of AIM). So I have been reading Terry Bourne’s Chairman’s statements every year since. Bourne is “special”…there are few quoted UK S/ITS companies who now have the same Ch. and CEO as in 1988. Probably now proving what many have long suspected about my mental health, I’ve rather enjoyed his statements.

It all started when I used Bourne in my crusade against the use of the word “confidence” in trading statements – Bourne had used the term “looking forward to the future with confidence every year…regardless of what had or was about to befall his company.
In the 1994 Chairman’s statement, his excuse for poor performance was to say “It is particularly galling that Total has the products, people and expertise yet customers seem unable to see the benefits.” It didn’t get any better.
In 1995 he wrote “Amongst some potential clients there is still a reluctance to introduce the level of change necessary to gain real and substantial cost savings through the installation of our application packages”.
Unfortunately, Bourne didn’t share my strange enjoyment at his utterings; accusing me of “unnecessary expressions of opinion”. (Ed - Isn't that what analysts are paid to do?) His letter of 7th July 1993 suggested that I wait and “let history make the point”.

“Let history make the point!”
Total’s Corporate Brochure in 1995 boasted “Total’s history has been one of steady growth”.
Well, in 1988 when they IPOed Total had revenues of £2.9m and PBT of £835K.

Yesterday, some 19 years later, Total Systems announced their results for the year to 31st March 07. Revenues had slumped yet again – this time by 4% to £3.36m. PBT had been wiped out – replaced by a loss of £530K. Patient investors had seen their share price slump from 85p in 1988 to 34p now (It fell another 11% yesterday) . So now you know what “Steady growth” means. I’m sure even Bourne would agree we have waited long enough for “history to make the point”.

Excuses, excuses
Last year the excuse was “Reduced partly due to the reliability and flexibility of our products”. So when customers are eventually convinced of the benefit of a Total product, go through the pain of change, they then find the products so reliable that they stop spending anymore with Total. It’s so sad.

So, it was with great anticipation that I turned to what excuses Bourne would use this year. “The level of work from Capita has not been as extensive as anticipated and our existing customers, although supportive, have not made decisions on starting significant projects. Invu and Contemi continue to generate interest with our clients and sales prospects but there have been no sizeable orders at the time of writing”. Oh dear, it's those damned customers and partners again.Reminds me of my time putting in Hotel systems back in the 1970s. A manager told me how well his hotel would run if it wasn't for the guests and staff.

The problem with Total is they shouldn’t have listed in the first place and certainly shouldn’t be listed now.

Anyway, you will be pleased to learn that Bourne ended his statement yesterday saying that “the Board is confident that the Company’s strategy will bear fruit.”

Nothing changes.

No comments: