Star Data Systems Inc -
Star Data first-quarter results
Star Data Systems Inc STY
Shares issued 16,798,437 1999-09-22 close $3.3
Thursday Sep 23 1999
Mr. Alan Hutton reports
Net income for the first quarter of fiscal 2000 increased substantially to $1.0-million, or six cents per share, representing a fivefold increase over the $0.2-million, or one cent per share, for the same period a year ago. In addition, earnings before interest, taxes, depreciation and amortization increased by 17 per cent to $4.5-million for the quarter, compared with $3.9-million in the first quarter last year.
Record revenues of $20.7-million were achieved in the quarter, an increase of 13 per cent, compared with $18.4-million for the same period one year ago. This also represents a 7-per-cent increase over the $19.4-million in revenue generated in the immediately preceding fourth quarter of fiscal 1999.
First-quarter cash flow from operations showed continued improvement, up significantly to $4.3-million, or 26 cents per share, from $3.5-million, or 21 cents per share a year ago, representing a 22-per-cent improvement. Cash flow from operations is also up 5 per cent from the $4.1-million in the previous three-month period, the last quarter of fiscal 1999. The strong cash flow from operations in the first quarter allowed for a further 9-per-cent reduction in long-term debt, to $12.1-million at Aug. 31, 1999.
The record level of revenues in this first quarter of fiscal 2000, and corresponding increase in net income, continued the trend established in the last half of fiscal 1999 of improving financial performance. The results reflect growth in both of Star Data's core businesses. Revenue from wealth management solutions experienced the most significant growth, increasing by $2.2-million, or 24 per cent, over the prior year. The information services business returned to year-over-year growth with a 1-per-cent increase in revenue. The recently introduced Internet-compliant StarQuote PRO will improve upon this positive trend. "Star Data is committed to building long-term value for our shareholders. Our first quarter results provide further evidence of the company's progress towards this objective, particularly with increased demand for services related to our wealth management solutions," said Alan Hutton, Star Data's president and chief executive officer. "We are also very pleased to see growth in our information services business. We completed the rollout of our latest StarQuote installation with a major financial institution, introduced our innovative and market-leading StarQuote PRO product nationally and launched the STAMP compliant version of our StarTrader equity trading software."
During the quarter Star Data also introduced the concept of e-settlement, a term trademarked by the company to describe the technology developed to process securities transactions in real-time. Our e-settlement technology now permits real-time transaction processing in the securities industry, a critical element in the wealth management strategies of the company's customers.
In August, 1999, Star Data launched a STAMP compliant version of its StarTrader trading station, a Y2K-tested application that has subsequently been certified by both the Montreal and Toronto stock exchanges. Star Data recognized over a year ago that the widespread adoption of the STAMP protocol (Securities Trading Access Message Protocol) by Canadian exchanges would significantly alter Canada's equity trading industry.
During the 1st quarter, Star Data's Year 2000 readiness project progressed in accordance with the schedule outlined in the company's 1998 annual report and further elaborated upon in subsequent quarterly and annual reports. The company's products and services have been validated as being Year 2000 ready. In certain instances, implementation of Year 2000 ready services has been delayed to accommodate client timetables. The company is fully participating in the financial services industry street-wide Year 2000 demonstrations, in addition to its program of internal and client-specific testing. Because of the interdependencies inherent in the Year 2000 issue and the company's extensive reliance on technology, the company continues to closely monitor the Year 2000 readiness of its key suppliers and customers. The company is developing its contingency plans to mitigate against possible Year 2000 failures within its business, including failures by its suppliers and customers. The company's Year 2000 costs established for fiscal 2000 will be expensed as incurred. The company continues to track to its overall Y2K budget of $3.8-million, substantially all of which has been expensed in previous fiscal years. Based on its current assessment, Star Data believes that the Year 2000 issue will not have a material adverse impact on the services to its customers, its results, operations or financial condition. However, there can be no assurance that the Year 2000 uncertainties will not be materially adverse to the company.
CONSOLIDATED STATEMENT OF INCOME
Three months ended Aug. 31
1999 1998
Revenue
Information services $ 9,446 $ 9,333
Wealth management
solutions 11,261 9,067
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20,707 18,400
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Expenses
Salaries and
benefits 4,749 4,450
Service delivery
costs 4,360 3,934
General and
administrative 3,537 3,611
Research and
development 3,543 2,536
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16,189 14,531
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Income before
the undernoted 4,518 3,869
Interest expense 189 333
Amortization 3,338 3,354
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Income before
income taxes 991 182
Provision for
income taxes - -
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Net income $991 $182
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Income per share 6 cents 1 cent
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