TIDMFMJ
RNS Number : 4185T
Formjet PLC
05 June 2009
Formjet plc
('Formjet' or 'the Company')
Final Results
The Board of Formjet PLC, the AIM listed alternative software vendor, is pleased
to announce its final results for the twelve month period ended 31 December
2008.
Financial highlights 2008
* 2008 turnover GBP3,592,144 (2007 : GBP3,662,630)
* 2008 gross profit GBP1,939,716 (2007 : GBP2,379,175)
* Operating loss before exceptional items GBP292,457 (2007 : GBP41,907)
* Exceptional items GBP519,599 (2007 : nil)
* Shareholders' funds GBP2,452,276 (2007 : GBP2,473,625)
Current trading highlights 2009
* Total turnover to end of April 2009 up 23.5% on same period in 2008
* Total core product sales, ASI Ability and Panda, to end of April 2009 up 17.1%
on same period in 2008.
Strategic highlights 2009
* Main product focus on wholly owned brand of ASI Ability
* Further Expansion of ASI Ability range in Europe
* Explore all appropriate options to improve shareholder value
* Review of all loss making activities resulting in a cost restructuring programme
with planned 20% reduction in overheads for 2009, resulting in savings in excess
of GBP500,000
Commenting on today's results, Lyndon Chapman, Executive Chairman of Formjet
said:
"2008, although promising much during the year, was badly affected by a
disappointing fourth quarter performance.
To compound what became a very difficult trading period, the Company incurred
losses through an acquisition which had to be aborted on adverse due diligence,
related costs and actions surrounding that proposed acquisition.
The Board is, however, well aware that a significant shift in scale and
direction may be necessary. The Directors will continue to explore and discuss
all appropriate options with the Company's advisers".
Chief Executive Tony Lee added:
"Like for like sales for the first nine months of 2008, compared to 2007, showed
a positive trend with us achieving 10% growth in sales. The fourth quarter
sales, however, were 23% down on the same period in 2007 due to difficult
trading conditions, particularly in the retail sector, leading to an overall
fall in sales year on year of 1.9%. This, combined with a greater proportion of
lower margin, non-core, sales contributed to a trading loss before exceptional
items of GBP292,457 (2007 : loss of GBP41,907).
The launch of an improved ASI Ability Office Version 5, together with an ASI
branded range of products aimed at small businesses, proved successful with
revenues achieved in the 7 months since launch in excess of GBP500,000 compared
with sales for the 12 months ended 31 December 2007 of the previous Version 4 of
GBP160,000.
Following the cost restructuring programme, savings are now starting to take
effect and with the increased sales to date in 2009, the Board is confident that
it will deliver improved results during 2009 in spite of the general difficult
trading conditions in this economic climate."
ENQUIRIES:
Formjet plc
Tel: 01293 848 860
Lyndon Chapman, Executive Chairman
Tony Lee, Chief Executive
www.formjetplc.com
Dowgate Capital Advisers Ltd Tel: 020
7492 4777
Liam Murray / Jo Turner
www.dowgatecapitaladvisers.co.uk
Dowgate Capital Stockbrokers Ltd Tel: 01293
517 744
Neil Badger, Broker
www.dowgatecapitalstockbrokers.co.uk
Chairman's Statement
Introduction
2008, although promising much during the year, was badly affected by a
disappointing Q4 performance.
To compound what became a very difficult trading period, the Company incurred
losses through an acquisition which had to be aborted on adverse due diligence
and related costs and actions surrounding that proposed acquisition.
These situations which were announced to the market in January 2009 had a
predictably detrimental effect on the Company's share price and this has
narrowed the options available to the Group in seeking acquisition opportunities
and raising additional funds.
In the light of the prevailing "credit crunch" and the uncertainties for the UK
economy in 2009, the Directors have reviewed product stocks and the carrying
value of other assets, in accordance with International Financial Reporting
Standards, and this has resulted in significant one-off write downs.
At the same time, a thorough review of the Group and subsidiary cost structures
has resulted in cost savings in 2009 of GBP500,000 against 2008 costs and an
annualised saving of over GBP600,000.
These cost reductions have impacted at all levels of the Group and have
significantly reduced the Company's break-even point to well below the turnover
achieved in the last few years.
The Directors are currently actively exploring ways of restoring and creating
additional shareholder value and I hope to be able to advise shareholders of
progress in this area in the near future.
Overview
The main brands of the Group are currently ASI Ability and Panda
Software, with white labelling and special projects designed and delivered
through Formjet Innovations. It is the Group's intention to focus on its own
brand, "ASI" through its subsidiary, Ability Software International Limited.
ASI Ability continues to attract large resellers and computer manufacturers as a
genuine alternative to the established market leader, and the routes to market
have been further enhanced by the addition of major distributors including
Asbis, Koch Media, and Actebis who will also lead a further push into Europe.
The ASI range was also expanded with the introduction of ASI BeAnywhere, a
remote access tool that enables complete main computer functionality wherever
the user has access to a computer and internet anywhere in the world. This
product has reviewed successfully and is already available through a number of
leading retailers and supermarkets.
The ASI brand will be further expanded into new territories and product lines
during the course of this year's development.
Panda Software (UK) Ltd, the Group's IT security software franchise, continues
to deliver solid profitability but did show a decline in turnover during the
year and in 2008 represented 46.5% of the Group's turnover.
In light of the difficulties encountered in 2008, the Board will view with
caution any additional cost actions to its agreed budgets but is pleased that
the cost savings achieved have not impacted negatively on the Group's trading or
effectiveness.
It is pleasing to report that gross margins remain robust and cash flows
manageable.
Current Trading
The period to 30 April 2009 has delivered solid growth on sales for the same
period of 2008; to some extent this has been driven by one off transactions,
however "core" sales growth over the first four months is up by 17.1%. In the
prevailing economic environment, however, this should not be taken as an
indication of future performance. June 2008 was a particularly good month and
unlikely to be repeated in 2009.
We have seen turnover growth from both Ability and Panda product ranges with the
retail products achieving good gains and increases in new corporate business
through a significantly enlarged reseller structure. Two new products Panda
Managed Office Protection and ASI BeAnywhere will provide important drivers in
2009 and are representative of a new generation of "software as a service" and
remote access tools.
We hope that this progress can be maintained during the year. Current
discussions at Board level on the future direction of the business may, however,
alter the dynamics of the Company's business model.
Board changes
There have been no changes to the Board structure, but the Directors continue to
keep the size and composition of the Board under review, to ensure that the
Directors' collective and individual skills sets meet the Group's developing
needs.
Acquisition
The current economic uncertainties have highlighted a number of acquisition
opportunities in the light of the Company's current share price, however, any
acquisition opportunity would have to be exceptional for the Directors to
consider taking it forward.
We are unlikely to announce any acquisitions prior to completion of current
discussions on the Group's future strategy.
Outlook
The Group's product range continues to review well and routes to market are
growing in both traditional IT outlets and creative routes such as those
announced in 2008.
Our products should be well placed to perform successfully in a recession due to
their "value for money" nature, and this has been largely confirmed by the first
four months of trading in 2009.
The Board is, however, well aware that for the Group to justify its AIM listing,
a significant shift in scale and direction may be necessary. The Directors will
continue to explore and discuss all appropriate options with the Company's
advisers.
I thank our staff, advisers and suppliers for their support and encouragement
and believe that we will deliver improved shareholder value in 2009.
Lyndon Chapman
Executive Chairman
Formjet plc
05 June 2009
Chief Executive Officer Statement
& Finance Director's Review
Operating Performance
Difficult trading conditions in the fourth quarter of 2008 particularly in the
retail sector offset sales growth in the first three quarters of the year and
led to a disappointing trading result for 2008.
Like for like sales for the first nine months of 2008, compared to 2007, showed
a positive trend and were favourable and we achieved 10% sales growth. 4th
Quarter sales, however, were 23% down on the same period in 2007 leading to an
overall fall in sales year on year of 1.9% and resulting in a trading loss
before exceptional items of GBP292,457 (2007: loss of GBP41,907).
With significant additional costs incurred by an aborted acquisition and further
stock write downs the Group achieved a disappointing result for the year with
total losses after non-recurring items before tax and interest of GBP812,056
(2007: loss GBP41,907).
Gross margins before exceptional stock write downs were reduced slightly on last
year at 60.3% (2007: 65.0%).
The launch of an improved ASI Ability Office Version 5 together with an ASI
branded range of products aimed at small businesses proved successful with
revenues achieved in the 7 months since launch in excess of GBP500,000.
In light of the continuing difficult economic climate and the losses incurred in
2008, the Board has undertaken a restructuring exercise in the first quarter of
2009 resulting in an expected 20% reduction in annual overheads for 2009
amounting to over GBP500,000 compared with 2008. The Board has also undertaken a
strategic review of all loss making and non core activities which has resulted
in the disposal of a controlling interest in Software Dialog Direct Limited on
31 March 2009 and also the outsourcing of the operations of Ideal Telecoms
Limited. Costs within South Coast Distributions Limited have also been reduced
to a minimum and the Group will concentrate on the sale of its Panda Security
and ASI Ability product ranges, together with white labelling and special
projects.
Total revenue for the first four months of 2009 was 23.5% up on the same period
last year with core product revenues up 17.1%, however, we remain cautious given
the difficult business climate.
Panda
Panda continued to be an important sales and margin contributor for the Group
during the year despite a fall in sales in both the retail and corporate
sectors. Retail sales were particularly affected by intense competition within
the security software sector leading to price erosion.
Corporate revenues continued to make up nearly 50% of all Panda revenue.
Our Exclusive Representation Agreement was extended to 31 December 2010 during
the year and, in addition, the company was awarded the distribution rights for
the Republic of Ireland. As announced, the Company has already signed up a major
distributor, Asbis, whom we expect to contribute to revenues in 2009.
Total Panda revenues in the first four months of 2009 were 8% up on the
equivalent period in 2008.
ASI Ability
The ASI Ability Office Version 5, together with the ASI small business range,
were launched in May 2008 and resulted in an increase in ASI Ability Group sales
of over GBP500,000 on 2007. Ability has enhanced its reputation as a genuine low
cost alternative in the Office market with the "Office on a stick" product
accounting for nearly 30% of total revenue. The rapidly expanding netbook market
which is particularly well suited for this product should provide further
avenues for growth into 2009.
The agreement to provide white label software to a major and long established
North American software vendor will yield $1 million guaranteed revenue over the
next two years and was a major contract win.
Revenues for the first four months of 2009 were over GBP100,000 (211%) up on the
same period in 2008.
Formjet Innovations
White label sales to existing customers were sharply down during 2008 with no
material reorders from the major retail client base. Woolworths was a notable
casualty albeit with no bad debt exposure for the Company.
We have successfully introduced our ASI branded product ranges via Formjet
Innovations to leading retailers such as Tesco, Argos, Asda and Carphone
Warehouse and have expanded our base of smaller independent retail outlets.
The first full year of Edalive edutainment range yielded sales of over
GBP100,000.
Taxation
No taxation arises due to the losses made during the year. Group tax losses
carried forward are approximately GBP2,800,000.
Cash balances
With the trading losses together with aborted acquisition costs and write downs,
gross cash balances reduced from GBP604,895 to GBP298,345 over the year. The
Board is confident that in light of the restructuring of the business cash
remains manageable, however, in an economic environment in which customer
collections are generally becoming increasingly difficult and business failures
increasing, credit control and cash flow remain a key priority.
The Board is confident that with our focus on cost minimisation and on sales of
our core products we will deliver improved results during 2009 in spite of the
general difficult trading conditions in this economic climate.
Tony Lee
Chief Executive Officer & Finance Director
Formjet plc
05 June 2009
CONSOLIDATED INCOME STATEMENT
For The Year Ended 31 December 2008
+------------------------------------------------+--------------+----+-------------+
| | 2008 | | 2007 |
+------------------------------------------------+--------------+----+-------------+
| | GBP | | GBP |
+------------------------------------------------+--------------+----+-------------+
| Continuing | | | |
| | | | |
+------------------------------------------------+--------------+----+-------------+
| REVENUE | 3,592,144 | | 3,662.630 |
+------------------------------------------------+--------------+----+-------------+
| Cost of sales | (1,652,428) | | (1,283,455) |
+------------------------------------------------+--------------+----+-------------+
| GROSS PROFIT | 1,939,716 | | 2,379,175 |
+------------------------------------------------+--------------+----+-------------+
| | | | |
+------------------------------------------------+--------------+----+-------------+
| Administrative expenses | (2,791,377) | | (2,421,082) |
+------------------------------------------------+--------------+----+-------------+
| Exchange gain on sales | 39,605 | | - |
+------------------------------------------------+--------------+----+-------------+
| | | | |
+------------------------------------------------+--------------+----+-------------+
| OPERATING LOSS | (812,056) | | (41,907) |
+------------------------------------------------+--------------+----+-------------+
+------------------------------------------------+--------------+----+------------+
| Analysed as: | | | |
+------------------------------------------------+--------------+----+------------+
| Operating loss before exceptional items | (292,457) | | (41,907) |
+------------------------------------------------+--------------+----+------------+
| Exceptional items | (519,599) | | - |
+------------------------------------------------+--------------+----+------------+
| | | | |
+------------------------------------------------+--------------+----+------------+
| Operating loss | (812,056) | | (41,907) |
+------------------------------------------------+--------------+----+------------+
| | | | |
+------------------------------------------------+--------------+----+------------+
| | | | |
+------------------------------------------------+--------------+----+------------+
| Finance income | 6,514 | | 22,045 |
+------------------------------------------------+--------------+----+------------+
| Finance costs | (39,513) | | (50,144) |
+------------------------------------------------+--------------+----+------------+
+------------------------------------------------+--------------+----+------------+
| LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION | (845,055) | | (70,006) |
+------------------------------------------------+--------------+----+------------+
| Tax on loss on ordinary activities | - | | - |
+------------------------------------------------+--------------+----+------------+
| | | | |
+------------------------------------------------+--------------+----+------------+
| LOSS FOR THE FINANCIAL YEAR AFTER TAXATION | (845,055) | | (70,006) |
+------------------------------------------------+--------------+----+------------+
| | | | |
+------------------------------------------------+--------------+----+------------+
Earnings per share
+---------------------------------------------------+----------+----------------+
| Basic and diluted earnings per share from | (0.47p) | (0.05p) |
| continuing operations | | |
+---------------------------------------------------+----------+----------------+
CONSOLIDATED BALANCE SHEET
31 December 2008
+---------------------------------------------+--------------------+--------------+
| | 2008 | 2007 |
+---------------------------------------------+--------------------+--------------+
| | GBP | GBP |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| ASSETS | | |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Non-current assets | | |
+---------------------------------------------+--------------------+--------------+
| Goodwill | 562,207 | 562,207 |
+---------------------------------------------+--------------------+--------------+
| Intangible assets | 446,308 | 329,335 |
+---------------------------------------------+--------------------+--------------+
| Investments held to maturity | 208,085 | - |
+---------------------------------------------+--------------------+--------------+
| Property, plant and equipment | 925,062 | 973,064 |
+---------------------------------------------+--------------------+--------------+
| Total non-current assets | 2,141,662 | 1,864,606 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Current assets | | |
+---------------------------------------------+--------------------+--------------+
| Inventories | 273,408 | 206,089 |
+---------------------------------------------+--------------------+--------------+
| Trade and other receivables | 1,250,528 | 1,430,116 |
+---------------------------------------------+--------------------+--------------+
| Cash and cash equivalents | 298,345 | 604,895 |
+---------------------------------------------+--------------------+--------------+
| Total current assets | 1,822,281 | 2,241,100 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Total assets | 3,963,943 | 4,105,706 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| EQUITY AND LIABILITIES | | |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Capital and reserves attributable to equity | | |
| holders | | |
+---------------------------------------------+--------------------+--------------+
| Share capital | 500,306 | 259,546 |
+---------------------------------------------+--------------------+--------------+
| Reserves | 3,901,973 | 3,319,027 |
+---------------------------------------------+--------------------+--------------+
| Retained earnings | (1,950,003) | (1, 104,948) |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Total equity | 2,452,276 | 2,473,625 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Non-current liabilities | | |
+---------------------------------------------+--------------------+--------------+
| Borrowings | 314,536 | 355,332 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Current liabilities | | |
+---------------------------------------------+--------------------+--------------+
| Trade and other payables | 1,156,042 | 1,090,793 |
+---------------------------------------------+--------------------+--------------+
| Borrowings | 41,089 | 185,956 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| | 1,197,131 | 1,276,749 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Total liabilities | 1,511,667 | 1,632,081 |
+---------------------------------------------+--------------------+--------------+
| | | |
+---------------------------------------------+--------------------+--------------+
| Total equity and liabilities | 3,963,943 | 4,105,706 |
+---------------------------------------------+--------------------+--------------+
CONSOLIDATED CASH FLOW STATEMENT
For The Year Ended 31 December 2008
+----------------------------------------------+----------------+----------------+
| | 2008 | 2007 |
+----------------------------------------------+----------------+----------------+
| | GBP | GBP |
+----------------------------------------------+----------------+----------------+
| Cash flows from operating activities | | |
+----------------------------------------------+----------------+----------------+
| Operating loss | (812,056) | (41,907) |
+----------------------------------------------+----------------+----------------+
| Depreciation of property, plant and | 66,924 | 71,009 |
| equipment | | |
+----------------------------------------------+----------------+----------------+
| Amortisation of intangible assets | 143,850 | 60,434 |
+----------------------------------------------+----------------+----------------+
| Changes in working capital: | | |
+----------------------------------------------+----------------+----------------+
| Inventories | (67,319) | 8,564 |
+----------------------------------------------+----------------+----------------+
| Trade and other receivables | 179,588 | (584,731) |
+----------------------------------------------+----------------+----------------+
| Trade and other payables | 65,249 | 215,793 |
+----------------------------------------------+----------------+----------------+
| Cash flows used in operating activities | (423,764) | (270,838) |
+----------------------------------------------+----------------+----------------+
| | | |
+----------------------------------------------+----------------+----------------+
| Cash flows from investing activities | | |
+----------------------------------------------+----------------+----------------+
| Investments held to maturity | (208,085) | - |
+----------------------------------------------+----------------+----------------+
| Purchases of property, plant and equipment | (18,922) | (44,350) |
+----------------------------------------------+----------------+----------------+
| Purchases of intangible fixed assets | (260,823) | (203,790) |
+----------------------------------------------+----------------+----------------+
| Interest received | 6,514 | 22,045 |
+----------------------------------------------+----------------+----------------+
| Net cash flows used in investing activities | (481,316) | (226,095) |
+----------------------------------------------+----------------+----------------+
| | | |
+----------------------------------------------+----------------+----------------+
| | | |
+----------------------------------------------+----------------+----------------+
| Cash flows from financing activities | | |
+----------------------------------------------+----------------+----------------+
| Proceeds from issue of ordinary shares | 902,846 | - |
+----------------------------------------------+----------------+----------------+
| Costs of issuing shares | (79,140) | - |
+----------------------------------------------+----------------+----------------+
| (Decrease) / Increase in borrowings | (185,663) | 108,163 |
+----------------------------------------------+----------------+----------------+
| Interest paid | (39,513) | (50,144) |
+----------------------------------------------+----------------+----------------+
| Net cash flows from financing activities | 598,530 | 58,019 |
+----------------------------------------------+----------------+----------------+
| | | |
+----------------------------------------------+----------------+----------------+
| | | |
+----------------------------------------------+----------------+----------------+
| Net (decrease)/increase in cash, cash | (306,550) | (438,914) |
| equivalents | | |
+----------------------------------------------+----------------+----------------+
| Cash, cash equivalents at beginning of year | 604,895 | 1,043,809 |
+----------------------------------------------+----------------+----------------+
| Cash, cash equivalents at end of year | 298,345 | 604,895 |
+----------------------------------------------+----------------+----------------+
EARNINGS PER SHARE
The calculation of basic earnings per share is based on the earnings for the
year (continuing and total operations) of GBP(845,055) (2007: GBP(70,006)) and
on a weighted average number of shares of 0.2p in issue during the year of
180,153,145 (2007: 129,773,025). The effect of the share options on the
calculation of the earnings per share was anti-dilutive.
ACCOUNTS
The Company announces that it has today posted the Annual Report and Accounts
for the year ended 31 December 2008 to shareholders, which is now also available
on the Company's website. Copies of the Annual Report and Accounts will be
available for collection from the Company's Trading Office at the address below:
Innovation House
Windsor Place
Faraday Road
Crawley
West
Sussex
RH10 9TF
Notes to Editors:
Formjet plc
Formjet plc is a UK-based company with a highly distinctive business model. It
acquires territorial rights to 'alternative' software products, and markets,
sells, distributes and supports these products in place of the vendor in
worldwide markets. The strategy has at its heart the proposition that the
Company can acquire product lines in territories of at least one country without
the expense of either product development or the creation of IPR.
Alternative Products
* Panda Software (UK) distributes Panda Software antivirus and Internet security
products in the UK. With its high margins and recurring annual renewal revenues.
* Ability Software International (ASI) distributes a powerful suite of office
products which, as well as being sold under their own branding, form an integral
part of the white label opportunities that Formjet is creating. Ability Software
International has also developed the ASI Business Software range. This comprises
nine titles, which include fully comprehensive office and graphics suites,
Internet security, a business plan development application, small business
accounting, appointment book management, staff records management software and a
remote access product - BeAnywhere.
* EdAlive edutainment software has opened up a new and growing market for Formjet
and now covers a wide range of core subjects including maths, word skills and
spelling.
Alternative Routes to Market
* Formjet Innovations is the specialist distribution arm of the Formjet Group
focusing on its alternative product range and associated alternative routes to
market. The focus here is on creating "white label" software, targeting retail
and brand leaders of importance.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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