TIDMFMJ
RNS Number : 6430G
Formjet PLC
04 February 2010
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
2009.
In the financial year ending 31 December 2009 the shape and structure of the
group changed considerably.
Group Structure and Management
o Successful disposal of Panda Software (UK) Ltd in July 2009 for at least
GBP1.2 million
o Andrew Monk joined the Board and took a 22.8% shareholding in the company
o Tony Lee retiring as Finance Director to be replaced by Peter Joy
o Lyndon Chapman to step down as Executive Chairman to Non Executive at AGM on
March 4th
Trading
o Current trading does not provide a reliable view of the Company's prospects
due to the sale of Panda and also the significant restructuring of its cost base
o Continued interest in Ability's range from major IT distributors, retailers
and hardware manufacturers
Acquisitions
o Major acquisition that the company was focussed on was dropped after concerns
and to prevent unnecessary payment of expenses if full due diligence had started
o On-going examination of a number of other potential acquisitions which the
board believes will be successfully delivered in 2010
For further information, please contact
Formjet plc
Andrew Monk, CEO +44 (0) 12 9384 8860 or 07973 224 283
Shore Capital and Corporate Limited
Andrew Raca +44 (0) 20 7408 4090
Edward Mansfield
Chairman's Statement
Introduction
In the financial year ending 31 December 2009 the shape and structure of the
group changed considerably.
These changes cover virtually every aspect of the group's activities including
its product ranges through to subsidiary management and the PLC board.
The successful disposal of Panda Software (UK) Ltd in July 2009 was initiated by
Panda Security International's desire to take control of its operations in the
major IT markets and I am pleased that we achieved a price of at least
GBP1,200,000, given that our rights to the product range were due to terminate
in December 2010.
The Panda subsidiary was the Company's sole subsidiary at the time of our
listing in 2004 and continued to play a major and important part of the group's
turnover. The acquisition in late 2004 of the sales rights to the Ability
Software range was originally sought to lessen the dependence on Panda and
provide an ongoing business strategy.
The management still retain a strong belief that Ability will provide levels of
turnover and profitability in the future but the timings are such that the board
believes that it would be unwise to rely on Ability as the principle source of
revenue.
It was apparent that in order to achieve significant growth in the short term an
ambitious acquisition strategy was necessary together with a management team
that could inspire investor confidence. To this end Mr Andrew Monk was invited
to join the company and his appointment on 8 July 2009 included his taking a
22.8% shareholding in the company.
Trading
Current trading does not provide a reliable view of the Company's prospects due
to the sale of Panda and also the significant restructuring of its cost base.
The management continue to be pleased with the levels of interest from major IT
distributors, retailers and hardware manufacturers in the Ability range as an
alternative to the market leading brands. The sales patterns are, however, not
sufficiently developed to provide reliable forecasting, comprising as they do
some very large potential orders that may or may not materialise.
Because of the changing direction of the business a forward view of accounting
policies has resulted in a number of exceptional write downs which are
considered prudent in current circumstances and have little cash impact.
Board Changes
The Formjet board structure has altered during the year and reflects the
changing size and direction of the business. In 2009 Mr David Hennell and Mr
Frank Lewis left the board with David now heading up the Ability subsidiary as
Managing Director. I would like to thank Frank and David for their contribution
and also extend that to Mr Tony Lee who left the company at the end of January.
Mr Peter Joy, whom we welcome to the company, has replaced Tony Lee as Finance
Director.
Acquisitions
The company is looking carefully at a number of potential acquisitions, some of
which are an extension of the current business model and others outside of it
but utilising the management skills base. I have previously commented on the
importance of our acquisition strategy and the board believes that this will be
successfully delivered in 2010.
Outlook
A number of important changes are planned for early 2010 to reflect the changing
direction of the group; these include a name change to Third Quad Capital Plc
conditional upon shareholder approval.
Further changes and strengthening of the board will be implemented as the
group's strategy evolves during the course of the year. I intend immediately
after the AGM on the 4 March 2010 to step down as your Executive Chairman. I
have however accepted the offer of the board to continue as non-Executive
Chairman.
In my previous statement I commented on the need for a significant shift in
scale and direction for the group to justify its AIM listing, and I now believe
that we are close to delivering that change.
The Company has changed considerably during the last twelve months and this has
largely impacted on the Company's staff and management who I thank for their
ongoing commitment through some difficult situations. I would also like to thank
the Company's advisers and shareholders for their continued support.
Chief Executive Officer Statement
2009 has been a year of significant change for your company. In June the Panda
franchise was sold back to Panda Security, S.L. for GBP1.2m and in July I
acquired a 22.8% stake in the company. I started work in September as the new
CEO and since then we have been working to reposition the company for the
future.
Because of these changes one should treat headline numbers with caution as they
are not necessarily a reflection of the performance of your company or of the
future performance. 2009 has been a difficult year economically and the ASI
Ability range of products have yet to reach a level of maturity that can
withstand this environment. Costs were taken out in the first half and further
costs have been taken out since my arrival. Achieving profitability is our
goal. Costs must be below revenue and it is our duty to ensure this is the case.
We can then look for ways to maximize profitability. Of course this can be
achieved either by reducing costs or increasing revenue and having already done
the former we are now focussed on the latter.
We have placed a greater emphasis on cash and cash management and I am pleased
to say that this has been successful and although we will have some debt until
our next instalment of the Panda payment in July, it is quite manageable. We
have also put our head office up for sale, although no guarantee of success can
be had in this market.
During the year ASI Ability extended the worldwide marketing rights of its
office product until 2018. The office software market is changing rapidly and
this may open interesting opportunities although not without risk. Currently the
market is dominated by Microsoft but this is changing with Open Office and
Google Office and this is making people consider alternatives to Microsoft, and
we are an attractive one. The way office software is sold is also changing and
it is now becoming the norm to be sold direct or as a trial period directly
loaded onto the hardware. This also offers opportunities for us as we are happy
to sell to retailers and also we are happy to be loaded directly onto hardware
at a price that is attractive to the hardware vendors and our product is ideally
suited to the rapidly growing Netbook and Smartbook market.
We already have one "licence and royalty" deal with a North American software
company and we continue to look for further "licence and royalty" deals.
Our BeAnywhere remote access solution is a very exciting product; adoption of
remote access tools has been slow for all providers but we are the lowest cost
provider. However as Netbooks and mobile broadband grow, the ability to have
remote access to your work or home computer should flourish with SMEs who are
regularly outside the work place or on the move.
We also continue to have a successful relationship with Panda since selling the
franchise back to them and we continue to act as a specialist reseller for them
with our customer base.
As previously announced we considered the strategic options for our loan to the
Benelux operation and as we concluded that we are unlikely to recover it we have
written it off. We have also taken a very conservative approach towards
accounting and have made a series of general provisions. We have also taken an
impairment charge on the subsidiary South Coast Distributions Limited.
Going forward it is the group's intention to make acquisitions as given the
costs associated with a listing, the existing operations are too small as a
standalone listed company. As a signal of the repositioning of the company, we
are proposing to change the name of the company at the Annual General Meeting to
Third Quad Capital Plc.
Making acquisitions is not as easy as it sounds and inherently brings risk. It
is ensuring the risk is minimised that is vital. We will not make acquisitions
for acquisitions' sake as shareholder value rather than size is our objective.
Potential acquisitions should be fundamentally good businesses where we can add
value to improve value. We will look to bring good people with any acquisition
and to invest and grow the business by being part of our group.
One of the key attractions of any deal will be strong cash flow. Ideally we wish
to get the company to the stage when it can have enough internal cash generation
that it can make acquisitions without the need to raise equity which is
dilutive, although this will take quite a long time. We do believe that over the
next few years, due to the problems in the UK economy and the financial crisis,
that there will be plenty of ideal companies that can be acquired at attractive
prices.
Unfortunately we had been focussed and proceeding with a potential acquisition
for the last few months but on closer due diligence serious issues became clear
and so we have stepped away as although the target was very attractive it would
have been wrong to do anything on the wrong terms. Little money has been
expended in advisers' fees and so the cost of stepping back is time rather than
money.
Our Finance Director Tony Lee left the company on 31 January 2010 and I would
like to thank him for his efforts and working closely with me in the last five
months to reposition the company and focus on cash flow. I am delighted that
Peter Joy agreed to replace Tony and he joined the Board on 1 February 2010.
Peter is ideally suited for working on acquisitions having spent the last 20
years as the Finance Director of Astaire & Partners Limited in the City.
Finally as shareholders you should be aware that although we are listed on AIM,
the cost of being an AIM quoted company compared to a fully listed company is no
longer that different. AIM is no longer a low cost alternative but it does still
have much more flexibility and so is currently the right market for your company
to be listed on.
Current Trading
As mentioned earlier we had hoped to be proceeding with a major acquisition but
this has not been forthcoming but we believe it is better to say "No" if things
are not quite right than "Yes" and regret it afterwards.
With ASI Ability it is too early in the financial year to comment on progress as
orders are likely to be lumpy. We do have some promising enquiries which give us
optimism but they do have to be converted into physical orders.
Andrew Monk
Chief Executive Officer
4 February 2010
FORMJET PLC
GROUP INCOME STATEMENT
For The Year Ended 31 December 2009
+----------------+--------------+-------------+
| | 2009 | 2008 |
+----------------+--------------+-------------+
| | GBP | GBP |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| REVENUE | | |
+----------------+--------------+-------------+
| Continuing | 868,733 | 3,592,144 |
| Operations | | |
+----------------+--------------+-------------+
| Discontinued | 954,461 | - |
| Operations | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| | 1,823,194 | 3,592,144 |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| Cost | (702,669) | (1,652,428) |
| of | | |
| sales | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| GROSS | 1,120,525 | 1,939,716 |
| PROFIT | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| Administrative | (3,114,859) | (2,791,377) |
| expenses | | |
+----------------+--------------+-------------+
| Exchange | - | 39,605 |
| gain on | | |
| sales | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| OPERATING | (1,994,334) | (812,056) |
| PROFIT / | | |
| (LOSS) | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| Continuing | (2,115,715) | (812,056) |
| Operations | | |
+----------------+--------------+-------------+
| Discontinued | 121,381 | - |
| Operations | | |
+----------------+--------------+-------------+
| | (1,994,334) | (812,056) |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| Analysed | | |
| as: | | |
+----------------+--------------+-------------+
| Operating | (714,334) | (292,457) |
| loss | | |
| before | | |
| exceptional | | |
| items | | |
+----------------+--------------+-------------+
| Exceptional | (1,280,000) | (519,599) |
| items | _________ | ________ |
+----------------+--------------+-------------+
| Operating | (1,994,334) | (812,056) |
| loss | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| Profit | 538,075 | - |
| on | | |
| disposal | | |
| of Panda | | |
| Software | | |
| (UK) Ltd | | |
+----------------+--------------+-------------+
| Finance | 813 | 6,514 |
| income | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| LOSS | (1,491,462) | (845,055) |
| ON | | |
| ORDINARY | | |
| ACTIVITIES | | |
| BEFORE | | |
| TAXATION | | |
+----------------+--------------+-------------+
| Tax on | - | - |
| loss | | |
| on | | |
| ordinary | | |
| activities | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| LOSS | (1,491,462) | (845,055) |
| FOR | | |
| THE | | |
| FINANCIAL | | |
| YEAR | | |
| AFTER | | |
| TAXATION | | |
+----------------+--------------+-------------+
| | | |
+----------------+--------------+-------------+
| Earnings | | |
| per | | |
| share | | |
+----------------+--------------+-------------+
| Basic | (0.50p) | (0.47p) |
| and | | |
| diluted | | |
| earnings | | |
| per | | |
| share | | |
| from | | |
| continuing | | |
| operations | | |
+----------------+--------------+-------------+
| Basic | (0.04p) | - |
| and | | |
| diluted | | |
| earnings | | |
| per | | |
| share | | |
| from | | |
| discontinued | | |
| operations | | |
+----------------+--------------+-------------+
FORMJET PLC
GROUP BALANCE SHEET
31 December 2009
+--------------+-------------+-------------+
| | 2009 | 2008 |
+--------------+-------------+-------------+
| | GBP | GBP |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| ASSETS | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Non-current | | |
| assets | | |
+--------------+-------------+-------------+
| Goodwill | 50,000 | 562,207 |
+--------------+-------------+-------------+
| Intangible | - | 446,308 |
| assets | | |
+--------------+-------------+-------------+
| Investments | - | 208,085 |
| held to | | |
| maturity | | |
+--------------+-------------+-------------+
| Property, | 870,342 | 925,062 |
| plant and | | |
| equipment | | |
+--------------+-------------+-------------+
| Total | 920,342 | 2,141,662 |
| non-current | | |
| assets | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Current | | |
| assets | | |
+--------------+-------------+-------------+
| Inventories | 27,285 | 273,408 |
+--------------+-------------+-------------+
| Trade | 875,881 | 1,250,528 |
| and | | |
| other | | |
| receivables | | |
+--------------+-------------+-------------+
| Cash | 23,950 | 298,345 |
| and | | |
| cash | | |
| equivalents | | |
+--------------+-------------+-------------+
| Total | 927,116 | 1,822,281 |
| current | | |
| assets | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Total | 1,847,458 | 3,963,943 |
| assets | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| EQUITY | | |
| AND | | |
| LIABILITIES | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Capital | | |
| and | | |
| reserves | | |
| attributable | | |
| to equity | | |
| holders | | |
+--------------+-------------+-------------+
| Share | 700,306 | 500,306 |
| capital | | |
+--------------+-------------+-------------+
| Share | 3,945,623 | 3,901,973 |
| premium | | |
| account | | |
+--------------+-------------+-------------+
| Retained | (3,441,465) | (1,950,003) |
| earnings | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Total | 1,204,464 | 2,452,276 |
| equity | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Non-current | | |
| liabilities | | |
+--------------+-------------+-------------+
| Borrowings | 253,081 | 314,536 |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Current | | |
| liabilities | | |
+--------------+-------------+-------------+
| Trade | 258,097 | 1,156,042 |
| and | | |
| other | | |
| payables | | |
+--------------+-------------+-------------+
| Borrowings | 131,816 | 41,089 |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| | 389,913 | 1,197,131 |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Total | 642,994 | 1,511,667 |
| liabilities | | |
+--------------+-------------+-------------+
| | | |
+--------------+-------------+-------------+
| Total | 1,847,458 | 3,963,943 |
| equity | | |
| and | | |
| liabilities | | |
+--------------+-------------+-------------+
FORMJET PLC
GROUP CASH FLOW STATEMENT
For The Year Ended 31 December 2009
+---------------+-------------+-----------+
| | 2009 | 2008 |
+---------------+-------------+-----------+
| | GBP | GBP |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| Cash | | |
| flows | | |
| from | | |
| operating | | |
| activities | | |
+---------------+-------------+-----------+
| Operating | (1,986,259) | (812,056) |
| loss | | |
+---------------+-------------+-----------+
| Depreciation | 38,622 | 66,924 |
| of property, | | |
| plant and | | |
| equipment | | |
+---------------+-------------+-----------+
| Amortisation | 70,550 | 143,850 |
+---------------+-------------+-----------+
| Intangible | 375,758 | - |
| assets | | |
| impairment | | |
| charge | | |
+---------------+-------------+-----------+
| Goodwill | 164,254 | - |
| impairment | | |
| charge | | |
+---------------+-------------+-----------+
| Impairment | 397,405 | - |
| of assets | | |
| held to | | |
| maturity | | |
+---------------+-------------+-----------+
| Changes | | |
| in | | |
| working | | |
| capital: | | |
+---------------+-------------+-----------+
| | 213,082 | (67,319) |
| Inventories | | |
+---------------+-------------+-----------+
| | (7,615) | 179,588 |
| Trade | | |
| and | | |
| other | | |
| receivables | | |
+---------------+-------------+-----------+
| | (596,653) | 65,249 |
| Trade | | |
| and | | |
| other | | |
| payables | | |
+---------------+-------------+-----------+
| Cash | (1,330,856) | (423,764) |
| flows | | |
| used | | |
| in | | |
| operating | | |
| activities | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| Cash | | |
| flows | | |
| from | | |
| investing | | |
| activities | | |
+---------------+-------------+-----------+
| Investments | (189,320) | (208,085) |
| held to | | |
| maturity | | |
+---------------+-------------+-----------+
| Proceeds | 1,011,947 | - |
| from | | |
| disposal | | |
| of | | |
| subsidiaries, | | |
| net of cash | | |
| transferred | | |
+---------------+-------------+-----------+
| Purchases | (10,114) | (18,922) |
| of | | |
| property, | | |
| plant and | | |
| equipment | | |
+---------------+-------------+-----------+
| Purchases | - | (260,823) |
| of | | |
| intangible | | |
| fixed | | |
| assets | | |
+---------------+-------------+-----------+
| Interest | 813 | 6,514 |
| received | | |
+---------------+-------------+-----------+
| Net | 813,326 | (481,316) |
| cash | | |
| flows | | |
| used | | |
| in | | |
| investing | | |
| activities | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| Cash | | |
| flows | | |
| from | | |
| financing | | |
| activities | | |
+---------------+-------------+-----------+
| Proceeds | 250,000 | 902,846 |
| from | | |
| issue of | | |
| ordinary | | |
| shares | | |
+---------------+-------------+-----------+
| Costs | (6,350) | (79,140) |
| of | | |
| issuing | | |
| shares | | |
+---------------+-------------+-----------+
| (Decrease) | (53,055) | (185,663) |
| / increase | | |
| in | | |
| borrowings | | |
+---------------+-------------+-----------+
| Interest | (36,016) | (39,513) |
| paid | | |
+---------------+-------------+-----------+
| Net | 154,579 | 598,530 |
| cash | | |
| flows | | |
| from | | |
| financing | | |
| activities | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| Net | (362,951) | (306,550) |
| (decrease) | | |
| in cash, | | |
| cash | | |
| equivalents | | |
+---------------+-------------+-----------+
| | | |
| Cash, | 298,345 | 604,895 |
| cash | | |
| equivalents | | |
| at | | |
| beginning | | |
| of year | | |
+---------------+-------------+-----------+
| | | |
| Cash, | (64,606) | 298,345 |
| cash | | |
| equivalents | | |
| at end of | | |
| year | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
| | | |
+---------------+-------------+-----------+
EARNINGS PER SHARE
The basic earnings per share is calculated by dividing the loss after taxation
by the weighted average number of shares in issue.
+----------+-------------+-------------+
| | 2009 | 2008 |
| | number | number |
+----------+-------------+-------------+
| The | 298,636,296 | 180,153,145 |
| weighted | | |
| average | | |
| number | | |
| of | | |
| shares | | |
| were: | | |
| Basic | | |
| weighted | | |
| average | | |
| number | | |
| of | | |
| shares | | |
+----------+-------------+-------------+
ACCOUNTS
The Company will post the Annual Report and Accounts for the year ended 31
December 2009 to shareholders during the course of February. The Accounts will
also be made available on the Company's website in due course. 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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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