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 £3,592,144 (2007 : £3,662,630)
-
2008 gross profit £1,939,716 (2007 : £2,379,175)
-
Operating loss before exceptional items £292,457 (2007 : £41,907)
-
Exceptional items £519,599 (2007 : nil)
-
Shareholders' funds £2,452,276 (2007 : £2,473,625)
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 £500,000
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 £292,457 (2007 : loss of £41,907).
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 £500,000 compared with sales for the 12 months ended 31 December 2007 of the previous Version 4 of £160,000.
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 £500,000 against 2008 costs and an annualised saving of over £600,000.
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 £292,457 (2007: loss of £41,907).
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 £812,056 (2007: loss £41,907).
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 £500,000.
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 £500,000 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 £500,000 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 £100,000 (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 £100,000.
Taxation
No taxation arises due to the losses made during the year. Group tax losses carried forward are approximately £2,800,000.
Cash balances
With the trading losses together with aborted acquisition costs and write downs, gross cash balances reduced from £604,895 to £298,345 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
|
|
|
£
|
|
£
|
|
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 continuing operations
|
(0.47p)
|
(0.05p)
|
CONSOLIDATED BALANCE SHEET
31 December 2008
|
|
2008
|
2007
|
|
|
£
|
£
|
|
|
|
|
|
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
|
|
|
£
|
£
|
|
Cash flows from operating activities
|
|
|
|
Operating loss
|
(812,056)
|
(41,907)
|
|
Depreciation of property, plant and equipment
|
66,924
|
71,009
|
|
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 equivalents
|
(306,550)
|
(438,914)
|
|
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 £(845,055) (2007: £(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
Alternative Routes to Market
This information is provided by RNS
The company news service from the London Stock Exchange
END
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