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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Formjet (See LSE:TQC) | LSE:FMJ | London | Ordinary Share | ORD 0.01P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.715 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:8444B Formjet PLC 24 April 2006 24 APRIL 2006 FORMJET PLC ("FORMJET" OR "THE COMPANY") (AIM:FMJ) FINAL RESULTS FOR THE FINANCIAL YEAR TO 31 DECEMBER 2005 AND TRADING UPDATE Formjet, the AIM listed alternative software vendor, announces today final results for the twelve month period ended 31 December 2005. HIGHLIGHTS * End user clients increased from 250,000 to over 400,000 and corporate clients from 5,000 to 17,000; * Relocation of its four subsidiary offices - resulting in increased efficiencies and lower ongoing establishment costs; * Management team strengthened by the addition of a new Finance Director and a new Sales Director; * Group sales increased by over 47% to #3.83m during the period; * The gross margin contribution of #2,117,665 was up from #1,718,574 in 2004; and * Loss of #933,249 - including exceptionals of #345,869. POST BALANCE SHEET HIGHLIGHTS * Q1 sales grew year-on-year by 61% from #757,970 to #1,221,605 - including the contribution from South Coast Distributions; * The launch of a new 'Essentials' suite of software solutions, designed specifically to address the needs of SMEs and home PC users, is expected to provide further revenue streams for the Company; and * Extension of its exclusive licence to distribute Panda software in the UK until January 2008. Commenting on today's results, Lyndon Chapman, Chief Executive of Formjet, said: "Clearly, 2005 was a difficult year for the Company. However, now the disappointment is in the past and we can look forward to building on an encouraging start to this year. We hope to build on this momentum on the back of further new product launches in the coming months." Formjet Plc Tel: 01293 848 860 Lyndon Chapman, CEO Tony Lee, Finance Director www.formjetplc.com Bishopsgate Communications Ltd Tel: 0207 430 1600 Maxine Barnes Nick Rome www.bishopsgatecommunications.com Notes to Editors: 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 we can acquire product lines in territories of not less than a country without the expense of either product development or the creation of IPR. The Formjet Group currently has four product lines: Panda Software and Filestream are UK licences and Ability and Software Dialog are worldwide. Formjet reaches a customer base of more than 400,000 direct customers and in excess of 17,000 corporate clients. This market penetration has been achieved through careful research into relevant territories and then applying the most suitable routes to market, whether through distribution and/or reseller partners, or via direct sales. Formjet acquired South Coast Distributions, a specialist OEM provider to system builders in July 2005. Chairman's Statement -------------------- Introduction This is my first statement as Chairman of Formjet PLC following my appointment in January 2006. Although Formjet made significant advances towards achieving its stated objectives during 2005, the financial result was extremely disappointing. This outcome led to extensive personnel changes at all levels and a thorough overhaul of the systems and controls. Lyndon Chapman, our CEO will describe the events of 2005 and the changes made in more detail in his statement below. The basic strategic aim of Formjet is creating a range of alternative software solutions taking the place of the vendor in exclusive territories of not less than a country; this remains as valid as ever. Despite the setbacks in 2005 substantial sales growth was achieved with further encouraging increases in the first quarter of 2006, compared with same period of 2005. Overview The milestones achieved in 2005 provide the basis for future growth. In the twelve months of 2005 end user clients increased from 250,000 to over 400,000 and corporate clients from 5,000 to 17,000. This coupled with high recurring revenue streams from annual licences is an encouraging growth trend. The UK reseller structure which commenced in 2004 now exceeds 600 resellers principally selling Ability and Panda. The Groups International Distribution structure numbers 16 countries with further interest from partners particularly in Asia and Australasia. Own brand opportunities exist with leading IT resellers and supermarkets. Formjet with its value for money alternative range of software titles is well placed to enter into this sector. Central to the improved control over the business was the closure in October 2005 of all of its four subsidiary offices and their relocation into a single, modern office in Crawley, West Sussex. The relocation will not only improve the ability to control the business but should also lower ongoing establishment costs and improve staff management and motivation. The relocation included South Coast Distributions Ltd, the software OEM business acquired in July 2005. The first six months of South Coast's contribution to Formjet was disappointing and someway off its targets. However in the first quarter of 2006 it has demonstrated substantial sales growth. I am pleased to report that in spite of losses exceeding #900,000, the gross margin contribution of #2,117,665 was up from #1,718,574 in 2004. Like for like, gross margin percentages actually improved, although over optimistic sales targets and resultant cost structures impacted adversely on profitability. Board Changes Julie Crosby, the Group's Marketing Director was absent during the whole of 2005 due to illness and maternity leave and resigned in November 2005. Peter Wardle, our Finance Director since listing resigned in September 2005. I am pleased to report that Tony Lee was appointed as Finance Director in December 2005. Tony has already established stringent and effective financial management, cost and debtor control regimes. Whilst there will always be scope for improving the relationship between costs and revenues, I feel that Tony has already achieved a much more appropriate balance. We also welcome Simon Hallworth who joined the Board in January 2006 as Sales Director, Simon is also the Managing Director of South Coast Distributions Ltd. It is my aim that we regain the confidence of shareholders through delivery of performance and enhanced corporate governance. In addition to the skills of the Executive team the Board now consists of myself, an experienced company director and Chris Roberts, an experienced and qualified accountant. Philip Speer, our Company Secretary is a corporate lawyer and partner in a legal practice. Outlook There are always many challenges to young businesses especially in the fast changing IT industry. These challenges include the difficulty of accurately forecasting first year sales of new products. Despite these challenges and the setbacks suffered, Formjet's management has skillfully introduced alternative software ranges. The enlarged sales channel established in 2005 will continue to grow with consequent increases in sales, and the new Crawley operating structures will improve cost control and efficiencies. I would like to thank the staff, advisors, and shareholders for their support and encouragement and our customers for their loyalty to our alternative brands. James Heyworth-Dunne Chairman April 2006 Chief Executive's Report ------------------------ The year under review has been disappointing; however the Board remains confident of its ability to correct the cost structures and deliver growth. The IT market place has been difficult in 2005, with many business failures especially in distribution and reseller channels. The entry of Microsoft and others into the security sector has not been without its challenges. In spite of this, sales still increased by 47% although the impact was lower growth than we expected, however gross margins were maintained. Formjet has a unique business model; it stands in place of the vendor with exclusive territorial sales rights. The strength of the business is its recurring revenue stream from its licenced products, royalty based margins resulting in high gross profits and quality alternative products. In July 2005 the business was further strengthened by the acquisition of South Coast Distributions Ltd, a specialist OEM software provider to major system builders. The combination of so many unplanned senior management changes and our commitment to product launches, acquisitions and need to centralize our activities resulted in insufficient sales progress and yet incurred the associated costs of the planned expansion. We have relocated all of our subsidiary operations into a single site and whilst affecting a number of one off write-offs, this has reduced costs and provided greater control and influence. The first quarter's trading of 2006 reflects increased sales over the same period last year and overhead costs in line with our internal budgets. Our business model is acknowledged in the IT industry as an enterprising route for new product launches and our level of end-user clients and channel structures is growing at impressive rates. We have also made inroads into improving our debt collection procedures and believe that we have the resources to fund our intended 2006 programme, outside of any funding for acquisition and new product development. Panda Software UK Panda continues to be the major contributor to the group's turnover and gross margin, albeit this represented 59% of group sales in 2005 compared with 88% in 2004. The product range improves each year and now covers a full spectrum of security applications from home users to multinational corporates. The award winning Truprevent technologies clearly distinguishes the range from its competitors. The 2006 ranges are the best we have seen from Panda International and we expect sales growth especially in the corporate and SME sectors. This is important because by our previous standards Panda sales were disappointing with static sales compared with 2004, although gross margins increased from 63.73% to 65.87%. In line with our other subsidiaries considerable expansion commitment was made in 2005 without the resultant sales increase. The incurred costs were principally increased sales salaries and recruitment costs, bad debts and an increase in group management charges to cover PLC costs. We expect in 2006 for Panda to return to its expanding ways and profitability and we have set a challenging budget for a smaller new team based in Crawley. The first quarter's performance is encouraging with retail performing extremely well and corporate showing steady progress especially in the area of its developing Business Partner programme. I am also pleased to report that our renewal rates are amongst the best in the industry and provide a very valuable springboard to the new financial year's growth. Corporate renewals in particular are performing ahead of our expectations in the first quarter of 2006. The management of Panda recognises the challenges of Microsoft's entry into the market, its OneCare and Vista rollouts clearly provide competition to Panda but we feel confident that we have the products that will continue to attract a loyal and committed client base. Software Dialog Direct Software Dialog Direct is a wholly owned subsidiary that specialises in a wide range of IT security products and services, specifically those targeted at SMEs. Software Dialog Direct sales continue to grow significantly each year (31% in 2005) but remains essentially a regional business and may form the basis of national rollout at a later date. Ability and Filestream The Group commenced 2005 with extremely high expectations from Ability Software, with hindsight these targets were set far too high. The commitment to sales and marketing in advance of achieving brand awareness must be deemed a mistake, and the resultant losses contributed significantly to the Groups problems, with recorded losses of #442,000. However there are positives to build on, from a cold start and launch in January 2006 the product now has 90,000 end users. The product is available from a number of leading retail groups and over 300 independent retailers. Through a structure of international country partners Ability is now available in 16 countries. In April 2006 we launch ASI Essentials, an extension but wholly owned range of additional products principally targeted at small businesses and home users. An initial launch of three products will be followed by further launches at quarterly intervals during 2006. The Ability cost base has been significantly trimmed and realistic targets set for the year ahead. The Filestream brand will be incorporated into the ASI Essentials range for ease of branding and to maximise all of the established Ability's sales channels. South Coast Distributions Ltd The Group acquired South Coast Distributions Ltd in July 2005. South Coast's core activity is the design of software bundles for supply with new computer systems either as a disc or pre-installed. South Coast supplies a number of leading system builders including Dell, Toshiba and Dixon's. Importantly South Coast have introduced Panda and Ability OEM products to the market and this is particularly cost effective brand building, and potential future Group revenue. OEM software is considered an important part of new product launches. Online The growth in the Group's online revenue continues with close to #1 million of sales a year transacted in this way. We expect this trend to continue, fuelled not only by renewal income but also through a wider range of product and service offerings. In May 2006, we will launch new sites onto the market targeted specifically at the Home-user through our Ideal Innovation site, Business and Corporate users through Ideal B2B and our most recent development aimed at offering our entire product range to all of our trade Reseller and Retailer partners called "Partnershare". Property During 2005 the Board decided to purchase Innovation House in Crawley. Acquired in September, the building was fully occupied by the end of the year with all of the Group's subsidiaries. We have only one lease left over from a previous location to dispose of and the cost of this is provided for in the 2005 accounts. We believe improvements in all disciplines of the business will be achieved by operating from a single base, as well as creating cost savings. Conclusion With 2005 and its problems behind us I look forward positively to 2006. In spite of the market and competition challenges ahead, our programme of new product launches and sales routes to market will, I believe, deliver a very satisfactory performance. The building blocks for growth were laid in 2005, the benefits of which should result in an improved performance in 2006. Lyndon Chapman Chief Executive Profit and Loss Account for the year ended 31 December 2005 2005 2005 2005 2004 ---- ---- ---- ---- # # # # Acquired Existing Continuing operations operations TURNOVER 1,076,907 2,755,037 3,831,944 2,599,239 COST OF SALES (880,727) (833,552) (1,714,279) (880,665) __________ ___________ ___________ ___________ GROSS PROFIT 196,180 1,921,485 2,117,665 1,718,574 Administrative expenses (265,461) (2,450,004) (2,715,465) (1,512,492) __________ ___________ ___________ ___________ OPERATING (LOSS) / PROFIT (69,281) (528,519) (597,800) 206,082 Exceptional items (345,869) - Interest Receivable 19,011 13,585 Interest Payable (15,227) (7,053) ___________ ___________ (LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (939,885) 212,614 TAXATION 6,636 - ___________ ___________ (LOSS) / PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION (933,249) 212,614 Dividends - - ___________ ___________ RETAINED (LOSS) / PROFIT (933,249) 212,614 FOR THE YEAR =========== =========== There were no recognised gains or losses other than the loss for the year above. Earnings per share Basic earnings per share (1.18p) 0.41p ====== ====== Diluted earnings per share (1.06p) 0.35p ====== ====== Balance Sheet As At 31 December 2005 2005 2004 ---- ---- # # FIXED ASSETS Intangible fixed assets 864,182 507,378 Tangible fixed assets 1,035,798 59,954 _________ _________ 1,899,980 567,332 CURRENT ASSETS Stocks and work in progress 334,096 87,133 Debtors 1,189,984 836,302 Cash at bank and in hand 637,150 676,388 _________ _________ 2,161,230 1,599,823 CREDITORS: Amounts falling due within one year (1,970,421) (861,328) _________ _________ NET CURRENT ASSETS 190,809 738,495 _________ _________ TOTAL ASSETS LESS CURRENT LIABILITIES 2,090,789 1,305,827 CREDITORS: Amounts falling due after more than one year (422,441) - _________ _________ NET ASSETS 1,668,348 1,305,827 ========= ========= CAPITAL & RESERVES Called up share capital - equity 173,983 130,246 Share premium 2,215,000 962,967 Profit and loss account (720,635) 212,614 _________ _________ SHAREHOLDERS' FUNDS 1,668,348 1,305,827 ========= ========= Cashflow statement for the year ended 31 December 2005 Notes 2005 2004 ----- ---- ---- # # NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES (658,169) (38,665) RETURNS ON INVESTMENTS & SERVICING OF FINANCE Interest received 19,011 13,585 Interest paid (15,227) (7,053) _________ _________ NET CASH INFLOW FROM RETURNS ON INVESTMENTS & SERVICING OF FINANCE 3,784 6,532 _________ _________ TAXATION UK corporation tax paid - - CAPITAL EXPENDITURE & FINANCIAL INVESTMENT Purchase of tangible fixed assets (998,038) (26,596) Purchase of intangible fixed assets - (93,755) _________ _________ NET CASH (OUTFLOW) FROM INVESTING ACTIVITIES (998,038) (120,351) _________ _________ ACQUISITIONS & DISPOSALS Purchase of subsidiary undertaking (358,329) - Cash acquired with subsidiary undertaking 202,037 - _________ _________ NET CASH (OUTFLOW) FROM ACQUISITIONS & DISPOSALS (156,292) - _________ _________ EQUITY DIVIDENDS PAID - - _________ _________ NET CASH (OUTFLOW) BEFORE FINANCING (1,808,715) (152,484) FINANCING Issue of shares 1,330,985 1,376,499 Cost of shares issued (35,215) (432,788) Additions to borrowings 489,550 - Repayment of borrowings (15,843) (169,500) _________ _________ NET CASH INFLOW FROM FINANCING 1,769,477 774,211 _________ _________ (DECREASE) / INCREASE IN CASH (39,238) 621,727 ========= ========= The financial information set out in this announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the period ended 31 December 2005, containing an unqualified auditors' report will be filed with the Registrar of Companies. The Directors do not propose a payment of a dividend. This information is provided by RNS The company news service from the London Stock Exchange END FR ILFFDSFILFIR
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