RNS Number : 6151E
Formjet PLC
30 September 2008
30th September 2008
FORMJET PLC
("FORMJET" OR "THE COMPANY")
(AIM:FMJ)
HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2008
Formjet, the AIM listed alternative software vendor, announces today half-yearly results for the six month period ended 30 June 2008.
HIGHLIGHTS
* Sales increase 3.8% to �1,747,421 (2007 H1- �1,683,700).
* Like for like sales in first two months of Q3 up 51%.
* Loss after tax reduced by 44% to �83,539 (2007 H1- �149,325 loss)
* Gross margin 63%, reduction in overheads of 5.8%.
* New funds successfully raised for potential acquisition and investment opportunities
* ASI product range making significant progress with major PC manufacturers as pre-installed software.
* Landmark white labeling agreement signed with a major North American software vendor.
Commenting on today's results, Lyndon Chapman, Executive Chairman of Formjet, said: "The Board is pleased to announce the half-yearly
results for 2008. The performance in the first six months has seen an increase in sales and losses reduced. Significantly the first two
months of Q3 are showing a 51% increase in sales year on year in spite of the current economic conditions. The Company remains well placed
having recently raised new funds for acquisition and investment opportunities."
Chief Executive Tony Lee added:
"We are pleased that the sales growth during the period, has continued into the second half - especially given the uncertain economic
conditions. During the period we achieved gross margins of over 63% while our retail sales increased by 13.8% over the period with our
Ability Office revenues doubling and strong initial sales of our EdAlive range."
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
David Newton, Nominated Adviser
www.dowgate.co.uk
Old Park Lane Capital Tel: 020 7493 8188
Michael Parnes, Joint Broker
www.oldplc.com
Dowgate Capital Stockbrokers Ltd Tel: 01293 517 744
Neil Badger, Joint Broker
www.dowgate.co.uk
Bishopsgate Communications Ltd Tel: 020 7562 3350
Maxine Barnes
Nick Rome
www.bishopsgatecommunications.com
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, Panda is a major contributor to the Group's sales and profitability.
* 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 eight titles, which include fully comprehensive office and graphics suites, Internet
security, a business plan development application, small business accounting, appointment book management and staff records management
software. In September the Company also added a remote access tool called BeAnywhere to this range.
* 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
Chairman's Statement
The Board is pleased to announce the half-yearly results for 2008. During the period the Company's performance was in line with
management's expectations. Since the period end trading has continued to improve with a 51% increase in sales during the first two months of
Q3 compared with 2007. This impressive performance has been achieved in spite of the current economic conditions and is a strong endorsement
for the quality and value for money that our software ranges represent.
The Company continues to grow its alternative software product range and entry points into new markets. We have significantly expanded
our ASI product offering, which now consists of nine titles including a complete new version of our Ability Office Suite and a new
innovative product ASI BeAnywhere, both of which are receiving encouraging reviews.
The Group's expanding product range is now being considered as pre-install software by major computer manufactures. The recent launch of
the Intel Atom processor and its adoption into the new breed of cost-effective sub-notebooks could have particularly positive impact on our
ASI Ability sales.
Our EdAlive edutainment software range is expected to boost sales as the Company further strengthens its relationships with major
retailers. During September the 2009 Panda Security software range was introduced to the market and this is expected to further enhance
sales and margins as the renewal-based model continues to contribute strongly.
We believe the ongoing growth in routes to market will provide an excellent base for the Group to make continued progress in the second
period. We are clearly pleased with the sales progress made and will continue to focus on maximising revenues moving forward.
Management remains mindful that, given the current market conditions, bad debts are an issue that need to be considered by all
companies. While we have not been affected by the number of distressed situations in the reseller and retail space, we are aware of the need
to remain vigilant of the impact this may have.
Having successfully raised new funds for potential acquisitions and investment opportunities, the Board remains on the look out for
suitable additions. However, while negotiations with two targets have been terminated as by us a result of due diligence, we are looking to
exploit opportunities as and when they arise. It is the Board's intention to consider all options available to enhance shareholder value.
The Company has now established an excellent range of products and developed a number of embryonic software ideas into successful
software subsidiaries. The Board believes its current business model will achieve success, but it will not hesitate to consider other routes
to increase the scale and profitability of the business if such opportunities arise.
Lyndon Douglas Chapman
Executive Chairman
Formjet plc
Chief Executive Officer's Statement
We are pleased that the sales growth during the period has continued into the second half - especially given the uncertain economic
conditions. During the period we achieved gross margins of over 63% while our retail sales increased by 13.8% over the period with our
Ability Office revenues doubling and strong initial sales of our EdAlive range.
We have continued to increase and improve our product range and expect this to contribute significantly in the second half of this year
and into 2009. In May 2008 we launched a new ASI small business range comprising a new version of our Ability Office product and a number of
other products targeted at small and medium enterprises. Subsequently in September we added a remote access tool called ASI BeAnywhere to
this range, which is receiving strong initial reviews and customer feedback.
Our partnership with a major North American software vendor - which guarantees revenues of $1.18 million over the next three years - was
a major contract win in the second quarter.
The new Ultra Mobile PCs have created an opportunity for our Ability Office product with its low resource requirements and affordable
pricing being perfectly suited to these lower specification machines, and we are working on some high profile alliances in this area.
Panda, with its renewal based model, continues to contribute strongly to both sales and margins and we have maintained renewal rates at
similar levels to 2007, thus demonstrating our customer loyalty.
We continue to monitor our costs closely and achieved a 5.8% reduction in administrative expenses over the first half of 2007.
We remain cautious given the current economic climate and consequent reduced consumer spend. However our fourth quarter is traditionally
our strongest, particularly in the retail sector, and we have a strong and well-placed product portfolio to compete in these difficult
markets.
Tony Lee
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
For the period to 30 June 2008
Six months ended Six months ended Year ended 31
30 June 2008 30 June 2007 December 2007
(Unaudited) (Unaudited) (Audited)
� � �
Revenue 1,747,421 1,683,700 3,662,630
Cost of sales (645,565) (583,651) (1,283,455)
_______ _______ _______
Gross profit 1,101,856 1,100,049 2,379,175
Administrative expenses (1,176,179) (1,248,595) (2,421,082)
_______ _______ _______
Operating loss (74,323) (148,546) (41,907)
Finance income 3,304 14,220 22,045
Finance expenses (12,520) (14,999) (50,144)
_______ _______ _______
Loss for the period (83,539) (149,325) (70,006)
_______ _______ _______
Basic and diluted loss per
share from continuing and (0.06)p (0.12)p (0.05)p
total operations (note 2)
______ ______ ______
STATEMENT OF CHANGES IN EQUITY
For the period to 30 June 2008
Six months ended Six months ended Year ended 31 December
30 June 2008 30 June 2007 2007
(Unaudited) (Unaudited) (Audited)
� � �
Loss for the financial period (83,539) (149,325) (70,006)
Issue of share capital - - -
Increase in reserve for - - -
potential share issues
_______ _______ _______
Net increase in shareholders' (83,539) (149,325) (70,006)
equity
Equity at the start of the 2,473,625 2,543,631 2,543,631
period
_______ _______ _______
Equity at the end of the 2,390,086 2,394,306 2,473,625
period
_______ _______ _______
CONSOLIDATED BALANCE SHEET
As at 30 June 2008
As at As at As at
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
� � �
ASSETS
Non-current assets
Property, plant and equipment 949,036 998,793 973,064
Goodwill 562,207 562,207 562,207
Other intangible assets 391,408 170,667 329,335
_______ _______ _______
1,902,651 1,731,667 1,864,606
_______ _______ _______
Current assets
Inventories 195,428 180,547 206,089
Trade receivables 1,397,387 706,737 1,146,929
Other current assets 248,899 478,546 283,187
Cash and cash equivalents 296,399 870,413 604,895
_______ _______ _______
2,138,113 2,236,243 2,241,100
_______ _______ _______
Total assets 4,040,764 3,967,910 4,105,706
________ ________ ________
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Share capital 259,546 259,546 259,546
Share premium 3,319,027 3,319,027 3,319,027
Share to be issued reserve - - -
Retained earnings (1,188,487) (1,184,267) (1,104,948)
_______ _______ _______
Total equity 2,390,086 2,394,306 2,473,625
________ ________ ________
Non-current liabilities
Long-term borrowings 333,991 377,018 355,332
_______ _______ _______
Total non-current liabilities 333,991 377,018 355,332
________ ________ ________
Current liabilities
Trade and other payables 1,274,629 1,157,908 1,090,793
Short term borrowings - - 145,349
Current portion of long-term 42,058 38,678 40,607
borrowings
________ ________ ________
Total current liabilities 1,316,687 1,196,586 1,276,749
________ ________ ________
Total liabilities 1,650,678 1,573,604 1,632,081
________ ________ ________
Total equity and liabilities 4,040,764 3,967,910 4,105,706
_______ _______ _______
CONSOLIDATED CASH FLOW STATEMENT
For the period to 30 June 2008
Six months ended Six months ended Year ended 31
30 June 2008 30 June 2007 December 2007
(Unaudited) (Unaudited) (Audited)
� � �
Cash flows from operating activities
Operating loss (74,323) (148,546) (41,907)
Adjustments for:
Depreciation 35,000 33,199 71,009
Amortisation 31,800 15,312 60,434
Equity-settled - - -
share-based payment
expense
Decrease in 10,661 34,106 8,564
inventories
Increase in trade (216,170) (339,898) (584,731)
and other
receivables
Increase in trade 183,836 282,908 215,793
and other payables
______ ______ ______
Net cash flows used in operating activities (29,196) (122,919) (270,838)
______ ______ ______
Cash flows from investing activities
Purchase of property, plant and equipment (10,972) (32,269) (44,350)
Purchase of intangible assets (93,873) - (203,790)
Interest received 3,304 14,220 22,045
______ ______ ______
Net cash used in investing activities (101,541) (18,049) (226,095)
______ ______ ______
Cash flows from financing activities
(Decrease) / increase in borrowings (165,239) (17,429) 108,163
Interest paid (12,520) (14,999) (50,144)
______ ______ ______
Net cash used in financing activities (177,759) (32,428) 58,019
______ ______ ______
Net decrease in cash and cash equivalents (308,496) (173,396) (438,914)
Cash and cash equivalents at beginning of 604,895 1,043,809 1,043,809
period
______ ______ ______
Cash and cash equivalents at end of period 296,399 870,413 604,895
______ ______ ______
Notes to the unaudited half-yearly report
* Basis of preparation
While the financial information included in this half-yearly announcement has been computed in accordance with International Financial
Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. The half-yearly financial
information has been prepared on the basis of the accounting policies set out in the Company's statutory accounts to 31 December 2007 which
were prepared in accordance with IFRS, International Accounting Standards and their interpretations issued or adopted by the International
Accounting Standards Board as adopted for use in the European Union. The half-yearly figures have not been audited. The half-yearly
financial statement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 (the "Act").
Comparative financial information for the 12 months ended 31 December 2007 has been extracted from the statutory accounts for the period
which have been delivered to the Registrar of Companies and upon which the auditors gave an unqualified report, with no statement under Section 237(2) or (3) of Act.
Statement of compliance with AIM Rule 31
The Company is quoted on AIM and, as such under AIM Rule 31 is required to:
* Have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules;
* Seek advice from its nominated adviser ("Nomad") regarding its compliance with Aim Rules whenever appropriate and take that advice
into account;
* Provide the Company's Nomad with any information it requests in order for the Nomad to carry out its responsibilities under the
AIM Rules for Companies and the AIM Rules for Nominated Advisers;
* Ensure that each of the Company's Directors accepts full responsibility, collectively and individually, for compliance with the
AIM Rules and;
* Ensure that each director discloses without delay all information which the Company needs in order to comply with AIM Rule 17
(Disclosure of Miscellaneous Information) insofar as that information is known to the director or could with reasonable diligence be
ascertained by the director.
In order to ensure that these obligations are being discharged the Board has established a committee of the board (the "AIM Committee"),
chaired by Frank Lewis a non-executive director of the Company.
Having reviewed relevant Board papers, and met with the Company's Executive Board to ensure that such is the case, the AIM Committee is
satisfied that the Company's obligations under AIM Rule 31 have been satisfied during the period under review.
2. Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the result for the period, for continuing operations as well as total
acquisitions, and the weighted average number of shares in issue during the period.
Six months to 30 Six months to 30 Year ended 31 December 2007
June 2008 June 2007
Weighted average number of
ordinary shares in issue 129,773,025 129,773,025 129,773,025
Dilutive potential ordinary
shares: Employee share options 16,476,393 10,149,385 9,849,385
Loss after tax (�) (83,539) (149,325) (70,006)
Basic earnings per share - (0.06p) (0.12p) (0.05p)
pence per share (p)
Diluted earnings per share - (0.06p) (0.11p) (0.05p)
pence per share (p)
There are 900,000 potentially dilutive employee share options in existence at 30 June 2008 (30 June 2007: 1,600,000) which relate to
share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during
the period.
3. Segmental reporting
In the opinion of the Directors the Group's core activities are the sales and distribution of computer software, hardware and
consumables as carried out by the subsidiary companies within the United Kingdom. The primary segmental information relating to business
segments and the secondary segmental geographical information is considered immaterial.
4. Due to the Company's losses, no taxation charge has arisen for the period.
5. The Directors have not declared a half-yearly dividend.
6. The financial statements for the six months ended 30 June 2008 were approved by the Board of Directors on 29 September 2008.
These financial statements do not constitute statutory accounts within the meaning of the Companies Act 1985 and are neither reviewed
nor audited.
7. Copies of this statement are available to shareholders and members of the public, free of charge, from the Company's registered
office at 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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