FLOMERICS GROUP PLC
2nd March 1999
FLOMERICS GROUP PLC
PRELIMINARY RESULTS FOR YEAR ENDING 31 DECEMBER 1998
EARNINGS PER SHARE INCREASE FROM 0.3P TO 10.1P ON TURNOVER UP 19.4%
Flomerics Group PLC, developer of FLOTHERM thermal management
software used to determine the cooling requirements of electronic
systems, and FLOVENT ventilation software used to analyse thermal
environment and air quality in buildings, announces its results for
the year to 31 December 1998.
Highlights for the year which, as announced last July, saw the
formation of a joint marketing agreement with Johnson Matthey
Electronics in the US, include:
- Turnover up 19.4% to £6.9 million (1997 : £5.8 million)
- Profit before tax up to £384,123 (1997 : £48,085)
- EPS up to 10.1p (1997: 0.3p)
- Net cash balances up to £229,173 (1997 : £36,026)
- Proposed dividend increased by 10% to 3.3p per share (1997:3.0p)
- New worldwide corporate licence agreement with Siemens, and new
joint marketing agreement with Thermacore.
Commenting on the results, the Chairman, David Mann, said:
"The completion of recent, significant investments has enabled
Flomerics to achieve good growth with substantial improvements in
margins.
Our strengthened product line, and the broadening of our activities
with new strategic relationships, lead us to view the prospects for
1999 and beyond with real confidence."
David Mann
Chairman
CHAIRMAN'S STATEMENT
Results - Turning the Corner
The recent completion of a programme of important investments has
enabled Flomerics to achieve good growth and substantial
improvements in margins for the year ended 31 December 1998.
Turnover increased by 19.4% to £6.9 million (1997: £5.8 million),
and profit before tax increased to £384,123 (1997 : £48,085).
Earnings per share increased to 10.1p (1997 : 0.3p), and net cash
balances increased to £229,173 (1997 : £36,026). This performance
was achieved in spite of the difficult economic circumstances in a
number of Far East markets, which had an adverse effect on sales; in
particular, revenues from Japan fell by 30%, to 6% of total turnover
(1997 : 10%).
The Directors propose to pay an increased dividend of 3.3p per share
(1997 : 3.0p) in respect of the year. Subject to approval by the
shareholders, the dividend will be paid on 5 May 1999 to
shareholders on the register at close of business on 12 March 1999.
The Business Today
The company's two principal products are FLOTHERM and FLOVENT.
FLOTHERM is used by electronics manufacturers to analyse and improve
the thermal design of electronics equipment of all kinds. FLOVENT is
used by building services engineers to analyse the ventilation,
thermal environment and air quality in buildings.
FLOTHERM Leads the Way
The FLOTHERM business accounts for 90% of turnover, and achieved
growth in turnover of 15.4% (1997: 11%). The US remains the largest
market for FLOTHERM, accounting for 51% of FLOTHERM turnover (1997:
51%). Europe represents 37% (1997: 34%), and the Far East 12% (1997:
15%).
1998 saw the successful release of the new-generation product,
FLOTHERM Version 2.0, on NT (following the release on Unix late in
1997). This was then followed in November 1998 by the release of
Version 2.1 for both Unix and NT. The excellent reception accorded
to these new releases has enabled the company to strengthen its blue-
chip FLOTHERM customer base, and achieve expansion within a number
of major, international corporate accounts, including Intel, HP,
Ericsson, and Nokia . Additionally, the company has just concluded a
new worldwide corporate licence agreement with Siemens.
Thermal management is increasingly a critical factor in current and
future electronics design. According to a recent report the market
for thermal management solutions (hardware, software, and services)
is growing at a rate of 20% to 25% per annum, and is already worth
US$ 1 billion per year. As well as strengthening its software
products for this market, the company is seeking strategic
relationships enabling it to address a broader sector of the market
by providing integrated thermal solutions.
Consequently, in July 1998 the company entered into a strategic
joint marketing agreement with Johnson Matthey Electronics (JME),
the $720m turnover US-based division of Johnson Matthey Plc; and the
company has recently entered into a new joint marketing agreement
with Thermacore, a US supplier of advanced thermal devices based on
heat-pipe technology. These two complementary relationships position
Flomerics and its partners to provide a unique combination of
software, design services, and manufactured components to enable the
electronics industries to address the escalating challenges of
thermal design.
FLOVENT - An Emerging Market
FLOVENT turnover grew by 71% in 1998, and now accounts for 10% of
company turnover (1997 : 7%). This follows a re-focussing and
strengthening of FLOVENT resources after their diversion in 1997,
and reverses the trend of 1997 (when turnover declined by 16%). Good
growth was achieved both in US (currently accounting for 44% of
turnover) and Europe (56%).
The emerging FLOVENT market continues to offer enormous
opportunities which, with the planned launch of FLOVENT Version 2 in
1999, the company is well positioned to exploit.
New Products add Value in Existing Markets
Recent investment in software development is yielding benefits in
new, add-on products.
FLOMOTION is an add-on to both FLOTHERM and FLOVENT, which animates
results in 3D form. First released (on Unix) in 1997, it has now
been considerably enhanced, released on NT, and fully supports
FLOTHERM Version 2.
The new FLO/MCAD module enables parts and assemblies to be
transferred from Mechanical Computer-Aided Design (MCAD) software
into FLOTHERM for thermal analysis. This was released in 1998, and
already makes an encouraging contribution to turnover.
As well as these "conventional" software products, during 1998 the
company also launched a new Web-based product, FLOPACK. This enables
users to create complex models of electronics packages via the Web,
and download them onto their own computers for use in FLOTHERM.
FLOPACK has been created by a new Flomerics Web development team
based in the new office in Austin, Texas.
Looking Ahead with Confidence
We appreciate the support we have had from our customers world-wide,
our major shareholders and our committed staff through an extended
programme of significant investment. Over this challenging period
Flomerics has continued to achieve good growth in turnover, as
recognised towards the end of 1998 when Flomerics received a
Deloitte & Touche "Fast 50 Technology Award".
We now have a strengthened product line with further product
releases planned during 1999. We have an established global presence
with an improved international sales and support infrastructure. We
see exciting opportunities for broadening the company's activities
by strategic relationships such as those with JME and Thermacore.
Consequently we view 1999 and beyond with real confidence.
David Mann
Chairman
FOR FURTHER INFORMATION
David Mann Chairman 0181 941 8810
David Tatchell Chief Executive 0181 941 8810
Richard Thompson Teather & Greenwood 0171 426 9073
Jody Downes Teather & Greenwood 0171 426 9011
Richard Pollen Pollen Associates 01428 608 860
FLOMERICS GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER
1998
1998 1997
£ £
Turnover 6,910,106 5,785,456
Cost of sales (584,191) (351,522)
--------- ---------
Gross profit 6,325,915 5,433,934
Administrative expenses (5,937,313)(5,301,977)
--------- ---------
Operating profit 388,602 131,957
Other interest receivable and
similar income 71,602 33,089
Interest payable and similar (76,081) (116,961)
charges
--------- ---------
Profit on ordinary activities
before taxation 384,123 48,085
Tax on profit on ordinary (126,216) (40,769)
activities
--------- ---------
Profit for the financial year 257,907 7,316
Dividends (84,502) (76,820)
--------- ---------
Retained Profit/(Loss) for the
financial year 173,405 (69,504)
========= =========
Earnings per share 10.1p 0.3p
All the groups operations are classified as continuing.
FLOMERICS GROUP PLC
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 1998
1998 1997
£ £
Fixed assets
Tangible assets 721,737 648,885
Current assets
Debtors 3,258,193 2,754,854
Cash at bank and in hand 437,148 408,856
---------- -----------
3,695,341 3,163,710
Creditors: amounts falling due
within one year (1,749,074) (1,443,596)
---------- -----------
Net current assets 1,946,267 1,720,114
---------- -----------
Total assets less current 2,668,004 2,368,999
liabilities
Creditors: amounts falling due
after more than one year (147,484) (85,796)
Provisions for liabilities and
Charges (500) (90,919)
Deferred income (943,576) (809,078)
---------- -----------
Net assets 1,576,444 1,383,206
========== ===========
Capital and reserves
Called up share capital 25,607 25,607
Share premium account 49,885 49,885
Other reserves 758,921 758,921
Profit and loss account 742,031 548,793
---------- -----------
Equity shareholders'funds 1,576,444 1,383,206
========== ===========
FLOMERICS GROUP PLC
SUMMARY CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31
DECEMBER 1998
1998 1997
£ £
Net cash inflow from operating 839,316 603,892
activities
Net cash outflow from returns on
investments and servicing of finance (106,211) (135,316)
Tax paid (74,198) (192,432)
Net cash outflow for capital
expenditure and financial investment (340,558) (282,105)
Net cash inflow (outflow) before 318,349 (5,961)
financing
Net cash outflow from financing (125,202) (252,694)
-------- --------
Increase/(decrease) in cash 193,147 (258,655)
======== ========
Notes:
1. The Group recognised unrealised gains on translation of foreign
currency net investments of £19,833 in the year which were taken to
reserves and are not included in the profits above.
2. The financial information shown for the years ended 31 December
1998 and 1997 set out above does not constitute statutory accounts
but is derived from those accounts. Statutory accounts for 1997 have
been delivered to the registrars of Companies whereas those for 1998
will be delivered following the Company's AGM. The auditor has
reported on those accounts; their reports were unqualified and did
not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. Copies of this announcement are available at the
registered offices of the Company (81 Bridge Road, Hampton Court,
Surrey, KT8 9HH) and at the offices of the company's nominated
advisors, Teather and Greenwood Ltd (12-20 Camomile Street, London,
EC3A 7NN) for a period of 14 days from the date hereof.
3. The group's turnover and profit before tax for each geographic
area of operation is:
Turnover Profit before
Taxation
1998 1997 1998 1997
£ £ £ £
United States of 3,407,529 2,809,145 (18,972) (185,755)
America
Europe and the Far 3,502,577 2,976,311 403,095 233,840
East
--------- --------- --------- ---------
6,910,106 5,785,456 384,123 48,085
--------- --------- --------- ---------
The net assets attributable to each geographic area
are;
United States of 270,240 276,159
America
Europe and the Far 1,306,204 1,107,047
East
--------- ---------
1,576,444 1,383,206
--------- ---------
4. The earnings per share figure for 1998 has been calculated
based on the profit on ordinary activities after taxation and
2,560,676 shares in issue (1997: 2,560,676).
5. In accordance with FRS14 issued in October 1998 the fully
diluted earnings per share was 10.1 pence per share (0.3p 1997). The
diluted number of shares was 2,560,346 (1997: 2,568,002)
6. The AGM will be held at 11.00 am on 28 April 1999 at the
registered office of the company (81 Bridge Road, Hampton Court,
Surrey, KT8 9HH).
7. The Report and Accounts for the year ended 31 December 1998
will be sent to shareholders shortly.
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