‘Stabilisation of market conditions’
Flomerics Group PLC, supplier of analysis software to the telecommunications,
semiconductor and computer industries, and other sectors of the electronics
industries, announces its results for the six months ended 30 June
2004.
Key Points
- Turnover
down 9% at £4.43 million (2003: £4.88 million)
- Turnover
flat at constant exchange rates (compared to a contraction of 15%
in the first half of 2003).
- Loss
before amortisation of goodwill and taxation of £65,000 (2003: £103,000)
- Strong
performance in the Asia Pacific region with turnover up 39%.
- Strong
cash position of £2.0 million, net of borrowings (2003: £1.4 million).
- New
product FLO/PCB, launched ahead of schedule in March. Very encouraging
initial response from customers for this lower priced product.
Commenting on the results and prospects, David Mann,
the Chairman, said:
“Results
for the first half of 2004 have been in line with our expectation.
After the long period of contraction in the electronics industry,
which has been affecting our results since 2001,we have found our
market conditions relatively stable with some positive signs of
recovery.
Flotherm
continues to be the market leader and should benefit from any increase
in investment by electronics companies in research and development.
The company has a strong balance sheet and is well placed to take
advantage of the more favourable economic climate.”
For further information please contact:
|
Flomerics:
|
|
|
David Mann, Chairman
|
020 8941 8810
|
|
David Tatchell, Chief Executive
|
|
|
Chris Ogle, Finance Director
|
|
| |
|
|
Buchanan Communications:
|
|
|
Tim Thompson / Nicola Cronk
|
020 7466 5000
|
Chairman’s Statement
Introduction
Results for the first half of 2004 have been in line with our expectations.
Whilst headline turnover was down on the same period last year, at
constant exchange rates turnover was flat (compared to contraction
of 15% in the first half of last year). This indicates that, after
the long period of contraction in the electronics’ industry, which
has been affecting our results since 2001, we have found our market
conditions this year relatively stable with some positive signs of
recovery.
Results
Turnover was down 9% at £4.43million (2003: £4.88 million). Recurring revenues
accounted for 52% (2003: 57%) of turnover. Administrative costs were
down 8%. The result is a loss before amortisation of goodwill and
taxation of £65,000 (2003: £103,000).
The cash position, net of borrowings, at the end of June was £2.0 million -
an improvement of nearly £700,000 compared to a year ago.
Regions
The results for the period have been significantly affected by the strength
of Sterling, especially against the US Dollar. In this section and
the section on Products all comparatives with 2003 are therefore
given at constant rates of exchange.
Revenues from the US, which is still the predominant market for our products,
showed contraction of 14%, but this was due mainly to some large
multi-year licences, which were signed last June. Without this factor,
turnover from the US would have been broadly flat, which is representative
of the underlying trend for this region.
Revenues from Europe were flat compared to the same period last year. Sales
in the UK and Germany increased by 6% and 9% respectively.
The Asia Pacific region has performed particularly well with turnover up by
39%. Sales in China more than doubled and in Japan increased by 35%.
The region accounted for 23% of turnover in the period, compared
to 16% last year.
Products
Flotherm continues to be the dominant product, accounting for 72% of turnover
(2003:77%). Sales of the product were down by 7% (2003:down 12.5%)
because of the effect of the multi-year licences referred to above.
FLO/PCB, a new product that tackles
thermal issues at the printed circuit board level, was released in
March, ahead of schedule. This has a lower price than our other products,
but we believe that there are many more potential users. We are at
an early stage of developing this market; interest from our customers
has been very good but sales have so far been slow.
With the new FLO/EMC product, we are
diversifying from heat flow into the analysis of electromagnetic
compatibility, as part of our strategy to offer multiple solutions
to mechanical designers of electronic goods. The experience of early
adopters has been encouraging, but it is again taking longer than
expected to secure take up across a wider front and sales were at
the same level as last year. Current campaigns are being directed
primarily at existing Flotherm users, who can most readily obtain
the benefits offered by the new product.
During the last twelve months we have decided to make further investments in
Micro-Stripes, in order to make it more competitive in the antenna
design market. Sales have responded well and were almost 40% ahead
of the same period last year – most of the revenue coming from the
UK and Japan. Similarly investment in Flovent has led to sales 14%
up on last year.
Other
Developments
In the annual report I announced that we would be investing in an off-shore
development and sales office in India. I am pleased to say that that
facility is now up and running. It will be used initially for non-core
development activities, such as testing, and will enable us to develop
products more cost-effectively. By co-locating a sales office there
we will be able to sell into the indigenous electronics companies
in India.
International
Accounting Standards
All AIM companies will be required to adopt International Accounting Standards
(IAS) with effect from 1 January 2006 and may do so from 1 January
2005. In order to apply what we believe will be best practice, we
shall be adopting IAS with effect from 1 January 2005.
Management
David Tatchell, who has been CEO since co-founding Flomerics in 1988, wishes
to be able to relinquish the position before he reaches the age of
60 in 2006. The board has therefore recently initiated the recruitment
of a Chief Operating Officer to take a leading role in exploiting
the opportunities currently facing the company. After a period, it
is intended that the COO will take over as CEO.
Outlook
Flomerics’ revenues are normally skewed towards the second half of the year,
because of the pattern of licence renewals. The directors consider
that there are currently good prospects for the turnover in the year
as a whole being at a level similar to last year’s.
The company is aiming to take advantage of the
current stability in its worldwide market to get back on the front
foot. Although the Flotherm business has contracted, the product continues
to be the market leader and should benefit any increase in investment
by electronics companies in research and development. Our new products
address important requirements in other areas of mechanical design
and determined efforts are now being made to secure their wider adoption.
The company has a strong balance sheet and is well placed to take advantage
of the more favourable economic climate.
|
CONSOLIDATED PROFIT AND LOSS ACCOUNT
|
|
|
|
|
Interim results for the six months to 30 June 2004
|
|
|
|
| |
30-Jun-04
|
30-Jun-03
|
31-Dec-03
|
| |
(Unaudited)
|
(Unaudited)
|
(Audited)
|
| |
£'000
|
£'000
|
£'000
|
|
Turnover
|
4,430
|
4,881
|
10,221
|
| |
|
|
|
|
Cost of sales
|
(74)
|
(152)
|
(259)
|
| |
|
|
|
|
Gross Profit
|
4,356
|
4,729
|
9,962
|
| |
|
|
|
|
Administrative expenses
|
(4,452)
|
(4,855)
|
(9,489)
|
| |
|
|
|
|
Amortisation of goodwill
|
(41)
|
(41)
|
(82)
|
| |
|
|
|
|
Operating (Loss) / Profit
|
(137)
|
(167)
|
391
|
| |
|
|
|
|
Interest receivable and other income
|
71
|
46
|
101
|
| |
|
|
|
|
Interest payable and similar charges
|
(40)
|
(23)
|
(37)
|
| |
|
|
|
|
(Loss) / Profit on Ordinary Activities Before Taxation
|
(106)
|
(144)
|
455
|
| |
|
|
|
|
Tax on profit on ordinary activities
|
-
|
-
|
(52)
|
| |
|
|
|
|
(Loss) / Profit on Ordinary Activities After Taxation
|
(106)
|
(144)
|
403
|
| |
|
|
|
|
Dividends
|
-
|
-
|
(146)
|
| |
|
|
|
|
Transferred to Reserves
|
(106)
|
(144)
|
257
|
| |
|
|
|
|
Earnings / (loss) per share
|
(0.72p)
|
(0.98p)
|
2.75p
|
| |
|
|
|
|
Diluted earnings / (loss) per share
|
(0.71p)
|
(0.98p)
|
2.74p
|
| |
|
|
|
|
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
|
|
|
| |
30-Jun-04
|
30-Jun-03
|
31-Dec-03
|
| |
(Unaudited)
|
(Unaudited)
|
(Audited)
|
| |
£'000
|
£'000
|
£'000
|
| |
|
|
|
|
(Loss) / Profit for the Period
|
(106)
|
(144)
|
403
|
| |
|
|
|
|
Unrealised (loss) / gain on translation of foreign currency investments
|
(59)
|
17
|
(75)
|
| |
|
|
|
|
Total Recognised (Loss) / Gain
|
(165)
|
(127)
|
328
|
| |
|
|
|
|
CONSOLIDATED BALANCE SHEET
|
30-Jun-04
|
30-Jun-03
|
31-Dec-03
|
|
At 30 June 2004
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
| |
£'000
|
£'000
|
£'000
|
|
Fixed Assets
|
|
|
|
|
Intangible assets
|
411
|
499
|
458
|
|
Tangible assets
|
1,648
|
1,783
|
1,675
|
| |
2,059
|
2,282
|
2,133
|
| |
|
|
|
|
Current Assets
|
|
|
|
|
Debtors
|
3,232
|
3,934
|
3,835
|
|
Cash at bank and in hand
|
2,571
|
1,975
|
2,490
|
| |
5,803
|
5,909
|
6,325
|
| |
|
|
|
| |
|
|
|
|
Creditors: amounts falling due within
|
|
|
|
|
one year
|
(2,666)
|
(3,072)
|
(3,067)
|
| |
|
|
|
|
Net Current Assets
|
3,137
|
2,837
|
3,258
|
| |
|
|
|
|
Total Assets Less Current Liabilities
|
5,196
|
5,119
|
5,391
|
| |
|
|
|
|
Creditors: amounts falling due after
|
|
|
|
|
one year
|
(476)
|
(543)
|
(506)
|
| |
|
|
|
|
Net Assets
|
4,720
|
4,576
|
4,885
|
| |
|
|
|
| |
|
|
|
|
Capital and Reserves
|
|
|
|
|
Called up share capital
|
146
|
146
|
146
|
|
Share premium account
|
1,602
|
1,602
|
1,602
|
|
Merger reserve
|
759
|
759
|
759
|
|
Profit and loss account
|
2,213
|
2,069
|
2,378
|
| |
|
|
|
|
Equity Shareholders' Funds
|
4,720
|
4,576
|
4,885
|
| |
|
|
|
|
CONSOLIDATED CASH FLOW STATEMENT
|
30-Jun-04
|
30-Jun-03
|
31-Dec-03
|
|
for the six months to 30 June 2004
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
| |
£'000
|
£'000
|
£'000
|
|
Operating Activities
|
|
|
|
|
Operating (loss) / profit
|
(137)
|
(167)
|
391
|
|
Depreciation and amortisation charges
|
216
|
281
|
505
|
|
Loss on disposal of fixed assets
|
-
|
-
|
1
|
|
Exchange differences
|
(59)
|
17
|
(70)
|
|
Decrease / (increase) in debtors
|
603
|
282
|
381
|
|
Decrease in creditors
|
(249)
|
(261)
|
(419)
|
|
Net Cash Inflow From Operating Activities
|
374
|
152
|
789
|
| |
|
|
|
| |
|
|
|
|
Net cashflow from returns on investments and servicing
|
|
|
|
|
of finance
|
31
|
23
|
64
|
|
Taxation
|
(6)
|
(38)
|
(76)
|
|
Net cashflow from capital expenditure and
|
|
|
|
|
financial investment
|
(142)
|
(115)
|
(196)
|
|
Equity Dividend paid
|
(146)
|
(146)
|
(146)
|
|
Net Cashflow Before Financing
|
111
|
(124)
|
435
|
| |
|
|
|
|
Net Cashflow From Financing
|
(30)
|
(60)
|
(104)
|
| |
|
|
|
| |
|
|
|
|
Increase / (decrease) in Cash in the Period
|
81
|
(184)
|
331
|
| |
|
|
|
| |
|
|
|
|
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
|
|
|
| |
30-Jun-04
|
30-Jun-03
|
31-Dec-03
|
| |
(Unaudited)
|
(Unaudited)
|
(Audited)
|
| |
£'000
|
£'000
|
£'000
|
|
Increase / (decrease) in Cash in the Period
|
81
|
(184)
|
331
|
| |
|
|
|
|
Cash outflow from decrease in debt and lease financing
|
30
|
60
|
104
|
| |
|
|
|
|
Movement in Net Funds in the Period
|
111
|
(124)
|
435
|
| |
|
|
|
|
Net Funds at Beginning of Period
|
1,921
|
1,486
|
1,486
|
| |
|
|
|
|
Net Funds at End of Period
|
2,032
|
1,362
|
1,921
|
