RNS Number:0776J
Formscan PLC
24 March 2003
EMBARGO FOR IMMEDIATE RELEASE AT 8.00AM, 24 MARCH 2003
FORMSCAN PLC ('FORMSCAN' OR THE 'COMPANY')
Interim results for the six months ended 31 January 2003
Chairman's Statement
The Board is pleased to report on the continuing progress of the Group for the 6
months ended 31 January 2003. A loss for the period belies the improvement in
business momentum, which has continued from the end of last year. We are
somewhat behind plan, but this is essentially due to a delay in confirming one
large order in the interim period. We expect to complete contract negotiations
with this customer in the short term.
We recently announced our largest single order for Integrity verification
devices to date, a contract valued at over #500,000 to deliver our solutions to
the second largest forms printing company in Japan. This, together with a steady
increase in other business, supports our view that a return to profit for the
year is realistic.
For the six months ended 31 January 2003, the Company recorded an operating loss
of #220,000 (2002 H1: loss of #225,000) on turnover of #2.2 million (#1.9
million for the equivalent period last year). A full six months of activity from
the Inspectron business is included this year, compared with three weeks of
activity from 9 January 2002 (the date of the Inspectron acquisition) in the
corresponding six month period a year ago. Interim losses per share were
reduced to 2.07 pence (2002 H1: loss #2.10 pence per share). The board does not
propose payment of an interim dividend for the period.
During the year since the Inspectron acquisition, we have consistently been
turning inventory into cash, as indicated by the overall stock level reduction.
This will continue, especially as a result of the Japanese order recently
announced.
Actual cash balances at 31 January 2003 were #279,000 (#141,000 in 2002). Net
assets were #831,000 (#1.3 million in 2002).
Operational Review
Over the past 6 months, our overall sales effort has been strengthened and we
repositioned the skill set of the team. This, together with priority targeting
of higher value orders, has resulted in an expanding order pipeline, both in
numbers of potential orders and order value. Larger orders generally take
longer to achieve, which is reflected in the modest slippage of this first
period. However, we are ensuring that all our operations are fully prepared for
the on-time and on-budget delivery of future large orders.
During this first half we have also achieved Integrity orders in France and
Belgium, and we are currently training our new sales partners in Germany. We
now have firm prospects for Continuity in the USA. Without losing sight of the
ongoing mainstream business needs, we plan to make a modest start at exploiting
these prospects, as well as expanding our level of Integrity exposure in Europe.
As our confidence continues to strengthen, we are spending more on trade shows,
and speculative joint development, where we see a "pull" of interest from
potential partners. The short-term focus continues to be on revenue producing
development, and increased sales efforts. Other business expenses continue to be
tightly monitored.
Our software development continues, primarily to consolidate new customer wishes
and latest technology into our growing library of solutions. The sales team is
slowly being cross-trained on both Integrity and Continuity, and we are
currently seeking more pre-sales staff to support the generally increased level
of activity.
Current Trading
Our typical trading pattern consists of regular business, and some larger "lumpy
" contracts every year. We are currently experiencing a steady flow of regular
business, and are actively involved in closing two or three larger deals. By
virtue of their size and complexity, it is difficult to forecast accurately when
they will fall, but experience tells us how to put a confidence level on these
larger items.
Our order flow and larger deal pipeline is in line with our plan, and we
maintain the focus of closing and delivering these deals, whilst aggressively
seeking new prospects to maintain our strong pipeline.
Since August we have taken three more orders for our Continuity solution for
various UK Police forces, and other forces around the country expect to place
orders this year.
We have just received payment for our earlier Chinese Integrity installation,
and expect more business to follow. We have learned to be patient with this kind
of new venture, and do not depend on repeat orders from China for our day-to-day
plans.
In America, the combined Inspectron/Formscan team have been working well as one
since last summer, and the combination of the Inspectron sales team with
Formscan's Sentinel value-added software solutions is showing benefits in the
increased number of sales proposals being delivered.
Future Prospects
Although we see no clear signs of a slow-down, our optimism must be measured in
the context of the outside world; the international nature of our business
appears to be naturally hedging us against downturns in one particular area.
Formscan's solutions are niche in nature, and they affect mission-critical parts
of our customers' businesses. For this reason, we feel that a continued
improvement in our ability to see the benefits of our past few years'
restructuring can be expected.
Allan Harle, Chairman
Formscan PLC
Consolidated Profit and Loss Account
For the half year ended 31 January 2003
Half year to Half year to Year ended
31 Jan 03 31 Jan 02 31 Jul 02
(Unaudited) (Unaudited) (Audited)
# # #
Turnover 2,222,013 1,923,479 4,231,420
--------- --------- ---------
Group operating loss (220,422) (225,029) (272,680)
Interest (21,851) (11,191) (36,239)
--------- --------- ---------
Loss before taxation (242,273) (236,220) (308,919)
Taxation (3,678) 2,085 (3,326)
--------- --------- ---------
Loss attributable to (245,951) (234,135) (312,245)
shareholders
Dividends - - -
--------- --------- ---------
Retained loss (245,951) (234,135) (312,245)
========= ========= =========
Losses per share (2.07)p (2.10)p (2.75)p
--------- --------- ---------
Losses per share (fully diluted) (2.07)p (2.10)p (2.75)p
--------- --------- ---------
Dividends per share - - -
--------- --------- ---------
Formscan PLC
Consolidated Balance Sheet
31 January 2003
Half year Half year Full year
ended ended ended
31 Jan 03 31 Jan 02 31 Jul 02
(Unaudited) (Unaudited) (Audited)
# # #
Fixed Assets
Tangible assets 613,219 680,403 636,961
Intangible assets 509,463 624,812 552,402
Own shares 18,405 44,914 26,074
--------- --------- ---------
1,141,087 1,350,129 1,215,437
--------- --------- ---------
Stocks 448,218 722,681 542,867
Debtors 1,081,717 1,237,887 746,573
Cash at Bank and in hand 278,848 140,821 426,421
--------- --------- ---------
1,808,783 2,101,389 1,715,861
Creditors due within one year (1,698,895) (1,566,608) (1,300,141)
--------- --------- ---------
Net current assets 109,888 534,781 415,720
--------- --------- ---------
Total assets less current 1,250,975 1,884,910 1,631,157
liabilities
Creditors due after one year (420,150) (567,980) (463,837)
--------- --------- ---------
830,825 1,316,930 1,167,320
========= ========= =========
Capital and reserves
Called up share capital 118,909 112,409 118,909
Share premium account 1,247,665 1,104,665 1,247,665
Merger reserve 712,147 712,147 712,147
Revaluation reserve 477,488 477,488 477,488
Capital redemption reserve 5,289 5,289 5,289
Profit and loss account (1,730,673) (1,095,068) (1,394,178)
--------- --------- ---------
830,825 1,316,930 1,167,320
========= ========= =========
Movement in shareholders' funds
At 31 July 2002 1,167,320
Loss for the financial period (245,951)
Shares issued 0
Share premium 0
Exchange translation differences (90,544)
---------
At 31 January 2003 830,825
---------
Notes to the Interim Report
(1) The interim results to 31 January 2003, which are unaudited, have
been prepared in accordance with the accounting policies adopted in the accounts
for the year ended 31 July 2002.
(2) The information set out in the Interim Report does not constitute
annual or group accounts within the meanings of Sections 226 and 227 of the
Companies Act 1985. The results of the year to 31 July 2002 are extracts from
the 2002 Group published accounts, which were audited and reported upon without
qualification, and have been delivered to the Registrar of Companies.
(3) Losses per share are calculated by dividing the losses for the period
by the weighted average number of shares during the period being 11,890,904
(2002: 11,169,904).
(4) Taxation is based on a corporation tax rate of 34% (2002: 34%)
after consideration of operating loss carry-backs and alternative minimum tax
requirements.
(5) The Directors do not propose the payment of an interim dividend.
(6) Copies of this statement are available from Apex House, West End,
Frome, Somerset BA11 3AS.
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