Interim Results
Flomerics Group PLC
31 July 2002
31 July 2002
FLOMERICS GROUP PLC
INTERIM RESULTS
For the 6 months ended 30 June 2002
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 to 30 June 2002.
Key Points
• Profit Before Tax increased 34% to £147,000 (2001: £110,000).
• Turnover fell 8% to £5,966,000 (2001: £6,455,000). (6% at constant
exchange rates).
• Turnover from FLOTHERM was down 15% (compared to an increase of 23% in
the first half of 2001). However all major customers have renewed
their licences and the customer base has continued to expand.
• Turnover from FLO/EMC increased by 79% -with favourable reactions from
customers to this relatively new product.
• Turnover from Microstripes increased by 56% - particularly strong
results from Japan.
• Cash as at end of June 2002 was £1.1 million.
Commenting on the results, David Mann, the Chairman, said:
"I am pleased to announce that we have increased our profits for this period,
despite lower turnover arising from the continuing difficult market conditions.
The directors consider that there are currently reasonable prospects for
turnover in the year 2002 showing some growth over the year 2001."
For further information please contact:
Flomerics:
David Mann, Chairman 020 8941 8810
David Tatchell, Chief Executive
Chris Ogle, Finance Director
Teather & Greenwood:
Richard Thompson 020 7426 9073
Adam Lawson (analyst) 020 7426 9592
Buchanan Communications:
Tim Thompson / Nicola Cronk 020 7466 5000
Chairman's Statement
Results
I am pleased to report that Flomerics has increased its profits in the six
months ended 30 June 2002, despite lower turnover arising from the continuing
difficult market conditions. The reduction in cost base implemented at the end
of 2001 has proved very appropriate for supporting the current trading, without
any material impact on the research and development programmes required for the
Group's longer-term strategic objectives.
Turnover for the Group was £5,966,000 (compared to £6,455,000 in the six months
ended 30 June 2001). This is a fall of 8%, or 6% at constant exchange rates. It
is important to point out that comparison is being made with a strong first half
in 2001, when Group turnover increased by 32% compared with the first half of
2000. Performance in the second half of 2001 was weaker and led us to reduce the
cost base for the current year.
As we expected at the start of the year, business has continued to be affected
by the poor economic climate, especially in the United States, and particularly
in the telecommunications and IT sectors. For the period, turnover in the US was
down 14%. In other territories trading has proved to be more resilient; turnover
in the non-US territories as a whole was up by 4%.
Great care has been taken to control costs. Due to the reduction in the work
force in the fourth quarter of 2001 (by about 20) and other continuing cost
controls, administrative expenses were down 8%. The result is that profit before
tax has increased by 34% to £147,000 (compared to £110,000).
Products
Turnover from FLOTHERM was down 15% over the same period last year (compared to
an increase of 23% in the first half of 2001). New business, renewals and
consultancy services were all down as a consequence of our customers deferring
expenditure and saving costs wherever possible. However, all of our major
customers, who were due to renew their licences in the period, have done so. In
addition, we continue to see expansion in our customer base, and new business
remains a significant element of total income. While FLOTHERM business is
clearly continuing to be affected by the current difficulties in the electronics
sector, we remain confident that, beyond the present slowdown, there is
potential for substantial market growth for this, our flagship product.
The other products all enjoyed good growth compared to the same period last
year, but are from a lower base. FLOTHERM accounted for 76% of the total
turnover, whilst in the first half of 2001 it accounted for 83%.
The growth for FLOVENT was 20% (compared to 23% in the first half of 2001). The
Data Centre Cooling initiative has contributed significantly to this growth, and
we are now seeing some good synergies with the FLOTHERM business.
Revenues from FLO/EMC are up 79%, and we are receiving some favourable reactions
from our customers to this relatively new product. The integrated product, which
will allow users of FLOTHERM and FLO/EMC to share data models, is in test and is
on track for release early in 2003.
Turnover from Microstripes, the other electro-magnetic product, targeted at
designers of microwave devices and antenna, is up 56%. It has done particularly
well in Japan.
Cash balances at the end of June stood at £1.1 million, a small improvement
since the end of last year and net funds have improved by £161,000.
Prospects
The Directors are assuming that similar slow trading conditions will persist
throughout this year. Although this prospect is unattractive in many respects,
it at least has the merit of some stability, which is likely to lead to the
normal pattern of results prior to 2001, i.e. to a stronger second half. In view
of the weak second half last year, the Directors consider that there are
currently reasonable prospects for turnover in the year 2002 showing some growth
over the year 2001.
Because of the actions taken to reduce costs in late 2001, the Directors believe
that the Group remains well on course to achieve a reasonable profit margin for
the year. At the same time it is making good progress with its longer-term
strategic programmes.
David Mann
Chairman
31 July 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Interim results for the six months to 30 June 2002
30-Jun-02 30-Jun-01 31-Dec-01
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Turnover 5,966 6,455 12,875
Cost of sales (226) (299) (518)
Gross Profit 5,740 6,156 12,357
Administrative expenses (5,539) (6,028) (11,968)
Amortisation of goodwill (41) (41) (82)
Operating Profit 160 87 307
Other interest receivable and other income 8 35 123
Interest payable and similar charges (21) (12) (122)
Profit on Ordinary Activities Before Taxation 147 110 308
Tax on profit on ordinary activities (37) (29) (55)
Profit on Ordinary Activities After Taxation 110 81 253
Dividends - - (146)
Transferred to Reserves 110 81 107
Earnings per share .75p .55p 1.73p
Diluted earnings per share .75p .55p 1.72p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
30-Jun-02 30-Jun-01 31-Dec-01
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Profit for the Period 110 81 253
Unrealised gain (loss) on translation of foreign currency investments (19) 126 (28)
Total Recognised Gains 91 207 225
CONSOLIDATED BALANCE SHEET
At 30 June 2002
30-Jun-02 30-Jun-01 31-Dec-01
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Fixed Assets
Intangible assets 581 663 622
Tangible assets 1,969 1,267 2,146
2,550 1,930 2,768
Current Assets
Debtors 5,182 4,667 5,109
Cash at bank and in hand 1,124 1,721 1,048
6,306 6,388 6,157
Creditors: amounts falling due within one year (3,659) (3,554) (3,754)
Net Current Assets 2,647 2,834 2,403
Total Assets Less Current Liabilities 5,197 4,764 5,171
Creditors: amounts falling due after one year (603) (122) (668)
Provisions for Liabilities and Charges (33) (30) (33)
Net Assets 4,561 4,612 4,470
Capital and Reserves
Called up share capital 146 146 146
Share premium account 1,602 1,616 1,602
Merger reserve 759 759 759
Profit and loss account 2,054 2,091 1,963
Equity Shareholders' Funds 4,561 4,612 4,470
CONSOLIDATED CASH FLOW STATEMENT 30-Jun-02 30-Jun-01 31-Dec-01
for the six months to 30 June 2002 (Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Operating Activities
Operating profit 160 87 307
Depreciation and amortisation charges 371 337 706
Loss on disposal of fixed assets - - 13
Profit on disposal of investment - - (25)
Exchange differences (19) 126 (36)
(Increase)/ decrease in debtors (73) 959 517
Increase in creditors 34 139 187
Net Cash Inflow From Operating Activities 473 1,648 1,669
Net cashflow from returns on investments and servicing
of finance (13) 23 1
Taxation - (192) (260)
Net cashflow from capital expenditure and
financial investment (153) (517) (1,704)
Equity Dividend paid (146) (146) (146)
Net Cashflow Before Financing 161 816 (440)
Net Cashflow From Financing (85) (93) 490
Increase in Cash in the Period 76 723 50
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
30-Jun-02 30-Jun-01 31-Dec-01
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Increase in Cash in the Period 76 723 50
Cash outflow from decrease in debt and lease financing 85 93 196
New Mortgage - - (700)
Change in Net Funds Resulting from Cash Flows 161 816 (454)
Movement in Net Funds in the Period 161 816 (454)
Net Funds at Beginning of Period 235 689 689
Net Funds at End of Period 396 1,505 235
NOTES TO THE INTERIM REPORT
1. ACCOUNTING POLICIES
The financial information contained in this Interim Report does not constitute
statutory accounts. The interim results, which have not been audited, have been
prepared using accounting policies consistent with those used in the preparation
of the Annual Report and Accounts for the year ended 31 December 2001. Those
accounts have been filed with the Registrar of Companies and received an
unqualified audit report.
2. TAXATION
Taxation for the six months to 30 June 2002 is based on the effective rate of
taxation that is estimated to apply to the year ending 31 December 2002.
3. EARNINGS PER SHARE
Basic earnings per share have been calculated by dividing the profit on ordinary
activities after taxation in the period by the weighted average number of shares
in issue in the period of 14,646,580 (six months to 30 June 2001: 14,646,580).
The diluted earnings per share calculation has been based on a fair value of 73p
per share (30 June 2001: 151p). The diluted weighted average number of shares is
14,694,665 (30 June 2001: 14,716,601).
4. SEGMENTAL INFORMATION
The group's turnover for each geographic area of operation is:
30 June 02 30 June 01 31 December 01
£'000 £'000 £'000
United States of America 3,057 3,627 7,120
Europe and the Far East 2,909 2,828 5,755
5,966 6,455 12,875
Segmental information on profit before tax and net assets is disclosed in the
Annual Report.
5. ANALYSIS OF NET FUNDS
30 June 02 30 June 01 31 December 01
£'000 £'000 £'000
Cash in hand and at bank 1,124 1,721 1,048
Debt due after one year (597) - (633)
Debt due within one year (50) - (50)
Finance leases (81) (216) (130)
Total 396 1,505 235
Debt represents a mortgage that was taken out on a property acquired in 2001.
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