7th Aug 2006 07:01
Flomerics Group PLC07 August 2006 7 August 2006 Flomerics Group plc ("Flomerics" or "the Company") (AIM: FLO) Flomerics Group plc, the global supplier of simulation software to theengineering and electronics industries, today announces its results for the sixmonths ended 30 June 2006. • Turnover £5.7 million (2005: £5.3 million) • Adjusted Profit Before Tax £238,000 following an exceptional item and increased investment in sales (2005: £380,000) • Strong cash position £4.0 million (2005: £3.5 million) • US sales up 29% and Asia Pacific sales up 16% (excluding MicReD and at constant rates of exchange) • Electronics thermal line of business sales up 10% • Sales and operational staff numbers strengthened globally • Post results - NIKA acquisition 6 July 2006: established European and Russian based supplier of fluid flow simulation tools Commenting on the results, Gary Carter, CEO of Flomerics plc, said: "During thefirst half of this year we have achieved sales of £5.7m and seen an extremelypromising performance from our product lines in both the US and Asia Pacific.Profit is down on 2005 but this is due in part to costs relating to thestrengthening of our sales operations and Flomerics is now in an extremelystrong position to drive the business forward into new markets for ourelectromagnetic, thermal and recently acquired product lines." www.flomerics.comFlomerics Group +44 20 8487 3000Gary Carter, Chief ExecutiveChris Ogle, Finance Director & Company SecretaryConduit PR +44 20 7429 6666Laurence Read / Angus Prentice +44 7979 955 923 Chairman's Statement Introduction Flomerics has made a good start to the year with sales reaching £5.7 million andstrong performances in the US and Asia Pacific. We have also made an adjustedprofit for the period of £238,000, which was subject to a 13% increase inadministrative costs mainly due to key recruitment. While our Europeanoperations saw a decline, due in part to relatively flat economic conditions inthe region, our integration of Nika GmbH, acquired in July 2006, bringsconsiderable extra resources in the region as well as exposure to significantnew markets around the world. Results Turnover was £5.7 million (2005: £5.3 million) achieving growth of 8%. Profit before taxation, amortisation of goodwill and share-based payment was£238,000. While this is down on the 2005 figure of £380,000 the period sawadministrative costs increase by 13% on a like-for-like basis, including anexceptional charge of £58,000. Our cash balance continues to be strong with £4.0 million at 30 June 2006,compared with £3.5 million a year earlier. In order to compare like-with-like, the comparisons made below with the sameperiod last year are all at constant rates of exchange. Similarly, the figuresfor the regions exclude the contribution from MicReD, which was acquired inApril 2005. The US had very strong growth (29% with strong contributions from both thethermal and electromagnetic). Asia Pacific also performed well (up 16%) withparticularly strong performances from our thermal products in China and Japan.In contrast European sales were down 13% partly attributable to the relativelyflat economy in the region's markets. A key objective for Flomerics during thenext 12 months is to increase sales productivity in Europe. This will partly beachieved through pursuing synergies between our existing and acquiredbusinesses. Looking at sales by product, our electronics thermal line of business grew by10% (2005: 16%), FLOVENT by 6% (2005: 14%) and the electromagnetics line ofbusiness by 4% (2005: 8%). In order to drive our electromagnetics products moreaggressively, we have recently hired an experienced sales professional with abackground in EM software to take complete responsibility for this line ofbusiness. In addition, and in order to improve profitability in this area, wehave committed to moving FLO/EMC and Microstripes to a common developmentplatform. MicReD contributed £128,000 to first half turnover (2005: £264,000). We aredelighted with the performance in the US, where we achieved the first sales ofT3Ster to open up this very significant market. There was some slippage ofMicReD sales in Europe and Asia Pacific, but there continue to be good prospectsin both regions NIKA In June we announced the proposed acquisition of NIKA GmbH, which was completedon 6 July 2006. NIKA develop and sell a suite of software tools for thesimulation of fluid flow that are tightly integrated with leading MechanicalComputer-Aided Design (MCAD) tools. The NIKA organisation is headquartered inGermany, and has other operations in France and Russia, with all softwaredevelopment taking place in Moscow. Over the coming months we will be workingto integrate the organisations and take full and rapid advantage of thesignificant opportunities facing the new combined group. In particular we willbe investing in sales organisations in the US and in the UK where NIKA has hadminimal presence up to now. Dividend Having carefully considered the dividend policy, the board has decided that itis appropriate for the Company to continue to pay only a final dividend.Therefore, as in previous years, we will not be paying an interim dividend. Outlook Flomerics' strategy has been to continue to maximise the sales opportunitiesassociated with the growth in the electronics industries through our marketleading products and our global presence. At the same time we have been lookingto widen the range of applications and markets we address which we have beenable to do by the 2005 acquisition of MicReD and now the addition of the NIKAbusiness to the Flomerics organisation. We see the latter as bringing atransformation in the growth of the business over the next few years. The directors believe that investment in sales and the recent acquisitions havecreated increasing momentum in the business. There is now a strong platform forgrowth and there are good prospects for the remainder of this year and beyond. CONSOLIDATED PROFIT AND LOSS ACCOUNTInterim results for the six months to 30 June 2006 30 Jun 06 30 Jun 05* 31 Dec 05* (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Turnover 5,677 5,256 11,424 Cost of sales (159) (238) (291) Gross Profit 5,518 5,018 11,133 Administrative expenses (5,367) (4,752) (10,197) Amortisation of goodwill (98) (59) (158) Other Operating Income 30 35 66 Operating Profit 83 242 844 Interest receivable and other income 54 72 92 Interest payable and similar charges (46) (19) (36) Profit on Ordinary Activities Before Taxation 91 295 900 Tax on profit on ordinary activities (18) (66) (37) Profit on Ordinary Activities After Taxation 73 229 863 Earnings per share 0.49 1.55 5.83 Diluted earnings per share 0.46 1.49 5.59 * As restated - see Note 7. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 30 Jun 06 30 Jun 05* 31 Dec 05* (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Profit for the Period 73 229 863 Unrealised (loss) / gain on translation of foreign currency investments (23) 31 124 Total Recognised gain 50 260 987 * As restated - see Note 7. CONSOLIDATED BALANCE SHEET 30 Jun 06 30 Jun 05* 31 Dec 05*At 30 June 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Fixed AssetsIntangible assets 1,255 1,448 1,353Tangible assets 1,754 1,756 1,726 3,009 3,204 3,079 Current AssetsStock 51 10 59Debtors 3,671 3,338 3,953Cash at bank and in hand 3,976 3,504 4,081 7,698 6,852 8,093 Creditors: amounts falling due withinone year (3,842) (3,582) (4,386) Net Current Assets 3,856 3,270 3,707 Total Assets Less Current Liabilities 6,865 6,474 6,786 Creditors: amounts falling due afterone year (350) (617) (377) Net Assets 6,515 5,857 6,409 Capital and ReservesCalled up share capital 150 148 148Shares to be issued account 108 249 33Share premium account 1,727 1,734 1,602Merger reserve 892 759 892Profit and loss account 3,638 2,967 3,734 Equity Shareholders' Funds 6,515 5,857 6,409 * As restated - see Note 7. CONSOLIDATED CASH FLOW STATEMENT 30 Jun 06 30 Jun 05* 31 Dec 05*for the six months to 30 June 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Operating ActivitiesOperating profit 83 242 844Depreciation and amortisation charges 264 211 492Gains on disposal of fixed assets - - (1)Exchange differences (23) 22 113Share based payment 49 26 66Increase in stock 8 43 (6)Decrease in debtors 282 584 53(Decrease) / increase in creditors (323) (170) 283Net Cash Inflow From Operating Activities 340 958 1,844 Net cashflow from returns on investments and servicingof finance 8 53 56Taxation paid (30) (23) (126)Net cashflow from capital expenditure (194) (247) (376)Net cash paid for acquisition - (360) (405)Equity Dividend paid (195) (161) (161)Net Cashflow Before Financing (71) 220 832 Net Cashflow From Financing (34) (30) (65) (Decrease) / increase in Cash in the Period (105) 190 767 * As restated - see Note 7. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 30-Jun-06 30/06/2005* 31-Dec-05 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000(Decrease) / increase in Cash in the Period (105) 190 767 Cash outflow from decrease in debt and lease financing 34 30 65 Movement in Net Funds in the Period (71) 220 832 Net Funds at Beginning of Period 3,637 2,805 2,805 Net Funds at End of Period 3,566 3,025 3,637 * As restated - see Note 7. NOTES TO THE INTERIM REPORT 1. ACCOUNTING POLICIES The financial information contained in this Interim Report does not constitutestatutory accounts. The interim results, which have not been audited, have beenprepared using accounting policies consistent with those used in the preparationof the Annual Report and Accounts for the year ended 31 December 2005 with oneexception: in accordance with FRS 20, 'Share based payments', the group has nowrecognised the cost of share based payments in these financial statements. The accounts for the year ended 31 December 2005 have been filed with theRegistrar of Companies and received an unqualified audit report. 2. TAXATION Taxation for the six months to 30 June 2006 is based on the effective rate oftaxation that is estimated to apply to the year ending 31 December 2006. 3. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the profit on ordinaryactivities after taxation in the period by the weighted average number of sharesin issue in the period as follows: Unaudited Unaudited Audited 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 * 31 December 2005 * Profit for the period (£'000) 73 229 863Weighted average number of shares inissue ('000) 14,932 14,717 14,783 Earnings per share (p) 0.49 1.55 5.83Diluted weighted average number ofshares ('000) 15,714 15,356 15,439 Diluted earnings per share (p) 0.46 1.49 5.59 The diluted earnings per share calculation is based on a fair value of 99p pershare (30 June 2005: 68p). * As restated - see Note 7. 4. SEGMENTAL INFORMATION The group's turnover for each geographic area of operation is: 30 Jun 06 30 Jun 05 31 Dec 05 £'000 £'000 £'000 United States of America 2,796 2,032 4,609Europe 1,730 2,062 4,438Asia Pacific 1,151 1,162 2,377 5,677 5,256 11,424 Segmental information on profit before tax and net assets is disclosed in theAnnual Report. 5. ANALYSIS OF NET FUNDS 30 Jun 06 30 Jun 05 31 Dec 05 £'000 £'000 £'000 Cash in hand and at bank 3,976 3,504 4,081Debt due after one year (343) (416) (377)Debt due within one year (67) (63) (67) Total 3,566 3,025 3,637 Debt represents a mortgage that was taken out on a property acquired in 2001. 6. RESERVES Shares Share Profit Share to be Premium Merger and loss Capital issued Account reserve account 30 Jun 06 31 Dec 05* £'000 £'000 £'000 £'000 £'000 £'000 £'000 Issue of new shares 2 (33) 125 - - 94 135Profit for the year - - - - 73 73 863Dividend paid - - - - (195) (195) (161)Currency translationmovement - - - - (23) (23) 124Acquistion of MicReD - 108 - - - 108 33Share based payment - - - - 49 49 66Net addition toshareholders funds 2 75 125 - (96) 106 1,060 Opening shareholders funds 148 33 1,602 892 3,734 6,409 5,349 Closing shareholders funds 150 108 1,727 892 3,638 6,515 6,409 * As restated - see Note 7. 7. PRIOR YEAR ADJUSTMENT Share based payments In order to conform with the requirements of FRS 20, 'Share Based Payments',share options that have been granted to employees have been recognised as anexpense as part of employee remuneration. The cost is spread over the vestingperiod and has been calculated using a Black-Scholes valuation model. The effect on the comparatives of this change in accounting policy is thatadministrative expenses have increased by £26,000 for the six months to 30thJune 2005 and by £66,000 for the year to 31 December 2005. In the six monthsended 30th June 2006 the charge was £49,000. Dividends paid In order to conform with the requirements of FRS 21' Events after the BalanceSheet Date', dividends have been restated and are recorded in the profit andloss account in the period that they have been declared. The effect of this change in accounting policy on the comparatives is thatdividends have increased by £161,000 for the six months to 30 June 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Flowtech Fluid.