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FFASTFILL PLC - 27th September, 2002
Preliminary Results for the Year ended 31 March, 2002
FFastFill plc, (“FFastfill” or “the Company”)
a leading provider of direct access trading solutions for intermediaries and
investors on international electronic exchanges, announces its preliminary
results for the year ended 31 March, 2002.
Highlights
- Turnover £0.9 million (2001: £0.4 million);
- Exceptional charges £1.4 million (2001:nil) reflect investment write-downs in Easy2Trade and SpreadMania;
- Operating loss before exceptional items £7.0 million (2001: loss £5.4 million) reflect higher than expected infrastructure costs and product development activity;
- Cash at 31 March 2002 £5.1 million, which equates to 11p per share;
- Major strategic review refocuses group objectives;
- Transaction revenue model initiated in the USA;
- Two major new contracts won with Dresdner Kleinwort Wasserstein with a total value up to £5.3 million over five years;
- Delivery of new service model for the provision of network-based exchange connectivity services for disaster recovery;
- New management appointments to be made include Keith Todd as executive Chairman, Nigel Hartnell as Business Development Director, and Dr John Elmore as Director, Technology and Operations.
Commenting on the results, Chris Stone, CEO of FFastFill, said:
"With strengthened management to take the group forward, combined with a
new focus and an excellent product set, FFastFill is now in a good position
to generate revenue at an increasing rate. The delivery of network-based exchange
connectivity services produces stable, recurring revenues over a longer term
and a substantial improvement in the group's performance is expected."
For further information, please contact:
FFastFill plc - Tel: (020) 7655 8900
Chris Stone / Marion Gay
Buchanan Communications -Tel: (020) 7466 5000
Richard Darby / Bobbie Swanson
Chairman's statement
Introduction
The dramatic changes in the technology requirements within the financial markets
have coincided with particularly severe markets for equities and in particular
for technology stocks. As a result the group has undertaken a complete review
of its market strategy, its product development programme and its management
requirements.
It is clear that while FFastFill's existing product suite is of excellent quality, new products and services will need to be developed in order to maximise the substantial opportunities which exist in providing technology to the financial markets.
Results
In the year ended 31 March 2002, turnover doubled to £0.896m although licence
fee revenues were flat, reflecting difficult market conditions. The operating
loss also increased by 55 per cent to £8.401m. A substantial part of these operating
losses arose from higher than expected costs on specific infrastructure and product
development activity. Exceptional losses of £1.371m
include write-downs of investments in Easy2Trade and SpreadMania. Additionally,
the group incurred one-off costs in restructuring certain aspects of the business
- such as the transfer of our development and testing facility from London to
Prague.
Cash reserves at 31 March 2002 were £5.093m which equates to 11p per share.
Management
Chris Stone was appointed Chief Executive in October 2001 and following a strategic
review initiated a number of substantial changes which will drive the group forward.
This process has been instigated against a backdrop of very difficult market
conditions.
In addition, significant management changes will also take place immediately following the approval of these accounts. I will step down as non-executive Chairman but will remain as a non-executive director.
Keith Todd will be appointed executive Chairman. Keith, who was previously Chief Executive of ICL and who also holds a number of senior non-executive positions including non-executive Chairman of EC Soft plc and Easynet plc, will bring substantial senior management and technology experience to the group.
Nigel Hartnell will be appointed Business Development Director. He was the director responsible for services and corporate development at ICL.
Dr John Elmore will be appointed Director, Technology and Operations, responsible for development and operations. He has previously held senior positions in BT, STC and ICL with responsibility for network services, technology and research.
The new management team will have options over 26.9% of the company's shares as part of their terms and conditions which have been approved by the Board.
Appropriate resolutions re-electing the new directors will be tabled at the forthcoming Annual General Meeting.
Strategy
The review of the group's position in the market, its strengths, its competitive
advantages and its product development and operational opportunities was prompted
by clear evidence that the business model of traditional independent software
vending, particularly in Europe, has changed.
The new strategy now being adopted by FFastFill comprises three core elements:
- The focus on software and network based services for the capital markets;
- Leveraging existing assets, including software, and the Prague development capability;
- Partnering with 'tier one' technology partners to accelerate revenue growth.
The group will pursue this strategy vigorously and positive results are now coming through.
Business and product development
With the strategy redefined and new management in place the current focus of
the group is now on developing profitable business activities, which can be sustained.
A significant reduction in costs has been achieved with the transfer of our development and testing facility to Prague. We are pleased with the commercial impact of this initiative, which has resulted in lower costs as well as a substantial improvement in the development time and quality of our software deliverables.
In line with our new strategy, the group continues to offer integrated, fully functional software for electronic markets which sustains significant customer loyalty. Achievement levels on connectivity, functionality and product stability are excellent and the real-time risk manager is a recognised market leader for traders, brokers, risk officers and compliance managers.
In Chicago, the creation of FFastTrade US and the appointment of Jim Oliff as its highly experienced Chief Operating Officer, has enabled the group to develop a new revenue stream, which is related to transaction volume. FFastTrade US is the electronic trading platform, which provides direct, risk-managed access to electronic markets. The venture between FFastTrade US and introducing broker La Salle Street Trading provides the mechanism to combine licence and fee-based revenue. Whilst this combined revenue stream had not impacted our results by 31 March 2002, the potential is considerable.
Our training and e-learning initiatives are generating income as well as providing marketing benefits and opportunities to FFastFill. FFastTrainer and Train2Trade offer online, real-time trading simulations and training programmes. Market participants are increasingly advised, and also required by risk managers, to acquire confidence in their trading ideas and competence in their trading skills and the group's products satisfy both these requirements.
Successfully adopting the new strategy will be a major focus for the strengthened management team. It will involve, amongst others, the delivery of network-based services to financial markets to provide a level of service quality not previously available. Institutions need to deal with the increased cost pressures they are facing as financial markets mature and to create new opportunities that substantially increase their client base without a commensurate increase in costs and risks.
In this context FFastFill is extremely pleased to have won two major new contracts
with Dresdner Kleinwort Wasserstein (DrKW) with a total value of up to £5.3 million
over five years.
One of the contracts extends the existing software licence arrangement with DrKW whilst the other is for the provision of network-based exchange connectivity services for disaster recovery. The latter will deliver a flexible, scalable resource to DrKW at reduced cost and is expected to be a model for future developments in the market.
The network-based exchange connectivity services contract for disaster recovery is conditional, amongst other things, upon the Company issuing 9,924,766 warrants to DrKW. Under the terms of the warrants DrKW will be entitled to subscribe for shares in FFastFill at 7 pence per share. The resolutions to be proposed at the forthcoming Annual General Meeting ask for the directors to be given authority to allot relevant securities, which includes ordinary shares and the warrants to be issued to DrKW, and to do so without making an offer to existing shareholders on a pre-emptive basis.
Outlook
With strengthened management to take the group forward, combined with a new
focus and an excellent product set, FFastFill is now in a good position to generate
revenue at an increasing rate. This primarily will be as a result of the move
to a managed network-based exchange connectivity service model which produces
stable, recurring revenues over a longer term. A substantial improvement in
the group's performance is expected, beginning with the 2002/03 financial year.
Nicholas Durlacher CBE
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 MARCH 2002
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Notes
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2002
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2001
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£’000
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£’000
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|
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Turnover
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1
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896
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438
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|
Administrative expenses
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- other
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(7,932)
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(5,863)
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|
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|
|
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-
exceptional
|
2
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(1,371)
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-
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|
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|
|
|
|
|
|
|
|
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Operating loss
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|
(8,407)
|
(5,425)
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|
|
|
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Interest
receivable and similar income
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|
390
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321
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|
|
|
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|
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Interest
payable and similar charges
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(1)
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(1)
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|
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|
|
|
|
|
|
|
|
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Loss on ordinary activities before taxation
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(8,018)
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(5,105)
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|
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Tax
on loss on ordinary activities
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3
|
412
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-
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|
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Loss on ordinary activities after taxation
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(7,606)
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(5,105)
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|
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|
|
|
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Minority
interest
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|
3
|
-
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|
|
|
|
|
|
|
|
|
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Retained loss for the financial year attributable to
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shareholders
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|
(7,603)
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(5,105)
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
Basic loss per share
|
4
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(16.73)p
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(14.34)p
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|
Diluted loss per share
|
4
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(14.70)p
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(12.69)p
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CONSOLIDATED BALANCE SHEET as at 31 MARCH 2002
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Notes
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2002
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2001
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|
|
|
£’000
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£’000
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Fixed assets
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|
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|
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Negative
goodwill
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|
(31)
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-
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|
Tangible
assets
|
|
474
|
535
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|
Investments
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
443
|
535
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|
|
|
|
|
|
Current assets
|
|
|
|
|
Investments
|
|
-
|
126
|
|
Debtors
|
|
488
|
879
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|
Cash
at bank and in hand
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|
5,093
|
11,782
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|
|
|
|
|
|
|
|
|
|
|
|
|
5,581
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12,787
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|
|
|
|
|
|
Creditors: amounts falling due within one year
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|
(1,179)
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(954)
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|
|
|
|
|
|
|
|
|
|
|
Net current assets
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|
4,402
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11,833
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|
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|
|
|
|
|
|
|
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|
Total assets less current liabilities
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|
4,845
|
12,368
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|
|
|
|
|
|
Creditors: amounts falling due after more than one year
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|
(3)
|
(5)
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|
|
|
|
|
|
|
|
|
|
|
Net assets
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|
4,842
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12,363
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|
|
|
|
|
|
|
|
|
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Capital and reserves
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|
|
|
|
Called
up share capital
|
5
|
456
|
455
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|
Share
premium account
|
5
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16,834
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16,834
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|
Shares
to be issued
|
5
|
293
|
258
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|
Merger
reserve
|
5
|
890
|
890
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|
Profit
and loss account
|
5
|
(13,660)
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(6,074)
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|
|
|
|
|
|
|
|
|
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|
Equity shareholders’ funds
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|
4,813
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12,363
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|
|
|
|
|
|
Minority
interest
|
|
29
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,842
|
12,363
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|
|
|
|
|
CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 MARCH 2002
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Notes
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2002
|
2001
|
|
|
|
£’000
|
£’000
|
|
|
|
|
|
|
Net cash outflow from operating activities
|
A
|
(6,858)
|
(5,199)
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|
|
|
|
|
|
|
|
|
|
|
Returns on investments and servicing of finance
|
|
|
|
|
Interest
received
|
|
348
|
321
|
|
Interest
element of finance lease payments
|
|
(1)
|
(1)
|
|
|
|
|
|
|
Net cash inflow from returns on investments and
|
|
|
|
|
servicing of finance
|
|
347
|
320
|
|
|
|
|
|
|
|
|
|
|
|
Taxation
|
|
|
|
|
Research
and development tax credit received
|
|
412
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure and financial investment
|
|
|
|
|
Purchase
of tangible fixed assets
|
|
(183)
|
(705)
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|
Purchase
of investments
|
|
(453)
|
(126)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(636)
|
(831)
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
|
|
Cash
acquired with subsidiary
|
|
47
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash outflow before financing
|
|
(6,688)
|
(5,710)
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|
|
|
|
|
|
|
|
|
|
|
Financing
|
|
|
|
|
Issue
of ordinary shares
|
|
1
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18,040
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|
Costs
of issue of ordinary shares
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|
-
|
(1,000)
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|
Capital
element of finance lease payments
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|
(2)
|
(1)
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|
|
|
|
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|
|
|
|
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Net cash (outflow)/inflow from financing
|
|
(1)
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17,039
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|
|
|
|
|
|
|
|
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(Decrease)/increase
in cash
|
B
|
(6,689)
|
11,329
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|
|
|
|
|
NOTES TO THE CASH FLOW STATEMENT
A.
Reconciliation of operating loss to operating cash flow
|
|
2002
|
2001
|
|
|
£’000
|
£’000
|
|
|
|
|
|
Operating
loss
|
(8,407)
|
(5,425)
|
|
Depreciation
|
268
|
240
|
|
Amortisation
|
(6)
|
-
|
|
Foreign
exchange gains
|
(3)
|
-
|
|
Decrease/(increase)
in debtors
|
468
|
(841)
|
|
Increase
in creditors
|
191
|
827
|
|
Charge
on issue of unapproved share options
|
52
|
-
|
|
Provision
against investments
|
579
|
-
|
|
|
|
|
|
|
|
|
|
Net cash outflow from operating activities
|
(6,858)
|
(5,199)
|
|
|
|
|
B.
Reconciliation of net cash flow to movement in net funds
|
|
2002
|
2001
|
|
|
£’000
|
£’000
|
|
|
|
|
|
(Decrease)/increase
in cash in the year
|
(6,689)
|
11,329
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|
|
|
|
|
Repayment
of finance leases
|
2
|
1
|
|
Net
funds at beginning of year
|
11,775
|
445
|
|
|
|
|
|
|
|
|
|
Net
funds at end of year
|
5,088
|
11,775
|
|
|
|
|
C. Analysis
of changes in net funds
|
|
At 1 April
|
Cash flows
|
At 31 March
|
|
|
2001
|
|
2002
|
|
|
£’000
|
£’000
|
£’000
|
|
|
|
|
|
|
Cash
at bank and in hand
|
11,782
|
(6,689)
|
5,093
|
|
Finance
leases
|
(7)
|
2
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
11,775
|
(6,687)
|
5,088
|
|
|
|
|
|
NOTES
1. Accounting policies
The accounts
have been prepared under the historical cost connection and in accordance with
applicable accounting standards.
2.
Exceptional Items
Exceptional items comprise:
|
|
2002
|
2001
|
|
|
£’000
|
£’000
|
|
|
|
|
|
Impairment
of investments
|
579
|
-
|
|
Provision
against staff loans
|
792
|
-
|
|
|
|
|
|
|
1,371
|
-
|
During the year the directors
reviewed the carrying value of investments held in SpreadMania Ltd and
Easy2Trade plc. The directors believe
that these investments have suffered an impairment and have written down the
carrying value of the investment in both entities to a nominal value of £1,
resulting in a charge to the profit and loss account of £579,000.
The Company has agreed to release
two individuals from their liabilities in respect of loans made to them by the
Company. Provision has been made
against the full amount of these loans, related tax and national insurance and
accrued interest resulting in a charge to the profit and loss account of £792,000.
3. Tax on Loss on Ordinary Activities
The
Company has no liability to UK Corporation tax as the Company made a loss for
the purposes of UK Corporation Tax.
During the year the Company received a research and development tax
credit.
4. Loss per share and diluted loss per share
Loss per
share is calculated by dividing the loss attributable to ordinary shareholders
for each period amounting to £7,603,000 for the year ended 31 March 2002 (2001:
£5,105,000) by 45,451,450 at 31 March 2002 (2001: 35,605,575), being the
weighted average number of ordinary shares in issue during each period.
Diluted
loss per share is calculated by dividing the loss attributable to ordinary
shareholders as disclosed above, by 51,706,658 at 31 March 2002 and by
40,218,117 at 31 March 2001, being the weighted average number of ordinary
shares in issue during each period, adjusted for the weighted number of share
options outstanding at the end of each period, retrospectively adjusted for the
exercise of share options. For the
purposes of dilution, outstanding share options have been included at their
exercise price of between £0.01 and £1.20 per share.
5. Statement of Movement on
Shareholders’ Funds
|
|
Share
capital £’000
|
Share
premium
account
£’000
|
Shares
to be
issued £’000 |
Merger
reserve £’000 |
Profit
and
loss
account £’000 |
Share-
holders’
funds
£’000 |
|
At 31 March 2001
|
455
|
16,834
|
258
|
890
|
(6,074)
|
12,363
|
|
Loss for the year
|
-
|
-
|
-
|
-
|
(7,603)
|
(7,603)
|
|
Charge on grant
|
|
|
|
|
|
|
|
of share options
|
-
|
-
|
52
|
-
|
-
|
52
|
|
Exercise of
|
|
|
|
|
|
|
|
share options
|
1
|
-
|
(17)
|
-
|
17
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2002
|
456
|
16,834
|
293
|
890
|
(13,660)
|
4,813
|
|
|
|
|
|
|
|
|
6. Financial Information
The financial information
set out in the announcement does not constitute the Company's statutory accounts. Information relating to the year ended 31
March 2001 is derived from the statutory accounts for that period which have
been delivered to the Registrar of Companies.
The auditors’ report on those accounts was unqualified and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31
March 2002 have been audited and the accounts will be delivered to the
Registrar of Companies after the Company's Annual General Meeting.
7. Annual Report and Accounts
The Annual Report and
Accounts will be posted to shareholders and will also be available from the
Company's registered office at 1-3 Norton Folgate, London
E1 6DB.
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