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FFASTFILL PLC
- 19th May, 2003
Preliminary Results For The Year Ended 31 March, 2003FFastFill plc (‘FFastFill’ or the ‘Company’), a leading
application service provider for trading and risk management in electronic markets,
announces its preliminary results for the year ended 31 March, 2003.
Highlights
- Turnover up by 53% to £1.37 million (2002 : £0.9 million);
- Operating loss before exceptional items down by 31% at £4.6
million (2002 : £6.7 million);
- Cash at 31 March 2003 was £1.0 million;
- The company is pleased to announce a new funding package of £1.2m,
including a new equity fundraising of £780k and the signing of
a leasing arrangement, which will release £420k of capital in
May 2003.
Since October, the company has
- Focused on building an annuity-based, application services business
- Completed the implementation of the first phase of the FFastConnect
contract for Dresdner Kleinwort Wasserstein (DrKW)
- Won a major £480,000 per annum bespoke software development
contract with DrKW
- Completed the development of FFastTrack, the company’s new
trade tracking system
- Initiated the implementation of a new software architecture which
will provide a unique set of service features
- Implemented our new service management system which underpins all
our future service offerings
- Introduced a new release of FFastFill, the company’s trading
and risk management system
- Grown monthly revenues in the USA to $84,000 in March 2003
- Reduced its monthly cost base by 28% to £377,000 in April 2003
- Taken a decision to close its subsidiary company in France
- Made changes to the Board which have strengthened the company’s
corporate governance
Commenting on the results, Keith Todd, Executive Chairman of FFastFill,
said :
“FFastFill has made significant progress during the second half
of the year in transforming itself from an ISV to a company that is well
placed to benefit from its new focus on application services”
For further information, please contact:
FFastFill plc - Tel: (020) 7665 8900
Keith Todd, Executive Chairman
Caroline Harrison, Company Secretary
Rostron Parry - Tel: (020) 7490 8062
John Parry/Lynda Hall
CHAIRMAN’S STATEMENT
Introduction
The year just completed was a year of significant change and progress. I was
pleased to join the company as Executive Chairman on 26 September 2002 and to
lead the transformation of FFastFill from an ISV to a company that is well placed
to benefit from its new focus as an applications services company for the capital
markets. I am also pleased to announce that we have agreed a new funding package
which will result in the company securing £1.2m of additional funding to
help underpin our plans
Six months of real progress
The past six months have been challenging but good progress has been achieved.
- We have completed the implementation of the first phase of the FFastConnect
contract for Dresdner Kleinwort Wasserstein (DrKW)
- We have completed the development of FFastTrack, our trade tracking
system
- We have implemented new development and test procedures to underpin
the focus on improved software quality and shortening development lead
times
- We have initiated the new software architecture development which
will be progressively released during 2003. This will give us an advanced
modular architecture and a unique set of service features
- We have completed the first implementation of our new service management
system that will underpin all our service offerings
- We have built a stable platform on which our USA Introducing Broker
business can now expand. Monthly revenues rose to $84k in March 2003
- We have built a strong prospect list for our primary offerings
- We have reduced our monthly cost base to £377k in April 2003
by establishing streamlined management processes and eliminating redundant
resources
Ongoing recurring revenue as at 31 March 2003 is now approximately £2.4m
for delivery in 2003/04 (includes £600k US revenues based on March
2003 achievement)
Financial results for the year:
Revenue grew to £1,372k (2001/2 £896k) up 53%. Particularly encouraging
is the revenue comparison between the first six months to 30 September 2002
(£396k) and the six months to 31 March 2003 (£976k), this is an
increase of 146% since the new management team arrived.
Operating loss before exceptional administrative expenses was £4,620k
(2001/2 £6,737k). The operating loss in the second half was £2,308k
down from £2,718k in the first six months of the year. This included
writing off all software development cost and the staff costs associated with
the build of FFastConnect .
There were £406k of exceptional expenses in the year to resize the business
and simplify management processes.
The loss after tax was £4,635k, which represented a loss per share of
10.05p down from 16.73p per share in 2001/2.
The cash balance at 31 March 2003 was £998k with cash out flow in the
second half of £1.4m compared to £2.6m in the first six months.
In April and May the company initiated further cost reduction measures including
the shutting of the French company and a salary sacrifice for options scheme
in which executive directors and senior management participated. Details of
the changes that the executive directors made are included in the directors’ report.
New funding arrangement
The Company is pleased to announce a new funding package of £1.2m, including
a new equity placing and subscription to raise £780k (before expenses)
and the signing of a leasing arrangement which will release £420k of
capital in May 2003.
The Placing is for 12,055,000 new ordinary shares and the subscription is for
7,500,000 new ordinary shares, at 4p per share. The Placing is being made to
a group of current and new investors including directors and senior managers.
Approval for the placing and subscription will be sought at the AGM on 16 June
2003. The lease arrangement that has been put in place is a precursor to the
leasing arrangements we expect to put in place to support the financing of
capital required for our FFastConnect offering.
In addition to the committed funding announced today we will seek shareholder
approval at the AGM for the issue of up to £1m convertible secured loan
stock with a 6% coupon and a conversion rate of not less than 6p. This is aimed
at the VCT investment community and we are currently seeking confirmation of
its qualification from the Inland Revenue.
Board Changes
I am pleased to announce that we are appointing on 16 May 2003 three new board
members to expand the experience and knowledge of the board.
Mr Jim Oliff is currently chairman and CEO of FFastTrade our US IB business
and is also Deputy Chairman of the CME. Jim brings to the board extensive knowledge
of derivatives and an exceptional reputation both in Chicago and global derivatives
markets.
Mr Hugh Hughes who is CEO of Thales Information Systems (Finance) and has worked
extensively in the City over 20 years brings to the board a breadth of business
knowledge of the financial markets.
Mr David Hurst-Brown who was previously with UBS Warburg in a number of corporate
finance positions brings to the board an astute understanding of the corporate
finance markets and extensive technology business understanding.
The board will now have four non executive members and three executive members.
We are also amending the Board’s remuneration in line with market rates.
Operational review
Strategy : We are continuing to implement our new strategy
of providing applications as a service. The essence of this proposition is
to provide our customers with a service, based around a service level agreement
(SLA), which frees up their management time, budgets and technical resources,
allowing them to focus on their own business imperatives rather than the internal
operation and management of the technology.
The deployment of this strategy is built around two fundamentals, developing
long term, strategic relationships with our customers, and providing a set
of service offerings which enhance our extensive application functionality.
Business Development : In order to market this differentiated
proposition we have brought together a specialist team of sales executives
and have already developed a substantial list of prospective clients. Following
the successful implementation of phase one at DrKW, we believe that a significant
number of these will become clients during 2003.
We are continuing to develop the number and range of our sales partnerships,
including Thales Information Systems and are working actively with other specialist
consultancies in the financial sector.
Services : Our major focus over the past six months has been
the implementation of FFastConnect, the first SLA-based exchange connectivity
service for the derivatives markets. This has now been completed for Eurex,
Euronext.liffe, and IDEM. We are now planning to extend this to cover a further
five exchanges by the end of 2003.
In implementing this service we have also built our core service management
platform which provides us with the base on which we can introduce other network-based
services later this year. The next of these is the provision of our own trading,
risk and order book management solutions as a service. We are currently implementing
this for one of our clients and are planning to bring other customers on to
the service later in the year.
Application : The initial work on enhancing our development,
testing and support processes paid off with a significant improvement in quality
in our major upgrade release at the end of March. This provided significant
new functionality in the area of pre-trade risk management, and expanded the
range of exchange connections to include One Chicago, IDEM, BTEX and OMLX.
Our software now connects to 10 major derivatives exchanges.
In addition we delivered the first release of our new multi-asset class, trade
tracking system. This system can be used in conjunction with other ISV’s
order capture front-end systems, as well as our own and can handle information
on FX, equities, and bonds as well as derivatives trades.
We are now progressively introducing elements of our new software architecture
which will allow us to deploy the application under an SLA-based service agreement.
We believe that this will be a first for this industry and will open up a wide
range of new market opportunities for the company.
USA : The Introducing Broker business grew substantially
during the second half of the year with monthly revenues increasing to $84k
in March. In addition we have started to develop the opportunity for the provision
of application services (ASP) to the institutional market. Whilst there is
synergy between these two businesses, we will progressively be developing them
in parallel paths, in line with their own requirements.
DrKW : We achieved a number of major milestones with DrKW.
The first was the implementation of phase one of FFastConnect. We have also
recently secured a £480k pa bespoke software development contract, which
will be serviced from our Software Development Centre in Prague. Additionally,
we implemented a major new release of our trading and risk management system.
We continue to expect that we will extend this relationship further to the
mutual advantage of both the bank and your company.
People: Software Development Centre: Our software development
team in Prague have continued to validate the earlier decision to relocate
this team by demonstrating high quality skills and producing high quality software.
In addition, significant steps were taken to further enhance the professionalism
and process management of this unit.
Communication: Much effort has been made over the past six
months to improve the communication with all staff and wherever possible to
involve them in the future direction of the company. I continue to be delighted
by the range of skills that the company possesses and with the degree of commitment
with which these skills are used.
Management: During the second half of the year I have progressively
reduced the size of the management team in line with improving management efficiency
and the needs of a small company. As part of this activity, I have taken over
as acting CEO following the resignation of Chris Stone, who continues to work
with the company in an advisory capacity. The new executive management team
all demonstrated their commitment by exchanging salary for options in April.
We have a strong, experienced team, which brings together mission critical
computing skills and experience in the financial services sector, with proven
ability to execute.
Outlook
The business is operating in a difficult economic environment; however the
board is confident that, following the progress over the past six months in
meeting our commitments to customers, the company will continue to progress
well in 2003/4.
Keith Todd
Executive Chairman
15 May 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 March
2003
| |
|
2003 |
|
2002 |
| |
|
£’000 |
£’000 |
|
£’000 |
|
£’000 |
| |
| Turnover |
|
|
|
|
|
|
|
| - continuing operations |
1 |
1,345 |
|
|
890 |
|
|
| - discontinued operations |
|
27 |
|
|
6 |
|
|
| |
|
|
1,372 |
|
|
|
896 |
| |
|
|
|
|
|
|
|
| Administrative expenses |
|
|
|
|
|
|
|
| - exceptional |
|
|
(406) |
|
|
|
(1,670) |
| - other |
|
|
(5,992) |
|
|
|
(7,633) |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Operating loss |
|
|
|
|
|
|
|
| - continuing operations |
|
(4,501) |
|
|
(8,037) |
|
|
| - discontinued operations |
|
(525) |
|
|
(370) |
|
|
| |
|
|
(5,026) |
|
|
|
(8,407) |
| |
|
|
|
|
|
|
|
| Interest receivable and similar income |
|
|
103 |
|
|
|
390 |
| |
|
|
|
|
|
|
|
| Interest payable and similar charges |
|
|
(3) |
|
|
|
(1) |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Loss on ordinary activities before taxation |
|
|
(4,926) |
|
|
|
(8,018) |
| |
|
|
|
|
|
|
|
| Tax on loss on ordinary activities |
2 |
|
285 |
|
|
|
412 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Loss on ordinary activities after taxation |
|
|
(4,641) |
|
|
|
(7,606) |
| |
|
|
|
|
|
|
|
| Minority interest |
|
|
6 |
|
|
|
3 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Loss for the financial year attributable to
shareholders |
|
|
(4,635) |
|
|
|
(7,603) |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Basic and diluted loss per share |
3 |
|
(10.05p) |
|
|
|
(16.73p) |
CONSOLIDATED BALANCE SHEET as at 31 March 2003
| |
Notes |
2003 |
|
2002 |
| |
|
£’000 |
|
£’000 |
| Fixed assets |
|
|
|
|
| Negative goodwill |
|
- |
|
(31) |
| Tangible assets |
|
629 |
|
474 |
| |
|
|
|
|
| |
|
|
|
|
| |
|
629 |
|
443 |
| |
|
|
|
|
| |
|
|
|
|
| Current assets |
|
|
|
|
| Debtors |
|
681 |
|
488 |
| Cash at bank and in hand |
|
998 |
|
5,093 |
| |
|
|
|
|
| |
|
|
|
|
| |
|
1,679 |
|
5,581 |
| |
|
|
|
|
| Creditors: amounts falling due within one
year |
|
(1,222) |
|
(1,079) |
| |
|
|
|
|
| |
|
|
|
|
| Net current assets |
|
457 |
|
4,502 |
| |
|
|
|
|
| |
|
|
|
|
| Total assets less current liabilities |
|
1,086 |
|
4,945 |
| |
|
|
|
|
| Creditors: amounts falling due after
more than one year |
|
(1) |
|
(3) |
| |
|
|
|
|
| Deferred income |
|
(875) |
|
(100) |
| |
|
|
|
|
| |
|
|
|
|
| Net assets |
|
210 |
|
4,842 |
| |
|
|
|
|
| |
|
|
|
|
| Capital and reserves |
|
|
|
|
| Called up share capital |
|
464 |
|
456 |
| Share premium account |
|
16,834 |
|
16,834 |
| Shares to be issued |
|
203 |
|
293 |
| Merger reserve |
|
890 |
|
890 |
| Profit and loss account |
|
(18,202) |
|
(13,660) |
| |
|
|
|
|
| |
|
|
|
|
| Equity shareholders’ funds |
4 |
189 |
|
4,813 |
| |
|
|
|
|
| Minority interest |
|
21 |
|
29 |
| |
|
|
|
|
| |
|
|
|
|
| Total capital employed |
|
210 |
|
4,842 |
| |
|
|
|
|
The accounts were approved by the Board of Directors on 15 May 2003
and were signed on its behalf by:
Director
CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2003
| |
|
2003 |
|
2002 |
| |
|
£’000 |
|
£’000 |
| |
|
|
|
|
| Net cash outflow from operating activities |
|
(3,987) |
|
(6,858) |
| |
|
|
|
|
| |
|
|
|
|
| Returns on investments and servicing of finance |
|
|
|
|
| Interest received |
|
103 |
|
348 |
| Interest element of finance lease payments |
|
(3) |
|
(1) |
| |
|
|
|
|
| |
|
|
|
|
| Net cash inflow from returns on investments and servicing
of finance |
|
100 |
|
347 |
| |
|
|
|
|
| |
|
|
|
|
| Taxation |
|
|
|
|
| Research and development tax credit received |
|
285 |
|
412 |
| |
|
|
|
|
| |
|
|
|
|
| Capital expenditure and financial investment |
|
|
|
|
| Purchase of tangible fixed assets |
|
(499) |
|
(183) |
| Purchase of investments |
|
- |
|
(453) |
| |
|
|
|
|
| |
|
|
|
|
| Net cash outflow from capital expenditure and financial
investment |
|
(499) |
|
(636) |
| |
|
|
|
|
| |
|
|
|
|
| Acquisitions |
|
|
|
|
| Cash acquired with subsidiary |
|
- |
|
47 |
| |
|
|
|
|
| |
|
|
|
|
| Cash outflow before financing |
|
(4,101) |
|
(6,688) |
| |
|
|
|
|
| |
|
|
|
|
| Financing |
|
|
|
|
| Issue of ordinary shares |
|
8 |
|
1 |
| Capital element of finance lease payments |
|
(2) |
|
(2) |
| |
|
|
|
|
| |
|
|
|
|
| Net cash inflow/(outflow) from financing |
|
6 |
|
(1) |
| |
|
|
|
|
| |
|
|
|
|
| Decrease in cash |
|
(4,095) |
|
(6,689) |
| |
|
|
|
|
NOTES
1. Accounting policies
The accounts have been prepared under the historical cost connection and
in accordance with applicable accounting standards.
2. Going concern
During the year, the group made losses of £4.6 million and had net
assets at 31 March 2003 of £210,000. As disclosed in the Chairman's
Statement on pages 4 to 6, the directors have taken steps to reduce operating
losses and they are optimistic that revenues will increase significantly
in the year ended 31 March 2004 which will further reduce these losses.
In addition, the directors have prepared cashflow forecasts for the foreseeable
future and are in the process of securing funding from existing shareholders
and new investors. Based on these discussions, the directors are confident
that they will be able to procure sufficient finance to enable the group
to meet its liabilities as they fall due for the foreseeable future.
On this basis, the directors have prepared the accounts on the going concern
basis. The accounts do not include any adjustments that would arise if
this basis was inappropriate.
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 £4,635,000 for the year
ended 31 March 2003 (2002: £7,603,000) by 46,124,866 (2002: 45,451,450),
being the weighted average number of ordinary shares in issue during each
year.
For the purposes of dilution, share options are non-dilutive.
5. Statement of Movement on Shareholders’ Funds
| |
|
2003 |
|
2002 |
| |
|
£’000 |
|
£’000 |
| |
|
|
|
|
| At 1 April 2002 |
|
4,813 |
|
12,363 |
| |
|
|
|
|
| Loss for the year |
|
(4,635) |
|
(7,603) |
| Charge on grant of options |
|
- |
|
52 |
| Exercise of share options |
|
8 |
|
1 |
| Foreign currency movement |
|
2 |
|
- |
| |
|
|
|
|
| |
|
|
|
|
| At 31 March 2003 |
|
189 |
|
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 2002 is derived from the statutory accounts for that year, 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 2003 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.
8. Dividends
The directors are unable to recommend the payment of a dividend.
9. Share options
Salary Waiver
On 1 April 2003 the Board of Directors and Remuneration Committee approved
a salary waiver scheme and granted share options to equivalent value to
those individuals who waived salary for the twelve months to 31 March 2004.
On 1 April 2003, T K Todd waived £100,000 of salary for the year
ended 31 March 2004 and voluntarily had 3,333,333 unapproved share options
with an exercise price of 7p each cancelled. In recognition of this he
was issued with the same number of unapproved share options (3,333,333)
with an exercise price of 1p each.
Also on 1 April 2003, N R Hartnell waived £49,306 of salary for the
year ended 31 March 2004 and voluntarily had 1,645,342 unapproved share
options with an exercise price of 7p each cancelled. In recognition of
this he was issued with the same number of unapproved share options (1,645,342)
with an exercise price of 1p each.
The Board of Directors and Remuneration Committee, also granted share options
at an exercise price of 1p to other staff who participated in the salary
waiver scheme, detailed below.
| Scheme |
At 1 April 2003 |
Exercise price |
Dates from which exercisable |
Expiry date |
| Unapproved |
1,066,667 |
£0.01 |
1 April 2004 |
31 March 2013 |
| EMI |
666,667 |
£0.01 |
1 April 2004 |
31 March 2013 |
Other
On 1 April 2003 the Board of Directors and Remuneration Committee also granted
the following share options to a member of staff.
| Scheme |
At 1 April 2003 |
Exercise price |
Dates from which exercisable |
Expiry date |
| EMI |
500,000 |
£0.05 |
1 April 2006 |
31 March 2013 |
| EMI |
500,000 |
£0.07 |
1 April 2006 |
31 March 2013 |
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