Financial Objects predicts difficult year ahead as revenues continue to fall

Financial Objects predicts difficult year ahead as revenues continue to fall

UK banking software vendor Financial Objects is anticipating another "difficult year" after reporting a 19% fall in revenues and widening operating losses for the year ending 31 December 2003.

Full year revenues fell to £10.4m for the year ending 31 December 2003, from £12.8m a year ago.

After amortisation of goodwill and exceptional items of £10.5m, Financial Objects' recorded an operating loss of £12.3m, compared with a £3.4m loss a year ago. Year-end net cash balances were £6.7m, down from £8.0m last year.

Commenting on the results, Roger Foster, chairman, Financial Objects, says the implementation of a new business model, announced last June, has been a major factor in a number of exceptional write-offs during the period.

Foster adds that 2004 "is anticipated to be another difficult year for the Group but we expect to benefit from the substantial cost reductions already achieved".

The vendor says its order backlog declined during 2003 to £8m. The order book however still represents over 75% of 2003 revenue, mainly as a result of recurring support revenues from its IBIS client base.

Shares in the firm fell to 27.50 pence this morning from an over-night close of 36 pence, but had recovered slightly to 31.50 pence by mid-day.

Financial Objects said in November it was making £1.7m provision in its year-end accounts after discovering significant cost-overruns in two major contracts at its ActiveBank division. However the firm recently signed a distribution agreement with Siemens Business Services which will use the activebank product as a "cornerstone technology" in systems delivery for both retail and wholesale European banking customers.

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