Financial Models counting the cost of takeover battle

Financial Models counting the cost of takeover battle

The battle for control of Canada's Financial Model Company is set to hit revenues and income in the fourth quarter, the TSX-listed firm has warned.

The warning came as the vendor reported a 2.9% drop in third quarter revenues to $17.9 million from $18.5 million in the the prior year. Third quarter cost of revenue and operating expenses declined 4.8% to $15.1 million from $15.9 million as a result of cost control measures and $0.6 million of investment tax credits.

Third quarter Ebitda was up $0.2 million to $2.8 million. Year to date earnings are 54.8% up on the equivalent time span to $8.2 million from $5.3 million.

Stamos Katotakis, president and chief executive officer of FMC, says the firm continues to focus on increasing its recurring revenue base from application services and licence maintenance. This now represents approximately 80% of total revenue.

Katotakis is currently competing with French IT firm Linedata Services for control of the company. As a result, fourth quarter revenue is expected to suffer, with forecasts for a range of $17 million to $18 million on costs of $15.5 million to $16.0 million.

An additional $1.5 million in one-time expenses are expected related to FMC's activites in exploring the competing bids, while the company stands to shell out as much as $4.25 million in penalty payments to Linedata should the French firm fail to take over. An additional $4million to $5 million may fall due in stock option expenses upon completion of any deal.

The FMC board is expected to report back on the merits of the competing bids on Monday 10 January.

Comments: (0)

Trending