Financial Objects is undertaking a review of its ActiveBank business after warning of a continued slump in sales for the component-based retail banking product line.
The company says market conditions have worsened signigicantly since its AGM in May, when it highlighted difficult trading conditions as a result of the slow decision processes and pricing pressure which continued to affect the ActiveBank business.
In a statement released to the Stock Exchange this morning, Financial Objects cautions: "Since then, these conditions have significantly worsened and sales are proving even more difficult to close. Accordingly, the Board is adopting a cautious approach towards its ActiveBank sales prospects and associated services for the remainder of the year."
The news sent Financial Objects share price into a tailspin, knocking 27.7% off the overnight close of 45 pence to leave the shares at 32.5 pence by mid-morning. In March the company reported a significant decline in revenues and a loss before tax of £2.8 million for the year ending December 2002, but talked up the prospects for ActiveBank and a strengthening of the order book.
Financial Objects says the legacy Ibis business continues to trade well and is performing in line with expectations for the year.
In an effort to cut costs the group is to rationalise its real estate and consolidate its London operations, resulting in a £0.6 million property provision for the year against an onerous lease agreement.
Financial Objects says it is undertaking a "strategic review" of its business which may result in a further investment in ActiveBank. The company continues to sit on a £7.9 million cash pile raised from its flotation so it has the funds to reinvest. Long-suffering shareholders might be more inclined to press for a sale of the business and a return of some cash.