Tesco to start selling low-cost, own-brand software

02 OCTOBER 2006

FORMJET PROVIDES GATEWAY FOR TESCO’S ENTRY INTO THE UTILITY SOFTWARE MARKET

Unique tie up shows strength of Formjet’s product portfolio as it provides one stop shop for Tesco-branded software

Alternative software vendor Formjet today commences its entry into the own-branded software market via an exclusive tie up with Tesco Stores Ltd (“Tesco”) – a subsidiary of Tesco Plc. As a result, Formjet will provide a range of utility software under the Tesco Software brand as the supermarket chain expands into this market.

All Tesco-branded software will be provided by Formjet’s white labelling division. Formjet will initially provide Tesco with six software titles with the opportunity to add more products as this relationship develops. Formjet will also provide a variety of services under the Tesco Software Support banner.

HIGHLIGHTS

· The exclusive partnership provides a strong platform for Formjet to develop strong ties with Tesco and to showcase the strength of its white-labelling solutions and software suite;

· The Tesco products will initially be launched in October 2006, rolling out into over 100 stores across the UK over the next 12 months;

· Formjet will provide a one stop platform – incorporating technology and customer support; and

· Formjet will also manage the TescoSoftware.com website.

Formjet CEO Lyndon Chapman said “We are very excited to be working with Tesco as their software partner and developing this initial range of software products. We will be working with them to expand the range and introduce a comprehensive software suite, to establish the Tesco Software brand and provide the necessary support infrastructures.”

The exclusive tie up provides a strong platform for Formjet to showcase its software capabilities. The fact that Tesco has chosen Formjet as its entry point for utility software products will enable both companies to benefit from the strong sales growth that has dominated the retail software market in recent years.

Formjet will initially provide Tesco with six software titles - two security/antivirus products; a personal finance tool; a complete office suite; a CD/DVD burning tool; and a photo editing tool. The software will also be sold in conjunction with computer hardware, following Tesco’s entry into this market earlier this year, and via tesco.com.

The Formjet product suite will be launched into over 100 stores in October of this year and the plan is to roll this out to more departments and UK stores over the next 12 months.

The partnership is structured so that Formjet will also provide a variety of services under the Tesco Software Support banner, demonstrating the strength of its software range as well as its back office support.

It will provide technology as well as customer support and will manage the entire Tesco Software renewing process. Formjet will design, run and maintain the TescoSoftware.com website, highlighting the scale of the relationship.

This is a unique collaboration that marks Formjet’s credentials as a provider of white label software packages, which it can provide on a bespoke basis. The fact that market leader Tesco has chosen Formjet as its entry point into the utility software market provides strong backing for its software solutions.

The scale and timing of this collaboration provides a strong opportunity for Formjet to grow its revenues, which will be boosted by increased software sales as well as growing support income.

The tie up will bring greater choice and value to the computer software retail market. . Tesco has recently moved into the hardware market while Tesco Direct marked its entry into the internet and catalogue market. The fact that the supermarket chain has chosen Formjet to provide Tesco-branded software will now enable it to offer customers quality software at great prices.

Tesco believes that with its low prices and wide customer appeal it can become a significant player in the computer software market, which is currently worth approximately £8.8 billion, 84.7% of which is business software.

To further develop its white labelling business, Formjet has created a new division - Formjet Innovations, specifically to exploit additional opportunities in this arena. Formjet Innovations will incorporate Ability Software and last year’s acquisition SouthCoast Distributions Ltd. Mr Graham O’Reilly will join the board of Formjet Innovations Ltd.

Commenting on the deal Tesco Buyer Daniel Cook said: “With more people working from home and schools encouraging greater use of IT, the demand for home computing equipment is bigger than ever.

“Customers can now access a wide range of good quality computer hardware at amazing prices but when it comes to software there is little choice and prices are high.

“Our new range of software changes this, bringing choice and value to the market that has offered little of either for too long. Whether running a home office or helping the kids with homework Tesco Software can help.”

Formjet CEO Lyndon Chapman said “Tesco has the power to reach an entirely different environment and customer to traditional computer stores; we intend to work hand in hand to offer market leading quality software, at a Tesco price point.

“The development of the products was only part of the transaction. The real test was providing a comprehensive technical and support service to enable a first class back up.”

Chapman added “This is one of a number of deals in the pipeline referred to in our interim announcement however it is unlikely to have a material effect on 2006 earnings. The investment towards the end of last year in support facilities has significantly improved response times and our “alternative” software brands are an ideal base for creating own label software.”


About Formjet
Formjet Plc is a UK-based company with a highly distinctive business model. It acquires territorial rights to 'alternative' software products, and markets, sells, distributes and supports these products in place of the vendor in worldwide markets.

The strategy has at its heart the proposition that the Company can acquire product lines in territories of at least one country without the expense of either product development or the creation of IPR.

The Formjet Group currently has four product lines: Panda Software and Filestream are UK licences and Ability and Software Dialog are worldwide.

Formjet reaches a customer base of more than 400,000 direct customers and in excess of 17,000 corporate clients. This market penetration has been achieved through careful research into relevant territories and then applying the most suitable routes to market, whether through distribution and/or reseller partners, or via direct sales. Formjet acquired SouthCoast Distributions Ltd, a specialist OEM provider to system builders in July 2005.

Formjet has developed a clear niche for creating “white label” software, targeting retail and brand leaders and investing heavily in its technical and customer support facilities, which can also be white label branded to fit a wide range of customers. This business will grow under the Formjet Innovations banner.

Formjet has restructured its business into four trading divisions;

· Formjet Security (Anti Virus and Malware products);
· Formjet Communications (Telephony services and products);
· Formjet Innovations (white label product creation, OEM software and Office suites); and
· Formjet Technologies (Franchise Developments).