Arcontech Group Regulatory News (ARC)

4 Dec 2007 07:01

Knowledge Technology Solutions PLC04 December 2007 RNS Release4 December 2007 KNOWLEDGE TECHNOLOGY SOLUTIONS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2007 Knowledge Technology Solutions PLC (AIM: KTS), provider of market informationservices in the finance sector, reports its unaudited results for the year ended30 June 2007. Financial and business highlights: • Turnover reduced to £1.0m (2006: £1.4 m) • Group loss before tax of £1.1m (2006: £1.0m) • Completed substantial fund raising amounting to over £1.7 million (net of expenses) • Continued to make investment in the enhancement of our underlying technology • Acquisition of Arcontech Limited completed in September 2007 • In September 2007, announced a significant contract win for CfD and Spread Betting trading solution with Hichens Harrison Richard Last, Chairman of Knowledge Technology Solutions, said: "The addition of Arcontech has brought closer the time by which the Group shouldreach profitability. Cost reductions and the organic growth anticipated fromthe KTS Solutions business are also expected to generate financial benefits forKTS. The Board's priority and immediate focus is to stem the recurring lossesin the KTS business whilst supporting the organic development of Arcontech. Wewill, however, continue to look for and pursue suitable acquisitionopportunities, which would enhance shareholders' value." Enquiries, please contact: Dr Marc Pinter-Krainer Knowledge Technology Solutions PLC 020 7256 2300Mike Coe/Marc Davies Blue Oar Securities PLC 0117 933 0020Katie Hunt/Will Henderson Smithfields 020 7360 4900 Chairman's Statement Introduction This is my first report to you as Chairman. The period since 30 June 2006 hasbeen one of considerable change for Knowledge Technology Solutions Plc ("KTS"). During the year KTS completed substantial fund raising amounting to over £1.7million (net of expenses), which has been used to provide additional workingcapital and to substantially strengthen the company's balance sheet. InSeptember 2007 the acquisition of Arcontech, a provider of IT solutions for theCfD and Spread Betting markets, for an initial consideration of £1.24 million incash and 45 million new ordinary shares in KTS, has also substantially broadenedand strengthened the Group's trading activities. Recent sales wins byArcontech, including Hichens Harrison, give us confidence that significantopportunities exist in this area. As regards the original KTS business, considerable development has beenundertaken to provide solutions for our customers relating to MiFID and internaldata aggregation, and whilst we believe opportunities in these areas remain wehave not yet succeeded in winning any significant orders for these products. Weare focusing sales effort in these areas to identify the opportunities that mayexist. The Market Terminal Subscription business has been disappointing with a netreduction in subscribers over the year and we are presently carrying out adetailed review of this part of the business. The results for the year to 30 June 2007 which report a 31% reduction inturnover to £982,000 (2006 £1,417,000) and an operating loss of £1,191,000 (2006£1,070,000) are reviewed in detail in the Chief Executive's Review. Board Appointments In addition to my own appointment to the Board on 19 February 2007, LouiseBarton also joined on that date. Louise has over twenty years experience in theCity in both Fund Management and Stockbroking and provides the Board withexcellent support and advice on such issues as fund raising, shareholdercommunication and in the areas of customer expectation and needs from ourproducts. Andrew Miller, Managing Director of Arcontech, joined the Board of KTS as ChiefTechnology Officer following the acquisition of Arcontech on 4 September 2007.Andrew brings a wealth of knowledge and experience of the IT Solutions market-place in the City of London. Employees I would like to thank all our employees for their hard work and commitment tothe Group over the last year. Business Development We propose to continue to develop the Group's business in providing IT Solutionsfor data aggregation and dissemination within and between financialinstitutions. The IT solutions provided by Arcontech, particularly in theSpread Betting and CfD areas will also be a focus for continued development. Weare confident of organic growth opportunities in these areas. Outlook The addition of Arcontech has brought closer the time by which the Group shouldreach profitability. Cost reductions and the organic growth anticipated fromthe KTS Solutions business are also expected to generate financial benefits forKTS. The Board's priority and immediate focus is to stem the recurring lossesin the KTS business whilst supporting the organic development of Arcontech. Wewill, however, continue to look for and pursue suitable acquisitionopportunities, which would enhance shareholders' value. Richard Last Chairman 4 December 2007 Chief Executive's review It has been an exciting period for KTS since our last report, marked by thesuccessful acquisition of Arcontech, the award-winning specialist middlewaresoftware company, as well as further development work focused on solutions whichare designed to address the changing market requirements, particularly in thelight of opportunities presented by the Markets in Financial InstrumentsDirective (MiFID). During the year ended 30 June 2007, turnover continued to be solely attributableto the MarketTerminal subscription service which continues to address achallenging market place. Turnover dropped 31% to £981,745 (2006: £1,417,063) inpart as a result of the discontinuation of international market coverage, whichtook effect from 1 January 2007. Although costs decreased by £314,389 comparedto the previous year, this was not sufficient to compensate for the decrease insubscription revenue and as a result, pre-tax losses increased by 12% to£1,140,518 (2006: £1,016,166). We have continued to make significant investment in the enhancement of ourunderlying technology to reduce latency, increase stability and reduce totalcost of ownership. The acquisition of Arcontech, completed on 4 September 2007, provides us with abasis for offering complete solutions combining front-end display componentsbased on our proven MarketTerminal application and the award-winning middlewaresolutions in which Arcontech specialises. Arcontech's middleware productscurrently provide a broad base of blue chip customers including major investmentbanks, data vendors and leading spread betting and Contracts for Difference(CfD) brokerages with leading edge solutions for real time calculation,publishing, distribution and aggregation of financial data, as well as acomplete online trading platform. Arcontech's trading platform (AXE), which comprises a low latency pricecalculation engine, order management and position keeping, as well as a fullback office administration system, allows Arcontech to exploit the fast growingCfD and Spread Betting markets. In September 2007, we announced a significantcontract win for the provision of this trading solution to Hichens Harrison. We are currently looking at ways to capitalise on our investment in theMarketTerminal technology to provide customised solutions to financialinstitutions. The increased resources, technology and blue-chip client base brought to theGroup through the acquisition of Arcontech provides a solid base to address theincreasing demand for sophisticated real-time, on-line and web-based datadistribution and trading systems. Marc Pinter-Krainer Chief Executive 4 December 2007 Consolidated Profit and Loss Account For the year ended 30 June 2007 Note Year ended Year ended 30 June 2007 30 June 2006 £ £Turnover 1 981,745 1,417,063Distribution costs (1,043,738) (1,316,988)Administrative costs (1,129,359) (1,170,498)Operating loss (1,191,352) (1,070,423)Interest receivable 50,834 54,257Loss on ordinary activities before taxation (1,140,518) (1,016,166)Taxation 2 - -Loss on ordinary activities after taxation (1,140,518) (1,016,166)Dividends 3 - -Retained loss for the year (1,140,518) (1,016,166)Loss per share 4 (0.45)p (0.69)pDiluted loss per share 4 (0.45)p (0.69)p All of the results relate to continuing operations. There are no recognised gains or losses other than the loss for the year. Consolidated Balance Sheet As at 30 June 2007 2007 2006 £ £Fixed assetsTangible assets 122,226 158,527Investments - - 122,226 158,527Current assetsDebtors 216,641 229,059Cash at bank and in hand 1,473,451 961,878 1,690,092 1,190,937Creditors: amounts falling due within one year (442,542) (562,723)Net current assets 1,247,550 628,214Net assets 1,369,776 786,741Capital and reservesCalled up share capital 332,532 148,275Share premium account 6,316,870 4,777,574Profit and loss account (5,279,626) (4,139,108)Equity shareholders' funds 1,369,776 786,741 Approved on behalf of the board on 4 December 2007 by: Marc Pinter-Krainer Michael LevyChief Executive Officer Group Finance Director Consolidated Cash Flow Statement For the year ended 30 June 2007 Year ended Year ended 30 June 2007 30 June 2006 £ £Net cash outflow from operating activities (1,254,885) (778,952)Returns on investments and servicing of financeInterest received 50,834 54,257Net cash inflow from returns on investments and servicing of finance 50,834 54,257Purchase of tangible fixed assets (8,971) (29,480)Sale of tangible fixed assets 1,042 - Net cash outflow from capital expenditure and financial investment (7,929) (29,480)Net cash outflow before financing (1,211,980) (754,175)FinancingIssue of share capital 1,842,571 -Expenses paid in connection with share issue (119,018) -Net cash inflow from financing 1,723,553 -Increase/(Decrease) in cash in the year 511,573 (754,175) All cash flows relate to continuing operations. Notes to the Preliminary Statement 1 Turnover Turnover is attributable to the principal activities of the Group being the saleof real-time data and analysis services, together with advertising andsponsorship revenue. All turnover arises within the UK. Income is recognised over the contract period. 2 Taxation on loss on ordinary activities As a result of the losses available, no liability to UK corporation tax arose onthe ordinary activities for the year ended 30 June 2007. 3 Dividends The Directors do not recommend the payment of a dividend. 4 Loss per ordinary share The loss per Ordinary Share has been calculated by dividing the loss onordinary activities after tax attributable to shareholders by 254,113,141 (2006:148,274,732), being the weighted average number of Ordinary Shares in issueduring the year, which carry the right to receive a dividend. As a result ofthe loss for the year there is no difference between the basic and diluted lossper share. 5 Post balance sheet events On 7th August 2007 the Company exchanged a conditional contract for theacquisition of the entire issued share capital of Arcontech Limited. Theacquisition was completed on 4th September 2007. The initial consideration wassatisfied with cash of £1,239,933 and the issue of 45 million Ordinary shares of0.1 pence. In addition, deferred consideration capped at £300,000 is payable incash or shares if Arcontech Limited achieves turnover over £1.2 million and upto £2.2 million in the twelve month period immediately following the completionof the acquisition. The Company allotted Ordinary Shares of 0.1 pence each as follows: Date Number 3 September 2007 111,111,111 shares at 0.9 pence per share4 September 2007 45,000,000 shares at 0.9 pence per share 6 Annual report and accounts The foregoing financial information does not amount to full accountswithin the meaning of Section 240 of the Companies Act 1985 and has not beenreported on but has been agreed with the Company's auditors. The Annual Reportand Accounts will be filed at Companies House following the Annual GeneralMeeting and will be posted to shareholders shortly. Copies will be availablefrom the Company Secretary at 8th Floor, Finsbury Tower, 103-105 Bunhill Row,London, EC1Y 8LZ. 7 Annual General Meeting The AGM will be held at 8th Floor, Finsbury Tower, 103-105 Bunhill Row,London, EC1Y 8LZ, on 28 December 2007 at 10 am. This information is provided by RNS The company news service from the London Stock Exchange