Arcontech Group Regulatory News (ARC)

20 Mar 2009 07:00



20 March 2009

ARCONTECH GROUP PLC 

(formerly Knowledge Technology Solutions plc)

INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2008

Arcontech Group PLC (AIM: ARC)("Arcontech" or the "Company"), providers of products and services for real-time financial market data processing and trading, reports its unaudited results for the six months ended 31 December 2008.

Financial and business highlights:

Richard Last, Chairman of Arcontech Group, said:

"Despite the general level of uncertainty in the financial services markets, we believe the opportunities for the refocused Arcontech business are significant. We have continued to invest in sales and marketing whilst reducing our overall level of costs. With recent sales wins we anticipate delivering an improved financial result for the second half of the current year." 

Enquiries; please contact:

Chairman's Statement

The results of Arcontech Group Plc ("Arcontech") for the six months ended 31 December 2008 finally bring to a close our withdrawal from the MarketTerminal business. Management is now able to focus on the growth and development of Arcontech's contributions and distribution software, and on its "AXE" CFD and spread betting system, where we believe significant opportunities exist.

The continuing Arcontech business reported a turnover of £466,409 for the six month period to 31 December 2008, (six month period to 31 December 2007 £548,446), this reduction reflects the low level of new contracts won and delivered in the period; partly due to the disruption caused by management focus on the withdrawal from the MarketTerminal business. Losses before taxation from the continuing business for the period were reduced to £465,156 (six months to 31 December 2007 £704,084) reflecting the action previously taken to reduce costs and the non-recurrence of exceptional charges. 

The profit from the discontinued MarketTerminal operations reflects the higher than expected number of MarketTerminal users converting to the Sharescope System for which we received a fee and the reduced costs of closure compared to those anticipated at the year end. 

The cost base of the business has been substantially reduced and now has a monthly run rate of approximately £138,000, whilst contracted support revenues amount to approximately £56,000 per month; 40% of our costs being covered by support revenues. In addition we have "run-rate" sales of over £15,000 per month from existing customers, which, combined with the contracted revenues covers 51% of our 

cost base. This leaves the business well placed to benefit from the increase in larger project sales to new and existing customers, which we believe is achievable despite the present challenging market conditions. 

I am pleased to report that the level of new business sales opportunities has increased significantly in recent months, reflecting the benefit of focusing management and sales resources on our core business areas. In February we secured a significant contract for our market data contributions system from a leading European banking group. The system is to be deployed in four major financial centres. We believe that other similar opportunities exist, albeit the timing of order placement is far less predictable in these uncertain markets.

Financing

At the close of business on 31 December 2008 the business had net cash balances of approximately £374,000, increasing to approximately £550,000 on 28 February 2009. Although the level of cash will fluctuate depending on the timing of the receipt of orders, we expect the company to remain cash positive for at least the remainder of the year. 

Management and staff 

Once again I should like to thank our management and staff for their continued hard work and dedication in what has clearly been a demanding time for the company. We believe that the road ahead, whilst challenging, will be one of opportunity and that the skills and dedication of our team will ensure that we are able to benefit from this environment. 

Outlook

Despite the general level of uncertainty in the financial services markets, we believe the opportunities for the refocused Arcontech business are significant. We have continued to invest in sales and marketing whilst reducing our overall level of costs. With recent sales wins we anticipate delivering an improved financial result for the second half of the current year.

Richard Last

Chairman

CONSOLIDATED INCOME STATEMENT for the six months ended 

31 December 2008

*See discontinued operations - note 4

CONSOLIDATED BALANCE SHEET as at 31 December 2008

CONSOLIDATED CASH FLOW STATEMENT for the six months ended 

31 December 2008

NOTES TO THE FINANCIAL INFORMATION for the six months ended 

31 December 2008

1 Basis of preparation

The financial information for the year ended 30 June 2008 set out in this interim report does not comprise the Group's statutory accounts as defined in section 435 of the Companies Act 2006. 

The statutory accounts for the year ended 30 June 2008, which were prepared under International Financial Reporting Standards (IFRS) as adopted for use in the EU, applied in accordance with the provisions of the Companies Act 1985, have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. 

The figures for the six months ended 31 December 2008 and 2007 are unaudited and do not constitute statutory accounts.

The Directors have elected not to apply IAS34 Interim financial reporting. 

The Group's results for the six months ended 31 December 2008 have been prepared on a basis consistent with the Group's accounting policies published in the financial statements for the year ended 30 June 2008. These accounting policies reflect International Financial Reporting Standards (IFRS) and interpretations that are expected to be applicable to the Group for its financial statements for the year ending 30 June 2009.

*See discontinued operations - note 4

The results for the six months ended 31 December 2008 reflect the adjustment to the provision made in the year ended 30 June 2008 in respect of forecast net costs relating to the termination of the Market Terminal subscription service.

*See discontinued operations - note 4

*See discontinued operations - note 4