Arcontech Group Regulatory News (ARC)

12 Mar 2007 07:01

Knowledge Technology Solutions PLC12 March 2007 RNS Release 12 March 2007 KNOWLEDGE TECHNOLOGY SOLUTIONS PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Knowledge Technology Solutions PLC (AIM: KTS), providers of market informationservices in the finance sector, reports its unaudited results for the six monthsended 31 December 2006. Financial and business highlights: • Turnover of £555,884 (2005: £720,278) • Group loss before tax of £580,283 (2005: £547,447) • Progressed new growth strategy, including developing MiFID* and MarketTerminal ON-SITE solutions • Raised £1.8 million from share placings to fund growth • Focused MarketTerminal on UK coverage only, reducing operating costs * MiFID is the Markets in Financial Instruments Directive. This important EUdirective is aimed at creating transparency throughout the European Union formarket participants dealing in securities and is expected to become law from 1November 2007. Dr Marc Pinter-Krainer, Chief Executive of Knowledge Technology Solutions, said: "We have responded to the continued challenges in the highly competitivefinancial information subscription services market by implementing a new growthstrategy complementing our MarketTerminal data service with MarketTerminalON-SITE for institutional clients and by addressing the opportunities arisingout of the introduction of MiFID. "Although it is early days, we have been encouraged by the response our newstrategy and products have generated from prospective customers." Enquiries, please contact: Dr Marc Pinter-Krainer Knowledge Technology Solutions PLC 020 7256 2300Barrie Newton Corporate Synergy Plc 01225 424 666Neil Boom/Laura Black Gresham PR Ltd 020 7404 9000 Chief Executive's review In the six months ended 31 December 2006, KTS has built on the strength andflexibility of the Company's technology to develop solutions that address therequirements resulting from the forthcoming MiFID directive and the need forinvestment banks to control and view data from many sources, both internal andexternal. This will reduce the Company's dependency on revenues derived solelyfrom its market data subscription service, MarketTerminal, which addresses anincreasingly competitive marketplace. MarketTerminal subscription business As highlighted in previous statements, intense competition among vendors of UKmarket data display applications has exerted pressure on turnover and profitmargins for our market data subscription service. As almost all revenues duringthe period were derived from the MarketTerminal market data subscriptionservice, the continued competitive environment has contributed to an increase inlosses of £580,283 (2005: £547,447) and a fall in turnover to £555,884 (2006:720,278). We are continuing to market our MarketTerminal service with new salesinitiatives, but have discontinued overseas exchange coverage with effect from 1January 2007. The associated reduction in data costs has already started to takeeffect in the current half of this financial year. Following negotiations withour data suppliers, data cost reductions are expected to generate an estimatednet saving in excess of £220,000 per annum. MiFID As part of the new strategy, a recent initiative has been the creation ofspecific solutions which address the requirements directly arising from theplanned introduction of MiFID. UK market participants will have requirements for MiFID specific solutions whichare wide-reaching, with a recent paper issued by the Financial ServicesAuthority (FSA) citing an estimated MiFID compliance cost impact on UK firms of£1bn. Through our participation in MiFID implementation forums over the past 18months and as a result of ongoing engagement with clients and partners, webelieve we have identified tangible opportunities among both the investment andthe securities' sales side of the financial marketplace. These products, which are currently being specified and developed, are designedto assist market participants with specific MiFID compliance solutions, whilstenabling clients to secure the maximum business benefit beyond the initialintroduction of MiFID in November. MarketTerminal ON-SITE A further, separate part of our new strategy also leverages our provenapplication technology to target new substantial growth opportunities. With therecent introduction of MarketTerminal ON-SITE, we have a solution that addressesthe increasing need amongst global investment banks to create and deploy theirown customised viewing applications. MarketTerminal ON-SITE uses the same proprietary technology platform asMarketTerminal and integrates seamlessly with a bank's existing infrastructure.It is designed to improve the interface between a bank's internally-originatedand derived information and the external data and prices sourced from a plethoraof third party suppliers. It is aimed at major international investment banksoperating in the City of London. We have received encouraging feedback from a number of global investment banksin response to MarketTerminal ON-SITE. The banks have recognised its ability toallow them control of their own data viewing application. It also enables themto benefit from the flexibility, reliability and potentially significant costreduction which can be achieved when a tailored version of our MarketTerminaldata display application is deployed within their organisation. We are currently engaged in the evaluation and sales process with several largeinstitutions, including a global investment bank for which we have successfullycompleted a 'proof of concept' initial installation of MarketTerminal ON-SITE. Board Appointments The recently announced appointment of two additional board directors, RichardLast as Chairman and Louise Barton as a non-executive director, has resulted ina stronger board that is able to take KTS through its next growth phase. Outlook We have responded to the continued challenges in the highly competitivefinancial information subscription services market by building on the strengthand flexibility of our technology to create new products and by takingappropriate cost saving measures. Organic growth should arise primarily from the new MiFID and MarketTerminalON-SITE initiatives and may be complemented with growth resulting from potentialselective acquisitions. However, significant revenues from these new initiativesare not expected until the next financial year due to the long sales cycles whensupplying large-scale solutions to global financial institutions. As a result,we do not expect a significant change in trading performance for the full yearcompared to the previous year. We are pleased to have successfully raised an additional £1.8 million in newfunds in the period. This is reflected in the cash balance at the end of theperiod of £1.94 million and leaves us with a suitably strong balance sheet topursue the significant opportunities we have identified with prospective banksand other financial institutions. Although it is early days, we have been encouraged by the response our newstrategy and products have generated from prospective customers. Marc Pinter-KrainerChief Executive12 March 2007 KNOWLEDGE TECHNOLOGY SOLUTIONS PLCCONSOLIDATED PROFIT & LOSS ACCOUNTFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Period ended Period ended Year ended 31 December 31 December 30 June 2006 2005 2006 (unaudited) (unaudited) (audited) Notes £ £ £ Turnover 3 555,884 720,278 1,417,063Distribution costs (595,667) (718,626) (1,316,988)Administrative costs (553,873) (583,210) (1,170,498) Operating loss (596,356) (581,558) (1,070,423)Interest receivable 16,073 34,111 54,257Loss on ordinary activitiesbefore taxation (580,283) (547,447) (1,016,166) Taxation on loss on ordinaryactivities 4 - - - Loss on ordinary activitiesafter taxation (580,283) (547,447) (1,016,166) Dividends 5 - - - Retained loss (580,283) (547,447) (1,016,166) Basic earnings perordinary share 6 (0.33)p (0.37)p (0.69)p Diluted earnings perordinary share 6 (0.33)p (0.37)p (0.69)p All of the results relate to continuing operations. There are no recognised gains and losses other than the loss for the period. KNOWLEDGE TECHNOLOGY SOLUTIONS PLCCONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 As at As at As at 31 December 31 December 30 June 2006 2005 2006 (unaudited) (unaudited) (audited) Notes £ £ £ Fixed assetsTangible fixed assets 140,523 154,519 158,527 Current assetsDebtors 253,929 173,633 229,059Cash at bank and in hand 1,937,108 1,353,363 961,878 2,191,037 1,526,996 1,190,937 Creditors: amounts falling duewithin one year (401,549) (426,055) (562,723) Net current assets 1,789,488 1,100,941 628,214 Total assets less current liabilities 1,930,011 1,255,460 786,741 Capital and reservesCalled up share capital 332,532 148,275 148,275Share premium account 6,316,870 4,777,574 4,777,574Profit and loss account (4,719,391) (3,670,389) (4,139,108) Equity shareholders' funds 9 1,930,011 1,255,460 786,741 KNOWLEDGE TECHNOLOGY SOLUTIONS PLCCONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Period ended Period ended Year ended 31 December 31 December 30 June 2006 2005 2006 (unaudited) (unaudited) (audited) Notes £ £ £ Net cash outflow fromoperating activities 7 (759,096) (396,136) (778,952) Returns on investment andservicing of financeInterest received 16,073 34,111 54,257 Net cash inflow from returns oninvestments and servicing of finance 16,073 34,111 54,257 Taxation Corporation tax refund - - - Net cash inflow from taxation - - - Capital expenditureDisposal of fixed assets 1,044 - -Purchase of tangible fixed assets (6,344) (665) (29,480) Net cash outflow from capitalexpenditure and financial investment (5,300) (665) (29,480) Net cash outflow before financing (748,323) (362,690) (754,175) FinancingIssue of share capital 1,842,571 - -Expenses paid in connection withshare issues (119,018) - -Net cash inflow from financing 1,723,553 - - Increase/(decrease) in cash 8 975,230 (362,690) (754,175) All cash flows relate to continuing operations. KNOWLEDGE TECHNOLOGY SOLUTIONS PLCNOTES TO THE INTERIM RESULTS FOR THE SIX MONTHSENDED 31 DECEMBER 2006 1 Basis of preparation The interim financial information in respect of the six months ended 31 December 2006 is unaudited and has been prepared on the basis of the accounting policies set out in the company's audited accounts for the year ended 30 June 2006. The financial information contained in this statement does not constitute statutory accounts. Statutory accounts for the year ended 30 June 2006 received an unqualified audit report and have been filed with the Registrar of Companies. 2 Continuing activities All of the activities are continuing. 3 Turnover All of the turnover arises in the United Kingdom. 4 Taxation As a result of losses available no liability to corporation tax is expected to arise. 5 Dividends The Directors do not recommend the payment of an interim dividend. 6 Earnings per ordinary share The basic earnings per ordinary share has been calculated by dividing the loss on ordinary activities after tax attributable to shareholders by the weighted average number of ordinary shares in issue during the period which carry the right to receive a dividend. The diluted earnings per ordinary share has been calculated as above on the basis of full exercise of options and warrants. 7 Reconciliation of operating loss to net cash outflow from operating activities Period ended Period ended Year ended 31 December 31 December 30 June 2006 2005 2006 £ £ £ Operating loss (596,356) (581,558) (1,070,423)Depreciation of fixed assets 23,796 26,173 50,979Profit on disposal of fixed assets (492) - -Increase in debtors (24,870) (10,707) (66,133)(Decrease)/increase in creditors (161,174) 169,956 306,625 Net cash outflow from operating activities (759,096) (396,136) (778,952) 8 Reconciliation of net cash flow to movement of liquid funds Period ended Period ended Year ended 31 December 31 December 30 June 2006 2005 2006 £ £ £ Net funds at start of period 961,878 1,716,053 1,716,053Increase/(decrease) in cash for the period 975,230 (362,690) (754,175) Net funds at end of period 1,937,108 1,353,363 961,878 Net funds at the end of the period relate to cash at bank and in hand. 9 Reconciliation of movement in shareholders' funds Period ended Period ended Year ended 31 December 31 December 30 June 2006 2005 2006 £ £ £ Loss for the period (580,283) (547,447) (1,016,166)New share capital issued less costs 1,723,553 - - Net increase/(reduction) during the period 1,143,270 (547,447) (1,016,166)Opening shareholders' funds 786,741 1,802,907 1,802,907 Closing shareholders' funds 1,930,011 1,255,460 786,741 This information is provided by RNS The company news service from the London Stock Exchange