Highlights
- Turnover up by 63% to £4.326m (2003/4: £2.651m);
- Operating loss on continuing operations was £2.293m (2003/4: £2.146m);
- Cash at 31 March 2005 was £911k (2003/4: £967k); in addition we received £1.7m in mid April from customers, being payments that were due to be received prior to 31 March 2005;
- The company was pleased to announce an additional Placing of £3.1m that is due to be approved at an EGM on 23 May 2005.
- Been selected by Reuters to be their launch partner in delivering CME E-quivalents. As a result we have signed application services contracts with five international banks including HSBC, Barclays Capital, ABN Amro, the Royal Bank of Scotland and Bank of America, for the provision of the CME E-quivalents service.
- Won the full application outsourcing for DrKW’s Listed Products Group for trading software.
- Acquired and successfully integrated Future Dynamics, a provider of trading, risk management and middle office software.
- Built a high specification data centre facility in Chicago from which it will deliver the new generation application services.
- Refocused it US business behind the Application Services strategy by transferring its Introductory Broker customers to Advantage Futures LLC, a fast growing Chicago-based Futures Commission Merchant to whom we now deliver an application service.
- Extended its support coverage to 24 hours a day for five and a half days a week.
Chairman’s statement
Introduction
I am pleased to announce another year of real progress in which our strategy has been vindicated by major Application Service contract wins. This success would not have been achieved without the support of our shareholders and staff but most importantly the confidence our customers have shown in us.
Over the past twelve months we have:
- Achieved revenue of £4.327m, a growth of 63.2%
- Been selected by Reuters to be their launch partner in delivering CME E-equivalents, which went live in March and we have now signed contracts with five international banks, including HSBC, Barclays Capital, ABN Amro, the Royal Bank of Scotland and Bank of America
- Won the full application outsourcing for DrKW’s Listed Products Group for trading software
- Successfully integrated Future Dynamics, which we acquired in July 2004.
The full year revenue grew to £4.327m (2003/4 £2.651m), up 63.2%. Operating loss on continuing operations was £2.293m (2003/4 £2.146m). The loss for 2004/5 includes expensing £130k of goodwill and all software development and build costs for the new services launched in the year. There was also a total of £311k one-time exceptional costs associated with the acquisition of Future Dynamics. These costs included the costs of redundancies and closure of premises.
We have maintained a rigorous control of cost ensuring that we continue to achieve increased productivity from our staff. This has enabled us for example, to expand the support coverage we provide to our customers to 24 hours a day, five and a half days a week without a commensurate overall increase in costs.
The cash balance at 31 March 2005 was £911k (2003/4 £967k). In addition we received £1.7m from customers in mid April. These payment were due to be received prior to 31 March 2005 but were delayed due to administrative issues within the customers’ systems.
I was also pleased to announce raising £3.1m of additional funding from investors in April that is due to be approved at an EGM on 23 May. This will be used for working capital to support our growth and to strengthen our balance sheet.
Operational Review
Strategy: Our strategy to become the leading application services business supporting the financial community is gaining significant traction. We are seeing increased market acceptance that application services are the future for the delivery of technology to customers. The investments we have made over the past two years have helped give us a leadership position in this sector and the barrier to entry from new competitors should not be underestimated.
Business Development: The success in winning the Reuters project and the DrKW application services contract has helped to raise our profile in the market and give other prospects confidence in our ability to deliver our promises. We have a strong service proposition and a very competitive application portfolio. As a result, our prospect list has never been stronger.
Services: We now have a resilient infrastructure to support our application services in both London and Chicago. In addition we can provide service support 24 hours a day, five and a half days a week.
Application: Our new application architecture has now gone live and this is providing us with an important technical advantage over our competitors since it is highly scalable, flexible and, most importantly for the trading community, fast. The purchase of Future Dynamics has given us access to middle office functionality that we are currently adding to our application services offering. In addition we are also progressively expanding the asset classes that we support.
USA: We have refocused our US operation fully behind our application services strategy with the building of a high specification data centre facility from which we will deliver the services. In addition we have integrated the US support operations with our London team so that we can provide global service support coverage, constantly, from both London and Chicago. We transferred our Introductory Broker (IB) customers to Advantage Futures LLC who are a fast growing Chicago-based Future Commission Merchant (FCM). We are now providing them with our application service. This has allowed us both to focus on our core business and gain an important new growth customer.
Staff: Our highly skilled teams in London, Chicago and Prague have worked diligently and effectively to ensure we succeeded with our plans. The board and I would again like to thank them for their dedication and commitment to the company.
Corporate Development: We made one important acquisition in the year with the purchase of Future Dynamics. This has been successfully integrated and we have gained access to and retained a significant customer base as well as the important middle office functionality.
We will continue to look for value enhancing acquisitions that accelerate the expansion of our asset class functionality, our ability to offer straight through processing, or expand our customer base. The board believes that the management have the experience to evaluate and implement appropriate consolidation opportunities.
Governance
The board consists of three executive directors and four independent non-executive directors. The senior independent non-executive is Mr Nigel McCorkell who is also joint deputy chairman. Mr Jim Oliff was promoted to joint deputy chairman recently in recognition of the important executive role he holds to increase the group’s ‘industry credentials’ and reputation. Mr Oliff has over 30 years experience in the financial services industry and is known throughout the sector.
Outlook
Winning business in the tough financial services sector is always challenging but one that continues to offer huge rewards to those who succeed. Whilst we have much still to do, we are confident that our application services strategy is working and will deliver further success in the new financial year.
Keith Todd
Executive Chairman
11 May 2005
Click here to download the financial statements.
