RNS Number:8956Q
Knowledge Technology Solutions PLC
15 October 2003
15 October 2003
KNOWLEDGE TECHNOLOGY SOLUTIONS PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2003
Knowledge Technology Solutions PLC, the independent provider of real-time market
data services, announces encouraging results for the year ended 30 June 2003.
Financial and business highlights:
- Significant orders won towards the year end and current annualised contracted
revenues exceeding #0.5million
- Strengthening of existing team to provide a solid base for future development
- Successful fundraising of #1 million before expenses in September 2003 the
proceeds will be used for the continuing roll-out of QuoteTerminal and
accelerating the sales and marketing of MarketTerminalTM
- Group loss before tax of #705,651, reflecting further investment in
research and development and additional overhead cost providing for
the launch of MarketTerminalTM
QuoteTerminal:
- Fast acceptance in marketplace with enterprise-wide systems (>25 units)
sold to seven clients
- High quality recurring revenues from QuoteTerminal increasing month-on-month
MarketTerminalTM:
- Accelerated plan put in place to grow MarketTerminalTM international product
- Scope of MarketTerminalTM lifted to 120 Exchanges
- MarketTerminalTM provides far bigger opportunity whilst leveraging a shared
infrastructure
Commenting on these results, Dr Marc Pinter-Krainer, chief executive, said:
"The Company has made encouraging progress across all aspects of its operations.
The short term sales prospect list is strong and we continue to strategically
focus our products towards areas which should capitalise on the downsizing of
the large market data vendors and provide outstanding opportunities for growth
in the medium term. Our programme of continued technical innovation will
culminate in the launch of the broader international MarketTerminalTM solution
this year accessing an increased target market of tier one institutions."
For further information, please contact:
Dr Marc Pinter-Krainer Knowledge Technology Solutions PLC 020 8795 2700
Mr Oliver Scott KBC Peel Hunt Ltd 020 7418 8900
Mr Neil Boom Gresham PR Ltd 020 7404 9000
Professional users have the opportunity to request a free QuoteTerminal trial by
calling the QuoteTerminal sales department on 020 7623 3399.
KNOWLEDGE TECHNOLOGY SOLUTIONS PLC
CHIEF EXECUTIVE'S STATEMENT
Overview
It is pleasing to report that during the year, Knowledge Technology Solutions
(the "Company") continued the systematic and confident expansion of its
business. The emphasis was on strengthening our sales and support teams,
establishing valuable reference sites for QuoteTerminal (the brand name for our
UK-only product) and a move towards launching our significantly broader
international MarketTerminalTM product.
These have been significant strides, demonstrating the effort and commitment of
our team and our unique technology platform which is delivering world-class
market data services to an ever larger client base. We continue to benefit from
taking market share from other, higher cost, market data vendors, as well as
from creating a whole new market segment as market data is made available to
those on the move.
The short term sales prospect list is strong and we continue to strategically
focus our products towards areas which should capitalise on the downsizing of
the large market data vendors and provide outstanding opportunities for growth.
It will already be obvious to shareholders and prospective investors that the
data services industry has, and is continuing to experience, a fundamental
restructuring of its operations, and here our thin-client ASP technology gives
us a genuine competitive advantage which is enabling us to gain market share.
Strategic Development
Our business model has been built on reduced costs, advanced technology,
enhanced efficiency as well as high product and service quality which has
created a credible alternative for financial institutions.
In line with our development strategy we have continued to invest in product
enhancement and development to ensure we emerge as a leading participant in our
market. This investment amounted to #260,000 this year and we remain confident
that this expenditure will improve returns to shareholders over the coming
years. As in previous years, the value of our software is not reflected in the
Balance Sheet as the costs relating to its development are written off as
incurred.
Almost all the investment was to develop further our core browser-based market
data platform, MarketTerminalTM, which was enhanced in terms of capacity and
capability. This platform now provides a robust and scalable infrastructure upon
which we base all our market data delivery ASP services.
Until now, the capability of the MarketTerminalTM platform (encompassing
QuoteTerminal) was confined to delivering UK market data. Having demonstrated
QuoteTerminal to several new business clients last year, the product was very
well received both in terms of its presentation and the modular flexibility of
pricing options.
Enterprise-wide contracts (>25 units) have been received from several clients
and QuoteTerminal has fast established itself as a reliable, quality supplier to
these customers. During the year we were encouraged to see several new business
clients from our target market of tier one and tier two financial institutions
choosing QuoteTerminal in preference to the products of other major competitors.
New clients include Morley Fund Management, Royal London Asset Management,
Prudential-Bache Limited, Williams de Broe Plc, Singer & Friedlander Limited,
Charles Stanley and Company Limited, City Equities Limited, Hoodless Brennan and
Partners Plc and Seymour Pierce Limited and these clearly endorse both the
technology and the overall strategy of our company.
QuoteTerminal now has many hundreds of live seats using the system daily and our
exceptional levels of customer satisfaction continue to result in high client
retention and renewal rates, and also in attracting new customers.
Such relatively fast acceptance in the marketplace was achieved due to the fact
that QuoteTerminal is "thin-client" and does not require a software installation
nor does it conflict with customers' firewalls which enables it to be operated
with a lower technical overhead when compared to rival vendors' systems. In the
secure world of banks and financial institutions, this is regarded as critical
success criteria. Unlike rival legacy systems, QuoteTerminal also eliminates the
need for expensive infrastructure and has substantially lower monthly costs for
the customer.
At the interim stage, we reported on our need to invest further in our sales and
marketing infrastructure. This included the appointment of a new head of sales
and the opening of an office in the City of London. We have since made further
appointments to our field sales team and are pleased to report that our ability
to execute and support much larger enterprise-wide contracts has been
progressively honed. We believe that the increased sales investment will bear
fruit in the current year.
We continue to see a growing number of engagements and will continue to acquire
new business in an orderly and structured way as and when customers are released
from contracts with their existing data vendors.
Entry Point to International Market Data
In parallel, another primary concentration last year was to extend the
MarketTerminalTM product's capability globally with the addition of international
data. This process will be complete this year and will be a major step in our
development. This new product will leverage a shared infrastructure and offer
the international market data coverage that is required by major financial
institutions, while being a much more cost-effective alternative to traditional
providers.
We are a great deal further forward in our development work upon the
international MarketTerminalTM product with data from most of the major
international markets, including Nasdaq, NYSE, Euronext and Frankfurt,
integrated into the service. We expect to commence trials later this year. It
may be worth reminding shareholders that there was a similar period of trial
before the successful QuoteTerminal launch and we believe this will be no
different provided that we take one step at a time.
The expanded breadth of our offering and our established reputation with
customers means that we are uniquely positioned to capitalise on the
opportunities within these markets once this product is launched.
Our Markets
We assess the market for our UK-market data service alone is some 20,000
terminals worth around #20 million per annum. With the activity that we are now
seeing and the opportunities which will arise from the launch of the
international MarketTerminalTM product we believe that the value of our market
opportunity has increased substantially.
Reference has been made in the Statement to a number of enterprise-wide
contracts signed during the year. In addition to the opportunity to upsell to
existing UK-only customers, there is considerable pent-up demand from other new
customers for the international version of the product. We therefore believe
that our addressable market will rise to $2.7bn (source: Inside Market Data
Reference 2002) per annum once the international product has been launched.
In order to develop the significant opportunity and to strengthen the Balance
Sheet, on 22 September 2003 we announced that we had placed 8 million new shares
to raise #1 million (before expenses). Contemporaneously to the Placing we
announced the appointment of KBC Peel Hunt as stockbroker and nominated advisor
to the Company. We were very pleased with the strong interest shown and welcome
the new institutional investors who participated in the Placing.
The Placing has further strengthened the Company's Balance Sheet. The Directors
are of the opinion that the additional strength will be commercially beneficial
in enabling the Company to engage successfully with large customers. We believe
that the placing will also enable us to increase our operating capacity as well
as increasing the flexibility to pursue the opportunities for MarketTerminalTM.
Financial Control and Reporting
We have a sound balance sheet with no borrowings and a product capable of
excellent cash generation. Operating expenses remain tightly controlled.
The MarketTerminalTM model is based around developing a business with a high
level of renewable revenues, a low breakeven hurdle point and a marginal cost to
service each new customer. It is important to note that our conservative
accounting policies mean that, while sales and marketing expenses are written
off as incurred, cash received from customers is not recognised as revenue
immediately but spread over the full term of the subscription. The Board has
always adopted this approach and is fully committed to continuing to follow this
prudent policy in the future.
These results are of academic interest given that the QuoteTerminal product was
launched towards the end of the first half of 2003 when significant orders were
received. Since then we have experienced continued success in winning larger
contracts and solid renewals performance, and we are experiencing considerable
growth quarter-on-quarter. The first quarter of the current year underway shows
an 84% increase in terminal sales over the fourth quarter of 2003, which in turn
showed a 46% increase the previous quarter. Annualised contracted revenues now
exceed #0.5 million.
The financial year just ended saw continued investment in MarketTerminalTM as we
extended this product's capability globally with the addition of international
data to ensure our longer-term goals are achieved. The year therefore includes
some overhead relating to this product which is not yet revenue generating. The
Group produced a net loss after tax of #705,651, consistent with managing this
major investment programme.
Outlook
In summary, our trading performance in the first quarter of this year has built
upon the good performance in the final quarter of last year. We have had strong
success in invoicing in the quarter, particularly with enterprise-wide contracts
incorporating multiple seats. Our programme of continued technical innovation
will culminate in the launch of the broader international MarketTerminalTM
solution this year accessing an increased target market of first tier
institutions.
We have every confidence that your company can build on the foundation now in
place and expect to continue to benefit from the rapid adoption of thin-client
market data services in this marketplace.
Dr Marc Pinter-Krainer
Chief Executive Officer
14 October 2003
*MarketTerminal is a registered trademark
Consolidated Profit and Loss Account
For the year ended 30 June 2003
________________________________________________________________________________
Note Year ended Year ended
30 June 2003 30 June 2002
# #
Turnover 1 160,708 76,539
Distribution costs (303,031) (184,532)
Administrative costs (572,949) (487,532)
--------------------------------- ------ -------- --------
(715,272) (595,525)
Other operating income - 125,000
--------------------------------- ------ -------- --------
Operating loss (715,272) (470,525)
Interest receivable 9,621 19,884
--------------------------------- ------ -------- --------
Loss on ordinary activities before
taxation (705,651) (450,641)
Taxation 2 41,837 -
--------------------------------- ------ -------- --------
Loss on ordinary activities after
taxation (663,814) (450,641)
Dividends 3 - -
--------------------------------- ------ -------- --------
Retained loss for the year (663,814) (450,641)
--------------------------------- ------ -------- --------
Loss per share 4 (0.73)p (0.57)p
--------------------------------- ------ -------- --------
Diluted loss per share 4 (0.73)p (0.38)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 2003
________________________________________________________________________________
2003 2002
# #
Fixed assets
Tangible assets 184,949 36,788
Investments - -
----------------------------------- -------- --------
184,949 36,788
----------------------------------- -------- --------
Current assets
Debtors 89,004 120,808
Cash at bank and in hand 439,245 366,074
----------------------------------- -------- --------
528,249 486,882
Creditors: amounts falling due within one year (102,065) (82,168)
----------------------------------- -------- --------
Net current assets 426,184 404,714
----------------------------------- -------- --------
Net assets 611,133 441,502
----------------------------------- -------- --------
Capital and reserves
Called up share capital 109,256 81,606
Share premium account 1,810,193 1,004,398
Profit and loss account (1,308,316) (644,502)
----------------------------------- -------- --------
Equity shareholders' funds 611,133 441,502
----------------------------------- -------- --------
Approved on behalf of the board on 14 October 2003 by:
Marc Pinter-Krainer Michael Levy
Chief Executive Officer Group Finance Director
Consolidated Cash Flow Statement
For the year ended 30 June 2003
________________________________________________________________________________
Year ended Year ended
30 June 2003 30 June 2002
# #
Net cash outflow from operating activities (630,020) (480,980)
--------------------------------- -------- --------
Returns on investments and servicing of
finance
Interest received 9,621 19,884
Net cash inflow from returns on investments
and servicing of finance 9,621 19,884
--------------------------------- -------- --------
Taxation
Corporation tax refund 41,837 -
Net cash inflow from taxation 41,837 -
--------------------------------- -------- --------
Purchase of tangible fixed assets (181,712) (30,038)
Net cash outflow from capital
expenditure and financial investment (181,712) (30,038)
--------------------------------- -------- --------
Net cash outflow before financing (760,274) (491,134)
--------------------------------- -------- --------
Financing
Issue of share capital 856,000 434,755
Expenses paid in connection with share
issues (22,555) (18,493)
Net cash inflow from financing 833,445 416,262
--------------------------------- -------- --------
Increase/(Decrease) in cash in the year 73,171 (74,872)
--------------------------------- -------- --------
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 sale
of real-time data and analysis services, together with advertising and
sponsorship 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 on
the ordinary activities for the year ended 30 June 2003.
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 on ordinary
activities after tax attributable to shareholders by 91,292,074 (2002:
78,588,504), being the weighted average number of Ordinary Shares in issue
during the year, which carry the right to receive a dividend. As a result of
the loss for the year there is no difference between the basic and diluted loss
per share.
5 Post balance sheet events
Subsequent to the year-end all of the Founder Warrants were cancelled. In
addition, 9,786,981 Ordinary Shares of 0.1 pence per share have been issued
raising #1,050,517 after expenses.
6 Annual report and accounts
The foregoing financial information does not amount to full accounts
within the meaning of Section 240 of the Companies Act 1985 and has not been
reported on but has been agreed with the Company's auditors. The Annual Report
and Accounts will be filed at Companies House following the Annual General
Meeting and will be posted to shareholders shortly. Copies will be available
from the Company Secretary at Wembley Point, 1 Harrow Road, Wembley, Middlesex
HA9 6DE.
7 Annual General Meeting
The AGM will be held at KBC Peel Hunt Ltd, 111 Old Broad Street, London
EC2N 1PH, on Tuesday 25 November 2003 at 1.00 p.m.
This information is provided by RNS
The company news service from the London Stock Exchange
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