RNS Number:4670M
Easyscreen PLC
18 June 2003
EasyScreen plc - Preliminary announcement for the year ended 31 March 2003
EasyScreen plc ('EasyScreen'), which designs and markets innovative software for
trading on electronic markets, announces its results for the year and quarter
ended 31 March 2002.
For further information please contact:
Philip Docker
EasyScreen
0207 645 4600
Chris Holder
Lighthouse PR
0207 968 4949
Chairman's statement
EasyScreen Plc ("the group") which designs and markets innovative software for
trading on electronic markets, announces its preliminary results for the year
ended 31 March 2003.
The total recognised loss for the year has been reduced by 36% to #2.7 million.
Annual turnover fell by 18% to #2.7 million, reflecting the impact of a large
Solutions licence fee received in the previous year. Operating expenses were
reduced by 18% to #5.5 million.
Business development
The group's strategic development has resulted in a position where the essential
elements are in place for further expansion and growth.
The Refco EasySolutions Joint Venture ("JV") is now well established. Screen
numbers continue to grow. I am pleased to say that the current rate of growth in
these numbers leads the directors to project the JV to move to operating
profitability in the near term. Furthermore, this growth in screen numbers is
expected to increase with the imminent release of an enhanced version of the
Refco ProTrader screen.
Our Data Centre model is now proven, with both current and prospective clients
seeing the advantages of the significant operational efficiencies and cost
savings that are made possible by a hosted ASP facility. The Data Centre model
satisfies their requirements for high functionality multi-exchange, multi-broker
/ multi-clearer connectivity, which many are demanding as a prerequisite for
connectivity to new exchanges. EasyScreen obtains initial set-up fees and, more
importantly, ongoing income contribution from a mix of screen and transaction
revenues that are projected to form a sustainable revenue stream for the group.
Data Centre revenues from early sales are now commencing and the group is in
advanced negotiations with several global financial institutions regarding
further ASP trading platforms delivered from the Data Centre.
The income from our installed traditional screen base, which currently forms the
bulk of our revenue, remains broadly stable.
Capital resources
Given the level of progress and client commitment to our product set, as
demonstrated by Solutions sales to major global financial institutions, the
directors believe that EasyScreen can expand further. To fully capitalise upon
this opportunity arising from our positioning in the marketplace, more working
capital will be required.
This will largely be used to establish new Solutions clients so that we may
fully exploit the opportunity to establish ongoing revenue streams. Capital will
be applied to specific areas such as Data Centre support, connectivity,
functionality and the set-up and integration of clients.
The group is in discussions with third parties to secure funding of
approximately #500,000 to cover immediate short-term cash requirements. The
directors and advisors are confident that this will be achieved in the next few
weeks. The directors believe it is necessary for shareholders to accept this
increase in short-term cash resources in order to sustain the group's
development. In the event that this funding is in the form of a loan, this will
require an amendment to the company's Articles. A circular convening an EGM will
be posted to shareholders shortly.
In addition to the proposed funding above there will be a requirement for
additional working capital for the development of the group and to provide for
its ongoing cash requirements. It is the current intention of the directors to
seek funds to support this expansion and strengthen the balance sheet later this
year.
Prospective move to AIM
The directors believe that the group will see advantages as a result of being
traded on AIM rather than the main market. The directors believe that the group
will benefit from a reduction in compliance costs and are also advised that a
listing on AIM is likely to bring a wider investor base to the group and that
liquidity in our shares should not be affected.
Product development
Central to our strategy is the immediate availability of market proven,
enterprise wide, trading Solutions and the delivery of ASP trading platforms
from our Data Centre. Clients are now confident that they are buying a reliable
platform that is in production and in use by their peers.
Future development will address enhancements of existing products, new exchange
connectivity and client integrations.
A new release of the Easy Active Trade ("EAT") front end will soon be made
available. This incorporates a host of functionality enhancements, largely as a
result of U.S. requirements.
Our EasyShield Risk management product has been further improved to offer
pre-trade risk management for Options and accounting for real time P&L, enabling
clients to risk manage these volatile instruments.
We continue to add new connectivity to the Data Centre and develop added value
services that can be distributed on an ASP basis. The availability of these new
products and connectivity has further built the momentum that is expected to
convert into the deals that will drive our ongoing revenue stream.
During the year we have taken steps to add further cash equity connectivity with
agreements being signed with cash equity providers. Further agreements are
expected in the near future that will enable us to add Foreign Exchange to our
connectivity.
EasyScreen has selected the FIX Antenna multi platform Financial Information
eXchange ("FIX") Engine for incorporation into EasyRouter and the EasyScreen
Data Centre. FIX connectivity is fast becoming a prerequisite for integrated
software solutions and enables simpler, faster connectivity across all asset
classes. The group believes that FIX will facilitate EasyScreen in rapidly
adding both Buy and Sell side users to the Data Centre.
EasyScreen has launched EasyQuant, an advanced financial toolkit that enables
users to develop, back test and implement their own quantitative trading
strategies and applications over multiple asset classes through the core
EasyRouter platform. This unique off the shelf product, enabling quantitative
trading across multiple asset classes on a hosted platform, is already
generating considerable interest.
Results
The preliminary results for the year to 31 March 2003 show a total recognised
loss of #2.7 million, an improvement over the previous year of 36% (2002 - #4.2
million).
Turnover for the year amounted to #2.7 million, a fall of 18% (2002 - #3.2
million), primarily due to a large Solutions sale received in the previous year.
Operating expenses for the year have been reduced by 18% to #5.5 million (2002 -
#6.8 million).
Outlook
It is the director's belief that the group is now emerging from a development
period, with two key factors projected to drive the group forward to
profitability.
The first factor is the Refco EasySolutions JV, which the directors anticipate
will move to operating profitability in the near term. The new version of EAT,
with specific functionality improvements, is designed to put Refco ProTrader in
an improved competitive position, further enhancing a compelling proposition of
functionality, reliability and price to Refco clients.
The second factor is accelerated sales, centred on Data Centre delivered ASP
trading platforms and exchange connectivity. The director's expect a total of up
to six major clearing clients will be signed up to the facility in the near
term. There is also a pipeline of similar prospects in various stages of
discussion. With every new client signed, interest builds, awareness grows and
the sales process is facilitated.
As referred to in my last quarterly statement, trading by a substantial group of
European traders introduced by a major global clearer, utilising the Data
Centre, has now commenced.
Finally, I would like to take this opportunity to formally thank our employees
and shareholders for their commitment to the group throughout the year.
Philip Docker
Chairman
17 June 2003
Operating and financial review
Fourth quarter ended 31 March 2003
Turnover
Turnover for the quarter ended 31 March 2003 was #788,478 (2002 - #627,679).
Turnover in the quarter was 26% up on the comparable quarter in the previous
year and 25% higher than the previous quarter to 31 December 2002. Recurring
licence screen revenues were broadly maintained but non-recurring revenues were
higher in the quarter. Cumulative licences sold at 31 March 2003 were 295 to 63
customers (2002 - 296 licences to 63 customers).
Operating expenses
Total operating expenses amounted to #939,472 for the quarter ended 31 March
2003 (2002 - #1,642,120). This represents a cost reduction of #702,648 or 43%
from the comparable quarter in the previous year. Compared to the previous
quarter to 31 December 2002 costs were lower by #421,105 or 31%. However, when
excluding the effects of translation losses due to the movement in the US dollar
exchange rate during the quarter total operating costs were 38% lower than the
previous year and 19% lower than the previous quarter. The translation
difference results from the retranslation of inter-company balances which is
charged to the profit and loss account. The retranslation of opening net assets
is shown as a credit directly to reserves. Both accounting treatments are in
accordance with SSAP 20, foreign currency translation.
Staff costs of #419,774 (2002 - #780,568) were #226,087 or 35% lower than the
previous quarter. This was primarily due to the write-back of previous
provisions. Staff numbers at 31 March 2003 were 40 (2002 - 48), the same as at
31 December 2002.
Other operating charges were #323,335 (2002 - #584,904), #211,927 or 40% lower
than the previous quarter. Excluding the effects of the translation differences
due to the movement in the US dollar rate other operating costs were just 8%
lower than the previous quarter.
Payments in the quarter for outsourced development were #196,363 (2002 -
#276,648). This compares to a cost of #179,454 in the previous quarter. Total
system support and development costs including costs of full time employees
amounted to #485,203 (2002 - #649,990) compared to #470,591 in the previous
quarter.
Interest receivable / payable
Interest receivable during the quarter was #4,708 (2002 - #4,649). Interest
payable of #49,344 (2002 - #45,000) includes #45,000 accrued in respect of the
secured convertible bond and #4,344 paid in respect of the finance lease.
Year ended 31 March 2003
Turnover
Turnover for the year ended 31 March 2003 was #2,654,514 compared to #3,236,111
in the year ended 31 March 2002, a reduction of 18%.
Recurring screen revenues were #2,089,199 (2002 - #1,961,112), 7% up on the
previous year. Cumulative licences sold at 31 March 2003 were 295 to 63
customers (2002 - 296 licences to 63 customers).
Non-recurring revenues were #565,315 (2002 - #1,274,999), 56% down on the
previous year. The reduction was due to the large licence fee of #850,000
received from Refco EasySolutions in the previous year. However, non-recurring
revenues were significant in the year with the completion of the eSpeed contract
and further revenues received from Refco EasySolutions.
Operating expenses
Total operating expenses for the year ended 31 March 2003 were #5,549,003 (2002
- #6,797,699) a reduction of 18% year on year due primarily to lower staff
costs.
Staff costs of #2,536,859 (2002 - #3,528,905) have decreased by #992,046 or 28%.
Average staff numbers employed during the year were 43 (2002 - 58). Staffing has
been reduced in our US and Far East offices due to the reduced customer support
requirements during the year and administrative staff reductions have been made
in our London head office.
Other operating charges of #2,230,667 (2002 - #2,479,803) show a reduction of
#249,136 or 10%.
Outsourced development costs were #781,477 (2002 - #788,991)
Interest receivable / payable
Interest receivable during the year was #21,690 (2002 - #42,316). Interest
payable of #184,344 (2002 - #76,562) includes #180,000 accrued in respect of the
secured convertible bond and #4,344 paid in respect of the finance lease.
Liquidity and capital resources
As at 31 March 2003 the group had cash reserves of #851,706.
In the final quarter of the year the group achieved a good cash performance - in
addition to continuing revenues, the group benefited from Inland Revenue tax
refunds (detailed below) and solution sales revenues received from eSpeed Inc
and Refco EasySolutions LLC resulting in a cash generative quarter. Excluding
the benefit of these items, the underlying cash burn was approximately #200,000
per month in the final quarter of the year, although this has increased in the
first two months of the new financial year.
The group is in discussions with third parties to secure funding of
approximately #500,000 to cover immediate short-term cash requirements. The
directors and advisors are confident that this will be achieved in the next few
weeks. In the event that this is in the form of a loan this will require an
amendment to the company's Articles. A circular convening an EGM will be posted
to shareholders shortly.
In addition, to meet the longer-term needs for working capital the group is
intending raising additional capital later in the year.
The growing numbers of users at Refco and at the group's own datacentre in
London encourage the directors to continue to believe that the group will be
successful in growing sales and in raising the additional working capital which
will be required in the near term. This matter is discussed further in note 1 to
the preliminary announcement.
On 7 June 2002 the company completed a placing and open offer raising #1,597,488
net of expenses and on 17 December 2002 the company raised additional capital of
#499,910 net of expenses from a placing for cash. The proceeds were used for
continuing product development and working capital purposes.
Dividend policy
The board of directors do not recommend the payment of a dividend in respect of
the financial year (2002 - #nil)
Taxation
During the year ended 31 March 2003 the group received cash repayments from the
Inland Revenue of #357,307 (2002 - #nil). This was in respect of claims under
the research and development tax credit scheme.
Consolidated profit and loss account
Note 3 months 3 months
ended ended Year ended Year ended
31 March 31 March 31 March 31 March
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (audited)
# # # #
Turnover 2 788,478 627,679 2,654,514 3,236,111
Operating expenses 3 (939,472) (1,642,120) (5,549,003) (6,797,699)
----------------- ----------------- ----------------- -----------------
Group operating loss (150,994) (1,014,441) (2,894,489) (3,561,588)
Share of operating loss of
associate 9 (139,266) (99,358) (340,699) (693,285)
----------------- ----------------- ----------------- ----------------
Total operating loss before
interest: group and share of
associate (290,260) (1,113,799) (3,235,188) (4,254,873)
----------------- ----------------- ----------------- ----------------
Interest receivable 4,708 4,649 21,690 42,316
Interest payable (49,344) (45,000) (184,344) (76,562)
----------------- ----------------- ----------------- ----------------
Loss on ordinary activities
before taxation (334,896) (1,154,150) (3,397,842) (4,289,119)
357,307 - 357,307 -
Taxation
----------------- ----------------- ----------------- ----------------
Profit / (loss) on ordinary 22,411 (1,154,150) (3,040,535) (4,289,119)
activities after taxation
Minority interest - equity 7 7,139 (23,204) 98,623 145,738
----------------- ----------------- ----------------- ----------------
Profit / (loss) for the 5 29,550 (1,177,354) (2,941,912) (4,143,381)
period
----------------- ----------------- ------------------ -----------------
Basic and diluted profit /
(loss) per ordinary share 5 -p (2.64)p (5.60)p (9.34)p
All of the group's results above were derived from continuing operations.
Consolidated statement of
total recognised gains and
losses
Profit/(loss) for the period 29,550 (1,177,354) (2,941,912) (4,143,381)
Exchange translation
differences (129,651) (86,369) 246,213 (48,508)
----------------- ----------------- ----------------- ----------------
Total recognised losses in the
period (100,101) (1,263,723) (2,695,699) (4,191,889)
----------------- ----------------- ----------------- ----------------
Consolidated balance sheet
Note 31 March 31 March
2003 2002
(unaudited) (audited)
# #
Fixed assets
Tangible assets 72,664 367,285
Investment in associate 9 - 306,715
------------------ ------------------
72,664 674,000
------------------ ------------------
Current assets
Debtors 183,956 253,172
Cash at bank and in hand 851,706 1,038,983
------------------ ------------------
1,035,662 1,292,155
Creditors: amounts falling due within one year (958,695) (1,362,270)
------------------ ------------------
Net current assets / (liabilities) 76,967 (70,115)
------------------ ------------------
Total assets less current liabilities 149,631 603,885
------------------ ------------------
Creditors: amounts falling due after one year -
convertible debt (2,131,663) (1,917,138)
Provisions for liabilities and charges 9 (33,984) -
------------------ ------------------
(2,016,016) (1,313,253)
------------------ ------------------
Capital and reserves 6
Called up share capital 2,776,773 2,322,353
Share premium account 13,801,066 12,163,927
Profit and loss account (18,094,649) (15,398,950)
------------------ ------------------
Equity shareholders' funds (1,516,810) (912,670)
------------------ ------------------
Minority interest - equity 7 (499,206) (400,583)
------------------ ------------------
(2,016,016) (1,313,253)
------------------ ------------------
Consolidated cash flow statement
Note Year ended Year ended
31 March 31 March
2003 2002
(unaudited) (audited)
# #
Net cash outflow from operating activities 8 (2,632,722) (2,864,479)
------------------ -----------------
Returns on investments and servicing of finance
Bank interest received 21,260 46,498
Interest element on finance lease rental payments (4,344) -
------------------ -----------------
16,916 46,498
------------------ -----------------
Net cash outflow from capital expenditure
Payments to acquire fixed assets (12,691) (31,403)
Proceeds from sale of fixed assets - 5,563
------------------ -----------------
(12,691) (25,840)
------------------ -----------------
Taxation
Research and development tax credit receipts 357,307 -
---------------
------------------
Acquisitions
Investment in associate company - (1,000,000)
------------------ -----------------
Cash outflow before financing (2,271,190) (3,843,821)
------------------ ----------------
Financing
Issues of share capital 2,440,485 713,292
Share issue costs (348,926) -
Issue of secured convertible bond - 2,000,000
Bond issue costs - (159,424)
Capital element of finance lease rental payments (4,425) -
------------------ -----------------
2,087,134 2,553,868
------------------ -----------------
Decrease in cash in the period (184,056) (1,289,953)
------------------ -----------------
Net funds:
At start of period 1,038,983 2,327,911
Cash flow for the period (184,056) (1,289,953)
Exchange difference (3,221) 1,025
------------------ -----------------
At end of period 851,706 1,038,983
------------------ -----------------
Notes to the preliminary announcement
1. Basis of preparation
The preliminary announcement has been prepared using accounting policies
consistent with those set out in the financial statements for the year ended 31
March 2002.
Going concern
The directors have prepared detailed cash flow projections for the period ending
30 June 2004, which assume that the group will raise additional capital and that
sales will increase.
As at 31 March 2003 the group had cash reserves of #851,706. The underlying cash
burn was approximately #200,000 per month in the final quarter of the year,
although this has increased in the first two months of the new financial year.
The group is in discussions with third parties to secure funding of
approximately #500,000 to cover immediate short-term cash requirements. In the
event that this is in the form of a loan this will require an amendment to the
company's Articles. A circular convening an EGM will be posted to shareholders
shortly.
In addition, to meet the longer-term needs for working capital the group is
intending raising additional capital later in the year.
While there is no certainty in relation to the group successfully raising
sufficient capital, on the basis of this cash flow information, at the date of
approval of this preliminary announcement the directors believe it is
appropriate for the preliminary announcement to be prepared on the going concern
basis as it indicates the group will continue in operational existence for the
foreseeable future.
The preliminary announcement does not include any adjustments that would result
should this basis not be appropriate.
Other matters
The results of operations for any quarter or interim period are not necessarily
indicative of the results of operations for any other future quarter or interim
period or for a full financial year.
The financial information in this preliminary announcement does not constitute
the company's statutory accounts for the years ended 31 March 2002 or 2003. The
financial information for the year ended 31 March 2002 is derived from the
statutory accounts for that financial year. Those accounts have been reported
on by the company's auditors and have been delivered to the registrar of
companies. The report of the auditors was unqualified and did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985. The statutory
accounts for the year ended 31 March 2003 will be finalised on the basis of the
financial information presented by the directors in this preliminary
announcement and will be delivered to the registrar of companies following the
company's annual general meeting.
The preliminary announcement for the year ended 31 March 2003 was approved by
the directors on 17 June 2003.
2. Turnover and segmental analysis
Turnover is attributable to the continuing activity of granting licences on
software products, shown net of VAT. In the year ended 31 March 2003 continuing
revenue was #2,089,199 (2002 - #1,961,112) and non-recurring sales were #565,315
(2002 - #1,274,999). Turnover for continuing revenue is generally receivable
quarterly in advance. Only income relating to the period is recognised in the
profit and loss account. Income relating to future periods is deferred in the
balance sheet.
Geographical analysis:
Turnover Loss on ordinary
activities before taxation
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2003 2002 2003 2002
(unaudited) (audited) (unaudited) (audited)
# # # #
UK 2,321,986 1,867,056 (2,938,159) (3,281,940)
USA 332,528 1,369,055 (225,274) (463,574)
Far East - - (234,409) (543,605)
------------------- ----------------- ----------------- -----------------
Total 2,654,514 3,236,111 (3,397,842) (4,289,119)
------------------- ----------------- ----------------- -----------------
Net assets / (liabilities)
As at As at
31 March 31 March
2003 2002
(unaudited) (audited)
# #
UK 2,463,031 2,558,087
USA (2,727,049) (2,378,786)
Far East (1,751,998) (1,492,554)
------------------- -----------------
Total (2,016,016) (1,313,253)
------------------- -----------------
3. Operating expenses
3 months ended 3 months ended Year ended Year ended
31 March 31 March 31 March 31 March
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (audited)
# # # #
Wages and salaries 419,774 780,568 2,536,859 3,528,905
Other operating charges 323,335 584,904 2,230,667 2,479,803
Outsourced development 196,363 276,648 781,477 788,991
------------------- ------------------- ------------------- -------------------
Operating expenses 939,472 1,642,120 5,549,003 6,797,699
------------------- ------------------- ------------------- -------------------
Total system support and development costs amounted to #485,203 in the 3 months
to 31 March 2003 (2002 - #649,990).
4. Taxation
The taxation credit in the quarter relates to receipts from the Inland Revenue
under the research and development tax credit scheme. #258,808 was received in
respect of the year ended 31 March 2001 and #98,499 was received in respect of
the year ended 31 March 2002. There is no provision for taxation in the year due
to losses in the current and prior periods.
5. Profit / (loss) per ordinary share
3 months ended 3 months ended 31 Year ended Year ended
March
31 March 31 March 31 March
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (audited)
# # # #
Profit/(loss) for the period 29,550 (1,177,354) (2,941,912) (4,143,381)
------------------- ------------------- ------------------- -------------------
number number number number
Basic and diluted weighted average
number of shares in the period 55,512,583 44,653,070 52,547,615 44,338,304
pence pence pence pence
Basic and diluted profit / (loss)
per ordinary share - (2.64) (5.60) (9.34)
------------------- ------------------- ------------------- -------------------
Basic profit / (loss) per ordinary share has been calculated by dividing the
profit / (loss) for the period retained for equity shareholders by the weighted
average number of shares in issue during the period.
6. Share capital and reserves
Ordinary Share premium Profit and
share capital account loss account Total
# # # #
At 1 April 2002 2,322,353 12,163,927 (15,398,950) (912,670)
Share issue 454,420 1,637,139 - 2,091,559
Retained loss for the period - - (2,941,912) (2,941,912)
Foreign exchange difference - - 246,213 246,213
------------------- ------------------- ------------------- -------------------
At 31 March 2003 2,776,773 13,801,066 (18,094,649) (1,516,810)
------------------- ------------------- ------------------- -------------------
7. Minority interest
#
At 1 April 2002 (400,583)
Share of loss for the year (98,623)
-------------------
At 31 March 2003 (499,206)
-------------------
Minority interest represents the minority shareholders' interests in the net
liabilities of EasyScreen Inc. In the opinion of the directors this deficit is
recoverable on the basis that EasyScreen Inc. is forecast to become profitable.
8. Reconciliation of operating loss to net cash outflow from operating
activities
Year ended Year ended
31 March 31 March
2003 2002
(unaudited) (audited)
(as restated)
# #
Operating loss (2,894,489) (3,561,588)
Depreciation 323,097 353,780
Loss on disposal of tangible fixed assets 8,145 5,245
Decrease in debtors 66,272 449,775
Decrease in creditors (135,747) (111,691)
------------------- -------------------
Net cash outflow from operating activities (2,632,722) (2,864,479)
------------------- -------------------
The 2002 numbers have been restated to exclude the share of loss of associate
from the operating loss.
9. Provisions for liabilities and charges
Investment in associate
#
At 1 April 2002 306,715
Share of associate losses (340,699)
-------------------
At 31 March 2003 (33,984)
-------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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