- Turnover of £306,000 (2005: £485,000)
- Losses before tax of £569,000 (2005: (£287,000))
- Major cost reduction programme implemented
- Successful disposal of data sales operation to Tenfore Systems Ltd in May
- New marketing model for TDI
Keith Young, Chairman of CMS WebView plc, commented:
“It is four months since shareholders received the Chairman’s statement that accompanied the 2005 full-year results. In that Statement a number of key actions were outlined aimed at cutting costs and maximising returns from investment in our proprietary TDI™ software system. I am pleased to report that the clear majority of the actions have now been fully implemented. This has resulted in the Company operating with substantially reduced overheads and able to progress a new marketing strategy for TDI™. Having achieved a major corporate restructuring, we are now also well positioned to explore other business opportunities.”
Chairman’s statement
It is four months since shareholders received the Chairman’s statement that accompanied the 2005 full-year results. In that Statement a number of key actions were outlined aimed at cutting costs and maximising returns from investment in our proprietary TDI™ software system. I am pleased to report that the clear majority of the actions have now been fully implemented. This has resulted in the Company operating with substantially reduced overheads and able to progress a new marketing strategy for TDI™. Having achieved a major corporate restructuring, we are now also well positioned to explore other business opportunities.
Results
I can report that for the six-month period ended 30 June 2006, CMS had turnover of £306,000 (2005: £485,000) and pre-tax losses of £569,000 (2005: £287,000).
While the losses are significant, we calculate that £268,000 were one-off costs relating to rationalisation. During this period we were also in the process of serving out notice on certain cancelled supplier contracts, therefore the full extent of the savings will not come into effect until the second half of the year.
Business Review
The Company continued to supply and maintain its wholly-owned TDI™ system to futures exchanges in their mission-critical business applications, in particular the Chicago Board of Trade (CBOT), which is one of the largest future exchanges in the world.
As previously reported to shareholders, CMS and CBOT agreed that the support element of this contract be cancelled with effect from the 30 June 2006.
The CBOT continues to use TDI™ under an agreed separate licence arrangement with CMS for the distribution of data from other organisations on a bureau-type basis. This includes three other North American exchanges (MGE, KCBT and the WCE) and, as described in the outlook section, we had expected at this time to be able to report an extension to include JADE, the CBOT’s new Singapore joint venture. The CBOT also uses TDI™ for the distribution of Dow Jones Indexes.
A key development during the review period was the identification of a purchaser for the data sales part of our business. The disposal of this part of our operation to Tenfore Systems Ltd was completed in May and we are pleased to report that the transfer of CMS data sales clients to Tenfore has proceeded smoothly. Under the client transfer process Tenfore is to operate a TDI™ based ticker plant under licence from CMS.
As reported in May 2006, it was critical we cancel suppliers whose services were not contributing positively to the Company’s performance or would not be necessary to achieve CMS’s current business objectives. The fact that a number of suppliers were still serving out their contract termination periods during the first half will mean a further reduction in costs will be realised in the second half of 2006.
The new marketing strategy for TDI™ is to sell the intellectual property (i.e. the computer source code of our data management software) to companies that wish to have full control of TDI™ within their own organisation rather than depend on CMS for its support and development.
We expect this new approach to have the benefit of removing a substantial barrier to any potential TDI™ sale, which is the fact that almost all large organisations prefer not to depend on smaller suppliers for mission critical functions.
The new TDI™ marketing model leaves CMS free to negotiate individual intellectual property (IP) licences, and enables purchasing organisations to retain control of their data distribution applications and to develop the software using their in-house IT function.
The merit of this approach is that organisations will have the benefit of owning a branded and proven product, and will only need to customise it to suit their particular needs. We believe that this should enable purchasers to substantially reduce the lead times for launching major new data distribution projects. Marketing of this new model commenced in July 2006 and a number of discussions have taken place. We will report further on this matter as and when appropriate.
As a consequence of the major structural changes to CMS it was necessary to reduce the size of the board of directors and to part company reluctantly with Keppel Simpson, our Non-Executive Chairman, who kindly volunteered to resign (as reported on 11th July 2006).
In assuming the role as Non-Executive Chairman (previously Non-Executive Vice Chairman) I should like to take the opportunity to thank Kep for his contribution over the years and his pragmatic approach to the needs of CMS.
Outlook
The Company continues to progress the new marketing model for TDI™ and ensure that the value we have created developing our software is fully protected and used for the maximum benefit of shareholders. With a new lower cost company structure in place, we are now also able to explore other new business opportunities.
The marketing of the new TDI™ model as detailed in the business review is underway. While there have been no orders yet, discussions have resulted in a series of follow up meetings and commercial proposals being submitted by CMS.
We will continue this new marketing approach until the end of 2006 and then review its effectiveness. At the same time a range of other new business opportunities is being considered which, should they progress positively, will be reported to shareholders.
I had expected to be able to report at this time an Agreement with the CBOT to extend its licence rights to TDI™ for the CBOT’s use of TDI™ in its the new Joint Asian Derivatives Exchange (JADE) – a Singapore-based commodities market which is a joint venture between the CBOT and the Singapore Exchange that went live on the 25th September 2006.
Unfortunately, the discussions have been protracted and have still to reach a conclusion. To try to reach a satisfactory outcome for both parties, CMS recently submitted a document to the CBOT which we believed reflected accurately a recent oral agreement. As the issue unfortunately has not been resolved, we felt it necessary to update shareholders, some of whom have enquired about this important commercial issue regarding the CBOT’s use of TDI™ in other exchanges.
Keith YoungChairman
25 September 2006
Interim Results For The Six Months Ended 30 June 2006