Patsystems unsettled by TT patent case; profits forecast for 2005

Patsystems unsettled by TT patent case; profits forecast for 2005

AIM-listed derivatives trading technology company Patsystems says it expects to deliver a "significant profit" to shareholders in 2005 despite posting widening operating losses for the year ending 31 December 2004.

The vendor posted operating losses of £2.9m for 2004, up from £2.5m on the previous year, although there was a marginal decrease in net losses to £2m, from £2.3m a year ago. Cash at the bank fell from £4.3m at the end of 2003 to just £1.1m in 2004.

But turnover was up 10% to £11.8m in 2004, compared to £10.7 million a year earlier. Revenues at the group's trading systems business were up 17% to £3.2m, but turnover was down 25% to £1.2m at the firm's exchange systems business.

Despite this, Patsystems chief executive, Kevin Ashby, says he expects the company to be cash positive from the second quarter of 2005.

"The continual growth in our revenues combined with the planned cost reductions should also enable us to deliver a significant profit for shareholders this year," says Ashby.

The firm expects costs to fall to £3.5m in Q1 2005 and to decrease to £3m for the remaining three quarters of the year, mainly because it has completed development of its new TradeMark platform. In 2004, the final costs of TradeMark were £900,000 more than expected at the start of the year.

Patsystems also says uncertainty arising from the Trading Technologies patents issue is unsettling the market, resulting in the delay of at least two major prospective projects. The vendor has applied for a patent for its Reflector functionality, which is part of the TradeMark system and allows traders to view market depth through a price ladder.

Looking ahead, Patsystems says TradeMark will enable it to diversify into new markets and incorporate other financial instruments. A beta programme is already underway in core markets.

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