Third Quarter Revenues

Sales, excluding Tamesis, which was acquired in August 2005, have grown during the third quarter by 4%. Whilst there is a considerable improvement in both sales and profitability compared with the same period last year, the increase in sales is less than the board anticipated due to:

i)Following the traditionally quiet months of July and August, user revenue in the UK did not follow the usual seasonal pattern in September and October. User revenues elsewhere are on budget.

ii) Delays in product enhancements from the third to the fourth quarter have pushed potential revenues into next year. All such products are now launched or in final Beta test.

iii) The client timescales for some significant projects have extended. Should we be successful in winning these pieces of business, the revenues and profits of most will be recognised in 2006.

Tamesis

The Tamesis business showed sales of £0.11m and a trading loss of £0.04m during the third quarter, plus a goodwill amortisation charge of £0.04m. A new project for an existing Tamesis client started in October and a number of prospects have been identified within both Tamesis' existing clients, and among Patsystems' dealing systems clients.

Cash flow

Operating cash flow, excluding Tamesis, was £0.6m inflow in the third quarter (including Tamesis, a £0.4m cash inflow). The Company had £3m in the bank at the end of the third quarter together with the un-drawn invoice discounting facility of £0.7m.

Fourth Quarter, Full Year 2005 and Prospects for 2006 (including Tamesis)

Based on extrapolating the September and October revenues, fourth quarter revenue is expected to be in the range £4.7m to £4.9m, with operating costs expected in the region of £4.2m (these estimates include revenues of £1.1m and costs of £0.9m for the completion of the TGE project). Thus the expected outcome for the full year is now a trading profit in the range £0.5m to £0.7m.

This is a substantial improvement from the corresponding 2004 full year trading loss of £0.7m and an even greater improvement in profit on ordinary activities for the year, which for 2005 is expected to show a small profit against a corresponding £2.0m loss in 2004.

Refco has continued to trade normally with us, with revenues so far comparable to recent months, and continue to meet their liabilities to us on the due dates. It is not yet possible to estimate any possible impact of any change of ownership of Refco.

The budget for 2006 is in the process of being finalised. Based on the pipeline of new business prospects (including Tamesis), small positive price adjustments and the ongoing cost containment programme, the Board anticipates that, subject to any significant change in commercial conditions, the Company will generate a trading profit of the order of £2m.Download the document now 29.4 kb (Adobe Acrobat Document)