| Company |
ARROWPOINT TECHNOLOGIES PLC |
| ISIN |
IM00B3VBZX00/GBX/PLUS-exn |
| Source |
MKW |
| Headline |
Admission to PLUS and Audited Results for the year ended 31 March 2009 |
| Released |
07:00AM 28th October 2009 |
| Number |
MKW.AFXUK5634423:Arrowpoint Technologies Plc |
|
28 October 2009
IM00B3VBZX00
Arrowpoint Technologies Plc
("Arrowpoint" or "the Company")
Admission to PLUS and commencement of trading
Audited results for the year ended 31 March 2009
Arrowpoint Technologies Plc, a leading pensions and retirement benefits administration software provider,
announces its audited results for the year ended 31 March 2009. The Company's shares have today been admitted
to trading on the PLUS-quoted market (PLUS) with a market capitalisation of £26.04 million. The trading symbol
is "ARWP ".
Financial Highlights
* Revenues increased 68% to $15.16m (2008: $9.03m), driven by new customer wins and ongoing demand for
Arrowpoint's pensions and post retirement solutions
* EBITDA increased 105% to $1.98m (2008: $0.97m), reflecting the benefits of the Company's low cost
offshore product development and customer support centres in India
* Operating Profit increased to $0.53m (2008: $0.44m)
* Loss per share of $0.31
* Today admitted to PLUS, raising approximately £120,000
Operating Highlights
* Won three new clients: these clients were from the financial services, manufacturing and
transportation sectors
* Signed one of the world's largest perfume manufacturing companies as the first customer for the
Company's outsourcing and support services based in Chennai, India
* Appointed Peter D'Amato to the board as Finance Director and Graham Cole as a non-executive director
Santanu Nandy, Group Managing Director, said: "We are delighted that the Company has been admitted to PLUS,
following a very successful year of growth in revenues and operating profits. We have now established the
building blocks for long term success and already have a leading position in the US pension software industry.
By combining our US domain knowledge with Indian offshore skills, the Company is positioned for long term
growth and looks to the future with confidence."
Enquiries:
Arrowpoint Technologies Plc
Santanu Nandy, Group Managing Director +91 22 2598 5900
Ritu Modi, Group Public Relations
St Helens Capital Partners LLP
Mark Anwyl or Duncan Vasey +44 (0)20 7368 6959
Corfin Communications
Neil Thapar, Harry Chathli, Alexis Gore +44(0)20 7977 0020
The Directors of Arrowpoint Technologies Plc are delighted to announce that trading in the Company's Ordinary
Shares has commenced today on the PLUS-quoted market.
Type of Issue: Offer for Subscription
Number of Ordinary Shares in issue: 200,330,950
Expected Start Price: 13 pence per share
Par Value: 1 pence each
Market Capitalisation on Admission: GBP26.04 million
Sector classification: Software and Computer Services
Stock Symbol: ARWP
Corporate Adviser: St Helens Capital Partners LLP
The Offer for Subscription
The Company raised gross proceeds of £120,250 in the Offer for Subscription through the issue of 925,000 New
Ordinary Shares at 13p per New Ordinary Share. The proceeds of the Offer for Subscription will be applied
towards costs associated with Admission.
The New Ordinary Shares are fully paid and rank pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends and distributions.
Introduction
Arrowpoint is a holding company which, through its subsidiary companies based in the USA and India, offers
information technology services, products and solutions to the retirement and financial services industry,
primarily in the USA.
The Company operates primarily in the USA and India and has developed IT products for the US retirement
industry where it has a leading position in the provision of Defined Benefit (DB) solutions; its operations are
supported by senior actuaries, software architects and developers in the United States and in India.
The Company's various products and solutions have been in use for over 30 years. Its clients include major
Fortune 500 retirement services companies and their subsidiaries such as Mass Mutual, Principal Financial and
Union Bank of California. It is also a service provider to The Pension Benefit Guarantee Corporation (PBGC) of
the USA. PBGC is the central federal body in the USA for the protection of workers' pensions. The Company also
provides offshore actuarial and data conversion services from its Development and Support Centre in Chennai,
India. In addition, the Company operates an off shore Product Development Support Centre which undertakes
product development and 24/7 critical support for customers such as Coty Inc and AST Equity of the USA.
In the twelve months ended 31 March 2009, the Company reported an operating profit of US$526,000 on revenues of
US$15.16 million. These results are set out in below.
The Company's Products and Services
The Company has three principal operating divisions:
* Lynchval Systems Worldwide, Inc. ("Lynchval ")-retirement industry products and solutions (USA);
* Arrowpoint Technologies Private Ltd ("ATPL") (India) -offshore services; and
* KeyTech Inc ("KeyTech") (USA) -consulting and integration services.
Lynchval Systems Worldwide, Inc.
Overview
Lynchval is a Defined Benefit pension plan software and services provider in the USA, with 25 years experience
in the industry. Lynchval was acquired by ATI in September 2007 and is now a wholly owned subsidiary of ATI.
Lynchval is headquartered in Chantilly, Virginia (a suburb of Washington, D.C.) and also has offices in
downtown Washington, D.C., Plano, Texas (a suburb of Dallas), and Chennai, India.
Since 1982, Lynchval has been providing innovative solutions for the retirement industry through the
development of creative software tools and packages. The company still leases these packages to clients and
offers them integrated actuarial knowledge and systems expertise in software development.
Since commencing operations, Lynchval has designed and developed an entire product portfolio that it provides
to clients in the retirement sector. DB products include a valuation system; an asset and liability projection
modelling system; an administration system; and a pension accounting system. The company also provides products
for the Defined Contribution ("DC") and the Other Post Employment Benefits ("OPEB") sectors. Lynchval also
provides a diversity of complementary supportive consulting services, including actuarial and technical
consulting.
Lynchval employs highly qualified and experienced actuaries and technologists in order to support its global
product and consulting base. Three of its staff members hold doctorates; one is a Doctor of Economics, one an
Actuarial Fellow, and one is a Certified Public Accountant. Other staff members include two attorneys, one of
whom is a pension (ERISA) attorney, as well as a certified actuary.
Lynchval has expanded its product and service offerings to two new areas. The first is the provision of legal
structuring, financial analysis/support and actuarial projections/services for political sub-divisions (e.g.
States, Counties and Municipalities) and for-profit corporations with under-funded health care and/or pension
plans. The second is technical integration services, where Lynchval assists a client with its ERP and EAI needs
on a global 24/7 basis.
Lynchval has already moved some of its back office operations to Chennai, thereby reducing its cost of
operations and will over the coming months move the remainder of its back office operations to ATPL in Chennai.
Lynchval's clients include the PBGC; Amtrak; Bridgestone; Firestone; DuPont; Coty; New York City Agencies; and
some of the largest and most prestigious insurance companies and banks in the United States.
Strategy
Lynchval's growth strategy includes the introduction of new product offerings and additional features in
existing products to increase product revenue provision. Most importantly, however, the Company has now
developed a product in the USA called the Unique Solution® from Lynchval, which represents an important step
forward in the administration of OPEB plans.
GASB (Governmental Accounting Standards Board) Statements 43 and 45 require government employers to recognise
the cost of an employee's post-employment benefits during that employee's period of employment and to report
any shortfall as a liability in their financial statements. Significant unfunded liabilities arising from
these GASB Statements could have a serious effect on an employer by impacting its credit rating and thereby
increasing its cost of borrowing.
The Unique Solution® from Lynchval overcomes shortfalls inherent in the current funding schemes by giving
government employers the ability to pre-fund post-retirement medical coverage using a special purpose "Section
115" trust.
By segregating post-retirement costs into a Section 115 trust, government employers can apply a higher discount
rate to those costs than would normally be permissible under GASB 43 and 45, thereby lowering the accounting
expense that the employer must report for the post-retirement liability. Accordingly, the primary benefit of
establishing such a trust is that GASB 43 and 45 allow the employer to invest assets long term (typically 30
years) to earn a rate of return higher than the return on general operating funds. Under the Unique Solution®,
the proceeds of an OPEB bond issued by a government employer are therefore used not only to fund the current
expenses but also to pre-fund the redemption of the bond itself through the existing Annual Recurring Cost, as
the issuer anticipates that the investment yield from the bond assets will exceed the interest paid to the bond
holders.
Based on this method, the Section 115 trust is able to receive an amount equal to the principal of the bonds at
the time of its maturity.
The Directors believe that the Unique Solution® is the most economically efficient way to administer OPEB
liabilities and that its benefits are four fold:
1. it creates a positive benefit for the employees via their plan;
2. it addresses the possible short falls of the program being underfunded;
3. it provides additional funding necessary for the employer to meet its commitments; and
4. it provides benefits to the employer after the trust terms are met.
A recent estimate of OPEB liability which government employers in the United States may be obliged to meet puts
that liability at US$1.8tn. The Directors believe that this represents a very significant opportunity for the
application of the Lynchval Unique Solution® and that Lynchval is well positioned to penetrate that market.
Typical administration contacts awarded in this area are expected to last approximately 30 years (the duration
of the associated bond) and to generate a fixed annual income over that period. Lynchval is currently in the
final stages of negotiating its first contract for its Unique Solution®, which if successful, would provide
Lynchval with revenue of approximately $3.0 million per annum for approximately 30 years. The Directors
believe that the Unique Solution® from Lynchval is the first product in this market and are therefore extremely
confident about its prospects.
The patent in relation to the Unique Solution® is currently registered in the name of Lawrence Bell, who is
Lynchval's Principal. The terms of the necessary and relevant contractual arrangements to, amongst other
things, vest the legal title in the patent in the name of Lynchval, are currently being negotiated between Mr
Bell and Lynchval. The Directors are confident that these arrangements will be settled and entered into in
relatively short order following Admission.
Arrowpoint Technologies Private Ltd
Overview
ATPL is a software solutions company with its headquarters in Chennai, India, where it operates a development
centre that also provides support systems, including pension plan conversions. In addition, ATPL operates a
24/7 product support centre for large clients and a product development and production support practice for
clients with outsourced product development needs. ATPL was incorporated in 2003.
The company was founded by Chokanath R Chandrasekhar and his wife Radhika Chandrasekhar, with the main
objective of providing services to organisations in the Banking and Financial Services sector with special
emphasis on the 401(k) retirement plan in the USA. ATPL was taken over in December 2005 by the company's
current management team.
Customers of the company have included Sigma Technologies Inc, 401(k) Exchange Inc, Johnson & Johnson Services
Inc and AST Equity Options Inc. ATPL's primary strengths include product development in Java and .NET
platforms in the retirement and employee benefit areas.
KeyTech
Overview
What began as RJS Contract Staffing, founded in 1987 to satisfy the many temporary staffing needs of clients in
the Greater Hartford area, has now become KeyTech, one of the premier staffing providers in Connecticut. RJS
Contract Staffing specialised in contract and direct hire placement of personnel in the fields of engineering,
healthcare and information technology.
In May 2001 the company's name was changed to KeyTech. With over two decades of staffing experience in several
targeted industries, KeyTech enhanced its capabilities by joining forces with InfoTec and IT Partners. InfoTec
is a direct placement IS/IT firm, and was founded in 1999 by Ron Divinere while IT Partners is a consulting
IS/IT firm, founded in 1999 by Steve and Dan Massucci. Not only did these two businesses allow for expanded
service, but with Dan as Chief Financial Officer came the benefits of an in-house CPA.
With this merger and strategic alliance partnership, KeyTech significantly increased its value to clients, by
procuring and placing professionals in several fields, including accounting/finance, engineering/
manufacturing, information systems/information technology, software development/engineering and human resources
and greatly expanded its resources and client base. KeyTech also provides technical integration services,
assisting clients with the ERP and EAI needs of their customers.
KeyTech operates as a division of Arrowpoint Technologies, Inc delivering its solutions to the insurance,
financial services and healthcare sectors.
The Company's Customers
Arrowpoint's ten largest clients in the nine month period ended 31 December 2008 were as follows:
Customer Percentage of Total Revenue
CIGNA 18.89
Mass Mutual 14.30
Pension Benefit Guarantee Corporation 11.45
Principal Financial Group 9.74
ING 1.92
DRS - PLT 3.17
AST 3.01
Schwab Retirement Plan 1.03
Phoenix Life Insurance 1.71
Coty Inc 1.92
The top ten customers accounted for approximately 67% of the Company's total sales in that period.
Future Growth and Strategy
The Company has already carved a niche for itself as a leading software solution provider to the pension
industry in the USA. Apart from its software solutions, the Company also provides services such as integration
consulting and cost-effective offshore development to its clientele. In order to augment its leadership
position, the Company intends to further strengthen its offerings in these areas.
Arrowpoint has identified the following areas of future development:
* additional DB products and services and further opportunities in hybrid plans;
* the need to develop and to strengthen solutions in DB and OPEB;
* the need to augment offshore infrastructure; and
* the need to develop consulting expertise in the insurance and pension industry.
In order to develop expertise in the above mentioned areas, the Company plans to invest in these areas through
organic expansion. In the next 18 months the Company plans to dramatically increase its areas of expertise and
depth in the fields of pension products (especially Defined Contribution, Employee Stock Option Management and
record keeping), integration and consulting based in the USA. It also plans to augment its offshore delivery
infrastructure based in India in order to enable a large scale product development capability. As stated, the
Directors are particularly optimistic about the Company's prospects in the OPEB sector following the proposed
roll out of the Unique Solution® by Lynchval.
Reasons for Admission
The Directors believe that the principal benefits to the Company of Admission will be the ability to heighten
the Company's profile whilst also increasing the potential to broaden the Company's investor base.
The Directors believe the other benefits of Admission include:
* the ability to enter into negotiations with potential vendors of businesses or companies, to whom
the issue of publicly traded shares as consideration is potentially attractive;
* the increased potential to raise further funds in the future, to finance acquisitions and/or to
provide additional working capital or development capital for the Company; and
* the increased potential to attract high quality directors and employees by offering share
options. The Directors believe that the ability to grant options over PLUS-quoted shares
is potentially more attractive to directors and employees than the grant of options over
unquoted shares.
Directors
On Admission, the Board will comprise four Directors, brief details of whom are summarised below.
Nirmal Kedia - Non-Executive Chairman
Nirmal was born in Mumbai, India, and started his career in 1987 at Nitin Castings Limited and has become an
experienced and proven businessman. He is a director of Kirti Investments Ltd, Prescon Builders Pvt Ltd and
Turnkey Software People India Pvt Limited ("Turnkey"). He is a professionally qualified graduate in commerce
from Mumbai University.
Santanu Nandy - Group Managing Director
Mr. Nandy was born in Cuttack, India, and was educated at the University of Mysore earning his bachelor degree
in Electronics and Communication Engineering (first class) in 1990. Mr. Nandy has approximately 19 years'
experience in managing large global scale businesses. As a director of Novasoft Information Technology
(Europe), he led one of the largest ERP/SAP operations in the United Kingdom. As vice president of Reliance
Infocomm ("Reliance"), a Fortune 500 group company, he helped build one of the largest greenfield telecom
projects. Prior to his time at Reliance, he was with Global Telesystems as a vice president.
Peter D'Amato - Financial Controller
Mr. D'Amato's responsibilities encompass the financial management and operational oversight of the Company.
With over 30 years of experience in the information technology as well as electronic and general publishing
industries, he brings to the Company hands on experience in financial management, business devolvement and
strategic planning. Mr D'Amato has a background in consumer products and has worked for a number of
international companies including Reuters, RJR Nabisco and PriceWaterhouseCoopers. He has a degree in
accounting from St. Francis College and an MBA from Fairleigh Dickinson University. He is a CPA in the State of
New York and is a member of the American Institute of Certified Public Accounts.
Graham Cole FCA, FSI - Non-Executive Director
Graham is a chartered accountant, formerly a partner in Deloitte, Haskins & Sells. He was a founder partner of
that firm's corporate finance division and the firm's European flotation partner. He continued this role
following that firm's merger with Coopers & Lybrand. He joined Beeson Gregory Limited (now Evolution Securities
Limited) in 1995 as a director where he advised domestic and international companies, both public and private,
on their strategies for growth and capital raising. Graham is a co-founder and past executive member of the
Quoted Companies Alliance. He is chairman of Stagecoach Theatre Arts plc, a non-executive director of Ashton
Penney Plc and a non-executive director of Vantis Plc.
Additional information on the Board
In addition to their directorship of the Company, the Directors hold or have held the following directorships
or have been partners in the following partnerships within the five years prior to the date of this
announcement:
Director Current Directorships/ Partnerships Past Directorships
Santanu Nandy Arrowpoint Technologies Pvt Limited Novasoft Information Technology
Turnkey Software People India Pvt Limited Limited
Peter D'Amato None None
Nirmal Kedia Kirti Investments Limited Nitin Alloys Global Limited
Prescon Builders Pvt Ltd Nitin Castings Limited
Turnkey Software People India Pvt Limited
Graham Cole Ashton Penney Holdings Plc Aproxis Plc
Ashton Penney Partnership Limited Lawnpaper Limited
Ideal Shopping Direct Plc Meldex International Plc
Pharmasmart Limited NBCC Plc
Recruitment Investment Group Limited Resource Insurance Group Plc
Rig Franchising Limited Vantis Corporate Finance Limited
Stagecoach Theatre Arts Plc
Thalassa Holdings Limited (Cayman Islands)
Vantis Plc
Graham Cole is a director of Ashton Penney Partnership Limited, in respect of which a winding up order was
issued on 28 May 2009 following the compulsory liquidation procedure.
Directors' and other interests
The interests of the Directors, persons connected with them and persons with an interest of 3% or more in the
issued share capital of the Company as at the date at Admission are as follows:
Name Number of issued Ordinary % of Enlarged Ordinary
Shares Share Capital
Nirmal Kedia 3,000,000 1.5
Santanu Nandy 14,986,638 7.5
Peter D'Amato - -
Graham Cole - -
Turnkey 143,750,373 71.75
Richard Feller 24,342,746 12.2
Mr Kedia and Mr Nandy are also interested in the 143,750,373 Ordinary Shares held by Turnkey, a company in
which Mr Kedia holds a 74% interest (through Kirti Investments, a company wholly owned by him) and Mr Nandy
holds a 26% interest.
Neither Mr D'Amato nor Mr Cole nor persons connected with them have any interests in Ordinary Shares; neither
will either have any such interests at Admission.
As at 31 March 2009, the Group had loans payable to its ultimate parent company, Turnkey, of which a facility
of US$2,596,365 has been made available to the Company and has been fully drawn down. The loan is interest
free, unsecured and without a fixed repayment term. Subject to certain conditions, this loan is convertible, at
Turnkey's option, into Ordinary Shares at a rate of 8p per share.
None of the Directors, nor Turnkey, will be subscribing for New Ordinary Shares under the Offer.
Supplementary Admission Document
A Supplementary Admission Document has been issued today setting out certain events that occurred since the
issue of the Company's Admission Document on 6 August 2009.
Audited Results for the Year Ended 31 March 2009
The text of the Company's announcement of audited results for the year ended 31 March 2009 is set out below:
Chairman's Statement
I am pleased to announce that Arrowpoint achieved strong growth in revenues and operating profits for the year
ended 31 March 2009. These are the first results to be reported by Arrowpoint as a listed company with dealings
in its shares on London's PLUS market commencing today.
The flotation is a major landmark in Arrowpoint's development and follows an extraordinary year for the
Company. The results highlight the success of our strategy to leverage growth by coupling Arrowpoint's
leadership position in the US pension software and consulting services sector with a proven offshore product
innovation and service delivery capability based in India.
Revenues grew by about 68% to $15.16 million while EBIDTA rose by 104% to $1.98 million. As of last year we
also started amortising our cost of acquisitions through goodwill amortisation over the next 20 years.
These results were achieved against a backdrop of a global financial crisis and are a testament to Arrowpoint's
robust business model and the strength of its long-standing customer relationships. Our blue chip corporate and
third party pensions administration clients include fortune 500 insurance companies, federal entities and many
sovereign countries. This meant that Arrowpoint, being a specialised IT solutions and products company in the
retirement and employee benefit industry, did not see a severe impact on its growth.
This was also our first full year of operations as a consolidated entity, following the acquisitions of
Lynchval Systems Worldwide and KeyTech in the US and Arrowpoint Technologies Private Ltd in India. While we
have consolidated and optimised many processes, the integration is expected to continue over the next 24 months
and will produce further efficiency and cost savings.
Our business model has proved its versatility in these tough times. Our client base continues to grow and over
the year we added three very important clients, without suffering any significant client attrition in the year.
We continue to innovate and have launched a specialised Knowledge Process Outsourcing Service for retirement
plan conversions out of our offshore centre in Chennai, India. We have also started a business continuity
support services for large enterprises.
In order to plan for long term growth, increase our corporate profile and ensure value creation of our
shareholders, during the year the Board also decided to seek a listing on a recognised public stock exchange in
a major financial market through an Initial Public Offering. It is our belief that a public listing will bring
added recognition of Arrowpoint among our shareholders, customers, vendors and the investment community.
Having analysed the various stock exchanges we opted for the PLUS market in London which provided competitive
listing costs, transparent listing rules and a strong regulatory framework. Your board of directors believes
that a listing on the PLUS Market Exchange was the right option for a company of our size.
Your Board also recommended the appointment of Graham Cole as a non-executive independent director. Mr Cole is
a respected figure in London's financial community and brings extensive experience as a non executive director
of publicly listed companies. He is also a former partner of Deloitte, Haskins and Sells and a former director
of Beeson Gregory (now Evolution Securities), a prominent London stock broking firm. Your board also
recommended the appointment of Mr. Peter D'Amato as the Finance Director. Mr. D'Amato is a US Certified Public
Accountant and comes with a wealth of experience having worked in various capacities in Accounts, Finance and
Audit of organisations such as PriceWaterhouse Coopers, Reuters and RJR Nabisco. Mr. D'Amato is our Finance
Director based out of New York, USA. On behalf of all shareholders and the Board, I welcome them both to
Arrowpoint.
Operating Review
Group revenues increased by 68% to $15.16m driven by the Company's strong position in the US pensions and post
retirement benefits software and support services market.
EBITDA increased by 105% to $1.98M as the Company reaped the benefits of its low-cost product development and
support services base in India. This enabled the Company to contain costs, leading to a significant boost to
profit margins.
The growth was attributable to major new customer wins as well as increasing demand from existing clients. The
new customers are from diverse sectors like financial services, manufacturing, railways etc.
During the year Arrowpoint also started a new line of business in Integration Services. It is a platform based
service providing System Integration to clients with large and diversified IT platforms.
Outlook
Current trading is in line with management expectations and revenues to date are ahead of the same period last
year. The pipeline of new business also remains encouraging.
The Directors do not recommend the payment of a dividend for this period.
Nirmal B Kedia
Chairman
ARROWPOINT TECHNOLOGIES PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2009
Incorporation to
Pro forma 31 March 2008
2009 2008
Continuing operations $'000 $'000 $'000
INCOME 15,163 9,030 5,644
Other income 37 2 1
Administrative expenses before depreciation and (13,219) (8,064)
amortisation (5,041)
Earnings before interest, tax, depreciation and 1,981 968 604
amortisation
Depreciation (491) (12) (7)
Amortisation (964) (518) (501)
OPERATING PROFIT 526 438 96
Interest receivable and similar income - 16 10
Interest payable and similar charges (703) (304) (190)
(177) 150 (74)
(LOSS)/ PROFIT BEFORE TAX
Tax on (loss)/profit on ordinary activities 68 (54) (34)
(LOSS)/ PROFIT ON ORDINARY (109) 96 (108)
ACTIVITIES AFTER TAX
(Loss)/ earnings per ordinary share ($)
Basic ($0.31) $96,000 ($108,000)
Diluted ($0.31) $96,000 ($108,000)
There is no material difference between the result as disclosed above in the profit and loss account and the
result on an unmodified historical cost basis.
ARROWPOINT TECHNOLOGIES PLC
COMPANY PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2009
2009 2008
Continuing operations $'000 $'000
INCOME - -
Cost of sales - -
GROSS PROFIT - -
Administrative expenses (33) (16)
OPERATING LOSS (33) (16)
Interest receivable and similar income - 7
Interest payable and similar charges (89) -
LOSS BEFORE TAX (122) (9)
Tax on loss on ordinary activities - -
LOSS ON ORDINARY (122) (9)
ACTIVITIES AFTER TAX
ARROWPOINT TECHNOLOGIES PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2009
2009 2008
$'000 $'000
Fixed assets
Intangible assets 18,019 16,972
Tangible assets 319 211
18,338 17,183
Current assets
Stock - 79
Debtors 2,046 2,468
Cash at bank and in hand 337 776
2,383 3,323
Creditors: amounts falling due within one year
Trade and other payables (457) (464)
Deferred consideration (8,000) (3,500)
Bank loan (1,539) -
Bank overdraft (185) (260)
Other payables (129) (356)
Accruals and deferred income (729) (454)
(11,039) (5,034)
Net current liabilities (8,656) (1,711)
Creditors: amounts failing due after more than one year
Bank loans (4,261) (5,800)
Amounts owed to ultimate parent company (2,596) (3,380)
Deferred consideration (1,000) (6,000)
(7,857) (15,180)
1,825 292
NET ASSETS
Called up share capital - -
Shares to be issued 2,107 473
Merger reserve (275) (275)
Profit and loss reserve (7) 94
EQUITY AND RESERVES 1,825 292
ARROWPOINT TECHNOLOGIES PLC
COMPANY BALANCE SHEET
AS AT 31 MARCH 2009
2009 2008
$'000 $'000
Fixed assets
Investments 278 278
Debtors: amounts owed after more than one year 4,796 3,140
5,074 3,418
Current assets
Cash at bank and in hand 8 16
8 16
Creditors: amounts falling due within one year
Creditors (94) (67)
Net current liabilities (86) (51)
Creditors: amounts falling due after more than one year (3,012) (2,903)
NET ASSETS 1,976 464
Called up share capital - -
Shares to be issued 2,107 473
Profit and loss reserve (131) (9)
EQUITY AND RESERVES 1,976 464
The above results are an extract from the full financial statements. A full version of these figures can be
found on the Report and Accounts section of the Company on the PLUS website."
RISK FACTORS
The attention of potential shareholders is drawn to the fact that ownership of shares in the Company involves a
variety of risks. Shareholders should be aware of the risks associated with an investment in a business in the
relatively early stages of its development. All potential shareholders should carefully consider the entire
contents of the Admission Document including, but not limited to, the factors described below before deciding
whether or not to invest in the Company. The information below does not purport to be an exhaustive list or
summary of the risks affecting the Company and is not set out in any particular order of priority.
Shareholders should carefully consider these risks before making a decision to invest in the Company. If any of
the events described in the following risks actually occur, the Company's business, financial condition,
results or future operations could be adversely affected. In such a case, the price of the Company's Ordinary
Shares could decline and investors may lose all or part of their investment. Additional risks and
uncertainties not presently known to the Directors, or which the Directors currently deem immaterial, may also
have an adverse effect upon the Company.
(i) the Company's future success will depend, among other things, on its Directors and senior management
team and their continuing contributions. The recruitment of suitable skilled employees and retention of their
services or the services of any future management team cannot be guaranteed;
(ii) the Directors consider that the Company and its members have taken appropriate measures to protect its
interests in its intellectual property, but there can be no assurance that those measures will prove to be
sufficient adequately or fully to protect those interests if a challenge to the same were to be forthcoming
from a third party. If a successful challenge were established to some or all of the Company's intellectual
property then this would be disruptive to the operations of the Company and may result in a material adverse
financial effect on the Company;
(iii) the Ordinary Shares are not listed or traded on any stock exchange. Notwithstanding the fact that an
application has been made for the Ordinary Shares to be admitted to trading through the PLUS-quoted Market this
should not be taken as implying that there will be a 'liquid' market in the Ordinary Shares. An investment in
the Ordinary Shares may thus be difficult to realise. The value of the Ordinary Shares may go down as well as
up. Investors may therefore realise less than their original investment, or sustain a total loss of their
investment;
(iv) the market price of the Ordinary Shares may not reflect the underlying value of the Company's net
assets or operations;
(v) there is no certainty that the Company will generate sufficient after tax profits to be able lawfully
to pay a dividend;
(vi) continued membership of PLUS is entirely at the discretion of PLUS Markets;
(vii) PLUS is not AIM or the Official List. Consequently, it may be more difficult for an investor to sell
his or her Ordinary Shares and he or she may receive less than the amount paid;
(viii) the share prices of public companies are often subject to significant fluctuations. In particular, the
market for shares in smaller public companies is less liquid than for larger public companies. Consequently,
the Company's share price may be subject to greater fluctuations and the Ordinary Shares may be difficult to
sell;
(ix) it is possible that the Company will need to raise further funds in the future, either to complete a
proposed acquisition or to raise further working or development capital. There is no guarantee that the then
prevailing market conditions will allow for such a fundraising or that investors will be prepared to subscribe
for Ordinary Shares. Shareholders may be materially diluted by any further issue of Ordinary Shares by the
Company;
(x) the Ordinary Shares are intended for capital growth and therefore may not be suitable as a short-term
investment. Investors may therefore not realise their original investment at all, or within the time-frame they
had originally anticipated;
(xi) the Company is incorporated in the Isle of Man and is subject to taxation on its income at a rate of
zero per cent in this jurisdiction. The Directors intend that the Company maintain this status. Should any tax
authority challenge this status, the Directors intend to defend the Company's tax position. However, should
that status be challenged successfully at any time, the Company's profits and/or capital gains may be subject
to taxation at a higher rate than is payable under its current status;
(xii) the Company has loans totalling $6.8 million from EXIM Bank and the success of the Company will depend
on its ability to properly service its obligations under these facilities (as described in the Admission
Document);
(xiii) as referred to in the Admission Document in relation to Lynchval, that company is negotiating with
Lawrence Bell to have certain interests in intellectual property transferred to it. There can be no assurance
that an agreement will be reached between the parties in relation to the arrangement. If the relevant
intellectual property is not transferred to Lynchval then it is possible that Lynchval's business may not be
able to be conducted as is currently the case and as is envisaged and this may have a material adverse effect
on its financial position. If an agreement is reached then it may involve financial or other consideration
having to be paid by Lynchval to Mr Bell, the quantum of which may be material;
(xiv) as a result of the current uncertainty in the worldwide economic climate, capital markets, economies
and investment strategies are subject to considerable uncertainties. The risks which face the worldwide
pensions industry may include circumstances and certain risks which are not foreseeable and which are without
precedent. The markets in which the Company operates, and the markets in which the Company's clients operate,
are or may be affected by national and worldwide factors that are beyond the control of the Company and/or its
clients. The uncertainty in and any worsening of economic and/or market conditions in the countries and/or the
sector in which the Company operates might result in a decrease in the demand for some or all of the Company's
services which in turn may have a material adverse effect on the business, financial condition and/or prospects
of the Company;
(xv) the success of the Company depends in part upon its continuing ability to attract and to retain
employees with suitable skills and experience, particularly, although not exclusively, in the area of product
development and sales. There can be no assurance that the Company will be able to recruit sufficient or
suitable staff or that the individuals whom it may wish to recruit will be able to be attracted and/or
retained. If the Company were to be unable to recruit and retain staff of appropriate quality then this may
have a material adverse affect on the Company's ability to conduct its business and to proceed in line with its
expectations;
(xvi) the Company may fail to obtain new business in relation to its services at desired profitable rates
and there can be no assurance that business will be available to the Company on terms or at prices which are
attractive to the Company, nor can there be any assurance that, to the extent that such terms or pricing exist
at the date of the Admission Document, they will continue on such terms as contracts fall to be renewed and/or
renegotiated. The Company may be sensitive to adverse market perception of its operations and services as it
operates in a market sector where confidence, integrity and trust are key. Any negative publicity about the
Company's operations and/or services may result in the Company losing business and/or clients, which may have a
material adverse affect on the Company's financial performance;
(xvii) the complexity of the products and services which the Company offers means that certain aspects of the
Company's business may involve relatively substantial risks of liability. Any litigation which may be brought
against the Company may have a material adverse affect on the financial performance and/or business of the
Company. The Company's insurance may not cover all or any of any claims which clients or other third parties
may bring against the Company or may not be sufficient to protect the Company against liability which may be
imposed on it; and
(xviii) the Company is reliant to an extent on third parties for the provision of important services which in
turn it needs to run its own business, including finance systems and processes and IT infrastructure, including
software. If any of these service providers should fail to perform to the necessary standard then this may
have a material impact on the business of the Company and its systems and its ability to discharge its
obligations to clients, any of which may have a material adverse affect on the financial performance and/or
business of the Company. The negotiation of potential acquisitions and the integration of an acquired business
or company and/or additional new personnel may result in a substantial diversion of the Company's management
resources. Acquisitions may involve additional risks on the Company, for example a decrease in the business of
the acquired business. Accordingly, the Company's ability to manage its growth through acquisitions or through
strategic investments will depend, partially, on its success in being able successfully to address and to
manage such risks. If the Company should fail successfully to implement its acquisition strategy then this may
have a material adverse affect on the business and/or financial condition of the Company.
Availability of Document
Copies of the Admission Document and Supplementary Admission Document are available free of charge from the
offices of St Helens Capital Partners LLP, 223a Kensington High Street, London W8 6SG, during normal business
hours on any weekday (Saturdays and public holidays excepted) and shall remain available for at least one month
after Admission.
The Directors of Arrowpoint Technologies Plc are responsible for the contents of this announcement.
Arrowpoint Technologies Plc