Confidence is returning to financial markets and we are noting budget allocations being made for the enhancement and replacement of risk management systems. In particular, there has been a distinct increase in the number of worldwide opportunities as regulatory direction becomes clearer. The CPSS-IOSCO policy guidance for central counterparties (CCPs) that clear over-the-counter (OTC) derivatives products, released in May 2010, emphasises the critical importance of robust and comprehensive risk management systems.
As a result of these market conditions, the company has more leads for new business than at the corresponding time last year.
Two clients have exercised their options to use Razor on a broader basis throughout their organisations and longer term incremental contracts exceeding $3m have been won in recent weeks. The company is also in ongoing discussions with a number of new prospects. One, for a significant license and implementation of Razor, is in an advanced state and may be close to conclusion. As a result of the uncertainty as to deals consummating in June, they have been quarantined from financial year end forecast. Current projections for FY2010 are for a reported EBITA profit of between $625,000 and $725,000 and, utilising prior tax losses under AASB 112, an estimated after tax net operating profit of between $1.5m and $1.8m. This guidance is subject to statutory audit and a review by the Directors of the carrying value of Goodwill as at 30th June 2010.
Ellis Bugg, Chairman, Razor Risk Technologies, said: âIt is pleasing to see that the company forecasts, and should achieve, a fourth consecutive half yearly profit. Moreover, the most recent results have been achieved in very trying market conditions and without the benefit of a new major licence sale. These results are testament to the steps taken over the past two years to put the company on a sustainable footingâ.
He then added, âManagement continues to focus on leading high performance Razor-based risk management solutions and on profit protection. Accordingly the Chennai-based development of PTX product in India will be closed this month (the development and support for PTX has already been transitioned to the companyâs existing centres in Melbourne and Sydney). The annualised cash benefit of the change is estimated at $325,000â.
As reported at the half year to 31/12/09, a significant portion of the companyâs revenues are denominated in United States dollars and British pounds. There have been extensive fluctuations in foreign currencies throughout the current year and the companyâs ability to adequately protect against these swings was constrained by limited hedge facilities. Accordingly, the companyâs management undertook a review of its banking facilities and aided by the companyâs improved financial position, management negotiated enhanced foreign currency facilities as well as overdraft facilities.
Research and Development
The company increased its expenditure on research and development and as a result will launch Razor 3.0 early in the new financial year. The new release culminates over two years of developments in real-time performance improvements and the ongoing expansion of risk analytics, as well as extensive functional enhancements and enhanced product coverage.
Andrew Wood, Chief Executive Officer, Razor Risk Technologies, said: âOur top priority is to ensure that our clientsâ Razor risk solutions keep exceeding their current needs and lead the market in high performance risk systems. Our clients need to respond to the changing regulatory environment and this requires a flexible risk framework that can be readily adapted to their business requirementsâ.
The company anticipates releasing its full year audited financial statements in the middle of August 2010.