Gulf starts at Sheikh Adi-2 25/05/2012
Iraq-focused oil explorer Gulf Keystone Petroleum (GKP) has begun drilling at the Sheikh Adi-2 well in the Sheikh Adi block.
Loss making Keystone says profits in sight
Even after an £8.4 million loss last year, business software developer Keystone expects to make money next time, writes Elliott Davis.
Claes Hultman, who became chairman of techMARK-listed Keystone (KYS) two weeks before March's year end, claims the company remains on track to achieve 'sustained annual profitability in the year to March 2002'. This is after a year in which losses soared from £200,000 to £8.4 million on turnover down by £300,000 to £4.5 million.
Some in the City believe Hultman seems slightly overconfident. But finance director Steve Kirk insists that the sale of Keystone's flagship time and billing product Keystone Professional to six US law firms represents a significant step in the right direction.
Kirk also suggests that revenues will continue to flow from 'lower ticket value' financial analytic offering Net Results (which retails for around £150,000). He adds that a new strategic partnership with US giant Oracle has 'given a lot of confidence to our buyers'.
Yet, even after a £3 million reduction in operating costs (accounted for by a 22 per cent reduction in staff numbers), Keystone still expects to have annual outgoings of £9 million. After all, £2.2 million of the £11.4 million raised in February was spent within a month, to pay off creditors.
Tom Christianson of house broker Investec Henderson Crosthwaite remains upbeat, forecasting a £2.5 million pre-tax profit for the coming year on £11.7 million of sales.
He quotes Hultman's pledge to 'make money for shareholders in one way or another'! Some other analysts think this seems a tall order from Keystone's current position.
In spite of the disappointing figures, the shares rose a quarter of a penny to 23.5p.
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