Arcontech Share Discussion Threads

[explorer88] 16/11/2006 14:07

Hi guys

FYI - having thoroughly researched ARC i've decided not to invest in the business. If they can hit their profit targets, then the company is certainly undervalued. However, primarily due to increasing competition, i don't think they will come close to achieving their profit targets. Even if they do get close to achieving their profit targets, i don't think that this level of profitability is sustainable. The size of the market opportunity is also relatively small, compared to other opportunities (e.g. ADA).

The key point is that there is no barrier to entry in this market - anyone can set up a competing business. The product is already being commoditised.

This para. in the statement is insightful...

"However, developing a retail product has attracted the attentions of security industry competitors who have traditionally only serviced the corporate market. Imitation may be the sincerest form of flattery but, nonetheless we are disappointed to be losing the Hiscox business, with effect from 31 December 2006, to a competitor in whom Hiscox have a significant shareholding. Over the medium term, we believe, that the effect of this will not be overly detrimental as more competition should lead to more rapid growth of the market." (hmmmm...!)

I think there are better opportunities out there (ATL, ADA, SRF) ... but good luck to all who are holding ARC.

[rcktmn] 16/11/2006 09:06

Yep.. good stuff, coming along nicely... operation loss halved again, turnover up, lots of stuff in the pipeline... still jam tomorrow but we should be turning in an op. profit when the finals are released next May (imo)... be nice to see some good press now..
Agree, the share price should slowly tick up over the coming months.. may top up again at any lower levels that come along.

[deadfred2] 16/11/2006 09:01

i know the way your thinking interger but i have a feeling this might just slowly tick up

[unionhall] 16/11/2006 08:41

Progress, but there will be opportunities to buy lower before the big surge I think. They need to get into profitability before they will fly.

[deadfred2] 16/11/2006 07:52

turnover up 42%

sales up 72%

training income up 30%

how much more % can we take

lol

[deadfred2] 16/11/2006 07:20

great results with plenty of scope for further growth

ARC Risk Management Group PLC
16 November 2006


ARC RISK MANAGEMENT GROUP PLC

INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2006

ARC Risk Management Group plc ('ARC' or the 'Group'), is a provider of security
risk management services, offering preventative and reactive advice to help
individuals avoid and manage personal risks to themselves and their families.
The products are distributed through leading international financial service
companies.

Highlights

•Operating loss halved to £212k, compared with £423k in the first half of
2005.

•Turnover up 42% to £1,270k, compared with £893k in the first half of
2005.

•New five year distribution agreement with AIG generating minimum $250k
cash flow per quarter.

•red24 sales up 72% on corresponding period last year.

•Significant overseas product launches likely in 2007, through key
distribution partners AIG and HSBC, who have over 30m potential customers.

Simon Richards, Chairman, commented:

'ARC is strongly positioned as a leading provider of security risk management
services, which are meeting the growing requirement for greater protection,
particularly for those traveling whether on business or for pleasure - a market
which, at present, remains largely untapped.

Our core division, red24, has continued to develop its relationships with key
partners AIG and HSBC and its prospects are encouraging as awareness of the
brand, and how it can assist in the financial services and insurance industries,
continues to grow.'

Enquiries:

ARC Risk Management Group plc
Simon Richards, Chairman Tel: [phone]
Simon Wakeling, Director

Threadneedle Communications
Graham Herring, Josh Royston Tel: [phone]



CHAIRMAN'S STATEMENT

Introduction

I am pleased to report that continued growth in our revenues has fed through to
an improved financial performance and a substantial reduction in the operating
loss. The most significant development of the first half of the current year has
been the signing of a five year distribution agreement with AIG International
Services for the distribution of the red24 products to the travel industry. This
provides a significant regular minimum cash flow to the Group though revenues
cannot be taken until the products are used. The potential revenue from this
project is considerable as AIG alone have over 8,000,000 travel policy holders.
Financial Overview

Turnover demonstrated a healthy 42% period on period growth to £1,270,000, while
the operating loss £212,000 for the half year compares favourably with the
operating loss of £423,000 incurred in the same period last year. The new AIG
distribution agreement supersedes the earlier agreement relating to Japan and a
one-off charge to eliminate unrecovered costs of £63,000 has been incurred. Thus
it can be seen that there has been continued progress in the direction of
breakeven and ultimately profitability. The adoption of Financial Reporting
Standard 20, relating to the pricing of share options, has led to a non-cash
charge of £15,000 in the half year, comparative figures have been restated and
over the full year a charge of £29,000 is anticipated.

The AIG distribution agreement has had a significant beneficial effect on cash
flow without, to date, much benefit to revenue and, when coupled with the
raising of a further £100,000 of loan notes and the extension of the loan notes,
due for repayment on 30 September 2006, for a further twelve months, there has
been little change to the Group's overall cash position.

red24

red24 is a global security service providing preventative and reactive advice to
help individuals avoid and manage personal risks to themselves and their
families. We have two key distribution channels, one through HSBC and the other
through AIG International Services.

In June 2005 we entered into an agreement with HSBC Bank plc to incorporate
red24's personal security service as part of HSBC's Premier banking offering and
ID imposter into their HSBC Plus banking offering. The inclusion of our offering
has helped HSBC market both these types of account and, over a twelve month
period, the numbers of clients has grown by some 50%. Each month several
thousand new customers are added and the English language service of red24 now
has sufficient mass to cover its costs on a monthly basis.

Our experience in the UK has shown that the red24 product works best when
included in a financial product on a mandatory basis as this enables us to
deliver the product at a very much lower cost without major external marketing.
Our new distribution agreement with AIG International Services recognises this
and we are working hard with them to include red24 on a mandatory basis on all
travel books. This is likely to be done on a country by country basis and it
will be some time before all countries are covered. Significant markets in the
UK and the Far East are expected to be first. Upsell opportunities to red alert
are expected to make an increasing contribution through 2007.

Between our two key distributors there are over 30 million potential customers,
of which only a little over 1 million currently receive a red24 product and
substantial growth is expected to occur just from these two agreements.
Nonetheless we are not neglecting the rest of the market place.

Significant investment in product development continues to be made. Essentially
we have developed a modular approach to the management of security risk advice
which enables us to tailor quite readily the core red24 product to meet the
needs of particular markets. The modular approach then gives an opportunity to
our distributors to purchase product upgrades appropriate to their client needs
and budgets. Our CorporateCare product continues to add some major corporate
accounts and the product is almost ready to be offered as part of a general
business insurance product by insurance companies as a way of differentiating
their offering.

red24 differs from many competing products in being able to offer response from
our own personnel to customers faced with security difficulties. However,
developing a retail product has attracted the attentions of security industry
competitors who have traditionally only serviced the corporate market. Imitation
may be the sincerest form of flattery but, nonetheless we are disappointed to be
losing the Hiscox business, with effect from 31 December 2006, to a competitor
in whom Hiscox have a significant shareholding. Over the medium term, we
believe, that the effect of this will not be overly detrimental as more
competition should lead to more rapid growth of the market.

Overall awareness of the need for security advice and of red24 in particular has
been increasing due to our PR activity and red24 personnel have appeared
regularly on Sky News, Fox and the BBC to comment on security related topics.

Consultancy

Our consultancy business has had a difficult half year and revenues from
contracts that have been held for some years have reduced due to changing market
conditions. However we have been appointed as retained advisers on new books of
business and this should translate into additional revenue as these books grow.

Training

The Training business has enjoyed an excellent start to the year with revenues
up 30% and generating good profitability. The university accredited courses are
proving popular and encouraging repeat business. Each of the three courses runs
twice a year at present but this could be expanded as demand grows. A new
trainer has been recruited to help in this expansion and to enable us to meet
growing demand for training courses overseas.
Outlook

ARC Risk Management is well positioned as a leading provider of security risk
management services to meet the growing requirement for greater protection for
those traveling, whether on business or for pleasure; the additional competition
in these markets should assist in the faster growth of the overall market and we
are well placed to win a significant share of this business.

We continue to develop our relationships with existing and new partners in the
financial service and insurance industries and envisage increasing growth in the
adoption worldwide of red24.

Simon Richards
Chairman

16 November 2006

[deadfred2] 15/11/2006 15:41

true
what is ace

[integer] 15/11/2006 13:07

yeah, I'm agreeing with you! Although I think we had an existing relationship before the finals with ACE, but I'm not going to labour it. If we end up at 5 or 6 before the next finals then I think we'll all be reasonably happy :-)

[deadfred2] 15/11/2006 08:05

so what are we saying then interger there have been or there have not been three contracts since finals

[integer] 15/11/2006 07:58

results out tomorrow. dead/union - 3 up with ACE!

[deadfred2] 15/11/2006 07:55

no news yet maybe getting held back for more new to come out

just an opinion

[unionhall] 14/11/2006 12:12

We aim to please...

[deadfred2] 14/11/2006 11:48

i thank you union

[unionhall] 14/11/2006 11:39

Well they mentioned ACE for the first time in the AGM Statement so three is correct.


Some buys ahead of interims tomorrow or Thursday....

[integer] 13/11/2006 17:48

no probs dead - thought I was missing something there....

[deadfred2] 13/11/2006 17:43

edited for the sake of interger

my mind was on other things i must appoligise

as ive stated before my posts on here are only my opinion nothing else

so any way two contracts since last finals and possibly more to come

that ok for you interger

[integer] 13/11/2006 09:43

dead - u mentioned 3 contracts since finals. we have aig and xn. must be losing it, what's the 3rd?

[wiganer] 13/11/2006 09:41

In for the first time at 1p.

[deadfred2] 13/11/2006 08:22

as the dead predicted a contract or three maybe more on the way

so lets look at this two new contracts announced since last finals directors buying with the added confidence that they think they will make 2mill by 08 but keep going the way they are and it might be well before hand

just my opinion dyor

[rcktmn] 13/11/2006 07:48

Yeh..more good news....gets better all the time

[integer] 13/11/2006 07:43

XN perhaps not so insignificant after all...

[rcktmn] 11/11/2006 10:20

I've been in ARC from about 3yrs ago @ 2p thru all the bad times and added a bit more earlier this yr (.0094p). Have believed in the product, the company and the management... it's all coming together nicely now and hope that now I'll start to reap some rewards..at the moment the company is relatively unknown, unloved and not hip...but this should all change very soon (imho) good luck to all holders.. we should see interims next week/week after at the very latest imo

[integer] 10/11/2006 21:24

DF - I concur, hence why I have a holding :-)

[deadfred2] 10/11/2006 20:53

as long as arc are reducing there losses or even stopped them then this share is due a rise imho

with two contracts and maybe one or three more before finals then im sure if it aint in profit for interims then it might be on the finals

just my opinion

[mjcrockett] 10/11/2006 18:50

Wiganer, In the Hoodless Brennan note released in August they said that 'the Interims due in November should show a good comparative turnover improvement with reduced losses'.

MJ