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TWST: Can we start with a brief introduction to Financial Objects (London: FIO.L)?

Mr. Carruthers: Financial Objects was founded seven years ago to develop Microsoft based software for the banking sector. Our software is browser-based, so from the very beginning it ran over the Internet. This was actually quite unusual at the time because the Internet by no means was the force that it is at now. All of our ActiveBank software is component-based, so everything we build is from objects; it is like providing a bank in a box that allows us to assemble customized systems without actually writing much new code. Financial Objects supply software for both retail and wholesale banks. Our Wholesale Banking system uses a combination of IBM AS/400 and Microsoft technology and is called IBIS/S2. We have several hundred customers around the world using this system, including about 12 in the United States. Financial Objects is now driving forward to exploit technology for universal banks. Universal Banks are generally strong retail banks with large numbers of DDA or Retail banking customers, big lenders supporting large numbers of lending customers, and providing modern banking via call centers and the Internet. Our company has its head offices in the UK and we have offices in New York, Luxembourg, Prague, Singapore and Hong Kong.

TWST: What are you doing to position the company for an increase in IT spend by the financial institutions?

Mr. Carruthers: We have costs under strict control and we are focusing our efforts on opportunities that are really going to happen. So, we focus on key markets and sectors rather than trying to sell to the entire world, and, at this stage, in anticipation of a future increase in IT spend, we are establishing some strong distribution partners. Our plan for this year is to continue controlling costs, improving our products and bringing on line a number of our bigger customers who are currently installing. But most importantly, as I have said, we have signed agreements with several companies to represent us in areas that we do not cover to be ready to take advantage of any upturn in the market.

TWST: You are still investing in the products then?

Mr. Carruthers: Yes. We have continued to invest in new products. Interestingly the R&D investments we made in 2001 in the treasury and money market areas of our software created our largest area of new business in 2002. In fact, most of our sales made in 2002 would not have been made without the investment we made in the previous year. So we are continuing to invest. We invest in technology. We have moved quickly in embracing Microsoft .Net technology. We continue to strengthen our relationship with Microsoft. We are key innovators and deployers of Microsoft technology, and Microsoft recognize this and assist us in many ways but technology without strong business functionality will not sell, so we continue to onward develop our banking functionality.

TWST: What about the U.S. market?

Mr. Carruthers: The U.S. should be a very interesting market for our new retail banking systems with its huge number of smaller retail banks. Our products are now mature and ready for deployment and our experience in servicing banks over the past 10 years has enabled us to build up good expertise. The U.S. market embraces modern technology so we do feel that there are good opportunities for us there. We conform to all the US regulations from a systems perspective so we believe the time is ready for us to increase our efforts in the USA. However, we do not believe this is a market that can be sold to without making a real investment in a sales and marketing effort and this would probably best be achieved in partnership with local partners.