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Arcontech Group PLC

Arcontech Group PLC - Interim Results

RNS Number : 9664P
Arcontech Group PLC
23 February 2021
 

ARCONTECH GROUP PLC

 

("Arcontech" or the "Group")

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

 

Arcontech (AIM: ARC), the provider of products and services for real-time financial market data processing and trading, is pleased to report its unaudited results for the six months ended 31 December 2020.

 

Highlights:

 

·        Turnover increased by 4.7% to £1,542,816 (six months ended 31 December 2019: £1,473,651)

 

·        Profit before tax decreased by 8% to £506,237 (six months ended 31 December 2019: £551,847) reflecting the full cost of investment in our sales team

 

·        Annual run-rate of recurring revenues at 31 December 2020 increased by 4% to £2.98 million (at 31 December 2019: £2.87 million)

 

·        Net cash of £4,997,822 at 31 December 2020, an increase of £597,367 on the level at 31 December 2019 ( £4,400,455)

 

·        Profit before tax for the year to 30 June 2021 is expected to be in line with market expectations

 

Geoff Wicks, Chairman of Arcontech, said:

 

"The Board is pleased with Arcontech's progress in the first half of the year. While the effects of the COVID-19 pandemic have continued to overshadow the market we have grown revenue with the addition of an important new customer and a significant upgrade to an existing tier one customer. At the same time we have maintained good profit levels after investing in future growth. We believe we are in a good position to accelerate growth once market conditions improve.

 

Enquiries:

 

Arcontech Group plc

020 7256 2300

Geoff Wicks, Chairman and Non-Executive Director

 

Matthew Jeffs, Chief Executive

 

 

 

finnCap Ltd (Nomad & Broker)

020 7220 0500

Carl Holmes/Simon Hicks

 

 

 

To access more information on the Group please visit: www.arcontech.com

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

 

The interim report will only be available to view online enabling the Group to communicate in a more environmentally friendly and cost-effective manner.

 

 

Chairman's Statement

 

I was delighted to join the board of Arcontech as a Non-Executive Director in July 2020, before becoming Chairman in September 2020. I would like to thank Richard Last for his stewardship of the Company over the last thirteen years, overseeing the Company's transformation and growth to be highly profitable with an impressive blue-chip customer base.

 

In these uncertain times Arcontech has continued to perform well, with sound revenue growth but a reduction in profit before tax due to the effect of the investment in building the sales team which is expected to enhance future earnings. The market continues to be challenging with customer contact limited and decisions being delayed due to remote working.  However, the enhanced sales team is making good progress growing the list of prospective new customers, which bodes well for the future.

 

Revenue was £1.54 million, up 4.7% from £1.47 million in the previous year.  Profit before tax (PBT) was £506,237, 8% lower than the same period last year, reflecting the additional investment in sales capability. Costs continue to be under tight control. Adjusted profit before tax, which is PBT before the release of accruals for administrative costs in respect of prior years, was down 9% to £462,237.​

                                                                                                            

Our strategy is to support our existing customers and to maximise opportunities to provide a wider range of services to them. At the same time we have invested in building our sales capability to grow our customer base globally. We also continue to focus on our desktop products to augment our server-side business.

 

The enlarged sales team has made good progress reaching out to potential new customers. The prevailing market conditions have meant that the sales cycle is taking much longer than in normal times. We are pleased with the progress made and are confident that growth will improve once we are in a more normal market.

 

Financing

 

Our cash position remains excellent, with cash balances of £4,997,822 at the end of the period, £597,367 above the level at 31 December 2019 and broadly the same as the balance of £5,006,969 at June 30, 2020, after paying £333,594 in dividends. This enables us to invest in the business, maintaining our larger sales team and developing our products.

 

Dividend

 

No interim dividend is proposed to be paid in respect of the half year. The Board expects to continue its policy of paying a dividend following the announcement of its full year results.

 

Employees

 

Our staff are now all working from home and I would like to thank them for their hard work adapting to this challenge.  The Company has been able to continue to provide full support to existing customers, which has included performing software upgrades and helping with data centre moves whilst at the same time supporting proof of concept projects and progressing the development of new products.

 

Outlook

 

We expect conditions in the second half of the year to remain challenging.  It seems unlikely that our sales team will have greater access to customers until at least the end of the year, however, we are confident that we will build on current growth once market conditions improve.

 

Geoff Wicks

Chairman and Non-Executive Director

 

 

 

 

 

 

 

 

 

 

GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

 

 

 

Note

Six months ended 31

 December

 

Six months ended 31

 December

 

 

Year ended

30 June

 

 

 

2020

 

2019

 

2020

 

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

 

 

 

 

 

 

 

 

Revenue

 

 

1,542,816

 

1,473,651

 

2,955,314

 

 

 

 

 

 

 

 

Administrative costs

 

 

(1,034,043)

 

(924,211)

 

(1,917,502)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

4

508,773

 

549,440

 

1,037,812

 

 

 

 

 

 

 

 

Finance income

 

 

8,442

 

16,573

 

29,914

 

 

 

 

 

 

 

 

Finance costs

 

 

(10,978)

 

(14,166)

 

(26,757)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

 

506,237

 

551,847

 

1,040,949

 

 

 

 

 

 

 

 

Taxation

 

6

-

 

9,734

 

176,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period after tax

 

 

 

506,237

 

561,581

 

 

1,217,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

506,237

 

561,581

 

1,217,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit per share (basic)

 

 

3.82p

 

4.25p

 

9.22p

 

 

 

 

 

 

 

 

Adjusted* Profit per share (basic)

 

 

3.49p

 

3.93p

 

8.56p

 

 

 

 

 

 

 

 

Profit per share (diluted)

 

 

3.76p

 

4.17p

 

9.03p

 

 

 

 

 

 

 

 

Adjusted* Profit per share (diluted)

 

 

3.43p

 

3.85p

 

8.39p

 

 

 

All of the results relate to continuing operations and there was no other comprehensive income in the period.

* Before release of accruals for administrative costs in respect of prior years.

 

GROUP BALANCE SHEET
 

 

 

 

Note

 

31 December 2020

 

 

31 December 2019

 

 

30 June

2020

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

Non-current assets

 

 

 

 

 

 

Goodwill

 

1,715,153

 

1,715,153

 

1,715,153

Property, plant and equipment

 

15,697

 

17,084

 

19,316

Right of use asset

10

438,908

 

588,212

 

512,061

Deferred tax asset

 

452,000

 

285,000

 

452,000

Trade and other receivables

 

141,750

 

141,750

 

141,750

 

 

 

 

 

 

 

Total non-current assets

 

2,763,508

 

2,747,199

 

2,840,280

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Trade and other receivables

 

759,655

 

608,910

 

192,632

Cash and cash equivalents

 

4,997,822

 

4,400,455

 

5,006,969

 

 

 

 

 

 

 

Total current assets

 

5,757,477

 

5,009,365

 

5,199,601

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

(643,512)

 

(694,215)

 

(655,907)

Deferred income

 

(1,483,908)

 

(1,513,941)

 

(1,195,130)

Lease liabilities

10

(162,000)

 

(162,000)

 

(141,693)

 

 

 

 

 

 

 

Total current liabilities

 

(2,289,420)

 

(2,370,156)

 

(1,992,730)

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Lease liabilities

10

(253,974)

 

(392,405)

 

(344,303)

 

 

 

 

 

 

 

Total non-current liabilities

 

(253,974)

 

(392,405)

 

(344,303)

 

 

 

 

 

 

 

Net current assets

 

 3,468,057

 

 2,639,209

 

3,206,871

 

 

 

 

 

 

 

Net assets

 

5,977,591

 

4,994,003

 

5,702,848

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

1,661,314

 

1,651,314

 

1,651,314

Share premium account

 

65,381

 

56,381

 

56,381

Shares to be issued

 

31,642

 

-

 

-

Share option reserve

 

206,797

 

145,352

 

188,639

Retained earnings

 

4,012,457

 

3,140,956

 

3,806,514

 

 

 

 

 

 

 

 

 

5,977,591

 

4,994,003

 

5,702,848

 

 

 

 

 

 

 

 

GROUP CASH FLOW STATEMENT

 

 

 

Note

Six months ended 31

December

 

Six months ended 31

December

 

Year ended

30 June

 

 

 

2020

 

2019

 

2020

 

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

 

 

 

 

 

 

 

 

 

 

Cash generated from operating activities

 

9

336,866

 

646,861

 

 

 

1,315,421

 

 

 

 

 

 

 

 

Tax recovered

 

6

-

 

9,734

 

9,734

 

 

 

 

 

 

 

 

Net cash generated from operating activities

 

 

336,866

 

656,595

 

 

1,325,155

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest received

 

 

8,442

 

16,573

 

29,914

 

Purchases of plant and equipment

 

 

 

(1,482)

 

 

(5,772)

 

 

 (12,750)

 

 

 

 

 

 

 

 

Net cash generated from investing activities

 

 

 

6,960

 

 

10,801

 

 

            17,164

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from the exercise of options

 

 

50,642

 

-

 

-

 

 

 

 

 

 

 

 

Dividends paid

 

 

(333,594)

 

(263,591)

 

(263,591)

 

 

 

 

 

 

 

 

Payment of lease liabilities

 

 

(70,021)

 

(66,834)

 

(135,243)

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

 

(352,973)

 

(330,425)

 

(398,834)

 

 

Net (decrease) / increase in cash and cash equivalents

 

 

 

 

(9,147)

 

 

 

336,971

 

 

 

         943,485

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

 

5,006,969

 

 

4,063,484

 

 

       4,063,484

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

 

4,997,822

 

4,400,455

 

      5,006,969

 

 

GROUP STATEMENT OF CHANGES IN EQUITY 

 

 

Share

capital

Share

premium

Shares to be issued

Share-based payments reserve

Retained

earnings

 Total

 

 

                £

                 £

                 £

               £

                £

                £

At 1 July 2019

1,651,314

56,381

-

56,366

2,011,689

3,775,750

Total comprehensive income for the period

 

-

 

 

-

 

 

-

 

 

-

 

 

561,581

 

561,581

Dividends paid

-

-

-

-

(263,591)

(263,591)

Share-based payments

-

-

-

45,705

-

45,705

At 31 December 2019

1,651,314

56,381

-

145,352

3,140,956

4,994,003

Total comprehensive income for the period

 

 

 

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

656,122

 

656,122

 

Share-based payments

 

-

 

-

 

-

 

52,723

 

-

52,723

Realisation of share option reserve

 

-

 

-

 

-

 

(9,436)

 

9,436

-

At 30 June 2020

1,651,314

56,381

-

188,639

3,806,514

5,702,848

Total comprehensive income for the period

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

506,237

 

506,237

Exercise of options

10,000

9,000

31,642

-

-

50,642

Transfer between reserves

-

-

-

(33,300)

33,300

-

Dividends paid

-

-

-

-

(333,594)

(333,594)

Share-based payments

 

-

-

-

 

51,458

 

 

-

 

51,458

 

At 31 December 2020

1,661,314

65,381

31,642*

206,797

4,012,457

5,977,591

 

 

* At 31 December 2020 £31,642 had been received from an optionholder as subscription funds to acquire 37,301 Ordinary Shares in the Company. The shares were issued post reporting date on 25 January 2021.

NOTES TO THE FINANCIAL INFORMATION

 

1.    The figures for the six months ended 31 December 2020 and 31 December 2019 are unaudited and do not constitute statutory accounts. The interim results have been prepared on a going concern basis using accounting policies which are consistent with International Financial Reporting Standards as adopted by the European Union and with the accounting policies adopted in the most recent annual financial statements to 30 June 2020. 

2.   The financial information for the year ended 30 June 2020 set out in this interim report does not comprise the Group's statutory accounts as defined in section 434 of the Companies Act 2006. The statutory accounts for the year ended 30 June 2020, which were prepared under International Financial Reporting Standards (IFRS) as adopted for use in the EU, applied in accordance with the provisions of the Companies Act 2006, have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

3.   Copies of this statement are available from the Company Secretary at the Company's registered office at 1st Floor 11-21 Paul Street, London, EC2A 4JU or from the Company's website at www.arcontech.com.

4.   Operating profit is stated after release of accruals for administrative expenses in respect of prior years of £44,000 (31 December 2019: £42,500; 30 June 2020: £86,500).

5.   Earnings per share have been calculated based on the profit after tax and the weighted average number of shares in issue during the half year ended 31 December 2020 of 13,259,206 (31 December 2019: 13,210,510; 30 June 2020: 13,210,510).

The number of dilutive shares under option at 31 December 2020 was 214,217 (31 December 2019: 256,341; 30 June 2020: 268,484). The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options. A calculation is done to determine the number of shares that could have been acquired at the average market price during the period, based upon the issue price of the outstanding share options including future charges to be recognised under the share-based payment arrangements.

6.   Taxation is based on the unaudited results and provision has been estimated at the rate applicable to the Company at the time of this statement and expected to be applied to the total annual earnings. No corporation tax has been charged in the period as any liability has been offset against tax losses brought forward from prior years. The tax credit represents the cash recovery of Research & Development tax credits during the period.

7.   A final dividend in respect of the year ended 30 June 2020 of 2.5 pence per share (2019: 2.0 pence per share) was paid on 9 October 2020.

8.   The Directors have elected not to apply IAS 34 Interim financial reporting.

 

 

 

 

9.   Cash generated from operations

 

 

Six months ended 31

December

 

Six months ended 31

December

 

Year ended

30 June

 

 

 

 

 

2020

 

2019

 

2020

 

 

 

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

508,773

 

549,440

 

1,037,812

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation charge

 

78,254

 

77,226

 

154,747

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash share option charges

 

51,457

 

45,705

 

98,428

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease interest paid

 

(10,978)

 

(14,166)

 

(26,757)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment for adoption of IFRS 16

 

-

 

(40,500)

 

(37,125)

 

 

 

 

(Increase)/decrease in trade and other receivables

 

(567,023)

 

(345,035)

 

 

 

71,244

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in trade and other payables

 

276,383

 

374,191

 

 

17,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash generated from operations

 

336,866

 

646,861

 

1,315,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     
 

 

10. Leases

 

As a lessee, under IFRS 16 the Group recognises right-of-use assets and lease liabilities for all leases on its balance sheet. The only lease applicable under IFRS 16 is the Group's office.

 

The key impacts on the Statement of Comprehensive Income and the Statement of Financial Position are as follows:

 

Right of use asset

£

 

Prepayments

 

£

 

Lease liability

£

 

Income statement

£

As at 1 July 2020

512,061

 

-

 

(485,996)

 

-

 

 

 

 

 

 

 

 

Depreciation

(73,153)

 

-

 

-

 

(73,153)

Interest

-

 

-

 

(10,978)

 

(10,978)

Lease payments

-

 

-

 

81,000

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying value at 31 December 2020

438,908

 

-

 

(415,974)

 

(84,131)

 

 

 

 

 

 

 

 

 

 

 

Right of use asset

£

 

Prepayments

 

£

 

Lease liability

£

 

Income statement

£

As at 1 July 2019

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

Recognised on adoption of IFRS 16

661,739

 

(40,500)

 

(621,239)

 

-

Depreciation

(73,527)

 

-

 

-

 

(73,527)

Interest

-

 

-

 

(14,166)

 

(14,166)

Lease payments

-

 

-

 

81,000

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying value at 31 December 2019

588,212

 

(40,500)

 

(554,405)

 

(87,693)

 

 

 

 

 

 

 

 

 

 

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