Final Results

RNS Number : 3543Z

Arcontech Group PLC

21 September 2009

 



RNS Release

21 September 2009

ARCONTECH GROUP PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2009

Arcontech Group PLC (AIM: ARC) ('Arcontech' or the 'Company'), providers of products and services for real-time financial market data processing and trading, reports its preliminary results for the year ended 30 June 2009.

Financial and business highlights:

• Revenue from continuing operations increased by 19% to £1.40m (2008: £1.18m)

• Contracted recurring revenue increased by 43% to £0.68m (2008: £0.48m)

• Group loss for the year reduced by 71% to £0.47m (2008: £1.6m)

• Continuing intention to increase investment in sales and marketing

• Name changed to Arcontech Group PLC

• Completed substantial fund raising in September 2009 amounting to approximately £1.5 million (net of expenses) - see separate announcement.

Richard Last, Chairman of Arcontech, said:

'As with many businesses of similar size to Arcontech, predicting the financial outcome over a relatively short period is always difficult and fraught with uncertainty.  The timing of contract wins and the precise point of delivery or deployment of a system is not easy to determine.  

That said, the new business won by Arcontech in the second half of the year and the increasing level of new prospects for our CityVision and AXE products, together with our recently strengthened balance sheet gives great encouragement that significant opportunities for growth exist. 

We are optimistic for the prospects of the business in the coming year.'

Enquiries, please contact:

Andrew Miller (Chief Executive)	Arcontech Group PLC	020 7256 2300
Richard Last (Chairman and Non-Executive Director)	Arcontech Group PLC	01608 683 108
Shane Gallwey	Astaire Securities PLC	020 7448 4400

Chairman's Statement

Commentary 

The year ended 30 June 2009 has been one of significant change for Arcontech Group PLC.  It brought to a close our involvement with the loss-making MarketTerminal business; the company's name was changed to Arcontech Group PLC, reflecting our focus on the CityVision market data platform and AXE, the CFD and spread betting business.  

We have also rationalised our cost base to improve our efficiency and competitiveness.  This leaves the Company well placed to benefit from the improved market conditions for our products and services which are now evident. 

Turnover from continuing operations for the year ended 30 June 2009 amounted to £1,395,078 (2008: £1,177,173). The Group reported a reduced loss for the year of £470,550 (2008: £1,637,498). Underlining this was a significant reduction in the loss for the second half of the year of £71,237 compared to £399,313 in the first half and £722,535 in the corresponding six months to June 2008, reflecting the reduction in costs and an improvement in new business activity. Contracted support revenues for the year amounted to £678,009 (2008: £473,746), representing 49% of total revenue (2008: 40%).

Having reduced our cost base and improved operational efficiency our focus is now on increasing the level of new sales. The company has the capacity to deliver increases in turnover without significantly expanding its cost base so that any increase in sales adds disproportionately to the overall level of profit achieved. 

It continues to be our intention to increase our investment in sales and marketing.  

Financing and Share Placing 

The Group had cash of £426,710 at 30 June 2009 (30 June 2008: £1,082,604) up from £374,478 at 31 December 2008.  As expected, the Arcontech business was broadly cash neutral at the operating level in the second half of the year. 

To strengthen our balance sheet and provide further support and resources for our sales and marketing drive we have, in September 2009, placed 776,635,000 shares (of which 199,750,000 are subject to shareholder approval at the Annual General Meeting) at 0.2 pence per share to raise additional funds of approximately £1.5 million, after anticipated costs.  This share placing was supported by both existing and new shareholders and we thank them for their support. 

Management and Staff

I would like to thank our management and staff for their continued hard work, commitment and dedication during what undoubtedly has been a challenging year.  

Having been through a period of cost reduction and business realignment when a number of people left the company, we are now entering a period of growth and investment and I am confident that all our staff will continue to support and contribute to the future success of the business. 

Outlook

As with many businesses of similar size to Arcontech, predicting the financial outcome over a relatively short period is always difficult and fraught with uncertainty.  The timing of contract-wins and the precise point of delivery or deployment of a system is not easy to determine.  

That said, the new business won by Arcontech in the second half of the year and the increasing level of new prospects for our CityVision and AXE products, together with our recently strengthened balance sheet gives great encouragement that significant opportunities for growth exist. 

We are optimistic for the prospects of the business in the coming year. 

         Richard Last

      Chairman

18 September 2009

Chief Executive's Review

This review comes after my first full year as CEO, one that has seen a great deal of change and some significant successes despite perhaps the worst market conditions I have ever experienced.

The year had four main themes: 

• dealing with issues following the decision to withdraw from the MarketTerminal business

• streamlining the business and reducing costs in response to the prevailing economic climate

• restructuring and building business momentum and the sales pipeline for the proven Arcontech CityVision products

• developing and enhancing products in response to customer demand

Following withdrawal from the MarketTerminal business during 2008 the group was renamed and the business refocused under the 'Arcontech Group PLC' banner.  

Regrettably staff reductions were necessary but were mostly achieved by normal staff turnover. We have the entire technical team from the time of the merger with KTS intact and, indeed, have expanded this resource, leaving us in a strong position to address market opportunities. I wish to thank the staff for their splendid efforts and support during such a difficult time.

Working with our sell-side investment banking clients, we have continued to enhance Arcontech's traditional 'CityVision' market data platform, identifying opportunities for new and existing products.

We are addressing sales and marketing of CityVision with both new and re-assigned resource. This has led to important business with major new banking clients in the second half, significantly reducing losses, greatly helping cash flow, and adding to growth in recurring annual revenue.

Increased international activity is also yielding results and we are seeing strong interest from several regions, with active product evaluations and contract negotiations in process. Our independence from the major data vendors is an important factor and is fundamental in many of these opportunities. We are the largest independent company with proven products in some areas - indeed, the only credible firm in some cases. 

The legacy track record has impeded sales progress in some instances due to concerns over financial stability. However, we believe that the improvement in this year's results, together with a strong balance sheet following the recent funding round, will counter this concern. CityVision will benefit from planned increases in sales and marketing spend over the next 12 months.

The core development of AXE, our platform for on-line and telephone trading of retail derivatives, is now substantially complete. We currently have two customers with expanding client bases - one involved with both Contracts for Difference trading (CFDs) and financial spread betting and the other with CFD trading.

The 'credit crunch' has affected the previously buoyant market for such systems. We minimised sales and marketing costs but continued to develop the product, working with our existing clients. We are seeing early signs of recovery in this area and will be increasing our sales and marketing efforts imminently.

Existing operators in this area continue to sign up new clients, often via 'white labels' for introducing brokers (IBs). We believe that there will be considerable opportunities for AXE and its component technology as larger IBs see the benefits of offering margin products directly to their retail clients and via their own IB arrangements.

Overall, I am pleased that the note of optimism expressed last year was well founded and that we have gained some significant new business. The pipeline today of identifiable, well qualified prospects is considerably stronger than it was for the corresponding period of 2008. 

I look forward to working with staff, clients and prospects to achieve the growth that we believe is possible in the coming year.

Andrew Miller

Chief Executive

18 September 2009

GROUP INCOME STATEMENT

For the year ended 30 June 2009

	Note	2009		2008
		£		£
Continuing operations
Revenue	2	1,395,078		1,177,173
Distribution costs		(37,138	)	(32,677	)
Administrative costs		(1,930,576	)	(2,287,111	)
Administrative costs - exceptional	3	(2,103	)	(222,062	)
Operating loss from continuing operations		(574,739	)	(1,364,677	)
Finance income		8,417		36,548
Loss before taxation from continuing operations		(566,322	)	(1,328,129	)
Taxation		38,458		67,754
Loss for the year from continuing operations		(527,864	)	(1,260,375	)
Discontinued operations
Profit/(loss) for the year after tax from discontinued operations		57,314		(377,123	)
Loss for the year		(470,550	)	(1,637,498	)
Earnings per share (basic and diluted)	4
From continuing operations		(0.07	)p	(0.24	)p
From discontinued operations		0.01	p	(0.07	)p
From continuing and discontinued operations		(0.06	)p	(0.31	)p

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2009

For the year ended 30 June 2009

	Share  capital	Share premium	Share option reserve	Retained earnings	Shares to be issued	Total  equity
	£	£	£	£	£	£
Balance at 1 July 2007	332,532	6,316,870	-	(5,279,626)	-	1,369,776
Loss for the year	-	-	-	(1,637,498)	-	(1,637,498)
Total recognised income and expenses  for the year	-	-	-	(1,637,498)	-	(1,637,498)
Share-based payments	-	-	45,920	-	-	45,920
Issue of equity share capital	403,911	2,200,070	-	-	-	2,603,981
Balance at 30 June 2008	736,443	8,516,940	45,920	(6,917,124)	-	2,382,179
Loss for the year	-	-	-	(470,550)	-	(470,550)
Total recognised income and expenses  for the year	-	-	-	(470,550)	-	(470,550)
Share-based payments	-	-	62,822	-	-	62,822
Recognition of equity shares to be issued	-	-	-	-	200,606	200,606
Balance at 30 June 2009	736,443	8,516,940	108,742	(7,387,674)	200,606	2,175,057

GROUP BALANCE SHEET

As at 30 June 2009

						2009 £		2008 £
Non-current assets
Goodwill						1,715,153		1,634,547
Property, plant and equipment						57,638		154,390
Investments in subsidiaries						-		-
Total non-current assets						1,772,791		1,788,937
Current assets
Trade and other receivables						521,328		563,159
Cash and cash equivalents						426,710		1,082,604
Total current assets						948,038		1,645,763
Current liabilities
Trade and other payables						(545,772	)	(1,052,521	)
Total current liabilities						(545,772	)	(1,052,521	)
Net current assets						402,266		593,242
Net assets						2,175,057		2,382,179
Equity
Called up share capital						736,443		736,443
Shares to be issued						200,606		-
Share premium account						8,516,940		8,516,940
Share option reserve						108,742		45,920
Retained earnings						(7,387,674	)	(6,917,124	)
						2,175,057		2,382,179

GROUP CASH FLOW STATEMENT

For the year ended 30 June 2009

	Note	2009		2008
		£		£
Continuing operations
Net cash used in operating activities		(687,627	)	(1,162,698	)
Investing activities
Interest received		7,193		36,548
Acquisition of subsidiary, net of cash acquired		-		(784,523	)
Purchases of plant and equipment		(1,956	)	(75,178	)
Disposal of plant and equipment		19,500		-
Net cash received/(used) in investing activities		24,737		(823,153	)
Financing activities
Proceeds on issue of shares		-		2,239,000
Expenses paid in connection with share issues		-		(130,019	)
Net cash generated from financing activities		-		2,108,981
Net (decrease)/increase in cash and cash equivalents from continuing operations		(662,890	)	123,130
Discontinued operations
Cash flows from operating activities		4,067		(519,153	)
Cash flows from investing activities		2,929		5,176
Net increase/(decrease) in cash and cash equivalents from discontinued operations		6,996		(513,977	)
Net decrease in cash and cash equivalents		(655,894	)	(390,847	)
Cash and cash equivalents at beginning of year		1,082,604		1,473,451
Cash and cash equivalents at end of year		426,710		1,082,604

NOTES TO THE PRELIMINARY ANNOUNCEMENT

For the year ended 30 June 2009

1.    Basis of preparation

The financial information presented in this preliminary announcement is extracted from, and is consistent with, the Group's audited financial statements for the year ended 30 June 2009. 

The preliminary announcement for the year ended 30 June 2009 was approved by the Board of Directors on 18 September 2009. The financial information set out above does not constitute the Company's statutory financial statements for the year ended 30 June 2009 or 2008 but is derived from those financial statements. Statutory financial statements for 2009 will be delivered to the registrar of companies following the Company's annual general meeting. The financial statements for the year ended 30 June 2009 and 2008 were reported on by the auditors without qualification or an emphasis of matter reference and did not contain a statement under section 498(2) or (3) of the Companies Act 2006 (2008: a statement under section 237(2) or (3) of the Companies Act 1985).

The Group's results have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

2. Revenue

An analysis of the Group's revenue is as follows:

		2009 £		2008 £
Financial information service, advertising and sponsorship, software development and consultancy
Continuing and discontinued operations		1,395,078		1,939,604
Discontinued operations		-		(762,431	)
Continuing operations		1,395,078		1,177,173

3. Administrative costs - exceptional:

		2009 £		2008 £
Directors' remuneration - payment in lieu of notice		2,103		135,315
(in respect of Marc Pinter-Krainer, the former Chief Executive)
Restructuring costs - office relocation expenses		-		86,747
		2,103		222,062

NOTES TO THE PRELIMINARY ANNOUNCEMENT (CONTINUED)

For the year ended 30 June 2009 (continued)

4.    Earnings per share 

		2009			2008
		£			£
Earnings
Earnings for the purpose of basic and diluted earnings per share being net profit/(loss) attributable to equity shareholders:
Continuing operations		(527,864	)		(1,260,375		)
Discontinued operations		57,314			(377,123		)
		(470,550	)		(1,637,498		)
		No.			No.
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per share		736,442,943			520,890,310
Number of dilutive shares under option		-			-
Weighted average number of ordinary shares for the purposes of dilutive earnings per share		736,442,943			520,890,310

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 fair value, based upon the monetary value of the subscription rights attached to outstanding share options. Share options are anti-dilutive and are therefore not included above.

5.     Dividends

        There were no dividends paid or proposed during the period (2008: Nil).

6.     Post balance sheet events

On 10 July 2009, the Company issued 18,236,927 shares of 0.1 pence, being the deferred consideration in 

connection with the acquisition of Arcontech Limited on 4 September 2007. The shares were issued at a price 

of 1.1 pence as per the share purchase agreement and amounted to £200,606.

On 15 September 2009, the Company placed 776,635,000 shares of 0.1 pence (of which 199,750,000 are subject to shareholder approval at the Annual General Meeting). The shares were placed at a price of 0.2 pence and amounted to £1,553,270.

7. Annual General Meeting

The annual general meeting of  the Company will be held at the Company's offices, 8th Floor, Finsbury Tower, 103-105 Bunhill Row, London EC1Y 8LZ on 29 October 2009 at 10 a.m.

NOTES TO THE PRELIMINARY ANNOUNCEMENT (CONTINUED)

For the year ended 30 June 2009 (continued)

8.     Copies of this statement

Copies of this statement are available from the Company Secretary at the Company's registered office at 8th Floor Finsbury Tower, 103-105 Bunhill Row, London, EC1Y 8LZ or from the Company's website at www.arcontech.com.

 

END

 

 

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