Interim Results

RNS Number : 6319C
Arcontech Group PLC
24 February 2022
 

 

 

 

ARCONTECH GROUP PLC

 

("Arcontech" or the "Group")

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2021

 

Arcontech (AIM: ARC), the provider of products and services for real-time financial market data processing and trading, reports its unaudited results for the six months ended 31 December 2021.

 

Overview:

 

· Turnover decreased by 3.9% to £1,451,298 (H1 2020: £1,542,816) due to the challenging trading environment

 

· Profit before tax decreased by 15.3% to £428,924 (H1 2020: £506,237) reflecting higher investment in sales and lower exceptional profit

 

· Our preferred measure of profit before tax which excludes the release of accruals unrelated to the underlying business declined by 8.2% to £424,425 (H1 2020: £462,238)

 

· Recurring revenues represented 98% of total revenues for the period (H1 2020: 97%).

 

·   Net cash of £5,620,352   at 31 December 2021, up 12.5% (H1 2020: £4,997,822)

 

· Profit before tax for the year to 30 June 2022 is expected to be in line with revised market expectations

 

 

Geoff Wicks, Chairman of Arcontech, said:

 

" The Board is confident that we remain well placed to return to growth as the market returns to pre-pandemic normality. Our desktop products and our server-side business are well embedded in our customer base, our business remains robust with good profitability and we believe the work our sales team is doing will produce future growth."

 

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/Tim Harper

 

 

 

 

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

 

Although the pandemic which has overshadowed our performance for nearly two years remains a significant drag on our short-term growth we continue to have a robust and profitable business with a high proportion of recurring revenue (98%) and a strong balance sheet. As reported in November 2021, we lost two contracts where customers were reducing their spend, which will impact our financial performance both in this and the next financial year.

 

We retain a very impressive customer list and continue to build a strong list of potential new customers. However, the market remains challenging with few of our customers growing or making changes in areas of their businesses that we serve. Our investment in building our sales team will continue as we believe that there is strong pent-up demand which will be available to us once markets return to normal, allowing for face-face sales activities.

 

Revenue was £1.48 million, down 3.9% from £1.54 million in the comparative six month period, reported profit before tax ("PBT") was £0.43 million, 15.6% lower than the same period last year reflecting the loss of revenue, our continuing investment in sales capability and lower exceptional profit. Our preferred measure of PBT, adjusted to exclude the release of accruals for administrative costs in respect of prior years was down 8.2% to £0.42 million.​ These costs are not related to the underlying business and amounted to £4,500 (H1 2020: £44,000).

 

Financing

 

Our balance sheet remains very robust with net cash of £5.6 million, £0.6 million higher than at 31 December 2020, and £0.2 million higher than the level at 30 June 2021 providing resources for continued investment in sales and products and a small complementary acquisition.

 

Dividend

 

No interim dividend is proposed to be paid in respect of the half year (2020: nil). The Board expects to continue its policy of paying a dividend following the announcement of its full year results.

 

Outlook

 

We believe our strategy to support our existing customers to maximise opportunities while building our sales capability to grow our customer base globally remains the right way to proceed. Our desktop products and our server-side business are well embedded in our customer base and we expect growth as their businesses return to pre-pandemic normality.

 

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

 

 

 

2021

 

2020

 

2021

 

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

 

 

 

 

 

 

 

 

Revenue

 

 

1,452,498

 

1,542,816

 

2,988,842

 

 

 

 

 

 

 

 

Administrative costs

 

 

(1,021,879)

 

(1,034,043)

 

(1,945,481)

 

 

 

 

 

 

 

 

Operating profit

 

4

430,619

 

508,773

 

1,043,361

 

 

 

 

 

 

 

 

Finance income

 

 

6,521

 

8,442

 

13,260

 

 

 

 

 

 

 

 

Finance costs

 

 

(8,216)

 

(10,978)

 

(20,307)

 

 

 

 

 

 

 

 

Profit before taxation

 

 

428,924

 

506,237

 

1,036,314

 

 

 

 

 

 

 

 

Taxation

 

6

-

 

-

 

10,796

 

 

 

 

 

 

 

 

Profit for the period after tax

 

 

 

428,924

 

506,237

 

 

1,047,110

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

428,924

 

506,237

 

1,047,110

 

 

 

 

 

 

 

 

Profit per share (basic)

 

 

3.21p

 

3.82p

 

7.88p

 

 

 

 

 

 

 

 

Adjusted* Profit per share (basic)

 

 

3.18p

 

3.49p

 

7.22p

 

 

 

 

 

 

 

 

Profit per share (diluted)

 

 

3.20p

 

3.76p

 

7.79p

 

 

 

 

 

 

 

 

Adjusted* Profit per share (diluted)

 

 

3.16p

 

3.43p

 

7.14p

 

 

 

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 2021

 

 

31 December 2020

 

 

30 June

2021

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

Non-current assets

 

 

 

 

 

 

Goodwill

 

1,715,153

 

1,715,153

 

1,715,153

Property, plant and equipment

 

7,489

 

15,697

 

11,147

Right of use asset

10

292,606

 

438,908

 

365,758

Deferred tax asset

 

471,000

 

452,000

 

471,000

Trade and other receivables

 

141,750

 

141,750

 

141,750

 

 

 

 

 

 

 

Total non-current assets

 

2,627,998

 

2,763,508

 

2,704,809

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Trade and other receivables

 

322,885

 

759,655

 

470,317

Cash and cash equivalents

 

5,620,352

 

4,997,822

 

5,395,457

 

 

 

 

 

 

 

Total current assets

 

5,943,237

 

5,757,477

 

5,865,774

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

(553,435)

 

(643,512)

 

(554,101)

Deferred income

 

(1,017,829)

 

(1,483,908)

 

(1,089,306)

Lease liabilities

10

(151,948)

 

(162,000)

 

(148,450)

 

 

 

 

 

 

 

Total current liabilities

 

(1,723,212)

 

(2,289,420)

 

(1,791,857)

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Lease liabilities

10

(118,994)

 

(253,974)

 

(195,853)

 

 

 

 

 

 

 

Total non-current liabilities

 

(118,994)

 

(253,974)

 

(195,853)

 

 

 

 

 

 

 

Net current assets

 

 4,220,025

 

 3,468,057

 

4,073,917

 

 

 

 

 

 

 

Net assets

 

6,729,029

 

5,977,591

 

6,582,873

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

1,671,601

 

1,661,314

 

1,651,314

Share premium account

 

115,760

 

65,381

 

92,360

Shares to be issued

 

-

 

31,642

 

-

Share option reserve

 

290,713

 

206,797

 

271,207

Retained earnings

 

4,650,955

 

4,012,457

 

4,553,329

 

 

 

 

 

 

 

 

 

6,729,029

 

5,977,591

 

6,582,873

 

 

 

 

 

 

 

 

 

 

GROUPCASH FLOW STATEMENT

 

 

 

Note

Six months ended 31

December

 

Six months ended 31

December

 

Year ended

30 June

 

 

 

2021

 

2020

 

2021

 

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

Cash generated from operating activities

 

9

630,439

 

336,866

 

 

809,559

 

 

 

 

 

 

 

 

Tax recovered

 

6

-

 

-

 

(8,204)

 

 

 

 

 

 

 

 

Net cash generated from operating activities

 

 

630,439

 

336,866

 

 

801,355

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest received

 

 

6,521

 

8,442

 

13,260

 

Purchases of plant and equipment

 

 

 

(527)

 

 

(1,482)

 

 

 (1,482)

 

 

 

 

 

 

 

 

Net cash generated from investing activities

 

 

 

5,994

 

 

6,960

 

 

  11,778

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from the exercise of options

 

 

29,024

 

50,642

 

50,642

 

 

 

 

 

 

 

 

Dividends paid

 

 

(367,202)

 

(333,594)

 

(333,594)

 

 

 

 

 

 

 

 

Payment of lease liabilities

 

 

(73,360)

 

(70,021)

 

(141,693)

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

 

(411,538)

 

(352,973)

 

(424,645)

 

 

Net (decrease) / increase in cash and cash equivalents

 

 

 

 

224,895

 

 

 

(9,147)

 

 

 

  388,488

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

 

5,395,457

 

 

5,006,969

 

 

 5,006,969

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

 

5,620,352

 

4,997,822

 

  5,395,457

 

GROUP STATEMENT OF CHANGES IN EQUITY 

 

 

 

 

Share

capital

Share

premium

Shares to be issued

Share-based payments reserve

Retained

earnings

 Total

 

 

  £

  £

  £

  £

  £

  £

At 1 July 2020

1,651,314

56,381

-

188,639

3,806,514

5,702,848

Profit for the period

-

-

-

-

506,237

506,237

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

Total transactions with owners

10,000

9,000

31,642

18,158

(300,294)

(231,494)

At 31 December 2020

1,661,314

65,381

31,642[1]

206,797

4,012,457

5,977,591

Profit for the period

-

-

-

-

540,872

540,872

Total comprehensive income for the period

-

-

-

-

540,872

540,872

Exercise of options

4,663

26,979

(31,642)

-

-

-

Share-based payments

-

-

-

64,410

-

64,410

Total transactions with owners

4,663

26,979

(31,642)

64,410

-

64,410

At 30 June 2021

1,665,977

92,360

-

271,207

4,553,329

6,582,873

Profit for the period

-

-

-

-

428,924

428,924

Total comprehensive income for the period

-

-

-

-

428,924

428,924

Exercise of options

5,624

23,400

-

-

-

29,024

Transfer between reserves

-

-

-

(35,904)

35,904

-

Dividends paid

-

-

-

-

(367,202)

(367,202)

Share-based payments

-

-

-

55,410

-

55,410

Total transactions with owners

5,624

23,400

 

19,506

(331,298)

(282,768)

At 31 December 2021

1,671,601

115,760

-

290,713

4,650,955

6,729,029

 

NOTES TO THE FINANCIAL INFORMATION

 

1.  The figures for the six months ended 31 December 2021 and 31 December 2020 are unaudited and do not constitute statutory accounts. The accounting policies adopted are consistent with those applied by the Group in the preparation of the annual consolidated financial statements for the year ended 30 June 2021. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. Several amendments and interpretations apply for the first time in 2021, but these do not have a material impact on the interim condensed consolidated financial statements of the Group. 

2.  The financial information for the year ended 30 June 2021 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 2021, which were prepared under international accounting standards in conformity with the requirements 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 £4,500 (31 December 2020: £44,000; 30 June 2021: £88,000).

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 2021 of 13,355,719 (31 December 2020: 13,259,206; 30 June 2021: 13,290,672).

The number of dilutive shares under option at 31 December 2021 was 62,727 (31 December 2020: 214,217; 30 June 2021: 143,168). 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.

7.  A final dividend in respect of the year ended 30 June 2021 of 2.75 pence per share (2020: 2.50 pence per share) was paid on 8 October 2021.

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

 

 

 

 

 

2021

 

2020

 

2021

 

 

 

 

 

(unaudited)

£

 

(unaudited)

£

 

(audited)

£

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

430,619

 

508,773

 

1,043,361

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation charge

 

77,337

 

78,254

 

155,954

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash share option charges

 

55,410

 

51,457

 

115,867

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease interest paid

 

(8,216)

 

(10,978)

 

(20,307)

 

 

 

 

Decrease/(increase) in trade and other receivables

 

147,432

 

(567,023)

 

 

 

(277,686)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Decrease)/increase in trade and other payables

 

(72,143)

 

276,383

 

 

(207,630)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash generated from operations

 

630,439

 

336,866

 

809,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

            
 

 

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 2021

365,758

 

-

 

(344,303)

 

-

 

 

 

 

 

 

 

 

Depreciation

(73,152)

 

-

 

-

 

(73,152)

Interest

-

 

-

 

(7,640)

 

(7,640)

Lease payments

-

 

-

 

81,000

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying value at 31 December 2021

292,606

 

-

 

(270,943)

 

(80,792)

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

[1] 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.

 

 

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