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Arcontech Group PLC (ARC)

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Friday 26 March, 2010

Arcontech Group PLC

Half Yearly Report

RNS Number : 2212J
Arcontech Group PLC
26 March 2010
 



 

 

ARCONTECH GROUP PLC

 

INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2009

Arcontech Group PLC (AIM: ARC), providers of products and services for real-time financial market data processing and trading, reports its unaudited results for the six months ended 31 December 2009.

 

Financial and business highlights:

 

·    Turnover £471,945 (six months to 31 December 2008: £466,409).

·    Loss before taxation for the period reduced to £396,775 (six months to 31 December 2008: £465,156 for continuing business).

·    Recurring revenues amount to £1.1 million (2008: £0.68 million) and now cover 58% of our cost base.

·    Net cash of £1.7 million at 31 December 2009

 

Richard Last, Chairman of Arcontech Group, said:

 

"Much of the uncertainty that has characterised the financial services markets in the recent past has diminished, and we have started to experience an increase in sales opportunities.  This together with our increased investment in Sales and Marketing resources gives us optimism for the future growth of our business."

 

 

 

 

 

Enquiries: please contact:

 

Andrew Miller (Chief Executive)

Arcontech Group PLC

020 7256 2300

Richard Last (Chairman and Non-Executive Director)

 

Arcontech Group PLC

 

01608  683108

Shane Gallwey

Astaire Securities PLC

020 7448 4474


 

 

Chairman's Statement

 

The six months ended 31 December 2009 have been a period of continued development and progress for Arcontech Group Plc ("Arcontech") and it's products, in particular the contributions and distribution software which has achieved new sales in what has been an uncertain market.

 

Turnover from continuing operations for the six month period to 31 December 2009 amounted to £471,945 (six month period to 31 December 2008: £466,409). The operating loss from continuing operations for the same period amounted to £396,775 (2008: £465,156). This reduced loss is due in the main to a reduction in the cost base of the business during the period, compared to the corresponding period in 2008. All product development costs are written off as incurred.

 

The increase in turnover for the period to 31 December 2009 appears quite modest when compared to the turnover for the same period last year. This is primarily due to the nature of the new contracts signed for our contributions and distribution software, which included a number of positions for our Excelerator real-time desktop product. Over three years these contracts are expected to amount to over £1.7 million and are being taken to revenue evenly over the period.  Had the contracts been of a more traditional licencing nature, with a large up front payment taken to revenue on delivery of the software, then turnover for the six month period to 31 December 2009 would have been substantially higher and the group would have shown an operating profit. The positive consequence of this is that annual contracted recurring revenues now amount to approximately £1.10 million compared to £0.68 million as at 30 June 2009, an increase of 62%.

 

We have continued to keep a tight rein on costs and have sought improvements in the efficiency of our operations which has led to a reduction in costs for the period. Recognising that the market opportunities for our product are starting to improve as confidence in the financial services markets returns, we have invested in additional sales and marketing personnel and expect to increase our marketing spend going forward, this will lead to an increase in the overall cost base of the business, but we believe this is essential if we are to achieve future growth. Despite this increase in costs going forward our annual contracted revenues cover 58% of our increased cost base compared to only 51% at 31 December 2008.

 

Financing

 

In September 2009 we successfully raised cash of approximately £1.5 million net of expenses by way of a placing of new ordinary shares at a price of 0.2 pence per share.  As at close of business on 31 December 2009 Arcontech had net cash balances of approximately £1.7 million; since then this has risen to nearly £2.0 million, although we expect this level to have reduced by the financial year-end due to the timing of new business and the completion of projects.  We believe that Arcontech now has the cash resources necessary to invest in business and product development and to move the company towards sustained profitability.

 

  

Management and staff

 

I should like to thank our management and staff for their continued hard work and dedication in what has clearly been a demanding time for the company.  We believe that the road ahead will be one of greater opportunity and that the skills and dedication of our team will ensure that we are able to benefit from this environment.

 

Outlook

 

Much of the uncertainty that has characterised the financial services markets in the recent past has diminished, and we have started to experience an increase in sales opportunities.  This together with our increased investment in Sales and Marketing resources gives us optimism for the future growth of our business.  However, as I have noted on previous occasions with businesses of the size of Arcontech, coupled with the difficulty in predicting the timing of contract wins and precise point of system delivery, forecasting accurately the financial results is less certain than we should like. A delay in winning or delivering any one such contract can have a significant adverse impact on the financial performance of the business in the short term.  As Arcontech continues to grow and develop the level of certainty in the performance of our business should undoubtedly improve.

 

 

Richard Last

Chairman



 

CONSOLIDATED INCOME STATEMENT for the six months ended 31 December 2009

 


 

Six months ended 31 December


Six months ended 31 December


Year ended 30 June


Notes

2009


2008


2009



£


£


£

Continuing operations







Revenue


471,945


466,409


1,395,078








Distribution costs


(11,994)


(6,352)


(37,138)








Administrative costs excluding exceptional items


(856,828)


(930,556)


(1,930,576)








Exceptional administrative costs


-


(2,103)


(2,103)















Operating loss


(396,877)


(472,602)


(574,739)








Finance income


102


7,446


8,417















Loss before taxation


(396,775)


(465,156)


 

(566,322)








Taxation

4

-


-


38,458















Loss for the period from continuing operations

 

 

(396,775)


(465,156)


 

(527,864)








Discontinued operations







 

Profit for the period after tax from discontinued operations

 

 

3

6,373


65,843


 

 

57,314















Loss for the period


(390,402)


(399,313)


(470,550)















Loss per share (basic and diluted)

 

5













From continuing operations


(0.035)p


(0.063)p


(0.072)p








From discontinued operations


0.001p


0.009p


0.008p








From continuing and discontinued operations

 

 

 

(0.034)p


 

(0.054)p


 

(0.064)p








 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET as at 31 December 2009

 


 

 

 

31 December


 

 

31 December


 

 

30 June


Notes

2009


2008


2009



£


£


£








Non-current assets







Goodwill


1,715,153


1,634,547


1,715,153

Plant and equipment


50,365


131,589


57,638















Total non-current assets


1,765,518


1,766,136


1,772,791















Current assets







Trade and other receivables


837,726


606,268


521,328

Cash and cash equivalents


1,715,070


374,478


426,710















Total current assets


2,552,796


980,746


948,038















Current liabilities







Trade and other payables


(993,694)


(736,831)


(545,772)















Total current liabilities


(993,694)


(736,831)


(545,772)















Net current assets


1,559,102


243,915


402,266















Net assets


3,324,620


2,010,051


2,175,057















Equity







Share capital


1,531,315


736,443


736,443

Shares to be issued


-


-


200,606

Share premium account


9,428,989


8,516,940


8,516,940

Share option reserve


142,392


73,105


108,742

Retained earnings


(7,778,076)


(7,316,437)


(7,387,674)

















3,324,620


2,010,051


2,175,057








 


 

CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31 December 2009

 


 

Six months ended 31 December


Six months ended 31 December


Year ended 30 June


Notes

2009


2008


2009



£


£


£

Continuing operations







 

Net cash used in operating activities

6

(222,416)


(705,110)


 

 

(687,627)








Investing activities







Interest received


102


7,446


     7,193

 

Purchases of plant and equipment


 

(2,014)


 

(1,956)


 

          (1,956)

 

Disposal of plant and equipment


 

-


 

-


 

     19,500















Net cash received/(used) in investing activities


(224,328)


(699,620)


24,737















Financing activities







Proceeds on issue of shares


1,553,270


-


-

Expenses paid in connection with share issues


 

(46,955)


 

-


 

-















Net cash generated from financing activities


 

1,506,315


 

-


                 -








Net increase /(decrease) in cash and cash equivalents from continuing operations


 

 

1,281,987


 

 

(699,620)


                            

 

(662,890)








Discontinued operations







Cash flows from operating activities


6,373


(10,757)


             4,067

Cash flows from investing activities


-


2,251


             2,929

 

Net increase /(decrease) in cash and cash equivalents from discontinued operations


 

 

6,373


 

 

(8,506)


                            

 

6,996















Net increase/(decrease) in cash and cash equivalents


1,288,360


(708,126)


(655,894)








Cash and cash equivalents at beginning of period


 

426,710


 

1,082,604


 

       1,082,604








Cash and cash equivalents at end of period


 

1,715,070


 

374,478


 

426,710








 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 December 2009

 


Share

capital

Share

premium

Share option reserve

Retained

earnings

Shares to be issued

       Total

     equity


         £

           £

         £

           £

           £

          £

At 1 July 2008

736,443

8,516,940

45,920

(6,917,124)

              -                 

2,382,179

Loss and comprehensive income for the period

 

-

 

 

-

 

 

-

 

 

(399,313)

 

                   

              -

 

(399,313)

 

Share-based payments

 

-

 

-

 

27,185

 

 

-

 

-

 

27,185

At 31 December 2008

736,443

8,516,940

73,105

(7,316,437)

              -

2,010,051

Loss and comprehensive income for the period

  

 

-

 

 

             -

 

 

-

 

 

(71,237)

 

                   

            -

 

(71,237)

 

Share-based payments

 

-

 

                 -

 

35,637

 

-

 

-

 

35,637

Recognition of equity shares to be issued

 

 

-

 

                 -

 

-

 

-

 

200,606

 

200,606

 

At 30 June 2009

736,443

8,516,940

108,742

(7,387,674)

    200,606

2,175,057

Loss and comprehensive income for the period

 

-

 

 

 

                 -

 

 

 

-

 

 

 

(390,402)

 

 

                   

              -

 

 

 

(390,402)

 

 

Issue of share capital

794,872

     912,049

-

 

 

(200,606) 

1,506,315

Share-based payments

 

-

 

                

-

 

33,650

 

 

-

 

              -

33,650

At 31 December 2009

1,531,315

9,428,989

142,392

(7,778,076)

              -

3,324,620

 

 

 

 

 

 

NOTES TO THE FINANCIAL INFORMATION for the six months ended 31 December 2009

 

1        Basis of preparation

 

The financial information for the year ended 30 June 2009 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 2009, 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.

The figures for the six months ended 31 December 2009 and 31 December 2008 are unaudited and do not constitute statutory accounts.

The Directors have elected not to apply IAS34 Interim financial reporting.

2        Accounting policies

 

          The Group's results for the six months ended 31 December 2009 have been prepared on a basis consistent with the Group's accounting policies published in the financial statements for the year ended 30 June 2009. These accounting policies reflect International Financial Reporting Standards (IFRS) and interpretations that are expected to be applicable to the Group for its financial statements for the year ending 30 June 2010.

 

 

 

3

Discontinued operations

 

On 29 August 2008 Knowledge Technology Services Limited terminated its MarketTerminal subscription service.

 


 

Six months ended 31 December


Six months ended 31 December


Year ended 30 June

 


 

2009


2008


2009

 

Results of discontinued operations


 

£


 

£


 

£

 








 

Revenue


-


-


-

 








 

Distribution costs


-


117,396


117,639

 








 

Administrative costs


6,373


(53,804)


(63,254)

 








 








 

Operating profit from discontinued operations

 

 

 

6,373


 

63,592


 

54,385

 








 

Finance income


-


2,251


2,929

 








 








 

Profit before taxation


6,373


65,843


57,314

 








 

Taxation


-


-


-

 








 








 

Profit for the period


6,373


65,843


57,314

 








 








 

Earnings per share - discontinued operations







 

(Basic and diluted)


(0.001)p


0.009p


0.010p

 








 

 

The results for the six months ended 31 December 2009 and 31 December 2008 reflect the adjustment to the provision made in respect of forecast net costs relating to the termination of the Market Terminal subscription service.

 

 

4

Taxation from continuing activities






 


Taxation is based on the unaudited results for the period and provision has been estimated at the rate applicable to the company at the time of this statement.

 

 

 

5

Earnings per share















Six months ended 31 December


Six months ended 31 December


Year ended 30 June



2009


2008


2009



£


£


£









Earnings







Earnings for the purposes of basic and diluted earnings per share being net loss attributable to equity shareholders:






 


From continuing operations

(396,775)


(465,156)


(527,864)









From discontinued operations

6,373


65,843


57,314








 


Number of shares







Weighted average number of ordinary shares for the purposes of basic earnings per share

 

 

1,147,281,895


 

 

736,442,943


 

 

736,442,943



      






Number of dilutive shares under option

 

-


 

-


 

-









Weighted average number of ordinary shares for the purposes of dilutive earnings per share

 

 

1,147,281,895


 

 

736,442,943


 

 

736,442,943








 


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.

 

6

Cash used in operations

 



Six months ended 31 December


Six months ended 31 December


Year ended 30 June



2009


2008


2009



£


£


£


Continuing operations














Operating loss

(396,877)


(472,602)


(574,739)


Depreciation charge

9,287


24,757


41,983


Non cash share option charges

33,650


27,185


62,822


Increase in trade and other receivables

 

(316,398)


 

(128,522)


 

(32,965)


Increase/(decrease) in trade and other payables

 

447,922


 

(155,928)


 

(221,953)


Loss on disposal of plant and equipment

 

-


 

-


 

37,225









Cash used in continuing  operations

 

(222,416)


 

(705,110)


 

(687,627)









Tax paid

-


-


-

















(222,416)


(705,110)


(687,627)








 

 

7

Dividends




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

 

 

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.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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