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Arcontech Group PLC (ARC)

  Print      Mail a friend       Annual reports

Monday 26 July, 2010

Arcontech Group PLC

Preliminary Results

RNS Number : 8605P
Arcontech Group PLC
26 July 2010
 



 

ARCONTECH GROUP PLC

 

("Arcontech" or the "Company")

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2010

 

Arcontech Group PLC (AIM: ARC), providers of products and services for real-time financial market data processing and trading, reports its preliminary results for the year ended 30 June 2010.

 

Financial and business highlights

 

Ø Contracted future annual recurring revenues as at 30 June 2010 increased by 59% to £1.08m (2009: £0.68m)

Ø Turnover for the year was £1.07m (2009: £1.4m) reflecting the move towards recurring rental model

Ø Contracts secured for CityVision contributions and distribution software in excess of £1.7m over 3 years

Ø Group operating loss for the year was £0.9m (2009: £0.6m)

Ø Had all new contracts signed during the year been traditional licence sales the results would have shown a marked improvement over 2009

Ø Existing products enhanced and continuing intention to invest in product development

Ø Cash balances at 30 June 2010 £1.6m (2009: £0.4m)

 

Richard Last, Chairman of Arcontech, said:

 

"The business has significant prospects for new sales with leading investment banks and other financial institutions. Evaluations of our products are presently taking place in a number of organisations.  However, the length of time now being taken to make purchasing decisions is increasing and invariably needs sign-off at higher levels in the respective organisations. This is almost certainly a result of the tighter financial controls now operating throughout business generally.  Consequently we are unable to predict with any degree of certainty the timing of contract wins.  We are, however, optimistic regarding the opportunities that we believe exist and the company has the financial resources necessary to continue to operate despite these delays."

 

 

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 7492 4750

 

Chairman's Statement

 

Commentary

 

The year ended 30 June 2010 has been disappointing as the Group did not achieve the new sales wins that it had anticipated in the second half of the year. Turnover for the year was £1,068,776 (2009: £1,395,095) and the operating loss from continuing activities was £918,754 (2009: £574,739).  Our success in promoting a licence rental model for new contracts (rather than an outright sale basis) has increased the quality and visibility of our future revenues. Inevitably this has reduced the reported performance in the year to 30th June 2010. Had all new contracts signed during the year been traditional licence sales the results would have shown a marked improvement over 2009. Nonetheless we believe our strategy is right for the business.

 

As at 30 June 2010 the contracted future annual recurring revenues of the business were £1,081,668 compared to £678,009 in 2009. This increase reflects the new international business won last year and in the first half of the year, the value of which is recognised over the life of the contracts.  The level of recurring contracted revenue remains a key strength of the business going forward.  These revenues now cover approximately 54% of our expected cost base compared to 34% in 2009 

 

The Group is now fully focussed on the CityVision market data platform and on AXE, the CfD and spread betting solution.  We believe good opportunities exist for these products albeit that the decision making process with regard to new sales has lengthened significantly.

 

During the year we continued to invest in the development of our software products. All related costs are expensed as incurred.  CityVision has now been developed to work on the Solaris platform and we expect this to be rolled out by one of our existing major customers during the current year.  Our Excelerator product is gaining market recognition through trials and although new sales are slow at present, prospects remain high.  Significant development has taken place in respect of our AXE product, particularly to increase its functionality, reliability and throughput.  Future product development will continue in order to meet customer needs and also to address new market opportunities as they present themselves. We do, however, expect this level of development to reduce, enabling more technical and consulting resource to be applied to revenue generating work. 

 

Financing

 

As at 30 June 2010 Arcontech had net cash balances of £1,586,376, having raised £1,505,495 (net of expenses) by the issue of new ordinary shares earlier in the year.  This level will reduce whilst trading losses continue, but we are optimistic that new sales, which should require little additional resources in order to be delivered, will significantly reduce the cash absorption going forward.

 

Management and Staff

 

Once again I should like to thank our staff and management for their continued hard work and dedication.  Our team has remained positive and hardworking despite the frustrations of delays in winning new business which when achieved will, we believe, ultimately provide great opportunity for all.

 

Outlook

 

The business has significant prospects for new sales with leading investment banks and other financial institutions. Evaluations of our products are presently taking place in a number of organisations.  However, the length of time now being taken to make purchasing decisions is increasing and invariably needs sign-off at higher levels in the respective organisations. This is almost certainly a result of the tighter financial controls now operating throughout business generally.  Consequently we are unable to predict with any degree of certainty the timing of contract wins.  We are, however, optimistic regarding the opportunities that we believe exist and the Group has the financial resources necessary to continue to operate despite these delays.

 

Richard Last

Chairman

 

23 July 2010

 

Chief Executive's Review

 

This year has been one of mixed fortunes. It was disappointing in terms of bottom-line financial performance yet with considerable progress on product development and some notable successes, particularly in international territories and larger accounts.

 

Overall market conditions have shown signs of improvement but mergers and acquisitions in the investment banking world have reduced the number of target organisations and delayed new initiatives during consolidation.

 

The main themes of the year have been:

 

·      ongoing implementation and support of recent, larger global contracts;

·      increased focus on the major international investment banks;

·      a cycle of new development based on evaluation and feedback from clients and prospects;

·      restructuring and expanding resource, particularly sales, pre-sales and post-sales support.

 

In the first half of the year we secured contracts for our CityVision contributions and distribution software in excess of £1.7 million over three years. These included a number of positions for our Excelerator real-time desktop product and for our development tools, supporting custom integration of CityVision with client's core systems.  New revenues in the second half were disappointing considering the number of evaluations underway. However, the weighted value of contracts currently under consideration is at a record level.

 

The change from a license sale model to a license rental model has held back revenue and profit in the short term but has longer term benefit from the increased recurring revenue base.

 

This year recurring revenues have risen by 59% from £678,009 to £1,081,668. Had all new contracts gained during the year been traditional license sales, the reported revenues would have been higher and the losses correspondingly lower.

 

Sales this year have brought new installations in Denmark, Dubai, Hong Kong, London, New York and Singapore.  This has increased our experience of different operating environments and commercial processes and we are better equipped to expedite future deals.

 

Our message of "data vendor independent technology" is gaining traction with many major banks and several evaluations are well advanced.  The closer involvement has lead to highly constructive feedback leading to a strengthened product set to address new opportunities and specific customer requirements.

 

Global support has been strengthened with a 24x7 help-desk and support personnel stationed in strategic regions, including the Far East, where we have made good progress.

 

The AXE brokerage suite for on-line and telephone trading has continued to mature, with initiatives underway to address speed and scalability as user numbers expand.

 

Overall, while sales progress is slower than we had hoped, I believe the foundations have been laid to support improved results next year. I would like to thank staff, clients and prospects for their help and support and look forward to working with them towards the success that we believe is possible in the coming year.

 

Andrew Miller

Chief Executive

 
23 July 2010

 

 

 

Group Income Statement

 

 

For the year ended 30 June 2010

 

 

Note

2010

 

2009

 

 

 

£

 

£

 

Continuing operations

 

 

 

 

 

Revenues

2

1,068,776

 

1,395,078

 

Distribution costs

 

(25,242

)

(37,138

)

Administrative costs

 

(1,962,288

)

(1,930,576

)

Administrative costs - exceptional

3

-

 

(2,103

)

Operating loss from continuing operations

4

(918,754

)

(574,739

)

Finance income

 

5,681

 

8,417

 

Loss before taxation from continuing operations

 

(913,073

)

(566,322

)

Taxation

 

-

 

38,458

 

Loss for the year from continuing operations

 

(913,073

)

(527,864

)

Discontinued operations

 

 

 

 

 

Profit for the year after tax from discontinued operations

 

-

 

57,314

 

Total comprehensive income

 

(913,073

)

(470,550

)

Earnings per share (basic and diluted)

5

 

 

 

 

From continuing operations

 

(0.07

)p

(0.07

)p

From discontinued operations

 

-

p

0.01

p

From continuing and discontinued operations

 

(0.07

)p

(0.06

)p

 

 

 

Statement of Changes in Equity

 

 

For the year ended 30 June 2010

Group:

 

Share

capital

Share

premium

Share option reserve

Retained

earnings

Shares to be issued

Total

equity

 

£

£

£

£

£

£

Balance at 1 July 2008

736,443

8,516,940

45,920

(6,917,124)

-

2,382,179

Loss for the year

-

-

-

(470,550)

-

(470,550)

Total comprehensive income for the year

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

Loss for the year

-

-

-

(913,073)

-

(913,073)

Total comprehensive income for the year

 

 

-

 

-

 

-

 

(913,073)

 

-

(913,073)

Share-based payments

 

-

 

-

 

34,555

-

 

-

34,555

Issue of shares

 

794,872

 

911,229

 

-

-

 

(200,606)

1,505,495

Balance at 30 June 2010

1,531,315

9,428,169

143,297

(8,300,747)

-

2,802,034

 

Company:

 

Share

capital

Share

premium

Share option reserve

Retained

earnings

Shares to be issued

Total

equity

 

£

£

£

£

£

£

Balance at 1 July 2008

736,443

8,516,940

45,920

(6,959,561)

-

2,339,742

Loss for the year

-

-

-

(324,882)

 

(324,882)

Total comprehensive income for the year

 

-

-

(324,882)

(324,882)

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

(7,284,443)

200,606

2,278,288

Loss for the year

-

-

-

(162,935)

-

(162,935)

Total comprehensive income for the year

 

-

-

-

(162,935)

-

(162,935)

Share-based payments

-

-

34,555

-

-

34,555

Issue of shares

794,872

911,229

-

-

(200,606)

1,505,495

Balance at 30 June 2010

1,531,315

9,428,169

143,297

(7,447,378)

-

3,655,403

 

 

Group Balance Sheet

 

As at 30 June 2010

 

 

 

Group
2010
£

 

Group
2009
£

 

Company
2010
£

 

Company
2009

£

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

Goodwill

 

1,715,153

 

1,715,153

 

-

 

-

 

Property, plant and equipment

 

46,597

 

57,638

 

-

 

-

 

Investments in subsidiaries

 

-

 

-

 

2,017,373

 

2,017,372

 

Total non-current assets

 

1,761,750

 

1,772,791

 

2,017,373

 

2,017,372

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

213,921

 

521,328

 

1,257,236

 

196,473

 

Cash and cash equivalents

 

1,586,376

 

426,710

 

859,378

 

88,280

 

Total current assets

 

1,800,297

 

948,038

 

2,116,614

 

284,753

 

 

 

 

 

 

 

 

 

 

 

Current liabilities










Trade and other payables


(760,013

)

(545,772

)

(478,584

)

(23,837

)

Total current liabilities


(760,013

)

(545,772

)

(478,584

)

(23,837

)



 

 

 

 

 

 

 

 

Net current assets


1,040,284

 

402,266

 

1,638,030

 

260,916

 



 

 

 

 

 

 

 

 

Net assets

 

2,802,034

 

2,175,057

 

3,655,403

 

2,278,288

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

Called up share capital

 

1,531,315

 

736,443

 

1,531,315

 

736,443

 

Shares to be issued

 

-

 

200,606

 

-

 

200,606

 

Share premium account

 

9,428,169

 

8,516,940

 

9,428,169

 

8,516,940

 

Share option reserve

 

143,297

 

108,742

 

143,297

 

108,742

 

Retained earnings

 

(8,300,747

)

(7,387,674

)

(7,447,378

)

(7,284,443

)

 

 

2,802,034

 

2,175,057

 

3,655,403

 

2,278,288

 

 

 

Group Cash Flow Statement

 

 

For the year ended 30 June 2010

 

 

 

2010

 

2009

 

 

 

£

 

£

 

Continuing operations

 

 

 

 

 

Net cash used in operating activities

 

(343,682

)

(687,627

)

Investing activities

 

 

 

 

 

Interest received

 

5,681

 

7,193

 

Acquisition of subsidiary, net of cash acquired

 

(1

)

-

 

Purchases of plant and equipment

 

(8,232

)

(1,956

)

Disposal of plant and equipment

 

405

 

19,500

 

Net cash (used)/received in investing activities

 

(2,147

)

24,737

 

Financing activities

 

 

 

 

 

Proceeds on issue of shares

 

1,553,270

 

-

 

Expenses paid in connection with share issues

 

(47,775

)

-

 

Net cash generated from financing activities

 

1,505,495

 

-

 

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

 

1,159,666

 

(662,890

)

Discontinued operations

 

 

 

 

 

Cash flows from operating activities

 

-

 

4,067

 

Cash flows from investing activities

 

-

 

2,929

 

Net increase in cash and cash equivalents from discontinued operations

 

-

 

6,996

 

Net increase/(decrease) in cash and cash equivalents

 

1,159,666

 

(655,894

)

Cash and cash equivalents at beginning of year

 

426,710

 

1,082,604

 

Cash and cash equivalents at end of year

 

1,586,376

 

426,710

 

 

 

 

 

Company Cash Flow Statement

 

 

For the year ended 30 June 2010

 

 

 

2010

 

2009

 

 

 

£

 

£

 

Net cash used in operating activities

 

(737,485

)

(320,263

)

Investing activities

 

 

 

 

 

Interest received

 

3,089

 

3,964

 

Acquisition of subsidiary, net of cash acquired

 

(1

)

-

 

Net cash generated from investing activities

 

3,088

 

3,964

 

Financing activities

 

 

 

 

 

Proceeds on issue of shares

 

1,553,270

 

-

 

Expenses paid in connection with share issues

 

(47,775

)

-

 

Net cash generated from financing activities

 

1,505,495

 

-

 

Net increase/(decrease) in cash and cash equivalents

 

771,098

 

(316,299

)

Cash and cash equivalents at beginning of year

 

88,280

 

404,579

 

Cash and cash equivalents at end of year

 

859,378

 

88,280

 

 

 

 

 

 

Notes to the Financial Statements

 

For the year ended 30 June 2010

 

1.             Accounting policies

 

The principal accounting policies are summarised belowThey have all been applied consistently throughout the period covered bythese financial statements.

 

Reporting entity

 

Arcontech Group PLC ("the Company") is a company incorporated in the United Kingdom. The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries (together referred to as "the Group").

 

Basis ofpreparation

 

These financial statements havebeen prepared in accordance with International Financial Reporting Standards ("IFRS") endorsed by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

On the basis of current projections, confidence of future profitability and cash balances held the Directors have adopted the going concern basis in the preparation of the financial statements.

 

The financial statements have been prepared under the historical cost convention.

 

 

2.             Revenues

 

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

 

 

 

2010
£

 

2009
£

 

 

 

 

 

 

 

Financial information service, advertising and sponsorship, software development and consultancy

 

1,068,776

 

1,395,078

 

             

All of the Group's revenue relates to continuing activities.

 

 

3.             Administrative costs - exceptional:

 

 

 

2010
£

 

2009
£

 

Directors' remuneration - payment in lieu of notice

 

-

 

2,103

 

(in respect of Marc Pinter-Krainer, the former Chief Executive)

 

 

 

 

 

 

 

-

 

2,103

 

 

 

4.             Operating loss for the year is stated after charging:

 

 

 

2010
£

 

2009
£

 

Depreciation of plant and equipment

 

18,868

 

41,983

 

Loss on disposal of fixed assets

 

-

 

37,225

 

Staff costs

 

1,453,848

 

1,480,579

 

Operating lease rentals  - land and buildings

 

55,300

 

55,300

 

Research and development

 

636,386

 

676,233

 

 

 

 

5.             Earnings per share

 

 

 

2010

 

2009

 

 

 

£

 

£

 

Earnings

 

 

 

 

 

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

 

 

 

 

 

Continuing operations

 

(913,073

)

(527,864

)

Discontinued operations

 

-

 

57,314

 

 

 

(913,073

)

(470,550

)

 

 

No.

 

No.

 

Number of shares

 

 

 

 

 

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

 

1,335,592,398

 

736,442,943

 

Number of dilutive shares under option

 

-

 

-

 

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

 

1,335,592,398

 

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 ofthe subscription rights attached to outstanding share options. Share options are anti-dilutive and are therefore not included above.

 

 

6.             Dividends

 

There were no dividends paid or proposed during the period (2009: Nil).

 

 

7.             Post balance sheet events

 

There were no events since the balance sheet date, which materially affect the position of the Group.

 

 

8.             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.

 

 

9.             Copies of this statement

 

Copies of the Annual Report & Accounts will be sent to shareholders shortly and  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
 
END
 
 
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