REG - Arcontech Group PLC - Interim Results

ArcontechAnnouncement

27/02/2019 07:05

RNS Number : 1957R
Arcontech Group PLC
27 February 2019
 


 
 
 
ARCONTECH GROUP PLC
 
("Arcontech" or the "Group")
 
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
 
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 2018.
 
 
Highlights:
 
·     Turnover increased by 13% to £1,371,107 (six months ended 31 December 2017: £1,213,776)
·     Profit before tax increased by 91% to £452,756 (six months ended 31 December 2017: £237,581)
·     Adjusted profit before tax (before release of accruals for administrative costs in respect of prior years) increased by 41% to £335,470 (six months ended 31 December 2017: £237,581)
·     Annual run-rate of recurring revenues at 31 December 2018 increased by 14% to £2.78 million (at 31 December 2017: £2.43 million).
·     Cash of £3,231,830 as at 31 December 2018 (31 December 2017: £2,663,935)
·     Trading in line and on track to meet management's full year expectations
 
 
Richard Last, Chairman of Arcontech Group, said:
 
"The Board is pleased with Arcontech's growth in revenue and adjusted profit before tax. Cash at the half year was £567,895 higher than the previous half year, further strengthening the Balance Sheet. We have continued to invest in product development to maintain and enhance our propositions to the market. Our sales cycle is often long and unpredictable however we remain positive about the Group's long term prospects and the Board expects results for the full year to be in line with expectations."
 
 
Enquiries:
 




Arcontech Group plc


020 7256 2300




Richard Last, 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
 
 
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
 
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 am pleased to report that Arcontech has continued to grow profits in the six-month period ended 31 December 2018, reporting an adjusted profit before tax of £335,470 (six months ended 31 December 2017: £237,581) an increase of 41%. Turnover increased by 13% to £1,371,107 compared to the corresponding six-month period in 2017 where turnover amounted to £1,213,776. This reflects the growth in recurring annual licence fees, primarily from existing customers, which on an annualised basis amounted to £2.78 million at 31 December 2018, compared to £2.43 million as at 31 December 2017. Fully diluted earnings per share were 3.72 pence per share compared to 2.36 pence per share for the corresponding period last year.
 
During the half year to 31 December 2018 Arcontech's increase in revenues reflects the full year effect of sales made during the year to 30 June 2018 and the impact of selling more products into the existing customer base. We are continuing to trial our Desktop software solution and have made a number of enhancements following positive comments from customers and prospective users. Usage has increased with existing customers by approximately 75% to 70.  We also continue to see demand for our Excelerator product with additional users to an approximate value of £225,000-pa being deployed by two existing clients.
 
For the server-side of the business our MVCS (Multi-Vendor Contribution System) and Real-time Cache continue to make a significant contribution to group revenue. We have continued to invest in the development and enhancement of these products to further optimise their efficiency whilst enhancing the customer experience. This work helps integrate the products further within the client environment, however, new sales in this area are significant projects in themselves and although we have a number of qualified prospects, none have contracted in the half year. A further benefit of that work is that both the MVCS and our Real-time Cache are increasingly seen as preferable alternatives to competitive offerings which also help our pipeline.
 
 
Financing
 
 The Group has a strong financial position with cash balances at the 31 December 2018 of £3,231,830 (31 December 2017 £2,663,935), an increase of £567,895, providing a sound basis for continued investment in the business.  The small increase in cash between 30 June 2018 and 31 December 2018 principally reflects timing differences in relation to advance payments.
 
Dividend
 
No interim dividend is proposed to be paid in respect of the half year, although the Board does expect to continue its policy of paying a dividend following the announcement of its full year results.
 
Employees
 
I should like to thank our employees and directors for their continued hard work and dedication, which I know is appreciated by our customers and shareholders alike.
 
Outlook
 
Arcontech has a sound business base supported by a high level of recurring revenues and a strong balance sheet. Our business is international with customers operating in the UK, Europe, the USA, Hong Kong and Singapore. As such it is the Board's view that we are unlikely to be adversely affected by Brexit. We propose to maintain ongoing investment in product development and enhancement, and as a result of working with existing customers we are delivering world class solutions which provide cost savings and competitive advantage. As we repeatedly note in our statements to shareholders we remain mindful of the long and unpredictable sales cycles we often face and the challenges this brings in predicting the timing of contract wins.  Nevertheless, the Board views the long term future for the business with optimism and in the short term expects results for the full year to be in line with expectations.
 
 
Richard Last
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




 


 


 


2018


 


2017


 


2018




 


 


 


(unaudited)


 


(unaudited)


 


(audited)




 


 


 


£


 


£


 


£




 


 


 


 


 


 


 


 




Revenue


 


 


1,371,107


 


1,213,776


 


2,519,699




 


 


 


 


 


 


 


 




Administrative costs


 


 


(931,902)


 


(982,528)


 


(1,958,176)




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Operating profit


 


4


439,205


 


231,248


 


561,523




 


 


 


 


 


 


 


 




Finance income


 


 


13,551


 


6,333


 


14,109




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Profit before taxation


 


 


452,756


 


237,581


 


575,632




 


 


 


 


 


 


 


 




Taxation


 


6


45,318


 


69,452


 


339,452




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




 
Profit for the period after tax


 


 
 


498,074


 


307,033


 


 
915,084




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Total comprehensive income


 


 


498,074


 


307,033


 


915,084




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Profit per share (basic)


 


 


3.77p


 


2.42p


 


7.14p




 


 


 


 


 


 


 


 




Adjusted* Profit per share (basic)


 


 


2.88p


 


2.42p


 


6.94p




 


 


 


 


 


 


 


 




Profit per share (diluted)


 


 


3.72p


 


2.36p


 


7.09p




 


 


 


 


 


 


 


 




Adjusted* Profit per share (diluted)


 


 


2.84p


 


2.36p


 


6.90p




 
*Adjusted for release of accruals for administrative expenses in respect of prior years
 
All of the results relate to continuing operations.
 
 
 
 
GROUP BALANCE SHEET

 




 


 


31 December 2018
(unaudited)


 


31 December 2017
(unaudited)


 


30 June
2018
(audited)




 


 


£


 


£


 


£




Non-current assets


 


 


 


 


 


 




Goodwill


 


1,715,153


 


1,715,153


 


1,715,153




Property, plant and equipment


 


11,398


 


24,834


 


17,941




Deferred tax asset


 


270,000


 


-


 


270,000




Trade and other receivables


 


141,750


 


141,750


 


141,750




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Total non-current assets


 


2,138,301


 


1,881,737


 


2,144,844




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Current assets


 


 


 


 


 


 




Trade and other receivables


 


320,608


 


624,781


 


310,123




Cash and cash equivalents


 


3,231,830


 


2,663,935


 


3,210,058




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Total current assets


 


3,552,438


 


3,288,716


 


3,520,181




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Current liabilities


 


 


 


 


 


 




Trade and other payables


 


(769,105)


 


(865,561)


 


(863,156)




Deferred income


 


(801,409)


 


(1,233,990)


 


(1,026,119)




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Total current liabilities


 


(1,570,514)


 


(2,099,251)


 


(1,889,275)




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Net current assets


 


            1,981,924


 


1,189,465


 


1,630,906




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Net assets


 


4,120,225


 


3,071,202


 


3,775,750




 


 


 


 


 


 


 




 


 


 


 


 


 


 




Equity


 


 


 


 


 


 




Share capital


 


1,651,314


 


1,600,375


 


1,651,314




Share premium account


 


56,381


 


24,881


 


56,381




Share option reserve


 


74,101


 


225,591


 


56,366




Retained earnings


 


2,338,429


 


1,220,355


 


2,011,689




 


 


 


 


 


 


 




 


 


 


 


 


 


 




 


 


4,120,225


 


3,071,202


 


3,775,750




 


 


 


 


 


 


 




 
GROUP CASH FLOW STATEMENT
 




 


 


Note


Six months ended 31
December


 


Six months ended 31
December


 


Year ended
30 June




 


 


 


2018


 


2017


 


2018




 


 


 


(unaudited)


 


(unaudited)


 


(audited)




 


 


 


£


 


£


 


£




 


 


 


 


 


 


 


 




 
Net cash generated from operating activities


 


9


181,880


 


94,113


 


 
 
552,111




 


 


 


 


 


 


 


 




Investing activities


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Interest received


 


 


13,551


 


6,333


 


14,109




 
Purchases of plant and equipment


 


 


 
(2,325)


 


 
-


 


 
 (2,090)




 


 


 


 


 


 


 


 




Net cash generated from investing activities


 


 


 
11,226


 


 
6,333


 


 
            12,019




 


 


 


 


 


 


 


 




Financing activities


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Issue of shares


 


 


-


 


52,778


 


135,217




 


 


 


 


 


 


 


 




Dividends paid


 


 


(171,334)


 


(125,760)


 


(125,760)




 


 


 


 


 


 


 


 




Net cash (used in)/generated from financing activities


 


 


 
(171,334)


 


 
(72,982)


 


 
9,457




 
 
Net increase in cash and cash equivalents


 


 


 
 
21,772


 


 
 
27,464


 


 
 
         573,587




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Cash and cash equivalents at beginning of period


 


 


 
3,210,058


 


 
2,636,471


 


 
       2,636,471




 


 


 


 


 


 


 


 




Cash and cash equivalents at end of period


 


 


3,231,830


 


2,663,935


 


      3,210,058




 
 
 
 
 
 
 
 
 
GROUP STATEMENT OF CHANGES IN EQUITY 




 


Share
capital


Share
premium


Share-based paymentsreserve


Retained
earnings


 Total
 




 


              £


                 £


               £


                £


              £




At 1 July 2017


1,562,676


9,802


188,425


1,039,082


2,799,985




Total comprehensive income for the period


 
-
 


 
-
 


 
-
 


 
307,033
 


 
307,033
 
 
 
 




Issue of shares


37,699


15,079


-


-


52,778




Dividends paid


-


-


-


(125,760)


(125,760)




Share-based payments


-


-


37,166


-


37,166




At 31 December 2017


1,600,375


24,881


225,591


1,220,355


3,071,202




Total comprehensive income for the period
 
 
 
 
 


 
-
 


 
-
 


 
-
 


 
608,051


 
608,051
 




Issue of shares


50,939


31,500


-


-


82,439




Share-based payments


 
-


 
-


 
14,058


 
-


14,058




Realisation of share option reserve


 
-


 
-


 
(183,283)


 
183,283


-




At 30 June 2018


1,651,314


56,381


56,366


2,011,689


3,775,750




Total comprehensive income for the period
 
 


 
-
 


 
-
 


 
-
 


 
498,074


 
498,074




Dividends paid


-


-


-


(171,334)


(171,334)




Share-based payments


 
-


-


 
17,735
 


 
-


 
17,735
 




At 31 December 2018


1,651,314


56,381


74,101


2,338,429


4,120,225




 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL INFORMATION
 
1.   The figures for the six months ended 31 December 2018 and 31 December 2017 are unaudited and do not constitute statutory accounts. The interim results have been prepared using accounting policies which are consistent with International Financial Reporting Standards as adopted by the European Union and are expected to be adopted in the next annual accounts.
2.   The financial information for the year ended 30 June 2018 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 2018, 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 £117,286 (31 December 2017: Nil; 30 June 2018: £25,500).
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 2018 of 13,210,510 (31 December 2017: 12,675,498; 30 June 2018: 12,396,220).
The number of dilutive shares under option at 31 December 2018 was 189,343 (31 December 2017: 330,023; 30 June 2018: 77,699). 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 2018 of 1.30 pence per share (2017 1.0 pence per share) was paid on 4 October 2018.
8.   The Directors have elected not to apply IAS34 Interim financial reporting.
 
9.   Net cash generated from operations




 


 


Six months ended 31
December


 


Six months ended 31
December


 


Year ended
30 June


 




 


 


2018


 


2017


 


2018


 




 


 


(unaudited)


 


(unaudited)


 


(audited)


 




 


 


£


 


£


 


£


 




 


 


 


 


 


 


 


 




Operating profit


 


439,205


 


231,248


 


561,523


 




 


 


 


 


 


 


 


 




Depreciation charge


 


8,868


 


8,991


 


17,974


 




 


 


 


 


 


 


 


 




Non cash share option charges


 


17,735


 


37,166


 


51,224


 




 
Increase in trade and other receivables


 


(10,485)


 


(379,833)


 


 
(134,626)


 




 


 


 


 


 


 


 


 




(Decrease)/increase in trade and other payables


 


(318,761)


 


196,541


 


 
(13,436)


 




 


 


 


 


 


 


 


 




Tax recovered


 


45,318


 


-


 


69,452


 




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




Cash generated from operations


 


181,880


 


94,113


 


552,111


 




 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 




 


 




 


 


 




 


 


 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 




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END
 
 
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