REG - Arcontech Group PLC - Interim Results
24/02/2022 07:00
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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
(http://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 Six months ended 31
December 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
31 December 2021 31 December 2020 30 June
Note 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
GROUP CASH FLOW STATEMENT
Note Six months ended 31 Six months ended 31 Year ended
December December 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 Share Shares to be issued Share-based payments reserve Retained Total
capital premium earnings
£ £ £ £ £ £
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 (#_ftn1) )) 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 1(st) Floor 11-21 Paul Street, London, EC2A
4JU or from the Company's website at www.arcontech.com
(http://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 Six months ended 31 Year ended
December December 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)
147,432 (567,023)
Decrease/(increase) in trade and other receivables
(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 (#_ftnref1) 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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