REG - Arcontech Group PLC - Interim Results
27/02/2023 07:00
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RNS Number : 0674R Arcontech Group PLC 27 February 2023
ARCONTECH GROUP PLC
("Arcontech" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
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 2022.
Overview:
* Turnover decreased by 6.6% to £1,357,041 (H1 2021: £1,452,498) due to the
effect of contract losses announced during the previous financial year
* Profit before tax decreased by 13.2% to £372,414 (H1 2021: £428,924)
reflecting the lower turnover
* Our preferred measure of adjusted profit before tax, which excludes the
release of accruals unrelated to the underlying business, declined by 13.3% to
£367,914 (H1 2021: £424,425)
* Recurring revenues represented 100% of total revenues for the period (H1 2021:
98%)
* Net cash of £5,908,814 at 31 December 2022, up 5.13% (H1 2021: £5,620,352)
after a record dividend payment of £434,616 paid on 24 October 2022
* Revenue and profit before tax for the year to 30 June 2023 are expected to be
in line with current expectations
Geoff Wicks, Chairman of Arcontech, said:
"Our strategy to support our existing customers to maximise opportunities
while building our sales capability to grow our customer base globally,
ensures we focus on growth in our core market. We are starting to see small
amounts of growth and are confident that this will continue, although this
must be balanced against continuing difficult markets for our customers."
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/George Dollemore
Harriet Ward (ECM)
To access more information on the Group please visit: www.arcontech.com
(http://www.arcontech.com)
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
While our results for the first half of this year show a decline in both
revenue and profit compared to the same period last year, this is the result
of the loss of business in the second half of last year. This impact will
continue in the second half of the year given the recurring nature of our
revenue. However, we are starting to see some growth with new and existing
clients although the market remains difficult with customers seeking to reduce
spend and prospects continuing to take time to commit.
We have worked hard at retaining customers and now have a significant
proportion of our customer base on longer term contracts. At the same time, we
are building a prospect list that gives us confidence of sustainable growth in
the future. We have also managed our costs appropriately to ensure continued
strong profitability and excellent cash generation.
Revenue was £1,357,041, down 6.6% on the same period last year, due to the
loss of two contracts in the second half of 2021/22. Profit before tax ("PBT")
was £372,414, 13.2% lower than the same period last year, reflecting the loss
of revenue. Adjusted profit before tax, which is PBT before the release of
accruals for administrative costs in respect of prior years, was down 13.3% to
£367,914.
We continue to invest in our sales, marketing and support teams which has
helped us to retain our excellent customer list and to start to build back
some of the business lost in the previous financial year.
Financing
Our balance sheet remains robust with net cash of £5.9 million, £0.3 million
higher than at 31 December 2022, and £0.1 million lower than the level at 30
June 2022 after payment to shareholders of a record dividend of £0.4 million.
This cash position provides resources for continued investment in sales and
products and for small complementary acquisitions.
Dividend
No interim dividend is proposed to be paid in respect of the half year. The
Board expects to continue its policy of paying a dividend following the
announcement of its full year results.
Outlook
Our strategy to support our existing customers to maximise opportunities while
building our sales capability to grow our customer base globally, ensures we
focus on growth in our core market. We are starting to see small amounts of
growth and are confident that this will continue although this must be
balanced against continuing difficult markets for our customers.
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
2022 2021 2022
(unaudited) (unaudited) (audited)
£ £ £
Revenue 1,357,041 1,452,498 2,757,795
Administrative costs (995,636) (1,021,879) (1,999,523)
Operating profit 4 361,405 430,619 758,272
Finance income 15,840 6,521 13,911
Finance costs (4,831) (8,216) (13,610)
Profit before taxation 372,414 428,924 758,573
Taxation 6 - - (148,007)
372,414 428,924
Profit for the period after tax 610,566
Total comprehensive income 372,414 428,924 610,566
Profit per share (basic) 2.78p 3.21p 4.57p
Adjusted* Profit per share (basic) 2.75p 3.18p 4.50p
Profit per share (diluted) 2.77p 3.20p 4.56p
Adjusted* Profit per share (diluted) 2.74p 3.16p 4.49p
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 2022 31 December 2021 30 June
Note 2022
(unaudited) (unaudited) (audited)
£ £ £
Non-current assets
Goodwill 1,715,153 1,715,153 1,715,153
Property, plant and equipment 4,420 7,489 6,545
Right of use asset 12 146,303 292,606 219,455
Deferred tax asset 318,000 471,000 318,000
Trade and other receivables 141,750 141,750 141,750
Total non-current assets 2,325,626 2,627,998 2,400,903
Current assets
Trade and other receivables 9 1,584,539 322,885 348,686
Cash and cash equivalents 5,908,814 5,620,352 6,026,468
Total current assets 7,493,353 5,943,237 6,375,154
Current liabilities
Trade and other payables 10 (891,203) (553,435) (630,644)
Deferred income (1,854,240) (1,017,829) (978,236)
Lease liabilities 12 (118,994) (151,948) (148,450)
Total current liabilities (2,864,437) (1,723,212) (1,757,330)
Non-current liabilities
Lease liabilities 12 - (118,994) (47,403)
Total non-current liabilities - (118,994) (47,403)
Net current assets 4,628,916 4,220,025 4,617,824
Net assets 6,954,542 6,729,029 6,971,324
Equity
Share capital 1,671,601 1,671,601 1,671,601
Share premium account 115,761 115,761 115,761
Share option reserve 306,440 290,713 270,825
Retained earnings 4,860,740 4,650,954 4,913,137
6,954,542 6,729,029 6,971,324
GROUP CASH FLOW STATEMENT
Note Six months ended 31 Six months ended 31 Year ended
December December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
£ £ £
Cash generated from operating activities 11 383,087 630,439
1,109,608
Tax paid 6 (4,993) - (2,642)
Net cash generated from operating activities 378,094 630,439
1,106,966
Investing activities
Interest received 15,840 6,521 13,911
Purchases of plant and equipment (114) (527) (2,688)
Net cash generated from investing activities
15,726 5,994 11,223
Financing activities
Proceeds from the exercise of options - 29,024 29,025
Dividends paid (434,616) (367,202) (367,752)
Payment of lease liabilities (76,859) (73,360) (148,450)
Net cash used in financing activities (511,475) (411,538) (487,177)
Net (decrease) / increase in cash and cash equivalents (117,655) 224,895 631,012
Cash and cash equivalents at beginning of period
6,026,469 5,395,457 5,395,457
Cash and cash equivalents at end of period 5,908,814 5,620,352 6,026,469
GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Share-based payments reserve Retained Total
capital premium earnings
£ £ £ £ £
At 1 July 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 1 5,624 23,401 - - 29,025
Transfer between reserves - - (35,904) 35,904 -
Dividends paid - - - (367,202) (367,202)
Share-based payments - - 55,409 - 55,409
Total transactions with owners 5,624 23,401 19,505 (331,298) (282,768)
At 31 December 2021 1,671,601 115,761 290,712 4,650,955 6,729,029
Profit for the period - - - 181,642 181,642
Total comprehensive income for the period - - - 181,642 181,642
Transfer between reserves - - (81,090) 81,090 -
Dividends paid - - - (550) (550)
Share-based payments - - 61,203 - 61,203
Total transactions with owners - - (19,887) 80,540 60,653
At 30 June 2022 1,671,601 115,761 270,825 4,913,137 6,971,324
Profit for the period - - - 372,414 372,414
Total comprehensive income for the period - - - 372,414 372,414
Transfer between reserves - - (9,805) 9,805 -
Dividends paid - - - (434,616) (434,616)
Share-based payments - - 45,420 - 45,420
Total transactions with owners - - 35,615 (424,811) (389,196)
At 31 December 2022 1,671,601 115,761 306,440 4,860,740 6,954,542
NOTES TO THE FINANCIAL INFORMATION
1. The figures for the six months ended 31 December 2022, and 31
December 2021, 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 2022. 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 2022, 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 2022 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 2022, which were prepared in accordance with UK-adopted
international accounting standards, 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 2021: £4,500; 30
June 2022: £9,000).
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 2022 of 13,372,811 (31 December 2021: 13,355,719 30 June 2022:
13,364,195).
The number of dilutive shares under option at 31 December 2022 was 18,612 (31
December 2021: 62,727; 30 June 2022: 25,145). 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 paid represents the cash
payment of tax liability from the preceding income tax year.
7. A final dividend in respect of the year ended 30 June 2022 of 3.25
pence per share (2021: 2.75 pence per share) was paid on 24 October 2022.
8. The Directors have elected not to apply IAS 34 Interim financial
reporting.
9. Trade and other receivables
31 December 31 December 30 June
2022
2021
2022
£
£
£
(unaudited)
(audited)
(unaudited)
Due within one year:
Trade and other receivables 1,468,165 209,800 196,541
Prepayments and accrued income 116,374 113,085 152,145
1,584,539 322,885 348,686
10. Trade and other payables
31 December 31 December 30 June
2022
2021
2022
£
£
£
(unaudited)
(audited)
(unaudited)
Trade payables 33,078 45,063 77,772
Other tax and social security payable 319,265 64,548 62,148
Other payables and accruals 538,860 443,824 490,724
891,203 553,435 630,644
11. Cash generated from operations
Six months ended 31 Six months ended 31 Year ended
December December 30 June
2022 2021 2022
(unaudited) (unaudited) (audited)
£ £ £
Operating profit 361,405 430,619 758,272
Depreciation charge 75,390 77,337 153,594
Non-cash share option charges 45,420 55,410 116,612
Lease interest paid (4,141) (7,640) (13,550)
Other interest paid (690) (576) (60)
(1,240,846) 147,432
(Increase)/decrease in trade and other receivables
126,624
Increase/(decrease) in trade and other payables 1,146,549 (72,143)
(31,884)
Cash generated from operations 383,087 630,439 1,109,608
12. 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 Lease liability Income statement
£ £ £
As at 1 July 2022 219,455 (195,853) -
Depreciation (73,152) - (73,152)
Interest - (4,141) (4,141)
Lease payments - 81,000 -
Carrying value at 31 December 2022 146,303 (118,994) (77,293)
Right of use asset 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)
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