REG - Arcontech Group PLC - Interim Results
21/02/2024 07:00
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RNS Number : 8390D Arcontech Group PLC 21 February 2024
ARCONTECH GROUP PLC
("Arcontech" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2023
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 2023.
Overview:
* Revenue increased by 6.8% to £1,448,804 (H1 2022: £1,357,041) reflecting the
new business secured during the period under review
* Profit before tax increased by 44.7% to £538,790 (H1 2022: £372,414)
reflecting the contribution from higher revenues and higher interest earned
on cash deposits
* Our preferred measure of adjusted profit before tax, which excludes the
release of accruals unrelated to the underlying business, increased by 45.3%
to £534,775 (H1 2022: £367,914)
* Recurring revenues represented 100% of total revenues for the period (H1 2022:
100%)
* Net cash of £5,734,226 at 31 December 2023, down 2.9% (H1 2022:
£5,908,814) after a record dividend payment of £468,048 paid on 3 November
2023
* Revenue expectation for the full year remains in line with current market
expectations, however, profit before tax for the year to 30 June 2024 is
expected to be slightly ahead of market expectations. This is the result of
higher interest income on cash balances received than previously forecast, and
a reduction in operational expenditure.
Geoff Wicks, Chairman of Arcontech, said:
"We believe our strategy has brought us through a difficult period of poor
market conditions well. Our focus is firmly on our core markets where we
believe we are best placed to build sustainable growth. We have invested in
our ability to grow globally and although lead times and competitive markets
mean slow progress, we have started to experience some growth and we are
confident about this continuing."
Enquiries:
Arcontech Group plc 020 7256 2300
Geoff Wicks, Chairman and Non-Executive Director
Matthew Jeffs, Chief Executive
Cavendish Capital Markets 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.
The information contained within this announcement was deemed by the Company
to constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 as amended. With the publication of
this announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.
Chairman's Statement
Arcontech is beginning to see some small improvements in market conditions and
new projects we have been working on come to fruition. There remain challenges
in the market and lead times are longer than before but we announced one major
new contract recently and we have the start of growth at existing customers.
Our pipeline is improving and we are confident that we are in a good position
to recover some of the ground we lost over the last few years.
We have retained a significant customer base, much of which is now on longer
contracts. Nearly all our revenue is now recurring which provides good
visibility and will help us to maintain growth. While we have been investing
in our sales and support operations, careful cost control has allowed us to
grow profit, although the last year's H1 profit was depressed by the impact of
lost business, so flatters this year's number.
Revenue was £1.44 million, up 6.8% on the same period last year, Profit
before tax ("PBT") was £0.54 million, up 44.7% on the same period last year.
Adjusted profit before tax, which is PBT before the release of accruals for
administrative costs in respect of prior years was £0.53 million, up 45.3% on
the previous year.
Financing
Our balance sheet remains robust with net cash of £5.7 million, £0.2 million
lower than at 31 December 2022, and £0.7 million lower than the level at 30
June 2023 after payment to shareholders of a record dividend of £0.4 million,
and a change to the billing cycle for a large customer. As at the date of
releasing this report the net cash balance is £6.8m. This cash position
allows for continued investment in sales and products and for us to remain
alert to opportunities to acquire small complementary businesses.
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
We believe our strategy has brought us through a difficult period in poor
market conditions in good shape. Our focus is firmly on growth in our core
markets where we believe we are best placed to build sustainable growth. We
have invested in our ability to grow globally and although lead times and
competitive markets mean slow progress we are confident about future growth.
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
2023 2022 2023
(unaudited) (unaudited) (audited)
£ £ £
Revenue 1,448,804 1,357,041 2,730,172
Administrative costs (1,039,456) (995,636) (1,924,962)
Operating profit 4 409,348 361,405 805,210
Finance income 126,055 15,840 76,977
Finance costs 13 3,387 (4,831) (6,491)
Changes in estimated variable remuneration liability 5 110,000
- -
Profit before taxation 538,790 372,414 985,696
Taxation 7 - - (5,587)
538,790 372,414
Profit for the period after tax 980,109
Total comprehensive income 538,790 372,414 980,109
Profit per share (basic) 4.03p 2.78p 7.33p
Adjusted* Profit per share (basic) 4.00p 2.75p 6.44p
Profit per share (diluted) 4.02p 2.77p 7.32p
Adjusted* Profit per share (diluted) 3.99p 2.74p 6.43p
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 2023 31 December 2022 30 June
Note 2023
(unaudited) (unaudited) (audited)
£ £ £
Non-current assets
Goodwill 1,715,153 1,715,153 1,715,153
Property, plant and equipment 6,325 4,420 5,950
Right of use asset 13 559,098 146,303 73,152
Deferred tax asset 328,000 318,000 328,000
Trade and other receivables 10 141,750 141,750 -
Total non-current assets 2,750,326 2,325,626 2,122,255
Current assets
Trade and other receivables 10 1,335,408 1,584,539 499,861
Cash and cash equivalents 5,734,226 5,908,814 6,411,241
Total current assets 7,069,634 7,493,353 6,911,102
Current liabilities
Trade and other payables 11 (473,512) (891,203) (427,030)
Deferred income (1,013,405) (1,854,240) (881,858)
Lease liabilities 13 (68,869) (118,994) (40,324)
Provisions (50,000) - (50,000)
Total current liabilities (1,605,786) (2,864,437) (1,399,212)
Non-current liabilities
Lease liabilities 13 (483,641) - -
Provisions (20,000) - (20,000)
Total non-current liabilities (503,641) - (20,000)
Net current assets 5,463,848 4,628,916 5,511,890
Net assets 7,710,533 6,954,542 7,614,146
Equity
Share capital 1,671,601 1,671,601 1,671,601
Share premium account 115,761 115,761 115,761
Share option reserve 305,101 306,440 279,455
Retained earnings 5,618,070 4,860,740 5,547,328
7,710,533 6,954,542 7,614,145
GROUP CASH FLOW STATEMENT
Note Six months ended 31 Six months ended 31 Year ended
December December 30 June
2023 2022 2023
(unaudited) (unaudited) (audited)
£ £ £
Cash (used in) / generated from operating activities 12 (296,937) 383,087
901,422
Tax paid 7 - (4,993) -
Net cash generated from operating activities (296,937) 378,094
901,422
Investing activities
Interest received 126,055 15,840 76,977
Proceeds on disposal of fixed assets 417 - -
Purchases of plant and equipment (3,471) (114) (3,480)
Net cash generated from investing activities
123,001 15,726 73,497
Financing activities
Dividends paid (468,048) (434,616) (434,616)
Payment of lease liabilities (35,031) (76,859) (155,529)
Net cash used in financing activities (503,079) (511,475) (590,145)
Net (decrease) / increase in cash and cash equivalents (677,015) (117,655) 384,772
Cash and cash equivalents at beginning of period
6,411,241 6,026,469 6,026,469
Cash and cash equivalents at end of period
5,734,266 5,908,814 6,411,241
GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Share-based payments reserve Retained Total
capital premium earnings
£ £ £ £ £
At 1 July 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
Profit for the period - - - 607,695 607,695
Total comprehensive income for the period - - - 607,695 607,695
Transfer between reserves - - (78,893) 78,893 -
Share-based payments - - 51,908 - 51,908
Total transactions with owners - - (26,985) 78,893 51,908
At 30 June 2023 1,671,601 115,761 279,455 5,547,328 7,614,145
Profit for the period - - - 538,790 538,790
Total comprehensive income for the period - - - 538,790 538,790
Dividends paid - - - (468,048) (468,048)
Share-based payments - - 25,646 - 25,646
Total transactions with owners - - 25,646 (468,048) (442,402)
At 31 December 2023 1,671,601 115,761 305,101 5,618,070 7,710,533
NOTES TO THE FINANCIAL INFORMATION
1. The figures for the six months ended 31 December 2023, and 31
December 2022, 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 2023. 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 2023, 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 2023 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 2023, 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 £4,014 (31 December 2022: £4,500; 30
June 2023: £8,393).
5. During the year to 30 June 2023, the Group Income Statement included the
release of £110,000 in accrued bonuses which was been disclosed separately.
The Board's best estimate of the liability to pay bonuses as at 30 June 2022
was £170,000 which was recorded with the prior year accruals. In the year to
30 June 2023, £110,000 of this liability was released to the Group Income
Statement following annual reappraisal of the estimated liability at 30 June
2023.
6. 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 2023 of 13,372,811 (31 December 2022: 13,372,811 30 June 2023:
13,372,811).
The number of dilutive shares under option at 31 December 2023 was 26,988 (31
December 2022: 18,612; 30 June 2023: 14,805). 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.
7. 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.
8. A final dividend in respect of the year ended 30 June 2023 of 3.5 pence
per share (2022: 3.25 pence per share) was paid on 3 November 2023.
9. The Directors have elected not to apply IAS 34 Interim financial
reporting.
10. Trade and other receivables
31 December 31 December 30 June
2023
2022
2023
£
£
£
(unaudited)
(audited)
(unaudited)
Due within one year:
Trade and other receivables 1,137,648 1,468,165 136,250
Prepayments and accrued income 197,760 116,374 221,861
Other receivables - - 141,750
1,335,408 1,584,539 499,861
31 December 31 December 30 June
2023
2022
2023
£
£
£
(unaudited)
(audited)
(unaudited)
Due after more than one year:
Other receivables 141,750 141,750 -
141,750 141,750 -
11. Trade and other payables
31 December 31 December 30 June
2023
2022
2023
£
£
£
(unaudited)
(audited)
(unaudited)
Trade payables 27,055 33,078 44,995
Other tax and social security payable 69,714 319,265 58,185
Other payables and accruals 376,743 538,860 323,850
473,512 891,203 427,030
12. Cash generated from operations
Six months ended 31 Six months ended 31 Year ended
December December 30 June
2023 2022 2023
(unaudited) (unaudited) (audited)
£ £ £
Operating profit 409,348 361,405 915,210
Depreciation charge 76,688 75,390 150,377
Non-cash share option charges 25,646 45,420 97,328
Lease interest paid (476) (4,141) (6,471)
Other interest paid (1,141) (690) (20)
Profit on disposal of fixed assets (152) - -
(990,910) (1,240,846)
Increase in trade and other receivables
(9,425)
Increase/(decrease) in trade and other payables 184,060 1,146,549
(265,577)
Increase in provisions - - 20,000
Cash (used in) / generated from operations (296,937) 383,087 901,422
13. 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 2023 73,152 (40,324) -
Recognition of new lease under IFRS 16 559,803 (552,220) -
Depreciation (73,857) - (73,857)
Liability write-back at expiry - 5,293 (1) 5,293
Interest - (765) ( ) (765)
Lease payments - 35,506 -
Carrying value at 31 December 2023 559,098 (552,510) (69,329)
(1 The lease interest charge for the period under review included a credit
entry to write-off the balance of the old office lease liability at expiry of
the lease. The credit arose due to the final lease payment being applied on a
pro-rata basis for the final quarter. The final lease payment made was
£35,506 and not £40,500 which was the amount used when calculating the
initial value of the lease liability.)
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)
Contractual maturity analysis of lease liabilities as at 31 December 2023
Less than 3 months 3 - 12 months 1 - 5 Years Longer than 5 Years Total
£ £
£ £ £
Lease liabilities - 113,400 439,110 - 552,510
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