INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020
ARCONTECH GROUP PLC
(“Arcontech” or the “Group”)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER
2020
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 2020.
Highlights:
- Turnover
increased by 4.7% to £1,542,816 (six months ended 31 December 2019: £1,473,651)
- Profit
before tax decreased by 8% to £506,237 (six months ended 31 December 2019:
£551,847) reflecting the full cost of investment in our sales
team
- Annual
run-rate of recurring revenues at 31 December 2020 increased by 4% to
£2.98 million (at 31 December 2019: £2.87 million)
- Net
cash of £4,997,822 at
31 December 2020, an increase of £597,367 on
the level at 31 December 2019 ( £4,400,455)
- Profit
before tax for the year to 30 June 2021 is expected to be in line with market
expectations
Geoff Wicks, Chairman of Arcontech, said:
“The
Board is pleased with Arcontech’s progress in the first half of the year. While
the effects of the COVID-19 pandemic
have continued to overshadow the market we have grown revenue with the addition
of an important new customer and a significant upgrade to an existing tier one
customer. At the same time we have maintained good profit levels after investing in future growth. We
believe we are in a good position to accelerate growth once market conditions
improve.
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/Simon Hicks | |
To access more
information on the Group please visit: 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
I was delighted to join the board of Arcontech as a Non-Executive
Director in July 2020, before becoming
Chairman in September 2020. I
would like to thank Richard Last for his stewardship of the Company over the
last thirteen years,
overseeing the Company’s
transformation and growth to be highly profitable with an
impressive blue-chip customer base.
In these uncertain times Arcontech has continued to
perform well,
with sound revenue growth but a reduction in profit before tax due to the
effect of the investment in building the sales team which is
expected to enhance future earnings.
The market continues to be challenging with customer contact limited and decisions being
delayed due to remote working. However, the enhanced sales team is making good progress growing the
list of prospective new customers, which bodes well for the future.
Revenue was £1.54 million, up 4.7% from £1.47 million in the previous
year. Profit before tax (PBT) was £506,237, 8% lower than the same period
last year,
reflecting the additional investment in sales capability. Costs continue to be
under tight control. Adjusted profit before tax, which is PBT before the
release of accruals for administrative costs in respect of prior years, was
down 9% to £462,237.
Our strategy is to support our existing customers and
to maximise opportunities to provide a wider range of services to them. At the
same time we have invested in building our sales capability to grow our
customer base globally. We also continue to focus on our desktop products to
augment our server-side business.
The enlarged sales team has made good progress
reaching out to potential new customers. The prevailing market conditions have meant that the sales
cycle is taking much longer than in
normal times. We are pleased with the progress made and are confident that
growth will improve once we are in a more normal market.
Financing
Our cash position remains excellent, with cash balances of £4,997,822 at the end of
the period, £597,367 above the level at 31 December 2019 and broadly the same
as the balance of £5,006,969 at June 30, 2020, after paying £333,594 in
dividends. This enables us to invest in the business, maintaining our larger
sales team and developing our products.
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.
Employees
Our staff are now all working from home and I would like to thank
them for their hard work adapting to this challenge. The Company has been able to continue to
provide full support to existing customers, which has included performing software upgrades and
helping with data centre moves whilst at the same time supporting proof of
concept projects and progressing the development of new products.
Outlook
We expect conditions in the second half of the year to
remain challenging. It seems unlikely that our sales team will have
greater access to customers until at least the end of the year, however, we are confident that we will build on current
growth once market conditions improve.
Geoff Wicks
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 |
||||
| 2020 | 2019 | 2020 | |||||
|
(unaudited) £ |
(unaudited) £ |
(audited) £ |
|||||
| Revenue | 1,542,816 | 1,473,651 | 2,955,314 | ||||
|
Administrative costs |
(1,034,043) | (924,211) | (1,917,502) | ||||
|
Operating profit |
4 | 508,773 | 549,440 | 1,037,812 | |||
|
Finance income |
8,442 | 16,573 | 29,914 | ||||
|
Finance costs |
(10,978) | (14,166) | (26,757) | ||||
|
Profit before taxation |
506,237 | 551,847 | 1,040,949 | ||||
| Taxation | 6 | – | 9,734 | 176,734 | |||
|
Profit for the period after tax |
|
506,237 | 561,581 |
1,217,703 |
|||
|
Total comprehensive income |
506,237 | 561,581 | 1,217,703 | ||||
|
Profit per share (basic) |
3.82p | 4.25p | 9.22p | ||||
|
Adjusted* Profit per share (basic) |
3.49p | 3.93p | 8.56p | ||||
|
Profit per share (diluted) |
3.76p | 4.17p | 9.03p | ||||
|
Adjusted* Profit per share (diluted) |
3.43p | 3.85p | 8.39p |
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
|
Note |
31 December 2020 |
31 December 2019 |
30 June 2020 |
|||
|
(unaudited) £ |
(unaudited) £ |
(audited) £ |
||||
|
Non-current assets |
||||||
| Goodwill | 1,715,153 | 1,715,153 | 1,715,153 | |||
|
Property, plant and equipment |
15,697 | 17,084 | 19,316 | |||
|
Right of use asset |
10 | 438,908 | 588,212 | 512,061 | ||
|
Deferred tax asset |
452,000 | 285,000 | 452,000 | |||
|
Trade and other receivables |
141,750 | 141,750 | 141,750 | |||
|
Total non-current assets |
2,763,508 | 2,747,199 | 2,840,280 | |||
|
Current assets |
||||||
|
Trade and other receivables |
759,655 | 608,910 | 192,632 | |||
|
Cash and cash equivalents |
4,997,822 | 4,400,455 | 5,006,969 | |||
|
Total current assets |
5,757,477 | 5,009,365 | 5,199,601 | |||
|
Current liabilities |
||||||
|
Trade and other payables |
(643,512) | (694,215) | (655,907) | |||
|
Deferred income |
(1,483,908) | (1,513,941) | (1,195,130) | |||
|
Lease liabilities |
10 | (162,000) | (162,000) | (141,693) | ||
|
Total current liabilities |
(2,289,420) | (2,370,156) | (1,992,730) | |||
|
Non-current liabilities |
||||||
|
Lease liabilities |
10 | (253,974) | (392,405) | (344,303) | ||
|
Total non-current liabilities |
(253,974) | (392,405) | (344,303) | |||
|
Net current assets |
3,468,057 | 2,639,209 | 3,206,871 | |||
|
Net assets |
5,977,591 | 4,994,003 | 5,702,848 | |||
| Equity | ||||||
|
Share capital |
1,661,314 | 1,651,314 | 1,651,314 | |||
|
Share premium account |
65,381 | 56,381 | 56,381 | |||
|
Shares to be issued |
31,642 | – | – | |||
|
Share option reserve |
206,797 | 145,352 | 188,639 | |||
|
Retained earnings |
4,012,457 | 3,140,956 | 3,806,514 | |||
| 5,977,591 | 4,994,003 | 5,702,848 | ||||
GROUP CASH FLOW STATEMENT
| Note |
Six months ended 31 December |
Six months ended 31 December |
Year ended 30 June |
||||
| 2020 | 2019 | 2020 | |||||
|
(unaudited) £ |
(unaudited) £ |
(audited) £ |
|||||
|
Cash generated from operating activities |
9 | 336,866 | 646,861 |
1,315,421 |
|||
|
Tax recovered |
6 | – | 9,734 | 9,734 | |||
|
Net cash generated from operating activities |
336,866 | 656,595 |
1,325,155 |
||||
|
Investing activities |
|||||||
|
Interest received |
8,442 | 16,573 | 29,914 | ||||
|
Purchases of plant and equipment |
(1,482) |
(5,772) |
(12,750) |
||||
|
Net cash generated from investing activities |
6,960 |
10,801 |
17,164 |
||||
|
Financing activities |
|||||||
|
Proceeds from the exercise of options |
50,642 | – | – | ||||
|
Dividends paid |
(333,594) | (263,591) | (263,591) | ||||
|
Payment of lease liabilities |
(70,021) | (66,834) | (135,243) | ||||
|
Net cash used in financing activities |
(352,973) | (330,425) | (398,834) | ||||
|
Net (decrease) / increase in cash and cash equivalents |
(9,147) |
336,971 |
943,485 |
||||
|
Cash and cash equivalents at beginning of period |
5,006,969 |
4,063,484 |
4,063,484 |
||||
|
Cash and cash equivalents at end of period |
4,997,822 | 4,400,455 | 5,006,969 |
GROUP
STATEMENT OF CHANGES IN EQUITY
|
Share capital |
Share premium |
Shares to be issued | Share-based payments reserve |
Retained earnings |
Total |
|
| £ | £ | £ | £ |
£ |
£ | |
| At 1 July 2019 | 1,651,314 | 56,381 | – | 56,366 | 2,011,689 | 3,775,750 |
| Total comprehensive income for the period |
– |
– |
– |
– |
561,581 |
561,581 |
| Dividends paid | – | – | – | – | (263,591) | (263,591) |
| Share-based payments | – | – | – | 45,705 | – | 45,705 |
| At 31 December 2019 | 1,651,314 | 56,381 | – | 145,352 | 3,140,956 | 4,994,003 |
|
Total comprehensive income for the period |
– |
– |
– |
– |
656,122 |
656,122 |
| Share-based payments |
– |
– |
– |
52,723 |
– |
52,723 |
| Realisation of share option reserve |
– |
– |
– |
(9,436) |
9,436 |
– |
| At 30 June 2020 | 1,651,314 | 56,381 | – | 188,639 | 3,806,514 | 5,702,848 |
|
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 |
| At 31 December 2020 | 1,661,314 | 65,381 | 31,642[1] | 206,797 | 4,012,457 | 5,977,591 |
NOTES
TO THE FINANCIAL INFORMATION
- The figures for the six months ended 31 December
2020 and 31 December 2019 are unaudited and do not constitute statutory
accounts. The interim results have been prepared on a going concern basis using
accounting policies which are consistent with International Financial Reporting
Standards as adopted by the European Union and with the accounting policies
adopted in the most recent annual financial statements to 30 June 2020. - The financial information for the year ended 30
June 2020 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 2020, 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. - 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. - Operating profit is stated after release of
accruals for administrative expenses in respect of prior years of £44,000 (31
December 2019: £42,500; 30 June 2020: £86,500). - 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 2020 of 13,259,206 (31 December 2019:
13,210,510; 30 June 2020: 13,210,510).
The number of
dilutive shares under option at 31 December 2020 was 214,217 (31 December 2019:
256,341; 30 June 2020: 268,484). 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.
- 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. - A final dividend in respect of the year ended 30
June 2020 of 2.5 pence per share (2019: 2.0 pence per share) was paid on 9
October 2020. - The Directors have elected not to apply IAS 34 Interim financial reporting.
- Cash generated from operations
|
Six months ended 31 December |
Six months ended 31 December |
Year ended 30 June |
||||||||||
| 2020 | 2019 | 2020 | ||||||||||
|
(unaudited) £ |
(unaudited) £ |
(audited) £ |
||||||||||
| Operating profit | 508,773 | 549,440 | 1,037,812 | |||||||||
| Depreciation charge | 78,254 | 77,226 | 154,747 | |||||||||
|
Non-cash share option charges |
51,457 | 45,705 | 98,428 | |||||||||
| Lease interest paid | (10,978) | (14,166) | (26,757) | |||||||||
|
Adjustment for adoption of IFRS 16 |
– | (40,500) | (37,125) | |||||||||
|
(Increase)/decrease in trade and other receivables |
(567,023) | (345,035) |
71,244 |
|||||||||
|
Increase in trade and other payables |
276,383 | 374,191 |
17,072 |
|||||||||
|
Cash generated from operations |
336,866 | 646,861 | 1,315,421 | |||||||||
- 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 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) | |||
|
Right of use asset £ |
Prepayments £ |
Lease liability £ |
Income statement £ |
||||
| As at 1 July 2019 | – | – | – | – | |||
|
Recognised on adoption of IFRS 16 |
661,739 | (40,500) | (621,239) | – | |||
| Depreciation | (73,527) | – | – | (73,527) | |||
| Interest | – | – | (14,166) | (14,166) | |||
| Lease payments | – | – | 81,000 | – | |||
|
Carrying value at 31 December 2019 |
588,212 | (40,500) | (554,405) | (87,693) | |||
[1] 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.
Arcontech Interim Results for the six months ended 31 December 2020