TIDMARC
RNS Number : 6319C
Arcontech Group PLC
24 February 2022
ARCONTECH GROUP PLC
("Arcontech" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 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 GBP1,451,298 (H1 2020:
GBP1,542,816) due to the challenging trading environment
-- Profit before tax decreased by 15.3% to GBP428,924 (H1 2020:
GBP506,237) 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 GBP424,425 (H1 2020: GBP462,238)
-- Recurring revenues represented 98% of total revenues for the period (H1 2020: 97%).
-- Net cash of GBP5,620,352 at 31 December 2021, up 12.5% (H1 2020: GBP4,997,822)
-- 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
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 GBP1.48 million, down 3.9% from GBP1.54 million in
the comparative six month period, reported profit before tax
("PBT") was GBP0.43 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
GBP0.42 million. These costs are not related to the underlying
business and amounted to GBP4,500 (H1 2020: GBP44,000).
Financing
Our balance sheet remains very robust with net cash of GBP5.6
million, GBP0.6 million higher than at 31 December 2020, and GBP0.2
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 Six months
ended 31 ended 31 Year ended
December December 30 June
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
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 31 December 30 June
Note 2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
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 Six months Year ended
ended 31 ended 31 30 June
December December
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
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 Share-based Retained Total
capital premium to be payments earnings
issued reserve
GBP GBP GBP GBP GBP GBP
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 31,642
2020 1,661,314 65,381 ([1]) 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 .
4. Operating profit is stated after release of accruals for
administrative expenses in respect of prior years of GBP4,500 (31
December 2020: GBP44,000; 30 June 2021: GBP88,000).
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
c a lcu l a t i on of d il u t ed e a r n i n gs per sh a re assu m
es c on v e rsi on of a ll po t e n t i a lly d i l u t ive o r d i
na ry shares, all of w h i ch a r ise f r om sh a re op t i on s. 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 Six months Year ended
ended 31 ended 31 30 June
December December
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP GBP GBP
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)
Decrease/(increase) in trade
and other receivables 147,432 (567,023) (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 Prepayments Lease Income
use asset liability statement
GBP GBP GBP GBP
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 Prepayments Lease Income
use asset liability statement
GBP GBP GBP GBP
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] At 31 December 2020 GBP31,642 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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