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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