TIDMARC
RNS Number : 9664P
Arcontech Group PLC
23 February 2021
ARCONTECH GROUP PLC
("Arcontech" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 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 GBP1,542,816 (six months ended
31 December 2019: GBP1,473,651)
-- Profit before tax decreased by 8% to GBP506,237 (six months
ended 31 December 2019: GBP551,847) reflecting the full cost of
investment in our sales team
-- Annual run-rate of recurring revenues at 31 December 2020
increased by 4% to GBP2.98 million (at 31 December 2019: GBP2.87
million)
-- Net cash of GBP4,997,822 at 31 December 2020, an increase of
GBP597,367 on the level at 31 December 2019 ( GBP4,400,455)
-- 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 GBP1.54 million, up 4.7% from GBP1.47 million in the
previous year. Profit before tax (PBT) was GBP506,237, 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 GBP462,237.
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
GBP4,997,822 at the end of the period, GBP597,367 above the level
at 31 December 2019 and broadly the same as the balance of
GBP5,006,969 at June 30, 2020, after paying GBP333,594 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 Six months
ended 31 ended 31 Year ended
December December 30 June
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP GBP GBP
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
31 December 31 December 30 June
Note 2020 2019 2020
(unaudited) (unaudited) (audited)
GBP GBP GBP
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 Six months Year ended
ended 31 ended 31 30 June
December December
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP GBP GBP
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 50,642 - -
of options
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 Share Shares Share-based Retained Total
capital premium to be payments earnings
issued reserve
GBP GBP GBP GBP GBP GBP
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* 206,797 4,012,457 5,977,591
--------------- ------------------- -------------------- -------------------- ------------------ ------------------- -------------------
* 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.
NOTES TO THE FINANCIAL INFORMATION
1. 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.
2. 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.
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 GBP44,000 (31
December 2019: GBP42,500; 30 June 2020: GBP86,500).
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 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
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 during the period.
7. 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.
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
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP GBP GBP
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
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 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 Prepayments Lease Income
use asset liability statement
GBP GBP GBP GBP
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)
----------- ------------ ----------- -----------
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