Company Announcements

Interim Results

Source: RNS
RNS Number : 1957R
Arcontech Group PLC
27 February 2019
 

 

 

 

ARCONTECH GROUP PLC

 

("Arcontech" or the "Group")

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018

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 2018.

 

 

Highlights:

 

·     Turnover increased by 13% to £1,371,107 (six months ended 31 December 2017: £1,213,776)

·     Profit before tax increased by 91% to £452,756 (six months ended 31 December 2017: £237,581)

·     Adjusted profit before tax (before release of accruals for administrative costs in respect of prior years) increased by 41% to £335,470 (six months ended 31 December 2017: £237,581)

·     Annual run-rate of recurring revenues at 31 December 2018 increased by 14% to £2.78 million (at 31 December 2017: £2.43 million).

·     Cash of £3,231,830 as at 31 December 2018 (31 December 2017: £2,663,935)

·     Trading in line and on track to meet management's full year expectations

 

 

Richard Last, Chairman of Arcontech Group, said:

 

"The Board is pleased with Arcontech's growth in revenue and adjusted profit before tax. Cash at the half year was £567,895 higher than the previous half year, further strengthening the Balance Sheet. We have continued to invest in product development to maintain and enhance our propositions to the market. Our sales cycle is often long and unpredictable however we remain positive about the Group's long term prospects and the Board expects results for the full year to be in line with expectations."

 

 

Enquiries:

 

Arcontech Group plc

020 7256 2300

Richard Last, 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

 

 

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

 

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 am pleased to report that Arcontech has continued to grow profits in the six-month period ended 31 December 2018, reporting an adjusted profit before tax of £335,470 (six months ended 31 December 2017: £237,581) an increase of 41%. Turnover increased by 13% to £1,371,107 compared to the corresponding six-month period in 2017 where turnover amounted to £1,213,776. This reflects the growth in recurring annual licence fees, primarily from existing customers, which on an annualised basis amounted to £2.78 million at 31 December 2018, compared to £2.43 million as at 31 December 2017. Fully diluted earnings per share were 3.72 pence per share compared to 2.36 pence per share for the corresponding period last year.

 

During the half year to 31 December 2018 Arcontech's increase in revenues reflects the full year effect of sales made during the year to 30 June 2018 and the impact of selling more products into the existing customer base. We are continuing to trial our Desktop software solution and have made a number of enhancements following positive comments from customers and prospective users. Usage has increased with existing customers by approximately 75% to 70.  We also continue to see demand for our Excelerator product with additional users to an approximate value of £225,000-pa being deployed by two existing clients.

 

For the server-side of the business our MVCS (Multi-Vendor Contribution System) and Real-time Cache continue to make a significant contribution to group revenue. We have continued to invest in the development and enhancement of these products to further optimise their efficiency whilst enhancing the customer experience. This work helps integrate the products further within the client environment, however, new sales in this area are significant projects in themselves and although we have a number of qualified prospects, none have contracted in the half year. A further benefit of that work is that both the MVCS and our Real-time Cache are increasingly seen as preferable alternatives to competitive offerings which also help our pipeline.

 

 

Financing

 

 The Group has a strong financial position with cash balances at the 31 December 2018 of £3,231,830 (31 December 2017 £2,663,935), an increase of £567,895, providing a sound basis for continued investment in the business.  The small increase in cash between 30 June 2018 and 31 December 2018 principally reflects timing differences in relation to advance payments.

 

Dividend

 

No interim dividend is proposed to be paid in respect of the half year, although the Board does expect to continue its policy of paying a dividend following the announcement of its full year results.

 

Employees

 

I should like to thank our employees and directors for their continued hard work and dedication, which I know is appreciated by our customers and shareholders alike.

 

Outlook

 

Arcontech has a sound business base supported by a high level of recurring revenues and a strong balance sheet. Our business is international with customers operating in the UK, Europe, the USA, Hong Kong and Singapore. As such it is the Board's view that we are unlikely to be adversely affected by Brexit. We propose to maintain ongoing investment in product development and enhancement, and as a result of working with existing customers we are delivering world class solutions which provide cost savings and competitive advantage. As we repeatedly note in our statements to shareholders we remain mindful of the long and unpredictable sales cycles we often face and the challenges this brings in predicting the timing of contract wins.  Nevertheless, the Board views the long term future for the business with optimism and in the short term expects results for the full year to be in line with expectations.

 

 

Richard Last

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

 

 

 

2018

 

2017

 

2018

 

 

 

(unaudited)

 

(unaudited)

 

(audited)

 

 

 

£

 

£

 

£

 

 

 

 

 

 

 

 

Revenue

 

 

1,371,107

 

1,213,776

 

2,519,699

 

 

 

 

 

 

 

 

Administrative costs

 

 

(931,902)

 

(982,528)

 

(1,958,176)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

4

439,205

 

231,248

 

561,523

 

 

 

 

 

 

 

 

Finance income

 

 

13,551

 

6,333

 

14,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

 

452,756

 

237,581

 

575,632

 

 

 

 

 

 

 

 

Taxation

 

6

45,318

 

69,452

 

339,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period after tax

 

 

 

498,074

 

307,033

 

 

915,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

498,074

 

307,033

 

915,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit per share (basic)

 

 

3.77p

 

2.42p

 

7.14p

 

 

 

 

 

 

 

 

Adjusted* Profit per share (basic)

 

 

2.88p

 

2.42p

 

6.94p

 

 

 

 

 

 

 

 

Profit per share (diluted)

 

 

3.72p

 

2.36p

 

7.09p

 

 

 

 

 

 

 

 

Adjusted* Profit per share (diluted)

 

 

2.84p

 

2.36p

 

6.90p

 

*Adjusted for release of accruals for administrative expenses in respect of prior years

 

All of the results relate to continuing operations.

 

 

 

 

GROUP BALANCE SHEET
 

 

 

31 December 2018

(unaudited)

 

31 December 2017

(unaudited)

 

30 June

2018

(audited)

 

 

£

 

£

 

£

Non-current assets

 

 

 

 

 

 

Goodwill

 

1,715,153

 

1,715,153

 

1,715,153

Property, plant and equipment

 

11,398

 

24,834

 

17,941

Deferred tax asset

 

270,000

 

-

 

270,000

Trade and other receivables

 

141,750

 

141,750

 

141,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-current assets

 

2,138,301

 

1,881,737

 

2,144,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Trade and other receivables

 

320,608

 

624,781

 

310,123

Cash and cash equivalents

 

3,231,830

 

2,663,935

 

3,210,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

3,552,438

 

3,288,716

 

3,520,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

(769,105)

 

(865,561)

 

(863,156)

Deferred income

 

(801,409)

 

(1,233,990)

 

(1,026,119)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

(1,570,514)

 

(2,099,251)

 

(1,889,275)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net current assets

 

            1,981,924

 

1,189,465

 

1,630,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

4,120,225

 

3,071,202

 

3,775,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

1,651,314

 

1,600,375

 

1,651,314

Share premium account

 

56,381

 

24,881

 

56,381

Share option reserve

 

74,101

 

225,591

 

56,366

Retained earnings

 

2,338,429

 

1,220,355

 

2,011,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,120,225

 

3,071,202

 

3,775,750

 

 

 

 

 

 

 

 

GROUP CASH FLOW STATEMENT

 

 

 

Note

Six months ended 31

December

 

Six months ended 31

December

 

Year ended

30 June

 

 

 

2018

 

2017

 

2018

 

 

 

(unaudited)

 

(unaudited)

 

(audited)

 

 

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

Net cash generated from operating activities

 

9

181,880

 

94,113

 

 

 

552,111

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest received

 

 

13,551

 

6,333

 

14,109

 

Purchases of plant and equipment

 

 

 

(2,325)

 

 

-

 

 

 (2,090)

 

 

 

 

 

 

 

 

Net cash generated from investing activities

 

 

 

11,226

 

 

6,333

 

 

            12,019

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issue of shares

 

 

-

 

52,778

 

135,217

 

 

 

 

 

 

 

 

Dividends paid

 

 

(171,334)

 

(125,760)

 

(125,760)

 

 

 

 

 

 

 

 

Net cash (used in)/generated from financing activities

 

 

 

(171,334)

 

 

(72,982)

 

 

9,457

 

 

Net increase in cash and cash equivalents

 

 

 

 

21,772

 

 

 

27,464

 

 

 

         573,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

 

3,210,058

 

 

2,636,471

 

 

       2,636,471

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

 

3,231,830

 

2,663,935

 

      3,210,058

 

 

 

 

 

 

 

 

 

GROUP STATEMENT OF CHANGES IN EQUITY 

 

Share

capital

Share

premium

Share-based paymentsreserve

Retained

earnings

 Total

 

 

              £

                 £

               £

                £

              £

At 1 July 2017

1,562,676

9,802

188,425

1,039,082

2,799,985

Total comprehensive income for the period

-

 

-

 

-

 

307,033

 

 

307,033

 

 

 

 

Issue of shares

37,699

15,079

-

-

52,778

Dividends paid

-

-

-

(125,760)

(125,760)

Share-based payments

-

-

37,166

-

37,166

At 31 December 2017

1,600,375

24,881

225,591

1,220,355

3,071,202

Total comprehensive income for the period

 

 

 

 

 

-

-

-

 

608,051

 

608,051

 

Issue of shares

50,939

31,500

-

-

82,439

Share-based payments

-

-

14,058

 

-

14,058

Realisation of share option reserve

-

-

(183,283)

 

183,283

-

At 30 June 2018

1,651,314

56,381

56,366

2,011,689

3,775,750

Total comprehensive income for the period

 

 

-

 

-

 

 

-

 

 

498,074

 

498,074

Dividends paid

-

-

-

(171,334)

(171,334)

Share-based payments

-

-

17,735

 

-

 

17,735

 

At 31 December 2018

1,651,314

56,381

74,101

2,338,429

4,120,225

 

 

 

 

 

 

 

 

 

NOTES TO THE FINANCIAL INFORMATION

 

1.   The figures for the six months ended 31 December 2018 and 31 December 2017 are unaudited and do not constitute statutory accounts. The interim results have been prepared using accounting policies which are consistent with International Financial Reporting Standards as adopted by the European Union and are expected to be adopted in the next annual accounts.

2.   The financial information for the year ended 30 June 2018 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 2018, 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 1st 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 £117,286 (31 December 2017: Nil; 30 June 2018: £25,500).

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 2018 of 13,210,510 (31 December 2017: 12,675,498; 30 June 2018: 12,396,220).

The number of dilutive shares under option at 31 December 2018 was 189,343 (31 December 2017: 330,023; 30 June 2018: 77,699). 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.

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 2018 of 1.30 pence per share (2017 1.0 pence per share) was paid on 4 October 2018.

8.   The Directors have elected not to apply IAS34 Interim financial reporting.

 

9.   Net cash generated from operations

 

 

Six months ended 31

December

 

Six months ended 31

December

 

Year ended

30 June

 

 

 

2018

 

2017

 

2018

 

 

 

(unaudited)

 

(unaudited)

 

(audited)

 

 

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

Operating profit

 

439,205

 

231,248

 

561,523

 

 

 

 

 

 

 

 

 

Depreciation charge

 

8,868

 

8,991

 

17,974

 

 

 

 

 

 

 

 

 

Non cash share option charges

 

17,735

 

37,166

 

51,224

 

 

Increase in trade and other receivables

 

(10,485)

 

(379,833)

 

 

(134,626)

 

 

 

 

 

 

 

 

 

(Decrease)/increase in trade and other payables

 

(318,761)

 

196,541

 

 

(13,436)

 

 

 

 

 

 

 

 

 

Tax recovered

 

45,318

 

-

 

69,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash generated from operations

 

181,880

 

94,113

 

552,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                   

 

 


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