Arcontech Group PLC Half-year Report (5683F)

TIDMARC

RNS Number : 5683F

Arcontech Group PLC

22 February 2018

ARCONTECH GROUP PLC

("Arcontech" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHSED 31 DECEMBER 2017

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 2017.

Highlights:

   --     Turnover increased by 9% to GBP1,213,776 (six months ended 31 December 2016: GBP1,115,232) 

-- Profit before tax increased by 10% to GBP237,581 (six months ended 31 December 2016: GBP216,270)

-- Annual run-rate of recurring revenues at 31 December 2017 increased by 13% to GBP2.43 million (at 31 December 2016: GBP2.15 million). Net cash of GBP2,663,935 as at 31 December 2017 (31 December 2016: GBP2,089,855)

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

Richard Last, Chairman of Arcontech Group, said:

"Arcontech's ongoing investment in product development and enhancement, coupled with the flexibility provided by its strong balance sheet and high level of recurring revenues, supports the Board's confidence in the Groups long term future and its ability to meet the challenges in its business environment. Although 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, the Board expects results for the full year to be in line with expectations."

Enquiries:

 
                                   020 7256 
 Arcontech Group plc                2300 
 Richard Last, Chairman and 
  Non-Executive Director 
 Matthew Jeffs, Chief Executive 
 
                                   020 7220 
 finnCap Ltd (Nomad & Broker)       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 2017, reporting an operating profit of GBP231,248 (2016: GBP212,006) and profit before tax of GBP237,581 (2016: GBP216,270). Turnover increased by 9% to GBP1,213,776 compared to the corresponding six-month period where turnover amounted to GBP1,115,232. This reflects the continued steady growth in recurring annual licence fees, which on an annualised basis amounted to GBP2.43 million at 31 December 2017, compared to GBP2.15 million as at 31 December 2016.

Fully diluted earnings per share were 2.36 pence per share compared to 2.45 pence per share for the corresponding period last year. This reduction is attributable to the reduction in tax credits in respect of our investment in eligible product Research and Development compared to the same period last year.

During the half year to 31 December 2017 we have secured another client for our new desktop software solution, now giving Arcontech a presence in two large global financial institutions. This new client sees much potential in the offering and we hope to expand its usage across the organisation as we jointly identify and incorporate additional features and functionality to enable greater efficiencies to be achieved. Details of the product enhancements have been well received by our trial base of Tier 1 banks. Usage of our Excelerator product has also grown with 70 additional positions across three existing clients.

For the server-side of the business we have been busy installing the previously contracted and reported MVCS upgrades which have gone to plan. Arcontech has also signed an agreement with a new client for our real-time cache and calculations engine which is scheduled to be commissioned in the near future.

As usual the sales cycles remain long and unpredictable due mainly to the nature of our customer base and our prospects. To an extent the situation has been exacerbated by our client's need to focus on meeting MiFID II and GDPR requirements. We have relocated our Hong Kong sales resource to London to enable us to focus on the larger global organisations which are in the main, headquartered in London, New York and Europe.

Financing

Arcontech had net cash balances at 31 December 2017 of GBP2,663,935 (31 December 2016: GBP2,089,855). The small increase in cash resources between the year-end and 31 December, 2017, reflects the payment of our maiden dividend and timing issues related to the collection of year-end debtors and the Research and Development tax credit. The Group's strong financial position provides a sound basis for future growth and continued investment in product development.

Dividend

Although no interim dividend is proposed, subject to continued growth and meeting expectations for the business, the Board expects to continue its policy of paying a dividend following the announcement of its full year results.

Employees

I should like to take this opportunity to thank our employees and Directors for their hard work and dedication, and I look forward to continuing to work together in the future.

Outlook

Arcontech's ongoing investment in product development and enhancement, coupled with the flexibility provided by its strong balance sheet and high level of recurring revenues, supports the Board's confidence in the Groups long term future and its ability to meet the challenges in its business environment. Although 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, the Board 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

 
                              Six months    Six months    Year ended 
                                   ended         ended       30 June 
                                      31            31 
                                December      December 
                                    2017          2016          2017 
                             (unaudited)   (unaudited)     (audited) 
                                     GBP           GBP           GBP 
 
 Revenue                       1,213,776     1,115,232     2,307,751 
 
 Administrative costs          (982,528)     (903,226)   (1,942,430) 
 
 
 Operating profit                231,248       212,006       365,321 
 
 Finance income                    6,333         4,264         7,942 
 
 
 Profit before taxation          237,581       216,270       373,263 
 
 Taxation                         69,452        96,988        96,988 
 
 
 
   Profit for the period 
   after tax                     307,033       313,258       470,251 
 
 
 Total comprehensive 
  income                         307,033       313,258       470,251 
 
 
 Profit per share 
  (basic)                          2.42p         2.53p         3.79p 
 
 Profit per share 
  (diluted)                        2.36p         2.45p         3.68p 
 

All of the results relate to continuing operations.

 
 BALANCE SHEETS 
 
                                 31 December     31 December       30 June 
                                        2017            2016          2017 
                                 (unaudited)     (unaudited)     (audited) 
                                         GBP             GBP           GBP 
 Non-current assets 
 Goodwill                          1,715,153       1,715,153     1,715,153 
 Property, plant 
  and equipment                       24,834          43,557        33,825 
 Trade and other 
  receivables                        141,750         141,750       141,750 
 
 
 Total non-current 
  assets                           1,881,737       1,900,460     1,890,728 
 
 
 Current assets 
 Trade and other 
  receivables                        624,781         592,378       175,496 
 Cash and cash equivalents         2,663,935       2,089,855     2,636,471 
 
 
 Total current assets              3,288,716       2,682,233     2,811,967 
 
 
 Current liabilities 
 Trade and other 
  payables                         (865,561)       (858,332)     (915,101) 
 Deferred income                 (1,233,990)     (1,155,942)     (987,609) 
 
 
 Total current liabilities       (2,099,251)     (2,014,274)   (1,902,710) 
 
 
 Net current assets               1,189,465          667,959       909,257 
 
 
 Net assets                        3,071,202       2,568,419     2,799,985 
 
 
 Equity 
 Share capital                     1,600,375       1,548,886     1,562,676 
 Share premium account                24,881           4,286         9,802 
 Share option reserve                225,591         133,158       188,425 
 Retained earnings                 1,220,355         882,089     1,039,082 
 
 
                                   3,071,202       2,568,419     2,799,985 
 
 

GROUP CASH FLOW STATEMENT

 
                                        Six months    Six months    Year ended 
                                             ended         ended       30 June 
                                                31            31 
                                          December      December 
                                              2017          2016          2017 
                                       (unaudited)   (unaudited)     (audited) 
                                               GBP           GBP           GBP 
 
 
   Net cash generated from 
   operating activities                     94,113       450,431      974,800 
 
 Investing activities 
 
 Interest received                           6,333         4,264         7,942 
 
   Purchases of plant and 
   equipment                                     -       (7,415)       (8,152) 
 
 Net cash generated from/(invested 
  in) investing activities                   6,333       (3,151)         (210) 
                                      ------------  ------------  ------------ 
 
 Financing activities 
 
 Issue of shares                            52,778         9,416        28,722 
 
 Dividends paid                          (125,760)             -             - 
 
 Net cash (used in)/generated 
  from financing activities               (72,982)         9,416        28,722 
                                      ------------  ------------  ------------ 
 
 
   Net increase in cash 
   and cash equivalents                     27,464       456,696     1,003,312 
 
 
 Cash and cash equivalents 
  at beginning of period                 2,636,471     1,633,159     1,633,159 
 
 Cash and cash equivalents 
  at end of period                       2,663,935     2,089,855    2,636,471 
                                      ============  ============  ============ 
 

STATEMENT OF CHANGES IN EQUITY

 
                            Share      Share   Share-based    Retained       Total 
                          capital    premium      payments    earnings 
                                                   reserve 
                           GBP           GBP           GBP         GBP         GBP 
 At 1 July 
  2016                  1,541,732      2,024       119,692     568,831   2,232,279 
 Total comprehensive 
  income for 
  the period                    -          -             -     313,258     313,258 
 Issue of shares            7,154      2,262             -           -       9,416 
 Share-based 
  payments                      -          -        13,466           -      13,466 
 At 31 December 
  2016                  1,548,886      4,286       133,158     882,089   2,568,419 
---------------------  ----------  ---------  ------------  ----------  ---------- 
 Total comprehensive 
  income for 
  the period                    -          -             -     156,993     156,993 
 Issue of shares           13,790      5,516             -           -      19,306 
 Share-based 
  payments                      -          -        55,267           -      55,267 
 At 30 June 
  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 
---------------------  ----------  ---------  ------------  ----------  ---------- 
 

NOTES TO THE FINANCIAL INFORMATION

1. The figures for the six months ended 31 December 2017 and 31 December 2016 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 2017 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 2017, 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. 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 2017 of 12,675,498 (31 December 2016: 12,360,981; 30 June 2017: 12,396,220). The number of shares for the period ended 31 December 2016 take into account the share consolidation of 125:1 carried out in September 2016.

The number of dilutive shares under option at 31 December 2017 was 330,023 (31 December 2016: 427,317; 30 June 2017: 367,595). 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.

5. 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.

6. A final dividend in respect of the year ended 30 June 2017 of 1.0 pence per share (2016 Nil) was paid on 29 September 2017.

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

This information is provided by RNS

The company news service from the London Stock Exchange

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February 22, 2018 02:00 ET (07:00 GMT)