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Share Name Share Symbol Market Type Share ISIN Share Description
Arcontech Group Plc LSE:ARC London Ordinary Share GB00BDBBJZ03 ORD GBP0.125
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -2.50 -1.35% 182.50 180.00 185.00 185.00 173.00 185.00 48,716 16:16:07
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 3.0 1.1 8.5 21.6 24

Arcontech Group PLC Interim Results

05/03/2020 7:00am

UK Regulatory (RNS & others)


Arcontech (LSE:ARC)
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TIDMARC

RNS Number : 0594F

Arcontech Group PLC

05 March 2020

ARCONTECH GROUP PLC

("Arcontech" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHSED 31 DECEMBER 2019

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 2019.

Highlights:

   --     Turnover increased by 7.5% to GBP1,473,651 (six months ended 31 December 2018: GBP1,371,107) 

-- Profit before tax increased by 22% to GBP551,847 (six months ended 31 December 2018: GBP452,756)

-- Adjusted profit before tax (before release of accruals for administrative costs in respect of prior years but including share based payments) increased by 52% to GBP509,347 (six months ended 31 December 2018: GBP335,470)

-- Annual run-rate of recurring revenues at 31 December 2019 increased by 3% to GBP2.87 million (at 31 December 2018: GBP2.78 million)

   --     Cash of GBP4,400,455   as at 31 December 2019 (31 December 2018: GBP3,231,830) 
   --     Trading in line and on track to meet full year market 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 GBP1,168,625 higher than the previous half year, further strengthening the Balance Sheet and demonstrating the cash generative and robust nature of the business. We have continued to invest in product development to add value to existing and prospective clients whilst making our products more competitive and compelling when compared with alternatives. Whilst there remain global factors that can affect our always long and unpredictable sales cycle, 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 
 Camille Gochez - ECM 
 

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 2019 in line with expectations, reporting an adjusted profit before tax of GBP509,347 (six months ended 31 December 2018: GBP335,470) an increase of 52%. Turnover increased by 7.5% to GBP1,473,651 compared to the corresponding six-month period in 2018 where turnover amounted to GBP1,371,107. This reflects the growth in recurring annual licence fees, primarily from existing customers, which on an annualised basis amounted to GBP2.87 million at 31 December 2019, compared to GBP2.78 million as at 31 December 2018. Declared fully diluted earnings per share were 4.17 pence per share compared to 3.72 pence per share for the corresponding period last year, while adjusted fully diluted earnings per share increased by 36% to 3.85p over the same period.

During the half year to 31 December 2019 Arcontech's increase in revenues reflects the full year effect of sales made during the year to 30 June 2019 and the impact of selling more Excelerator Add-in's into the existing customer base. During the half year and in the run up to Brexit we did notice decisions being put on hold as clients considered their options. That said, we continue to trial our Desktop software solution with a number of blue chip organisations and usage has increased by approximately 71% to 120 (70 in December 2018). We also added a new client user. Excelerator users have remained stable.

For the server-side of the business which consists of our MVCS (Multi-Vendor Contribution System) and Real-time Cache, we have continued developments to provide visualisation of data throughput, which is in Alpha-test and for which client feedback is very positive. This will make our server-side software more competitive and add value in terms of faster identification and resolution of any data or performance issues thus reducing risk for the client.

Financing

The Group has a strong financial position with cash balances at the 31 December 2019 of GBP4,400,455 (31 December 2018 GBP3,231,830), an increase of GBP1,168,625, providing a sound basis for continued investment in the business and demonstrating the cash generative nature of the business. The increase in cash between 30 June 2019 and 31 December 2019 principally reflects net cash inflows from operations less dividends paid to shareholders during the period.

Dividend

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

Employees

I would 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 robust 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. We propose to maintain ongoing investment in product development and to bolster our sales efforts. 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. The Board is also currently monitoring the Coronavirus and assessing the possible impact on the Group's business. While there has been no impact to date, if the spread of the virus is prolonged it may lead to companies delaying capital expenditure, which may reduce new business. There is expected to be no impact on existing revenues. That said, 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 market expectations.

Richard Last

Chairman and Non-Executive Director

GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

 
                                Note   Six months   Six months     Restated* 
                                         ended 31     ended 31    Year ended 
                                         December     December       30 June 
                                             2019         2018          2019 
                                              GBP          GBP           GBP 
 
 Revenue                                1,473,651    1,371,107     2,841,362 
 
 Administrative costs                   (924,211)    (931,902)   (1,936,829) 
 
 
 Operating profit                4        549,440      439,205       904,533 
 
 Finance income                            16,573       13,551        27,184 
 
 Finance costs                           (14,166)            -             - 
 
 
 Profit before taxation                   551,847      452,756       931,717 
 
 Taxation                        6          9,734       45,318        60,318 
 
 
 
   Profit for the period 
   after tax                              561,581      498,074       992,035 
 
 
 Total comprehensive income               561,581      498,074       992,035 
 
 
 Profit per share (basic)                   4.25p        3.77p         7.40p 
 
 Adjusted** Profit per 
  share (basic)                             3.93p        2.88p         6.88p 
 
 Profit per share (diluted)                 4.17p        3.72p         7.30p 
 
 Adjusted** Profit per 
  share (diluted)                           3.85p        2.84p         6.79p 
 

* See note 11

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

All of the results relate to continuing operations.

GROUP BALANCE SHEET

 
                                                                             Restated* 
                                           31 December       31 December       30 June 
                                  Note            2019              2018          2019 
                                                   GBP               GBP           GBP 
 Non-current assets 
 Goodwill                                    1,715,153         1,715,153     1,715,153 
 Property, plant and 
  equipment                                     17,084            11,398        15,011 
 Right of use asset               10           588,212                 -             - 
 Deferred tax asset                            285,000           270,000       285,000 
 Trade and other receivables                   141,750           141,750       141,750 
 
 Total non-current 
  assets                                     2,747,199         2,138,301     2,156,914 
 
 Current assets 
 Trade and other receivables                   608,910           320,608       263,875 
 Cash and cash equivalents                   4,400,455         3,231,830     4,063,484 
                                        --------------  ----------------  ------------ 
 
 Total current assets                        5,009,365         3,552,438     4,327,359 
 
 Current liabilities 
 Trade and other payables                    (694,215)         (769,105)     (682,420) 
 Deferred income                           (1,513,941)         (801,409)   (1,151,545) 
 Lease liabilities                10         (162,000)                 -             - 
 
 Total current liabilities                 (2,370,156)       (1,570,514)   (1,833,965) 
 
 Non-current liabilities 
 Lease liabilities                10         (392,405)                 -             - 
 
 Total non-current                           (392,405)                 -             - 
  liabilities 
 
 Net current assets                          2,639,209         1,981,924     2,493,394 
 
 Net assets                                  4,994,003         4,120,225     4,650,308 
 
 
 Equity 
 Share capital                               1,651,314         1,651,314     1,651,314 
 Share premium account                          56,381            56,381        56,381 
 Share option reserve                          145,352            74,101        99,647 
 Retained earnings                           3,140,956         2,338,429     2,842,966 
 
                                             4,994,003         4,120,225     4,650,308 
 
 

* See note 11

GROUP CASH FLOW STATEMENT

 
                                        Note    Six months    Six months       Year ended 
                                                  ended 31      ended 31          30 June 
                                                  December      December 
                                                      2019          2018             2019 
                                                       GBP           GBP              GBP 
 
 
 
   Cash generated from operating 
   activities                            9         661,027       136,562          966,060 
 
 Tax recovered                                       9,734        45,318           45,318 
 
 Net cash generated from operating 
  activities                                       670,761       181,880        1,011,378 
 
 Investing activities 
 
 Interest received                                  16,573        13,551           27,184 
 
   Purchases of plant and equipment                (5,772)       (2,325)         (13,802) 
 
 Net cash generated from investing 
  activities                                        10,801        11,226           13,382 
                                              ------------  ------------  --------------- 
 
 Financing activities 
 
 Dividends paid                                  (263,591)     (171,334)        (171,334) 
 
 Payment of lease liabilities                     (81,000)             -                - 
 
 Net cash used in financing 
  activities                                     (344,591)     (171,334)        (171,334) 
                                              ------------  ------------  --------------- 
 
 
   Net increase in cash and cash 
   equivalents                                     336,971        21,772       853,426 
 
 Cash and cash equivalents 
  at beginning of period                         4,063,484     3,210,058        3,210,058 
 
 Cash and cash equivalents 
  at end of period                               4,400,455     3,231,830        4,063,484 
                                              ============  ============  =============== 
 

GROUP STATEMENT OF CHANGES IN EQUITY

 
                               Share                 Share         Share-based             Retained              Total 
                             capital               premium     paymentsreserve             earnings 
                                 GBP                   GBP                 GBP                  GBP                GBP 
 At 1 July 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 
-----------------  -----------------  --------------------  ------------------  -------------------  ----------------- 
 Total 
  comprehensive 
  income for the 
  period                           -                     -                   -              493,961            493,961 
 Share-based 
  payments                         -                     -              36,122                    -             36,122 
 Realisation of 
  share option 
  reserve                          -                     -            (10,576)               10,576                  - 
 At 30 June 2019           1,651,314                56,381              99,647            2,842,966          4,650,308 
-----------------  -----------------  --------------------  ------------------  -------------------  ----------------- 
 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 
-----------------  -----------------  --------------------  ------------------  -------------------  ----------------- 
 

NOTES TO THE FINANCIAL INFORMATION

1. The figures for the six months ended 31 December 2019 and 31 December 2018 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. IFRS 16 Leases has been applied for the first time in preparing the interim financial information. Note 10 sets out the key impacts on the Statement of Comprehensive Income and the Statement of Financial Position of the adoption of the new standard.

2. The financial information for the year ended 30 June 2019 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 2019, 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. The auditors have not reported on the restatement of the information for the year ended 30 June 2019 as explained in note 11.

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 GBP42,500 (31 December 2018: GBP117,286; 30 June 2019: GBP156,786).

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 2019 of 13,210,510 (31 December 2018: 13,210,510; 30 June 2019: 13,210,510).

The number of dilutive shares under option at 31 December 2019 was 256,341 (31 December 2018: 189,343; 30 June 2019: 165,223). 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 2019 of 2.0 pence per share (2018: 1.3 pence per share) was paid on 11 October 2019.

   8.   The Directors have elected not to apply IAS34 Interim financial reporting. 
   9.   Cash generated from operations 
 
                                       Six months    Six months    Year ended 
                                         ended 31      ended 31       30 June 
                                         December      December 
                                             2019          2018          2019 
                                              GBP           GBP           GBP 
 
 Operating profit                         549,440       439,205       904,533 
 
 Depreciation charge                       77,226         8,868        16,732 
 
 Non-cash share option charges             45,705        17,735        53,857 
 
 Adjustment for adoption of                                                 - 
  IFRS 16                                (40,500)             - 
 
   (Increase)/decrease in trade 
   and other receivables                (345,035)      (10,485)        46,248 
 
 Increase/(Decrease) in trade 
  and other payables                      374,191     (318,761)      (55,310) 
 
 
 Cash generated from operations           661,027       136,562       966,060 
 
 
 
 

10. Adoption of accounting standard IFRS 16

The Group has adopted IFRS 16 using the modified retrospective approach with the effect of applying this standard at the date of initial recognition of 1 July 2019, consequently comparatives have not been restated.

As a lessee, the Group has previously classified leases as operating or finance leases based on whether the lease transferred significantly all of the risks and rewards incidental to the ownership of the underlying asset. 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           GBP    liability    statement 
                                         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       81,000 
 
 
 Carrying value at 31 December 
  2019                               588,212      (40,500)    (554,405)      (6,693) 
                                 -----------  ------------  -----------  ----------- 
 
 

11. Revision to revenue recognition policy under IFRS 15

IFRS 15 "Revenue from contracts with customers" was adopted from 1 July 2018 in line with transitional provisions provided in the new standards. The audited financial statements for the year ended 30 June 2019 recognised revenue from recurring license fees on an 'at a point in time' basis. The Group has undertaken a further review and analysis of its offering and performance obligations under the terms of recurring license fee contracts. The conclusion reached is that in the context of IFRS 15 the correct approach for the recognition of revenue is on an over time basis whereby deferred income arises upon entering into a license fee agreement and is then subsequently recognised as revenue across the remaining passage of time on the license.

This is consistent with the Group's approach to revenue recognition for recurring license fees prior to the introduction of IFRS 15.

The interim report for the six months ended 31 December 2018 reported revenue on an over time basis and accordingly there have been no changes to six month comparatives presented in this report.

The comparatives for the twelve month period to 30 June 2019 have been restated in this report to recognise revenue from recurring license fee contracts on an over time basis. The effect of this change on the trading result for the twelve months to 30 June 2019 as a result of this change in revenue recognition policy is shown below.

Group Income Statement and Statement of Comprehensive Income:

Revenue decreased by GBP125,426

Profit for the year before taxation and after taxation decreased by GBP125,426

Statement of Changes in Equity:

Total comprehensive income for the year at 30 June 2019 decreased by GBP125,426

Retained earnings at 30 June 2019 decreased by GBP1,151,545

Group Balance Sheet:

Deferred income increased by GBP1,151,545

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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