Last checked at 10 Aug 2016 07:00
ARCONTECH GROUP PLC
("Arcontech", the "Company" or the "Group")
Final Results for the Year Ended 30 June 2016
Arcontech (AIM: ARC), the provider of products and services for real-time financial market data processing and trading, is pleased to announce its final audited results for the year ended 30 June 2016.
Financial highlights
· Profit before tax of £302,329 (2015: £243,660)
· Cash balance of £1,633,159 (2015: £1,069,755)
· Basic earnings per share of 0.027p (2015: 0.023p)
Operational highlights
· 'Soft launch' of a new Desktop product
· Good cost control (costs lowered by 2%)
· Continued investment in R&D to develop new solutions for existing and new clients
· Pipeline currently unaffected by Brexit
Distributable reserves and Proposed Share Consolidation
In March 2016 Arcontech obtained court approval to cancel its share premium account, creating positive distributable reserves. This will enable the directors to recommend the payment of dividends out of retained profits in the future, should the Board feel this is appropriate.
Due to the large number of shares in issue and to avoid fractional entitlements to any future dividend, it is the Board's intention to consolidate the number of shares prior to announcing a dividend. Further details of the proposed share consolidation will be provided to shareholders in the Notice of Annual General Meeting.
Commenting on the results, Richard Last, Chairman of Arcontech said:
"We believe, as a result of continued product investment and from listening to our customers, we have a good product set that is suitable for our markets. Our focus is now fundamentally on winning new business and whilst we believe the opportunities for increased sales exist, the sales cycle remains longer than we would like. We also need to fully compensate for the reduction in revenue during the year from the Asian focused bank. Our prospects, however, whilst positive need to be tempered against uncertainties in the banking sector as a result of the low interest rate environment and potential issues following Brexit."
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Enquiries:
Arcontech Group plc |
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Richard Last, Chairman and Non-Executive Director | 07713 214484 |
Matthew Jeffs, Chief Executive | 020 7256 2300 |
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finnCap Ltd (Nomad & Broker) |
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Carl Holmes/Simon Hicks | 020 7220 0500 |
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To access more information on the Group please visit: www.arcontech.com
Chairman's Statement
Arcontech Group plc ("Arcontech" or the "Company") is pleased to report a profit before taxation for the year ended 30 June 2016 of £302,329 compared to £243,660 for the year ended 30 June 2015. After taking the benefit of the Research and Development tax credit of £105,813 (2015: £109,378) which the company receives due to the amount it has invested in qualifying product design and development, Arcontech achieved a profit after tax of £408,142 (2015: £353,038).
Turnover for the year increased modestly by 0.5% to £2,141,630 (2015: £2,129,958) reflecting the situation that new business predominantly from existing customers only marginally exceeded the impact of the loss in revenue from the Asian focused bank, previously reported, from the start of the second half. With the "soft launch" of our new Desktop product we would expect to see increased sales momentum in the coming year.
Throughout the year ended 30 June 2016 we maintained tight control of costs which has helped improve our profitability. We have continued to invest in new product development which we expect to maintain going forward as we believe product development and innovation is key to our future success. Further investment in sales and marketing resources is expected but this will be dependent on new sales wins.
Financing
As at 30 June 2016 Arcontech had no debt and cash balances of £1,633,159 (2015: £1,069,755), reflecting increased profitability. This leaves the business well financed for the future.
Employees
Once again I would like to thank our employees who are the core of the business and whose support and dedication is greatly appreciated.
Outlook
We believe, as a result of continued product investment and from listening to our customers, we have a good product set that is suitable for our markets. Our focus is now fundamentally on winning new business and whilst we believe the opportunities for increased sales exist, the sales cycle remains longer than we would like. We also need to fully compensate for the reduction in revenue during the year from the Asian focused bank. Our prospects, however, whilst positive need to be tempered against uncertainties in the banking sector as a result of the low interest rate environment and potential issues following Brexit.
Richard Last
Chairman Chief Executive's Review
I am pleased to report that during the year our continued attention to managing costs whilst bringing the sales pipeline forward, has resulted in an increase in profit before tax of 24% compared to the previous year.
Our endeavours resulted in revenue growth of 0.5% and a reduction in costs of 2%. This had a significant and positive impact to our bottom line to generate a profit before tax of £302,329.
As well as progressing the sales pipeline, this year has also seen us improve our product offering by adding functionality to existing products as well as building out the product portfolio with a new Desktop component. This is currently in trials with several Tier 1 clients with whom prospects for commercial deployment are looking very promising.
More generally, the outlook for the business remains positive and as yet has been unaffected by the wider uncertainties surrounding Brexit. What does continue to affect revenues, however, is the length of the sales cycle. This is largely attributable to the fact that our traditional offerings invariably need to displace an incumbent for which the existing contract terms can affect our prospects. As has been stated previously, however, once a commercial relationship has been established, we inevitably find many opportunities to grow the relationship both through displacement and development of new solutions. We also look forward to securing cornerstone clients for our newly developed Desktop component in order to generate new and additional revenues outside of our traditional target market due to the broad appeal of its value proposition.
Having maintained momentum and grown profitability over the previous year, we have reconfirmed the value of our products to the market whilst strengthening our position. We are now working to capitalise on this by increasing revenues. Sales growth remains our clear priority.
Matthew Jeffs
Chief Executive
Group Income Statement and Statement of Comprehensive Income
For the year ended 30 June 2016
| 2016 |
| 2015 |
| £ |
| £ |
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Revenue | 2,141,630 |
| 2,129,958 |
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Administrative costs | (1,849,257) |
| (1,890,242) |
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Operating profit | 292,373 |
|
239,716 |
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|
|
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Finance income | 9,956 |
| 3,944 |
Profit before taxation | 302,329 |
| 243,660 |
|
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Taxation | 105,813 |
| 109,378 |
Profit for the year after tax | 408,142 |
| 353,038 |
Total comprehensive income for the year | 408,142 |
| 353,038 |
Earnings per share (basic) | 0.027p |
| 0.023p |
Earnings per share (diluted) | 0.026p |
| 0.023p |
All of the results relate to continuing operations.
Statement of Changes in Equity
For the year ended 30 June 2016
Group:
| Share capital | Share premium | Share option reserve | Retained earnings | Total equity |
| £ | £ | £ | £ | £ |
Balance at 30 June 2014 | 1,536,672 | 9,430,312 | 72,562 | (9,622,661) | 1,416,885 |
Profit for the year |
- | - | - | 353,038 | 353,038 |
Total comprehensive income for the year |
- | - | - | 353,038 | 353,038 |
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Share-based payments | - | - | 20,199 | - | 20,199 |
Balance at 30 June 2015 | 1,536,672 | 9,430,312 | 92,761 | (9,269,623) | 1,790,122 |
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Profit for the year | - | - | - | 408,142 | 408,142 |
Total comprehensive income for the year | - | - | - | 408,142 | 408,142 |
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Cancellation of share premium account | - | (9,430,312) | - | 9,430,312 | - |
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Issue of shares | 5,060 | 2,024 | - | - | 7,084 |
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Share-based payments | - | - | 26,931 | - | 26,931 |
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Balance at 30 June 2016 | 1,541,732 | 2,024 | 119,692 | 568,831 | 2,232,279 |
Balance Sheet
As at 30 June 2016
| Group2016£ |
| Group2015£ |
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Non-current assets |
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Goodwill | 1,715,153 |
| 1,715,153 |
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Property, plant and equipment | 44,785 |
| 41,605 |
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Trade and other receivables | 141,750 |
| 141,750 |
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Total non-current assets | 1,901,688 |
| 1,898,508 |
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Current assets |
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Trade and other receivables | 265,360 |
| 478,402 |
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Cash and cash equivalents | 1,633,159 |
| 1,069,755 |
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Total current assets | 1,898,519 |
| 1,548,157 |
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Current liabilities | ||||
Trade and other payables | (1,567,928) | (1,656,543) | ||
Total current liabilities | (1,567,928) | (1,656,543) | ||
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Net current assets/(liabilities) | 330,591 |
| (108,386) |
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Net assets | 2,232,279 |
| 1,790,122 |
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Equity |
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Called up share capital | 1,541,732 |
| 1,536,672 |
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Share premium account | 2,024 |
| 9,430,312 |
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Share option reserve | 119,692 |
| 92,761 |
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Retained earnings | 568,831 |
| (9,269,623) |
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| 2,232,279 | 1,790,122 |
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Group Cash Flow Statement
For the year ended 30 June 2016
| 2016 |
| 2015 |
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| £ |
| £ |
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Net cash generated from operating activities | 567,420 |
| 369,982 |
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Investing activities |
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Interest received | 9,956 |
| 3,944 |
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Purchases of plant and equipment | (21,056) |
| (38,014) |
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Proceeds of sales of plant and equipment | - |
| 167 |
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Net cash invested in investing activities | (11,100) |
| (33,903) |
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Financing activities |
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Issue of shares | 7,084 |
| - |
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Net cash generated from financing activities | 7,084 |
| - |
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Net increase in cash and cash equivalents | 563,404 |
| 336,079 |
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Cash and cash equivalents at beginning of year | 1,069,755 |
| 733,676 |
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Cash and cash equivalents at end of year | 1,633,159 |
| 1,069,755 |
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Notes to the Financial Information
For the year ended 30 June 2016
1. Status of financial information
Arcontech Group plc is a public limited company incorporated in England and Wales whose ordinary shares of 0.1p each are traded on the AIM Market of the London Stock Exchange. The Company's registered office is 1st Floor, 11-21 Paul Street, London, EC2A 4JU.
The Board of Directors approved this preliminary announcement on 9 August 2016. Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the European Union, this announcement does not itself contain sufficient information to comply with all the disclosure requirements of IFRS and does not constitute statutory accounts of the Company for the years ended 30 June 2016 or 30 June 2015.
The financial information has been extracted from the statutory accounts of the Company for the years ended 30 June 2016 and 30 June 2015. The auditors reported on those accounts; their reports were 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 statutory accounts for the year ended 30 June 2015 have been delivered to the Registrar of Companies, whereas those for the year ended 30 June 2016 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
2. Basis of preparation
This financial information has been prepared in accordance with the principles of International Financial Reporting Standards ("IFRS") as adopted by the European Union and International Financial Reporting Interpretations Committee ("IFRIC") recommendations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. For the purposes of the preparation of the consolidated financial information, the Group has applied all standards and interpretations that are effective for accounting periods beginning on or after 1 July 2015. There have been no changes in accounting policies during the year. The financial information has been prepared under the historical cost convention unless otherwise stated.
3. Profit per share
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| 2016 |
| 2015 |
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| £ |
| £ |
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Earnings |
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Earnings for the purpose of basic and diluted earnings per share being net profit attributable to equity shareholders |
| 408,142 |
| 353,038 |
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| 408,142 |
| 353,038 |
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| No. |
| No. |
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Number of shares |
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Weighted average number of ordinary shares for the purpose of basic earnings per share |
| 1,537,198,758 |
| 1,536,672,013 |
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Number of dilutive shares under option |
| 26,682,073 |
| 15,602,384 |
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Weighted average number of ordinary shares for the purposes of dilutive earnings per share |
| 1,563,880,831 |
| 1,552,274,847 |
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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 fair value, based upon the monetary value of the subscription rights attached to outstanding share options.
4. Annual General Meeting
The Annual general meeting of Arcontech Group PLC will be held at the Company's offices, 1st Floor, 11-21 Paul Street, London EC2A 4JU on 27 September 2016 at 10 a.m.
5. Annual report and accounts
Copies of the annual report and accounts will be sent to shareholders shortly and will be 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