Last checked at 21 Sep 2009 07:00
RNS Release
21 September 2009
ARCONTECH GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2009
Arcontech Group PLC (AIM: ARC) ("Arcontech" or the "Company"), providers of products and services for real-time financial market data processing and trading, reports its preliminary results for the year ended 30 June 2009.
Financial and business highlights:
Revenue from continuing operations increased by 19% to £1.40m (2008: £1.18m)
Contracted recurring revenue increased by 43% to £0.68m (2008: £0.48m)
Group loss for the year reduced by 71% to £0.47m (2008: £1.6m)
Continuing intention to increase investment in sales and marketing
Name changed to Arcontech Group PLC
Completed substantial fund raising in September 2009 amounting to approximately £1.5 million (net of expenses) - see separate announcement.
Richard Last, Chairman of Arcontech, said:
"As with many businesses of similar size to Arcontech, predicting the financial outcome over a relatively short period is always difficult and fraught with uncertainty. The timing of contract wins and the precise point of delivery or deployment of a system is not easy to determine.
That said, the new business won by Arcontech in the second half of the year and the increasing level of new prospects for our CityVision and AXE products, together with our recently strengthened balance sheet gives great encouragement that significant opportunities for growth exist.
We are optimistic for the prospects of the business in the coming year."
Enquiries, please contact:
| Andrew Miller (Chief Executive) | Arcontech Group PLC | 020 7256 2300 |
| Richard Last (Chairman and Non-Executive Director) | Arcontech Group PLC | 01608 683 108 |
| Shane Gallwey | Astaire Securities PLC | 020 7448 4400 |
Chairman's Statement
Commentary
The year ended 30 June 2009 has been one of significant change for Arcontech Group PLC. It brought to a close our involvement with the loss-making MarketTerminal business; the company's name was changed to Arcontech Group PLC, reflecting our focus on the CityVision market data platform and AXE, the CFD and spread betting business.
We have also rationalised our cost base to improve our efficiency and competitiveness. This leaves the Company well placed to benefit from the improved market conditions for our products and services which are now evident.
Turnover from continuing operations for the year ended 30 June 2009 amounted to £1,395,078 (2008: £1,177,173). The Group reported a reduced loss for the year of £470,550 (2008: £1,637,498). Underlining this was a significant reduction in the loss for the second half of the year of £71,237 compared to £399,313 in the first half and £722,535 in the corresponding six months to June 2008, reflecting the reduction in costs and an improvement in new business activity. Contracted support revenues for the year amounted to £678,009 (2008: £473,746), representing 49% of total revenue (2008: 40%).
Having reduced our cost base and improved operational efficiency our focus is now on increasing the level of new sales. The company has the capacity to deliver increases in turnover without significantly expanding its cost base so that any increase in sales adds disproportionately to the overall level of profit achieved.
It continues to be our intention to increase our investment in sales and marketing.
Financing and Share Placing
The Group had cash of £426,710 at 30 June 2009 (30 June 2008: £1,082,604) up from £374,478 at 31 December 2008. As expected, the Arcontech business was broadly cash neutral at the operating level in the second half of the year.
To strengthen our balance sheet and provide further support and resources for our sales and marketing drive we have, in September 2009, placed 776,635,000 shares (of which 199,750,000 are subject to shareholder approval at the Annual General Meeting) at 0.2 pence per share to raise additional funds of approximately £1.5 million, after anticipated costs. This share placing was supported by both existing and new shareholders and we thank them for their support.
Management and Staff
I would like to thank our management and staff for their continued hard work, commitment and dedication during what undoubtedly has been a challenging year.
Having been through a period of cost reduction and business realignment when a number of people left the company, we are now entering a period of growth and investment and I am confident that all our staff will continue to support and contribute to the future success of the business.
Outlook
As with many businesses of similar size to Arcontech, predicting the financial outcome over a relatively short period is always difficult and fraught with uncertainty. The timing of contract-wins and the precise point of delivery or deployment of a system is not easy to determine.
That said, the new business won by Arcontech in the second half of the year and the increasing level of new prospects for our CityVision and AXE products, together with our recently strengthened balance sheet gives great encouragement that significant opportunities for growth exist.
We are optimistic for the prospects of the business in the coming year.
Richard Last
Chairman
18 September 2009
Chief Executive's Review
This review comes after my first full year as CEO, one that has seen a great deal of change and some significant successes despite perhaps the worst market conditions I have ever experienced.
The year had four main themes:
dealing with issues following the decision to withdraw from the MarketTerminal business
streamlining the business and reducing costs in response to the prevailing economic climate
restructuring and building business momentum and the sales pipeline for the proven Arcontech CityVision products
developing and enhancing products in response to customer demand
Following withdrawal from the MarketTerminal business during 2008 the group was renamed and the business refocused under the "Arcontech Group PLC" banner.
Regrettably staff reductions were necessary but were mostly achieved by normal staff turnover. We have the entire technical team from the time of the merger with KTS intact and, indeed, have expanded this resource, leaving us in a strong position to address market opportunities. I wish to thank the staff for their splendid efforts and support during such a difficult time.
Working with our sell-side investment banking clients, we have continued to enhance Arcontech's traditional 'CityVision' market data platform, identifying opportunities for new and existing products.
We are addressing sales and marketing of CityVision with both new and re-assigned resource. This has led to important business with major new banking clients in the second half, significantly reducing losses, greatly helping cash flow, and adding to growth in recurring annual revenue.
Increased international activity is also yielding results and we are seeing strong interest from several regions, with active product evaluations and contract negotiations in process. Our independence from the major data vendors is an important factor and is fundamental in many of these opportunities. We are the largest independent company with proven products in some areas - indeed, the only credible firm in some cases.
The legacy track record has impeded sales progress in some instances due to concerns over financial stability. However, we believe that the improvement in this year's results, together with a strong balance sheet following the recent funding round, will counter this concern. CityVision will benefit from planned increases in sales and marketing spend over the next 12 months.
The core development of AXE, our platform for on-line and telephone trading of retail derivatives, is now substantially complete. We currently have two customers with expanding client bases - one involved with both Contracts for Difference trading (CFDs) and financial spread betting and the other with CFD trading.
The "credit crunch" has affected the previously buoyant market for such systems. We minimised sales and marketing costs but continued to develop the product, working with our existing clients. We are seeing early signs of recovery in this area and will be increasing our sales and marketing efforts imminently.
Existing operators in this area continue to sign up new clients, often via 'white labels' for introducing brokers (IBs). We believe that there will be considerable opportunities for AXE and its component technology as larger IBs see the benefits of offering margin products directly to their retail clients and via their own IB arrangements.
Overall, I am pleased that the note of optimism expressed last year was well founded and that we have gained some significant new business. The pipeline today of identifiable, well qualified prospects is considerably stronger than it was for the corresponding period of 2008.
I look forward to working with staff, clients and prospects to achieve the growth that we believe is possible in the coming year.
Andrew Miller
Chief Executive
18 September 2009
GROUP INCOME STATEMENT
For the year ended 30 June 2009
| Note | 2009 | 2008 | |||
| £ | £ | ||||
| Continuing operations | |||||
| Revenue | 2 | 1,395,078 | 1,177,173 | ||
| Distribution costs | (37,138 | ) | (32,677 | ) | |
| Administrative costs | (1,930,576 | ) | (2,287,111 | ) | |
| Administrative costs - exceptional | 3 | (2,103 | ) | (222,062 | ) |
| Operating loss from continuing operations | (574,739 | ) | (1,364,677 | ) | |
| Finance income | 8,417 | 36,548 | |||
| Loss before taxation from continuing operations | (566,322 | ) | (1,328,129 | ) | |
| Taxation | 38,458 | 67,754 | |||
| Loss for the year from continuing operations | (527,864 | ) | (1,260,375 | ) | |
| Discontinued operations | |||||
| Profit/(loss) for the year after tax from discontinued operations | 57,314 | (377,123 | ) | ||
| Loss for the year | (470,550 | ) | (1,637,498 | ) | |
| Earnings per share (basic and diluted) | 4 | ||||
| From continuing operations | (0.07 | )p | (0.24 | )p | |
| From discontinued operations | 0.01 | p | (0.07 | )p | |
| From continuing and discontinued operations | (0.06 | )p | (0.31 | )p |
GROUP STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2009
For the year ended 30 June 2009
| Share capital | Share premium | Share option reserve | Retained earnings | Shares to be issued | Total equity | |
| £ | £ | £ | £ | £ | £ | |
| Balance at 1 July 2007 | 332,532 | 6,316,870 | - | (5,279,626) | - | 1,369,776 |
| Loss for the year | -
| - | - | (1,637,498) | - | (1,637,498)
|
| Total recognised income and expenses for the year | - | - | - | (1,637,498) | - | (1,637,498) |
| Share-based payments | - | - | 45,920 | - | -
| 45,920 |
| Issue of equity share capital | 403,911
| 2,200,070 | - | - | - | 2,603,981
|
| Balance at 30 June 2008 | 736,443 | 8,516,940 | 45,920 | (6,917,124) | - | 2,382,179 |
| Loss for the year |
- |
- |
- |
(470,550) |
- |
(470,550) |
| Total recognised income and expenses for the year | - | - | - | (470,550) | - |
(470,550) |
| Share-based payments | - | - | 62,822 | - | - | 62,822 |
| Recognition of equity shares to be issued | - | - | - | - | 200,606 |
200,606 |
| Balance at 30 June 2009 | 736,443 | 8,516,940 | 108,742 | (7,387,674) | 200,606 | 2,175,057 |
GROUP BALANCE SHEET
As at 30 June 2009
| 2009 £ | 2008 £ | ||||||||
| Non-current assets | |||||||||
| Goodwill | 1,715,153 | 1,634,547 | |||||||
| Property, plant and equipment | 57,638 | 154,390 | |||||||
| Investments in subsidiaries | - | - | |||||||
| Total non-current assets | 1,772,791 | 1,788,937 | |||||||
| Current assets | |||||||||
| Trade and other receivables | 521,328 | 563,159 | |||||||
| Cash and cash equivalents | 426,710 | 1,082,604 | |||||||
| Total current assets | 948,038 | 1,645,763 | |||||||
| Current liabilities | |||||||||
| Trade and other payables | (545,772 | ) | (1,052,521 | ) | |||||
| Total current liabilities | (545,772 | ) | (1,052,521 | ) | |||||
| Net current assets | 402,266 | 593,242 | |||||||
| Net assets | 2,175,057 | 2,382,179 | |||||||
| Equity | |||||||||
| Called up share capital | 736,443 | 736,443 | |||||||
| Shares to be issued | 200,606 | - | |||||||
| Share premium account | 8,516,940 | 8,516,940 | |||||||
| Share option reserve | 108,742 | 45,920 | |||||||
| Retained earnings | (7,387,674 | ) | (6,917,124 | ) | |||||
| 2,175,057 | 2,382,179 |
GROUP CASH FLOW STATEMENT
For the year ended 30 June 2009
| Note | 2009 | 2008 | |||
| £ | £ | ||||
| Continuing operations | |||||
| Net cash used in operating activities | (687,627 | ) | (1,162,698 | ) | |
| Investing activities | |||||
| Interest received | 7,193 | 36,548 | |||
| Acquisition of subsidiary, net of cash acquired | - | (784,523 | ) | ||
| Purchases of plant and equipment | (1,956 | ) | (75,178 | ) | |
| Disposal of plant and equipment | 19,500 | - | |||
| Net cash received/(used) in investing activities | 24,737 | (823,153 | ) | ||
| Financing activities | |||||
| Proceeds on issue of shares | - | 2,239,000 | |||
| Expenses paid in connection with share issues | - | (130,019 | ) | ||
| Net cash generated from financing activities | - | 2,108,981 | |||
| Net (decrease)/increase in cash and cash equivalents from continuing operations | (662,890 | ) | 123,130 | ||
| Discontinued operations | |||||
| Cash flows from operating activities | 4,067 | (519,153 | ) | ||
| Cash flows from investing activities | 2,929 | 5,176 | |||
| Net increase/(decrease) in cash and cash equivalents from discontinued operations | 6,996 | (513,977 | ) | ||
| Net decrease in cash and cash equivalents | (655,894 | ) | (390,847 | ) | |
| Cash and cash equivalents at beginning of year | 1,082,604 | 1,473,451 | |||
| Cash and cash equivalents at end of year | 426,710 | 1,082,604 |
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 June 2009
1. Basis of preparation
The financial information presented in this preliminary announcement is extracted from, and is consistent with, the Group's audited financial statements for the year ended 30 June 2009.
The preliminary announcement for the year ended 30 June 2009 was approved by the Board of Directors on 18 September 2009. The financial information set out above does not constitute the Company's statutory financial statements for the year ended 30 June 2009 or 2008 but is derived from those financial statements. Statutory financial statements for 2009 will be delivered to the registrar of companies following the Company's annual general meeting. The financial statements for the year ended 30 June 2009 and 2008 were reported on by the auditors without qualification or an emphasis of matter reference and did not contain a statement under section 498(2) or (3) of the Companies Act 2006 (2008: a statement under section 237(2) or (3) of the Companies Act 1985).
The Group's results have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
2. Revenue
An analysis of the Group's revenue is as follows:
| 2009 £ | 2008 £ | ||||
| Financial information service, advertising and sponsorship, software development and consultancy | |||||
| Continuing and discontinued operations | 1,395,078 | 1,939,604 | |||
| Discontinued operations | - | (762,431 | ) | ||
| Continuing operations | 1,395,078 | 1,177,173 |
3. Administrative costs - exceptional:
| 2009 £ | 2008 £ | ||||
| Directors' remuneration - payment in lieu of notice | 2,103 | 135,315 | |||
| (in respect of Marc Pinter-Krainer, the former Chief Executive) | |||||
| Restructuring costs - office relocation expenses | - | 86,747 | |||
| 2,103 | 222,062 |
NOTES TO THE PRELIMINARY ANNOUNCEMENT (CONTINUED)
For the year ended 30 June 2009 (continued)
4. Earnings per share
| 2009 | 2008 | ||||||||
| £ | £ | ||||||||
| Earnings | |||||||||
| Earnings for the purpose of basic and diluted earnings per share being net profit/(loss) attributable to equity shareholders: | |||||||||
| Continuing operations | (527,864 | ) | (1,260,375 | ) | |||||
| Discontinued operations | 57,314 | (377,123 | ) | ||||||
| (470,550 | ) | (1,637,498 | ) | ||||||
| No. | No. | ||||||||
| Number of shares | |||||||||
| Weighted average number of ordinary shares for the purpose of basic earnings per share | 736,442,943 | 520,890,310 | |||||||
| Number of dilutive shares under option | - | - | |||||||
| Weighted average number of ordinary shares for the purposes of dilutive earnings per share | 736,442,943 | 520,890,310 | |||||||
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. Share options are anti-dilutive and are therefore not included above.
5. Dividends
There were no dividends paid or proposed during the period (2008: Nil).
6. Post balance sheet events
On 10 July 2009, the Company issued 18,236,927 shares of 0.1 pence, being the deferred consideration in
connection with the acquisition of Arcontech Limited on 4 September 2007. The shares were issued at a price
of 1.1 pence as per the share purchase agreement and amounted to £200,606.
On 15 September 2009, the Company placed 776,635,000 shares of 0.1 pence (of which 199,750,000 are subject to shareholder approval at the Annual General Meeting). The shares were placed at a price of 0.2 pence and amounted to £1,553,270.
7. Annual General Meeting
The annual general meeting of the Company will be held at the Company's offices, 8th Floor, Finsbury Tower, 103-105 Bunhill Row, London EC1Y 8LZ on 29 October 2009 at 10 a.m.
NOTES TO THE PRELIMINARY ANNOUNCEMENT (CONTINUED)
For the year ended 30 June 2009 (continued)
8. Copies of this statement
Copies of this statement are available from the Company Secretary at the Company's registered office at 8th Floor Finsbury Tower, 103-105 Bunhill Row, London, EC1Y 8LZ or from the Company's website at www.arcontech.com.