Arcontech Group Regulatory News (ARC)

ARCONTECH GROUP PLC

("Arcontech", the "Company" or the "Group")

Final Results for the year ended 30 June 2017

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 2017.

Financial Highlights:

· Revenue of £2,307,751 (2016:£2,141,630)

· Adjusted profit before tax* of £441,996 (2016: £329,260)

· Profit before tax of £373,263 (2016:£302,329)

· Cash balance of £2,636,471 (2016:£1,633,159)

· Basic earnings per share of 3.79p (2016 3.38p)

· Maiden final dividend of 1 pence per share

*Adjusted for share-based payments

Operational Highlights:

· Healthy injection of new contracts mainly through additional sales of server-side infrastructure solutions to existing customers, with full benefit to come in 2017/18

· New desktop software solution currently in proof of concept trials at five Tier 1 banks

· Continued investment in sales & marketing with increased sales focus on Asia

· Increased participation in the fintech community with wider benefits for the group

· Strong cash generation

Commenting on the results, Richard Last, Chairman of Arcontech said:

"Arcontech is a well-run business where costs, including continued product investment, are well controlled such that increases in revenue materially improve profitability. Our focus is, therefore, on winning new business. Whilst we believe the opportunities for increased sales exist, the sales cycle is unpredictable and remains longer than we would like. Our prospects are positive, albeit they need to be tempered against uncertainties in the investment banking and finance sectors, as a result of the low interest rate environment and issues following Brexit."

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Enquiries:

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 share-based payments and taxation for the year ended 30 June 2017 of £441,996 (2016: £329,260), a year-on-year increase of 34.2%. After taking the benefit of the Research and Development tax credit of £96,988 (2016: £105,813) which the Company receives, due to the amount it has invested in qualifying product design and development and the cost of share based payments of £68,733 (2016: £26,931), Arcontech achieved a profit after tax of £470,251 (2016: £408,142) for the year.

Turnover for the year increased by 7.8% to £2,307,751 (2016: £2,141,630) this was achieved mainly through additional sales of server-side infrastructure solutions to existing customers. The level of new sales has not yet benefitted from the new business expected from our new desktop software solution launched earlier in the year. Expected desktop solution sales in 2018 and the full year effect of the net new sales achieved in the year ended 30 June 2017 is expected to lead to an increase in turnover for the year ending 30 June 2018.

We have continued to operate tight cost control throughout the year, whilst maintaining investment in product development and enhancement, which we expect to sustain going forward. The sales resource was increased during the year, which, together with marketing, are areas where we expect to see additional investment in 2018.

Financing

As at 30 June 2017 Arcontech had net cash balances of £2,636,471 (2016: £1,633,159), reflecting increased profitability and an improved working capital position. The business is well financed for the future and has a robust balance sheet.

Dividend and Share Consolidation

Having completed the cancellation of the share premium account (creating positive distributable reserves) and the share consolidation, I am pleased to announce that subsequent to the year-end we agreed to propose, subject to approval at the Annual General Meeting, to pay a maiden dividend of 1 pence per share for the year ended 30 June 2017, to those shareholders on the register as at the close of business on 25 August 2017, with an ex-dividend date of 24 August 2017.

Employees

We have a small team of dedicated employees who are the core of our business. I would like to thank them for their hard work and continued support which is greatly appreciated.

Outlook

Arcontech is a well-run business where costs, including continued product investment, are well controlled such that increases in revenue materially improve profitability. Our focus is, therefore, on winning new business. Whilst we believe the opportunities for increased sales exist, the sales cycle is unpredictable and remains longer than we would like. Our prospects are positive, albeit they need to be tempered against uncertainties in the investment banking and finance sectors, as a result of the low interest rate environment and issues following Brexit.

Richard Last

Chairman and Non-Executive Director

Chief Executive's Review

I am pleased to report that during the year our continued attention to costs whilst building out and delivering on the sales pipeline resulted in a profit before tax of £373,263 (2016: £302,329), an increase of 23.5% compared to the previous year.

During the year under review we have further reconfirmed the value of our products and quality of support to the market by increasing the use of our server-side solutions such as our real-time last value cache and symbol mapper with existing clients, and on the desktop with Excelerator, whilst not receiving a single contract cancellation.

We continue to progress the sales pipeline and improve our product offering by adding functionality to existing products as well as enhancing our new desktop software solution. This software solution continues to be of significant interest to our clients, with one of the trials with Tier 1 clients culminating in a signed agreement for its deployment in New York. It is hoped by both ourselves, and our client, that it will expand from there and be rolled out in additional office locations over coming months. The prospects elsewhere, whilst taking time, continue to develop and are looking promising.

To increase sales growth, in January 2017 we recruited a sales person in Hong Kong to explore opportunities in this region.

During the year we have also increased our participation in the fintech community, where we believe we can both add and receive value. This includes becoming members of the OpenMAMA steering committee and more recently, the Symphony Foundation. Both these global, open source, not for profit organisations include major Tier 1 clients and non-clients as members, who we are working closely with, whilst providing vendor agnostic solutions to the market data needs of the broader financial community.

The outlook for the business remains positive and to date unaffected by the wider uncertainties surrounding Brexit. The length of the sales cycle is something that is a constant and the only realistic way to address it is to create more sales opportunities. This is being done by building solutions that increase the addressable market whilst increasing our sales resource. As a result, the sales pipeline is looking healthy.

In order to supplement the Company's growth strategy, we will continue to review prospective complementary acquisition opportunities.

With such a strong foundation, we will keep working to strengthen our position by focusing on increasing revenues. Going forward, sales growth remains our clear priority.

Matthew Jeffs

Chief Executive

Strategic Report

The Directors present the group strategic report for Arcontech Group plc and its subsidiaries for the year ended 30 June 2017.

Principal activities

The principal activities of the Company and its subsidiaries during the year were the development and sale of proprietary software and provision of computer consultancy services.

Review of the business and prospects

A full review of the operations, financial position and prospects of the Group is given in the Chairman's Statement and Chief Executive's Review above.

Key performance indicators (KPIs)

The Directors monitor the business using management reports and information, reviewed and discussed at monthly Board meetings. Financial and non-financial KPIs used in this report include:

Financial KPIs:

Non-financial KPIs:

Principal risks and uncertainties

The Group's performance is affected by a number of risks and uncertainties, which the Board monitor on an ongoing basis in order to identify, manage and minimise their possible impact. General risks and uncertainties include changes in economic conditions, interest rate fluctuations and the impact of competition. The Group's principal risk areas and the action taken to mitigate their outcome are shown below:

Approved on behalf of the board on 11 August 2017 by:

Group Income Statement and Statement of Comprehensive Income

For the year ended 30 June 2017

Comparative figures for the year ended 30 June 2016 have been restated to take into account the share consolidation carried out in September 2016.

All of the results relate to continuing operations.

Statement of Changes in Equity

For the year ended 30 June 2017

Group:

Company:

Balance Sheets

Registered number: 04062416

As at 30 June 2017

The profit dealt with in the financial statements of the Parent Company was £1,418,859 (2016: £10,899).

Approved on behalf of the board on 11 August 2017 by:

Group Cash Flow Statement

For the year ended 30 June 2017

Company Cash Flow Statement

For the year ended 30 June 2017

Notes to the Financial Statements For the year ended 30 June 2017

Status of financial information

Arcontech Group plc is a public limited company incorporated in England and Wales whose ordinary shares of £0.125 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 11 August 2017. 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 2017 or 30 June 2016.

The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 30 June 2017 or 30 June 2016.

The financial information has been extracted from the statutory accounts of the Company for the years ended 30 June 2017 or 30 June 2016. The auditors reported on those accounts; their reports were unqualified and did not contain a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006.

The statutory accounts for the year ended 30 June 2016 have been delivered to the Registrar of Companies, whereas those for the year ended 30 June 2017 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

Operating segments:

The Group reports internally to the Chief Operating Decision Maker (CODM), who is considered to be the Board. Intersegment license fees and management charges are not included in the reports reviewed by the CODM during the year but are calculated for statutory reporting purposes and therefore are excluded from the following revenue and operating profit disclosures.

During the year there were 3 customers (2016: 1) who accounted for more than 10% of the Group's revenues as follows:

These revenues are attributable to the software development and licence fees segment.

Profit per share

The number of shares for the year ended 30 June 2017 takes into account the share consolidation of 125:1 carried out in September 2016. The number of shares for the year ended 30 June 2016 has been restated accordingly.

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.

Dividends

A final dividend of 1 pence will be proposed at the Annual General Meeting but has not been recognised as it requires approval (2016: £Nil).

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 26 September 2017 at 10.00 a.m.

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