Arcontech Group Regulatory News (ARC)

ARCONTECH GROUP PLC

("Arcontech" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2020

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 2020.

Highlights:

Geoff Wicks, Chairman of Arcontech, said:

"The Board is pleased with Arcontech's progress in the first half of the year. While the effects of the COVID-19 pandemic have continued to overshadow the market we have grown revenue with the addition of an important new customer and a significant upgrade to an existing tier one customer. At the same time we have maintained good profit levels after investing in future growth. We believe we are in a good position to accelerate growth once market conditions improve.

Enquiries:

To access more information on the Group please visit: www.arcontech.com

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

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 was delighted to join the board of Arcontech as a Non-Executive Director in July 2020, before becoming Chairman in September 2020. I would like to thank Richard Last for his stewardship of the Company over the last thirteen years, overseeing the Company's transformation and growth to be highly profitable with an impressive blue-chip customer base.

In these uncertain times Arcontech has continued to perform well, with sound revenue growth but a reduction in profit before tax due to the effect of the investment in building the sales team which is expected to enhance future earnings. The market continues to be challenging with customer contact limited and decisions being delayed due to remote working. However, the enhanced sales team is making good progress growing the list of prospective new customers, which bodes well for the future.

Revenue was £1.54 million, up 4.7% from £1.47 million in the previous year. Profit before tax (PBT) was £506,237, 8% lower than the same period last year, reflecting the additional investment in sales capability. Costs continue to be under tight control. Adjusted profit before tax, which is PBT before the release of accruals for administrative costs in respect of prior years, was down 9% to £462,237.​

Our strategy is to support our existing customers and to maximise opportunities to provide a wider range of services to them. At the same time we have invested in building our sales capability to grow our customer base globally. We also continue to focus on our desktop products to augment our server-side business.

The enlarged sales team has made good progress reaching out to potential new customers. The prevailing market conditions have meant that the sales cycle is taking much longer than in normal times. We are pleased with the progress made and are confident that growth will improve once we are in a more normal market.

Financing

Our cash position remains excellent, with cash balances of £4,997,822 at the end of the period, £597,367 above the level at 31 December 2019 and broadly the same as the balance of £5,006,969 at June 30, 2020, after paying £333,594 in dividends. This enables us to invest in the business, maintaining our larger sales team and developing our products.

Dividend

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

Employees

Our staff are now all working from home and I would like to thank them for their hard work adapting to this challenge. The Company has been able to continue to provide full support to existing customers, which has included performing software upgrades and helping with data centre moves whilst at the same time supporting proof of concept projects and progressing the development of new products.

Outlook

We expect conditions in the second half of the year to remain challenging. It seems unlikely that our sales team will have greater access to customers until at least the end of the year, however, we are confident that we will build on current growth once market conditions improve.

Geoff Wicks

Chairman and Non-Executive Director

GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

All of the results relate to continuing operations and there was no other comprehensive income in the period.

* Before release of accruals for administrative costs in respect of prior years.

GROUP BALANCE SHEET 

GROUP CASH FLOW STATEMENT

GROUP STATEMENT OF CHANGES IN EQUITY 

* At 31 December 2020 £31,642 had been received from an optionholder as subscription funds to acquire 37,301 Ordinary Shares in the Company. The shares were issued post reporting date on 25 January 2021.NOTES TO THE FINANCIAL INFORMATION

The number of dilutive shares under option at 31 December 2020 was 214,217 (31 December 2019: 256,341; 30 June 2020: 268,484). 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.

10. Leases

As a lessee, 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: