Last checked at 27 Feb 2023 07:00
ARCONTECH GROUP PLC
("Arcontech" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Arcontech (AIM: ARC), the provider of products and services for real-time financial market data processing and trading, reports its unaudited results for the six months ended 31 December 2022.
Overview:
Turnover decreased by 6.6% to £1,357,041 (H1 2021: £1,452,498) due to the effect of contract losses announced during the previous financial year
Profit before tax decreased by 13.2% to £372,414 (H1 2021: £428,924) reflecting the lower turnover
Our preferred measure of adjusted profit before tax, which excludes the release of accruals unrelated to the underlying business, declined by 13.3% to £367,914 (H1 2021: £424,425)
Recurring revenues represented 100% of total revenues for the period (H1 2021: 98%)
Net cash of £5,908,814 at 31 December 2022, up 5.13% (H1 2021: £5,620,352) after a record dividend payment of £434,616 paid on 24 October 2022
Revenue and profit before tax for the year to 30 June 2023 are expected to be in line with current expectations
Geoff Wicks, Chairman of Arcontech, said:
"Our strategy to support our existing customers to maximise opportunities while building our sales capability to grow our customer base globally, ensures we focus on growth in our core market. We are starting to see small amounts of growth and are confident that this will continue, although this must be balanced against continuing difficult markets for our customers."
Enquiries:
Arcontech Group plc | 020 7256 2300 |
Geoff Wicks, Chairman and Non-Executive Director | |
Matthew Jeffs, Chief Executive | |
finnCap Ltd (Nomad & Broker) | 020 7220 0500 |
Carl Holmes/George Dollemore Harriet Ward (ECM) | |
To access more information on the Group please visit: www.arcontech.com
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
While our results for the first half of this year show a decline in both revenue and profit compared to the same period last year, this is the result of the loss of business in the second half of last year. This impact will continue in the second half of the year given the recurring nature of our revenue. However, we are starting to see some growth with new and existing clients although the market remains difficult with customers seeking to reduce spend and prospects continuing to take time to commit.
We have worked hard at retaining customers and now have a significant proportion of our customer base on longer term contracts. At the same time, we are building a prospect list that gives us confidence of sustainable growth in the future. We have also managed our costs appropriately to ensure continued strong profitability and excellent cash generation.
Revenue was £1,357,041, down 6.6% on the same period last year, due to the loss of two contracts in the second half of 2021/22. Profit before tax ("PBT") was £372,414, 13.2% lower than the same period last year, reflecting the loss of revenue. Adjusted profit before tax, which is PBT before the release of accruals for administrative costs in respect of prior years, was down 13.3% to £367,914.
We continue to invest in our sales, marketing and support teams which has helped us to retain our excellent customer list and to start to build back some of the business lost in the previous financial year.
Financing
Our balance sheet remains robust with net cash of £5.9 million, £0.3 million higher than at 31 December 2022, and £0.1 million lower than the level at 30 June 2022 after payment to shareholders of a record dividend of £0.4 million. This cash position provides resources for continued investment in sales and products and for small complementary acquisitions.
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.
Outlook
Our strategy to support our existing customers to maximise opportunities while building our sales capability to grow our customer base globally, ensures we focus on growth in our core market. We are starting to see small amounts of growth and are confident that this will continue although this must be balanced against continuing difficult markets for our customers.
Geoff Wicks
Chairman and Non-Executive Director
GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
Note | Six months ended 31 December | Six months ended 31 December |
Year ended 30 June | ||||
2022 | 2021 | 2022 | |||||
(unaudited) £ | (unaudited) £ | (audited) £ | |||||
Revenue | 1,357,041 | 1,452,498 | 2,757,795 | ||||
Administrative costs | (995,636) | (1,021,879) | (1,999,523) | ||||
Operating profit | 4 | 361,405 | 430,619 | 758,272 | |||
Finance income | 15,840 | 6,521 | 13,911 | ||||
Finance costs | (4,831) | (8,216) | (13,610) | ||||
Profit before taxation | 372,414 | 428,924 | 758,573 | ||||
Taxation | 6 | - | - | (148,007) | |||
Profit for the period after tax |
| 372,414 | 428,924 |
610,566 | |||
Total comprehensive income | 372,414 | 428,924 | 610,566 | ||||
Profit per share (basic) | 2.78p | 3.21p | 4.57p | ||||
Adjusted* Profit per share (basic) | 2.75p | 3.18p | 4.50p | ||||
Profit per share (diluted) | 2.77p | 3.20p | 4.56p | ||||
Adjusted* Profit per share (diluted) | 2.74p | 3.16p | 4.49p |
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
Note |
31 December 2022 |
31 December 2021 |
30 June 2022 | |||
(unaudited) £ | (unaudited) £ | (audited) £ | ||||
Non-current assets | ||||||
Goodwill | 1,715,153 | 1,715,153 | 1,715,153 | |||
Property, plant and equipment | 4,420 | 7,489 | 6,545 | |||
Right of use asset | 12 | 146,303 | 292,606 | 219,455 | ||
Deferred tax asset | 318,000 | 471,000 | 318,000 | |||
Trade and other receivables | 141,750 | 141,750 | 141,750 | |||
Total non-current assets | 2,325,626 | 2,627,998 | 2,400,903 | |||
Current assets | ||||||
Trade and other receivables | 9 | 1,584,539 | 322,885 | 348,686 | ||
Cash and cash equivalents | 5,908,814 | 5,620,352 | 6,026,468 | |||
Total current assets | 7,493,353 | 5,943,237 | 6,375,154 | |||
Current liabilities | ||||||
Trade and other payables | 10 | (891,203) | (553,435) | (630,644) | ||
Deferred income | (1,854,240) | (1,017,829) | (978,236) | |||
Lease liabilities | 12 | (118,994) | (151,948) | (148,450) | ||
Total current liabilities | (2,864,437) | (1,723,212) | (1,757,330) | |||
Non-current liabilities | ||||||
Lease liabilities | 12 | - | (118,994) | (47,403) | ||
Total non-current liabilities | - | (118,994) | (47,403) | |||
Net current assets | 4,628,916 | 4,220,025 | 4,617,824 | |||
Net assets | 6,954,542 | 6,729,029 | 6,971,324 | |||
Equity | ||||||
Share capital | 1,671,601 | 1,671,601 | 1,671,601 | |||
Share premium account | 115,761 | 115,761 | 115,761 | |||
Share option reserve | 306,440 | 290,713 | 270,825 | |||
Retained earnings | 4,860,740 | 4,650,954 | 4,913,137 | |||
6,954,542 | 6,729,029 | 6,971,324 | ||||
GROUP CASH FLOW STATEMENT
Note | Six months ended 31 December | Six months ended 31 December | Year ended 30 June | ||||
2022 | 2021 | 2022 | |||||
(unaudited) £ | (unaudited) £ | (audited) £ | |||||
Cash generated from operating activities | 11 | 383,087 | 630,439 |
1,109,608 | |||
Tax paid | 6 | (4,993) | - | (2,642) | |||
Net cash generated from operating activities | 378,094 | 630,439 |
1,106,966 | ||||
Investing activities | |||||||
Interest received | 15,840 | 6,521 | 13,911 | ||||
Purchases of plant and equipment |
(114) |
(527) |
(2,688) | ||||
Net cash generated from investing activities |
15,726 |
5,994 |
11,223 | ||||
Financing activities | |||||||
Proceeds from the exercise of options | - | 29,024 | 29,025 | ||||
Dividends paid | (434,616) | (367,202) | (367,752) | ||||
Payment of lease liabilities | (76,859) | (73,360) | (148,450) | ||||
Net cash used in financing activities | (511,475) | (411,538) | (487,177) | ||||
Net (decrease) / increase in cash and cash equivalents |
(117,655) |
224,895 |
631,012 | ||||
Cash and cash equivalents at beginning of period |
6,026,469 |
5,395,457 |
5,395,457 | ||||
Cash and cash equivalents at end of period | 5,908,814 | 5,620,352 | 6,026,469 |
GROUP STATEMENT OF CHANGES IN EQUITY
Share capital | Share premium | Share-based payments reserve | Retained earnings | Total
| |
£ | £ | £ | £ | £ | |
At 1 July 2021 | 1,665,977 | 92,360 | 271,207 | 4,553,329 | 6,582,873 |
Profit for the period | - | - | - | 428,924 | 428,924 |
Total comprehensive income for the period
| - | - | - | 428,924 | 428,924 |
Exercise of options[1] | 5,624 | 23,401 | - | - | 29,025 |
Transfer between reserves | - | - | (35,904) | 35,904 | - |
Dividends paid | - | - | - | (367,202) | (367,202) |
Share-based payments | - | - | 55,409 | - | 55,409 |
Total transactions with owners | 5,624 | 23,401 | 19,505 | (331,298) | (282,768) |
At 31 December 2021 | 1,671,601 | 115,761 | 290,712 | 4,650,955 | 6,729,029 |
Profit for the period | - | - | - | 181,642 | 181,642 |
Total comprehensive income for the period
| - | - | - | 181,642 | 181,642 |
Transfer between reserves | - | - | (81,090) | 81,090 | - |
Dividends paid | - | - | - | (550) | (550) |
Share-based payments | - | - | 61,203 | - | 61,203 |
Total transactions with owners | - | - | (19,887) | 80,540 | 60,653 |
At 30 June 2022 | 1,671,601 | 115,761 | 270,825 | 4,913,137 | 6,971,324 |
Profit for the period | - | - | - | 372,414 | 372,414 |
Total comprehensive income for the period
| - | - | - | 372,414 | 372,414 |
Transfer between reserves | - | - | (9,805) | 9,805 | - |
Dividends paid | - | - | - | (434,616) | (434,616) |
Share-based payments | - | - | 45,420 | - | 45,420 |
Total transactions with owners | - | - | 35,615 | (424,811) | (389,196) |
At 31 December 2022 | 1,671,601 | 115,761 | 306,440 | 4,860,740 | 6,954,542 |
NOTES TO THE FINANCIAL INFORMATION
1. The figures for the six months ended 31 December 2022, and 31 December 2021, are unaudited and do not constitute statutory accounts. The accounting policies adopted are consistent with those applied by the Group in the preparation of the annual consolidated financial statements for the year ended 30 June 2022. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. Several amendments and interpretations apply for the first time in 2022, but these do not have a material impact on the interim condensed consolidated financial statements of the Group.
2. The financial information for the year ended 30 June 2022 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 2022, which were prepared in accordance with UK-adopted international accounting standards, 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.
3. Copies of this statement are 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.
4. Operating profit is stated after release of accruals for administrative expenses in respect of prior years of £4,500 (31 December 2021: £4,500; 30 June 2022: £9,000).
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 2022 of 13,372,811 (31 December 2021: 13,355,719 30 June 2022: 13,364,195).
The number of dilutive shares under option at 31 December 2022 was 18,612 (31 December 2021: 62,727; 30 June 2022: 25,145). 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.
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 paid represents the cash payment of tax liability from the preceding income tax year.
7. A final dividend in respect of the year ended 30 June 2022 of 3.25 pence per share (2021: 2.75 pence per share) was paid on 24 October 2022.
8. The Directors have elected not to apply IAS 34 Interim financial reporting.
9. Trade and other receivables
31 December2022£ (unaudited) | 31 December2021 £ (unaudited) | 30 June2022£ (audited) | |||
Due within one year: | |||||
Trade and other receivables | 1,468,165 | 209,800 | 196,541 | ||
Prepayments and accrued income | 116,374 | 113,085 | 152,145 | ||
1,584,539 | 322,885 | 348,686 |
10. Trade and other payables
31 December2022£ (unaudited) | 31 December2021 £ (unaudited) | 30 June2022£ (audited) | |||
Trade payables | 33,078 | 45,063 | 77,772 | ||
Other tax and social security payable | 319,265 | 64,548 | 62,148 | ||
Other payables and accruals | 538,860 | 443,824 | 490,724 | ||
891,203 | 553,435 | 630,644 |
11. Cash generated from operations
Six months ended 31 December | Six months ended 31 December | Year ended 30 June | |||||||||
2022 | 2021 | 2022 | |||||||||
(unaudited) £ | (unaudited) £ | (audited) £ | |||||||||
Operating profit | 361,405 | 430,619 | 758,272 | ||||||||
Depreciation charge | 75,390 | 77,337 | 153,594 | ||||||||
Non-cash share option charges | 45,420 | 55,410 | 116,612 | ||||||||
Lease interest paid | (4,141) | (7,640) | (13,550) | ||||||||
| |||||||||||
Other interest paid | (690) | (576) | (60) | ||||||||
(Increase)/decrease in trade and other receivables | (1,240,846) | 147,432 |
126,624 | ||||||||
Increase/(decrease) in trade and other payables | 1,146,549 | (72,143) |
(31,884) | ||||||||
Cash generated from operations | 383,087 | 630,439 | 1,109,608 | ||||||||
12. 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:
Right of use asset £ | Lease liability £ | Income statement £ | |||
As at 1 July 2022 | 219,455 | (195,853) | - | ||
Depreciation | (73,152) | - | (73,152) | ||
Interest | - | (4,141) | (4,141) | ||
Lease payments | - | 81,000 | - | ||
Carrying value at 31 December 2022 | 146,303 | (118,994) | (77,293) |
Right of use asset £ | Lease liability £ | Income statement £ | |||
As at 1 July 2021 | 365,758 | (344,303) | - | ||
Depreciation | (73,152) | - | (73,152) | ||
Interest | - | (7,640) | (7,640) | ||
Lease payments | - | 81,000 | - | ||
Carrying value at 31 December 2021 | 292,606 | (270,943) | (80,792) | ||