Last checked at 21 Feb 2024 07:00
ARCONTECH GROUP PLC
("Arcontech" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2023
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 2023.
Overview:
Geoff Wicks, Chairman of Arcontech, said:
"We believe our strategy has brought us through a difficult period of poor market conditions well. Our focus is firmly on our core markets where we believe we are best placed to build sustainable growth. We have invested in our ability to grow globally and although lead times and competitive markets mean slow progress, we have started to experience some growth and we are confident about this continuing."
Enquiries:
Arcontech Group plc | 020 7256 2300 |
Geoff Wicks, Chairman and Non-Executive Director | |
Matthew Jeffs, Chief Executive | |
Cavendish Capital Markets 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.
The information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
Chairman's Statement
Arcontech is beginning to see some small improvements in market conditions and new projects we have been working on come to fruition. There remain challenges in the market and lead times are longer than before but we announced one major new contract recently and we have the start of growth at existing customers. Our pipeline is improving and we are confident that we are in a good position to recover some of the ground we lost over the last few years.
We have retained a significant customer base, much of which is now on longer contracts. Nearly all our revenue is now recurring which provides good visibility and will help us to maintain growth. While we have been investing in our sales and support operations, careful cost control has allowed us to grow profit, although the last year's H1 profit was depressed by the impact of lost business, so flatters this year's number.
Revenue was £1.44 million, up 6.8% on the same period last year, Profit before tax ("PBT") was £0.54 million, up 44.7% on the same period last year. Adjusted profit before tax, which is PBT before the release of accruals for administrative costs in respect of prior years was £0.53 million, up 45.3% on the previous year.
Financing
Our balance sheet remains robust with net cash of £5.7 million, £0.2 million lower than at 31 December 2022, and £0.7 million lower than the level at 30 June 2023 after payment to shareholders of a record dividend of £0.4 million, and a change to the billing cycle for a large customer. As at the date of releasing this report the net cash balance is £6.8m. This cash position allows for continued investment in sales and products and for us to remain alert to opportunities to acquire small complementary businesses.
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
We believe our strategy has brought us through a difficult period in poor market conditions in good shape. Our focus is firmly on growth in our core markets where we believe we are best placed to build sustainable growth. We have invested in our ability to grow globally and although lead times and competitive markets mean slow progress we are confident about future growth.
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 | ||||
2023 | 2022 | 2023 | |||||
(unaudited) £ | (unaudited) £ | (audited) £ | |||||
Revenue | 1,448,804 | 1,357,041 | 2,730,172 | ||||
Administrative costs | (1,039,456) | (995,636) | (1,924,962) | ||||
Operating profit | 4 | 409,348 | 361,405 | 805,210 | |||
Finance income | 126,055 | 15,840 | 76,977 | ||||
Finance costs | 13 | 3,387 | (4,831) | (6,491) | |||
Changes in estimated variable remuneration liability | 5 |
- |
- | 110,000 | |||
Profit before taxation | 538,790 | 372,414 | 985,696 | ||||
Taxation | 7 | - | - | (5,587) | |||
Profit for the period after tax |
| 538,790 | 372,414 |
980,109 | |||
Total comprehensive income | 538,790 | 372,414 | 980,109 | ||||
Profit per share (basic) | 4.03p | 2.78p | 7.33p | ||||
Adjusted* Profit per share (basic) | 4.00p | 2.75p | 6.44p | ||||
Profit per share (diluted) | 4.02p | 2.77p | 7.32p | ||||
Adjusted* Profit per share (diluted) | 3.99p | 2.74p | 6.43p |
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 2023 |
31 December 2022 |
30 June 2023 | |||
(unaudited) £ | (unaudited) £ | (audited) £ | ||||
Non-current assets | ||||||
Goodwill | 1,715,153 | 1,715,153 | 1,715,153 | |||
Property, plant and equipment | 6,325 | 4,420 | 5,950 | |||
Right of use asset | 13 | 559,098 | 146,303 | 73,152 | ||
Deferred tax asset | 328,000 | 318,000 | 328,000 | |||
Trade and other receivables | 10 | 141,750 | 141,750 | - | ||
Total non-current assets | 2,750,326 | 2,325,626 | 2,122,255 | |||
Current assets | ||||||
Trade and other receivables | 10 | 1,335,408 | 1,584,539 | 499,861 | ||
Cash and cash equivalents | 5,734,226 | 5,908,814 | 6,411,241 | |||
Total current assets | 7,069,634 | 7,493,353 | 6,911,102 | |||
Current liabilities | ||||||
Trade and other payables | 11 | (473,512) | (891,203) | (427,030) | ||
Deferred income | (1,013,405) | (1,854,240) | (881,858) | |||
Lease liabilities | 13 | (68,869) | (118,994) | (40,324) | ||
Provisions | (50,000) | - | (50,000) | |||
Total current liabilities | (1,605,786) | (2,864,437) | (1,399,212) | |||
Non-current liabilities | ||||||
Lease liabilities | 13 | (483,641) | - | - | ||
Provisions | (20,000) | - | (20,000) | |||
Total non-current liabilities | (503,641) | - | (20,000) | |||
Net current assets | 5,463,848 | 4,628,916 | 5,511,890 | |||
Net assets | 7,710,533 | 6,954,542 | 7,614,146 | |||
Equity | ||||||
Share capital | 1,671,601 | 1,671,601 | 1,671,601 | |||
Share premium account | 115,761 | 115,761 | 115,761 | |||
Share option reserve | 305,101 | 306,440 | 279,455 | |||
Retained earnings | 5,618,070 | 4,860,740 | 5,547,328 | |||
7,710,533 | 6,954,542 | 7,614,145 | ||||
GROUP CASH FLOW STATEMENT
Note | Six months ended 31 December | Six months ended 31 December | Year ended 30 June | ||||
2023 | 2022 | 2023 | |||||
(unaudited) £ | (unaudited) £ | (audited) £ | |||||
Cash (used in) / generated from operating activities | 12 | (296,937) | 383,087 |
901,422 | |||
Tax paid | 7 | - | (4,993) | - | |||
Net cash generated from operating activities | (296,937) | 378,094 |
901,422 | ||||
Investing activities | |||||||
Interest received | 126,055 | 15,840 | 76,977 | ||||
Proceeds on disposal of fixed assets | 417 | - | - | ||||
Purchases of plant and equipment |
(3,471) |
(114) |
(3,480) | ||||
Net cash generated from investing activities |
123,001 |
15,726 |
73,497 | ||||
Financing activities | |||||||
Dividends paid | (468,048) | (434,616) | (434,616) | ||||
Payment of lease liabilities | (35,031) | (76,859) | (155,529) | ||||
Net cash used in financing activities | (503,079) | (511,475) | (590,145) | ||||
Net (decrease) / increase in cash and cash equivalents |
(677,015) |
(117,655) |
384,772 | ||||
Cash and cash equivalents at beginning of period |
6,411,241 |
6,026,469 |
6,026,469 | ||||
Cash and cash equivalents at end of period |
5,734,266 |
5,908,814 |
6,411,241 |
GROUP STATEMENT OF CHANGES IN EQUITY
Share capital | Share premium | Share-based payments reserve | Retained earnings | Total
| |
£ | £ | £ | £ | £ | |
At 1 July 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 |
Profit for the period | - | - | - | 607,695 | 607,695 |
Total comprehensive income for the period
| - | - | - | 607,695 | 607,695 |
Transfer between reserves | - | - | (78,893) | 78,893 | - |
Share-based payments | - | - | 51,908 | - | 51,908 |
Total transactions with owners | - | - | (26,985) | 78,893 | 51,908 |
At 30 June 2023 | 1,671,601 | 115,761 | 279,455 | 5,547,328 | 7,614,145 |
Profit for the period | - | - | - | 538,790 | 538,790 |
Total comprehensive income for the period
| - | - | - | 538,790 | 538,790 |
Dividends paid | - | - | - | (468,048) | (468,048) |
Share-based payments | - | - | 25,646 | - | 25,646 |
Total transactions with owners | - | - | 25,646 | (468,048) | (442,402) |
At 31 December 2023 | 1,671,601 | 115,761 | 305,101 | 5,618,070 | 7,710,533 |
NOTES TO THE FINANCIAL INFORMATION
1. The figures for the six months ended 31 December 2023, and 31 December 2022, 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 2023. 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 2023, 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 2023 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 2023, 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 £4,014 (31 December 2022: £4,500; 30 June 2023: £8,393).
5. During the year to 30 June 2023, the Group Income Statement included the release of £110,000 in accrued bonuses which was been disclosed separately. The Board's best estimate of the liability to pay bonuses as at 30 June 2022 was £170,000 which was recorded with the prior year accruals. In the year to 30 June 2023, £110,000 of this liability was released to the Group Income Statement following annual reappraisal of the estimated liability at 30 June 2023.
6. 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 2023 of 13,372,811 (31 December 2022: 13,372,811 30 June 2023: 13,372,811).
The number of dilutive shares under option at 31 December 2023 was 26,988 (31 December 2022: 18,612; 30 June 2023: 14,805). 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.
7. 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.
8. A final dividend in respect of the year ended 30 June 2023 of 3.5 pence per share (2022: 3.25 pence per share) was paid on 3 November 2023.
9. The Directors have elected not to apply IAS 34 Interim financial reporting.
10. Trade and other receivables
31 December2023£ (unaudited) | 31 December2022 £ (unaudited) | 30 June2023£ (audited) | |||
Due within one year: | |||||
Trade and other receivables | 1,137,648 | 1,468,165 | 136,250 | ||
Prepayments and accrued income | 197,760 | 116,374 | 221,861 | ||
Other receivables | - | - | 141,750 | ||
1,335,408 | 1,584,539 | 499,861 |
31 December2023£ (unaudited) | 31 December2022 £ (unaudited) | 30 June2023£ (audited) | |||
Due after more than one year: | |||||
Other receivables | 141,750 | 141,750 | - | ||
141,750 | 141,750 | - |
11. Trade and other payables
31 December2023£ (unaudited) | 31 December2022 £ (unaudited) | 30 June2023£ (audited) | |||
Trade payables | 27,055 | 33,078 | 44,995 | ||
Other tax and social security payable | 69,714 | 319,265 | 58,185 | ||
Other payables and accruals | 376,743 | 538,860 | 323,850 | ||
473,512 | 891,203 | 427,030 |
12. Cash generated from operations
Six months ended 31 December | Six months ended 31 December | Year ended 30 June | |||||||||
2023 | 2022 | 2023 | |||||||||
(unaudited) £ | (unaudited) £ | (audited) £ | |||||||||
Operating profit | 409,348 | 361,405 | 915,210 | ||||||||
Depreciation charge | 76,688 | 75,390 | 150,377 | ||||||||
Non-cash share option charges | 25,646 | 45,420 | 97,328 | ||||||||
Lease interest paid | (476) | (4,141) | (6,471) | ||||||||
| |||||||||||
Other interest paid | (1,141) | (690) | (20) | ||||||||
| |||||||||||
Profit on disposal of fixed assets | (152) | - | - | ||||||||
Increase in trade and other receivables | (990,910) | (1,240,846) |
(9,425) | ||||||||
Increase/(decrease) in trade and other payables | 184,060 | 1,146,549 |
(265,577) | ||||||||
Increase in provisions | - | - | 20,000 | ||||||||
Cash (used in) / generated from operations | (296,937) | 383,087 | 901,422 | ||||||||
13. 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 2023 | 73,152 | (40,324) | - | ||
Recognition of new lease under IFRS 16 | 559,803 | (552,220) | - | ||
Depreciation | (73,857) | - | (73,857) | ||
Liability write-back at expiry | - | 5,293 | 1 | 5,293 | |
Interest | - | (765) |
| (765) | |
Lease payments | - | 35,506 | - | ||
Carrying value at 31 December 2023 | 559,098 | (552,510) | (69,329) |
1 The lease interest charge for the period under review included a credit entry to write-off the balance of the old office lease liability at expiry of the lease. The credit arose due to the final lease payment being applied on a pro-rata basis for the final quarter. The final lease payment made was £35,506 and not £40,500 which was the amount used when calculating the initial value of the lease liability.
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) |
Contractual maturity analysis of lease liabilities as at 31 December 2023
Less than 3 months £ | 3 - 12 months
£ | 1 - 5 Years
£ | Longer than 5 Years £ | Total
£ | |
Lease liabilities | - | 113,400 | 439,110 | - | 552,510 |