Last checked at 26 Jul 2010 07:00
ARCONTECH GROUP PLC
("Arcontech" or the "Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2010
Arcontech Group PLC (AIM: ARC), providers of products and services for real-time financial market data processing and trading, reports its preliminary results for the year ended 30 June 2010.
Financial and business highlights
Ø Contracted future annual recurring revenues as at 30 June 2010 increased by 59% to £1.08m (2009: £0.68m)
Ø Turnover for the year was £1.07m (2009: £1.4m) reflecting the move towards recurring rental model
Ø Contracts secured for CityVision contributions and distribution software in excess of £1.7m over 3 years
Ø Group operating loss for the year was £0.9m (2009: £0.6m)
Ø Had all new contracts signed during the year been traditional licence sales the results would have shown a marked improvement over 2009
Ø Existing products enhanced and continuing intention to invest in product development
Ø Cash balances at 30 June 2010 £1.6m (2009: £0.4m)
Richard Last, Chairman of Arcontech, said:
"The business has significant prospects for new sales with leading investment banks and other financial institutions. Evaluations of our products are presently taking place in a number of organisations. However, the length of time now being taken to make purchasing decisions is increasing and invariably needs sign-off at higher levels in the respective organisations. This is almost certainly a result of the tighter financial controls now operating throughout business generally. Consequently we are unable to predict with any degree of certainty the timing of contract wins. We are, however, optimistic regarding the opportunities that we believe exist and the company has the financial resources necessary to continue to operate despite these delays."
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 7492 4750 |
Chairman's Statement
Commentary
The year ended 30 June 2010 has been disappointing as the Group did not achieve the new sales wins that it had anticipated in the second half of the year. Turnover for the year was £1,068,776 (2009: £1,395,095) and the operating loss from continuing activities was £918,754 (2009: £574,739). Our success in promoting a licence rental model for new contracts (rather than an outright sale basis) has increased the quality and visibility of our future revenues. Inevitably this has reduced the reported performance in the year to 30th June 2010. Had all new contracts signed during the year been traditional licence sales the results would have shown a marked improvement over 2009. Nonetheless we believe our strategy is right for the business.
As at 30 June 2010 the contracted future annual recurring revenues of the business were £1,081,668 compared to £678,009 in 2009. This increase reflects the new international business won last year and in the first half of the year, the value of which is recognised over the life of the contracts. The level of recurring contracted revenue remains a key strength of the business going forward. These revenues now cover approximately 54% of our expected cost base compared to 34% in 2009
The Group is now fully focussed on the CityVision market data platform and on AXE, the CfD and spread betting solution. We believe good opportunities exist for these products albeit that the decision making process with regard to new sales has lengthened significantly.
During the year we continued to invest in the development of our software products. All related costs are expensed as incurred. CityVision has now been developed to work on the Solaris platform and we expect this to be rolled out by one of our existing major customers during the current year. Our Excelerator product is gaining market recognition through trials and although new sales are slow at present, prospects remain high. Significant development has taken place in respect of our AXE product, particularly to increase its functionality, reliability and throughput. Future product development will continue in order to meet customer needs and also to address new market opportunities as they present themselves. We do, however, expect this level of development to reduce, enabling more technical and consulting resource to be applied to revenue generating work.
Financing
As at 30 June 2010 Arcontech had net cash balances of £1,586,376, having raised £1,505,495 (net of expenses) by the issue of new ordinary shares earlier in the year. This level will reduce whilst trading losses continue, but we are optimistic that new sales, which should require little additional resources in order to be delivered, will significantly reduce the cash absorption going forward.
Management and Staff
Once again I should like to thank our staff and management for their continued hard work and dedication. Our team has remained positive and hardworking despite the frustrations of delays in winning new business which when achieved will, we believe, ultimately provide great opportunity for all.
Outlook
The business has significant prospects for new sales with leading investment banks and other financial institutions. Evaluations of our products are presently taking place in a number of organisations. However, the length of time now being taken to make purchasing decisions is increasing and invariably needs sign-off at higher levels in the respective organisations. This is almost certainly a result of the tighter financial controls now operating throughout business generally. Consequently we are unable to predict with any degree of certainty the timing of contract wins. We are, however, optimistic regarding the opportunities that we believe exist and the Group has the financial resources necessary to continue to operate despite these delays.
Richard Last
Chairman
23 July 2010
Chief Executive's Review
This year has been one of mixed fortunes. It was disappointing in terms of bottom-line financial performance yet with considerable progress on product development and some notable successes, particularly in international territories and larger accounts.
Overall market conditions have shown signs of improvement but mergers and acquisitions in the investment banking world have reduced the number of target organisations and delayed new initiatives during consolidation.
The main themes of the year have been:
·; ongoing implementation and support of recent, larger global contracts;
·; increased focus on the major international investment banks;
·; a cycle of new development based on evaluation and feedback from clients and prospects;
·; restructuring and expanding resource, particularly sales, pre-sales and post-sales support.
In the first half of the year we secured contracts for our CityVision contributions and distribution software in excess of £1.7 million over three years. These included a number of positions for our Excelerator real-time desktop product and for our development tools, supporting custom integration of CityVision with client's core systems. New revenues in the second half were disappointing considering the number of evaluations underway. However, the weighted value of contracts currently under consideration is at a record level.
The change from a license sale model to a license rental model has held back revenue and profit in the short term but has longer term benefit from the increased recurring revenue base.
This year recurring revenues have risen by 59% from £678,009 to £1,081,668. Had all new contracts gained during the year been traditional license sales, the reported revenues would have been higher and the losses correspondingly lower.
Sales this year have brought new installations in Denmark, Dubai, Hong Kong, London, New York and Singapore. This has increased our experience of different operating environments and commercial processes and we are better equipped to expedite future deals.
Our message of "data vendor independent technology" is gaining traction with many major banks and several evaluations are well advanced. The closer involvement has lead to highly constructive feedback leading to a strengthened product set to address new opportunities and specific customer requirements.
Global support has been strengthened with a 24x7 help-desk and support personnel stationed in strategic regions, including the Far East, where we have made good progress.
The AXE brokerage suite for on-line and telephone trading has continued to mature, with initiatives underway to address speed and scalability as user numbers expand.
Overall, while sales progress is slower than we had hoped, I believe the foundations have been laid to support improved results next year. I would like to thank staff, clients and prospects for their help and support and look forward to working with them towards the success that we believe is possible in the coming year.
Andrew Miller
Chief Executive
23 July 2010
Group Income Statement
For the year ended 30 June 2010
|
| Note | 2010 |
| 2009 |
|
|
|
| £ |
| £ |
|
| Continuing operations |
|
|
|
|
|
| Revenues | 2 | 1,068,776 |
| 1,395,078 |
|
| Distribution costs |
| (25,242 | ) | (37,138 | ) |
| Administrative costs |
| (1,962,288 | ) | (1,930,576 | ) |
| Administrative costs - exceptional | 3 | - |
| (2,103 | ) |
| Operating loss from continuing operations | 4 | (918,754 | ) | (574,739 | ) |
| Finance income |
| 5,681 |
| 8,417 |
|
| Loss before taxation from continuing operations |
| (913,073 | ) | (566,322 | ) |
| Taxation |
| - |
| 38,458 |
|
| Loss for the year from continuing operations |
| (913,073 | ) | (527,864 | ) |
| Discontinued operations |
|
|
|
|
|
| Profit for the year after tax from discontinued operations |
| - |
| 57,314 |
|
| Total comprehensive income |
| (913,073 | ) | (470,550 | ) |
| Earnings per share (basic and diluted) | 5 |
|
|
|
|
| From continuing operations |
| (0.07 | )p | (0.07 | )p |
| From discontinued operations |
| - | p | 0.01 | p |
| From continuing and discontinued operations |
| (0.07 | )p | (0.06 | )p |
Statement of Changes in Equity
For the year ended 30 June 2010
Group:
|
| Share capital | Share premium | Share option reserve | Retained earnings | Shares to be issued | Total equity |
|
| £ | £ | £ | £ | £ | £ |
| Balance at 1 July 2008 | 736,443 | 8,516,940 | 45,920 | (6,917,124) | - | 2,382,179 |
| Loss for the year | - | - | - | (470,550) | - | (470,550) |
| Total comprehensive income for the year 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 |
| Loss for the year | - | - | - | (913,073) | - | (913,073) |
| Total comprehensive income for the year
|
- |
- |
- |
(913,073) |
- | (913,073) |
| Share-based payments |
- |
- |
34,555 | - |
- | 34,555 |
| Issue of shares |
794,872 |
911,229 |
- | - |
(200,606) | 1,505,495 |
| Balance at 30 June 2010 | 1,531,315 | 9,428,169 | 143,297 | (8,300,747) | - | 2,802,034 |
Company:
|
| Share capital | Share premium | Share option reserve | Retained earnings | Shares to be issued | Total equity |
|
| £ | £ | £ | £ | £ | £ |
| Balance at 1 July 2008 | 736,443 | 8,516,940 | 45,920 | (6,959,561) | - | 2,339,742 |
| Loss for the year | - | - | - | (324,882) |
| (324,882) |
| Total comprehensive income for the year
| - | - | - | (324,882) | - | (324,882) |
| 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 | (7,284,443) | 200,606 | 2,278,288 |
| Loss for the year | - | - | - | (162,935) | - | (162,935) |
| Total comprehensive income for the year
| - | - | - | (162,935) | - | (162,935) |
| Share-based payments | - | - | 34,555 | - | - | 34,555 |
| Issue of shares | 794,872 | 911,229 | - | - | (200,606) | 1,505,495 |
| Balance at 30 June 2010 | 1,531,315 | 9,428,169 | 143,297 | (7,447,378) | - | 3,655,403 |
Group Balance Sheet
As at 30 June 2010
|
|
| Group 2010 £ |
| Group 2009 £ |
| Company 2010 £ |
| Company 2009 £ |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
|
| Goodwill |
| 1,715,153 |
| 1,715,153 |
| - |
| - |
|
| Property, plant and equipment |
| 46,597 |
| 57,638 |
| - |
| - |
|
| Investments in subsidiaries |
| - |
| - |
| 2,017,373 |
| 2,017,372 |
|
| Total non-current assets |
| 1,761,750 |
| 1,772,791 |
| 2,017,373 |
| 2,017,372 |
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
| Trade and other receivables |
| 213,921 |
| 521,328 |
| 1,257,236 |
| 196,473 |
|
| Cash and cash equivalents |
| 1,586,376 |
| 426,710 |
| 859,378 |
| 88,280 |
|
| Total current assets |
| 1,800,297 |
| 948,038 |
| 2,116,614 |
| 284,753 |
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
| Trade and other payables |
| (760,013 | ) | (545,772 | ) | (478,584 | ) | (23,837 | ) |
| Total current liabilities |
| (760,013 | ) | (545,772 | ) | (478,584 | ) | (23,837 | ) |
|
|
|
|
|
|
|
|
|
|
|
| Net current assets |
| 1,040,284 |
| 402,266 |
| 1,638,030 |
| 260,916 |
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets |
| 2,802,034 |
| 2,175,057 |
| 3,655,403 |
| 2,278,288 |
|
|
|
|
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
|
|
|
|
|
| Called up share capital |
| 1,531,315 |
| 736,443 |
| 1,531,315 |
| 736,443 |
|
| Shares to be issued |
| - |
| 200,606 |
| - |
| 200,606 |
|
| Share premium account |
| 9,428,169 |
| 8,516,940 |
| 9,428,169 |
| 8,516,940 |
|
| Share option reserve |
| 143,297 |
| 108,742 |
| 143,297 |
| 108,742 |
|
| Retained earnings |
| (8,300,747 | ) | (7,387,674 | ) | (7,447,378 | ) | (7,284,443 | ) |
|
|
| 2,802,034 |
| 2,175,057 |
| 3,655,403 |
| 2,278,288 |
|
Group Cash Flow Statement
For the year ended 30 June 2010
|
|
| 2010 |
| 2009 |
|
|
|
| £ |
| £ |
|
| Continuing operations |
|
|
|
|
|
| Net cash used in operating activities |
| (343,682 | ) | (687,627 | ) |
| Investing activities |
|
|
|
|
|
| Interest received |
| 5,681 |
| 7,193 |
|
| Acquisition of subsidiary, net of cash acquired |
| (1 | ) | - |
|
| Purchases of plant and equipment |
| (8,232 | ) | (1,956 | ) |
| Disposal of plant and equipment |
| 405 |
| 19,500 |
|
| Net cash (used)/received in investing activities |
| (2,147 | ) | 24,737 |
|
| Financing activities |
|
|
|
|
|
| Proceeds on issue of shares |
| 1,553,270 |
| - |
|
| Expenses paid in connection with share issues |
| (47,775 | ) | - |
|
| Net cash generated from financing activities |
| 1,505,495 |
| - |
|
| Net increase/(decrease) in cash and cash equivalents from continuing operations |
| 1,159,666 |
| (662,890 | ) |
| Discontinued operations |
|
|
|
|
|
| Cash flows from operating activities |
| - |
| 4,067 |
|
| Cash flows from investing activities |
| - |
| 2,929 |
|
| Net increase in cash and cash equivalents from discontinued operations |
| - |
| 6,996 |
|
| Net increase/(decrease) in cash and cash equivalents |
| 1,159,666 |
| (655,894 | ) |
| Cash and cash equivalents at beginning of year |
| 426,710 |
| 1,082,604 |
|
| Cash and cash equivalents at end of year |
| 1,586,376 |
| 426,710 |
|
Company Cash Flow Statement
For the year ended 30 June 2010
|
|
| 2010 |
| 2009 |
|
|
|
| £ |
| £ |
|
| Net cash used in operating activities |
| (737,485 | ) | (320,263 | ) |
| Investing activities |
|
|
|
|
|
| Interest received |
| 3,089 |
| 3,964 |
|
| Acquisition of subsidiary, net of cash acquired |
| (1 | ) | - |
|
| Net cash generated from investing activities |
| 3,088 |
| 3,964 |
|
| Financing activities |
|
|
|
|
|
| Proceeds on issue of shares |
| 1,553,270 |
| - |
|
| Expenses paid in connection with share issues |
| (47,775 | ) | - |
|
| Net cash generated from financing activities |
| 1,505,495 |
| - |
|
| Net increase/(decrease) in cash and cash equivalents |
| 771,098 |
| (316,299 | ) |
| Cash and cash equivalents at beginning of year |
| 88,280 |
| 404,579 |
|
| Cash and cash equivalents at end of year |
| 859,378 |
| 88,280 |
|
Notes to the Financial Statements
For the year ended 30 June 2010
1. Accounting policies
The principal accounting policies are summarised below. They have all been applied consistently throughout the period covered bythese financial statements.
Reporting entity
Arcontech Group PLC ("the Company") is a company incorporated in the United Kingdom. The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries (together referred to as "the Group").
Basis ofpreparation
These financial statements havebeen prepared in accordance with International Financial Reporting Standards ("IFRS") endorsed by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
On the basis of current projections, confidence of future profitability and cash balances held the Directors have adopted the going concern basis in the preparation of the financial statements.
The financial statements have been prepared under the historical cost convention.
2. Revenues
An analysis of the Group's revenues is as follows:
|
|
| 2010 £ |
| 2009 £ |
|
|
|
|
|
|
|
|
| Financial information service, advertising and sponsorship, software development and consultancy |
| 1,068,776 |
| 1,395,078 |
|
All of the Group's revenue relates to continuing activities.
3. Administrative costs - exceptional:
|
|
| 2010 £ |
| 2009 £ |
|
| Directors' remuneration - payment in lieu of notice |
| - |
| 2,103 |
|
| (in respect of Marc Pinter-Krainer, the former Chief Executive) |
|
|
|
|
|
|
|
| - |
| 2,103 |
|
4. Operating loss for the year is stated after charging:
|
|
| 2010 £ |
| 2009 £ |
|
| Depreciation of plant and equipment |
| 18,868 |
| 41,983 |
|
| Loss on disposal of fixed assets |
| - |
| 37,225 |
|
| Staff costs |
| 1,453,848 |
| 1,480,579 |
|
| Operating lease rentals - land and buildings |
| 55,300 |
| 55,300 |
|
| Research and development |
| 636,386 |
| 676,233 |
|
5. Earnings per share
|
|
| 2010 |
| 2009 |
|
|
|
| £ |
| £ |
|
| Earnings |
|
|
|
|
|
| Earnings for the purpose of basic and diluted earnings per share being net loss attributable to equity shareholders: |
|
|
|
|
|
| Continuing operations |
| (913,073 | ) | (527,864 | ) |
| Discontinued operations |
| - |
| 57,314 |
|
|
|
| (913,073 | ) | (470,550 | ) |
|
|
| No. |
| No. |
|
| Number of shares |
|
|
|
|
|
| Weighted average number of ordinary shares for the purpose of basic earnings per share |
| 1,335,592,398 |
| 736,442,943 |
|
| Number of dilutive shares under option |
| - |
| - |
|
| Weighted average number of ordinary shares for the purposes of dilutive earnings per share |
| 1,335,592,398 |
| 736,442,943 |
|
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 ofthe subscription rights attached to outstanding share options. Share options are anti-dilutive and are therefore not included above.
6. Dividends
There were no dividends paid or proposed during the period (2009: Nil).
7. Post balance sheet events
There were no events since the balance sheet date, which materially affect the position of the Group.
8. 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.
9. Copies of this statement
Copies of the Annual Report & Accounts will be sent to shareholders shortly and 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.