TIDMARC
RNS Number : 1140V
Arcontech Group PLC
05 August 2015
ARCONTECH GROUP PLC
("Arcontech", the "Company" or the "Group")
Final Results for the Year Ended 30 June 2015
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
2015.
Financial highlights
-- Revenue increased 8% to GBP2.13m (2014: GBP1.98m)
-- Profit before tax of GBP243,660 (2014: loss of GBP35,565)
-- Cash balance of GBP1.07m (2014: GBP733,676)
-- Basic earnings per share of 0.023p (2014: 0.004p)
Operational highlights
-- Expanded customer base with a new business from a U.S based
international investment bank and a regional German bank
-- Growth in revenues from existing clients by building new
solutions and improving some existing ones
-- Continued investment in R&D to develop new solutions for existing and new clients
Commenting on the results, Richard Last, Chairman of Arcontech
said: "Arcontech has a healthy pipeline of qualified prospects and
although the lead time to a sale continues to be unpredictable,
once a sale is completed we invariably have a long and positive
relationship supported by annual recurring licence fees. Despite
the challenges presented in the year under review, with a
broadening product range and customer base, we are both positive
and confident as to Arcontech's prospects."
Enquiries:
Arcontech Group plc
Richard Last, Chairman and
Non-Executive Director 07713 214484
020 7256
Matthew Jeffs, Chief Executive 2300
finnCap Ltd (Nomad & Broker)
020 7220
Carl Holmes/Simon Hicks 0500
To access more information on the Group please visit:
www.arcontech.com
Chairman's Statement
I am pleased to report that Arcontech Group plc ("Arcontech")
has moved into profit for the year ended 30 June 2015, reporting a
profit before taxation of GBP243,660 compared to a loss before
taxation of GBP35,565 for the year ended 30 June 2014. After taking
the benefit of the Research and Development tax credit of
GBP109,378 (2014: GBP100,251) which the company receives due to the
amount it has invested in qualifying product design and
development, Arcontech achieved a profit after tax of GBP353,038
(2014: GBP64,686).
Turnover for the year increased by 8% to GBP2,129,958 (2014:
GBP1,981,375) largely reflecting new business from existing
customers. Recently the customer base was expanded, with new
business from a U.S. based international investment bank and a
regional German bank. The termination of a material product
agreement with an Asia focused bank (as announced on 4 June 2015)
was disappointing, but it is encouraging that we are continuing to
provide solutions to this group.
Staff changes during the year resulted in cost savings which
contributed to the improvement in profit. Although we do not expect
the same uplift from cost savings in the current year, we will
continue to keep a tight rein on costs whilst we invest in our
products and sales capability.
Arcontech has not been able to declare a dividend due to its
negative distributable reserves. It is our intention to seek court
approval to re-designate our reserves and thereby enable the
company to pay dividends.
Financing
As at 30 June 2015 Arcontech had no debt and cash balances of
GBP1,069,755 (2014: GBP733,676), reflecting increased profitability
and additional contract wins, bearing in mind that the majority of
our agreements are recurring in nature and paid annually in
advance. The company, therefore, remains capable of funding, from
its own resources, any demands for additional product development
and sales and marketing.
Employees
Once again I would like to thank our employees who are the core
of the business. They have continued to respond positively to the
challenges presented by the competitive market place in which we
operate to produce this excellent result.
Outlook
Arcontech has a healthy pipeline of qualified prospects and
although the lead time to a sale continues to be unpredictable,
once a sale is completed we invariably have a long and positive
relationship supported by annual recurring licence fees. Despite
the challenges presented in the year under review, with a
broadening product range and customer base, we are both positive
and confident as to Arcontech's prospects.
Richard Last
Chairman
Chief Executive's Review
I am happy to report that during the year, our continued focus
on streamlining costs whilst bringing the sales pipeline forward,
has led to Arcontech moving firmly into profit.
We achieved revenue growth similar to that of last year at 8%
which, along with a reduction in costs of 5%, had a significant and
positive impact to our bottom line to generate a profit before tax
of GBP243,660.
To build on this profitability we are now fully targeted on
growing our business with existing clients and acquiring new ones.
In the period under review we secured both a major U.S. investment
bank and a regional German bank as new clients. Both these clients
performed extensive due diligence and testing on our solutions and
I am pleased to say we were appointed notwithstanding the
competition.
We also managed to grow revenues with our existing clients by
both expanding the use of existing solutions and deploying
additional ones. We did this by adjusting or building out solutions
to better meet their requirements.
In consultation with several existing clients we have also been
working on the development of new product offerings to meet
identified market needs. We hope to roll these out initially with
those same clients and then to a wider client base during the
coming year.
The year, however, was not without its challenges. We
successfully maintained momentum through some staff changes,
negotiated and resolved an issue with a major client and
successfully moved to new office premises which are a significant
improvement over the previous location.
With the initial milestone of moving into solid profitability
accomplished, our goal is to continue to increase the rate of
revenue growth organically and, if a suitable opportunity is
identified, through focused acquisitions.
Matthew Jeffs
Chief Executive
Group Income Statement and Statement of Comprehensive Income
For the year ended 30 June 2015
2015 2014
GBP GBP
Revenue 2,129,958 1,981,375
Distribution costs - (31,439)
Administrative costs (1,890,242) (1,989,156)
Operating profit/(loss) 239,716 (39,220)
Finance income 3,944 3,655
-------------------------------------------- ------------------------------ ------------
Profit/(loss) before taxation 243,660 (35,565)
Taxation 109,378 100,251
Profit for the year after tax 353,038 64,686
-------------------------------------------- ------------------------------ ------------
Total comprehensive income for the year 353,038 64,686
-------------------------------------------- ------------------------------ ------------
Profit per share (basic) 0.023p 0.004p
-------------------------------------------- ------------------------------ ------------
Profit per share (diluted) 0.023p 0.004p
-------------------------------------------- ------------------------------ ------------
All of the results relate to continuing operations.
Statement of Changes in Equity
For the year ended 30 June 2015
Group:
Share Share Retained Total
capital premium Share option reserve earnings equity
GBP GBP GBP GBP GBP
Balance at 30 June 2013 1,531,315 9,428,169 253,234 (9,886,696) 1,326,022
Profit for the year - - - 64,686 64,686
Total comprehensive income for the year - - - 64,686 64,686
Issue of shares 5,357 2,143 - - 7,500
Share-based payments - - 18,677 - 18,677
Share-based payments reserve released - - (199,349) 199,349 -
Balance at 30 June 2014 1,536,672 9,430,312 72,562 (9,622,661) 1,416,885
Profit for the year - - - 353,038 353,038
Total comprehensive income for the year - - - 353,038 353,038
Share-based payments - - 20,199 - 20,199
Balance at 30 June 2015 1,536,672 9,430,312 92,761 (9,269,623) 1,790,122
------------------------------------------ ---------- ---------- --------------------- ------------ ----------
Company:
Share Share Retained Total
capital premium Share option reserve earnings equity
GBP GBP GBP GBP GBP
Balance at 30 June 2013 1,531,315 9,428,169 253,234 (7,755,508) 3,457,210
Profit for the year - - - 23,186 23,186
----------------------------------- ---------- ---------- --------------------- ------------ ----------
Total comprehensive income for
the year - - - 23,186 23,186
Issue of shares 5,357 2,143 - - 7,500
Share-based payments - - 18,677 - 18,677
Share-based payments reserve
released - - (199,349) 53,091 (146,258)
Balance at 30 June 2014 1,536,672 9,430,312 72,562 (7,679,231) 3,360,315
Loss for the year - - - (118,454) (118,454)
----------------------------------- ---------- ---------- --------------------- ------------ ----------
Total comprehensive expense for
the year - - - (118,454) (118,454)
Share-based payments - - 20,199 - 20,199
Balance as at 30 June 2015 1,536,672 9,430,312 92,761 (7,787,685) 3,262,060
----------------------------------- ---------- ---------- --------------------- ------------ ----------
Balance Sheets
As at 30 June 2015
Group Group Company Company
2015 2014 2015 2014
GBP GBP GBP GBP
Non-current assets
Goodwill 1,715,153 1,715,153 - -
Property, plant
and equipment 41,605 19,112 - -
Investments in
subsidiaries - - 2,017,373 2,017,373
Trade and other
receivables 141,750 - - -
Total non-current
assets 1,898,508 1,734,265 2,017,373 2,017,373
---------------------------------- ------------ ------------ ------------ ------------
Current assets
Trade and other
receivables 478,402 361,016 806,382 1,510,725
Cash and cash equivalents 1,069,755 733,676 649,907 37,854
---------------------------------- ------------ ------------ ------------ ------------
Total current assets 1,548,157 1,094,692 1,456,289 1,548,579
---------------------------------- ------------ ------------ ------------ ------------
Current liabilities
Trade and other
payables (1,656,543) (1,412,072) (211,602) (205,637)
---------------------------------- ------------ ------------ ------------ ------------
Total current liabilities (1,656,543) (1,412,072) (211,602) (205,637)
---------------------------------- ------------ ------------ ------------ ------------
Net current (liabilities)/assets (108,386) (317,380) 1,244,687 1,342,942
---------------------------------- ------------ ------------ ------------ ------------
Net assets 1,790,122 1,416,885 3,262,060 3,360,315
---------------------------------- ------------ ------------ ------------ ------------
Equity
Called up share
capital 1,536,672 1,536,672 1,536,672 1,536,672
Share premium account 9,430,312 9,430,312 9,430,312 9,430,312
Share option reserve 92,761 72,562 92,761 72,562
Retained earnings (9,269,623) (9,622,661) (7,797,685) (7,679,231)
---------------------------------- ------------ ------------ ------------ ------------
1,790,122 1,416,885 3,262,060 3,360,315
---------------------------------- ------------ ------------ ------------ ------------
Group Cash Flow Statement
For the year ended 30 June 2015
2015 2014
GBP GBP
Net cash generated from/(used in) operating activities 369,982 (151,013)
-------------------------------------------------------- ---------- ----------
Investing activities
Interest received 3,944 3,655
Purchases of plant and equipment (38,014) (5,270)
Sales of plant and equipment 167 -
Net cash invested in investing activities (33,903) (1,615)
-------------------------------------------------------- ---------- ----------
Financing activities
Issue of shares - 7,500
-------------------------------------------------------- ---------- ----------
Net cash generated from financing activities - 7,500
-------------------------------------------------------- ---------- ----------
Net increase/(decrease) in cash and cash equivalents 336,079 (145,128)
Cash and cash equivalents at beginning of year 733,676 878,804
-------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of year 1,069,755 733,676
-------------------------------------------------------- ---------- ----------
Company Cash Flow Statement
For the year ended 30 June 2015
2015 2014
GBP GBP
Net cash generated from/(used
in) operating activities 609,347 (24,652)
------------------------------------ -------- ---------
Investing activities
Interest received 2,706 189
------------------------------------ -------- ---------
Net cash generated from investing
activities 2,706 7,689
------------------------------------ -------- ---------
Financing activities
Issue of shares - 7,500
------------------------------------ -------- ---------
Net cash generated from financing
activities - 7,500
------------------------------------ -------- ---------
Net increase/(decrease) in
cash and cash equivalents 612,053 (16,963)
Cash and cash equivalents at
beginning of year 37,854 54,817
------------------------------------ -------- ---------
Cash and cash equivalents at
end of year 649,907 37,854
------------------------------------ -------- ---------
Notes to the Financial Statements
For the year ended 30 June 2015
1. Accounting policies
The principal accounting policies are summarised below. They
have all been applied consistently throughout the period covered by
these 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 of preparation
These financial statements have been 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.
Accounting standards and interpretations adopted during the
period
IFRS 10: Revision to accounting for groups to provide additional
guidance on when and how to consolidate group interests and related
disclosures and IFRS 12: Disclosure of interests in other entities
were adopted in the year but have only had a presentation and
disclosure impact on these financial statements.
Other than this, there have only been minor improvements to
existing International Financial Reporting Standards and
interpretations that are effective for the first time in the
current financial year that have been adopted by the Group. These
have had no impact on its consolidated results or financial
position.
Standards, amendments and interpretations that are expected to
be effective for periods beginning on or after 1 July 2015 for
standards, amendments subject to EU endorsement:
Standards, interpretations and amendments to existing standards
that have been published, and are mandatory to accounting periods
beginning on or after 1 July 2015 or later periods and that have
not been early adopted by the Group or the Company include the
following:
Effective EU adopted
date (periods
beginning
on or after)
-------------------- --------------- -----------
IFRS 9 Financial 1 January No
Instruments 2018
-------------------- --------------- -----------
IFRS 15 Revenue 1 January No
from Contracts 2018
with Customers
-------------------- --------------- -----------
Annual Improvements 1 January No
to IFRSs 2012-2014 2016
Cycle
-------------------- --------------- -----------
A number of other interpretations and amendments to existing
standards have been made by the IASB and IFRIC but are not
considered relevant to the Group's operations.
The directors are considering the impact of the above new
standards and amendments on the reported results of the Group and
Company.
Basis of consolidation
The Group financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) prepared to 30 June 2015. Control is achieved
where the Company has the power to govern the financial and
operating policies of an investee entity so as to obtain benefits
from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Business combinations and goodwill
On acquisition, the assets and liabilities and contingent
liabilities of subsidiaries are measured at their fair value at the
date of acquisition. Any excess of cost of acquisition over the
fair values of the identifiable net assets acquired is recognised
as goodwill. Any deficiency of the cost of acquisition below the
fair values of the identifiable net assets acquired (i.e. discount
on acquisition) is credited to the income statement in the period
of acquisition. Goodwill arising on consolidation is recognised as
an asset and reviewed for impairment at least annually. Any
impairment is recognised immediately in the income statement and is
not subsequently reversed.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts, VAT and other sales related taxes.
Revenue arising from the provision of services is recognised
when and to the extent that the Group obtains the right to
consideration in exchange for the performance of its contractual
obligations as follows:
Software development and licence fee income - recognised evenly
over the contracted licence period.
Taxation
The tax charge/(credit) represents the sum of the tax
payable/(receivable) and any deferred tax.
The tax payable/(receivable) is based on the taxable result for
the year. The taxable result differs from the net result as
reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates
that have been enacted or substantially enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset
realised. Deferred tax is charged or credited to the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current assets and liabilities on a net basis.
Share-based payments
The cost of share-based employee compensation arrangements,
whereby employees receive remuneration in the form of shares or
share options, is recognised as an employee benefit expense in the
income statement.
The total expense to be apportioned over the vesting period of
the benefit is determined by reference to the fair value (excluding
the effect of non market-based vesting conditions) at the date of
grant. Fair value is measured by the use of the Black-Scholes
model. The expected life used in the model has been adjusted, based
on management's best estimate, for the effects of the
non-transferability, exercise restrictions and behavioural
considerations. A cancellation of a share award by the Group or an
employee is treated consistently, resulting in an acceleration of
the remaining charge within the consolidated income statement in
the year of cancellation.
Impairment of tangible and intangible assets
The carrying amounts of the Group's and Company's tangible and
intangible assets are reviewed at each year end date to determine
whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated.
For goodwill the recoverable amount is estimated at each year
end date, based on value in use. The recoverable amount of other
assets is the greater of their net selling price and value in
use.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash
generating unit to which the asset belongs.
An impairment loss is recognised in the income statement
whenever the carrying amount of an asset or its cash-generating
unit exceeds its recoverable amount. Impairment losses recognised
in respect of cash-generating units are allocated first to reduce
the carrying amount of any goodwill allocated to cash-generating
units and then to reduce the carrying amount of the other assets in
the unit on a pro rata basis.
A cash generating unit is the smallest identifiable group of
assets that generates cash inflows that are largely independent of
the cash inflows from other assets or groups of assets.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost of assets,
over their estimated useful lives, on the following bases:
Leasehold property - over the period of the lease
Computer equipment - 33% - 40% on cost
- 20% - 25% on cost or reducing
Office furniture and equipment balance
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any
provision for impairment.
Financial instruments
Financial assets and financial liabilities are recognised on the
balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Financial liabilities and equity instruments issued by the Group
are classified in accordance with the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs.
Trade and other receivables
Trade and other receivables are measured at initial recognition
at fair value, and are subsequently measured at amortised cost
using the effective interest method. A provision is established
when there is objective evidence that the Group will not be able to
collect all amounts due. The movement on any provision is
recognised in the income statement.
Trade and other payables
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost, using the
effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and
short-term bank deposits with an original maturity of three months
or less.
Leasing commitments
Rentals payable under operating leases are charged to income on
a straight-line basis over the term of the relevant lease.
Research and development
Research costs are charged to the income statement in the year
incurred. Development expenditure is capitalised to the extent that
it meets all of the criteria required by IAS 38, otherwise it is
charged to the income statement in the year incurred.
Pension costs and other post-retirement benefits
The Group makes payments to employees' personal pension schemes.
Contributions payable for the year are charged in the income
statement.
Foreign currencies
Transactions denominated in foreign currencies are translated
into sterling at the exchange rate ruling when the transaction was
entered into. Foreign currency monetary assets and liabilities are
translated into sterling at the exchange rate ruling at the balance
sheet date. Exchange gains or losses are included in operating
profit.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief
operating decision-maker as required by IFRS 8 "Operating Segments". The chief operating decision-maker responsible for allocating resources and assessing performance of the operating segments has been identified as the Board of Directors. The accounting policies of the reportable segments are consistent with the accounting policies of the group as a whole. Segment profit/(loss) represents the profit/(loss) earned by each segment without allocation of foreign exchange gains or losses, gains or losses on the disposal of available-for sale investments, investment income, interest payable and tax. This is the measure of profit that is reported to the Board of Directors for the purpose of resource allocation and the assessment of segment performance. When assessing segment performance and considering the allocation of resources, the Board of Directors review information about segment assets and liabilities. For this purpose, all assets and liabilities are allocated to reportable segments with the exception of cash and cash equivalents, available-for-sale financial assets and current and deferred tax assets and liabilities.
2. Revenue
An analysis of the Group's revenue is as follows:
2015 2014
GBP GBP
Software development and licence fees 2,129,958 1,981,375
---------------------------------------- ---------- ----------
All of the Group's revenue relates to continuing activities.
3. Operating profit/(loss) for the year is stated after charging:
2015 2014
GBP GBP
Depreciation of plant and equipment 8,682 10,736
Loss on disposal of fixed assets 6,673 465
Staff costs (see note 7) 1,352,295 1,476,944
Operating lease rentals - land and buildings (see note 21) 88,789 79,000
Research and development 592,185 736,867
------------------------------------------------------------- ---------- ----------
4. Profit per share
2015 2014
GBP GBP
Earnings
Earnings for the purpose of basic and diluted earnings per share being net profit
attributable
to equity shareholders 353,038 64,686
353,038 64,686
-------------------------------------------------------------------------------------------- -------- -------
No. No.
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per
share 1,536,672,013 1,531,505,672
Number of dilutive shares under option 15,602,384 13,314,419
---------------------------------------------------------------------------------- -------------- --------------
Weighted average number of ordinary shares for the purposes of dilutive earnings
per share 1,552,274,847 1,544,820,092
---------------------------------------------------------------------------------- -------------- --------------
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.
5. Dividends
There were no dividends paid or proposed during the period
(2014: GBPNil).
6. 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 29 September 2015 at 10 a.m.
7. 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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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