Interim Results

About this update from Arcontech Group Plc

  ARCONTECH GROUP PLC   ("Arcontech" or the "Group")   INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 202 4   Arcontech (AIM: ARC), the provider of products and services for real-time financial market data processing and trading, report s its unaudited results for the six months ended 31 December 202 4 .     Overview:     Revenue increased by 4.3% to £ 1,511,346 (H1 2023: £ 1,448,804) Recurring revenues represented 97% of total revenues for the period (H1 2023: 100%)     Adjusted EBITDA * decreased by 12.1% to £446,513 (H1 2023: £507,668) reflecting the expected increase in staff costs (* adjusted ebitda is defined as operating profit before depreciation, amortisation, share base payments and releases of historic accruals relating to administrative expenses)   Profit before tax decreased by 3.8% to £518,166 (H1 2023: £538,790) Our preferred measure of adjusted profit before tax, which excludes the release of accruals unrelated to the underlying business, decreased by 7.5% to £494,360 (H1 2023: £534,775)   Net cash of £ 7,166,839 at 31 December 2024, up 24.9% (H1 2023: £5,734,226). The period under review saw the return to a normal billing cycle for one of our large customers, and a record dividend payment of £501,479 on 1 November 2024   Trading in line with full year market expectations and confident in the full year outturn       Geoff Wicks, Chairman of Arcontech, said:   "The improvements to market conditions we mentioned in our Preliminary Statement last year have continued and the growth has materialised. We remain cautious as customers are careful about increasing their costs and lead times remain long. However, our pipeline is strong and we are confident about our future and the full year outturn."   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/ Rory Sale (Corporate Finance) Harriet Ward (Corporate Broking)   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   Arcontech has seen continued growth and although market conditions have improved many customers are cautious about embarking on new projects and increasing their cost base. As a result our pipeline has improved but lead times remain long. Our continued focus on our core market has ensured we continue to build the potential for future growth.   Our expected growth is likely to be tempered by some downsizing at larger customers as technology and markets change, however we are confident that new business will continue to work its way through the pipeline. With the complexity of markets changing, we have started to see some one-off contracts for work to change and embed our products into our customers' systems. It remains a small part of our business.   Revenue was £1.51 million, up 4.3% on the same period last year, Profit before tax ("PBT") was £0.51 million, down 3.8% 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 £0.50 million, down 7.5% on the previous year.   Financing   Our balance sheet remains robust with net cash of £7.1 million, £1.2 million higher than at 31 December 2023. The cash generation profile for the period normalised with a return to regular timing of the billing cycle for a large customer. 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   The improvements to market conditions we mentioned in our Preliminary Statement last year have continued and the growth has materialised. We remain cautious as customers are careful about increasing their costs and lead times remain long. However, our pipeline is strong and we are confident about our future and the full year outturn.     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 202 4 20 23 202 4 (unaudited) £ (unaudited) £ (audited) £ Revenue 1,511,346 1,448,804 2,910,232 Administrative costs (1,109,882) (1,039,456) ( 2,040,541 ) Operating profit 4 401,464 409,348 869,691 Finance income 139,066 126,055 247,903 Finance costs 12 (22,364) 3,387 ( 18,635 ) Profit before taxation 518,166 538,790 1,098,959 Taxation 6 - - (31,302)   Profit for the period after tax     518,166 538,790   1,067,657 Total comprehensive income 518,166 538,790 1,067,657 Profit per share (basic) 3.87p 4.03p 7.98 p Adjusted* Profit per share (basic) 3.70p 4.00p 7.80 p Profit per share (diluted) 3.85p 4.02p 7.96 p Adjusted* Profit per share (diluted) 3.68p 3.99p 7.78 p     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 202 4   31 December 20 23   30 June 202 4 (unaudited) £ (unaudited) £ (audited) £ Non-current assets Goodwill 1,715,153 1,715,153 1,715,153 Property, plant and equipment 10,220 6,325 5,404 Right of use asset 12 447,279 559,098 503,190 Deferred tax asset 358,000 328,000 358,000 Trade and other receivables 9 141,750 141,750 141,750 Total non-current assets 2,672,402 2,750,326 2,723,497 Current assets Trade and other receivables 9 821,336 1,335,408 677,069 Cash and cash equivalents 7,166,839 5,734,226 7,160,177 Total current assets 7,988,175 7,069,634 7,837,246 Current liabilities Trade and other payables 10 (594,088) (473,512) ( 595,190 ) Deferred income (1,221,194) (1,013,405) ( 1,092,835 ) Lease liabilities 12 (114,893) (68,869) ( 110,308 ) Provisions - (50,000) - Total current liabilities (1,930,175) (1,605,786) ( 1,798,333 ) Non-current liabilities Lease liabilities 12 (368,748) (483,641) (427,365) Provisions (70,000) (20,000) (70,000) Total non-current liabilities (438,748) (503,641) ( 497,365 ) Net current assets   6,058,000   5,463,848 6,038,913 Net assets 8,291,654 7,710,533 8,265,045 Equity Share capital 1,671,601 1,671,601 1,671,601 Share premium account 115,761 115,761 115,761 Share option reserve 340,668 305,101 330,746 Retained earnings 6,163,624 5,618,070 6,146,937 8,291,654 7,710,533 8,265,045   GROUP CASH FLOW STATEMENT   Note Six months ended 31 December Six months ended 31 December Year ended   30 June 202 4 20 23 2024 (unaudited) £ (unaudited) £ (audited) £ Cash generated from / (used in) operating activities 11 432,237 (296,937)   1,051,177 Tax paid 6 - - (15,586) Net cash generated from / (used in) operating activities 432,237 (296,937)   1,035,591 Investing activities Interest received 137,775 126,055 247,903 Proceeds on disposal of fixed assets - 417 417   Purchases of plant and equipment   (7,840)   (3,471)    ( 12,055 ) Net cash generated from investing activities   129,935   123,001            236,265 Financing activities Dividends paid (501,479) (468,048) ( 468,048 ) Payment of lease liabilities (54,031) (35,031) ( 54,872 ) Net cash used in financing activities (555,510) (503,079) ( 522,920 )     Net increase / (decrease) in cash and cash equivalents     6,662     (677,015)              748,936 Cash and cash equivalents at beginning of period   7,160,177   6,411,241          6,411,241 Cash and cash equivalents at end of period   7,166,839   5,734,266       7,160,177     GROUP STATEMENT OF CHANGES IN EQUITY   Share capital Share premium Share-option reserve Retained earnings  Total                   £                 £                £               £                 £ At 1 July 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 Profit for the period - - - 528,867 528,867 Total comprehensive income for the period   - - - 528,867 528,867 Share-based payments - - 25,645 - 25,645 Total transactions with owners - - 25,645 - 25,645 At 30 June 2024 1,671,601 115,761 330,746 6,146,937 8,265,045 Profit for the period - - - 518,166 518,166 Total comprehensive income for the period   - - - 518,166 518,166 Dividends paid - - - (501,479) (501,479) Share-based payments - - 9,922 - 9,922 Total transactions with owners - - 9,922 (501,479) (491,557) At 31 December 2024 1,671,601 115,761 340,668 6,163,624 8,291,654 NOTES TO THE FINANCIAL INFORMATION   1.    The figures for the six months ended 31 December 202 4 and 31 December 202 3 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 202 4 . 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 the 2025 financial year, 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 202 4 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 202 4 , 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 1 st 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 £23,806 (31 December 20 23 : £ 4,014 ; 30 June 202 4 : £24,603). 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 202 4 of 13,372,811 (31 December 20 23 : 13,372,811 30 June 202 4 : 13,372,811). The number of dilutive shares under option at 31 December 202 4 was 76,017 (31 December 20 23 : 26,988 ; 30 June 202 4 : 31,620). T h e c a l c u l a t i o n o f d il u t e d e a r n i n g s pe r s h a r e a ss u m e s c on v e r s i o n o f a l l po t e n t i a ll y d i l u t i ve o r d i na r y shares, all o f w h i c h a r i se f r o m s h a r e op t i on s. 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 202 4 of 3.75 pence per share (20 23 : 3.50 pence per share) was paid on 1 November 202 4 . 8.   The Directors have elected not to apply IAS 34 Interim financial reporting. 9.   Trade and other receivables 31 December 2024 £ (unaudited) 31 December 2023 £ (unaudited) 30 June 2024 £ (audited) Due within one year: Trade and other receivables 628,762 1,137,648 458,227 Prepayments and accrued income 192,575 197,760 218,842 Other receivables - - - 821,336 1,335,408 677,069   31 December 2024 £ (unaudited) 31 December 2023 £ (unaudited) 30 June 2024 £ (audited) Due after more than one year: Other receivables 141,750 141,750 141,750 141,750 141,750 141,750   The long term trade receivable of £141,750 is the rental agreement deposit for the Group's Paul Street office.   10. Trade and other payables 31 December 2024 £ (unaudited) 31 December 2023 £ (unaudited) 30 June 2024 £ (audited) Trade payables 88,874 27,055 61,328 Other tax and social security payable 169,864 69,714 106,899 Other payables and accruals 335,350 376,743 426,963 594,088 473,512 595,190   11. Cash generated from operations Six months ended 31 December Six months ended 31 December Year ended   30 June 202 4 20 23 202 4 (unaudited) £ (unaudited) £ (audited) £ Operating profit 401,464 409,348 869,691 Depreciation charge 58,933 76,688 134,518 Non-cash share option charges 9,922 25,646 51,291 Lease interest charge (21,569) (476) ( 18,435 )   Other interest charge (795) (1,141) (200)   Profit on disposal of fixed assets - (152) (151)   Increase in trade and other receivables (133,039) (990,910)     (318,958) Increase in trade and other payables 117,321 184,060 333,421 Cash generated from / (used in) operations   432,237   (296,937)   1,051,177   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 202 4 503,190 (537,672) - Depreciation (55,911) - (55,910) Interest - (21,569)   (21,569) Lease payments - 75,600 - Carrying value at 31 December 202 4 447,279 (483,641) (77,479)     Right of use asset £ Lease liability £ Income statement £ As at 1 July 202 3 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 5,293 Interest - (765)   (765) Lease payments - 35,506 - Carrying value at 31 December 202 3 559,098 (552,510) (69,329)     Contractual maturity analysis of lease liabilities as at 31 December 2024   Less than 3 months £ 3 - 12 months   £ 1 - 5 Years   £ Longer than 5 Years £ Total   £ Lease liabilities 37,800 113,400 332,441 - 483,641  

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