ARCONTECH GROUP PLC — Earnings Release 2014

Aug 18, 2014

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RNS Number : 3214P

Arcontech Group PLC

18 August 2014

Arcontech Group plc

("Arcontech", the "Company" or the "Group")

Final Results for the Year Ended 30 June 2014

Chairman's Statement

Arcontech has achieved a significantly improved operating result for the year ended 30 June 2014, with a loss before taxation and exceptional items of £35,565 (2013: loss before taxation and exceptional items of £340,750). After taking the benefit of the Research and Development tax credit of £100,251 (2013: £88,905) which the company receives due to the amount it has invested in qualifying product design and development, Arcontech achieved a profit after tax of £64,686 (2013: loss after tax of £251,845).

Turnover for the year was £1,981,375 (2013: £1,830,717), an increase of 8%. This increase, whilst positive, is lower than we would have hoped to achieve due in part to the continued lengthening of sales cycles and to customers prioritising areas subject to greater regulatory focus than those addressed by our products. However, at 30 June 2014 the annual recurring licence fees amounted to £1,985,355 (2013: £1,884,778) representing 98% of our annualised running costs (2013: 87%).

As a result of negative distributable reserves, Arcontech has not been able to declare a dividend (2013:£Nil). We intend, however, when the company moves into sustainable profitability, to seek court approval to re-designate our reserves and thereby enable the company to pay dividends.

Financing

As at 30 June 2014 Arcontech had no debt and cash balances of £733,676 (2013: £878,804), this reduction being due to the timing of sales invoicing and of cash receipts from customers. Nevertheless, the company remains well financed.

Employees

Our employees are core to our business. They have responded positively to the challenges presented by a competitive market place during the last financial year and we again thank them for their continued hard work, dedication and support.  

Outlook

With Arcontech's lower cost base and improved product offering we believe that the company is well placed to continue to grow its revenues. The level of sales prospects the company has are significant, however the timing of their conversion into actual sales orders is, as in previous years, extremely difficult to predict. We remain convinced that opportunities for the sale of our products to international investment banks, central banks and other financial institutions remain strong.

Richard Last

Chairman

Chief Executive's Review

During the year we have continued to work on positioning the business so that we have a solid, efficient and effective platform from which to grow. At the same time we have worked with our existing clients to strengthen and grow our relationships whilst also prospecting for new opportunities. In both areas we have succeeded and are now well positioned to move forward.

We have managed to reduce costs in running the organisation so that it is efficient and productive with all areas complementing each other in our goal for growth. We implemented stricter controls on development to ensure work undertaken generated revenue and contributed to making our offerings more competitive.  We also improved the way in which we test our software by building out automated processes where possible, which although requiring human input at the scripting phase does not require subsequent repetitive and costly human intervention.

Growing the business has been successful too, in a very challenging market. Ongoing issues in the marketplace such as the LIBOR-fixing scandal and staff reductions have served to prolong decision making.  Despite this we managed to grow revenues by 8% and we are pleased to say we believe Excelerator to be the leading Excel Add-In in the financial market-place with one client having rolled out more than 300 positions across the organisation. We are also happy to have secured the world's oldest international financial organisation as a new MVCS client. 

More generally we have also expanded our discussions with clients to identify additional areas in which we can add value to embed us further within their businesses and to aid development of our product portfolio. At the same time we have continued to improve our marketing function which, together with our overall business and sales strategy, increasingly addresses issues of regulation and compliance. 

As we build on what has been done and develop these areas I look forward to achieving greater progress.  

Matthew Jeffs

Chief Executive

For further information please visit www.arcontech.com 

Enquiries

Arcontech Group plc Matthew Jeffs, CEO	+44 20 7256 2300
Northland Capital Partners Limited Matthew Johnson / Lauren Kettle	+44 20 7382 1100

Group Income Statement and Statement of Comprehensive Income

For the year ended 30 June 2014

	Note	2014	Before exceptional              items      2013	Exceptional items 2013		Total     2013
		£	£	£		£
Revenue	2	1,981,375	1,830,717	-		1,830,717
Distribution costs		(31,439)	(28,468)	-		(28,468)
Administrative costs		(1,989,156)	(2,150,126)	(160,994)		(2,311,120)
Operating loss	3	(39,220)	(347,877)	(160,994)		(508,871)
Finance income		3,655	7,127	-		7,127
Loss before taxation		(35,565)	(340,750)	(160,994)		(501,744)
Taxation		100,251	88,905	-		88,905
Profit/(loss) for the year after tax		64,686	(251,845)	(160,994)		(412,839)
Total comprehensive income for the year		64,686	(251,845)	(160,994)		(412,839)
Profit/(loss) per share (basic and diluted)	4	0.004p				(0.027)p

All of the results relate to continuing operations.

Statement of Changes in Equity

For the year ended 30 June 2014

Group:

	Share capital	Share premium	Share option reserve	Retained earnings	Total equity
	£	£	£	£	£
Balance at 30 June 2012	1,531,315	9,428,169	190,760	(9,473,857)	1,676,387
Loss for the year	-	-	-	(412,839)	(412,839)
Total comprehensive income for the year	-	-	-	(412,839)	(412,839)
Share-based payments	-	-	62,474	-	62,474
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 provision released	-	-	(199,349)	199,349	-
Balance at 30 June 2014	1,536,672	9,430,312	72,562	(9,622,661)	1,416,885

Company:

	Share capital	Share premium	Share option reserve	Retained earnings	Total equity
	£	£	£	£	£
Balance at 30 June 2012	1,531,315	9,428,169	190,760	(7,565,688)	3,584,556
Loss for the year	-	-	-	(189,820)	(189.820)
Total comprehensive income for the year	-	-	-	(189,820)	(189.820)
Share-based payments	-	-	62,474	-	62,474
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 provision released	-	-	(199,349)	53,091	(146,258)
Balance as at 30 June 2014	1,536,672	9,430,312	72,562	(7,679,231)	3,360,315

Balance Sheets

As at 30 June 2014

		Group 2014 £		Group 2013 £		Company 2014 £		Company 2013 £
Non-current assets
Goodwill		1,715,153		1,715,153		-		-
Property, plant and equipment		19,112		25,044		-		-
Investments in subsidiaries		-		-		2,017,373		2,017,373
Total non-current assets		1,734,265		1,740,197		2,017,373		2,017,373
Current assets
Trade and other receivables		361,016		591,780		1,510,725		1,648,084
Cash and cash equivalents		733,676		878,804		37,854		54,817
Total current assets		1,094,692		1,470,584		1,548,579		1,702,901
Current liabilities
Trade and other payables		(1,412,072)		(1,884,759)		(205,637)		(263,064)
Total current liabilities		(1,412,072)		(1,884,759)		(205,637)		(263,064)
Net current (liabilities)/assets		(317,380)		(414,175)		1,342,942		1,439,837
Net assets		1,416,885		1,326,022		3,360,315		3,457,210
Equity
Called up share capital		1,536,672		1,531,315		1,536,672		1,531,315
Share premium account		9,430,312		9,428,169		9,430,312		9,428,169
Share option reserve		72,562		253,234		72,562		253,234
Retained earnings		(9,622,661)		(9,886,696)		(7,679,231)		(7,755,508)
		1,416,885		1,326,022		3,360,315		3,457,210

Approved on behalf of the board on 15 August 2014 by:

Matthew Jeffs	Michael Levy
Chief Executive	Group Finance Director

Group Cash Flow Statement

For the year ended 30 June 2014

	Note	2014		2013
		£		£
Net cash ( used in)/generated from operating activities		(151,013)		130,081
Investing activities
Interest received		3,655		7,127
Purchases of plant and equipment		(5,270)		(5,079)
Issue of shares		7,500		-
Net cash generated from investing activities		5,885		2,048
Net (decrease)/increase in cash and cash equivalents		(145,128)		132,129
Cash and cash equivalents at beginning of year		878,804		746,675
Cash and cash equivalents at end of year		733,676		878,804

Company Cash Flow Statement

For the year ended 30 June 2014

		2014		2013
		£		£
Net cash (used in)/generated from operating activities		(24,652)		16,915
Investing activities
Interest received		189		307
Issue of shares		7,500		-
Net cash generated from investing activities		7,689		307
Net (decrease)/increase in cash and cash equivalents		(16,963)		17,222
Cash and cash equivalents at beginning of year		54,817		37,595
Cash and cash equivalents at end of year		37,854		54,817

Notes to the Financial Statements

For the year ended 30 June 2014

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

The financial information set out above for the years ended 30 June 2014 and 2013 does not constitute the Group's statutory accounts within the meaning of Section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for the year ended 30 June 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts. The auditors' reports were unqualified and did not contain statements under s.498 (2) or (3) Companies Act 2006. The results have been prepared using accounting policies consistent with those used in the preparation of the statutory accounts.

The 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.

The financial statements have been prepared under the historical cost  convention.

2.      Revenue

An analysis of the Group's revenue is as follows:

		2014 £		2013 £
Financial information service, advertising and sponsorship, software development and consultancy		1,981,375		1,830,717

All of the Group's revenue relates to continuing activities.

3.      Operating loss for the year is stated after charging:

		2014 £		2013 £
Depreciation of plant and equipment		10,736		13,951
Loss on disposal of fixed assets		465		346
Staff costs		1,476,944		1,645,544
Operating lease rentals - land and buildings		79,000		79,000
Research and development		736,867		729,095

4.      Loss per share

		2014		2013
		£		£
Earnings
Earnings for the purpose of basic and diluted earnings per share being net profit/(loss) attributable to equity shareholders		64,686		(412,839)
		64,686		(412,839)

		No.		No.
Number of shares
Weighted average number of ordinary shares for the purpose of basic earnings per share		1,531,505,672		1,531,314,870
Number of dilutive shares under option		13,314,419		-
Weighted average number of ordinary shares for the purposes of dilutive earnings per share		1,544,820,092		1,531,314,870

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 (2013: £Nil).

6.      Post balance sheet events

There were no events since the balance sheet date, which materially affect the position of the Group.

7.      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 2014 at 10 a.m.

8.      Annual report and accounts

Copies of the annual report and accounts will be sent to shareholders in due course and will be 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.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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