ARCONTECH GROUP PLC
("Arcontech", the
"Company" or the "Group")
Final Results for the year ended 30 June
2024
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 2024.
Financial
Highlights:
· Turnover was
£2,910,232 (2023 £2,730,172)
· Profit before taxation
was £1,098,959 (2023 £985,696) up by £113,263
· Recurring revenues
represented 99% of total revenues for the period (2023: 100%)
· Net cash of £7,160,177
(2023 £6,411,241), an increase of 11.7%
· Final dividend
increased 7.1% to 3.75 pence per share (2023: 3.50 pence per
share)
Operational
Highlights:
· Overall engagement
with the market much stronger than the previous two years
· Sales team has been
increased to identify growth opportunities with existing
clients
· Several PoC (Proof of
Concept) with prospective clients have been started
· Working with clients
on additional planned developments to round out offering
Commenting on the
results, Geoff Wicks, Chairman and Non-Executive Director of
Arcontech said:
"We are optimistic that revenue growth will continue
and our strategy will be to concentrate on our core market and
build out our geographic presence. We will continue to improve our
products to enable us to compete in more areas of the market. We
have a stable customer base and maintaining this will be key to
leveraging our recurring revenue to build higher levels of
growth".
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 - ECM
|
|
|
|
|
To access more
information on the Group please visit: www.arcontech.com
This announcement
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
("MAR"), and is disclosed in accordance with the company's
obligations under Article 17 of MAR.
Chairman's Statement
In the year to 30 June 2024 Arcontech started to
benefit from its strong sales pipeline and the Company experienced
revenue growth for the first time in three years. The last four
years have been challenging but the Company has maintained its
market position with much of its excellent customer base intact and
although lead times remain long, as is often the case with large
organisations with complex requirements, new customers are coming
on board and there is growth at existing customers.
We remain well placed competitively as a
cost-effective provider and customers and potential customers are
moving forward on projects that have been under discussion for some
time. Product development has put us in a more competitive position
and recent additions to our sales and support operation are helping
us to broaden our base.
Turnover was £2,910,232 (2023: £2,730,172) up 6.6%
on last year. A large new customer at the start of the year
replaced a previously reported customer cancellation and other new
sales through the year have driven this improvement, Profit before
taxation (PBT) was £1,098,959 (2023: £985,696) up 11.5% on last
year as a result of revenue growth flowing through to the
bottom line with planned costs being delayed. Statutory
earnings per share for the year to 30 June 2024 were 7.98p (2023:
7.33p).
Nearly all our revenue is recurring and, as has been
reported before, many of our larger customers are on longer term
contracts. So while lead times remain long, with a growing sales
pipeline we are confident that we will be able to continue to grow
our customer base. PBT in the year to end June 2024 benefited from
planned growth in our sales and support team coming later in the
year than expected so the planned costs were lower. Staff costs
will therefore be at a higher level for the whole of the current
year. As the current level of opportunity is continuing we will
keep the need to increase the size of the team under review.
Financing
Cash balances were £7,160,177 (2023: £6,411,241) at
the year end, an increase of 11.7%. This strong balance sheet
allows the Company to continue to invest in organic growth.
There is also potential to invest in building a revenue streams in
an adjacent financial market while continuing to look at potential
acquisitions in our core market.
Dividend
I am pleased to announce that subject to approval at
the Annual General Meeting we intend to pay a dividend of 3.75p per
share for the year ended 30 June 2024 (2023: 3.5 pence) an increase
of 7.1%, to those shareholders on the register as at the close of
business on 4 October 2024 with a dividend payment date of 1
November 2024.
Outlook
We are optimistic that growth will continue. Our
strategy is to concentrate on our core market and to build our
geographic presence`. We will continue to improve products to
enable us to compete in more areas of the market. We have a stable
customer base and maintaining this will be key to leveraging our
recurring revenue to build higher levels of growth.
Geoff Wicks
Chairman and Non-Executive Director
Chief Executive's Review
The 2023/24 financial year saw us return to revenue
growth of 6.6% as the market continues to normalise and the
relationships we have built over the years bear fruit. Whilst more
than 90% of our revenues were on a recurring basis a proportion was
on a flexible basis allowing certain customers to adjust usage with
business demands.
After the recent inflationary period our clients and
prospects are also showing greater motivation to gain control of
increasing market-data costs which for many are now at a level that
renders the risk and discomfort of changing their market-data
platform a secondary consideration to reducing cost.
During the year we have worked to meet the needs of
our larger global clients. As would be expected with the critical
nature of our software, the need to integrate with existing systems
and work with client developers whilst conducting extensive testing
takes time and we should benefit from this work in the coming
year.
The year has also seen us engage with several
prospective clients and embark on proof of concept (PoC) exercises
with them. Each new engagement brings new requirement requests
which invariably round out our product offerings to create new
opportunities at existing clients and other prospects alike. The
projects being worked on are situated across the globe and consist
local and global organisations.
For our existing clients we have seen interest in
reducing overall market-data costs by exploring the replacement of
the major providers with our solutions. Our clients appear to have
broadened the number of vendors across which cost reductions are
being sought which plays to our strengths and flexibility in being
able to manage data from multiple vendors and sources including
clients' internal data.
We now also have dedicated sales resources to
oversee our support function whilst increasing our business with
existing clients by encouraging greater engagement though our
support relationships. At the same time our relationship with the
Asia based consultancy has facilitated engagement with several new
opportunities.
All our integration and customisation work is very
ably supported by our in-house development team. As a result of our
increasing engagements, our short term development pipeline
envisages Arcontech having the ability to offer a complete
market-data platform in the coming months. This will enable us to
effect the wholesale replacement of other more expensive software
platforms rather than at present where we are able to replace a
number of core components with one or two remaining. Already a
factor in some PoC exercises we anticipate the completion of this
development to make our solution a more compelling option.
During the year we have also continued to look for
and had discussions with prospective acquisitions, with growth
potential and fit being the primary considerations. Whilst those
discussions did not progress, we continue to seek the right
opportunity.
Our staff are a key asset to the Company and have
continued to provide exemplary service and support to our clients.
I would like to express my thanks for their continued
commitment.
With our increased engagement and the encouraging
signs from existing clients and prospects alike, we feel optimistic
for the year ahead and beyond.
Matthew Jeffs
Chief Executive
Strategic Report
The Directors present the group strategic report for
Arcontech Group plc and its subsidiaries for the year ended 30 June
2024.
Principal activities
The principal activities of the Company and its
subsidiaries during the year were the development and sale of
proprietary software and provision of computer consultancy
services.
Review
of the business and prospects
A full review of the operations, financial position
and prospects of the Group is given in the Chairman's Statement and
Chief Executive's Review on pages 2 to 3.
Key
performance indicators (KPIs)
The Directors monitor the business using management
reports and information, reviewed and discussed at monthly Board
meetings. Financial and non-financial KPIs used in this report
include:
Financial KPIs:
Revenue £2,910,232 (2023: £2,730,172; 2022:
£2,757,795)
Measurement:
Revenue from sales made to all customers (excluding
intra-group sales which eliminate on
consolidation)
Performance:
Increase from 2023 with the win of a new customer
and an increase in flexible licences from certain customers.
Adjusted EBITDA £1,030,898 (2023: £1,044,522; 2022:
£1,019,478) Measurement:
EBITDA before the release of accruals for
administrative costs in respect of prior years, and share-based
payments. This is an alternative, non-IFRS performance measure,
that is considered relevant as it provides a more accurate
reflection of trading performance than EBITDA. The adjusted EBITDA
is EBITDA less the amount of accruals for administrative costs
released as disclosed in the footnote to the Income Statement and
share-based payments. The accruals release for 2023 includes a
release of £110,000 which is disclosed separately in the Group
Statement of Income.
Performance:
Adjusted EBITDA is flat year-on-year, reflective of
both an increase in revenue and staff costs
Adjusted profit £1,043,054 (2023: £861,716; 2022:
£601,566)
Measurement:
Profit after tax and before release of accruals for
administrative costs in respect of prior years. This is an
alternative, non-IFRS performance measure, that is considered
relevant as it provides a more accurate reflection of trading
performance than net profit after tax. The adjusted profit is Net
profit after tax less the amount of accruals for administrative
costs released as disclosed in the footnote to the Income
Statement. The accruals release for 2023 includes a release of
£110,000 which is disclosed separately in the Group Statement of
Income.
Performance:
Revenue and interest income increased, partially
offset by an increase in staff costs
Strategic Report (continued)
Cash £7,160,177 (2023: £6,411,241; 2022:
£6,026,468)
Measurement:
Cash and cash equivalents held at the end of the
year
Performance:
The Group
continues to maintain healthy cash balances
subject to any exceptional circumstances or
acquisition
opportunities
Earnings per share (basic) 7.98p (2023: 7.33; 2022:
4.57p)
Measurement:
Earnings after tax divided by the weighted average
number of shares
Performance:
Increase due to higher interest income
Earnings per share (diluted) 7.96p (2023: 7.32p;
2022:
4.56p)
Measurement:
Earnings after tax divided by the fully diluted
number of shares
Performance:
Increase
due to higher interest income
Non-financial KPIs:
Staff retention rate (net) 94% (2023: 94%; 2022:
87%)
Measurement:
Net retention after adjusting for joiners and
leavers during the year
Performance:
Staff morale from our dedicated employees remains
strong, reflected in the stable retention rate
ESG
Arcontech Group plc qualified as a low energy user
in the year ending 30 June 2024 and accordingly is not required to
disclose energy consumption and Greenhouse Gas emission
information.
Principal risks and uncertainties
The Group's performance is affected by a number of
risks and uncertainties, which the Board monitor on an ongoing
basis in order to identify, manage and minimise their possible
impact. General risks and uncertainties include changes in economic
conditions, interest rate fluctuations and the impact of
competition. The Group's principal risk areas and the action taken
to mitigate their outcome are shown below:
|
Risk area
|
Nature
|
Mitigation
|
|
|
|
|
|
Competition
|
Loss of business due to existing
competition or new entrants into the market
|
Ongoing investment in research and
development
responding to the changing needs
of clients to remain competitive
|
|
|
|
|
|
Loss of key personnel
|
Inability to execute business plan
due to the risk of losing key personnel
|
Employee share option scheme in
place
|
|
|
|
|
|
Brexit
|
Business made difficult due to
increased regulations between the UK and Europe caused by
Brexit
|
Arcontech is a global company and as
such seeks growth across a geographically diverse customer
base
|
Strategic Report (continued)
Relations with shareholders
Section 172(1)
Statement - Promotion of the Company for the benefit of the members
as a whole
The Directors believe they have acted in the way
most likely to promote the success of the Group for the benefit of
its members as a whole, as required by s172 of the Companies Act
2006.
The requirements of s172 are for the Directors
to:
· Consider the
likely consequences of any decision in the long term;
· Act fairly
between the members of the Company;
· Maintain a
reputation for high standards of business conduct;
· Consider the
interests of the Company's employees;
· Foster the
Company's relationships with suppliers, customers and others;
· The desirability
of the Company maintaining a reputation for high standards of
business conduct; and
· Consider the
impact of the Company's operations on the community and the
environment.
Section 172(1)
Companies Act 2006
The Board takes decisions with the long term in
mind, and collectively and individually aims to uphold the highest
standards of conduct. Similarly, the Board understands that the
Company can only prosper over the long term if it understands and
respects the views and needs of its customers, distributors,
employees, suppliers and the wider community in which it
operates.
A firm understanding of investor needs is also vital
to the Company's success. The Directors are fully aware of their
responsibilities to promote the success of the Company in
accordance with Section 172(1) of the Companies Act 2006. The text
of Section 172(1) of the Companies Act 2006 has been sent out to
each main Board Director.
The Board ensures that the requirements are met, and
the interests of stakeholders are considered as referred to
elsewhere in this report and through a combination of the
following:
· A rolling agenda of
matters to be considered by the Board through the year, which
includes an annual strategy review meeting, where the strategic
options for the following year are developed;
· At each
board meeting, to receive and discuss a will report on customers,
employees and other colleagues, and investors;
· Standing agenda points
and papers;
· A review of certain of
these topics through the Audit Committee and the Remuneration
Committee agenda items referred to in this report; and
· Detailed
consideration is given to of any of these factors where they are
relevant to any major decisions taken by the Board during the
year.
The Group's operation is the development and sale of
proprietary software and provision of computer consultancy
services. The Board has identified its key stakeholders as its
customers, shareholders, employees and suppliers. The Board keeps
itself appraised of its key stakeholders' interests through a
combination of both direct and indirect engagement, and the Board
has regard to these interests when discharging its duties.
The application of the s172 requirements can be
demonstrated in relation to some of the key decisions made during
the year to 30 June 2024:
· Allocation of
the Group's capital in a way which offers significant returns to
shareholders in line with the Company's dividend policy, while also
ensuring that the Group retains flexibility to continue to deploy
capital towards profitable growth;
· Continuation of
a hybrid location working format for staff as working environments
continue to evolve post Covid-19, while ensuring that the Group
continued to deliver both the high level of service and security
that our customers depend on without compromising the health and
safety of employees.
During the year to 30 June 2024, the Board assessed
its current activities between the Board and its stakeholders,
which demonstrated that the Board actively engages with its
stakeholders and takes their various objectives into consideration
when making decisions. Specifically, actions the Board has taken to
engage with its stakeholders over the last twelve months
include:
· All Directors attended
the 2023 AGM to answer questions and receive additional feedback
from investors;
· The outcome of the AGM
is published on the Company's corporate website;
· The Board receives
regular updates on the views of shareholders through briefings and
reports from the executive directors, and the Company's
brokers;
· Arranged meetings with
certain stakeholders to provide them with updates on the Company's
operational activities and other general corporate updates;
· We
discussed feedback from investors' and analysts' meetings following
the release of our annual and half-year announcements. We have an
investor relations programme of meetings with existing and
potential shareholders;
·
Monitored company culture and engaged with employees on efforts to
continuously improve company culture and morale; and
· A range of corporate
information (including all Company announcements) is also available
to shareholders, investors and the public on the Company's
corporate website: www.arcontech.com.
The Board believes that appropriate steps and
considerations have been taken during the year so that each
Director has an understanding of the various key stakeholders of
the Company. The Board recognises its responsibility to contemplate
all such stakeholder needs and concerns as part of its discussions,
decision-making, and in the course of taking actions, and will
continue to make stakeholder engagement a top priority in the
coming years.
Approved on behalf of the board on 30 August 2024
by:
|
Matthew Jeffs
|
|
|
Chief Executive
|
|
Group Income Statement and Statement of Comprehensive
Income
For the year ended 30
June 2024
|
|
Note
|
|
|
2024
|
|
2023
|
|
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Revenue
|
3
|
|
|
2,910,232
|
|
2,730,172
|
|
|
|
|
|
|
|
|
|
Administrative costs
|
|
|
|
(2,040,541)
|
|
(1,924,962)
|
|
|
|
|
|
|
|
|
|
Operating profit
|
4
|
|
|
869,691
|
|
805,210
|
|
Net finance income
|
5
|
|
|
229,268
|
|
70,486
|
|
|
|
|
|
|
|
|
|
Changes in estimated variable
remuneration liability
|
2
|
|
|
-
|
|
110,000
|
|
Profit before taxation
|
|
|
|
1,098,959
|
|
985,696
|
|
|
|
|
|
|
|
|
|
Taxation
|
9
|
|
|
(31,302)
|
|
(5,587)
|
|
Profit for the year after tax
|
|
|
|
1,067,657
|
|
980,109
|
|
Total comprehensive income for the year
|
|
|
|
1,067,657
|
|
980,109
|
|
Earnings per share (basic)
|
10
|
|
|
7.98p
|
|
7.33p
|
|
Adjusted* Earnings per share (basic)
|
10
|
|
|
7.80p
|
|
6.44p
|
|
Earnings per share (diluted)
|
10
|
|
|
7.96p
|
|
7.32p
|
Adjusted* Earnings per share (diluted)
|
10 |
|
|
7.78p |
|
6.43p |
*Adjusted to exclude the release of accruals for
administrative costs of £24,603 (2023: £118,393, which included the
£110,000 shown in the comparative above in respect of estimated
variable remuneration liability releases in respect of prior
years). This is a non-IFRS alternative performance measure that the
Board considers to be a more accurate indicator of underlying
trading performance. This measure has been adopted as a KPI and is
disclosed in the Strategic Report on page 4.
All of the results relate to continuing
operations.
There was no Other Comprehensive Income other than
Profit for the year after tax for the year under review (2023:
nil).
The notes on pages 33 to 59 form part of these
financial statements
Statement of Changes in Equity
For the year ended 30 June
2024
Group:
|
|
Share
capital
|
Share
premium
|
Share option
reserve
|
Retained
earnings
|
Total
equity
|
|
|
£
|
£
|
£
|
£
|
£
|
|
Balance at 30 June 2022
|
1,671,601
|
115,761
|
270,825
|
4,913,137
|
6,971,324
|
|
Profit for the year
|
-
|
-
|
-
|
980,109
|
980,109
|
|
Total comprehensive income for the year
|
-
|
-
|
-
|
980,109
|
980,109
|
|
|
|
|
|
|
|
|
Dividend paid
|
-
|
-
|
-
|
(434,616)
|
(434,616)
|
|
Share-based payments
|
-
|
-
|
97,328
|
-
|
97,328
|
|
|
|
|
|
|
|
|
Transfer between reserves
|
-
|
-
|
(88,698)
|
88,698
|
-
|
|
Balance at 30 June 2023
|
1,671,601
|
115,761
|
279,455
|
5,547,328
|
7,614,145
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
1,067,657
|
1,067,657
|
|
Total comprehensive income for the year
|
-
|
-
|
-
|
1,067,657
|
1,067,657
|
|
|
|
|
|
|
|
|
Dividend paid
|
-
|
-
|
-
|
(468,048)
|
(468,048)
|
|
|
|
|
|
|
|
|
Share-based payments
|
-
|
-
|
51,291
|
-
|
51,291
|
|
|
|
|
|
|
|
|
Balance at 30 June 2024
|
1,671,601
|
115,761
|
330,746
|
6,146,937
|
8,265,045
|
Company:
|
|
Share
capital
|
Share
premium
|
Share option
reserve
|
Retained
earnings
|
Total
equity
|
|
|
£
|
£
|
£
|
£
|
£
|
|
Balance at 30 June 2022
|
1,671,601
|
115,761
|
270,825
|
4,354,279
|
6,412,466
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
304,044
|
304,044
|
|
Total comprehensive expense for the year
|
-
|
-
|
-
|
304,044
|
304,044
|
|
|
|
|
|
|
|
|
Dividend paid
|
-
|
-
|
-
|
(434,616)
|
(434,616)
|
|
Share-based payments
|
-
|
-
|
97,328
|
-
|
97,328
|
|
Transfer between reserves
|
-
|
-
|
(88,698)
|
88,698
|
-
|
|
Balance at 30 June 2023
|
1,671,601
|
115,761
|
279,455
|
4,312,406
|
6,379,222
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
328,596
|
328,596
|
|
Total comprehensive income for the year
|
-
|
-
|
-
|
328,596
|
328,596
|
|
|
|
|
|
|
|
|
Dividend paid
|
-
|
-
|
-
|
(468,048)
|
(468,048)
|
|
|
|
|
|
|
|
|
Share-based payments
|
-
|
-
|
51,291
|
-
|
51,291
|
|
|
|
|
|
|
|
|
Balance as at 30 June 2024
|
1,671,601
|
115,761
|
330,746
|
4,172,954
|
6,291,061
|
The notes on pages 33 to 59 form
part of these financial statements.
Statements of Financial Position
Registered number: 04062416
As at 30 June
2024
|
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
Note
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
Goodwill
|
11
|
1,715,153
|
|
1,715,153
|
|
-
|
|
-
|
|
Property, plant and
equipment
|
12
|
5,404
|
|
5,950
|
|
-
|
|
-
|
|
Right of use asset
|
17
|
503,190
|
|
73,152
|
|
-
|
|
-
|
|
Investments in
subsidiaries
|
13
|
-
|
|
-
|
|
2,017,471
|
|
2,017,471
|
|
Deferred tax asset
|
19
|
358,000
|
|
328,000
|
|
71,000
|
|
68,000
|
|
Trade and other
receivables
|
14
|
141,750
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
2,723,497
|
|
2,122,255
|
|
2,088,471
|
|
2,085,471
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
14
|
677,069
|
|
499,861
|
|
4,069,235
|
|
3,842,300
|
|
Cash and cash equivalents
|
15
|
7,160,177
|
|
6,411,241
|
|
287,606
|
|
518,678
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
7,837,246
|
|
6,911,102
|
|
4,356,841
|
|
4,360,978
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
16
|
(1,688,025)
|
|
(1,308,888)
|
|
(154,251)
|
|
(67,227)
|
|
Lease liabilities
|
17
|
(110,308)
|
|
(40,324)
|
|
-
|
|
-
|
|
Provisions
|
18
|
-
|
|
(50,000)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
(1,798,333)
|
|
(1,399,212)
|
|
(154,251)
|
|
(67,227)
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
Lease liabilities
|
17
|
(427,365)
|
|
-
|
|
-
|
|
-
|
|
Provisions
|
18
|
(70,000)
|
|
(20,000)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Total non-current
liabilities
|
|
(497,365)
|
|
(20,000)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net
current assets
|
|
6,038,913
|
|
5,511,890
|
|
4,202,590
|
|
4,293,751
|
|
Net
assets
|
|
8,265,045
|
|
7,614,146
|
|
6,291,576
|
|
6,383,222
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Called up share capital
|
20
|
1,671,601
|
|
1,671,601
|
|
1,671,601
|
|
1,671,601
|
|
Share premium account
|
21
|
115,761
|
|
115,761
|
|
115,760
|
|
115,760
|
|
Share option reserve
|
21
|
330,746
|
|
279,455
|
|
330,746
|
|
279,455
|
|
Retained earnings
|
21
|
6,146,937
|
|
5,547,328
|
|
4,172,954
|
|
4,312,406
|
|
|
|
8,265,045
|
|
7,614,145
|
|
6,291,061
|
|
6,379,222
|
As permitted by s408 of the Companies Act 2006, the
Company has not presented its own income statement. The Company
profit for the year was £328,596 (2023: £304,044).
The notes on pages 33 to 59 form part of these
financial statements.
Approved on behalf of the board on 30 August 2024
by:
|
Matthew Jeffs
|
|
|
Chief Executive
|
|
Group Statement of Cash Flows
For the year ended 30
June 2024
|
|
Note
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
22
|
1,051,177
|
|
901,422
|
|
|
|
|
|
|
|
|
|
Tax paid
|
|
(15,586)
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
cash generated from operating activities
|
|
1,035,591
|
|
901,420
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
247,903
|
|
76,977
|
|
|
|
|
|
|
|
|
|
Receipts from the sale of plant and
equipment
|
|
417
|
|
-
|
|
|
Purchases of plant and
equipment
|
|
(12,055)
|
|
(3,480)
|
|
|
|
|
|
|
|
|
|
Net
cash generated from investing activities
|
|
236,265
|
|
73,497
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend paid
|
|
(468,048)
|
|
(434,616)
|
|
|
|
|
|
|
|
|
|
Payment of lease
liabilities
|
17
|
(54,872)
|
|
(155,529)
|
|
|
|
|
|
|
|
|
|
Net
cash used in financing activities
|
|
(522,920)
|
|
(590,145)
|
|
|
Net
increase in cash and cash equivalents
|
|
748,936
|
|
384,772
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of year
|
|
6,411,241
|
|
6,026,469
|
|
|
Cash and cash equivalents at end of year
|
15
|
7,160,177
|
|
6,411,241
|
|
For the year to 30 June 2024, the Group had no debt,
and there were no material non-cash transactions.
The notes on pages 33 to 59 form part of these
financial statements.
Company Statement of Cash Flows
For the year ended 30
June 2024
|
|
Note
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Net
cash generated by / (used in) operating
activities
|
22
|
227,448
|
|
(129,978)
|
|
|
|
|
|
|
|
|
|
Tax paid
|
|
(1,706)
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
cash generated from / (used in) operating
activities
|
|
225,742
|
|
(129,978)
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest received
|
|
11,234
|
|
8,978
|
|
|
|
|
|
|
|
|
|
Net
cash generated from investing activities
|
|
11,234
|
|
8,978
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend paid
|
|
(468,048)
|
|
(434,616)
|
|
|
|
|
|
|
|
|
|
Net
cash used in financing activities
|
|
(468,048)
|
|
(434,616)
|
|
|
Net
decrease in cash and cash equivalents
|
|
(231,072)
|
|
(555,616)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of year
|
|
518,678
|
|
1,074,294
|
|
|
Cash and cash equivalents at end of year
|
15
|
287,606
|
|
518,678
|
|
|
|
|
|
|
|
|
For the year to 30 June 2024, the Company had no debt,
and there were no material non-cash transactions.
The notes on pages 33 to 59 form part of these
financial statements.
Notes to the Financial Statements
For the year ended 30
June 2024
1. Accounting
policies
The principal accounting
policies
are summarised
below.
They have
all been applied consistently throughout the period
covered by these financial statements except
where changes have been noted below.
Reporting entity
Arcontech Group plc ("the
Company") is a company incorporated in England and Wales with a
registered address at 1st floor, 11-21 Paul Street,
London, EC2A 4JU. The consolidated financial statements
incorporate the financial statements of the Company and its
subsidiaries (together referred to as "the Group").
Principal Activity
The principal activities of the Company and its
subsidiaries during the year were the development and sale of
proprietary software and provision of computer consultancy
services.
Basis of preparation
These financial statements have
been prepared in accordance with UK-adopted international
accounting standards and with the requirements of the Companies Act
2006.
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. As at 30 June 2024 all assets and liabilities are
recorded at amortised cost, and there were no assets or liabilities
recorded at fair value.
Going
Concern
On the basis of current projections and having
regard to the Group's existing cash reserves, the Directors
consider that the Group has adequate resources to continue in
operational existence for the foreseeable future. In reaching this
conclusion the Directors have projected cash flow out twelve months
from the date of signing this report. Revenue projection has been
based on recurring revenue streams from existing customers and a
forecast for new revenue from additional sales that the Directors
feel is achievable. The Group has a highly stable cost base which
has been reviewed to incorporate the impact of additional costs for
revenue generation activities such as industry trade shows. The
Directors have stress tested the cash flow projections assuming no
new revenue generation and an increase in costs of up to 15%, given
the current inflationary environment. Under this scenario given
expected cash generation from operations and existing cash
balances, the Group will have sufficient resources to continue
trading for well in excess of the next twelve months. Accordingly,
the Directors have adopted the going concern basis in the
preparation of the financial statements.
Changes in
accounting policies and disclosures
a) New and amended
Standards and Interpretations adopted by the Group and
Company
The International Accounting Standards Board (IASB)
issued various amendments and revisions to International Financial
Reporting Standards and IFRIC interpretations per the table below.
The amendments and revisions were applicable for the period year 30
June 2024 but did not result in any material changes to the
financial statements of the Group.
|
Standard
|
Impact on initial application
|
Effective date
|
|
IAS 1 (Amendments)
|
Presentation of Financial
Statements and IFRS
Practice Statement 2: Disclosure
of Accounting Policies
|
1 January 2023
|
|
IAS 8 (Amendments)
|
Accounting policies, Changes in
Accounting
Estimates and Errors - Definition
of Accounting Estimates
|
1 January 2023
|
|
IAS 12 (Amendments)
|
Income Taxes - Deferred Tax
related to Assets
and Liabilities arising from a
Single Transaction
|
1 January 2023
|
Notes to the Financial Statements
For the year ended 30
June 2023 (continued)
1. Accounting policies
(continued)
b) New and amended
Standards and Interpretations issued but not effective for the
financial year beginning 1 July 2023
|
Standard
|
Impact on initial
application
|
Effective
date
|
|
IFRS S1
|
General Requirements for
Disclosure of Sustainability-related Financial
Information
|
TBC
|
|
IFRS S2
|
Climate-related
Disclosures
|
TBC
|
|
IAS 1 (Amendments)
|
Presentation of Financial
Statements: Classification of Liabilities as Current or
Non-Current
|
1 January 2024
|
|
IAS 7 (Amendments)
|
Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures: Supplier Finance
Arrangements
|
TBC
|
|
IFRS 18
|
Presentation and disclosure of
financial instruments
|
TBC
|
|
IFRS 9 (Amendments)
|
Financial Instruments and IFRS 7
Financial Instruments: Disclosures: Classification and Measurement
of Financial
Instruments
|
TBC
|
The new and amended Standards and Interpretations
which are in issue but not yet mandatorily effective is not
expected to be material.
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 2024. Subsidiaries
are entities controlled by the Group. Control is achieved when the
Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those
returns through its power over the investee. Specifically, the
Group controls an investee if, and only if, the Group has:
· Power over the
investee (i.e. existing rights that give it the current ability to
direct the relevant activities of the investee).
· Exposure, or
rights, to variable returns from its involvement with the
investee
· The ability to
use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of
voting rights result in control. To support this presumption and
when the Group has less than a majority of the voting or similar
rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
· The contractual
arrangement with the other vote holders of the investee.
· Rights arising
from other contractual arrangements.
· The Group's
voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses
control of the subsidiary. Assets, liabilities, income
and expenses of a subsidiary acquired or disposed of during the
year are included in the consolidated financial statements from the
date the Group gains control until the date the Group ceases to
control the subsidiary. The acquisition method is used to account
for the acquisition of subsidiaries.
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.
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
1. Accounting policies
(continued)
Revenue recognition
Revenue is recognised in accordance with the
transfer of promised services to customers (i.e. when the customer
gains control of the service) and is measured as the consideration
which the group expects to be entitled to in exchange for those
services. Consideration is typically fixed on the agreement of a
contract except for quarterly flexible license contracts. Payment
terms are agreed on a contract by contract basis.
A service is distinct if the customer can benefit
from the service on its own or together with other resources that
are readily available to the customer and the entity's promise to
transfer the service to the customer is separately identifiable
from other promises in the contract.
Contracts with customers do not contain a financing
component.
Under IFRS 15, revenue earned from contracts with
customers is recognised based on a five-step model which requires
the transaction price for each identified contract to be
apportioned to separate performance obligations arising under the
contract and recognised either when the performance obligation in
the contract has been performed (point in time recognition) or over
time as control of the performance obligation is transferred to the
customer.
The group recognises revenue when it satisfies a
performance obligation by transferring a promised service to the
customer as follows:
• Revenue from recurring license fees and other
license fees is recognised on an over time basis via a straight
line across the period the services are provided. In reaching this
conclusion the group has assessed that ongoing contractual
obligations are not separately identifiable from other promises in
the contract and are not distinct from the licence, and hence are
accounted for as a single performance obligation. As the license is
not distinct the combined performance obligation is recognised over
time.
In assessing whether a licence is distinct the Group
considered the continuing requirement to:-
- optimise functionality;
- optimise performance; and
- provide enhancements to ensure user
regulatory compliance.
• Revenue from flexible license contracts that
include variable consideration are quarterly contracts assessed at
the end of each calendar quarter and revenue is recognised based on
actual usage confirmed for that quarter at the point of customer
acceptance;
• Revenue from project work is recognised on
satisfactory completion of each project, as this is considered to
be the point in time the customer gains control over the results of
the project work.
Taxation
The tax charge/(credit) represents the sum of the
tax payable/(receivable) and any deferred tax.
Research and development tax credits are recognised
when received.
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 substantively 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.
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
1. Accounting
policies (continued)
Taxation
(continued)
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.
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.
Expenses incurred on Research & Development are
currently expensed through the income statement as the expenditure
is incurred on the maintenance and enhancement of existing
products. The applicability of this treatment is reviewed regularly
by the Company.
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.
Notes to the Financial Statements
For the year ended
30 June 2024 (continued)
1. Accounting
policies (continued)
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
|
|
Office
furniture and equipment
|
- 20% - 25% on cost or reducing
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 in the statement of financial position when the Group
becomes a party to the contractual provisions of the
instrument.
Financial
assets
The Group does not hold any investments other than
investments in subsidiaries.
Trade receivables are held in order to collect the
contractual cash flows and are initially measured at the
transaction price as defined in IFRS 15, as the contracts of the
Group do not contain significant financing components. Impairment
losses are recognised based on lifetime expected credit losses in
profit or loss.
Other receivables are held in order to collect the
contractual cash flows and accordingly are measured at initial
recognition at fair value, which ordinarily equates to cost and are
subsequently measured at cost less impairment due to their
short-term nature. A provision for impairment is established based
on 12-month expected credit losses unless there has been a
significant increase in credit risk when lifetime expected credit
losses are recognised. The amount of any provision is recognised in
the income statement.
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.
Financial
liabilities and equity
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.
Effective interest
rate method
The effective interest rate method is a method of
calculating the amortised cost of a financial asset or liability
and allocating interest income or expense over the relevant period.
The effective interest rate is the rate that exactly discounts
estimated future cash flows through the expected life of the
financial asset or liability, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
Notes to the Financial Statements
For the year ended
30 June 2024 (continued)
1. Accounting
policies (continued)
Financial
instruments (continued)
(a) Classification
The Group classifies its financial assets in the
following measurement categories:
· those to be
measured subsequently at fair value (either through OCI or through
profit or loss); and
· those to be
measured at amortised cost.
The classification depends on the Group's business
model for managing the financial assets and the contractual terms
of the cash flows.
For assets measured at fair value, gains and losses
will be recorded either in profit or loss or in OCI. For
investments in equity instruments that are not held for trading,
this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income
(FVOCI). See Note 16 for further details.
(b) Recognition
Purchases and sales of financial assets are
recognised on trade date (that is, the date on which the Group
commits to purchase or sell the asset). Financial assets are
derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the
Group has transferred substantially all the risks and rewards of
ownership.
(c) Measurement
At initial recognition, the Group measures a
financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss (FVPL), transaction
costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.
Debt instruments
Amortised cost; Assets that are held for collection
of contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method.
Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses.
Impairment losses are presented as a separate line item in the
statement of profit or loss.
(d) Impairment
The Group assesses, on a forward-looking basis, the
expected credit losses associated with its debt instruments carried
at amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the
receivables.
Leases
Leases are recognised as a right-of-use asset and a
corresponding lease liability at the date at which the leased asset
is available for use by the Group.
Notes to the Financial Statements
For the year ended
30 June 2024 (continued)
1. Accounting
policies (continued)
Leases
(continued)
Assets and liabilities arising from a lease are
initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
· Fixed payments
(including in-substance fixed payments), less any lease incentives
receivable;
· Variable lease
payment that are based on an index or a rate, initially measured
using the index or rate as at the commencement date;
· Amounts expected
to be payable by the Group under residual value guarantees;
· The exercise
price of a purchase option if the Group is reasonably certain to
exercise that option; and
· Payments of
penalties for terminating the lease, if the lease term reflects the
Group exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement of the
liability.
The lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group,
the lessee's incremental borrowing rate is used, being the rate
that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security and conditions.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or loss over
the lease period.
Right-of-use assets are measured at cost which
comprises the following:
· The amount of
the initial measurement of the lease liability;
· Any lease
payments made at or before the commencement date less any lease
incentives received;
· Any initial
direct costs; and
· Restoration
costs.
Right-of-use assets are generally depreciated over
the shorter of the asset's useful life and the lease term on a
straight-line basis. If the Group is reasonably certain to exercise
a purchase option, the right-of-use asset is depreciated over the
underlying asset's useful life.
Payments associated with short-term leases (term
less than 12 months) and all leases of low-value assets (generally
less than £4k) are recognised on a straight-line basis as an
expense in profit or loss.
Provisions
Provisions are recognised when the Group has a
present obligation, legal or constructive, resulting from past
events and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a
reliable estimate can be made of the obligation.
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. In order for development expenditure to meet the
capitalisation criteria of IAS 38, it must be both technically
feasible to complete the work, and there must be the intention to
either use or sell the asset created.
Pension costs and
other post-retirement benefits
The Group makes payments to occupational and
employees' personal pension schemes. Contributions payable for the
year are charged in the income statement.
Notes to the Financial Statements
For the year ended
30 June 2024 (continued)
1. Accounting
policies (continued)
Foreign
currencies
Transactions denominated in foreign currencies are
translated into sterling at the exchange rate ruling when the
transaction was entered into. Where consideration is received in
advance of revenue being recognised the date of the transaction
reflects the date the consideration is received. 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, 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 and current and deferred tax assets
and liabilities.
2. Critical accounting
judgments and key sources of estimation uncertainty
The preparation
of financial statements in conformity with generally accepted
accounting
practice requires management to make estimates
and judgements
that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities
at the balance sheet date and the reported amounts of revenues and expenses during the reporting
period.
Estimates and judgements are continually evaluated
and are based on historic experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
Judgements
Determination of performance obligations and
satisfaction thereof
For the purposes of recognising revenue, the
Directors are required to identify distinct services in contracts
and allocate the transaction price to the performance obligations.
Details of determining performance obligations, passing of control
and amounts recognised as costs incurred to obtain or fulfil a
contract are given in Note 1 - Revenue recognition. There has been
no change in the Group's business model from the previous year and
the Directors are satisfied that the revenue recognition policy
remains correct for the year under review.
Changes in estimated variable
remuneration liability
The Group Income Statement in the comparative year
includes the release of £110,000 in accrued bonuses which has been
disclosed separately. The Board's best estimate
of the liability to pay bonuses as at 30 June 2022 was £170,000 and
this was recorded with the prior year accruals balance. In the 2023
year, £110,000 of this liability was released to the Group
Income Statement following annual reappraisal of the estimated
liability at 30 June 2023. The balance carried forward to future
periods, is the Board's estimation of a constructive obligation
with regards to bonuses in respect of work undertaken to date in
progressing new business development and sales opportunities.
Capitalisation of development costs
As described in Note 1, the Group capitalises
development costs when certain criteria are met including the
probability of relevant future economic benefits. The key variable
in making judgement of the correct treatment of development costs
is new product development versus modification and maintenance of
existing products. The development work undertaken has been to
existing products, and having assessed the likelihood of future
economic benefit, the Directors have judged it appropriate to not
capitalise any development costs (2023 - £Nil).
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
2. Critical
accounting judgments and key sources of estimation uncertainty
(continued)
Estimates
Impairment
of intangible assets and
investment in subsidiary
Determining whether non-current assets are impaired requires an estimation
of the value
in use of the cash generating
units to which non-current assets have
been allocated. The value in use calculation
requires the Group to estimate the future cash
flows expected to arise from the cash-generating
unit and a suitable discount rate in order to calculate
the present value. The key variables used
in cash flow projections are: a timeline of fourteen years (the
"time period"); the forecast for the next year which is used as the
base for future years; revenue and cost projections for the time
period using the average rate of increase / (decrease) achieved
over the preceding ten years. No
provision
for impairment
was made in the year to the carrying value of goodwill (see note 11) or
investments in subsidiaries (see
note 13).
Recognition of deferred tax assets
As described in Note 1, the Group recognises
deferred tax assets arising from unused tax losses when certain
criteria are met including the probability that future relevant
taxable profits will be available. The directors have assessed the
likelihood of future taxable profits being available and have
judged it appropriate to recognise deferred tax assets for unused
losses. The key variables used in the calculation of deferred tax
assets are: a timeline of three years out from reporting date;
revenue and cost projections on the same basis as used in the
assessment of impairment of goodwill; a cost of capital of 8.44%.
At the year-end a deferred tax asset of £358,000 (2023 - £328,000)
was recognised.
Share based payment transactions
The Company has made awards of options and over its
unissued share capital to certain Directors and employees as part
of their remuneration package.
The valuation of these options involves making a
number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture
rates. These assumptions have been described in more detail
in Note 20.
3.
Revenue
An analysis of the Group's revenue
is as follows:
|
|
|
2024
£
|
|
2023
£
|
|
|
|
|
|
|
|
|
|
Software development, licence fees
and project work
|
|
2,910,232
|
|
2,730,172
|
|
All of the Group's revenue relates to continuing
activities.
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
4. Operating
profit for the year is stated after
charging/(crediting):
|
|
|
2024
£
|
|
2023
£
|
|
|
Depreciation of plant and equipment
(see note 12)
|
|
4,752
|
|
4,074
|
|
Depreciation of leased assets
(see note 17)
|
|
129,766
|
|
146,303
|
|
Interest on leased assets
(see note 17)
|
|
18,435
|
|
6,471
|
|
Staff costs (see note 8)
|
|
1,499,656
|
|
1,374,676
|
|
Research and development
|
|
521,853
|
|
476,491
|
|
Release of accruals for
administrative costs in respect of prior years
|
|
(24,603)
|
|
(8,393)
|
|
|
|
|
|
|
|
5. Finance
income and Finance costs:
|
|
2024
£
|
2023
£
|
|
Finance income
|
|
|
|
Interest on cash and cash
equivalents
|
247,903
|
76,977
|
|
|
|
|
|
Finance costs
|
|
|
|
Lease interest expense
|
(18,435)
|
(6,471)
|
|
Other interest expense
|
(200)
|
(20)
|
|
Net
finance income
|
229,268
|
70,486
|
6. Auditor's
remuneration:
|
|
|
2024
£
|
|
2023
£
|
|
|
Fees payable to the Group's auditor
for the audit of the Group's annual accounts
|
|
40,500
|
|
37,750
|
|
|
Fees payable to the Group's auditor
for other services:
|
|
|
|
|
|
|
- audit of the Company's
subsidiaries
|
|
7,000
|
|
7,000
|
|
|
|
|
47,500
|
|
44,750
|
|
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
7. Operating
segments:
The Group
reports internally to the Chief
Operating Decision Maker (CODM), who is considered to be the Board.
Intersegment license fees and management charges are not included
in the reports reviewed by the CODM during the year but are
calculated for statutory reporting purposes and therefore are
excluded from the following revenue and operating profit
disclosures.
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Revenue by segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software development and licence
fees
|
|
2,910,232
|
|
2,730,172
|
|
|
External segment revenue
|
|
2,910,232
|
|
2,730,172
|
|
|
|
|
|
|
|
|
|
Operating profit by segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software development and licence
fees
|
|
1,375,772
|
|
1,366,930
|
|
|
|
|
|
|
|
|
|
Unallocated overheads
|
|
(524,716)
|
|
(458,211)
|
|
|
Total operating profit
|
|
851,056
|
|
908,719
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
247,903
|
|
76,977
|
|
|
Total profit before tax as reported in the Group income
statement
|
|
1,098,959
|
|
985,696
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Segment total of assets
|
|
|
|
|
|
|
Software development and licence
fees
|
|
10,056,804
|
|
8,295,757
|
|
|
|
|
|
|
|
|
|
Unallocated assets
|
|
4,564,942
|
|
4,559,078
|
|
|
|
|
14,621,746
|
|
12,854,835
|
|
|
|
|
|
|
|
|
|
Less intercompany debtors
|
|
(4,061,003)
|
|
(3,821,478)
|
|
|
Total assets
|
|
10,560,743
|
|
9,033,357
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Segment total of liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software development and licence
fees
|
|
6,202,071
|
|
5,172,801
|
|
|
|
|
|
|
|
|
|
Unallocated liabilities
|
|
154,630
|
|
67,889
|
|
|
|
|
6,356,701
|
|
5,240,690
|
|
|
|
|
|
|
|
|
|
Less intercompany
creditors
|
|
(4,061,003)
|
|
(3,821,478)
|
|
|
Total liabilities
|
|
2,295,698
|
|
1,419,212
|
|
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
7. Operating
segments (continued):
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Additions of property, plant and equipment assets by
segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software development and licence
fees
|
|
12,055
|
|
3,480
|
|
|
Total additions
|
|
12,055
|
|
3,480
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Depreciation of property, plant and equipment assets
recognised in the period by segment
|
|
|
|
|
|
|
Software development and licence
fees
|
|
4,752
|
|
4,074
|
|
|
Total depreciation
|
|
4,752
|
|
4,074
|
|
|
Non-current assets by country
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
UK
|
|
2,723,497
|
|
2,122,255
|
|
|
Total non-current
assets
|
|
2,723,497
|
|
2,122,255
|
|
|
Geographical information - External revenue
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
UK
|
|
1,958,953
|
|
1,979,802
|
|
|
Europe (excluding UK)
|
|
585,263
|
|
584,987
|
|
|
Africa
|
|
45,000
|
|
42,500
|
|
|
North America
|
|
287,788
|
|
89,656
|
|
|
Australia
|
|
12,604
|
|
12,603
|
|
|
Asia Pacific
|
|
20,624
|
|
20,624
|
|
|
|
|
2,910,232
|
|
2,730,172
|
|
During the year there were 5 customers (2023: 4) who
accounted for more than 10% of the Group's revenues as follows:
|
|
2024
|
|
2023
|
|
|
|
|
Value of
sales
£
|
% of Total
|
|
Value of
sales
£
|
|
% of Total
|
|
|
|
|
|
|
|
|
|
|
|
Customer 1
|
668,506
|
23%
|
|
685,720
|
|
25%
|
|
|
Customer 2
|
520,990
|
18%
|
|
520,990
|
|
19%
|
|
|
Customer 3
|
437,978
|
15%
|
|
361,152
|
|
13%
|
|
|
Customer 4
|
337,900
|
12%
|
|
342,588
|
|
13%
|
|
|
Customer 5
|
378,186
|
10%
|
|
-
|
|
-
|
|
|
|
2,343,560
|
78%
|
|
1,910,451
|
|
70%
|
|
|
|
|
|
|
|
|
|
|
|
These revenues are attributable to the software
development and licence fees segment.
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
8. Staff
costs:
|
|
|
2024
£
|
|
2023
£
|
|
|
a) Aggregate staff costs, including Directors'
remuneration
|
|
|
|
|
|
|
Wages and salaries
|
|
1,267,472
|
|
1,114,182
|
|
|
Social security costs
|
|
152,473
|
|
136,786
|
|
|
Pension contributions
|
|
28,420
|
|
26,380
|
|
|
Share-based payments
|
|
51,291
|
|
97,328
|
|
|
|
|
1,499,656
|
|
1,374,676
|
|
|
b) The average number of employees (including
Directors) was:
|
|
|
|
|
|
|
Sales and
administration
|
|
7
|
|
7
|
|
|
Development and support
|
|
10
|
|
9
|
|
|
|
|
17
|
|
16
|
|
|
|
|
£
|
|
£
|
|
|
c) Directors' emoluments
|
|
|
|
|
|
|
Short-term employee
benefits
|
|
322,365
|
|
252,883
|
|
|
Pension contributions
|
|
5,512
|
|
5,513
|
|
|
Share-based payments
|
|
21,000
|
|
45,673
|
|
|
|
|
348,877
|
|
304,069
|
|
|
Social security costs
|
|
40,554
|
|
31,260
|
|
|
Total Director
compensation
|
|
389,431
|
|
335,329
|
|
Directors' emoluments represent the staff costs of
the Company.
The average number of employees of the parent
company is 3 (2023: 3)
The highest paid Director received remuneration of
£270,377 (2023: £192,114).
The number of Directors that are members of a
defined contribution pension scheme is 1 (2023: 1). Pension
contributions paid to a defined contribution scheme in respect of
the highest paid Director amounted to £5,512 (2023: £5,513).
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
9.
Taxation
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Current tax
|
|
(61,302)
|
|
(15,587)
|
|
|
Deferred tax
|
|
30,000
|
|
10,000
|
|
|
Total tax charge for the
year
|
|
31,302
|
|
5,587
|
|
The difference between the total tax credit shown
above and the amount calculated by applying the standard rate of UK
corporation tax to the profit before tax is as follows:
|
|
|
2024
£
|
|
2023
£
|
|
|
Profit on ordinary activities before
tax
|
|
1,098,959
|
|
985,696
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities
multiplied by the effective rate of corporation tax in the UK of
25.00% (2023: 20.49%)
|
|
274,740
|
|
201,969
|
|
|
|
|
|
|
|
|
|
Effects of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disallowed expenses
|
|
68
|
|
52
|
|
|
|
|
|
|
|
|
|
Temporary differences on deferred
tax
|
|
1,921
|
|
494
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
movement
|
|
(30,000)
|
|
(10,000)
|
|
|
|
|
|
|
|
|
|
Brought forward losses
utilised
|
|
(215,427)
|
|
(186,928)
|
|
|
Total tax charge for the
year
|
|
31,302
|
|
5,587
|
|
Factors which may
affect future tax charges
At 30 June 2024 the Group has tax losses of
approximately £7,600,000 (2023: £8,000,000) to offset against
future trading profits.
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
10. Earnings per
share
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Earnings
|
|
|
|
|
|
|
Earnings for the purpose of basic
and diluted earnings per share being net profit attributable to
equity shareholders
|
|
1,067,657
|
|
980,109
|
|
|
|
|
1,067,657
|
|
980,109
|
|
|
|
|
No.
|
|
No.
|
|
|
Number of shares
|
|
|
|
|
|
|
Weighted average number of ordinary
shares for the purpose of basic earnings per share
|
|
13,372,811
|
|
13,372,811
|
|
|
|
|
|
|
|
|
|
Number of dilutive shares under
option
|
|
31,620
|
|
14,805
|
|
|
Weighted average number of ordinary
shares for the purposes of dilutive earnings per share
|
|
13,404,431
|
|
13,387,616
|
|
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.
11.
Goodwill
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Cost
and net book amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July
2023 and at 30 June 2024
|
|
1,715,153
|
|
1,715,153
|
|
Goodwill acquired in a business combination is
allocated at acquisition,
to the cash
generating units (CGUs) that are expected to benefit from that business combination.
The carrying amount of goodwill has been allocated as follows:
|
|
|
2024
|
|
2023
|
|
|
|
|
£
|
|
£
|
|
|
Arcontech Limited
|
|
1,715,153
|
|
1,715,153
|
|
|
|
|
1,715,153
|
|
1,715,153
|
|
The CGU used in these calculations is Arcontech
Limited. The
group tests goodwill annually for impairment or more frequently if
there are indications
that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from
value in use calculations.
The key assumptions
for the value
in use calculations are
those regarding
the discount rates, growth
rates and expected
changes to selling prices and direct costs
during the period. The
discount rate is estimated
using pre-tax rates that
reflect current market assessments
of the time value
of money and the risks specific
to the CGUs. Long-term
growth rates are based on industry growth
forecasts.
Changes in selling prices
are based on past practices and expectations of future changes
in the market. Changes in direct costs are based
on expected cost of inflation of 6.0% and 1.8% after year
5.
Cashflow forecasts are based on the
latest financial budgets and extrapolate the cashflows
for the next five years based on an estimated growth
in revenue representing an average rate of 3.4%
(2023: 3.4%) per annum, after which the UK long-term growth
rate of 1.8% is applied. The Directors consider that this rate is
appropriate, given the current sales pipeline. Fluctuation in
revenue is the most sensitive of assumptions. Should revenue fall
by more than an average of 5% per annum then this could result in
the value of goodwill being impaired.
As the Group does not have any borrowings, the rate
used to discount all the forecast cash flows is 8.8% (2023: 8.8%),
which represents the Group's cost of capital.
Goodwill on the purchase of Arcontech Limited is
attributable to the operating
synergies that
have arisen as a result
of the combination.
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
12.
Property, plant and equipment - Group
|
|
|
Leasehold
Property
|
|
Office
furniture &
equipment
|
|
Total
|
|
|
Cost
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July 2022
|
|
26,199
|
|
105,941
|
|
132,140
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
-
|
|
3,480
|
|
3,480
|
|
|
|
|
|
|
|
|
|
|
|
Disposals
|
|
-
|
|
(6,056)
|
|
(6,056)
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July 2023
|
|
26,199
|
|
103,365
|
|
129,564
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
-
|
|
4,471
|
|
4,471
|
|
|
|
|
|
|
|
|
|
|
|
Disposals
|
|
(26,199)
|
|
(795)
|
|
(26,994)
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2024
|
|
-
|
|
107,041
|
|
107,041
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July 2022
|
|
23,520
|
|
102,076
|
|
125,596
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year
|
|
1,461
|
|
2,613
|
|
4,074
|
|
|
|
|
|
|
|
|
|
|
|
Disposals
|
|
-
|
|
(6,056)
|
|
(6,056)
|
|
|
|
|
|
|
|
|
|
|
|
At 1 July 2023
|
|
24,981
|
|
98,633
|
|
123,614
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year
|
|
1,218
|
|
3,534
|
|
4,752
|
|
|
|
|
|
|
|
|
|
|
|
Disposals
|
|
(26,199)
|
|
(530)
|
|
(26,729)
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2024
|
|
-
|
|
101,637
|
|
101,637
|
|
|
Net book amount at 30 June 2024
|
|
-
|
|
5,404
|
|
5,404
|
|
|
Net book amount at 30 June 2023
|
|
1,218
|
|
4,732
|
|
5,950
|
|
13. Investment in
subsidiaries
|
|
|
2024
|
|
2023
|
|
|
Carrying amount
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
At 1 July 2023
|
|
2,017,471
|
|
2,017,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2024
|
|
2,017,471
|
|
2,017,471
|
|
Details of the investments in
which the Group
and the Company holds
20% or more of the nominal value of any class of share capital are listed below. The
Goodwill recognised in Note 11 is in connection with investments
made in subsidiaries:
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
13. Investment in
subsidiaries (continued)
|
|
Country of
Incorporation
|
Address
|
Nature of business
|
Ordinary
shares
held
|
|
Arcontech Solutions
Limited
|
England
|
11-21 Paul Street, London EC2A
4JU
|
Dormant
|
100%
|
|
Cognita Technologies
Limited
|
England
|
11-21 Paul Street, London EC2A
4JU
|
Software development
|
100%
|
|
Arcontech Limited
|
England
|
11-21 Paul Street, London EC2A
4JU
|
Software development and
consultancy
|
100%
|
14.
Trade and other receivables
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
Due
within one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
458,227
|
|
136,250
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed by group
undertakings
|
-
|
|
-
|
|
4,060,904
|
|
3,821,378
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and accrued
income
|
218,842
|
|
221,861
|
|
8,331
|
|
20,922
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables
|
-
|
|
141,750
|
|
-
|
|
-
|
|
|
|
677,069
|
|
499,861
|
|
4,069,235
|
|
3,842,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
Due
after more than one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables
|
141,750
|
|
-
|
|
-
|
|
-
|
|
|
|
141,750
|
|
-
|
|
-
|
|
-
|
|
Trade receivables, which are the
only financial assets at amortised cost, are non-interest bearing
and generally have a 30-90 day term. Due to their short maturities,
the carrying amount of trade and other receivables is a reasonable
approximation of their fair value. A provision for impairment of
trade receivables is established using an expected loss model.
Expected loss is calculated from a provision based on the expected
lifetime default rates and estimates of loss on
default.
As at 30 June 2024, trade receivables of £Nil were
impaired
(2023: £Nil) and
during the year an impairment charge relating to trade receivables
of £Nil (2023: £Nil) was recognised. As
at 30 June 2024
trade receivables
of £214,142
(2022: £63,314) were past due but not impaired as full
recovery is expected. The ageing analysis of these
trade receivables is
as follows:
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
|
|
|
|
|
|
|
|
|
|
Up to 3 months past due
|
214,142
|
|
63,314
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
3 to 6 months past due
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
214,142
|
|
63,314
|
|
-
|
|
-
|
|
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
15. 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. The Directors consider
that the carrying amount of cash and cash equivalents approximates
to their fair value.
16. Trade and other
payables
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
61,328
|
|
44,995
|
|
3,437
|
|
4,595
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to group
undertakings
|
-
|
|
-
|
|
100
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
Other tax and social security
payable
|
106,899
|
|
58,185
|
|
12,612
|
|
12,740
|
|
|
|
|
|
|
|
|
|
|
|
|
Other payables and
accruals
|
426,963
|
|
323,850
|
|
138,102
|
|
49,792
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income
|
1,092,835
|
|
881,858
|
|
-
|
|
-
|
|
|
|
1,688,025
|
|
1,308,888
|
|
154,251
|
|
67,227
|
|
The Directors consider that the carrying amount of
trade and other payables approximates to their fair value.
Trade payables and other payables and accruals constitute
the financial liabilities within
the category
"Financial liabilities at amortised cost."
The total value
of Financial liabilities at amortised
cost is £488,291 (2023: £368,845) which
includes provisions (Refer to
note 18).
17. Leases
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:
|
As
at 30 June 2024
|
|
|
Lease
liability
£
|
|
Right of
use asset
£
|
|
Income
statement
£
|
|
Carrying value at 30 June
2023
|
|
|
(40,324)
|
|
73,152
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
(552,221)
|
|
559,804
|
|
-
|
|
Depreciation
|
|
|
-
|
|
(129,766)
|
|
(129,766)
|
|
Interest
|
|
|
(18,435)
|
|
-
|
|
(18,435)
|
|
Lease payments
|
|
|
73,307
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value at 30 June 2024
|
|
|
(537,673)
|
|
503,190
|
|
(148,201)
|
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
17. Leases
(continued)
|
Reconciliation of lease
liabilities
|
Operating cash flow
£
|
Financing cash flow
£
|
Non-cash
£
|
Total
£
|
|
As at 1 July 2023
|
-
|
-
|
-
|
40,324
|
|
Cash flows:
|
|
|
|
|
|
Interest
paid
|
(18,435)
|
-
|
-
|
(18,435)
|
|
Liability
reduction
|
-
|
(54,872)
|
-
|
(54,872)
|
|
Non-cash changes:
|
|
|
|
|
|
New lease
|
-
|
-
|
552,221
|
552,221
|
|
Interest
expense
|
-
|
-
|
18,435
|
18,435
|
|
As at 30 June 2024
|
(18,435)
|
(54,872)
|
570,656
|
537,673
|
|
As
at 30 June 2023
|
|
|
Lease
liability
£
|
|
Right of
use asset
£
|
|
Income
statement
£
|
|
Carrying value at 30 June
2022
|
|
|
(195,853)
|
|
219,455
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
(146,303)
|
|
(146,303)
|
|
Interest
|
|
|
(6,471)
|
|
-
|
|
(6,471)
|
|
Lease payments
|
|
|
162,000
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value at 30 June 2023
|
|
|
(40,324)
|
|
73,152
|
|
(152,774)
|
|
Reconciliation of lease
liabilities
|
Operating cash flow
£
|
Financing cash flow
£
|
Non-cash
£
|
Total
£
|
|
As at 1 July 2022
|
-
|
-
|
-
|
195,853
|
|
Cash flows:
|
|
|
|
|
|
Interest
paid
|
(6,471)
|
-
|
-
|
(6,471)
|
|
Liability
reduction
|
-
|
(155,529)
|
-
|
(155,529)
|
|
Non-cash changes:
|
|
|
|
|
|
Interest
expense
|
-
|
-
|
6,471
|
6,471
|
|
As at 30 June 2023
|
(6,471)
|
(155,529)
|
6,471
|
40,324
|
|
Contractual maturity analysis of lease liabilities as at 30
June 2024
|
|
|
Less
than
3
months
£
|
3 -
12
Months
£
|
1 -
5
Year
£
|
Longer
than
5
years
£
|
Total
£
|
|
Lease liabilities
|
37,800
|
113,400
|
386,473
|
-
|
537,673
|
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
18. Provisions
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 July
|
70,000
|
|
50,000
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in provision
|
-
|
|
20,000
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 30 June
|
70,000
|
|
70,000
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosed as:
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
-
|
|
50,000
|
|
-
|
|
-
|
|
|
Non-current
liabilities
|
70,000
|
|
20,000
|
|
-
|
|
-
|
|
Provisions consists of dilapidations for the Office
premises of £70,000 (2023: £70,000). Refer to note 1 for the
Accounting Policy for Provisions. The total estimate of
dilapidation costs for the Paul Street office is £50,000 which is
disclosed as a current liability as at 30 June 2024, as the lease
is due to beyond twelve months. The £20,000 non-current
dilapidations provision relates to a potential liability in
connection with a previous office. The value of the provisions has
not been discounted as the impact is not material.
19. Deferred tax
Deferred tax is calculated in full on temporary
differences under the liability method using the tax rate of 20.4%
which is the effective tax rate of the Group. The movement on the
deferred tax account is as shown below:
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
At 1 July
|
328,000
|
|
318,000
|
|
68,000
|
|
56,000
|
|
|
Effect of change in tax
rate
|
-
|
|
78,000
|
|
-
|
|
16,000
|
|
|
Effect of movement in temporary
differences
|
30,000
|
|
(68,000)
|
|
3,000
|
|
(4,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June
|
358,000
|
|
328,000
|
|
71,000
|
|
68,000
|
|
The deferred tax asset has been recognised in
relation to forecast taxable profits which are considered
probable.
Losses to offset against future trading profits at
30 June 2024 amounted to approximately £7,600,000 (2023:
£8,000,000).
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
20.
Share capital
The Company has authorised share capital of
16,000,000 Ordinary shares of £0.125 each.
|
Company
Allotted and fully paid:
|
|
Shares
of 12.5p
each
|
|
Share Capital
£
|
|
Share
Premium
£
|
|
As at 1 July 2023
|
|
13,372,811
|
|
1,671,601
|
|
115,761
|
|
As
at 30 June 2024
|
|
13,372,811
|
|
1,671,601
|
|
115,761
|
Share
options
Under the Company's approved 2002 Share Option
Scheme, certain Directors and employees held options at 30 June
2024 for unissued Ordinary Shares of 12.5 pence each as
follows:
|
Share options
|
At 1 July
2023
|
Granted
|
Exercised
|
Lapsed
|
At 30 June
2024
|
Exercise
price
|
Normal exercise
period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees:
|
100,000
|
-
|
-
|
-
|
100,000
|
64.50
pence
|
25 Apr 20
- 24 Apr 27
|
|
|
50,000
|
-
|
-
|
-
|
50,000
|
110.00
pence
|
30 Jun 21
- 29 Jun 28
|
|
|
20,000
|
-
|
-
|
-
|
20,000
|
196.00
pence
|
30- Jun
22 - 27 Sep 29
|
|
|
43,000
|
-
|
-
|
-
|
43,000
|
164.50
pence
|
30 Jun 23
- 2 Oct 30
|
|
|
67,500
|
-
|
-
|
-
|
67,500
|
130.50
pence
|
30 Jun 24
- 11 Oct 31
|
|
|
70,000
|
-
|
-
|
-
|
70,000
|
76.50
pence
|
30 Jun 25
- 21 Oct 32
|
|
Directors:
|
|
-
|
|
-
|
|
|
|
|
|
|
-
|
|
-
|
|
|
|
|
Geoff Wicks
|
30,000
|
-
|
-
|
-
|
30,000
|
164.50
pence
|
30 Jun 23
- 2 Oct 30
|
|
|
|
-
|
|
-
|
|
|
|
|
Matthew Jeffs
|
100,000
|
-
|
-
|
-
|
100,000
|
110.00
pence
|
30 Jun 21
- 29 Jun 28
|
|
|
50,000
|
-
|
-
|
-
|
50,000
|
130.50
pence
|
30 Jun 24
- 11 Oct 31
|
|
|
50,000
|
-
|
-
|
-
|
50,000
|
76.50
pence
|
30 Jun 25
- 21 Oct 32
|
|
|
|
|
|
|
|
|
|
|
Total
|
580,500
|
-
|
-
|
-
|
580,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average exercise price
|
109.2
pence
|
-
|
-
|
-
|
109.2
pence
|
|
|
The number of options exercisable at 30 June 2024
was 460,500 (at 30 June 2023: 343,000), these had a weighted
average exercise price of 117.7 pence (2023: 113.3 pence).
The weighted average share price as at the exercise
date of the shares exercised in the year was nil pence (2023: nil
pence) and of the shares were forfeited in the year was nil pence
(2023: 166.2).
Options granted under the Company's approved 2002
Share Option Scheme are forfeited when the Optionholder ceases to
be a Director or employee of a Participating Company. The Directors
may before the expiry of 3 months following cessation of employment
permit an Optionholder to exercise their Option within a period
ending no later than 12 months from the cessation of
employment.
The highest price of the Company's shares during the
year was 112.0 pence, the lowest price was 61.2 pence and the price
at the year-end was 92.5 pence.
The weighted average remaining contractual life of
share options outstanding at 30 June 2024 was 6 years (2023: 7
years).
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
20. Share capital
(continued)
Share-based
payments
The Group operates an approved Share Option Scheme
for the benefit of Directors and employees. Options are granted to
acquire shares at a specified exercise price at any time following
but no later than 10 years after the grant date. There are no
performance conditions on the exercise of the options granted prior
to 1 July 2018. The performance conditions of those granted after 1
July 2018 which apply to executive directors and certain key staff,
are set out below.
The options issued to certain directors and members
of staff in November 2018, September 20192, October
20203, October 2021 and in October 2022 will be
exercisable from 30 June 2021, 30 June 2022, 30 June 2023, 30 June
2024 and 30 June 2025 respectively, dependent on the Company's
compound annual rate of growth in fully diluted earnings* for the
three financial years ending 30 June 2022, 2023, 2024 and 2025,
respectively.
|
Options issued date
|
Exercisable from
|
Dependent on the Company's compound annual rate of growth in
fully diluted earnings1 for the three financial years
ending
|
|
November 2018
|
30 June
2021
|
30 June
2021
|
|
September 2019
|
30 June
2022
|
30 June
2022
|
|
October 2020
|
30 June
2023
|
30 June
2023
|
|
October 2021
|
30 June
2024
|
30 June
2024
|
|
October 2022
|
30 June
2025
|
30 June
2025
|
The Options will vest subject to performance
criteria as follows:
- compound annual earnings growth of 10% or more -
fully vested (100%);
- compound annual earnings growth between 5%-10% -
partial vesting between 0% and 100% on a sliding scale; and
- compound annual earnings growth of 5% and below -
nil.
Any Ordinary Shares arising from the
vesting of Options must be held for a period of two years after
vesting.
1 Fully diluted earnings
will be based on: (a) the Company's pre-tax profit excluding
exceptional items and the share option
charge and (b) the current UK
corporation tax rate of 19%, such that the fully diluted earnings
calculation takes no account
of R&D and deferred tax credits.
For the purposes of the fully diluted earnings calculation, the
applied rate of corporation tax
will remain constant at 19%
irrespective of any current or future changes to corporation
tax.
2 70,000 options issued in September 2019
lapsed on 30 June 2022 as compound annual earnings growth targets
for the financial years ended 30 June 2020, 2021 and 2022 were not
achieved.
3 70,000 options issued in October 2020
lapsed on 30 June 2023 as compound annual earnings growth targets
for the financial years ended 30 June 2021, 2022 and 2023 were not
achieved.
The fair value of options is valued using the
Black-Scholes pricing model. An expense of £51,291 (2023: £97,328)
has been recognised in the year in respect of share options
granted. The cumulative share option reserve at 30 June 2024 is
£330,746 (2023:
£279,455).
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
20. Share capital
(continued)
The inputs into the Black-Scholes pricing model are
as follows:
|
Directors & Employees
|
|
|
Grant date
|
25 Apr
2017
|
29 Nov
2018
|
27 Sep
2019
|
2 Oct
2020
|
11 Oct
2021
|
21 Oct
2022
|
|
Exercise price
|
64.5 pence
|
110.0
pence
|
196.0 pence
|
164.5
pence
|
130.5
pence
|
76.5
pence
|
|
Expected life
|
10
years
|
10
years
|
10
years
|
10
years
|
10
years
|
10
years
|
|
Expected volatility
|
50%
|
50%
|
50%
|
49%
|
45%
|
44%
|
|
Risk free rate of
interest
|
0.5%
|
0.75%
|
0.75%
|
0.00%
|
0.60%
|
3.69%
|
|
Dividend yield
|
Nil
|
Nil
|
Nil
|
0.01%
|
0.01%
|
0.04%
|
|
Fair value of option
|
36.7
pence
|
57.0
pence
|
115.0
pence
|
91.92
pence
|
70.03
pence
|
45.47
pence
|
Volatility has been estimated based on the historic
volatility over a period equal to the expected term from the grant
date.
21. Reserves
Details of the movements in reserves are set out in
the Statement of Changes in Equity. A description of each reserve
is set out below.
Share capital
reserve
This is used to record the aggregate nominal amount
of the Company's shares on issue.
Share premium
account
This is used to record the aggregate amount or value
of premiums paid when the Company's shares are issued at a premium,
net of issue costs, less amounts cancelled by court order.
Share option
reserve
This relates to the fair value of options granted
which has been charged to the income statement over the vesting
period of the options, less amounts transferred to retained
earnings.
Retained
earnings
This relates to accumulated profits and losses
together with distributable reserves arising from capital
reductions, less amounts distributed to shareholders.
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
22. Net cash generated from
operations - Group
|
|
2024
|
|
2023
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Operating profit and exceptional
items before tax
|
869,691
|
|
915,210
|
|
|
|
|
|
|
Depreciation charge
|
134,518
|
|
150,377
|
|
|
|
|
|
|
Non cash share option
charges
|
51,291
|
|
97,328
|
|
|
|
|
|
|
Profit on disposal of plant and
equipment
|
(151)
|
|
-
|
|
|
|
|
|
|
Lease interest paid
|
(18,435)
|
|
(6,471)
|
|
|
|
|
|
|
Other interest paid
|
(200)
|
|
(20)
|
|
|
|
|
|
|
(Increase) in trade and other
receivables
|
(318,958)
|
|
(9,425)
|
|
|
|
|
|
|
Increase / (decrease) in trade and
other payables
|
333,421
|
|
(265,577)
|
|
|
|
|
|
|
(Increase) in provisions
|
-
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
1,051,177
|
|
901,422
|
|
|
|
|
|
Net cash generated
from operations - Company
|
|
2024
|
|
2023
|
|
|
£
|
|
£
|
|
|
|
|
|
|
Operating profit
|
316,497
|
|
284,772
|
|
|
|
|
|
|
Non cash share option
charges
|
21,000
|
|
45,673
|
|
|
|
|
|
|
Increase in trade and other
receivables
|
(196,644)
|
|
(469,614)
|
|
|
|
|
|
|
Increase in trade and other
payables
|
86,595
|
|
9,191
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from / (used in) operations
|
227,448
|
|
(129,978)
|
|
|
|
|
|
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
23. Related party
transactions
Group
Transactions between the Company
and its subsidiaries, which are related parties, have been
eliminated on consolidation and are disclosed in this part of the
note.
Key management compensation
Key management are those
persons having
authority and responsibility for planning, controlling and directing
the activities
of the Group. In
the opinion
of the Board, the Group's key management are the Directors
of Arcontech Group PLC. Information
regarding their
compensation
is given in notes 8 and 20 for each of the categories specified in IAS 24 Related
Party Disclosures. All emoluments given in notes 8 and 20
relate to short-term employee benefits and there are no
post-employment or other long-term benefits.
The financial statements include the following
amounts in respect of services provided to the Group:
Company
Transactions between the Parent Company and its
subsidiaries during the year were as follows:
Management charges payable by subsidiaries £626,698
(2023: £546,676).
The amounts due from/to subsidiaries at the balance
sheet date were as follows:
|
|
|
2024
£
|
|
2023
£
|
|
|
|
|
|
|
|
|
|
Amount due from
subsidiaries
|
|
7,443,477
|
|
7,415,999
|
|
|
|
|
|
|
|
|
|
Less: Provision for
impairment
|
|
(3,382,474)
|
|
(3,594,521)
|
|
|
Amount due from subsidiaries -
net
|
|
4,061,003
|
|
3,821,478
|
|
|
|
|
|
|
|
|
During the year a provision of £212,047 was released
(2023: £193,659) in respect of balances due from subsidiaries.
|
|
|
2024
£
|
|
2023
£
|
|
|
|
|
|
|
|
|
|
Amount due to
subsidiaries
|
|
626,698
|
|
546,676
|
|
|
|
|
626,698
|
|
546,676
|
|
24. Dividends
A final dividend of 3.75 pence will be proposed at
the Annual General Meeting but has not been recognised as it
requires approval (2023: 3.5 pence).
Notes to the Financial Statements
For the year ended 30
June 2024 (continued)
25. Financial
instruments
The Group's financial instruments comprise cash and
cash equivalents, and items such as trade payables and trade
receivables, which arise directly from its operations. The main
purpose of these financial instruments is to provide finance for
the Group's operations.
The Group's operations expose it to a variety of
financial risks including credit risk, liquidity risk and interest
rate risk. Given the size of the Group, the Directors have not
delegated the responsibility of monitoring financial risk
management to a sub-committee of the Board. The policies set by the
Board of Directors are implemented by the Company's finance
department.
Credit risk
The Group's credit risk is primarily attributable to
its trade receivables. The Group has implemented policies that
require appropriate credit checks on potential customers before
sales are made. The amount of exposure to any individual
counterparty is subject to a limit, which is reassessed annually by
the Board. Trade receivables are considered in default and subject
to additional credit control procedures when they are more than 30
days past due in line with industry practice. Trade receivables are
only written off when there is no reasonable expectation of
recovery due to insolvency of the debtor.
The
carrying amount of financial assets represents the maximum credit exposure.
The maximum
exposure to credit risk at the reporting
date was:
|
|
Group
2024
£
|
|
Group
2023
£
|
|
Company
2024
£
|
|
Company
2023
£
|
|
|
Trade receivables
|
458,227
|
|
136,250
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
7,160,177
|
|
6,411,241
|
|
287,606
|
|
518,678
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed by group
undertakings
|
-
|
|
-
|
|
4,069,092
|
|
3,821,378
|
|
|
|
7,618,404
|
|
6,547,491
|
|
4,356,698
|
|
4,340,056
|
|
Interest rate risk
The
Group has interest bearing assets and no interest-bearing liabilities. Interest bearing assets comprise only
cash and cash equivalents,
which earn interest at a variable
rate.
The
Group has not entered
into any derivative transactions during
the period
under review.
The Group does not have any borrowings.
The
Group's cash and cash equivalents
earned
interest
at variable
rates, between 4.35% below bank base
rate and 0.25% below bank base rate and at fixed/variable rates of
between 1.56% below bank base rate and 0.56% below bank base
rate (2023: variable rates of
between 3.65% below bank base rate and 0.25% below
bank base rate and at fixed/variable rates of of between 2.53%
below bank base rate and 0.06% below).
Liquidity risk
The
Group has no short-term debt
finance. The Group
monitors its levels of working capital to ensure that it can meet its liabilities as they fall
due.
The
Group's
financial
liabilities comprise trade payables
and other payables, provisions and accruals, excluding deferred
income, with a carrying value equal to the gross cash flows payable
of £488,291 (2023: £368,845) all of which are payable within 6
months.
Notes to the Financial Statements
For the year ended
30 June 2024 (continued)
25. Financial instruments
(continued)
Market risk and sensitivity analysis
Equity price risk
The Directors do not consider themselves exposed to
material equity price risk due to the nature of the Group's
operations.
Foreign currency exchange risk
The Directors do not consider themselves exposed to
material foreign currency risk due to the nature of the Group's
operations. All invoices are raised in sterling.
Interest rate
risk
The
Group is exposed to interest rate
risk as a result
of positive
cash balances, denominated in sterling, which earn interest at variable
and fixed rates. As at 30
June 2024, if bank base rate had
increased by 0.5% with all other variables held constant, post-tax profit would have been £35,801
(20223 £32,056) higher and equity would have been
£35,801
(2023: £32,056) higher. Conversely, if bank
base rate had fallen
0.5% with all
other variables held
constant,
post-tax profit would have been
£35,801 (2023:
£32,056)
lower and
equity
would have been £35,801 (2023: £32,056) lower.
26. Capital risk management
The
Group's
objectives when
managing
capital
are to safeguard the Group's ability to continue
as a going concern
in order to provide returns for shareholders and maintain an optimal
capital
structure.
The
Group defines
capital
as being share capital plus
reserves. The Board of Directors
continually monitors
the level of capital.
The
Group is not subject to any externally
imposed capital requirements.
27. Ultimate controlling party
There is no ultimate controlling
party.
28. Copies of these
statements
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.