Final Results

Source: RNS
RNS Number : 3823C
Arcontech Group PLC
02 September 2024
 

 

 

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





£



Segment total of liabilities










Software development and licence fees


6,202,071








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.

 

 

 

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