REGISTERED NUMBER: 4062416 (England and Wales)
Arcontech Group PLC
Year ended 30 June 2010
Contents
Chairman’s Statement
Chief Executive’s Review
Company Information
Board of Directors
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Group Income Statement
Statement of Changes in Equity
Balance Sheets
Group Cash Flow Statement
Company Cash Flow Statement
Notes to the Financial Statements
Notice of Annual General Meeting
ARCONTECH GROUP PLC
Page
1
2
3
4
5 - 7
8
9-10
11
12
13
14
15
16 - 41
42 - 44
Chairman’s Statement
Commentary
The year ended 30 June 2010 has been disappointing as the Group did not achieve the new sales wins that it had
anticipated in the second half of the year. Turnover for the year was £1,068,776 (2009: £1,395,095) and the
operating loss from continuing activities was £918,754 (2009: £574,739). Our success in promoting a licence
rental model for new contracts (rather than an outright sale basis) has increased the quality and visibility of our
future revenue. Inevitably this has reduced the reported performance in the year to 30th June 2010. Had all new
contracts signed during the year been traditional licence sales the results would have shown a marked
improvement over 2009. Nonetheless we believe our strategy is right for the business.
As at 30 June 2010 the contracted future annual recurring revenues of the business were £1,081,668 compared
to £678,009 in 2009. This increase reflects the new international business won last year and in the first half of
the year, the value of which is recognised over the life of the contracts. The level of recurring contracted
revenue remains a key strength of the business going forward. These revenues now cover approximately 54%
of our expected cost base compared to 34% in 2009
The Group is now fully focussed on the CityVision market data platform and on AXE, the CfD and spread
betting solution. We believe good opportunities exist for these products albeit that the decision making process
with regard to new sales has lengthened significantly.
During the year we continued to invest in the development of our software products. All related costs are
expensed as incurred. CityVision has now been developed to work on the Solaris platform and we expect this to
be rolled out by one of our existing major customers during the current year. Our Excelerator product is gaining
market recognition through trials and although new sales are slow at present, prospects remain high. Significant
development has taken place in respect of our AXE product, particularly to increase its functionality, reliability
and throughput. Future product development will continue in order to meet customer needs and also to address
new market opportunities as they present themselves. We do, however, expect this level of development to
reduce, enabling more technical and consulting resource to be applied to revenue generating work.
Financing
As at 30 June 2010 Arcontech had net cash balances of £1,586,376, having raised £1,505,495 (net of expenses)
by the issue of new ordinary shares earlier in the year. This level will reduce whilst trading losses continue, but
we are optimistic that new sales, which should require little additional resources in order to be delivered, will
significantly reduce the cash absorption going forward.
Management and Staff
Once again I should like to thank our staff and management for their continued hard work and dedication. Our
team has remained positive and hardworking despite the frustrations of delays in winning new business which
when achieved will, we believe, ultimately provide great opportunity for all.
Outlook
The business has significant prospects for new sales with leading investment banks and other financial
institutions. Evaluations of our products are presently taking place in a number of organisations. However, the
length of time now being taken to make purchasing decisions is increasing and invariably needs sign-off at
higher levels in the respective organisations. This is almost certainly a result of the tighter financial controls
now operating throughout business generally. Consequently we are unable to predict with any degree of
certainty the timing of contract wins. We are, however, optimistic regarding the opportunities that we believe
exist and the Group has the financial resources necessary to continue to operate despite these delays.
Richard Last
Chairman
23 July 2010
ARCONTECH GROUP PLC
1
Chief Executive’s Review
This year has been one of mixed fortunes. It was disappointing in terms of bottom-line financial performance
yet with considerable progress on product development and some notable successes, particularly in international
territories and larger accounts.
Overall market conditions have shown signs of improvement but mergers and acquisitions in the investment
banking world have reduced the number of target organisations and delayed new initiatives during
consolidation.
The main themes of the year have been:
•
•
•
•
ongoing implementation and support of recent, larger global contracts;
increased focus on the major international investment banks;
a cycle of new development based on evaluation and feedback from clients and prospects;
restructuring and expanding resource, particularly sales, pre-sales and post-sales support.
In the first half of the year we secured contracts for our CityVision contributions and distribution software in
excess of £1.7 million over three years. These included a number of positions for our Excelerator real-time
desktop product and for our development tools, supporting custom integration of CityVision with client’s core
systems. New revenues in the second half were disappointing considering the number of evaluations underway.
However, the weighted value of contracts currently under consideration is at a record level.
The change from a license sale model to a license rental model has held back revenue and profit in the short
term but has longer term benefit from the increased recurring revenue base.
This year recurring revenue has risen by 59% from £678,009 to £1,081,668. Had all new contracts gained during
the year been traditional license sales, the reported revenue would have been higher and the losses
correspondingly lower.
Sales this year have brought new installations in Denmark, Dubai, Hong Kong, London, New York and
Singapore. This has increased our experience of different operating environments and commercial processes
and we are better equipped to expedite future deals.
Our message of “data vendor independent technology” is gaining traction with many major banks and several
evaluations are well advanced. The closer involvement has lead to highly constructive feedback leading to a
strengthened product set to address new opportunities and specific customer requirements.
Global support has been strengthened with a 24x7 help-desk and support personnel stationed in strategic
regions, including the Far East, where we have made good progress.
The AXE brokerage suite for on-line and telephone trading has continued to mature, with initiatives underway
to address speed and scalability as user numbers expand.
Overall, while sales progress is slower than we had hoped, I believe the foundations have been laid to support
improved results next year. I would like to thank staff, clients and prospects for their help and support and look
forward to working with them towards the success that we believe is possible in the coming year.
Andrew Miller
Chief Executive
23 July 2010
ARCONTECH GROUP PLC
2
Company Information
Directors
Richard Last (Chairman and Non-Executive Director)*+
Andrew Miller (Chief Executive)+
Michael Levy (Group Finance Director)
Louise Barton (Non-Executive Director)*+
Secretary and Registered Office
Nominated Adviser
and Broker
Michael Levy
8th Floor
Finsbury Tower
103-105 Bunhill Row
London EC1Y 8LZ
Astaire Securities Plc
46 Worship Street
London EC2A 2EA
Registered Number
4062416
Solicitors
Auditors
Registrars
Principal Bankers
TLT LLP
One Redcliff Street
Bristol BS1 6TP
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
Portwall Place
Portwall Lane
Bristol
BS1 6NA
Capita IRG Plc
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire
HD8 0LA
Nat West Bank Plc
94 Moorgate
London
EC2M 6UR
Company website
www.arcontech.com
* Members of the Remuneration Committee
+ Members of the Audit Committee
ARCONTECH GROUP PLC
3
Board of Directors
Directors - Executive
Andrew Miller (52)
Andrew was appointed Chief Technology Officer in September 2007 and subsequently Chief Executive in
December 2007. Andrew has been Managing Director of Arcontech Limited since 2000. He conceived the
CityVision product strategy in response to market demand for fast, reliable, cost-effective alternatives. He is a
vocal advocate of technology to reduce costs and increase quality of real-time market data and has been
instrumental in turning Arcontech Limited into an award-winning technology provider in the City with a blue-
chip client list.
Michael Levy (48)
Michael was appointed Group Finance Director in May 2001. In addition he operates his own Chartered
Accountants practice, Michael Levy & Co. Michael obtained a BA (Econ) in Economics and Social Studies
from the University of Manchester in 1983. He qualified as a Chartered Accountant in 1986 with BDO Stoy
Hayward and is a Fellow of The Institute of Chartered Accountants in England & Wales.
Directors – Non-Executive
Richard Last (53)
Richard was appointed Chairman and Non-Executive Director in February 2007. He has over 16 years’ senior
experience in information technology, having worked at board level for a number of publicly quoted and private
companies operating in this sector. Currently, he is Chairman of Patsystems plc, a provider of solutions for
futures trading and exchange systems, of Parseq plc a provider software and BPO solutions, both are listed on
AIM and the British Smaller Technology Companies VCT 2 plc, a fully listed venture capital trust. Richard also
sits on the Boards of Corero plc, an AIM listed IT solutions provider, Lighthouse Group plc, an AIM listed
financial services group and the British Smaller Companies VCT plc, a fully listed venture capital trust, as well
as a number of private businesses.
Louise Barton (60)
Louise was appointed Non-Executive Director in February 2007. She has more than 26 years’ experience as an
investment analyst. Louise’s background embraces a high profile City career, including having held senior
positions with fund management group Prudential Portfolio Managers and stockbrokers CCF Laurence Prust
and Investec Securities.
ARCONTECH GROUP PLC
4
Directors’ Report
The Directors present their Report and financial statements for the year ended 30 June 2010.
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 Summary on pages 1 to 2.
Results and dividends
Details of the results for the year are given on page 11. The Directors do not recommend the payment of a
dividend. (2009: £Nil).
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:
-
-
-
-
subscription, software development and consultancy revenues
revenue and overhead variations against budget
technical development (e.g. project updates and progress)
personnel matters
As noted in the income statement on page 11, revenue from continuing operations for the year has fallen by
23%, whilst distribution and administrative costs from continuing operations (excluding exceptional items) for
the year increased by 1%. The loss per share from continuing operations share remains unchanged at
0.07 pence.
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
Competition
Mitigation
Ongoing investment in R&D
Responding to the changing needs of clients to remain competitive
Loss of key personnel
Keyman insurance policies held for certain senior management
Employee share option scheme in place
Directors
The Directors who have held office during the period from 1 July 2009 to the date of this report are
as follows:
Richard Last
Andrew Miller
Michael Levy
Louise Barton
In accordance with the Company’s Articles of Association, Andrew Miller and Michael Levy, who retire by
rotation, offer themselves for re-election.
ARCONTECH GROUP PLC
5
Directors’ Report (continued)
Directors (continued)
Except as disclosed in note 25 to the financial statements none of the Directors had an interest in any contracts
with the Company or its subsidiaries during the year.
Employees
The Directors recognise the importance of good communication with employees to ensure a common awareness
of factors affecting the Group. They also recognise their statutory responsibilities. Matters of current concern or
interest are discussed with staff on a regular basis.
Charitable and political contributions
The Group did not make any political or charitable donations during the year.
Corporate Governance
The Company’s shares are traded on AIM, a market operated by the London Stock Exchange and the Company
is not, therefore, required to report on compliance with the Combined Code (“the Code”). However, the Board
of Directors support the Code and also the recommendations made by Quoted Companies Alliance in its bulletin
“Guidance for Smaller Quoted Companies”. The bulletin provides a series of recommendations for smaller
quoted companies in approaching the question of corporate governance.
Internal control
The Directors acknowledge their responsibilities for the Group’s system of internal control. The Board considers
major business and financial risks. All strategic decisions are referred to the Board, which meets monthly, for
approval. Accepting that no system of control can provide absolute assurance against material misstatement or
loss, the Directors believe that the established systems of internal control within the Group are appropriate to the
business.
Financial risk management
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 risks arising from the Group’s financial instruments are interest rate fluctuations and liquidity risk. It
is the Group’s policy to finance its operations through a mixture of cash and, where appropriate, external finance
and to review the projected cash flow requirements of the Group with an acceptable level of risk exposure.
Going concern
On the basis of current projections and having regard to the facilities available to the Group, the Directors
consider that the Group has adequate resources to continue in operational existence for the foreseeable future.
Accordingly the Directors have adopted the going concern basis in the preparation of the financial statements.
Supplier payment policy
The Group’s policy is to settle the terms of payment with suppliers when agreeing the terms of each transaction,
and to ensure that suppliers are made aware of the terms of payment and abide by them. At 30 June 2010, the
average trade payables for the Group, expressed as a number of days, were 47 days (2009: 112 days).
Research and Development
The Group continues to make progress in product development, while continuing to keep control of costs.
Research and development expenditure is charged to the income statement in the year incurred, unless it meets
the criteria under IAS 38 to capitalise.
ARCONTECH GROUP PLC
6
Directors’ Report (continued)
Disclosures to auditors
In the case of each of the persons who are Directors at the time when the report is approved, the following
applies:
-
-
so far as each of the Directors are aware, there is no relevant audit information of which the Company’s
auditors are unaware; and
each of the Directors have taken all the steps that they ought to have taken as Directors in order to make
themselves aware of any relevant audit information and to establish that the Company’s auditors are aware
of that information.
This information is given and should be interpreted in accordance with the provisions of s418 of the Companies
Act 2006.
Auditors
Nexia Smith & Williamson LLP resigned as auditors effective as of 30 April 2010. Nexia Smith & Williamson
Audit Limited, which trades as Nexia Smith & Williamson, has been appointed as auditors. A resolution to re-
appoint Nexia Smith & Williamson will be proposed at the annual general meeting.
On behalf of the Board
Michael Levy
Company Secretary
23 July 2010
ARCONTECH GROUP PLC
7
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006. Under company
law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the company and of the group and of the profit or loss of the group for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state that the financial statements comply with IFRSs as adopted by the European Union;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group will continue in business;
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company's transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the company’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
ARCONTECH GROUP PLC
8
Independent Auditors’ Report to the shareholders of
Arcontech Group PLC
We have audited the financial statements of Arcontech Group PLC for the year ended 30 June 2010 which
comprise the Group Income Statement, the Group and Parent Company Statement of Changes in Equity, the
Group and Parent Company Balance Sheets, the Group and Parent Company Cash Flow Statements and the
related notes 1 to 33. The financial reporting framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards
the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 8, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/UKNP.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and the parent company’s
affairs as at 30 June 2010 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in accordance with the provisions of the Companies Act
2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
ARCONTECH GROUP PLC
9
Independent Auditors’ Report to the shareholders of
Arcontech Group PLC
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Steven Coombe
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
Portwall Place
Portwall Lane
Bristol
BS1 6NA
23 July 2010
ARCONTECH GROUP PLC
10
Group Income Statement
For the year ended 30 June 2010
Continuing operations
Revenue
Distribution costs
Administrative costs
Administrative costs - exceptional
Operating loss from continuing operations
Finance income
Loss before taxation from continuing operations
Taxation
Loss for the year from continuing operations
Discontinued operations
Profit for the year after tax from discontinued operations
Total comprehensive income
Earnings per share (basic and diluted)
From continuing operations
From discontinued operations
From continuing and discontinued operations
Note
2010
£
2009
£
3
1,068,776
1,395,078
4
5
9
10
11
(25,242 )
(37,138)
(1,962,288 )
(1,930,576)
-
(2,103)
(918,754 )
(574,739)
5,681
8,417
(913,073 )
(566,322)
-
38,458
(913,073 )
(527,864)
-
57,314
(913,073 )
(470,550)
(0.07 )p
- p
(0.07 )p
(0.07)p
0.01p
(0.06)p
The notes on pages 16 to 41 form part of these financial statements.
ARCONTECH GROUP PLC
11
Statement of Changes in Equity
For the year ended 30 June 2010
Group:
Share
capital
Share
premium
£
£
Share
option
reserve
£
736,443
8,516,940
45,920 (6,917,124)
Balance at 1 July 2008
Loss for the year
Total comprehensive income for the
year
Share-based payments
Recognition of equity shares to be issued
Balance at 30 June 2009
Loss for the year
Total comprehensive income for the
year
Share-based payments
Issue of shares
Balance at 30 June 2010
Company:
Balance at 1 July 2008
Loss for the year
Total comprehensive income for the
year
Share-based payments
Recognition of equity shares to be issued
Balance at 30 June 2009
Loss for the year
Total comprehensive income for the
year
Retained
earnings
Shares to
be issued
Total
equity
£
-
-
(470,550)
(470,550)
£
£
- 2,382,179
-
-
(470,550)
(470,550)
-
-
-
-
-
-
-
-
62,822
-
-
-
-
200,606
62,822
200,606
736,443
8,516,940
108,742 (7,387,674)
200,606 2,175,057
-
-
-
-
-
-
-
-
(913,073)
(913,073)
34,555
-
-
-
-
(913,073)
(913,073)
34,555
794,872
1,531,315
911,229
9,428,169
-
-
143,297 (8,300,747)
(200,606) 1,505,495
- 2,802,034
Share
capital
Share
premium
£
£
Share
option
reserve
£
Retained
earnings
Shares to
be issued
Total
equity
£
£
£
736,443
8,516,940
45,920 (6,959,561)
- 2,339,742
-
-
-
-
-
-
-
-
-
-
(324,882)
(324,882)
62,822
-
-
-
-
-
-
(324,882)
(324,882)
62,822
200,606
200,606
736,443
8,516,940
108,742 (7,284,443)
200,606 2,278,288
-
-
-
-
-
-
(162,935)
(162,935)
-
-
(162,935)
(162,935)
Share-based payments
Issue of shares
-
794,872
-
911,229
34,555
-
-
-
-
(200,606)
34,555
1,505,495
Balance at 30 June 2010
1,531,315
9,428,169
143,297 (7,447,378)
- 3,655,403
The notes on pages 16 to 41 form part of these financial statements.
ARCONTECH GROUP PLC
12
Balance Sheets
As at 30 June 2010
Non-current assets
Goodwill
Property, plant and equipment
Investments in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Group
2010
£
Group
2009
£
Company
2010
£
Company
2009
£
1,715,153
1,715,153
46,597
57,638
-
-
-
-
-
-
2,017,373
2,017,372
1,761,750
1,772,791
2,017,373
2,017,372
213,921
521,328
1,257,236
196,473
1,586,376
426,710
859,378
88,280
Note
12
13
14
15
16
Total current assets
1,800,297
948,038
2,116,614
284,753
Current liabilities
Trade and other payables
17
(760,013 )
(545,772 )
(478,584 )
(23,837 )
Total current liabilities
(760,013 )
(545,772 )
(478,584 )
(23,837 )
Net current assets
1,040,284
402,266
1,638,030
260,916
Net assets
2,802,034
2,175,057
3,655,403
2,278,288
Equity
Called up share capital
Shares to be issued
Share premium account
Share option reserve
19
20
20
20
1,531,315
736,443
1,531,315
-
200,606
-
736,443
200,606
9,428,169
8,516,940
9,428,169
8,516,940
143,297
108,742
143,297
108,742
Retained earnings
(8,300,747 )
(7,387,674 )
(7,447,378 )
(7,284,443 )
2,802,034
2,175,057
3,655,403
2,278,288
Approved on behalf of the board on 23 July 2010 by:
Andrew Miller
Chief Executive
Michael Levy
Group Finance Director
The notes on pages 16 to 41 form part of these financial statements.
ARCONTECH GROUP PLC
13
Group Cash Flow Statement
For the year ended 30 June 2010
Note
2010
£
2009
£
Continuing operations
Net cash used in operating activities
23
(343,682 )
(687,627 )
Investing activities
Interest received
Acquisition of subsidiary, net of cash acquired
22
Purchases of plant and equipment
Disposal of plant and equipment
5,681
(1 )
(8,232 )
405
7,193
-
(1,956 )
19,500
Net cash (used)/received in investing activities
(2,147 )
24,737
Financing activities
Proceeds on issue of shares
Expenses paid in connection with share issues
Net cash generated from financing activities
19
1,553,270
(47,775 )
1,505,495
-
-
-
Net increase/(decrease) in cash and cash equivalents from continuing
operations
1,159,666
(662,890 )
Discontinued operations
Cash flows from operating activities
Cash flows from investing activities
Net increase in cash and cash equivalents from discontinued
operations
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
23
-
-
-
4,067
2,929
6,996
1,159,666
(655,894 )
426,710
1,082,604
Cash and cash equivalents at end of year
16
1,586,376
426,710
The notes on the pages 16 to 41 form part of these financial statements.
ARCONTECH GROUP PLC
14
Company Cash Flow Statement
For the year ended 30 June 2010
Net cash used in operating activities
23
(737,485 )
(320,263 )
Note
2010
£
2009
£
Investing activities
Interest received
Acquisition of subsidiary, net of cash acquired
22
Net cash generated from investing activities
Financing activities
Proceeds on issue of shares
Expenses paid in connection with share issues
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
16
19
1,553,270
3,089
(1 )
3,088
(47,775 )
1,505,495
771,098
88,280
859,378
3,964
-
3,964
-
-
-
(316,299 )
404,579
88,280
The notes on the pages 16 to 41 form part of these financial statements.
ARCONTECH GROUP PLC
15
Notes to the Financial Statements
For the year ended 30 June 2010
1.
Accounting policies
The principal accounting policies are summarised below. They have all been applied consistently throughout the
period covered by these financial statements.
Reporting entity
Arcontech Group PLC (“the Company”) is a company incorporated in the United Kingdom. The consolidated
financial statements incorporate the financial statements of the Company and its subsidiaries (together
referred to as “the Group”).
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) endorsed by the European Union and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
On the basis of current projections, confidence of future profitability and cash balances held the Directors have
adopted the going concern basis in the preparation of the financial statements.
The financial statements have been prepared under the historical cost convention.
Effect of new IFRS and changes to IFRS
The following standards, interpretations and amendments to existing standards have been applied for the first
time in the year:
•
•
•
•
•
IFRS 8 Operating segments – this is a disclosure standard and has resulted in revised segmental
analysis being presented this year
Revised IAS 1 Presentation of Financial Statements – this has resulted in various presentational
changes to the primary statements
Revised IFRS 3 Business Combinations – the revision amends the treatment for certain aspects of
acquisition accounting however as there has been no business combination since the implementation
date there has been no impact on the results or net assets of the Group as a result of this adoption.
Amendment to IFRS 2 Share-based payments – the amendment clarifies where an employee cancels an
option, other than on leaving employment, the related charge should be accelerated. There has been no
impact on the results or net assets of the Group as a result of this adoption.
Amendments to IFRS 1 and IAS 27 – First time adoption of International Financial Reporting
Standards and Consolidated and Separate Financial Statements
A number of other interpretations and amendments to existing standards have been made by the IASB and
IFRIC but are not considered relevant to the Group’s operations.
Standards, interpretations and amendments to existing standards that have been published, and are mandatory to
accounting periods beginning on or after 1 July 2010 or later periods and that have not been early adopted by the
Group or the Company are as follows:
•
•
•
•
Improvements to IFRS issued April 2009 (EU adopted) – various minor amendments to clarify IFRS
requirements
Amendment to IAS 32: Classification of rights issues (EU adopted) – clarification of accounting for a
rights issue in a currency other than the functional currency
Amendment to IFRS 1: Limited exemption from comparative IFRS 7 disclosure for first time adopters
(EU adopted) – exemptions relating to fair value measurements and liquidity risk
Revised IAS 24: Related Party Disclosures (not yet EU adopted) – revisions to disclosure in relation to
government related entities
ARCONTECH GROUP PLC
16
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
1. Accounting policies (continued)
Effect of new IFRS and changes to IFRS (continued)
•
•
•
IFRS 9: Financial Instruments (not yet EU adopted) – project to replace IAS 39 on recognition and
measurement of financial instruments
Improvements to IFRS issued May 2010 (not yet EU adopted) – various minor amendments to clarify
IFRS requirements
IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments (not yet EU adopted) – guidance
on accounting for “debt for equity swaps” and similar transactions
With the exception of IFRS 9 there is no material effect expected of the above new standards and amendments
on the reported results of the Group and Company. As IFRS 9 has not yet been completed it is not possible to
evaluate if there will be a material effect on the reported results of the Group and Company when the standard is
adopted.
Additional disclosures will be made to comply with the requirements of the new standards when implemented.
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 2010. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income
statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Business combinations and goodwill
On acquisition, the assets and liabilities and contingent liabilities of subsidiaries are measured at their fair value at
the date of acquisition. Any excess of cost of acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the
identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of
acquisition. Goodwill arising on consolidation is recognised as an asset and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods and services provided in the normal course of business, net of discounts, VAT and other
sales related taxes.
Sales of goods are recognised when delivered and title has passed.
Revenue arising from the provision of services is recognised when and to the extent that the Group obtains
the right to consideration in exchange for the performance of its contractual obligations as follows:
Subscriptions, consultancy, advertising and sponsorship – on a time basis over the contract period.
ARCONTECH GROUP PLC
17
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
1. Accounting policies (continued)
Taxation
The tax charge represents the sum of the tax payable and any deferred tax.
The tax payable is based on the taxable result for the year. The taxable result differs from the net result as
reported in the income statement because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or deductible. The Company’s liability for
current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries,
except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or
the asset realised. Deferred tax is charged or credited to the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.
Share-based payments
The cost of share-based employee compensation arrangements, whereby employees receive remuneration in the
form of shares or share options, is recognised as an employee benefit expense in the income statement.
The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair
value (excluding the effect of non market-based vesting conditions) at the date of grant. Fair value is measured by
the use of the Black-Scholes model. The expected life used in the model has been adjusted, based on
management’s best estimate, for the effects of the non- transferability, exercise restrictions and behavioural
considerations. A cancellation of a share award by the Group or an employee is treated consistently, resulting in
an acceleration of the remaining charge within the consolidated income statement in the year of cancellation.
ARCONTECH GROUP PLC
18
Notes to the Financial Statements
For the year ended 30 June 2010 (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
Computer equipment
Office furniture and equipment
-
-
-
over the period of the lease
33% - 40% on cost
20% - 25% on 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 on the balance sheet when the Group becomes a party to
the contractual provisions of the instrument.
Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance
of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured
at amortised cost using the effective interest method. A provision is established when there is objective
evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised
in the income statement.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost,
using the effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity
of three months or less.
Leasing commitments
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the
relevant lease.
ARCONTECH GROUP PLC
19
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
1.
Accounting policies (continued)
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 IAS38, otherwise it is charged to the income statement in
the year incurred.
Pension costs and other post-retirement benefits
The Group makes payments to employees’ personal pension schemes. Contributions payable for the year are
charged in the income statement.
Foreign currencies
Transactions denominated in foreign currencies are translated into sterling at the exchange rate ruling when the
transaction was entered into. Foreign currency monetary assets and liabilities are translated into sterling at the
exchange rate ruling at the balance sheet date. Exchange gains or losses are included in operating profit.
Discontinued operations
A discontinued operation is a component of the Group that has either been disposed of during the year, or that is
classified as held-for-sale, which represents a separate major line of business or geographical area of operations
or is part of a single coordinated plan to dispose of a separate line of business or geographical area of operations.
Discontinued operations are presented in the income statement as a separate line and are shown net of tax.
2. Critical accounting judgements 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 historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements:
Share-based payments
In determining the fair value of equity settled share-based payments and the related charge to the income
statement, the Group makes assumptions about future events and market conditions. In particular, judgement
must be made as to the likely number of shares that will vest, and the fair value of each award granted. The fair
value is determined using a valuation model which is dependent on further estimates, including the Group’s
future dividend policy, employee turnover, the timing with which options will be exercised and the future
volatility in the price of the Group’s shares. Such assumptions are based on publicly available information and
reflect market expectations and advice taken from qualified personnel. Different assumptions about these factors
to those made by the Group could materially affect the reported value of share-based payments.
Key sources of estimation uncertainty:
Bad debt provisions
The trade receivables balances recorded in the Group’s balance sheet comprise a relatively small number of
large balances. A full line by line review of trade receivables is carried out at the end of each month. Whilst
every attempt is made to ensure that the bad debt provisions are as accurate as possible, there remains a risk that
the provisions do not match the level of debts which ultimately prove to be uncollectible.
ARCONTECH GROUP PLC
20
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
2. Critical accounting judgements and key sources of estimation uncertainty (continued)
Key sources of estimation uncertainty (continued):
Bad debt provisions (continued)
No provision for bad debts was made at the balance sheet date (2009: £Nil) and the carrying value of trade
receivables at the balance sheet date was £104,885 (2009: £325,655).
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating
units to which goodwill has 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. No provision for impairment was made in the year and the carrying value of goodwill
at the balance sheet date was £1,715,153 (2009: £1,715,153).
3. Revenue
An analysis of the Group’s revenue is as follows:
Financial information service, advertising and sponsorship, software
development and consultancy
1,068,776
1,395,078
2010
£
2009
£
All of the Group’s revenue relates to continuing activities.
4. Administrative costs – exceptional:
Directors’ remuneration – payment in lieu of notice
(in respect of Marc Pinter-Krainer, the former Chief Executive)
5. Operating loss for the year is stated after charging:
Depreciation of plant and equipment
Loss on disposal of fixed assets
Staff costs (see note 8)
Operating lease rentals - land and buildings (see note 24)
Research and development
2010
£
-
-
2010
£
18,868
-
2009
£
2,103
2,103
2009
£
41,983
37,225
1,453,848
1,480,579
55,300
55,300
636,386
676,233
ARCONTECH GROUP PLC
21
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
6. Auditor’s remuneration:
Fees payable to the Group’s auditor for the audit of the Group’s annual
accounts
Fees payable to the Group’s auditor for other services:
- audit of the Company’s subsidiaries, pursuant to legislation
- other services
2010
£
2009
£
16,500
16,500
8,500
750
8,500
515
7.
Operating segments:
During the year the Group adopted IFRS8 “Operating Segments” and has therefore disclosed segment details in
accordance with the new standard for the first time this year and reclassified the comparatives as required. For
management purposes, the Group is currently organised into two main operating divisions by product group:
Financial information service, advertising and sponsorship (Arcontech Solutions Limited formerly Knowledge
Technology Services Limited) and software development and consultancy (Arcontech Limited and Arcontech
Pte. Ltd.). These divisions are the operating segments for which 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 (loss)/profit disclosures.
Revenue by segment
Financial information service, advertising
and sponsorship
Software development and consultancy
External segment revenue
Operating (loss)/profit by segment
Financial information service, advertising
and sponsorship
Software development and consultancy
Unallocated overheads
Total operating loss
Finance income
Total loss before tax and discontinued
operations as reported in the Group
income statement
2010
£
2009
£
-
63,880
1,068,776
1,331,198
1,068,776
1,395,078
(138,634 )
(266,349)
(492,906 )
17,451
(287,214 )
(325,841)
(918,754 )
(574,739)
5,681
8,417
(913,073 )
(566,322)
ARCONTECH GROUP PLC
22
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
7.
Operating segments (continued):
Segment total of assets
Financial information service, advertising
and sponsorship
Software development and consultancy
Unallocated assets
Less inter segment debtors
Total assets
Segment total liabilities
Financial information service, advertising
and sponsorship
Software development and consultancy
Unallocated liabilities
Less inter segment creditors
Total liabilities
2010
£
2009
£
268,334
77,622
3,370,152
2,553,708
2,143,494
284,755
5,781,980
2,916,085
(2,219,933 )
(195,256)
3,562,047
2,720,829
2010
£
2009
£
34,552
37,598
2,466,812
679,593
478,582
23,837
2,979,946
741,028
(2,219,933 )
(195,256)
760,013
545,772
ARCONTECH GROUP PLC
23
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
7.
Operating segments (continued):
Segment total liabilities
Financial information service, advertising
and sponsorship
Software development and consultancy
Unallocated liabilities
Less inter segment creditors
Total liabilities
Additions of property, plant and
equipment assets by segment
Software development and consultancy
Total additions
Depreciation of property, plant and
equipment assets recognised in the period
by segment
Financial information service, advertising
and sponsorship
Software development and consultancy
Total depreciation
External revenue by country
UK
Germany
Denmark
Singapore
2010
£
2009
£
34,552
37,598
2,466,812
679,593
478,582
23,837
2,979,946
741,028
(2,219,933 )
(195,256)
760,013
545,772
8,232
8,232
1,956
1,956
12,488
33,966
6,380
8,017
18,868
41,983
2010
£
732,768
16,473
66,140
253,395
2009
£
993,308
401,770
-
-
1,068,776
1,395,078
ARCONTECH GROUP PLC
24
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
7.
Operating segments (continued):
During the year there were 2 customers (2009: 2) who each accounted for more than 10% of the group’s
revenues as follows:
Customer 1
Customer 2
Customer 3
2010
Value of
sales
£
253,395
55,579
145,809
454,783
% of Total
24%
6%
14%
44%
Value of
sales
£
-
415,975
148,998
564,973
% of Total
-
27%
10%
37%
These revenues are attributable to the software development and consultancy segment.
8.
Staff costs:
a)
Aggregate staff costs, including Directors’ remuneration
Wages and salaries
Social security costs
Pension contributions
Share-based payments
b)
The average number of employees (including executive
Directors) was:
Sales and administration
2010
£
2009
£
1,185,154
1,214,501
135,396
146,716
98,743
34,555
56,540
62,822
1,453,848
1,480,579
19
£
22
£
c)
Directors’ emoluments
Short-term employee benefits
121,438
128,552
Termination benefits
Post-employment benefits
Share-based payments
-
33,000
12,436
2,103
22,000
26,546
166,874
179,201
ARCONTECH GROUP PLC
25
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
8.
Staff costs (continued):
Executive Directors
Marc Pinter-Krainer - compensation
(resigned 7 December 2007)
Michael Levy - emoluments*
Andrew Miller - emoluments
- contributions to pension scheme
Non-Executive Directors
Richard Last - emoluments
Louise Barton - emoluments
£
-
15,000
88,438
33,000
18,000
-
£
2,103
13,333
99,219
22,000
16,000
-
154,438
152,655
The number of Directors that are members of a defined contribution pension scheme is 1 (2009: 1).
* Fees payable to Michael Levy & Co, Chartered Accountants, in which Michael Levy is the principal, in
respect of accountancy services are disclosed in note 25.
Key management personnel
In the opinion of the Board, the Group’s key management are the Directors of Arcontech Group PLC.
Social security costs relating to Directors was £13,515 (2009: £14,784).
ARCONTECH GROUP PLC
26
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
9.
Taxation
Current tax
Deferred tax
Total tax credit for the year
2010
£
-
-
-
2009
£
(38,458 )
-
(38,458 )
The difference between the total tax credit shown above and the amount calculated by applying the standard
rate of UK corporation tax to the loss before tax is as follows:
Loss on ordinary activities before tax
2010
£
2009
£
(913,073 )
(509,008 )
Loss on ordinary activities multiplied by the standard rate of
corporation tax in the UK of 28% (2009: 28%)
(255,660 )
(142,522 )
Effects of:
Disallowed expenses
Temporary differences on deferred tax not recognised
Singapore taxable profit/(loss) at lower tax rate
Loss on sale of fixed assets
Adjustment in respect of prior years
Losses brought forward and utilised
Losses carried forward
Total tax credit for the year
5,396
3,294
(9,157 )
-
-
-
4,197
324
-
10,423
(38,458 )
(19,047 )
256,127
146,625
-
(38,458 )
Factors which may affect future tax charges
At 30 June 2010 the Group has tax losses of approximately £8,600,000 (2009: £4,900,000) to offset against
future trading profits.
ARCONTECH GROUP PLC
27
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
10.
Discontinued operations
On 29 August 2008 Arcontech Solutions Limited terminated its MarketTerminal subscription service.
Results of discontinued operations
Revenue
Distribution costs
Administrative costs
Operating profit from discontinued operations
Finance income
Profit before taxation
Taxation
Profit for the year
11.
Earnings per share
Earnings
Earnings for the purpose of basic and diluted earnings per share being
net loss attributable to equity shareholders:
Continuing operations
Discontinued operations
2010
£
2009
£
-
-
-
-
-
-
-
-
-
117,639
(63,254 )
54,385
2,929
57,314
-
57,314
2010
£
2009
£
(913,073 )
(527,864 )
-
57,314
(913,073 )
(470,550 )
No.
No.
Number of shares
Weighted average number of ordinary shares for the purpose of basic
earnings per share
Number of dilutive shares under option
Weighted average number of ordinary shares for the purposes of
dilutive earnings per share
1,335,592,398
736,442,943
-
-
1,335,592,398
736,442,943
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. Share options are anti-dilutive and are therefore not included above.
ARCONTECH GROUP PLC
28
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
12.
Goodwill
Cost and net book amount
At 1 July 2009
Additions
At 30 June 2010 (see Note 22)
2010
£
2009
£
1,715,153
1,634,547
-
80,606
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:
Arcontech Limited
2010
£
2009
£
1,715,153
1,715,153
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. The growth rates
are based on industry growth forecasts. Changes in selling prices a re based on past practices and
expectations of future changes in the market. Changes in direct costs are based on expected cost of inflation
of 2.5%.
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 of 15% (2009: 15%) per annum, after which the UK long-term
growth rate is applied. The Directors consider that this rate is appropriate, given the significant new contracts
achieved during the year, which resulted in an increase of 59% in contracted recurring revenues together with
those currently in negotiation anticipated to start in 2011.
As the Group does not have any borrowings, the rate used to discount all the forecast cash flows is 12.1%
(2009: 11.8%), which represents the Group’s cost of capital.
Goodwill on the purchase of Arcontech Limited is attributable to the anticipated future operating synergies
which will arise as a result of the combination.
ARCONTECH GROUP PLC
29
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
13.
Property, plant and equipment - Group
Cost
At 1 July 2008
Additions
Disposals
At 1 July 2009
Additions
Disposals
At 30 June 2010
Depreciation
At 1 July 2008
Charge for the year
On disposals
At 1 July 2009
Charge for the year
On disposals
At 30 June 2010
Net book amount at 30 June 2010
Net book amount at 30 June 2009
Leasehold
Property
Office
furniture &
equipment
£
£
Total
£
6,373
505,338
511,711
-
-
1,956
1,956
(269,864 )
(269,864)
6,373
237,430
243,803
-
-
8,232
(450 )
8,232
(450)
6,373
245,212
251,585
3,949
1,077
353,372
357,321
40,906
41,983
-
(213,139 )
(213,139)
5,026
1,077
-
181,139
186,165
17,791
18,868
(45 )
(45)
6,103
198,885
204,988
270
1,347
46,327
56,291
46,597
57,638
ARCONTECH GROUP PLC
30
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
14.
Investment in subsidiaries
Cost and net book amount
At 1 July 2009
Additions (see note 22)
Provision for impairment
At 30 June 2010
2010
£
2009
£
2,017,372
2,016,060
1
-
80,606
(79,294 )
2,017,373
2,017,372
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 as follows:
Arcontech Solutions Limited
(formerly Knowledge
Technology Services Limited)
Country of
Incorporation
Nature of business % voting rights and shares held
England and Wales Provision of financial
information services
100% of Ordinary shares
Cognita Technologies Limited England and Wales Software development 100% of Ordinary shares
Arcontech Limited
England and Wales Software development
100% of Ordinary shares
Arcontech Pte. Ltd.
Singapore
15.
Trade and other receivables
Due within one year:
Trade receivables
and consultancy
Software development
and consultancy
100% of Ordinary shares
Group
2010
£
Group
2009
£
Company
2010
£
Company
2009
£
104,885
325,655
-
-
Amounts owed by group undertakings
Other receivables
Prepayments and accrued income
-
4,396
104,640
-
1,246,848
185,902
96,988
98,685
2,894
7,494
3,208
7,363
213,921
521,328
1,257,236
196,473
Trade receivables, other receivables and accrued income constitute the financial assets within the category
“Loans and receivables” as defined by IAS 39 with a total value of £109,281 (2009: £409,643). Trade receivables
are non-interest bearing and generally have a 30-90 day term. Due to their short maturities, the fair value of
trade receivables approximates their book value.
A provision for impairment of trade receivables is established when there is no objective evidence that
the Group will be able to collect all amounts due according to the original terms. The Group considers
factors such as default or delinquency in payment, significant financial difficulties of the debtor and the
probability that the debtor will enter bankruptcy in deciding whether the trade receivable is impaired. Trade
and other receivables are disclosed net of allowances for bad and doubtful debts.
ARCONTECH GROUP PLC
31
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
15.
Trade and other receivables (continued)
As at 30 June 2010, trade receivables of £Nil were impaired (2009: £Nil). As at 30 June 2010 trade receivables
of £43,704 (2009: £244,249) were past due but not impaired. The ageing analysis of these trade receivables is
as follows:
Up to 3 months past due
Over 3 months past due
Group
2010
£
705
42,999
43,704
Group
2009
£
64,430
179,819
244,249
Company
2010
£
Company
2009
£
-
-
-
-
-
-
Other receivables do not contain impaired assets.
The Directors consider that there has been no deterioration in the credit quality of debts which are past due.
16.
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.
17.
Trade and other payables
Trade payables
Amounts owed to group undertakings
Other tax and social security payable
Other payables and accruals
Group
2010
£
78,961
-
55,348
625,704
Group
2009
£
75,380
Company
2010
£
-
-
448,731
52,352
418,040
7,302
22,551
Company
2009
£
2,155
-
1,292
20,390
760,013
545,772
478,584
23,837
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” as defined by IAS 39 with a total value of £171,224 (2009: £154,317).
18.
Deferred tax
There is no actual or potential liability for deferred taxation due to the availability of losses, which at 30 June
2010 amounted to approximately £8,600,000 (2009: £4,900,000). The unprovided deferred tax asset at 30 June
2010 was £2,400,000 (2009: £1,400,000).
Currently the criteria for the recognition of a deferred tax asset have not been met and accordingly a deferred tax
asset has not been included in the balance sheet as at 30 June 2010 and as at 30 June 2009.
ARCONTECH GROUP PLC
32
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
19.
Share capital
Company
Allotted and fully paid:
1,531,314,870 (2009 736,442,943)
Ordinary Shares of 0.1p each
2010
£
2009
£
1,531,315
736,443
The Company allotted Ordinary Shares of 0.1pence each during the year as follows:
Date
Number
Consideration
10 July 2009
18,236,927 shares at 1.1 pence per share
21 September 2009
29 October 2009
576,885,000 shares at 0.2 pence per share
199,750,000 shares at 0.2 pence per share
Deferred consideration in
connection with the acquisition
of Arcontech Limited
Cash
Cash
ARCONTECH GROUP PLC
33
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
19.
Share capital (continued)
Share options and warrants
Under the Company’s approved 2002 Share Option Scheme, certain Directors and employees held options at 30
June 2010 for unissued Ordinary Shares of 0.1 pence each as follows:
Share options
At 1 July
2009
Granted Exercised
Lapsed
At 30 June
2010
Exercise
price
Normal exercise period
Employees:
14,871,795
1,000,000
-
-
-
1,000,000
Directors:
Andrew Miller
4,444,444
Share options
(to Directors):
Michael Levy
125,000
1,851,852
-
-
-
Richard Last
2,777,778
-
Warrants
(to Directors):
Michael Levy
500,000
-
25,570,869
1,000,000
-
-
-
-
-
-
-
-
-
480,769
14,391,026
0.78 pence
20 Dec 09 – 19 Dec 13
-
-
1,000,000
0.175 pence
18 Mar 11– 17 Mar 15
1,000,000
0.27 pence
1 Dec 2011-30 Nov 2015
-
4,444,444
0.9 pence
20 Dec 09 – 19 Dec 13
125,000
-
15.0 pence
17 Nov 05 – 16 Nov 09
-
-
1,851,852
0.9 pence
20 Dec 09 – 19 Dec 13
2,777,778
0.9 pence
20 Dec 09 – 19 Dec 13
-
500,000
2.5 pence
10 May 04 –10 May11
605,769 25,965,100
Weighted average
exercise price
0.90 pence
0.27 pence
- pence
3.71 pence
0.81 pence
The number of options/warrants exercisable at 30 June 2010 was 23,965,100 (At 30 June 2009: 625,000), these
had a weighted average exercise price of 0.86 pence (2009: 5.0 pence).
Options granted under the Company’s approved 2002 Share Option Scheme lapse 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.
In the case of the warrant instruments, Ordinary Shares resulting from the exercise of any such rights will rank
pari passu in all respects with the Ordinary Shares in issue at the time of exercise.
The highest price of the Company’s shares during the year was 0.5p, the lowest price was 0.185p and the price
at the year-end was 0.21p.
ARCONTECH GROUP PLC
34
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
19.
Share capital (continued)
Share options and warrants (continued)
The weighted average remaining contractual life of share options outstanding at 30 June 2010 was 3.57 years
(2009: 4.48 years)
20.
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 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.
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.
Shares to be issued
This relates to the deferred consideration shares as disclosed in note 22.
Retained earnings
This relates to accumulated losses.
21.
Income statement
The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not
to publish its individual income statement and related notes. The loss dealt with in the financial statements of the
Parent Company was £162,935 (2009: £324,882).
ARCONTECH GROUP PLC
35
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
22.
Acquisition of subsidiaries
On 4 September 2007, the Group acquired 100 per cent of the issued share capital of Arcontech Limited. The
initial consideration was satisfied with cash of £1,239,933 and the issue of 45,000,000 shares of 0.1 pence. On
10 July 2009 a further 18,236,927 shares of 0.1 pence, being the deferred consideration, were issued at a price
of 1.1 pence. This transaction has been accounted for by the purchase method of accounting.
Net assets acquired:
Plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Goodwill
Book and
Fair value
£
4,737
266,266
537,240
(506,024)
302,219
1,715,153
Total consideration
2,017,372
Satisfied by:
Cash
Directly attributable costs
Issue of shares
Net cash outflow arising on
acquisition:
Cash consideration
1,239,933
81,833
695,606
2,017,372
1,321,763
Cash and cash equivalents acquired
(537,240)
784,523
Equity shares issued are included at either market value at the date of acquisition or the price fixed in the purchase
Agreement.
Included in the issue of shares above is £200,606 in respect of the deferred consideration, of which £80,606 is
revised deferred consideration, recognised as an addition in the previous year to goodwill in note 12.
On 18 November 2009, the Group acquired 100 per cent of the issued share capital of Arcontech Pte. Ltd. for a
cash consideration of S$1. At the date of acquisition the fair value of the net assets acquired was S$1 and
accordingly no goodwill was recognised.
ARCONTECH GROUP PLC
36
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
23.
Net cash used in operations - Group
Continuing
operations
2010
£
Continuing
operations
2009
£
Discontinued
operations
2010
£
Discontinued
operations
2009
£
Operating (loss)/profit
Depreciation charge
Non cash share option charges
Decrease/(increase) in trade and
other receivables
Increase/(decrease) in trade and
other payables
Loss on disposal of plant and
equipment
(918,754)
18,868
34,555
(574,739)
41,983
62,822
307,407
(32,965)
214,242
(221,953)
-
37,225
Cash (used in)/from operations
(343,682)
(687,627)
-
-
-
-
-
-
-
54,385
-
-
114,479
(164,797)
-
4,067
Net cash used in operations - Company
Operating loss
Non cash share option charges
Provision for impairment of fixed asset
investments
Increase in trade and other receivables
Increase/(decrease) in trade and other
payables
Cash used in operations
2010
£
(166,024)
34,555
-
(1,060,763)
2009
£
(328,846)
26,546
79,294
(31,512)
454,747
(65,745)
(737,485)
(320,263)
24.
Operating lease commitments
At the year-end date the Group has lease agreements in respect of property for which the payments extend over
a number of years. The commitments fall due as follows:
Land and buildings:
Due within one year
Due between two and five years
ARCONTECH GROUP PLC
Group
2010
£
13,787
-
13,787
Group
2009
£
55,300
13,787
69,087
Company
2010
£
Company
2009
£
-
-
-
-
-
-
37
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
25.
Related party transactions
Group
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this 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 4, 8 and 19 for each of the
categories specified in IAS 24 Related Party Disclosures. All emoluments given in notes 4 and 8 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:
Michael Levy:
Fees payable to Michael Levy & Co, Chartered Accountants, in which Michael Levy is the principal, in respect
of accountancy services of £47,986 (2009: £81,736). At 30 June 2010 the amount outstanding was £Nil (2009:
£Nil).
Company
Transactions between the Parent Company and its subsidiaries during the year were as follows:
Management charges payable by subsidiaries £238,706 (2009: £Nil).
The amounts due from/to subsidiaries at the balance sheet date were as follows:
Amount due from subsidiaries
Less: Provision for impairment
Amount due from subsidiaries - net
2010
£
2009
£
7,361,433
6,181,970
(6,114,585 )
(5,996,068)
1,246,848
185,902
During the year a provision of £118,517 was made (2009: £75,290) in respect of balances due from subsidiaries.
Amount due to subsidiaries
Less: Provision for impairment
Amount due to subsidiaries - net
2010
£
448,731
-
448,731
2009
£
-
-
-
26.
Dividends
There were no dividends paid or proposed during the period (2009: Nil).
ARCONTECH GROUP PLC
38
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
27.
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 6 years after the
grant date. There are no performance conditions on the exercise of the share options. Outstanding options
granted under the Scheme are disclosed in note 19.
Options granted under the Scheme lapse 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 fair value of options is valued using the Black-Scholes pricing model. An expense of £34,555 (2009:
£62,822) has been recognised in the period in respect of share options granted. The cumulative share option
reserve at 30 June 2010 is £143,297 (2009: £108,742). The inputs into the Black-Scholes pricing model are as
follows:
Exercise price
Expected life
Expected volatility
Risk free rate of interest
Dividend yield
30 June
2010
Directors
0.9 pence
6 years
100%
5%
Nil
30 June
2010
Employees
0.78/0.175/0.27
pence
6 years
100%
5%
Nil
30 June
2009
Directors
0.9 pence
6 years
100%
5%
Nil
30 June
2009
Employees
0.78/0.175
pence
6 years
100%
5%
Nil
Weighted average share price
0.74 pence
0.74/0.175/0.27
pence
0.74
pence
0.74/0.175
pence
Fair value of option
0.5851
pence
0.5961/0.1419/
0.22 pence
0.5851
pence
0.5961/0.1419
pence
Volatility has been estimated based on the historic volatility over a period equal to the expected term from the
grant date.
28.
Material non-cash transactions
There were no material non-cash transactions during the period.
29.
Post balance sheet events
There were no events since the balance sheet date, which materially affect the position of the Group.
ARCONTECH GROUP PLC
39
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
30.
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.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was:
Trade receivables
Group
2010
£
104,885
Cash and cash equivalents
1,586,376
Group
2009
£
325,655
426,710
Company
2010
£
Company
2009
£
-
-
859,378
88,280
Amounts owed by group
undertakings
Interest rate risk
-
-
1,246,848
185,902
1,691,261
752,365
2,106,226
274,182
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 based on bank base rate, between
1.15% above and 2.5% below bank base rate (2009: between 2.5% above and 0.5% below bank base rate).
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 only financial liabilities comprise trade payables and other payables and accruals, excluding
deferred income, with a carrying value equal to the gross cash flows payable of £171,224 (2009: £154,317)
all of which are payable within 6 months.
ARCONTECH GROUP PLC
40
Notes to the Financial Statements
For the year ended 30 June 2010 (continued)
30.
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 a variable rate. As at 30 June 2010, if bank base rate had increased by 0.5% with
all other variables held constant, post-tax loss would have been £5,000 (2009: £4,000) lower and equity would
have been £5,000 (2009: £4,000) higher. Conversely, if bank base rate had fallen 0.5% with all other
variables held constant, post-tax loss would have been £5,000 (2009: £4,000) higher and equity would have
been £5,000 (2009: £4,000) lower.
31. 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.
32. Ultimate controlling party
There is no ultimate controlling party.
33.
Copies of this statement
Copies of this statement are available from the Company Secretary at the Company’s registered office at 8th
Floor Finsbury Tower, 103-105 Bunhill Row, London, EC1Y 8LZ or from the Company’s website at
www.arcontech.com.
ARCONTECH GROUP PLC
41
Notice of the Annual General Meeting
ARCONTECH GROUP PLC
Company Number 4062416
NOTICE IS HEREBY GIVEN that the annual general meeting of Arcontech Group PLC (the "Company") will be held
at the Company’s offices, 8th Floor, Finsbury Tower, 103-105 Bunhill Row, London EC1Y 8LZ on 29 September 2010 at
10 a.m. to consider, and if thought fit, pass the following Ordinary and Special Resolutions specified below:
Ordinary Business
1.
2.
3.
4.
THAT the audited financial statements of the Company for the financial year ended 30 June 2010 together with
the reports on those financial statements of (i) the Directors of the Company (the "Directors") and (ii) the
Auditors of the Company (the "Auditors") be received and adopted.
THAT Nexia Smith & Williamson be reappointed as Auditors to the Company to hold office until the
conclusion of the next general meeting at which financial statements are laid before the Company, and that the
Directors be authorised to determine their remuneration.
THAT Andrew Miller and Michael Levy, who retire by rotation under Article 107 of the Company's Articles of
Association and, who being eligible offer themselves to be re-elected as Directors.
THAT any other ordinary business of the Company be transacted.
Special Business
THAT the following resolution be considered as an Ordinary Resolution:
5.
THAT in accordance with section 551 of the Companies Act 2006 ("2006 Act"), the Directors of the Company
("Directors") be generally and unconditionally authorised to allot shares in the Company or grant rights to
subscribe for or to convert any security into shares in the Company ("Rights") up to an aggregate nominal
amount of £600,000 provided that this authority shall, unless renewed, varied or revoked by the Company,
expire on the day falling fifteen months after the passing of this resolution or at the conclusion of the annual
general meeting of the Company to be held in the calendar year 2011 (which ever is later) save that the
Company may, before such expiry, make an offer or agreement which would or might require shares to be
allotted or Rights to be granted and the Directors may allot shares or grant Rights in pursuance of such offer or
agreement notwithstanding that the authority conferred by this resolution has expired.
This authority is in substitution for all previous authorities conferred on the Directors in accordance with section
551 of the 2006 Act.
THAT the following resolution be considered as a Special Resolution:
6.
THAT subject to the passing of the resolution 5 above and in accordance with section 570 of the 2006 Act, the
Directors be generally empowered to allot equity securities (as defined in section 560 of the 2006 Act) pursuant
to the authority conferred by resolution 5, as if section 561(1) of the 2006 Act did not apply to any such
allotment, provided that this power shall:
6.1 Be limited to the allotment of equity securities up to an aggregate nominal amount of £600,000; and
6.2 Expire on the day falling fifteen months after the passing of this resolution or at the conclusion of the annual
general meeting of the Company to be held in the calendar year 2011 (which ever is later) (unless renewed,
varied or revoked by the Company prior to or on that date) save that the Company may, before such expiry
make an offer or agreement which would or might require equity securities to be allotted after such expiry and
the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the
power conferred by this resolution has expired.
By Order of the Board
.............................................
Michael Levy
Secretary
23 July 2010
ARCONTECH GROUP PLC
Registered Office:
8th Floor
Finsbury Tower
103-105 Bunhill Road
London
EC1Y 8LZ
42
Notice of the Annual General Meeting
Background to the Special Business resolutions
Ordinary Resolution – Resolution 5
Directors may only allot shares if authorised to do so by shareholders. The authority granted at the last Annual General
Meeting ("AGM") is due to expire at the conclusion of this year's AGM. Therefore, this resolution seeks to grant a new
authority to allow authority to allow directors to allot shares until the conclusion of the next AGM or until 15 months
from the date of this meeting, whichever is the earlier. The maximum amount of shares which the directors would be
able to allot without further authority from shareholders is 600,000,000. It is expected that this amount will be sufficient
for the day to day running of the Company.
Special Resolution – Resolution 6
Under the requirements of the 2006 Act, if directors wish to allot any of the unissued shares, they must first offer them
to existing shareholders on a pro-rata basis in proportion to their shareholdings. There may be occasions, however
where the directors will need the flexibility to finance business opportunities through the issue of shares without a pre-
emptive offer to existing shareholders. This resolution asks shareholders to waive the pre-emption rights on shares
issued up to a maximum aggregate number of shares of 600,000,000. As with Resolution 5, this authority will expire at
the next AGM or within 15 months of the date of this meeting, whichever is the earlier.
Notes:
1. Any member who is entitled to attend and vote at this meeting is entitled to appoint one or more persons as proxies
to attend, speak and vote on their behalf. A proxy need not be a member of the Company. You can only appoint a
proxy using the procedure set out in these notes and the notes to the proxy form.
2. The Company, pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those
members registered in the register of members of the Company at the close of business two days before the meeting
or any adjournment thereof, shall be entitled to attend, speak or vote at the meeting in respect of the number of
shares registered in their name at the relevant time. Changes to entries in the relevant register of securities later than
this shall be disregarded in determining the rights of any person to attend, speak or vote at the meeting. A form of
proxy is provided with this notice. You may appoint more than one proxy provided each proxy is appointed to
exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to
any one share. To appoint more than one proxy you may photocopy this form. Please indicate the proxy holders
name and number of shares in relation to which they authorised to act as your proxy. Please also indicate if the proxy
is one of multiple instructions being given. All forms must be signed and should be returned together in the same
envelope. To be valid, a form of proxy together with any power of attorney or other authority under which it is
executed or a copy thereof certified notarially or in accordance with the Power of Attorney Act 1971 or as the
Directors shall accept must be lodged with the PXS, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, so as to
arrive not later than 48 hours before the start of the meeting. Completion of the form of proxy will not affect the
right of a member to attend, speak and vote at the meeting.
3. The register of Directors’ share interests will be available for inspection at the meeting convened by this notice, as
will the Directors' service contracts.
4. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be
accepted to the exclusion of the votes of the other joint holders and seniority shall be determined by the order in
which their names stand on the register of members of the Company.
ARCONTECH GROUP PLC
43
ARCONTECH GROUP PLC
I/We of
being (a) member(s) of the above-
named Company hereby appoint the Chairman of the meeting (Note 3) as my/our proxy to vote for me/us on my/our
behalf at the annual general meeting to be held on 29 September 2010 at 10 a.m. and at any adjournment thereof.
Dated ..................................................... 2010
Signature(s) ............................................................................
For
Against
1. Ordinary resolution - To receive and adopt the Report of the Directors and the Audited
Financial Statements of the Company for the year ended 30 June 2010
2. Ordinary resolution - To reappoint Nexia Smith & Williamson as Auditors of the
Company and to authorise the Directors to fix their remuneration
3. Ordinary resolution - To re-elect Andrew Miller as a Director
4. Ordinary resolution - To re-elect Michael Levy as a Director
5. Ordinary resolution - Directors' authority to allot shares
6. Special resolution - Disqualification of pre-emption rights
Notes
1.
2.
Please indicate with an "X" in the appropriate boxes how you wish your proxy to vote. Unless otherwise directed the proxy will vote or abstain as he
or she thinks fit.
If you do not indicate how you wish your proxy to vote, your proxy will exercise his/her discretion as to whether, and if so how, he/she votes. Your
proxy may also vote or abstain from voting as he/she thinks fit on any other business which may properly come before the meeting including on any
permissible amendment to the resolutions set out in the notice of meeting.
3. A proxy need not be a member of the Company. A member may appoint a proxy of his/her own choice. If you wish to appoint someone else other
than the Chairman as proxy please delete the words "the Chairman of the meeting" and insert the name of the person whom you wish to appoint in the
space provided. The Chairman of the meeting will act as your proxy, whether or not such deletion is made, if no other name is inserted.
4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more
than one proxy to exercise rights attached to any one share. To appoint more than one proxy, copy this form as many times as needed and indicate on
each form how many shares are allocated to each proxy appointment.
5.
6.
In the case of joint registered holders the signature of one holder on the form of proxy will be accepted by the vote of the senior who tenders a vote
whether in person or by proxy to the exclusion of the votes of any joint holders and for this purpose seniority shall be determined by the order in
which the names stand in the register of members in respect of such joint holdings.
In the case of a corporation the form of proxy must be executed under its common seal or signed on its behalf by a duly authorised attorney or a duly
authorised officer of the corporation.
7. Any alteration made to the form of proxy should be initialled.
8.
To change your proxy instructions simply submit a new proxy appointment. Note that the cut-off time for receipt of proxy appointments (see below)
also applies in relation to amended instructions; any amended proxy appointment received after the cut-off time shall be disregarded. You may
contact the Company Secretary of Arcontech Group plc, 8th Floor, Finsbury Tower, 103-105 Bunhill Row, London EC1Y 8LZ to obtain another
proxy form. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will
take precedence. To revoke a proxy instruction you will need to inform the Company by sending a hard copy notice clearly stating your intention to
revoke your proxy appointment to the Company's registrars – PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU by the cut-off time stated
below. In the case of a member which is a corporation, the revocation must be executed under its common seal or signed on its behalf by a duly
authorised attorney or duly authorised officer of the corporation. Any power of attorney or any other authority under which the revocation notice is
signed (or a duly certified copy of such power of attorney) must be included in the revocation notice.
9.
This form of proxy should be signed and dated.
10. Completion and return of the form of proxy will not affect the right of a member to attend and vote at the meeting.
To be effective, this form of proxy, together with any power of attorney or any other authority (if any) under which it is executed, or a copy of such
power of attorney or other authority, certified notarially, must be lodged at the Company's registrars – PXS, 34 Beckenham Road, Beckenham, Kent
BR3 4TU, not later than the close of business two days before the holding of the meeting or adjourned meeting at which it is to be used.
ARCONTECH GROUP PLC
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