Harvest Technology plc - Interim Results

On 28 July 2020, Harvest Technology plc published its interim financial statements covering the six-month period ended 30 June 2020.

Performance Overview 

Total revenues increased by 19.5% to €8.99 million compared to €7.53 in the previous comparable period. The company’s two operating arms – namely the ‘Payment Processing Services’ segment and the ‘Retail & IT Solutions’ segment – recorded much higher volumes of business. Revenues generated by ‘Payment Processing Services’ surged by almost 28% to €3.78 million (H1 2019: €2.96 million) whilst the ‘Retail & IT Solutions’ segment recorded a growth of 16.4% to €5.99 million (H1 2019: €5.15 million). In this respect, Harvest Technology explained that the strong performance of its payment gateway subsidiary – namely APCO Systems Ltd – emanated from its increased customer base and diversification strategy. On the other hand, the ‘Retail & IT Solutions’ segment was driven by PTL Limited whose performance was strengthened by the commencement of a new international project in Mauritius related to the installation of the country’s border security system. In contrast, APCO Limited, which specialises in the provision of on-going automation services, experienced a slowdown in product orders partly due to the negative impact from ‘COVID-19’.

Given the higher level of business, total operating costs increased by 18.1% to €7.5 million (H1 2019: €6.35 million). However, operating profit still grew by 25.2% to €1.86 million compared to €1.49 million in the first half of the 2019 financial year.

After taking into account net finance costs of €0.08 million and the extraordinary income of €0.09 million from the Government ‘COVID-19’ supplement, Harvest Technology recorded a pre-tax profit of €1.87 million representing an upsurge of nearly 37% compared to the figure of €1.36 million in H1 2019. Furthermore, the level of pre-tax profits achieved were also 21% higher than previously budgeted. The tax charge for the period under review increased by almost 64% to €0.67 million. Nonetheless, Harvest Technology still recorded a 25.4% increase in the net profit figure to just under €1.2 million (translating into an annualised return on average equity of around 22%) compared to €0.95 million in the first six months of the 2019 financial year.

The Statement of Financial Position shows that total assets increased by 7.6% to €22.6 million when compared to the position as at 31 December 2019. The increase in the asset base of the company principally resulted from the higher amounts in contract assets (+€0.48 million) and cash balances (+€0.57 million). Likewise, total liabilities also increased by 7.6% to €11.4 million largely reflecting higher level of bank borrowings (+€0.39 million), current tax liabilities (+€0.68 million) as well as trade and other payables (+€0.71 million) which were partly offset by the lower amounts of contract liabilities (-€0.34 million) and other financial liabilities (-€0.5 million). Overall, the equity base of Harvest Technology expanded by 7.6% to €11.1 million compared to €10.4 million as at the end of 2019.

Dividend

The Board of Directors of Harvest Technology resolved to distribute a net interim dividend of €0.024 per share to all shareholders as at close of trading on Wednesday 29 July 2020. The payment of the dividend will take place by not later than 14 August 2020.

In the Prospectus dated 18 November 2019, Harvest Technology had explained that although it intends to distribute a net dividend of €0.0597 per share annually, the Board of Directors may also declare to distribute the dividend on a semi-annual basis.

Outlook

In their commentary, the Directors explained that despite the strong set of financial results which were also above expectations, the company’s future performance might be negatively affected due to the effects of the ‘COVID-19’ pandemic. As a result, while Harvest Technology continues to pursue its previous targets set for the 2020 financial year, the Board of Directors remains conscious of the fact that in the prevailing extraordinary circumstances, such targets may need to be revised depending on how the situation unfolds in the near future.

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Harvest Technology plc – Interim Financial Statements for the six-month period ended 30 June 2020.