On 24 April 2020, Harvest Technology plc published its maiden annual results for the financial year ended 31 December 2019 following the listing of the company’s shares on the Regulated Main Market of the Malta Stock Exchange on 6 January 2020.
Revenues increased by more than forecasted to just over €16 million (FY2018: €15.6 million / IPO forecast: €15.4 million) mostly driven by the growth within the ‘Payment Gateway Services’ segment which, in turn, contributed almost 30% of total revenues.
Despite the higher volumes of business, operating costs contracted by 9.8% to €12.8 million. As a result of the growth in revenues and the decline in costs, operating profits surged to €3.23 million which is also 31.5% higher than previously anticipated.
Net finance costs for the year amounted to €0.13 million. Moreover, during 2019, Harvest recorded a loss of €0.06 million related to the disposal of the investment in Eunoia Limited.
Overall, Harvest posted a pre-tax profit of €3.04 million compared to the forecasted corresponding figure of €2.26 million. After accounting for a tax charge of €0.95 million, the company’s net profit for the year amounted to €0.2.09 million which, in turn, translates into a return on average equity of 21.4% (FY2018: 6.19%).
The Statement of Financial Position as at 31 December 2019 shows that total assets increased by 6.7% to just under €21 million reflecting the recognition of ‘right-of-use assets’ (€1.98 million) and the higher amounts in inventories (+€1.68 million) and cash (+€1.14 million) which were partly offset by the reduction in receivables (-€2.6 million). On the other hand, total liabilities eased by 2.6% to €7.75 million as the considerable reduction in total debt to €4.23 (when including lease liabilities of €2 million) was mostly offset by the increases in payables and contract liabilities (+€1.17 million). In total, net assets expanded by 12.4% to €10.4 million compared to €9.21 million as at the end of 2018.
The Directors of Harvest Technology plc resolved to distribute a net dividend of €0.018 per share. In view of the ‘COVID-19’ pandemic, Harvest noted that it is not as yet possible to establish the date of the Annual General Meeting. As a result, the Directors elected to proceed with the payment of the dividend in advance of an eventual AGM and that all shareholders as at close of trading on 28 April 2020 will receive the dividend on or around 15 May 2020.
Commenting on the results, the Directors of Harvest explained that 2019 was characterised by the consolidation of the company’s principal subsidiaries and the progress registered in achieving further diversification and internationalisation. In this respect, APCO Systems continued to diversify its client base and has extended its reach into the growing payments industry as a gateway of choice. In collaboration with IBM, PTL managed to secure a very significant five-year contract in Mauritius to install and maintain a boarder security system. On its part, APCO Limited experienced very encouraging response to its efforts to expand the automation segment of its business, particularly in retail automation. Moreover, Harvest increased its focus on rationalising costs, streamline operations and boost its investments in HR.
The company closed 2019 with a strong pipeline of work. In fact, Harvest generated a net profit of €0.84 million in Q1 2020 which is 25% higher than the projected figure. However, future performance might be negatively effected due to the ‘COVID-19’ pandemic although the company has already implemented measures to maintain its operations ongoing as much as possible. Accordingly, Harvest noted that in the prevailing extraordinary circumstances, some of its targets may need to be revised depending on how the situation unfolds in the near term.
For the future, Harvest noted that it is aggressively pursuing new arenas involving virtual currencies, wallets, blockchain, artificial intelligence and machine learning as well as robotic process automation, internet of things and other areas which create added value to its various product and service offerings. In addition, Harvest explained that it aims at increasing its international presence through opportunities particularly in Europe and Africa.