On 26 March 2021, Harvest Technology plc published its annual results for the financial year ended 31 December 2020.
During 2020, total revenues increased by nearly 20% (or +€3.17 million) to a record of €19.2 million largely driven by the considerable growth registered by the ‘Consulting Services & Development’ (+€1.71 million to €3.46 million) and the ‘Payment Gateway Services’ (+€1.31 million) segments. Meanwhile, the ‘Maintenance, Support & Servicing’ segment recorded a flat performance when compared to 2019 while the ‘Sale of Goods’ segment registered a 3.6% increase in revenues to €6.39 million (2019: €6.17 million). In this respect, Harvest explained that APCO Limited (which specialises in the provision of on-going automation services) secured additional contactless cards business and EMV cards deal whilst another leading local bank was onboarded as a new client. In addition, APCO Limited implemented its first, large-scale, solar farm CCTV security solution at a site located in Benghajsa, and also added more fuel stations to its growing list of clients using its software in this area of business. PTL Limited (which provides systems integration services and various IT solutions) also recorded a positive performance in 2020 as in addition to the business in Mauritius related to the installation and maintenance of a national border security system, during the year the company was awarded a tender by the Malta Police Force and also concluded an agreement for a National Electronic Health Record project in Malta. Moreover, PTL Limited was contracted to create a Batch Appointment Software Application for the nationwide scheduling of COVID-19 vaccination appointments. Meanwhile, the payment gateway subsidiary of Harvest – namely APCO Systems Limited – increased its revenues by 27% to €7.8 million reflecting higher volume of e-commerce business processed which was also boosted by the increased demand for online payments amid the COVID-19 pandemic.
Given the higher level of business, operating costs increased by 13.6% to €14.6 million (2019: €12.8 million) largely reflecting additional direct costs (+€1.62 million) while administrative expenses only increased by 2.7% (or +€0.11 million) to €4 million. Excluding depreciation and amortisation charges, EBITDA surged by just over 40% to €5.42 million compared to €3.86 million in 2019. Likewise, operating profit increased by nearly 44% to €4.64 million compared to €3.22 million in 2019. Harvest also recorded improvements in its profit margins with the EBITDA and operating profit margins advancing by over 4 percentage points to 28.2% and 24.2% respectively.
After accounting for net finance costs of €0.14 million, Harvest recorded a pre-tax profit of €4.5 million compared to €3.04 million in 2019. The tax charge for the year amounted to €1.46 million. As a result, Harvest posted a net profit of €3.04 million (2019: €2.09 million) which, in turn, translates into a return on average equity of 27.1% (2019: 21.4%).
The Statement of Financial Position as at 31 December 2020 shows that total assets contracted by 1.7% to €20.6 million as the declines in the level of ‘right-of-use assets’, inventories and trade receivables outweighed the increase in contract assets and cash balances. Total liabilities declined by 19.5% to €8.55 million due to the considerable reductions in total debt (-€1.53 million to €2.71 million) and contract liabilities (-€0.93 million to €1.32 million). Overall, the equity base of the Group expanded by 16.6% to €12.1 million.
From a cash flow perspective, Harvest generated net cash from operating activities of €3.89 million during 2020. These funds were principally used for capital investments (€0.45 million), the reduction in borrowings as well as dividend payments (€1.32 million).
The Directors of Harvest Technology plc resolved to distribute a net dividend of €0.02 per share. This is payable on or around 9 April 2021 to all shareholders as at the close of trading on 29 March 2021. Harvest also noted that it will hold its Annual General Meeting remotely on 7 May 2021.
Commenting on the results, the Directors of Harvest explained that 2020 was a successful year for the Group as it: (i) proceeded ahead of schedule with a number of projects which were contemplated at the time of the IPO in late 2019; (ii) kick-started significant new projects; (iii) increased and enhanced a number of its products and services; (iv) experienced robust growth for its online payment solutions services; (v) increased cost efficiency throughout all business segments; and (vi) strengthened its capital structure through debt reduction. The Group also noted that despite the pandemic, its profitability was much higher than previously forecasted which also supported a higher dividend payment. In fact, in the Prospectus dated 18 November 2019, Harvest had anticipated a net profit of €2.04 million (compared to the actual net profit of €3.04 million) whilst the Group will be paying a total net dividend of €0.06 per share for the 2020 financial year compared to the previously estimated dividend of €0.0597 per share.
Looking ahead, Harvest explained that it looks towards 2021 and beyond with optimism and reiterated the key performance indicators for the current financial year – namely revenues in the region of €19.5 million compared to the projected figure of €18.3 million, and profits before tax of €4.0 million compared to the previous estimate of €3.4 million.
With respect to the Group’s growth strategy, Harvest added that although the pandemic is limiting its endeavours to extend its presence overseas, it is nonetheless using this time to lay the groundwork for further internationalisation once business travel is practical and safe. In fact, APCO Systems is well positioned to pursue a growth campaign in Greece whilst PTL Limited is pursuing further prospects in the Indian Ocean and Africa. Moreover, Harvest continues to actively look for strategic opportunities around acquisition and investments whilst also upgrade its product and services portfolio through modernisation, innovation and automation.