Harvest Technology plc - Full-Year Results

On 8 April 2022, Harvest Technology plc published its annual results for the financial year ended 31 December 2021.

Performance Overview

Revenues dropped by 18.1% (or -€3.47 million) to €15.7 million mostly driven by the lower amount of goods sold which contracted by almost 45% to €3.54 million compared to €6.39 million in 2020. In addition, Harvest recorded lower turnover from the provision of consulting services and development (-€0.67 million) and payment gateway services (-€0.14 million), whilst revenues from maintenance and support services grew by 5.8% (or +€0.18 million) to €3.33 million.

In this respect, the company explained that the lower volume of goods sold reflects the successful completion in April 2021 of the Mauritius Police Advanced Passenger Analysis border security project. Moreover, although the total transaction value processed by the payment gateway increased, on the other hand this business segment is experiencing challenges to maintain the level of commissions receivable from partnering banks amid stricter on-boarding requirements.

On the expenditure side, total operating costs (net of other income) dropped by 19.4% to €11.7 million. However, given the sharper reduction in revenue in absolute terms than the drop in operating costs, operating profit (“EBIT”) declined by 13.7% to €4 million (2020: €4.64 million). Excluding depreciation and amortisation charges, EBITDA contracted by 12.3% to €4.75 million but the EBITDA margin improved to 30.2% compared to 28.2% in 2020. Despite the lower volume of business recorded throughout the year, Harvest still managed to exceed the EBITDA target of €4.36 million at the time of the IPO. Similarly, the EBIT of €4 million achieved in 2021 is 10% higher than the EBIT target €3.65 million at the time of the IPO.

After accounting for net finance costs of €0.06 million and a €0.06 million gain on lease termination, Harvest recorded a pre-tax profit of €4 million compared to €4.5 million in 2020. The tax charge for the year amounted to €1.31 million. As a result, Harvest posted a net profit of €2.69 million (2020: €3.04 million) which, in turn, translates into a return on average equity of 21.2% (2020: 27.1%).

The Statement of Financial Position as at 31 December 2021 shows that total assets increased by 9.7% to €22.6 million whilst total liabilities grew by 7.8% to €9.22 million. Overall, the company’s equity base expanded by 11% to €13.4 million.

Dividend

The Directors of Harvest are recommending the payment of a final net dividend of €0.02 per share. This is payable on or around 29 April 2022 to all shareholders as at the close of trading on 20 April 2022. Coupled with the interim dividends paid out in August 2021 (€0.024 per share) and November 2021 (€0.016 per share), the total dividend for the year amounts to €0.06 per share which is in line with the company’s dividend policy as set out at the time of the IPO.

Meanwhile, the Directors noted that as part of a strategic review, the company is evaluating its dividend policy and a new dividend policy will be proposed.

Outlook

Commenting on the results, the Directors explained that although the pandemic has limited the company’s ability at growing its international business and footprint, Harvest has nonetheless continued to lay out the foundations for the future. In fact, the Group is working on strategic initiatives to improve cost efficiency, drive further growth within existing businesses, and also enter new segments of the technology space. These initiatives will require significant investment in the business to scale up existing operations.

Apco Systems will pursue additional investments in technology platforms, personnel and marketing as this subsidiary will roll out its services in Greece and other countries. After establishing itself as a leading player in border control technology, PTL is looking to expand its services (together with its partner IBM) in several African countries. Meanwhile, Apco Limited is exploring new opportunities to expand its product offering, particularly in the electric vehicle charging market. In this respect, Apco signed a partnership agreement with a leading global electric vehicle charging brand and it will start launching products locally and internationally.

Overall, Harvest noted that on the back of its strong financial position which is also free from any borrowings, the Group has now increased its focus on investment opportunities both in start-ups but also bolt-on acquisitions.