REG - Microlise Group PLC - FY2023 Trading Update

MicroliseAnnouncement

30/01/2024 07:15

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RNS Number : 2886B  Microlise Group PLC  30 January 2024

30 January 2024

 

Microlise Group plc

("Microlise", "the Group" or "the Company")

 

FY2023 Trading Update

Momentum from direct customers returns driving double-digit growth in ARR

 

Microlise Group plc (AIM: SAAS), a leading provider of transport management
software to fleet operators, provides the following unaudited trading update
covering the expected results for the year ending 31 December 2023 ("the
Period"). The Group expects to publish its full year results for the Period in
early April 2024.

 

Highlights

 

·    Full year revenue of c.£72m, growth of 13%

·    Organic revenue growth(1) of 12%

·    ARR growth of 11% to £47.2m, of which c.10% represents organic
growth

·    Adjusted EBITDA(2) of c.£9.4m, representing margins of 14%

·    Cash conversion above 90% and net cash of £16.8m

·    Announced three(6) high quality acquisitions for a maximum
consideration of £10.7m

 

Trading Update

The Board is pleased to confirm that the Group experienced good trading in
FY23 with results expected to be ahead of market expectations. Revenue is
anticipated to increase by 13% to £71.7m (FY22: £63.2m) with adjusted
EBITDA2 growth of 14%, slightly ahead of market expectations3.

On a product level, growth in the period was a result of continued strong
demand from OEM customers and increased revenue from direct customers towards
the end of the year as an improvement of new vehicle availability in H2
enabled the Company to deliver against its record orderbook. ARR has grown 11%
(10% organic) to £47.2m (FY22: £42.6m), contributing to total recurring
revenue of £45.0m (FY22: 10.0% and £40.5m). This increase in hardware and
installation activity in H2 has also driven a c.17.5% YoY increase in
non-recurring revenues.

The Group's net cash at 31 December 2023 was £16.8m (31 December
2022: £16.7m), after net cash spend of £3.0m on acquisitions during the
period, including initial consideration of £1.86m for Vita Software, the
final deferred consideration instalment of £1.0m in relation to the 2020
acquisition of TruTac and £0.14m in relation to the acquisition of K-Safe.
This was lower than market expectations, partly due to a delay with several
large receipts which have been received in full post period end. The Group's
cash conversion rate remained healthy at 91%, lower than FY22 (133%)
reflecting this working capital phasing.

Customers

The Group added 450 new customers during the year with key customer wins
including McCulla, BCA/ECM, LF&E and two significant customer wins in
Australia, further cementing our position in one of our key target markets.
Microlise also extended its relationships with numerous existing customers
including Tesco, Culina and Bidfood. The Company continues to have high rates
of customer retention, experiencing very low churn of 0.7% during the Period,
reflecting the strength of our customer relationships and the value our
product offering brings to customers.

Acquisition

Microlise announced two acquisitions in 2023 for a total maximum consideration
of £10.6m. This included the acquisition of Vita Software, which completed in
March 2023, and Enterprise Software Systems (ESS) which completed in January
2024. A third acquisition of K-Safe completed in December 2023, with the
announcement in January 2024. The positive impact of these acquisitions is
already evident, with successful sales of Vita software's TMS offering and a
growing pipeline for the ESS and Flare Aware (K-Safe Product) products amongst
our existing customers.

Microlise Transport Conference

The 2024 Microlise Transport Conference will take place on 19th March 2024 at
the Coventry Building Society Arena. This will build on the success of the
2023 conference, being the most successful event in the Company's history.

There will be 14 keynote speakers this year, including MP Guy Opperman,
Minister for Roads and Local Transport, MP Bill Esterson, Shadow Minister for
Roads, and JCB showcasing the hydrogen combustion engine technology to the
+1,200-person audience. This year, there will be four additional stages at the
show, with talks from SMEs from around the logistics industry bringing
delegates valuable information to utilise in their own business operations.
OEMs including DAF, Mercedes-Benz and Volvo will also be looking to showcase
their newest electric vehicle offerings to delegates.

The invitation to the conference is open to investors and the Company will be
hosting sessions dedicated to investors at the event. For further details on
how to register please contact Bob Huxford at microlise@secnewgate.co.uk.

Outlook

Microlise expects to deliver strong revenue growth in FY24, driven by further
organic growth and recent M&A. To service a growing pipeline and deliver
an improved proposition, the Group has commenced its investment programme into
its TMS offering following the acquisitions of Vita Software and ESS as
planned. Looking ahead, the Board sees an opportunity for organic growth to
improve from current levels as we move through the year supported by a healthy
orderbook and pipeline of opportunities across OEM and direct customer
divisions. Operating margins are expected to trend upwards in FY24 and beyond,
as we focus on careful management of the cost base and efficiently scaling the
Group.

Nadeem Raza, CEO, Microlise said: "Trading momentum improved in the second
half supported by an increase in delivery to direct customers towards the end
of the period and strong uptake from OEM customers. This continues to drive
double digit growth in ARR, an increasing base of recurring revenues and good
cashflows.

"The three acquisitions made during the period have resulted in an improved
and expanded offering which is already having a positive effect on trading
momentum and pipeline. This, together with the resolution of the microchip
supply crisis, gives us confidence in the Group's continued success."

Footnotes:

 

(1) Organic growth is calculated by applying the Group's actual performance in
the respective period and excluding acquired and disposed/discontinued
business.

(2)Earnings Before interest, tax, depreciation, amortisation and share based
payments.

(3) Analysts' Adjusted EBITDA expectations for FY 2023 range
from £9.1m to £9.2m.

(4) Cash conversion is the % of cash generated from operating activities as a
% of adjusted EBITDA.

(5) Analysts' revenue expectations for FY 2023 range
from £66.5m to £67.0m. Analysts' net cash expectations for 31 December
2023 range from £18.3m to £18.9m.

(6) 2 announced acquisitions in 2023 (Vita & ESS), 2 completed
acquisitions in 2023 (Vita & K-Safe) with K-Safe announced in January 2024
and ESS Completing January 2024.

 

 

For further information, please contact:

 

 Microlise Group plc
 Nadeem Raza, CEO                                                   C/O SEC Newgate

 Nick Wightman, CFO
 Singer Capital Markets (Nominated Adviser & Broker)
 Steve Pearce / James Moat / Harry Gooden                           Tel: 020 7496 3000
 SEC Newgate (Financial Communications)
 Bob Huxford / Molly Gretton / Harry Handyside                      Microlise@secnewgate.co.uk

 

About Microlise

Microlise Group Plc is a leading provider of transport management software to
fleet operators helping them to improve efficiency, safety, and reduce
emissions. These improvements are delivered through reduced fuel use, reduced
mileage travelled, improved driver performance, fewer accidents, elimination
of paperwork and delivery of an enhanced customer experience.

 

Established in 1982, Microlise is an award-winning business with over 400
enterprise clients. With 463 employees based at the Group's headquarters in
Nottingham in the UK, the Company also has offices in France, Australia, and
India, with a total global staff base of over 670.

 

Microlise is listed on the AIM market of the London Stock Exchange (AIM: SAAS)
and qualifies for the London Stock Exchange's Green Economy Mark.

 

 

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