REG - Microlise Group PLC - Interim Results for the Six Months to 30 June 2023
28/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230928:nRSb9131Na&default-theme=true
RNS Number : 9131N Microlise Group PLC 28 September 2023
28 September 2023
Microlise Group plc
("Microlise", "the Group" or "the Company")
Interim Results for the Six Months Ended 30 June 2023
Microlise Group sees double digit growth as supply chain issues begin to ease
Microlise Group plc (AIM: SAAS), a leading provider of transport management
software to fleet operators, announces its unaudited results for the six
months ended 30 June 2023.
Financial Highlights
H1 FY23 (£m) H1 FY22 (£m) Change
Group revenue 33.9 30.7 10.5%
Recurring revenue 21.9 19.8 10.3%
Annual recurring revenue (ARR)(1) 44.8 40.2 11.5%
Gross Profit 20.5 18.4 11.8%
Adjusted EBITDA (2) 4.5 4.3 4.0%
Adjusted EBITDA margin 13.2% 14.0%
EBITDA (2) 4.2 4.1 2.6%
Profit before tax 1.5 1.4 5.7%
Profit before tax margin 4.5% 4.7%
Basic Earnings per share 1.05p 0.94p 12.1%
Adjusted cash conversion rate (3) 80.0% 127.0%
Net cash / (net debt) 14.1 14.8
(1) Annual Recurring Revenue ("ARR"), which is the period exit rate for
recurring subscription and transaction revenue.
(2) EBITDA comprises Operating profit as reported in the Consolidated
statement of comprehensive income, adjusted for amortisation of intangible
assets and depreciation. Adjusted EBITDA comprises EBITDA, adjusted for
share-based payments expense.
(3) The Adjusted cash conversion rate is cash generated from operations as a
percentage of the Adjusted EBITDA.
· Continued good demand for Microlise solutions, with new customer
acquisition particularly strong.
· Microlise's main growth driver in the period was increased demand
from OEM customers, contributing to ARR growth of 11%, of which 10.2%
represented organic growth, to £44.8m (H1 FY22: 10.5% and £40.2M)
· The delays to delivery for direct customers, together with the
investments made last year in product development, operations, and sales &
marketing, impacted EBITDA margin in H1
· The Group's net cash at 30 June 2023 was £14.1m (31 December 2022:
£16.7m), after net cash spend of £2.86m on acquisitions during the period,
including initial consideration of £1.86m for Vita Software and the final
deferred consideration instalment of £1.0m in relation to the 2020
acquisition of TruTac.
· Several large receipts were received post period end, totalling
£2.8m, this resulted in a cash conversion rate of 80% of adjusted EBITDA,
which was lower than H1 FY22 (127%), reflecting this working capital phasing.
Operational Highlights
· More than 250 new customers added during the period.
· 12 major multi-year renewals signed in the period including Tesco,
Bidfood and Pall-ex.
· Excellent customer retention with churn of just 0.5%.
· First acquisition since IPO of Vita Software for £1.86m on cash free
debt free basis.
· Acquisition has expanded product suite to include resource &
transport costing, subcontractor management and invoicing solutions with two
upsells made already.
· Growth in subscriptions of 10% during the six months to 626K.
Nadeem Raza, CEO of Microlise, commented: "Microlise delivered another strong
performance during H1 2023 as we successfully executed our growth strategy. We
secured new customers in our key geographies beyond the UK including France,
Australia and New Zealand, expanded our customer base, and efficiently
integrated our latest acquisition.
"We have successfully navigated the Company through global supply chain issues
and subsequent delays in new vehicle availability, maintaining strong
relationships with our valued customers. We are seeing significant
improvements in all these situations, which we expect to have normalised by
the start of 2024.
"During the second half of the year, our focus will remain on investing in
growth, expanding our product portfolio, and growing our strong customer base
and geographical presence. Whilst it is sensible to look to the future with a
degree of caution, given the continuing global macro-economic challenges, the
Company's positive trading performance during the period and proven ability to
navigate these challenges, underpin the Board's confidence that the Group's
performance for FY23 will be in line with market expectations."
For further information, please contact:
Microlise Group plc C/O SEC Newgate
Nadeem Raza, CEO
Nick Wightman, CFO
Singer Capital Markets (Nominated Adviser & Broker) Tel: 020 7496 3000
Steve Pearce / James Moat / Harry Gooden
SEC Newgate (Financial PR) Tel: 020 3757 6880
Bob Huxford / Molly Gretton / Harry Handyside Email: microlise@secnewgate.co.uk (mailto:microlise@secnewgate.co.uk)
About Microlise
Established in 1982, Microlise Group Plc is a leading SaaS technology provider
of fleet management and IIoT solutions. Its technology is designed to help
businesses bring connectivity to its products and operations, improve
efficiency, reduce emissions, lower costs, and increase safety on the road.
With a range of products and services used by more than 400 enterprise clients
globally, Microlise helps companies of all shapes and sizes - across a wide
range of industries - to better manage their entire logistics operation and
products.
Backed by a team of experienced professionals who provide excellent customer
service, the Group has won a number of awards, including three Queens Awards
for International Trade (2018) and Enterprise (2019, 2020).
Headquartered in the United Kingdom, the company also has offices in France,
Australia, and India with a global staff base of more than 690 industry
professionals.
Handling over 626,000 subscriptions annually, Microlise joined the Alternative
Investment Market (AIM) in 2021, qualifying for the London Stock Exchange's
Green Economy Mark.
Chairman's Statement
On behalf of the Board, I am pleased to announce Microlise's results for the
six-month period ended 30 June 2023. Despite the prevailing macro-economic
challenges, the Group continued to make solid progress toward its strategic
goals, reflecting the dedication both of staff and management. This is best
observed in the growth in revenue where Microlise delivered an increase of
10.5% during the period, from £30.7m in H1 2022 to £33.9m in H1 2023.
The Company, along with the broader transport industry, continued to grapple
with global component shortages during the first half of the period, which in
turn impacted the availability of new vehicles. However, we are pleased to
report that we are seeing positive signs of improvement and are confident
component availability will return to pre-pandemic levels in H2, with new
vehicle lead times some three to six months later.
We were delighted to announce the acquisition of Vita Software, a provider of
Transportation Management Systems, on 14 March 2023. This was a milestone
event, as our first acquisition since listing which has already proved a
success, resulting in new product sales.
Our strategic focus for the next six months remains unchanged, and we will
continue to review additional M&A opportunities that complement our
product suite and customer strategy. We remain focused on our international
expansion with particular interest in France, Australia and New Zealand, and
on ensuring our customers benefit through the broader use of our
comprehensive, integrated product range.
On behalf of the Board, I would like to thank the Microlise management team
and employees for their ongoing hard work and determination, and our
shareholders for their continued support. The commitment of our stakeholders
is instrumental to our success and we look forward to updating you at the end
of the year with our Full Year results.
Jon Lee, Non-Executive Chairman
CEO Statement
Microlise has traded well in the first half of FY2023, showing continued
growth in revenue and profitability. Although we are seeing supply chain issue
and chip shortages normalise, lead times on new vehicles are not expected to
recover to pre-pandemic levels until the end of the year. Despite these
headwinds, we continue to deliver against a strong order book from our OEM
customers underpinning our confidence that we will achieve market expectations
for the full year.
We continued to strengthen our global business, adding 250 new customers in
the first 6 months of FY2023, while growing/extending contracts with 12 of our
existing large enterprise customers. At the same time, we maintained an
extremely low churn rate of 0.5%, demonstrating that once our solutions are
established within our customers' operations, they become essential and
invaluable to the success of their businesses.
We acquired Vita Software in March 2023, to expand the Group's suite of
technology solutions. The acquisition has proven to be immediately earnings
enhancing, and the Company has already signed two contracts to provide Vita's
solutions to Microlise's existing clients.
In addition, the Microlise Transport Conference returned in May 2023, which
included sessions specifically for investors and research analysts. The
conference was a huge success and reinforced Microlise as a leading solutions
provider and one that is central to the UK transport industry and beyond.
Market
At the start of H1 2023, our customers continued to face significant
challenges posed by the current market conditions, including the war in
Ukraine, unprecedented global supply chain issues, chip shortages and rising
fuel costs. However, as expected, we saw the global supply chain and chip
shortages begin to diminish towards the end of the period and expect this
trend to continue through the rest of the year.
These supply chain issues significantly reduced the availability of new
vehicles for our customers, creating a substantial order backlog, and
resulting in delays in the delivery of projects to new customers. We continue
to see signs of improvement in new vehicle lead times, and we expect this to
continue with a lag behind supply chain improvements by three to six months.
We are confident that this will be back to pre-pandemic levels by the start of
2024.
Customer Base
Securing new customers and establishing enduring customer relationships
remains at the core of our business. We achieve this by continuously expanding
and evolving our product offerings to cover new functionalities and
geographical areas.
During the six months under review, we added over 250 new customers including
Leeds-headquartered LF&E Refrigerated Transport, and Northern
Ireland-based McCulla, both signing six-year contracts. Other key multi-year
contracts include the ~£3.5M new business win with the UK's largest car
transportation business, which sees a 1,405-vehicle implementation of products
such as Fleet Performance with Driver Performance Monitoring, Safety Module,
Remote Tachograph Download and Forward-Facing Camera Systems. This strong
performance highlights the importance of the Microlise offering in helping
fleet operators improve efficiencies, minimise costs and protect margins.
Post period end, we have signed major contracts with two of Australia's
largest grocery retailers. These two significant contracts demonstrate
progress made against our strategy of enlarging our geographical footprint,
alongside the attraction of our product offering.
12 major multi-year renewals were signed in the year to date including Tesco,
Bidfood and Pall-ex, with more targeted to close in Q4.
Microlise continued to have high rates of customer retention and extremely low
churn of 0.5% during the period, reflecting the importance of the Company's
solutions to its customers and the loyalty of our customer base.
Product Offering and M&A
Fleet operators face rising fuel prices, driver shortages and delays in new
vehicle availability. Our solutions, which help make the most efficient use of
assets, thereby reducing fuel, the time drivers are on the road, and wear and
tear on vehicles, remain of crucial importance.
In March 2023, as part of the Company's strategic growth plan, Microlise
acquired Vita Software for an initial consideration of £1.86 million cash
payment, on a cash free, debt free basis, with the initial consideration
funded from the Company's existing cash reserves. In addition, the Company
will pay a deferred consideration of £0.2 million after 12 months subject to
any claims. The acquisition expanded the Group's suite of technology solutions
to include resource and transport costing, subcontractor management and
invoicing solutions. It has proven to be immediately earnings enhancing, and
the Company has made strong progress already with two upsells of Vita's
solutions to existing clients. The software is applicable to fleets of all
sizes, supporting our strategy to expand into smaller fleets.
The integration of the acquisition has progressed well, and we expect there to
be significant opportunity for upsell and cross-sell into the Company's
broader client base. This will enable the Company to strengthen customer
relationships and reinforce Microlise's position as a leading provider of
transport technology solutions.
Strategic Focus
Our strategy remains focused on growth and ensuring our solution remains
best-in-class for HGV fleet operators. We remain focused on continuing to
navigate current market challenges, including supply chain issues and reduced
vehicle availability, while maintaining our strong trading performance.
As technology evolves, our customers demand ever-stronger assurances, and we
are dedicated to meeting these demands. Therefore, we have invested in
security measures for our blue-chip customer base including replacement
enterprise firewalls using additional services to help us on our Zero Trust
journey complimented with the Nvidia Mellanox Software Defined Network. We
have leveraged our Exposure Management Platform tools and created Monitoring
Dashboards for Software Vulnerabilities.
We will also continue to invest heavily in product development, ensuring that
we remain at the forefront of our industry, bringing new, innovative solutions
to our platform that benefit our customers.
During the period, we have remained focussed on international expansion,
making solid progress across a number of key geographies including Australia
and New Zealand. As described above we have signed two new contracts with
leading Australian grocery retailers, demonstrating this progress, as well as
the attraction of our expanded product offering and services.
M&A remains a core part of our strategy and we continue to have a robust
pipeline of opportunities. Our acquisition of Vita Software during the period
has already provided opportunities to further embed Microlise into customer
operations. We continue to assess further acquisition opportunities and will
act appropriately should they align with our immediate and long-term strategic
focus.
Microlise Transport Conference
The Microlise Transport Conference in May was a resounding success,
bringing together a remarkable assembly of industry leaders and
innovators with the aim of addressing the current sector challenges and
seizing the many promising opportunities available within today's
market. With over 1,100 delegates, 48 exhibitors, and more than 50
distinguished speakers, the conference marked a significant milestone in our
commitment to fostering collaboration and change within the industry.
This year, we also hosted our first investor-focused event as part of the
conference, to showcase Microlise's solutions both to investors and investment
commentators. We were pleased with the positive feedback we received and look
forward to hosting similar events at future conferences.
People
During the period Nick Wightman was appointed to the Board as an Executive
Director in the role of Chief Financial Officer. Nick replaced Bill Wynn, who
announced his retirement after 15 years with the Company.
In August 2023 a new Strategy and M&A Director was appointed to the senior
leadership team, who is responsible for enabling and accelerating the
company's profitable, sustainable growth.
Shenny Remtulla has held senior leadership positions in several large, branded
consumer multinational organisations, including Head of Strategy at SABMiller
plc. He brings a long and successful track record of creating and executing
corporate and commercial growth strategies and delivering performance
improvement.
Prior to this, Shenny spent 10 years as a strategy consultant with Bain &
Company across North America, Europe and Africa in a variety of sectors,
including, FMCG / CPG, Consumer Products, Financial Services, Telecoms,
Transportation, Natural Resources, etc., as well as a dedicated assignment
within the Private Equity Practice.
ESG
Microlise is continuing to develop its ESG credentials. In April 2023, we
achieved 'Great Place to Work' and 'Great Place to Work for Women'
accreditation, recognising our commitment to improving the work experience of
our employees and their wellbeing.
During the period, we completed the installation of 502 solar panels at our
Nottingham HQ, which aims to reduce the sites annual carbon footprint by over
80 tonnes of CO2. We also have plans to expand our current on-site EV charging
point infrastructure, as more staff take up the EV Salary Sacrifice Scheme the
business has introduced.
We are incredibly proud of the headway we have made to date and look forward
to updating the market on our continued progress.
Outlook
Microlise delivered another strong performance during H1 2023 as we
successfully executed our growth strategy. We secured new customers in our key
geographies beyond the UK including France, Australia and New Zealand,
expanded our customer base, and efficiently integrated our latest acquisition.
We have successfully navigated the Company through global supply chain issues
and subsequent delays in new vehicle availability, maintaining strong
relationships with our valued customers. We are seeing significant
improvements in all these situations, which we expect to have normalised by
the start of 2024.
During the second half of the year, our focus will remain on investing in
growth, expanding our product portfolio, and growing our strong customer base
and geographical presence.
Whilst it is sensible to look to the future with a degree of caution, given
the continuing global macro-economic challenges, the Company's positive
trading performance during the period and proven ability to navigate these
challenges, underpin the Board's confidence that the Group's performance for
FY23 will be in line with market expectations.
Nadeem Raza, Chief Executive Officer
CFO's Statement
The financial results for the six-month period to 30 June 2023 reflect a
further period of profitable growth for Microlise despite the challenges
widely reported across all industry sectors.
Revenue
KPIs for the six months ended 30 June 2023 H1 FY23 (£m) H1 FY22 (£m) Change
Group revenue 33.9 30.7 10.5%
Recurring revenue 21.9 19.8 10.3%
Recurring revenue as % of Group revenue 64.5% 64.6% (0.1)%
Annual recurring revenue (ARR) 44.8 40.2 11.5%
Non-recurring revenue 12.0 10.9 10.8%
Installation 1.3 0.8 58.9%
Hardware 9.5 8.8 7.9%
Professional services 1.2 1.2 (1.7)%
Despite supply chain issues having a significant impact on new vehicle
availability for our customers, resulting in delays in the delivery of
projects to new customers, revenue for the 6 months ended 30 June 2023 was
£33.9m, an increase of 10% (£30.7m in H1 FY22) reflecting strong demand from
our existing customer base.
Recurring revenue increased 10% to £21.9m (H1 FY22: £19.8m), representing
64.5% of total revenues (64.6% in H1 FY22). New customer wins, together with
growth in our existing customer's fleets and the recent acquisition of Vita
Software resulted in 11% growth in Annual Recurring Revenue (ARR) to £44.8m
as of 30 June 2023, of which 10.2% represented organic growth (H1 FY22: 10.5%
and £40.2m). Non-recurring revenue for the period increased 11% to £12.0m
(H1 FY22 £10.9m). This increase was driven primarily by strong OEM revenue
with record orders, and the priority given to satisfying OEM hardware demand,
where supply chain shortages caused constraints.
During the 6-month period, 250 new clients and a number of contract extensions
and renewals were secured. In addition to winning new business and deepening
existing accounts, the Group successfully maintained an extremely low rate of
customer churn by value at 0.5% (FY22: 0.4%) reflecting the importance of
Microlise's software solutions in our customers' operations.
Gross Profit
Gross profit for the period increased by 11.8% to £20.5m (H1 FY22: £18.4m),
driven by improved recurring revenue and recurring margin. This resulted in an
increase in gross margins to 61% from 60% in H1 FY22.
Operating Expenses
Operating expenses in the 6-month period ended 30 June 2023 increased 15% to
£16.8m (H1 FY22: £14.6m). Operating expenses represents employee costs,
premises costs, marketing costs, research & development costs (net of
capitalised costs), finance charges, and administration costs.
The 14% increase in staff costs in the 6 months ended 30 June 2023 to £14.3m
(H1 FY22: £12.5m) reflects our planned investment into our global sales
force, which has seen headcount increase by an average of 18% in the period.
The increase also reflects the costs associated with the implementation of our
Employee Engagement strategy. As part of this strategy, we ensure market rate
alignment for salary roles, the introduction of numerous cross-company social
events and team collaboration events, the introduction of employee engagement
initiatives, increased staff training and the introduction of a share option
scheme for staff. Staff costs also include commissions reflecting the
increased new customer win rate. Headcount in the period increased by 8.4% to
703 (H1 FY22: 644) overall.
Capitalised development costs in the period were £1.3m (H1 FY22: £0.8m),
reflecting the investment the Group has made in the innovation and development
of its range of products. Amortisation of capitalised development costs in the
period was £0.5m (H1 FY22: £0.3m).
Adjusted EBITDA and Profit Before Tax
Adjusted EBITDA in the 6 months ended 30 June 2023 increased 4% to £4.5m (H1
FY22 £4.3m), with adjusted EBITDA margin for the period at 13.2% (H1 FY22:
14.0%). The decrease in the EBITDA margin was a result of the planned increase
in operating expenses summarised above. To provide a guide to the underlying
business performance, adjusted EBITDA excludes depreciation, amortisation,
interest, tax and share based payments.
In the 6 months ended 30 June 2023 profit before taxation increased 5.7% to
£1.5m (H1 FY22: profit of £1.4m).
EPS and Dividend
The Group made a profit after taxation in the period of £1.2m (H1 FY22:
£1.1m), an increase of 12% over the same period in 2022.
As a result of the increase in profit after taxation, the reported basic
earnings per share increased 12% to 1.05p (H1 FY22: 0.94p) and the diluted
earnings per share increased 13% to 1.05p (H1 FY22: 0.93p).
The Board still does not feel that it is an appropriate time to commence
paying dividends, as the Company continues to invest in its growth strategy.
Group Statement of Financial Position
The Group had net assets of £74.9m at 30 June 2023 (30 June 2022: £72.8m),
with the increase primarily driven by the acquisition of Vita Software
Limited.
Cashflow and Net Cash
The Group's net cash at 30 June 2023 was £14.1m (31 December
2022: £16.7m), after net cash spend of £2.86m on acquisitions during the
period, including initial consideration of £1.86m for Vita Software and
the final deferred consideration instalment of £1.0m in relation to the
2020 acquisition of TruTac. Investment in capital expenditure increased by
108% to £1.6m (H1 FY22 £0.8m) reflecting the acceleration of our investment
programme on security measures. Several large receipts were received post
period end, totalling £2.8m, this resulted in a cash conversion rate of 80%
of adjusted EBITDA, which was lower than H1 FY22 (127%), reflecting this
working capital phasing. Full year cash conversion rate expectations remain
unchanged.
Banking Facility
The Group has remained comfortably within its banking covenants which relate
to available headroom and EBITDA performance. The Group agreed a £20.0m
committed revolving cash flow facility with HSBC Bank PLC upon IPO. The Group
has not utilised any of this facility to date. The Group's gross cash of
£14.1m and the undrawn £20.0m facility gives the Group access to £34.1m of
capital, which the Directors believe is sufficient in order to support
Microlise's growth plans as first set out at the IPO in July 2021. The Board
are currently in discussions with HSBC regarding the renewal of its facility
which expires in July 2024.
Nick Wightman, Chief Financial Officer
Interim unaudited Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2023
Six months ended Six months ended
30 June
30 June
2023 2022
Note £'000 £'000
Revenue 1 33,887 30,675
Cost of sales (13,374) (12,322)
Gross profit 20,513 18,353
Other operating income 541 459
Administrative expenses (19,728) (17,104)
Operating profit 1,326 1,708
Interest income 151 1
Interest expense (160) (142)
Share of profit/(loss) of associate net of tax 204 (127)
1,521 1,440
Profit before tax
Taxation 3 (299) (350)
Profit for the period 1,222 1,090
Other comprehensive income for the period
Currency translation differences (64) 47
Total comprehensive income for the period attributable to the equity 1,158 1,137
shareholders of Microlise Group PLC
Earnings per share
Basic earnings per share (pence) 4 1.05 0.94
Diluted earnings per share (pence) 4 1.05 0.93
Interim unaudited consolidated Statement of Changes in Equity
Share Capital Share Premium Retained earnings Total Equity
£'000 £'000 £'000 £'000
At 1 January 2022 116 17,630 53,802 71,548
Comprehensive income for the period to 30 June 2021
Profit for the period - - 1,090 1,090
Other comprehensive income - - 47 47
Total comprehensive income for the period - - 1,137 1,137
Share based payment - - 181 181
Total transactions with owners - - 181 181
116 17,630 55,120 72,866
At 30 June 2022
Comprehensive income for the period to 31 December 2022
Profit for the period - - 263 263
Other comprehensive income - - (41) (41)
Total comprehensive income for the period - - 222 222
Share based payment - - 380 380
Total transactions with owners - - 380 380
At 31 December 2022 116 17,630 55,722 73,468
Comprehensive income for the period to 30 June 2023
Profit for the period - - 1,222 1,222
Other comprehensive income - - (64) (64)
Total comprehensive income for the period - - 1,158 1,158
Share based payment - - 245 245
Total transactions with owners - - 245 245
At 30 June 2023 116 17,630 57,125 74,871
Interim unaudited Consolidated Statement of Financial Position
as at 30 June 2023
Note 30 June 31 December 30 June
2023 2022 2022
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 9,414 8,292 8,645
Intangible assets 5 76,595 75,031 75,373
Investments in associate 1,572 1,368 1,719
Loan to associate 1,000 1,000 -
Trade and other receivables 2,976 3,078 2,285
Total non-current assets 91,557 88,769 88,022
Current assets
Inventories 3,335 2,635 3,516
Trade and other receivables 22,714 16,760 18,817
Corporation tax recoverable 1,437 1,289 1,160
Cash and cash equivalents 14,063 16,683 15,774
Total current assets 41,549 37,367 39,267
133,106 126,136 127,289
Total assets
Current liabilities
Lease liabilities (1,056) (821) (768)
Trade and other payables (34,372) (29,183) (32,468)
Total current liabilities (35,428) (30,004) (33,236)
Non current liabilities
Lease liabilities (718) (926) (817)
Trade and other payables (16,830) (16,898) (15,092)
Deferred tax (5,259) (4,840) (5,278)
Total non current liabilities (22,807) (22,664) (21,187)
Total liabilities (58,235) (52,668) (54,423)
Net assets 74,871 73,468 72,866
Equity
Issued share capital 116 116 116
Share premium account 17,630 17,630 17,630
Retained earnings 57,125 55,722 55,120
Total equity 74,871 73,468 72,866
Interim unaudited Consolidated Statement of Cash Flows
for the period ended 30 June 2023
Six months ended Six months ended
30 June
30 June
Note 2023 2022
£'000 £'000
Cash flows from operating activities
Cash generated from operations A 3,571 5,714
Tax paid (38) (28)
Net cash generated from operating activities 3,533 5,686
Cash flows from investing activities
Purchase of property, plant and equipment (1,593) (764)
Proceeds on disposal of property, plant and equipment 53 -
Additions to intangible assets (1,262) (820)
Purchase of subsidiaries (TruTac Limited deferred consideration paid) (1,000) (1,000)
Purchase of subsidiaries (Vita Software Limited) (1,803) -
Interest received 151 1
Net cash used in investing activities (5,454) (2,583)
Cash flows from financing activities
Interest paid (155) (135)
Lease liability payments (535) (409)
Net cash used in financing activities (690) (544)
Net (decrease)/increase in cash and cash equivalents (2,611) 2,559
Cash and cash equivalents at beginning of the year 16,683 13,210
Foreign exchange (losses)/gains (9) 5
Cash and cash equivalents at end of the year B 14,063 15,774
Notes to the interim unaudited consolidated statement of cash flows
for the period ended 30 June 2023
A. Cash generated from operations
The reconciliation of profit for the period to cash generated from operations
is set out below:
Six months ended Six months ended
30 June
30 June
2023 2022
£'000 £'000
Profit for the period 1,222 1,090
Adjustments for:
Depreciation 1,223 980
Amortisation 601 389
Amortisation - business combination assets 1,080 1,045
Profit on disposal of tangible fixed assets (18) -
Share based payments 245 181
Net interest costs 9 141
Share of (profit)/loss of associate (204) 127
Tax charge 299 350
4,457 4,303
Working capital movements:
Increase in inventories (700) (575)
Increase in trade and other receivables (6,013) (3,249)
Increase in trade and other payables 5,827 5,235
Cash generated from operations 3,571 5,714
.
B. Analysis of net cash
At 1 January 2022 Cash flow Non-cash changes At
30 June
2022
£'000 £'000 £'000 £'000
Lease liabilities (1,711) 409 (283) (1,585)
Liabilities arising from financing activities (1,711) 409 (283) (1,585)
Cash and cash equivalents 13,210 2,559 5 15,774
Net cash 11,499 2,968 (278) 14,189
At 1 January Cash flow Non-cash changes At
30 June
2023 2023
£'000 £'000 £'000 £'000
Lease liabilities (1,747) 535 (562) (1,774)
Liabilities arising from financing activities (1,747) 535 (562) (1,774)
Cash and cash equivalents 16,683 (2,611) (9) 14,063
Net cash 14,936 (2,076) (571) 12,289
Notes to the interim unaudited financial information
General information
The parent company is a holding company and its subsidiaries are businesses
that provide technological transport and fleet management solutions. Its
technology is designed to help businesses improve efficiency, reduce
emissions, lower costs, and increase safety on the road . The company is a
public limited company listed on AIM, limited by shares, incorporated and
domiciled in England. The address of the registered office is Farrington Way,
Eastwood, Nottingham, NG16 3AG.
Basis of preparation
This interim announcement and condensed consolidated interim financial
information has been prepared in accordance with the recognition and
measurement requirements of UK adopted International Accounting Standards as
effective for periods beginning on or after 1 January 2023 ('IFRS').
In preparing these interim financial statements, the Board have considered the
impact of any new standards or interpretations which will become applicable
for the next Annual Report and Accounts which deal with the year ending 31
December 2023 and there are not expected to be any changes in the Group's
accounting policies compared to those applied at 31 December 2022, a full
description of which are contained in the financial statements for the period
ended 31 December 2022 which are available on our website.
There are no new standards, interpretations and amendments in issue which are
not yet effective in these financial statements, expected to have a material
effect on the Group's future financial statements.
The principal accounting policies used in preparing the interim results are
those the Group expects to apply in its financial statements for the year
ending 31 December 2023.
The financial information does not contain all of the information that is
required to be disclosed in a full set of IFRS financial statements. The
financial information for the periods ended 30 June 2023 and 30 June 2022 is
unaudited and does not constitute the Group's statutory financial statements
for the period.
The statutory audited financial statements for the year ended 31 December 2022
have been filed at Companies House. The auditor's report on those financial
statements was unqualified, did not include references to any matters to which
the auditor drew attention by way of emphasis without qualifying its report
and did not contain a statement under section 498(2)-(3) of the Companies Act
2006.
The interim financial information has been prepared under the historical cost
convention unless otherwise specified within these accounting policies. The
financial information and the notes to the financial information are presented
in thousands of pounds sterling ('£'000'), the functional and presentation
currency of the Group, except where otherwise indicated.
The policies have been consistently applied to all periods presented, unless
otherwise stated.
Exceptional items
Exceptional items are significant items of income or expense which, because of
their size, nature and infrequency of the events giving rise to them, merit
separate presentation to provide further understanding of the underlying
financial performance of the Group during the period.
Going concern
The Group had cash balances of £14.1m at 30 June 23 (30 June 2022: £15.8m)
and an undrawn revolving bank facility of £20 million. The facility may be
used for general corporate and working capital purposes and for permitted
acquisitions. This facility is due to be renewed in July 2024 and, whilst it
is not anticipated to be required for use in the immediate future, the
directors expect the facility will be available to be renewed at that time.
The Group has prepared forecasts for the period to 31 December 2024 and a
range of sensitivities have been run on the working capital model. The
directors consider a scenario in which the business will face liquidity issues
or breach covenant conditions in respect of facilities is remote. As part of
the sensitivity analysis the directors have considered the impact of a
reduction in turnover from their principal customer and the impact on working
capital and are satisfied that in such a scenario the Group has sufficient
liquid resources to restructure and continue as a going concern servicing the
remaining customer base.
In view of the funds and facilities available to the Group the directors
consider that there is significant cash headroom in the forecasts and the
going concern basis of preparation is therefore appropriate.
1. Segmental information
Recurring revenue represents the sale of the Group's full vehicle telematics
solutions, support and maintenance. Non recurring revenue represents the sale
of hardware, installation and professional services.
Revenue in respect of the set up, supply of hardware and software installation
is recognised at a point in time. Professional services including project
management, managed services and support services income is recognised over
the period when services are provided.
Six months ended Six months ended
30 June 2023
30 June 2022
£'000 £'000
By type
Revenue recognised at a point in time:
Supply of hardware and installation 10,811 9,595
Revenue recognised over time:
Professional services including project management 1,221 1,242
Managed service agreement income 20,185 18,219
Other support and maintenance services 1,670 1,619
23,076 21,080
33,887 30,675
By destination:
UK 30,661 27,812
Rest of Europe 472 684
Rest of the World 2,754 2,179
Total revenue 33,887 30,675
One customer contributed £12.2m and 36% of revenue to the six months ended 30
June 2023 (£9.6m and 31% to the six months ended 30 June 2022).
Due to the nature of revenue, there is not considered to be seasonality in
relation to the reported results.
The directors consider the Group to comprise two complementary segments in
respect of fleet management services (Microlise) and tachograph specific
software and analysis services (TruTac).
Microlise TruTac Total Six months ended 30 June 2023 Microlise TruTac Total Six months ended
30 June 2022
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 31,397 2,490 33,887 28,711 1,964 30,675
Depreciation and amortisation 2,560 344 2,904 2,125 289 2,414
Operating profit 822 504 1,326 1,400 308 1,708
Net interest (27) 18 (9) (139) (2) (141)
Share of associate profit/(loss) 204 - 204 (127) - (127)
Profit before tax 999 522 1,521 1,134 306 1,440
The results for Vita Software Limited post-acquisition are included within in
the Microlise segment above due to the nature of services being aligned with
that segment and are not considered material to report separately.
2. Alternative performance measures
In reporting financial information, the Group presents alternative performance
measures (APMs), which are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide depth and understanding
to the users of the financial statements to allow for further assessment of
the underlying performance of the Group. The Group's primary results measure,
which is considered by the directors of the Group to represent the underlying
and continuing performance of the Group, is adjusted EBITDA as set out below.
EBITDA is a commonly used measure in which earnings are stated before net
finance income, tax, amortisation and depreciation as a proxy for cash
generated from trading.
The group qualifies for large company R&D tax reliefs with the RDEC credit
included in other operating income above operating profit and in line with
common practice is included in the Group's calculation of EBITDA.
Six months ended Six months ended
30 June 2023
30 June 2022
£'000 £'000
Operating profit before share of associate 1,326 1,708
Share based payment 245 181
Amortisation of intangible assets that arose from business combinations 1,080 1,045
Depreciation 1,223 980
Amortisation of other intangible assets 601 389
Adjusted EBITDA 4,475 4,303
3. Tax on profit
Six months ended Six months ended
30 June 2023
30 June 2022
£'000 £'000
Current taxation
Current period overseas tax (62) (63)
Adjustments in respect of prior periods 1 -
(61) (63)
Deferred taxation
Origination and reversal of timing differences (238) (287)
(238) (287)
Tax charge on profit (299) (350)
The Finance Act 2021 enacted a UK corporation tax rate of 25% applying to
taxable profits from April 2023 (19% applicable until March 2023). This has
accordingly been applied at 30 June 2023 to deferred tax balances (2022: to
reversals expected to occur after that date).
3. Tax on profit (continued)
Factors affecting the tax for the period
The tax charge on the profit for the period differs from applying the standard
rate of corporation tax in the UK of 22% (2022: 19%). The differences are
reconciled below:
Six months ended Six months ended
30 June 2023
30 June 2022
£'000 £'000
Profit before taxation 1,521 1,440
Corporation tax at standard rate 335 274
Factors affecting charge for the period:
Disallowable expenses 58 63
Additional capital superdeductions (100) -
Other differences including higher overseas and deferred tax rates 6 13
Tax charge on profit 299 350
In addition, an RDEC credit of £255,000 is included in other operating income
for the period ended 30 June 2023 (2022: £263,000).
4. Earnings per share
Six months ended Six months ended
30 June 2023
30 June 2022
Profit used in calculating EPS (£'000) 1,222 1,090
Weighted average number of shares for basic EPS 115,945,956 115,945,956
Weighted average number of shares for diluted EPS 116,063,069 117,001,050
Basic earnings per share (pence) 1.05 0.94
Diluted earnings per share (pence) 1.05 0.93
There were 2,709,522 unexercised share options in place at 30 June 2023 (2022:
2,087,935) of which 141,509 (2022: 1,055,755) were potentially dilutive at
their nominal exercise price and are included in the weighted average for
diluted EPS.
5. Intangible fixed assets
Goodwill Customer relationships Brands Technology Total business combination assets Developed technology products Software Overall total
- business combinations
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2022 52,778 17,780 2,711 6,422 79,691 2,951 791 83,433
Additions - - - - - 803 17 820
At 30 June 2022 52,778 17,780 2,711 6,422 79,691 3,754 808 84,253
Amortisation
At 1 January 2022 - 3,514 575 2,326 6,415 904 127 7,446
Charge for the period - 569 90 386 1,045 316 73 1,434
At 30 June 2022 - 4,083 665 2,712 7,460 1,220 200 8,880
Net book value
At 30 June 2022 52,778 13,697 2,046 3,710 72,231 2,534 608 75,373
Cost
At 1 January 2023 52,778 17,780 2,711 6,422 79,691 4,731 1,091 85,513
Additions - - - - - 1,262 - 1,262
Acquisition (note 5) 1,513 406 - 283 2,202 - - 2,202
Reclass to tangible fixed assets - - - - - - (246) (246)
At 30 June 2023 54,291 18,186 2,711 6,705 81,893 5,993 845 88,731
Amortisation
At 1 January 2023 - 4,652 756 3,099 8,507 1,664 311 10,482
Charge for the period - 587 90 403 1,080 530 71 1,681
Reclass to tangible fixed assets - - - - - - (27) (27)
At 30 June 2023 - 5,239 846 3,502 9,587 2,194 355 12,136
Net book value
At 30 June 2023 54,291 12,947 1,865 3,203 72,306 3,799 490 76,595
Intangible assets have arisen principally on acquisition with a continuing
investment in technology and software.
6. Acquisition of subsidiaries
On 13 March 2023 the company acquired all of the ordinary share capital of
Vita Software Limited. It provides software solutions to customers in the
logistics and retail sectors that are complementary to the existing Group
services.
The acquisition had the following provisional effect on the Group's assets and
liabilities.
Book value Fair value adjustments Fair value
£'000 £'000 £'000
Intangible fixed assets - 689 689
Tangible fixed assets 14 - 14
Debtors 94 - 94
Cash 1,120 - 1,120
Creditors (45) - (45)
Corporation tax (86) - (86)
Deferred tax - (176) (176)
1,097 513 1,610
Goodwill 1,513
Consideration payable 3,123
The cash outflow, net of cash acquired, at the date of acquisition was
£1,803,000 with £200,000 of deferred consideration payable in March 2024.
The deferred consideration has not been discounted on the basis of
materiality.
The intangible fixed assets acquired are in relation to technology and
customer relationships. Technology acquired is valued at £283,000, valued on
a relief from royalty method and with a deemed useful life of 5 years given
the need to upgrade and continue to develop the software. Customer
relationships have been valued at £406,000 using a multi-period excess
earnings method approach, with a useful life of 7 years assumed in line with
the attrition rate.
The trade and assets of Vita Software Limited transferred to Microlise Limited
on 31 May 2023.
In addition to the above cash outflows, the final £1,000,000 was paid in the
period in respect of the deferred consideration for TruTac Limited.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EAENXAADDEAARecent news on Microlise
See all newsREG - Microlise Group PLC - Statement regarding Trakm8 Holdings plc
AnnouncementREG - Microlise Group PLC - Annual Report, Notice of AGM & Dividend Timetable
AnnouncementREG - Microlise Group PLC - Results for the year ended 31 December 2024
AnnouncementREG - Microlise Group PLC - Notice of Results
AnnouncementREG - Microlise Group PLC - FY2024 Trading Update
Announcement