REG - Microlise Group PLC - Interim Results
26/09/2022 07:00
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RNS Number : 5351A Microlise Group PLC 26 September 2022
26 September 2022
MICROLISE GROUP PLC
("Microlise", the Company or "the Group")
Interim Results for the 6 months ended 30 June 2022
Continued Progress in line with Market Expectations
Microlise Group plc (AIM: SAAS), a leading provider of transport management
software to fleet operators, announces its unaudited results for the 6 months
ended 30 June 2022.
Financial Highlights
H1 2022 H1 2021 (1) Change %
Revenue £30.7M £29.1M 5%
Recurring Revenue £19.8M £18.0M 10%
Gross Profit £18.4M £17.2M 7%
Annual Recurring Revenue £40.2M £36.4M 10%
EDITDA (2) £4.1M £4.1M -
Operating Profit £1.7M £1.8M (6%)
Profit before tax £1.1M £0.7M 67%
Earnings per share 0.94 0.64 47%
Cash balances £15.8M £13.2M (3) 19%
Operational Highlights
· More than 60 new customers added in the Period including PD Ports,
K+N Logistics, H&M Distribution, Europa Worldwide Logistics
· Major renewals signed with Tesco and Asda in the UK. In Australia, a
5-year extension was signed with Coles, a supermarket chain with over 2,500
stores nationally
· Existing customer churn remains very low at 0.1%
· Growth in subscriptions of 3% during the six months to 570k
· Introduced TruVan - a new compliance software package for vans
· Successful return of the Microlise Transport Conference 2022 in May
with over 1,000 delegates
Post Period End and Outlook
· Full-year revenue and profit expected to be in line with market
expectations
· Progress made in the M&A area, with over 40 companies evaluated
over the last 15 months
Nadeem Raza, CEO of Microlise, said: "Despite market headwinds, our team has
proved resilient and continued to deliver in the first half of the year. With
the transport industry's growing need for our technology and a solid and
strengthening order book, we are confident of delivering a performance for the
full year in line with market expectations."
(1) H1 2021 refers to the 6 months ending June 30, 2021
(2). Earnings before interest, tax, depreciation, and amortisation
(3) £13.2m Cash as at end of December 2021
For further information, please contact:
Microlise Group plc c/o SEC Newgate
Nadeem Raza, CEO / Bill Wynn, CFO
Singer Capital Markets (NOMAD & Broker) Tel: +44 20 7496 3000
Steve Pearce / James Moat / Harry Gooden
SEC Newgate (Financial PR) Tel: 020 3757 6880
Bob Huxford / Isabelle Smurfit / Max Richardson Email: 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 350 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 600.
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.
Chairman's Statement
Introduction
Microlise continues to make solid progress, both in terms of growth and toward
meeting its strategic goals. The Company delivered revenue growth of 5% during
the period, from £29.1m in H1 2021 to £30.7 million in H1 2022, while cash
increased a healthy 19% during the six months under review, from £13.2m, as
at 31 December 2021, to £15.8m, as at 30 June 2022.
It is testament to the staff and management of Microlise that this profitable
growth has been delivered during a time of significant macro-economic
disruption, which presented the Company with a global shortage of components
and a challenging recruitment environment. Microlise had the foresight to take
early action to mitigate these issues and has successfully navigated them
since.
The disruption has also continued to affect the wider transport sector, which
has had to contend with additional issues including increased fuel costs,
driver shortages and a reduction in the number of new vehicles coming to
market. Together, these have further reduced already tight profit margins for
many haulage and fleet management companies. Microlise's leading solutions
help these companies to reduce costs through improved planning, routing and
safety as well as reduced fuel consumption, amongst many other benefits, and
Microlise is delighted to be able to provide such essential assistance to its
clients in these challenging times.
Microlise is committed to empowering operators to work as smartly,
efficiently, and sustainably as possible. Through improved planning and
efficiencies, our clients reduce distance travelled, fuel consumed and,
therefore, harmful emissions.
Financial Performance
The Company continued to enjoy exceptionally high levels of customer
retention, evidencing the mission critical nature of its products, during the
Period. This underpinned solid financial performance with revenues rising 5%
from £29.1m to £30.7m. Recurring revenues rose from £18.0m to £19.8m such
that they now represent 64.7% of total revenues, up from 61.6% in H1 2021.
Importantly, our cash position has been further strengthened, up 19% from
£13.2m at 31 December 2021 to £15.8m at 30 June 2022, such that we are in an
excellent position to be able to invest in some of the exciting opportunities
we see to accelerate our growth plans. This was aided by exceptional cash
generation during the period which grew by 68% from £3.4m in H1 2021 to
£5.7m in H2 2022.
The Group is confident that trading at the half year stage is in line with
meeting full year market expectations.
Governance
As Chairman, I am responsible for leading the Board and ensuring it is focused
on strategic matters and that the highest corporate governance standards are
adhered to. My fellow board members and the senior management of Microlise are
also dedicated to ensuring the successful oversight of the business with the
interests of our supportive shareholders always front of mind.
As part of our continuing commitment to strengthen our Governance, we welcomed
Lucy Sharman-Munday to the Board in February 2022 as an independent
Non-Executive Director. As Chief Financial Officer of AIM listed technology
company Eagle Eye Solutions, Lucy brings considerable experience in software,
finance and capital markets, and is proving a great asset.
In our recent trading update, released on 28 July 2022, we also announced the
planned retirement of our Chief Financial Officer, Bill Wynn, which will take
place in the Spring of 2023. The search for a replacement is already well
underway and Bill will support the transition process of his successor.
Looking Ahead
With costs, complexity and competition on the rise for transport management
companies, the need to deliver excellent customer service at a competitive
price, and to rapidly scale up or down in response to consumer demand, is
increasingly important. These factors are driving demand for end-to-end
transport management technologies, such as those provided by Microlise, which
is in a strong position to capitalise on growth opportunities within its
fast-growing markets thanks to its proven and expanding product portfolio.
We have an increasingly strong balance sheet driven by excellent cash
generation. This will allow continued investment into R&D to enable the
extension of our product range and capability; the expansion into new
geographies and adjacent markets, such as smaller fleets and vehicles; and
provides the resources to make selective acquisitions that can accelerate our
strategy, when opportunities arise.
Although challenges in the industry remain, Microlise has proven it is adept
at meeting these, and increasingly so. The situation in Ukraine is not
adversely affecting the Company at present, and, although micro-chip supply
issues are now expected to remain until mid-2023, Microlise continues to
successfully secure necessary components and has the resources to pay premiums
where required.
We are delivering against the targets we have set for ourselves and remain
confident of meeting market forecasts for the full year. The future looks
brighter still for 2023, with increasing customer product demand driving order
volumes, and the easing of many of the macro challenges, such as microchip
shortages, expected later in the year.
As always, I pay particular tribute to our selfless staff who continue to face
up to some of the most challenging circumstances our industry has had to deal
with in many years and, through a combination of their positive can-do
attitude, commitment to Microlise, and dedication to our customers, have again
delivered a performance of solid growth.
Jon Lee, Non-Executive Chairman
CEO's Statement
The six months to 30 June 2022 was a period of substantial progress for
Microlise. We further strengthened our global business through the addition of
more than 60 new customers, and we are particularly proud that churn remained
extremely low at 0.1%. We also introduced new products including TruVan which,
as a compliance software package for vans and Light Commercial Vehicles
(LCVs), also brought us into new markets. In addition, we saw the successful
return of the Microlise Transport Conference in May of 2022 which, with over
1,000 delegates, was a resounding success and firmly places Microlise as a
leading solutions provider that is central to the transport industry.
We continue to see strong fundamentals in terms of revenue and growth, with a
3% increase in subscriptions, a churn rate of 0.1% and a 10% increase in ARR
run rate for the six-month period ended 30 June 2020.
Market
The market for our customers is being heavily disrupted however, with fleet
operators under considerable financial pressures. Microlise's technology
enables our customers to not only survive but thrive.
The tragic war in Ukraine, coupled with chip shortages, is impacting vehicle
production as customers struggle to secure new vehicles. Operators are
therefore having to run assets for longer, making solutions that can
proactively manage fleets, such as those provided by Microlise, crucial to
staying on top of maintenance, costs and service levels to their end
customers.
Rising fuel costs also renders software that can manage driver performance
increasingly essential. Approximately one third of a transport operators'
costs is fuel, meaning even a small increase in fuel usage can have a
disproportionately negative impact upon the economic viability of their
business.
Driver shortages also means software solutions that can manage drivers become
ever more vital, while regulations, driver safety and the need for visibility
continue to drive mobility technology in transportation.
During Microlise's transport conference held in May, over 61% of the 1,000
delegates stated that better planning and optimisation will have the biggest
impact to reducing costs. These are core elements to Microlise's suite of
software solutions, with a new planning and optimisation product launched in
late 2021 which is already gaining traction in the market.
Microlise Transport Conference
After a two-year hiatus as a result of the global pandemic, the Microlise
Transport Conference made a successful return in May 2022. The conference is
one of Europe's largest road transport events which this year included over 50
exhibitors, 40 speakers, including HRH Princess Royal, and over 1,000
delegates. They joined leaders from across the transport industry to discuss
the current challenges and opportunities within the sector, while providing an
opportunity for networking and collaboration.
Customer Base
We have a strong track record of building long-term relationships with our
customers and growing our engagement over time, through product expansion
across new functions and geographies. This is reflected in the number of
contract extensions and renewals we have secured during the period.
Major multi-year renewals were signed with Tesco and Asda among several
others, in the UK. In Australia we also signed a 5-year extension with Coles,
a supermarket chain with over 2,500 stores nationally.
During the six months under review, we also added over 60 new customers,
almost as many as the 65 secured in the whole of calendar year 2021. This
strong performance highlights the increasing attractiveness of our offering,
particularly in helping fleet operators minimise costs and protect margins in
this challenging economic environment.
Notably, we won a contract with international bakery company Arytza in France,
an important milestone in a key target market, where we are now building a
strong pipeline for Q4. In addition, we signed contracts with customers
including PD Ports, K+N Logistics, H&M Distribution and Europa Worldwide
Logistics. As a result, the Company grew vehicle subscriptions by 3% to a
total of 570k at period end.
Overall customer churn remained extremely low during the period at less than
0.1%. This excellent performance reflects the loyalty of our customer base as
well as the importance of Microlise's award-winning technology platforms in
ensuring the efficient running of their operations.
We continue to invest in our sales capacity, with a particular focus on
developing international opportunities and on new markets such as smaller
fleets and vehicles.
Product Offering
With fleet operators facing unprecedented rises in fuel prices, a shortage of
drivers, and difficulties in replacing aging vehicles owing to supply
problems, Microlise's solutions have never been of greater importance.
Our recently launched Planning & Optimisation module provides faster and
more flexible route planning. Its ability to reduce driver hours and mileage,
and therefore mitigate the impact of rising fuel costs, has been greatly
welcomed by our existing customer base while attracting interest from
potential new customers.
In addition, our new compliance software package TruVan, has opened a new
compliance market for us in van and Light Commercial Vehicle ("LCV")
Operators. TruVan includes an App and web-based 'back-office' management
system, enabling van operators to comply with DVSA Best Practice and operating
guidelines, while efficiently managing their fleets.
Strategic Focus
Our focus is on growth and ensuring our solution remains best-in-class for
large HGV fleet operators. We invest heavily in product development as we look
to bring new solutions to our platform that deliver significant cost and
emission savings to our clients. In addition, we are expanding our product and
services range to become more accessible for operators of smaller fleets with
less than 500 vehicles. In order to achieve this, we have invested in growing
our sales capabilities which has led to a strong pipeline where we are already
closing deals.
Supply chain issues continue to delay new-vehicle delivery across the world,
and, as a result, more and more operators are seeking to optimise the vehicles
they currently have. We therefore remain focussed on international expansion
to capitalise on the global opportunity, and we are able to report solid
development across a number of geographies.
In the Middle East, we assisted MAN with the Dubai launch of MAN TG3 truck,
and we are seeking to extend this into new geographies including Western and
Central Africa. In addition, we are exploring new solutions for EV Fleets and
piloting P&O with Emirates Logistics for Adidas across both India and the
Middle East. In France, we signed a contract with Arytza and in the ANZ
region, we secured a 5-year extension with the Australian supermarket chain,
Coles.
Selective M&A
We have a robust pipeline of opportunities in M&A where we are engaged in
several processes at present. We also continue to actively assess further
potential acquisition opportunities, with a focus on companies that could
expand our technological capability or increase our international presence.
Progress is being made in this area and we have evaluated over 40 companies
over the last 15 months.
Post period end, we have made a further investment in TrakM8 (TRAK) via a £1m
convertible loan note to deliver a restructuring that would focus on core
growth areas and accelerate route to profitability.
ESG
Microlise is continuing to develop its ESG credentials with projects underway
to offset the Group's carbon footprint. Highlights include our plans to
install solar panels at our Nottingham HQ and to increase the number of EV
charging points for staff. We also continue to nurture the next generation of
talent with new roles, apprenticeships and graduate schemes. We have
welcomed 6 qualified software engineer apprentices, as well as a new Graduate
Operations and Product programme being launched, with 4 new graduates entering
the business to be trained over the next 12 months, including 13 new Software
Engineering Graduates.
I am incredibly proud of the steps we have made and look forward to updating
the market on our progress.
Outlook
Microlise's strong performance during a period of significant geo-political
and macro-economic upheaval demonstrates the continued strong demand in the
transport industry for our market-leading technology.
We continue to successfully navigate a course through the global microchip
shortage to ensure we meet our customers' needs in a timely manner. We are
already beginning to see improvements in the situation which we expect to have
normalised by mid-2023, although the Board will continue to remain vigilant.
Looking ahead, Microlise is increasingly well-capitalised and well-positioned
to be able to continue to invest in growth, expand our product portfolio and
grow our strong customer base.
Despite market headwinds, our team has proved resilient and continued to
deliver in the first half of the year. With the transport industry's growing
need for our technology and a solid and strengthening order book, we are
confident of delivering a performance for the full year in line with market
expectations.
Nadeem Raza, Chief Executive Officer
CFO's Statement
The financial results for the six-month period to 30 June 2022 reflect a
further period of profitable and cash generative growth for Microlise despite
the challenges widely reported across all industry sectors.
Group Results
Revenue
Revenue for the 6 months ended 30 June 2022 was £30.7m, an increase of 5%
(£29.1m in H1 2021). Recurring revenue increased 10% to £19.8m (H1 2021:
£18.0m), representing 64.7% of total revenues (61.6% in H1 2021). New
customer wins, together with growth in our existing customer's fleets resulted
in 10% growth in Annual Recurring Revenue (ARR) to £40.2m as of 30 June 2022
from £36.4m at 30 June 2021. Non-recurring revenue for the period was £10.8m
(H1 2021 £11.2m).
During the 6-month period, 60 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 0.1% (FY 2021: 0.1%) reflecting the importance of
Microlise's software solutions in our customers' operations.
Gross Profit
Gross profit for the period increased by 7% to £18.4m (H1 2021: £17.2m).
This resulted in a slight increase in gross margins to 60% from 59% in H1
2021.
Operating Expenses
Despite the global uncertainties caused by current market conditions, the
Group has continued to invest in product development, operations, and sales
and marketing. Operating expenses in the 6-month period ended 30 June 2022
increased 8% to £14.6m (H1 2021: £13.5m). This cost represents employee
costs, premises costs, marketing costs, research & development (net of
capitalised costs), finance charges, and administration costs.
The 3% increase in staff costs in the 6 months ended 30 June 2022 to £12.5m
(H1 2021: £12.2m) reflected standard annual pay awards, share based payments
and increased commissions/ bonuses reflecting the increased new customer win
rate and the Group's strong EBITDA performance. Marketing costs increased
during the period by £0.5m due to the return (after a 3 year absence) of the
Microlise Transport Conference. Administration costs increased during the
period by £0.4m reflecting Microlise's costs of listed business status. The
increase also included an average headcount increase in operations due to the
strategy of bringing more installation work in-house. Average headcount in the
period was 644 (H1 2021: 610) overall.
Capitalised development costs in the period were £0.8m (H1 2021: £0.6m),
whilst amortisation of capitalised development costs in the period was £0.3m
(H1 2021: £0.2m).
EBITDA and Profit Before Tax
EBITDA in the 6 months ended 30 June 2022 remained consistent at £4.1m (H1
2021 £4.1m), with EBITDA margin for the period at 13.4% (H1 2021: 14.1%). The
decrease in the EBITDA % was a result of the planned increase in operating
expenses summarised above. To provide a better guide to the underlying
business performance, EBITDA excludes depreciation, amortisation, interest,
and tax.
In the 6 months ended 30 June 2022 the profit before taxation was £1.4m (HY
2021: profit of £1.4m).
EPS and Dividend
The Group made a profit after taxation in the period of £1.1m (H1 2021:
£0.7m), an increase of 67% over the same period in 2021. This increase comes
in part due to a decrease in the taxation charge compared with H1 2021 which
reflected a change in the corporation tax rates from 19% to 25% from April
2023 that was applied to deferred tax balances.
As a result of the increase in profit after taxation, the reported basic
earnings per share increased to 0.94 (H1 2021: 0.64) and the diluted earnings
per share increased to 0.93 (H1 2021: 0.64)
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 £72.8m at 30 June 2022 (30 June 2021: £57.2m),
due to the repayment of the term loans and increased cash balances resulting
from the IPO (£18.6m). Current assets increased by £5.2m to £39.3m at 30
June 2022, as a result of the strong operating cash flow in the year.
Total liabilities were down by 18% to £54.4m at the period end (30 June 2021:
£66.1m) due mainly to the repayment of the term loans.
Cashflow and Net Cash
The Group ended the 6-month period to 30 June 2022 with cash of £15.8m, up
19% since 31 December 2021, beating the Board's expectations.
Overall net cash inflow for the period was £2.6m (30 June 2021: outflow of
£0.7m).
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
£15.8m and the undrawn £20.0m facility gives the Group access to £35.8m 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.
One of the main purposes of the IPO was to raise funds for acquisitions, and
whilst discussions were underway, nothing was imminent at the time, so the
Board took the decision to repay borrowings from the funds raised in the IPO
in order in order to save interest costs in the short-term. The borrowings
repaid could be reborrowed at any time via the revolving cash flow facility.
Bill Wynn, Chief Financial Officer
Interim unaudited Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2022
Six months ended Six months ended
30 June
30 June
2022 2021
Note £'000 £'000
Revenue 1 30,675 29,136
Cost of sales (12,322) (11,928)
Gross profit 18,353 17,208
Other operating income 459 379
Administrative expenses (17,104) (15,765)
Operating profit 1,708 1,822
Interest income 1 -
Interest expense (142) (286)
Share of loss of associate net of tax (127) (77)
1,440 1,459
Profit before tax
Taxation 2 (350) (806)
Profit for the period 1,090 653
Other comprehensive income for the period
Currency translation differences 47 (1)
Total comprehensive income for the period attributable to the equity 1,137 652
shareholders of Microlise Group PLC
Earnings per share
Basic earnings per share (pence) 3 0.94 0.64
Diluted earnings per share (pence) 3 0.93 0.64
Interim unaudited consolidated Statement of Changes in Equity
Share Capital Share Premium Merger Reserve Retained earnings Total Equity
£'000 £'000 £'000 £'000 £'000
At 1 January 2021 44 - 55,172 1,320 56,536
Comprehensive income for the period to 30 June 2021
Profit for the period - - - 653 653
Other comprehensive income - - - (1) (1)
Total comprehensive income for the period - - - 652 652
Bonus issue of shares 55,172 - (55,172) - -
Reduction of share capital (55,114) - - 55,114 -
Total transactions with owners 58 - (55,172) 55,114 -
102 - - 57,086 57,188
At 30 June 2021
Comprehensive income for the period to 31 December 2021
Loss for the period (after exceptional IPO costs) - - - (3,342) (3,342)
Other comprehensive income - - - (71) (71)
Total comprehensive income for the period - - - (3,413) (3,413)
Share based payment - - - 129 129
Issue of shares 14 17,630 - - 17,644
Total transactions with owners 14 17,630 - 129 17,773
At 31 December 2021 116 17,630 - 53,802 71,548
Comprehensive income for the period to 30 June 2022
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
At 30 June 2022 116 17,630 - 55,120 72,866
Interim unaudited Consolidated Statement of Financial Position
as at 30 June 2022
Note 30 June 31 December 30 June
2022 2021 2021
£'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 8,645 8,573 7,930
Intangible assets 4 75,373 75,987 76,128
Investments in associate 1,719 1,846 1,773
Deferred tax - - 808
Trade and other receivables 2,285 2,710 2,600
Total non-current assets 88,022 89,116 89,239
Current assets
Inventories 3,516 2,941 3,897
Trade and other receivables 18,817 15,143 18,840
Corporation tax recoverable 1,160 932 1,610
Cash and cash equivalents 15,774 13,210 9,718
Total current assets 39,267 32,226 34,065
127,289 121,342 123,304
Total assets
Current liabilities
Lease liabilities (768) (717) (628)
Borrowings - - (2,338)
Trade and other payables (32,468) (25,780) (29,065)
Total current liabilities (33,236) (26,497) (32,031)
Non current liabilities
Lease liabilities (817) (994) (343)
Borrowings - - (12,790)
Trade and other payables (15,092) (17,312) (16,224)
Deferred tax (5,278) (4,991) (4,728)
Total non current liabilities (21,187) (23,297) (34,085)
Total liabilities (54,423) (49,794) (66,116)
Net assets 72,866 71,548 57,188
Equity
Issued share capital 116 116 102
Share premium account 17,630 17,630 -
Retained earnings 55,120 53,802 57,086
Total equity 72,866 71,548 57,188
Interim unaudited Consolidated Statement of Cash Flows
for the period ended 30 June 2022
Six months ended Six months ended
30 June
30 June
Note 2022 2021
£'000 £'000
Cash flows from operating activities
Cash generated from operations A 5,714 3,401
Tax paid (28) (42)
Net cash generated from operating activities 5,686 3,359
Cash flows from investing activities
Purchase of property, plant and equipment (764) (481)
Additions to intangible assets (820) (756)
Purchase of subsidiaries (deferred consideration paid) (1,000) (1,000)
Interest received 1 -
Net cash used in investing activities (2,583) (2,237)
Cash flows from financing activities
Interest paid (135) (233)
Lease liability payments (409) (379)
Repayment of bank loans - (1,061)
Repayment of other loans - (195)
Net cash used in financing activities (544) (1,868)
Net increase/(decrease) in cash and cash equivalents 2,559 (746)
Cash and cash equivalents at beginning of the year 13,210 10,464
Foreign exchange gains 5 -
Cash and cash equivalents at end of the year B 15,774 9,718
Notes to the interim unaudited consolidated statement of cash flows
for the period ended 30 June 2022
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
2022 2021
£'000 £'000
Profit for the period 1,090 653
Adjustments for:
Depreciation 980 987
Amortisation 1,434 1,293
Share based payments 181 -
Net interest costs 141 286
Share of loss of associate 127 77
Tax charge 350 806
4,303 4,102
Working capital movements:
Increase in inventories (575) (238)
Increase in trade and other receivables (3,249) (1,849)
Increase in trade and other payables 5,235 1,386
Cash generated from operations 5,714 3,401
.
B. Analysis of net cash/(debt)
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
2021 2021
£'000 £'000 £'000 £'000
Bank loans (15,990) 1,061 (19) (14,948)
Other loans (375) 195 (65) (245)
Lease liabilities (1,101) 379 (183) (905)
Liabilities arising from financing activities (17,466) 1,635 (267) (16,098)
Cash and cash equivalents 10,464 (746) - 9,718
Net debt (7,002) 889 (267) (6,380)
Notes to the interim unaudited financial information
General information
The parent company is a holding company and its subsidiaries are telematics
businesses providing technological transport solutions that enable customers
to reduce costs and environmental impact by maximising the efficiency of their
transportation. The company is a public limited company, 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 International Financial Reporting Standards issued
by the International Accounting Standards Board, as adopted by the United
Kingdom and as effective for periods beginning on or after 1 January 2022
('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 2022 and there are not expected to be any changes in the Group's
accounting policies compared to those applied at 31 December 2021, a full
description of which are contained in the financial statements for the period
ended 31 December 2021 which are available on our website.
There are no new standards, interpretations and amendments 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 2022.
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 2022 and 30 June 2021 is
unaudited and does not constitute the Group's statutory financial statements
for the period.
The statutory audited financial statements for the eighteen months ended 31
December 2021 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.
Going concern
The group had cash balances of £15.8m at 30 June 22 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. All existing
loans at 30 June 2021 were repaid from cash balances following the admission
to AIM.
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 and non-Gaap adjusted results
The Group operates in the telematics market and considers all revenue to
relate to the same.
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 2022
30 June 2021
£'000 £'000
By type
Revenue recognised at a point in time:
Supply of hardware and installation 9,595 9,506
Revenue recognised over time:
Professional services including project management 1,242 1,670
Managed service agreement income 18,219 16,237
Other support and maintenance services 1,619 1,723
21,080 19,630
30,675 29,136
By destination:
UK 27,812 27,237
Rest of Europe 684 577
Rest of the World 2,179 1,322
Total revenue 30,675 29,136
One customer contributed £9.6m and 31% of revenue to the six months ended 30
June 2022 (£7.7m and 26% to the six months ended 30 June 2021).
Adjusted results
EBITDA is a commonly used measure in which earnings are stated before net
finance income, amortisation and depreciation as a proxy for cash generated
from trading.
The group now qualifies for large company R&D tax reliefs with the RDEC
credit included in other operating income above operating profit for the six
months ended 30 June 2022 and in line with common practice is included in the
Group's calculation of EBITDA.
Six months ended Six months ended
30 June 2022
30 June 2021
£'000 £'000
Operating profit before interest and share of associate 1,708 1,822
Depreciation 980 987
Amortisation of intangible assets 1,434 1,293
Adjusted EBITDA 4,122 4,102
The directors consider the Group to comprise two complementary segments in
respect of fleet management services (Microlise) and tachograph specific
software and analysis services, a segment acquired on 9 March 2020 (TruTac).
Microlise TruTac Total Six months ended 30 June 2022 Microlise TruTac Total Six months ended
30 June
2021
Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 28,711 1,964 30,675 27,448 1,688 29,136
Depreciation and amortisation 2,125 289 2,414 2,026 254 2,280
Operating profit 1,400 308 1,708 1,671 151 1,822
Net interest (139) (2) (141) (286) - (286)
Share of associate loss (127) - (127) (77) (77)
Profit before tax 1,134 306 1,440 1,308 151 1,459
2. Tax on profit
Six months ended Six months ended
30 June 2022
30 June 2021
£'000 £'000
Current taxation
Current period overseas tax (63) -
(63) -
Deferred taxation
Origination and reversal of timing differences (287) (150)
Change in rate - (656)
(287) (806)
Tax charge on profit (350) (806)
The Finance Act 2021 enacted a 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 2022 to deferred tax reversals expected to
occur from that date.
On 23 September 2022 it was announced that this increase in tax rate is to be
reversed, with the date to be substantively enacted yet to be confirmed. The
financial impact of this rate change to the tax charge will be considered at
that point and reflected at the relevant future time.
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 19% (2021: 19%). The differences are
reconciled below:
Six months ended Six months ended
30 June 2022
30 June 2021
£'000 £'000
Profit before taxation 1,440 1,459
Corporation tax at standard rate 274 277
Factors affecting charge for the period:
Disallowable expenses 63 42
Deferred tax not previously recognised - (169)
Other differences including higher overseas tax rates 13 -
Effect of change in deferred tax rates - 656
Tax charge on profit 350 806
In addition, an RDEC credit of £263,000 is included in other operating income
for the period ended 30 June 2022 (£290,000 for the six months ended 30 June
2021).
3. Earnings per share
Six months ended Six months ended
30 June 2022
30 June 2021
Profit used in calculating EPS (£'000) 1,090 653
Weighted average number of shares for basic EPS 115,945,956 102,168,178
Weighted average number of shares for diluted EPS 117,001,050 102,168,178
Basic earnings per share (pence) 0.94 0.64
Diluted earnings per share (pence) 0.93 0.64
There were 2,087,935 share options in place at 30 June 2022 (2021: nil) of
which 1,055,755 were potentially dilutive at their nominal exercise price and
are included in the weighted average for diluted EPS.
4. Intangible fixed assets
Goodwill Customer relationships Technology Brands Software Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2021 52,300 17,780 8,143 2,711 547 81,481
Additions - - 614 - 142 756
At 30 June 2021 52,300 17,780 8,757 2,711 689 82,237
Amortisation
At 1 January 2021 - 2,375 2,046 395 - 4,816
Charge for the period - 569 590 90 44 1,293
At 30 June 2021 - 2,944 2,636 485 6,109
Net book value
At 30 June 2021 52,300 14,836 6,121 2,226 645 76,128
Cost
At 1 January 2022 52,778 17,780 9,373 2,711 791 83,433
Additions - - 803 - 17 820
At 30 June 2022 52,778 17,780 10,176 2,711 808 84,253
Amortisation
At 1 January 2022 - 3,514 3,230 575 127 7,446
Charge for the period - 569 702 90 73 1,434
At 30 June 2022 - 4,083 3,932 665 200 8,880
Net book value
At 30 June 2022 52,778 13,697 6,244 2,046 608 75,373
Intangible assets have arisen principally on acquisition with a continuing
investment in technology and software.
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