REG - Microlise Group PLC - Trading Update

MicroliseAnnouncement

25/07/2023 07:00

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RNS Number : 0249H  Microlise Group PLC  25 July 2023

25 July 2023

 

 

Microlise Group plc

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

 

Trading Update

 

Supply chain issues begin to ease resulting in double digit growth

 

Microlise Group plc (AIM: SAAS), a leading provider of transport technology
solutions to fleet operators, is pleased to provide a half year update on
trading for the six months to June 30, 2023 ("the Period"). The Group expects
to publish its interim results in late September.

 

Trading update

 

Microlise experienced solid trading during the first half of FY23, in-line
with management expectations. The Group saw continued growth in revenue,
recurring revenue, ARR and profitability.

 

As a result, revenue for the first half of the year is expected to show growth
of 10% to £33.9m (H1 FY22: £30.7m) with anticipated adjusted EBITDA(1)
growth of 4% to £4.5m (H1 FY22: £4.3M). 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). New vehicle delays continued to slow down deliveries to direct
customers resulting in an order backlog increase of 95%, which is expected to
be delivered during H2 as new vehicle lead times continue to improve. 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, however this will normalise in H2 as the Company
delivers against its order book for direct sales.

 

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(2) of 80% of adjusted EBITDA,
which was lower than H122 (127%), reflecting this working capital phasing. FY
cash conversion rate expectations remain unchanged.

 

Customers

 

New customer acquisition continued to be strong in the first half, with the
Group adding an additional 250 new customers, including Leeds headquartered
LF&E Refrigerated Transport, and Northern Ireland based McCulla, both
signing 6-year contracts.

 

Microlise continues to have high rates of customer retention and very low
churn. Churn in the six months under review was 0.5%, emphasising the
importance of Microlise's solutions to its customers, which the Group continue
to deepen through a combination of its market leading solutions coupled with
the introduction of new integrated products.

 

Acquisition and Products

 

Microlise acquired Vita Software in March 2023 for a total net consideration
of £2.06m, expanding the Group's suite of technology solutions to include
resource and transport costing, subcontractor management and invoicing
solutions.  The acquisition has proven to be immediately earnings enhancing,
and the Company has made good progress with 2 contract wins for Vita's
solutions to existing clients. The integration of the acquisition has
progressed well and Microlise is confident of further customer successes going
forward.

 

Microlise Transport Conference

 

The Microlise Transport Conference, Europe's largest road transport
conference, returned for another year in May 2023. Over 50 speakers, 48
exhibitors, and more than 1,100 delegates attended the event this year. They
joined leaders from across the transport industry to learn about the
challenges and opportunities facing the sector, as well as creating a space
for them to network and collaborate.

 

There were two interactive panel discussions that took place this year,
'Alternative Fuel Future' and 'Road to Rail'. Both sessions sparked debate
surrounding two key topics that support the industry's route to zero emissions
and the government's wider 'net zero' target. During the same time as the
conference, Microlise also hosted a separate event for investors. This
provided a hands-on demonstration of Microlise's technology, including its new
Transport Management System; 2 customer showcases; and a joint presentation in
which Microlise and OEM customers discussed strategy in relation to the
changing nature of vehicle fuel.

 

Link to video: https://vimeo.com/user107326204/mtc23?share=copy
(https://vimeo.com/user107326204/mtc23?share=copy)

 

 

Outlook

 

Microlise has seen the global supply chain and microchip shortages ease during
the Period and the Board remains confident that this trend will continue in
the second half of 2023. These supply chain issues have also reduced the
availability of new vehicles for our customers, leading to delays in the
delivery of projects to new customers. Despite this, the Group enters the
second half of the year in a strong position with a record order book to
deliver as it is beginning to see new vehicle lead times begin to improve and
expects this to improve further by Q4 2023. As a result, the Company is
confident of meeting market expectations for revenue, profit and cash for the
full year. The Group's cash balance, continued strong cash generation and the
£20m available under its undrawn committed revolving credit facility, leave
the Group well placed to pursue its organic and acquisition growth strategy.

 

Nadeem Raza, CEO, Microlise said: "We are very pleased with the performance of
the Group during H1, given the many challenges we have had to overcome. These
have included supply chain issues and a shortage of new vehicles coming to
market, both of which hampered our ability to deliver solutions, though not to
secure sales, such that our order book is at a record level.

 

"We enter the second half in a strong position. With supply chains improving
coupled with the expectation that vehicle deliveries will also improve in H2,
the Board are confident in the Group's continued successful growth."

 

Notes:

 

All financials are based on unaudited figures.

1 Earnings Before interest, tax, depreciation, amortisation and share based
payments.

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

3 Analysts' revenue expectations for FY 2023 range from £66.5m to £67.0m.

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

5 Analysts' net cash expectations for 31 December 2023 range from £18.3m to
£18.9m.

 

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 provider of telematics
and fleet management solutions. Its technology is designed to help businesses
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.

 

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 670 industry
professionals.

Handling over 599,000 subscriptions annually, Microlise joined the Alternative
Investment Market (AIM) in 2021, qualifying for the London Stock Exchange's
Green Economy Mark.

 

 

 

 

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