29 Oct 2010 08:52
This announcement replaces the half yearly results announcement (announcementnumber 01803-8B0F) released by SureTrack Monitoring plc at 7.00am this morning.The previous announcement contained two typographical errors in the secondparagraph of the Chairman's Statement. The gross margin figure has beencorrected to 48.9% and the administrative costs figure corrected to £383,883(as opposed to 44.3% and £370,883, respectively, in the previous release). Theannouncement is otherwise unchanged. 29 October 2010 SureTrack Monitoring plc ("SureTrack", the "Company" or the "Group")
Half yearly results for the six months ended 31 July 2010
SureTrack (AIM: STK), one of the UK's leading asset protection, cash security,crime deterrent and tracking businesses, announces its interim results for thesix months ended 31 July 2010.
Highlights
* Revenues in the period decreased due to the economic downturn particularly
affecting sales and renewals to construction customers * Ford contract won - launched post period end * Insurers offer discount for commercial vehicles fitted with MT2 unit * "Sold Secure Diamond" accreditation renewed * IBP restructured - significant reduction in overheads * Sales team strengthened Post period * Admission to AIM
* Placing to raise £1.4m completed
Will Hirons, Managing Director, SureTrack Monitoring commented:
"The business has performed well despite the economic downturn and with the securing of the Ford contract we can look forward to sustained growth."
"The sales team has been strengthened and further contracts are under discussion."
For further information contact:
SureTrack Monitoring plc Tel: 01926
863630
Will Hirons, Managing Director Tel: 07850 934204 Simon Barrell
Merchant Securities Limited (Nominated Adviser and Broker) Simon Clements / Bidhi Bhoma - Nominated Adviser Tel: 020 7628
2200
Graeme Cull - Corporate Broking Lothbury Financial Services (Financial PR) Tel: 020 7868
2010 Michael Padley/Simon Astley Chairman's StatementOver the past few months the Company has achieved two significant milestones.The first being the signing of a contract with Ford in June, under which theCompany's MT2 product is now an approved accessory for Ford vehicles and thesecond being the placing of 236,066,670 new Ordinary Shares at 0.6 pence toraise £1.42 million (before expenses) and Admission of the Company's shares totrading on the AIM market of the London Stock Exchange on 3 August 2010. TheBoard is proud of these notable achievements against the backdrop ofchallenging economic conditions.The Group's revenue in the six months ended 31 July 2010 was £248,656 (2009: £274,409). The decline in revenue was the result of a slowdown in the levels ofcustomer renewals particularly in the plant hire and construction sector. Thereduced revenues from both parts of the business has resulted in slightly lowergross margins, at 48.9 per cent. (2009: 57.2 per cent.). Administrative costshave risen to £383,883 (2009:£243,320), however this includes the exceptionalcosts of £23,819 associated with the reorganisation of IBP. The net result is aloss before taxation for the period of £262,688 (2009: loss £86,356).
Sure-Track Europe
At the time the Ford deal was announced in June, the Board believed that revenues from this contract would commence early in the third quarter of 2010. However, the main launch to the Ford dealer network was delayed until late September whilst marketing, training and sales collateral were approved by Ford.
Overall, we have been very encouraged by the reception that the product hasreceived from Ford dealers in the last few weeks. The training programme hasnow been completed in approximately 10 per cent of the dealer network and weexpect all Ford's backbone dealers to have completed their programmes by theyear end. We have recently received the first, albeit small, orders and areconfident that these will build over the coming months. Despite the initialdelay to the rollout programme we are very pleased with the progress made withFord and as a consequence have increased our sales force. The traction achievedwith Ford has also led to the commencement of discussions with other majorplant and vehicle manufacturers.In addition, significant progress has been made with two insurers. Ford Insureand another major SME insurance aggregator are offering a 10 per cent discountfor commercial vehicles fitted with an MT2 unit. These discounts aresignificantly greater than those offered on other tracking products.
The highly acclaimed `Sold Secure Diamond' accreditation has recently been renewed. This will assist the Company in building on its existing line fit programme with a major caravan manufacturer and we anticipate a new line fit range will be initiated by this manufacturer in 2011.
In the construction and plant hire sectors there has been a slowdown in the levels of business reflecting the current fortunes of these businesses which has adversely affected the renewals and new sales.
IBP
During the period under review and since the half year end the Board hasclosely monitored the IBP operations and changes have been made in an effort toreduce costs whilst maintaining a strong focus on sales. The Company has nowrelocated the IBP business and the overheads of this business have been reducedsignificantly, with additional support now being provided from our head officein Kenilworth. The second half is already showing more progress, particularlyin the UK with sales to a major European bank, and in tendering for two majorcontracts in Europe. Additional sales resource for the UK has been added inSeptember and it is anticipated that this will further drive UK sales.
IBP is also undertaking trials for its products with a nationwide network of local convenience stores and is in discussions with another major retailer regarding a trial of its products.
Summary
The fundraising that was undertaken as part of the AIM IPO process has allowedthe Group to invest in the Company's sales functions, to increase stock levelsand to enable the business to build on the progress it has made in the previous12 months. The result is a significantly strengthened sales team and acorresponding investment in stock levels, to ensure that the Company isprepared for the expected demand for the products from Ford and othercustomers. We have seen considerable interest from Ford dealerships in the MT2product and we are gradually building our customer order book. Discussionscontinue with new plant hire customers and manufacturers and vehicle suppliers;the backing of the major insurers proving a useful asset. IBP's progress hasbeen steady in the period and we are confident that the reorganisation willenhance the prospects of this business in the short to medium term.
In conjunction with the move to AIM we have strengthened the Board and I am pleased to welcome Brain Wise and Simon Barrell, who both have considerable public market and industry experience and knowledge, which I am sure will help the business as it grows.
.The Board believes that the momentum created in both parts of the Company willdeliver positive returns to shareholders in the future I am confident that inmy statement for the full year, I will be able to report further progress.
Nigel LinacreChairmanConsolidated Income StatementContinuing operations Notes Six months Six months Year ended ended ended 31 July 31 July 31 January 2010 2009 2010 (Unaudited) (Restated (Audited) £ Unaudited) £ £ Revenue 2 248,656 274,409 671,493 Cost of sales (127,151) (117,328) (295,260) Gross profit 121,505 157,081 376,233 Other operating expenses (360,064) (243,370) (1,537,145) Exceptional items (23,819) - - Operating profit (262,378) (86,289) (1,160,912) Finance expense (310) (67) (455) Loss before tax (262,688) (86,356) (1,161,367) Tax expense 5 - - - Loss for the period (262,688) (86,356) (1,161,367) Loss per share 4 Basic (0.07)p (0.02)p (0.31)p
Consolidated Statement of Comprehensive Income
Six months Six months Year ended ended ended 31 July 31 July 31 January 2010 2009 2009 (Unaudited) (Unaudited) (Audited) £ £ £ Loss for the period (262,688) (86,356) (1,161,367) Total comprehensive income for (262,688) (86,356)
(1,161,367)
the period
Consolidated Statement of Financial Position
Notes 31 July 31 July 31 January 2010 2009 2010 (Unaudited) (Restated/ (Audited) £ Unaudited) £ £ Non-current assets Goodwill 6 885,028 1,753,190 885,028 Other intangible assets 7 54,423 57,752 57,137 Property, plant and equipment 5,762 4,743 6,606 945,213 1,815,685 948,771 Current assets Inventories 95,287 129,615 79,257 Trade and other receivables 128,394 118,982 139,092 Cash and cash equivalents 22,822 48,446 54,185 246,502 297,043 272,534 Total assets 1,191,715 2,112,728 1,221,305 Equity and liabilities Equity Share capital 8 4,002,810 3,876,430 4,001,430 Share premium account 29,220 29,220 29,220 Other reserves (1,420,762) (1,420,762) (1,420,762) Retained earnings (1,998,154) (660,454) (1,735,465) Total equity 613,115 1,824,434 874,423 Current liabilities Trade and other payables 428,487 288,181 346,769 Short term loans 9 150,000 - - Tax liabilities 113 113 113 Total current liabilities 578,600 288,294 346,882 Total equities and liabilities 1,191,715 2,112,728
1,221,305
Consolidated Statement of Cash Flows
Six months Six months Year ended ended ended 31 July 31 July 31 January 2010 2009 2009 (Unaudited) (Unaudited) (Audited) £ £'000 £'000 Operating activities Loss before tax (262,688) (86,356) (1,161,367) Adjustments for: Depreciation and amortisation 14,076 13,372 25,274 Impairment of goodwill - - 868,162
(Increase) /decrease in inventories (16,030) (5,254)
2,228
Decrease/(increase) in receivables 10,698 19,884
(28,380)
Increase/(Decrease) in payables 81,719 (17,050) 123,092 Cash utilised by operations (172,225) (75,404) (170,991) Net finance income 310 67 455 Net cash utilised from operating (171,915) (75,337) (170,536)activities Investing activities Bank overdraft acquired with subsidiary - (2,870) (2,870) Finance costs (310) (67) (455) Purchase of intangible assets (10,396) - (10,112)
Purchase of property, plant and equipment (123) (907) (14,352)
Net cash used in investing activities (10,829) (3,844) (27,789)
Net cash outflow before financing (182,744) (79,181) (198,325) Financing activities Short term loans received 150,000 - - Issue of shares (net of costs) 1,380 51,600
176,483
Net cash inflow from financing 151,380 51,600
176,483
Decrease in cash and cash equivalents in (31,364) (27,581) (21,842)period Net cash and cash equivalents at start of 54,185 76,027 76,027the period
Net cash and cash equivalents at end of 22,821 48,446 54,185 the period
Consolidated Statement of Changes in Equity
Share Share Other Retained Total capital premium reserve earnings account £ £ £ £ £ At 1 February 2009 2,854,960 29,220 (2,148,000) (574,098) 162,082 Loss for the year - - - (1,161,367) (1,161,367) Total recognised income - - - (1,161,367) (1,161,367)and expense Reserve on acquisition of - - 727,238 - 727,238subsidiary Shares issued 1,146,470 - - - 1,146,470 At 31 January 2010 4,001,430 29,220 (1,420,762) (1,735,465) 874,423 At 1 February 2010 4,001,430 29,220 (1,420,762) (1,735,465) 874,423 Loss for the period - - - (262,688) (262,688) Total recognised income - - - (262,688) (262,688)and expense Shares issued 1,380 - - - 1,380 At 31 July 2010 4,002,810 29,220 (1,420,762) (1,998,153) 613,115
Notes to the interim report
1 Basis of preparation of the interim report
The financial information set out in this interim report does not constitutestatutory accounts as defined in section 434 of the Companies Act 2006. TheGroup's statutory financial statements for the year ended 31 January 2010 havebeen delivered to the Registrar of Companies. The auditor's report on thosefinancial statements was unqualified and did not contain statements underSection 498(2) or Section 498(3) of the Companies Act 2006.This interim financial report has been prepared in accordance withInternational Accounting Standard 34 Interim Financial Reporting. The interimfinancial information has been prepared on a basis which is consistent with theaccounting policies adopted by the Group for the last financial statements andcomparative figures are given for the six months to 31 July 2009 and the yearended 31 January 2010.2 RestatementThe July 2009 results have been restated under IFRS to correct the accountingpolicy of the Group for treatment of the income recognition on monitoring salesthroughout the year.3 Segmental informationThe group has two key operating segments which are overseen by distinctmanagement teams and reported to the board. These are the provision of trackingdevices, monitoring and recovery services thereon and the supply, assembly andinstallation of security equipment. The former is conducted through itssubsidiary company, Sure-Track Europe Limited and the later through therecently acquired subsidiary, IBP Limited. Sure-Track IBP Ltd Central Total Europe Adjustments 6 6 months Year to 6 6 Year to 6 6 months Year to 6 6 Year to months months months months ended months months ended ended 31 ended ended 31 ended 31 ended ended 31 January January 31 July January January 31 July 31 July 2010 31 July 31 July 2010 31 July 31 July 31 July 2010 2010 2009 2010 2009 2009 2010 2010 2009 £ £ 2010 £ £ £ £ £ £ £ £ £ £ Revenue from 138,538 150,618 331,148 71,250 100,068 236,771 - (53,517) (65,319) 209,788 197,169 502,600UK Revenue from - - - 38,868 77,240 168,895 - - - 38,868 77,240 285,003Europe Total 138,538 150,618 331,148 110,118 177,308 405,666 - (53,517) (65,319) 248,656 274,409 671,493Revenue Interest 4 67 67 6,308 - 388 - - - 6,312 67 455expense Amortisation 13,722 12,492 24,240 354 880 1,034 - - - 14,076 13,372 25,274 - Loss before 98,113 37,162 126,265 107,330 39,860 110,656 57,245 9,334 924,446 262,688 86,356 1,161,367tax Total 199,807 139,443 603,644 154,146 88,306 269,804 224,649 60,545 -526,566 578,601 288,294 346,882liabilities 4 Earnings per shareEarnings per share has been calculated on a loss of £262,688 (2009: £86,356)and the average number of shares in issue for the period of 400,236,533 (2009:358,821,656 shares). Six months ended Six months ended Year ended 30 July 2010 30 July 2009 31 January 2010 (Unaudited) (Restated/ (Audited) Unaudited) Basic Basic Basic £ £ £ Loss for the period 262,688 86,356 1,161,367 Loss per share 0.07p 0.02p 0.31p5 Tax
No tax has been accounted for any of the period shown as the group has been loss making during these periods.
6 Goodwill Six months Year ended ended 31 January 30 July 2010 2010 (Audited) (Unaudited) £ £'000 Cost At 1 January 1,753,190 - On acquisition of subsidiary - 1,753,190 Total 1,753,190 1,753,190 Amortisation At 1 January 866,162 Charge for the period - 866,162 866,162 866,162 Net book value 885,028 885,0287 Other intangible assets Software Customer Patents and Total database licences £ £ £ £ Cost At 1 February 2009 71,514 40,000 - 111,514 Additions in the year 10,031 - - 10,031 Business combinations - - 3,970 3,970 At 31 January 2010 81,545 40,000 3,970 125,515 Additions in the period 10,396 - - 10,396 At 31 July 2010 91,941 40,000 3,970 135,911 Amortisation At 1 February 2009 29,240 16,000 - 45,240 Charge for the year 15,138 8,000 - 23,138 At 31 January 2010 44,378 24,000 - 68,378 Charge for the period 9,000 4,002 108 13,110 At 31 July 2010 53,378 28,002 108 81,488 Net book amount At 31 July 2010 38,563 11,998 3,862 54,423 At 31January 2010 37,167 16,000 3,970 57,1378 Share Capital
During the period the company issued 138,000 shares of 1p at par.
9 Loan Notes
The company issued loan notes in the amount of £150,000 during the period. These loan notes were convertible loan notes and they were converted into ordinary shares on the company's admission to AIM on 3 August 2010. The conversion was at 0.6p per share and resulted in new shares of 25,000,000 being issued.
10 Post balance sheet eventsOn 3 August 2010 the company reorganised its share capital by the redesignationof its issued share into 1 new ordinary share of 0.05p and 1 deferred share of0.95p. At the same time capital raised £1.42 million by way of the issue of236,066,670 new ordinary shares of 0.05p at 0.6p per share and also convertedthe £150,000 loan notes into 25,000,000 new ordinary shares.
11 Copies of the interim report
Copies of the interim report will be sent to shareholders shortly and will be available from the registered office of the Company at 17A The Square, Kenilworth Warwickshire CV8 1EFand from the Company's website www.sure-track.co.uk
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