31 Jul 2012 07:00
31 July 2012Suretrack Monitoring plc
("Suretrack") or (the "Company")
Final Results for the 14 months ended 31 March 2012
Chairman's statement
The 14 month period to 31 March 2012 has seen many changes within the Companyand we have ended the financial year with a business much different to the onewe started with.The results for the period show a loss for the period of £596,365 (12 months to31 January 2011: loss of £542,452) including exceptional items of £19,313 (31January 2011: £23,819). The loss recorded for the year includes £432,286relating to the discontinued business of Sure-Track Europe Limited. The lossfor the period for IBP Limited, the continuing operation (excluding head officecosts), was £5,173 a significant improvement over the year ended 31 January2011 (loss of £100,211).
At the period end the Group had cash resources of £228,930.
IBP
IBP has traded at a small loss of £5,173 (including exceptional costs ofredundancies of £15,650) for the 14 months ended 31 March 2012. The reducedloss is largely attributable to the Eastern European Post office contract thatwas won and substantially completed during the period. Some additional work wassecured for stage one post the period end and we are currently tendering forstage two.IBP's trial of its products with a major high street retailer has beensuccessful in reducing the level of robberies in those pilot stores and we areawaiting a decision by the retailer as to its next steps. At present there isno indication on the likely timing of any decision from the retailer but we arehopeful for an indication within the next six months. IBP continues to serviceits other existing blue chip customers with maintenance and new installationsand will again be running its much hailed symposium in September 2012.
The business is developing the next generation of smoke notes technology which it intends to launch at the time of the symposium.
Sure-Track Europe Limited ("STE") trading and disposal
During 2011 the Company continued to pursue the opportunity offered under theFord agreement and in April 2011 the Company acquired the business and certainassets of a distributor of the MT2, Automotion Security Limited ("Automotion")to assist with this development. Automotion's owner, Ian Platt, who was anexecutive board member of International Association of Auto Theft Investigatorsin the UK has, as part of the acquisition, joined SureTrack on a full timebasis. We considered that this move would enhance our business developmentactivity and reduce the commissions paid by the Company.As we have previously reported at the half year we had less support from Fordthan previously anticipated and we had invested heavily in meeting with andtraining the Ford dealers. We took action at this stage to reduce the overheadsby reducing our level of direct activity with the Ford dealers.Around the time of the half year we obtained an International Motors (IM) partnumber and achieved Thatcham 7 accreditation which we considered to be vital togain more insurance business. Unfortunately neither the IM business nor theaccreditation significantly increased the level of business activity.We were approached by Will Hirons, the Company's CEO, late in 2011 for him topurchase the STE business and the Board considered that given the lossesincurred and the cash drain on the business that the disposal of STE was themost appropriate way forward.Full details of the disposal were given in the circular to shareholders dated16 February 2012. Will Hirons and Deborah Davis have purchased the STE businessfor £188,062 and the Company entered into a Call Option with Will Hirons andDeborah Davis to acquire their entire shareholding in the Company of117,538,809 ordinary shares for approximately £188,062, the equivalent of 0.16pper share being the middle market closing price on 15 February 2012, the lastpracticable date before the entry into the agreement. It is intended that theconsideration arising on the sale of STE will be satisfied by the transfer ofthe Call Option Shares to the Company in accordance with the Call Option andtheir subsequent cancellation.As outlined in the Notice of General Meeting dated 16 February 2012, theCompany intends to undertake a capital reorganisation to enable this to beeffected. Following advice from the Company's lawyers we have waited until thepublication of these results before applying to the Courts to cancel the sharepremium account and the deferred shares. Once this has been effected and theshare buy back has been completed the number of shares in issue will reduce by117,538,809 to 618,808,861.
This disposal was a significant step in stemming the losses made by the Company and the cash drain on the business.
Summary and outlook
The period has been one of great change for the business and we are now in aposition to move forward with IBP. We have removed the trading losses relatingto STE and the resultant cash drain. The Company is now entirely focused ondeveloping the IBP business.The current year has started as the Board expected it to. The final stage ofphase one of the European Post Office contract was completed which enhanced thecurrent trading results. We also await the outcome of the decision regardingphase two of the project and the next steps following a pilot with a largeretailer. We continue to engage with our current and potential customers toassist them with their serious crime issues.We remain cautiously optimistic as to trading in the current year and we willcontinue to actively seek to grow the business in order to increase shareholderreturns.S G Barrell30 July 2012Further enquiries:Suretrack Monitoring plc Simon Barrell Tel: 07850 934 204
Merchant Securities Limited (Nominated Adviser and Broker)
Simon Clements Tel: 020 7628 2200Consolidated Income Statement
For the 14 months ended 31 March 2012
14 Months 14 Months 14 Months 12 Months 12 Months 12 Months ended ended ended ended ended ended 31 March 31 March 31 March 31 January 31 January 31 2012 2012 2012 2011 2011 January 2011 £ £ £ £ £ £ Discontinued Continuing Total Discontinued Continuing Total business business business business Revenue 478,578 466,399 944,977 312,175 312,437 624,612 Cost of sales (305,435) (279,134) (584,569) (182,498) (153,656) (336,154) GROSS PROFIT 173,143 187,265 360,408 129,677 158,781 288,458 Other operating - - - 225 2,159 2,384income Distribution - - - (4,976) (4,976)costs Administrative (605,429) (332,130) (937,559) (418,351) (384,657) (803,008)expenses Exceptional items - (19,313) (19,313) - (23,819) (23,819) OPERATING LOSS (432,286) (164,178) (596,464) (288,449) (252,512) (540,961) Finance costs - (1,623) Finance income 99 132 LOSS BEFORE (596,365) (542,452)INCOME TAX Income tax - - LOSS FOR THE (596,365) (542,452)PERIOD Loss attributable to: Owners of the (596,365) (542,452)parent Earnings per share expressed in pence per share Basic (0.08) (0.08) Diluted (0.08) (0.08)
Consolidated Statement of Comprehensive Income
For the 14 months ended 31 March 2012
14 Months 12 Months ended ended 31 March 2012 31 January 2011 £ £ LOSS FOR THE PERIOD (596,365) (542,452) OTHER COMPREHENSIVE INCOME - - TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (596,365)
(542,452)
Total comprehensive income attributable to:
Owners of the parent (596,365) (542,452)
Consolidated Statement of Financial Position
As at 31 March 2012 As at As at 31 March 31 January 2012 2011 £ £ ASSETS NON-CURRENT ASSETS Goodwill 885,028 885,028 Intangible assets 3,970 45,470 Property, plant and equipment 13,646 53,304 Long term loan note 188,062 - 1,090,706 983,802 CURRENT ASSETS Inventories 25,444 104,068 Trade and other receivables 54,961 256,024 Cash and cash equivalents 228,930 520,962 309,335 881,054 TOTAL ASSETS 1,400,041 1,864,856 EQUITY SHAREHOLDERS' EQUITY Called up share capital 4,170,844 4,133,344 Share premium 2,091,897 1,879,858 Other reserves - (2,148,000) Retained earnings (5,006,961) (2,273,917) TOTAL EQUITY 1,255,780 1,591,285 LIABILITIES CURRENT LIABILITIES Trade and other payables 144,261 273,458 Tax payable - 113 144,261 273,571 TOTAL LIABILITIES 144,261 273,571 TOTAL EQUITY AND LIABILITIES 1,400,041
1,864,856
Consolidated Statement of Cash Flows
For the 14 months ended 31 March 2012
2012 2011 £ £ Cash flows from operating activities Cash generated from operations (465,382) (716,348) Interest paid - (6,323) Net cash from operating activities (465,382) (722,671) Cash flows from investing activities Purchase of intangible fixed assets (17,150) (13,825) Purchase of tangible fixed assets (9,860) (52,172) Acquisition of business assets (30,000) - Proceeds from sale of fixed assets 10,136 - Cash disposed off with subsidiary (29,250) - Interest received 99 132 Net cash used by investing activities (76,025) (65,865) Cash flows from financing activities Share issues net of expenses 249,375 1,255,313 Net cash from financing activities 249,375 1,255,313
(Decrease)/Increase in cash and cash equivalents (292,032) 466,777
Cash and cash equivalents at beginning of periods 520,962 54,185
Cash and cash equivalents at end of period 228,930 520,962
Consolidated Statement of Changes in Equity
For the 14 months ended 31 March 2012
Called up Profit Share Other Total share and loss premium reserves equity capital account £ £ £ £ £ Balance at 1 February 2010 4,001,430 (1,735,465) 756,458 (2,148,000) 874,423 Changes in equity Issue of share capital 131,914 - 1,123,400 - 1,255,314 Total comprehensive income - (542,452) - - (542,452) Share based payment charge - 4,000 - - 4,000 Balance at 31 January 2011 4,133,344 (2,273,917) 1,879,858 (2,148,000) 1,591,285 Changes in equity Issue of share capital 37,500 - 212,039 - 249,539 Total comprehensive income - (596,365) - - (596,365) Disposal of subsidiary - (2,148,000) - 2,148,000 - Share based payment charge - 11,321 - - 11,321 Balance at 31 March 2012 4,170,844 (5,006,961) 2,091,897 -
1,255,780
Notes to the Consolidated Financial Statements
For the 14 months ended 31 March 2012
1. BASIS OF PREPARATION
The financial information set out above does not constitute the Company's statutory accounts for the 14 month period ended 31 March 2012 or 12 month period ended 31 January 2011, but is derived from those accounts. Statutory accounts for 2012 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
The Group's consolidated financial statements are for the 14 months ended 31 March 2012.
These financial statements have been prepared in accordance with InternationalFinancial Reporting Standards as adopted for use in the European Union andIFRIC interpretations and with those parts of the Companies Act 2006 applicableto companies reporting under IFRS. The financial statements have been preparedunder the historical cost convention, except that they have been modified toinclude the presentation of certain non-current financial assets andliabilities at fair value.The consolidated financial statements of SureTrack Monitoring plc are presentedin pounds sterling. The functional currency of the parent and subsidiary entityis pounds sterling.The financial statements have been prepared on a going concern basis. Thedirectors have taken action with the disposal of Sure-Track Europe Limited toreduce the cash outflows of the business. The directors consider that theoutlook presents significant challenges in terms of sales volume and pricingbut are positive with potential new clients in the pipeline. The directors haveinstituted measures to preserve cash until these opportunities come to apositive fruition. The directors have prepared detailed profit and cash flowforecasts to ensure they can project their working capital requirements andmanage the business accordingly.After making enquiries and considering the uncertainties described above, thedirectors have a reasonable expectation that the Group and Company haveadequate resources to continue in operational existence for the foreseeablefuture. For these reasons, they continue to adopt the going concern basis inpreparing the annual report and accounts.
2. SEGMENTAL REPORTING
The Group had 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 was conducted through itssubsidiary company, Sure-Track Europe Limited and latter through its subsidiaryIBP Limited. Sure-Track Europe Limited was disposed of on 5 March 2012 andsince that time there has only been one reportable segment.
Segmental analysis by reportable segments*:
Sure-Track Europe IBP Central adjustments* Total 2012 2011 2012 2011 2012 2011 2012 2011 £ £ £ £ £ £ £ £
Revenue from UK 478,578 312,175 276,755 263,119 - -
755,333 575,294 Revenue from - - 189,644 49,318 - - 189,644 49,318Europe Total revenue 478,578 312,175 466,399 312,437 - - 944,977 624,612 Interest - - - 99 132 99 132revenue Interest - 15 6,308 - - - 6,323expenses Depreciation 9,857 3,424 5,711 2,050 - -
15,568 5,474
Amortisation 30,005 25,492 - - - -
30,005 25,492
Loss before tax 411,153 288,359 5,173 100,211 180,039 153,882 596,365 542,452 Total External - 1,125,814 38,495 339,257 105,766 (1,191,500) 144,261 273,571Liabilities Total External - 431,983 224,215 100,133 1,175,826 1,332,740 1,400,041 1,864,856Assets
* The measurement of information in the table above that is reported to the Board does not include consolidation adjustments or central costs.
During the period both Sure-Track Europe and IBP made sales to individualcustomers that exceed 10% of the total revenue. Sure-Track Europe made sales toone individual customers of £100,015 (2011: £72,423). IBP made sales to twocustomers of £124,235 and £123,957 (2011: one customer £51,062).
3. INCOME TAX
Analysis of the tax charge
No liability to UK corporation tax arose on ordinary activities for the period ended 31 March 2012 nor for the year ended 31 January 2011.
Factors affecting the tax charge
The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is explained below:
2012 2011 £ £ Loss on ordinary activities before tax (596,365)
(542,452)
Loss on ordinary activities multiplied by the (119,273)
(108,490)
standard rate of corporation tax in the UK of 20 %
(2011 - 20%) Effects of: Disallowed items 47 -
Depreciation in excess of capital allowances on (255)
-qualifying assets Losses utilised 40 - Other tax adjustments 119,441 108,490 Total income tax - -
Factors that may affect future tax charges
There is an unrecognised deferred tax asset of £153,000 (2011: £211,433).Thisrelates to estimated surplus trading losses carried forward which are availableto be relieved against future profits of the same trade amounting to £763,921(2011: £1,107,169).4. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
The diluted earnings per share is calculated using the weighted average numberof shares adjusted to assume the conversion of all dilutive potential ordinaryshares.
The diluted loss per share is the same as the basic loss per share as the conversion of share options decreases the basis loss per share, thus being anti-dilutive.
Reconciliations are set out below.
2012 Weighted Per-share Earnings average number amount £ of shares pence Basic EPS
Earnings attributable to ordinary (164,079) 704,331,161 (0.02) shareholders from continuing operations
Earnings attributable to ordinary (432,286) 704,331,161 (0.06) shareholders from discontinued
operations Effect of dilutive options - - - Diluted EPS Adjusted earnings (596,365) 704,331,161 (0.08) 2011 Weighted Per-share Earnings average number amount £ of shares pence Basic EPS
Earnings attributable to ordinary (254,003) 661,347,670 (0.04) shareholders from continuing operations
Earnings attributable to ordinary (288,449) 661,347,670 (0.04) shareholders from discontinued
operations Effect of dilutive options - - - Diluted EPS Adjusted earnings (542,452) 661,347,670 (0.08)5. INVESTMENTS
Disposal of subsidiary undertaking
The net assets disposed of were as follows:
£ Intangible assets 58,645 Tangible assets 23,429 82,074 Current assets Stock 97,072 Debtors 175,823 Cash 29,250 Net liabilities (215,494) Total assets disposed of 168,725 Proceeds - loan payable. 188,062 Profit on disposal 19,337On 5 March 2012 the Company disposed of Sure-Track Europe Limited to WillHirons and Deborah Davis (the "Buyers") for a consideration of £188,062. Theconsideration is due by 31 December 2016. In addition, the Company has enteredinto a Call Option with the Buyers to acquire their entire shareholding in theCompany of 117,538,809 ordinary shares for approximately £188,062, theequivalent of 0.16p per share being the middle market closing price on 15February 2012, the last practicable date before the entry into the agreement.
It is intended that the consideration arising on the sale of Sure-Track Europe Limited will be satisfied by the transfer of the Call Option Shares to the Company in accordance with the Call Option and their subsequent cancellation.
The Buyers acquired the entire issued share capital of Sure-Track EuropeLimited comprising 2,148 ordinary shares of 1p each and assumed all assets,liabilities and TUPE obligations of Sure-Track Europe Limited. Prior tocompletion of the Disposal, an intercompany loan amounting to approximately £1,294,140 owed by Sure-Track Europe Limited to SureTrack Monitoring plc waswritten off which together with the investment value of £2,148,000 lessconsideration of £188,062 resulted in a loss to the parent entity on disposalof £3,254,078.
The cash flows relating to Sure-Track Europe Limited are as follows:
2012 2011 £ £ Operating cash flows (329,235) (421,091) Investing cash flows (35,680) (51,133) Financing cash flows 331,562 510,129 Total cash flows (33,353) 37,905
6. TRADE AND OTHER RECEIVABLES
2012 2011 £ £ Non Current: Long term loan 188,062 - 2012 2011 £ £ Current: Trade receivables 22,431 114,375
Amounts owed by group undertakings -
- Other receivables 3,142 - VAT 17,245 8,709 Directors' current accounts - 4,887 Prepayments and accrued income 12,143 128,053 54,961 256,024Disclosure of credit risk
The directors consider that the carrying amount of trade and other receivables approximates to their value.
On 5 March 2012 the Company disposed of Sure-Track Europe Limited, to Will Hirons and Deborah Davis for a consideration of £188,062. The consideration is due by 31 December 2016 and is shown as a long term loan.
The ageing of the trade receivables as at 31 March 2012 is detailed below:
2012 2012 2011 2011 Gross Allowance Gross Allowance 0 to 30 days 26,286 - 88,134 - 30 to 60 days 5,905 - 25,256 - 60 to 90 days - - 6,767 5,391 Over 90 days (8,172) 1,588 (391) - 24,019 1,588 119,766 5,391The movement in allowance for doubtful debts in respect of trade receivables isdetailed below: 2012 2011 £ £ Opening Balance 5,391 8,313 Additional Provisions - - Utilised in Period (3,803) (2,922) Closing balance 1,588 5,391
7. CASH AND CASH EQUIVALENTS
2012 2011 £ £ Cash in hand - 72 Bank accounts 228,930 520,890 228,930 520,9628. CALLED UP SHARE CAPITALOrdinary Shares Number of Nominal Total ordinary Value Value share £ £ Issued at 1 February 2011 661,347,670 0.0005 330,674 Placing August 2011 75,000,000 0.0005 37,500 Issued at 31 March 2012 736,347,670 0.0005 368,174
The shares issued on 1 August 2011 were issued at 0.0035p creating a premium credited to the share premium account of £211,875 net of expenses of £13,125.
Prior year
Issued and fully paid ordinary shares of 1 pence each:
Number of Nominal Total ordinary Value value share £ £ Issued at 31 January 2010 400,143,000 0.01 4,001,430 Placing June 2010 138,000 0.01 1,380 400,281,000 0.01 4,002,810
On 31 July 2010 the Company undertook a capital reorganisation whereby each 1pence ordinary shares was split into 1 new ordinary share of £0.0005 and 1
newdeferred share of £0.0095. Number of Nominal Total ordinary Value value share £ £ Capital Reorganisation 31 July 2010 400,281,000 0.0005 200,141 Placing August 2010 236,066,670 0.0005 118,033 Debt Capitalisation August 2010 25,000,000 0.0005 12,500 661,347,670 0.0005 330,674
Deferred shares Since 31 July 2010 there have been 400,281,000 deferred shares at a nominal value of £0.0095.
Total ordinary and deferred shares
The issued share capital as at 31 March 2012 is as follows:
Nominal Total Number Value Value of shares £ £ Deferred shares 400,281,000 0.0095 3,802,670 Ordinary shares 736,347,670 0.0005 368,174 4,170,844On flotation to AIM, the Company issued 261,066,670 shares with a nominal valueof £130,533 for a consideration of £1,566,400. The premium of £1,435,867 wascredited to the share premium account.
Transaction costs of £312,467 were incurred on the issue of shares which were settled in cash. These costs have been deducted from the share premium account.
9. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS 2012 2011 £ £ Loss before income tax (596,365) (542,452) Depreciation and amortisation charges 45,573 30,967 Impairment of goodwill - -
Loss on sale of fixed assets 385
-
(Profit)/loss on disposal of subsidiary (19,337)
- Share based payment cost 11,321 Finance costs - 6,323 Finance income (99) (132) (558,522) (505,294) (Increase) in inventories (18,448) (24,811) (Increase)/Decrease in trade and other receivables 25,240
(116,932)
Increase/(Decrease) in trade and other payables 86,348 (69,311) Cash used by operations (465,382) (716,348)10. DIVIDEND
The directors do not propose the payment of a dividend.
11. Availability of Report & Accounts
Copies of the Report and Accounts will be posted to shareholders shortly, willbe available from the Company's registered office Wolfe Lodge, Farnham Road,Bordon, Hampshire GU35 0NH and will be available from the Company's websitewww.suretrackgroup.com.