16 Jun 2011 07:32
16 June 2011 Suretrack Monitoring Plc ("the Company") Final Results for the year ended 31 January 2011
Chairman's Statement
These are the first full year results since the award of the Ford part number and the Company's placing to raise £1.42 million and admission to AIM in August 2010, two significant milestones for the business.
We announced in the trading update in February, the Company's 2011 revenues were below the Board's expectations at £642,612 (2010 £671,493). At that time we reported that the lower revenues were due to slower trading with Ford than had been originally expected. When the Company made its trading update in February it stated that its key focus was on Ford and that the Board was encouraged by the reception the Company's tracking device had received from the Ford dealer network. Units are being ordered in small quantities by dealerships, both for their own use in demonstrator vehicles and for new vehicle sales.
The Group's loss for the year was £542,452 including exceptional items of £ 23,819 (2010: £1,161,367 including exceptional items £868,162).
Sure-Track Europe.
The lower than expected revenue from Ford and the downturn in the construction sector which led to less plant utilisation from plant hire companies, were the key factors that have resulted in the continued losses for the year.
The sales and administration functions were expandedduring the financial period and this has resulted in higher operating costs for the year. Since the trading update in February the Company has seen some improvement in the level of sales, although Ford is still not ordering the anticipated amount of units and we are continuing to review our arrangements and offering to Ford and their dealers. The Board's main focus is to establish an improved order flow from the core dealerships which have received full training before we invest further resource in the training programme.
In light of the lower than expected sales the Board has taken steps since the year end to reduce certain of its operating costs.
The construction plant sector is suffering from an increase in thefts and we are also seeing a pickup in overall sales to plant hire companies and in the renewal of previously dormant units. We are currently undertaking a marketing campaign to the plant hire sector focusing on our impressive record of recovering stolen assets.
The product is currently undergoing Thatcham Category 7 approval which has required a redesign of the unit which will be launched as the MT3 once full accreditation is awarded. To date the MT3 has passed stages 1 and 2, of the accreditation process and full accreditation is expected to be completed by the end of June 2011. The board believe that this will allow the Company to compete with other tracking devices for the high end vehicle insurance market where Thatcham accredited trackers are in many cases mandatory. The Board believe the accreditation will also allow the Company to also partner with Insurers specialising in farm equipment.
We are delighted to have been recently awarded an official part number by a second motor manufacturer. International Motors Group through their subsidiary International Motors Parts and Service Limited, has granted the MT3 an Isuzu part number. The launch of our product through their dealer network for all Isuzu vehicles (but initially focused on commercial vehicles) in the UK is anticipated in July 2011
The Company continues to receive orders from the Explorer Group, one of Europe's leading caravan manufacturers, as part of its line fit programme for caravans. The Board believes that the Thatcham accreditation will enhance our standing with Explorer and lead to further opportunities for sales.
Other avenues for distribution of the product are being actively pursued. In South Africa our tracking device has obtained SAIAS accreditation, the Thatcham equivalent, which is allowing our sales agent to present the product to new markets.
On 1st April 2011 the Company acquired the business and certain assets of a distributor of the MT2, Automotion Security Limited ("Automotion"). Automotion's owner, Ian Platt, an executive board member of International Association of Auto Theft Investigators in the UK has, as part of the acquisition joined Sure Track on a full time basis.
IBP
During the year under review, and since the year end, the Board has closely monitored the IBP operations and changes have been made to reduce costs whilst maintaining a strong focus on sales. The Company has relocated the IBP business and the overheads of the business have been reduced, with additional support now being provided from our head office in Kenilworth.
IBP continued to be loss making in the year, due in the main to with less support from the Government for Raid Control through regional police forces. The company is however in early stages of discussions and trials for its security products with a number of larger retailers and continues to obtain repeat business from its existing customers. IBP is currently appraising other security companies products that are complementary to its products, with a view to partnering with those suppliers in order to be able to offer a comprehensive offering.
Summary
The group is working hard to increase its revenue base and as detailed above it is making good progress in that respect. Sure Track Europe is finding that there is a longer time lag for sales of the tracking unit between the initial contact with potential clients and the receipt of orders. This is often because the Company doesn't have direct contact with the end user and sell through insurance companies or vehicle dealerships. We are working with all our partners to improve the marketing of our tracking products to end users. IBP is also seeking to expand its offering to retailers which hopefully should lead to further growth opportunities.
We are undoubtedly seeing more interest in the MT2, and following Thatcham accreditation we hope that the MT3 will increase and broaden that interest. We expect to be able to announce further partnerships and contracts later in the financial year.
We have a number of encouraging prospects which we hope to build on in thecurrent financial year which we expect will lead to an improved tradingperformance. S G Barrell16 June 2011 Further enquiries: SureTrack Monitoring plc Tel: 01926 863630 Will Hirons, Managing Director
Merchant Securities Limited (Nominated Adviser and Broker)
Simon Clements - Nominated Adviser Tel: 020 7628 2200
Graeme Cull - Corporate Broking
Consolidated Income Statement for the year ended 31 January 2011
Year ended Year ended 31 January 31 January Notes 2011 2010 £ £ Continuing operations Revenue 2 624,612 671,493 Cost of sales (336,154) (295,260) Gross profit 288,458 376,233 Other operating income 2,384 30,586 Distribution costs (4,976) (3,891) Administrative expenses (803,008) (691,178) Other operating expenses - (4,500) Exceptional items 3 (23,819) (868,162) Operating loss (540,961) (1,160,912) Finance costs 4 (1,623) (455) Finance income 4 132 - Loss before income tax 5 (542,452) (1,161,367) Income tax 6 - - Loss for the year (542,452) (1,161,367) Loss attributable to: Owners of the parent (542,452) (1,161,367) Earnings per share expressed in pence per share: 7 Basic (0.08) (0.31) Diluted (0.08) (0.31) Consolidated Statement of Comprehensive Income for the year ended 31 January2011 Year ended Year ended 31 January 31 January 2011 2010 £ £ Loss for the year (542,452) (1,161,367) Other comprehensive income - -
Total comprehensive income for the year (542,452) (1,161,367)
Total comprehensive income attributable to: Owners of the parent (542,452) (1,161,367)
Consolidated Statement of Financial Position as at 31 January 2011
As at As at 31 January 31 January Notes 2011 As restated 2010 £ £ Assets Non-current assets Goodwill 885,028 885,028 Intangible assets 45,470 57,137 Property, plant and equipment 53,304 6,606 983,802 948,771 Current assets Inventories 104,068 79,257
Trade and other receivables 8 256,024 139,092
Cash and cash equivalents 9 520,962 54,185 881,054 272,534 Total assets 1,864,856 1,221,305 Equity Shareholders' equity Called up share capital 10 4,133,344 4,001,430 Share premium 1,879,858 756,458 Other reserves (2,148,000) (2,148,000) Retained earnings (2,273,917) (1,735,465) Total equity 1,591,285 874,423 Liabilities Current liabilities Trade and other payables 11 273,458 346,769 Tax payable 113 113 273,571 346,882 Total liabilities 273,571 346,882
Total equity and liabilities 1,864,856 1,221,305
Consolidated Statement of Changes in Equity for the year ended 31 January 2011
Called up Profit and Share Other Total share loss premium reserves* equity capital account £ £ £ £ £ Balance at 1 February 2,854,960 (574,098) 29,220 (2,148,000) 162,0822009 Changes in equity Issue of share 1,146,470 - 727,238 - 1,873,708capital Total comprehensive - (1,161,367) - - (1,161,367)income Balance at 31 January 4,001,430 (1,735,465) 756,458 (2,148,000) 874,4232010 Changes in equity Issue of share 131,914 - 1,123,400 - 1,255,314capital Total comprehensive - (542,452) - - (542,452)income Share based payment - 4,000 - - 4,000charge Balance at 31 January 4,133,344 (2,273,917) 1,879,858 (2,148,000) 1,591,2852011
*In the year ended 31 January 2010, an amount of £727,238 was incorrectly credited to other reserves in respect of the acquisition of IBP limited. This amount should have been credited to the share premium account. The comparatives have been amended accordingly.
Consolidated Statement of Cash Flows for the year ended 31 January 2011
Year ended Year ended 31 January 31 January Notes 2011 2010 £ £ Cash flows from operating activities Cash generated from operations 12 (716,348) (170,536) Interest paid (6,323) (455) Net cash from operating activities (722,671) (170,991) Cash flows from investing activities Purchase of intangible fixed assets (13,825) (10,112) Purchase of tangible fixed assets (52,172) (14,352) Bank overdraft acquired with subsidiary - (2,870) Interest received 132 - Net cash from investing activities (65,865) (27,334) Cash flows from financing activities Share issues net of expenses 1,255,313 176,483 Net cash from financing activities 1,255,313 176,483
Increase/(Decrease) in cash and cash equivalents 466,777 (21,842)
Cash and cash equivalents at beginning of year 54,185 76,027 Cash and cash equivalents at end of year 520,962 54,185
Notes to the Consolidated Financial Statements
1. Basis of Preparation
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 January 2010 or 2011, but is derived from those accounts. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's Annual General Meeting.
The Group's consolidated financial statements are for the year ended 31 January 2011. They have been prepared in accordance with the accounting policies set out in the Report and Accounts.
The Group prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
The consolidated financial statements of Suretrack Monitoring plc are presented in pounds sterling, which is also the functional currency of the Group.
The group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Review of Business in the Report & Accounts, as is the financial position of the group and its cash flows and liquidity position.
As described in the directors' report in the Report & Accounts the current economic environment is challenging and the group has reported an operating loss for the year. The directors consider that the outlook presents significant challenges in terms of sales volume and pricing but are very positive with potential new clients in the pipeline. But the directors have instituted measures to preserve cash until these opportunities come to a positive fruition. The Directors have prepared detailed profit and cash flow forecasts to ensure they can project their working capital requirements and manage the business accordingly.
So after making enquiries and considering the uncertainties described above, the directors have a reasonable expectation that the group and company have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and accounts.
2. Segmental Reporting
The group has two key operating segments which are overseen by distinct management teams and reported to the board. These are the provision of tracking devices, monitoring and recovery services thereon and the supply, assembly and installation of security equipment. The former is conducted through its subsidiary company, Sure-Track Europe Limited and latter through its subsidiary IBP Limited.
Segmental analysis by reportable segments*:
Sure-Track Europe IBP Central adjustments* Total 2011 2010 2011 2010 2011 2010 2011 2010 £ £ £ £ £ £ £ £ Revenue from 312,175 331,148 263,119 236,769 - (65,319) 575,294 502,698UK Revenue from - - 49,318 168,895 - - 49,318 168,895Europe Total 312,175 331,148 312,437 405,664 - (65,319) 624,612 671,493Revenue Interest - - - - 132 - 132 -revenue Interest 15 67 6,308 388 - - 6,323 455expenses Depreciation 3,424 1,034 2,050 1,102 - - 5,474 2,136 Amortisation 25,492 23,138 - - - - 25,492 23,138 Loss before 288,359 126,265 100,211 110,656 153,882 924,446 542,452 1,161,367tax Total 1,125,814 603,644 339,257 269,804 (1,191,500) (526,566) 273,571 346,882Liabilities Total Assets 431,983 198,261 100,133 130,891 1,332,740 892,153 1,864,856 1,221,305
\* The measurement of information in the table above that is reported to the board does not include consolidation adjustments or central costs.
During the year both Sure-Track Europe and IBP made sales to individualcustomers that exceed 10% of the total revenue. Sure-Track Europe made salesto one individual customers of £72,423. IBP made sales to one individualcustomers of £51,062 3. Exceptional Costs Year ended Year ended 31 January 31 January 2011 2010 £ £
Impairment of goodwill in IBP Limited - 868,162
Redundancy costs 23,819 - 23,819 868,162
4. Finance income and finance costs
Year ended Year ended 31 January 31 January 2011 2010 £ £ Finance income:
Deposit account interest 132 -
Finance costs: Loan interest 1,608 - Bank interest 15 455 1,623 455
5. Loss before income tax
The loss before income tax is stated after charging/(crediting):
Year Year ended ended 31 31 January January 2011 2010 £ £ Cost of inventories recognised as expense 336,154 295,260 Other operating leases 8,742 (6,319) Depreciation - owned assets 5,475 2,136 Goodwill impairment - 868,162 Customer database amortisation 8,000 8,000 Development costs amortisation 17,492 15,138 Auditors' remuneration 11,000 10,000 The auditing of accounts of associates of the company pursuant to legislation 7,000 4,550 Foreign exchange differences 2,553 78 Research and development (13,557) 2,730 6. Income tax Analysis of the tax charge
No liability to UK corporation tax arose on ordinary activities for the year ended 31 January 2011 nor for the year ended 31 January 2010
Factors affecting the tax charge
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:
Year ended Year ended 31 January 31 January 2011 2010 £ £ Loss on ordinary activities before tax (542,452) (1,161,367) Loss on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 20% (2010 - 28%) (108,490) (325,183)
Effects of: Disallowed items - - Depreciation in excess of capital allowances on - -qualifying assets Losses utilised - - Other tax adjustments 108,490 325,183 Total income tax - -
Factors that may effect future tax charges
There is an unrecognised deferred tax asset of £221,433. This relates to surplus trading losses carried forward which are relieved against future profits of the same trade amounting to £1,107,169.
7. 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.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.
Reconciliations are set out below.
2011 Per-share Earnings Weighted amount £ average pence number of shares Basic EPS (542,452) 661,347,670 (0.08) Earnings attributable to ordinary shareholders Effective of dilutive options - - - Diluted EPS Adjusted earnings (542,452) 661,347,670 (0.08) 2010 Per-share Earnings Weighted amount average £ pence number of shares Basic EPS (1,161,367) 377,985,000 (0.31) Earnings attributable to ordinary - - -shareholders Effective of dilutive options Diluted EPS Adjusted earnings (1,161,367) 377,985,000 (0.31)
8. Trade and other receivables
Year ended Year ended 31 January 31 January 2011 2010 £ £ Current: Trade receivables 114,375 114,572 Other receivables 8,709 - Directors' current accounts 4,887 603
Called up share capital not paid - 16,500
Prepayments and accrued income 128,053 7,417
256,024 139,092 Disclosure of credit risk
The directors consider that the carrying amount of trade and other receivables approximates to their value.
The ageing of the trade receivables as at 31 January 2011 is detailed below:
2011 2011 2010 2010 Gross Allowance Gross Allowance 0 to 30 days 88,134 - 55,870 - 30 to 60 days 25,256 - 36,484 - 60 to 90 days 6,767 5,391 24,535 8,313 Over 90 days (391) - 5,996 - 119,766 5,391 122,885 8,313 The movement in allowance for doubtful debts in respect of trade receivables isdetailed below: Year ended Year ended 31 January 31 January 2011 2010 £ £ Opening balance 8,313 - Additional provisions - 8,313 Utilised in period (2,922) - Closing balance 5,391 8,313
9. Cash and cash equivalents
Year ended Year ended 31 January 31 January 2011 2010 £ £ Cash in hand 72 640 Bank accounts 520,890 53,545 520,962 54,185
10. Called up share capital
Number of Nominal Total ordinary value value shares £ Ordinary shares Issued and fully paid ordinary shares of 1 pence each: 31 January 2010 400,143,000 0.01 4,001,430 Placing - March 2010 138,000 0.01 1,380 31 July 2010 400,281,000 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. Capital Reorganisation 31 January 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
Total 661,347,670 330,674 Deferred shares
Since 31 July 2010, there have been 400,281,000 deferred shares were at a nominal value of £0.0095.
Total ordinary and deferred shares
The issued share capital as at 31 January 2011 is as follows:
Nominal Total Number of value Value ordinary shares £ £ Deferred shares 400,281,000 0.0095 3,802,670 Ordinary shares 661,347,670 0.0005 330,674 Total 4,133,344
On flotation to AIM, the company issued 261,066,670 shares with a nominal value of £130,533 for a consideration of £1,566,400. The premium of £1,435,867 was credited 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.
11. Trade and other payables
Year ended Year ended 31 January 31 January 2011 2010 £ £ Current: Trade payables 66,913 84,727
Social security and other taxes 40,093 86,965
Other payables - 33,250 Osprey House property loan - 20,452 Accruals and deferred income 145,173 118,549 VAT 21,279 2,826 273,458 346,769
The ageing of the trade payables as at 31 January 2011 is detailed below:
2011 2010 0 to 30 days 31,067 28,785 30 to 60 days 18,054 33,466 60 to 90 days 13,710 13,395 Over 90 days 4,082 9,081 66,913 84,727
12. Reconciliation of loss before tax to cash generated from operations
Year ended Year ended 31 January 31 January 2011 2010 £ £ Loss before income tax (542,452) (1,161,367) Depreciation charges 30,967 25,274 Impairment of goodwill - 868,162 Finance costs 6,323 455 Finance income (132) - (505,294) (267,476) (Increase)/Decrease in inventories (24,811) 2,228
(Increase) in trade and other receivables (116,932) (28,380)
(Decrease)/Increase in trade and other payables (69,311) 123,092
Cash generated from operations (716,348) (170,536)
13. Related party transactions
During the year the company paid fees to its directors of £29,057 (2010: £ 21,275) which are included within directors remuneration. Included in accountancy services is £29,057 (2010: £10,500) paid to MGF, an entity controlled by M Fairbotham, a former director of the company.
The company had the following amounts outstanding with its subsidiaries at theyear end: Year ended Year ended 31 January 31 January 2011 2010 £ £
Sure-Track Europe Limited 962,578 452,449
IBP Limited 293,030 128,000 1,255,608 580,440 Transactions with directors The following loan to directors subsisted during the years ended 31 January2011 and 31 January 2010: Year ended Year ended 31 January 31 January 2011 2010 £ £ W Hirons
Balance outstanding at start of year 603 (15,253)
Amounts advanced 4,284 20,856 Amounts repaid - (5,000)
Balance outstanding at end of year 4,887 603
No interest is charged on this loan.
14. Events after balance sheet date
On 1st April 2010 Sure-Track Europe Limited purchased the customer database, website and the rights to the name for a consideration of £33,500 of Automotion Security Limited.
15. Operating Lease Arrangements
At the balance sheet date the group had outstanding commitments for futureminimum lease payments under non-cancellable operating leases, which fall dueas follows: Year ended Year ended 31 January 31 January 2011 2010 £ £ Within one year 6,557 8,742
In the second to fifth years inclusive - 6,557
After five years - - 6,557 15,299
Operating lease payments represent rentals payable by the Group for its office premises.
16. Dividend
The Directors do not propose the payment of a dividend.
17. Availability of Report & Accounts
Copies of the Report and Accounts will be posted to shareholders shortly, will be available from the Company's registered office 17a The Square, Kenilworth, Warwickshire CV8 1EF and will be available from the Company's website www.sure-track.co.uk.
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