28 Sep 2012 07:00
28 September 2012
Eco City Vehicles PLC
("Eco City", "ECV" or "the Group")
Results for the six months ended 30 June 2012
Eco City Vehicles PLC, a developer and supplier of the London licensed taxi, is pleased to announce its results for the six months ended 30 June 2012.
Financial highlights
·; Total revenues increased by 40.5% to £16.4m (H1 2011: £11.6m) reflecting the increased momentum of sales and popularity of the latest Mercedes Vito Euro V model
·; Gross margin slightly increased to 13.9% (H1 2011: 13.7%)
·; EBITDA before non recurring items increased by £0.8m to a profit of £0.3m (H1 2011: £0.5m EBITDA loss) primarily due to increased contribution from the vehicle sales division coupled with the return to gross profit of the Group's technology subsidiary, One80 Limited ("One80")
·; Net loss excluding non recurring items reduced to £0.1m (H1 2011: £1m)
Operating highlights
·; Total new Vito licenses in the six months period increased by 116% to 324 (H1 2011: 150) being 98% of the license sales achieved in the whole of last year
·; Increased share of the new London licensed taxi market to 38.3% (H1 2011: 21.1%) based on Transport for London data
·; Inventories reduced by 36.7% to £1.9m (H1 2011: £3m)
·; Increased shareholding of One80 from 58.8% to 76.6% as a result of subscribing in a £0.23m rights issue by One80
Post balance sheet events
·; Firm share placing to raise £1.75m to reduce debt and provide working capital
·; Board changes to position the Company for the next phase of its development
·; Improved loan repayment schedules
·; Acquiring the benefit of a loan provided to One80 secured against certain of its assets
Outlook
·; Demand for new taxis has improved significantly in 2012 amid growing market acceptance of the latest 'Blue Efficiency' Vito taxi, due to its superior quality, six seater capacity and lower total cost of ownership. As a result sales of new vehicles in the year to date together with its share of the London taxi market are well ahead of the same period last year.
·; The new EU environmental regulations and 15 year age limit rules for London taxis are expected to have a positive impact on sales in the last quarter of the year
·; The Group is on track to meet its sales forecast for the year driven by the Euro V sales momentum demonstrated to date
Commenting on the results, Peter DaCosta, Chief Executive, said: "Our first half results reflect the growing popularity of the latest Mercedes Euro V Vito taxi as well as the return to profitability of One80."
"The net proceeds of the Placing announced earlier this month will be used to repay debt, fund capital investment and provide additional working capital to support the continued growth of the Company."
Enquiries:
Eco City Vehicles plc | |
Peter DaCosta, Chief Executive Officer Ran Oren, Finance Director | +44 20 7377 2182 |
Luther Pendragon | |
Neil Thapar, Alexis Gore | +44 20 7618 9100 |
Numis Securities Limited | |
Stuart Skinner (Nominated Adviser) | +44 20 7260 1000 |
David Poutney (Corporate Broker) |
Overview
The Group delivered a strong performance in the first half reflecting increasing popularity of the new improved Euro V Vito taxi combined with the competitive financing package introduced by the Company in December 2011. Sales of new Vito taxis more than doubled during the period as the Euro V taxi, which is fully compliant with new EU vehicle emission standards and provides improved fuel savings, continued to gain market share.
Total revenues were 40.5% higher at £16.4m (H1 2011: £11.6m) with gross margin slightly increased to 13.9% (H1 2011: 13.7%). The upturn was largely due to New Taxi sales as detailed below and a 39% increase in Used Taxi sales.
The Group moved to an EBITDA profit position from continuing operations, before non recurring items, of £0.3m (H1 2011: EBITDA loss £0.5m), due to the sales increase and increased contribution from One80, the Group's technology subsidiary, following the transfer of second stage production to Mercedes-Benz. One80's revenue is derived from a licence fee per production unit, with a guaranteed minimum number of units per annum.
Operational Review
Taxi Sales
Sales of new Vito taxis increased by 104% to £11.0m (H1 2011: £5.4m). Based on Transport for London (TfL) data, the Mercedes Vito increased its share of the new London licensed taxi market to 38% in the first six months of the year, against a market share of 21% in the same period last year. New Vito taxi licenses increased by 116% to 324 vehicles in the first six months against 150 in the same period last year, and 331 for the whole of 2011. This means that new licenses in the first six months of 2012 represented 98% of the annual license sales achieved last year.
Sales of used taxis increased by 39% to £2.7m (H1 2011: £2.0m) as a result of the increased number of used Vito's available for sale as drivers upgrade to the new Euro V model.
After Sales Division - Parts and Service
The parts business has seen a revenue decrease of 40.4% to £0.7m (H1 2011: £1.2m) as a result of increased competition from LTI distributors. Gross margins increased slightly from 19% to 21%.
Revenues and profits from after sales service both decreased to £1.3m (H1 2011: £1.6m) and £43,000 loss (H1 2011: £0.1m Profit) respectively. Revenue from LTI taxis has decreased in the first half by 37% to £0.5m, with Mercedes-Benz revenue remaining unchanged at £0.8m.
The Group is pursuing opportunities for further sales growth in the after sales and parts divisions following the implementation of a number of cost reduction actions to mitigate the impact of the revenue reduction.
One80 Limited
One80 have a licence agreement which provides a fixed licence fee per Vito taxi produced with a minimum guaranteed level of 450 units per annum. One80 owns the intellectual property rights to the rear wheel steer technology used on the Mercedes Vito taxi.
The Group increased its shareholding in One80 from 58.8% to 76.6% during the first half of the year, as a result of subscribing in a £0.23m rights issue by One80. One80's trading was improved due to increased units being converted following the transfer of the second stage manufacture to Mercedes-Benz which resulted in a £0.4m gross profit (H1 2011: £10,000 loss). Cost reductions and restructuring led to a net loss of £0.1m compared to a loss of £0.55m in the same period last year. Amortisation and depreciation of £0.2m (H1 2011: £0.2m) were incurred mainly due to amortisation of development costs for both the original Vito taxi and significant further development costs for the new Euro V model.
As disclosed previously, as part of the agreement dated 16 November 2010 ECV announced its intention to acquire further shares in the capital of One80 Limited (the "One80 Stake"), which owns the intellectual property rights to the rear wheel steer technology used on the Mercedes Vito taxi. The consideration for the One80 Stake was stated to be £640,000 in cash, which was paid on completion of the acquisition, and up to 12,800,000 shares in the capital of ECV ("ECV Shares") (representing 3.8% of ECV's current issued share capital). The ECV Shares were to be issued following completion of the acquisition of the One80 Stake subject to the satisfaction of certain conditions and potential downwards adjustment following a statutory valuation and report under Section 593 of the Companies Act 2006 (the "Valuation Report").
As of the date of this announcement the Valuation Report has not been completed and no ECV Shares have been issued to the seller. There is also additional documentation which, if valid and effective, could compensate the seller for any downward adjustment required by the terms of the share purchase agreement as regards any remaining consideration payable for the One80 Stake. ECV is reviewing its position in relation to the above matters and will release further updates as appropriate.
ECV is the legal and beneficial holder of 16,250 A ordinary shares of £0.01 each in the capital of One80, representing 61.9% of its total issued share capital. ECV also holds the beneficial interest in 3,850 B ordinary shares of £0.01 each, such interest having been acquired from Jevon Thurston-Thorpe pursuant to the transaction described in the announcement dated 20 July 2012. These shares represent a further 14.67% of One80's total issued share capital, and ECV has voting control in relation to such shares. Accordingly, ECV has control of 76.6% of the voting rights in One80.
On 7 September 2012 the Company agreed to acquire the benefit of a £250,000 short-term loan made to One80 by Cabvision Network Limited. The acquisition of the benefit of the One80 Loan by ECV will ensure that the One80 Loan and the related security over One80's assets are under the control of ECV as majority shareholder rather than an external party. As a result ECV will control the enforceability of the loan and related security over the relevant assets of One80, which are important to the business of ECV. Further details are set out in the Post balance sheet events note
Non recurring items
The Group has incurred one-off non recurring items of £0.4m (H1 2011: £0.2m) due to legal, restructuring and impairment costs. The Group has reviewed the value of its fixed assets and as a result has impaired the book value of its property in Coventry by £0.2m. This property is occupied by One80 and another tenant. The Group has also surrendered the rental lease of another property in London, resulting in a one off income of £0.2m, though it maintains occupation on improved terms.
Finance income & Costs
The Group has reduced finance costs due to the decreased interest on lower levels of vehicle stock, which has significantly fallen due to the increased sales in 2012. The Group, under IFRS, has provided for the fair value liability associated with its fixed rate swap. The fair value liability is estimated based on the differential between the fixed rate of 5.12% and the expected market rates until the termination of the swap in 2023.
Inventory
Inventory levels at the beginning of the period were high at £5.0m due to the Euro V stock build-up at the end of the last financial year, but have subsequently been significantly reduced to £1.9m at June 2012 due to the increased new vehicle sales in the first half of 2012. The Group continues to limit its exposure to used LTI stock with the majority of vehicles sold to the trade. Demand for used Mercedes-Benz Vito taxis remains solid resulting in a quick stock turn and resultant low stock levels.
In May 2012 Mercedes-Benz increased the Group's existing stocking facilities to £5.75m from £4.95m in order to support the working capital required for the continued growth of the business. The terms of the facilities are in line with the Group's existing facilities and will enable the Group to order additional taxis from Mercedes-Benz when required.
Cash balances and funding
Cash balances at 30 June 2012 were £0.5m (H1 2011: £0.3m) with borrowings increased by £0.9m to £3.7m (H1 2011:£2.8m). This was mainly due to loans in total of £0.7m received from the KPM-UK Taxi Plc Discretionary Pension Scheme.
Post balance sheet events
On 7 September 2012 the Group raised £1.75m (before expenses) through a firm placing of 116,666,666 ordinary shares at 1.5 pence per share (the "Placing"). The Group has undertaken the Placing to certain new and existing institutional investors at a price of 1.5 pence per share (representing a discount of approximately 18 per cent. against the closing mid-market price on 6 September 2012).
The net proceeds of the Placing will be used to repay debt, fund capital investment and to provide additional working capital to support the growth of the Group. The new funds will reduce the Group's borrowing by £0.6m from approximately £3.8m at the end of August 2012 to approximately £3.2m. As part of the Placing the Group entered into a number of financing arrangements, further details of these arrangements are set out in note 9 to the interim accounts.
Board changes
On 7 September 2012 the Group announced that it would make certain changes to its Board following the completion of the Placing in order to lead the Group through the next phase in its development. The Group intends to seek a new Chief Executive Officer ("CEO") and, once a suitable candidate is confirmed, Peter DaCosta intends to assume a Non-Executive Director role. Whilst Mr DaCosta's intention is to reduce his time-commitment to the Group, he expects to remain actively involved with the Group and, in addition to providing the benefit of his substantial industry experience, his focus will be on sourcing and assessing new opportunities. The process for recruiting a new CEO will be led by John Swingewood.
Tim Yeo retired from the Board on completion of the Placing, to be replaced as chairman by John Swingewood. Tim, who has chaired the Group since its admission to AIM in October 2007, has recently taken on new chairmanships in the education and energy sectors and wished to devote more time to those. Keith Marder also stepped down from the Board on completion of the Placing but will remain as an employee of the business and a director of the Group's subsidiaries.
Risks and uncertainties
The Board maintains a policy of continuous identification of risks and rewards which may significantly impact on the Group's current and future results. Details of the principle risks and uncertainties are disclosed in the Directors' Report in the 2011 Annual Report.
Outlook
Demand for new taxis has improved significantly in 2012 amid growing market acceptance of the latest 'Blue Efficiency' Vito taxi, due to its superior quality, six seater capacity and lower total cost of ownership. As a result sales of new vehicles in the year to date together with its share of the London taxi market are well ahead of the same period last year.
In addition, the introduction of tighter EU emission standards together with a 15-year age limit for London licensed taxis is expected to benefit sales in the final quarter of this year as well as foster a substantial replacement market for new taxis in the years ahead.
The net proceeds of the Placing announced earlier this month will be used to repay debt, fund capital investment and provide additional working capital to support the continued growth of the Group. The Group is on track to meet its sales forecast for the year driven by the Euro V sales momentum demonstrated to date.
Peter DaCosta
Chief Executive Officer
INDEPENDENT REVIEW REPORT TO ECO CITY VEHICLES PLC
Introduction
We have been engaged by the Company to review the financial information in the half-yearly financial report for the six months ended 30 June 2012 which comprises a consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cashflows and related notes.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
Malcolm Thixton (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Southampton
United Kingdom
Date: 27 September 2012
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Consolidated Statement of Comprehensive Income
For the period ended 30 June 2012
Unaudited | Unaudited | Audited | |||||
Period ended | Period ended | Year ended | |||||
30 June | 30 June | 31 December | |||||
2012 | 2011 | 2011 | |||||
Notes | £000 | £000 | £000 | ||||
Revenue | 16,353 | 11,641 | 22,153 | ||||
Cost of sales | (14,080) | (10,051) | (19,154) | ||||
Gross profit | 2,273 | 1,590 | 2,999 | ||||
Administrative expenses | (3,004) | (2,868) | (5,831) | ||||
Other income | 335 | 282 | 688 | ||||
Profit/(loss) from operations before non-recurring items | 36 | (799) | (1,634) | ||||
Non-recurring items | 3 | (432) | (197) | (510) | |||
Loss from operations | (396) | (996) | (2,144) | ||||
Finance costs | 4 | (186) | (236) | (525) | |||
Loss before taxation | (582) | (1,232) | (2,669) | ||||
Taxation | 33 | - | 203 | ||||
Loss for the period and total comprehensive loss | (549) | (1,232) | (2,466) | ||||
Loss for year attributable to owners of parent | (515) | (1,005) | (2,001) | ||||
Non-controlling interest | (34) | (227) | (465) | ||||
(549) | (1,232) | (2,466) | |||||
Loss per share | Pence | Pence | Pence | ||||
Basic and diluted losses per share : | 5 | (0.15) | (0.30) | (0.60) | |||
eco city vehicles plc
Consolidated statement of financial position
As at 30 June 2012
Unaudited | Unaudited | Audited | |||||
As at | As at | As at | |||||
30 June | 30 June | 31 December | |||||
2012 | 2011 | 2011 | |||||
Assets | Notes | £000 | £000 | £000 | |||
Non current | |||||||
Property, plant and equipment | 2,264 | 2,754 | 2,550 | ||||
Intangibles | 1,060 | 1,580 | 1,274 | ||||
Goodwill | 1,420 | 1,420 | 1,420 | ||||
Total non-current assets | 4,744 | 5,754 | 5,244 | ||||
Current | |||||||
Inventories | 1,923 | 3,041 | 4,956 | ||||
Trade and other receivables | 2,644 | 2,786 | 1,945 | ||||
Cash and cash equivalents | 453 | 345 | 157 | ||||
Total current assets | 5,020 | 6,172 | 7,058 | ||||
Total assets | 9,764 | 11,926 | 12,302 | ||||
Equity and liabilities | |||||||
Equity | |||||||
Equity attributable to owners of the parent: | |||||||
Share capital | 3,343 | 3,343 | 3,343 | ||||
Share premium | 2,796 | 2,796 | 2,796 | ||||
Shares to be issued | 324 | 324 | 324 | ||||
Reverse acquisition reserve | (1,709) | (1,709) | (1,709) | ||||
Retained deficit | (5,414) | (3,882) | (4,866) | ||||
(660) | 872 | (112) | |||||
Non-controlling interest | 53 | 325 | 87 | ||||
Total equity | (607) | 1,197 | (25) | ||||
Current liabilities | |||||||
Borrowings | 6 | 1,827 | 689 | 1,288 | |||
Trade and other payables | 6,495 | 7,701 | 8,735 | ||||
Provisions | 191 | - | 353 | ||||
Total current liabilities | 8,513 | 8,390 | 10,376 | ||||
Non current liabilities | |||||||
Borrowings | 6 | 1,858 | 2,151 | 1,951 | |||
Deferred tax liability | - | 188 | - | ||||
Total non-current liabilities | 1,858 | 2,339 | 1,951 | ||||
Total liabilities | 10,371 | 10,729 | 12,327 | ||||
Total equity and liabilities | 9,764 | 11,926 | 12,302 | ||||
eco city vehicles plc
Consolidated statement of changes in equity - unaudited
As at 30 June 2012
Total | |||||||||||||||
attributable | |||||||||||||||
Reverse | Shares | to equity | Non- | ||||||||||||
Share | Share | acquisition | to be | Retained | holders | Controlling | Total | ||||||||
capital | premium | reserve | issued | deficit | of Parent | Equity | Equity | ||||||||
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | ||||||||
At 1 January 2011 | 3,343 | 2,796 | (1,709) | 324 | (2,888) | 1,866 | 552 | 2,418 | |||||||
Loss for the period | - | - | - | - | (1,005) | (1,005) | (227) | (1,232) | |||||||
Share based payment | - | - | - | - | 11 | 11 | - | 11 | |||||||
At 30 June 2011 | 3,343 | 2,796 | (1,709) | 324 | (3,882) | 872 | 325 | 1,197 | |||||||
Total comprehensive loss for the period | - | - | - | - | (996) | (996) | (238) | (1,234) | |||||||
Share based payment | - | - | - | - | 12 | 12 | - | 12 | |||||||
At 31 December 2011 | 3,343 | 2,796 | (1,709) | 324 | (4,866) | (112) | 87 | (25) | |||||||
Total comprehensive loss for the period | - | - | - | - | (515) | (515) | (34) | (549) | |||||||
Share based payment | - | - | - | - | (33) | (33) | - | (33) | |||||||
At 30 June 2012 | 3,343 | 2,796 | (1,709) | 324 | (5,414) | (660) | 53 | (607) | |||||||
eco city vehicles plc
Consolidated statement of cash flows
For the period ended 30 June 2012
Unaudited | Unaudited | Audited | |||||
Period ended | Period ended | Year ended | |||||
30 June | 30 June | 31 December | |||||
2012 | 2011 | 2011 | |||||
Notes | £000 | £000 | £000 | ||||
Operating activities | |||||||
Loss for the year before taxation | (582) | (1,232) | (2,669) | ||||
Adjustments | 7 | 678 | 564 | 1,283 | |||
Net changes in working capital | 7 | (68) | 1,314 | 1,689 | |||
Net cash inflow from operating activities | 28 | 646 | 303 | ||||
Investing activities | |||||||
Purchase of property, plant and equipment | - | (35) | (84) | ||||
Sale of tangible fixed assets | 31 | - | 26 | ||||
Purchase of intangibles | - | (13) | (7) | ||||
Cash inflow/(outflow) from investing activities | 31 | (48) | (65) | ||||
Financing activities | |||||||
Interest paid | (209) | (232) | (407) | ||||
Repayments of pension loans | (25) | (170) | (195) | ||||
Proceeds from loans | 525 | 170 | 695 | ||||
Repayments of mortgages | (63) | (53) | (120) | ||||
Repayments of finance leases | (215) | (150) | (406) | ||||
Proceeds from finance leases | 224 | 117 | 287 | ||||
Cash inflow/(outflow) from financing activities | 237 | (318) | (146) | ||||
Cash and cash equivalents at beginning of period | 157 | 65 | 65 | ||||
Net change in cash and cash equivalents from continuing operations | 296 | 280 | 92 | ||||
Cash and cash equivalents at end of period | 453 | 345 | 157 | ||||
1. General Information
Eco city vehicles plc is a company incorporated in the United Kingdom and listed on the AIM market. The address of the registered office is Hemming House, Hemming Street, London, E1 5BL.
The Group is engaged in the sale and service of new and used taxicabs to owner operators of licensed taxis in London and the provision of related services. During the interim period the Group operated from a single site in East London from where it conducted all operations. The premises in Coventry, owned by Eco City Vehicle Plc, is partially sublet to One80 Limited, the Groups' technology subsidiary, and one other tenant.
This unaudited consolidated interim report is presented in British Pounds Sterling, the currency of the primary economic environment in which the Group operates. The Group comprises eco city vehicles plc and its subsidiary and associated companies as set out in the Note 3 of the Parent Company's financial statements, for the year ended 31 December 2011
The unaudited consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.
The financial information for the year ended 31 December 2011 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The Independent Auditors' Report on those accounts was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
2. Basis of preparation
The unaudited consolidated interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as endorsed by the European Union.
The same accounting policies, presentation and method of computation are followed in this financial information as was applied in the group's latest annual audited financial statements and using accounting policies that are expected to be applied for the financial year ending 31 December 2012. Practice is continuing to evolve on the application and interpretations of IFRS. Further standards may be issued by the International Accounting Standards (IASB) and standards currently in issue and endorsed by the EU may be subject to interpretations issued by IFRIC.
The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this consolidated financial information.
Going Concern
As further explained in note 9 to the interim accounts, on 7 September 2012 the Group raised £1.75m (before expenses) through a firm placing of 116,666,666 ordinary shares at 1.5 pence per share (the "Placing") and entered into a number of new financing arrangements. The Directors believe that the new arrangements together with the Placing proceeds provide the Company with substantially increased clarity in respect of the expected repayment profile of its key liabilities and materially strengthen its financial position. The current economic climate makes forecasting difficult and the Board will continue to monitor the Company's financial position having regard to its ongoing trading performance.
Based on the Group's forecast, the Placing and the financing arrangements agreed at the time of the Placing the Directors have a reasonable expectation that the Group will have adequate resources available from funds generated from trading and the Placing proceeds for at least 12 months from release of the interim statements.
3. Non recurring items
Unaudited | Unaudited | Audited | |||
Period | Period | Year | |||
Ended | Ended | Ended | |||
30 June | 30 June | 31 December | |||
2012 | 2011 | 2011 | |||
£000 | £000 | £000 | |||
Professional fees | (301) | - | - | ||
Review of assets useful economic lives | - | - | (108) | ||
Impairment of fixed assets | (180) | - | - | ||
Other | (165) | (43) | (36) | ||
Surrender of property lease | 214 | - | - | ||
Supplier Settlement | - | (129) | (185) | ||
Disposal of assets | - | - | (144) | ||
Strategic, operational & corporate governance review | - | (18) | (37) | ||
One80 Valuation | - | (7) | - | ||
(432) | (197) | (510) | |||
4. Finance costs
Unaudited | Unaudited | Audited | |||
Period | Period | Year | |||
Ended | Ended | Ended | |||
30 June | 30 June | 31 December | |||
2012 | 2011 | 2011 | |||
£000 | £000 | £000 | |||
Finance costs | |||||
Interest payable on borrowings | 158 | 126 | 262 | ||
Fair value movement on interest rate swap | (23) | (4) | 118 | ||
Consignment stock interest | 49 | 111 | 140 | ||
Finance lease interest | 2 | 3 | 5 | ||
186 | 236 | 525 | |||
5. Loss per share
Unaudited | Unaudited | Audited | |||
Period | Period | Year | |||
Ended | Ended | Ended | |||
30 June | 30 June | 31 December | |||
2012 | 2011 | 2011 | |||
£000 | £000 | £000 | |||
Losses | |||||
Total Comprehensive loss for the period, used in the calculation of total basic earnings per share | |||||
(515) | (1,005) | (2,001) | |||
Non-recurring items | 432 | 197 | 510 | ||
Adjusted loss for the period | (83) | (808) | (1,491) | ||
Weighted average number of ordinary shares for the purpose of basic and adjusted loss per share | 334,250,200 | 334,250,200 | 334,250,200 | ||
loss per share | |||||
Continuing operations | (0.15) | (0.30) | (0.60) | ||
Adjusted for non-recurring items (pre-tax) | (0.02) | (0.24) | (0.45) | ||
Due to the losses returned diluted loss per share is equal to the basic loss per share. Share options have been excluded from the earning per share calculation because they are anti-dilutive but may become dilutive in future periods.
6. Borrowings
Unaudited | Unaudited | Audited | |||
Period | Period | Year | |||
Ended | Ended | Ended | |||
30 June | 30 June | 31 December | |||
2012 | 2011 | 2011 | |||
£000 | £000 | £000 | |||
Current portion of long term borrowings | |||||
Mortgages | 182 | 207 | 208 | ||
Obligations under finance leases | 287 | 312 | 240 | ||
Pension loans | 1,008 | 170 | 490 | ||
Other loans | 350 | - | 350 | ||
Total | 1,827 | 689 | 1,288 | ||
Non-current long term borrowings | |||||
Mortgages | 1,366 | 1,471 | 1,403 | ||
Obligations under finance leases | - | - | 38 | ||
Pension loans | 492 | 680 | 510 | ||
Total | 1,858 | 2,151 | 1,951 | ||
7. Adjustments to cashflow
Unaudited | Unaudited | Audited | |||||||
Period | Period | Year | |||||||
Ended | Ended | Ended | |||||||
30 June | 30 June | 31 December | |||||||
2012 | 2011 | 2011 | |||||||
£000 | £000 | £000 | |||||||
Adjustments: | |||||||||
Finance costs | 209 | 236 | 407 | ||||||
Depreciation | 262 | 130 | 329 | ||||||
Amortisation | 27 | 187 | 397 | ||||||
Impairment of fixed assets | 180 | - | - | ||||||
Loss and disposal of tangible fixed assets | - | - | 37 | ||||||
Loss and disposal of intangible fixed assets | - | - | 90 | ||||||
R&D Tax credit | 33 | - | - | ||||||
Share based payments | (33) | 11 | 23 | ||||||
Total adjustments | 678 | 564 | 1,283 | ||||||
Net changes in working capital: | |||||||||
(Increase)/decrease in trade and other receivables | (699) | (17) | 824 | ||||||
(Decrease)/increase in trade and other payables | (2,402) | 538 | 1,932 | ||||||
Decrease/(increase) in inventories | 3,033 | 793 | (1,067) | ||||||
Total changes in working capital | (68) | 1,314 | 1,689 | ||||||
8. Segment revenues and results
Segment revenues and results | ||||||||||||||||||
The following is an analysis of the Group's revenue and results from continuing operations by reportable segment. | ||||||||||||||||||
Segment Revenue | Segment Profit | |||||||||||||||||
Unaudited | Unaudited | Audited | Unaudited | Unaudited | Audited | |||||||||||||
June | June | December | June | June | December | |||||||||||||
2012 | 2011 | 2011 | 2012 | 2011 | 2011 | |||||||||||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||||||||
Vehicle Sales | 13,700 | 7,346 | 14,791 | 533 | (9) | 227 | ||||||||||||
Parts Sales | 692 | 1,165 | 2,262 | |||||||||||||||
Parts Sales (inter-segment) | (3) | 689 | (5) | 1,160 | (8) | 2,254 | 98 | 74 | 88 | |||||||||
After-sales | 1,476 | 1,606 | 3,040 | |||||||||||||||
After-sales (inter-segment) | (190) | 1,286 | (36) | 1,570 | (134) | 2,906 | (43) | 106 | 192 | |||||||||
Licence Revenue | 678 | 1,565 | 2,202 | (142) | (554) | (1,134) | ||||||||||||
Total for continuing operations | 16,353 | 11,641 | 22,153 | 446 | (383) | (627) | ||||||||||||
Other operating income | 209 | 282 | 238 | |||||||||||||||
Finance costs | (161) | (236) | (407) | |||||||||||||||
Non-recurring items | (432) | (197) | (510) | |||||||||||||||
Central administration costs | (700) | (691) | (1,222) | |||||||||||||||
Loss before tax per management information | (638) | (1,225) | (2,528) | |||||||||||||||
Reconciliation to statutory accounts: | ||||||||||||||||||
Loss per management information | (638) | (1,225) | (2,528) | |||||||||||||||
Reconciling items: | ||||||||||||||||||
- Fair value movement on interest rate swap | 23 | 4 | (118) | |||||||||||||||
- Share based payments | 33 | (11) | (23) | |||||||||||||||
Loss before tax per statutory accounts | (582) | (1,232) | (2,669) | |||||||||||||||
9. Post balance sheet events
Share Placing
On 7 September 2012 the Company raised £1.75m (before expenses) through a firm placing of 116,666,666 ordinary shares at 1.5 pence per share ("the Placing"). The Company has undertaken the Placing to certain new and existing institutional investors at a price of 1.5 pence per share.
The net funds raised from the Placing will be used principally for the following purposes:
·; Repayment of £0.25m of debt owed to the KPM-UK Taxi Plc Discretionary Pension Scheme (the "Pension Scheme")
·; Capital investment of approximately £0.1m in infrastructure, enabling part of the after sales division to obtain an accreditation which will enable the division to diversify its revenue streams
·; Repayment of £0.1m of debt owed to Lee DaCosta, the son of director Peter DaCosta
·; Working capital: funds will also be used to provide additional working capital to the business to support the growth of the Company
As part of the Placing ECV entered into the following financing arrangements with a number of related parties and its directors:
The Pension Scheme Loan
The Pension Scheme provided the Company with a loan in total of £1.5m as at 30 June 2012 ("The Pension Scheme Loan") which was due to be repaid in tranches on various dates as previously announced on 2 May and 22 June 2012. However, the beneficiaries of the Pension Scheme (being Peter DaCosta, Keith Marder and Michael Troullis) and the Company have now agreed revised repayment terms, pursuant to which £0.25m, including associated expenses, will be paid out of the Placing Proceeds.
In accordance with these revised repayment terms, repayment of the remaining £1.25 m outstanding principal amount will commence:
(a) once the Company has achieved a cumulative consolidated EBITDA of £1m on a consolidated basis (the "Target"), to be measured on a monthly basis from 1 September 2012; and
(b) once the loan of £0.25m owed by the trustees of the Pension Scheme to Barclays Bank plc has been repaid (which the beneficiaries have undertaken to repay using the £0.25m Pension Scheme Loan repayment referred to above),
(together the "Repayment Conditions"). Repayments will be made in monthly instalments of £20,800, starting in the month after the Target is met and ending in September 2017. The remaining balance outstanding at September 2017 will be repaid but, subject to compliance with H M Revenue and Customs' rules, will be re-lent to the Company on substantially similar terms to those described in this paragraph. Interest will accrue at a rate of 5% per annum from the date of this Announcement and will be payable on 31 December 2012 and on 31 December in each year thereafter (subject to the Repayment Conditions being satisfied). Interest accrued up to 31 August 2012, totalling £66,120, and interest accruing thereafter, up to a total of £33,880, will be deferred and paid in 12 monthly payments which will commence after satisfaction of the Repayment Conditions.
It has also been agreed that arrears of rent of approximately £0.2m in respect of premises owned by the Pension Scheme and occupied by the Company, will be paid in equal monthly instalments over a period of 12 months once the Repayment Conditions have been satisfied. Interest will accrue on the arrears at a rate of 5% per annum.
KPM-UK Taxes Plc, a wholly owned subsidiary of the Company, has the benefit of a claim for a refund of VAT in an amount of up to £2.8m ("VAT Claim"). The Company has agreed that any compensation net of corporation tax received from HMRC as a result of the VAT Claim will be applied firstly in repayment of the Pension Scheme Loan and secondly (provided the Pension Scheme Loan has been repaid in full) in repayment of the Global Meters Arrears.
The beneficiaries of the Pension Scheme have also agreed to use all reasonable endeavours to procure that the trustees of the Pension Scheme offer reasonable alternative repayment terms to the Company in the event that the Company, acting reasonably, is unable to meet the revised repayment terms described above (subject always to compliance with HMRC rules).
The revised repayment terms described above require the approval of the corporate trustee of the Pension Scheme. The beneficiaries of the Pension Scheme have agreed to use all reasonable endeavours to ensure that the necessary documentation is entered into by the Pension Scheme trustees within 30 business days of the announcement of the Placing to give effect to these revised terms.
The parties have further agreed that once the Company is in a position to pay a dividend then the Company shall be permitted to increase the amount of repayments of the Pension Scheme Loans and the Global Meters arrears to an amount equal to the amount of any dividends paid, such amount to be allocated by the Company between the Pension Scheme Loan and the Global Meters Arrears described below.
Global Meters Systems Limited ("Global Meters")
Repayment of the outstanding arrears to Global Meters in total of £514,000 will commence following completion of the Placing and once the £0.25m loan owed by the Pension Scheme to Barclays Bank Plc has been repaid. It will be repaid by way of monthly payments of £10,000. Interest will accrue from the date of this Announcement at a rate equal to 5% per annum payable on 31 December 2012 and on 31 December in each year thereafter, subject to the repayment of the Pension Scheme Loan from Barclays Bank plc as described above.
As described above the Company may increase payments to Global Meters provided such payments are matched by dividends, and do not exceed the amount of any dividends when aggregated with any additional repayments made under the Pension Scheme Loan.
Amounts owing to directors
The Company has agreed with Peter DaCosta and Keith Marder that the outstanding loans of £12,450 and £48,514 respectively made by them to the Company will be repaid to each of them in equal monthly instalments of in aggregate £5,000 commencing in the month following the Placing or, if later, once the £0.25m loan owed by the Pension Scheme to Barclays Bank Plc has been repaid. Interest will accrue at a rate of 5% per annum. Both Mr DaCosta and Mr Marder have been granted options to convert the outstanding balance of the loans to ECV shares at 1.5p per share, to be exercised at any time in the period of six months commencing on completion of the Placing.
The outstanding bonus payments of £63,000 owed to each of Mr DaCosta and Mr Marder will be satisfied by the issue to each of them of such number of ECV shares at 1.5p per share having an aggregate value equal to 50% of the bonus payment after income tax and national insurance contributions have been paid, with the remaining sum being repaid in cash in monthly repayments of £5,000, such repayments to commence following repayment of the loans referred to above. Interest will accrue on the amount owed at a rate of 5% per annum. Any outstanding bonus balance will be repaid in cash upon either of Mr DaCosta or Mr Marder leaving the Company. Both Mr DaCosta and Mr Marder have been granted options to convert the remaining outstanding balance of the bonus payments to ECV shares at 1.5p per share, to be exercised at any time in the period of six months commencing on completion of the Placing.
Further, John Swingewood and Jeremy Fenn, non-executive directors of the Company, are each owed fees of £27,000 and £19,500 respectively by the Company. They have each agreed to receive ECV shares in lieu of those fees, at 1.5p per share. They have also agreed to use the fees that will be payable to them over the next 12 months to purchase ECV shares, at 1.5p per share, on a quarterly basis.
Tim Yeo will also receive approximately £51,000 in relation to fees owed to him for the period from October 2011 and in respect of his three month notice period.
Amount owing to Lee DaCosta
In January 2011 the Group received an interest-free loan from Lee DaCosta of £0.1m which will be repaid following completion of the Placing.
Acquisition of One80 Loan
The Company agreed to acquire the benefit of a £0.25m short-term loan at par (plus accrued unpaid interest) made to One80 by Cabvision Network Limited (the "One80 Loan"). The One80 Loan was made to One80 in August 2011 as a short-term facility, is secured against certain of the assets of One80 and carries interest of 3% per month. The acquisition of the benefit of the One80 Loan by ECV will ensure that the One80 Loan and the related security over One80's assets are under the control of ECV as majority shareholder rather than an external party. As a result ECV will control the enforceability of the loan and related security over the relevant assets of One80, which are important to the business of ECV. The secured assets include the rear wheel steer technology developed and owned by One80 which is used on the Mercedes Vito taxi. The technology is installed in Mercedes Vito taxis in order to meet the Conditions of Fitness of the Public Carriage Office of Transport for London. The agreement is conditional on payment of £0.25m plus accrued interest (if any) and on payment of the £0.1m due to Lee DaCosta, as described above.