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CybIT Holdings PLC (CYH)

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Tuesday 02 December, 2008

CybIT Holdings PLC

Interim Results

RNS Number : 3272J
CybIT Holdings PLC
02 December 2008
 




Date:                   2nd December 2008

On behalf of:        Cybit Holdings Plc ("Cybit" or "the Company" or "the Group")

Embargoed until:   0700hrs


 

Cybit Holdings Plc 

INTERIM RESULTS

    

Cybit Holdings Plc (AIM: CYH), the international provider of telematics based products and services for the management and control of land and sea based assets, today announces its interim results for the six months ended 30th September 2008. 


Financial Highlights:

  • Revenues have increased by 37% to £12.3m (2007: £9.0m)

  • Pre-tax profit has increased 39% to £855,000 (2007: £616,000)

  • Funding costs static at 7% of total revenues despite interest rate increases during the period

  • Revenue placed on the internal lease book increased to £2.3m (31% of telematics revenues)


Operational Highlights:

  • Major new customer wins including Greene King Brewing, Stannah Lift Services, Abel & Cole, Powys County Council and Highways Agency 

  • Exclusive contract with Ford Motor Company in UK to provide a fully managed aftermarket service branded 'Ford Fleet Telematics' 

  • Cybit now supports nearly 50,000 mobile assets for approaching 2,000 customers

  • BlueFinger awarded contract from UK DEFRA as a potential precursor to a number of similar contracts around Europe

  • Acquisition of assets relating to OxLoc Limited in August 2008


Commenting on the results Richard HorsmanChief Executive of Cybit, said:


"Even in these turbulent markets, Cybit has achieved another period of substantial organic and acquisitive growth in both revenue and profit. We continue to deliver against our stated strategy of building a profitable, multi-faceted, international telematics business.


"The organic growth shown by the Company during the period is a strong indication that businesses believe our fleet management solutions can help reduce costs and increase efficiencies, making this a cost-effective investment in these tough economic conditions.


"We remain confident in relation to future prospects and will continue to build our position within the significant market opportunity available to us."


For further information please contact:


Cybit Holdings Plc

Redleaf Communications

Cenkos Securities Plc

Richard Horsman, Chief Executive

Emma Kane/Samantha Robbins/

Stephen Keys

Kevin Lawrence, Finance Director

Rebecca Sanders-Hewett

Elizabeth Bowman

Tel: +44 (0)1480 455489

Tel: +44 (0)20 7566 6700

Tel: +44 (0)20 7397 1930


Email: [email protected]




Notes to Editors: 


  • Cybit operates within three core sectors:  Vehicle Telematics Solutions; Maritime Solutions; and Private Mobile Radio (PMR) based tracking and precise positioning solutions. Its products and services enable companies to monitor and position mobile assets, manage service level agreements, enhance employee duty of care and comply with legislation.

  • In the Vehicle Telematics sector, Cybit is one of Europe's leading Telematics Service Providers (TSPs).  Approximately 2,000 business-to-business clients use its fleet and asset management solutions to manage in the region of 50,000 mobile assets. Solutions include in-vehicle technologies, workflow management and internet-based monitoring and reporting software. The Company also provides consulting services to advise on legal issues such as duty of care and working hours.

  • Cybit's Maritime Solutions business, BlueFinger, is recognised as one of the world's leading suppliers of Fisheries Vessel Monitoring Systems. Bluefinger provides the fisheries authority with the necessary tools for managing their licensed fishing fleets and coordinating the activity of the fisheries patrol vessels that enforce national fisheries policy throughout the EEZ. BlueFinger's Saffire-Online system is ideal for race organisers to track the position, direction and speed of each yacht and vessel in ocean going or inshore races.  

  • Its PMR business, Cybit Positioning Solutions, provides asset-tracking and security solutions for both maritime and land-based applications including exploration and mining. Its precise positioning solutions assist in the location and exploitation of oil, gas and mineral reserves around the globe.

 

 

CHAIRMAN'S STATEMENT 


This has been yet another exceptional period of growth for Cybit. Despite a background of economic and financial turmoil, the Company has generated substantial increases in both revenue and profit during the period. It is pleasing to note that 12% of period on period growth has been achieved organically with the balance coming from acquisitions.  With the acquisition of Truck24 at the end of the last financial year and OxLoc in the last six months, we continue to deliver against our stated strategy of building a profitable, multi-faceted, international Telematics business.  


Group performance has once again been very strong. We have integrated additional acquisitions, increased revenue and profit performance whilst at the same time maintaining a healthy cash position. The Board firmly believes that Cybit is well placed to deliver continued growth for the foreseeable future.


Operational Review


In the vehicle telematics sector, Cybit now supports nearly 50,000 mobile assets for approaching 2,000 customers. Major new customer wins during the first half have included Greene King Brewing and Retailing Ltd, Stannah Lift Services, Abel & Cole, Powys County Council and Highways Agency. Revenues from repeat business and renewals are growing with significant business being generated from existing customers including SIG plc, May Gurney, Sainsbury's online groceries, NIE Powerteam and Interserve. 


Vehicle telematics order intake, excluding Truck24, showed 25% growth over the first half of last year. This leads us to believe that many companies do recognise that tough trading conditions require investment in proven solutions such as Cybit's to reduce costs and increase efficiencies.


Cost and cash management continue to remain an absolute priority. We have an ongoing programme of work designed to implement operational efficiencies and process improvements within the business.


As an example, a project is underway to consolidate all Group back office operations into our core Enterprise Resource Planning (ERP) software backbone. There are substantial savings that can be made from the rationalisation of billing and Customer Relationship Management (CRM) platforms across the Group. We have recently completed a similar project to standardise all of our back-office accounting applications with cost savings already achieved during the period.


Financial Performance


Revenue in the first half has grown by 15% over the second half of last year. Compared to the equivalent period in 2007, revenues have jumped by 37% from £9.0m to £12.3m. Pre-tax profit has increased significantly to £855,000 (2007: £616,000).  It is worth noting that funding costs have remained static at 7% of total revenues despite significant increases in funding rates during the period.  


Gross cash, excluding bank overdrafts, increased from £2.9m at 31st March to £3.0m at 30th September. Cash balances, including overdrafts, remained virtually unchanged at £2.3m at September. Net cash, after all group bank borrowings, decreased from £1.6m to £0.6m as a result of investment in acquisitions, own book and capital investment.


Investment in the internal lease book increased from £1.0m in the first half of last year to £2.2m (21% to 31%) on a like for like basis i.e. as a percentage of total vehicle telematics deals financed. This increase is in part due to mitigation of increased funding costs coupled with more challenging lending criteria in the SME sector.  


Operational Performance


As we have previously reported, the provision of telematics and online services incorporates three sectors; Vehicle Telematics, Maritime Solutions and Private Mobile Radio based tracking and precise positioning. Order intake from our precise positioning and maritime businesses is in-line with management expectations at just over £2.1m. Cybit Positioning Solutions has again performed well with strong revenue and order performance as many of our key customers in this sector continue to strengthen their order books. 


Our BlueFinger Maritime business delivered a good revenue performance in the period. In the second half of the period, order performance is expected to strengthen as a number of key contracts are due to conclude at this time.  In the first half, following on from our Volvo Ocean Race contract, the team won the prestigious P1 Powerboat Race Management contract. 


Perhaps more significantly, BlueFinger also won a contract from UK DEFRA to provide a catch management and reporting solution, which is the precursor to a number of similar contracts expected to be tendered around Europe in the next few years. This puts the Company in a strong strategic position as we will be bidding standard commercially available software. 


Technology


During the period, we relocated our flagship Fleetstar-Online Telematics application to an off-site hosting centre. The platform has been scaled to support growth beyond 100,000 vehicles and currently processes around 10 million live positions on an average day. 


We have introduced new monthly Development Management Cycle (DMC) which allows us to combine long term strategic developments with short cycle customer and market driven enhancements. The first of these releases was made in October with a second release in November. Further updates are scheduled for December and the fourth quarter.  


Over the coming months, we intend to focus on the consolidation of our current vehicle telematics platforms in order to reduce operating costs and streamline internal support processes. We have already identified significant savings opportunities and will be assessing the likely timescales associated with achievement of these benefits.


During September, we launched the Truck24 solution in the UK under the Fleetstar-Logistics brand. This product has received a significant level of interest and we have already signed the first customer contract.


Indirect Channels


During the period, our indirect channel partners added 73 new customers. This represents circa 10% order value growth over the same period last year but is slightly below management expectations for this area of the business. We believe that the SME sector has been affected by the current economic climate to some extent. However, it was encouraging to note that a significant number of our reseller customers purchased additional units, which confirms they believe that they are receiving a return on their investment.


We do believe that this is a temporary slowing of growth and are implementing a number of initiatives to recruit new resellers. We are also providing additional support around helping the end customer to recognise the rapid return on investment potential that is available from installing our technology into their fleet.

In June, the Company announced an exclusive partnership agreement with Ford Motor Company in the UK, to provide a fully managed aftermarket service branded 'Ford Fleet Telematics' targeted at Ford Fleet customers. This service is to be launched in December.

Under the terms of the agreement, Cybit has exclusive telematics access to Ford's confidential CanBus coding information, which allows details relating to vehicle usage and performance to be reported through the Cybit Fleetstar-Online application.  The partnership initially includes access to CanBus systems on the current Ford Transit and Transit Connect models. This collaborative access to CanBus enables Ford Fleet customers to have confidence in the accuracy of data contained within reports.

OxLoc


In August, for a nominal cash consideration, we acquired the trade and assets of OxLoc Limited, an Oxford based supplier of battery-powered tracking units for HGV trailers, plant and mobile assets. 

OxLoc provided asset monitoring, tracking and alerting solutions to the sector of the mobile asset management market where there is 
either non existent or limited access to a power source, through the supply of autonomous battery-powered data collection products.  The company was originally founded by Isis Innovation Ltd, the technology transfer company of the University of Oxford. 

The purchase cover
ed all hardware, software and intellectual property and provides Cybit with non-powered tracking devices that will become highly integrated with Cybit's leading Fleetstar-Online telematics and fleet-tracking solution. This will include built-in RFID technology for temperature, pallet and goods-in-transit monitoring. 


Cybit 
is looking to integrate the OxLoc products into the current product range and will continue to run and expand the service that is already installed with customers and partners such as Fowler Welch and Balfour Beatty. This process will be relatively easy as Cybit has already incorporated the OxLoc product into its AssetLocator platform and have a number of customers using the solution for non-powered assets.


International Operations


Truck24


The acquisition of Truck24, completed at the end of the last financial year, has given us a substantial platform from which to launch further regional organic and acquisitive growth. We currently have more than 3,300 vehicles across 200 customers in GermanyAustriaItaly and Switzerland with good growth prospects in all markets.


The integration process is now complete with the creation of a pan-European support function covering both Sweden and Germany. The logistics and configuration process has been outsourced on the same basis as the UK. The net result of these changes has been a significant level of operational saving achieved during the second quarter. The business also benefited from Cybit Group supply contracts in a number of areas which have reduced operating costs associated with the existing installed base. The combined effect of these savings resulted in Truck24 being broadly break even during the first half of the year.


As part of the restructuring process the Truck24 CEO has moved on with a highly experienced replacement Country Sales Manager joining the business during October.


In terms of outlook, the change in management structure has given the team renewed focus and confidence in the business. In October alone, the business achieved record order intake in excess of €700k. 


Cybit AB


In the first six months of the year, we have seen a significant upturn in sales of Fleetstar-Online into the Swedish market.  Significant contracts have been signed with Flygfrakt, the largest freight forwarder in Sweden, and Fujitsu. We have also renewed a number of our early Fleetstar-Online customers.

In the latter part of the period, we launched the Truck24 logistics and distribution solution into Sweden. A number of pilot installations are already underway with positive initial feedback from customers using the solution.


As a result of this increased interest in fleet and asset management solutions and a decline in our car sharing business, we have decided to retire the Drive-IT solution by the end of the current financial year.

 

During the period, we have increased our local team to eight with a view to driving additional local and regional growth.  


Cybit Middle East


Having a local presence in Dubai is helping us to form closer relationships with a number of our oil and gas exploration clients. This has already led to us receiving orders for our TDMA precise positioning technology for local deployment in the field. Perhaps more significantly, through one of our regional agents, we have won a pilot coastal security project using the same UHF and VHF TDMA technology which could lead to a significant future deployment.


Our Dubai based Vehicle Telematics partner has won an initial pilot project which will involve a satellite-based tracking and communication deployment into Iran. This group has significant experience and reach into the region which we believe could lead to significant repeat order potential for our solutions.


Although it is still early days for us, we firmly believe that the Middle East represents a significant long term growth opportunity for Cybit and we will continue to explore potential opportunities and partnerships in this marketplace.


Future Prospects


In terms of organic growth, current market conditions will undoubtedly have had an impact on our customers to varying degrees, however, we strongly believe that any well run business will be looking for ways to both manage productivity and reduce costs in a tough market. Further to this, we believe that customers making investment decisions will be carrying out far more due diligence on the financial strength of any potential partner. Accordingly, as one of the recognised European leaders with a strong balance sheet and track record of delivering tangible return on investment, Cybit is well placed to enhance our position in this challenging market.


The Company also benefits from diversity in business and geographic spread which should allow us to demonstrate "counter cyclical" growth in an economic downturn.


In terms of acquisitive growth, we are seeing a number of smaller competitors suffering both from a reduction in orders and an inability to raise funds to support business growth. If current market conditions prevail in the medium term, the Board believes that this could present the Company with further growth opportunities. 


In summary, business levels across the Group remain strong and the Board is looking forward to delivering continued growth in the second half.



Neil Johnson

Chairman

2nd December 2008



  

  


Consolidated interim income statement



For the six months ended 30 September 2008







Six months 

30 September 2008 (unaudited)

Six months 

30 September 2007 (unaudited)

Year ended 

31 March 

2008

 (audited)


Notes

£

£

£






Sales revenue

3

12,305,835

9,007,456

19,671,179

Cost of sales


(5,050,944)

(3,466,899)

(7,301,291)

Gross profit


7,254,891

5,540,557

12,369,888

Administrative expenses





  Other operating expenses


(4,966,325)

(3,831,471)

(8,125,373)

  Depreciation and amortisation


(552,134)

(477,945)

(981,212)

Total administrative expenses


(5,518,459)

(4,309,416)

(9,106,585)

Operating result


1,736,432

1,231,141

3,263,303

Finance income


78,043

8,038

38,360

Finance expense


(959,280)

(623,295)

(1,606,827)

Result for the period before taxation


855,195

615,884

1,694,836

Tax expense, net


(246,781)

(184,756)

(627,561)

Net result for the period


608,414

431,128

1,067,275






Attributable to shareholders of Cybit Holdings Plc


608,414

431,128

1,067,275






Earnings per share (pence)

5




Basic


2.22p

1.94p

4.65p

Diluted


2.21p

1.90p

4.61p

 

 

Consolidated interim balance sheet




30 September 2008







30 September

2008 (unaudited)

 30 September 2007 (unaudited)

31 March 2008 (audited)



£

£

£

ASSETS





Non-current assets





Goodwill


4,945,604

2,873,265

5,138,890

Other intangible assets


4,638,770

2,501,476

4,377,714

Property, plant and equipment


560,730

752,953

473,328

Deferred tax assets


401,122

528,416

609,799

Other non-current assets


115,387

466,923

131,410



10,661,613

7,123,033

10,731,141

Current assets





Inventories


1,511,343

1,813,808

1,420,696

Trade and other receivables


7,834,735

7,094,709

8,004,116

Cash and cash equivalents


2,974,752

3,295,512

2,853,984

Total 


12,320,830

12,204,029

12,278,796






TOTAL ASSETS


22,982,443

19,327,062

23,009,937






LIABILITIES





Current liabilities





Trade and other payables


4,097,208

3,345,135

3,964,270

Short term borrowings


1,083,277

653,780

598,192

Current tax payable


36,069

509,316

527,131

Finance leases


28,348

46,502

16,374

Other payables


553,564

866,486

953,233

Deferred consideration payable


135,000

250,000

1,012,102

Accruals and deferred income


1,863,524

1,298,320

1,739,801



7,796,990

6,969,539

8,811,103






Non- current liabilities





Long-term borrowings


1,326,528

729,561

656,914

Finance leases


49,085

-

-

Deferred tax


393,774

459,146

426,458

Deferred income


705,315

1,789,958

894,335

Deferred consideration payable


-

-

100,000






TOTAL LIABILITIES


10,271,692

9,948,204

10,888,810






NET ASSETS


12,710,751

9,378,858

12,121,127






EQUITY





Share capital


7,425,488

7,213,618

7,425,488

Share premium account


7,591,607

7,250,224

7,591,607

Merger reserve


(1,141,368)

(2,716,568)

(1,141,368)

Equity reserve

194,374

238,571

194,374

Foreign exchange reserve

(29,656)

(32,732)

(10,866)

Retained earnings

(1,329,694)

(2,574,255)

(1,938,108)





TOTAL EQUITY


12,710,751

9,378,858

12,121,127


 

 

 

 

 

 

Consolidated interim statement of changes in equity




30 September 2008








Equity attributable to equity holders of Cybit Holdings Plc:






Share capital

Share premium account

Foreign exchange reserve

Merger reserve

Equity reserve

Retained earnings

Total equity


£

£

£

£

£

£

£









Balance at 31 March 2007

7,150,882

7,098,214

(301)

(3,168,708)

288,172

(3,005,383)

8,362,876

Shares issued on acquisition of Amatics Limited

48,100

-

-

452,140

-

-

500,240

Shares issued on exercise of warrants

14,636

97,564

-

-

-

-

112,200

Transfer between reserves on exercise of warrants

-

54,446

-

-

(54,446)

-

-

Increase in equity reserve in relation to options issued

-

-

-

-

4,845

-

4,845

Foreign exchange adjustments

-

-

(32,431)

-

-

-

(32,431)

Profit for the six month period 

-

-

-

-

-

431,128

431,128

Balance at 30 September 2007

7,213,618

7,250,224

(32,732)

(2,716,568)

238,571

(2,574,255)

9,378,858

Shares issued on acquisition of Truck24 AG

179,000

-

-

1,575,200

-

-

1,754,200

Warrants issued on acquisition of Truck24 AG

-

-

-

-

82,923

-

82,923

Shares issued on exercise of warrants

32,870

219,108

-

-

-

-

251,978

Transfer between reserves on exercise of warrants

-

122,275

-

-

(122,275)

-

-

Foreign exchange adjustments

-

-

21,866

-

-

-

21,866

Increase in equity reserve in relation to options issued

-

-

-

-

(4,845)

-

(4,845)

Profit for the six month period 

-

-

-

-

-

636,147

636,147

Balance at 31 March 2008

7,425,488

7,591,607

(10,866)

(1,141,368)

194,374

(1,938,108)

12,121,127

Foreign exchange adjustments

-

-

(18,790)

-

-

-

(18,790)

Profit for the six month period 

-

-

-

-

-

608,414

608,414

Balance at 30 September 2008

7,425,488

7,591,607

(29,656)

(1,141,368)

194,374

(1,329,694)

12,710,751



 

 

 

 

 

 

Consolidated interim cash flow statement




For the six months ended 30 September 2008







Six months 

30 September 2008 (unaudited)

Six months 30 September 2007 (unaudited)

Year ended 31 March

2008

 (audited)



£

£

£

Operating activities





Results for the period after tax


608,414

431,128

1,067,275

Adjustments for:





 Depreciation and amortisation


552,134

477,945

981,212

 Loss on sale of property, plant and equipment


-

-

1,919

 Working capital changes


(253,477)

529,462

(183,089)

Finance costs


881,237

615,257

1,568,467

Taxation expense recognised in the income statement 


246,781

184,756

627,561

 Employee equity settled share options


-

4,845

-

Cash generated from operations


2,035,089

2,243,393

4,063,345

Corporation tax paid


(346,638)

-

(28,754)

Financing costs of assigning debts to finance companies


(882,328)

(596,943)

(1,529,642)

Net cash from operating activities


806,123

1,646,450

2,504,949






Investing activities





Purchase of subsidiary undertakings


(999,031)

(4,017,330)

(4,783,421)

Net cash acquired with subsidiaries


-

3,317,707

3,457,996

Purchase of property, plant and equipment


(198,283)

(79,690)

(149,457)

Purchase of other intangibles


(705,468)

(176,516)

(859,393)

Proceeds from sale of property, plant and equipment


-

3,019

1,222

Interest received


78,043

4,728

38,360

Net cash used in investing activities


(1,824,739)

(948,082)

(2,294,693)






Financing activities





Interest paid


(76,952)

(23,042)

(77,185)

Proceeds from share issues


-

112,200

364,178

Receipts from borrowings


1,039,503

500,000

500,000

Receipts from short term borrowings


-

3,250,000

3,250,000

Repayment of short term borrowings


-

(3,250,000)

(3,250,000)

Finance lease repayments


(17,957)

(56,673)

(86,801)

Repayment of loans


(64,061)

(79,041)

(221,875)

Net cash generated from financing activities


880,533

453,444

478,317

Net changes in cash and cash equivalents


(138,083)

1,151,812

688,573

Exchange differences


(672)

-

(388)

Net cash and cash equivalents, beginning of period


2,425,689

1,737,504

1,737,504

Net cash and cash equivalents, end of period


2,286,934

2,889,316

2,425,689

  

 

 

 

Selected explanatory notes


1. Nature of operations and general information


Cybit Holdings plc, a public limited company, is the Group's ultimate parent company. It is registered in England & Wales. The address of Cybit Holdings plc's registered office, which is also its principal place of business, is Cybit House, Kingfisher Way, Hinchingbrooke Business Park, Huntingdon, Cambridgeshire PE29 6FN.


Cybit Holdings plc's shares are listed on the London Stock Exchange's Alternative Investment Market (AIM). Cybit Holdings plc's consolidated full year financial statements are presented in British Pounds (£), which is also the functional currency of the ultimate parent company.

 

2. Accounting policies and basis of preparation


These consolidated interim financial statements have been prepared in accordance with the accounting policies expected to be followed for the year ending 31 March 2009. These policies are consistent with those of the annual financial statements for the year ended 31 March 2008 which are based on the recognition and measurement principle of International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial statements have been prepared under the historical cost convention. The impact of showing items at fair value, such as share options, is not material.


3. Segment Analysis

 

The Group has one principal activity and makes sales to a variety of global destinations. An analysis of sales revenue by geographical market is given below: 


Six months 30 September 2008 (unaudited)

Six months 30 September 2007 (unaudited)

Year ended 31 March 2008 (audited)


£

£

£





United Kingdom

9,226,524

8,312,596

17,467,941

Rest of Europe

2,604,540

298,880

1,475,901

Africa

269,570

193,470

346,259

Middle East

194,341

25,640

359,935

Rest of world

10,860

176,870

21,143


12,305,835

9,007,456

19,671,179


 

4. Share issues


There were no issues of shares during the period under review.


 

5. Earnings Per Share 

The calculation of the basic earnings per share is based on the profits attributable to the shareholders of the Group divided by the weighted average number of shares in issue during the period. All earnings per share calculations relate to continuing operations of the Group.


Profits attributable to shareholders

Weighted average number of shares

Basic earnings per share amount in pence

Six months ended 30 September 2008

608,414

27,451,768

2.22p

Six months ended 30 September 2007

431,128

22,278,925

1.94p

Year ended 31 March 2008

1,067,275

22,943,055

4.65p


The calculation of the diluted earnings per share is based on the profits attributable to the shareholders of the Company divided by the weighted average number of shares in issue during the period, as adjusted for dilutive share options. All earnings per share calculations relate to continuing operations of the Group.




Dilutive options

Diluted earnings per share amount in pence

Six months ended 30 September 2008


105,385

2.21p

Six months ended 30 September 2007


409,597

1.90p

Year ended 31 March 2008


199,796

4.61p



6. Financial Statements 


The interim financial information included in this report does not constitute statutory accounts for the purposes of section 240 of the Companies Act 1985. The full accounts for the year ended 31 March 2008 which were prepared under IFRS and which received an unqualified report from the auditors, and did not contain a statement under s237(2) or (3) of the Companies Act 1985, have been filed with the Registrar of Companies. Comparative figures for the period ended 30 September 2007 contained within this report were published in a press release on 3 December 2007.






This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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