RNS Number:0542F
CybIT Holdings PLC
23 June 2006
Cybit Holdings Plc ("CYBIT")
Preliminary Results for the year ended 31 March 2006
HIGHLIGHTS
Cybit Holdings Plc, the innovative Telematics Service Provider, today announces
its preliminary results for the year ended 31 March 2006.
Audited Audited
year ended year ended
31 March 2006 31 March 2005
#'000 #'000
Turnover 10,190 6,727
EBITDA 1,770 (214)
Operating profit/(loss) 1,338 (627)
Profit/(loss) before taxation 200 (1,543)
Cash 2,693 3,704
Key points
* 52% increase in turnover;
* Return to profitability, reporting a profit before tax of #0.2m (2005:
loss #1.5m);
* Overall 40% increase in customer numbers;
* 70% increase in number of assets managed through Cybit's solution
portfolio;
* Recently announced acquisition of Bluefinger Limited for #1.6m,
cementing Cybit's position as the UK's market leader in internet-based
vehicle telematics solutions, as well as expanding Cybit's operations
into the maritime telematics sector.
Neil Johnson, Chairman of Cybit commented:
Cybit has had an excellent year. We are seeing increasing evidence in the UK
market of a growing acceptance of telematics in transport-related and support
service sectors. Two separate markets are emerging, advanced vehicle location
systems and more complex integrated business and logistics solutions.
While the advanced vehicle location business is becoming highly competitive and
price-sensitive, we are well placed to exploit the potential with Fleetstar. In
the more complex, and higher margin business, of integrated solutions, Cybit is
well placed to further improve market penetration. In the coming year we expect
to increase market share in all sectors where Cybit operates.
Meanwhile, the acquisition of Bluefinger will extend our reach into the maritime
arena where we see new and exciting opportunities whilst also bringing
complementary activities in related vehicle telematics where Cybit has clear
market leadership. This acquisition therefore represents a significant
milestone in Cybit's development.
We will continue to develop the potential of our European businesses and to
examine the possibility of further acquisitions alongside the ongoing organic
development of the business.
23 June 2006
Enquiries:
Cybit Holdings Plc 01480 389100
Richard Horsman, Chief Executive
College Hill 0207 457 2007
Mark Garraway
CHAIRMAN'S STATEMENT
Overview
I am pleased to be able to report a robust performance for the past trading year
with revenues up and a return to profitability
This performance was the result of the Group's ongoing consolidation of its
position as the market leader in online fleet management solutions. We now have
more than 800 corporate customers and our systems cover more than 20,000 fixed
and mobile assets. Encouragingly, over 2,000 of the units ordered during the
past 12 months have been repeat business from existing satisfied customers.
Results
Revenues increased 52% to #10.2m (2005: #6.7m) generating a profit before tax of
#200,000 compared to a loss of #1.5m last year.
Operations
Our consultancy business continues to grow and to develop a high reputation in
the industry. Of particular note, more than half of our top-50 customers also
used our consultancy services during the year. This is an excellent
achievement.
A cornerstone of our strategic development is the development of new products
and services across our range of activities. We made significant progress in
this area and Richard Horsman, the Group's Chief Executive Officer, covers these
in more detail in his Review.
Our relationships with major customers continue to develop positively. For
example, our relationship with Norwich Union has already generated around 20
customers and many others are expected to take advantage of the fleet telematics
opportunity when they next renew their insurance cover.
In Europe, our subsidiaries in Sweden and Germany continue to develop. Routes
to market in Germany are being developed, and in Sweden revenue has increased by
129% as customer numbers doubled year on year.
Acquisition of Bluefinger
We recently announced the acquisition of Bluefinger, a maritime telematics
business, for a total consideration of #1.6m, including #0.5m of debt.
Bluefinger has developed a vehicle telematics division with approximately 200
customers covering a vehicle base of some 3,600 and also acquired Loca Vista
which manages the Vodafone branded vehicle telematics service. A number of
synergies between this division and Cybit's business have been identified.
Bluefinger's telematics are also used predominantly by government agencies to
protect and manage sovereign assets including fish stocks and mineral reserves.
Current customers include the UK, Tanzanian and Ghanaian governments and the
Southern African Development Community.
With an increased focus on coastal security around the world, the management
believes that this is an expanding marketplace with high barriers to entry and
commensurately attractive margin levels.
Outlook
Cybit has had an excellent year. We are seeing increasing evidence in the UK
market of a growing acceptance of telematics in transport-related and support
service sectors. Two separate markets are emerging, advanced vehicle location
systems and more complex integrated business and logistics solutions.
While the advanced vehicle location business is becoming highly competitive and
price-sensitive, we are well placed to exploit the potential with Fleetstar. In
the more complex, and higher margin business, of integrated solutions, Cybit is
well placed to further improve market penetration. In the coming year we expect
to increase market share in all sectors where Cybit operates.
Meanwhile, the acquisition of Bluefinger will extend our reach into the maritime
arena where we see new and exciting opportunities whilst also bringing
complementary activities in related vehicle telematics where Cybit has clear
market leadership. This acquisition therefore represents a significant
milestone in Cybit's development.
We will continue to develop the potential of our European businesses and to
examine the possibility of further acquisitions alongside the ongoing organic
development of the business.
Neil Johnson
23 June 2006
CHIEF EXECUTIVE'S REVIEW
Operating Review
Cybit made excellent progress during the year. It was particularly pleasing to
see a return to profitability.
With an overall increase in our own book percentage, a result based on increased
margin, major enhancements to our product portfolio, a significant number of
larger customer wins and progress in generating service related revenues, Cybit
is in robust shape.
Our Marketplace
As the market for our solutions evolves, two distinct sectors are emerging. The
first is strong demand for a simple, low cost solution for the SME market that
we are addressing with Fleetstar-AVL through our reseller channel. Although
offering opportunities for volume sales, this area of the market is becoming
extremely price sensitive with an increasing number of competitors vying for
market share. Operating through an indirect channel in this sector poses a far
lower risk to the business than the more expensive direct sales route to market.
The second sector is a demand for more complex solutions requiring integration
with horizontal solutions such as scheduling and Mobile Resource Management
(MRM). This market is where Cybit has a strong track record of successful Return
on Investment (RoI) and is where we can typically differentiate ourselves
through provision of a broader product and service portfolio. Our track record
of success means that Cybit is viewed as a lower risk alternative leading to a
premium over competitor solutions and better margins.
The opportunities for consolidation in the market continue to present themselves
on a fairly regular. Most do not pass our strict criteria for further
investigation but as the recent acquisition of Bluefinger demonstrated, there
are opportunities to develop the group by acquisition as well as organically.
Customer Growth
The customer base for Fleetstar-Online grew substantially over the period. Net
of churn, the Fleetstar-Online customer base increased from 470 customers to 656
(an increase of 40%). More significantly, the number of vehicles supported on
the platform increased 70% from 10,000 to 17,000 over the period. This growth
can be attributed to an increasing number of larger clients attracted by the
broad scope of the Fleetstar-Online solution together with the increasing range
of value-added services offered by Cybit.
Our existing customers continue to make a significant contribution towards
company growth. Larger customers such as Alfred McAlpine Business Services,
Sainsbury's to You, Interserve FM and Tulloch Construction have all increased
the number of vehicles being managed through the Fleetstar-Online solution.
A migration strategy aimed at moving the original server-based Fleetstar
application to Fleetstar-Online was undertaken during the year. This has
resulted in a reduction in the number of customers using this application from
100 to 31 over the period.
The number of customers looking to take advantage of real-time reporting offered
by technology such as General Packet Radio Service (GPRS) has increased
significantly. At the end of the period under review, Cybit had in excess of
5,500 real-time units installed with the number continuing to increase
significantly month on month. This capability now represents over 30% of the
installed base and the percentage of customers taking advantage of this
capability is expected to grow substantially in the future.
Overall renewal rates remain high. When considered as a percentage of the
overall Fleetstar base, the number of customers not renewing their Fleetstar or
Fleetstar-Online contracts represents less than 5% of total customer numbers.
Enhanced Service Delivery
During the period, revenues from non-hardware related sources increased 60% from
#1m to #1.6m. In addition to increased service support billings and our existing
return on investment consultancy, a range of new services has been developed to
complement the Fleetstar-Online solution, including new Personnel based
consultancy services to support implementation and ongoing management of the new
Duty of Care functionality released during late 2005.
As a committed user of telematics solutions within our own business, adoption of
the Duty of Care functionality (together with the use of our own consulting
services) has reduced the incidence of excessive speeding by around 90%. Not
only has this initiative reduced the business risks associated with operating a
remote workforce, it has also resulted in significant fuel savings and a
reduction in fault accidents across the business.
Another innovation during the period was the creation of a new Structured
Implementation Planning Process (SIPP) aimed at larger clients with more complex
implementation and operational environments. At the period end, Cybit was
engaged in a number of SIPP engagements with larger clients seeing this as a
significant differentiator over competitor offerings.
In all, more than 50% of our top 50 customers have taken advantage of the
consulting services offered by Cybit.
Our mapAmobile GSM mobile phone tracking service continues to deliver revenue to
the business. Annual retention rates for existing users of this service are
running at more than 95% with new customers jointing on a regular basis. A key
benefit of this service is that it acts as a customer acquisition tool for the
main Fleetstar solution with many initial mapAmobile enquiries converting to
Fleetstar-Online sales.
Operational Efficiency
In addition to expansion of ISO to include product development and IT
infrastructure, Cybit has also undertaken a number of initiatives to reduce cost
and increase efficiency. A key strategy was the outsourcing of stock management,
configuration and distribution. This initiative has resulted in improved
flexibility, increased capacity and faster response times whilst reducing
overall cost.
We have also established a small internal implementation team. The initial
impact of this initiative has been a dramatic quality improvement resulting in
greater customer satisfaction. The overall effect has been to reduce cost,
improve response times and provide greater flexibility. As a result of this
initial success we are currently growing the internal team on a national basis.
In the coming year, a new, integrated Enterprise Resource Planning (ERP) system
will be implemented to further improve operational efficiencies with associated
cost reductions.
Product Development
During the year, our in-house development team has grown such that we now have
both web and technology development capabilities within the team. As a result,
this has been another year of significant product enhancement across the
portfolio.
Fleetstar-Online was again the subject of a significant development program. We
released a messaging module supporting two-way text based communication over
GPRS and Short Messaging Service (SMS), a comprehensive Duty of Care module with
associated driver identification (Driver-id) technology together with the first
phase of our exciting new job management module.
I am pleased to report that all of these developments have contributed to our
revenue growth during the period and perhaps more importantly, have helped Cybit
demonstrate competitive advantage and to achieve enhanced revenues.
Although many of the deliverables in the year under review were focused on
Fleetstar-Online, Cybit also delivered a major upgrade of the Drive-IT car
sharing booking system which is now being used extensively by City Car Clubs,
our major UK based user of this technology. In addition, development of the new
Drive-IT hardware platform was substantially complete by the year-end with
general availability scheduled for the summer of 2006.
In the coming year, Cybit has an extensive development program planned. In
addition to the Drive-IT enhancements, the corporate version of mapAmobile will
be the subject of an extensive re-write delivering a new look user interface and
enhanced functionality.
Fleetstar-Online will also be upgraded to include Swedish language support,
phase 2 of the job management module to include job status and forms management
through PDAs and Mobile Data Terminals (MDTs), integration of third party Mobile
Resource Management (MRM) and scheduling applications plus additional
capabilities for larger corporate customers to manage more complex fleet
requirements.
Indirect Channels
Cybit continues to make progress with the Norwich Union Fleet Telematics
Solution. Approximately 20 customers have already signed up with many other
companies expected to qualify for the product at their next insurance renewal.
Progress continues with the specialist brokers who are working with our field
sales team identifying potential clients for the Fleet Telematics product.
In March 2005, we launched Fleetstar-AVL, a simplified version of
Fleetstar-Online targeted at Small to Medium Enterprise (SME) customers looking
for a simple, low cost means of managing smaller fleets of vehicles. As Cybit is
increasingly targeting larger more complex clients, it was decided that a
motivated, focused reseller channel is a far more effective way of driving
volume from this sector of the market. Accordingly, this solution will only be
available through resellers.
The initial response from customers and resellers alike has been extremely
positive with a number of new and existing resellers signing up to sell the
solution. Our resellers have also achieved sales of the solution within the
first few weeks of launch.
European Subsidiaries
Although modest, revenues in Sweden increased by 129% over the period with a
number of contracts signed with new and existing users of both Fleetstar-Online
and Drive-IT technology. Much of the contracted revenue is assigned to the Cybit
internal lease book, reducing headline revenue numbers but establishing a solid
revenue and profit stream for the future. The pipeline of potential Fleetstar
business continues to grow with the release of Swedish language in Q1 expected
to contribute to future success.
Progress in Germany has been slower than expected but the recruitment of a new
local sales manager has resulted in new contracts during Q4 and a stronger
pipeline of business for the current financial year.
During the period Cybit GmbH was formed in Germany and the name of Drive-IT
Systems AB in Sweden was changed to Cybit AB.
Financial review
Cybit recorded a #0.2m profit for the period on revenues of #10.1m. This
represents 52% revenue growth and a move from a loss of #1.5m in the same period
last year. Significantly, gross margins increased from 59% to 67% over the
previous period. This can be attributed to a number of factors including
improved supplier terms, reduction in variable costs of running the service and
a focus on "value selling" to protect margins.
Despite the significant increases in headline revenues, administrative expenses
only increased by 21% as strict cost controls have been maintained.
During the period, net financing costs reduced from 13.6% to 11.2% as a
percentage of turnover. This has been achieved through volume based cost
reductions and an increasing number of customers paying cash for hardware. This
achievement should be considered against a background of more four and five year
leases as a percentage of total deals which would typically increase finance
costs.
A key strategic goal is to increase the levels of predictable forward profit and
cash through greater use of both our internal leasing book and monthly billing
programme. During the year under review, approximately #2m of business was
treated in this manner, representing 20% of the total business written during
the year. This strategy ensures that the business currently has forward
visibility of approximately #2m in revenue and related profit, the majority of
which will be received over the next three years.
Cash in the period reduced by #1m, primarily as a direct result of increased use
of our internal leasing book. However, the business still remains cash positive
at the operating level with cash generated from operating activities increasing
from #316,000 to #373,000 in the year.
Additionally, cash generated from recurring sources (including our own leasing
book) now stands at #200,000 per month - up from #140,000 per month a year ago.
This covers approximately 50% of our monthly fixed cost base representing an
increase from the 40% reported in the prior year.
Outlook
The progress made by Cybit over the last year reflects the growing mainstream
acceptance in the UK support services and transport sectors that
telematics-based fleet management solutions can play a key role in driving down
costs, increasing efficiency and complying with the increasing legislative
burden impacting business.
Cybit is seeing an increasing pipeline of potential business and expects this to
build further on the back of a range of product innovation and development.
I would like to thank our dedicated team for their hard work and support during
what has been another highly successful year for Cybit.
Richard Horsman
23 June 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended Year ended
31 March 31 March
2006 2005
# #
Turnover 10,190,382 6,727,392
Cost of sales (3,338,521) (2,752,063)
Gross profit 6,851,861 3,975,329
Administrative expenses
Other operating expenses
Depreciation and goodwill (5,081,553) (4,189,110)
amortisation (431,949) (412,881)
Total administrative expenses (5,513,502) (4,601,991)
Operating profit/(loss) 1,338,359 (626,662)
Net interest and financing costs (1,138,349) (916,102)
Profit/(loss) on ordinary
activities before taxation 200,010 (1,542,764)
Tax on profit/(loss) on ordinary
activities (77,049) 234,835
Profit/(loss) transferred/set
against reserves 122,961 (1,307,929)
Earnings/(loss) per share - basic 0.62p (6.60p)
Earnings/(loss) per share - diluted 0.62p (6.60p)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
The The
group group
year ended year ended
31 March 31 March
2006 2005
# #
Profit/(loss) for the year 122,961 (1,307,929)
Other recognised gains and losses in the year 10,912 (19,140)
Issue of shares in the year - 45,167
Net increase/(decrease) in shareholders' funds 133,873 (1,281,902)
Shareholders' funds at 1 April 2005 6,327,539 7,609,441
Shareholders' funds at 31 March 2006 6,461,412 6,327,539
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
The The
group group
year year ended
ended 31 31 March
March 2005
2006
# #
Profit/(loss) for the year 122,961 (1,307,929)
Exchange adjustments offset in reserves 10,912 (19,140)
Total recognised gains/(losses) for the year 133,873 (1,327,069)
CONSOLIDATED BALANCE SHEET AT 31 MARCH 2006
The The The The
group group company company
2006 2005 2006 2005
# # # #
Fixed assets
Intangible assets 539,186 614,526 - -
Tangible assets 600,527 661,063 - -
Investment in subsidiaries - - 13,450,213 5,431,204
Total fixed assets 1,139,713 1,275,589 13,450,213 5,431,204
Current assets
Stocks, being goods for resale 454,322 120,821 - -
Debtors: amounts falling due
after more than one year 1,026,476 1,431,293 685,761 8,704,877
Debtors: amounts falling due
within one year 3,810,152 2,414,166 8,260 8,260
Cash at bank and in hand 2,693,308 3,704,225 - -
7,984,258 7,670,505 694,021 8,713,137
Creditors: amounts falling
due within one year (2,392,554) (2,266,422) - -
Net current assets 5,591,704 5,404,083 694,021 8,713,137
Total assets less current
liabilities 6,731,417 6,679,672 14,144,341 14,144,341
Creditors: amounts falling
due after more than one year (270,005) (352,133) - -
Net assets 6,461,412 6,327,539 14,144,341 14,144,341
Capital and reserves
Called up share capital 7,046,127 7,046,127 7,046,127 7,046,127
Share premium account 7,098,214 7,060,714 7,098,214 7,060,714
Merger reserve - 37,500 - 37,500
Other reserve (4,090,553) (4,090,553) - -
Profit and loss account (3,592,376) (3,726,249) - -
deficit
Shareholders' funds 6,461,412 6,327,539 14,144,341 14,144,341
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
31 March 31 March
2006 2005
# #
Net cash inflow from operating activities 381,949 315,861
Returns on investments and servicing of finance
Interest received 106,994 122,562
Finance costs of assigning debts to finance
companies (1,217,057) (994,833)
Interest received on finance leases 9,360 3,535
Finance lease interest paid (21,851) (11,580)
Interest paid (15,795) (26,420)
Net cash outflow from returns on investments and
servicing of finance (1,138,349) (906,736)
Taxation (2) (11,808)
Capital expenditure
Purchase of tangible fixed assets (138,103) (410,687)
Purchase of intangible fixed assets (159,424) (7,971)
Disposal proceeds of tangible fixed assets 1,048 -
Net cash outflow from capital expenditure (296,479) (418,658)
Acquisitions
Purchase of business - (89,408)
Net cash outflow from acquisitions - (89,408)
Financing
Issue of shares - 5,167
Receipts from borrowing 224,297 308,966
Finance lease repayments (113,984) (69,330)
Repayment of loans (67,675) (23,052)
Net cash inflow from financing 42,638 221,751
Decrease in cash (1,010,243) (888,998)
Net cash inflow from operating activities
Year ended Year ended
31 March 31 March
2006 2005
# #
Operating profit/(loss) 1,338,359 (626,662)
Depreciation and amortisation 431,949 412,881
Increase in stock (333,501) (27,884)
(Increase)/decrease in debtors (1,057,916) 123,875
Increase in creditors 57,792 230,565
(Decrease)/increase in deferred income (54,734) 203,086
Net cash inflow from operating activities 381,949 315,861
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2006 2005
# #
Decrease in cash in the year (1,010,243) (888,998)
Receipts from borrowing (224,297) (308,966)
Finance lease repayments 113,984 69,330
Repayment of loans 67,675 23,052
Change in net resulting from cash flows (1,052,881) (1,105,582)
Effect of foreign exchange (54) (428))
(1,052,935) (1,106,010)
Net funds at 31 March 2005 3,422,738 4,528,748
Net funds at 31 March 2006 2,369,803 3,422,738
NOTES TO THE FINANCIAL STATEMENTS
1. The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in section 240 of
the Companies Act 1985.
2. The financial information has been extracted from the
group's 2006 financial statements. Those financial statements have not yet been
delivered to the Registrar. However the group's auditors have given an
unqualified audit opinion on those financial statements.
3. Basis of preparation
The preliminary results have been prepared under the historical cost convention
and in accordance with applicable accounting standards. The principal accounting
policies of the group are set out in the group's 2005 annual report and
financial statements. The policies in this preliminary announcement have
remained unchanged from those 2005 financial statements. The group has
implemented FRS 21 'Events After the Balance Sheet Date', FRS 22 'Earnings Per
Share', the presentational aspects of FRS 25 'Financial instruments: Disclosures
and Presentation', and FRS 28 'Corresponding Amounts'. The implementation of
these new standards has had no significant effect on the group's existing
disclosures.
4. Earnings/(loss) per share
The calculation of the basic earnings/(loss) per share is based on the profits/
(losses) attributable to ordinary shareholders divided by the weighted average
number of shares in issue during the year.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The group has two classes of dilutive potential ordinary shares: those
share options granted to employees where the exercise price is less than the
average market price of the company's ordinary shares during the year and the
warrants issued to Trafficmaster as part of the acquisition of Fleetstar in
February 2002.
Reconciliations of the earnings/(losses) and weighted average number of shares
used in the calculations are set out below.
Year ended 31 March 2006 Year ended 31 March 2005
Earnings Weighted Per-share Earnings Weighted Per-share
average amount average amount
number of number of (Restated)
shares shares
(Restated)
# No. Pence # No. Pence
Basic earnings/
(loss) per share
Earnings/(losses)
attributable to
ordinary
shareholders 122,961 19,864,554 0.62p (1,307,929) 19,830,038 (6.60p)
Effect of dilutive
securities
Options and
warrants 45,461 -
Diluted earnings
per share
Adjusted earnings 122,961 19,910,015 0.62p (1,307,929) 19,830,038 (6.60p)
In the year ended 31 March 2005 the options and warrants were anti-dilutive due
to the loss in the year.
5. Copies of the company's Annual Report and Accounts will be available from the
company's registered office.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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