PRELIMINARY RESULTS 2009
Minorplanet Systems plc ("Minorplanet" or the "Company" or the "Group"), the provider of Vehicle Management Information ("VMI™") systems, announces its preliminary results for the year ended 31 August 2009.
Key points:
· Exceptionally difficult year - Group exposed to recession driven fall in demand from SMEs, which was exacerbated by major shortage in lease funding, due to banks tightening their lending criteria
· Extensive cost reduction programme undertaken in response:
- Reduction of 40% in headcount and 45% in overhead cost in the UK
- Full review of loss making European operations completed and actions taken
· Strong support from major shareholders, lease funders and banks during refinancing
Post year end activity:
· Financial climate remains very difficult, with funding challenges for the Group which give rise to material uncertainties. The Directors are confident that these can be adequately addressed. Further details are set out in Note 2 of the financial information.
· Strong sales drive highlighting the cost saving and "green" nature of the product (with full investment payback in under one year) attractive to large organisations in the private and Government sectors, delivering results with new contract wins including:
- AGA Rangemaster
- York City Council
· Strategic move to separate maintenance and extended warranty contracts, already generating cash and increasing recurring revenues
· In negotiation for the sale of Australasian subsidiary
· January 2010 sales performance was a big improvement in the UK on the previous months and this is expected to continue as the pipeline and platform increase
· Working capital injection of £300,000 through loan from Chief Executive
Terry Donovan, Chief Executive of Minorplanet, said: "The past five years have been a rollercoaster ride for the Group, its employees and its shareholders. We completed a turnaround, stabilising sales and returning the business to profitability prior to 2009, and improved Minorplanet's product and service beyond recognition. Our strategy to shift focus from SMEs to large corporates was starting to gain foothold, when unprecedented economic turmoil hit the world.
"The Group's reliance on the SME market and its historic business model left us particularly vulnerable in the ensuing downturn and, regrettably, the Group's financial results for 2009 bear witness to this.
"Although the climate is expected to remain difficult, I firmly believe that the longer-term prospects for Minorplanet remain sound. Our cost base is now repositioned, our product is a highly valuable, cost saving, resource efficiency tool and we are making tangible progress in our chosen markets. Our major shareholders and the Board continue to back this vision with substantial investments in Minorplanet to assist it in getting through the worst economic conditions experienced in decades. The extensive support and goodwill shown by our other partners, including lease funders, creditors and banks, during this incredibly difficult year also demonstrated their faith in this business and their understanding of the growth potential inherent in our markets.
"The short term economic difficulties present funding challenges for the Group, but substantial long-term potential remains. All our efforts are focused on delivering that potential. The Company is evolving into a stronger, leaner, more focused organisation which can continue to take a leading position in this exciting market."
CHAIRMAN'S STATEMENT
This has been a frustrating year for Minorplanet and its stakeholders with the Company making a loss for the first time since 2005. The considerable progress made during and after the turnaround of the Group has been overshadowed by the recent severe reduction in demand from our traditional SME customers; a problem which was compounded by a major shortage of lease funding.
I am pleased to report that the Board's strategy to focus on larger organisations is making headway. The Group's sales operation is now focused on targeting service operators in certain sectors and this is proving successful. We have also introduced separate maintenance and warranty contracts to provide regular cash flow for the Group.
Results
For the year ended 31 August 2009, the Group incurred a loss for the year of £7.2m (2008 - profit of £1.5m), although this incorporated a loss (including goodwill write offs) of £3.2m attributable to the discontinued operations in Germany and Australasia. More details of the Group's results are set out in the Financial Review.
Cost reduction programme
As the economic climate worsened, with the inevitable impact on revenue and margins, management took swift action to mitigate the steep decline in SME sales to preserve and support the Group's core business. Additional working capital of £1.6m was raised; we placed the historically loss making German operation into administration and put our Australasian subsidiary up for sale. We have re-acquired the valuable parts of the German business and integrated these with the Benelux operation such that these various markets can be serviced effectively from a much reduced cost base.
Further cost reduction activity was rapidly implemented, including major headcount reductions, particularly in the UK, and the elimination of discretionary overhead spend. We also have major projects underway to reduce product costs and other elements of cost of sales.
Refinancing and funding
The Group raised additional working capital of £1.6m in September 2009, through a Placing and Open Offer to existing shareholders totalling £1.2m, net of costs and £0.4m of new block discount loan facilities. A share capital consolidation of 1 for 20 was also effected as part of the Refinancing. The Group's existing bank overdraft facility of £0.75m was converted into a five year Enterprise Finance Guarantee Loan and an agreement was reached with Her Majesty's Customs and Revenue ("HMRC") in respect of a phased repayment of sums outstanding.
In February 2010, a £300,000 secured loan was obtained from our Chief Executive, Terry Donovan, to assist the working capital requirements of the Group. However, a number of funding challenges remain, as set out in Note 2 of the financial information.
Minorplanet is in negotiation for the sale of its Australasian subsidiary, Minorplanet Asia Pacific Pty Limited ("MAP"). After settlement of MAP's liabilities and costs, the transaction is expected to result in substantial net proceeds to the Company. This disposal would provide a vital cash injection to the Group and allow management and product development resources to be focused on the growth of Minorplanet's European operations.
The Directors continue to focus on the requirements to raise additional working capital and believe that there is a potential opportunity through the refinancing of its internal lease book provided that mutually acceptable terms can be reached.
Business model
The impact of the credit crunch was exacerbated by the one-off external leasing (inclusive of maintenance) sales model. In response to the economic environment and in conjunction with the Group's main leasing funders, since the financial year end we have moved to a new model with separate contracts covering maintenance and warranty income. Our action has already had a positive impact on the Group's regular monthly income and forms part of a determined strategy to ensure that Minorplanet's recurring income substantially covers its overheads.
Litigation
On 1 September 2009, we announced the settlement of the longstanding Spanish litigation with Asbury Park S.A. ("Asbury"). Minorplanet agreed to pay Asbury the sum of €170,000, secured by a debenture, in instalments over the period to March 2011. The Company also granted Asbury a transferable warrant to subscribe for up to 450,000 shares at an exercise price of 30p per share, exercisable by not later than 14 September 2012. The Board is satisfied that the settlement was in the best interests of the Company in that it eliminated a significant uncertainty relating to future costs and the potential liability attributable to this dispute.
I am pleased to report that another claim for £8m, also relating to the former Spanish subsidiary, was finally struck out by the courts during the year.
In January 2010, we were formally notified of a claim which had previously been threatened against the Company by Popular de Renting S.A. totalling €2.1m. As previously reported, the Board intends to vigorously defend the claim, more details of which are set out in Note 7 of the financial information.
Strategy and outlook
Our strategy to increase the Group's penetration of the large corporate market and public sector remains unchanged and we are beginning to make headway. The pipeline of potential new business in this sector is strong with conversion rates, from initial leads to signed orders, improving. The Company is currently in early stage discussions on several very large contracts and, through its improved product and service proposition, is demonstrating, unequivocally, Minorplanet's ability to reduce field service costs dramatically.
The SME market will remain challenging in the short term due to financing issues. The Group's cash position remains tight and a number of funding uncertainties remain. Whilst we are very encouraged by the inroads the Group is making into the large corporate market, there remain other possible opportunities to raise further working capital should it be required.
The long term prospects for telematics are good and Minorplanet is evolving to maintain its position as one of the leaders in that market.
Lars McBride
Chairman
25 February 2010
CHIEF EXECUTIVE'S REVIEW
Our Chairman has accurately described this as a frustrating year for the Group. Whilst the sales focus of the business has been improved enormously, the Company's results for the year ended 31 August 2009 reflect the legacy of our non-recurring sales finance model and reliance on more vulnerable SME customers.
Despite the funding challenges (more details of which are set out in Note 2 of the financial information), my belief in a bright future for this business is evidenced by my recent financial support of the Group. A great deal more improvement is planned and we will work ceaselessly to ensure Minorplanet's key role in what is currently a very difficult market for both us and our competitors.
Review of Operations
UK
It is disappointing to report how severely the credit crunch and related recession affected sales to our traditional SME customers in the UK during the year. This decline was partly offset by successes in the larger corporate sector but, nevertheless, UK revenues reduced by around 40% to £8m; the major contributory factor being the shortage of lease finance to SME businesses. As trading conditions worsened, we undertook an aggressive cost reduction programme to mitigate, as far as possible, the impact of the credit crunch on our business with, inter alia, a 45% reduction in the UK overhead cost. More details of these cost reductions are reported in the Financial Review.
The finance issue has continued into the current year. However, our strategy to penetrate the larger corporate and public sector markets, which are less affected by funding issues, is beginning to make strides. We have also taken action to move the business towards a recurring income model to generate regular revenue and cash inflow, as explained in more detail below.
Ireland
Our Irish business, Monitcom, remained profitable in the first half of the year, despite a downturn in sales created by the frustrating shortage of lease finance, as well as competitive pricing pressures. Sales continued to be affected by these pressures in the second half, as well as Ireland's more general economic problems. Overall, revenue reduced by £0.5m in 2009 to £1.3m and, despite strong gross margins and tight cost control, the company fell below break even for the full year for the first time since 2005. We are the market leaders in this territory and are working hard to maintain sales. Monitcom has made inroads into the public sector but this has yet to produce revenues. The economy in Ireland remains very tough.
Benelux and Germany
I am pleased to report that, under the guidance of General Manager, Robert Weij, our Benelux operation made some progress in 2009. A slight reduction in sales was more than offset by gains in margin and losses were reduced to a negligible level.
In contrast, despite considerable efforts, Germany continued to report losses and we took the decision to place the business in administration in July 2009. The valuable parts of the business, including the internal lease book, were then acquired by a new Dutch subsidiary, Minorplanet Europa BV. This company will continue to service and, hopefully, grow our customer base in Germany. We believe the combined territories, operating on a much reduced cost base and with a clear sales focus, can become a profitable enterprise and provide a platform for growth in Continental Europe.
Our other European operations, including Spain, France and Italy, are all serviced by distributors and are under review. Our new proposition is appealing to European-wide operators and the review will cover the best way to sell to and service these customers.
Australasia
Minorplanet Asia Pacific Pty Ltd incurred a loss before tax of £0.8m in the year on reduced turnover of £5.8m. Although progress was being made on the Australian Government sponsored Intelligent Access Program and the development of a new distributor in South East Asia, the impact of these initiatives in 2009 was less than anticipated.
Prevailing difficult trading conditions, combined with the distraction of a proposed sale of the business, have had a negative impact on the current year's performance and, as outlined in the Chairman's Statement, we expect to complete the sale of the business in the near future. This should generate a welcome injection of cash into the Group's core business.
Strategy, sales and marketing and business model
Our strategy to penetrate the larger corporate and public sector markets is making tangible progress and Minorplanet is evolving to exploit the opportunities in this market. The sales and marketing team has been retrained and reorganised to focus on a select number of service operators in vertical markets within these sectors. Minorplanet has a compelling, cost saving, resource efficient, "green" service proposition, supported by KPI statistics generated from use of the product within our own engineering fleet. This is proving highly attractive to larger organisations and we have already secured new contracts with AGA Rangemaster and York City Council.
This new, invigorated sales and marketing focus is being rolled out across all our key territories.
The Group's extensive sales and support coverage provides major opportunities to acquire contracts with businesses operating across all of Europe's key economies and a number of discussions are already being held with such organisations.
We have created a new revenue stream from separate maintenance and extended warranty contracts, which were introduced towards the end of 2009. Such revenues were previously incorporated in the "one off" external lease income. The unbundling of these revenues not only provides additional comfort to our customers and lease providers, but also creates an income stream which, together with other recurring revenues, should in time substantially cover our reduced overhead base.
Product development
Minorplanet places great emphasis on the ongoing development of its leading edge technology. Therefore, despite the large reduction in headcount within the business, we have ring-fenced our core development team. They are a valuable asset and play a key role in the future of this business.
Innovative products for the trailer and plant tracking markets have recently been launched, as well as a new fixed data terminal, VCom, which provides significantly enhanced communications between the driver and back office. Our VMIgreenlight™ software is being continually enhanced through regular upgrades and now plays host to over 30,000 units across Europe. A new low cost data collection unit will also be launched to the "track and trace market" in March 2010.
Operations
The Group's UK Operations team continues to perform strongly, aided by a highly reliable product set, most of which are now maintained and upgraded "over the air". Average installation times and response times on maintenance requests have been reduced further. We have established a dedicated customer care team, focused on maintaining regular contact with our valued and extensive customer base. I believe that this will have a positive impact on our renewal performance.
Markets and outlook
The past five years have been a rollercoaster ride for the Group, its employees and its shareholders. We completed a turnaround, stabilising sales and returning the business to profitability prior to 2009, and improved Minorplanet's product and service beyond recognition. Our strategy to shift focus from SMEs to large corporates was starting to gain foothold, when unprecedented economic turmoil hit the world.
The Group's reliance on the SME market and its historic business model left us particularly vulnerable in the ensuing downturn and, regrettably, the Group's financial results for 2009 bear witness to this.
Although the climate is expected to remain difficult, I firmly believe that the longer-term prospects for Minorplanet remain sound. Our cost base is now repositioned, our product is a highly valuable, cost saving, resource efficiency tool and we are making tangible progress in our chosen markets. Our major shareholders and the Board continue to back this vision with substantial investments in Minorplanet to assist it in getting through the worst economic conditions experienced in decades. The extensive support and goodwill shown by our other partners including lease funders, creditors and banks during this incredibly difficult year also demonstrated their faith in this business and their understanding of the growth potential inherent in our markets.
The short term economic difficulties present funding uncertainties for the Group, but substantial long-term potential remains. All our efforts are focused on delivering that potential. The Company is evolving into a stronger, leaner, more focused organisation, which can continue to take a leading position in this exciting market.
Terry Donovan
Chief Executive
25 February 2010
FINANCIAL REVIEW
Results for the year
For the year ended 31 August 2009, the Group incurred a pre-exceptional loss on continuing operations of £3.2m (2008 - profit of £1.7m) on a turnover of £9.7m (2008 - £15.3m) and a loss for the year of £7.2m (2008 - profit of £1.5m).
Total revenues on continuing operations were £5.6m (37%) down on the previous year due to adverse variances in all subsidiaries, although a significant proportion of the shortfall arose in the UK for the reasons outlined in the Chairman's Statement and Chief Executive's Review. Gross margins on continuing operations of 72% were 5% down on 2008 due to increased price pressure and some change in mix towards the larger, lower margin deals.
Total Group overheads relating to continuing operations were £11.7m (2008 - £11.1m), but the prior year comparatives were reduced by provision releases (£1.2m) and the current year has increased by £0.4m due to the impact of exchange rates on overheads denominated in foreign currencies. The Group's average headcount fell by 12% from 327 in 2008 to 288 in 2009. Interest receivable, net on continuing operations, was £0.9m (2008 - £1.1m), with the reduction reflecting lower internal lease interest and increased borrowings. Exceptional items totalled £0.6m in 2009 (2008 - credit of £0.1m) and largely comprised redundancy and other restructuring costs.
Losses from discontinued operations (Germany and Australasia) totalled £3.2m (2008 - £0.3m) including a goodwill write off of £2.1m. The Group incurred a net loss per share on continuing operations of £2.42 (2008 - earnings per share of £1.10) and on discontinued operations a loss per share of £1.98 (2008 - £0.18).
Cost reductions
The UK business has undertaken a major cost reduction programme over the last 18 months. Headcount has decreased from 167 in September 2008 to 122 in August 2009 and, since the year end, to the current level of around 100. Discretionary overhead spend has also been cut, resulting in a reduction in the UK monthly overhead cost from over £900,000 to approximately £500,000.
Projects have also been initiated to reduce significantly material costs and other elements of cost of sales, to improve gross margins and support more aggressive pricing strategies on major public and private sector contracts.
Balance sheet
The Group had net liabilities of £2.5m at 31 August 2009, compared with net assets of £4.7m at the start of the year. This adverse movement arose primarily from the loss for the financial year of £7.2m, which included exceptional items of £0.6m and losses from discontinued operations of £3.2m.
The Group's net assets subsequently increased by £1.2m, as a result of the equity element of the Refinancing completed after 31 August 2009, which is outlined in the Chairman's Statement.
Taxation
The Group's current taxation charge was £nil for 2009 (2008: £nil) due to tax losses brought forward and there was a deferred tax charge of £0.2m. Total tax losses across the worldwide Group available for future offset are approximately £57m. A deferred tax asset of £0.1m (2008: £0.3m) was recognised in respect of a small proportion of these losses but has not been recognised in relation to the remaining losses, due to the unpredictability of future profit streams.
Cashflow
The Group incurred a net cash outflow of £1.8m in 2009 (2008: £2.7m), as a result of the trading losses outlined above, partly offset by a favourable movement in working capital. Stocks and debtors fell during the year due to lower sales activity and tight working capital controls, while creditors rose by £2.0m, as supplier credit and liabilities due to HMRC were stretched. Repayments of historic block discount loans totalled £0.1m in the period.
Borrowings
Loans totalling £1.5m in respect of the former minority shareholder in our Australian subsidiary remained outstanding at year end but will be repaid as part of the planned disposal of this company outlined in the Chairman's Statement. The principal other remaining loans (£0.6m) related to the historic block discounting arrangements utilised by the Group partly to refinance the internal leasebook, with repayments scheduled over the next two years. Leasing and hire purchase liabilities were £0.1m. Similar facilities will continue to be used, where necessary, to supplement the Group's funding arrangements for specific items of capital expenditure. The Group had an overdraft facility of £0.75m with Yorkshire Bank at 31 August 2009 of which £0.5m was utilised at year end. The Yorkshire Bank overdraft has been converted to an Enterprise Finance Guarantee Loan of £0.75m, repayable over five years, and this has been fully drawn down since the year end. A new loan of £0.3m, repayable by May 2012, was advanced by Terry Donovan in February 2010.
Treasury
The Group operates a central treasury function which is primarily responsible for managing cash balances and foreign currency risks. Forward exchange contracts and similar instruments will be used, if appropriate, on a selective basis to hedge against currency exposures.
Accounting policies and basis of preparation
This Preliminary Announcement has been prepared in accordance with the measurement criteria of International Financial Reporting Standards.
Note 2 sets out the Directors' Statement on going concern. This Statement refers to certain events and circumstances which represent a material uncertainty and which may cast significant doubt on the Group's and Company's ability to continue as a going concern. These events and circumstances are outlined in detail in Note 2. However, after making enquiries, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.
Richard Hopkin
Finance Director
25 February 2010
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the year ended 31 August 2009
|
|
Year ended
|
Year ended
|
|
|
31 August 2009
|
31 August 2008
|
|
|
£'m
|
£'m
|
|
Continuing operations
|
|
|
|
Revenue
|
9.7
|
15.3
|
|
Cost of sales
|
(2.7)
|
(3.5)
|
|
Gross profit
|
7.0
|
11.8
|
|
|
|
|
|
Operating expenses
|
(11.7)
|
(11.1)
|
|
Interest on internal finance leases
|
1.0
|
1.1
|
|
Net external finance costs
|
(0.1)
|
(0.0)
|
|
|
|
|
|
(Loss)/profit before tax
|
(3.8)
|
1.8
|
|
|
|
|
|
(Loss)/profit before tax and exceptional items
|
(3.2)
|
1.7
|
|
Exceptional items, net
|
(0.6)
|
0.1
|
|
|
|
|
|
(Loss)/profit before tax
|
(3.8)
|
1.8
|
|
|
|
|
|
|
|
|
|
Tax
|
(0.2)
|
(0.0)
|
|
(Loss)/profit for the year from continuing operations
|
(4.0)
|
1.8
|
|
|
|
|
|
Discontinued operations
|
|
|
|
Loss for the year from discontinued operations
|
(3.2)
|
(0.3)
|
|
|
|
|
|
(Loss)/profit for the year
|
(7.2)
|
1.5
|
|
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of the parent
|
(7.1)
|
1.5
|
|
Minority interest
|
(0.1)
|
0.0
|
|
|
(7.2)
|
1.5
|
|
|
|
|
|
(Loss)/earnings per share
From continuing operations
|
|
|
|
- basic and diluted
|
(£2.42)
|
£1.10
|
|
From discontinued operations
|
|
|
|
- basic and diluted
|
(£1.98)
|
(£0.18)
|
|
|
|
|
|
From continuing and discontinued operations
|
|
|
|
- basic and diluted
|
(£4.40)
|
£0.92
|
UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 August 2009
|
|
Year ended
|
Year ended
|
|
|
31 August
|
31 August
|
|
|
2009
|
2008
|
|
|
£'m
|
£'m
|
|
|
|
|
|
Exchange differences on translation of foreign operations
|
0.1
|
0.2
|
|
Net income recognised directly in equity
|
0.1
|
0.2
|
|
(Loss)/profit for the year
|
(7.2)
|
1.5
|
|
Total recognised income and expense for the year
|
(7.1)
|
1.7
|
|
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of the parent
|
(7.0)
|
1.7
|
|
Minority interests
|
(0.1)
|
0.0
|
|
|
(7.1)
|
1.7
|
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 31 August 2009
|
|
31 August 2009
|
31 August 2008
|
|
|
£'m
|
£'m
|
|
|
|
|
|
Non-current assets
|
|
|
|
Goodwill
|
0.3
|
2.4
|
|
Other intangible assets
|
1.1
|
1.4
|
|
Property, plant and equipment
|
0.2
|
0.5
|
|
Finance lease receivables
|
1.9
|
2.0
|
|
Deferred tax assets
|
0.1
|
0.3
|
|
|
3.6
|
6.6
|
|
|
|
|
|
Current assets
|
|
|
|
Inventories
|
0.2
|
1.1
|
|
Finance lease receivables
|
0.6
|
0.7
|
|
Trade and other receivables
|
1.6
|
5.5
|
|
Cash and cash equivalents
|
0.0
|
1.2
|
|
Assets held for resale
|
5.0
|
-
|
|
|
7.4
|
8.5
|
|
|
|
|
|
Total assets
|
11.0
|
15.1
|
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
(7.4)
|
(7.6)
|
|
Current tax liabilities
|
-
|
(0.0)
|
|
Obligations under finance leases
|
(0.1)
|
(0.1)
|
|
Bank overdraft
|
(0.5)
|
-
|
|
Borrowings
|
(0.3)
|
(1.2)
|
|
Provisions
|
(1.1)
|
(0.5)
|
|
Liabilities directly associated with assets classified as held for sale
|
(3.8)
|
-
|
|
|
(13.2)
|
(9.4)
|
|
|
|
|
|
Net current liabilities
|
(5.8)
|
(0.9)
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
Borrowings
|
(0.3)
|
(1.0)
|
|
|
|
|
|
Total liabilities
|
(13.5)
|
(10.4)
|
|
|
|
|
|
Net (liabilities)/assets
|
(2.5)
|
4.7
|
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
8.6
|
8.6
|
|
Equity reserves
|
18.2
|
18.2
|
|
Retained earnings
|
(29.5)
|
(22.4)
|
|
Equity attributable to equity holders of the parent
|
(2.7)
|
4.4
|
|
Minority interest
|
0.2
|
0.3
|
|
Total equity
|
(2.5)
|
4.7
|
UNAUDITED CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 August 2009
|
|
Year ended
|
Year ended
|
|
|
31 August 2009
|
31 August 2008
|
|
|
£'m
|
£'m
|
|
|
|
|
|
Net cash used in operating activities
|
(2.9)
|
(2.4)
|
|
|
|
|
|
Investing activities
|
|
|
|
Interest received
|
1.3
|
1.3
|
|
Proceeds on disposal of property, plant and equipment
|
0.1
|
0.1
|
|
Purchases of property, plant and equipment
|
(0.2)
|
(0.4)
|
|
Purchases of patents and trademarks
|
(0.0)
|
(0.0)
|
|
Acquisition of subsidiary
|
(0.0)
|
-
|
|
|
|
|
|
Net cash from investing activities
|
1.2
|
1.0
|
|
|
|
|
|
Financing activities
|
|
|
|
Repayments of borrowings
|
(0.1)
|
(1.3)
|
|
Repayments of obligations under finance leases
|
(0.0)
|
(0.0)
|
|
Proceeds on issue of shares
|
-
|
0.0
|
|
|
|
|
|
Net cash used in financing activities
|
(0.1)
|
(1.3)
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
(1.8)
|
(2.7)
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
1.2
|
3.7
|
|
|
|
|
|
Effect of foreign exchange rate changes
|
0.1
|
0.2
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
(0.5)
|
1.2
|
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the year ended 31 August 2009
1. General information
The financial information contained in this announcement does not constitute the Group's financial statements for the years ended 31 August 2009 and 31 August 2008. The financial statements for the year ended 31 August 2008 have been delivered to the Registrar of Companies and distributed to shareholders. These financial statements contained an unqualified auditor's report which did not contain any statements under Section 237 (2) or (3) of the Companies Act 1985. As at the date of this announcement, the Auditors have not reported on the financial statements for the year ended 31 August 2009, nor have such financial statements been delivered to the Registrar of Companies. The audit report on the 31 August 2009 financial statements is expected to be modified by the inclusion of an emphasis of matter with regard to the material uncertainties and significant doubt concerning the Group and the Company's ability to continue as a going concern (explained in Note 2 below). The financial statements for 2009 will be distributed to shareholders prior to the Annual General Meeting and filed with the Registrar of Companies following that meeting.
2. Basis of preparation
This financial information has been prepared using the measurement bases contained within International Financial Reporting Standards (IFRS).
As described in the Chairman's Statement, Chief Executive's Review and Financial Review, the current economic environment is challenging and the Group has reported a loss of £7.2m for the year. In assessing the appropriateness of the going concern basis, the Directors have prepared forecasts for a period of 12 months from the date of these financial statements and have considered downside sensitivity scenarios. These forecasts take into account the current economic environment as well as the Directors' view with regard to the Group's future prospects. The forecasts show that the Group should be able to meet its obligations as they fall due, but they also demonstrate that there is limited headroom, although the Directors believe that there are enough alternative options to maintain this position. A number of material uncertainties exist and these have been summarised below. Failure to achieve the assumed outturn in respect of any of these uncertainties would result in a shortfall of funds.
· During February 2010, the Group's UK trading subsidiary Minorplanet Limited agreed a revised 12 month payment schedule with HMRC regarding approximately £2.1m of taxation balances. The ability of the Group to generate sufficient funds to meet this payment schedule is dependent upon the outcome of the uncertainties explained below. If the Group were to be unable to meet this repayment plan then HMRC may agree to a revised payment schedule or may seek recovery through legal action which could ultimately result in the execution of a winding up petition against the Company. However, as explained below, the Directors are confident of a successful outturn with regard to these matters and hence of meeting the obligations under the repayment plan.
· The forecasts assume an improvement in sales performance. The Directors acknowledge that such an improvement is uncertain in the current economic conditions. However, based on the sales pipeline, recent large account wins, the renewals capability and service proposition, the Directors consider the prospects for the Group to be sound and that the forecast sales levels are realistic. The sales pipeline for new business is now strong and the Directors believe that, with the Group's new proposition, it can close the necessary proportion of this business to achieve forecast sales.
· It is assumed that the Group will finalise a successful disposal of the Australian subsidiary for substantial net proceeds. In preparing the forecasts the Directors have assumed a net cash benefit of £1m, after deduction of liabilities and costs, realised by 30 April 2010. This sale is uncertain both in terms of timing and value. However, the Directors are in discussions with certain interested parties and are confident that the transaction will be satisfactorily completed by 30 April 2010.
· The Group has breached the terms of a loan obligation of approximately £500,000. Under the terms of the loan agreement, the balance is payable on demand as a result of this breach and currently no formal waiver or revised repayment plan is agreed. In preparing the forecasts, the Directors have assumed that repayments can be made over a period of approximately 2 years. No formal agreement exists with regard to repayment and hence an uncertainty exists over the required repayment timings. However, the Directors note that during informal discussions the counterparty has indicated that such arrangements are acceptable and that immediate repayment will not be requested.
· The Group has been notified of a material claim with regard to guarantees purportedly given in relation to obligations of a former subsidiary (see Note 7). Should any settlement be required, its quantum and timing are uncertain. However, the claim will be vigorously defended and the Directors are of the view that, based on legal advice, there is unlikely to be a judgement or commercial settlement in the next twelve months. Any settlement would be agreed on terms that the Group was able to meet.
The Directors have concluded that a combination of these circumstances represents a material uncertainty related to events or circumstances which may cast significant doubt on the Group's and Company's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, after making enquiries and considering the uncertainties described above, the Directors are of the view that these matters can be managed to a satisfactory resolution and consequently the impact of the uncertainties can be mitigated. In light of the above, together with other possible fund-raising opportunities, the Directors have a reasonable expectation that both the Group and Company will have adequate resources to continue in operational existence for the foreseeable future.
3. Exceptional items, net
Exceptional items, net, comprise:
|
|
Year ended
|
Year ended
|
|
|
31 August 2009
|
31 August 2008
|
|
|
£'m
|
£'m
|
|
Profit on sale of equipment and lease debtors
|
-
|
0.3
|
|
Restructuring and other charges
|
(0.6)
|
(0.2)
|
|
|
(0.6)
|
0.1
|
4. Tax
Corporation tax for the year is charged at the prevailing rates, adjusted for the utilisation of brought forward losses.
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
|
|
Year ended
|
Year ended
|
|
|
31 August 2009
|
31 August 2008
|
|
|
£'m
|
£'m
|
|
Earnings
From continuing operations
|
|
|
|
Earnings for the purposes of basic and diluted earnings per share being the net (loss)/profit attributable to equity holders of the parent from continuing operations
|
(3.9)
|
1.8
|
|
|
|
|
|
Earnings
From discontinued operations
|
|
|
|
Earnings for the purposes of basic and diluted earnings per share being the net loss attributable to equity holders of the parent from discontinued operations
|
(3.2)
|
(0.3)
|
|
|
Number
|
Number
|
|
Number of shares
|
|
|
|
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share
|
1,617,476
|
1,617,476
|
The (loss)/earnings per share figures have been restated to reflect the 1 for 20 share capital consolidation which was effected subsequent to the year end.
6. Notes to the cash flow statement
|
|
Year ended
|
Year ended
|
|
|
31 August 2009
|
31 August 2008
|
|
|
£'m
|
£'m
|
|
|
|
|
|
(Loss)/profit for the year
|
(7.2)
|
1.5
|
|
Adjustments for:
|
|
|
|
Interest on internal finance leases
|
(1.3)
|
(1.3)
|
|
Interest paid
|
0.2
|
0.1
|
|
Corporation tax expense
|
0.2
|
0.0
|
|
Loss on disposal of discontinued operations
|
0.1
|
-
|
|
Depreciation of property, plant and equipment
|
0.2
|
0.2
|
|
Capitalisation of intangible assets net of related amortisation
|
(0.2)
|
(0.3)
|
|
Share-based payment expense
|
0.0
|
0.0
|
|
Impairment of goodwill
|
2.1
|
-
|
|
Movement in asset held for sale
|
(0.1)
|
-
|
|
Gain on disposal of property, plant and equipment
|
(0.0)
|
(0.0)
|
|
Increase/(decrease) in provisions
|
0.6
|
(0.5)
|
|
Operating cash flows before movements in working capital
|
(5.4)
|
(0.3)
|
|
|
|
|
|
Decrease/(increase) in inventories
|
0.5
|
(0.3)
|
|
Decrease/(increase) in receivables
|
0.2
|
(2.2)
|
|
Increase in payables
|
2.0
|
0.6
|
|
Cash used in operations
|
(2.7)
|
(2.2)
|
|
|
|
|
|
Corporation tax paid
|
-
|
(0.1)
|
|
Interest paid
|
(0.2)
|
(0.1)
|
|
|
|
|
|
Net cash used in operating activities
|
(2.9)
|
(2.4)
|
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank.
7. Potential litigation
In January 2010, the Company was notified of a formal claim of €2.09m by Popular de Renting SA against the Company in relation to guarantees purportedly given to Minorplanet Systems SA, the former Spanish subsidiary, in relation to leasing facilities. As previously disclosed, the Company intends to vigorously defend the claim.
8. Board Approval of this Preliminary Announcement
This report was approved by the Board on 25 February 2010.
9. Annual Report and Accounts
The report and accounts will be sent to shareholders shortly. Copies will be available by writing to the Company Secretary, Minorplanet Systems plc, Greenwich House, 223 North Street, Leeds, LS7 2AA.