TIDMC21
RNS Number : 9510T
21st Century Technology PLC
26 March 2019
26 March 2019
21(st) Century Technology plc
("21(st) Century", "the Group", or "the Company")
Final Results for the year ended 31 December 2018
21(st) Century Technology plc (AIM: C21), the specialist
provider of tailored solutions to the transport community, solving
complex operational requirements both 'on-vehicle' and 'in-street',
announces its final results for the year ended 31 December
2018.
Financial headlines
-- Revenue GBP12.6m (2017: GBP11.8m) of which GBP3.9m (2017: GBP3.5m) was recurring revenue
-- Gross profit GBP4.8m (2017: GBP5.0m) reflecting business mix
-- Underlying loss before tax GBP138k (2017: underlying profit GBP11k)
-- Profit before tax of GBP0.1m (2017: loss GBP0.4m) as a result
of beneficial effects from share-based payments credit
-- Diluted earnings per share 0.15p (2017: loss per share: 0.38p)
-- Net cash flows from operating activities GBP380k (2017: cash outflow GBP729k)
-- Cash and cash equivalents at year end GBP0.5m (2017: GBP0.3m)
-- Extended the maturity of the GBP300k 2016 loan notes to 31
March 2021 and raised a further GBP250k of loan notes which mature
on 31 March 2022 in order to provide additional working capital
Operational headlines
-- Fleet sales increased 10% to GBP8.2m (2017: GBP7.5m); gross
profit decreased to GBP2.4m (2017: GBP2.6m) reflecting the business
mix.
-- Passenger sales increased to GBP4.4m (2017: GBP4.3m) and
gross profit increased to GBP2.5m (2017: GBP2.4m) with an increase
in recurring, higher margin maintenance sales.
-- Revenues from overseas operations grew to GBP2.3m (2017: GBP2.0m).
-- Increased orders for our new technologies marketed under the
Journeo(TM) brand and sold as Software as a Service (SaaS)
contributed to the GBP0.4m increase in recurring revenue.
-- R&D continues to be crucial to innovation led growth
strategy with increased joined-up opportunities drawing from Fleet
and Passenger expertise.
Russ Singleton, CEO of 21(st) Century Technology plc, said: "Our
performance last year reflected the state of flux of the UK
transport sector whereby continued PTA and local authority spending
constraints resulted in significantly lower investment in new
vehicles. In the UK we ensured our clients met regulatory
requirements and extended the life of older vehicles via
retro-fits, while we sought to grow recurring revenues and expand
overseas sales.
Despite the persistence of reduced fleet investment, there is a
strong recognition by the industry in the need to adopt new
technologies to meet H&S and emissions regulations, as well as
the joined-up public transport requirements of the future.
Inevitably, this will lead to investment in new vehicles and,
therefore, it is increasingly a matter of 'when', rather than 'if',
it will happen. This is set against a demand to reduce upfront
capital investment in technologies and the move towards SaaS
business models.
As a result, considerable effort was made last year working in
close collaboration with our existing and potential customers to
define and develop new technologies for both passengers and
operators. Our SaaS solutions, marketed under Journeo(TM), are
being received very well and we are building our reputation for
innovation, evidenced by an increasing number of in-bound
enquiries. There is therefore a great sense of anticipation at
21(st) Century, not least resulting from a healthy pipeline of new
business opportunities, but also how our new technologies will
fundamentally change the profile of the Group. I look forward to
reporting on our continued progress."
Enquiries:
21st Century Technology Russ Singleton/Nick Lowe Tel: 0844 871 7990
plc
finnCap
Nominated Adviser Julian Blunt/Scott Mathieson Tel: 0207 220 0500
Media enquiries
Communications Portfolio Ariane Comstive Tel: 07785 922
354
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Notes to editors:
'Connected Systems for Connected Journeys'
21(st) Century provides tailored solutions to the transport
community, solving complex operational requirements both on-board
vehicles, through 21(st) Century Fleet Systems and into Towns &
Cities through 21(st) Century Passenger Systems.
Fleet Systems solutions include on-board CCTV, Wi-Fi and
passenger information systems to improve accessibility and safety,
vehicle and driver performance telematics, remote condition
monitoring and advanced passenger counting technologies, which
improve efficiency, alongside our cloud-based agnostic video
management software that connects the vehicle to other enterprise
stakeholders.
Passenger Systems solutions include a wide range of robust
external digital signage such as, on-street interactive wayfinding
totems, bus shelter displays and transport interchange departure
boards and our powerful content management software, which enables
users to inform passengers with graphical real-time departure
information, road-works & disruption messaging with supporting
advertorial media on a 24/7 basis.
With over 20 years' experience, we combine our R&D and
domain expertise to create technologically converged solutions,
leveraging the IoT to deliver more deeply integrated solutions to
complex, regulated, safety-critical applications in our current and
targeted market spaces.
Further information on the company is available on
www.21stplc.com or search for 21st Century Technology on LinkedIn
and @21stCenturyLtd on Twitter.
Chairman's statement
I am pleased to report on another year of progress in 2018
during which the Group increased revenues for the fourth successive
year to GBP12.6m (2017: GBP11.8m) deriving from our increased
investment in the future, through further development into our own
IP technologies; products, services and software.
Trading results
Group results for the year ending 31 December 2018 show a small
underlying loss before tax of GBP138k (2017: underlying profit
GBP11k). Overall sales volumes increased to GBP12.6m (2017:
GBP11.8m) and gross profit decreased to GBP4.8m (2017:
GBP5.0m).
Fleet sales increased 10% to GBP8.2m (2017: GBP7.5m) on improved
sales performance in Bus UK & Eire and International,
particularly in non-EU markets. Gross profit decreased to GBP2.4m
(2017: GBP2.6m) reflecting the business mix. Passenger sales
increased to GBP4.4m (2017: GBP4.3m) and gross profit increased to
GBP2.5m (2017: GBP2.4m) with an increase in recurring, high-margin,
software and support sales.
Underlying administrative expenses increased to GBP5.4m (2017:
GBP5.1m) following the investment in technical and sales
personnel.
The effect of a share-based payments credit, R&D tax credits
and grant income resulted in a profit before tax of GBP0.1m (2017:
loss GBP0.4m). The basic profit per share is 0.15p (2017: loss
0.38p).
To support the businesses' investment in R&D and to provide
working capital to ensure that anticipated opportunities are
capitalised upon, agreement was made to extend the maturity of the
GBP300k 2016 loan notes to 31 March 2021 and the Company raised a
further GBP250k of loan notes which mature on 31 March 2022.
Customer update
Our programme to retain and broaden the customer base and the
range of services we provide is working. From a base of three
important and large operator customers, First Bus, Arriva Bus and
Keolis we were delighted to welcome Abellio and more recently
Translink in Northern Ireland. This programme is on-going as we
continue to forge new customer relationships.
It is very encouraging to see a growing number of new and
existing customers seeking out our technologies, marketed under the
Journeo(TM) brand. New products, software and services are a key
component in our growth and diversification strategy. We have
identified niche-market opportunities with the potential to effect
a profound change on our business, opening global market access for
our products & Software as a Service (SaaS) based solutions to
value-added resellers, distributors and end-user operators.
Whilst it takes time and investment to bring new products to
market it is with the objective of growing a profitable, long-term
and sustainable recurring revenue business. In 2018 recurring
revenues were GBP3.9m (31% of total revenue) demonstrating the
value of our software, technologies and services throughout the UK
and beyond.
Following our breakthrough work in 2017, we were pleased to
secure additional sales of GBP1m into the New Zealand bus market,
shielding the Group from impacts associated with reduced new
vehicle registrations in the UK. Importantly it has exposed our
R&D teams to exciting and scalable opportunities utilising
global standards such as GTFS (General Transit Feed Specification)
for new technology-based sales outside of the UK, currently
dominated by the more complex and variably-interpreted SIRI
(Service Interval for Real-time Information) standards.
During 2018 we completed, what turned out to be a challenging
GBP1m fleet-wide safety systems upgrade involving the installation
of Handbrake Warning (HBW) technology on over 5,000 buses located
in over 60 depots throughout the UK. The logistics associated with
coordinating vehicle availability, engineering allocation with
just-in-time equipment delivery to each site, in a safety critical
quality assured process produced some unexpected and valuable
insights. As a result, we are now well positioned to carry out
similar business-critical, fleet-wide engineering upgrade
programmes and will be making further IT systems investments during
2019 to strengthen capabilities in this area.
A change in the mix of business, particularly within our Fleet
segment, resulted in slightly reduced margins at group level of
GBP4.85m (2017: GBP5m). Large fleet customers in the UK held back
investment in the numbers of new double-deck and single-deck
vehicles ordered during 2018, resulting in lower numbers than
indicated and compared with the average numbers over each of the
last few years. To extend the life of some older vehicles within
their existing fleets, we carried out important, but lower value
mid-life refurbishment of existing on-board technologies. We are
anticipating that this situation may persist for a while longer for
a variety of reasons; not least the uncertainty surrounding
Brexit.
Market opportunities
A number of bus manufacturers have been increasing investment in
their overseas marketing and as a result, have been keen to include
and demonstrate their vehicles with the latest range of advanced
on-board technology that 21(st) Century has to offer. We have
welcomed the opportunity to provide this support, as it not only
improves bonding with our partners, it provides international
marketing exposure where we can showcase our solutions. Over the
last 12 months we have made new contacts in EU Countries along with
Mexico, Chile, Hong Kong and New Zealand. We are now working on
opportunities as a result of these visits that we hope will begin
to come to fruition later this year.
Investment decisions regarding new vehicle types and numbers are
influenced by many factors; Demand Responsive Transport (DRT) such
as Uber, congestion, low interest rates and online shopping. As
populations continue to coalesce around ever larger urban centres,
agile, machine-learning based solutions will become essential for
movement around smarter cities of the future. It has taken a while
for us to establish our technical credentials in the marketplace,
but we are now forging links within a broader eco-system and look
forward to playing an increasing role in this paradigm shift.
Transport Authorities and fleet operators are adapting to these
changing circumstances in a variety of ways. Some are moving
towards smaller, electric or Zero Emission Vehicles (ZEV), others
are upgrading existing infrastructure and vehicles, whilst also
modifying routes to improve the passenger experience, reduce
congestion, attract people to public transport and, at the same
time fulfil their commitment to reduce emissions.
Research and Development
We continue to provide engineering services, technical support,
new equipment and evaluation systems to bus manufacturers,
operators and Transport Authorities. Our research has identified
tangible growth opportunities in segments of our target markets;
partly as a result of the long operating life of vehicles and
associated legacy upgrade requirements, but also due to congestion,
modal shift and other changing passenger dynamics. We are fortunate
to have a small number of thought-leaders and early- adopter
customers who support the development of new-concepts and
prototypes.
Increasing the development pulse and pace of innovation for our
novel or next-generation solutions that improve safety, efficiency
and accessibility for many types of transport related services is a
priority. Our sales, marketing and development plans are
coordinated and align with the requirements of the Bus Services Act
2017 and the Transforming Cities Fund. We aim to capture an
increasing share of both of these market initiatives in the UK and
in other overseas territories where similar approaches are being
considered.
Governance
As Chairman, it is my responsibility to ensure the highest
practicable standards of corporate governance are in place. Of the
two widely recognised formal codes, we adhere to the Quoted
Companies Alliance's (QCA) Corporate Governance Code for small and
mid-size quoted companies, which the Board considers the most
appropriate for the size and structure of the Group. More
information can be found in the Corporate Governance section of
this report and on our website.
Please see www.21stplc.com/en/investors for our full compliance
statement.
People
As we further develop into more a customer-centric, technically
agile business, so does the expectations and responsibilities that
we place on our team members. It pleases me to report that our
staff are adapting exceptionally well within this changing
environment, improving their skill sets and what they can offer our
customers.
We have developed internal resource into key roles and recruited
industry-proven specialists where relevant. Focus has been placed
on enhancing the skills of our engineering force and throughout the
year we have increased the number of our specialist electricians
and made great strides towards ensuring all fleet engineers are
FITAS accredited, not just those engineers working in London as
mandated by TfL.
We are fortunate to have enthusiastic and skilled staff who
share our vision for the Company. I would like to thank all of them
for their continued dedication and hard work.
Outlook
The focus that the business has placed on developing its
technical capabilities in recent years is coming to fruition and
gives me greater confidence in our ability to grow the business
over the course of the coming years.
By applying our core capabilities to build new solutions that
can deliver benefits to our customers and their operations, the
value proposition of working with 21(st) Century grows and our
position in the target markets is shifting towards that of
innovator and leader.
This is being echoed by a growing pipeline of opportunities for
increasingly complex and valuable systems, that are now within our
reach as a result of our own products services and software; with
significant scale potential to resell the core technologies in the
UK, the EU and further overseas.
Whether it is meeting new statutory regulations or delivering
cost and operational efficiencies the technological solutions
provided by 21(st) Century and the range of customers we offer them
to has never been greater.
Mark Elliott
Non-executive Chairman
26 March 2019
Chief Executive's report
Principal Activities
The Group's principal activities are in providing tailored
solutions to the transport community, solving complex operational
requirements both on-board vehicles, through 21(st) Century Fleet
Systems and into towns and cities through 21(st) Century Passenger
Systems.
Fleet Systems solutions include on-board CCTV, Wi-Fi and
passenger information systems to improve accessibility and safety,
vehicle and driver performance telematics, remote condition
monitoring and advanced passenger counting technologies, which
improve efficiency, alongside our cloud-based agnostic video
management software that connects the vehicle to other enterprise
stakeholders.
Passenger Systems solutions include a wide range of robust
external digital signage such as, on-street interactive wayfinding
Totems, bus shelter displays and transport interchange departure
boards and our powerful content management software, which enables
users to inform passengers with graphical real-time departure
information, road-works & disruption messaging with supporting
advertorial media on a 24/7 basis.
We combine our R&D and domain expertise to create
technologically converged solutions, leveraging the Internet of
Things (IoT) to deliver more deeply integrated solutions to
complex, regulated, safety-critical applications in our current and
targeted market spaces.
Business Model
Our business model is to compete in the market as an open
provider of technology solutions, unlocking customers from
proprietary, or closed systems. We work with global-scale product
companies and our supply chain to deliver highly reliable, scalable
and cost-effective solutions for the transport community over the
lifecycle of the systems. The service offering includes the design,
assembly, software development, installation, on-site support and
back-office systems.
We compete by striving to offer better, more fully integrated
solutions at reduced costs to our customers. We carefully seek out,
or in some cases create new, niche-market applications where we see
significant growth and market leadership potential. Our customers
include multi-national fleet operators, vehicle manufacturers,
local authorities and Passenger Transport Executives (PTEs).
Strategic Goals
Our aim is to become market-leaders through our innovative
products, technologies and software and the 'go-to' provider of
solutions to the wider transport community, by solving the complex
operational and information requirements on-board vehicles and the
associated connected systems in towns and cities.
Our guiding principle is to improve the customer service
experience continuously. We do this by working closely with our
customers, partners and suppliers and applying our R&D
resources to create new solutions, having the best team of people
and having the right systems in place to operate efficiently.
Each year we set strategic goals and monitor performance against
them throughout the year. I am pleased to be able to demonstrate
the progress we have made this year and further objectives looking
forward as part of the continual development of 21(st) Century.
Original Strategic 2018 Additions Progress Additions for
goals 2019
Improve customer Enhance our field Increased number Enhance the tools
service engineering capabilities of specialist provided to our
electricians customer service
and FITAS accredited team.
Field Service
Engineers
-------------------------- ---------------------- ------------------------
Increase technical Invest in additional Growing pipeline Achieve breakthrough
capabilities technical capabilities of sales based sales in new
and systems linked upon our own verticals
to target market technologies
sectors
-------------------------- ---------------------- ------------------------
Empower management Encourage the Promotion and Extend the platform
training and recruitment to to empower all
development of form new Senior staff
existing staff Management team.
members, whilst Establishment
attracting the of a Group-wide
highest calibre management platform
recruits
-------------------------- ---------------------- ------------------------
Secure positive Retain all existing All accounts Form tighter
outcomes from accounts retained where bonds with our
contract negotiations commercial terms customers to
and renewals were acceptable secure recurring
revenues for
our new solutions
-------------------------- ---------------------- ------------------------
Develop new lines Broaden sales Trials underway Third-party re-sale
of business and to our current to re-sell core of our own technology
diversify client customer base, technology in IP through Journeo(TM)
base extend into new several new customer
customers and verticals
achieve breakthrough
sales into adjacent
markets
-------------------------- ---------------------- ------------------------
Preserve cash Maintain vigilance Loan facility Generate cash
on tight working increased to to continue investment
capital controls GBP0.55m in December whilst maintaining
2018 to support tight working
future growth capital controls
-------------------------- ---------------------- ------------------------
Key Performance Indicators
The Company uses a number of Key Performance Indicators (KPIs)
to monitor progress against its objectives. The KPIs are:
Key performance indicators 2018 2017 Mvmt
GBP'000 GBP'000 GBP'000
Revenue 12,601 11,761 840
Gross Profit 4,849 4,996 -147
Underlying administrative
expenses 5,357 5,074 283
Total administrative expenses 4,589 5,297 -708
Underlying (loss)/profit -138 11 -149
Operating profit/(loss)
before impairment 260 -301 561
Net current liabilities -1,084 -785 -299
Net cash flows from operating
activities 380 -729 1,109
Cash and cash equivalents 485 302 183
------------------------------- -------- -------- --------
Pence Pence Pence
------------------------------- -------- -------- --------
Earnings/(loss) per share
- basic 0.15 (0.38) 0.53
Earnings/(loss) per share
- diluted 0.15 (0.38) 0.53
------------------------------- -------- -------- --------
Operational Review
Fleet Systems
Over the last 12-months we have been investing in sales and
technical support to broaden the range of services we provide to
both retain existing and attract new customers, whether they are
small coaching operations, medium-scale fuel distribution or large
multi-national bus and rail transport operators such as Abellio,
Arriva, First, Keolis and Translink.
Our ambitious plans for growth and market share saw sales
increase by 9% to GBP8.2m (2017: GBP7.5m) against a backdrop of an
industry-wide reduction in the number of new vehicle registrations,
and in the case of one of our longest standing customers,
significantly so. Sales into Sweden, Holland, France and New
Zealand increased to GBP2.3m (2017: GBP2.0m), offsetting revenues
from reduced new vehicle registrations in the UK. However, currency
exchange, support costs and marketing expenses led to slightly
reduced margins on international sales, eroding underlying profit
for the segment to GBP148k (2017: GBP449k).
The growing market share of the Fleet business within Northern
Ireland is particularly pleasing and in March 2018 we were able to
announce that we had secured a contract with Translink for major
upgrade works to the DVR estate of the publicly-owned transport
operator. This has since resulted in subsequent orders that, whilst
smaller in nature, are a testament to the dedication and hard work
of our Belfast-based engineering team.
We are supporting leading bus manufacturers in their overseas
marketing efforts as technical partners, which is presenting new
opportunities as we build on existing relationships to drive new
sales. Expansion into new territories is not a quick-win, but it is
already providing valuable market insight, diversifying sales into
alternate economic environments and a significantly larger
marketplace in which to channel our new solutions.
Our Research and Development resources are applied to clearly
identified customer or market requirements, where no off the shelf
solution exists. This approach is delivering new solutions that are
required by the regulatory changes present in the UK Bus Services
Act along with insights gained through close collaboration with our
partners. One example of this approach from the last year, is the
further adoption of our Journeo(TM) Remote Condition Monitoring
(RCM) system by a major UK fleet operator customer, as part of a
plan to improve CCTV system reliability & availability.
Recurring revenues are now GBP0.4m pa on a monthly subscription
basis and we are in discussions with number of other fleet
operators who are considering the benefits of the Journeo(TM) suite
of services.
In July of 2018, TfL announced "Vision Zero", which will see a
range of technology mandated to eliminate deaths and serious
injuries on London's transport network by 2041. We have been
working with Vision Systems (France) for over two years on a
camera-based solution to replace the large external wing mirrors
and secure approval (homologation) for its deployment on UK roads.
In October we announced an exclusive distribution agreement for
SmartVision; a High Definition camera wing mirror replacement
system. This safety-led development is one of the core items within
the Vision Zero strategy and is already generating interest ahead
of the requirement to install on new London vehicles by 2021. It is
currently the only system of its type to be approved for UK Road
use.
Passenger Systems
Revenue for the full year was broadly flat at GBP4.4m (2017:
GBP4.3m) which was behind management expectation, but the business
made a lot of progress including its first breakthrough order for
digital signage into the health market for the NHS. Improved
margins as a result of recurring revenues from software and
maintenance resulted in an operating loss of GBP57k (2017: loss of
GBP267k).
We have identified a number of growth opportunities for
solutions within the emerging smart city transformation. Our
Passenger Systems business has long-standing relationships with
many influential local government and Passenger Transport Executive
customers and provides a vital entry point for our applied
technologies and expertise. In September, 10 city regions were
shortlisted to receive their share of GBP840m as part of the
GBP1.7Bn Transforming Cities Fund (TCF) previously announced by the
Chancellor. This Funding was increased to GBP2.4Bn in the 2018
Autumn statement.
Central services
Within the year, all businesses within the Group and all sites
retained their ISO9001, ISO14001 and BHOSAS 18001 accreditations.
Early in the year, ahead of new legislation, a full GDPR audit was
completed to ensure compliance.
As the software and data components within our cloud-based
solutions are playing an increasingly important role in the
customers' enterprise and our company's future, we are constantly
monitoring our cyber security practices and have initiated a
programme to attain ISO27001:2 accreditation for our Information
Security Management System (ISMS).
Business review and results
The performance of the Group showed an increase in sales on 2017
with an underlying loss of GBP138k (2017: GBP11k profit). Total
revenue grew by 7% while gross profit decreased by 3%.
The segmental results show the performance of our Fleet and
Passenger Systems segments as seen in table: Segmental results.
Segmental results Fleet Passenger Total Fleet Passenger Total
2018 2018 2018 2017 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 8,217 4,384 12,601 7,502 4,259 11,761
Gross profit 2,395 2,454 4,849 2,617 2,379 4,996
-------- ---------- -------- -------- ---------- --------
Underlying profit/(loss) 148 (57) 91 449 (267) 182
-------- ---------- -------- ----------
Central costs (229) (171)
-------- --------
Underlying (loss)/profit (138) 11
-------------------------- -------- ---------- -------- -------- ---------- --------
Basic profit per share is 0.15p (2017: 0.38p loss).
Fleet Systems sales overall were up 10%, with the varying
changes in the elements of the segment being Bus 9% increase,
International 11% increase and Rail 11% decrease. Fleet gross
profit levels decreased by 3% with a 3% decrease in Bus, a 3%
decrease in International and a 3% decrease in Rail. Inflationary
increases in overheads resulted in an underlying profit of GBP148k
(2017: GBP449k).
The trading environment in Passenger Systems remained similar
across 2018 as it was in 2017. Sales were up 3% on 2017, with a 2%
decrease on new systems, while software and support saw a 12%
increase. Gross profit increased 3% in the year. An improvement in
absorption of manufacturing costs, combined with the R&D tax
credit received contributed to an improved operating loss of GBP57k
(2017: GBP267k).
The underlying operating loss reconciles to the IFRS operating
profit as seen below in table: Reconciling segmental results to
IFRS operating profit.
Overall, the Group made an operating profit was GBP260k (2017:
GBP301k loss).
Principal risks and uncertainties
The management of the business and the execution of the Group's
strategy are subject to a number of risks. Risks are formally
reviewed by the Board and, where possible, appropriate processes
are put in place to monitor and mitigate them. If more than one
event occurred, it is possible that the overall effect of such
events would compound the possible adverse effects on the Group.
The key business risks affecting the Company are set out below:
Risk or uncertainty and potential Mitigation
impact
Dependence on major customers
Currently the Fleet Systems These risks are mitigated by
segment has a high dependence monitoring and managing the
on a small number of customers business' operational performance
which are of a far greater scale measures, including response
than the Group. This generates times and CCTV availability,
three distinct risks, each of with operational dashboards
which could have a significant agreed with each customer, and
impact on the business: by regular communication at
* the loss of any single major customer; Director level. Additionally,
there are long-term framework
agreements in place with two
* pressure on price and margin; and of our largest customers.
This risk has reduced through
diversification into the Passenger
* changes to their vehicle replacement or retro-fit Systems market and last year
schedules. through the Abellio contract
win. However, it remains a large
risk. We are highly focused
on customer retention and winning
new business with other public
transport companies in the UK
and overseas, to further reduce
reliance on the existing customer
base.
------------------------------------
Reduction in government spending on public transport
Our Group revenues are strongly We now have a more diversified
linked to the overall health position in the transport sector
of the UK public transport sector, where we operate nationally
which in turn is significantly rather than regionally across
affected by levels of government bus and rail networks, on and
funding at local, regional and off vehicles. We are targeting
national levels. an increase in international
sales.
------------------------------------
Brexit
The Group has an international We initiated a programme of
supply chain and a growing overseas advance purchase and delivery
customer base. Access to, and of stock to our warehousing
delivery of equipment, people facilities in Coventry, Stockholm
and materials could negatively and Auckland to mitigate any
impact our ability to meet customer short-term impact.
SLAs. The duty paid on non-EU purchases
is in line with WTO terms and
therefore the risk of a no-deal
Brexit, forcing the UK to adopt
these terms is minimal.
----------------------------------------
Major project delivery
Failure to deliver a major project Risk assessments are conducted
on time or to specification, for all projects and the major
or technical performance falling ones are also subject to Board
significantly short of customer approval.
expectations, would have potentially Major projects are reviewed
significant adverse financial at various levels and frequencies
and reputational consequences. throughout the project lifecycle.
----------------------------------------
Dependence on key suppliers
Wherever possible the Group On certain projects there is
endeavours to retain a choice technical risk with our suppliers
of suppliers for its components when they are developing systems
and finished goods. In instances for our customers' applications.
where we are currently reliant We manage this risk with rigorous
on one supplier, we are constantly project management and the involvement
looking for ways to minimise of our internal R&D team.
technical and commercial risk.
----------------------------------------
Competition
----------------------------------------
The Group may face increased The Group will continue to increase
competition as the technology its technical capability to
on and off vehicles moves away capitalise on our current market
from point solutions to broader position and work closely with
integrated solutions. This changing technology partners to broaden
technology landscape creates our skills.
openings for new product and We are targeting becoming a
service entrants which may possess larger group via organic growth
better technical and capital and potential acquisitions to
resources than the Group. provide better economies of
scale and increased industry
knowledge.
----------------------------------------
Technology
The future success of the Group's This involves keeping pace with
activities depends upon it creating changes and improvements in
a leading position for innovative relevant technology and having
systems within both the Fleet the integration skills necessary
Systems and Passenger Systems to create added value for our
segments. As a smart integrator customers on the move and in
we require both a breadth of the back office. The Group has
knowledge and a deeper understanding been investing in our development
in areas of software integration. team allowing stronger relationships
Market adoption and timing are with partner organisations.
difficult to predict, particularly
in the emerging opportunities
in the ticketing arena.
----------------------------------------
Future developments
The current trading and outlook are covered in the Chairman's
Statement and a more detailed shareholder presentation will be made
immediately following the Group's Annual General Meeting (AGM).
Signed on behalf of the Board
Russ Singleton
Chief Executive
26 March 2019
Consolidated statement of comprehensive income
for the year ended 31 December 2018
2018 2017
Notes GBP'000 GBP'000
------------------------------------------------------- ----- -------- --------
Revenue 2,3 12,601 11,761
Cost of sales (7,752) (6,765)
------------------------------------------------------- ----- -------- --------
Gross profit 3 4,849 4,996
Underlying administrative expenses (5,357) (5,074)
Other income 370 89
------------------------------------------------------- ----- -------- --------
Underlying (loss) / profit (138) 11
Share-based payments 398 (224)
Reorganisation costs 8 - (88)
------------------------------------------------------- ----- -------- --------
Total administrative expenses (4,589) (5,297)
------------------------------------------------------- ----- -------- --------
Operating profit / (loss) 260 (301)
Finance expense (121) (63)
------------------------------------------------------- ----- -------- --------
Profit / (loss) before taxation from continuing
operations 139 (364)
Taxation credit 4 3 13
------------------------------------------------------- ----- -------- --------
Profit / (loss) for the year being total comprehensive
loss attributable to owners of the parent 142 (351)
------------------------------------------------------- ----- -------- --------
Profit / (loss) per share 5
Basic 0.15p (0.38p)
------------------------------------------------------- ----- -------- --------
Diluted 0.15p (0.38p)
------------------------------------------------------- ----- -------- --------
Consolidated statement of changes in equity
for the year ended 31 December 2018
Share Total equity
Share premium Retained shareholders'
capital account earnings funds
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- --------- --------------
Balance at 1 January 2017 6,061 8 (5,675) 394
Loss and total comprehensive income
for the year - - (351) (351)
Share-based payments - - 224 224
-------------------------------------- -------- -------- --------- --------------
Balance at 31 December 2017 6,061 8 (5,802) 267
-------------------------------------- -------- -------- --------- --------------
Profit and total comprehensive income
for the year - - 142 142
Share-based payments - - (398) (398)
-------------------------------------- -------- -------- --------- --------------
Balance at 31 December 2018 6,061 8 (6,058) 11
-------------------------------------- -------- -------- --------- --------------
Consolidated statement of financial position
at 31 December 2018
2018 2017
Notes GBP'000 GBP'000
------------------------------ ----- -------- --------
Assets
Non-current assets
Goodwill 6 1,345 1,345
Other intangible assets 969 829
Property, plant and equipment 138 128
Trade and other receivables 43 44
------------------------------ ----- -------- --------
2,495 2,346
------------------------------ ----- -------- --------
Current assets
Inventories 1,650 1,355
Trade and other receivables 3,224 3,827
Cash and cash equivalents 485 302
------------------------------ ----- -------- --------
5,359 5,484
------------------------------ ----- -------- --------
Total assets 7,854 7,830
------------------------------ ----- -------- --------
Equity and Liabilities
Shareholders' equity
Share capital 6,061 6,061
Share premium account 8 8
Retained earnings (6,058) (5,802)
------------------------------ ----- -------- --------
Total equity 11 267
------------------------------ ----- -------- --------
Non-current liabilities
Deferred revenue 499 569
Loans and borrowings 576 300
Deferred tax liability 35 35
Provisions 290 390
------------------------------ ----- -------- --------
1,400 1,294
------------------------------ ----- -------- --------
Current liabilities
Trade and other payables 2,914 3,182
Deferred revenue 2,329 1,926
Loans and borrowings 1,000 933
Provisions 200 228
------------------------------ ----- -------- --------
6,443 6,269
------------------------------ ----- -------- --------
Total equity and liabilities 7,854 7,830
------------------------------ ----- -------- --------
Consolidated statement of cash flows
for the year ended 31 December 2018
2018 2017
Notes GBP'000 GBP'000
------------------------------------------------------- ----- -------- --------
Net cash flows from operating activities 7 380 (729)
------------------------------------------------------- ----- -------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (91) (42)
Purchases/generation of intangible assets (452) (316)
------------------------------------------------------- ----- -------- --------
Net cash flows from investing activities (543) (358)
------------------------------------------------------- ----- -------- --------
Cash flows from financing activities
Cash flows from financing activities 126 948
Issue of loan notes 250 -
Repayment of loans (32) (70)
------------------------------------------------------- ----- -------- --------
Net cash flows from financing activities 344 878
------------------------------------------------------- ----- -------- --------
Net increase / (decrease) in cash and cash equivalents 181 (209)
Cash and cash equivalents at beginning of year 302 511
Effect of foreign exchange rate changes 2 -
------------------------------------------------------- ----- -------- --------
Cash and cash equivalents at end of year 485 302
------------------------------------------------------- ----- -------- --------
Notes to the consolidated financial statements
for the year ended 31 December 2018
1. Basis of preparation
The Group financial statements are prepared in accordance with
International Financial Reporting Standards and IFRIC
interpretations issued and effective (or adopted early) and
endorsed by the European Union at the time of preparing these
financial statements and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost convention,
except financial instruments and share-based payments, which are
prepared in accordance with IAS 39 and IFRS 2 respectively.
The financial information contained in this announcement does
not constitute statutory accounts for the year ended 31 December
2018 or 31 December 2017. The financial information for the years
ended 31 December 2018 and 31 December 2017 is derived from the
statutory accounts for those periods which include audit reports
which are unqualified, do not contain a statement under either
Section 498(2) or Section 498(3) of the Companies Act 2006 and do
not include references to any matters to which the auditor drew
attention by way of emphasis. The statutory accounts for the year
ended 31 December 2017 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 31 December
2018 will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
Going concern
The Group's business activities, together with factors likely to
affect its future development, performance and position, are set
out in the Strategic Report along with the principal risks and
uncertainties.
The Group's net underlying loss for the year was GBP138k (2017:
underlying profit GBP11k). As at 31 December 2018 the Group had net
current liabilities of GBP1,084k (2017: GBP785k) and net cash
reserves of GBP485k (2017: GBP302k).
In December 2017 a new GBP1.25m invoice discounting facility was
put in place.
In December 2018 the 2016 Loan Notes maturity date was extended
and an additional GBP250k of 2018 Loan Notes were issued to enable
the Group to continue its investment in R&D and provide working
capital to ensure that the Group can capitalise on anticipated
opportunities.
Current trading is in line with management forecasts.
The Directors have prepared Group cash flow projections for the
period to 30 June 2020 based on latest forecasts that show that the
Group will be able to operate within the Group current funding
resources. It is important that we achieve sales forecasts and the
profile of cash receipts.
As with all businesses there are particular times of the year
where our working capital requirements are at their peak. The Group
is well placed to manage these business risks effectively and the
Board reviews the Group's performance against budgets and forecasts
on a regular basis to ensure action is taken when needed.
These projections indicate that the Group will operate within
available facilities throughout the projection period and therefore
based on these projections, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future and for at least
twelve months from the date of these financial statements. The
Directors therefore continue to adopt the going concern basis in
preparing the financial statements.
2. Revenue
The revenue split between goods and services is:
2018 2017
GBP'000 GBP'000
--------------------------------- -------- --------
Goods 8,202 7,745
Services 4,399 4,016
--------------------------------- -------- --------
12,601 11,761
--------------------------------- -------- --------
Contract works included in goods 2,699 2,701
--------------------------------- -------- --------
3. Segmental reporting
IFRS 8 requires operating segments to be determined on the basis
of those segments whose operating results are regularly reviewed by
the Board of Directors (the Chief Operating Decision Maker as
defined by IFRS 8) to make strategic decisions.
As the Board of Directors reviews revenue, gross profit and
operating loss on the same basis as set out in the consolidated
statement of comprehensive income, no further reconciliation is
considered to be necessary.
Revenue and gross profit
Revenue Gross profit Revenue Gross profit
2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- ------------ -------- ------------
Fleet Systems 8,217 2,395 7,502 2,617
Passenger Systems 4,384 2,454 4,259 2,379
Total 12,601 4,849 11,761 4,996
------------------ -------- ------------ -------- ------------
Major customers
In the year, two customers within the Fleet Systems segment each
accounted for over 10% of Group revenue at 19% and 11%. In the
prior year, there were two Fleet Systems customers that each
accounted for over 10% of revenue at 22% and 10%. There were no
major customers within the Passenger Systems segment.
Underlying (loss)/profit
2018 2017
GBP'000 GBP'000
------------------------- -------- --------
Fleet Systems 148 449
Passenger Systems (57) (267)
------------------------- -------- --------
91 182
Central (229) (171)
------------------------- -------- --------
Underlying (loss)/profit (138) 11
------------------------- -------- --------
Reconciling to profit / (loss) before interest and tax
One-off
Underlying legal and Profit/(loss)
operating reorganisation Share-based Operating before interest
profit/(loss) costs payments profit/(loss) and tax
2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- --------------- ----------- -------------- ----------------
Fleet Systems 148 - 398 546 546
Passenger Systems (57) - - (57) (57)
------------------ -------------- --------------- ----------- -------------- ----------------
91 - 398 489 489
Central (229) - - (229) (229)
------------------ -------------- --------------- ----------- -------------- ----------------
(138) - 398 260 260
------------------ -------------- --------------- ----------- -------------- ----------------
One-off
Underlying legal and Profit/(loss)
operating reorganisation Share-based Operating before interest
profit/(loss) costs payments profit/(loss) and tax
2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- --------------- ----------- -------------- ----------------
Fleet Systems 449 (85) (224) 140 140
Passenger Systems (267) (3) - (270) (270)
------------------ -------------- --------------- ----------- -------------- ----------------
182 (88) (224) (130) (130)
Central (171) - - (171) (171)
------------------ -------------- --------------- ----------- -------------- ----------------
11 (88) (224) (301) (301)
------------------ -------------- --------------- ----------- -------------- ----------------
Net assets attributed to each business segment represent the net
external operating assets of that segment, excluding goodwill, bank
balances and borrowings, which are shown as unallocated amounts,
together with central assets and liabilities.
Net assets
Assets Liabilities Net assets Assets Liabilities Net assets
2018 2018 2018 2017 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- ----------- ---------- -------- ----------- ----------
Fleet Systems 2,848 (2,183) 665 3,638 (3,183) 455
Passenger Systems 3,135 (4,039) (904) 2,500 (3,176) (676)
-------------------- -------- ----------- ---------- -------- ----------- ----------
5,983 (6,222) (239) 6,138 (6,359) (221)
Goodwill 1,345 - 1,345 1,345 - 1,345
Cash and borrowings 485 (1,576) (1,091) 302 (1,233) (931)
Unallocated 41 (45) (4) 45 29 74
-------------------- -------- ----------- ---------- -------- ----------- ----------
Total 7,854 (7,843) 11 7,830 (7,563) 267
-------------------- -------- ----------- ---------- -------- ----------- ----------
Geographical segments
Revenue Gross profit Revenue Gross profit
2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- ------------ -------- ------------
UK 10,337 3,755 9,725 3,866
-------------------- -------- ------------ -------- ------------
International
- Scandinavia 924 1,053
- Other EU 345 448
- Non-EU 995 535
-------------------- -------- ------------ -------- ------------
Total international 2,264 1,094 2,036 1,130
-------------------- -------- ------------ -------- ------------
Total 12,601 4,849 11,761 4,996
-------------------- -------- ------------ -------- ------------
Assets and liabilities by location
2018 2017
GBP'000 GBP'000
------------------ -------- --------
Assets
UK 7,823 7,796
International 31 34
------------------ -------- --------
Total assets 7,854 7,830
------------------ -------- --------
Liabilities
UK (7,814) (7,529)
International (29) (34)
------------------ -------- --------
Total liabilities (7,843) (7,563)
------------------ -------- --------
All non-current assets are located within the United
Kingdom.
4. Taxation
(a) Analysis of (credit)/charge in year:
2018 2017
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Current tax
UK corporation tax on the loss for the year (19%) - -
Swedish corporation tax on the profit for the year
(22%) (3) (4)
Deferred tax (credit)/charge
- Temporary differences on acquisition - (9)
--------------------------------------------------- -------- --------
Total tax credit for the year (3) (13)
--------------------------------------------------- -------- --------
(b) Factors affecting the total tax (credit)/charge for the
year
The tax assessed for the year differs from the standard rate of
corporation tax in the UK at 19% (2017: 19.25%). The differences
are explained below:
2018 2017
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Profit / (loss) on ordinary activities before tax 140 (364)
-------------------------------------------------- -------- --------
Profit / (loss) on ordinary activities multiplied
by standard rate of corporation tax in the UK of
19% (2017: 19.25%) 27 (70)
Effects of:
Expenses not deductible for tax purposes (53) 105
Change in unrecognised deferred tax assets 96 (39)
Income not taxable (70) -
Prior year (over)/under provision (3) (9)
Total tax credit for the year (3) (13)
-------------------------------------------------- -------- --------
(c) Deferred tax asset/(liability)
The unrecognised and recognised deferred tax assets/(liability)
comprise the following:
Unrecognised Recognised
------------------ ------------------
2018 2017 2018 2017
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- -------- --------
Tax losses 508 615 - -
Decelerated capital allowances 24 56 - -
Short term timing differences 43 - - -
Arising on acquisition - - (35) (35)
------------------------------- -------- -------- -------- --------
575 671 (35) (35)
------------------------------- -------- -------- -------- --------
The Group has GBP2,987,000 of unutilised tax losses (2017:
GBP3,621,000) which may be carried forward indefinitely.
5. Profit / (loss) per Ordinary Share
Basic earnings per share (EPS) is calculated by dividing the
earnings attributable to Ordinary Shareholders by the weighted
average number of Ordinary Shares in issue during the year.
For diluted earnings, the weighted average number of Ordinary
Shares in issue is adjusted to assume conversion of all dilutive
potential Ordinary Shares.
2018 2017
------------------- -------------------
Profit / Per share Profit / Per share
(Loss) amount (Loss) amount
Group GBP'000 Pence GBP'000 Pence
-------------------------------- -------- --------- -------- ---------
Basic EPS
Profit / (loss) attributable to
Ordinary Shareholders 142 0.15 (351) (0.38)
-------------------------------- -------- --------- -------- ---------
Diluted EPS
Profit / (loss) attributable to
Ordinary Shareholders 142 0.15 (351) (0.38)
-------------------------------- -------- --------- -------- ---------
Details of the weighted average number of Ordinary Shares used
as the denominator in calculating the earnings per Ordinary Share
are given below:
2018 2017
'000 '000
------------------------------------------ ------ ------
Basic weighted average number of shares 93,240 93,240
Dilutive potential Ordinary Shares - -
------------------------------------------ ------ ------
Diluted weighted average number of shares 93,240 93,240
------------------------------------------ ------ ------
6. Goodwill
Goodwill acquired in a business combination is allocated at
acquisition to the cash generating unit (CGU) that is expected to
benefit from that business combination. The Group has two CGUs
which are its two operating segments, Fleet Systems and Passenger
Systems. The carrying amount of goodwill has been allocated to the
CGUs as follows:
Passenger
Systems Total
GBP'000 GBP'000
-------------------- --------- --------
Deemed cost:
At 1 January 2017 1,345 1,345
-------------------- --------- --------
At 31 December 2017 1,345 1,345
-------------------- --------- --------
At 31 December 2018 1,345 1,345
-------------------- --------- --------
The Group tests goodwill annually for impairment as at 31
December, or more frequently if there are indications that goodwill
might be impaired.
The recoverable amounts of the CGUs are determined based on a
value-in-use calculation which uses cash flow projections based on
financial budgets and business plans approved by the Directors
covering a five-year period. Cash flows beyond that period have
been extrapolated in perpetuity assuming no growth, which the
Directors consider to be a conservative approach.
The key assumptions for the value-in-use calculations are those
regarding discount rates and sales forecasts.
The discount rates needed to equate the net present value from
these cash flows to the carrying value of goodwill are compared to
the required rate of return from the CGU based upon an assessment
of the time value of money, prevailing interest rates and the risks
specific to the CGU. If this discount rate is in excess of the
required rate of return, then it is assumed that no impairment has
occurred to the carrying value of goodwill.
The discount rates are as follows:
2018 2017
% %
------------------ ---- ----
Passenger Systems 14 14
------------------ ---- ----
The discount rates used are based on the Board's judgement
considering macroeconomic factors and reflecting specific risks in
each segment such as the nature of the market served, the
concentration of customers, cost profiles and barriers to
entry.
Passenger Systems also has intangible assets which are
considered in the same value-in-use calculations as goodwill.
The Passenger Systems cash flow projections used to determine
value in use are based upon assumptions of sales, margins and cost
bases. Of these assumptions the value in use is most sensitive to
the level of sales. Margins are fixed in the forecast based upon
past experience; the cost base is similarly based upon past
experience and will vary depending upon the level of sales. In
accordance with the requirements of IAS 36 our value-in-use
calculations do not include cash flows from restructurings to which
the Group is not yet committed.
The level of sales is the key assumption used in the cash flow
forecast. Sales have been determined by management using estimates
based upon past experience and future performance with reference to
market position and the sales pipeline. Due to the difficult
macroeconomic environment there has been a reduction in the
availability of contracts, which has in turn resulted in pressure
on margins. In 2017 a major restructuring took place, followed by a
reinvestment in key staff at the end of the year and during 2018.
The 2019 forecast predicts growth of 42%. The remaining four years
are based upon compound sales growth of 5%.
The value-in-use calculation supports the carrying value of the
CGU with headroom of GBP1,567k. A sensitivity analysis has been
performed on the impairment test. The Directors consider that an
absolute change in the key sales assumption is possible and a
reduction of 10% points in the growth rate in 2019 to 30% would
result in an impairment charge being recognised for the current
carrying value of goodwill in relation to Passenger Systems of
GBP250k. If sales forecasts were down 10% across the whole period
and overheads were partially scaled back by 5% then there would be
headroom of GBP151k.
Based on the review the discount rate applied to equate the net
present value of the forecast cash flows to the carrying value of
goodwill and the intangible assets was 27.8%, whereas the required
rate of return of the CGU is 14%.
In view of this, the Directors consider that no impairment of
goodwill or intangible assets is required
7. Reconciliation of operating profit / (loss) to net cash
outflow from operating activities
2018 2017
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Profit / (loss) for the year 142 (351)
Adjustments for:
- Finance expense 121 63
- Deferred tax credit - (9)
- Depreciation of property, plant and equipment 79 63
- Amortisation of intangible fixed assets 313 334
- Share-based payment (income) / expense (398) 224
- Foreign exchange rate 17 (14)
- Decrease in provisions (128) (668)
-------------------------------------------------------- -------- --------
Operating cash flows before movement in working capital 146 (358)
(Increase) / decrease in inventories (295) 155
Decrease / (increase) in receivables 515 (271)
Increase / (decrease) in payables 133 (196)
-------------------------------------------------------- -------- --------
Cash inflow / (outflow) from operations 498 (670)
Income taxes received 3 4
Interest paid (121) (63)
-------------------------------------------------------- -------- --------
Net cash inflow / (outflow) from operating activities 380 (729)
-------------------------------------------------------- -------- --------
8. Reorganisation costs
2018 2017
GBP'000 GBP'000
------------------ -------- --------
Passenger Systems - 3
Central - 85
------------------ -------- --------
- 88
------------------ -------- --------
Prior year reorganisation costs relate to the additional costs
in respect of the December 2016 restructuring programme and costs
related to the loss of office of one of the Group's Directors.
All reorganisation costs relate to administrative expenses.
9. Availability of audited accounts:
Copies of the 2018 audited accounts will be made available
following the announcement of the date of our AGM. They will also
be available on the Company's website (www.21stplc.com) for the
purposes of AIM Rule 26 and will be posted to shareholders in due
course.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR JAMLTMBITBPL
(END) Dow Jones Newswires
March 26, 2019 03:00 ET (07:00 GMT)
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