TIDMTCM
RNS Number : 4960G
Telit Communications PLC
08 August 2016
8 August 2016
Telit Communications PLC
Interim results
Telit Communications PLC ("Telit", "the Group", AIM: TCM), a
global enabler of the Internet of Things (IoT), has published its
results for the six months ended 30 June 2016.
Financial highlights(1)
-- Revenues up 6.3% to $166.1 million (H1 2015: $156.3 million)
-- IoT services revenues grew 23.4% to $13.7 million (H1 2015: $11.1 million)
-- Gross margin continued improving, to 40.1% (H1 2015: 39.7%)
-- Adjusted EBITDA $21.4 million (H1 2015: $21.8 million)
-- Adjusted profit before tax $11.4 million (H1 2015: $13.9 million)
-- Adjusted basic earnings per share 10.0 cents (H1 2015: 11.7 cents)
-- Interim dividend 2.5 cents per share (2015: nil) - 1/3 of
expected full year dividend, based on 28% of the mid-range adjusted
EPS guidance (27 cents)
Operational highlights
-- Certifications: AT&T and Verizon for LTE Cat-1 and Cat-4
products; and Telstra (Australia) for LTE CAT-4 products
-- Newly launched IoT Factory Solutions gaining traction,
winning deals with Fortune 500 industrial companies, such as John
Deere
-- License and reseller agreement secured with SAP(R) for SAP to
resell Telit's deviceWISE IoT platform
-- Two acquisitions to enhance product portfolio:
o several cellular module product lines & related IP from Novatel Wireless
o Bluetooth Smart (otherwise known as Bluetooth Low Energy or BLE) assets from Stollman
Full year guidance
The Group is providing the following guidance for the 2016
annual results (2) :
-- Revenues of $370-$390 million - increase of 11% to 17%
-- Adjusted EBITDA of $52-$60 million - increase of 15% to 32%
-- Adjusted basic earnings per share of $24-$30 cents - increase of 11% to 38%
1. For reconciliation from IFRS financial results to adjusted
financial results, please refer to the table in Note 4.
2. This guidance for the full year reflects current business
indicators and expectations. Inherent in this guidance are risk
factors that are described in greater detail in our regulatory
filings. All figures are approximations based on management's
current beliefs and assumptions and our actual results could differ
from those presented above.
Oozi Cats, Chief Executive, said:
"Our overall growth was held back by a slower ramp-up of the LTE
Cat-1 product line due to unexpected delays in their certification
in the U.S. However, these certifications are now in hand and we
expect the second half of the year in the US to perform much
better, achieving an annual growth rate of some 20%."
"Our IoT Services business unit is continuing to gain real
momentum. Its growth rate continues to be high - 23% in the half.
"
"Our ability to provide integrated end-to-end IoT solutions for
corporates and enterprises - encompassing our connectivity, IoT
platforms and IoT factory solutions - is gaining strong traction
and recognition by customers and partners. 2 recently announced
partners are SAP and Tech Mahindra."
"Although R&D, S&M and G&A growth were ahead of
revenue growth, as a result of our continued investment in
infrastructure, our target remains to reduce operational expenses
as percentage of revenues by some 8-9% by 2018."
"Overall, we are confident of a strong second half performance,
which will lead to double digit revenue growth and profitability
growth for the year."
For further information:
Telit Communications Plc Tel: +39 06
Oozi Cats, CEO 420 4601
Yosi Fait, President and Finance
Director
Canaccord Genuity Limited (Nomad Tel: +44 20
and Joint Broker) 7523 8000
Simon Bridges/Cameron Duncan
Berenberg (Joint Broker) Tel: +44 20
Chris Bowman/Ben Wright 3465 2722
Instinctif Partners Tel: +44 20
Adrian Duffield/Chantal Woolcock 7457 2020
Overview
Telit's strong competitive positioning and global reach has
enabled the Group to continue to achieve solid growth during the
first half of the year, despite the slower growth in the Americas
and automotive business unit. All regions showed solid growth.
As expected, the Group's financial performance is weighted to
the second half of the financial year. Telit expects 2016 will be
another year of double-digit revenue growth with improvements
expected in all profitability parameters.
Telit's IoT services business unit continued to build momentum
and saw strong growth, up 23.4% to $13.7 million, up from $11.1
million in H1 2015. The Group's ability to provide a complete
end-to-end solution is proving particularly attractive to
multi-national customers.
IoT Platforms, within this business unit, has continued to grow
steadily, securing new customers for Cloud-based application
enablement services and for the newly formed IoT Factory Solutions.
Recent wins include the Fortune 500 industrial company, John
Deere.
Telit entered into an agreement with SAP(R) for SAP to license
and resell the Telit deviceWISE IoT platform. The collaboration
with SAP is expected to offer a foundation for easily and securely
connecting devices. The goal is to deliver trusted data to SAP
enterprise systems and extract value through the SAP HANA(R)
platform, across numerous industrial environments for remote
machine monitoring and control, production diagnostics, predictive
maintenance, remote service and across several markets and
industries worldwide.
Telit also launched a series of new products and secured
significant design wins for cellular, location and timing,
automotive, and short-range IoT modules including introducing a
number of new 4G IoT modules across different regions, including
LTE Cat-4 and Cat-1.
The Group shipped 17.9 million M2M modules in 2015. It expects
to ship approximately 21 million in the current financial year.
Strategy
The Group is focussed on combining and seamlessly integrating
its IoT Modules, IoT Connectivity, and IoT Platform businesses
through the Telit IoT portal, to enable end-to-end IoT solutions
that corporates and enterprises can easily implement with one of
its ecosystem partners, or with Telit directly.
The Group will exploit its leading position in the IoT industry
by:
-- becoming a single point of reference, with its unique IoT-as-a-Service concept
-- providing end-to-end enterprise solutions including IoT
Factory Solutions for Industrial IoT and Industry 4.0
-- continuing to develop strong products and services through
its technology roadmap with extensive engineering support and
developer resources
-- Go-to-market leverage through a fast and growing ecosystem.
Telit will actively seek to improve recurring revenues, both
through its robust organic growth, which is buoyed by the strong
growth in the industrial and other IoT verticals, and through
selective acquisitions to enhance its products and services
offering.
During the first half Telit acquired a number of businesses as
part of this strategy and to enhance its geographical coverage. The
acquisitions made over the past few years have materially enhanced
Telit's cloud platform capabilities, which is a key factor in
delivering on its strategy and increasing recurring revenues in the
IoT Services business unit.
Outlook
With a market leading position in modules, connectivity,
connectivity management and Platform as a Service, Telit is poised
to exploit the numerous opportunities developing across the Group
as well as increase recurring revenues.
With a strong second half expected, the Board is confident of
maintaining Telit's double-digit revenue growth for the current
financial year.
It has therefore published guidance which states that Group
revenues for the financial year to 31 December 2016 will be between
$370 million to $390 million, up 11% to 17%; adjusted EBITDA of $52
million to $60 million, up 15% to 32%; and adjusted basic earnings
per share of 24 $cents to 30 $cents, up 11% to 38%.
Financial review
Financial results*
H1 2016 H1 2015 FY 2015
$'000 $'000 $'000
---------------------------- --------- --------- ---------
Revenue 166,122 156,281 333,493
---------------------------- --------- --------- ---------
Gross profit 66,610 62,043 133,060
---------------------------- --------- --------- ---------
Gross margin 40.1% 39.7% 39.90%
---------------------------- --------- --------- ---------
Research and development (17,849) (12,812) (32,768)
---------------------------- --------- --------- ---------
Selling and marketing (29,863) (26,416) (55,508)
---------------------------- --------- --------- ---------
General and administrative (13,037) (12,115) (26,582)
---------------------------- --------- --------- ---------
Other operating income
/(expenses) 529 (145) 593
---------------------------- --------- --------- ---------
EBIT 6,390 10,555 18,795
---------------------------- --------- --------- ---------
Adjusted EBIT 13,078 15,748 30,617
---------------------------- --------- --------- ---------
Adjusted EBITDA 21,403 21,752 45,333
---------------------------- --------- --------- ---------
Profit before tax 4,703 8,705 15,873
---------------------------- --------- --------- ---------
Adjusted profit before
tax 11,391 13,898 27,695
---------------------------- --------- --------- ---------
Profit for the year from
continuing operations 3,987 7,385 14,116
---------------------------- --------- --------- ---------
Adjusted net profit for
the year 11,506 13,360 24,941
---------------------------- --------- --------- ---------
Adjusted basic profit per
share (cents) 10.0 11.7 21.7
---------------------------- --------- --------- ---------
* For reconciliation from IFRS financial results to adjusted
financial results, see note 4.
Revenue
Group revenue increased by 6.3% to $166.1 million (H1 2015:
$156.3 million) with the Services business unit up 23.4% to $13.7
million (H1 2015: $11.1 million).
Revenue by region
The split of revenue on a geographical basis is as follows:
H1 2016 % of H1 2015 % of 2015 % of
total total total
revenue revenue revenue
$m $m $m
---------- -------- --------- -------- --------- ------ ---------
Americas 67.3 40.5% 64.8 41.5% 129.4 38.8%
---------- -------- --------- -------- --------- ------ ---------
EMEA 63.0 37.9% 58.5 37.4% 133.2 40%
---------- -------- --------- -------- --------- ------ ---------
APAC 35.8 21.6% 33.0 21.1% 70.9 21.2%
---------- -------- --------- -------- --------- ------ ---------
Total 166.1 156.3 333.5
---------- -------- --------- -------- --------- ------ ---------
Americas revenues increased by 3.9% to $67.3 million. The ramp
up of the LTE Cat-1 product line was slower than expected due to a
slow certifications cycle which is a result of the restructuring
taking place at one of Telit's blue chip suppliers. This therefore
resulted in a lower level of support and a significant delay in
product releases.
Based on the Group's LTE Cat-1 products that were already
certified, Telit believes that the second half of the year in the
US will perform much better and will drive the US market to an
annual growth of about 20%.
EMEA revenues increased by 7.7% to $63 million. This is a strong
growth rate in this very mature market, in which 2G remains the
dominant technology. Telit expects that the significant wins in
smart grid projects, in the UK and in the Netherlands, together
with some automotive design wins, will lead the region to double
digit growth from 2017 onwards.
APAC revenues continued increasing to $35.8 million, up by
8.5%.
Gross margin and gross profit
Gross margin continued to improve, from 39.7% in H1 2015 to
40.1% in H1 2016, due to the Group's strong positioning in the IoT
industry, further improvements in the hardware business and the
increasing share of revenues from the higher margin IoT services
business.
Gross profit increased by 7.4% to $66.6 million (H1 2015: $62.0
million).
Operating expenses
Gross R&D operating expenses (expenses before capitalisation
and amortisation of internally generated development costs - see
note 3) increased to $28.8 million (H1 2015: $24.4 million). As a
percentage of revenues, H1 2016 expenses increased to 17.3% of
revenue (H1 2015: 15.6%).
The amount capitalised in respect to internally generated
development costs is $15.3 million, an increase of $1 million
compared to H1 2015. As a percentage of revenues this remains
unchanged, compared to H1 2015, at 9.2%. This mainly relates to the
development of 4G platforms and product variants for multiple
territories and verticals.
The amortisation of internally generated development costs
increased by 63.1% to $4.4 million (H1 2015: $2.7 million). This
increase relates mainly to the release of 3G, 4G and IoT Services
products to the market.
Sales and Marketing expenses increased by $3.4 million to $29.9
million (H1 2015: $26.4 million), and as a percentage of revenues
increased to 18.0% (H1 2015: 16.9%). The increase is mainly due to
the rapid build-up of a global services and end-to-end solutions
sales specialist team.
General and Administrative expenses increased by $0.9 million to
$13.0 million (H1 2015: $12.1 million), but remained virtually
unchanged, compared to H1 2015, at 7.8% as a percentage of
revenues.
Telit expects a meaningful decrease over the next few years of
gross R&D, Sales and Marketing, as well as General and
Administrative expenses, as a percentage of Group revenues, with a
target to decrease them by 8-9%, by 2018.
Finance costs, net
H1 2016 H1 2015
$m $m
---------------------------------- -------- --------
Non-cash expenses as fair
value on Italian preferred
loan 0.6 0.6
---------------------------------- -------- --------
Interest on loans and overdrafts 0.6 0.4
---------------------------------- -------- --------
Bank fees 0.3 0.2
---------------------------------- -------- --------
Exchange rate differences 0.3 0.8
---------------------------------- -------- --------
Interest income from bank
deposits (0.1) (0.1)
---------------------------------- -------- --------
Total 1.7 1.9
---------------------------------- -------- --------
Finance costs, net decreased by 8.8% to $1.7 million (H1 2015:
$1.9 million), mainly due to exchange rate differences which
decreased from $0.8 million expenses in H1 2015 to $0.3 million
expense in H1 2016.
Profitability
Adjusted EBITDA was $21.4 million (H1 2015: $21.8 million); as a
percentage of revenues it represents 12.9% (H1 2015: 13.9%).
Adjusted EBIT was $13.1 million (H1 2015: $15.7 million) and
adjusted profit before tax was $11.4 million (H1 2015: $13.9
million).
Adjusted basic earnings per share was 10.0 cents (H1 2015: 11.7
cents) and reported diluted earnings per share was 3.4 cents (H1
2015: 6.2 cents).
Dividend
On May 27, 2016, Telit paid a maiden dividend, for the financial
year ended 31 December 2015, of 6 dollar cents per share. This
dividend represented 28% of 2015 adjusted EPS.
The Directors have declared an interim dividend of 2.5 dollar
cents per share. This represents approximately 1/3 of the expected
dividend for the year, based on the directors' expectations (as
reflected in the full year guidance) for adjusted earnings per
share of 24-30 cents. The Board plan to distribute 28% of adjusted
basic EPS as dividend.
The interim dividend will be paid on 23 September 2016 to
shareholders on the register on 19 August 2016, with an ex-dividend
date of 18 August 2016. The default payment for dividends remains
in US dollars. However, shareholders can elect to have dividends
paid in sterling (GBP) and the option to elect a sterling dividend
payment will be available to shareholders until 5 September 2016
(the "Election Date"). The pounds sterling equivalent dividend
payment will be announced as soon as practicable following the
Election Date. Further details together with a copy of the Dividend
Currency Election Form, which should be sent to Capita Asset
Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
when completed, will be available on the Group's website shortly at
www.telit.com/investor-relations/financial-statements. CREST
shareholders must elect via CREST.
Balance sheet
Internally generated development assets, net as of 30 June 2016
increased during the period by $11.4 million to $65.6 million (31
December 2015: $54.2 million).
The main growth is driven by continued investment in 4G
platforms and product variants for multiple territories and
verticals. The split is as follows:
30 June % 31 December %
2016 2015
$m $m
-------------------------- -------- --- ------------ ---
Assets in development
process (not amortised
yet) 34.4 52 29.9 55
-------------------------- -------- --- ------------ ---
Assets after development
process, net (began to
be amortized) 31.2 48 24.3 45
-------------------------- -------- --- ------------ ---
Total 65.6 54.2
-------------------------- -------- --- ------------ ---
Internally generated development assets that completed the
development phase, moved to mass production phase and started the
three to five years of amortization period increased to 48% of the
total internally generated development assets (31 December 2015:
45%).
The net assets that are in development phase, before starting
the amortization phase, are mainly related to automotive products,
4G products and the Platform as a Service.
Total equity grew to $112.6 million (31 December 2015: $110.2
million).
During the period, the Group repurchased 207,722 ordinary shares
for a total consideration of $0.6 million.
Cash
As of 30 June 2016, the Group had net debt of $29.1 million (31
December 2015: net cash $1.1 million). The main reasons for the
increase are acquisitions ($14 million), the payment of the 2015
dividend (approximately $7 million) and increase in working
capital.
Operational review
Acquisitions
In April 2016 Telit acquired several cellular module product
lines, related IP and inventory from Novatel Wireless, Inc., for an
initial cash purchase price of $11 million and conditional earn-out
consideration, which expected to be non-material.
As part of this acquisition, the Group acquired specific IP and
was granted an exclusive license to other Novatel IP related to the
acquired cellular module lines, including subsequent versions
currently in development.
This acquisition forms an important part of the Group's strategy
to enhance its product offering in the security market segment.
In February 2016 Telit acquired Bluetooth Smart, otherwise known
as Bluetooth Low Energy ("BLE"), assets from Stollmann Entwicklungs
und Vertriebs Gmbh ("Stollmann"), a developer and marketer of low
power hardware products and software solutions for wireless
communications for a cash consideration of EUR3.6 million, before
adjustments.
The acquired assets include Stollmann's Bluetooth IP, NFC and
other wireless communications IP. Thirty-five Stollmann employees,
mainly R&D engineers, were transferred to Telit.
The acquisition materially enhances Telit's short-range
low-power Bluetooth product offering and is another step in the
Group's strategy to provide a comprehensive solution to connect
edge devices, such as sensors, to the Telit IoT enablement
platform.
MarketsandMarkets estimates the global BLE and "Smart-Ready"
market will be worth $5.6 billion by 2020. BLE shipments are
expected to surpass 1.2 billion units in five years, up from just
49 million units in 2013.
Products
Technological innovation is Telit's core capability. The Group's
nine R&D centres provide a comprehensive portfolio of quality
modules ranging from cellular to short-range RF and location
technologies.
The Group's modules are currently integrated in a wide range of
applications, including asset tracking, remote industrial
monitoring, automated utility meter reading, insurance telematics,
consumer electronics, mobile health devices and many more.
The Group markets its industrial IoT products to numerous
verticals including asset tracking, health care, security,
telematics, point of sale, wearables, telemetry, industry and
energy and smart metering. These verticals are set to grow
significantly during the next few years, with substantial projects
already in advanced stages around the world such as SMIP in the UK
with energy and smart metering.
To cater to all these verticals, the Group continuously develops
a wide range of LTE products, from the high-end categories down to
the Cat-1, with a roadmap to launch Cat-M and narrow-band IoT
products.
During the period, the Group received certifications from:
AT&T and Verizon, for LTE Cat-1 and Cat-4 products; and Telstra
(Australia), for LTE CAT-4 products. Telit also began mass
production of the world's smallest 3G module (the UE866-EU).
IoT Services
Telit has continued to expand its IoT services offering and
premium managed connectivity as well as a range of complementary
value added services.
The Group's IoT Portal is designed to enable customers to manage
Telit's products and services through a single portal that makes
IoT deployments easier, cuts the time to market and saves
money.
It provides customers with access to data management, including
collection, storage and big data export, connectivity management,
it facilitates interaction with mobile network operators, dash
boarding tools, security and administration.
Telit continued to invest and develop the IoT connectivity
business, which provides Telit with a recurring revenue stream in
addition to the revenues from its established module business. The
Group recently launched IoT Mobile Broadband Package - attractive
Pan-European broadband plans which are helping its customers deploy
new and innovative types of IoT applications that require much
higher data usage with coverage across multiple countries.
As part of the IoT Platforms business and the Industry 4.0
trend, the Group launched deviceWISE for Factory, an
enterprise-grade industrial automation platform designed to easily
connect complex, disparate production equipment from different
suppliers with different protocols and interfaces to enterprise
systems and applications without custom programming. The scalable
architecture is configurable to any manufacturing environment in
any industry by leveraging a vast library of built-in standardised
device drivers and enterprise connectors. deviceWISE is perfectly
suited to all manufacturing verticals including automotive,
pharmaceuticals, machinery, oil and gas, electrical power
generation, water and more.
During the period, the Group secured several wins with Fortune
500 industrial companies, including John Deere.
The Group's secureWISE service has been providing secure remote
connectivity to leading OEM and semiconductor FABs. Telit recently
introduced a new service called Business Management Portal (BMP)
providing detailed business analytics and reporting capabilities to
optimize engineering support and improve customer service. A few of
its OEM customers are already in initial deployment or advanced
trials of the BMP service.
The Telit deviceWISE platform won Best Industrial IoT Solution
at this year's IoT Evolution Expo Battle of the Platforms. The
award was given for the first time at this year's event in
recognition of the growing importance of IoT in industrial
automation.
The Internet of Things (IoT) market opportunity
IoT has the power to completely transform businesses and
industries, enhance the way in which they gather, analyse and
distribute data and in turn, convert that data into productivity
gains, new revenue streams, and new business models.
The ABI Research report, "M2M and IoT Embedded Modules",
published on April 14, 2016 predicts that the demand for cellular
IoT modules will grow significantly over the coming years. ABI
predicts that the number of units in all cellular technologies to
be shipped globally will reach 365 million by 2021, representing a
2016-21 CAGR of 33%.
The report projects gradual average selling price (ASP) declines
for modules across the different wireless standards for the period
2016-21. This trend of declining prices is fuelling the growth of
the industry. Considering the product mix forecast by ABI, the
market will grow in monetary value at a CAGR of 21% from 2016 to
2021, with total revenues from cellular module sales reaching $4.9
billion in 2021.
In IoT services for connectivity and platforms, growth is
estimated to be even more robust. According to IoT expert analyst
firm MachNation, in its report "IoT Application Enablement
Forecast: 2015 - 2025", published June 1(st) 2016, in 2015, IoT
application enablement and device management revenues were $600
million and will increase at a CAGR of 65% over the 10-year period
to $83 billion by 2025.
In its report "The Global M2M/IoT Communications Market"
published in December 2015, analyst firm Berg Insight estimated
that the global number of cellular IoT subscribers increased by 23%
in 2015, reaching 265.2 million by the end of the year -
corresponding to around 3 percent of all mobile subscribers.
Through 2020, the firm estimates the number of cellular IoT
subscribers will grow at a CAGR of 22.9% to reach 744.2 million at
the end of the period. During the same period, cellular IoT
connectivity revenues are forecasted to grow at a CAGR of 23.3%
from $8.8 billion in 2015 to approximately $25.2 billion in 2020.
Meanwhile the monthly average revenues per user, or ARPU, is
expected to remain stable at around $2.75.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
-------------------------- -------------
2016 2015 2015
------------ ------------ -------------
Unaudited Audited
-------------------------- -------------
$'000 $'000 $'000
------------ ------------ -------------
Revenue 166,122 156,281 333,493
Cost of sales (99,512) (94,238) (200,433)
------------ ------------ -------------
Gross profit 66,610 62,043 133,060
Research and development
expenses, net(1) (17,849) (12,812) (32,768)
Selling and marketing expenses (29,863) (26,416) (55,508)
General and Administrative
expenses (13,037) (12,115) (26,582)
Other income (expenses),
net 529 (145) 593
Operating profit 6,390 10,555 18,795
Finance costs, net (1,687) (1,850) (2,922)
------------ ------------ -------------
Profit before income taxes 4,703 8,705 15,873
Tax expenses (716) (1,320) (1,757)
------------ ------------ -------------
Net profit for the period 3,987 7,385 14,116
============ ============ =============
Other comprehensive income
Foreign currency translation
differences 2,102 (4,460) (7,002)
------------ ------------ -------------
Total comprehensive income
for the period 6,089 2,925 7,114
============ ============ =============
Basic profit per share (in
USD cents) 3.5 6.4 12.3
============ ============ =============
Diluted profit per share
(in USD cents) 3.4 6.2 11.8
============ ============ =============
Adjusted basic profit per
share (in USD cents) 10.0 11.7 21.7
============ ============ =============
Adjusted diluted profit per
share (in USD cents) 9.8 11.3 20.9
============ ============ =============
Basic weighted average number
of equity shares 114,837,682 114,515,414 114,809,803
============ ============ =============
Diluted weighted average
number of equity shares 117,862,338 118,241,937 119,192,610
============ ============ =============
(1) For a breakdown of research and development, expenses, net,
please refer to Note 3.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 31 December
-------------------- ------------
2016 2015 2015
--------- --------- ------------
Unaudited Audited
-------------------- ------------
$'000 $'000 $'000
--------- --------- ------------
ASSETS
Non-current assets
Intangible assets 104,946 78,595 81,877
Property, plant and equipment 21,198 19,015 21,792
Other long term assets 1,858 888 2,198
Deferred tax asset 5,250 3,871 5,907
--------- --------- ------------
133,252 102,369 111,774
--------- --------- ------------
Current assets
Inventories 23,713 22,987 20,080
Trade receivables 76,673 66,464 72,157
Other current assets 15,894 14,505 13,040
Deposits - restricted cash 83 770 75
Cash and cash equivalents 19,179 36,574 29,844
--------- --------- ------------
135,542 141,300 135,196
--------- --------- ------------
Total assets 268,794 243,669 246,970
========= ========= ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Shareholders' equity
Share capital 1,971 1,960 1,969
Share premium account 103 90,746 24
Other reserve (2,727) (2,727) (2,727)
Merger reserve - 1,235 -
Treasury stock fund (1,929) - (1,323)
Translation reserve (18,153) (17,340) (20,256)
Retained earnings 133,296 29,703 132,494
--------- --------- ------------
Total equity attributable
to owners of the Company 112,561 103,577 110,181
--------- --------- ------------
Non-current liabilities
Other loans 20,343 24,588 23,812
Post-employment benefits 5,063 4,595 4,737
Deferred tax liabilities 436 5 262
Provisions 4,530 3,289 3,894
Other long-term liabilities 2,556 23 39
--------- --------- ------------
32,928 32,500 32,744
--------- --------- ------------
Current liabilities
Short-term borrowings from
banks 28,034 12,751 4,968
Trade payables 75,338 75,509 77,627
Provisions 576 1,327 585
Other current liabilities 19,357 18,005 20,865
--------- --------- ------------
123,305 107,592 104,045
--------- --------- ------------
Total equity and liabilities 268,794 243,669 246,970
========= ========= ============
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Year
ended ended
30 June 31 December
-------------------- -------------
2016 2015 2015
--------- --------- -------------
Unaudited Audited
-------------------- -------------
$'000 $'000 $'000
--------- --------- -------------
CASH FLOWS - OPERATING ACTIVITIES
Profit for the period 3,987 7,385 14,116
Adjustments for:
Depreciation of property, plant
and equipment 3,051 2,434 5,306
Amortization of intangible assets 7,792 5,624 13,532
Loss (gain) on sale of property,
plant and equipment - 113 (226)
Increase in provision for post-employment
benefits 272 277 567
Finance costs, net 1,689 1,850 2,922
Tax expense 716 1,320 1,757
Share-based payment charge 3,709 2,644 6,348
--------- --------- -------------
Operating cash flows before movements
in working capital 21,216 21,647 44,322
Increase in trade receivables (3,345) (3,965) (12,486)
Increase in other current assets (2,477) (2,148) (1,556)
Decrease (increase) in inventories 862 (2,814) 11
Increase (decrease) in trade payables (2,381) 9,391 13,231
Increase (decrease) in other current
liabilities (5,214) (1,652) 1,231
Increase in provisions and other
long term liabilities 651 802 1,472
--------- --------- -------------
Cash from operations 9,312 21,261 46,225
Income tax paid - - (3,047)
Interest received 66 71 12
Interest paid (866) (599) (1,978)
--------- --------- -------------
Net cash from operating activities 8,512 20,733 41,212
--------- --------- -------------
CASH FLOWS - INVESTING ACTIVITIES
Acquisition of business, net of
cash acquired (13,681) - (352)
Acquisition of property, plant
and equipment (2,415) (2,979) (8,823)
Proceeds from disposal of property,
plant and equipment 463 193 677
Acquisition of intangible assets (801) (614) (1,397)
Capitalized development expenditures (15,338) (14,333) (26,106)
Increase (decrease) in restricted
cash deposits 64 (65) 657
--------- --------- -------------
Net cash used in investing activities (31,708) (17,798) (35,344)
--------- --------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
Six months ended Year ended
30 June 31 December
--------------------- -------------
2016 2015 2015
----------- -------- -------------
Unaudited Audited
--------------------- -------------
$'000 $'000 $'000
----------- -------- -------------
CASH FLOWS - FINANCING ACTIVITIES
Proceeds from exercise of options 81 231 264
Purchase of own shares (606) - (1,323)
Dividend paid (6,893) - -
Proceeds from other loans - 11,562 11,562
Repayment of other loans (1,682) (1,645) (2,337)
Short-term borrowings from
banks and other lenders 20,971 1,310 (4,949)
----------- -------- -------------
Net cash from financing activities 11,871 11,458 3,217
----------- -------- -------------
(Decrease)/increase in cash
and cash equivalents (11,325) 14,393 9,085
Cash and cash equivalents-balance
at beginning of period 29,844 25,399 25,399
Effect of exchange rate differences 660 (3,218) (4,640)
----------- -------- -------------
Cash and cash equivalents-balance
at end of period 19,179 36,574 29,844
=========== ======== =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2016 (Unaudited)
Treasury
Share Share Other stock Translation Retained
capital premium reserve fund reserve earnings Total
-------- -------- -------- -------- ----------- --------- -------
$'000 $'000 $'000 $'000 $'000 $'000 $'000
-------- -------- -------- -------- ----------- --------- -------
Balance at
1 January 2016 1,969 24 (2,727) (1,323) (20,256) 132,494 110,181
Total comprehensive
income for
the period
Profit for
the period - - - - - 3,987 3,987
Foreign currency
translation
differences - - - - 2,102 - 2,102
-------- -------- -------- -------- ----------- --------- -------
Total comprehensive
income for
the period - - - - 2,102 3,987 6,089
Transaction
with owners:
Exercise of
options 2 79 - - - - 81
Dividend (6,893) (6,893)
Repurchase
of shares (606) (606)
Share based
payment charge - - - - - 3,709 3,709
-------- -------- -------- -------- ----------- --------- -------
Total transactions
with owners 2 79 - (606) - (3,184) (3,710)
Balance at
30 June 2016 1,971 103 (2,727) 1,929 (18,153) 133,297 112,561
======== ======== ======== ======== =========== ========= =======
Six months ended 30 June 2015 (Unaudited)
Share Share Merger Other Translation Retained
capital premium reserve reserve reserve earnings Total
-------- -------- -------- -------- ----------- --------- -------
$'000 $'000 $'000 $'000 $'000 $'000 $'000
-------- -------- -------- -------- ----------- --------- -------
Balance at
1 January 2015 1,942 90,533 1,235 (2,727) (13,254) 20,048 97,777
Total comprehensive
income for
the period
Profit for
the period - - - - - 7,385 7,385
Foreign currency
translation
differences - - - - (4,460) - (4,460)
-------- -------- -------- -------- ----------- --------- -------
Total comprehensive
income for
the period - - - - (4,460) 7,385 2,925
Transaction
with owners:
Exercise of
options 18 213 - - - - 231
Share based
payment charge - - - - - 2,644 2,644
-------- -------- -------- -------- ----------- --------- -------
Total transactions
with owners 18 213 - - - 2,644 2,875
Balance at
30 June 2015 1,960 90,746 1,235 (2,727) (17,714) 30,077 103,577
======== ======== ======== ======== =========== ========= =======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Year ended 31 December 2015 (Audited)
Treasury
Share Share Merger Other stock Translation Retained
capital premium reserve reserve fund reserve earnings Total
-------- -------- -------- -------- --------- ----------- --------- -------
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------- -------- -------- -------- --------- ----------- --------- -------
Balance at
1 January
2015 1,942 90,533 1,235 (2,727) - (13,254) 20,048 97,777
Total comprehensive
income for
the period
Profit for
the period - - - - - - 14,116 14,116
Foreign currency
translation
differences - - - - - (7,002) - (7,002)
-------- -------- -------- -------- --------- ----------- --------- -------
Total comprehensive
income for
the period - - - - - (7,002) 14,116 7,114
Transaction
with owners:
Exercise of
options 27 237 - - - - - 264
Reduction
of share premium
and merger
reserve - (90,746) (1,235) - - - 91,981 -
Repurchase
of shares - - - - (1,323) - - (1,323)
Share based
payment charge - - - - - - 6,349 6,349
-------- -------- -------- -------- --------- ----------- --------- -------
Total transactions
with owners 27 (90,509) (1,235) - (1,323) - 98,330 5,290
Balance at
31 December
2015 1,969 24 - (2,727) (1,323) (20,256) 132,494 110,181
======== ======== ======== ======== ========= =========== ========= =======
NOTES TO THE INTERIM FINANCIAL STATEMENT AT 30 JUNE 2015
(Unaudited)
1. The Company was incorporated and registered in England and
Wales as a public limited company on 30 November 2004 under the
Companies Act 1985.
2. The interim financial statements include the results of
operations and the financial position of the Company and its
subsidiaries (together the "Group") as at and for the six months
ended 30 June 2016. The consolidated interim financial statements
of the Company have been prepared in accordance with the
recognition and measurement criteria of IFRS and the disclosure
requirements of the AIM Rules using the accounting policies set out
in the Group's 31 December 2015 statutory accounts. The AIM Rules
do not require compliance with the requirements of IAS 34 "Interim
Financial Statements" and these consolidated interim financial
statements have not been prepared in compliance with the disclosure
requirements of that standard. The consolidated interim financial
statements have not been audited or reviewed and do not constitute
the Company's statutory accounts within the meaning of Section 435
of the Companies Act 2006. The financial information for the year
ended 31 December 2015 is derived from the statutory accounts for
that year, which have been delivered to the Registrar of Companies.
The report of the auditors was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
3. Research and development expenses, net, were:
H1 2016 H1 2015 FY 2015
---------- ---------- ---------
$'000 $'000 $'000
---------- ---------- ---------
Research and development
expenses 28,766 24,434 51,216
Capitalized development
expenses (15,338) (14,333) (26,106)
Amortization of internally
generated development costs 4,421 2,711 7,658
Research and development
expenses, net 17,849 12,812 32,768
4. Reconciliation of operating profit, profit before tax and net
profit to the adjusted figures:
H1 2016 H1 2015 FY 2015
$'000 $'000 $'000
--------------------------------- --------- --------- ---------
Operating profit 6,390 10,555 18,795
--------------------------------- --------- --------- ---------
Share based payments 3,709 2,573 6,349
--------------------------------- --------- --------- ---------
Non-recurring expenses 461 566 1,351
--------------------------------- --------- --------- ---------
Amortization intangibles
acquired 2,518 2,054 4,122
--------------------------------- --------- --------- ---------
Adjusted EBIT 13,078 15,748 30,617
--------------------------------- --------- --------- ---------
Depreciation and amortization 8,325 6,004 14,716
--------------------------------- --------- --------- ---------
Adjusted EBITDA 21,403 21,752 45,333
--------------------------------- --------- --------- ---------
Profit before tax (PBT) 4,703 8,705 15,873
--------------------------------- --------- --------- ---------
Share based payments 3,709 2,573 6,349
--------------------------------- --------- --------- ---------
Non-recurring expenses 461 566 1,351
--------------------------------- --------- --------- ---------
Amortization intangibles
acquired 2,518 2,054 4,122
--------------------------------- --------- --------- ---------
Adjusted PBT 11,391 13,898 27,695
--------------------------------- --------- --------- ---------
Net Profit for the period
attributable to the owners
of the Company 3,987 7,385 14,116
--------------------------------- --------- --------- ---------
Share based payments 3,709 2,573 6,349
--------------------------------- --------- --------- ---------
Non-recurring (income) expenses 461 566 1,351
--------------------------------- --------- --------- ---------
Amortization - acquired
intangibles 2,518 2,054 4,122
--------------------------------- --------- --------- ---------
Change in deferred taxes,
net 831 782 (997)
--------------------------------- --------- --------- ---------
Adjusted profit for the
period attributable to the
owners of the Company 11,506 13,360 24,941
--------------------------------- --------- --------- ---------
5. Net cash (debt) position:
H1 2016 H1 2015 FY 2015
---------- --------- ---------
$'000 $'000 $'000
---------- --------- ---------
Cash and cash equivalent 19,179 36,574 29,844
Restricted cash deposits 83 770 75
Working capital borrowings
(1) (22,867) (10,384) (2,663)
Long term loan (2) (4,440) (5,595) (4,899)
Governmental loan
(3) (18,160) (18,160) (18,234)
Mortgage loan (4) (2,910) (3,200) (2,984)
Net cash / (debt) (29,115) 5 1,139
========== ========= =========
(1) Short term borrowings, less than one year, arising from
invoice advances used for working capital.
(2) Representing three long term loans from banks in Italy- (i)
$6.2 million bearing interest at a rate of Euribor 3 months plus
3.25%, repayable in 20 quarterly instalments that commenced in
September 2013; (ii) $1.3 million bearing interest at a rate of
Euribor 6 months plus 5.5% and is repayable in 6 semi-annual
instalments that will commence in December 2020; and (iii) $1.1
million bearing interest at a rate of Euribor 6 months plus 5.5%
and repayable in 6 semi-annual instalments that will commence in
December 2020.
(3) Representing three long term loans with preferential rates
(i) $8.2 million received in February 2015; ii) $7.7 million
received at December 2013, both with a fixed-rate of 0.5% p.a. and
repayable in 14 semi-annual instalments that will commence in
December 2016, supported by the Italian MISE (Ministry of Economic
Development) to develop an innovative platform for the application
of M2M technologies and; (iii) $6.1 million with a fixed-rate of
0.75% p.a. and repayable in 10 annual instalments that commenced in
March 2009, supported by the Ministry of Trade and Commerce in
Italy, provided in connection with the Group's business development
program in Sardinia.
(4) Representing a preferential rate mortgage from a regional
fund in Italy provided in connection with the Group's acquisition
of the campus used for the Company's main R&D facility in
Trieste, Italy. The mortgage is denominated in Euro, bears interest
at a rate of Euribor 6 months minus 20% and repayable in 15
semi-annual instalments that commenced in June 2012.
The directors believe, based on the past performance of the
relevant subsidiaries and the history of the relationships with the
lending banks, that the credit facilities will remain available to
the Group in the foreseeable future and that therefore the Group
will be able to continue to fund its operations from these credit
facilities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EVLBBQVFFBBZ
(END) Dow Jones Newswires
August 08, 2016 02:00 ET (06:00 GMT)
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