TIDMC21
RNS Number : 1470J
21st Century Technology PLC
28 March 2018
28 March 2018
21(st) Century Technology plc
("21(st) Century" or "the Group")
Final Results for the year ended 31 December 2017
21(st) Century Technology plc (AIM: C21), the specialist
provider of tailored solutions to the transport community, solving
complex operational requirements both on and off vehicle, announces
its final results for the year ended 31 December 2017.
Financial headlines
-- Revenue GBP11.8m (2016: GBP11.6m)
-- Gross profit GBP5.0m (2016: GBP4.7m)
-- Underlying operating profit GBP0.01m (2016: GBP1.4m loss)
-- Operating loss GBP0.3m (2016: GBP2.3m)
-- Cash at year end GBP0.3m (2016: GBP0.5m)
-- Cost base reduced by 18% to GBP5.1m (2016: GBP6.2m)
-- Additional working capital secured with access to a GBP1.25m
invoice discounting facility on materially improved grounds (2016:
GBP0.4m invoice discounting facility)
Operational headlines
-- Strategy to return Fleet and Passenger segments to profit
well under way and supported by several significant contract
wins:
-- 3-year agreement with major London-based fleet operator Abellio, worth cGBP2.5m.
-- Landmark GBP1m airport car park passenger information project
for Omniserve and Gatwick Airport.
-- GBP1m contract from a large UK Fleet operator for the provision of safety systems engineering
-- Underlying profit in Fleet segment recovered to GBP449k (2016: GBP748k loss).
-- Underlying loss in Passenger segment reduced to GBP267k
(2016: GBP460k loss), all of which was incurred during H1. Order
intake in segment improved throughout the period, with Q4
particularly strong.
-- Revenues from overseas operations grew to GBP1,653k (2016: GBP1,007k).
-- Operations consolidated to a central location resulting in
annualised savings of GBP1.4m, whilst creating a more dynamic and
innovative working environment.
-- 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:
"We've made enormous progress in the last year in our strategy to
return the Group to profitability. The changes implemented have
resulted in a far more dynamic, innovative and customer centric
business, leading to several important contract wins. I am
particularly pleased to see positive results emerging from greater
collaboration between our Fleet and Passenger teams. It is this
joined-up approach that will position us well for opportunities
resulting from the Integrated or Intelligent Transport Systems
(ITS) government initiatives, and as major urban areas move towards
the creation of Smart Cities.
"Having started the year with a far stronger order book than
last year, I expect our progress to continue."
Enquiries:
21st Century Technology Russ Singleton/Nick Tel: 0844 871
plc Lowe 7990
finnCap
Nominated Adviser Julian Blunt/Scott Tel: 0207 220
Mathieson 0500
Media enquiries
Communications Ariane Comstive / Tel: 07785
Portfolio Helen Carpanini 922 354/
0207 536 2007
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'
21st Century Technology is the specialist provider of tailored
solutions to the transport community, solving complex operational
requirements both on and off the vehicle. Comprised of a Fleet
Systems division and a Passenger Systems division, 21st Century
Technology provides integrated solutions both on and off the
vehicle to deliver 'connected systems for connected journeys'.
Fleet Systems: include CCTV video surveillance; to improve
passenger & driver safety, vehicle & driver performance
monitoring, real-time on-board IT subsystems management and
automatic passenger counting.
Passenger Systems: include the design & manufacture of all
the necessary hardware and software for electronic passenger
information systems, off-vehicle smart ticketing and
way-finding.
With over 20 years' experience in the transport industry, 21st
Century Technology specialises in providing innovative,
cost-effective technology lead solutions to improve the passenger
experience and provide operational benefits to fleet and network
operators.
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 the significant progress achieved by
the Company over the course of 2017 toward becoming a technically
agile and customer-centric business, providing connected systems
and services on vehicles and into the Smart Cities of today and
tomorrow.
The programme of consolidating operations, started last year,
has completed and, following the launch of 21st Century's new head
office at Ashby-de-la-Zouch last January, resulted in annualised
savings of GBP1.4m. At the same time, customer services were
strengthened and asset clients were retained, enabling the Company
to deliver a broadly breakeven result.
Concentrating the research and development, sales, finance and
customer service teams into a single location has improved
communication and teamwork, created a better environment for
innovation and lifted the overall customer service experience. The
combined effect of these efforts resulted in several significant
contract wins.
I would like to welcome Abellio Bus London as a new Tier 1
transport operator customer to our Fleet Systems business.
Investment in pre-sales and the subsequent integration of this c.
GBP2.5m three-year contract into our operations was completed in H2
and contributed GBP0.2m of sales in the year. This strategic win
builds on the two major contract renewals last year with First Bus
UK and Arriva UK Bus.
For large fleet operators, connecting what were previously
standalone systems to the Internet of Things (IoT), in order to
gain data-driven insights, is allowing them greater visibility on
the performance of their on-board technology. The inclusion of the
Journeo(R) Remote Condition Monitoring (RCM) system, the software
and hardware platform developed in house, is an important factor in
renewing and securing new contracts.
The Passenger Systems business broadened its existing
relationship with Transport for the West Midlands (TfWM), the
transport arm of West Midlands Combined Authority. TfWM is
pioneering some important changes within the UK public transport
sector by implementing a Mobility as a Service (MaaS) model along
the lines introduced in Helsinki.
The Nordics and Scandinavia continue to lead the industry as
early adopters of new technologies and ITxPT (Information
Technology for Public Transport) standards. Our Stockholm-based
business continues to perform well, delivering high-quality managed
services to Tier 1 operator customers in the region.
Towards the end of the year, we secured a GBP1m contract from a
large UK Fleet operator for the provision of safety systems
engineering, building on our existing framework. We commenced the
installation programme at the start of 2018 and the project is
scheduled to complete within the year.
The collaboration between our Fleet and Passenger teams is
growing. The first joint project, the Gatwick Airport car park
passenger information system, was handed over in December and is a
great show-case for the Company's capabilities and we have already
received interest from other airports. On a larger scale, recent
government announcements for a series of Department for Transport
(DfT) backed initiatives for Integrated or Intelligent Transport
Systems (ITS), will require expertise in both passenger and fleet
systems, and provide attractive opportunities for the future.
Furthermore we aim to capitalise on the longstanding
relationships the Passenger Systems business has with many
Passenger Transport Executives (PTEs) and local authorities as they
look to solve the challenge of ensuring the safe movement of
people, utilities and goods in increasingly congested urban
environments.
Financing
Towards the end of the year we secured a new GBP1.25m invoice
discounting facility with Close Brothers to provide additional
working capital to the Group on materially improved terms to the
previous GBP0.4m facility. Our new Chief Financial Officer, Nick
Lowe, who joined the Board in May 2017, has implemented tight
working capital controls to ensure an ongoing focus on cash as the
business returns to profitable growth.
Trading results
2017 2016 Mvmt
GBP'm GBP'm GBP'm
Revenue 11.8 11.6 0.2
Gross profit 5.0 4.7 0.3
Gross profit percentage 42% 41% 1%
Other income 0.1 0.1 0
--------------------------- ------- ------- ------
Underlying administrative
expenses (5.1) (6.2) 1.1
--------------------------- ------- ------- ------
Underlying profit/(loss) 0 (1.4) 1.4
--------------------------- ------- ------- ------
Share-based payments (0.2) (0.3) 0.1
Reorganisation costs (0.1) (0.5) 0.4
--------------------------- ------- ------- ------
Total administrative
expenses (5.3) (7.0) 1.7
--------------------------- ------- ------- ------
Operating loss (0.3) (2.3) 2.0
Taxation 0 0 0
--------------------------- ------- ------- ------
Loss after taxation (0.3) (2.3) 2.0
--------------------------- ------- ------- ------
Pence Pence Pence
--------------------------- ------- ------- ------
Basic loss per share (0.38) (2.47) 2.09
--------------------------- ------- ------- ------
Group Results for the year ended 31 December 2017 are broadly
break-even with an underlying profit before tax of GBP11k (2016:
underlying loss GBP1,397k).
Overall sales volumes showed a slight increase to GBP11.8m
(2016: GBP11.6m) and gross profit similarly increased to GBP5.0m
(2016: GBP4.7m).
Fleet sales increased 8% to GBP7.5m (2016: GBP6.9m) on improved
volumes in Bus UK & Eire and International, more than replacing
the downsized Rail business, which is covered in the Chief
Executive's Report. Gross profit increased to GBP2.6m (2016:
GBP2.3m) reflecting the change in business mix.
Passenger sales reduced to GBP4.3m (2016: GBP4.7m) as sales
recovered from their low in H2 2016 of GBP1.8m (H2 2017: GBP2.2m).
Gross profit was maintained at GBP2.4m (2016: GBP2.4m).
The reduction of GBP1.1m in underlying administrative expenses
is mainly attributable to the target annualised savings being
delivered from the previously announced cost base restructuring and
centralisation.
People
We remain fortunate to have many talented and loyal staff and,
having achieved our 2017 objectives, we are investing in technical
and sales personnel to support our growth plans.
I would like to welcome them and pass on my sincere thanks and
that of the Board to everybody for their help in implementing the
changes made and now being part of this growing and dynamic
business.
Outlook
We entered 2018 with a significantly stronger order book than
last year in both Fleet and Passenger Systems and are completing
the transformation of 21(st) Century into the provider of choice
for fully connected systems on and off vehicles.
Following the awards from First Bus UK, Arriva Bus and the
Abellio Bus contract win last year, we have further broadened our
customer base through the recent announcement this month of a
contract award from Translink, who operate services throughout
Northern Ireland with additional select services to Dublin.
A customer-centric approach and increasing R&D capabilities
are strengthening our capabilities, underpinning an innovation-led,
customer-focussed growth strategy.
Sales of new and niche applications within the passenger, fleet
and integrated transport markets coupled with recently announced
contract wins secured using our own IP and software, demonstrate
that this strategy is working, and the Board expects the Group's
progress to continue.
Following the Group's Annual General Meeting, the Chief
Executive, Russ Singleton, will review these areas in more detail
and a copy of his presentation will be added to our website.
Mark Elliott
Non-executive Chairman
28 March 2018
Strategic Report
Principal activities
The Group's principal activities are in providing tailored
solutions to the transport community, solving complex operational
requirements both on and off vehicles.
Fleet Systems solutions include on-board video surveillance to
improve passenger and driver safety, vehicle, driver performance
telematics and advanced passenger counting technologies.
Passenger Systems information solutions include the hardware,
software and management services for urban passenger information
estates, smart ticketing applications and interactive
wayfinding.
Business model
Our business model is to compete in the market as an open
provider of technology solutions, working with global-scale product
companies and local specialists to deliver highly reliable and
cost-effective solutions for the transport community over the
lifecycle of the systems. The service offering includes the design,
tailoring, installation, on-site support and back-office
systems.
We compete by striving to offer better integrated solutions at
reduced costs to our customers. We carefully select niche markets
where we can generate significant market share to generate the
economies of scale needed. Our customers in the transport community
include fleet operators, vehicle manufacturers, local authorities
and Passenger Transport Executives (PTEs).
Strategic goals
Our vision is to become the market-leading provider of tailored
solutions to the transport community, solving the complex
operational requirements on-board vehicles and associated connected
systems in towns and cities. Our guiding principle is to improve
the customer service experience continuously through innovation of
our solutions, having the best team of people and operating
efficiently.
Each year we set strategic goals and monitor performance against
them throughout the year. Our goals for 2018 build on the
achievements for 2017 and we have highlighted additional objectives
as important focus areas.
Strategic Progress in 2017 Additional Comments
goals 2017 strategic
goals 2018
--------------- ------------------------- -------------------- ----------------------
Improve Significant progress Enhance our Provide training
customer made with centralised field engineering and information
service call handling, capabilities. systems to
management and --Yen improve reliability,
extension of first time
call-centre operating fix rates
hours. and overall
efficiency.
--------------- ------------------------- -------------------- ----------------------
Increase Centralising Invest in Building
technical the R&D team additional out our core
capability under our CTO technical technologies
++-- to complete the capabilities and IP for
integration of and systems wider resale;
Passenger Systems. linked to directly
target market and indirectly,
sectors. and into
--Yen new channels.
--------------- ------------------------- -------------------- ----------------------
Empower Cultural change Encourage Empower all
Management from building the development our people
-- moves and cost-base and training to be decisive
reductions have of existing and have
improved communication, staff members, the trust
morale and empowerment. whilst attracting of our customers.
the highest
calibre recruits.
--Yen
--------------- ------------------------- -------------------- ----------------------
Secure High level of Retain all Secure additional
positive renewals in Passenger existing accounts. sales of
outcomes Systems and significant ++Yen products,
from contract extra engineering services
negotiations upgrade work and software.
and renewals in Fleet Systems Offer greater
Yen under an existing value through
framework. innovation.
--------------- ------------------------- -------------------- ----------------------
Develop Secured Abellio Broaden sales Leverage
new lines as a major fleet to our current domain expertise
of business operator for customer base, and investment
and diversify Fleet Systems. extend into in R&D, develop
client Delivered Gatwick new customers potentially
base Airport car park and achieve disruptive
++Yen passenger information breakthrough products
system as a joint sales into and services
project from adjacent markets. and create
Passenger and ++Yen new market
Fleet. leadership
positions.
--------------- ------------------------- -------------------- ----------------------
Preserve Strengthened Maintain vigilance Operational
Cash debt collection on tight working efficiencies
Yen procedures. capital controls. during business
Increased invoice Yen growth phase.
discounting facility
from GBP0.4m
to GBP1.25m with
a move to Close
Brothers.
--------------- ------------------------- -------------------- ----------------------
Supporting principles
guide
------------------------
Excel at customer
service
------------------ ----
Continuous ++
innovation
------------------ ----
Best people --
------------------ ----
Operational Yen
efficiency
------------------ ----
In 2017 we made significant progress in several areas and have
seen how a positive outcome on a single strategic goal can deliver
multiple positive results.
Technology that we developed in-house was pivotal in securing
positive contract negotiations from First UK Bus in 2016 and
Abellio in 2017. By realising the power of the data produced from
the installed systems, we were able to build an intelligent new
tool that gives customers real-time information about their fleet.
Our Journeo(R) branded technology has the potential to
fundamentally change the traditional service model for fleet
operators.
Investing in technical capabilities with customer application,
or 'domain expertise', provides an informed insight with an agility
to spot and react swiftly to emergent industry trends or customer
needs.
Key performance indicators
The Company uses a number of Key Performance Indicators (KPIs)
to monitor progress against its objectives. The key KPIs are:
2017 2016 Mvmt
GBP'000 GBP'000 GBP'000
Revenue 11,761 11,555 206
Gross Profit 4,996 4,687 309
Underlying administrative
expenses 5,074 6,203 (1,129)
Total administrative
expenses 5,297 6,985 (1,688)
Underlying profit/(loss) 11 (1,397) 1,408
Operating loss (301) (2,298) 1,997
Net current (liabilities)/assets (785) (392) (393)
Net cash flows from
operating activities (729) (435) (294)
Cash and cash equivalents 302 511 (209)
---------------------------------- -------- -------- --------
Pence Pence Pence
---------------------------------- -------- -------- --------
Loss per share -
basic (0.38) (2.47) 2.09
Loss per share -
diluted (0.38) (2.47) 2.09
---------------------------------- -------- -------- --------
In addition, operational performance measurements are monitored
at a major account level with exceptions raised to the Board.
Fleet Systems
This was a transformational year for the Fleet business as the
strategic decisions to return the segment to profit were
implemented. The transformation was achieved against a backdrop of
scaling back aspects of the Rail business, the operational
reorganisation and significant cost base savings whilst improving
customer service, increasing technical capability and ultimately
winning more business. Revenues in the year increased by GBP579k,
even though the Rail business contracted significantly by GBP779k.
Overall margin increased in the year by GBP349k despite significant
margin pressures in our UK & Eire Bus operations.
The underlying profit recovered to GBP449k (2016 loss of
GBP748k), ahead of management expectations.
We continued to support our major fleet asset clients Arriva,
First Bus UK, Translink and Keolis throughout 2017 and in August we
secured a three-year agreement with major London-based fleet
operator Abellio. Under the contract 21(st) Century take
responsibility for all on-board and depot-based CCTV download and
related sub-systems and, importantly, become Abellio's technical
partner for installations on their new vehicles. We also continue
to provide care, support and new systems for several small to
medium-sized fleet operating companies, including our first ATEX
approved solution for a fuel-oil tanker operator. Throughout 2018
we are targeting further growth in these new customer segments.
The award of the Abellio contract, with a value of c. GBP2.5m,
is a good step forward. The sales process to win new large fleet
operator customers is long and complex; requiring a substantial
investment in pre-sales activities and a deep understanding of
their technology and other customer-specific factors.
We have completed several complex projects throughout 2017,
including large-scale refurbishment programmes for existing
customers and the landmark GBP1m airport car park passenger
information project for Omniserve and Gatwick Airport Limited. I am
delighted to see both sides of the Group working together to
deliver such a high-profile and unique solution that is generating
cost reductions and operational benefits for the customer. Since
handover in December, we have received approaches from other
operators for this type of solution, including from overseas.
Another notable success in the year was securing a major
engineering project to fit safety critical systems to one of the
UK's largest bus fleet operators. The GBP1m fleet-wide programme,
with an existing customer, is a new challenge for our engineering
teams, highlighting the benefits that can be realised through
adopting a customer-centric approach.
The 2016 report highlighted the margin shortfall in our Rail
operations due to challenging market conditions and we worked
throughout 2017 to realign our strategy to operate from a lower
cost base. We are continuing to support Rail customers and, with
our increasing technical capability, are able to address
opportunities to provide solutions that will further diversify our
offering to the sector as part of a multi-modal approach.
Passenger Systems
The Passenger business has long-standing relationships with many
PTEs and local authorities and, whilst budgets may be under
pressure, the responsibilities for ensuring the safe movement of
people, utilities and goods in increasingly congested urban
environments remain, and require new solutions.
Revenue for the full year was GBP4.3m (2016: GBP4.7m), slightly
behind management expectations due to the low level of
brought-forward order book from FY 2016, which impacted the
programme to return the segment to profit. Sales orders during H1
began to improve; however, the lead-time between order receipt and
commissioning (typically 16-20 weeks) resulted in the full year
producing an underlying loss of GBP267k (2016: loss of GBP460k),
all of which was incurred during H1.
During the second half, the business performed well and was
profitable and included sales of our next generation E-ink and
solar powered displays, along with the first field application of
our prototype pollution sensing system. Order intake continued to
improve throughout the period, with Q4 particularly strong at
GBP1.5m with GBP1m carried forward to 2018.
I am particularly pleased to have secured the contract with
Transport for the West Midlands (TfWM), the transport arm of West
Midlands Combined Authority (WMCA) as it adopts a Mobility as a
Service (MaaS) model. We completed an audit of over 600 displays
across their large estate and, with our own design and
manufacturing capabilities, were able to make innovative and
cost-effective recommendations to repair and upgrade, extending the
life of key elements of their equipment. The contract award was
followed by a renewal of our Content Management System (CMS)
software which demonstrates the business is able to manage and
maintain large estates with a high-availability service; both on
the street and in the cloud.
Upgrading complex applications, such as for TfWM are target
areas for sales and maintenance and in 2017 we achieved a 25%
year-on-year increase for managed services in this segment,
building quality earnings due to the long-term, recurring nature of
the revenue.
In the UK, the DfT and a Smarter Cities agenda is driving
innovation, providing opportunities across the Group that are
accessible through our Passenger Systems team. Towards the end of
the year, we further invested in our capabilities for these
emerging areas through the recruitment of additional high-calibre
Intelligent Transport System (ITS) industry experts.
Central services
Significant benefits and efficiencies were delivered across all
our operations having started the year from our new head office in
the Midlands at Ashby-de-la-Zouch and with logistics now
centralised to one of our sites in Coventry. Our UK sales teams,
field engineers and project managers and all R&D resources are
now supported and coordinated from Ashby. To further enhance
customer service, we have extended the eight-hour support desk to
twelve-hours' coverage.
In addition, all ISO accreditations have been renewed and
consolidated under a single audit body for both companies.
Business review and results
Segmental
results Fleet Passenger Total Fleet Passenger Total
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 7,502 4,259 11,761 6,923 4,715 11,638
Intersegment
sales - (83)
-------- ---------- -------- -------- ---------- --------
11,761 11,555
-------- ---------- -------- -------- ---------- --------
Gross profit 2,617 2,379 4,996 2,268 2,419 4,687
-------- ---------- -------- -------- ---------- --------
Underlying
profit/(loss) 449 (267) 182 (748) (460) (1,208)
-------- ---------- -------- ----------
Central costs (171) (189)
-------- --------
Underlying
profit/(loss) 11 (1,397)
---------------- -------- ---------- -------- -------- ---------- --------
The performance of the Group was a significant improvement on
2016 with an underlying profit of GBP11k (2016: loss of GBP1,397).
Total revenue grew by 1% in the year and gross profit by 7%. The
segmental results show the performance of our Fleet and Passenger
Systems segments as seen in table: Segmental results.
Basic loss per share is 0.38p (2016: loss per share of
2.47p).
Fleet Systems sales overall were up 8%, with the varying changes
in the elements of the segment being Bus 17% increase,
International 51% increase and Rail decreased 62% reflecting the
scaling back of activities in this area. Fleet gross profit levels
improved by 15% with a 17% decrease in Bus, an 84% increase in
International and a 12% decrease in Rail. The significant overhead
cuts in Fleet of GBP963k enabled a return to underlying profit of
GBP449k (2016: loss of GBP748k).
Our Scandinavian and wider European operations continue to
perform well, with revenue increasing to GBP1,653k (2016:
GBP1,007k). We have an office and team of engineers based in
Stockholm, delivering high-quality managed services to our
customers in the region. There is scope for further growth as a
number of the operating contracts and franchises come up for
renewal during 2018. We are engaged and tracking the progress of
these with great interest and aligning our sales and technical
services accordingly.
The trading environment in Passenger Systems remained
challenging across 2017 after the marked slowdown in sales reported
in H2 2016. Overall sales were down 10% on 2016, but this did
represent a 19% recovery on the annualised sales levels from H2
2016. The overall sales decrease saw new systems down 23%, while
service work saw a 25% increase. Passenger Systems gross profit
fell 2% in the year which was marginally ahead of management
expectations due to the improved margin sales mix from increased
service work. However, the shortfall in new sales lead to an
under-absorption of manufacturing costs, reducing the saving on
overheads to GBP233k and contributed to the underlying loss of
GBP269k (2016: loss of GBP460k).
The overall underlying profit of GBP11k (2016: loss of
GBP1,397k) is in-line with management expectations.
The underlying operating profit reconciles to the IFRS operating
loss as seen below in table: Reconciling segmental results to IFRS
operating loss.
The operating loss was GBP301k (2016: GBP2,298k).
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 Mitigation
potential impact
-------------------------------------------------------------- ----------------------------------
Dependence on major customers
--------------------------------------------------------------------------------------------------
Currently the Fleet Systems These risks are mitigated
segment has a high dependence by monitoring and managing
on a small number of the business' operational
customers which are of performance measures,
a far greater scale than including response times
the Group. This generates and CCTV availability,
three distinct risks, with operational dashboards
each of which could have agreed with each customer,
a significant impact and by regular communication
on the business: at Director level. Additionally,
* the loss of any single major customer; there are long-term framework
agreements in place with
two of our largest customers.
* pressure on price and margin; and This risk has reduced
through diversification
into the Passenger Systems
* changes to their vehicle replacement or retro-fit market and this 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 We now have a more diversified
strongly linked to the position in the transport
overall health of the sector where we operate
UK public transport sector, nationally rather than
which in turn is significantly regionally across bus
affected by levels of and rail networks, on
government funding at and off vehicles. We
local, regional and national are targeting an increase
levels. in international sales.
-------------------------------------------------------------- ----------------------------------
Major project delivery
--------------------------------------------------------------------------------------------------
Failure to deliver a Risk assessments are
major project on time conducted for all projects
or to specification, and the major ones are
or technical performance also subject to Board
falling significantly approval.
short of customer expectations, Major projects are reviewed
would have potentially at various levels and
significant adverse financial frequencies throughout
and reputational consequences. the project lifecycle.
-------------------------------------------------------------- ----------------------------------
Dependence on key suppliers
--------------------------------------------------------------------------------------------------
Wherever possible the On certain projects there
Group endeavours to retain is technical risk with
a choice of suppliers our suppliers when they
for its components and are developing systems
finished goods. In instances for our customers' applications.
where we are currently We manage this risk with
reliant on one supplier, rigorous project management
we are constantly looking and the involvement of
for ways to minimise our internal R&D team.
technical and commercial
risk.
-------------------------------------------------------------- ----------------------------------
Competition
-------------------------------------------------------------- ----------------------------------
The Group may face increased The Group will continue
competition as the technology to increase its technical
on and off vehicles moves capability to capitalise
away from point solutions on our current market
to broader integrated position and work closely
solutions. This changing with technology partners
technology landscape to broaden our skills.
creates openings for We are targeting becoming
new product and service a larger group via organic
entrants which may possess growth and potential
better technical and acquisitions to provide
capital resources than better economies of scale
the Group. and increased industry
knowledge.
-------------------------------------------------------------- ----------------------------------
Technology
--------------------------------------------------------------------------------------------------
The future success of This involves keeping
the Group's activities pace with changes and
depends upon it creating improvements in relevant
a leading position for technology and having
innovative systems within the integration skills
both the Fleet Systems necessary to create added
and Passenger Systems value for our customers
segments. As a smart on the move and in the
integrator we require back office. The Group
both a breadth of knowledge has been investing in
and a deeper understanding our development team
in areas of software allowing stronger relationships
integration. with partner organisations.
Market adoption and timing
are difficult to predict,
particularly in the emerging
opportunities in the
ticketing arena.
-------------------------------------------------------------- ----------------------------------
Future developments
The current trading and outlook is covered in the Chairman's
Statement and a more detailed shareholder presentation will be made
immediately following the Group's Annual General Meeting (AGM) in
April 2018.
Signed on behalf of the Board
Russ Singleton
Chief Executive
28 March 2018
Consolidated statement of comprehensive income
for the year ended 31 December 2017
2017 2016
Notes GBP'000 GBP'000
-------------------------------------------- ----- -------- --------
Revenue 2, 3 11,761 11,555
Cost of sales (6,765) (6,868)
-------------------------------------------- ----- -------- --------
Gross profit 3 4,996 4,687
Underlying administrative expenses (5,074) (6,203)
Other income 89 119
-------------------------------------------- ----- -------- --------
Underlying profit / (loss) 11 (1,397)
Share-based payments (224) (323)
One-off legal costs - (44)
Reorganisation costs 8 (88) (534)
-------------------------------------------- ----- -------- --------
Total administrative expenses (5,297) (6,985)
-------------------------------------------- ----- -------- --------
Operating loss (301) (2,298)
Finance expense (63) (11)
-------------------------------------------- ----- -------- --------
Loss before taxation from continuing
operations (364) (2,309)
Taxation credit 4 13 6
-------------------------------------------- ----- -------- --------
Loss for the year being total comprehensive
loss attributable to owners of the
parent (351) (2,303)
-------------------------------------------- ----- -------- --------
Loss per share 5
Basic (0.38p) (2.47p)
-------------------------------------------- ----- -------- --------
Diluted (0.38p) (2.47p)
-------------------------------------------- ----- -------- --------
Consolidated statement of changes in equity
for the year ended 31 December 2017
Total
Share equity
Share Premium Retained shareholders'
capital account earnings funds
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- --------- --------------
Balance at 1 January 2016 6,061 8 (3,695) 2,374
Loss and total comprehensive
income for the year - - (2,303) (2,303)
Share-based payments - - 323 323
----------------------------- -------- -------- --------- --------------
Balance at 31 December 2016 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
----------------------------- -------- -------- --------- --------------
Consolidated statement of financial position
at 31 December 2017
2017 2016
Notes GBP'000 GBP'000
------------------------------ ----- -------- --------
Assets
Non-current assets
Goodwill 6 1,345 1,345
Other intangible assets 829 847
Property, plant and equipment 128 149
Trade and other receivables 44 39
------------------------------ ----- -------- --------
2,346 2,380
------------------------------ ----- -------- --------
Current assets
Inventories 1,355 1,510
Trade and other receivables 3,827 3,549
Cash and cash equivalents 302 511
------------------------------ ----- -------- --------
5,484 5,570
------------------------------ ----- -------- --------
Total assets 7,830 7,950
------------------------------ ----- -------- --------
Liabilities
Current liabilities
Trade and other payables (5,108) (5,303)
Loans and borrowings (933) (54)
Provisions (228) (605)
------------------------------ ----- -------- --------
(6,269) (5,962)
------------------------------ ----- -------- --------
Net current liabilities (785) (392)
------------------------------ ----- -------- --------
Non-current liabilities
Trade and other payables (569) (569)
Loans and borrowings (300) (300)
Deferred tax liability (35) (44)
Provisions (390) (681)
------------------------------ ----- -------- --------
Total liabilities (7,563) (7,556)
------------------------------ ----- -------- --------
Net assets 267 394
------------------------------ ----- -------- --------
Shareholders' equity
Share capital 6,061 6,061
Share premium account 8 8
Retained earnings (5,802) (5,675)
------------------------------ ----- -------- --------
Total equity 267 394
------------------------------ ----- -------- --------
Consolidated statement of cash flows
for the year ended 31 December 2017
2017 2016
Notes GBP'000 GBP'000
------------------------------------------- ----- -------- --------
Net cash flows from operating activities 7 (729) (435)
------------------------------------------- ----- -------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (42) (85)
Disposals of property, plant and equipment - 40
Purchases / generation of intangible
assets (316) (229)
------------------------------------------- ----- -------- --------
Net cash flows from investing activities (358) (274)
------------------------------------------- ----- -------- --------
Cash flows from financing activities
Cash flows from financing activities 948 -
Issue of loan notes - 300
Repayment of loans (70) (104)
------------------------------------------- ----- -------- --------
Net cash flows from financing activities 878 196
------------------------------------------- ----- -------- --------
Net decrease in cash and cash equivalents (209) (513)
Cash and cash equivalents at beginning
of year 511 1,010
Effect of foreign exchange rate changes - 14
------------------------------------------- ----- -------- --------
Cash and cash equivalents at end of
year 302 511
------------------------------------------- ----- -------- --------
Notes to the consolidated financial statements
for the year ended 31 December 2017
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.
The financial information contained in this announcement does
not constitute statutory accounts for the year ended 31 December
2017 or 31 December 2016. The financial information for the years
ended 31 December 2017 and 31 December 2016 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 2016 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 31 December
2017 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 profit for the year was GBP11k (2016:
underlying loss GBP1,397k). As at 31 December 2017 the Group had
net current liabilities of GBP785k (2016: GBP392k) and net cash
reserves of GBP302k (2016: GBP511k).
In 2016 the Directors identified a need to raise finance to
cover liquidity issues pending the anticipated return of the Group
to profitability and raised GBP300k from the issue of loan notes in
December 2016 and arranged a GBP400k invoice discounting
facility.
In December 2017 a new GBP1.25m invoice discounting facility was
put in place to replace the GBP400k facility. Current trading is in
line with management forecasts and restructuring efforts are
complete.
The Directors have prepared Group cash flow projections for the
period to 30 June 2019 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:
2017 2016
GBP'000 GBP'000
--------------------------------- -------- --------
Goods 7,745 8,435
Services 4,016 3,120
--------------------------------- -------- --------
11,761 11,555
--------------------------------- -------- --------
Contract works included in goods 2,701 3,384
--------------------------------- -------- --------
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 Revenue Gross
2017 profit 2016 profit
GBP'000 2017 GBP'000 2016
GBP'000 GBP'000
------------------- -------- -------- -------- --------
Fleet Systems 7,502 2,617 6,923 2,268
Passenger Systems 4,259 2,379 4,715 2,419
Intersegment sales - - (83) -
------------------- -------- -------- -------- --------
Total 11,761 4,996 11,555 4,687
------------------- -------- -------- -------- --------
Major customers
In the year, two customers within the Fleet Systems segment each
accounted for over 10% of Group revenue at 22% and 10%. In the
prior year, there were two Fleet Systems customers that each
accounted for over 10% of revenue at 18% and 13%. There were no
major customers within the Passenger Systems segment.
Underlying profit/(loss)
2017 2016
GBP'000 GBP'000
--------------------------- -------- --------
Fleet Systems 449 (748)
Passenger Systems (267) (460)
--------------------------- -------- --------
182 (1,208)
Central (171) (189)
--------------------------- -------- --------
Underlying profit / (loss) 11 (1,397)
--------------------------- -------- --------
Reconciling to loss before interest and tax
One-off
legal Profit/(Loss)
Underlying and before
operating reorganisation Share-based Operating 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)
------------------ -------------- --------------- ----------- -------------- -------------
One-off
legal Loss
Underlying and before
operating reorganisation Share-based Operating interest
loss costs payments loss and tax
2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- --------------- ----------- --------- ---------
Fleet Systems (748) (410) (323) (1,481) (1,481)
Passenger Systems (460) (168) - (628) (628)
------------------ ---------- --------------- ----------- --------- ---------
(1,208) (578) (323) (2,109) (2,109)
Central (189) - - (189) (189)
------------------ ---------- --------------- ----------- --------- ---------
(1,397) (578) (323) (2,298) (2,298)
------------------ ---------- --------------- ----------- --------- ---------
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
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- ----------- ---------- -------- ----------- ----------
Fleet Systems 3,638 (3,183) 455 3,814 (4,042) (228)
Passenger Systems 2,500 (3,176) (676) 2,246 (3,148) (902)
-------------------- -------- ----------- ---------- -------- ----------- ----------
6,138 (6,359) (221) 6,060 (7,190) (1,130)
Goodwill 1,345 - 1,345 1,345 - 1,345
Cash and borrowings 302 (1,233) (931) 511 (354) 157
Unallocated 45 29 74 34 (12) 22
-------------------- -------- ----------- ---------- -------- ----------- ----------
Total 7,830 (7,563) 267 7,950 (7,556) 394
-------------------- -------- ----------- ---------- -------- ----------- ----------
Geographical segments
Revenue Gross Revenue Gross
2017 profit 2016 profit
GBP'000 2017 GBP'000 2016
GBP'000 GBP'000
-------------------- -------- -------- -------- --------
UK 10,108 3,989 10,462 4,057
-------------------- -------- -------- -------- --------
International
- Scandinavia 1,053 626
- Other EU 448 361
- Non-EU 152 106
-------------------- -------- -------- -------- --------
Total international 1,653 1,007 1,093 630
-------------------- -------- -------- -------- --------
Total 11,761 4,996 11,555 4,687
-------------------- -------- -------- -------- --------
Assets and liabilities by location
2017 2016
GBP'000 GBP'000
------------------ -------- --------
Assets
UK 7,796 7,914
International 34 36
------------------ -------- --------
Total assets 7,830 7,950
------------------ -------- --------
Liabilities
UK (7,529) (7,514)
International (34) (42)
------------------ -------- --------
Total liabilities (7,563) (7,556)
------------------ -------- --------
All non-current assets are located within the United
Kingdom.
4. Taxation
(a) Analysis of (credit)/charge in year:
2017 2016
GBP'000 GBP'000
-------------------------------------------- -------- --------
Current tax
UK corporation tax on the loss for the year - -
(19.25%)
Swedish corporation tax on the profit for
the year (22%) (4) 7
Deferred tax (credit)/charge
- Temporary differences on acquisition (9) (13)
-------------------------------------------- -------- --------
Total tax credit for the year (13) (6)
-------------------------------------------- -------- --------
(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 19.25% (2016: 20%). The differences
are explained below:
2017 2016
GBP'000 GBP'000
-------------------------------------------- -------- --------
Loss on ordinary activities before tax (364) (2,309)
-------------------------------------------- -------- --------
Loss on ordinary activities multiplied by
standard rate of corporation tax in the UK
of 19.25% (2016: 20%) (70) (462)
Effects of:
Expenses not deductible for tax purposes 105 53
Change in unrecognised deferred tax assets (39) 408
Prior year (over) / under provision (9) -
Brought forward tax losses used (previously
not recognised) - (5)
Total tax credit for the year (13) (6)
-------------------------------------------- -------- --------
(c) Deferred tax asset/(liability)
The unrecognised and recognised deferred tax assets/(liability)
comprise the following:
Unrecognised Recognised
------------------ ------------------
2017 2016 2017 2016
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- -------- --------
Tax losses 615 573 - -
Decelerated capital allowances 56 62 - -
Arising on acquisition - - (35) (44)
------------------------------- -------- -------- -------- --------
671 635 (35) (44)
------------------------------- -------- -------- -------- --------
The Group has GBP3,621,000 of unutilised tax losses (2016:
GBP3,372,000) which may be carried forward indefinitely.
5. 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.
2017 2016
------------------- -------------------
Per share Per share
Losses amount Losses amount
Group GBP'000 Pence GBP'000 Pence
-------------------------------- -------- --------- -------- ---------
Basic EPS
Losses attributable to Ordinary
Shareholders (351) (0.38) (2,303) (2.47)
-------------------------------- -------- --------- -------- ---------
Diluted EPS
Losses attributable to Ordinary
Shareholders (351) (0.38) (2,303) (2.47)
-------------------------------- -------- --------- -------- ---------
Details of the weighted average number of Ordinary Shares used
as the denominator in calculating the earnings per Ordinary Share
are given below:
2017 2016
'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 2016 1,345 1,345
At 31 December 2016 1,345 1,345
At 31 December 2017 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:
2017 2016
% %
------------------ ---- ----
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 but also takes into account savings from restructuring
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. The 2018 forecast
predicts growth of 40%. 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 GBP344k. 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 5% points in the growth rate in 2018 to 35% would
result in an impairment charge being recognised for the current
carrying value of goodwill in relation to Passenger Systems of
GBP541k. If sales forecasts were down 10% across the whole period
and overheads were partially scaled back by 5% then the impairment
charge would be GBP979k.
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 16.7%, 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 loss to net cash (outflow)/inflow
from operating activities
2017 2016
GBP'000 GBP'000
------------------------------------------- -------- --------
Loss for the year (351) (2,303)
Adjustments for:
- Finance income 63 11
- Profit on disposal of fixed assets - 4
- Deferred tax credit (9) (13)
- Depreciation of property, plant and
equipment 63 107
- Amortisation of intangible fixed
assets 334 295
- Share-based payment expense 224 323
- Foreign exchange rate (14) (32)
- (Decrease)/increase in provisions (668) 42
------------------------------------------- -------- --------
Operating cash flows before movement
in working capital (358) (1,566)
Decrease/(Increase) in inventories 155 (428)
(Increase)/decrease in receivables (271) 1,026
(Decrease)/increase in payables (196) 551
------------------------------------------- -------- --------
Cash outflow from operations (670) (417)
Income taxes received/(paid) 4 (7)
Interest paid (63) (11)
------------------------------------------- -------- --------
Net cash outflow from operating activities (729) (435)
------------------------------------------- -------- --------
8. Reorganisation costs
2017 2016
GBP'000 GBP'000
------------------ -------- --------
Passenger Systems 3 124
Fleet Systems - 410
------------------ -------- --------
Central 85 -
88 534
------------------ -------- --------
Prior year reorganisation costs related to restructuring
programmes arising during the year, the disposal of the Group's
leased premises in Croydon, and the December 2016 agreed
restructuring programme.
Current 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 2017 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 company news service from the London Stock Exchange
END
FR JRMFTMBTTBMP
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March 28, 2018 02:00 ET (06:00 GMT)
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