RNS Number:6008I
Trafficmaster PLC
12 March 2003
12th March 2003
Trafficmaster plc
2002 Preliminary Results
Trafficmaster plc, the leading supplier of telematics systems, today announced its results for the
year ended 31st December 2002.
Summary
- Moving into growing in-car navigation market with launch of Smartnav product in June 2002
- Revenues increased to #34.9 million, up from #30.9 million in 2001
- Trackstar revenues more than doubled to #2.55 million (2001: #1.17 million)
- Operating costs before exceptional items cut to #28.9 million (2001: #38.7 million)
- Operating loss before exceptional items reduced to #9.1 million (2001: #19.6 million)
- Cash stood at #5.7 million as at 31 December 2002
- Exceptional Items of #53 million, as announced in January
Sir James McKinnon, Chairman, commented:
"Management has taken firm and decisive action to restructure Trafficmaster and to focus attention on areas of the
market that provide the most growth opportunities. Costs and working capital remain firmly under control and we are
confident that we have now positioned the business to take advantage of the developing in-car navigation market
whilst remaining active in our traditional sector.
We are encouraged by the outlook for Smartnav, which we believe has enormous potential both as an after-market and
original equipment product. In addition, Trackstar continues to grow strongly. We look forward to playing a major
role in those sectors of the Telematics marketplace which compliment our strengths and are exhibiting growth
potential."
For further information please contact:
Trafficmaster
David Martell, Chief Executive Tel: 01234 759 300
Nigel Bond, Finance Director Tel: 01234 759 301
Financial Dynamics
Ben Atwell / Samantha Robbins Tel: 020 7831 3113
Chairman's Statement
Trafficmaster has taken decisive action during the year to counter the difficult trading conditions in its core
markets. The anticipated general rise in demand for traffic information products has failed to materialise and
Trafficmaster has taken steps to reposition the business to take advantage of the existing and developing in-car
navigation market and to consolidate its position in the traffic information business.
Trafficmaster has established a market-leading position in the provision of live traffic information services and
enjoys relationships with numerous motor manufacturers, cellular phone operators and other strategic partners.
Although this market has not developed at the pace that had been widely predicted, we will remain active in this
market and we are well positioned to take advantage of opportunities as they develop.
A strategic priority in 2002 was the opening up of a major new revenue stream through Trafficmaster's entry into the
more established navigation market. Our intelligent navigation system, Smartnav, was launched in June and has been
very well received by the industry, the media and customers. Trackstar, our stolen vehicle recovery product, enjoyed
a record year of revenue growth.
Financial Highlights
Revenues increased to #34.9 million (2001: #30.9 million). Our US business, Teletrac, contributed full year revenues
of #16.8 million, up from #12.3 million in the period from May to December 2001.
Operating costs, before exceptional items, fell to #28.9 million from #38.7 million reflecting the measures
undertaken by management to bring costs more into line with revenues. As anticipated, losses on ordinary activities
for the second half of the financial year were lower than the first half, resulting in a group operating loss before
exceptional items of #9.1 million (2001: #19.6 million). As indicated in January exceptional items of #53 million
were recorded, principally in relation to asset writedowns.
Capital expenditure for 2002 was #4.7 million down from #17.7 million.
Net debt at the year-end was #3.9 million (2001: #4.2 million) comprising bonds held by Teletrac Inc of #9.6 million
(2001: #10.7 million) offset by cash balances of #5.7 million (2001: #6.5 million). Management believes that the cash
balances are sufficient for all current and planned requirements. The bonds held by the US subsidiary Teletrac Inc
are due for repayment in October 2004.
Smartnav
Smartnav, the company's unique intelligent navigation system, was launched in the UK in June 2002. Since launch, we
have received a very positive response from the industry, the media and customers. The product has developed brand
recognition based upon its high functionality and relatively low cost. I am delighted that existing users share our
enthusiasm. This is backed by encouraging sales performance in the retail sector, where our longer standing Trackstar
dealerships have been particularly active.
Smartnav is now available through a variety of outlets in the UK, including aftermarket dealerships, mainstream
automotive dealers and specialist local franchise organisations. We are constantly adding to this distribution base.
Additionally, we are engaged in programmes with a number of OEM customers developing distribution arrangements.
With the successful launch of Smartnav, we intend to consolidate our position in the rapidly growing in-car
navigation market. We believe that Trafficmaster is ideally positioned to exploit the growth in this developing
market for the following reasons:
- Ease of use: Many existing in-car navigation products are difficult to use whilst driving, they rely on a
cumbersome point and click user interface. Smartnav, with its single button connecting the user to a call centre, is
simple and safe to use.
- Unique traffic data: Smartnav incorporates high quality live traffic information into the route planning
calculation, providing an intelligent navigation system capable of forewarning the driver of delays on his or her
chosen routes.
- Marketing and distribution channels: Trafficmaster has established relationships with OEMs and has considerable
experience of marketing vehicle tracking and traffic information products direct to consumers and through retail
channels.
Traffic Information
We provide numerous OEMs with live traffic information and have maintained an active presence in the consumer
marketplace. We added MG Rover to our list of motor manufacturer clients in the period and Trafficmaster continues to
supply BMW, Citroen, Fiat, and Alfa Romeo with live traffic information products.
We also have established relationships with many of the major telecoms partners including Orange, O2 and Virgin and
continue to develop our relationship with the RAC, with whom we work closely in the collection and collation of
incident based road and traffic information.
The traffic information business in continental Europe has not developed as previously expected and Trafficmaster has
decided to suspend all further investment whilst considering its future plans in those marketplaces.
Trackstar Limited
Trackstar, which is a leading provider of advanced GPS/GSM stolen vehicle tracking systems, has continued to grow
rapidly with revenues increasing by over 200% to a total of #2.55 million.
Trackstar II was launched successfully during 2002 and is being fitted as standard by Renault and Subaru on certain
models. There is increasing interest from other automotive manufacturers for this sophisticated product.
We expect Trackstar to continue to grow during 2003. Unit sales to all sectors of the market are forecast to grow
strongly along with the recurring revenue stream from steadily increasing subscription base. We expect this trend to
continue as insurance companies increasingly recognise the benefits of the product in protecting top-end models.
Teletrac
Teletrac, our US fleet services business, has made progress despite the poor performance of the US economy. As noted
in the interims, our product offering and sales efficiency have improved the performance of the business in the
financial year.
Revenues for the full year were #16.8 million. (2001: #12.3 million May-Dec) Tight control over costs resulted in
operating expenses falling by 10.4% in the second half of the year to #4.8 million. This management action has
resulted in Teletrac approaching a breakeven level of pre-tax profit on a month by month basis. Whilst this is a
strong improvement in trading performance, we believe that due to market conditions in the USA, Teletrac performance
will not improve significantly in the medium term.
Asset Writedown
As announced in January, Trafficmaster has undertaken a review of the carrying value of certain assets held on its
balance sheet. Accordingly, the net asset value of the company at 31 December 2002 was reduced by #53 million.
Many of our assets were acquired and developed to take advantage of a traffic information market that has not
developed as expected. We have looked at our asset portfolio with a view to assessing its value in line with our
revised view of the market and now have an asset base that accords with our future earnings potential. The main
elements of the asset writedown are summarised below.
Since acquiring Teletrac in May 2001, we have developed this company to a stage where it is approaching profitability
on a consistent month by month basis. However in light of the medium term potential of this business, we consider it
prudent to write off goodwill of #13.2 million. A further #2.8 million was provided against network and development
costs.
Germany has proved to be an extremely difficult region in which to earn revenue from telematics products. Owing to
this slower than anticipated development of the marketplace, we consider it prudent to writedown the assets of the
German network by #16 million.
Even the UK traffic information marketplace has not grown as rapidly as many expected. To reflect this, we have
provided a total of #12.7 million against the cost of the network. This provision was primarily made against the cost
of the additional sensors placed on the trunk road system in the past three years.
As a result of these actions, the Board believes that the carrying value of the remaining assets in the Trafficmaster
group balance sheet is now in line with expected future earnings potential. The cost of the writedowns is
substantial, however the result is a slimmed down group, focussed on our core strengths.
Prospects
Management has taken firm and decisive action to restructure Trafficmaster and to focus attention on areas of the
market that provide the most growth opportunities. Costs and working capital remain firmly under control and we are
confident that we have now positioned the business to take advantage of the developing in-car navigation market,
whilst remaining active in our traditional sector.
We are encouraged by the outlook for Smartnav, which we believe has enormous potential both as an after-market and
original equipment product. In addition, Trackstar continues to grow strongly. We look forward to playing a major
role in those sectors of the Telematics marketplace which compliment our strengths and are exhibiting growth
potential.
Preliminary Results for the year ended 31 December 2002
Unaudited Consolidated Profit and Loss Account
Year to Year to Year to Year to
31 December 31 December 31 December 31 December
2002 2002 2002 2001
Before Exceptional Total
exceptional items
items
#'000 #'000 #'000 #'000
Turnover: group and share of joint ventures 35,624 - 35,624 31,362
Less: share of joint ventures (694) - (694) (448)
Group turnover 34,930 - 34,930 30,914
Cost of sales (15,128) (7,750) (22,878) (11,791)
Gross profit 19,802 (7,750) 12,052 19,123
Selling and distribution costs (4,679) - (4,679) (9,216)
Administrative expenses (24,230) (42,984) (67,214) (29,551)
Group operating loss (9,107) (50,734) (59,841) (19,644)
Share of operating loss in joint ventures (401) (2,276) (2,677) (855)
Share of operating loss in associate (26) - (26) (73)
Amortisation of goodwill arising on associate (180) - (180) (180)
Total operating loss: group and share of (9,714) (53,010) (62,724) (20,752)
joint ventures and associates
Profit on sale of business - 559 559 -
Loss on disposal of fixed assets - (526) (526) -
Loss on ordinary activities before interest (9,714) (52,977) (62,691) (20,752)
Net interest (payable)/receivable and similar income (612) 362
Loss on ordinary activities before taxation (63,303) (20,390)
Taxation on loss on ordinary activities 31 482
Loss on ordinary activities after taxation (63,272) (19,908)
Equity minority interest 3,979 535
Loss attributable to the shareholders (59,293) (19,373)
of Trafficmaster Plc
Loss per ordinary share - basic (47.10)p (15.39)p
- diluted (47.10)p (15.39)p
All activities derive from continuing operations
Consolidated statement of total recognised gains and losses
Year to Year to
31 December 31 December
2002 2001
#000 #000
Loss for the period attributable to the shareholders of Trafficmaster Plc (59,293) (19,373)
Net exchange differences on foreign investments 896 (343)
Total recognised gains and losses relating to the period (58,397) (19,716)
Unaudited Consolidated Balance Sheet
as at 31 December 2002
As at As at
31 December 31 December
2002 2001
#'000 #'000
Fixed assets
Intangible fixed assets 1,889 19,415
Tangible fixed assets 14,902 51,023
Investments in joint ventures
Share of gross assets 290 1,556
Share of gross liabilities (724) (1,421)
(434) 135
Loan to joint ventures 550 1,340
116 1,475
Interest in associated undertakings 1,134 1,314
Investments 1,250 2,789
18,041 73,227
Current assets
Stocks 6,310 11,983
Debtors 4,695 9,316
Investments 420 -
Cash at bank and short-term deposits 5,729 6,537
17,154 27,836
Creditors: Amounts falling due within
one year (6,990) (9,513)
Net current assets 10,164 18,323
Total assets less current liabilities 28,205 91,550
Creditors: Amounts falling due after more
than one year (9,350) (10,550)
Deferred Income (1,569) (1,176)
Provisions for liabilities and charges
Investments in joint ventures
Share of gross assets - 261
Share of gross liabilities (208) (734)
(208) (473)
Net assets 17,078 79,351
Capital and reserves
Called up share capital 6,294 6,294
Share premium account 90,759 90,759
Profit and loss account (79,630) (21,233)
Equity shareholders' funds 17,423 75,820
Equity minority interest (345) 3,531
17,078 79,351
Unaudited Consolidated Cash Flow Statement
Year to Year to
31 December 31 December
2002 2001
#'000 #'000
Net cash inflow/(outflow) from operating activities 6,013 (10,184)
Returns on investments and servicing of finance (809) 571
Taxation (10) -
Capital expenditure and financial investments (4,438) (17,307)
Acquisitions and disposals (1,500) (9,068)
Cash outflow before management of liquid resources and financing (744) (35,988)
Management of liquid resources 2,483 38,539
Financing (225) (1,945)
Increase in cash in the period 1,514 606
Reconciliation of net cash flow to movement in net debt
Increase in cash in the period 1,514 606
Cash outflow from repayment of debt 225 1,945
Decrease in short-term deposits (2,483) (38,539)
Change in net funds arising from cash flows (744) (35,988)
Exchange differences 1,071 (142)
Net debt acquired through purchase of subsidiary - (12,839)
Change in net funds/(debt) 327 (48,969)
Opening net (debt)/funds (4,239) 44,730
Closing net debt (3,912) (4,239)
Notes
1. Basis of preparation
The financial information set our in this preliminary announcement does not constitute that Group's statutory
accounts for the years ended 31 December 2001 and 2002. The financial information for 2001 is derived from the
statutory accounts for 2001 which have been delivered to the Registrar of Companies.
The auditors have reported on the 2001 accounts: their report was unqualified and did not contain a statement under
section 273(2) or (3) of the Companies Act 1985.
The statutory accounts for 2002 will be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Group's
annual general meeting. This will be held on 10 June 2003 at Cranfield starting at 12.00 noon.
2. Exceptional items
UK Germany USA Other businesses Total Total
and joint ventures
2002 2002 2002 2002 2002 2001
#'000 #'000 #'000 #'000 #'000 #'000
Exceptional operating items:
Tangible fixed assets 12,699 9,596 2,176 507 24,978 -
Intangible fixed assets 3,594 - 14,411 - 18,005 -
Investments 96 - 720 2,070 2,886 -
Stock 1,600 6,081 - 69 7,750 -
Debtors - 244 148 459 851 -
Creditors: Amounts falling due within one - 61 99 (1,698) (1,538) -
year
Profit and loss account - - 54 24 78 -
17,989 15,982 17,608 1,431 53,010 -
Profit on sale of business (559) -
Loss on disposal of fixed assets 526 -
3. Reconciliation of operating loss to net inflow/(outflow from operating activities
Year to Year to
31 December 31 December
2002 2001
#'000 #'000
Group operating loss for the period (59,841) (19,644)
Depreciation and amortisation 8,655 8,108
Impairment charges 42,985 1,787
Provision against current asset investment 130 -
Decrease/(increase) in stock 11,427 (498)
Decrease/(increase) in debtors 3,321 (538)
(Decrease)/increase in creditors (664) 601
Net cash inflow/(outflow) from operating activities 6,013 (10,184)
4. Loss per share
The calculation of earnings per ordinary share is based on the loss for the year of #59,293,000 (2001: Loss
#19,373,000) and on the weighted average number of ordinary shares in issue during the year of 125,882,737 (2001:
125,882,737).
Share options in existence at both year ends had no dilutive effect on loss per share because the share options'
exercise prices are greater than the current market price.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JBMRTMMJBBFJ
