YEAR END REPORT FOR TAGMASTER AB(publ.)PERIOD 2012-01-01–2012-12-31
Full focus on customers and on developing the business!
- The good order intake continues
- Jonas Svensson new CEO from October 1
- Divesting of loss making TagMaster SB in Malaysia
- Intensive work for new customer, Alstom in France, started by TagMaster
- Net sales quarter four: 10,0 MSEK (9,4), a 7 % growth
- Operating income quarter four (EBITDA): -1,0 MSEK (-2,9) excluding TagMaster SB effects
- Result quarter four after debt depreciation related to TagMaster SB: -2,5 MSEK (-5,5)
- Increased sales and sales focus
- Refocusing on core business
- New board and chairman
- Relocation to more cost efficient premises
- Successful participation in InnoTrans exhibition in Berlin
- Major cost reductions achieved
- Net sales full year: 39,6 MSEK (34,2), a 16% growth
- Operating income full year (EBITDA): +0,2 MSEK (-9,5)
- Operating cash flow full year: -0,4 MSEK (-4,7)
- Accumulated result after goodwill impairment charge and debt depreciation related to TagMaster SB: -5.5 MSEK (-13,3)
- No dividend is proposed
|Sales and income|
|TSEK||Fourth quarter||Full year|
|Sales||10 043||9 406||7%||39 616||34 190||16%|
|Operating income (EBITDA)||-983||-2 936||-67%||154||-9 524||-102%|
|Operating margin (EBITDA)||-9,8%||-31,2%||0,4%||-27,9%|
|Income before tax||-2 514||-5 460||-54%||-5 466||-13 265||-59%|
|Operating cash flow||-379||-4 677||-90%|
|Earnings per share||-0,02||-0,06||-59%||-0,05||-0,16||-68%|
The fourth quarter has been dominated by two major tasks apart from continued focus on sales. The first is the divesting of the loss making company TagMaster SB in Malaysia, which was successfully completed by November 30, 2012. The second is discussions about a new major project within our Transportation segment including a substantial NRE (Non Recurrent Engineering) part with a new customer for TagMaster, the well-known French train manufacturer Alstom, which has just recently presented in a separate press release.
Invoicing and result
Sales in the fourth quarter have remained stable and a temporary lower sale in the fourth quarter within Transportation has been compensated by a higher sale in Access/Parking. The fourth quarter sales increased by nearly 7% and totaled 10,0 MSEK (9,4). The net income amounted to -2,5 MSEK
(-5,5) corresponding to SEK (-0,02) per share. These figures include costs incurred by TagMaster SB on TagMaster AB of about 1,2 MSEK. Since the sales ended up substantially above what was budgeted for the fourth quarter the gross profit has increased and the bonus agreements signed with employees in the beginning of the year have accelerated and costs incurred from this is more than 0,6 MSEK in addition to what has been reserved for. In addition to this there is some write off of the inventory for slow moving items of around 0,2 MSEK.
The costs during the quarter were 6,2 MSEK (6,6).
Full year 2012
The year 2012 has been a very turbulent year for TagMaster. The first half year was very much characterized by a new and temporary management and with multiple consultants trying to find cost savings. This lead unfortunately to less focus on the business and it was of course very tough for the employees. At the end of the first half year the economical situation was very challenging.
A new board was elected at the Annual General Meeting in June. This has led to a changed focus. During the first period the main focus was on cash flow generation and on how to survive. At the same time, measures were taken to secure full focus on the business and therefore refocus on our customers. We needed to set our strategy for going forward and we also needed to start the process to find a qualified sales and market oriented CEO for TagMaster. And we had a loss making business in Malaysia (TagMaster SB), with very low sales, to take care of. This led to the conclusion that we had to divest the Malaysian company. This was finally agreed in November when we sold the company to a Malaysian buyer already dealing in RFID business in Malaysia. This resulted in a goodwill impairment charge and debt depreciation related to TagMaster SB. The debt was loans from parent company, loans given to cover losses since the company was acquired in May 2011.
The refocus on our core business and on our customers has led to that we have managed to grow visibly in sales over 2011 with 16% and that we have a small positive EBITDA for the year compared to losses of almost 10 MSEK for 2011, net income amounted to -5,5 MSEK (-13,3) in losses due to the Malaysian goodwill impairment charge and debt write offs.
Both main business areas in the agreed strategy for going forward have shown growth and the interest for the TagMaster products has remained and even increased in both areas. We see a lot of activity in both Access/Parking and in transportation as we go forward.
TagMaster is going into 2013 with a more cost efficient organization and with focus set on our business. Cash flow will be prioritized throughout the year. Our expectations for 2013 are both further increase in sales and a positive bottom line.
Invoicing and result
For the full year the net sales is totally 39,6 MSEK (34,2). The operating income (EBITDA) for the full year is +0,2 MSEK (-9,5). The costs for the full year were 22,6 MSEK (26,6).
Cost savings which have gradually come into effect during the year and will have full effect 2013:
Personnel costs (fewer employees) -2,2 MSEK
Other costs -0,4 MSEK
Rent of premises -0,7 MSEK
TOTAL -3,3 MSEK
Non-recurring costs during the year
There are a number of costs which are non-recurring during 2012 amounting to around 7 MSEK. This includes impairment charges of investment in TagMaster SB including loans and losses, consultant’s costs during the first half year, additional bonus costs and relocation costs. Around 3,5 MSEK of these costs have also influenced cash-flow negatively.
Per December 31, 2012 TagMaster had liquid assets of 3,8 MSEK (4,7). The revolving credit amounts to 4,0 MSEK (4,0) and locked funds is 0,5 MSEK (0,5).
TagMaster’s cash position has improved during the second half of the year from a very tough and strained position at the end of quarter two. The main reasons for the improvement are growing sales and lower costs.
Liquidity planning for the company is based on regular follow-up of costs and sales and also a detailed analysis of the cash flow for the next future. Liquidity and cash flow have priority in the daily work and the dialogue with creditors, suppliers and customers is continuous. The board therefore, based on the reduced cost structure in the company and the positive sales development, makes the judgment that the company has sufficient liquidity for the coming 12 months.
Accounts receivable were 4,4 MSEK (3,9) and accounts payable were 3,6 MSEK (5,5). The inventories were 5,8 MSEK (8,3).
Access and Parking (AVI): The efforts to search for, identify and engage distributors in the most important markets have ended up in the first agreements in some key markets during the fourth quarter. TagMaster should thereby be able to reach more integrators and become part of more projects with less own effort. Access and Parking sales are 64 % of total sales 2012.
Transportation: There are many requests in the business area and TagMaster has to make sure to make the right priorities to spend resources on what could end up as real projects in a reasonable time and thereby even decline some requests. One big project that has come to fruition is the project with Alstom in France, which has been mentioned above. Transportation sales 2012 are 36 % of total sales 2012.
Technology and products: The new UHF products have seen an increasing sales volume and is now accounting for more than 10% of sales, and the established 2,4 GHz products have also grown during the year.
Organization and personnel
TagMaster AB has during the year had in average 12 (16) employees.
TagMaster AB has two daughter companies, TagMaster Finance and TagMaster China Holding, which are both non active companies.
There are two associated companies through long term cooperation agreements, TagMaster China and TagMaster North America Inc. They have the sales responsibility in China and the US respectively. TagMaster AB has presently no ownership in these companies.
The future outlook is unchanged and the company has very good growth opportunities within Access/Parking as well as in Transportation. TagMaster’s market share is still small in a big and growing, in some parts even fast growing market, which means that future growth is mostly dependent on the company’s own ability. As of the beginning of February the sales force has been strengthened by one experienced sales person within the Access/Parking business.
About 2012 reporting
TagMaster AB with daughter company TagMaster SB has been a Group and accounting has been made and shown accordingly. From the fourth quarter and for the full year the accounting is for TagMaster AB only since TagMaster SB has been divested by November 30, 2012.
Coming reports 2013-14
May 3, 2013, quarterly report January – March 2013
August 8, 2013, quarterly report April – June 2013
October 24, 2013, quarterly report July – September 2013
February 13, 2014, quarterly report October – December and year-end report 2013
Annual General meeting 2014 is proposed to take place April 24, 2014
Annual General Meeting (AGM)
April 18, 2013
Invitation to the meeting will be published no less than 4 weeks before the AGM at the company home page and in “Post & Inrikes Tidningar”.
The annual report 2012 will be available no later than March 15, 2013 on the company home page www.tagmaster.com
According to the company rules the nominating committee is composed of the three biggest shareholders, the chairman and one representative for the smaller shareholders. The nominating committee for the AGM 2013 includes Jan Westlund, Tomas Brunberg, Didrik Hamilton, Mikael Aronowitsch (representing the smaller shareholders) and Rolf Norberg, Jan Westlund is the committee chairman and also representing Gert Sviberg.
Control balance sheet established
Due to the development of the business in Malaysia and the following sale of the Malaysian company in November 2012 TagMaster has suffered a major loss in capital through goodwill impairment charges and debt depreciation related to TagMaster SB. The total capital has come very close to 50% of the share capital and according to the Swedish Companies Act, the board of directors should, as soon as the shareholders’ equity capital is less than half of the registered share capital, make a balance sheet for liquidation purposes. The board of directors has done this and it shows that there is still some margin to 50% of the share capital, but that the margin is thin. To address this issue the board of directors will propose the AGM to decide on a reduction of the share capital by setting down the nominal value of the TagMaster share from 0,10 SEK to 0,05 SEK.
Jonas Svensson, CEO, +46 8-6321950, Jonas.Svensson@TagMaster.se