Interim report January to June 2016
Continued development, restructuring and cost reductions in CitySync and cost reductions in TagMaster charging the quarter
- Net sales increased during the first quarter by 10,4% to 20,6 MSEK (18,7)
- Result before depreciation (EBITDA) was -4,9 MSEK (2,5), corresponding to a margin of -23,8% (13,3)
- Net result after tax was -5,2 MSEK (1,9)
- Result per share was -0,03 (0,02)
- CitySync Ltd introduces a restructuring program including among other personnel reductions and reorganization charging the quarter with 3 MSEK in costs
- Cash flow from the business for the period was -2,0 MSEK (3,8)
- The Balogh acquisition is proceeding and is expected to be finalized in Q3
First half year
- Net sales increased during the period by 19,3% to 45,2 Mkr (37,9)
- Result before depreciation (EBITDA) was -2,9 Mkr (5,1), corresponding to a margin of -6,4% (13,5)
- Net result after tax was -4,3 Mkr (3,9)
- Result per share was -0,03 (0,03)
- Cash flow from the business for the period was -2,2 Mkr (7,2)
Comments by the CEO
Our sales during the second quarter has been weak in the CitySync part and there has been much focus on product development, both general d´for the company and for specific customers.
As we have described earlier CitySync is going through a thorough change where the strategy has been totally changed and as a result of the strategy change we expect a lower sales this year before it goes into a new growth period. We have consciously left a number of bigger non profitable projects and instead focused on building a scalable business model supported by several product launches during 2016. We have also chosen to focus our market resources on fewer markets common to TagMaster’s markets.
CitySync’s sales during the quarter has been very weak due to both external and internal circumstances. Internally we have been delayed in product development, slow with sales synergies and locked into old project commitments, which have taken a lot of time and split up our focus.
We will therefore restructure the business and we reserve a cost of 3 MSEK for this and where also write down of project costs is included. We will reorganize the business to become more of a product department instead of an independent company and this will lead to personnel reductions and changes in product management, development, sales and administration. Several of these functions will be centralized toTagMaster and the cost reductions are estimated to 3,5 MSEK on a yearly basis.
We launched during Q1 the CitySync 50, an ANPR camera with all functionality integrated in the camera and which could work standalone making it well suited for free-flow parking and for bus lane enforcement. CitySync 50 is now after some delay expected to start delivery in August. In parallel with hardware launches we improve our software and we offer a brand new web based user interface with the purpose to simplify and shorten installation time. We intend to launch this in the beginning of Q4
Our rail business has been recognized by intensive NRE (non recurring engineering) work for the big rail project announced at the end of last year. We work on a new rail reader where prototypes have been finalized during the quarter, which is in record time for a project of this complexity. We also work on a new rail tag with 20 year lifetime to be used in the same project, but also in future projects. We have, however, had a lower speed of serial deliveries which influences our sales negatively by 2 MSEK. We still judge that further mid-size projects will come during 2016 and with serial deliveries in the years to come.
Our Traffic business has continued to develop well in several of our markets with increasing margins. The US market has continued to develop well while the markets in the ME region and in the Nordics have been disappointing. We have during the quarter increased our market activities significantly among others through participation in several fairs.
We estimate that our newly launched UHF products will have a positive impact on sales and margin during the years to come. We also continue the work to develop more products in our UHF family and we will launch more new products towards the end of 2016. Our quarterly result of -5,2 MSEK (1,9) is a disappointment and in addition to the already mentioned restructuring in CitySync, also TagMaster will make personnel reductions and cost savings. With these measures we expect to be back on the former result levels during the second half of the year.
Coming reports 2016-2017
Interim report 3 July-September October 27, 2016
Yearend report January 26, 2017
This as well as previous financial reports could be found at the company homepage www.tagmaster.com
For further information, please contact
Jonas Svensson, CEO, +46 8-6321950, email@example.com
TagMaster is an application driven technology company that designs and markets advanced identification systems and solutions based on radio & vision technology (RFID & ANPR) for demanding environments. Business areas include Traffic Solutions and Rail Solutions providing innovative mobility solutions, sold under the brands TagMaster & CitySync, in order to increase efficiency, security, convenience and to decrease environmental impact within Smart Cities. TagMaster has dedicated agencies in the US and in China and exports mainly to Europe, Middle East, Asia and North America via a global network of partners, systems integrators and distributors. TagMaster was founded in 1994 and has its headquarters in Stockholm. TagMaster is a public company and its shares are traded on First North stock exchange in Stockholm, Sweden. TagMasters certified advisor is Remium AB. For more information about TagMaster, please visit www.tagmaster.com