QUARTERLY REPORT FOR TAGMASTER AB (publ.) 556487- 4534 PERIOD 2012-07-01 – 2012-09-30
Continued focus on our customers!
- Net sales quarter two: 10.1 MSEK (7.0)
- Result quarter three: +0.2 MSEK (-3.1)
- Result quarter three after goodwill depreciation for TagMaster SB: -3.2 MSEK
- Accumulated result: +0.7 MSEK (-7.0)
- Accumulated result after goodwill depreciation for TagMaster SB: -3.3 MSEK
- Good order intake continues in spite of summer holidays
- Jonas Svensson new CEO in place
- Big interest for TagMaster at InnoTrans in Berlin
- Quality work continues
- New organization and new direction strengthens customer focus
- Depreciation of goodwill for TagMaster SB and decision to review the future of the company during the fourth quarter
New marketing and sales oriented CEO with growth experience in place since October 1
Jonas Svensson started to get acquainted with the company already during September and started officially on October 1. Jonas has previous experience from both bigger and smaller companies internationally and he has himself built a company from 0 to 200 MSEK including a stock market introduction. Jonas thereby has experience from big as well as small organizations and of how you go from the small to the big. These experiences will become useful for the continued development of TagMaster.
The employment of Jonas is the result of a very wide search process where we had more than 200 interested candidates, man of them with very qualified background and experience. Jonas finally became the board’s choice of person best fitted to take care of and develop TagMaster.
Invoicing and result
Order intake as well as invoicing has reached an acceptable level in spite of the summer holidays. In spite of costs for relocation and CEO recruitment costs the result is now positive for the quarter. The second quarter ended up with a net invoicing of 10.1 MSEK (7.0), of which 9.5 MSEK from the mother company. The result turned out to be +0.2 MSEK (-3.1), of which +0.5 MSEK from the mother company corresponding to +0.01 SEK (-0.04) per share (totally 107,731,708 and 101,003,884 average number of shares respectively).
For the three first quarters the net invoicing is totally 31.5 MSEK (24.9), of which 29.6 MSEK from the mother company. The operating result for the three first quarters 0.7 MSEK (-7.0), of which +1.1 MSEK from the mother company.
The costs during the quarter were 5.7 MSEK (7.0).
Liquidity
Per September 30, 2012 the Group had 2.0 MSEK (1.5). The revolving credit is 4.0 MSEK (4.0) and locked funds is 0.5 MSEK (0.5). The company has during the first nine months had an operational cash flow of -4.4 MSEK (-8.2). The negative cash flow is explained by higher cost for the first six months and a gradual payback of supplier credits during the third quarter.
The Group’s cash position has improved slightly during the period from a very tough position at the end of quarter two. The main reasons for the improvement are an acceptable invoicing and lower costs. The relocation to more cost efficient premises Mid-September has not yet influenced the costs, which, however, the relocation costs have. Thanks to understanding and cooperative suppliers we have managed the tough cash situation during the summer.
Liquidity planning for the company is based on regular follow-up of costs and income 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 today, and based on the reduced cost structure in the company and the positive sales development we see now, makes the judgment that the company has sufficient liquidity for the coming 12 months.
Accounts receivable were 7.7 MSEK (6.0) and supplier debts were 4.7 MSEK (3.1). The goods for sale were 6.6 MSEK (8.0).
Sales
Our customers have shown continued confidence during the period and orders have been received in all business areas. We have also been able to deliver parts of bigger orders from the second quarter within Transportation. Our own increased customer and sales focus has also contributed to increased market activity in spite of the summer period being a bit slow or even stopping in some areas. The orders in hand are therefore only marginally less than at the end of quarter two.
New organization in place
After our strategy work during July and August, a new organization has been established and the work has started in the different areas and in the agreed direction.
Access and Parking (AVI): The efforts to search for, identify and engage distributors in the most important markets have started and is expected to result in establishment in key markets during the autumn. In this way TagMaster should be able to reach more integrators and become part of more projects with less own effort after an introductory establishment phase.
Transportation: The big event during the quarter was the exhibition, InnoTrans, which is held in Berlin every second year. TagMaster participated as part of the SWERIG stand and attracted much interest. All the big actors and many of the smaller participate in this enormous exhibition. The customers we already know as well as many new potential customers found us there. It is very obvious that the companies already working with TagMaster appreciate the quality, functionality and competence the company offers. There are many projects around the globe, both in mass transit (local trains) and in long distance (national) rail to track the rolling stock and its valuable load and to enable more efficient use of the infrastructure with shorter distance between trains on the tracks. Both areas where TagMaster solutions, both within UHF and within 2,45 MHz fit well.
Logistics: A first order has been received during the quarter to TagMaster SB in Malaysia for University of Sabah in Borneo.
Quality certification (ISO 9001)
A gap analysis has been done with the help of external expertise. The result will be used in the plan that is now under establishment to reach the target of being certified by June 30, 2013. A certain amount of external support will be required. It is, however, of great importance that the major part of the work with clarifying processes and document and define our working methods comes from inside, which means most of the organization will be involved in the work.
TagMaster SB
Since TagMaster AB acquired Free2Move Asia and thereby established TagMaster SB with its business in Malaysia, the growth expectations have changed substantially, partly due to not realized sales volumes (much lower volume and negative result) and partly due to delays regarding commercialization of new products and projects. These changed market conditions have made it necessary to reevaluate the goodwill from the acquisition of Free2Move Asia, and ended up in write down of the goodwill with 3 MSEK. The remaining value of immaterial assets from the acquisition of Free2Move Asia is thereby 0 MSEK. Reconsideration of the future of TagMaster SB has been started and should be finalized during Q4, 2012.
Looking forward
The company has with its new direction and focus very good growth opportunities within Access/Parking as well as in Transportation. Logistics will continue to be an area to create and take care of new opportunities with TagMaster’s established products and solutions. 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 and which resources the company can create and provide.
Coming reports
February 14, 2013, Year-end report 2012
Annual General Meeting
April 18, 2013
Contact persons
Jonas Svensson, CEO, +46 8-6321950, Jonas.Svensson@TagMaster.se
Sven Wramner, Economy, +46 8-6321950, Sven.Wramner@TagMaster.se