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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Telit Communications Plc | LSE:TCM | London | Ordinary Share | GB00B06GM726 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 229.00 | 229.00 | 229.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTCM
RNS Number : 3827W
Telit Communications PLC
18 August 2020
18 August 2020
Telit Communications PLC
Interim results - continued improvement in profitability
Telit Communications PLC ("Telit", "the Group", AIM: TCM), a global enabler of the Internet of Things (IoT), has published its results for the six months ended 30 June 2020.
Financial highlights(1)
-- Group revenues were $166.9 million, down by 7.4% reflecting the impact of COVID-19 (H1 2019: $180.3 million excluding revenue from the automotive division sold in February 2019)
-- IoT Cloud & Connectivity revenues were $21.0 million, up by 12.3% (H1 2019: $18.7 million) in line with strategic refocus on industrial IoT services
-- Adjusted EBITDA(2) , increased by 12.5% to $18.0 million (H1 2019: $16.0 million)
-- Gross Margin increased to 35.2% (H1 2019: 32.0%) as a result of supply chain optimisation and increasing share of service revenues
-- Profit in cash (3) increased to $5.9 million (H1 2019: $2.6 million), supported by improved Adjusted EBITDA and management's disciplined approach to capital expenditure
-- Adjusted profit before tax improved to $12.1 million, (H1 2019: $4.0 million); as reported Profit before tax: $9.7 million (H1 2019: $58.1 million including exceptional profit from sale of automotive business)
-- Net cash position improved to $56.2 million at 30 June 2020 (31 December 2019: net cash $48.2 million), including improved collection of receivables from Titan
Operational highlights
-- Continued supply chain improvements with new production facility in Vietnam now fully operational and expected to contribute to further gross margin improvement
-- Sustained investment and innovation across product and services with focus on key sector opportunities related to integration, scalability, security and management
-- Commercial launch of OneEdge , Telit's flagship integrated hardware and services IoT solution with roll out to customers underway
-- Positive product certification progress in H1 2020 further expanding availability on an international level, including first 5G product addressing demand for high bandwidth products; global certification for NB-IoT and LTE-M modules from major US networks
-- Advanced IoT connectivity solution to be launched in H2 2020 following receipt of Mobile Virtual Network
Hot Features
Premium
Operator (" MVNO") licence and core network in 2019
[1] For reconciliation from IFRS financial results to adjusted financial results, see Note 3.
[2] Adjusted EBITDA is defined as Adjusted EBIT plus depreciation and other amortisation; Adjusted EBIT is defined as Earnings Before Interest, Tax, share based payment expenses, amortisation of acquired intangibles, impairment of intangible assets, exceptional expenses related to restructuring and other exceptional items
[3] Profit in cash defined as Adjusted EBITDA less development costs capitalised, less capital expenditures, less lease expenses in cash
Paolo Dal Pino, Chief Executive Officer, said:
"Over the past two years Telit has undergone a major transformation and, as demonstrated by our strong performance in H1 2020, is now a business built on strong operational, financial and governance foundations.
As a result of this transformation, Telit is now fully focused on industrial IoT products and services and is deploying an effective strategy using our OneEdge platform that offers both hardware and services solutions.
The COVID-19 pandemic is accelerating the adoption of IoT solutions as a "mission critical" service, mainly due to the increased need to manage assets remotely, which will create medium and long-term benefits for Telit. We are working for the future and 5G will be a game changer in the connected devices industry. Thanks to our position in 4G and fast connectivity devices we are the natural partner for customers investing in 5G-enabled devices.
The evolution of the business has also enabled Telit to respond effectively to COVID-19 by executing a targeted programme of efficiencies to protect both our supply chain and our strategic and financial targets.
We remain confident both that we will be able to deliver full-year profitability in line with the Board's expectations and that the business is well positioned to create further value for shareholders as markets recover."
For further information:
Telit Communications PLC Tel: +44 203 289
Paolo Dal Pino, Chief Executive Officer 3831
Yariv Dafna, Finance Director & President
Tel: +44 20 7220
finnCap (Nomad and broker) 0500
Henrik Persson/Giles Rolls/Charlie Beeson
(corporate finance)
Tim Redfern/Richard Chambers (ECM)
FinElk Tel: +44 20 7631
8618
Robin Haddrill/ Cornelia Schnepf Email: telit@finelk.eu
Operational Overview
During the first half of 2020, Telit made continued good progress in executing its strategy as a key player in the industrial IoT market with a focus on both operational and customer focused improvements.
The Group's new contract manufacturer in Vietnam is now fully operational with a plan to increase volumes until year end that will reduce supply chain risks and ensure our products are competitively priced.
Telit's IoT connectivity business continued to grow with improved profitability, highlighting both the growing demand for dedicated IoT connectivity services, and the scalability of the business. Following the receipt of the MVNO licence, the Group is in the final stages of developing a more flexible and cost-effective solution by investing in core-network based services and in IoT modules with the iSIM offer. As a result, Telit plans to roll out its advanced connectivity solutions in the second half of 2020, which will enable the Group to offer a solution for global, large scale projects.
OneEdge, Telit's integrated hardware and services IoT solution, has now launched commercially and will continue to ramp up, first in EMEA and later on in North America. With several projects on this platform, the Group expects this solution to contribute to the synergy between the IoT Product business and the Cloud & Connectivity business, with improved attachment rates between the businesses.
Telit received global certification for its first 5G data card, which addresses the demand for high bandwidth products including applications like gateways and routers. This certification provides additional verification that devices will perform on major network operators worldwide. The data card incorporates support for all scenarios prescribed by the 3GPP for short, mid and long-term deployments of 5G.
Financial Overview
In the first half of the year, Group revenues for the period were $166.9 million (H1 2019: $180.3 million, excluding revenues from the divested automotive business). Customer demand softened as the reporting period progressed after early indications that the Group's sales and supply chain would be relatively unaffected. Whilst revenues are below those of the previous year, they have remained resilient.
The composition of revenues and associated profit margins have also been encouraging. Demonstrating the positive impact of the Group's strategic refocusing efforts, IoT Connectivity and Platform revenues grew by 12.3% to $21.0 million (H1 2019: $18.7 million) and the gross margin in the first half improved slightly to 35.2%.
Adjusted EBITDA increased by 12.5% to $18.0 million (H1 2019: $16.0 million). Adjusted EBITDA improved due to the enhanced gross profitability and thanks to the impact of the cost rationalisations implemented in recent years.
Improved cash generation is a priority for Telit, with a focus on a disciplined approach to operating expenses and improvements in gross margin. At the beginning of the COVID-19 outbreak, the Group took swift action to protect against a slowdown in customer demand and the introduction of lockdown measures across the world.
As a result, together with the wider strategic measures taken by the Group over the longer term, profit in cash improved in the first half of the year to $5.9 million (H1 2019: $2.6 million) supported by the improved EBITDA and disciplined approach to capital expenditures. This leaves the Group with net cash of $56.2 million at 30 June 2020 (31 December 2019: net cash $48.2 million).
During the period, the Group launched a cost reduction plan that included, a temporary salary reduction, primarily for the Group's management, and a reduction in all areas of discretionary expenditure, including marketing and travel costs. These savings will not affect our strategic, development and operational plans, which remain on track.
The Group continues to monitor the COVID-19 situation closely and is taking all necessary actions to minimise any impact on the Company's workforce, operational and financial performance for the full year.
R&D and Investment
Investment and innovation across the Group's range of products and services integration remains a priority for Telit. One area of investment is the OneEdge software suite which enables solutions for a new generation of Telit cellular LPWA IoT modules. With integrated, secure, easy-to-use tools, OneEdge simplifies design, deployment and management of IoT products and solutions, across a variety of verticals such as Smart Asset Tracking, Smart Metering and Security which enable a leap ahead into the new 5G super-connected world. Combined with Telit's iSIM solution, simWISE, these technologies solve long-standing challenges related to integration, scalability, security and management.
In recent years, the Group has also invested in the development of best in class, award winning high bandwidth products such as LM960, and the new 5G FN980 data card. The Group will continue to invest in the integration of its products and services into a cohesive solution which is ready to connect and send data, in order to simplify all aspects of IoT implementation for customers in order to save them time and money, reducing risks and speeding up time to market.
Outlook
Telit is now focused solely on the growing and dynamic market for industrial IoT products and services. Whilst there are short-term uncertainties for all businesses with regard to underlying consumer demand, Telit remains well positioned to capitalise on growth opportunities over the medium and longer term.
Telit responded swiftly to the pandemic by taking effective operational and financial measures. These, together with the Group's performance for the year to date and prospects for the second half, underpinned by the addition of our 5G offering, by OneEdge and by new offerings within the Cloud & Connectivity business, leave the Board confident in delivering growth and performance in line with its existing expectations.
Financial review
Financial results
H1 2020 H1 2019 Change
$m $m $m
Revenues 166.9 190.7 (23.8)
-------- -------- -------
Gross profit 58.8 61.0 (2.2)
-------- -------- -------
Gross margin 35.2% 32.0%
-------- -------- -------
Other operating income 0.9 1.7 (0.8)
-------- -------- -------
Research and development (18.4) (24.4) 6.0
-------- -------- -------
Selling and marketing (22.6) (24.4) 1.8
-------- -------- -------
General and administrative (11.7) (12.1) 0.4
-------- -------- -------
Exceptional expenses (income) (0.8) 56.4 (57.2)
-------- -------- -------
Operating profit - EBIT 6.1 58.2 (52.1)
-------- -------- -------
Adjusted EBIT 8.6 4.1 4.5
-------- -------- -------
Adjusted EBITDA 18.0 16.0 2.0
-------- -------- -------
Profit in cash 5.9 2.6 3.3
-------- -------- -------
Profit before tax 9.7 58.1 (48.4)
-------- -------- -------
Adjusted profit before tax 12.1 4.0 8.1
-------- -------- -------
Basic profit per share (cents) 6.6 35.0 (28.4)
-------- -------- -------
Adjusted basic profit per share
(cents) 8.0 2.2 5.8
-------- -------- -------
-- Adjusted EBIT is defined as Earnings Before Interest, Tax, share based payment expenses, amortisation of acquired intangibles, impairment of intangible assets and Exceptional expenses (income)
-- Adjusted EBITDA is defined as Adjusted EBIT plus depreciation and other amortisation
-- Adjusted Profit before tax as Profit before tax plus share based payment expenses, amortisation of acquired intangibles, impairment of intangible assets and Exceptional expenses (income)
-- Adjusted net profi t for the year as net Profit for the year plus share based payment expenses, amortisation of acquired intangibles, impairment of intangible assets and Exceptional expenses (income) less change in deferred tax assets, net.
Revenues
Revenues decreased by 7.4% to $166.9 million (H1 2019: $180.3 million excluding two months contribution from the automotive business which was sold in February 2019). IoT Cloud & Connectivity revenues were up 12.3% to $21.0 million (H1 2019: $18.7 million).
The split of revenues is as follows:
H1 2020 H1 2019 2019
% of total % of total Change H1-20 % of total
$m revenues $m revenues over H1-19 $m revenues
Americas 89.6 53.6% 88.1 46.2% 1.7% 194.1 49.4%
-------- ----------- -------- ----------- ------------- ------ -----------
EMEA 48.5 29.1% 54.1 28.4% (10.3%) 114.2 29.1%
-------- ----------- -------- ----------- ------------- ------ -----------
APAC 28.8 17.3% 38.1 20.0% (24.4%) 74.5 19.0%
-------- ----------- -------- ----------- ------------- ------ -----------
Total 166.9 180.3 (7.4%) 382.8 97.5%
-------- ----------- -------- ----------- ------------- ------ -----------
Automotive - 10.4 5.4% 9.7 2.5%
-------- ----------- -------- ----------- ------------- ------ -----------
Total 166.9 190.7 (12.5%) 392.5
-------- ----------- -------- ----------- ------------- ------ -----------
Americas - revenues were up by 1.7% to $89.6 million (H1 2019: $88.1 million). This minor growth, which is below expectation due to the impact of the COVID-19, does demonstrate the underlying strength of our business in this region.
EMEA - revenues decreased by 10.3% to $48.5 million (H1 2019: $54.1 million). This region was significantly affected by the slowdown in demand for our customers' products due to the COVID-19 pandemic.
APAC - revenues decreased by 24.4% to $28.8 million (H1 2019: $38.1 million). While a decrease was broadly expected, the decline is mainly attributed to a significant slowdown in the deployment of a large project which we expect to recover in 2021.
Gross margin and gross profit
Gross profit in H1 2020 was $58.8 million (H1 2019: $61.0 million) following the decline in IoT products revenue, offset by a better gross margin.
Gross margin improved by 3.2% to 35.2% (H1 2019: 32.0%) mainly due to stronger growth of our Cloud & Connectivity business with higher gross margins and the optimisation of the supply chain of the IoT products business.
Operating expenses
The Group's cost base and expenses were substantially reduced in H1 2020, reflecting both the removal of automotive operating costs from 28 February 2019 as well as the impact of the optimisation plan.
Cash OPEX decreased by $5.8 million to $50.7 million (H1 2019: $56.5 million) supported by the operating cost optimisation implemented in response to COVID-19, the decline related to the automotive business expenses and the optimisation plan implemented in 2017-2019:
H1 2020 H1 2019 Change
$m $ m $m
Gross research & development expenses 21.3 26.1 (4.8)
-------- -------- -------
Selling and marketing expenses 22.6 24.4 (1.8)
-------- -------- -------
General and administrative expenses 11.7 12.1 (0.4)
-------- -------- -------
55.6 62.6 (7.0)
-------- -------- -------
Less share-based payment charges (0.7) (1.1) 0.4
-------- -------- -------
Less other depreciation and amortisation (6.1) (6.9) 0.8
-------- -------- -------
Add back lease expenses in cash 1.9 1.9 -
-------- -------- -------
Total Cash OPEX 50.7 56.5 (5.8)
-------- -------- -------
-- Gross R&D expenses as follows:
H1 2020 H1 2019 Change
$m m$ $m
Gross research & development
expenses (1) 21.3 26.1 (4.8)
-------- -------- -------
Less - Capitalisation (2) (7.1) (8.1) 1.0
-------- -------- -------
Add - Amortisation 4.2 6.2 (2.0)
-------- -------- -------
Add - Impairment - 0.2 (0.2)
-------- -------- -------
Research and development, net 18.4 24.4 (6.0)
-------- -------- -------
(1) Gross research and development expenses decreased to $21.3 million, or 12.8% of revenues (H1 2019: $26.1 million 13.7% of revenue) reflecting the further optimisation of the R&D teams, transferring some resources and knowledge to more efficient R&D centre, the removal of automotive R&D from 28 February 2019, and due to the COVID-19 we also saw delay in the certification activity which were moved from H1 to H2 this year.
(2) The amount capitalised in respect of internally generated development assets decreased slightly in H1 2020. The percentage of the capitalisation from gross R&D was 33.3% (H1 2019: 31.0%). The capitalised costs in H1 2020 mainly relate to the development of additional 4G and 5G products.
-- Selling and marketing expenses decreased to $22.6 million, or 13.5% of revenues (H1 2019: $24.4 million, 12.8% of revenues). The decrease was affected by the cost saving plan implemented by management due to COVID-19 and mainly comprised a decrease in marketing and travel expenses.
-- General and administrative expenses decreased to $11.7 million, or 7.0% of revenues (H1 2019: $12.1 million, 6.3% of revenues). The decrease was affected by the cost saving plan and mainly comprised a decrease in professional fees and travel expenses.
-- Other exceptional items declined significantly due to the profit on disposal from the sale of the automotive business which was disposed in February 2019.
Finance cost (income), net
H1 2020 H1 2019 Change
$m $m $m
Bank fees and other bank expenses 0.2 0.8 (0.6)
-------- ---------- -------
Non-cash expenses related to effective
interest rate on preferred loan 0.5 0.5 -
-------- ---------- -------
Interest related to lease liabilities
(1) 0.2 0.3 (0.1)
-------- ---------- -------
Interest expense on bank loans and
overdrafts 0.2 0.6 (0.4)
-------- ---------- -------
Loss from Hedging Transactions (2) - 0.3 (0.3)
-------- ---------- -------
Exchange rate differences, net (3) (4.3) (1.9) (2.4)
-------- ---------- -------
Interest income (0.4) (0.5) 0.1
-------- ---------- -------
Total (3.6) 0.1 (3.7)
-------- ---------- -------
(1) Interest related to IFRS 16
(2) In 2019 the Company entered a hedging arrangement to protect the operating costs denominated in Euro - as the Euro currency against the USD was lower than expected, the hedging arrangement resulted in a loss. In H1-2020, the Company did not enter to any hedging arrangement
(3) The exchange rate income in H1 2020 derives mainly from the weakness of GBP over US dollar
Net cash and cash flow
As at 30 June 2020, net cash was $56.2 million (31 December 2019: net cash $48.2 million).
Cash flow generated from operating activity before working capital, increased by $2.3 million to $18.4 million (H1 2019: $16.1 million), due to the improved financial performance.
Cash flow generated from operating activity, after working capital movement, was $22.4 million (H1 2019: used in $11.8 million), the improvement in the working capital movement is mainly related to better receivables collection, including improved collection of the receivables from Titan.
Cash flow used in investing activity was $10.1 million related mainly to investment in equipment and capitalisation of R&D costs (H1 2019: provided by $90.9 million, including the consideration from the sale of the automotive business).
Cash flow used in financing activity was $3.2 million (H1 2019: $39.4 million, related mainly due to the repayment of all bank loans following the sale of the automotive business).
Dividend
The Board is not proposing to pay an interim dividend.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
---------------------- -------------
2020 2019 2019
---------- ---------- -------------
Unaudited Audited
---------------------- -------------
$'000 $'000 $'000
---------- ---------- -------------
Revenue 166,936 190,732 392,537
Cost of sales (108,181) (129,742) (263,277)
---------- ---------- -------------
Gross profit 58,755 60,990 129,260
Other operating income 882 1,651 3,399
Research and development expenses,
net (18,422) (24,393) (46,687)
Selling and marketing expenses (22,613) (24,430) (48,194)
General and administrative expenses (11,666) (12,078) (25,849)
Exceptional income (expenses) (800) 56,497 51,693
---------- ---------- -------------
Operating Profit -- EBIT 6,136 58,237 63,622
Operating Profit -- EBIT 6,136 58,237 63,622
Share based payment charges 724 1,081 1,688
Impairment of internally generated
development assets - 196 1,316
Exceptional expenses (income) 800 (56,497) (51,693)
Amortisation of intangible assets
acquired 913 1,084 1,996
---------- ---------- -------------
Adjusted EBIT (*) 8,573 4,101 16,929
------------------------------------- ---------- ---------- -------------
Finance income 4,648 2,377 1,212
Finance costs (1,101) (2,523) (4,965)
---------- ---------- -------------
Profit before income taxes 9,683 58,091 59,869
Tax expense 989 12,229 12,469
---------- ---------- -------------
Net profit 8,694 45,862 47,400
---------- ---------- -------------
* Adjusted EBIT is a company specific non-GAAP measure which excludes share based payment charges, impairment of internally generated development assets, Exceptional expenses (income) and amortisation of intangible assets acquired. The Group's management believes that non-GAAP measures provide useful information to investors to evaluate operating results and profitability for financial and operational decision-making purposes and to provide comparability between the companies in this sector, as they eliminate non-cash items and exceptional items, which are not inherent to the business.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)
Six months ended Year ended
30 June 31 December
--------------------- -------------
2020 2019 2019
---------- --------- -------------
Unaudited Audited
--------------------- -------------
$'000 $'000 $'000
---------- --------- -------------
Net profit 8,694 45,862 47,400
Other comprehensive income (Loss)
Items to be reclassified in subsequent
periods to profit and loss:
Foreign currency translation differences (5,702) (3,923) (1,021)
Items not to be reclassified in subsequent
periods to profit and loss:
Remeasurement income (loss) on defined
benefit plan, net of tax - 182 (49)
---------- --------- -------------
Total other comprehensive income
(Loss) (5,702) (3,741) (1,070)
Total comprehensive income for the
period 2,992 42,121 46,330
========== ========= =============
Basic profit per share (in USD cents) 6.6 35.0 36.0
============ ============ =============
Diluted profit per share (in USD
cents) 6.5 34.2 35.7
============ ============ =============
Adjusted basic profit per share (in
USD cents) 8.0 2.2 12.5
============ ============ =============
Adjusted diluted profit per share
(in USD cents) 7.9 2.2 12.4
============ ============ =============
Basic weighted average number of
equity shares 132,357,921 131,045,493 131,507,097
============ ============ =============
Diluted weighted average number of
equity shares 133,432,579 134,276,207 132,674,790
============ ============ =============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 31 December
-------------------- ------------
20 20 201 9 201 9
--------- --------- ------------
Unaudited Audited
-------------------- ------------
$'000 $'000 $'000
--------- --------- ------------
ASSETS
Non-current assets
Intangible assets 65, 0 68 66,396 64,052
Property, plant and equipment 24,023 27,819 27,153
Other long-term assets 1,091 1,313 1,179
Deferred tax asset 3 , 148 2,505 2,507
--------- --------- ------------
9 3 , 33
0 98,033 94,891
--------- --------- ------------
Current assets
Inventories 16,762 21,292 14,966
Trade receivables 64, 482 80,336 83,351
Income tax receivables 1,087 782 1,494
Other trade receivable 14, 618 25,085 23,309
Other current assets 15, 977 12,302 15,332
Deposits - restricted cash 656 1,611 646
Cash and cash equivalents 88,309 73,849 81,304
--------- --------- ------------
201, 891 215,257 220,402
--------- --------- ------------
Total assets 295,221 313,290 315,293
========= ========= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Share capital 2,176 2,167 2,176
Share premium account 49,93 5 49,932 49,935
Other reserve (2,746) (2,727) (2,746)
(24,77 2
Translation reserve ) (21,972) (19,070)
Retained earnings 113,472 101,547 104,054
--------- --------- ------------
Total equity 138,065 128,947 134,349
--------- --------- ------------
Non-current liabilities
Long term borrowings 20,393 24,676 23,999
Post-employment benefits 2, 184 2,050 2,230
Deferred tax liabilities 666 649 626
Provisions 2,219 1,658 1,952
Long term lease liability 5,465 8,054 6,326
30, 927 37,087 35,133
--------- --------- ------------
Current liabilities
Short-term borrowings 12,344 6,107 9,782
Trade payables 79,895 107,657 95,887
Provisions 2,129 2,692 1,239
Income tax payables 2,338 1,218 2,893
Short term lease liabilities 2,334 3,244 3,848
Accruals and other current liabilities 27,189 26,338 32,162
--------- --------- ------------
126,229 147,256 145,811
--------- --------- ------------
Total equity and liabilities 295,221 313,290 315,293
========= ========= ============
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30 June 31 December
--------------------- -------------
2020 2019 2019
---------- --------- -------------
Unaudited Audited
--------------------- -------------
$'000 $'000 $'000
---------- --------- -------------
CASH FLOWS - OPERATING ACTIVITIES
Profit for the period 8,694 45,862 47,400
Adjustments for:
Depreciation of property, plant and equipment 4,564 4,891 9,546
Amortisation of intangible assets 5,780 8,118 13,720
Impairment of intangible assets - 196 1,316
Profit on disposal of the automotive business - (57,221) (54,472)
Gain (Loss) on sale of property, plant and
equipment 13 - (238)
Change in provision for post-employment benefits (8) 1,098 231
Change in long term provisions, net 1,173 761 (362)
Finance costs, net (3,547) 147 3,523
Tax expenses 989 12,229 12,469
Share-based payment charge, net 724 46 1,467
---------- --------- -------------
Operating cash flows before movements in
working capital: 18,382 16,127 34,600
Decrease (Increase) in trade receivables 26,399 (15,998) (13,702)
Decrease (Increase) in other current assets (123) 2,468 (453)
Decrease (Increase) in inventories (2,005) 4,257 11,426
Decrease in trade payables (17,800) (9,757) (17,211)
(Decrease) increase in other current liabilities (2,441) (6,165) 2,416
---------- --------- -------------
Cash from operations 22,412 (9,068) 17,076
Income tax paid (135) (1,852) (2,068)
Interest received 278 451 1,212
Interest paid (177) (1,296) (2,247)
---------- --------- -------------
Net cash from / (used in) operating activities 22,378 (11,765) 13,973
---------- --------- -------------
CASH FLOWS - INVESTING ACTIVITIES
Proceeds from sale of subsidiary, net of
cash deal cost - 103,760 96,292
Acquisition of property, plant and equipment (2,540) (1,467) (4,642)
Acquisition of intangible assets (458) (2,437) (2,824)
Capitalised development expenditure (7,160) (8,074) (15,289)
Proceeds from sale of property, plant and
equipment 109 374 199
Increase in restricted cash deposits (11) (1,267) (311)
---------- --------- -------------
Net cash (used in) / from investing activities (10,060) 90,889 73,425
---------- --------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
Six months ended Year ended
30 June 31 December
--------------------- -------------
2020 2019 2019
--------- ---------- -------------
Unaudited Audited
--------------------- -------------
$'000 $'000 $'000
--------- ---------- -------------
CASH FLOWS - FINANCING ACTIVITIES
Proceeds from exercise of share options - 154 168
Proceeds from long-term borrowings - 3,707 7,047
Repayment of lease liabilities (1,737) (1,822) (3,924)
Repayment of long-term borrowings (3,086) (18,316) (22,218)
Short-term borrowings, net 1,652 (23,127) (20,682)
--------- ---------- -------------
Net cash used in financing activities (3,171) (39,404) (39,609)
--------- ---------- -------------
Increase in cash and cash equivalents 9,147 39,720 47,789
Cash and cash equivalents-balance at
beginning of period 81,304 35,006 35,006
Effect of exchange rate differences (2,142) (877) (1,491)
--------- ---------- -------------
Cash and cash equivalents-balance at
end of period 88,309 73,849 81,304
========= ========== =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2020 (Unaudited)
Share
Share premium Other Translation Retained
capital account reserve reserve earnings Total
--------- --------- --------- ------------ ---------- --------
$'000 $'000 $'000 $'000 $'000 $'000
--------- --------- --------- ------------ ---------- --------
Balance at 1 January 2020 2,176 49,935 (2,746) (19,070) 104,054 134,349
Total comprehensive income
for the period
Net profit for the period - - - - 8,694 8,694
Total other comprehensive
income - - - (5,702) - (5,702)
--------- --------- --------- ------------ ---------- --------
Total comprehensive income/
(loss) for the period - - - (5,702) 8,694 2,992
Transactions with owners:
Exercise of options - - - - - -
Share based payment charge - - - - 724 724
--------- --------- --------- ------------ ---------- --------
Total transactions with
owners - - - - 724 724
Balance at 30 June 2020 2,176 49,935 (2,746) (24,772) 113,472 138,065
========= ========= ========= ============ ========== ========
Six months ended 30 June 2019 (Unaudited)
Share Share premium Translation Retained
capital account Other reserve reserve earnings Total
--------- -------------- -------------- ------------ ---------- --------
$'000 $'000 $'000 $'000 $'000 $'000
--------- -------------- -------------- ------------ ---------- --------
Balance at 1 January 2019 2,165 49,778 (2,727) (18,049) 55,319 86,486
Total comprehensive income
for the period
Net profit for the period - - - - 45,862 45,862
Other comprehensive income - - - (3,923) 182 (3,741)
--------- -------------- -------------- ------------ ---------- --------
Total comprehensive Income
/(loss) for the period - - - (3,923) 46,044 42,121
Transactions with owners:
Exercise of option 2 154 - - - 156
Share based payment charge - - - - 184 184
--------- -------------- -------------- ------------ ---------- --------
Total transactions with
owners 2 154 - - 184 340
Balance at 30 June 2019 2,167 49,932 (2,727) (21,972) 101,547 128,947
========= ============== ============== ============ ========== ========
NOTES TO THE INTERIM FINANCIAL STATEMENT AT 30 JUNE 2020 (Unaudited)
Note 1 - General
The Company was incorporated and registered in England and Wales as a public limited company on 30 November 2004 under the Companies Act 1985.
Note 2 - Basis of preparation
The interim financial statements include the results of operations and the financial position of the Company and its subsidiaries (together the "Group") as at and for the six months ended 30 June 2020. The consolidated interim financial statements of the Company have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the EU ("EU adopted IFRSs") and the disclosure requirements of the AIM Rules using the accounting policies set out in the Group's 31 December 2019 statutory accounts. The AIM Rules do not require compliance with the requirements of IAS 34 "Interim Financial Statements" and these consolidated interim financial statements have not been prepared in compliance with the disclosure requirements of that standard. The consolidated interim financial statements have not been audited or reviewed and do not constitute the Company's statutory accounts within the meaning of Section 435 of the Companies Act 2006. The financial information for the year ended 31 December 2019 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Note 3 - Alternative performance measures
EBITDA is not a financial measure defined by IFRS as a measurement of financial performance and may not be comparable to other similarly titled indicators used by other companies. Adjusted EBIT, adjusted EBITDA, adjusted profit before tax and profit in cash are provided as additional information only and should not be considered as a substitute for operating profit/loss (EBIT) or net cash provided by operating activities.
Adjusted EBIT is defined as Earnings Before Interest, Tax, share based payment expenses, amortisation
of acquired intangibles, impairment and exceptional items; Adjusted EBITDA as Adjusted EBIT plus depreciation and other amortisation; profit/loss in cash as Adjusted EBITDA less capitalisation of internally generated development assets, less acquisition of tangible and intangible assets net of proceeds from disposal of assets.
Adjusted (Loss) / Profit before tax as (Loss) / Profit before tax plus share based payment expenses, amortisation of acquired intangibles and exceptional items; and Adjusted net (loss) / profit for the year as net (Loss) / Profit for the year plus share based payment expenses, amortisation of acquired intangibles and non-recurring items less deferred tax (credit) / expense. The Group's management believes that these non-GAAP measures provide useful information to investors to evaluate operating results and profitability for financial and operational decision-making purposes and to provide comparability between the companies in this sector, as they eliminate non-cash items and other exceptional items, which are not inherent to the business. Consequently, Adjusted EBIT, Adjusted EBITDA, profit / (loss) in cash, Adjusted (loss) / profit before tax and Adjusted net (loss) / profit for the year are presented in addition to the reported results.
H1 2020 H1 2019 FY 2019
$'000 $'000 $'000
---------- ---------- ---------
Operating profit - EBIT 6,136 58,237 63,622
Share based payments 724 1,081 1,688
Exceptional expenses (income) 800 (56,497) (51,693)
Impairment of internally developed
assets - 196 1,316
Amortization of intangibles acquired 913 1,084 1,996
---------- ---------- ---------
Adjusted EBIT 8,573 4,101 16,929
Depreciation and amortization
(1) 9,430 11,947 21,270
Adjusted EBITDA 18,003 16,048 38,199
Capitalisation of internally
generated development assets (7,160) (8,074) (15,289)
IFRS 16 (Rental costs) (1,947) (1,877) (3,897)
Acquisition of tangible and intangible
assets, net of proceeds from
disposal of assets (2,998) (3,529) (7,266)
Profit in cash 5,898 2,568 11,747
========== ========== =========
Profit before tax 9,683 58,091 59,869
Share-based payments 724 1,081 1,688
Exceptional expenses (income) 800 (56,497) (51,693)
Impairment of internally developed
assets - 196 1,316
Amortisation of intangibles acquired 913 1,084 1,996
Adjusted profit before tax 12,120 3,955 13,176
========== ========== =========
Net profit for the period 8,694 45,862 47,400
Share-based payments 724 1,081 1,688
Exceptional expenses (income) 800 (56,497) (51,693)
Impairment of internally developed
assets - 196 1,316
Amortisation- intangibles acquired 913 1,084 1,996
Deferred taxes charge (601) 11,200 15,713
Adjusted net profit for the period 10,530 2,926 16,420
========== ========== =========
Note 4 - Net cash position:
H1 2020 H1 2019 FY 2019
$'000 $'000 $'000
--------- --------- ---------
Cash and cash equivalent 88,309 73,849 81,304
Restricted cash deposits 656 1,611 646
Working capital borrowings (1) (5,599) - (3,934)
Long term loans (2) (3,342) (3,020) (3,353)
Governmental loan (3) (22,232) (25,800) (24,675)
Mortgage loan (4) (1,564) (1,963) (1,819)
Net cash 56,228 44,677 48,169
========= ========= =========
(1) Credit facilities of up to Euro 10.5 million used for working capital and bear average interest at a rate of 0.85%.
Note 4 - Net cash position (Continued):
(2) Representing a Euro based loan from banks in Italy with an interest rate of Euribor 6 months plus 5.5% and is repayable in 6 semi-annual instalments that will commence in December 2020.
(3) Representing a Euro-based preferential long-term loan with fixed rate of 0.5% and is repayable in 14 semi-annual instalments that commenced in December 2016, supported by the Italian MISE (Ministry of Economic Development) to develop an innovative platform for the application of IoT technologies. The loan is initially recognised at fair value and subsequently measured at amortised cost.
(4) Representing a preferential rate mortgage loan from a regional fund in Italy provided in connection with the Group's acquisition of the campus used for the Company's main R&D facility in Trieste, Italy. The mortgage loan is denominated in Euro, attracts interest at a rate of 80% of Euribor 6 months, with a minimum interest rate of 0.85%, and is repayable in 30 semi-annual instalments that commenced in June 2012. The loan was initially recognised at fair value and subsequently measured at amortised cost. In July 2020, this loan was fully repaid - see also Note 7.
Note 5 - Shareholder equity
Net shareholders' equity increased to $138.1 million as at 30 June 2020 from $134.3 million as at 31 December 2019, mainly due to the net profit in the period.
The issued share capital of Telit as at 30 June 2020, comprised 132,691,291 Ordinary Shares, each with voting rights. There are no shares held in treasury.
The outstanding options and restricted stock units (RSU's) as at 30 June 2020 were 9,306,826 representing approximately 7.0%, of the outstanding share capital of the Company.
Note 6 - Sale of automotive business
In connection with its agreement to sell the automotive business to TUS International Limited ("TUS"), Telit agreed to provide certain transitional IT, procurement and production management services to Titan Group ("Titan"), pursuant to a transitional services agreement (TSA). Titan is required to pay Telit for these services and, as at 30 June 2020, the account receivable balance under the TSA, presented as "Other trade receivables", was approximately $14.6 million (31 December 2019: $23.3 million), out of which, approximately $7.0 million was overdue (31 December 2019: $1.2 million).
Telit made good progress with TUS and Titan to resolve the payment delay and as at the date of this report, most of the overdue amount has already been paid. Telit expects the TSA to end on 31 December 2020.
Note 7 - post balance sheet events
-- On 8 July 2020, the Mortgage loan related to the company facility in Trieste Italy was fully repaid without any penalty for the early payment. The total paid amount was approximately Euro 1.6 million.
-- During August 2020, 1,783,332 stock options to employees and 166,666 stock options to director which were granted in 2015, lapsed following the 5-year terms of these options.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR BDLLFBVLZBBD
(END) Dow Jones Newswires
August 18, 2020 02:00 ET (06:00 GMT)
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