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Toad PLC (TGP)

  Print      Mail a friend       Annual reports

Friday 22 March, 2002

Toad PLC

Final Results

Toad PLC
22 March 2002


Toad plc ('Toad' or the 'Company')



Audited preliminary results for the year ended 31 December 2001


Chairman's Statement



I am pleased to present our results for the year ended 31 December 2001.

Whilst our profit before goodwill, exceptional and non-recurring items of £0.5m
was in line with analysts' expectations, it has been a challenging year for the
Company.


                                                          2001              2000
                                                            £m                £m

Turnover                                                  34.3              33.6
Gross profit                                              13.7              14.7
Operating profit*                                          1.3               3.4
Net profit*                                                0.5               2.7



*before tax, amortisation of goodwill, exceptional and non-recurring items



During the year we grew the Company's turnover to £34.3m but our gross margin
suffered due to the loss of the Laserline alarm distribution agreement and the
reduced value of the pound against the dollar combined with continuing pricing
pressures in the vehicle security market. The directors recognised that the
business needed reorganising so that we could focus on our key core activities
and capitalise on our excellent infrastructure. We therefore took the decision
during the year to:



•         relocate the vehicle security operation from Runcorn to our head
          office in Mitcham;

•         purchase the Datatool motorcycle security business to complement our
          vehicle security business;

•         invest in setting up a new telematics division to sell the Actra Fleet
          system into the fleet management market;  and

•         develop the in-car multi-media brand Toad M3.


These actions have all been implemented and our business now divides into three
interrelated divisions - Services, Distribution and Telematics.



Services

Our Services division provides a mobile audio, security and multi-media
installation service to the UK's major insurance, fleet and multiple retail
companies. This is a core business for Toad and the support infrastructure,
including our 70 seat call centre, our 80 mobile installers and our warehousing
facility, provides the backbone of the operation. We have a marketing alliance
with Autoglass in the UK and we continue to be market leader in this specialist
installation field. Turnover in 2001 grew 4% per cent to £14.2m.



Distribution

Turnover during 2001 increased to £20.1m despite the loss of approximately £3m
turnover from the Laserline contract which ended in December 2000. This revenue
was replaced by growth in our Toad Audio Express operation, strong growth in our
Toad M3 business and by the Datatool acquisition, which contributed to the
business from June 2001.




Our distribution division consists of the following businesses:


•        Toad Audio Express - Vehicle audio wholesale

•        Toad VTD - Vehicle security supply and distribution

•        Datatool - motorcycle security and accessory assembly and distribution

•        Toad M3 - Mobile multi-media supply and distribution

•        ITI - audio interface cable distribution (51% controlling stake)

•        Toade.com - vehicle security, audio and multi-media e-commerce



Toad Audio Express grew its business to £10m (2000 - £9m) and continues to
consolidate its position as the UK's number one specialist audio wholesale
business.


VTD, our vehicle security business, sells our Toad, Sigma and Maxpower brands
into the specialist vehicle after-market. Turnover declined to £6.5m (2000 -
£9.5m) following the loss of Laserline.   In response VTD, which was based in
Runcorn, has been relocated to share our head office facility in Mitcham.
Absorbing VTD into the existing Toad infrastructure makes excellent commercial
sense and will reduce the overhead cost base.


The acquisition of Datatool, one of the UK's leading motorcycle security and
accessory companies, in June 2001 has added significantly to our vehicle
security portfolio. Agreements to supply Datatool alarms to a number of the
major motorcycle manufacturers and sales following the launch of a new range of
accessory products at the NEC Motorcycle Show in November 2001 are encouraging.


Our Toad M3 mobile multi-media business showed excellent growth during the year
and our portable Video Traveller is now listed in Halfords, the UK's largest
vehicle accessory retailer.


The majority of our toade.com sales were from customers who visited our website/
partner websites and then ordered through our call centre. We have therefore
taken the decision to change toade.com to a dealer portal site and fulfil the
internet retailers' demands through our existing call centre operation. This
should maintain existing e-commerce sales from the affinity partnerships, reduce
the costs of running an e-commerce operation and focus the business on
supporting our dealer network which is a core area of our business.



Our ITI audio cable business increased sales by 64% in 2001 to £0.8m and came
close to break even in this its second year of trading.



Telematics



During the year we established our Toad Telematics division to capitalise on our
existing client and infrastructure base. We developed our web-based 'Actra
Fleet' fleet management system in conjunction with a number of partner companies
and launched the product with a small number of customers in the summer of 2001.



As a newcomer into this emerging market we set ourselves ambitious targets for
sales growth in 2001. Sales in 2001 did not achieve these targets as most of our
efforts during the year were devoted to developing a competitive product which
offers a credible alternative to challenge the existing leaders in the fleet
management market.



We are now in a position to make that challenge but we also recognise that we
need to view expectations of rapid growth in this early stage market with some
caution.  Our aim is to build a robust telematics business on the back of our
existing core business so that we are well placed to exploit growth
opportunities. As a first step in this, we have developed an excellent fleet
management system (please visit www.myactra.com for an online demonstration) and
our Telematics division has achieved the following:



•         an exclusive 2 year contract with Datafactory AG in Germany as the
          provider of their webfleet software solution in the UK;

•         a 12 month lead generation contract with BT whereby BT provide
          qualified leads from their extensive customer base for the Actra Fleet 
          system; and

•         the establishment of our own national sales and telesales team and a
          network of dealer partners who sell the system on our behalf.



The system is fitted to all our own company vehicles and is already providing
savings on running costs and improving the efficiency of our mobile services
operation. From a slow start we now have around 40 companies using the system
and the directors believe that 2002 will enable us to establish ourselves in
this growing market.



Board changes



In February this year Stephen Wheatley left the company to pursue other
interests and I became Executive Chairman with Nick Grimond moving from
Operations Director to Chief Operating Officer.



Also in February, Patrick Rogers, who was due to retire by rotation this year,
stepped down as a non-executive director and has been replaced by David Voss,
who has a wealth of experience in the vehicle rental and leasing market. David
joined the board in March and will be an excellent addition to the team.



I would like to thank both Stephen and Patrick for their contributions over the
years.



Our staff



Since becoming Chairman I have been impressed by the enthusiasm and
professionalism of all the staff in the group.  The team has met a number of
challenges during 2001 and they are looking forward to 2002 with confidence.



Strategy and current trading



Our primary focus is to restore the group's profit performance. We have taken
action to address the downturn in our vehicle security business experienced in
2001 and the businesses acquired and launched in the period now have the
integrated strength of our consolidated operations to support them.



Current trading is in line with our budget forecasts and the Board is confident
that the Company has the resources, products and services to meet our
objectives.





Peter Ward

Executive Chairman





Financial Review


Results


Turnover for the year from ongoing operations was £33.2m (53 weeks ended 31
December 2000 - £33.6m) with a further £1.1m from the acquisition of Datatool
(UK) Limited ('Datatool') in June 2001.



Operating profit for the year before goodwill amortisation, exceptional and
non-recurring items was £1.3m (2000 - £3.4m) including a contribution from
Datatool of £0.2m (2000 - nil) and after costs relating to the set up of ACTRA.
Profit before taxation, goodwill amortisation, exceptional and non-recurring
items was £0.5m (2000 - £2.7m).



In December 2000 the Laserline distribution agreement was ended.  Laserline was
one of the group's three vehicle security brands and contributed around £3m to
group turnover out of total security sales at that time of £9.5m.  In response
the Maxpower brand was added to the stable and in June 2001 the company acquired
Datatool, a leading UK motorcycle alarm company, which had achieved sales of
£2.7m for the previous year.  The impact of pricing pressures in the vehicle
security sector combined with the strong dollar continued to squeeze margins
during 2001. Consequently, while total sales for the group have held up even
without Datatool, the sales mix change, pricing pressures and the strong dollar
have had a negative impact of around £1.4m on our overall gross margin in 2001
compared to 2000.



Operating expenses before goodwill, exceptional and non recurring items have
risen by £1m over and above the increase attributable to Datatool.  £0.3m of
this reflects our investment in ACTRA, the remaining amount represents a 6%
increase in overheads.



Exceptional and non recurring items



At the end of the year the Board resolved to consult with the affected employees
with a view to closing the vehicle security operation in Runcorn and relocating
it to share the head office resource in Mitcham.  The group has accrued costs of
£0.7m as a result of the relocation and reorganisation of the head office, which
was completed in the New Year, and the write down of stock values following the
loss of the Laserline distribution agreement.  These costs are exceptional items
and are shown separately in the additional analysis on the profit and loss
account.



Exceptional and non recurring items also include £0.1m aborted deal costs and a
net charge of £0.2m in respect of a change in accounting estimate which followed
a review of the reliability of estimation techniques on adoption of 'FRS 18 -
Accounting Policies'.



Amortisation and write down of intangibles



Amortisation and write down of intangibles including research costs for the year
totalled £0.5m.  This amount includes the write down of the carrying value of
the distribution agreement of September 1997 with Spacetrac Limited ('Spacetrac
') which was included in intangible fixed assets from that date. This agreement
gave Toad the exclusive rights to distribute in certain markets a miniature
satellite based wireless location device. The full carrying value of this
agreement of £0.7m included provision for the payment of £0.5m to be satisfied
by the issue to Spacetrac of 1,818,182 ordinary shares in Toad at 27.5p each on
delivery of the first product to us.  The product has still not been delivered
and, in view of the passage of time since the agreement was signed, the
directors consider that there is significant doubt that the product will be
delivered.  Consequently, the full carrying value brought forward from last year
has been written down to nil. £0.5m has been written off against the shares to
be issued which had been accrued  within capital and reserves and the balance of
£0.2m has been written off to the profit and loss account.  However, a
contingency remains that should Spacetrac deliver the product within the
contract period which expires in May 2007, this would result in a dilution of
the group's share capital.



Interest and Corporation Tax



Net interest and similar charges were £0.8m (2000 - £0.7m) and the there was no
tax charge in the year (2000 - £0.1m).  The group has tax losses of
approximately £5.8m to carry forward for relief against future profits.



Acquisitions



On 1 June 2001 the Company acquired the entire share capital of Datatool.  The
results of this business from the date of acquisition to 31 December 2001 are
disclosed under acquisitions in the profit and loss account.  Datatool was
acquired for £1m in cash and up to 3,433,476 ordinary shares in Toad contingent
on the achievement by Datatool of target profitability for the years to 31
December 2001 and 31 December 2002.  Datatool made a profit before tax of £0.5m
for the year to 31 December 2001 and this will result in the issue of 858,369
shares to the vendors of Datatool under the terms of the acquisition agreement.



Cash and debt



Net cash inflow from operations was £2m (2000 - £0.5m).  Interest and finance
costs paid were £0.9m (2000 - £0.7m).  Net capital expenditure was £0.8m (2000 -
£0.3m) of which £0.4m (2000 - nil) was related to the start up of ACTRA.  Net
cash outflow from the acquisition of Datatool was £0.5m and tax paid was £0.4m
(2000 - £0.1m).  The Company received £0.2m from the issue of 710,819 shares at
25p each to Carglass Luxembourg SARL under an option deed established in
connection with the Autoglass Alliance.



Net debt at the year end was £8.5m (2000 - £8.1m) and remaining headroom on the
bank overdraft facilities at the year end was £1.4m (2000 - £0.9m).



Treasury



Group policy

The group operates a central treasury function whose purpose is to arrange
borrowings and manage and reduce financial risks.  Prudent use is made of
financial instruments, mainly interest hedging instruments and forward foreign
exchange contracts.  No speculative transactions are permitted.



Foreign exchange risk

Approximately 25% of the group's cost of sales involve exposures to foreign
currency risk in US dollars.  Foreign currency flows are monitored and matched
on a regular basis and the majority of these exposures are hedged for periods of
up to nine months ahead where appropriate.



Interest rate risk

Subsequent to the year end the Company has entered into a fixed rate interest
rate swap in respect of 50% of its total bank facility.







Wilson W Jennings

Finance Director



                                                             2001 Audited                                 2000
                                                    Before goodwill        Goodwill
                                                      amortisation,    amortisation,
                                                    exceptional and exceptional and      52 weeks     53 weeks
                                                      non recurring   non recurring  ended 31 Dec ended 31 Dec
                                                              items           items          2001         2000
                                              Notes           £'000           £'000         £'000        £'000

TURNOVER
Ongoing operations                                1          33,456           (288)        33,168       33,557
Acquisitions                                                  1,143               -         1,143            -
                                                             34,599           (288)        34,311       33,557
COST OF SALES
Ongoing operations                                         (20,154)             115      (20,039)     (18,893)
Acquisitions                                                  (525)               -         (525)            -
                                                           (20,679)             115      (20,564)     (18,893)

GROSS PROFIT                                                 13,920           (173)        13,747       14,664
Other operating expenses                        2,3        (12,625)         (1,369)      (13,994)     (11,390)

OPERATING (LOSS)/PROFIT
Ongoing operations                                            1,062         (1,462)         (400)        3,274
Acquisitions                                                    233            (80)           153            -
                                                              1,295         (1,542)         (247)        3,274
Interest payable and similar charges                          (821)               -         (821)        (704)

(LOSS)/PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION                                                 474         (1,542)       (1,068)        2,570
Taxation                                                          -               -             -        (140)

(LOSS)PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION                                                  474         (1,542)       (1,068)        2,570
Minority interests                                               16              19            35           43

(LOSS)PROFIT FOR THE YEAR ATTRIBUTABLE
TO MEMBERS OF THE PARENT COMPANY                                490         (1,523)       (1,033)        2,473


Earnings per share - basic                                    0.68p                       (1.43)p        3.58p
                   - diluted                                  0.68p                       (1.43)p        3.58p







TOTAL RECOGNISED GAINS AND LOSSES

There are no recognised gains and losses other than £1,033,000 (2000 - profit - 
£2,473,000) included in the profit and loss account above.


                                                            Audited                        Audited
                                                                               Group                    Company
                                                               2001             2000          2001         2000
                                         Notes                £'000            £'000         £'000        £'000

FIXED ASSETS
Intangible assets                                             1,992            1,479             -          730
Tangible assets                                               3,017            2,726             -            -
Investments                                                       -                -        16,351       16,340
                                                              5,009            4,205        16,351       17,070

CURRENT ASSETS
Stocks                                                        4,931            4,229             -            -
Debtors                                                       6,655            7,356         6,472        8,666
Cash at bank and in hand                                      1,326            1,972           390            -
                                                             12,912           13,557         6,862        8,666

CREDITORS: amounts falling due
within one year                                            (10,567)         (12,004)       (1,397)      (4,318)

NET CURRENT ASSETS                                            2,345            1,553         5,465        4,348

TOTAL ASSETS LESS CURRENT
LIABILITIES                                                   7,354            5,758        21,816       21,418

CREDITORS: amounts falling due
after more than one year                                    (3,797)          (1,162)       (3,720)      (1,009)

Minority Interests - equity                                      78               43             -            -

NET ASSETS                                                    3,635            4,639        18,096       20,409

CAPITAL AND RESERVES
Called up share capital                                       7,689            7,499         7,689        7,499
Share premium account                                        11,638           11,353        11,638       11,353
Share capital to be issued                                      515            1,189           515        1,189
Merger reserve                                                    -                -         1,001        1,001
Profit and loss account                                    (16,207)         (15,402)       (2,747)        (633)

SHAREHOLDERS' FUNDS
Equity                                                        2,856            3,860        17,317       19,630
Non-equity                                                      779              779           779          779

                                                              3,635            4,639        18,096       20,409



                                                                             Audited      Audited
                                                                            52 weeks     53 weeks
                                                                               ended        ended
                                                                              31 Dec       31 Dec
                                                                                2001         2000
                                                                 Notes         £'000        £'000

NET CASH INFLOW FROM OPERATING ACTIVITIES                            5         2.007          525

RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Issue costs of new loans                                                       (173)            -
Interest paid                                                                  (679)        (669)
Interest paid on finance leases                                                 (10)         (12)
                                                                               (862)        (681)

TAXATION
UK corporation tax paid                                                        (358)         (33)

CAPITAL EXPENDITURE
Purchase of intangible fixed assets                                            (209)        (110)
Purchase of tangible fixed assets                                              (598)        (254)
Sale of tangible fixed assets                                                     15           63
                                                                               (792)        (301)

ACQUISITIONS
Purchase of subsidiary undertakings (note 4)                                   (795)          (1)
Cash acquired (note 4)                                                           283            -
                                                                               (512)          (1)

CASH OUTFLOW BEFORE FINANCING                                                  (517)        (491)

FINANCING
Issue of shares                                                                  178           26
Movement in short term borrowings                                            (1,476)          358
Movement in long term borrowings                                               2,785      (2,408)
Repayment of principal under finance leases                                    (103)         (90)
                                                                               1,384      (2,114)

INCREASE/(DECREASE) IN CASH IN THE YEAR                              6           867      (2,605)






NOTES



1.     TURNOVER

Turnover consists primarily of sales made in the United Kingdom from the group's
main continuing activity.  Export sales are not material.

2.     OTHER OPERATING EXPENSES


                                                                    Goodwill
                                                               amortisation,
                                                             exceptional and 52 weeks ended 53 weeks ended
                                                                   recurring         31 Dec         31 Dec
                                                                       items           2001           2000
                                                 Ongoing                              Total          Total
                                              operations
                                                   £'000               £'000          £'000          £'000

Continuing         - Administrative                4,433               1,064          5,497          3,965
                   - Distribution                  7,327                 225          7,552          7,083
                   - Technical                       481                   -            481            342
                                                  12,241               1,289         13,530         11,390
Acquisitions       - Administrative                  384                  80            464              -
                                                  12,625               1,369         13,994         11,390




3.      GOODWILL AMORTISATION, EXCEPTIONAL AND NON RECURRING ITEMS



                                                                                      52 weeks     53 weeks
                                                                                         ended        ended
                                                                                   31 December  31 December
                                                                                          2001         2000
                                                                                         £'000        £'000
Amortisation/write down of goodwill and other intangibles                                  412           83
ACTRA product research costs written off                                                   122            -
Relocation and reorganisation costs                                                        459            -
Stock write down following loss of the Laserline distribution agreement                    198            -
Aborted deal costs                                                                         140            -
Change in estimation technique (see below)                                                 173            -
Other                                                                                       38            -
                                                                                         1,542           83



Change in estimate of sales value

This charge represents the impact of changing the method of estimating the value
of goods installed but not yet invoiced at the period end.  This follows a
review of the reliability of estimation techniques on adoption of FRS 18 -
Accounting Policies. The impact of this adjustment on sales of £288,000 and cost
of sales of £115,000 are shown in the profit and loss account.



4.     FIXED ASSET INVESTMENTS 

Acquisition of Datatool (UK) Limited

On 1 June 2001 the group acquired the entire share capital of Datatool (UK)
Limited for consideration of £1,472,000 satisfied by cash consideration of
£750,000, deferred cash of £250,000 and shares to be issued of £472,000.

Goodwill arising on the acquisition is being amortised over ten years.  The
investment in Datatool (UK) Limited has been included in the company's balance
sheet date at its fair value at the date of acquisition.


                                                                       Book       Adjustments       Fair value
                                                                      value                           to group
                                                                       £000              £000             £000
Tangible fixed assets                                                   107                 -              107
Stocks                                                                  370                 -              370
Debtors                                                                 506                 -              506
Cash                                                                    312                 -              312
Overdraft                                                              (29)                 -             (29)
Creditors due within one year                                         (805)         (131) (a)            (936)
Creditors due in more than one year                                    (29)                 -             (29)
                                                                        432             (131)              301
Goodwill arising on acquisition                                                                          1,216
                                                                                                         1,517
Discharged by:
Cash                                                                                                       750
Deferred cash consideration                                                                                250
Shares to be issued (see below)                                                                            472
Costs associated with the acquisition                                                                       45
                                                                                                         1,517






Adjustments:

(a)    Reassessment of provision for taxation and other liabilities.

The shares to be issued are contingent upon certain profit targets being met, up
to a maximum of £2 million (3,433,476 shares).  The shares will be issued in
2002 and 2003.




5.     RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH INFLOW FROM 
       OPERATING ACTIVITIES



                                                                                          2001          2000
                                                                                         £'000         £'000
Operating (loss)/profit                                                                  (247)         3,274
Depreciation on tangible fixed assets                                                      415           315
Amortisation of intangible fixed assets                                                    182            83
Impairment of goodwill                                                                     230             -
Increase in stocks                                                                       (332)         (457)
Decrease/(increase) in debtors                                                           1,290       (2,085)
Increase/(decrease) in creditors                                                           469         (605)

Net cash inflow from continuing operating activities                                     2,007           525



6.     RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT


                                                                                          2001          2000
                                                                                         £'000         £'000

Increase/(decrease) in cash in the year                                                    867       (2,605)
Cash (inflow)/outflow from movement in debt                                            (1,344)         2,140

Change in net debt arising from cash flows                                               (477)         (465)
New finance leases                                                                        (16)          (25)
Other                                                                                      103          (51)

Movement in net debt in the year                                                         (390)         (541)
Net debt at 31 December 2000 (see note 7)                                              (8,126)       (7,585)

Net debt at 31 December 2000 (see note 7)                                              (8,516)       (8,126)



7.     ANALYSIS OF NET DEBT


                                             At                                                              At
                                         31 Dec       Cash flow    Acquisitions           Other          31 Dec
                                           2000                                                            2001
                                          £'000           £'000           £'000           £'000           £'000

Cash at bank and in hand                  1,972           (646)               -               -           1,326
Bank overdrafts                         (6,477)           1,513               -               -         (4,964)
                                        (4,505)             867               -               -         (3,638)

Finance leases                            (236)             103             (9)            (16)           (158)
Short term bank loans                   (2,376)           1,476           (100)               -         (1,000)
Other loans                             (1,009)         (2,785)            (29)             103         (3,720)
                                        (8,126)           (339)           (138)              87         (8,516)





8.     PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information contained in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.  The financial information for the preceding year is based on the
statutory accounts for the 53 weeks ended 31 December 2000.  Those accounts,
upon which the auditors issued an unqualified opinion, have been delivered to
the registrar of companies.





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            The company news service from the London Stock Exchange