Transics International NV (EURONEXT Brussels: TRAN), today announced its results for FY 2008. The financial information reported in this release is presented in Euro and has been prepared in accordance with the recognition and measurement criteria of IFRS.

Financial highlights

• Total revenue reached €43,679k, an increase of 0.4% compared to the same period last year.
• Gross profit amounted to €30,085k or 68.9% of revenue, compared to €29,718k and 68.3% of revenue for the same period last year. This represents an increase in gross profit of 1.2% over the same period last year.
• EBITDA amounted to €8,915k or 20.4% of revenue, a decrease of 32.3% compared to the same period last year.
• Operating Result amounted to €5,700k or 13.0% of revenue, a decrease of 46.8% compared to the same period last year.
• A net result of €2,175k for FY2008 or €0.27 basic earnings per share compared to €0.75 last year.

Business highlights

• New product suite launched in Q2 and Q3 including completely revamped on-board computer incorporating numerous new features.
• Milestone of 57.700 total units shipped end of the year.
• First major customer wins in several new European markets including Italy, Romania and Czech Republic.
• Sharp loss of sales momentum in Q3 resulting from the lack of availability of leasing for customers and the general slowdown of the economy.
• Business activity stabilised in Q4 with a slight quarter-on-quarter increase in revenues.
• Cost of international roll-out caused lower EBITDA margin.
• Cost reduction programme initiated in Q4.

Outlook 2009

• Revenue visibility is limited to the near term. Management expects Q1 revenues to remain in line with the run-rate achieved during the second half of 2008, or approximately €9m.
• Assuming no further deterioration in the transport sector and no recovery in the leasing market, Management anticipates the level of activity for 2009 to remain in line with the level observed during the second half of 2008.
• Cost reduction measures have been implemented during Q4 2008 and will continue during Q1 2009.

Consolidated Results 2008

Consolidated key figures

Transics International NV ‘000 euro	31/12/2008 Consolidated 12 months	H2 08 Consolidated 6 months	H1 08 Consolidated 6 months	31/12/2007 Consolidated 12 months
Revenue	43,679	18,419	25,260	43,519
Gross profit Gross margin	30,085 68.9%	12,806 69.5%	17,279 68.4%	29,718 68.3
EBITDA EBITDA margin	8,915 20.4%	2,077 11.3%	6,838 27.1%	13,175 30.3%
Operating result Operating margin	5,700 13.0%	380 2.1%	5,320 21.1%	10,716 24.6%
Net result Net margin	2,175 5.0%	(1,116) -6.1%	3,291 13.0%	5,214 12.0%
Basic earnings per share	0.27			0.75

 

Consolidated income statement

Transics International NV ‘000 euro	31/12/2008 Consolidated 12 months	H2 08 Consolidated 6 months	H1 08 Consolidated 6 months	31/12/2007 Consolidated 12 months
Revenue	43,679	18,419	25,260	43,519
Cost of sales (-)	(13,594)	(5,613)	(7,981)	(13,801)
Gross profit	30,085	12,806	17,279	29,718
Research and development expenses	(2,151)	(1,184)	(967)	(1,454)
Sales and marketing expenses	(16,316)	(8,169)	(8,147)	(11,607)
General and administration expenses	(5,845)	(2,980)	(2,865)	(5,446)
Operating Expenses	(24,312)	(12,333)	(11,979)	(18,507)
Other Operating Income/(expenses)	(73)	(93)	20	(495)
OPERATING RESULT	5,700	380	5,320	10,716
Finance income/(expenses)	(1,932)	(1,434)	(498)	(3,830)
RESULT BEFORE TAX	3,768	(1,054)	4,822	6,886
Tax income (expense)	(1,593)	(62)	(1,531)	(1,672)
NET RESULT	2,175	(1,116)	3,291	5,214
EBITDA	8,915	2,077	6,838	13,175

Revenue

Consolidated revenue for FY 2008 reached €43,679k, representing a 0.4% growth over the same period last year.

After a strong start of the year, which saw sales increase by 34% in the first half of 2008 over the same period in 2007, Transics experienced a sharp slowdown in sales starting in August. This slowdown is attributable to the lack of availability of lease financing for transport companies and the general slowdown of the economy. Sales in the second half of 2008 were 25% below the same period in 2007.

The solid base of recurring revenues of the company has served as a shock absorber as evidenced by the change in the revenue mix of Transics observed during FY 2008. Product sales accounted for 67% of total revenue, recurring sales for 28% and field services for 5%, compared with 76%, 20% and 4% respectively in 2007.

• Gross profit
  Gross profit reached €30,085k or 68.9% of revenue in FY 2008, representing an increase over the same period last year (€29,718k and 68.3% of revenue). Following a recommendation of its audit committee and after approval of its statutory auditors, the company has amended its accounting treatment of hosting and telecom costs. These costs used to be entirely treated as operating expenses; starting with financial year 2008, the company will include in its cost of sales the hosting and telecom costs associated with the delivery of recurring revenues. Under the previous accounting rules, gross margin would have been 76,1% in 2008 to be compared to 73% in 2007.

 

• Operating expenses
  Operating expenses increased from €18,507k in FY 2007 to €24,312k in FY 2008. This 31% increase reflects the need for the company to develop its infrastructure and its strategy to invest in sales and marketing to support its international expansion. Sales and Marketing expenses have increased by 40% over the same period last year. Between January 1, 2008 and December 31, 2008 the sales and marketing headcount increased by 26. General and Administration expenses have grown by 7.3%.

 

• Financial income/expenses
  Financial charges decreased from €4,192k in 2007 to €2,198k in 2008 as a result of the substantial reduction of the financial debt from €28,189k as of year-end 2007 to €9,994k as of year-end 2008 and thanks to the non-recurrence of the one-off effect of the recognition in 2007 of the charges associated with the MBO of the company in 2006.Financial charges are attributable to a net interest expense of €1,539k and to the €659k impact of the change in market-to-market value of the interest rate swaps. These interest rate swaps cover two thirds of the debt of the company. As of year-end the 3-month EURIBOR was below the fixed rate of these floating-fixed rate swaps of 4.80% and 4.77% and, consequently, they are out-of-the money and carry a negative value. The company has no intention at present to unwind or buy back these swaps given that any mark-down has no cash effect.
• Income taxes
  Effective tax rate amounts to 38% of net income before taxes. The tax asset of Transics Deutschland GmbH, amounting to €322k, has not been recognised as there is no history of profit making for this entity.

 

• Net result
  Net result for 2008 was €2,175k, a 58% reduction compared to 2007 net result.

Balance sheet

Transics International NV ‘000 euro	31/12/2008 Consolidated 12 months	30/06/2008 Consolidated 6 months	31/12/2007 Consolidated 12 months
Goodwill	31,603	31,603	31,603
Intangible assets	9,243	8,981	8,214
Property, plant and equipment	3,307	3,165	3,119
Investments	4	4	4
Deferred tax assets	1,545	1,406	1,634
Receivables	0	3	8
Non Current Assets	45,702	45,162	44,582
Inventories	6,528	3,347	2,675
Tax receivables	1,562	858	1,476
Trade receivables	11,453	15,024	15,476
Other receivables	34	0	0
Prepayments	456	261	378
Cash and cash equivalents	2,930	3,827	17,762
Other current assets	84	139	65
Current Assets	23,047	23,456	37,832
TOTAL ASSETS	68,749	68,618	82,414
Share capital	6,045	6,128	6,126
Share premium	24,514	24,514	24,514
Reserves	6,295	6,292	1,081
Result of the year	2,175	3,291	5,214
Shareholder’s Equity	39,029	40,225	36,935
Bank borrowings	7,542	10,919	24,446
Finance leases	845	958	964
Other loans	0	0	0
Deferred tax liabilities	1,560	1,586	1,720
Non Current Liabilities	9,947	13,463	27,130
Current interest-bearing borrowings	2,453	90	3,743
Bank overdrafts	800	0	0
Deferred income	1,887	1,343	1,246
Provisions	73	142	141
Tax payables	1,245	2,120	2,224
Trade payables	8,794	8,680	7,053
Financial instruments	911	(109)	252
Other payables	3,371	2,470	3,394
Other current liabilities	239	194	296
Current liabilities	19,773	14,930	18,349
TOTAL EQUITY AND LIABILITIES	68,749	68,618	82,414

• Non Current Assets
  During 2008, €2,952k of development costs was capitalised.

 

• Current Assets
  Whilst Transics managed to considerably improve its receivables (excl VAT) position from 107 days to 77 at 2008 year-end, inventory at 2008 year-end stood at the unusually high level of 213 days of cost of sales compared to 69 days as of December 2007. This excess inventory stems from two main factors: the introduction of a new hardware platform in September 2008, which temporarily creates the need to carry inventory for two product lines, and the unanticipated slowdown in sales observed during the second half of the year.

 

• Shareholders’ Equity
  Profit incorporated amounted to €2,175k.

 

• Non current liabilities
  As of December 31, 2008, the non-current bank borrowings amounted to €7,542k.

 

• Current liabilities
  At year-end 2008, trade payables (excl VAT) stood at 103 days compared to 99 days last year.

Cashflow statement

Transics International NV ‘000 euro	31/12/2008 Consolidated 12 months	31/12/2007 Consolidated 12 months
Cash and cash equivalents, beginning balance	17,762	8,548
Profit of the year	2,175	5,214
Interest expense	2,198	4,192
Interest income (-)	(266)	(362)
Income tax expense (income)	1,593	1,672
Profit (loss) from operations	5,700	10,716
Depreciation and amortisation	3,111	2,444
Impairment losses	73	0
Writ off inventory	31	14
Increase (decrease) in provisions	(67)	88
Other non cash adjustments	(659)	(252)
Non cash adjustments	2,489	2,294
Decrease (increase) in inventories	(3,883)	(833)
Decrease (increase) in trade and other receivables	3,702	(7,195)
Increase (decrease) trade and other payables	2,986	4,104
Other increase (decrease) in working capital	0	0
Decrease (increase) in working capital	2,805	(3,924)
Income tax (paid)/refunded	(2,355)	(3,010)
Cash flows relating to operations	8,639	6,076
Acquisitions	0	(6,374)
Internally developed R&D	(1,878)	(1,209)
Externally developed R&D	(1,074)	(584)
Purchases of other intangibles	(451)	(359)
Purchases of property, plant and equipment	(1,023)	(745)
Disposals	26	19
Government grants received	0	0
Interest received	362	254
Cash flows relating to investing activities	(4,038)	(8,998)
Capital increase	(79)	25.228
New loans	0	27.444
Repayment of finance leases (-)	(105)	(105)
Repayment of loans (-)	(18,480)	(36,842)
Bank overdrafts increased (decreased)	800	0
Interest paid (-)	(1,568)	(3,590)
Cash flows relating to financing activities	(19,432)	12,135
Net increase in cash and cash equivalents	(14,832)	9,213
Cash and cash equivalents, ending balance	2,930	17,761

“The statutory auditor of Transics International NV, BDO Atrio Bedrijfsrevisoren Burg. Ven. CVBA, represented by Veerle Catry, has confirmed that his audit work, which is substantially complete, has not revealed any significant matters requiring adjustments of the 2008 consolidated income statement, balance sheet and cashflow statement included in this press release.”

Transics International NV, established in 1991, develops and commercialises high-end fleet management solutions for the transport and logistics sector. Thanks to many years of experience, thorough R&D efforts and an intensive focus on the customer experience, Transics has become the leading European player in its sector. At the start of 2007, the company acquired DIS (France), a specialist in IT solutions for driving time management based on tachographs. With this takeover, Transics was able to extend its product offering. In addition to its headquarters in Ypres (Belgium), Transics is active throughout Europe. The company has been quoted on the stock exchange (Euronext Brussels) since June 2007.