REG - Microlise Group PLC - Results for the year ended 31 December 2024
27/03/2025 07:15
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RNS Number : 3963C Microlise Group PLC 27 March 2025
27 March 2025
Microlise Group plc
("Microlise", "the Group" or "the Company")
Results for the year ended 31 December 2024
Strong performance driven by consistent strategic execution
Microlise Group plc (AIM: SAAS), a leading provider of transport management
software to fleet operators, announces its audited results for the twelve
months ended 31 December 2024 ("FY24" or the "Period").
FY24 FY23 Change
Financial Revenue £79.5m £71.7m 11%
Adjusted Revenue ((1)) £81.0m £71.7m 13%
Recurring Revenue £53.1m £45.0m 18%
Adjusted Recurring Revenue((1)) £54.7m £45.0m 21%
Adjusted EBITDA ((2)) £11.3m £9.4m 20%
Adjusted Operating Profit((3)) £6.3m £5.5m 13%
Operating (Loss)/Profit((3)) £(2.3)m £2.3m (202)%
Profit / (loss) before tax £(2.3)m £2.5m (193)%
Adjusted Profit before tax ((4)) £6.5m £5.6m 16%
Basic EPS (p) (1.77)p 1.36p (230)%
Adjusted EPS (p) 4.19p 3.45p 21%
Cash and cash equivalents £11.4m £16.8m (32)%
(1) Adjusted Revenue and Adjusted Recurring Revenue excludes revenue
reversals relating to the cyber security incident, which are expected to be
fully covered by insurance.
(2) Adjusted EBITDA excludes, exceptional costs in relation to the
cyber incident, acquisitions, restructuring, depreciation, amortisation, share
of loss of associate, interest, tax and share based payments
(3) Adjusted Operating Profit excludes amortisation on business
combinations, exceptional costs in relation to the cyber incident,
acquisitions, restructuring costs and share based payments.
(4) Adjusted Profit / (loss) before taxation excludes amortisation
on business combinations, exceptional costs in relation to the cyber incident,
acquisitions, restructuring costs, share based payments and loss of share of
associate.
Financial Highlights
· The Group delivered an increase in adjusted revenue, which excludes
revenue reversal relating to the cyber security incident, which are expected
to be fully covered by insurance, of 13% to £81.0m for FY24 (FY23: £71.7m).
Reported Group revenue for the period was £79.5m (FY23: £71.7m).
· Adjusted recurring revenue increased 21% to £54.7m (FY23: £45.0m),
due to the acquisitions made in the year and the delivery key contract wins
which contributed towards 11% organic recurring revenue growth. Reported
recurring revenue was £53.1m (FY23: £45.0m).
· Annual recurring revenue (ARR) run rate +18.8% to £56.6m, of which
9.4% represented organic growth at 31 December 2024 from £47.7m on 31
December 2023.
· A total of £4.4m, relating to the cyber incident are expected to be
covered in full by the Group's cyber security insurance:
o Revenue service credits of £1.5m reflecting the period during which the
Group's network and services were unavailable to customers;
o Costs of £0.4m cost reflecting costs incurred by the Group in rectifying
the cyber security incident;
o £2.4m of provisions in respect of claims for consequential losses from
the disruption to the Company's customers' own businesses.
· Adjusted EBITDA increased 20% to £11.3m (FY23: £9.4m) with adjusted
EBITDA margin increasing to 14.0% (FY23: 13.2%).
· Adjusted operating profit increased 13% to £6.3m (FY23: £5.5m).
Reported operating loss for the period was £2.3m (FY23: £2.3m profit),
following the exceptional costs incurred from the cyber incident and increases
in amortisation charges as a result of business combinations.
· Continued strong underlying cash conversion exceeding 90% reflecting
growth in subscription revenue and continued good working capital management.
· Robust balance sheet with £11.4m cash and cash equivalents (FY23:
£16.8m), following consideration of £7.3m paid during the period in relation
to the acquisitions of ESS and Vita Software .
· The Board are recommending the payment of a final dividend of 1.24
pence per ordinary share subject to shareholder approval, payable on 27 June
2025 to shareholders on the register at the close of business on 6 June 2025.
Strategic and operational highlights
· Over 375 new customers were gained across the Group, including
companies such as GSF, Woolies, STAF and FSSI, and 52 contracts were renewed
during the period including as JCB, Bidfood, Sainsbury's and Cemex.
· Strong international growth with new direct customers secured in
Australia, New Zealand and France further establishing the Company's expanding
positions in those markets.
· Integration of ESS, K-Safe and Vita is continuing in line with
expectations, with MicroliseOne launched post period end. The Group has
already completed a number of upsells of the acquired TMS solutions to
existing customers.
· Long-term contract customer churn rate by value remained very low at
0.7% (FY23: 0.7%)
· Subscriptions +36%, driven by completed acquisitions, continued
growth in our existing customers together and new direct customer wins (FY23:
640,000).
Current Trading & Outlook
· The Group delivered a record performance in 2024, with cash levels
and adjusted EBITDA exceeding market expectations.
· With a strong pipeline, growing international footprint, and
improving market conditions the Company is confident in the Group's prospects
for 2025.
· Our enhanced and expanded product set continues to gain traction, our
end markets are improving, and our new Chief Revenue Officer is further
refining our sales and marketing processes.
Nadeem Raza, CEO of Microlise, commented:
"Microlise delivered record performance in FY24, exceeding market expectations
in cash levels and adjusted EBITDA which is reflective of our comprehensive
growth strategy and continually improving customer offerings. We have
continued to secure major customer contracts and have renewed our longstanding
partnerships with longstanding customers such as JCB.
Toward the end of the year, the hard work of the Microlise team and our
previous commitment to cyber security ensured that we successfully navigated a
cyber security incident, loosing no customers and we have continued to build
and convert our new business pipeline.
We remain focused on improving our customer offering and expanding our
international business in key geographies such as Australia, New Zealand and
France. Our strong pipeline, paired with our growing international footprint
gives us much to look forward to in 2025 and I would like to thank everyone at
Microlise for their hard work in the period."
For further information, please contact:
Microlise Group plc C/O SEC Newgate
Nadeem Raza, CEO
Nick Wightman, CFO
Singer Capital Markets (Nominated Adviser & Broker) Tel: 020 7496 3000
Steve Pearce / James Moat / Sam Butcher
SEC Newgate (Financial PR) Tel: 020 3757 6880
Bob Huxford / Molly Gretton / Harry Handyside Email: microlise@secnewgate.co.uk (mailto:microlise@secnewgate.co.uk)
About Microlise
Established in 1982, Microlise Group Plc is a leading SaaS provider of
Transport and fleet management solutions. Its technology is designed to help
businesses improve efficiency, reduce emissions, lower costs, and increase
safety on the road.
With a range of products and services used by more than 400 enterprise clients
globally, Microlise helps companies of all shapes and sizes - across a wide
range of industries - to better manage their entire operation.
Backed by a team of experienced professionals who provide excellent customer
service, the Group has won a number of awards, including three Queens Awards
for Innovation (2019, 2020).
Headquartered in the United Kingdom, the company also has offices in France,
Australia, and India with a global staff base of more than 800 industry
professionals.
Handling over 873,000 subscriptions annually, Microlise joined the Alternative
Investment Market (AIM) in 2021, qualifying for the London Stock Exchange's
Green Economy Mark.
Chairman's Statement
The Company has delivered another year of strong performance, achieving solid
revenue and profit growth driven by organic expansion and the ongoing
integration of recent acquisitions.
During the 12 months ended 31 December 2024, the Group delivered a robust
financial performance, reflecting the strength of our offering and the
continued demand for our solutions. We saw strong momentum across all core
markets, with the Group's international businesses in Australia, New Zealand
and France performing particularly strongly by all securing material new
direct customer wins.
Adjusted revenue increased by 12.9% to £81m (FY23: £71.7m). Adjusted
recurring revenue grew by 21.4% to £54.7m (FY23: £45.0), with organic growth
accounting for 11.1%. Annual Recurring Revenue (ARR) grew by 18.8% to £56.6m
(FY23: £47.7m), including 9.4% organic growth. Adjusted EBITDA grew 20%
during the period, ahead of market expectations.
A key challenge during the period was the cyber security incident the Company
faced in October 2024. Thanks to the Microlise team's quick response and our
prior investment in comprehensive security measures, we were able to restore
services within 2.5 weeks, and most importantly, ensure that no customer
systems data was compromised. Thanks to the response of the team, the Group
has been able to bounce back strongly, having not lost any existing customers
and continuing to add new customers following the incident. Going forward, we
will continue to invest in our security to prevent such incidents, ensuring
the highest forms of protection for our customers and colleagues.
The completion of the acquisition of Enterprise Software Systems (ESS) in
January 2024 and the continued integration of K-Safe and Vita throughout 2024
have strengthened our market-leading position, particularly in transport
management systems ("TMS"). We have already made steady progress with our TMS
acquisitions, delivering sales of these products to both new and existing
customers. During the period, we have continued to integrate these
acquisitions into our broader product offering to create MicroliseOne; a
single interface and technology stack for all the Group's solutions. This will
accelerate cross-sell and upsell opportunities of our end-to-end product suite
and reduce costs.
Market conditions significantly improved in the latter stages of 2024, with
supply chain disruptions and vehicle production delays now expected to be
fully behind us, with the Group adding a total of 375 new customers. Looking
to the year ahead, our primary focus will remain on driving operational
efficiency and enhancing profitability within the business. We have multiple
initiatives in progress to improve EBITDA margins and the efficiency of our
business by streamlining internal processes, enabling us to scale more
effectively. At the same time, we will continue to review strategic growth
opportunities through both organic expansion and potential acquisitions that
may complement our existing portfolio.
Finally, I would like to thank our customers for their continued trust and our
employees for their dedication, particularly in overcoming the challenge of
the cyber incident. Their efforts have ensured that Microlise remains a
resilient, innovative, and forward-looking business.
Jon Lee, Non-Executive Chairman
CEOs Statement
Microlise delivered a record performance in 2024, with cash levels and
adjusted EBITDA exceeding market expectations. This performance reflects the
effectiveness of our growth strategy and the continued strength of our
offerings.
During the period we made significant progress on a number of strategic growth
objectives, including adding 375 new direct clients; expanding our presence in
targeted international geographies; completing, and making substantial
progress in integrating, the acquisitions of Enterprise Software Systems (ESS)
and K-Safe; and successfully cross-selling products from our enhanced and
extended product portfolio.
With a strong pipeline, growing international footprint, and improving market
conditions we are confident in the Company's prospects for 2025.
Market
2024 was a year of robust growth for our markets with the global supply chain
issues and chip shortages, which negatively affected our financial performance
in previous years, mostly behind us.
In Australia, initial delays caused by new vehicle availability led to a
temporary vehicle and component supply shortage. However, we are pleased to
report that in the second half of the year vehicle supply conditions
normalised and, as a result, we are now experiencing accelerated growth in the
region as our new customers roll out our products across their fleet.
In addition, Microlise experienced a slowdown in business with OEM customers,
both in the automotive and construction industries, during the latter half of
the year. This was due to these markets processing an excess of orders
fulfilled following resolution of the supply chain problems of prior years,
alongside the removal of certain tax incentives.
We are encouraged to see that activity amongst our OEM customers are trending
towards normal levels during 2025.
Customers
During the period Microlise secured 375 new clients, while customer churn
remained extremely low at 0.7%. The excellent client retention highlights the
critical importance of Microlise's offerings to its client base and our strong
customer relationships.
The Company continued to secure new customers in the UK throughout 2024,
further building upon its market-leading position. Expansion into the
international target markets of France, Australia and New Zealand were
especially strong, where Microlise is increasingly becoming recognised as a
major industry player.
Microlise also secured 52 client renewals during the period, with many of
these taking up an enhanced offering as part of the renewal. Notable examples
include a five-year extension with JCB, building further upon a relationship
already in its 14th year.
Post-period end the Company has continued to build upon the performance of
2024 with our customer pipeline showing strong growth.
Product Offering
At the beginning of 2024, Microlise announced the completion of its
acquisition of Enterprise Software Systems (ESS), a leading provider of
Transport Management System (TMS) solutions. This acquisition enhanced the
Group's existing TMS solution which helps customers manage transport
operations from order receipt to invoice creation.
The acquisition immediately contributed to both revenue and earnings and the
Group's TMS solution is being fully integrated into Microlise's growing
products suite, enhancing its end-to-end service offering, which now covers
the entire delivery journey, from order receipt to the consumer's doorstep.
Several cross-sales have been made of the TMS product since acquisition, and
we are confident that it will gain further traction in the year ahead.
Additionally, Microlise fully integrated the software from its K-Safe
acquisition during the period. This added the Driver Hazard Warning (DHW)
safety solution to the Company's product suite, ensuring two-wheeled vehicles
such as cyclists, motorcyclists, and e-scooters are visible to drivers even
when in their blind spot.
At our renowned Microlise Transport Conference on 18 March, attended by over
1,200 delegates, we officially announced MicroliseOne, our new single
integrated interface for the full suite of our enhanced product offering.
MicroliseOne will reduce costs and create a seamless integration of our
end-to-end offering, making it easier for clients to use and add more of our
products across their operations. We look forward to this complete end-to-end
service being adopted by more of our customers.
Other product developments made by Microlise in the year include improvements
to hardware with the release of several new models. In addition, support has
been introduced for several new third party camera solutions.
Cyber Security Incident
On 31 October 2024, Microlise announced it had experienced a cyber security
incident involving unauthorised activity detected on its network. The
Microlise team reacted immediately, taking a number of actions to contain the
situation such that the Company's network and services were fully restored
within 2.5 weeks.
The Group expects the exceptional costs associated with the incident to be
fully covered by its cyber security insurance.
As a result of Microlise having prioritised investment into enhancing the
security of its systems, the Company was able to ensure that no customer
systems data was compromised during the incident. Since the event, Microlise
has accelerated its investment plan on cyber security measures ensuring that
its data, and that of its customers, remains safe and secure.
The incident has had a limited effect on the Company's ability to retain and
secure business. Importantly, the Group has not lost any clients as a result
of the attack, and its pipeline is robust and continues to grow, with 375 new
customers signed since the restoration of the network.
We would like to thank all of our customers for their understanding during the
incident and are grateful for their continued support throughout 2025.
Strategic Focus
We are currently focused on the following core strategic objectives:
Bringing our three recent acquisitions into the Microlise architecture
Technical integration is progressing well which will enable us to more
effectively upsell and cross-sell products and attract new customers. This
programme of work is externally named MicroliseOne, launched at the Group's
transportation conference in March 2025, as we look to reduce costs and
continue to build on our differentiator of being an end-to-end integrated
solution for transport operators.
Combining all of our products into a single, seamlessly integrated product
suite
Our R&D team is currently developing our systems architecture across all
our products to ensure each is fully integrated. This will allow for common
functionality across the suite of programmes. This will make our product suite
still more attractive to potential customers while also facilitating the sale
of more products to existing customers.
Improving margins through greater efficiencies
We have multiple initiatives underway to improve the efficiency of our
business by further streamlining internal processes, allowing us to reduce
costs, improve margins and scale the business more effectively.
Greater product integration with partners
We are strategically increasing our support for 3rd party hardware products,
extending the portfolio of solutions we can offer to our customers. This
expansion will reduce the costs of installing the Microlise platform,
encouraging customers to utilise a greater number of our solutions to manage
their business operations with our SaaS platform.
Continued investment into security measures for our blue-chip customer base
In an increasingly challenging cyber threat landscape, a number of our clients
have experienced attacks in recent years, including ourselves in 2024. Thanks
to prior investment and swift action, our services were fully restored
quickly, with no customer data compromised.
With the broader industry context, this has reinforced the importance of
continued investment in our cyber defences. We have accelerated our security
programme, including enhancements to our enterprise firewalls and increased
use of our Exposure Management Platform, which includes real-time monitoring
for software vulnerabilities.
While this area represents our largest capital investment, it is essential to
ensure the resilience of our business-critical systems. Our customers,
particularly in the logistics sector, depend on our solutions to maintain
seamless operations and we remain committed to delivering the assurance and
security they require.
International Expansion
During the period, we have remained focussed on international expansion, and
we have made material progress across a number of key geographies,
particularly in Australia and New Zealand where we signed new contracts with
leading grocery retailers. This demonstrates the market leading nature of our
products in the region and we have therefore committed increased investment to
our sales function to ensure accelerate growth in the region.
M&A
Accretive M&A remains a core part of our strategy and we continue to see a
robust pipeline of opportunities. We continue to assess acquisition
opportunities, with a current focus on international business. We will act
appropriately should acquisition opportunities align with our immediate and
long-term strategic focus.
Microlise Transport Conference
The 2025 Microlise Transport Conference took place on 18th March at the
Coventry Building Society Arena. 1200 delegates attended the event making it
the biggest and most successful conference in our history. Each year we have
an impressive range of keynote speakers to addressed crucial topics the
audience. In addition, there were four further stages at the show featuring
talks from SMEs from across the logistics industry, and OEMs, such as DAF,
Mercedes-Benz, Volvo and Renault Trucks showcasing their latest electric
vehicle offerings to delegates.
People
In September 2024, we appointed Mike Blackburn as Chief Revenue Officer. Mike
has a proven track record in fostering innovation, scaling sales, and
orchestrating business transformation. He has been instrumental in two major
private equity exits, as well as securing new customers and driving growth
through cross-sell and upsell strategies across multiple markets.
With extensive experience in SaaS, technology, and professional services, Mike
is responsible for leading the sales and marketing teams at Microlise in
driving revenue generation and accelerating growth.
Since his appointment, Mike has already implemented several new initiatives.
These include changes to the structure of the sales and marketing teams to
drive efficiency and targeted investment in systems and capacity to ensure
Microlise is optimally equipped to capture the growing opportunities within
its markets.
ESG
Microlise's solutions provide material benefits to customers in terms of
reducing emissions, improving safety for drivers, and lengthening the life of
assets, through ensuring they are driven and maintained effectively -
lengthening the useful life of assets. As well as reducing costs to our
customers, these benefits improve the environment for everybody, both in terms
of lowering pollutants in the atmosphere and improving the safety of our
roads.
Microlise is committed to meeting its net zero goals and continues to improve
its ESG credentials. To ensure ESG remains a priority to the Company, the
incentive plan for Microlise's executive team relates in part to the company
meeting its sustainability objectives.
During the first half of the year, we also completed the installation of 502
solar panels and doubled the number of EV charge points at our Nottingham HQ,
with the objective of reducing the site's annual carbon footprint by over 80
tonnes of CO2. We have also ordered a new fleet of hybrid vans for our
engineering teams, to replace an existing aged mixed fleet of diesel vehicles.
In terms of the social element of ESG, we achieved 'Great Place to Work'
accreditation for the 3rd year in a row, with the categories "Best Large
Workplaces" and "Best Workplaces in Tech" also being achieved within this.
Outlook
Looking ahead, we remain confident in our ability to deliver continued growth.
We currently have a strong customer pipeline which is experiencing accelerated
growth post the cyber-securing incident. Our enhanced and expanded product set
continues to gain traction, our end markets are improving, and our new Chief
Revenue Officer is further refining our sales and marketing processes. We are
therefore well positioned to build upon our strong 2024 performance and
deliver further growth in the year ahead.
Nadeem Raza, CEO
CFO's Statement
The financial results for the twelve-month period to 31 December 2024 reflect
another period of profitable growth for Microlise.
Key Performance Indicators
The following key performance indicators for the 12-month period to 31
December 2024
FY24 FY23 Change
Financial Revenue £79.5m £71.7m 11%
Adjusted Revenue ((1)) £81.0m £71.7m 13%
Recurring Revenue £53.1m £45.0m 18%
Adjusted Recurring Revenue((1)) £54.7m £45.0m 21%
Adjusted EBITDA ((2)) £11.3m £9.4m 20%
Adjusted Operating Profit ((3)) £6.3m £5.5m 13%
Operating (Loss)/Profit £(2.3)m £2.3m (202)%
(Loss)/profit before tax £(2.3)m £2.5m (193)%
Adjusted Profit before tax ((4)) £6.5m £5.6m 16%
Basic EPS (p) (1.77)p 1.36p (230)%
Adjusted EPS (p) 4.19p 3.45p 21%
Cash and cash equivalents £11.4m £16.8m (32)%
Exceptional costs
During the period, the Group incurred a number of one off, exceptional costs
in relation to the cyber incident, totalling £4.4m. These exceptional costs
include £1.5m reversal in revenue in relation to service level credits,
£0.4m of professional services costs in relation to managing technical
restoration of services, and £2.4m of provisions in respect of claims for
consequential losses from the disruption to the customers' own businesses. The
group considers that its related insurance policies will cover these
liabilities and that it is likely to be reimbursed a materially similar amount
in due course once the insurance claims are evaluated and processed with
insurance receipts due to be recognised in FY25 as exceptional other income.
During the period, the Group also incurred a number of one-off charges
relating to acquisition fees and subsequent restructuring. The total of these
charges in the period ended 31 December 2024 was £0.4m (FY23: £0.4m).
To assist users of the financial statements with understanding underlying
business trading, the Group will present KPI's excluding exceptional items,
including exceptional cyber costs and revenue reversals. All exceptional costs
are disclosed separately in note 2 of the financial statements.
(1) Adjusted Revenue and Adjusted Recurring Revenue excludes revenue
reversals relating to the cyber security incident, which are expected to be
fully covered by insurance.
(2) Adjusted EBITDA excludes, exceptional costs in relation to
acquisitions, restructuring and cyber related costs, depreciation,
amortisation, share of loss of associate, interest, tax and share based
payments
(3) Adjusted Operating Profit excludes amortisation on business
combinations, exceptional costs in relation to the cyber incident,
acquisitions, restructuring costs and share based payments.
(4) Adjusted Profit / (loss) before taxation excludes amortisation
on business combinations, exceptional costs in relation to the cyber incident,
acquisitions, restructuring costs, share based payments and loss of share of
associate.
KPIs for the twelve months ended 31 December 2024 FY24 FY23 Change Organic
Group Revenue £79.5m £71.7m 10.8% 3.8%
Recurring revenue £53.1m £45.0m 18.0% 7.7%
Adjusted Group revenue ((1)) £81.0m £71.7m 12.9% 6.0%
Adjusted recurring revenue £54.7m £45.0m 21.4% 11.1%
Non-recurring revenue £26.3m £26.7m (1.4%) (2.6%)
Installation £3.2m £3.1m 3.0% 3.0%
Hardware £19.4m £20.6m (6.1%) (6.4%)
Professional services £3.8m £3.0m 27.1% 17.6%
Annual recurring revenue (ARR) ((2)) £56.6m £47.7m 18.8% 9.4%
Adjusted Group revenue for the 12 months ended 31 December 2024 (FY24) was
£81m, an increase of 12.9% from 31 December 2023 (FY23), driven by strong
growth in adjusted recurring revenues which have grown 21.4% to £54.7m (FY23:
£45m). Delivery increases towards the end of the prior year against its
strong direct customer orderbook with key contract wins such as BCA, McCulla
and LF&E contributing towards the 11% organic recurring revenue growth.
Recurring revenues contributed 66.9% to overall revenue (FY23: 62.8%).
Reported Group revenue and recurring revenues for the period were £79.5m
(FY23: £71.7m) and £53.1m (FY23: £45.0m) respectively.
ARR increased 18.8% (9.4% organic) to £56.6m (FY23: £47.7m) with further
contributions from key contract wins in the period such as Woolworths, GSF,
Foodstuffs North Island and STAF have continued to positively impact as
deliveries continued in H2. Looking forward, the Group expects ARR to continue
to grow as customers won over the past year continue to roll out Microlise's
products across their fleets, alongside further customer wins.
Non-recurring revenues decreased by 1.4% to £26.3m (FY23: £26.7m). An
anticipated slowdown in both the con-struction and automotives industries has
impacted hardware shipments to our OEM((3)) customers which has driven a
decrease of 6.1% to £19.4m (FY23: £20.6m). This decrease was partially
offset by an increase in hardware revenues in both Australia and France as new
contracts are rolled out and vehicles availability issues in Australia have
eased.
Professional services and installation revenues have increased by 27% to
£3.8m (FY23: £3m) and 3% to 3.2m (FY23: £3.1m) respectively, driven by
implementation and integration support for both projects with direct and OEM
customers.
Gross Profit
Adjusted gross profit((4)) for the 12 months ended 31 December 2024 increased
by 23% to £53.5m (FY23 £43.6m). Adjusted gross margin % increased from 61%
to 66% reflecting margin improvements in both recurring and non-recurring
revenue coupled with an increasing mix of the Group towards higher margin
recurring revenues. Non-recurring margins have increased due to an
increasing mix towards higher margin direct customer sales. Recurring margin
saw a c.1.0% increase in gross margin as a result of increased subscription
revenues coupled with effective cost management and efficiency programmes,
this was impacted by less favourable gross margins from ESS which will improve
over time as the service in integrated into Microlise's technology platform.
Reported gross profit for the 12 months ended 31 December 2024 is £52.0m
(FY23: £43.6m).
Administrative Expenses & Operating Profit
Adjusted administrative expenses((5)) before exceptional administrative
charges and share based payment charges, in the 12-month period ended 31
December 2024 increased 23% to £50.7m (FY23: £41.2m). On an organic basis,
this increase is 16.1%
Staff costs in the 12 months ended 31 December 2024 increased 21% to £36.2m
(FY23: £30m) reflecting our investment into our international teams, the
impact of the ESS acquisitions, as well as annual pay awards and increased
commissions/bonuses reflecting the increased new customer win rate and the
Group's strong Adjusted EBITDA performance. Average headcount in the Period
was 805 (FY23: 715) overall, 39 of this headcount increase relates to the
acquisition of ESS with a further 11 employees joining our graduate training
programme. The increase in operations includes additional engineering resource
to support the strategy of bringing more installation work inhouse which
supports our margin enhancement strategy. A further 9 staff were added in
sales & marketing including increases in staff numbers in Australia and
France to drive growth in these regions.
Marketing costs increased during the period by £0.1m to £1.3m as the Group
has continued to focus on growth with targeted marketing spend in key
strategic geographies. This includes an increased number of exhibitions
globally, the implementation of global prospecting tools and the product
launch of Microlise TMS (Vita software and ESS).
Legal, professional and IT costs increased during the period by a net £1.3m.
The Group has continued to invest significantly in its security posture
increasing spend by c.0.4m on the prior year. Investment in its internal
business systems has also continued to increase as it continues to leverage
efficiency improvements to support growth and scalability. The Group has also
absorbed 3rd party licensing cost increase.
Depreciation and amortisation charges in the period increased 29% to £7.9m
(FY23: 6.1m). Depreciation charges increased as a result of increased levels
of fixed asset investment in the Group's data centres and improvements to its
headquarters. Amortisation charges increased as a result of business
combinations following the recent acquisitions, and a continuation of levels
of investment in internally developed technologies.
Capitalised development costs in the period were £2.7m (FY23: £2.5m),
reflecting the ongoing levels of investment into the product portfolio
including integration of recent acquisitions, architecture and security whilst
amortisation of capitalised development costs in the period ended 31 December
2024 was £1.7m (FY23: £1.2m).
Operating profit for the 12 months ended 31 December 2024 after adjusting for
exceptional costs, share based payments, amortisation charges as a result of
business combinations increased by 13.2% to £6.3m (FY23: £5.5m). Reported
operating loss for the 12 months ended 31 December 2024 was £2.3m (FY23:
£2.3m profit), the principal factors driving this are cyber related
exceptional costs and increases in amortisation charges as a result of
business combinations due to the acquisition of ESS.
Adjusted EBITDA & Profit Before Tax
The growth in revenue and gross margin has enabled the Group to deliver an
adjusted EBITDA((6)) ahead of market expectations at £11.3m in the 12 months
ended 31 December 2024, an increase of 20% (FY23: £9.4m). Adjusted EBITDA
margin has increased to 14% (FY23: 13%). To provide a better guide to the
underlying business performance, adjusted EBITDA excludes the impact of the
cyber incident (£4.4m) and exceptional costs in relation to acquisitions,
restructuring costs, depreciation, amortisation, share of loss of associate,
interest, tax and share based payments.
Adjusted profit before taxation for the 12 months ended 31 December 2024
increased 16% to £6.5m (FY23: £5.6m). The adjusted profit before taxation
excludes exceptional costs in relation to acquisitions, restructuring and
cyber costs, amortisation charges of £2.8m as a result of business
combinations (FY23: £2.2m), share of loss of associate and share based
payments. Reported loss before taxation in the period was £2.3m (FY23: £2.5m
profit).
Taxation
The tax credit in the 12 months ended 31 December 2024 was £0.3m (FY23:
£0.9m charge). The effective tax rate for the year is higher than the
standard rate of corporation tax and this is driven by the share of associate
loss not deductible and non-deductible expenses for share-based payments as
the intrinsic value of the options has been assessed as £nil. Underlying
deferred tax credits relate to the amortisation of intangible assets and
utilisation of accelerated allowances offset by the utilisation of tax losses
brought forward.
From 1 July 2020, Microlise has been classified as a large company for tax
research and development purposes and benefits from the Research and
Development Ex-penditure Credit scheme (RDEC) with any benefit being reflected
as grant income within other operating income. In the period ended 31 December
2024 the pre-tax value of the credit was £0.4m (FY23: £0.6m).
Profit After Tax, EPS and Dividend
Adjusted profit after tax increased 21.4% to £4.9m (FY23: £4.0m). As a
result, adjusted earnings per share((7)) the for the 12 months period ended 31
December 2024 increased 21.4% to 4.19p (FY23: 3.45p). Reported basic loss per
share for the 12-month period ended 31 December 2024 was 1.77p (FY23: 1.36p
earnings) and diluted loss per share was 1.77p for the 12 months period ended
31 December 2024 (FY23: 1.36p earnings). For further information on earnings
per share, please refer to note 8 of the financial statements. Reported loss
after tax for the 12 months period ended 31 December 2024 was £2.1m (FY23:
£1.6m profit).
During the period, the Group announced the introduction of its dividend policy
and paid a full year dividend of 1.72 pence per share and an interim dividend
of 0.57 pence per share. The Board are recommending the payment of a final
dividend of 1.24 pence per ordinary share. Subject to shareholder approval at
the Annual General Meeting to be held on 28 May 2025, the dividend will be
paid on 27 June 2025 to shareholders on the register at the close of business
on 12 June 2025.
Group Statement of Financial Position
The Group had net assets of £71.9m at 31 December 2024 (FY23: £75.7m).
Intangible assets increased by £7.7m reflecting the £9.6m of acquired
intangible assets and goodwill resulting from the acquisition of ESS,
capital-ised development costs less amortisation charges. Cur-rent assets
decreased by £4.1m, primarily due to a de-crease in cash offset by an
increase in debtors driven by higher revenues in the year. Total liabilities
increased by £7.2m due to an increase in deferred income and trade payables
and the provisions relating to 3rd party claims resulting from the cyber
incident. The Group typically in-voices for software subscriptions monthly,
quarterly, an-nually or for the life of the subscription in advance which
drives a strong balance sheet with significant cash bal-ances. Revenue is
recognised in the month the service is provided with deferred income disclosed
as contract lia-bilities in current and non-current liabilities. As at the end
of December 2024 total Trade and other payables was £52.4m (FY23: £48.3m) of
this balance £38.8m (FY23: £34.5m) is deferred income and relates to future
con-tracted revenue recognition.
Adjusted Cashflow((8)) & Net Cash
Adjusted cash flows generated from operations (8) re-mains healthy at £10.3m
in the period (FY23: £9.3m), this represents a cash conversion rate (9) of
91% (FY23: 98%). Reported cash flows generated from operations in the period
was £9.7m (FY23: £8.8m)
The Group ended the 12-month period to 31 December 2024 with cash and cash
equivalents of £11.4m (FY23: £16.8m). Overall, the net cash outflow was
£5.7m with the main movements being; £7.1m for the acquisition of ESS;
repayments of tax £1.2m, (FY23: nil), FY23 dividend and FY24 interim dividend
totalling £2.7m (FY23: nil), purchases of plant, property and equipment of
£1.4m (FY23 £2.2m), investment into product and development of £2.8m (FY23:
£2.5m), pay-ments in respect of lease liabilities £1.2m (FY23: £1.1m).
Banking Facility
In April 2024, the Group renewed its facility with HSBC with an agreed £10.0m
committed revolving cash flow facility and a £20m accordion. The Group has
not utilised any of this facility to date and therefore remains com-fortably
within its banking covenants. The Group's cash of £11.4m (FY23: £16.8m) and
the undrawn £10.0m facil-ity gives the Group £21.4m of cash availability,
which the Directors believe provides ample headroom for Microlise to deliver
against its strategic goals. Given the level of headroom in the business
forecasts the Board consider it appropriate to prepare the financial
statements on the going concern basis. Details of the Board's going con-cern
assessment is provided in the basis of preparation note in the financial
statements.
Additional Notes
1. Adjusted Revenue adds back the impact of credit notes related to the
cyber incident.
2. Annual Recurring Revenue (ARR) is calculated by multiplying the
December 2024 monthly recurring revenue by 12
3. OEM is an abbreviation for Original Equipment Manufac-turers
4. Adjusted gross margin adds back the impact of credit notes related to
the cyber incident
5. Adjusted Administrative Expenses & Operating Profit adds back the
impact of credit notes and exceptional costs related to the cyber incident,
exceptional costs in relation to acquisitions and restructuring costs.
6. Adjusted EBITDA excludes, exceptional costs in relation to
acquisitions and restructuring costs, costs in relation to the cyber incident,
depreciation, amortisation, share of loss of associate, interest, tax and
share based payments.
7. Adjusted EPS excludes exceptional costs in relation to acquisitions
and restructuring costs, costs in relation to the cyber incident, share based
payments and amortisation of intangible assets resulting from business
combinations.
8. Adjusted cash flow generated from operations adds back exceptional
costs in relation to acquisitions and restructuring costs.
9. Cash conversion is calculated by dividing adjusted cash flow
generated from operations by adjusted EBITDA.
Nick Wightman, Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2024
2024 2024 2024 2023
Underlying results Exceptional cyber costs Total Total
(note 2)
Note £'000 £'000 £'000 £'000
Revenue 1 80,995 (1,520) 79,475 71,716
Cost of sales (27,474) - (27,474) (28,132)
Gross profit 53,521 (1,520) 52,001 43,584
Other operating income 3 640 - 640 973
Administrative expenses (52,089) (2,860) (54,949) (42,302)
3 2,072 (4,380) (2,308) 2,255
Operating profit/(loss)
Interest income 5 452 - 452 360
Interest expense 6 (250) - (250) (333)
Share of (loss)/profit of associate net of tax 12 (229) - (229) 225
2,045 (2,335) 2,507
Profit/(loss) before taxation (4,380)
Taxation 7 (814) 1,095 281 (931)
Profit/(loss) for the year 1,231 (3,285) (2,054) 1,576
Other comprehensive expense for the year
Currency translation differences (34) - (34) (102)
Total comprehensive income/(expense) for the year attributable to the equity (2,088) 1,474
shareholders of Microlise Group plc
1,197 (3,285)
Basic earnings per share (pence) 8 1.06 (2.83) (1.77) 1.36
Diluted earnings per share (pence) 8 1.06 (2.83) (1.77) 1.36
Consolidated Statement of Financial Position
as at 31 December 2024
31 December 31 December
2024 2023
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 10 8,702 8,947
Intangible assets 11 83,914 76,228
Investments in associate 12 1,364 1,593
Trade and other receivables 14 3,201 2,841
Total non-current assets 97,181 89,609
Current assets
Inventories 13 3,212 3,348
Loan to associate 12 1,000 1,000
Trade and other receivables 14 21,104 18,757
Corporation tax recoverable 746 1,665
Cash and cash equivalents 15 11,401 16,800
Total current assets 37,463 41,570
134,644 131,179
Total assets
Current liabilities
Lease liabilities 16 (809) (907)
Trade and other payables 17 (36,409) (32,630)
Total current liabilities (37,218) (33,537)
Non-current liabilities
Lease liabilities 16 (500) (646)
Trade and other payables 17 (16,051) (15,701)
Deferred tax 18 (6,114) (5,622)
Provisions 19 (2,862) -
Total non-current liabilities (25,527) (21,969)
Total liabilities (62,745) (55,506)
Net assets 71,899 75,673
Equity
Issued share capital 22 116 116
Share premium account 17,630 17,630
Retained earnings 54,153 57,927
Total equity 71,899 75,673
Consolidated Statement of Changes in Equity
Share Capital Share Premium Account Retained earnings Total Equity
£'000 £'000 £'000 £'000
At 31 December 2022 116 17,630 55,722 73,468
Comprehensive income/(expense) for the year ended 31 December 2023
Profit for the year - - 1,576 1,576
Other comprehensive expense - - (102) (102)
Total comprehensive income for the year - - 1,474 1,474
Share based payment (note 23) - - 731 731
Total transactions with owners - - 731 731
116 57,927 75,673
At 31 December 2023 17,630
Comprehensive income/(expense) for the year ended 31 December 2024
Loss for the year - - (2,054) (2,054)
Other comprehensive expense - - (34) (34)
Total comprehensive expense for the year - - (2,088) (2,088)
Share based payment (note 23) - - 975 975
Dividends paid (note 9) - - (2,661) (2,661)
Total transactions with owners - - (1,686) (1,686)
116 54,153 71,899
At 31 December 2024 17,630
Company Statement of Financial Position
as at 31 December 2024
31 December 31 December
2024 2023
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 10 4,634 4,736
Investments 12 94,094 83,005
Deferred tax 1 1
Total non-current assets 98,729 87,742
Current assets
Loan to associate 12 1,000 1,000
Trade and other receivables 14 51 158
Cash and cash equivalents 15 55 86
Total current assets 1,106 1,244
99,835 88,986
Total assets
Current liabilities
Trade and other payables 17 (23,311) (15,434)
Total current liabilities (23,311) (15,434)
Total liabilities (23,311) (15,434)
Net assets 76,524 73,552
Equity
Issued share capital 22 116 116
Share premium account 17,630 17,630
Retained earnings 58,778 55,806
Total equity 76,524 73,552
Company Statement of Changes in Equity
Share Capital Share Premium Account Retained earnings Total Equity
£'000 £'000 £'000 £'000
At 31 December 2022 116 49,562 67,308
17,630
Comprehensive income for the year to 31 December 2023
Profit for the year - - 5,529 5,529
Other comprehensive income - - - -
Total comprehensive income for the year - - 5,529 5,529
Share based payment (note 23) - - 715 715
Total transactions with owners - - 715 715
116 55,806 73,552
At 31 December 2023 17,630
Comprehensive income for the year to 31 December 2024
Profit for the year - - 4,643 4,643
Other comprehensive income - - - -
Total comprehensive income for the year - - 4,643 4,643
Share based payment (note 23) - - 990 990
Dividends paid (note 9) - - (2,661) (2,661)
Total transactions with owners - - (1,671) (1,671)
116 58,778 76,524
At 31 December 2024 17,630
Consolidated Statement of Cash Flows
for the year ended 31 December 2024
Year ended Year ended
31 December
31 December
Note 2024 2023
£'000 £'000
Cash flows from operating activities
Cash generated from operations A 8,820 8,906
Tax received 1,211 -
Tax paid (334) (144)
Net cash generated from operating activities 9,697 8,762
Cash flows from investing activities
Purchase of property, plant and equipment (1,421) (2,195)
Proceeds from disposals of tangible fixed assets 1 54
Additions to intangible assets (2,765) (2,543)
Purchase of subsidiary net of cash acquired 27 (7,063) (1,966)
Purchase of subsidiaries deferred consideration paid (200) (1,000)
Interest received 452 360
Net cash used in investing activities (10,996) (7,290)
Cash flows from financing activities
Interest paid (250) (283)
Lease liability payments (1,150) (1,056)
Dividends paid (2,661) -
Net cash used in financing activities (4,061) (1,339)
Net (decrease)/increase in cash and cash equivalents (5,360) 133
Cash and cash equivalents at beginning of year 16,800 16,683
Foreign exchange losses (39) (16)
Cash and cash equivalents at end of year B 11,401 16,800
Notes to the cash flow statements
A. Cash generated from operations
The reconciliation of (loss)/profit for the period to cash generated from
operations is set out below:
Year ended Year ended
31 December
31 December
2024 2023
£'000 £'000
(Loss)/profit for the year (2,054) 1,576
Adjustments for:
Depreciation 3,174 2,585
Amortisation 4,689 3,492
Loss/(profit) on disposal of tangible fixed assets 1 (19)
Share based payments 975 731
Foreign exchange movements 4 (65)
Net interest costs (202) (27)
Share of loss/(profit) of associate 229 (225)
Tax (credit)/charge (281) 931
6,535 8,979
Decrease/(increase) in inventories 136 (713)
Increase in trade and other receivables (2,138) (2,315)
Increase in trade and other payables 1,425 2,955
Increase in provisions 2,862 -
Cash generated from operations 8,820 8,906
B. Analysis of net funds
At 1 January Cash flow Non-cash changes At
31 December
2024 2024
£'000 £'000 £'000 £'000
Lease liabilities (1,553) 1,284 (1,040) (1,309)
Liabilities arising from financing activities (1,553) 1,284 (1,040) (1,309)
Cash and cash equivalents 16,800 (5,360) (39) 11,401
Net funds 15,247 (4,076) (1,079) 10,092
At 1 January Cash flow Non-cash changes At
31 December
2023 2023
£'000 £'000 £'000 £'000
Lease liabilities (1,747) 1,163 (969) (1,553)
Liabilities arising from financing activities (1,747) 1,163 (969) (1,553)
Cash and cash equivalents 16,683 133 (16) 16,800
Net funds 14,936 1,296 (985) 15,247
Major non cash items
£406,000 of additions to right of use assets and lease liabilities are
included in non cash movements in the year ended 31 December 2024 (2023:
£862,000) together with £500,000 of acquired lease assets and liabilities
(2023: none).
Summary of Significant Accounting Policies
General information
Microlise Group plc is a holding and management services company. Its
subsidiaries are telematics businesses providing technological transport
solutions that enable customers to reduce costs and environmental impact by
maximising the efficiency of their transportation. The company is a public
limited company, traded on the Alternative Investment Market ("AIM") of the
London Stock Exchange, and incorporated and domiciled in England. The
address of the registered office is Farrington Way, Eastwood, Nottingham, NG16
3AG.
Accounting policies
A. Basis of preparation
The consolidated financial statements have been prepared in accordance with
the historical cost convention and UK adopted International Accounting
Standards ('UK IFRS'). The stated accounting policies have been consistently
applied to all periods presented.
The financial information does not constitute the Company's statutory accounts
for the years ended 31 December 2024 or 31 December 2023 but is derived from
those accounts. Statutory accounts for the year ended 31 December 2024 will be
delivered to the Registrar of Companies in due course. The Auditor has
reported on the 2024 accounts; his reports (i) were unqualified, (ii) did not
include a reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying his report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
The parent company financial statements have been prepared under applicable
United Kingdom Accounting Standards (FRS101). The following FRS 101 disclosure
exemptions have been taken in respect of the parent company only information:
· IAS 7 Statement of cash flows;
· IFRS 7 Financial instruments disclosures; and
· IAS 24 Key management remuneration.
The financial statements including the notes are presented in thousands of
pounds sterling ('£'000'), the functional and presentation currency of the
Group, except where otherwise indicated.
The principal accounting policies adopted in preparation of the financial
statements are set out below. The policies have been consistently applied to
all periods presented, unless otherwise stated.
Judgements made by the Directors in the application of the accounting policies
that have a significant effect on the historical financial information and
estimates with significant risk of material adjustment in the next year are
discussed in note C.
Going concern
The directors have considered working capital forecasts prepared for the
period to December 2026. The Group had cash balances of £11.4m at the year
end, no borrowings and a £20m undrawn working capital facility which is not
forecast to be utilised. The Group also has a significant recurring income
base with inflationary clauses in the main contracts.
A range of sensitivities have been run on the working capital model, and the
directors consider a scenario in which the business will face liquidity issues
is remote. As part of the sensitivity analysis the directors have considered
the impact of a reduction in turnover from their principal customer and the
impact on working capital as well as cost and supply issues that might arise
in the context of the current international conflicts and are satisfied that
the Group has sufficient resources to respond to reasonably foreseeable
scenarios. The Directors conclude that a scenario that would result in the
need for the Group to require additional funding to be remote.
Based on the forecasts, the Directors are satisfied that the Group can meet
its day-to-day cash flow requirements and operate within the terms of its
working capital banking facilities if required. Accordingly, the financial
statements have been prepared on a going concern basis.
B. Accounting policies
Consolidation
The consolidated financial statements include the results of Microlise Group
plc and its subsidiary undertakings. The results of the subsidiary
undertakings are included from the date that effective control passed to the
company.
On acquisition, all the subsidiary undertakings' assets and liabilities at
that date of acquisition are recorded under purchase accounting at fair value,
having regard to condition at the date of acquisition. All changes to those
assets and liabilities and the resulting gains and losses that arise after the
company gained control are included in the post-acquisition results. Sales,
profits and balances between group companies are eliminated on consolidation.
The Group has taken advantage of the exemption not to disclose transactions
between wholly owned entities in the group.
Associates
Entities in which the Group holds a participating interest and over whose
operating and financial policies the group exercises a significant influence
are treated as associates. In the Group financial statements, Trakm8 Holdings
plc is accounted for as an associate using the equity method. The initial
investment was accounted for at cost and the subsequent share of associate
profits or losses reported in the Statement of Comprehensive Income and are
added to or deducted from the carrying value of the investment.
Revenue recognition
Revenue comprises revenue recognised by the Group in respect of goods and
services supplied during the year, based on the consideration specified in a
contract, exclusive of Value Added Tax and trade discounts.
The Group enters into the sale of multi-element contracts, which combine
separate performance obligations including hardware, installation, managed
service contracts (software-as-a-service or SaaS), software licences,
professional services (which includes bespoke software development, project
management (incorporating activities including project and installation
planning, managing change control and stage boundaries and project reporting),
consultancy, training), and support and maintenance services relating to
these products. In accordance with IFRS 15, these are considered to be
distinct.
Each performance obligation is allocated a transaction price based on the
stand-alone selling prices. Where stand-alone prices are not directly
observable, they are based on expected cost plus margin.
Revenue is recognised depending upon the revenue stream to which it relates,
as follows:
· The fair value of hardware and installation revenue is recognised
at a point in time when control is transferred to the customer on despatch
and/or upon installation;
· Revenue from the SaaS arrangement is recognised over a period of
time, based on the term of the contract on a straight line basis. Revenue
recognition over time is considered appropriate based on provisions of IFRS 15
paragraph 35 as the customer simultaneously receives and consumes the benefits
provided by the Group. The contractual term for average SaaS agreements are
approximately 5 years;
· Professional services typically include implementation,
configuration, training and other similar services to create optimised
interfaces between the Group's software and customers systems. Revenue from
professional services is recognised over a period of time using the input
method as professional services are being performed, as this best depicts the
timing of how the value is transferred to the customer; and
· Support and maintenance turnover is deferred at the point of sale
and recognised in the Statement of Comprehensive Income over a period of time
of the contractual life, utilising the output method, generally on a straight
line basis as the customer simultaneously receives and consumes the benefits
provided by the Group.
Invoicing for all revenue streams is undertaken in accordance with the terms
of the agreement with the customer. When an invoice is due for payment at
the statement of financial position date but the associated performance
obligations have not been fulfilled the amounts due are recognised as trade
receivables and a contact liability is recognised for the sales value of the
performance obligations that have not been provided. If payment is received
in advance of the delivery of the associated performance obligation a contract
liability is recognised. When an invoice is not due for payment at the
statement of financial position date and the associated performance obligation
has not been fulfilled no amounts are recognised in the financial statements.
In cases where customers pay for the goods and services over an agreed period,
the fair value of the consideration is determined by discounting future
receipts using an imputed rate of interest. The difference between the fair
value and the nominal amount of the consideration is recognised as finance
income over the payment period.
Contract assets
Under IFRS 15, the Group capitalises commission fees as costs of obtaining a
contract when they are incremental and, if they are expected to be recovered,
it amortises them consistently with the pattern of revenue for the related
contract. If the expected amortisation period is one year or less, then the
commission is expensed when incurred. Contract costs are capitalised to
trade and other receivables, due within and after one year.
The Group in certain circumstances incurs costs to deliver its services and
fulfil specific contracts. These costs may include process mapping and
design, scoping and configuration. Contract fulfilment costs are divided into
costs that deliver an asset and costs that are expensed as incurred.
Under IFRS 15, the Group capitalises these contract fulfilment costs when they
directly relate to a specifically identifiable contract or anticipated
contract, will enhance or generate resources used to satisfy future
performance obligations and they are expected to be recovered. Where
capitalised, it amortises them consistently with the pattern of revenue for
the related contract.
At each reporting date, the Group determines whether or not the contract
assets are impaired by comparing the carrying amount of the asset to the
remaining amount of consideration that the Group expects to receive less the
costs that relate to providing services under the relevant contract.
Employee benefits
The Group operates a defined contribution pension scheme. Contributions are
recognised in the Statement of Comprehensive Income in the year in which they
become payable in accordance with the rules of the scheme.
Short term employee benefits including holiday pay are recognised as an
expense in the period in which the service is rendered.
Share based payment
The Group operates an equity-settled share based compensation plan in which
the Group receives services from directors and certain employees as
consideration for share options. The fair value of the services is recognised
as an expense over the estimated vesting period, determined by reference to
the fair value of the options granted.
Taxation
The taxation expense or credit comprises current and deferred tax recognised
in the profit for the financial period or in other comprehensive income or
equity if it arises from amounts recognised in other comprehensive income or
directly in equity. Current tax is provided at amounts expected to be paid (or
recovered) in respect of the taxable profits for the period using tax rates
and laws that have been enacted or substantively enacted by the reporting
date. Microlise, as a large company from 1 July 2020 for tax R&D purposes,
qualifies for the large company RDECs which are included as grant income
within other operating income.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction
other than a business combination that, at the time of the transaction,
affects neither accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised to the extent that it is regarded as more
likely than not that they will be recovered.
Deferred tax assets and liabilities are offset only where there is a legally
enforceable right to offset and where the deferred tax balances relate to the
same taxation authority.
Exceptional items
The Group classifies certain one-off charges or credits that have a material
impact on the financial results as 'exceptional items'. These are disclosed
separately to provide further understanding of the financial performance of
the group.
Government grants
Grants are accounted under the accruals model, and grants of a revenue nature
are recognised in the Statement of Comprehensive Income in the same period as
the related expenditure. Government grants relate to innovation grants and
large company research and development expenditure credits ('RDEC' s).
Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling on the date of the transaction. Monetary assets or liabilities denominated in foreign currencies at the Statement of Financial Position date are translated at the rate ruling on that date and all translation differences are charged or credited in the Statement of Comprehensive Income.
On consolidation, the results of overseas operations are translated into
Sterling at rates approximating to those ruling when the transactions took
place. All assets and liabilities of overseas operations are translated at
the rate ruling at the reporting date. Exchange differences arising on
translating the opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive income.
Intangible assets
Goodwill arises on the acquisition of subsidiaries and represents the excess
of the consideration transferred over the fair value of the net assets
acquired at the acquisition date. Goodwill is stated at cost less any
accumulated impairment losses. Goodwill is allocated to cash-generating units
and is not amortised but is tested annually for impairment. In respect of
equity accounted investees, the carrying amount of goodwill is included in the
carrying amount of the investment in the investee.
Intangible assets acquired separately from a business are recognised at cost.
Intangible assets acquired as part of an acquisition are recognised separately
from goodwill if the fair value can be measured reliably on initial
recognition. Intangible assets created within the business are not recognised,
other than for qualifying development expenditure, and expenditure is charged
against profits in the year in which it is incurred.
Subsequent to initial recognition, intangible assets are stated at cost less
accumulated recognised and accumulated impairment. Intangible assets are
amortised on a straight line basis within administrative expenses over their
estimated useful lives as follows:
Asset class Amortisation period
Brands
3 to 15 years
Customer relationships 7 to
16 years
Technology assets
5 to 13 years
Software
3 to 5 years
Intangible assets are tested for impairment when an event that might affect asset values has occurred. Any such impairment in carrying value is written off to the Statement of Comprehensive Income immediately.
Research and development expenditure
An internally generated intangible asset arising from development (or the
development phase) of an internal project is recognised if, and only if, all
of the following have been demonstrated:
· It is technically feasible to complete the development such that it
will be available for use, sale or licence;
· There is an intention to complete the development;
· The method by which probable future economic benefits will be
generated is known;
· There are adequate technical, financial and other resources required
to complete the development; and
· There are reliable measures that can identify the expenditure
directly attributable to the project during its development.
The amount recognised is the expenditure incurred from the date when the
project first meets the recognition criteria listed above. Expenses
capitalised as "Technology" within intangible assets consist of employee costs
incurred on development. Where the above criteria are not met, development
expenditure is charged to the consolidated statement of comprehensive income
in the period in which it is incurred. The expected life of internally
generated intangible assets varies based on the anticipated useful life,
currently ranging from five to seven years.
Subsequent to initial recognition, internally generated intangible assets are
reported at cost less accumulated amortisation and impairment losses.
Amortisation is charged on a straight-line basis over the estimated useful
life in which the intangible asset has economic benefit and is reported within
administrative expenses in the consolidated statement of comprehensive income.
Research expenditure is recognised as an expense in the period in which it is
incurred.
Research and development expenditure tax credits arise in the UK. Those
relevant to a large company for tax purposes are credited to other operating
income as a grant.
Financial assets
Financial assets, including trade and other receivables, cash and cash equivalent balances are initially recognised at transaction price. Such assets are subsequently carried at amortised cost using the effective interest method. Cash and cash equivalents comprise cash held at bank which is available on demand.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade
receivables. The group measures loss allowances at an amount equal to
lifetime ECL, which is estimated using past experience of the group's
historical credit losses experienced over the three year period prior to the
period end. Historical loss rates are then adjusted for current and
forward-looking information on macroeconomic factors affecting the group's
customers, such as inflation rates. The gross carrying amount of a financial
asset is written off (either partially or in full) to the extent that there is
no realistic prospect of recovery.
To measure expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and aging. The
contract assets have similar risk characteristics to the trade receivables for
similar types of contracts.
The group recognises loss allowances for expected credit losses (ECLs) on
financial assets measured at amortised cost to the extent that these are
material. The group has determined that there is no material impact of ECLs
on the historical financial information.
Contingent assets
A contingent asset is a possible asset that arises from past events and whose
existence as of the reporting date will be confirmed only by the occurrence or
non‑occurrence of one or more uncertain future events not wholly within the
control of the entity. Contingent assets are not recognised at the financial
period end. The nature and circumstances relating to the contingent asset are
disclosed.
Financial liabilities
Financial liabilities, including trade and other payables, lease liabilities
and bank borrowings are initially recognised at transaction price, unless the
arrangement constitutes a financing transaction, where the debt instrument is
measured at the present value of the future receipts discounted at a market
rate of interest. Debt instruments are subsequently carried at amortised cost,
using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Borrowings are initially stated at the fair value of the consideration received after deduction of wholly attributable issue costs. Borrowings are subsequently stated at amortised cost using the effective interest method.
Right-of-use assets and lease liabilities
Under IFRS 16, leases are recognised as right-of-use assets, presented as a
separate category within property, plant and equipment included in the
consolidated statement of financial position, and with a corresponding lease
liability from the date at which the leased asset is available for use by the
Group. This has been adopted and applied on a full retrospective basis.
Assets and liabilities arising from a lease are initially measured at the
present value of the lease payments and payments to be made under the terms of
the lease. Reasonably certain extension options are also included in the
measurement of the liability. The lease payments are discounted using the
interest rate implicit in the lease, if that rate can be readily determined,
or the incremental borrowing rate that the individual lessee would have to pay
to borrow the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar terms,
security and conditions.
Lease payments are allocated between principal, presented as a separate
category within liabilities, and finance cost. The finance cost is charged to
the statement of comprehensive income over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. Right-of-use assets are measured at cost comprising the
amount of the initial measurement of lease liability, any lease payments made
at or before the commencement date less any lease incentives received and any
initial direct costs. Leasehold dilapidations are recognised in relation to
the estimated cost of returning a leasehold property to its original state at
the end of the lease in accordance with the lease terms.
Depreciation is charged on a straight line basis over the period of the lease
and assets are subject to impairment reviews where circumstances indicate
their value may not be recoverable of if they are not being utilised.
Payments associated with short-term leases of property, plant and equipment
and leases of low-value assets continue to be recognised on a straight-line
basis as an expense. Short-term leases are leases with a lease term of 12
months or less.
Property, plant and equipment
Property, plant and equipment assets are stated at cost less depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided on all property, plant and equipment assets at rates calculated to write off the cost of each asset on a straight line basis over its expected useful life, as follows:
Asset class Depreciation method rate
Freehold
property
2% straight line
Leasehold improvements Over the period of the lease
Equipment, fixtures and fittings 20-33% straight line basis
Investments
Investments in subsidiaries are stated at cost or at the fair value of shares
issued as consideration less provision for any impairment. Investments in
associates are stated at fair value through the profit and loss.
Inventories
Inventories are valued at the lower of purchase cost and net realisable value, after due regard for any slow moving items. Net realisable value is based on selling price less anticipated costs to completion and selling costs. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, inventories are assessed for impairment. If
inventory is impaired, the carrying amount is reduced to its net realisable
value. The impairment loss is recognised immediately in the consolidated
statement of comprehensive income.
Provisions
Provisions are recognised for probable liabilities of uncertain timing or amount including elements of claims for reimbursement relating to a cyber incident that impacted services to customers. The provision is measured at the best estimate of the expenditure required to settle an obligation existing at the reporting date. Possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company and hence where an outflow of economic benefit is not probable are not provided for and are disclosed as contingent liabilities.
Share capital and reserves
Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a financial liability. The parent company's ordinary shares are classified as equity instruments.
The share premium account represents the amount by which the issue price of
shares exceeds the nominal value of the shares less any share issue expenses.
The merger reserve represents the difference between the fair value of the
shares issued as part of the consideration for Microlise Holdings Limited and
the nominal value of the shares issued.
Retained earnings comprises opening retained earnings and total comprehensive
income/expense for the year, net of dividends paid.
New or revised accounting standards and interpretations
Certain new standards, amendments and interpretations to existing standards
have been published that are mandatory for accounting periods beginning on or
after 1 January 2025 and which the Group has chosen not to adopt early. These
include the following standards which may be relevant to the Group:
- Amendments to IFRS 9 and IFRS 7 mandatory for periods commencing 1 January
2026 - Amendments to the Classification and Measurement of Financial
Instruments made to address diversity in accounting practice by clarifying
requirements in two specific areas:
• classification of financial assets with environmental, social and
corporate governance (ESG) and similar features; and
• timing of derecognition of financial liabilities settled through
electronic payment systems.
- IFRS 18 Presentation and Disclosure in Financial Statements mandatory for
periods commencing 1 January 2027. IFRS 18 introduces three key new
requirements:
• specified categories and defined subtotals in the statement of profit or
loss;
• improved principles for aggregation and disaggregation of information; and
• disclosures about management-defined performance measures
As a result of initial review of the new standards, interpretations and
amendments which are not yet effective in these financial statements, none are
expected to have a material effect on the Company or Group's future financial
statements. All IFRS effective at the reporting date of 31 December 2024 have
been applied.
C. Critical accounting estimates and assumptions
Critical judgements in applying the accounting policies
The preparation of the financial statements under IFRS requires the use of
certain critical accounting assumptions and requires management to exercise
its judgement and to make estimates in the process of applying the Company's
and Group's accounting policies. Management bases its estimates on historical
experience and on various other assumptions that management believes to be
reasonable in the circumstances. The key judgements and estimates used in the
preparation of these financial statements that could result in a material
change in the carrying value of assets or liabilities within the next twelve
months are as follows:
Fair values and intangible assets on acquisition of a business
Fair values have been applied on the acquisition of subsidiaries which involve
a degree of judgement and estimation in particular in the identification and
evaluation of intangible assets. The values are derived from the business cash
flow forecasts and assumptions based on experience and factors relevant to the
nature of the business activity.
Useful economic lives of intangible assets
The annual amortisation charge for intangible assets is sensitive to changes
in the estimated useful economic lives of the assets. The useful economic
lives and residual values are re-assessed annually. They are amended when
necessary to reflect current estimates, based on technological advancement,
future investments and economic utilisation. There is no current indication
that the Group's businesses will not continue to trade profitably and hence
the life may differ or be longer than the estimates used to amortise
intangible assets.
Capitalisation of development expenditure
Management have used their judgement in respect of the capitalisation of
development costs against the criteria in the policy. The viability of the
new technology and know-how is supported by the results of testing and by
forecasts for the overall value and margins from future sales to support the
approach taken.
Impairment of intangible assets including goodwill and investments
Investments made by the Company and intangible assets acquired in a business
combination capitalised with goodwill by the Group are subject to annual
impairment tests and other intangibles amortised over their estimated useful
lives subject to an assessment of impairment.
Subsequent impairment tests for investments and intangible assets are based on
risk adjusted future cash flows discounted using appropriate discount rates.
These future cash flows are based on forecasts which include estimated factors
and are inherently judgemental. Future events could cause the assumptions to
change which could have an adverse effect on the future results of the Group.
Further detail including sensitivities is given in note 10.
Provisions
Provisions have been recognised in relation to settlement of claims from
customers relating to the cyber breach. Provisions, by their nature, include
an element of estimation of the most likely outcomes in circumstances where
claims have not been able to be fully evaluated at the reporting date. Whilst
they are based on review of support provided and the terms of customer
agreements the final payments may vary from the claim submitted. Further
detail of the assumptions applied including sensitivities is included in note
19.
Share based payment
The fair values in respect of share based payments are estimated using a
number of inputs to an appropriate valuation models including the probability
that performance conditions may be met. Further detail of the assumptions
applied is included in note 23.
Notes to the financial statements for the year ended 31 December 2024
1. Revenue and segmental analysis
Recurring revenue represents the sale of the group's full vehicle telematics
solutions, support and maintenance. Non-recurring revenue represents the
sale of hardware, installation, and professional services. Revenue is
defined as per the accounting policies.
Revenue in respect of the setup, supply of hardware and software installation
is recognised at a point in time. Professional services including project
management, managed services and support services income is recognised over
the period when services are provided.
2024 2023
£'000 £'000
By type
Revenue recognised at a point in time 22,534 23,707
Supply of hardware and installation
22,534 23,707
Revenue recognised over time 3,796 2,987
Professional services including project management
Managed service agreement income 47,818 41,614
Other support and maintenance services 5,327 3,408
56,941 48,009
79,475 71,716
By destination:
UK 72,251 65,670
Rest of Europe 1,966 1,514
Rest of the World 5,258 4,532
Total revenue 79,475 71,716
Revenue in respect of one customer amounted to £26.1m representing 32% of the
revenue for the year (2023: £23.1m representing 32% of the revenue).
The split of the disaggregated revenue between segments is summarised below.
The chief operating decision maker ("CODM") is identified as the Board. The
Board as the CODM reviews the revenue streams of recurring and non-recurring
revenue as part of their internal reporting.
The directors previously considered the Group to comprise two complementary
segments in respect of fleet management services (Microlise) and tachograph
specific software and analysis services (TruTac). Further acquisitions have
since been made, broadening the range of fleet management services and with
all acquired businesses now transferred and integrated within Microlise
Limited. The board no longer reviews the results of a distinct Trutac segment
and views operations as one business with a focus on areas within this
including geographical expansion and selling complementary services to the
existing customer base.
The group's non-current assets comprising investments, tangible and intangible
fixed assets and the net assets by geographical location are:
31 December 2024 31 December 2023
Non-current assets Net assets Non-current assets Net assets
£'000 £'000 £'000 £'000
United Kingdom 96,952 69,608 89,316 73,787
France 13 39 15 25
Australia 7 203 7 150
India 209 2,049 271 1,711
97,181 71,899 89,609 75,673
2. Adjusted results and exceptional costs
In reporting financial information, the Group presents alternative performance
measures (APMs), which are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide depth and understanding
to the users of the financial statements to allow for further assessment of
the underlying performance of the Group. The Group's primary results measure,
which is considered by the directors of the Group to represent the underlying
and continuing performance of the Group, is adjusted EBITDA as set out below.
EBITDA is a commonly used measure in which earnings are stated before net
finance income, tax, amortisation and depreciation as a proxy for cash
generated from trading.
The group qualifies for large company R&D tax reliefs with the RDEC
credits included in other operating income above operating profit/(loss) which
in line with common practice is included in the Group's calculation of
EBITDA.
The measure has been adjusted by acquisition related costs and the material
costs of managing and compensating customers for an unexpected cyber security
incident in the year which are considered to be non-recurring and non-trading
in nature together with the share based payment charge as it represents a non
cash item to provide a clearer picture of cash operating performance.
The group was subject to a cyber attack on 31 October 2024 where the actions
to mitigate and contain the attack resulted in a number of customers not
receiving all the managed services they subscribed for in the weeks following
the incident. As a result, the group has incurred a number of exceptional
costs totalling £4,380,000 which arise as follows: £429,000 of professional
and related fees in respect of managing the technical restoration of services;
£1,520,000 reduction in revenue and credit note provision recorded against
trade receivables in respect of the value of invoiced services not available
to customers in that period; £2,431,000 of provisions have been made in
respect of claims for consequential losses from the disruption to the
customers' own businesses.
The group considers that its related insurance policies cover these
liabilities and that it is likely to be reimbursed a materially similar amount
of income in due course once the insurance claims are evaluated and processed.
However, confirmation that the policies cover the circumstances was received
after the reporting date and in accordance with IAS 37 this is therefore
determined to be a contingent asset for the purpose of these financial
statements and will be recognised in the next financial period.
In view of the highly material amounts that are expected to be incurred, the
primary income statement has been presented to show the result before as well
as after these exceptional costs.
2024 2023
£'000 £'000
Operating (loss)/profit (2,308) 2,255
Exceptional costs:
Transaction and subsequent restructuring costs 403 374
Cost of managing cyber security incident 429 -
Customer credits for services downtime from cyber incident 1,520 -
Cost of other customer claims from cyber incident 2,431 -
Depreciation 3,174 2,585
Amortisation of intangible assets 4,689 3,492
Share based payment 975 731
Adjusted EBITDA 11,313 9,437
3. Operating (loss)/profit
The operating (loss)/profit is stated after charging/(crediting):
2024 2023
£'000 £'000
Auditors remuneration:
Audit of the Group and Company financial statements 338 279
Depreciation of property, plant and equipment 1,994 1,553
Profit on disposal of tangible fixed assets - (19)
Depreciation of right-of-use assets 1,180 1,032
Amortisation of intangible assets 4,689 3,492
Cost of inventory sold 13,418 15,520
Research and development costs 2,205 2,021
Foreign exchange losses 165 211
Acquisition evaluation costs and expenses 83 196
In other operating income: (194)
Other income (158)
Government innovation grants - (170)
Research and Development Expenditure Credit (445) (645)
The Group claims RDEC credits which are treated as other operating income and
reflected in the profit/(loss) before tax.
4. Information regarding directors and employees
Employees
The aggregate remuneration of employees comprised:
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Wages and salaries 36,794 31,353 900 864
Social security costs 3,591 3,071 109 108
Pensions 1,424 1,149 27 25
Share based payment 975 731 263 334
Total 42,784 36,304 1,299 1,331
Average number of employees
The average number of employees in the year was:
Group Company
Year ended Year ended Year ended Year ended
31 December
31 December
31 December
31 December
2024 2023 2024 2023
Sales, operations and development 715 629 - -
Administration 90 86 5 6
Total 805 715 5 6
Directors' remuneration
Year ended Year ended
31 December
31 December
2024 2023
£'000 £'000
Directors' remuneration - aggregate emoluments 878 852
Group pension contributions in respect of 4 26 23
(2023: 4) directors
334
Share based payment
363
1,267 1,209
Remuneration of the highest paid director 438 393
Group pension contributions 11 11
Share based payment 162
239
688 566
Full information by director is disclosed in the remuneration report.
Key management compensation
Year ended Year ended
31 December
31 December
2024 2023
£'000 £'000
Short term employee benefits 2,614 2,346
Post employment benefits 97 71
Share based payment 747 559
Total key management remuneration 3,458 2,976
Key management is defined as those persons having authority and responsibility
for planning, directing, and controlling the activities of the Group, directly
or indirectly, including any directors (whether executive or otherwise) of the
Group.
5. Interest receivable
Year ended Year ended
31 December
31 December
2024 2023
£'000 £'000
Interest receivable
Bank interest receivable 287 240
Loan interest receivable 165 120
452 360
6. Interest payable
Year ended Year ended
31 December
31 December
2024 2023
£'000 £'000
Interest payable
Interest and similar charges on bank and other borrowings 116 220
Lease liability financing charges 134 107
Other interest - 6
250 333
7. Taxation on (loss)/profit
2024 2023
£'000 £'000
Current taxation
UK corporation tax charge - 104
Foreign tax 281 135
Adjustments in respect of previous periods (75) 8
206 247
Deferred taxation
Origination and reversal of timing differences (452) 732
Adjustments in respect of previous periods (35) (48)
(487) 684
Tax (credit)/charge on (loss)/profit (281) 931
Factors affecting the tax (credit)/charge for the year
The tax (credit)/charge on the (loss)/profit for the year differs from
applying the average standard rate of corporation tax in the UK of 25% (2023:
23.5%). The differences are reconciled below:
2024 2023
£'000 £'000
(Loss)/profit before taxation (2,335) 2,507
Corporation tax at standard rate (584) 589
Factors affecting (credit)/charge for the year:
Disallowable expenses 321 235
Share of associate (loss)/profit not deductible/taxed 57 (53)
Reassessment of share option related deferred tax - 172
Other differences including capital super deductions - (26)
Overseas tax rates 35 (15)
Adjustments in respect of previous periods (110) (40)
Differing corporate and deferred tax rates - 69
Tax (credit)/charge on (loss)/profit (281) 931
In May 2021 a change in the corporation tax rate from 19% to 25% from April
2023 was substantively enacted in the Finance Act 2021 and accordingly has
been applied to deferred tax balances at 31 December 2023 and 2024.
8. Earnings per share
2024 2023
(Loss)/profit used in calculating EPS (£'000) (2,054) 1,576
Weighted average number of shares for basic EPS ('000) 115,946 115,946
Weighted average number of shares for diluted EPS ('000) 116,185 116,087
Basic earnings per share (pence) (1.77) 1.36
Diluted earnings per share (pence) (1.77) 1.36
There were 4,276,815 unexercised share options in place at 31 December 2024
(2023: 3,701,954) of which 239,462 were potentially dilutive in respect of the
year (2023: 141,509 included in the weighted average for diluted EPS).
9. Dividends
2024 2023
£'000 £'000
Final dividend of 1.725p per share paid in respect of FY23 2,000 -
Interim dividend of 0.57p per share paid in respect of FY24 661 -
2,661 -
The directors have proposed a final dividend for FY24 of 1.24p per share to be
paid on 27 June 2025.
10. Property, plant and equipment
Group Freehold property Right-of-use property Leasehold building Improvements Right-of-use equipment Equipment, fixtures and fittings Total
£'000 £'000 £'000 £'000 £'000 £'000
Net book value
At 1 January 2023 4,838 1,224 71 463 1,696 8,292
Cost
At 1 January 2023 5,271 1,880 308 1,017 6,422 14,898
Additions - 176 - 686 2,219 3,081
Acquisitions - - - - 14 14
Disposals - - - - (1,712) (1,712)
Reclassification - - - - 246 246
Exchange adjustments - - (19) - (31) (50)
At 31 December 2023 5,271 2,056 289 1,703 7,158 16,477
Depreciation
At 1 January 2023 433 656 237 554 4,726 6,606
Charge for the year 102 673 52 359 1,399 2,585
Disposals - - - - (1,653) (1,653)
Reclassification - - - - 27 27
Exchange adjustments - - (14) - (21) (35)
At 31 December 2023 535 1,329 275 913 4,478 7,530
Net book value
At 31 December 2023 4,736 727 14 790 2,680 8,947
Cost
At 1 January 2024 5,271 2,056 289 1,703 7,158 16,477
Additions - 228 3 178 1,418 1,827
Acquisitions - 410 - 108 588 1,106
Disposals - (844) (320) (216) (1,380)
Exchange adjustments - - (3) - (6) (9)
At 31 December 2024 5,271 1,850 289 1,669 8,942 18,021
Depreciation
At 1 January 2024 535 1,329 275 913 4,478 7,530
Charge for the year 102 803 - 377 1,892 3,174
Disposals - (844) (320) (214) (1,378)
Exchange adjustments - - (3) - (4) (7)
At 31 December 2024 637 1,288 272 970 6,152 9,319
Net book value
At 31 December 2024 4,634 562 17 699 2,790 8,702
Company Freehold property
£'000
Cost
At 31 December 2023 and 2024 4,965
Accumulated depreciation
At 31 December 2023 229
Charge for the year 102
At 31 December 2024 331
Net book value
At 31 December 2024 4,634
At 31 December 2023 4,736
11. Intangible assets
Technology - business combinations Total business combination assets
Customer relationships Developed technology
Goodwill Brands Software Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Net book value
At 1 January 2023 52,778 13,128 3,323 1,955 71,184 3,067 780 75,031
Cost
At 1 January 2023 52,778 17,780 6,422 2,711 79,691 4,731 1,091 85,513
Additions - - - - - 2,523 20 2,543
Acquisitions (note 27) 1,513 406 446 - 2,365 - - 2,365
Reclassification - - - - - - (246) (246)
Exchange adjustments - - - - - - (1) (1)
At 31 December 2023 54,291 18,186 6,868 2,711 82,056 7,254 864 90,174
Amortisation
At 1 January 2023 - 4,652 3,099 756 8,507 1,664 311 10,482
Charge for the year - 1,185 818 181 2,184 1,152 156 3,492
Reclassification - - - - - - (27) (27)
Exchange adjustments - - - - - - (1) (1)
At 31 December 2023 - 5,837 3,917 937 10,691 2,816 439 13,946
Net book value
At 31 December 2023 54,291 12,349 2,951 1,774 71,365 4,438 425 76,228
Cost
At 1 January 2024 54,291 18,186 6,868 2,711 82,056 7,254 864 90,174
Additions - - - - - 2,678 87 2,765
Acquisitions (note 27) 5,902 1,837 1,552 319 9,610 - - 9,610
At 31 December 2024 60,193 20,023 8,420 3,030 91,666 9,932 951 102,549
Amortisation
At 1 January 2024 - 5,837 3,917 937 10,691 2,816 439 13,946
Charge for the year - 1,376 1,164 284 2,824 1,725 140 4,689
At 31 December 2024 - 7,213 5,081 1,221 13,515 4,541 579 18,635
Net book value
At 31 December 2024 60,193 12,810 3,339 1,809 78,151 5,391 372 83,914
All the goodwill is now considered to relate to the Microlise cash generating
unit, following integration of acquired businesses into Microlise Limited as
explained in note 1 above.
The Group tests goodwill annually for impairment, or more frequently if events
or changes in circumstances indicate that the asset might be impaired. The
Microlise carrying value is assessed for impairment purposes by calculating
the value in use using the net present value (NPV) of future cash flows
discounted at a pre-tax rate of 15.2% (2023: 17% for Microlise and TruTac
businesses).
The Microlise goodwill has been tested by reference to a 3 year management
approved plan and TruTac for the prior year by reference to a 3 year plan with
a 2% long term growth rate considered applicable to the UK market applied to
the terminal period. This includes consideration of the impact of cost
inflationary pressures in the December tests and forecasts at that date and
taking account of the corresponding inflationary price terms within the
group's contracts with customers. The businesses achieved the FY24 forecasts
used in the prior year test and no impairment is indicated although they are
sensitive to forecast increases in EBITDA. The Microlise NPV including all the
group trade for the 2024 test exceeds carrying values by £25m (2023: £5m for
Microlise segment and £8.6m for the TruTac segment) with the overall increase
reflecting an increase in overall growth over the forecast period.
Reasonable changes in the discount rate or terminal growth rate do not result
in a risk of impairment of goodwill.
At 31 December 2024, the Microlise forecast, subject to the impairment test to
support the carrying value of goodwill, forecast over £18m and a required
£14.5m of recurring long term EBITDA in 5 year's time. This compares with
£11.3m on the same basis recorded for 2024 which is in line with the growth
trends in the Microlise revenues, supported by significant investment in the
development of technology.
12. Investments and loan receivables
Group Associate
£'000
At 1 January 2023 1,368
Share of profit for the year 225
At 31 December 2023 1,593
Share of loss for the year (229)
At 31 December 2024 1,364
Company Subsidiary undertakings Associate Total
£'000 £'000 £'000
At 1 January 2023 77,942 1,250 79,192
Additions 3,132 - 3,132
Additions - fair value of share options held by subsidiary company employees 381 - 381
Increase in fair value - 300 300
At 31 December 2023 81,455 1,550 83,005
Additions (note 27) 11,436 - 11,436
Additions - fair value of share options held by subsidiary company employees 728 - 728
Decrease in fair value - (1,075) (1,075)
At 31 December 2024 93,619 475 94,094
Subsidiary undertaking Principal activity Class of % share
shares held
holding
Microlise Limited Transport management technology solutions Ordinary 100%
Microlise Holdings Limited Intermediate holding company Ordinary 100%
Microlise Midco Limited Dormant company Ordinary 100%
Microlise Engineering Limited Non trading company Ordinary 100%
TruTac Limited Dormant company Ordinary 100%
Enterprise Software Systems Limited Dormant company Ordinary 100%
Microlise Pty Limited (Australia) Transport management technology solutions Ordinary 100%
Microlise SAS (France) Transport management technology solutions Ordinary 100%
Microlise Telematics Private Limited (India) Transport management technology solutions Ordinary 100%
Microlise India Private Ltd Non trading company Ordinary 100%
Vita Software Limited Dormant company Ordinary 100%
All the UK subsidiary companies are registered in England at the same
registered office as the Company. Microlise Pty Limited is registered at Level
1, 20 Albert Street, Blackburn, Victoria, 3130 Australia, Microlise SAS at Les
Hauts de la Duranne, 505 Avenue Galilee, 13290 Aix-en-Provence, France,
Microlise Telematics Private Limited and Microlise India Private Limited at
4(th) Floor, Pride Accord, Baner Road, Pune, 411045, India.
The Group agrees to guarantee the liabilities of Microlise Engineering Limited
(02211125), TruTac Limited (02521511) and Enterprise Software Systems Limited
(03374336) thereby allowing them to take exemption from having an audit under
section 479A of the Companies Act 2006.
Investments in associates consist of a 20% holding in Trakm8 Holdings plc
acquired on 22 December 2018 and measured in accordance with the accounting
policy. The company is listed on AIM and at 31 December 2024 the market value
of the shareholding was £0.475m (2023: £1.55m).
The primary business of Trakm8 Holdings plc is the development, manufacture,
distribution and sale of telematics devices, services and optimisation
solutions. The principal place of business is 4 Roman Park, Roman Way,
Coleshill, Birmingham, West Midlands, B46 1HG.
The Group also has an interest of £1 in a jointly controlled not for profit
community investment company, Road to Logistics C.I.C. This had commenced
activity funded by a government grant and incurs neither a profit nor a
loss. The principal place of business is Market Chambers, 2b Market Place,
Shifnal, Shropshire, England, TF11 9AZ.
Summarised financial information (material associates)
Trakm8 Holdings plc
Trakm8 Holdings plc has a year end of 31 March, and the summarised financial
information disclosed is based on their published annual statements to 31
March 2023 and 2024 together with interim financial statements to 30 September
2023 and 2024, prepared under IFRS.
30 September 30 September
2024
2023
£'000 £'000
Assets - non-current 27,260 26,516
Assets - current 7,168 10,910
Liability - non-current (2,549) (3,255)
Liability - current (13,789) (14,936)
Net assets (100%) 18,090 19,235
Group share of book net assets (20%) 3,618 3,847
The differing carrying value above reflects the equity accounting policy
applied.
Year ended Year ended
30 September 30 September
2024
2023
£'000 £'000
Revenues 15,863 19,722
(Loss)/profitfrom continuing operations (1,180) 1,103
Other comprehensive income/(expense) 13 (8)
Total comprehensive (expense)/income (1,167) 1,095
The Company also advanced £1,000,000 to Trakm8 Holdings plc in September
2022. This is a loan bearing interest at 18% (2023: 12%), repayable 14
September 2025 or convertible at the Company's option into a fixed number of
ordinary shares in Trakm8 Holdings plc. It is considered that the fair value
of the loan is approximately £1,000,000 and the convertible element has no
separate material equity value.
Group and company
£'000
At 31 December 2023 and 2024 1,000
13. Inventories
Group 31 December 31 December
2024 2023
£'000 £'000
Raw materials and consumables 1,853 1,331
Work in progress 20 28
Finished goods and goods for resale 1,339 1,989
3,212 3,348
An impairment loss of £17,000 in respect of inventory was recorded in the
year ended 31 December 2024 (2023: £425,000 release).
14. Trade and other receivables
Group Company
31 December 31 December 31 December 31 December
2023
2023
2024 2024
£'000 £'000 £'000 £'000
Current
Trade receivables 16,232 15,288 - -
Provision for impairment of trade receivables (276) (457) - -
Trade receivables net 15,956 14,831 - -
Contract assets 2,579 1,431 - -
Other receivables 166 222 - -
Prepayments 2,403 2,273 51 158
Total 21,104 18,757 51 158
Non-current
Trade receivables 113 353 - -
Contract assets 3,088 2,488 - -
Total 3,201 2,841 - -
Total 24,305 21,598 51 158
Analysis of expected credit losses is included in note 20.
The movements in Group contract related balances in the year are as follows:
Year Year
ended ended
31 December
31 December
2024 2023
Contract assets £'000 £'000
Opening balance 3,919 3,952
Amortised to income statement (1,425) (1,774)
Incurred in the year 3,173 1,741
Closing balance 5,667 3,919
15. Cash and cash equivalents
Group Company
31 December 31 December 31 December 31 December
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Cash at bank and in hand 11,401 16,800 55 86
16. Lease liabilities
Group Company
31 December 31 December 31 December 31 December
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Current 809 907 - -
Non-current 500 646 - -
Total 1,309 1,553 - -
Leases
The group has entered into lease contracts in respect of property in the
jurisdictions from which it operates, use of data centres and vehicles which
are typically for terms of 3 to 5 years. In respect of data centre contracts
there are options to extend the initial period with these factored into the
liabilities where the group plans to use these for a longer period. For
property leases, it is customary for lease contracts to be reset periodically
to market rental rates. Leases of equipment, data centre usage and vehicles
comprise only fixed payments over the lease terms.
Right of use assets, additions and amortisation are included in note 10.
Interest expenses relating to lease liabilities are included in note 6.
Other amounts relating to leases were as follows:
31 December 31 December
2024 2023
£'000 £'000
Short term lease expense 317 46
Total cash outflow for leases 1,284 1,163
The maturity of lease liabilities at 31 December 2024 were as follows:
Property Equipment and vehicles Total
£'000 £'000 £000
Within 1 year 298 511 809
1-2 years 132 80 212
2-5 years 267 21 288
Total 697 612 1,309
The maturity of lease liabilities at 31 December 2023 were as follows:
Property Equipment and vehicles Total
£'000 £'000 £000
Within 1 year 711 196 907
1-2 years 370 85 455
2-5 years 174 17 191
Total 1,255 298 1,553
17. Trade and other payables
Group Company
31 December 31 December 31 December 31 December
2023
2023
2024 2024
£'000 £'000 £'000 £'000
Current
Trade payables 3,798 6,372 12 63
Taxation and social security 3,208 2,612 35 33
Amounts owed to group undertakings - - 22,166 14,231
Other payables 874 556 4 205
Accruals 5,827 4,195 1,094 902
Contract liabilities 22,702 18,895 - -
Total 36,409 32,630 23,311 15,434
Non-current
Contract liabilities 16,051 15,587 - -
Deferred grant income - 114 - -
Total 16,051 15,701 - -
Total 52,460 48,331 23,311 15,434
The carrying amounts of trade and other payables are considered to be the same
as their fair values, due to their short-term nature. Contract liabilities
relates principally to service income received in advance. The timing of
recognition of Group contract liabilities are as follows:
Less than one year 1-2 years 2-3 years 3-4 years 4-5 years Total
At 31 December 2024 £'000 £'000 £'000 £'000 £'000 £'000
Contract liabilities 22,702 7,584 4,191 3,033 1,243 38,753
Less than one year 1-2 years 2-3 years 3-4 years 4-5 years Total
At 31 December 2023 £'000 £'000 £'000 £'000 £'000 £'000
Contract liabilities 19,448 9,134 4,112 1,364 424 34,482
The movements in Group contract related balances in the year are as follows:
Year Year ended
31 December
ended
31 December 2023
2024
£'000 £'000
Revenue related contract liabilities
Opening balance (34,482) (33,283)
Invoiced in the year (52,089) (42,813)
Recognised as revenue in the year 47,818 41,614
Closing balance (38,753) (34,482)
18. Deferred tax assets and liabilities
Group Intangible assets Accelerated capital allowances Freehold property Tax losses Other Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2023 (5,344) (231) (1,137) 1,525 347 (4,840)
On acquisition (172) (4) - - - (176)
RDEC credit carried forward - - - - 84 84
Foreign exchange movement - - - - (6) (6)
Credit/(charge) for the year 182 (240) 24 (641) (9) (684)
At 31 December 2023 (5,334) (475) (1,113) 884 416 (5,622)
On acquisition (927) (147) - - - (1,074)
RDEC credit carried forward - - - - 99 99
Foreign exchange movement - - - - (4) (4)
Credit/(charge) for the year 911 88 27 (460) (79) 487
At 31 December 2024 (5,350) (534) (1,086) 424 432 (6,114)
Company
Other
£'000
At 31 December 2023 -
Charge for the year -
At 31 December 2024 -
Deferred tax has been recognised at a rate of 25% (2023: 25%).
19. Provisions
Group
£'000
At 31 December 2023 -
Charge for the year 2,862
Utilised in the year -
At 31 December 2024 2,862
As explained in note 2, the provisions arise as a result of a cyber attack
incident which impacted the services provided to customers. The amount
provided for, represents an estimate based on the claims submitted by
customers for consequential losses from the disruption caused during the time
services were not available to them. It is expected to be settled within the
next year.
The provision includes uncertainties around the amounts that certain claims
will be settled at based on the nature of the claim, the contractual
arrangement and the evidence provided to support the claim. Independent legal
advice has been sought to estimate the most likely outcome of the claim by
applying a probability factor. A 5% increase in the probability factor applied
would increase the provision recognised by £191,000.
A related contingent asset for insurance income has been disclosed in note 25.
It is expected that the insurance proceeds will largely meet the liability and
will be recognised as income in 2025.
20. Financial Instruments
Financial risk management
The determination of financial risk management policies and the treasury
function is managed by the CFO. Policies are set to reduce risk as far as
possible without unduly affecting the operating effectiveness of the Group.
The Group's activities expose it to a variety of financial risks, the most
significant being credit risk, liquidity risk and interest rate risk together
with a degree of foreign currency risk as discussed below.
Categories of financial instruments
The Group has the below categories of financial instruments:
31 December 31 December
2024 2023
Recognised at amortised cost £'000 £'000
Cash and bank balances 11,401 16,800
Trade receivables - net 16,069 15,184
Other receivables 1,166 1,222
Total financial assets 28,636 33,206
Trade payables 3,798 6,372
Other payables 6,701 4,751
Lease liabilities 1,309 1,553
Provisions 2,862 -
Total financial liabilities 14,670 12,676
There were no assets or liabilities at 31 December 2024 or 2023 that were
recognised and measured at fair value in the historical financial information.
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss for the Group. Financial
instruments, which potentially subject the Group to concentration of credit
risk, consist primarily of cash and cash equivalents and trade accounts
receivable including accrued income.
The Group places its cash and cash equivalents with major financial
institutions, which management assesses to be of high-credit quality in order
to limit the exposure of each cash deposit to a minimal level.
Trade receivables
Trade accounts receivable are derived primarily from non-recurring hardware
sales and monthly service income and generally have 30-60 day terms. With the
exception of one large customer who accounts for 22% (2023: 24%) of the trade
receivable invoiced balance, credit risk with respect to accounts receivable
is dispersed due to the large number of customers. Collateral is not required
for accounts receivable. The credit worthiness of customers with balances in
trade receivables not yet due has been assessed as high.
The aging of past due trade receivables according to their original due date
is detailed below:
31 December 31 December
2024 2023
Past due £'000 £'000
0-60 days 4,295 5,202
60-120 days 788 833
121+ days 1,132 1,000
Expected credit loss provision (276) (457)
Total 5,939 6,578
A majority of the expected credit loss provision relates to balances that are
more than 120 days overdue. The expected credit loss on balances less than 120
days is immaterial. A substantial majority of the overdue debt has been
collected since the period end date with the unprovided amounts considered to
be collectible.
The expected credit loss provision relates to specific customers based on
credit information available at the year end.
A lifetime expected loss provision has been assessed on the remaining balance
of trade receivables based on historical credit losses across the
customer base and this is considered immaterial.
At each of the Statement of Financial Position dates, a portion of the trade
receivables were impaired and provided for. The movement in the provision for
trade receivables in each of the periods is as follows:
Year Year
ended ended
31 December
31 December
2024 2023
£'000 £'000
At start of year 457 402
Provision charged - 55
Utilised (181) -
At year end 276 457
Oher receivables are considered to bear similar risks to trade receivables or
are owed by government bodies. Hence any expected credit loss on other
financial assets is considered to be immaterial.
Liquidity risk
The Group now funds its business through equity and from cash generated from
operations and also has a £20m undrawn working capital facility available.
Details of the Group's borrowings are discussed in note 16. The Group monitors
and manages cash to mitigate any liquidity risk it may face. The following
table shows the Group's contractual maturities of financial liabilities based
on undiscounted cash flows including interest charges and the earliest date on
which the Group is obliged to make repayment:
Less than one year 1-2 years 2-5 years Total
At 31 December 2024 £'000 £'000 £'000 £'000
Trade and other payables 10,495 - - 10,495
Lease liabilities 892 241 291 1,424
Total 11,387 241 291 11,919
Less than one year 1-2 years 2-5 years Total
At 31 December 2023 £'000 £'000 £'000 £'000
Trade and other payables 11,123 - - 11,123
Lease liabilities 1,021 521 193 1,735
Total 12,144 521 193 12,858
Interest rate risk
There are no borrowings or liabilities subject to variable interest rates.
Currency risk
The Group operates predominantly in the UK with sterling being its functional
currency and has a degree of exposure to foreign currency risk, with this
spread across income and expenses in Euros, US dollars and Australian dollars
for sales and purchasing operations together with an outflow only of Indian
rupees for the costs of development and operational support activity. The
impact of a 10% fluctuation in all foreign exchange rates moving in the same
direction against GBP has been assessed to be an overall impact of up to
£300,000 which would be mitigated by some matching of income and expenses.
The net exposure to the dollar is offset by significant purchases made in
dollars. The net underlying foreign currency balances, comprising overseas
assets and liabilities, cash, receivables and payables in the UK, in the Group
statement of financial position by underlying currency at the period end were:
USD Euro AUD INR Total
£'000 £'000 £'000 £'000 £'000
At 31 December 2024 189 512 84 433 1,218
At 31 December 2023 4,608 710 183 18 5,519
Capital management
The Group's capital comprises share capital, share premium and retained
earnings. The Group's objectives when maintaining capital are:
To safeguard the entity's ability to continue as a going concern, so that it
can continue to provide returns for shareholders and benefits for other
stakeholders and to provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The capital structure of the Group consists of shareholders equity as set out
in the consolidated statement of changes in equity. The longer-term funding
requirements for acquisitions were financed from cash reserves and term bank
debt which was fully repaid from the equity proceeds on listing. All working
capital requirements are financed from existing cash resources.
The Group sets the amount of capital it requires in proportion to risk in
conjunction with the retained earnings. The Group manages its capital
structure and makes adjustments to it in the light of changes in economic
conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new
shares, or sell assets to reduce debt.
21. Pensions
Defined contributions pension scheme
The group operates a number of defined contribution pension schemes.
Contributions totalling £347,000 (2023: £278,000) were included in payables
and due to the defined contribution scheme at the end of the year. The total
contributions are disclosed in note 4.
22. Share capital
Group and Company
Allotted, called up and fully paid At At
31 December
31 December
2024 2023
£ £
115,945,956 ordinary shares of £0.001 each 115,946 115,946
All shares rank equally in respect of income and capital distributions.
23. Share based payments
Options Weighted average exercise price Number
At 1 January 2024 £0.38 3,701,974
Granted in the year £0.11 1,534,959
Lapsed in the year £0.08 (960,118)
At 31 December 2024 £0.35 4,276,815
The Company granted 1,049,226 options on 22 December 2023 to executive
employees at an exercise price of £0.001 per share. They are exercisable from
31 December 2025 with 10% subject to carbon reduction targets and 90% subject
to a Total Shareholder Return condition for the three years from 1 January
2023 of a minimum of 8% annual growth in the share price up to an 18% return
for 100% to be exercised. The fair value of the carbon reduction target
options has been assessed at an average fair value of £0.88 per option using
a Black Scholes model and the TSR options at £0.17 using a Monte Carlo model,
both applying a volatility of 45%, risk free rates of 3.58% and a dividend
yield of 1.93%.
The Company granted 1,430,342 options on 11 March 2024 to executive employees
at an exercise price of £0.001 per share. They are exercisable from 31
December 2026 with 10% subject to carbon reduction targets and 90% subject to
a Total Shareholder Return condition for the three years from 1 January 2024
of a minimum of a median growth in the share price compared to a comparator
group up to highest growth in the group for 100% to be exercised. The fair
value of the carbon reduction target options has been assessed at an average
fair value of £1.19 per option using a Black Scholes model and the TSR
options at £0.78 using a Monte Carlo model, both applying a volatility of
46%, risk free rates of 4.20% and a dividend yield of 1.51%.
104,617 options were granted to employees on 16 May 2024 at an exercise price
of £1.54 subject to a 3 year vesting period only. The fair value was assessed
as £0.49 per option using a Black Scholes model with a volatility of 45%,
risk free rates of 4.10% and a dividend yield of 1.51%.
The average vesting period for all options is estimated at 3 years and the
share based payment charge was £975,000 for the year (2023: £731,000). The
weighted average remaining vesting period is 1 year (2023: 1.7 years).
24. Capital commitments
The Group had capital commitments contracted but not provided for of £25,000
at 31 December 2024 (2023: £119,000). The company had no capital commitments
(2023: £nil).
25. Contingencies
As disclosed in note 2, the Group was the target of a cyber-attack.
Investigations to date have identified that some limited employee data and
corporate data was impacted by the incident, but no customer systems data was
compromised. Discussions continue to be held with the Information
Commissioner's Office (ICO) and no provision has been recognised in the
financial year for any penalties. The merit, likely outcome and potential
impact on the Group of the investigation by the ICO and any future customer
claims arising are still subject to a number of significant uncertainties and
therefore, any assessment of the likely outcome or quantum cannot be made at
the date of disclosure.
The Group incurred exceptional costs for professional and related fees in
respect of managing the technical restoration of services and has provided for
customer claims. The Group considers that its related insurance policies cover
these liabilities and that it is likely to be reimbursed a materially similar
amount of income in due course once the insurance claims are evaluated and
processed. Confirmation that the policies cover the circumstances was received
after the reporting date and in accordance with IAS 37 this is therefore
determined to be a contingent asset for the purpose of these financial
statements. The income from the insurance proceeds will be recognised in the
next financial period.
26. Related party transactions
The remuneration of key management personnel and directors is set out in note
4 and transactions with the associate in note 11.
27. Business combinations
On 10 January 2024, the group acquired 100% of Enterprise Software Systems
Limited ('ESS'), a leading provider of transportation management system
solutions. The acquisition is expected to further expand Microlise's suite
of transport technology solutions. The total consideration of £11,436,000
included £850,000 of deferred consideration paid six months after the date of
acquisition. The acquisition was funded from the Group's cash resources and
the identifiable assets acquired included £4,373,000 of cash of which
£3,500,000 was considered to be excess cash. The goodwill arising of
£5,902,000 is attributable to the workforce, synergies and expected future
growth in customers and earnings. The transaction has been accounted for under
the purchase method of accounting. The principal adjustments are in respect of
the intangible fixed assets of £3,708,000 acquired in relation to the brand,
technology and customer relationships, together with the related deferred
taxation liability of £927,000.
The brand acquired is valued at £319,000 on a relief from royalty method and
with a deemed useful life of 3 years and technology acquired is valued at
£1,552,000, valued on a cost savings method with a deemed useful life of 5
years. Customer relationships have been valued at £1,837,000 using a
multi-period excess earnings method approach, with a useful life of 10 years
assumed in line with the existing trends.
Synergies are expected to arise by combining the management of operations and
providing a broader service offering to all Group customers with the trade and
assets of ESS transferred to Microlise Limited on 31 May 2024 and as such it
is not possible to separately identify the post acquisition profit included in
the consolidated statement of comprehensive income. ESS has contributed
£4,836,000 of revenue included in the consolidated income statement from 10
January 2024 to 31 December 2024. Had ESS been consolidated from 1 January
2024, the additional contribution to results from 10 days trading would have
been negligible.
The fair value of the assets and liabilities acquired were as follows:
Book value Fair value adjustments Fair value
£'000 £'000 £'000
Intangible assets - customer, tradename, technology 3,708
- 3,708
Property, plant and equipment 1,106 - 1,106
Cash and cash equivalents 4,373 - 4,373
Receivables 1,032 - 1,032
Payables (3,043) - (3,043)
Lease liabilities (500) - (500)
Corporation tax (68) - (68)
Deferred tax (147) (927) (1,074)
5,534
Goodwill 5,902
Cash consideration paid in the year 11,436
The cash outflow, net of cash acquired, at the date of acquisition was
£6,295,000 with £850,000 of deferred consideration payable in July 2024. The
deferred consideration was not discounted on the basis of materiality.
Acquisition costs of £0.3m were incurred relating to the acquisition with
£0.2m incurred and expensed in the year ended 31 December 2023 and £0.1m
in the year ended 31 December 2024. Other than the acquisition costs the
acquisition was not included in the reported results for the year ended 31
December 2023.
Prior year combinations
On 13 March 2023, the Group acquired the entire share capital of Vita Software
Limited, a provider of fleet logistics services for consideration of
£3,123,000. The goodwill arising of £1,513,000 is attributable to the
workforce, synergies and expected future growth in customers and earnings. The
transaction has been accounted for under the purchase method of accounting.
The principal adjustments relate to £283,000 in respect of the technology and
£406,000 of customer relationships together with the related deferred
taxation liability of £172,000.
The Vita software business has been transferred and integrated into Microlise
Limited and as such it is not possible to separately identify the post
acquisition results.
Had Vita been consolidated from 1 January 2023 it would have contributed
another £104,000 of revenue and a further profit before tax of £60,000 to
the year (excluding acquisition expenses and amortisation of intangible assets
arising on consolidation).
Book value Fair value adjustments Fair value
£'000 £'000 £'000
Intangible assets - 689 689
Property, plant and equipment 14 - 14
Cash and cash equivalents 1,120 - 1,120
Receivables 94 - 94
Payables (45) - (45)
Corporation tax (86) - (86)
Deferred taxation liability (4) (172) (176)
Net assets acquired 1,610
Goodwill 1,513
3,123
Consideration satisfied by:
Cash 2,923
Deferred consideration (payable March 2024) 200
3,123
The Group incurred acquisition related costs of £0.1m related to stamp duty,
legal and professional fees. These costs have been included in
administrative expenses in the group's consolidated statement of comprehensive
income.
The Group also acquired another small business in the year comprising only
intangible assets of £163,000.
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. END FR PKABKDBKBCNBRecent news on Microlise
See all newsREG - Microlise Group PLC - Statement regarding Trakm8 Holdings plc
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