REG - Trakm8 Holdings PLC - Final Results
29/06/2022 07:01
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RNS Number : 5300Q Trakm8 Holdings PLC 29 June 2022
Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
UK Market Abuse Regulation. With the publication of this announcement, this
information is now considered to be in the public domain.
29 June 2022
TRAKM8 HOLDINGS PLC
('Trakm8' or 'the Group' or 'the Company')
Final Results
Trakm8 Holdings plc (AIM: TRAK), the global telematics and data insight
provider, announces its final results for the year ended 31 March 2022
(FY-2022).
FINANCIAL SUMMARY:
FY-2022 FY-2021 Change
Group revenue £18.1m £16.0m +13%
of which, Recurring revenue(1) £9.8m £9.4m +5%
Loss before tax (£0.1m) (£1.9m) +93%
Adjusted Profit/(Loss) before tax(2) £0.0m (£0.3m) +101%
Profit/(Loss) after tax £0.2m (£1.2m) +115%
Net cash inflow generated from operations £3.8m £4.7m -19%
Net debt(3) £5.4m £4.9m +10%
Basic Profit/(Loss) per share 0.37p (2.47p) +115%
Adjusted basic earnings per share(2) 0.41p 0.07p +486%
(1) Recurring revenues are generated from ongoing service and maintenance fees
(2) Before exceptional costs and share based payments
(3 )Total borrowings less cash and cash equivalents. FY-2022 net debt
excludes £1.6m IFRS 16 lease liability.
OPERATIONAL OVERVIEW
· 13% increase in revenues
· 4% increase to over 264,000 connected units in operation
(FY-2021: 254,000)
· 5% increase in recurring revenues to £9.8m (FY-2021: £9.4m)
· 150% increase in software revenues to £1.4m (FY-2021: £0.5m)
· New contract wins with Ticker and Adiona
· Strong continued reduction in direct and indirect costs
· Successfully navigated a large number of supply chain challenges
OUTLOOK
· Group revenues in current financial year to end of May 2022 were
11% ahead of last year
o Revenues from insurance clients increasing due to new contract wins and
increased volumes from existing clients - revenues to end of May 2022 were 33%
ahead of the comparable 2021 period
o Fleet sales showing good progress - revenues to end of May 2022 were 4%
ahead of the comparable 2021 period
· Inflationary pressure on payroll and components is partially
mitigated with lower headcount and lower designed-in device costs
· The Company continues to face component availability issues that
could impact deliveries but the expectation is that we will continue to
overcome these
· The Board believes Trakm8 is building increasing momentum and is
hopeful that this can be transformed into improved financial returns as we
move forward
- Ends -
For further information:
Trakm8 Holdings plc
John Watkins, Executive Chairman Tel: +44 (0) 1675 434 200
Jon Edwards, Chief Financial Officer www.trakm8.com (http://www.trakm8.com/)
Allenby Capital Limited (Nominated Adviser & Broker) Tel: +44 (0) 20 3328 5656
David Hart/Liz Kirchner, Corporate Finance www.allenbycapital.com
Tony Quirke, Sales and Corporate Broking
Notes to Editors
Trakm8 is a UK based technology leader in fleet management, insurance
telematics, connected car, and optimisation. Through IP owned technology, the
Group uses AI data analytics collected from its installed base of telematics
units to fine tune the algorithms that are used to produce its' solutions;
these monitor driver behaviour, identify crash events and monitor vehicle
health to provide actionable insights to continuously improve the security and
operational efficiency of both company fleets and private drivers.
The Group's product portfolio includes the latest data analytics and reporting
portal (Trakm8 Insight), integrated telematics/cameras/optimisation,
self-installed telematics units and one of the widest ranges of installed
telematics devices. Trakm8 has over 264,000 connections.
Headquartered in Coleshill near Birmingham alongside its manufacturing
facility, the Group supplies to the Fleet, Optimisation, Insurance and
Automotive sectors to many well-known customers in the UK and internationally
including the AA, Saint Gobain, EON, Iceland Foods, GSF, Direct Line Group,
Ticker and Ingenie.
Trakm8 has been listed on the AIM market of the London Stock Exchange since
2005. Trakm8 is also recognised with the LSE Green Economy Mark
www.trakm8.com (http://www.trakm8.com/) / @Trakm8
EXECUTIVE CHAIRMAN'S STATEMENT
Results
Covid-19 continued to impact the market for telematics, particularly in our
Insurance business where young drivers were unable to secure driving tests
compounded by the scarcity and higher costs of second hand cars. It also led
to significant challenges in the supply of electronic components for our
devices. Trakm8 managed its way through most of this and achieved a very
significant improvement on the previous year delivering results in line with
market expectations, returning to a profit after tax for the first time in
several years.
The revenues of the business increased by 13% and despite higher costs due to
lower furlough support and supply chain challenges posted an adjusted profit
before tax of £0.0m (FY-2021: loss £0.3m). Loss before tax improved to
£0.1m (FY-2021: loss £1.9m) and Profit after Tax improved to £0.2m
(FY-2021: loss £1.2m).
Connections grew by 4% to 264,000. The total number of fleet management
connections increased by 1% over the year to 71,000 (FY-2021: 70,000).
Telematics for insurance/automotive connections increased by 5%. At the
year-end we had 193,000 insurance/automotive connections (FY-2021: 184,000).
Recurring service revenues increased by 5% to £9.8m (FY-2021: £9.4m).
Software revenues increased by 150% to £1.4m (FY-2021: £0.5m). A good number
of contract wins and renewals were secured particularly with the insurance
clients.
It was pleasing to have strong cash generation of the business with a cash
flow from operations of £3.8m (FY-2021: £4.7m). The Company paid down £0.9m
of HMRC deferred payments on VAT/PAYE/NI, with the balance of £0.9m to be
paid during this financial year. This resulted in a free cash flow of £0.6m
(FY-2021: £2.0m) and net debt increased by £0.5m at £5.4m (pre-IFRS 16).
The Group had £1.0m cash on hand and an undrawn overdraft facility of £0.5m.
Overheads excluding exceptionals increased by 6% due to a reduction of
furloughed staff along with an increased marketing spend. Headcount reduced by
5% during the year with underlying salary costs 5% lower than at the end of
the previous year.
Trakm8 was awarded the London Stock Exchange Green Economy Mark during the
year in recognition that what the Company does plays a significant role in
reducing the carbon footprint of our customers' operations. Trakm8 has also
started the process of joining the Science Based Targets initiative in the
goal of achieving net zero emissions by 2050.
Research and development ('R&D')
Trakm8 has maintained a significant level of investment in R&D for another
year. The Board believes that this level of investment is necessary to
retain a portfolio of market-leading technology. Over time as revenues grow
we expect that this investment as a proportion of revenues will decline.
Trakm8 continues to focus on owning the intellectual property ('IP') we use in
our solutions, and we see this as one of our key competitive advantages.
Telematics systems are complex; but because we own all the elements that
encompass a solution (with the exception of the mobile networks) we have the
ability to understand and resolve problems more easily than our competitors.
The R&D investment has concentrated on the development of self-fit
devices, a multi-camera solution, development of the feature set in Insight,
and further development of our Insurance Broker platform. As identified in
previous years, the requirement to do more for less cost remains a key
strategy as this widens the opportunity to expand the rate of growth as our
customers' return on investment improves.
Governance
The Group has adopted the Quoted Companies Alliance's (QCA) Corporate
Governance Code for small and mid-size quoted companies, which the Board
considers the most appropriate for the size and structure of the Group. More
information can be found in the Governance Report section of this report and
our website (https://www.trakm8.com/investor-relations/corporate-governance
(https://www.trakm8.com/investor-relations/corporate-governance) ).
Dividend
The Group does not propose to recommend a dividend for the year at the
forthcoming AGM. However, the Board will continue to review its dividend
policy in light of future results and investment requirements.
People
The number of people Trakm8 employs has reduced further during FY-2022 with
reductions across the business. In total our staff numbers have reduced by
5% over the year.
Trakm8 has a great team and I would like to thank everyone for their hard
work, dedication and contribution to the ongoing success of the business.
Outlook
We start the new financial year with the ongoing supply chain challenges
impacting our costs and our development progress. A significant amount of our
engineering resources are devoted to redesigning current devices to meet
component changes.
Currently Insurance & Automotive devices supplied to end of May 2022
amount to 60% more than the corresponding period last year due to the
increased number of new clients secured. Fleet deliveries have been reasonably
good with new unit shipments 38% greater than the corresponding period last
year.
These shipments whilst increasing revenues for devices and where applicable
installation in the short term, also drive increased levels of service
revenues and profit for future periods.
April and May revenues were 11% higher than the corresponding period in FY
2022.
Like many businesses, Trakm8 is having to continue to face challenges in a
number of areas in particular, component supply availability and logistics
which have the potential to lead to shortages that could impact customer
product deliveries. In addition, salary and component inflationary pressures
are prevalent. However, the board is taking action to minimise the impact of
these challenges on the Trakm8 business through, for example, reduced
headcount, higher selling prices and engineered cost reductions.
On a much more positive note, we are seeing strong growth in the Insurance
business due, in particular, to new customer wins. In addition, we are
optimistic about securing a number of Fleet deployment contract renewals
during the remainder of this year.
It is against this business generation backdrop that the Board believes Trakm8
is building increasing momentum and is hopeful that this can be transformed
into improved financial returns as we move forward.
John Watkins
EXECUTIVE CHAIRMAN
28 June 2022
FINANCIAL REVIEW
TRADING RESULTS
2022 2021 Change
Group Revenue (£'000) 18,111 15,961 +13%
of which, Recurring Revenue (£'000) 9,806 9,379 +5%
Loss before tax (£'000) 122 1,867 +93%
Profit/(Loss) after tax (£'000) 187 (1,237) +115%
Adjusted Profit/(Loss) before tax(1) (£'000) 3 (342) +101%
Basic Profit/Loss per share (p) 0.37 (2.47) +115%
Adjusted basic earnings per share (p) 0.41 0.07 +486%
(1) Before exceptional costs and share based payments
Revenue
Group revenue increased by 13% to £18.1m (FY-2021: £16.0m) as the impact of
Covid-19 reduced. Fleet revenues increased by 18% to £11.2m and Insurance and
Automotive revenues increased by 7% to £6.9m. Despite the majority of
Covid-19 lockdown measures ending early in the financial year, Insurance
revenues recovered much slower than anticipated due to the well publicised
driving test delays and second hand car price inflation and availability but
offset by shipments to new customers in the final quarter. This was
complimented by increased levels of Fleet and Optimisation orders including
strong software revenues in H1. Recurring revenue generated from service and
maintenance fees increased by 5% to £9.8m (FY-2021: £9.4m) due to the higher
levels of shipments of devices across both business units and implementation
of optimisation services.
Loss before tax
The Group reported a loss before tax of £0.1m (FY-2021: £1.9m). This marked
significant progress as increased revenues delivered gross margins of £11.1m
(FY-2021: £9.3m). Total administrative costs remained broadly similar at
£10.8m despite the increased levels of revenue. This included an increase in
marketing spend of £0.1m to aid revenue growth, a reduction of Coronavirus
Job Retention Scheme income to £0.19m (FY-2021: £0.94m) and an increase in
depreciation and amortisation of £0.2m. This was offset by overall reduction
in employee costs of £0.38m and a reduction in share-based payments of £0.6m
compared to the prior year.
Adjusted Profit before tax
With the improved revenues and gross margins, the Group returned to
profitability with an adjusted profit of £0.0m (FY-2021: £0.3m loss). The
improved revenue performance was offset by increased employee costs as the
furloughed staff costs decreased to £0.4m (FY-2021: £1.6m) along with
increases in depreciation and amortisation, marketing costs and a reduction in
Other Income of £0.2m, £0.1m and £0.2m respectively. Our continued efforts
in efficiency savings improved underlying overheads including a reduction in
employee costs of £0.3m to offset the cost increases.
Exceptional Costs
Exceptional costs totalled £0.6m (FY-2021: £1.3m) and again primarily
include one off costs relating to Covid-19 albeit greatly reduced from the
prior year. This included £0.4m of employee costs whilst on furlough in the
first half of the year and £0.2m of component costs due to the ongoing supply
chain challenges instigated by Covid-19 both here and abroad. This was offset
by £0.2m received as part of the Coronavirus Job Retention Scheme. In
addition, £0.1m was incurred in our ongoing project to streamline our
internal operations.
Balance Sheet
2022 2021
£'000 £'000
Non-Current Assets 25,874 25,640
Net Current Assets 1,704 4,169
Non-Current Liabilities 7,702 9,687
Net Assets 19,876 20,122
Net Assets decreased by £0.2m to £19.9m (FY-2021: £20.1m) reflecting the
profit for the year, after deducting the IFRS2 Share based payments credits.
Non-current assets increased by £0.2m to £25.9m (FY-2021: £25.6m). This
is due to a £0.5m reduction in right of use assets due to depreciation offset
by a £0.8m increase in Intangible assets and £0.1m decrease in Property,
plant and equipment. Intangible assets increased due to the continued
investment in development in both software and hardware with capitalised
development costs in the year totaling £2.9m (FY-2021: £2.3m), offset by
amortisation of £1.9m (FY-2021: £1.7m).
Cash Flow
2022 2021
£'000 £'000
Net Cash generated from operations 3,810 4,702
Investing activities (3,254) (2,667)
Free Cash Flow(1) 556 2,035
Financing activities (1,992) (1,330)
(Decrease)/Increase in Cash in Year (1,366) 705
Net Debt(2) 5,395 4,887
(1) Cash generated from operating activities less cash used in investing
activities (excluding cash flows related to acquisitions)
(2) Total borrowings less cash and cash equivalents. FY-2022 net debt excludes
£1.6m IFRS 16 lease liability.
Cash from operating activities reduced by £0.9m to £3.8m (FY-2021: £4.7m)
which included the repayment of £0.9m to HMRC under the time to pay agreement
negotiated at the end of the last financial year. FY-2021 included the
deferment of payments to HMRC which increased Cash from operating activities
by £1.7m. Cash from operating activities also included R&D tax credit
cash receipts of £0.7m (FY-2021: £0.9m) which reflects the Group's continued
investment in development.
Free cash inflow of £0.6m (FY-2021: £2.0m) is due to the Net Cash generated
from operating activities as detailed above, offset by cash outflows from
investing activities which increased by £0.6m to £3.3m (FY-2021: £2.7m).
Financing activities was an outflow of £1.9m (FY-2021: £1.3m). Following the
negotiation of new and revised terms for the Group's borrowings in March 2021,
capital repayments to both HSBC and the MEIF WM Debt LP resumed in the second
half of the year totalling £0.7m (FY2021: £0.1m).
Net Debt
Net debt excluding IFRS 16 lease liability of £1.6m (FY-2021 £1.9m)
increased by £0.5m to £5.4m (FY-2021: £4.9m). Cash balances total £1.0m
(FY-2021: £2.4m) and total borrowings including IFRS16 lease liability of
£1.6m totals £7.9m (FY-2021: £9.1m). Borrowing comprised £4.9m (FY-2021:
£5.3m) term loan with HSBC, a £1.2m (FY-2021: £1.5m) term loan with MEIF WM
Debt LP and £2.0m (FY-2021: £2.4m) of obligations under Right-to-use lease
liabilities. In addition, at the year end the Group had a £0.5m unused
overdraft facility with HSBC.
Consolidated Statement of Comprehensive Income For The Year Ended 31 March
2022
Note Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
REVENUE 4 18,111 15,961
Cost of sales (7,004) (6,643)
Gross profit 11,107 9,318
Other income 5 13 194
Administrative expenses excluding exceptional costs (10,193) (9,585)
Exceptional administrative costs 7 (568) (1,342)
Total administrative costs (10,761) (10,927)
OPERATING PROFIT/(LOSS) 6 359 (1,415)
Finance income 67 78
Finance costs 8 (548) (530)
LOSS BEFORE TAXATION (122) (1,867)
Income tax 309 630
PROFIT/(LOSS) FOR THE YEAR 187 (1,237)
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations 10 (3)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) 10 (3)
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE 197 (1,240)
PARENT
LOSS BEFORE TAXATION (122) (1,867)
Exceptional administrative costs 568 1,342
IFRS2 Share based payments charge (443) 183
ADJUSTED PROFIT/(LOSS) BEFORE TAX 6 3 (342)
PROFIT/(LOSS) PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic 9 0.37p (2.47p)
Diluted 9 0.37p (2.47p)
The results all relate to continuing operations.
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2022
Note Share capital Share premium Merger reserve Translation reserve Treasury reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 April 2020 500 14,691 1,138 196 (4) 4,658 21,179
Comprehensive loss
Loss for the year - - - - - (1,237) (1,237)
Other comprehensive loss
Exchange differences on translation of overseas operations - - - (3) - - (3)
Total comprehensive loss - - - (3) - (1,237) (1,240)
Transactions with owners
IFRS2 Share-based payments charge - - - - - 183 183
Transactions with owners - - - - - 183 183
Balance as at 1 April 2021 500 14,691 1,138 193 (4) 3,604 20,122
Comprehensive income
Income for the year - - - - - 187 187
Other comprehensive income
Exchange differences on translation of overseas operations - - - 10 - - 10
Total comprehensive income - - - 10 - 187 197
Transactions with owners
IFRS2 Share based payments credit - - - - - (443) (443)
Transactions with owners - - - - - (443) (443)
Balance as at 31 March 2022 500 14,691 1,138 203 (4) 3,348 19,876
Consolidated Statement of Financial Position As At 31 March 2022
Note As at 31 March 2022 As at 31 March 2021
ASSETS £'000 £'000
NON CURRENT ASSETS
Intangible assets 10 23,012 22,187
Property, plant and equipment 803 891
Right of use assets 2,032 2,512
Amounts receivable under finance leases 27 50
25,874 25,640
CURRENT ASSETS
Inventories 1,322 1,409
Trade and other receivables 7,944 6,679
Corporation tax receivable 709 690
Cash and cash equivalents 1,004 2,370
10,979 11,148
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (7,521) (5,417)
Borrowings (1,115) (855)
Right of use liability (612) (680)
Provisions (27) (27)
(9,275) (6,979)
CURRENT ASSETS LESS CURRENT LIABILITIES 1,704 4,169
TOTAL ASSETS LESS CURRENT LIABILITIES 27,578 29,809
NON CURRENT LIABILITIES
Trade and other payables (626) (1,546)
Borrowings (4,855) (5,815)
Right of use liability (1,367) (1,767)
Provisions (112) (190)
Deferred income tax liability (742) (369)
(7,702) (9,687)
NET ASSETS 19,876 20,122
EQUITY
Share capital 11 500 500
Share premium 14,691 14,691
Merger reserve 1,138 1,138
Translation reserve 203 193
Treasury reserve (4) (4)
Retained earnings 3,348 3,604
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 19,876 20,122
The loss for the Company for the year determined in accordance with the
Companies Act 2006 was £176,000 (2021: loss £257,000).
The notes on pages 46 to 81 of the annual report and accounts are an integral
part of these consolidated financial statements. These financial statements
were approved by the Board of directors and authorised for issue on 28 June
2022 and are signed on its behalf by:
John Watkins - Director Jon Edwards - Director
Consolidated Statement of Cash Flows For The Year Ended 31 March 2022
Notes Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
NET CASH GENERATED FROM OPERATING ACTIVITIES 12 3,810 4,702
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (420) (330)
Proceeds from sale of property, plant and equipment 125 -
Purchases of software (48) (47)
Capitalised development costs (2,911) (2,290)
NET CASH USED IN INVESTING ACTIVITIES (3,254) (2,667)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loans - 5,300
Loan arrangement fees (5) (88)
Repayment of loans (743) (5,379)
Repayment of obligations under lease agreements (674) (670)
Interest paid (500) (493)
NET CASH USED IN FINANCING ACTIVITIES (1,922) (1,330)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,366) 705
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,370 1,665
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,004 2,370
Notes to the Consolidated Financial Statements
1 GENERAL INFORMATION
Trakm8 Holdings PLC ("Company") and its subsidiaries (together the "Group")
develop, manufacture, distribute and sell telematics devices and services and
optimisation solutions.
Trakm8 Holdings PLC is a public limited company incorporated in the United
Kingdom (registration number 05452547). The Company is domiciled in the United
Kingdom and its registered office address is 4 Roman Park, Roman Way,
Coleshill, West Midlands, B46 1HG. The Company's Ordinary shares are traded on
the AIM market of the London Stock Exchange. The Company is registered in
England and is limited by shares.
The Group's principal activity is the development, manufacture, marketing and
distribution of vehicle telematics equipment and services and optimisation
solutions. The Company's principal activity is to act as a holding company for
its subsidiaries.
The consolidated financial statements are presented in Sterling and all values
are rounded to the nearest thousand (£'000) except where otherwise indicated.
2 PREPARATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
The Group's financial statements have been prepared in accordance with
UK-adopted International Financial Reporting Standards ("IFRS") and IFRS
Interpretations Committee ("IFRS IC") interpretations as endorsed by the
European Union, and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
3 BASIS OF PREPARATION
The audited financial information included in this preliminary results
announcement for the year ended 31 March 2022 and audited information for the
year ended 31 March 2021 does not comprise statutory accounts within the
meaning of section 434 Companies Act 2006. The information has been
extracted from the audited statutory financial statements for the year ended
31 March 2022 which will be delivered to the Registrar of Companies in due
course. Statutory financial statements for the year ended 31 March 2021 were
approved by the Board of directors and have been delivered to the Registrar of
Companies. The report of the independent auditors for the year ended 31
March 2022 and 2021 respectively on these financial statements were
unqualified and did not include a statement under section 498 of the Companies
Act 2006.
These financial statements are prepared on a going concern basis after
assessing the principal risks. To monitor the future cash position the Group
produces projections of its working capital and long term funding requirements
covering 3 months in detail and 1 and 2 year projections. These projections
are updated on a regular basis to reflect current trading and latest
information on future trading. The Group does have a substantial recurring
revenue base that accounts for 54% of revenues that provide a strong
underlying base.
The Group renewed its debt facilities with HSBC in March 2021 and benefitted
from deferral of capital repayments which recommenced in September 2021. This
was in addition to reaching an agreement with HMRC to repay £1.8m VAT, PAYE
& NI equally between this financial year and next. Covenant tests to the
end of March 2022 were an absolute EBITDA tested quarterly, moving to
quarterly cash flow cover and leverage covenants from June 2022.
At the year end the Group has cash balances of £1,004,000 and an unused
overdraft facility of £500,000. The Groups latest projections for twelve
months from the date of signing the financial statements show that the Group
has sufficient cash resources and will meet its covenants with headroom for
the foreseeable future. The Group has completed adverse sensitivities against
its current projections to reflect potential external risks where material
shortages constrain its ability to fulfil orders or demand of its products and
services reduce and material costs increase.
To assess the potential impact of these, a 10% reduction in Fleet new business
contract value and Insurance shipments and a 10% increase in material costs
were modelled against the Groups current forecast. Despite the cumulative
impact of these changes the Group still maintains compliance with the
covenants for the coming twelve months without the inclusion of any
mitigations that could and would be implemented such as price increases and
savings in both direct and indirect costs.
On this basis the Directors have a reasonable expectation that the Group will
have adequate financial resources to continue in operation for the foreseeable
future and therefore it is appropriate to adopt the going concern basis of
accounting in preparing the financial statements.
4 SEGMENTAL ANALYSIS
The chief operating decision maker ("CODM") is identified as the Board. It
continues to define all the Group's trading under the single Integrated
Telematics Technology segment and therefore review the results of the group as
a whole. Consequently all of the Group's revenue, expenses, assets and
liabilities are in respect of one Integrated Telematics Technology segment.
The Board as the CODM review the revenue streams of Integrated Fleet,
Optimisation, Insurance and Automotive Solutions ("Solutions") as part of
their internal reporting. Solutions represents the sale of the Group's full
vehicle telematics and optimisation services, engineering services,
professional services and mapping solutions to customers.
A breakdown of revenues within these streams are as follows:
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Solutions: 18,111 15,961
Fleet and optimisation 11,217 9,520
Insurance and automotive 6,894 6,441
A geographical analysis of revenue by destination is as follows:
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
United Kingdom 17,784 15,647
North America - 4
Norway - 2
Rest of Europe 272 293
Rest of World 55 15
18,111 15,961
5
OTHER INCOME
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Grant income 13 194
13 194
6 OPERATING PROFIT/(LOSS)
The following items have been included in arriving at operating profit/(loss):
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Depreciation
- owned assets 176 156
- right of use assets 630 625
Amortisation of intangible assets
- owned assets (see note 10) 2,134 1,992
Other operating lease rentals 34 13
Research and development expenditure 669 637
Loss on disposal of property plant and equipment 263 318
Loss on foreign exchange transactions 22 1
Staff costs 5,187 6,465
Exceptional administrative costs (see note 7) 568 1,342
Auditors' remuneration
- Fees payable to the Company's auditors for the audit of the parent
company and consolidated financial statements 77 73
Adjusted profit/(loss) before tax is monitored by the Board and measured as
follows:
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Loss before tax (122) (1,867)
Exceptional administrative costs (note 9) 568 1,342
Share based payments (443) 183
Adjusted profit/(loss) before tax 3 (342)
7 EXCEPTIONAL ADMINISTRATIVE COSTS
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Integration & restructuring costs 107 168
Covid-19 costs 646 2,109
Furlough grant income (185) (935)
568 1,342
The Group incurred exceptional costs in the current and prior financial year
relating to the Covid-19 pandemic. These costs include the increased cost of
temporarily buying raw materials from auxiliary markets to ensure continuity
of supply of key components which were in constraint due to supply chain
issues caused by the pandemic. In addition this includes the costs of
employees during periods of furlough.
The Group has also incurred significant costs relating to its ongoing project
to streamline and rationalise the operations of the business. This has
resulted in the following non-underlying, one-off costs:
- Restructuring costs incurred as a result of a headcount reduction activity
undertaken during the current financial year.
- In the prior year, integration and restructuring costs incurred relate to
integrating the activities of Route Monkey Limited and Roadsense Limited that
were acquired in previous financial years and include costs associated with
office closures and costs and profits incurred as part of its long-term real
estate plan.
- In the current and prior year, the Group received furlough grant income that
relates to income received from the Coronavirus Job Retention Scheme for
employees furloughed as a result of Covid-19.
8 FINANCE COSTS
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Interest on bank loans 388 373
Amortisation of debt issue costs 48 37
Interest on right of use assets 112 120
548 530
9 EARNINGS PER ORDINARY SHARE
The earnings per Ordinary share have been calculated in accordance with IAS 33
using the profit/(loss) for the year and the weighted average number of
Ordinary shares in issue during the year as follows:
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Profit/(Loss) for the year after taxation 187 (1,237)
Exceptional administrative costs 568 1,342
Share based payments (443) 183
Tax effect of adjustments (108) (255)
Adjusted profit for the year after taxation 204 33
No. No.
Number of Ordinary shares of 1p each at 31 March 50,004,002 50,004,002
Basic weighted average number of Ordinary shares of 1p each 50,004,002 50,004,002
Diluted weighted average number of Ordinary shares of 1p each* 50,056,538 50,004,002
Basic profit/(loss) per share 0.37p (2.47p)
Diluted profit/(loss) per share 0.37p (2.47p)
Adjust for effects of:
Exceptional costs 0.92p 2.17p
Share based payments (0.89p) 0.37p
Adjusted basic earnings per share 0.41p 0.07p
Adjusted diluted earnings per share 0.41p 0.07p
*In the current year, the Group awarded Tranch AI with an exercise price of
16p. This grant is dilutive as the exercise price is less than the average
share price as at year end.
10 INTANGIBLE ASSETS
Goodwill Intellectual property Customer relationships Development costs Software Total
£'000 £'000 £'000 £'000 £'000 £'000
COST
As at 1 April 2020 10,417 1,920 100 17,190 1,903 31,530
Additions - Internal developments - - - 2,119 - 2,119
Additions - External purchases - - - 171 47 218
Impairments - - - - (155) (155)
Disposals - - - (238) (36) (274)
As at 31 March 2021 10,417 1,920 100 19,242 1,759 33,438
Additions - Internal developments - - - 2,521 46 2,567
Additions - External purchases - - - 390 2 392
As at 31 March 2022 10,417 1,920 100 22,153 1,807 36,397
AMORTISATION
As at 1 April 2020 - 1,910 100 6,479 1,044 9,533
Charge for year - 10 - 1,733 249 1,992
Disposals - - - (238) (36) (274)
As at 31 March 2021 - 1,920 100 7,974 1,257 11,251
Charge for year - - - 1,943 191 2,134
As at 31 March 2022 - 1,920 100 9,917 1,448 13,385
NET BOOK AMOUNT
As at 31 March 2022 10,417 - - 12,236 359 23,012
As at 31 March 2021 10,417 - - 11,268 502 22,187
As at 1 April 2020 10,417 10 - 10,711 859 21,997
Goodwill arose in relation to the Group's acquisition of 100% of the share
capital of Roadsense Technology Limited (Roadsense), Route Monkey Limited
(Route Monkey), Box Telematics Limited (Box) and DCS Systems Limited (DCS).
Since the acquisition Roadsense, Box, Route Monkey and DCS have been
incorporated into the Trakm8 business. These businesses have therefore been
assessed as one cash generating unit for an impairment test on Goodwill.
The impairment review has been performed using a value in use calculation.
The impairment review has been based on the Group's budgets for FY-2023 which
have been reviewed and approved by the Board and projections for FY-2024.
Forecasts for the subsequent 3 years have been produced based on 7% (a prudent
growth rate for telematics market) growth rates in revenue and EBITDA in each
year. A net present value has been calculated using a pre tax discount rate
of 9% (Group's weighted average cost of capital) which is deemed to be a
reasonable rate taking account of the Group's cost of funds and an extra
element for risk. A terminal value has been calculated and included in the
discounted cash flow forecasts used within the model to fully support the
goodwill value. A growth rate of 2% was used to determine the terminal value.
The forecast shows sufficient headroom of cash flow above the net assets value
when we have performed sensitivity analysis.
1. An increase in the discount rate to 12% shows headroom of £3m.
2. A decrease in the growth rate to 5% shows headroom of £10m.
3. A decrease in the terminal growth rate to 1% shows headroom of £11m.
In addition, sensitivity analysis has been undertaken and indicates that an
impairment will be triggered by:
1. Decrease in annual growth rates from 7% to 4% and decrease in terminal
growth rate from 2% to 1% and increase the discount rate from 10% to 11%.
Or triggered by:
1. Decrease in net cash generated from operating activities for FY-2023 and
FY-2024 of 14%.
Amortisation expenses of £2,134,000 (2021: £1,992,000) have been charged to
Administrative expenses in the Consolidated Statement of Comprehensive
Income.
11 SHARE CAPITAL
As at 31 March 2022 As at 31 March 2021
No's £'000 No's £'000
Authorised: '000's '000's
Ordinary shares of 1p each 200,000 2,000 200,000 2,000
Allotted, issued and fully paid:
Ordinary shares of 1p each 50,004 500 50,004 500
The Company currently holds 29,000 Ordinary shares in treasury representing
0.06% (2021: 0.06%) of the Company's issued share capital. The number of 1
pence Ordinary shares that the Company has in issue less the total number of
Treasury shares is 49,975,002.
12 CASH GENERATED FROM OPERATIONS
As at 31 March 2022 As at 31 March 2021
£'000 £'000
Loss before tax (122) (1,867)
Depreciation 806 781
(Profit)/Loss on disposal of fixed assets 263 318
Net bank and other interest 481 452
Exceptional costs 568 1,342
Amortisation of intangible assets 2,134 1,992
Exchange movement 10 (3)
Share based payments (443) 183
Operating cash flows before movement in working capital 3,697 3,198
Movement in inventories 87 634
Movement in trade and other receivables (1,242) 1,166
Movement in trade and other payables 1,184 70
Movement in provisions (78) 33
Cash generated from operations before exceptional costs 3,648 5,101
Cash outflow from exceptional costs (568) (1,342)
Cash generated from operations 3,080 3,759
Interest received 67 78
Income taxes received 663 865
Net cash inflow from operating activities 3,810 4,702
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