REG - Trakm8 Holdings PLC - Final Results
04/07/2023 07:00
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RNS Number : 8289E Trakm8 Holdings PLC 04 July 2023
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.
4 July 2023
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 2023
(FY-2023).
FINANCIAL SUMMARY:
FY-2023 FY-2022
Group revenue £20.2m £18.1m
of which, Recurring revenue(1) £10.5m £9.8m
Adjusted Profit before tax(2) £0.3m £0.0m
(Loss) before tax (£1.2m) (£0.1m)
(Loss)/Profit after tax (£0.8m) £0.2m
Net cash inflow generated from operations £4.3m £3.8m
Net debt(3) £5.6m £5.4m
Adjusted basic earnings per share(2) 0.95p 0.41p
Basic (loss)/earnings per share (1.57p) 0.37p
(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-2023 net debt
excludes £1.3m IFRS 16 lease liability.
OPERATIONAL OVERVIEW
· 12% increase in revenues
· 32% increase to over 348,000 connected devices in operation
(FY-2022: 264,000)
· 7% increase in recurring revenues to £10.5m (FY-2022: £9.8m)
· 54% increase in software revenues to £2.1m (FY-2022: £1.4m)
· Substantial contract extensions with Iceland Foods and Sainsburys
· Significant reduction in indirect costs following strategic
review
· Successfully navigated a large number of supply chain challenges
but at an increased cost
· Continued inflationary costs pressures across all areas of
operations
OUTLOOK
· Insurance expected to be impacted by reinsurance cost and
capacity issues in H1
· H1 revenues expected to be in line with prior year but with lower
operating costs
· The Board expects full year to continue trend of improved
performance with strong second half revenues, including from a significant
software contract
- 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/ Vivek Bhardwaj, Corporate Finance www.allenbycapital.com
Tony Quirke/ Joscelin Pinnington, 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 348,000 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 Direct Line Group, Ticker, Howden, Sainsburys, Iceland Foods,
AA, EON, GSF, and Saint Gobain.
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
The revenues of the business increased by 12% and posted an adjusted profit
before tax of £0.3m (FY-2022: £0.0m). Loss before tax was £1.2m (FY-2022:
£0.1m) and Loss after Tax was £0.8m (FY-2022: profit £0.2m).
In September last year, the Company announced a restructuring to focus on
those market and products where we have been most successful. This was largely
completed during the year and once complete will reduce our annual cash
outflow by over £2.5m, helping to mitigate the effect of inflationary
pressures on remaining costs. We reduced our headcount down to 121 which did
not impact our rate of order entry overall and resulted in a profitable second
half to the year.
Connections grew by 32% to 348,000 (FY-2022: 264,000). Telematics for
insurance/automotive connections increased by 45%. At the year-end, we had
279,000 insurance/automotive connections (FY-2022: 193,000). The total
number of fleet management connections decreased by 3% over the year to 69,000
(FY-2022: 71,000). Recurring service revenues increased by 7% to £10.5m
(FY-2022: £9.8m).
The impact of the war in Ukraine on inflation and COVID induced component
shortages have been widely reported. Trakm8 navigated through these, avoiding
any missed customer deliveries and managed to develop revised devices to
ensure continued supply where necessary. This did however negatively impact
direct costs.
It was pleasing to maintain strong cash generation in the business with a cash
flow from operations of £4.3m (FY-2022: £3.8m). The Company paid down the
final £0.9m of HMRC deferred payments on VAT/PAYE/NI. This resulted in a free
cash flow of £0.9m (FY-2022: £0.6m) and net debt, excluding IFRS16 lease
liabilities, increased by £0.3m to £5.6m. The Group had £1.1m cash on
hand and an undrawn overdraft facility of £0.5m.
The Group issued unsecured convertible loan notes amounting to £1.58m with a
repayment or conversion in September 2025. The Group also extended its loan
facilities with HSBC to 31 July 2024 maintaining existing terms.
Overheads excluding exceptional costs increased by 16% to £11.9m with the
restructuring and cost saving completed mid way through the year. Headcount
reduced by 24% during the year with underlying overall payroll costs 16% lower
than at the end of the previous year despite significant salary inflation.
Trakm8 has also made good progress with the process of Science Based Targets
with the goal of achieving net zero emissions by 2050.
A good number of contract wins and renewals were secured with both fleet and
insurance clients showing our commitment to long term customer relationships.
Research and development ('R&D')
Trakm8 has maintained a significant level of investment in R&D for another
year but following a period of significant investment has been able to reduce
the amount invested going forward. The Board believes that this new lower
level of investment is necessary and sufficient to retain a portfolio of
market-leading technology. Over time as revenues grow, we expect that this
investment as a proportion of revenues will further 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 update of all our devices to
the most modern and most available components, finalisation of a multi-camera
solution, development of the feature set in Insight particularly for our two
major optimisation clients, 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 the return on their investment for our customers improves.
ESG
The Group provides solutions that significantly improve the carbon footprint
of clients' operations through improved efficiencies and reduced risk costs.
Trakm8 also provides device exchange programmes to recycle hardware thereby
reducing the need to make new ones and reducing the cost of telematics to our
clients. We also provide business optimisation consultancy for clients to
assess opportunities for further reducing their carbon footprint.
Trakm8 is also committed to Science Based Target initiative (SBTi) with the
objective to reduce our Scope 1 and Scope 2 emissions and reach Net Zero by
2025. All our company cars are now fully electric and we are analysing all our
uses of energy to minimise our impact on the environment through further
internal projects. We will also work with our supply chain to try to minimise
our sourcing from suppliers not committed to reducing their carbon impact.
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.
Please see https://www.trakm8.com/investor-relations/corporate-governance
(https://www.trakm8.com/investor-relations/corporate-governance) for our full
compliance statement.
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-2023 with
reductions across the business. In total, our staff numbers have reduced by
24% over the year.
Trakm8 has an exceptionally talented team and I would like to thank everyone
for their hard work, dedication and contribution to the ongoing success of the
business.
Outlook
In the trading update in April this year, we advised the market that there had
been a significant impact on the insurance market with increased re-insurance
costs and some insurance capacity being removed from the market. We expected
that this would impact revenues for the first quarter. This has turned out to
be correct and we now expect that this will continue to significantly impact
the second quarter of the financial year.
We expect that Group revenues in the first half of the year will be broadly in
line with last year but with much lower operating costs.
We secured several new Insurance contracts this year and last. The capacity
constraints are expected to diminish in the last calendar quarter of 2023 and
therefore the Insurance activity is expected to be strong in the second half
of the year. As with last year, we expect that trading will be significantly
loaded on the second half of the financial year when we also expect to secure
a significant software contract. The Board expects that FY2024 will continue
the trend of recent years with improving operational and financial results.
John Watkins
EXECUTIVE CHAIRMAN
3 July 2023
FINANCIAL REVIEW
TRADING RESULTS
2023 2022 Change
Group Revenue (£'000) 20,197 18,111 +12%
of which, Recurring Revenue (£'000) 10,466 9,806 +7%
(Loss) before tax (£'000) (1,243) (122) -919%
(Loss)/Profit after tax (£'000) (783) 187 -512%
Adjusted Profit before tax(1) (£'000) 306 3 +10,100%
Basic (Loss)/earnings per share (p) (1.57) 0.37 -516%
Adjusted basic earnings per share (p) 0.95 0.41 +137%
(1) Before exceptional costs and share based payments
Revenue
Group revenue increased by 12% to £20.2m (FY-2022: £18.1m) with strong
second half revenues of £11.2m versus first half revenues of £9.0m.
Insurance and Automotive revenues grew by 26% to £8.7m (FY-2022: £6.9m) and
benefitted from a full year of shipments to new customers launched late last
year, driving both increased device sales and associated service and
maintenance fees. The latter part of the period saw further contract wins and
extensions adding additional customers to increase the diversity and size of
our Insurance client base.
Fleet and Optimisation revenues increased to £11.4m (FY-2022: £11.3m)
inclusive of £1.9m of software sales (FY-2022: £1.2m) following strong
contract extensions in the second half of the period with both Iceland and
Sainsburys. This resulted in second half revenues increasing to £6.57m versus
£4.83m for the first six months. Recurring revenues remained strong at £7.0m
(FY-2022: £6.9m) with slightly higher attrition in device connections being
offset by increased service fees per device as we continue to add features and
benefits to our solutions to both new and existing customers alike.
Loss before tax
The Group reported a loss before tax of £1.2m (FY2022: £0.1m). Gross margin
value for the year, inclusive of exceptional cost of sales, increased to
£12.5m (FY-2022: £11.1m) and percentages were slightly increased to 61.8%
(FY-2022: 61.3%). The ongoing impact of COVID continued to drive significant
cost pressures in material procurement during the first half of the year,
including £0.2m of exceptional costs as we maintained continuity of supply to
our customers. This was offset in the second half with significant high margin
software sales and the supply of materials returning to a less distressed
state and therefore lower exceptional costs of just £0.05m.
Whilst total administration costs increased during the year, we did complete a
change in strategy as announced in September 2022 which significantly reduced
operational costs ensuring a reduced cost base for future periods. This
coupled with improved, higher margin trading resulted in a profit before tax
of £1.2m in the second half of the year as expected, compared to a first half
loss before tax of £2.4m. This was despite inflationary pressures in our
remaining costs.
Adjusted Profit before tax
The Group maintained the progress of the prior year with an adjusted profit of
£0.3m (FY-2022: £0.0m). Improved gross margins were offset by inflationary
pressures and increased costs with the most significant increases being Real
Estate costs, Interest and Amortisation of £0.2m, £0.1m and £0.2m
respectively.
The reduction in headcount did result in monthly payroll spend reducing by 28%
helping reduce second half expensed staff costs by £0.6m.
Exceptional Costs
Exceptional costs totalled £1.5m (FY-2022: £0.5m) and were dominated by the
costs of our restructuring efforts as previously discussed. These costs
include staff costs as our head count reduced from the beginning of the period
by 24% to 121 along with associated professional fees incurred in executing
our plan. £0.3m of premium material costs were incurred to ensure delivery of
products to our customers. Other COVID costs include a contract write down as
termination for a Fleet customer's contracts was agreed due to their trading
performance during and since the pandemic.
Balance Sheet
2023 2022
£'000 £'000
Non-Current Assets 26,200 25,874
Net Current Assets 1,582 1,704
Non-Current Liabilities 8,653 7,702
Net Assets 19,129 19,876
Net Assets decreased by £0.7m to £19.1m (FY-2022: £19.9m) reflecting the
loss for the year, after deducting the IFRS2 Share based payments charges.
Non-current assets increased by £0.3m to £26.2m (FY-2022: £25.9m). This
is due to a £0.3m reduction in right of use assets due to depreciation offset
by a £0.3m increase in Intangible assets and £0.3m increase in Property,
plant and equipment. Intangible assets increased due to the continued,
albeit reduced, investment in development in both software and hardware with
capitalised development costs in the year totaling £2.7m (FY-2022: £2.9m),
offset by amortisation of £2.3m (FY-2022: £2.1m).
Non-Current Liabilities increased during the year with the issue of a new
£1.58m convertible loan note which helped finance our change of strategy and
restructure. This was offset by a full year of capital repayments to both HSBC
and Maven following their recommencement in the second half of FY-2022.
Cash Flow
2023 2022
£'000 £'000
Net Cash generated from operations 4,314 3,810
Investing activities (3,419) (3,254)
Free Cash Flow(1) 895 556
Financing activities (780) (1,992)
Increase/(Decrease) in Cash in Year 115 (1,366)
Net Debt(2) 5,618 5,395
(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-2023 net debt excludes
£1.3m IFRS 16 lease liability.
Cash from operating activities increased by £0.5m to £4.3m (FY-2022: £3.8m)
with improved working capital management. This was despite the final repayment
of £0.9m to HMRC under the time to pay agreement negotiated at the end of
FY-2021. Cash from operating activities also included R&D tax credit cash
receipts of £0.7m (FY-2022: £0.7m) which reflects the Group's continued
investment in cutting edge development.
Free cash inflow of £0.9m (FY-2022: £0.6m) is due to the Net Cash generated
from operating activities as detailed above, offset by cash outflows from
investing activities which increased by £0.2m to £3.4m (FY-2022: £3.2m).
Financing activities was an outflow of £0.8m (FY-2022: £2.0m). A full year
of repayments in relation to our agreements with HSBC and Maven drove outflows
of £1.1m (FY2022: £0.7m) but new unsecured convertible loan notes were
issued totaling £1.58m which assisted the financing of our restructuring
activities.
Net Debt
Net debt excluding IFRS 16 lease liability of £1.3m (FY-2022 £1.6m)
increased by £0.3m to £5.6m (FY-2022: £5.4m). Cash balances total £1.1m
(FY-2022: £1.0m) and total borrowings including IFRS16 lease liability of
£1.3m totals £6.9m (FY-2022: £6.9m). Borrowing comprised £4.1m (FY-2022:
£4.9m) term loan with HSBC, a £0.8m (FY-2022: £1.2m) term loan with MEIF WM
Debt LP, Unsecured Convertible Loan Notes of £1.6m (FY-2022: £nil) and
£1.6m (FY-2022: £2.0m) 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
2023
Note Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
REVENUE 4 20,197 18,111
Cost of sales (7,445) (7,004)
Exceptional cost of sales (261) -
(7,706) (7,004)
Gross profit 12,491 11,107
Other income 5 16 13
Administrative expenses excluding exceptional costs (11,860) (10,193)
Exceptional administrative costs 7 (1,272) (568)
Total administrative costs (13,132) (10,761)
OPERATING PROFIT/(LOSS) 6 (625) 359
Finance income 50 67
Finance costs 8 (668) (548)
LOSS BEFORE TAXATION (1,243) (122)
Corporation tax 460 309
PROFIT/(LOSS) FOR THE YEAR (783) 187
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations 9 10
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) 9 10
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE (774) 197
PARENT
LOSS BEFORE TAXATION (1,243) (122)
Exceptional cost of sales 261 -
Exceptional administrative costs 1,272 568
IFRS2 Share based payments charge 16 (443)
ADJUSTED PROFIT/(LOSS) BEFORE TAX 306 3
PROFIT/(LOSS) PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic (1.57p) 0.37p
Diluted (1.57p) 0.37p
The results all relate to continuing operations.
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2023
Share capital Share premium Merger reserve Translation reserve Treasury reserve Convertible loan reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at 1 April 2021 500 14,691 1,138 193 (4) - 3,604 20,122
Comprehensive loss
Income for the year - - - - - 187 187
Other comprehensive loss
Exchange differences on translation of overseas operations - - - 10 - - - 10
Total comprehensive income - - - 10 - - 187 197
Transactions with owners
IFRS2 Share-based payments release - - - - - - (443) (443)
Transactions with owners - - - - - - (443) (443)
Balance as at 1 April 2022 500 14,691 1,138 203 (4) - 3,348 19,876
Comprehensive income
Loss for the year - - - - - - (783) (783)
Other comprehensive income
Exchange differences on translation of overseas operations - - - 9 - - - 9
Total comprehensive loss - - - 9 - - (783) (774)
Transactions with owners
IFRS2 Share based payments charge - - - - - - 16 16
Convertible Loan - - - - - 11 - 11
Transactions with owners - - - - - 11 16 27
Balance as at 31 March 2023 500 14,691 1,138 212 (4) 11 2,581 19,129
Consolidated Statement of Financial Position As At 31 March 2023
Note As at 31 March 2023 As at 31 March 2022
ASSETS £'000 £'000
NON CURRENT ASSETS
Intangible assets 10 23,382 23,012
Property, plant and equipment 1,103 803
Right of use assets 1,711 2,032
Amounts receivable under finance leases 4 27
26,200 25,874
CURRENT ASSETS
Inventories 2,426 1,322
Trade and other receivables 7,948 7,944
Corporation tax receivable 856 709
Cash and cash equivalents 1,119 1,004
12,349 10,979
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (9,196) (7,521)
Borrowings (1,031) (1,115)
Right of use liability (466) (612)
Provisions (74) (27)
(10,767) (9,275)
CURRENT ASSETS LESS CURRENT LIABILITIES 1,582 1,704
TOTAL ASSETS LESS CURRENT LIABILITIES 27,782 27,578
NON CURRENT LIABILITIES
Trade and other payables (828) (626)
Borrowings (5,435) (4,855)
Right of use liability (1,113) (1,367)
Provisions (166) (112)
Deferred income tax liability (1,111) (742)
(8,653) (7,702)
NET ASSETS 19,129 19,876
EQUITY
Share capital 11 500 500
Share premium 14,691 14,691
Merger reserve 1,138 1,138
Translation reserve 212 203
Treasury reserve (4) (4)
Convertible loan reserve 11 -
Retained earnings 2,581 3,348
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 19,129 19,876
Consolidated Statement of Cash Flows For The Year Ended 31 March 2023
Notes Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
NET CASH GENERATED FROM OPERATING ACTIVITIES 12 4,314 3,810
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (749) (420)
Proceeds from sale of property, plant and equipment - 125
Purchases of software (12) (48)
Capitalised development costs (2,658) (2,911)
NET CASH USED IN INVESTING ACTIVITIES (3,419) (3,254)
CASH FLOWS FROM FINANCING ACTIVITIES
New Convertible loan note 1,580 -
Loan arrangement fees (36) (5)
Repayment of loans (1,095) (743)
Repayment of obligations under lease agreements (619) (674)
Interest paid (610) (500)
NET CASH USED IN FINANCING ACTIVITIES (780) (1,922)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS 115 (1,366)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,004 2,370
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,119 1,004
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 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 2023 and audited information for the
year ended 31 March 2022 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 2023 which will be delivered to the Registrar of Companies in due
course. Statutory financial statements for the year ended 31 March 2022 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 2023 and 2022 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 52% of revenues that provide a strong
underlying base.
The Group extended its debt facilities with HSBC in March 2023 in line with
the existing arrangement inclusive of quarterly covenant tests of both
Leverage and Debt Service. In addition the HMRC arrangement to repay £1.7m of
VAT and PAYE accrued during the COVID-19 pandemic was settled during the year.
During the year a new Convertible Loan note with existing shareholders was
secured totalling £1.58m, helping to finance a significant restructure
following a review of the company strategy.
At the year end the Group has cash balances of £1,119,000 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 the wider
economic climate reduces demand, across both Insurance and Automotive device
sales and Fleet new business contracts, as well as potential increases in
material costs incurred.
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 2023 Year ended 31 March 2022
£'000 £'000
Solutions: 20,197 18,111
Fleet and optimisation 11,475 11,217
Insurance and automotive 8,722 6,894
A geographical analysis of revenue by destination is as follows:
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
United Kingdom 19,769 17,784
North America - -
Norway - -
Rest of Europe 397 272
Rest of World 31 55
20,197 18,111
5
OTHER INCOME
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
Grant income 16 13
16 13
6 OPERATING (LOSS)/PROFIT
The following items have been included in arriving at operating (loss)/profit:
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
Depreciation
- owned assets (see note 15) 227 176
- right of use assets (see note 16) 540 630
Amortisation of intangible assets
- owned assets (see note 14) 2,300 2,134
Other operating lease rentals 96 34
Research and development expenditure 395 669
Loss on disposal of property plant and equipment 222 263
Loss on foreign exchange transactions 32 22
Staff costs (note 12) 5,693 5,187
Exceptional cost of sales (see note 9) 261 -
Exceptional administrative costs (see note 9) 1,272 568
Auditors' remuneration
- Fees payable to the Company's auditors for the audit of the parent
company and consolidated financial statements 100 77
Adjusted profit before tax is monitored by the Board and measured as follows:
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
Loss before tax (1,243) (122)
Exceptional costs (note 9) 1,533 568
Share based payments 16 (443)
Adjusted profit before tax 306 3
7 EXCEPTIONAL COSTS
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
Exceptional costs of sales
Covid-19 - component acquisition 261 -
261 -
Exceptional administrative costs
Covid-19 - other costs 234 646
Integration & restructuring costs 1,038 107
Furlough grant income - (185)
Total exceptional administrative costs 1,272 568
Total exceptional costs 1,533 568
During the year the Group completed a review of its strategy and significantly
reduced its sales and marketing resources, engineering investment and
associated support functions. In addition, the Group completed a refresh of
it's hardware platforms and narrowed its product range accordingly. Costs were
incurred during the period through a reduction in headcount, inventory write
down, non-refundable marketing event deposits and associated professional
service costs.
In the prior year, restructuring costs were also incurred as a result of
headcount reduction.
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 inventory 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, the group terminated a contract with a
customer affected by ongoing issues following the pandemic.
In the 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 2023 Year ended 31 March 2022
£'000 £'000
Interest on loans 510 388
Amortisation of debt issue costs 58 48
Interest on lease liabilities 100 112
668 548
9 EARNINGS PER ORDINARY SHARE
The earnings per Ordinary share have been calculated in accordance with IAS 33
using the (loss)/profit for the year and the weighted average number of
Ordinary shares in issue during the year as follows:
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
(Loss)/Profit for the year after taxation (783) 187
Exceptional administrative costs 1,533 568
Share based payments 16 (443)
Tax effect of adjustments (291) (108)
Adjusted profit for the year after taxation 475 204
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 50,004,002 50,056,538
Basic (loss)/profit per share (1.57p) 0.37p
Diluted (loss)/profit per share (1.57p) 0.37p
Adjust for effects of:
Exceptional costs 2.48p 0.92p
Share based payments 0.03p (0.89p)
Adjusted basic earnings per share 0.95p 0.41p
Adjusted diluted earnings per share 0.95p 0.41p
10 INTANGIBLE ASSETS
Goodwill Intellectual property Customer relationships Development costs Software Total
£'000 £'000 £'000 £'000 £'000 £'000
COST
As at 1 April 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
Additions - Internal developments - - - 2,320 - 2,320
Additions - External purchases - - - 338 12 350
As at 31 March 2023 10,417 1,920 100 24,811 1,819 39,067
AMORTISATION
As at 1 April 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
Charge for year - - - 2,125 175 2,300
As at 31 March 2023 - 1,920 100 12,042 1,623 15,685
NET BOOK AMOUNT
As at 31 March 2023 10,417 - - 12,769 196 23,382
As at 31 March 2022 10,417 - - 12,236 359 23,012
As at 1 April 2021 10,417 - - 11,268 502 22,187
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-2024 which
have been reviewed and approved by the Board and projections for FY-2025.
Forecasts for the subsequent 3 years have been produced based on 7% (a prudent
growth rate for the 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 show sufficient headroom of cash flow above the net assets value
when we have performed sensitivity analysis.
1. An increase in the discount rate to 13% shows headroom of £8m.
2. A decrease in the growth rate to 3% shows headroom of £15m.
3. A decrease in the terminal growth rate to 1% shows headroom of £20m.
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 3% and decrease in terminal
growth rate from 2% to 1% and increase the discount rate from 10% to 14%.
Or triggered by:
1. Decrease in net cash generated from operating activities for FY-2024 and
FY-2025 of 14%.
Amortisation expenses of £2,300,000 (2022: £2,134,000) have been charged to
Administrative expenses in the Consolidated Statement of Comprehensive
Income.
11 SHARE CAPITAL
As at 31 March 2023 As at 31 March 2022
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% (2022: 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 2023 As at 31 March 2022
£'000 £'000
Loss before tax (1,243) (122)
Depreciation 767 806
(Profit)/Loss on disposal of fixed assets 222 263
Net bank and other interest 618 481
Exceptional costs 1,533 568
Amortisation of intangible assets 2,300 2,134
Exchange movement 9 10
Share based payments 16 (443)
Operating cash flows before movement in working capital 4,222 3,697
Movement in inventories (1,104) 87
Movement in trade and other receivables 19 (1,242)
Movement in trade and other payables 1,877 1,184
Movement in provisions 101 (78)
Cash generated from operations before exceptional costs 5,115 3,648
Cash outflow from exceptional costs (1,533) (568)
Cash generated from operations 3,582 3,080
Interest received 50 67
Income taxes received 682 663
Net cash inflow from operating activities 4,314 3,810
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