REG - Trakm8 Holdings PLC - Final Results
29/07/2024 07:00
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RNS Number : 1100Y Trakm8 Holdings PLC 29 July 2024
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 July 2024
TRAKM8 HOLDINGS PLC
('Trakm8', 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 2024
(FY-2024).
FINANCIAL SUMMARY:
FY-2024 FY-2023
Group revenue £16.1m £20.2m
of which, Recurring revenue(1) £10.1m £10.5m
Adjusted (Loss)/Profit before tax(2) (£1.3m) £0.3m
(Loss) before tax (£1.5m) (£1.2m)
(Loss)/Profit after tax (£1.2m) (£0.8m)
Net cash inflow generated from operations £6.1m £4.3m
Net debt(3) £4.9m £5.6m
Adjusted basic (loss)/earnings per share(2) (2.20p) 0.95p
Basic (loss)/earnings per share (2.42p) (1.57p)
(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-2024 net debt
excludes £0.7m IFRS 16 lease liability.
OPERATIONAL OVERVIEW
· Results in line with expectations as announced on 3 April 2024,
although with an improvement in Net cash generated from operations for FY-2024
at £6.1m against previous expectations of £5.4m (FY-2023: £4.3m)
· Revenues heavily impacted by insurance capacity market with in
excess of £5m estimated revenue lost
· Fleet software revenues down by £1.5m with significant contract
award expected for next financial year ending 31 March 2025 ("FY-2025")
· Optimisation solutions continue to deliver award winning results
with our key UK retailers
· Business restructuring in prior period increased financial
resilience with overheads down by £0.9m despite continued inflationary
pressures
· Further overheads to be reduced with move to second data centre
· Strong cash generation from operations resulting in cash balance
of £1.4m despite challenging trading
OUTLOOK
· Insurance market recovery slower than anticipated with capacity
and pricing challenges continuing for some customers
· Positive start to FY-2025 for Fleet revenues with expanded
agreement with Iceland
· Contract extension with Drvn announced for fulfilment services as
part of AA Vixa programme
· Board confident of improving results for FY-2025 for revenue and
profit but results remain uncertain due to speed of Insurance market recovery
- 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
About Trakm8
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 275,000 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, Stark, EON, Iceland Foods, Sainsbury's, GSF, Direct Line
Group, Ticker and Freedom Group.
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
Financial Performance
This year's performance was set against a challenging Insurance market where
our customers' ability to sell and renew policies that incorporate our
solutions were either hampered or entirely removed. The effect of this can be
seen in the negative impact on our personal car insurance costs. These
challenges, we estimate, reduced revenues by over £5m for the year and made a
significant impact to all our key financial metrics.
Our Fleet and Optimisation solutions continue to be recognised for their
impact on businesses and their ability to make a difference to cost of
operations and the impact on the environment around us. This was shown with
the recent receipt of the 'Plan for Better' award from Sainsburys after our
Optimisation algorithm saved over 4,000 tonnes of carbon emissions.
Our software revenues for the year in Fleet were significantly reduced, with
the prior year including renewals with both Sainsburys and Iceland. We had
hoped to secure a significant contract within the year but this continues
within our sales process and we hope to secure this in the coming financial
year.
The Insurance challenges meant overall our revenues in this area were down by
20% compared to the prior year and a reduction in our connections of 21% to
275,000 connections (2023: 348,000). It was pleasing that recurring revenue
was broadly maintained at £10.1m (2023: £10.5m) and remains key to our
future success.
Our actions in the previous year to change strategy and reduce associated
costs has helped our financial resilience to manage challenges such as those
experienced this year. Our overheads excluding exceptional costs reduced by
£0.9m despite continued inflationary pressures including staff salary costs.
Despite the controlled costs, the reduction in revenues resulted in an
Adjusted Loss for the period of £1.3m (2023: Profit £0.3m).
Despite the challenging trading environment we are pleased to maintain strong
cash generation in the business with a cash flow from operations of £6.1m
(FY-2023: £4.3m). The company ended the year with increased Cash and cash
equivalents year on year at £1.4m (2023: £1.1m) and our Net Debt (excluding
the impact of IFRS16) reduced to £4.9m (FY-2023: £5.6m).
It was pleasing to agree revised agreements with both HSBC and Maven prior to
the year-end which along with the extension of the existing Convertible Loan
Notes and raising of a new Convertible Loan Note, allowed us to acquire
complementary Driver Risk solution from the Freedom Services Group.
People
One of Trakm8's greatest strengths is the talented team of people we have.
Across the business their dedication to our customers allows us to deliver
positive outcomes when implementing our solutions. I would like to thank
everyone for their hard work and dedication over the last twelve months and
look forward to striving towards our collective goals over the next year.
During the year our team was, on average, smaller than last year averaging 120
(2023: 150) with the size of our team remaining relatively constant after the
conclusion of our restructure during the prior year. We have focused on
retaining our existing team through market rate salary reviews, adding new
optional employment benefits and investing in our office space to help foster
increased collaboration when needed.
We anticipate that our headcount will most likely increase initially in Sales
and Marketing to support our revenue growth ambitions, but we continually
review the resource requirement across the business to ensure our goals are
achieved.
Strategic Focus
We continue to focus on three key objectives of increasing our market share,
delivering exceptional technology to our customers and continually focusing on
our own efficiency.
Whilst our levels of revenues have fallen, we believe the challenging
Insurance market has widely impacted telematics policies in the UK so our
market share is potentially unaffected. Returning the Group to revenue and
connection growth and profitability is the predominate focus for the coming
year.
We have continued to make progress on becoming more efficient and cost
effective. The key project being progressed during the year being our exit
from cloud solutions to a more cost effective on premise second data centre.
Our customers' requirements continue to be at the heart of our technology
roadmap, delivering more Insight to their operations with new features across
all our technology.
Research and development ('R&D')
Trakm8 has continued a significant level of investment into R&D for the
year. Our internal capitalised development costs did reduce to £2.1m (2023:
£2.3m) but this was complemented with £0.7m of external purchases (2023:
£0.3m). This is inclusive of the software acquired from Freedom Services
Group for our own use and development for a consideration of £0.5m. This adds
to our extensive risk management and driver profiling capabilities.
Our focus this year has been building on our core technology competencies.
These include Driver Risk and Accident Detection for the breadth of the
Insurance & Automotive market, connected vehicle solutions and fleet
management applications for larger customer fleets and Optimisation algorithms
and associated workflow management. We are particularly pleased with the speed
of our "get slots" algorithm which forms part of the solution to our retail
customers providing their end customers optimised delivery slots in marketing
leading response times.
The Board continues to believe that owning our Intellectual Property "IP" is a
significant benefit to our customers through our ability to solve operational
challenges with agility. Our customers also value our support of their
solutions which is entirely within our control except for the mobile networks
which we rely upon for device connectivity.
Our R&D investment is now at a level which allows us to maintain our
market leading, award winning portfolio of existing solutions and add features
that customers desire where we see the strategic and financial benefit of
delivering them. The Board doesn't anticipate increasing our investment, other
than maintaining our team's remuneration against the market, ensuring that our
investment as a percentage of revenues decreases over the coming years as
previously outlined.
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 to further reduce their carbon footprint.
We remain focussed on our own environmental impact, continuing our membership
to the Science Based Target initiative (SBTi) with the objective to reduce our
Scope 1 and Scope 2 emissions and reach Net Zero by 2050. During the year
initiatives to help work towards this included moving our supply of
electricity to 100% renewable energy and the introduction of an EV salary
sacrifice scheme.
Further initiatives in the coming year will focus on certain elements of our
supply chain and reducing our impact on emissions from use of their products
and services.
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 for
our full compliance statement.
Outlook
In our trading update in early April this year, we announced our revised
agreement with a member of the Freedom Services Group and the return of
capacity to our largest Insurance customer.
The recovery of insurance policy sales has however been slower than we
anticipated with a number of our customers still impacted by capacity and
competitive pricing challenges. In addition, our Insurance customers'
inventory, much like our own, is higher than normal. This combination means
that the start to the year is behind where we had previously expected to be in
respect of device sales and the recovery of connections.
We are hopeful that the recently announced contract extension and widening of
services with Drvn, which will cover the launch of the AA Vixa programme, will
positively impact the later parts of the year.
We have started the year quite well regarding our Fleet and, particularly,
Optimisation revenues including a pleasing expanded agreement with Iceland. In
addition to securing the significant software contract which we previously
hoped would close in FY-2024, our focus is to continue our levels of new
business from previous years. We will continue to work hard on our
relationships with existing customers to ensure they are benefitting from our
latest range of solutions and solve more of their day-to-day challenges. We
are increasing our sales team headcount and marketing spend to support this.
Our focus remains on our core strategies which should continue to improve our
financial position after several years of unavoidable headwinds. The trading
conditions, particularly within insurance, mean the results for the coming
financial year remain uncertain but the Board is confident of improving
revenues and levels of profitability from recent years.
John Watkins
EXECUTIVE CHAIRMAN
27 July 2024
FINANCIAL REVIEW
The financial results for the year show the impact of a challenging Insurance
market for the 12 months to 31(st) March although the Group has increased its
financial resilience due to actions taken in the previous financial year.
Financial Key Performance Indicators
Statement of Comprehensive Income
2024 2023
Group Revenue (£'000) 16,088 20,197
of which, Recurring Revenue (£'000) 10,109 10,466
Gross Margin 10,393 12,491
Gross Margin percentage 64.6% 61.8%
Loss before tax (£'000) (1,483) (1,243)
Loss after tax (£'000) (1,211) (783)
Adjusted (Loss)/Profit before tax(1) (£'000) (1,344) 306
Basic Loss per share (p) (2.42) (1.57)
Adjusted basic (loss)/earnings per share (p) (2.20) 0.95
(1) Before exceptional costs and share based payments
Non-Financial
2024 2023
Connected devices 275,000 348,000
Insurance and Automotive Connections 212,000 279,000
Fleet and Optimisation Connections 63,000 69,000
Statement of Financial Position
2024 2023
£'000 £'000
Non-Current Assets 27,462 27,889
Net Current Assets (3,393) (107)
Non-Current Liabilities 6,134 8,653
Net Assets 17,935 19,129
Statement of cash flows
2024 2023
£'000 £'000
Net Cash generated from operations 6,065 4,314
Investing activities (3,597) (3,419)
Free Cash Flow(1) 2,468 895
Financing activities (2,192) (780)
Increase/(Decrease) in Cash in Year 276 115
Net Debt(2) 4,857 5,618
(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.
Revenue
Group revenue decreased by 20% to £16.1m (FY-2023: £20.2m) following a
challenging period in the Insurance market as outlined in the Chairman's
statement which continued from the prior year.
Insurance and Automotive revenues fell by 25% to £6.6m (FY-2023: £8.7m) with
new device sales and policy renewals impacted. This meant that recurring
revenues remained static at £3.3m (FY-2023: £3.4m) as connections fell to
212,000 during the year (FY-2023: 279,000).
Fleet and Optimisation revenues decreased to £9.5m (FY-2023: £11.5m). Of
this revenue £0.4m was related to software sales with the prior year
including £1.9m of software sales which contained contract renewals for both
Iceland and Sainsburys. Recurring revenues remained strong at £6.8m (FY-2023:
£7.0m) with slightly higher attrition in device connections with customers
with a smaller Fleet size resulting in 63,000 connections (FY-2023: 69,000).
Gross Margin
Gross Margin decreased to £10.4m (FY-2023: £12.5m) but with an increase
gross margin percentage to 64.6% from 61.8% in the prior year as service fees
became a larger proportion of overall revenues.
The Gross Margin reduction was largely due to lower revenues particularly in
Insurance. We continue to work on ensuring our service costs are optimised and
explore options to reduce our material costs now the supply chain constraints
of the previous period are behind us.
Loss before tax
The Group reported a loss before tax of £1.5m (FY-2023: £1.2m).
Administrative expenses excluding exceptional costs reduced by £1m to £10.9m
(FY2023-£11.9m) despite continued salary and other inflationary increases.
We have continued to control overheads across the business as we seek to drive
the Group to profitability. Overall payroll, contractor and associated staff
costs were £0.5m lower than the prior year with a further £0.2m saving in
Marketing spend. Our new data centre was commissioned during the second half
of the year but the full savings were not fully realised with the
decommissioning of services continuing into the new financial year.
Depreciation and Amortisation remained similar to the prior year at £2.9m
(FY-2023: £2.8m). Finance costs did however increase to £0.9m (FY-2023:
£0.7m) as a result of a full year of interest from the Convertible Loan note
and increased base rates impacted costs.
Exceptional Costs
Exceptional costs totalled £0.1m (FY-2023: £1.5m). This represents the final
costs of exiting a leased building early that we no longer require following
our change of strategy and cost reduction in the prior year.
Statement of Financial Position
Net Assets decreased to £17.8m (FY-2023: £19.9m) reflecting the loss for the
year, after deducting the IFRS2 Share based payments charges.
Working capital continues to be challenging with the lower levels of device
sales resulting in inventories continuing to run higher than we would expect
in normal circumstances. This represents an opportunity for improvement in
the coming year as our insurance device sales recover.
Non-current assets increased by £0.4m to £27.5m (FY-2023: £27.9m). This
is due to a £0.1m reduction in right of use assets due to depreciation and
disposal of a lease building, offset by a £0.5m increase in Intangible
assets. Intangible assets increased due to the acquisition of Intellectual
Property for Driver Risk profiling of £0.5m. The remaining development cost
was offset by amortisation in the period.
Borrowings within current liabilities includes the Convertible Loan note
issued in September 2022. Post period this was extended for a further twelve
months with the terms amended to match those of a new Convertible Loan also
entered into post period end.
Non-current liabilities decreased to £6.2m (FY-2023: £8.7m) which were also
effected by the classification of the Convertible Loan note already discussed.
Right of use liabilities also fell by £0.3m to £0.8m (FY-2023: £1.1m).
Statement of Cashflows
Cash from operating activities increased by £1.8m to £6.1m (FY-2023: £4.3m)
with improved working capital management including the reduction in accrued
income. Cash from operating activities also included R&D tax credit cash
receipts of £0.7m (FY-2023: £0.7m) which reflects the Group's continued
investment in cutting edge development.
Free cash inflow of £2.5m (FY-2023: £0.9m) 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 £3.6m (FY-2023: £3.4m)
which is inclusive of the software purchased from Freedom Services Group
announced post year end.
Financing activities resulted in an outflow of £2.2m (FY-2023: £0.8m). A
full year of interest charges from our Convertible loan note in addition to
capital repayments to our two lenders.
Net Debt
Net debt excluding IFRS 16 lease liability of £0.7m (FY-2023 £1.3m)
decreased by £0.8m to £4.9m (FY-2023: £5.6m). Cash balances at the end of
the year totalled £1.4m (FY-2023: £1.1m) and total borrowings including
IFRS16 lease liability of £1.3m totals £6.9m (FY-2023: £8.0m). Borrowings
comprised a £3.6m (FY-2023: £4.1m) term loan with HSBC, a £0.5m (FY-2023:
£0.8m) term loan with MEIF WM Debt LP, Unsecured Convertible Loan Notes of
£1.6m (FY-2023: £1.6m) and £1.3m (FY-2023: £1.6m) of obligations under
Right-of-use lease liabilities. In addition, at the year end, the Group had
a £0.5m unused overdraft facility with HSBC.
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.
Consolidated Statement of Comprehensive Income For The Year Ended 31 March
2024
Note Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
REVENUE 4 16,088 20,197
Cost of sales (5,695) (7,445)
Exceptional cost of sales - (261)
(5,695) (7,004)
Gross profit 10,393 12,491
Other income 5 - 16
Administrative expenses excluding exceptional costs (10,919) (11,860)
Exceptional administrative costs 7 (115) (1,272)
Total administrative costs (11,034) (13,132)
OPERATING PROFIT/(LOSS) 6 (641) (625)
Finance income 18 50
Finance costs 8 (860) (668)
LOSS BEFORE TAXATION (1,483) (1,243)
Corporation tax 272 460
PROFIT/(LOSS) FOR THE YEAR (1,211) (783)
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations (7) 9
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) (7) 9
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE (1,218) (774)
PARENT
LOSS BEFORE TAXATION (1,483) (1,243)
Exceptional cost of sales - 261
Exceptional administrative costs 115 1,272
IFRS2 Share based payments charge 24 16
ADJUSTED PROFIT/(LOSS) BEFORE TAX (1,344) 306
PROFIT/(LOSS) PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic (2.42p) (1.57p)
Diluted (2.42p) (1.57p)
The results relate to continuing operations.
Consolidated Statement of Financial Position As At 31 March 2024
Note As at 31 March 2024 As at 31 March 2023 (restated)
ASSETS £'000 £'000
NON CURRENT ASSETS
Intangible assets 10 23,828 23,382
Property, plant and equipment 1,123 1,103
Right of use assets 1,558 1,711
Amounts receivable under finance leases 953 1,693
27,462 27,889
CURRENT ASSETS
Inventories 2,506 2,426
Trade and other receivables 3,613 6,259
Corporation tax receivable 363 856
Cash and cash equivalents 1,395 1,119
7,877 10,660
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (8,255) (9,196)
Borrowings (2,502) (1,031)
Right of use liability (489) (466)
Provisions (24) (74)
(11,270) (10,767)
CURRENT ASSETS LESS CURRENT LIABILITIES (3,393) (107)
TOTAL ASSETS LESS CURRENT LIABILITIES 24,069 27,782
NON CURRENT LIABILITIES
Trade and other payables (895) (828)
Borrowings (3,165) (5,435)
Right of use liability (831) (1,113)
Provisions (208) (166)
Deferred income tax liability (1,035) (1,111)
(6,134) (8,653)
NET ASSETS 17,935 19,129
EQUITY
Share capital 11 500 500
Share premium 14,691 14,691
Merger reserve 1,138 1,138
Translation reserve 205 212
Treasury reserve (4) (4)
Convertible loan reserve 11 11
Retained earnings 1,394 2,581
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 17,935 19,129
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2024
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 2022 500 14,691 1,138 203 (4) - 3,348 19,876
Comprehensive loss
Income for the year - - - - - - (783) (783)
Other comprehensive loss
Exchange differences on translation of overseas operations - - - 9 - - - 9
Total comprehensive income - - - 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 1 April 2023 500 14,691 1,138 212 (4) 11 2,581 19,129
Comprehensive income
Loss for the year - - - - - - (1,211) (1,211)
Other comprehensive income
Exchange differences on translation of overseas operations - - - (7) - - - (7)
Total comprehensive loss - - - (7) - - (1,211) (1,218)
Transactions with owners
IFRS2 Share based payments charge - - - - - - 24 24
Convertible Loan - - - - - - - -
Transactions with owners - - - - - - 24 24
Balance as at 31 March 2024 500 14,691 1,138 205 (4) 11 1,394 17,935
Consolidated Statement of Cash Flows For The Year Ended 31 March 2024
Notes Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
NET CASH GENERATED FROM OPERATING ACTIVITIES 12 6,065 4,314
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (740) (749)
Purchases of software (500) (12)
Capitalised development costs (2,357) (2,658)
NET CASH USED IN INVESTING ACTIVITIES (3,597) (3,419)
CASH FLOWS FROM FINANCING ACTIVITIES
New Convertible loan note - 1,580
Loan arrangement fees (42) (36)
Repayment of loans (821) (1,095)
Repayment of obligations under lease agreements (542) (619)
Interest paid (787) (610)
NET CASH USED IN FINANCING ACTIVITIES (2,192) (780)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS 276 115
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,119 1,004
CASH AND CASH EQUIVALENTS AT END OF YEAR 1,395 1,119
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 Accounting 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 2024 and audited information for the
year ended 31 March 2023 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 2024 which will be delivered to the Registrar of Companies in due
course. Statutory financial statements for the year ended 31 March 2023 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 2024 and 2023 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 62% of revenues that provide a strong
underlying base.
The Group extended its debt facilities with HSBC in March 2024 to 31 July 2025
with capital payments paused until October 2024. The facility with Maven was
at the same time amended to include interest only payments until September
2024.
At the year end the Group has cash balances of £1,395,000 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 2024 Year ended 31 March 2023
£'000 £'000
Solutions: 16,088 20,197
Fleet and optimisation 9,511 11,475
Insurance and automotive 6,577 8,722
A geographical analysis of revenue by destination is as follows:
Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
United Kingdom 15,780 19,769
Rest of Europe 299 397
Rest of World 9 31
16,088 20,197
Adjusted profit before tax is monitored by the Board and measured as follows:
Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
Loss before tax (1,483) (1,243)
Exceptional costs (note 9) 115 1,533
Share based payments 24 16
Adjusted profit before tax (1,344) 306
5
OTHER INCOME
Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
Grant income - 16
- 16
6 OPERATING (LOSS)/PROFIT
The following items have been included in arriving at operating (loss)/profit:
Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
Depreciation
- owned assets (see note 15) 271 227
- right of use assets (see note 16) 498 540
Amortisation of intangible assets
- owned assets (see note 14) 2,411 2,300
Other operating lease rentals 45 96
Research and development expenditure 433 395
Loss on disposal of property plant and equipment 449 222
Gain on disposal of Right of Use Assets (62) -
Loss on foreign exchange transactions 12 32
Staff costs (note 12) 4,439 5,693
Exceptional cost of sales (see note 9) - 261
Exceptional administrative costs (see note 9) 115 1,272
Auditors' remuneration
- Fees payable to the Company's auditors for the audit of the parent
company and consolidated financial statements 98 100
7 EXCEPTIONAL COSTS
Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
Exceptional costs of sales
Covid-19 - component acquisition - 261
- 261
Exceptional administrative costs
Covid-19 - other costs - 234
Integration & restructuring costs 115 1,038
Total exceptional administrative costs 115 1,272
Total exceptional costs 115 1,533
In the prior 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 its hardware platforms and narrowed its product range
accordingly. Costs were incurred during the prior year through a reduction in
headcount, inventory write down, non-refundable marketing event deposits and
associated professional service costs. During the current year this activity
was finalised with professional services and termination fees incurred through
the exit of a lease property that was no longer required due to the narrower
focus of activities.
In the prior year the Group also incurred exceptional costs 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.
8 FINANCE COSTS
Year ended 31 March 2024 Year ended 31 March 2023
£'000 £'000
Interest on loans 652 510
Amortisation of debt issue costs 66 58
Interest on lease liabilities 142 100
860 668
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 2024 Year ended 31 March 2023
£'000 £'000
(Loss)/Profit for the year after taxation (1,211) (783)
Exceptional administrative costs 115 1,533
Share based payments 24 16
Tax effect of adjustments (29) (291)
Adjusted profit for the year after taxation (1,101) 475
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 (2.42p) (1.57p)
Diluted (loss)/profit per share (2.42p) (1.57p)
Adjust for effects of:
Exceptional costs 0.17p 2.48p
Share based payments 0.05p 0.03p
Adjusted basic earnings per share (2.20p) 0.95p
Adjusted diluted earnings per share (2.20p) 0.95p
10 INTANGIBLE ASSETS
Goodwill Intellectual property Customer relationships Development costs Software Total
£'000 £'000 £'000 £'000 £'000 £'000
COST
As at 1 April 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
Additions - Internal developments - - - 2,142 - 2,142
Additions - External purchases - - - 215 500 715
As at 31 March 2024 10,417 1,920 100 27,168 2,319 41,924
AMORTISATION
As at 1 April 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
Charge for year - - - 2,345 66 2,411
As at 31 March 2024 10,417 1,920 100 14,387 1,689 18,096
NET BOOK AMOUNT
As at 31 March 2024 10,417 - - 12,781 630 23,828
As at 31 March 2023 10,417 - - 12,769 196 23,382
As at 31 March 2022 10,417 - - 12,236 359 23,012
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 & forecasts
for FY-2025 which have been reviewed and approved by the Board and projections
for FY-2026. 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 13% shows headroom of £6m.
2. A decrease in the growth rate to 3% shows headroom of £11m.
3. A decrease in the terminal growth rate to 1% shows headroom of £7m.
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 12%.
Or triggered by:
1. Decrease in net cash generated from operating activities for FY-2024 and
FY-2025 of 8%.
11 SHARE CAPITAL
As at 31 March 2024 As at 31 March 2023
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% (2023: 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 2024 As at 31 March 2023
£'000 £'000
Loss before tax (1,483) (1,243)
Depreciation 769 767
Loss on disposal of fixed assets 449 222
Profit on disposal of right of use assets (62) -
Net bank and other interest 833 618
Exceptional costs 115 1,533
Amortisation of intangible assets 2,411 2,300
Exchange movement (7) 9
Share based payments 24 16
Operating cash flows before movement in working capital 3,049 4,222
Movement in inventories (80) (1,104)
Movement in trade and other receivables 3,386 19
Movement in trade and other payables (874) 1,877
Movement in provisions (8) 101
Cash generated from operations before exceptional costs 5,473 5,115
Cash outflow from exceptional costs (115) (1,533)
Cash generated from operations 5,358 3,582
Interest received 18 50
Income taxes received 689 682
Net cash inflow from operating activities 6,065 4,314
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