RNS Number : 1629T
Trakm8 Holdings PLC
02 July 2018
2 July 2018
TRAKM8 HOLDINGS PLC
('Trakm8' or 'the Group' or 'the Company')
Final Results
Migration to a Telematics Service Provider now complete
with progress in core telematics division driving higher recurring revenues
Trakm8 Holdings plc (AIM: TRAK), a leading telematics and data supplier to global markets, announces its final results for the year ended 31 March 2018 (FY-2018).
FINANCIAL SUMMARY:
FY-2018
FY-2017
Change
Group revenue
£30.1m
£26.8m
+12%
Solutions revenue
£26.8m
£21.3m
+26%
Recurring revenue1
£10.8m
£9.8m
+10%
Operating Profit
£1.3m
£0.9m
+55%
Profit before tax
£1.2m
£0.7m
+69%
Adjusted profit before tax2
£2.8m
£1.2m
+142%
Profit after tax
£1.6m
£1.5m
+7%
Cash generated from operations
£4.7m
£0.7m
+608%
Net debt3
£3.3m
£3.9m
-£0.5m
Basic earnings per share
4.40p
4.51p
-2%
Adjusted earnings per share2
8.19p
5.81p
+41%
1 Recurring revenues are generated from ongoing service and maintenance fees
2 Before exceptional costs and share based payments
3 Total borrowings less cash
OPERATIONAL HIGHLIGHTS
· Successful exit from non-core Contract Electronics Manufacturing ('CEM') activities
· Achieved planned reduction of annual operating costs by £1.5m with savings reinvested into sales and marketing - particularly in Fleet Management
· Core telematics business revenue (Solutions Revenue) grew by 26% and Group adjusted profit before tax grew by 142%.
· Recurring Service revenue increased by 10%
· Solutions Revenue now represents 90% of total revenue (FY-2017: 80%)
· Over 251,000 connected units in operation (FY-2017: 190,000)
· Launch of Trakm8's Insight software platform and RoadHawk 600 4G integrated telematics camera
· New contract wins with Intelematics, Mecalac and Calor Gas UK; and contract extensions with Iceland Foods, Marmalade, and Direct Line Group
· Maintained considerable investment in R&D
· Further streamlining of operational activities to Coleshill and Prague through the closure of Trakm8's Bodmin and Livingston offices
· Board strengthened with the appointment of new Finance Director
OUTLOOK
· Due to customer inventory build-up in Q4-FY2018 and the terminated CEM activities, revenue and profit for the first half of FY-2019 is expected to be below the figure reported at H1-2018; although the full year result is anticipated to be in line with market expectations and higher than FY-2018
· The new financial year has begun with a new contract award from Intelematics Australia, a contract extension from FMG and a positive growth in connections
· Trakm8 has decided to expand its existing facilities in Coleshill to meet demand for both product and people resources
Commenting on the Final Results, John Watkins, Executive Chairman said:
"It is pleasing to report very strong progress during the past year. Our ambition to reduce annual operating costs by £1.5m was successfully achieved by the half year, and delivered full year savings of £2m with these savings reinvested into our sales and marketing resources. Coupled with our decision to continue a high level of investment in R&D, this resulted in core telematics service revenues increasing by 26% and adjusted profit before tax having increased by 142%.
"We have continued to develop market leading software and hardware solutions and during the year launched the new Insight software platform and the RoadHawk 600, which have provided the Group with a strong pipeline of opportunities. During the year, we announced new contracts with Intelematics, Calor Gas UK and Mecalac, and a number of contract extensions with Marmalade, Iceland Foods, and Direct Line Group.
"Since year end, the Group is also pleased to announce a contract award from Intelematics Australia, and a contract extension from FMG.
"Although revenues for H1-FY2019 are expected to be lower than last year following the termination of CEM contracts and a customer inventory build-up in Q4-FY2018, new contracts in the insurance sector will start deliveries in the second half. As a result, we expect the second half of FY-2019 will be considerably better than last year resulting in a year on year growth.
"In addition to continuing to grow our UK operations, we are focused on expanding our international business in Europe and Asia. Trakm8's pipeline is strong and the Board is confident of meeting market expectations for the full year ending 31 March 2019."
A presentation for analysts is being hosted today (2 July 2018) at 9.30am at Buchanan's offices, 107 Cheapside, London EC2V 6DN. For further information, please contact Buchanan at trakm8@buchanan.uk.com
For further information:
Trakm8 Holdings plc
John Watkins, Executive Chairman
Tel: +44 (0) 1675 434 200
Jon Furber, Finance Director
www.trakm8.com
Arden Partners plc(Nominated Adviser & Broker)
Tel: +44 (0) 20 7614 5900
Paul Shackleton / Alex Penney
www.arden-partners.com
Media enquiries:
Buchanan
Chris Lane / Tilly Abraham
Tel: +44 (0) 20 7466 5000
trakm8@buchanan.uk.com
www.buchanan.uk.com
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 analyses data collected by 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 and reporting portal (Trakm8 Insight), integrated telematics/cameras, self-installed telematics units and one of the widest ranges of installed telematics devices. Trakm8 has over 250,000 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, Direct Line Group and Young Marmalade.
Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005.
www.trakm8.com / @Trakm8
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
EXECUTIVE CHAIRMAN'S STATEMENT
A YEAR OF STRONG PROGRESS
FY-2018 was a year of strong progress for Trakm8. During the year we successfully exited from all Contract Electronics Manufacturing (CEM) and third-party hardware supply to focus on our core telematics services without distraction and associated overheads. The benefits of this increased focus are already coming through and provided the necessary capacity for the second half growth in device demand. This demand came through later than originally expected, but fully utilised our production capacity in the last two months of the year.
The revenues of the core telematics business grew by 26% and the Group adjusted profit before tax grew by 142%. Connections grew by 32% to 251,000. Revenues generated from providing data and analytics services increased by 10%.
We also started the year with the ambition to reduce annual operations costs by £1.5m, which by the half year we had fully achieved and delivered full year savings of £2m. We repurposed that saving into increased sales and marketing expenditure with a particular focus on Fleet activities. As a result, we have seen an increase in new contracts and extensions including those from ScottishPower, General Traffic, COLAS CZ, HW Martin Group, and Strategic Analytics Team. We have also secured many contracts within the SME and small fleet sector via our digital sales strategy. We decided to maintain the significant level of R&D spend that we had established the previous year. We are confident that these two initiatives will drive Trakm8's future growth. The operational cost reduction focus has continued with the closure of our offices in Bodmin and Livingston, consolidating those activities in Coleshill and Prague, with the additional benefit of closer cooperation between the teams. We have embarked on implementing a new ERP system, provided by Epicor, which we expect will lead to further efficiency improvements.
The investment in sales and marketing expense was rewarded with a wide range of contract extensions and new customer contract awards both in the UK and internationally. The pipeline is strong and the Sales and Marketing teams have continued to expand. Trakm8 launched its first fully internet-based sales strategy in the UK, under the Trakm8 Prime banner, and traction of this has been good.
The investment in engineering resources has delivered market-leading software and hardware solutions. Trakm8's Insight platform, which was launched with Iceland Foods and Calor Gas UK, provides superb customer experience and data, enabling vehicle operators to significantly improve operational efficiencies and reduction in risk. Insight is available as a mobile app experience as well as via web portals. The RoadHawk 600 integrated telematics and camera product is the first in the UK using 4G technology and has been implemented by large and small enterprises. 3,000 units were deployed in the second half of the year. The latest self-fit telematics devices, both in 2G and 4G, have best-in-class functionality and fit rates; they are being deployed in volume across Europe and Asia by major customers.
Solutions
Solutions sales are the core of our telematics offerings and comprise revenues from customers where they pay for service fees in addition to the cost of the hardware, installation and other bespoke services. Revenues increased by 26% to £26.8m (2017: £21.3m). Recurring service revenues grew by 10% to £10.8m. Solutions revenues increased from 80% of the Group's total revenues in 2017 to 90% in the 2018 Year.
In total, we had in excess of 251,000 connections (FY-2017: 190,000) at the year-end. Our solutions sales cover both the fleet management and insurance/automotive market sectors. The total fleet management connections increased by 11% over the year to 73,000 (FY-2017: 66,000). Telematics for insurance/automotive is experiencing higher levels of growth. At the year-end we had 178,000 insurance/automotive connections (FY-2017: 124,000), which is an increase of 44%.
The key outcomes in the year were the contract renewal with Direct Line Group, new contract awards with Intelematics and Calor Gas UK, along with the contract extension with Iceland Foods. A contract was also secured with a leading global vehicle leasing company to supply devices based on our Trakm8connectedcare software and hardware.
We have continued to invest in our software solutions, algorithms and devices, ensuring that Trakm8 retains market-leading solutions with the widest and deepest offer in the market today.
Post-period end, we have announced a contract with Intelematics Australia and a contract extension with FMG.
Products
Product sales are predominantly revenue from CEM, along with hardware-only sales to other telematics service providers and integrators and sales of third-party manufactured camera products. We terminated all CEM activity during FY-2018 and as a result, total product revenues reduced by 41% to £3.3m (FY-2017: £5.5m). Consequently, Product sales accounted for just 10% of total revenues down from 20% in FY-2017.
Included in FY-2018 is £2.0m of revenues from the terminated CEM activities and therefore this will be the last year that we report Product sales as a category. The migration to a Telematics Service Provider is now complete.
Research and development ('R&D')
Trakm8 has maintained the significant level of investment in R&D from the previous year. Although as a percentage of revenue this is reducing, the Board believes that this level of investment is necessary to retain a portfolio of market-leading technology. 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 building out the capability of the Insight platform to provide best-in-class data analytics and customer experience, creating algorithms with increasingly accurate driver profiling for efficiency and risk, crash detection and video feature recognition. All the technologies within the Group are now consolidated into a single solution. Trakm8 also expects to launch soon a range of devices with new and enhanced functionality and smaller size to address market opportunities not currently served.
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 ROI for our customers improves.
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 slightly during FY-2018 as reductions in operational headcount were partially offset by increases in our customer service, sales and marketing teams. In total our staff numbers have reduced by 8% over the year. As a result, revenue per employee increased by 22%.
It has been a demanding year as the Group has worked through the very high levels of change. We have an exceptional team and I would like to thank everyone for their hard work, dedication and contribution to the ongoing success of the business.
Outlook
Our focus is on organic growth driven by the implementation of the strategy outlined above and we continue to make solid progress. The new financial year has started very much as the previous year left off with new contract awards and growth in connections. The final £2.0m reduction in revenues related to terminated CEM activities will impact FY2019, but we are positive that the growth of our Telematics Services will more than offset this over the full year. The £2.0m year-on-year reduction in terminated CEM activities is mostly a first half reduction.
Due to customer inventory build-up in Q4-FY2018 and the terminated CEM activities, revenue for the first half of FY-2019 is expected to be below the figure reported at H1-2018 although the full year result is anticipated to be in line with market expectations and higher than FY-2018.
To ensure that we can meet the demand expected over the coming years, both for manufactured product and people resources, Trakm8 has decided to expand its existing manufacturing and distribution facilities in Coleshill. During the year, Trakm8 will expect to invest over £1.5m to create state-of-the-art facilities, to increase capacity to circa 1m devices per annum - and do so with high levels of automation in assembly and test.
We expect to expand our international business in Europe and Asia, whilst continuing to grow our domestic business in the UK. Overall, we expect that the percentage of connections from outside the UK will grow. In addition, we will continue to invest in our digital sales strategy.
The pipeline of features for the Insight data platform and camera products is strong, so we expect to maintain our position as a provider of market-leading solutions.
The Board is confident that FY-2019 will result in further progress and growth as we deliver our strategy and is confident of meeting market expectations for the year.
John Watkins
Executive Chairman
2 July 2018
FINANCIAL REVIEW
TRADING RESULTS
2018
2017
Change
£000
£000
Group Revenue
30,081
26,759
+12%
Solutions Revenue
26,808
21,256
+26%
Recurring Revenue
10,826
9,842
+10%
Profit before tax
1,173
693
+71%
Adjusted Profit before tax1
2,794
1,156
+142%
Basic earnings per share
4.40p
4.51p
-2%
Adjusted earnings per share
8.19p
5.81p
+41%
1 Before exceptional costs and share based payments
Revenue
Group revenue increased by 12% to £30.1m (2017: £26.8m), with Solutions revenue growth of 26% from the core continuing activities of the Group offset by a reduction in product revenues following the strategic decision to exit from Contract Electronic Manufacturing (CEM) activities.
The solutions revenue growth of 26% to £26.8m (2017: £21.3m) reflect the continued growth in telematics connections across our core Fleet, Insurance and Automotive sectors and continued growth in sales of Optimisation solutions. Recurring revenue generated from service and maintenance fees increased by 10% to £10.8m (2017: £9.8m). Growth in recurring revenue will always lag behind headline growth in new unit sales given that the service and maintenance revenues are recognized over the life time of the contract.
Product revenues decreased from £5.5m to £3.3m following the planned exit from CEM activities. All sub-contract electronic manufacturing activities had ceased by the year end.
Profit before tax
Profit before tax increased by 71% to £1.2m (2017: £0.7m). This significant improvement was generated by the strong solutions revenue growth being delivered at gross margin percentages in line with the prior year resulting in a £1.6m increase in gross profit. Additionally other income increased by £0.2m. This was offset by £1.2m increase of non-recurring exceptional costs that are detailed further below and £0.3m increase in depreciation and amortisation, primarily resulting from capitalised development costs, reflecting the significant investment undertaken by the group in earlier years. Other overheads decreased by £0.1m.
Adjusted Profit before tax
As detailed above, the improved trading performance resulted in adjusted profit before tax increasing by 142% to £2.8m (2017: £1.2m). The improvement in gross profit converted into adjusted profit before tax, with administrative costs excluding exceptional costs only up £0.2m on prior year. During the year the company has increased its investment in sales and marketing by 54% all part of a strategy to increase market share. This investment was funded by streamlining of activities resulting in other overheads (excluding Sales, Marketing and Engineering costs) before exceptional costs and depreciation and amortisation decreasing by 31%.
Exceptional Costs
Exceptional costs total £1.4m (2017: £0.2m) relating to three projects undertaken to streamline activities and additional costs relating to the acquisition of Roadsense Technology Limited in the previous financial year. The projects to streamline activities were to fully integrate the acquisitions made in prior years including closing two offices, relocating the head office and administrative functions to our core site in the West Midlands and costs associated with the exit from contract electronic manufacturing. This project has resulted in operating costs (excluding Sales & Marketing costs and Engineering costs) decreasing £2m year on year.
Balance Sheet
2018
2017
£000
£000
Non- Current Assets
21,534
19,759
Net Current Assets
6,848
5,800
Non-Current Liabilities
6,240
5,329
Net Assets
22,142
20,230
Net Assets increased by £1.9m to £22.1m (2017: £20.2m). This reflects the significant improvement in trading performance and profitability in the year, with retained profit for the year of £1.6m.
Non-current assets increased by £1.7m to £21.5m (2017: £19.8m). This is due to the continued investment in development in both our software and hardware with capitalised development costs totalling £3.4m (2017: £3.2m).
Cash Flow
2018
2017
£000
£000
Cash generated by operations
4,735
668
Investing activities
(3,716)
(4,447)
Free Cash Flow1
1,019
(3,016)
Financing activities
463
1,898
Change in Cash in Year
1,482
(1,881)
Net Debt
3,300
3,867
1 Cash generated from operating activities less cash used in investing activities (excluding cashflow relating to acquisitions)
Cash generated from operating activities increased significantly in the year to £4.7m (2017: £0.7m), which included R&D tax credit cash receipts of £1.6m (2017: £0.1m). The R&D tax credit cash receipt reflects the Group's investment in development. Cash generation excluding the impact of the R&D tax credit cash is still £3.1m (2017: £0.6m).
Free cash flow improved to an inflow of £1.0m (2017: outflow £3.0m). This represents a 90% conversion of profit before tax to cash. As we have stated, our strategy in the next couple of years is to maintain our current level of investment in development which will reduce as a proportion of revenue and profit. We anticipate this improved leverage will continue to improve the conversion of adjusted profit before tax into cash in the medium term. If as planned, we make the considerable investment in manufacturing capacity and quality equipment then this will also impact our free cash flow and net debt for 2019.
Net Debt
Net debt decreased by £0.6m to £3.3m (2017: £3.9m). Cash balances total £3.5m (2017: £2.0m) and total borrowings £6.8m (2017: £5.9m) of which £2.9m was our term loan with HSBC and £3.4m (2017: £1.7m) were amounts drawn under our £5m revolving credit facility with HSBC. During the year the revolving credit facility was extended by 2 years and is repayable in December 2020.
Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2018
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations
9
(1)
TOTAL OTHER COMPREHENSIVE INCOME
9
(1)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT
1,580
1,469
ADJUSTED PROFIT BEFORE TAX
6
2,794
1,156
EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic
9
4.40p
4.51p
Diluted
9
4.33p
4.36p
The results relate to continuing operations.
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2018
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 2016
320
9,641
1,122
200
(4)
5,796
17,075
Comprehensive income
Profit for the year
-
-
-
-
-
1,470
1,470
Other comprehensive income
Exchange differences on translation of overseas operations
-
-
-
(1)
-
-
(1)
Total comprehensive income
-
-
-
(1)
-
1,470
1,469
Transactions with owners
Shares issued
37
2,142
16
-
-
-
2,195
Equity Dividend
-
-
-
-
-
(649)
(649)
Share placing fees
-
(109)
-
-
-
-
(109)
IFRS2 Share-based payments
-
-
-
-
-
249
249
Transactions with owners
37
2,033
16
-
-
(400)
1,686
Balance as at 1 April 2017
357
11,674
1,138
199
(4)
6,866
20,230
Comprehensive income
Profit for the year
-
-
-
-
-
1,571
1,571
Other comprehensive income
Exchange differences on translation of overseas operations
-
-
-
9
-
-
9
Total comprehensive income
-
-
-
9
-
1,571
1,580
Transactions with owners
Shares issued
2
76
-
-
-
-
78
IFRS2 Share based payments
-
-
-
-
-
216
216
Tax recognised directly in equity (Note 11)
-
-
-
-
-
38
38
Transactions with owners
2
76
-
-
-
254
332
Balance as at 31 March 2018
359
11,750
1,138
208
(4)
8,691
22,142
Consolidated Statement of Financial Position As At 31 March 2018
Note
As at 31 March 2018
As at 31 March 2017
ASSETS
£'000
£'000
NON CURRENT ASSETS
Intangible assets
10
19,460
17,108
Property, plant and equipment
1,756
1,855
Deferred income tax asset
-
297
Amounts receivable under finance leases
318
499
21,534
19,759
CURRENT ASSETS
Inventories
2,556
3,674
Trade and other receivables
10,844
6,076
Corporation tax receivable
1,001
1,645
Cash and cash equivalents
3,472
1,990
17,873
13,385
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
(9,598)
(6,471)
Borrowings
(1,151)
(1,052)
Provisions
(47)
(62)
Deferred income tax liability
(229)
-
(11,025)
(7,585)
CURRENT ASSETS LESS CURRENT LIABILITIES
6,848
5,800
TOTAL ASSETS LESS CURRENT LIABILITIES
28,382
25,559
NON CURRENT LIABILITIES
Trade and other payables
(581)
(480)
Borrowings
(5,621)
(4,805)
Provisions
(38)
(44)
NET ASSETS
22,142
20,230
EQUITY
Share capital
11
359
357
Share premium
11,750
11,674
Merger reserve
1,138
1,138
Translation reserve
208
199
Treasury reserve
(4)
(4)
Retained earnings
8,691
6,866
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
22,142
20,230
Consolidated Statement of Cash-Flows For The Year Ended 31 March 2018
Notes
Year ended 31 March 2018
Year ended 31 March 2017
£'000
£'000
NET CASH GENERATED FROM OPERATING ACTIVITIES
12
4,735
668
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary undertaking (net of cash acquired)
-
(763)
Purchases of property, plant and equipment
(91)
(181)
Purchases of software
(236)
(262)
Proceeds from sale of plant and equipment
-
-
Capitalised development costs
(3,389)
(3,241)
NET CASH USED IN INVESTING ACTIVITIES
(3,716)
(4,447)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares
78
2,070
Increase in bank loan
2,600
2,700
Repayment of bank loans
(1,880)
(1,954)
Repayment of obligations under hire purchase agreements
(146)
(104)
Interest paid
(189)
(165)
Dividends paid to owners of the parent
-
(649)
NET CASH GENERATED FROM FINANCING ACTIVITIES
463
1,898
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
1,482
(1,881)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
1,990
3,871
CASH AND CASH EQUIVALENTS AT END OF YEAR
3,472
1,990
Notes To The Consolidated Financial Statements
1
GENERAL INFORMATION
Trakm8 Holdings PLC ("Company") and its subsidiaries (together the "Group") manufacture, distribute and sell telematics devices and services.
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. The Company's principal activity is to act as a holding company for its subsidiaries.
The condensed consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand (£'000) except where otherwise indicated.
2
AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
The Group's financial statements have been prepared in accordance with 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 2018 and audited information for the year ended 31 March 2017 does not comprise statutory accounts within the meaning of sections 404 and 435 Companies Act 2006. The information has been extracted from the audited statutory financial statements for the year ended 31 March 2018 which will be delivered to the Registrar of Companies in due course. Statutory financial statements for the year ended 31 March 2017 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 2018 and 2017 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 presented on a going concern basis. The Group has cash balances of £3,472,000 and undrawn revolving credit facilities of £1,600,000 at 31 March 2018 therefore the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operation for the foreseeable future. A cash flow forecast for the next 12 months prepared by the Directors has indicated that the Group will have adequate financial resources to continue in operation for the foreseeable future.
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, results, assets and liabilities are in respect of one Integrated Telematics Technology segment.
The Board as the CODM review the revenue streams of Integrated Fleet Insurance and Automotive Solutions (Solutions) and Hardware as Discrete Devices (Products) as part of their internal reporting. Products is the sale of Contract Electronic Manufacturing services (now ceased) and other third party hardware only supply. 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 2018
Year ended 31 March 2017
£'000
£'000
Solutions
26,808
21,256
Products
3,273
5,503
30,081
26,759
A geographical analysis of revenue by destination is as follows:
Year ended 31 March 2018
Year ended 31 March 2017
Solutions
Products
Total
Solutions
Products
Total
£'000
£'000
£'000
£'000
£'000
£'000
United Kingdom
26,484
3,068
29,552
20,922
5,405
26,327
North America
56
-
56
-
18
18
Norway
58
-
58
71
-
71
Rest of Europe
73
197
270
260
14
274
Rest of World
137
8
145
3
66
69
26,808
3,273
30,081
21,256
5,503
26,759
5
OTHER INCOME
Year ended 31 March 2018
Year ended 31 March 2017
£'000
£'000
Grant income
531
325
R&D tax credit
35
-
566
325
6
OPERATING PROFIT
The following items have been included in arriving at operating profit:
Year ended 31 March 2018
Year ended 31 March 2017
£'000
£'000
Depreciation
- owned fixed assets
261
282
- assets on hire purchase
60
22
Amortisation of intangible assets
1,484
1,157
Operating lease rentals
- Land and buildings
159
129
- Other
263
230
Research and development expenditure
1,485
1,314
Loss on foreign exchange transactions
(59)
40
Staff costs
7,936
7,302
Loss on disposal of property plant & equipment
26
-
Exceptional administrative costs
1,405
214
Auditors' remuneration
- Fees payable to the Company's auditors for the audit of the parent
company and consolidated financial statements
103
71
Fees payable to the Company's auditors for other services:
- Share based payments advisory services
8
-
- Tax compliance services
-
10
- Tax advisory services
-
10
Adjusted profit before tax is monitored by the Board and measured as follows:-
Year ended 31 March 2018
Year ended 31 March 2017
£'000
£'000
Profit before tax
1,173
693
Exceptional administrative costs (note 9)
1,405
214
Share based payments
216
249
Adjusted profit before tax
2,794
1,156
7
EXCEPTIONAL ADMINISTRATIVE COSTS
Year ended 31 March 2018
Year ended 31 March 2017
£'000
£'000
Acquisition costs
256
63
Integration costs
501
90
Head Office relocation
238
-
Contract manufacturing closure costs
410
61
1,405
214
The acquisition costs incurred in 2018 relate to non-underlying charges under two separate agreements linked to the acquisition in the prior year. The costs incurred are directly linked to the acquisition and not as part of the ongoing underlying business. One agreement terminates on 31 July 2019, and the second agreement on 31 March 2019. The 2017 acquisition costs relate to the actual acquisition itself.
The Company has incurred significant costs relating to a project to streamline and rationalise the operations of the business. This has resulted in the following non-underlying, one-off costs:
- In the current and prior year, integration costs relate to costs incurred integrating the activities of Route Monkey Limited and DCS Systems Limited that were acquired in previous financial years and include costs associated with office closures. This integration project is now complete.
- Head Office relocation costs are non-underlying costs incurred in moving the Head Office and associated administrative functions from Shaftesbury to the West Midlands which was completed by the end of the financial year.
- In the current and prior year, contract manufacturing closure costs relate to residual inventory costs and contract exit costs following cessation of manufacturing contracts with third-parties. All these contracts have now ceased.
8
FINANCE COSTS
Year ended 31 March 2018
Year ended 31 March 2017
£'000
£'000
Interest on bank loans
147
148
Amortisation of debts issue costs
13
-
Interest on Hire Purchase and similar agreements
29
17
189
165
9
EARNINGS PER ORDINARY SHARE
The earnings per Ordinary share have been calculated in accordance with IAS 33 using the profit for the year and the weighted average number of Ordinary shares in issue during the year as follows:
Year ended 31 March 2018
Year ended 31 March 2017
£'000
£'000
Profit for the year after taxation
1,571
1,470
Exceptional administrative costs
1,405
214
Share based payments
216
249
Tax effect of adjustments
(267)
(43)
Adjusted profit for the year after taxation
2,925
1,890
No.
No.
Number of Ordinary shares of 1p each
35,898,254
35,723,254
Basic weighted average number of Ordinary shares of 1p each
35,740,877
32,594,891
Diluted weighted average number of Ordinary shares of 1p each
36,297,287
33,708,702
Earnings per share
4.40p
4.51p
Diluted earnings per share
4.33p
4.36p
Adjust for effects of:
Exceptional costs
3.18p
0.53p
Share based payments
0.61p
0.77p
Adjusted earnings per share
8.19p
5.81p
Adjusted diluted earnings per share
8.06p
5.61p
10
INTANGIBLE ASSETS
Goodwill
Intellectual property
Customer relationships
Development costs
Software
Total
£'000
£'000
£'000
£'000
£'000
£'000
COST
As at 1 April 2016
9,752
1,920
-
4,052
1,104
16,828
Additions - Internal developments
-
-
-
2,822
263
3,085
Additions - External purchases
-
-
-
419
-
419
Acquisition of RSL
665
-
100
-
-
765
Reclassified
-
-
-
(59)
59
-
As at 31 March 2017
10,417
1,920
100
7,234
1,426
21,097
Additions - Internal developments
-
-
-
2,707
117
2,824
Additions - External purchases
-
-
-
680
332
1,012
As at 31 March 2018
10,417
1,920
100
10,621
1,875
24,933
AMORTISATION
As at 1 April 2016
-
1,479
-
1,221
132
2,832
Charge for year
-
192
22
757
186
1,157
Amortisation on disposals
-
-
-
-
-
-
As at 31 March 2017
-
1,671
22
1,978
318
3,989
Charge for year
-
117
34
1,123
210
1,484
Amortisation on disposals
-
-
-
-
-
-
As at 31 March 2018
-
1,788
56
3,101
528
5,473
NET BOOK AMOUNT
As at 31 March 2018
10,417
132
44
7,520
1,347
19,460
As at 31 March 2017
10,417
249
78
5,256
1,108
17,108
As at 1 April 2016
9,752
441
-
2,831
972
13,996
11
SHARE CAPITAL
As at 31 March 2018
As at 31 March 2017
No's
£'000
No's
£'000
Authorised:
'000's
'000's
Ordinary shares of 1p each
200,000
200,000
200,000
200,000
Allotted, issued and fully paid:
Ordinary shares of 1p each
35,898
359
35,723
357
Movement in share capital:
As at 31 March 2018
As at 31 March 2017
£'000
£'000
As at 1 April
357
320
New shares issued
2
37
As at 31 March
359
357
The Company currently holds 29,000 Ordinary shares in treasury representing 0.08% (2017: 0.08%) 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 35,869,254.
During the year the following shares were issued:
Date
Description
Shares
Share Capital
Premium
No's '000's
£'000
£'000
27/11/2017
Exercise of options over Ordinary Shares by an employee
50
1
22
29/03/2018
Exercise of options over Ordinary Shares by an employee
125
1
54
175
2
76
12
CASH GENERATED FROM OPERATIONS
As at 31 March 2018
As at 31 March 2017
£'000
£'000
Profit before tax
1,173
693
Depreciation
321
304
Loss on disposal of fixed assets
26
-
Net bank and other interest
156
165
Amortisation of intangible assets
1,484
1,157
Share based payments
216
249
Operating cash flows before movement in working capital
3,376
2,568
Movement in inventories
1,118
(1,377)
Movement in trade and other receivables
(4,614)
499
Movement in trade and other payables
3,237
(1,105)
Movement in provisions
(21)
(46)
Cash generated from operations
3,096
539
Interest received
33
-
Income taxes received
1,606
129
Net cash inflow from operating activities
4,735
668
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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