Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.
29 June 2022
TRAKM8 HOLDINGS PLC
('Trakm8' or 'the Group' or 'the Company')
Final Results
Trakm8 Holdings plc (AIM: TRAK), the global telematics and data insight provider, announces its final results for the year ended 31 March 2022 (FY-2022).
FINANCIAL SUMMARY:
| | FY-2022 | FY-2021 | Change |
| Group revenue | £18.1m | £16.0m | +13% |
| of which, Recurring revenue1 | £9.8m | £9.4m | +5% |
| Loss before tax | (£0.1m) | (£1.9m) | +93% |
| Adjusted Profit/(Loss) before tax2 | £0.0m | (£0.3m) | +101% |
| Profit/(Loss) after tax | £0.2m | (£1.2m) | +115% |
| Net cash inflow generated from operations | £3.8m | £4.7m | -19% |
| Net debt3 | £5.4m | £4.9m | +10% |
| Basic Profit/(Loss) per share | 0.37p | (2.47p) | +115% |
| Adjusted basic earnings per share2 | 0.41p | 0.07p | +486% |
1 Recurring revenues are generated from ongoing service and maintenance fees
2 Before exceptional costs and share based payments
3 Total borrowings less cash and cash equivalents. FY-2022 net debt excludes £1.6m IFRS 16 lease liability.
OPERATIONAL OVERVIEW
· 13% increase in revenues
· 4% increase to over 264,000 connected units in operation (FY-2021: 254,000)
· 5% increase in recurring revenues to £9.8m (FY-2021: £9.4m)
· 150% increase in software revenues to £1.4m (FY-2021: £0.5m)
· New contract wins with Ticker and Adiona
· Strong continued reduction in direct and indirect costs
· Successfully navigated a large number of supply chain challenges
OUTLOOK
· Group revenues in current financial year to end of May 2022 were 11% ahead of last year
o Revenues from insurance clients increasing due to new contract wins and increased volumes from existing clients - revenues to end of May 2022 were 33% ahead of the comparable 2021 period
o Fleet sales showing good progress - revenues to end of May 2022 were 4% ahead of the comparable 2021 period
· Inflationary pressure on payroll and components is partially mitigated with lower headcount and lower designed-in device costs
· The Company continues to face component availability issues that could impact deliveries but the expectation is that we will continue to overcome these
· The Board believes Trakm8 is building increasing momentum and is hopeful that this can be transformed into improved financial returns as we move forward
- Ends -
For further information:
| Trakm8 Holdings plc |
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| John Watkins, Executive Chairman | Tel: +44 (0) 1675 434 200 |
| Jon Edwards, Chief Financial Officer | |
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| Allenby Capital Limited (Nominated Adviser & Broker) | Tel: +44 (0) 20 3328 5656 |
| David Hart/Liz Kirchner, Corporate Finance Tony Quirke, Sales and Corporate Broking | www.allenbycapital.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 uses AI data analytics collected from its installed base of telematics units to fine tune the algorithms that are used to produce its' solutions; these monitor driver behaviour, identify crash events and monitor vehicle health to provide actionable insights to continuously improve the security and operational efficiency of both company fleets and private drivers.
The Group's product portfolio includes the latest data analytics and reporting portal (Trakm8 Insight), integrated telematics/cameras/optimisation, self-installed telematics units and one of the widest ranges of installed telematics devices. Trakm8 has over 264,000 connections.
Headquartered in Coleshill near Birmingham alongside its manufacturing facility, the Group supplies to the Fleet, Optimisation, Insurance and Automotive sectors to many well-known customers in the UK and internationally including the AA, Saint Gobain, EON, Iceland Foods, GSF, Direct Line Group, Ticker and Ingenie.
Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005. Trakm8 is also recognised with the LSE Green Economy Mark
www.trakm8.com / @Trakm8
EXECUTIVE CHAIRMAN'S STATEMENT
Results
Covid-19 continued to impact the market for telematics, particularly in our Insurance business where young drivers were unable to secure driving tests compounded by the scarcity and higher costs of second hand cars. It also led to significant challenges in the supply of electronic components for our devices. Trakm8 managed its way through most of this and achieved a very significant improvement on the previous year delivering results in line with market expectations, returning to a profit after tax for the first time in several years.
The revenues of the business increased by 13% and despite higher costs due to lower furlough support and supply chain challenges posted an adjusted profit before tax of £0.0m (FY-2021: loss £0.3m). Loss before tax improved to £0.1m (FY-2021: loss £1.9m) and Profit after Tax improved to £0.2m (FY-2021: loss £1.2m).
Connections grew by 4% to 264,000. The total number of fleet management connections increased by 1% over the year to 71,000 (FY-2021: 70,000). Telematics for insurance/automotive connections increased by 5%. At the year-end we had 193,000 insurance/automotive connections (FY-2021: 184,000). Recurring service revenues increased by 5% to £9.8m (FY-2021: £9.4m). Software revenues increased by 150% to £1.4m (FY-2021: £0.5m). A good number of contract wins and renewals were secured particularly with the insurance clients.
It was pleasing to have strong cash generation of the business with a cash flow from operations of £3.8m (FY-2021: £4.7m). The Company paid down £0.9m of HMRC deferred payments on VAT/PAYE/NI, with the balance of £0.9m to be paid during this financial year. This resulted in a free cash flow of £0.6m (FY-2021: £2.0m) and net debt increased by £0.5m at £5.4m (pre-IFRS 16). The Group had £1.0m cash on hand and an undrawn overdraft facility of £0.5m.
Overheads excluding exceptionals increased by 6% due to a reduction of furloughed staff along with an increased marketing spend. Headcount reduced by 5% during the year with underlying salary costs 5% lower than at the end of the previous year.
Trakm8 was awarded the London Stock Exchange Green Economy Mark during the year in recognition that what the Company does plays a significant role in reducing the carbon footprint of our customers' operations. Trakm8 has also started the process of joining the Science Based Targets initiative in the goal of achieving net zero emissions by 2050.
Research and development ('R&D')
Trakm8 has maintained a significant level of investment in R&D for another year. The Board believes that this level of investment is necessary to retain a portfolio of market-leading technology. Over time as revenues grow we expect that this investment as a proportion of revenues will decline. Trakm8 continues to focus on owning the intellectual property ('IP') we use in our solutions, and we see this as one of our key competitive advantages. Telematics systems are complex; but because we own all the elements that encompass a solution (with the exception of the mobile networks) we have the ability to understand and resolve problems more easily than our competitors.
The R&D investment has concentrated on the development of self-fit devices, a multi-camera solution, development of the feature set in Insight, and further development of our Insurance Broker platform. As identified in previous years, the requirement to do more for less cost remains a key strategy as this widens the opportunity to expand the rate of growth as our customers' return on investment improves.
Governance
The Group has adopted the Quoted Companies Alliance's (QCA) Corporate Governance Code for small and mid-size quoted companies, which the Board considers the most appropriate for the size and structure of the Group. More information can be found in the Governance Report section of this report and our website (https://www.trakm8.com/investor-relations/corporate-governance).
Dividend
The Group does not propose to recommend a dividend for the year at the forthcoming AGM. However, the Board will continue to review its dividend policy in light of future results and investment requirements.
People
The number of people Trakm8 employs has reduced further during FY-2022 with reductions across the business. In total our staff numbers have reduced by 5% over the year.
Trakm8 has a great team and I would like to thank everyone for their hard work, dedication and contribution to the ongoing success of the business.
Outlook
We start the new financial year with the ongoing supply chain challenges impacting our costs and our development progress. A significant amount of our engineering resources are devoted to redesigning current devices to meet component changes.
Currently Insurance & Automotive devices supplied to end of May 2022 amount to 60% more than the corresponding period last year due to the increased number of new clients secured. Fleet deliveries have been reasonably good with new unit shipments 38% greater than the corresponding period last year.
These shipments whilst increasing revenues for devices and where applicable installation in the short term, also drive increased levels of service revenues and profit for future periods.
April and May revenues were 11% higher than the corresponding period in FY 2022.
Like many businesses, Trakm8 is having to continue to face challenges in a number of areas in particular, component supply availability and logistics which have the potential to lead to shortages that could impact customer product deliveries. In addition, salary and component inflationary pressures are prevalent. However, the board is taking action to minimise the impact of these challenges on the Trakm8 business through, for example, reduced headcount, higher selling prices and engineered cost reductions.
On a much more positive note, we are seeing strong growth in the Insurance business due, in particular, to new customer wins. In addition, we are optimistic about securing a number of Fleet deployment contract renewals during the remainder of this year.
It is against this business generation backdrop that the Board believes Trakm8 is building increasing momentum and is hopeful that this can be transformed into improved financial returns as we move forward.
John Watkins
EXECUTIVE CHAIRMAN
28 June 2022
FINANCIAL REVIEW
TRADING RESULTS
| | 2022 | 2021 | Change |
| Group Revenue (£'000) | 18,111 | 15,961 | +13% |
| of which, Recurring Revenue (£'000) | 9,806 | 9,379 | +5% |
| Loss before tax (£'000) | 122 | 1,867 | +93% |
| Profit/(Loss) after tax (£'000) | 187 | (1,237) | +115% |
| Adjusted Profit/(Loss) before tax1 (£'000) | 3 | (342) | +101% |
| Basic Profit/Loss per share (p) | 0.37 | (2.47) | +115% |
| Adjusted basic earnings per share (p) | 0.41 | 0.07 | +486% |
1 Before exceptional costs and share based payments
Revenue
Group revenue increased by 13% to £18.1m (FY-2021: £16.0m) as the impact of Covid-19 reduced. Fleet revenues increased by 18% to £11.2m and Insurance and Automotive revenues increased by 7% to £6.9m. Despite the majority of Covid-19 lockdown measures ending early in the financial year, Insurance revenues recovered much slower than anticipated due to the well publicised driving test delays and second hand car price inflation and availability but offset by shipments to new customers in the final quarter. This was complimented by increased levels of Fleet and Optimisation orders including strong software revenues in H1. Recurring revenue generated from service and maintenance fees increased by 5% to £9.8m (FY-2021: £9.4m) due to the higher levels of shipments of devices across both business units and implementation of optimisation services.
Loss before tax
The Group reported a loss before tax of £0.1m (FY-2021: £1.9m). This marked significant progress as increased revenues delivered gross margins of £11.1m (FY-2021: £9.3m). Total administrative costs remained broadly similar at £10.8m despite the increased levels of revenue. This included an increase in marketing spend of £0.1m to aid revenue growth, a reduction of Coronavirus Job Retention Scheme income to £0.19m (FY-2021: £0.94m) and an increase in depreciation and amortisation of £0.2m. This was offset by overall reduction in employee costs of £0.38m and a reduction in share-based payments of £0.6m compared to the prior year.
Adjusted Profit before tax
With the improved revenues and gross margins, the Group returned to profitability with an adjusted profit of £0.0m (FY-2021: £0.3m loss). The improved revenue performance was offset by increased employee costs as the furloughed staff costs decreased to £0.4m (FY-2021: £1.6m) along with increases in depreciation and amortisation, marketing costs and a reduction in Other Income of £0.2m, £0.1m and £0.2m respectively. Our continued efforts in efficiency savings improved underlying overheads including a reduction in employee costs of £0.3m to offset the cost increases.
Exceptional Costs
Exceptional costs totalled £0.6m (FY-2021: £1.3m) and again primarily include one off costs relating to Covid-19 albeit greatly reduced from the prior year. This included £0.4m of employee costs whilst on furlough in the first half of the year and £0.2m of component costs due to the ongoing supply chain challenges instigated by Covid-19 both here and abroad. This was offset by £0.2m received as part of the Coronavirus Job Retention Scheme. In addition, £0.1m was incurred in our ongoing project to streamline our internal operations.
Balance Sheet
| | 2022 | 2021 |
| | £'000 | £'000 |
| Non-Current Assets | 25,874 | 25,640 |
| Net Current Assets | 1,704 | 4,169 |
| Non-Current Liabilities | 7,702 | 9,687 |
| Net Assets | 19,876 | 20,122 |
Net Assets decreased by £0.2m to £19.9m (FY-2021: £20.1m) reflecting the profit for the year, after deducting the IFRS2 Share based payments credits.
Non-current assets increased by £0.2m to £25.9m (FY-2021: £25.6m). This is due to a £0.5m reduction in right of use assets due to depreciation offset by a £0.8m increase in Intangible assets and £0.1m decrease in Property, plant and equipment. Intangible assets increased due to the continued investment in development in both software and hardware with capitalised development costs in the year totaling £2.9m (FY-2021: £2.3m), offset by amortisation of £1.9m (FY-2021: £1.7m).
Cash Flow
| | 2022 | 2021 |
| | £'000 | £'000 |
| Net Cash generated from operations | 3,810 | 4,702 |
| Investing activities | (3,254) | (2,667) |
| Free Cash Flow1 | 556 | 2,035 |
| Financing activities | (1,992) | (1,330) |
| (Decrease)/Increase in Cash in Year | (1,366) | 705 |
| Net Debt2 | 5,395 | 4,887 |
1 Cash generated from operating activities less cash used in investing activities (excluding cash flows related to acquisitions)
2 Total borrowings less cash and cash equivalents. FY-2022 net debt excludes £1.6m IFRS 16 lease liability.
Cash from operating activities reduced by £0.9m to £3.8m (FY-2021: £4.7m) which included the repayment of £0.9m to HMRC under the time to pay agreement negotiated at the end of the last financial year. FY-2021 included the deferment of payments to HMRC which increased Cash from operating activities by £1.7m. Cash from operating activities also included R&D tax credit cash receipts of £0.7m (FY-2021: £0.9m) which reflects the Group's continued investment in development.
Free cash inflow of £0.6m (FY-2021: £2.0m) is due to the Net Cash generated from operating activities as detailed above, offset by cash outflows from investing activities which increased by £0.6m to £3.3m (FY-2021: £2.7m).
Financing activities was an outflow of £1.9m (FY-2021: £1.3m). Following the negotiation of new and revised terms for the Group's borrowings in March 2021, capital repayments to both HSBC and the MEIF WM Debt LP resumed in the second half of the year totalling £0.7m (FY2021: £0.1m).
Net Debt
Net debt excluding IFRS 16 lease liability of £1.6m (FY-2021 £1.9m) increased by £0.5m to £5.4m (FY-2021: £4.9m). Cash balances total £1.0m (FY-2021: £2.4m) and total borrowings including IFRS16 lease liability of £1.6m totals £7.9m (FY-2021: £9.1m). Borrowing comprised £4.9m (FY-2021: £5.3m) term loan with HSBC, a £1.2m (FY-2021: £1.5m) term loan with MEIF WM Debt LP and £2.0m (FY-2021: £2.4m) of obligations under Right-to-use lease liabilities. In addition, at the year end the Group had a £0.5m unused overdraft facility with HSBC.
| Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2022 |
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| | Note | Year ended 31 March 2022 | Year ended 31 March 2021 |
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| | | £'000 | £'000 |
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| REVENUE | 4 | 18,111 | 15,961 |
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| Cost of sales | | (7,004) | (6,643) |
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| Gross profit | 11,107 | 9,318 |
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| Other income | 5 | 13 | 194 |
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| Administrative expenses excluding exceptional costs | | (10,193) | (9,585) |
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| Exceptional administrative costs | 7 | (568) | (1,342) |
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| Total administrative costs | | (10,761) | (10,927) |
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| OPERATING PROFIT/(LOSS) | 6 | 359 | (1,415) |
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| Finance income | | 67 | 78 |
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| Finance costs | 8 | (548) | (530) |
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| LOSS BEFORE TAXATION |
| (122) | (1,867) |
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| Income tax | | 309 | 630 |
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| PROFIT/(LOSS) FOR THE YEAR | | 187 | (1,237) |
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| OTHER COMPREHENSIVE INCOME | | | |
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| Items that may be subsequently reclassified to profit or loss: | | | |
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| Exchange differences on translation of foreign operations | | 10 | (3) |
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| TOTAL OTHER COMPREHENSIVE INCOME/(LOSS) | | 10 | (3) |
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| TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT | | 197 | (1,240) |
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| LOSS BEFORE TAXATION | | (122) | (1,867) |
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| Exceptional administrative costs | | 568 | 1,342 |
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| IFRS2 Share based payments charge | | (443) | 183 |
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| ADJUSTED PROFIT/(LOSS) BEFORE TAX | 6 | 3 | (342) |
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| PROFIT/(LOSS) PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT | | | |
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| Basic | 9 | 0.37p | (2.47p) |
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| Diluted | 9 | 0.37p | (2.47p) |
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| The results all relate to continuing operations.
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| Consolidated Statement of Changes in Equity For The Year Ended 31 March 2022 | ||||||||||
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| Note | Share capital | Share premium | Merger reserve | Translation reserve | Treasury reserve | Retained earnings | Total equity | ||
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| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
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| Balance as at 1 April 2020 |
| 500 | 14,691 | 1,138 | 196 | (4) | 4,658 | 21,179 | ||
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| Comprehensive loss |
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| Loss for the year |
| - | - | - | - | - | (1,237) | (1,237) | ||
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| Other comprehensive loss |
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| Exchange differences on translation of overseas operations |
| - | - | - | (3) | - | - | (3) | ||
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| Total comprehensive loss |
| - | - | - | (3) | - | (1,237) | (1,240) | ||
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| Transactions with owners |
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| IFRS2 Share-based payments charge |
| - | - | - | - | - | 183 | 183 | ||
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| Transactions with owners |
| - | - | - | - | - | 183 | 183 | ||
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| Balance as at 1 April 2021 |
| 500 | 14,691 | 1,138 | 193 | (4) | 3,604 | 20,122 | ||
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| Comprehensive income |
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| Income for the year |
| - | - | - | - | - | 187 | 187 | ||
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| Other comprehensive income |
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| Exchange differences on translation of overseas operations |
| - | - | - | 10 | - | - | 10 | ||
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| Total comprehensive income |
| - | - | - | 10 | - | 187 | 197 | ||
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| Transactions with owners |
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| IFRS2 Share based payments credit |
| - | - | - | - | - | (443) | (443) | ||
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| Transactions with owners |
| - | - | - | - | - | (443) | (443) | ||
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| Balance as at 31 March 2022 |
| 500 | 14,691 | 1,138 | 203 | (4) | 3,348 | 19,876 | ||
| Consolidated Statement of Financial Position As At 31 March 2022 | ||||
| | Note | As at 31 March 2022 | As at 31 March 2021 | |
| ASSETS | | £'000 | £'000 | |
| NON CURRENT ASSETS | | | | |
| Intangible assets | 10 | 23,012 | 22,187 | |
| Property, plant and equipment | | 803 | 891 | |
| Right of use assets | | 2,032 | 2,512 | |
| Amounts receivable under finance leases | | 27 | 50 | |
| | 25,874 | 25,640 | ||
| CURRENT ASSETS |
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| Inventories | | 1,322 | 1,409 | |
| Trade and other receivables | | 7,944 | 6,679 | |
| Corporation tax receivable | | 709 | 690 | |
| Cash and cash equivalents | | 1,004 | 2,370 | |
| | 10,979 | 11,148 | ||
| LIABILITIES | | | | |
| CURRENT LIABILITIES | | | | |
| Trade and other payables | | (7,521) | (5,417) | |
| Borrowings | | (1,115) | (855) | |
| Right of use liability | | (612) | (680) | |
| Provisions | | (27) | (27) | |
| | | (9,275) | (6,979) | |
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| CURRENT ASSETS LESS CURRENT LIABILITIES | 1,704 | 4,169 | ||
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| TOTAL ASSETS LESS CURRENT LIABILITIES | 27,578 | 29,809 | ||
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| NON CURRENT LIABILITIES | | | | |
| Trade and other payables | | (626) | (1,546) | |
| Borrowings | | (4,855) | (5,815) | |
| Right of use liability | | (1,367) | (1,767) | |
| Provisions | | (112) | (190) | |
| Deferred income tax liability | | (742) | (369) | |
| | | (7,702) | (9,687) | |
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| NET ASSETS | 19,876 | 20,122 | ||
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| EQUITY | | | | |
| Share capital | 11 | 500 | 500 | |
| Share premium | | 14,691 | 14,691 | |
| Merger reserve | | 1,138 | 1,138 | |
| Translation reserve | | 203 | 193 | |
| Treasury reserve | | (4) | (4) | |
| Retained earnings | | 3,348 | 3,604 | |
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| TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | | 19,876 | 20,122 | |
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| The loss for the Company for the year determined in accordance with the Companies Act 2006 was £176,000 (2021: loss £257,000). | ||||
| The notes on pages 46 to 81 of the annual report and accounts are an integral part of these consolidated financial statements. These financial statements were approved by the Board of directors and authorised for issue on 28 June 2022 and are signed on its behalf by: | ||||
| John Watkins - Director | Jon Edwards - Director | | ||
| Consolidated Statement of Cash Flows For The Year Ended 31 March 2022 |
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| | Notes | Year ended 31 March 2022 | Year ended 31 March 2021 |
| | | £'000 | £'000 |
| NET CASH GENERATED FROM OPERATING ACTIVITIES | 12 | 3,810 | 4,702 |
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| CASH FLOWS FROM INVESTING ACTIVITIES |
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| Purchases of property, plant and equipment | | (420) | (330) |
| Proceeds from sale of property, plant and equipment | | 125 | - |
| Purchases of software | | (48) | (47) |
| Capitalised development costs | | (2,911) | (2,290) |
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| NET CASH USED IN INVESTING ACTIVITIES |
| (3,254) | (2,667) |
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| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Increase in loans | | - | 5,300 |
| Loan arrangement fees | | (5) | (88) |
| Repayment of loans | | (743) | (5,379) |
| Repayment of obligations under lease agreements | | (674) | (670) |
| Interest paid | | (500) | (493) |
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| NET CASH USED IN FINANCING ACTIVITIES |
| (1,922) | (1,330) |
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| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS |
| (1,366) | 705 |
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| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
| 2,370 | 1,665 |
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| CASH AND CASH EQUIVALENTS AT END OF YEAR |
| 1,004 | 2,370 |
Notes to the Consolidated Financial Statements
| 1 | GENERAL INFORMATION |
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| | Trakm8 Holdings PLC ("Company") and its subsidiaries (together the "Group") develop, manufacture, distribute and sell telematics devices and services and optimisation solutions. | ||||||||
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| | 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. | ||||||||
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| | 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. | ||||||||
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| | 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 | ||||||||
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| | The Group's financial statements have been prepared in accordance with UK-adopted International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") interpretations as endorsed by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. | ||||||||
| 3 | BASIS OF PREPARATION | | | | | | | ||
| | | | | | | | | | |
| | The audited financial information included in this preliminary results announcement for the year ended 31 March 2022 and audited information for the year ended 31 March 2021 does not comprise statutory accounts within the meaning of section 434 Companies Act 2006. The information has been extracted from the audited statutory financial statements for the year ended 31 March 2022 which will be delivered to the Registrar of Companies in due course. Statutory financial statements for the year ended 31 March 2021 were approved by the Board of directors and have been delivered to the Registrar of Companies. The report of the independent auditors for the year ended 31 March 2022 and 2021 respectively on these financial statements were unqualified and did not include a statement under section 498 of the Companies Act 2006. | ||||||||
| | | | | | | | | | |
| | These financial statements are prepared on a going concern basis after assessing the principal risks. To monitor the future cash position the Group produces projections of its working capital and long term funding requirements covering 3 months in detail and 1 and 2 year projections. These projections are updated on a regular basis to reflect current trading and latest information on future trading. The Group does have a substantial recurring revenue base that accounts for 54% of revenues that provide a strong underlying base.
The Group renewed its debt facilities with HSBC in March 2021 and benefitted from deferral of capital repayments which recommenced in September 2021. This was in addition to reaching an agreement with HMRC to repay £1.8m VAT, PAYE & NI equally between this financial year and next. Covenant tests to the end of March 2022 were an absolute EBITDA tested quarterly, moving to quarterly cash flow cover and leverage covenants from June 2022.
At the year end the Group has cash balances of £1,004,000 and an unused overdraft facility of £500,000. The Groups latest projections for twelve months from the date of signing the financial statements show that the Group has sufficient cash resources and will meet its covenants with headroom for the foreseeable future. The Group has completed adverse sensitivities against its current projections to reflect potential external risks where material shortages constrain its ability to fulfil orders or demand of its products and services reduce and material costs increase.
To assess the potential impact of these, a 10% reduction in Fleet new business contract value and Insurance shipments and a 10% increase in material costs were modelled against the Groups current forecast. Despite the cumulative impact of these changes the Group still maintains compliance with the covenants for the coming twelve months without the inclusion of any mitigations that could and would be implemented such as price increases and savings in both direct and indirect costs.
On this basis the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operation for the foreseeable future and therefore it is appropriate to adopt the going concern basis of accounting in preparing the financial statements.
| ||||||||
| 4 | SEGMENTAL ANALYSIS | | | |||||
| | | | | | | | | |
| | The chief operating decision maker ("CODM") is identified as the Board. It continues to define all the Group's trading under the single Integrated Telematics Technology segment and therefore review the results of the group as a whole. Consequently all of the Group's revenue, expenses, assets and liabilities are in respect of one Integrated Telematics Technology segment. | |||||||
| | The Board as the CODM review the revenue streams of Integrated Fleet, Optimisation, Insurance and Automotive Solutions ("Solutions") as part of their internal reporting. Solutions represents the sale of the Group's full vehicle telematics and optimisation services, engineering services, professional services and mapping solutions to customers.
| |||||||
| | A breakdown of revenues within these streams are as follows: | | | |||||
| | | | | | | | Year ended 31 March 2022 | Year ended 31 March 2021 |
| | | | | | | | £'000 | £'000 |
| | Solutions: | | | | | | 18,111 | 15,961 |
| | Fleet and optimisation | | | | | | 11,217 | 9,520 |
| | Insurance and automotive | | | | | | 6,894 | 6,441 |
| | | | | | | | | |
| | A geographical analysis of revenue by destination is as follows: | | | |||||
| | | | | | | | | |
| | | | | | | | Year ended 31 March 2022 | Year ended 31 March 2021 |
| | | | | | | | £'000 | £'000 |
| | United Kingdom | | | | | | 17,784 | 15,647 |
| | North America | | | | | | - | 4 |
| | Norway | | | | | | - | 2 |
| | Rest of Europe | | | | | | 272 | 293 |
| | Rest of World | | | | | | 55 | 15 |
| | | | | | | | 18,111 | 15,961 |
|
5 |
OTHER INCOME | | | | | | | |
| | | | | | | | Year ended 31 March 2022 | Year ended 31 March 2021 |
| | | | | | | | £'000 | £'000 |
| | Grant income | | | | | | 13 | 194 |
| | | | | | | | 13 | 194 |
| 6 | OPERATING PROFIT/(LOSS) |
| | | |
| | | | | | |
| | The following items have been included in arriving at operating profit/(loss): | ||||
| | | | | Year ended 31 March 2022 | Year ended 31 March 2021 |
| | | | | £'000 | £'000 |
| | Depreciation | | | | |
| | - owned assets | | | 176 | 156 |
| | - right of use assets | | | 630 | 625 |
| | Amortisation of intangible assets | | | | |
| | - owned assets (see note 10) | | | 2,134 | 1,992 |
| | Other operating lease rentals | | | 34 | 13 |
| | Research and development expenditure | | | 669 | 637 |
| | Loss on disposal of property plant and equipment | | 263 | 318 | |
| | Loss on foreign exchange transactions | | | 22 | 1 |
| | Staff costs | | | 5,187 | 6,465 |
| | Exceptional administrative costs (see note 7) | | | 568 | 1,342 |
| | Auditors' remuneration | | | | |
| | - Fees payable to the Company's auditors for the audit of the parent | | | ||
| | company and consolidated financial statements | | 77 | 73 | |
| | | | | | |
| | Adjusted profit/(loss) before tax is monitored by the Board and measured as follows: | | |||
| | | | | Year ended 31 March 2022 | Year ended 31 March 2021 |
| | | | | £'000 | £'000 |
| | Loss before tax | | | (122) | (1,867) |
| | Exceptional administrative costs (note 9) | | | 568 | 1,342 |
| | Share based payments | | | (443) | 183 |
| | Adjusted profit/(loss) before tax | | | 3 | (342) |
| | | | | | |
| 7 | EXCEPTIONAL ADMINISTRATIVE COSTS |
| | | |
| | | | | Year ended 31 March 2022 | Year ended 31 March 2021 |
| | | | | £'000 | £'000 |
| | Integration & restructuring costs | | | 107 | 168 |
| | Covid-19 costs | | | 646 | 2,109 |
| | Furlough grant income | | | (185) | (935) |
| | | | | 568 | 1,342 |
| | The Group incurred exceptional costs in the current and prior financial year relating to the Covid-19 pandemic. These costs include the increased cost of temporarily buying raw materials from auxiliary markets to ensure continuity of supply of key components which were in constraint due to supply chain issues caused by the pandemic. In addition this includes the costs of employees during periods of furlough. |
| | The Group has also incurred significant costs relating to its ongoing project to streamline and rationalise the operations of the business. This has resulted in the following non-underlying, one-off costs: |
| 8 | FINANCE COSTS |
| | |
| ||||||
| | | | Year ended 31 March 2022 | Year ended 31 March 2021 |
| ||||||
| | | | £'000 | £'000 |
| ||||||
| | Interest on bank loans | | 388 | 373 |
| ||||||
| | Amortisation of debt issue costs | 48 | 37 |
| |||||||
| | Interest on right of use assets | | 112 | 120 |
| ||||||
| | | | 548 | 530 |
| ||||||
|
| 9 | EARNINGS PER ORDINARY SHARE | |||||||||
|
|
| | | | | ||||||
|
| | The earnings per Ordinary share have been calculated in accordance with IAS 33 using the profit/(loss) for the year and the weighted average number of Ordinary shares in issue during the year as follows: | |||||||||
|
| | | | Year ended 31 March 2022 | Year ended 31 March 2021 | ||||||
|
| | | | £'000 | £'000 | ||||||
|
| | Profit/(Loss) for the year after taxation | | 187 | (1,237) | ||||||
|
| | Exceptional administrative costs | | 568 | 1,342 | ||||||
|
| | Share based payments | | (443) | 183 | ||||||
|
| | Tax effect of adjustments | | (108) | (255) | ||||||
|
| | Adjusted profit for the year after taxation | | 204 | 33 | ||||||
|
| | | | | | ||||||
|
| | | | No. | No. | ||||||
|
| | Number of Ordinary shares of 1p each at 31 March | | 50,004,002 | 50,004,002 | ||||||
|
| | | | | | ||||||
|
| | Basic weighted average number of Ordinary shares of 1p each | 50,004,002 | 50,004,002 | |||||||
|
| | Diluted weighted average number of Ordinary shares of 1p each* | 50,056,538 | 50,004,002 | |||||||
|
| | | | | | ||||||
|
| | Basic profit/(loss) per share | | 0.37p | (2.47p) | ||||||
|
| | Diluted profit/(loss) per share | | 0.37p | (2.47p) | ||||||
|
| | | | | | ||||||
|
| | Adjust for effects of: | | | | ||||||
|
| | Exceptional costs | | 0.92p | 2.17p | ||||||
|
| | Share based payments | | (0.89p) | 0.37p | ||||||
|
| | | | | | ||||||
|
| | Adjusted basic earnings per share | | 0.41p | 0.07p | ||||||
|
| | Adjusted diluted earnings per share | | 0.41p | 0.07p | ||||||
|
| | | | | | ||||||
|
| | *In the current year, the Group awarded Tranch AI with an exercise price of 16p. This grant is dilutive as the exercise price is less than the average share price as at year end. | |||||||||
| 10 | INTANGIBLE ASSETS |
| | | | | | |
| |||||
| | | | Goodwill | Intellectual property | Customer relationships | Development costs | Software | Total |
| |||||
| | | | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| |||||
| | COST |
| | | | | | |
| |||||
| | As at 1 April 2020 | | 10,417 | 1,920 | 100 | 17,190 | 1,903 | 31,530 |
| |||||
| | Additions - Internal developments | - | - | - | 2,119 | - | 2,119 |
| ||||||
| | Additions - External purchases | - | - | - | 171 | 47 | 218 |
| ||||||
| | Impairments | | - | - | - | - | (155) | (155) |
| |||||
| | Disposals | - | - | - | (238) | (36) | (274) |
| ||||||
| | As at 31 March 2021 | | 10,417 | 1,920 | 100 | 19,242 | 1,759 | 33,438 |
| |||||
| | Additions - Internal developments | - | - | - | 2,521 | 46 | 2,567 |
| ||||||
| | Additions - External purchases | - | - | - | 390 | 2 | 392 |
| ||||||
| | As at 31 March 2022 | | 10,417 | 1,920 | 100 | 22,153 | 1,807 | 36,397 |
| |||||
| | AMORTISATION |
| | | | | | |
| |||||
| | As at 1 April 2020 | | - | 1,910 | 100 | 6,479 | 1,044 | 9,533 |
| |||||
| | Charge for year | | - | 10 | - | 1,733 | 249 | 1,992 |
| |||||
| | Disposals | - | - | - | (238) | (36) | (274) |
| ||||||
| | As at 31 March 2021 | | - | 1,920 | 100 | 7,974 | 1,257 | 11,251 |
| |||||
| | Charge for year | | - | - | - | 1,943 | 191 | 2,134 |
| |||||
| | As at 31 March 2022 | | - | 1,920 | 100 | 9,917 | 1,448 | 13,385 |
| |||||
| | NET BOOK AMOUNT |
| | | | | | |
| |||||
| | As at 31 March 2022 | | 10,417 | - | - | 12,236 | 359 | 23,012 |
| |||||
| | | | | | | | | |
| |||||
| | As at 31 March 2021 | | 10,417 | - | - | 11,268 | 502 | 22,187 |
| |||||
| | | | | | | | | |
| |||||
| | As at 1 April 2020 | | 10,417 | 10 | - | 10,711 | 859 | 21,997 |
| |||||
| |
Goodwill arose in relation to the Group's acquisition of 100% of the share capital of Roadsense Technology Limited (Roadsense), Route Monkey Limited (Route Monkey), Box Telematics Limited (Box) and DCS Systems Limited (DCS). |
| ||||||||||||
| | | | ||||||||||||
| | Since the acquisition Roadsense, Box, Route Monkey and DCS have been incorporated into the Trakm8 business. These businesses have therefore been assessed as one cash generating unit for an impairment test on Goodwill. |
| ||||||||||||
| | The impairment review has been performed using a value in use calculation. |
| ||||||||||||
| | | | | | | | | | ||||||
| | The impairment review has been based on the Group's budgets for FY-2023 which have been reviewed and approved by the Board and projections for FY-2024. Forecasts for the subsequent 3 years have been produced based on 7% (a prudent growth rate for telematics market) growth rates in revenue and EBITDA in each year. A net present value has been calculated using a pre tax discount rate of 9% (Group's weighted average cost of capital) which is deemed to be a reasonable rate taking account of the Group's cost of funds and an extra element for risk. A terminal value has been calculated and included in the discounted cash flow forecasts used within the model to fully support the goodwill value. A growth rate of 2% was used to determine the terminal value. |
| ||||||||||||
| | The forecast shows sufficient headroom of cash flow above the net assets value when we have performed sensitivity analysis. | |||||||
| | 1. An increase in the discount rate to 12% shows headroom of £3m. | | | | ||||
| | 2. A decrease in the growth rate to 5% shows headroom of £10m. | | | | | |||
| | 3. A decrease in the terminal growth rate to 1% shows headroom of £11m. | | | | ||||
| | | | | | | | | |
| | In addition, sensitivity analysis has been undertaken and indicates that an impairment will be triggered by: | |||||||
| | 1. Decrease in annual growth rates from 7% to 4% and decrease in terminal growth rate from 2% to 1% and increase the discount rate from 10% to 11%. | |||||||
| | Or triggered by: | | | | | | | |
| | 1. Decrease in net cash generated from operating activities for FY-2023 and FY-2024 of 14%. | |||||||
| | | | | | | | | |
| | Amortisation expenses of £2,134,000 (2021: £1,992,000) have been charged to Administrative expenses in the Consolidated Statement of Comprehensive Income. | |||||||
| 11 | SHARE CAPITAL |
| | | | | | ||||||
| | | | | | As at 31 March 2022 | As at 31 March 2021 | |||||||
| | | | | | | | | | |||||
| | | | | | No's | £'000 | No's | £'000 | |||||
| | Authorised: | | | | '000's | | '000's | | |||||
| | Ordinary shares of 1p each | | | 200,000 | 2,000 | 200,000 | 2,000 | ||||||
| | Allotted, issued and fully paid: | | | | | | | ||||||
| | Ordinary shares of 1p each | | | 50,004 | 500 | 50,004 | 500 | ||||||
| | | | | | | | | | |||||
| | The Company currently holds 29,000 Ordinary shares in treasury representing 0.06% (2021: 0.06%) of the Company's issued share capital. The number of 1 pence Ordinary shares that the Company has in issue less the total number of Treasury shares is 49,975,002. | ||||||||||||
| 12 | CASH GENERATED FROM OPERATIONS |
| | | | |||
| | | | | | | | As at 31 March 2022 | As at 31 March 2021 |
| | | | | | | | £'000 | £'000 |
| | | | | | | | | |
| | Loss before tax | | | | | (122) | (1,867) | |
| | Depreciation | | | | | 806 | 781 | |
| | (Profit)/Loss on disposal of fixed assets | | | 263 | 318 | |||
| | Net bank and other interest | | | | 481 | 452 | ||
| | Exceptional costs | | | | | 568 | 1,342 | |
| | Amortisation of intangible assets | | | | 2,134 | 1,992 | ||
| | Exchange movement | | | | 10 | (3) | ||
| | Share based payments | | | | (443) | 183 | ||
| | Operating cash flows before movement in working capital | | 3,697 | 3,198 | ||||
| | Movement in inventories | | | | 87 | 634 | ||
| | Movement in trade and other receivables | | | (1,242) | 1,166 | |||
| | Movement in trade and other payables | | | 1,184 | 70 | |||
| | Movement in provisions | | | | (78) | 33 | ||
| | Cash generated from operations before exceptional costs | | 3,648 | 5,101 | ||||
| | Cash outflow from exceptional costs | | | (568) | (1,342) | |||
| | Cash generated from operations | | | | 3,080 | 3,759 | ||
| | Interest received | | | | | 67 | 78 | |
| | Income taxes received | | | | 663 | 865 | ||
| | Net cash inflow from operating activities | | | 3,810 | 4,702 | |||
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