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-2023

Group revenue

£16.1m

£20.2m

of which, Recurring revenue1

£10.1m

£10.5m

Adjusted (Loss)/Profit before tax2

(£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 debt3

£4.9m

£5.6m

Adjusted basic (loss)/earnings per share2

(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.

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

 

 

 

Allenby Capital Limited (Nominated Adviser & Broker)

Tel: +44 (0)20 3328 5656

David Hart / Vivek Bhardwaj, Corporate Finance
Tony Quirke / Joscelin Pinnington, Sales and Corporate Broking 

www.allenbycapital.com

 

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 / @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 31st 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 tax1 (£'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 Flow1

2,468

895

Financing activities

(2,192)

(780)

Increase/(Decrease) in Cash in Year

276

115

Net Debt2

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 PARENT



(1,218)

(774)

 






 

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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