TIDMTRAK
RNS Number : 4480R
Trakm8 Holdings PLC
30 June 2020
30 June 2020
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 2020 (FY-2020).
FINANCIAL SUMMARY:
FY-2020 FY-2019 Change
Group revenue GBP19.6m GBP19.1m 2%
---------- ---------- -------
of which, Recurring revenue(1) GBP9.8m GBP10.1m -3%
---------- ---------- -------
Loss before tax (GBP1.7m) (GBP3.6m) 52%
---------- ---------- -------
Adjusted loss before tax(2) (GBP0.2m) (GBP1.5m) 85%
---------- ---------- -------
Loss after tax (GBP1.1m) (GBP2.5m) 56%
---------- ---------- -------
Net cash inflow/(outflow) generated GBP4.1m (GBP1.8m) n/a
from operations
---------- ---------- -------
Net debt(3) GBP5.6m GBP5.6m 0%
---------- ---------- -------
Basic loss per share 2.19p 6.20p n/a
---------- ---------- -------
Adjusted basic earnings/(loss)
per share(2) 0.28p (1.89p) n/a
---------- ---------- -------
(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-2020 net
debt excludes GBP2.3m IFRS 16 lease liability.
OPERATIONAL OVERVIEW
-- Modest return to growth (+2%) despite Covid-19 impact late March.
-- Significant improvement in financial performance to close to breakeven adjusted profit.
-- Strong continued reduction in direct and indirect costs.
-- Strengthened Group with appointment of Group Sales and Marketing Director
-- Production launch of new insurance self-fit hardware products.
-- Over 245,000 connected units in operation (FY-2019: 243,000).
-- New contract wins with two new significant Insurance companies.
-- Contract renewals with two large long term customers (E.ON
and Bibby) and a significant enhancement to the solution for
Iceland Foods
-- R&D spend down 7%, however still GBP4.1m invested.
OUTLOOK
-- Momentum established in last year disrupted by Covid-19.
-- The new financial year has begun with new contract awards
from two further insurance companies, with revenues already
commenced.
-- Revenues from new insurance contract wins now compensating
for the impact of Covid-19 on the overall market with recent device
shipments ahead of last year.
-- The AA Smart Breakdown sales now underway albeit impacted by Covid-19.
-- Fleet sales negatively impacted by Covid-19 but recent weeks show progress.
-- Early months in current financial year benefitting from the various Government initiatives.
-- Given the uncertainty of the impact and timing due to the
Covid-19 pandemic the Group is not providing any guidance to the
results for the current financial year.
- Ends -
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 Tel: +44 (0) 20 7614 5900
& Broker)
Paul Shackleton www.arden-partners.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 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 245,000 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, Scottish Power, Direct Line Group,
LexisNexis and Ingenie.
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
Results
FY-2020 was a productive year in terms of financial results. We
delivered on our promise to return to growth and but for a Covid-19
induced disruption in the final two weeks of the financial year, we
would have achieved our plan to deliver a modest adjusted profit.
Notwithstanding that, we did achieve a significant improvement with
a small adjusted loss.
Revenue grew by 2% and the Group posted an adjusted loss before
tax of GBP0.2m. Connections grew by 1% to 245,000. The total fleet
management connections increased by 1% over the year to 77,000
(FY-2019: 76,000). Telematics for insurance/automotive connections
also increased by 1%. At the year-end we had 168,000
insurance/automotive connections (FY-2019: 167,000). Recurring
service revenues reduced by 3.3% to GBP9.8m (FY-2019: GBP10.1
m).
It was pleasing to improve cash generation significantly with
cash flow from operations of GBP4.1m (FY-2019: -GBP1.8m). In
achieving this, the Group only deferred GBP0.2m under the
Government tax deferral support schemes. This resulted in a free
cash flow of GBP0.8m (FY-2019 -GBP4.9m) and net debt unchanged at
GBP5.6m (pre-IFRS 16). The Group had GBP1.7m cash on hand and an
undrawn RCF of GBP0.5m.
FY-2020 was another year of excellent progress in many
internally focussed activities. The Group continued to focus on
improving efficiency of our operations and engineering activities.
Significant reductions in direct and indirect costs were delivered
during the year. During the year restructuring of the engineering
department led to the COO taking direct responsibility for the
engineering teams. Improved testing and software coding standards
have been implemented to address some of the technical challenges
we have experienced. The investment in engineering resources,
whilst some GBP0.3m less than last year, has continued to deliver
market-leading software and hardware solutions. Trakm8's Insight
platform provides superb customer experience and data, enabling
vehicle operators both to improve operational efficiencies and
reduce risk significantly.
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-year end, we have concluded contracts with two additional
insurance companies.
Research and development ('R&D')
Trakm8 has maintained a significant level of investment in
R&D although for a second year below the level of the previous
year. 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 more easily
resolve problems.
The R&D investment has concentrated on building out a range
of self-fit devices, improved cameras, development of the feature
set in Insight, including a SaaS optimisation product. As
identified in previous years, the requirement to do more at a lower
cost remains a key strategy as this widens the opportunity to
expand the rate of growth as the ROI for our customers
improves.
Trakm8 was pleased to be granted two patents in the year, a
patent for the ADAS algorithm it developed for detection of
tailgating situations and a patent for monitoring the health of a
vehicle battery for its Connectedcare solution.
Governance
In the prior financial year we 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. The Board annually reviews
its Corporate Governance policies and procedures, these were last
reviewed on 18 June 2020. More information can be found in the
Governance Report section of this report and our website.
Post year end the Group appointed a third Non-Executive
Director, Penny Searles who brings greater diversity to the Board
and increases the Group's compliance with the code.
Please see
https://www.trakm8.com/investor-relations/corporate-governance for
our full compliance statement.
Dividend
The Group does not propose to recommend a dividend for the year
at the forthcoming AGM. However, the Board will continue to review
its dividend policy in light of future results and investment
requirements.
People
The number of people Trakm8 employs has reduced further during
FY-2020 with reductions in operational and engineering headcount.
In total our actual staff numbers have reduced by 15% over the
year.
The turnaround in performance has taken extraordinary efforts.
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
The momentum established in the business last year has been
disrupted by the Covid-19 epidemic. We had returned to growth in
our Fleet business and had finally launched with three new
Insurance customers. The AA had launched Smart Breakdown. Two more
insurance customers have been secured since year end. Prior to the
current lock down, this year was expected to be one of very
significant growth.
Our new year started in the early stage of the lockdown and
unsurprisingly April saw very significant reductions in new
business. May saw slight improvements and June has improved further
still.
The total value of new Fleet contracts signed in April was 83%
down on the prior year, 50% lower in May compared to the prior year
and is expected to be 22% lower in June compared to the prior
year.
Insurance shipments in April at 3,867 devices were 39% below
last year, May shipments at 5,447 devices were in line with the
prior year. Currently June shipments are expected to be 26% higher
than last year.
With a significant proportion of revenues derived from the
service fees of the installed base, the first two months of the
year revenues were 27% lower than the previous year but resulted in
a significantly reduced loss because of lower direct and indirect
costs.
We are confident that the growth potential in our chosen markets
is good and that we have the solutions and sales teams to deliver
on this opportunity. It is simply a matter of timing and landscape
as the crisis subsides. The solutions we provide significantly
improve the customer's efficiencies and so that market driver
remains. We cannot predict how many of our existing and potential
customers will no longer be at the scale they were.
We have continued to drive operational efficiency savings in
direct and indirect costs, both those made last year that will
benefit the full year and some made this year.
Trakm8 has availed itself of various support measures from the
government including the cash deferment of VAT and PAYE/NI and is
benefitting from the payroll support through the furlough
scheme.
Trakm8 has agreed capital repayment holidays with our debt
providers and agreed covenants that we are confident are
achievable. Based on current forecasts and scenario planning that
Trakm8 has undertaken, along with the agreed capital repayment
holidays we believe this provides appropriate cash headroom,
therefore the Group are not currently progressing with a CBILS
loan.
Despite the positive trends of the year to date, the uncertainty
due to Covid-19 is such that the Group is not able to provide
forward guidance at this time but will do so as soon as there is
more certainty in the market.
John Watkins
EXECUTIVE CHAIRMAN
29 June 2020
FINANCIAL REVIEW
TRADING RESULTS
2020 2019 Change
Group Revenue (GBP'000) 19,550 19,145 2%
------- ------- -------
of which, Recurring Revenue
(GBP'000) 9,753 10,087 -3%
------- ------- -------
Loss before tax (GBP'000) 1,705 3,563 n/a
------- ------- -------
Adjusted Loss before tax(1)
(GBP'000) 224 1,452 n/a
------- ------- -------
Basic loss per share (p) 2.19 6.20 n/a
------- ------- -------
Adjusted basic earnings/(loss)
per share (p) 0.28 (1.89) n/a
------- ------- -------
(1) Before exceptional costs and share based payments
Revenue
Group revenue increased by 2% to GBP19.6m (FY-2019: GBP19.1m).
Fleet revenues increased by 11% to GBP12.0m, primarily due to
additional Optimisation revenues, this was offset by a 9% reduction
in Insurance and Automotive revenues to GBP7.5m. The recently
launched Insurance and Automotive customers resulted in the second
half revenue being 19% higher than the first half reversing some of
the full year decline. Recurring revenue generated from service and
maintenance fees decreased by 3% to GBP9.8m (FY-2019: GBP10.1m) due
to the reduction in Connections from Insurance customers earlier in
the year, which were not offset by the growth from the newly
launched customers towards the end of the financial year.
Loss before tax
The Group reported a loss before tax of GBP1.7m (FY-2019:
GBP3.6m). This significant reduction in losses was primarily due to
the significant efficiencies the Group realised through both cost
of sales and administrative costs. Gross margin improved by 5%
points to 59% primarily due to a change in mix in revenue, but also
due to lower cost hardware products and improved efficiency on
communication and installation costs. Total administrative costs
reduced by GBP0.8m of which GBP0.6m was a reduction in
non-recurring exceptional costs (detailed below). Other
administrative costs (excluding exceptional costs and depreciation
and amortisation) reduced by GBP0.9m due to headcount reductions as
a result of the cost saving initiatives implemented, offset by a
GBP0.7m increase in depreciation and amortisation, GBP0.3m from
capitalised development costs, reflecting the significant
investment undertaken by the group in earlier years and GBP0.4m due
to the adoption of IFRS16.
Adjusted Loss before tax
The improved trading performance and significantly reduced cost
base resulted in adjusted loss before tax decreasing to a loss of
GBP0.2m (FY-2019: GBP1.5m). The GBP1.3m improvement in gross profit
as detailed above fully converted into a significant reduction in
Adjusted Loss before tax. Administrative costs (excluding
exceptional costs and depreciation and amortisation) were GBP0.9m
lower than the previous year, offset by a GBP0.7m increase in
amortisation and depreciation as detailed above, and a GBP0.2m
increase in finance costs.
Exceptional Costs
Exceptional costs totaling GBP1.3m (FY-2019: GBP1.9m) include
integration and restructuring costs relating to initiatives to
streamline and rationalize the operations of the business and
additional costs relating to the acquisition of Roadsense
Technology Limited. Additionally, significant product component
refit costs relating to ongoing re-visit and material costs were
incurred to remedy significant component and software issues
relating to the prior year, these issues have been fixed by year
end. The Group also incurred a number of one-off costs as a result
of the Covid-19 pandemic, these relate to employee costs, cancelled
marketing events and bad debts.
Balance Sheet
2020 2019
GBP'000 GBP'000
-------- --------
Non-Current Assets 25,759 22,736
-------- --------
Net Current Assets 4,437 5,765
-------- --------
Non-Current Liabilities 9,017 6,407
-------- --------
Net Assets 21,179 22,094
-------- --------
Net Assets decreased by GBP0.9m to GBP21.2m (FY-2019: GBP22.1m)
reflecting the loss for the year, after adding back the IFRS2 Share
based payments charge.
Non-current assets increased by GBP3.0m to GBP25.8m (FY-2019:
GBP22.7m). This is due to the adoption of IFRS 16 in the current
year, with no adjustment to the prior year which resulted in
GBP2.8m of leased assets being capitalised, offset by depreciation
charge in the year of GBP0.6m. Continued investment in development
in both software and hardware with capitalised development costs in
the year totaling GBP3.2m (FY-2014: GBP3.4m), offset by a GBP0.3m
increase in amortisation to GBP1.8m (FY-2019: GBP1.5m).
Cash Flow
2020 2019
GBP'000 GBP'000
-------- --------
Net Cash generated from operations 4,115 (1,752)
-------- --------
Investing activities (3,199) (3,179)
-------- --------
Free Cash Flow(1) 916 (4,931)
-------- --------
Financing activities (456) 2,664
-------- --------
Change in Cash in Year 460 (2,267)
-------- --------
Net Debt(2) 5,643 5,629
-------- --------
(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-2020 net
debt excludes GBP2.3m IFRS 16 lease liability.
Cash from operating activities significantly improved by GBP5.9m
during this year to an inflow of GBP4.1m (FY-2019: GBP1.8m
outflow), which included R&D tax credit cash receipts of
GBP1.0m (FY-2019: GBP1.0m). The R&D tax credit cash receipt
reflects the Group's investment in development. The operational
cash flow improvement is due to the significantly reduced operating
loss increasing operating cash flows (GBP2.9m) and GBP3.0m
improvement year on year from enhanced working capital
management.
Free cash inflow of GBP0.9m (FY-2019: outflow GBP4.9m) is due to
the GBP4.1m Net Cash generated from operating activities as
detailed above offset by cash outflows from investing activities
which remained flat at GBP3.2m (FY-2019: GBP3.2m). The ongoing
investing activities outflow has decreased by GBP0.5m to GBP3.2m,
with the prior year investment of GBP3.7m offset by the one-off
GBP0.5m from the proceeds of the property disposal.
Financing activities was an outflow of GBP0.5m (FY-2019: Inflow
GBP2.7m). This outflow is net of GBP2.0m new loans which includes
the GBP1.5m growth capital loan from MEIF WM Debt LP. The decrease
from prior year was due to the subscription in December 2018 which
raised approximately GBP3.1m (net of expenses) to fund general
working capital requirements and further strengthen the Group's
balance sheet.
Net Debt
Net debt excluding IFRS 16 lease liability of GBP2.3m remained
flat at GBP5.6m (FY-2019: GBP5.6m). Cash balances total GBP1.7m
(FY-2019: GBP1.2m) and total borrowings including IFRS16 lease
liability of GBP2.3m totals GBP9.6m (FY-2019: GBP6.8m) of which
GBP0.9m (FY-2019: GBP1.8m) was a term loan with HSBC, GBP1.5m
(FY-2019: nil) was a term loan with MEIF WM Debt LP, GBP4.5m
(FY-2019: GBP4.4m) were amounts drawn under our GBP5m revolving
credit facility with HSBC and GBP2.8m (FY-2019: GBP0.6m) were
obligations under Right of use lease liabilities, which includes
finance lease liabilities from the prior year.
Consolidated Statement of Comprehensive Income For The Year Ended
31 March 2020
Note Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
REVENUE 4 19,550 19,145
Cost of sales (7,991) (8,890)
----------- -----------
Gross profit 11,559 10,255
Other income 5 364 436
Administrative expenses excluding exceptional
costs (11,926) (12,101)
Exceptional administrative costs 7 (1,296) (1,930)
----------- -----------
Total administrative costs (13,222) (14,031)
OPERATING LOSS 6 (1,299) (3,340)
Finance income 12 10
Finance costs 8 (418) (233)
----------- -----------
LOSS BEFORE TAXATION (1,705) (3,563)
Income tax 612 1,057
LOSS FOR THE YEAR (1,093) (2,506)
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified
to profit or loss:
Exchange differences on translation of
foreign operations (7) (5)
----------- -----------
TOTAL OTHER COMPREHENSIVE INCOME (7) (5)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
ATTRIBUTABLE TO OWNERS OF THE PARENT (1,100) (2,511)
----------- -----------
LOSS BEFORE TAXATION (1,705) (3,563)
Exceptional administrative costs 1,296 1,930
IFRS2 Share based payments charge 185 181
----------- -----------
ADJUSTED LOSS BEFORE TAX (224) (1,452)
LOSS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE
TO OWNERS OF THE PARENT
Basic 9 (2.19p) (6.20p)
Diluted 9 (2.19p) (6.20p)
The results relate to continuing operations.
Consolidated Statement of Changes in Equity For The Year Ended
31 March 2020
Note Share Share Merger Translation Treasury Retained Total
capital premium reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 April 2018 359 11,750 1,138 208 (4) 7,929 21,380
Comprehensive
loss
Loss for the year - - - - - (2,506) (2,506)
Other comprehensive
loss
Exchange differences
on translation of
overseas operations - - - (5) - - (5)
Total comprehensive
income - - - (5) - (2,506) (2,511)
--------- --------- --------- ------------ --------- ---------- --------
Transactions with
owners
Shares issued 141 2,941 - - - - 3,082
IFRS2 Share-based
payments charge - - - - - 181 181
Tax recognised directly
in equity (Note 11) - - - - - (38) (38)
Transactions with
owners 141 2,941 - - - 143 3,225
--------- --------- --------- ------------ --------- ---------- --------
Balance as at
1 April 2019 500 14,691 1,138 203 (4) 5,566 22,094
--------- --------- --------- ------------ --------- ---------- --------
Comprehensive
loss
Loss for the year - - - - - (1,093) (1,093)
Other comprehensive
loss
Exchange differences
on translation of
overseas operations - - - (7) - - (7)
Total comprehensive
loss - - - (7) - (1,093) (1,100)
--------- --------- --------- ------------ --------- ---------- --------
Transactions with
owners
IFRS2 Share based
payments charge - - - - - 185 185
Transactions with
owners - - - - - 185 185
--------- --------- --------- ------------ --------- ---------- --------
Balance as at 31 March
2020 500 14,691 1,138 196 (4) 4,658 21,179
--------- --------- --------- ------------ --------- ---------- --------
Consolidated Statement of Financial Position As At 31 March 2020
Note As at 31 As at 31
March 2020 March 2019
ASSETS GBP'000 GBP'000
NON CURRENT ASSETS
Intangible assets 10 21,997 21,165
Property, plant and equipment 717 1,432
Right of use assets 13 3,004 -
Amounts receivable under finance leases 41 139
25,759 22,736
------------ ------------
CURRENT ASSETS
Inventories 2,043 2,736
Trade and other receivables 7,854 8,345
Corporation tax receivable 863 1,050
Cash and cash equivalents 1,665 1,205
12,425 13,336
------------ ------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (6,180) (6,307)
Borrowings (1,125) (1,237)
Right of use liability 13 (656) -
Provisions (27) (27)
(7,988) (7,571)
------------ ------------
CURRENT ASSETS LESS CURRENT LIABILITIES 4,437 5,765
TOTAL ASSETS LESS CURRENT LIABILITIES 30,196 28,501
NON CURRENT LIABILITIES
Trade and other payables (713) (607)
Borrowings (5,675) (5,597)
Right of use liability 13 (2,162) -
Provisions (157) (115)
Deferred income tax liability (310) (88)
(9,017) (6,407)
------------ ------------
NET ASSETS 21,179 22,094
------------ ------------
EQUITY
Share capital 11 500 500
Share premium 14,691 14,691
Merger reserve 1,138 1,138
Translation reserve 196 203
Treasury reserve (4) (4)
Retained earnings 4,658 5,566
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT 21,179 22,094
------------ ------------
The loss for the Company for the year determined in accordance
with the Companies Act 2006 was GBP236,000 (2019: loss GBP242,000)
The notes on pages 45 to 81 are an integral part of these consolidated
financial statements. These financial statements on pages 41 to
81 were approved by the Board of directors and authorised for
issue on 29 June 2020 and are signed on its behalf by:
John Watkins - Jon Furber
Director - Director
Consolidated Statement of Cash-Flows For The Year Ended 31 March
2020
Note Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
NET CASH GENERATED FROM OPERATING ACTIVITIES 12 4,115 (1,752)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (20) (103)
Purchases of software (23) (158)
Proceeds from sale of property - 495
Capitalised development costs (3,156) (3,413)
NET CASH USED IN INVESTING ACTIVITIES (3,199) (3,179)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares - 3,082
Increase in loans 2,000 2,000
Repayment of loans (1,440) (2,026)
Repayment of obligations under lease agreements (630) (187)
Interest paid (386) (205)
NET CASH GENERATED FROM FINANCING ACTIVITIES (456) 2,664
------------ ------------
NET INCREASE / (DECREASE) IN CASH AND CASH
EQUIVALENTS 460 (2,267)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR 1,205 3,472
CASH AND CASH EQUIVALENTS AT OF YEAR 1,665 1,205
------------ ------------
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 condensed consolidated financial statements are presented
in Sterling and all values are rounded to the nearest thousand
(GBP'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 2020 and
audited information for the year ended 31 March 2019 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 2020 which will be delivered to the Registrar
of Companies in due course. Statutory financial statements
for the year ended 31 March 2019 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 2020 and 2019 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 and having considered
the impact of Covid-19. To monitor the future cash position
the Group produces projections of its working capital and
long term funding requirements covering three months in detail
and 1 and 2 year future projections. These projections are
updated on a regular basis and have been re-assessed in light
of the Covid-19 pandemic through which the Group has continued
trading albeit at reduced volume.
The Group has a substantial recurring revenue base that accounted
for 50% of revenues in the FY-2020 and has taken advantage
of some of the various government support schemes to protect
the business. Whilst the impact of Covid-19 and the speed
at which trading returns to normal levels continues to evolve,
the Group has revised its forecasts for plausible downside
scenarios. Further consideration to the risks associated with
Covid-19 and other significant risks and the mitigations the
Group has developed are detailed on page 20 of the FY-2020
Annual report and accounts. In addition the Group recently
entered into Amendment and Restatement Agreements with HSBC
that extended the term of all facilities to 30 September 2021,
deferred all scheduled capital repayments from June 2020,
with these recommencing in April 2021 and amended the covenants.
The recently agreed covenants relate to cash flow cover, next
tested on 31 March 2021 and leverage next tested on 30 September
2020. The Group also recently entered into an Amendment and
Restatement Agreement with MEIF EM Debt LP that deferred the
commencement date of capital repayments to 30 June 2021 and
amended the covenants in line with the agreement with HSBC.
At the year end the Group had cash balances of GBP1,665,000
and undrawn revolving credit facilities of GBP500,000 at 31
March 20. These revised projections for twelve months from
date of signing the financial statements show that the Group
has sufficient cash resources and will meet its covenants
with ample headroom for the foreseeable future.
The Group has undertaken a number of adverse sensitivities
against its projections, these show that the Group would still
have cash reserves in all these scenarios and would meet the
agreed covenants. This sensitivity analysis showed that if
either a 50% reduction in Adjusted EBITDA, or a 50% reduction
in free cash flow materialised that covenants would still
be met. 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 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 Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Solutions: 19,550 19,145
Fleet and optimisation 12,034 10,845
Insurance and automotive 7,516 8,300
------------ -----------
A geographical analysis of revenue by destination
is as follows:
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
United Kingdom 19,181 18,910
North America 7 12
Norway - 4
Rest of Europe 67 111
Rest of World 295 108
19,550 19,145
------------ -----------
5 OTHER INCOME
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Grant income 361 449
R&D tax credit 4 5
R&D tax credit adjustment in respect
of prior periods (1) (18)
364 436
------------ -----------
6 OPERATING LOSS
The following items have been included in arriving at operating
loss:
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Depreciation
- owned assets (see note
15) 149 242
- right of use assets (see
note 31) 550 71
Amortisation of intangible
assets
- owned assets (see note
14) 2,194 1,866
Operating lease rentals
- Land and buildings - 208
- Other 80 183
Research and development
expenditure 896 933
Loss /(Gain) on foreign exchange transactions 2 (3)
Staff costs (note 12) 6,730 7,126
Profit on disposal of property plant
& equipment - (106)
Exceptional administrative
costs 1,296 1,930
Auditors' remuneration
- Fees payable to the Company's auditors
for the audit of the parent
company and consolidated financial
statements 73 93
Adjusted loss before tax is monitored by
the Board and measured as follows:
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Loss before tax (1,705) (3,563)
Exceptional administrative
costs (note 9) 1,296 1,930
Share based payments 185 181
Adjusted loss profit before
tax (224) (1,452)
----------- -----------
7 EXCEPTIONAL ADMINISTRATIVE
COSTS
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Acquisition costs 52 102
Integration & restructuring
costs 602 707
New product component refit
costs 442 453
Covid-19 costs 200 -
Product enhancement costs - 375
Iranian bad debt - 293
1,296 1,930
----------- -----------
The acquisition costs incurred in 2020 and 2019 relate to non-underlying
charges under two separate agreements linked to the acquisition
in 2017. The costs incurred are directly linked to the acquisition
and not as part of the underlying business. One agreement terminated
on 31 July 2019, and the second agreement terminated on 31
March 2019.
The Group has 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:
- In the current and prior year, integration and restructuring
costs incurred relate to integrating theactivities of Route
Monkey Limited and Roadsense Limited that were acquired in
previous financial years and include costs associated with
office closures and costs and profits incurred as part of its
long-term real estate plan.
- Restructuring costs incurred as a result of a headcount reduction
activity undertaken during the current financial year
The Product component refit costs incurred in the current
and prior year relate to significant component and software
issues that arose during the financial year on a recently launched
product. These issues were fixed by the end of the previous
financial year. However significant re-visit and material costs
have been incurred in both the current and financial year as
a result of the project to remedy these issues. No customers
have been lost as a result of these issues.
In the prior year product enhancement costs incurred relate
to product upgrade costs incurred as a result of a decision
to roll out an enhanced hardware product with increased functionality
to just two existing customers to enable much greater roaming
capability across Europe and increase the range of services
that can therefore be provided.
In the prior year, it was considered inappropriate to proceed
with a contract to supply insurance solutions into Iran due
to the impact of US sanctions, therefore the cost of the work
and solutions supplied in the previously have been provided
for.
The Group has also incurred exceptional costs in the current
financial year relating to the Covid-19 pandemic. These costs
relate to a variety of overheads including employee costs,
cancelled marketing events and bad debts resulting from Covid-19.
8 FINANCE COSTS
Year ended Year ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Interest on bank loans 284 172
Amortisation of debt issue costs 32 28
Interest on right of use assets 102 33
418 233
--------------- -----------
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 Year ended
31 March 2020 31 March 2019
GBP'000 GBP'000
Loss for the year after taxation (1,093) (2,506)
Exceptional administrative costs 1,296 1,930
Share based payments 185 181
Tax effect of adjustments (246) (367)
Adjusted profit/(loss) for the year
after taxation 142 (762)
----------------- ---------------
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 40,397,188
Diluted weighted average number of
Ordinary shares of 1p each 50,004,002 40,397,188
Basic loss per share (2.19p) (6.20p)
Diluted loss per share (2.19p) (6.20p)
Adjust for effects of:
Exceptional costs 2.10p 3.87p
Share based payments 0.37p 0.45p
Adjusted basic earnings/(loss) per
share 0.28p (1.89p)
Adjusted diluted earnings/(loss)
per share 0.28p (1.89p)
10 INTANGIBLE ASSETS
Goodwill Intellectual Customer Development Software Total
property relationships costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
COST
As at 1 April 2018 10,417 1,920 100 10,621 1,875 24,933
Additions - Internal
developments - - - 2,844 144 2,988
Additions - External
purchases - - - 569 14 583
----------- ------------- ---------------- -------------- --------- --------
As at 31 March 2019 10,417 1,920 100 14,034 2,033 28,504
Reclassification
of right of use
assets(1) - - - - (153) (153)
Additions - Internal
developments - - - 2,763 - 2,763
Additions - External
purchases - - - 393 23 416
As at 31 March 2020 10,417 1,920 100 17,190 1,903 31,530
----------- ------------- ---------------- -------------- --------- --------
AMORTISATION
As at 1 April 2018 - 1,788 56 3,101 528 5,473
Charge for
year - 61 33 1,531 241 1,866
----------- ------------- ---------------- -------------- --------- --------
As at 31 March 2019 - 1,849 89 4,632 769 7,339
Charge for
year - 61 11 1,847 275 2,194
As at 31 March 2020 - 1,910 100 6,479 1,044 9,533
----------- ------------- ---------------- -------------- --------- --------
NET BOOK AMOUNT
As at 31 March 2020 10,417 10 - 10,711 859 21,997
----------- ------------- ---------------- -------------- --------- --------
As at 31 March 2019 10,417 71 11 9,402 1,264 21,165
----------- ------------- ---------------- -------------- --------- --------
As at 1 April 2018 10,417 132 44 7,520 1,347 19,460
----------- ------------- ---------------- -------------- --------- --------
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 revised
for the impact of Covid-19 for FY-2021 which have been reviewed
and approved by the Board and projections for FY-2022. 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 10% (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.
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 5.7% (terminal growth
rate of 2%)
Or triggered
by:
1. Decrease in net cash generated from operating activities for
FY-2021 and FY-2022 of 24%
Amortisation expenses of GBP2,194,000 (2019: GBP1,866,000) have
been charged to Administrative expenses in the Consolidated Statement
of Comprehensive Income.
(1) Amounts previously recognised as finance lease assets have
been reclassified to right of use assets upon transition to IFRS
16 on 1 April 2019. Refer to note 31 - Leases for further details.
11 SHARE CAPITAL
As at 31 March As at 31 March
2020 2019
No's GBP'000 No's GBP'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
Movement in share capital:
As at As at
31 March 31 March
2019 2018
GBP'000 GBP'000
As at 1 April 2019 500 500
New shares issued - -
As at 31 March 2020 500 500
----------- -----------
The Company currently holds 29,000 Ordinary shares in treasury
representing 0.06% (2019: 0.06%) of the Company's issued share
capital. The number of 1 penny 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 As at 31
March 2020 March 2019
GBP'000 GBP'000
Loss before
tax (1,705) (3,563)
Depreciation 699 313
Profit on disposal of fixed
assets - (106)
Net bank and other
interest 406 223
Amortisation of intangible
assets 2,194 1,866
Exchange movement (7) -
Share based payments 185 181
------------ ------------
Operating cash flows before movement
in working capital 1,772 (1,086)
Movement in inventories 693 (180)
Movement in trade and other
receivables 589 1,732
Movement in trade and other
payables (21) (3,214)
Movement in provisions 42 1
------------ ------------
Cash generated from
operations 3,075 (2,747)
Interest
received 12 10
Income taxes received 1,028 985
------------
Net cash inflow/ (outflow) from
operating activities 4,115 (1,752)
------------ ------------
13 CHANGES IN ACCOUNTING POLICIES
The following tables set out the reconciliation from operating
lease commitments disclosed in the 2019 Consolidated Financial
Statements and the financial impact of adopting IFRS 16 for
the year ended 31 March 2020:
Reconciliation of lease liabilities
GBP'000
Lease liabilities recognised on adoption of
IFRS 16 2,510
Add: finance leases recognised in borrowings as
at 31 March 2019 626
--------
Lease liabilities as at 1 April
2019 3,136
Lease additions 342
Payments of lease liabilities (630)
Lease terminated (30)
Interest expense on lease liabilities 59
Interest paid on lease liabilities (59)
Lease liabilities as at 31 March
2020 2,818
--------
Of which:
Current lease liabilities 656
Non-current lease liabilities 2,162
--------
2,818
--------
Reconciliation of right of use
assets
Right of use assets recognised on adoption
of IFRS 16 2,510
Add: net book value of assets relating to finance leases
recognised in PP&E and Intangible assets as at 31 March
2019 739
Right of use assets as at 1 April
2019 3,249
--------
Lease additions 342
Leases terminated (37)
Depreciation of right of use assets (550)
Foreign exchange -
Right of use assets as at 31 March 2020 3,004
--------
Of which:
Real estate and other 2,560
Motor Vehicles 444
--------
3,004
--------
Upon adoption of IFRS 16 at 1 April 2019, there was an increase
in both deferred tax assets and deferred tax liabilities of
GBP477,000.
For the year ended 31 March 2020, expenses related to short-term
leases and low-value leases of GBP80,000 were recognised in
the Consolidated Statement of Comprehensive Income.
The Group's Consolidated Statement of Comprehensive Income
for the year ended 31 March 2020 includes a net expense of
GBP33,000 as a result of adopting IFRS 16. Total cash outflow
of IFRS 16 lease liabilities including interest for the year
ended 31 March 2020 was GBP689,000.
14 POST BALANCE SHEET EVENTS
The Group recently entered into Amendment and Restatement Agreements
with HSBC that extended the term of the facilities to 30 September
2021, deferred all scheduled capital repayments from June 2020,
with these recommencing in April 2021 and amended the covenants.
The Group also recently entered into an Amendment and Restatement
Agreement with MEIF EM Debt LP that deferred the commencement
date of capital repayments to 30 June 2021 and amended the covenants
in line with the agreement with HSBC.
All other terms of the facilities remained unchanged.
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.
END
FR KKCBNKBKBNAB
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June 30, 2020 02:00 ET (06:00 GMT)
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