TIDMTRAK
RNS Number : 7132E
Trakm8 Holdings PLC
08 July 2019
8 July 2019
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 2019 (FY-2019).
FINANCIAL SUMMARY:
FY-2019 FY-2018 Change
Restated(4)
Group revenue GBP19.1m GBP29.4m -35%
---------- ------------- -------
of which, Solutions revenue GBP19.1m GBP26.1m -27%
---------- ------------- -------
of which, Recurring revenue(1) GBP10.1m GBP10.8m -7%
---------- ------------- -------
(Loss)/ Profit before tax (GBP3.6m) GBP0.5m n/a
---------- ------------- -------
Adjusted (loss)/ profit before (GBP1.5m) GBP2.1m n/a
tax(2)
---------- ------------- -------
(Loss)/ profit after tax (GBP2.5m) GBP1.0m n/a
---------- ------------- -------
Net Cash generated from operations (GBP1.8m) GBP4.7m n/a
---------- ------------- -------
Net debt(3) GBP5.6m GBP3.3m +70%
---------- ------------- -------
Basic (loss)/ earnings per
share (6.20p) 2.72p n/a
---------- ------------- -------
Adjusted basic (loss)/ earnings
per share(2) (1.89p) 6.51p 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
(4) Restatement due to adoption of IFRS15, details provided in
note 13
OPERATIONAL HIGHLIGHTS
-- Sales related challenges and contract delays significantly impacted revenue in the year
-- Implemented further reduction of annualised operating costs by GBP2.0m, including the final consolidation of Roadsense and Routemonkey, with savings reinvested into sales and marketing.
-- Re-structured Fleet Management sales team including
recruiting new management with dedicated Direct and Channel
teams.
-- Production launch of new insurance self-fit hardware product.
-- Over 243,000 connected units in operation (FY-2018: 251,000).
-- New contract wins with LexisNexis and Ingenie, with launch
inventory for both supplied in quarter 4.
-- R&D spend down 10%, however still GBP4.3m invested.
OUTLOOK
-- 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 expected to impact
strongly the second half of the new financial year.
-- The AA Smart Breakdown launch is expected to provide a lift
to revenues in the second half of the financial year.
-- Fleet sales team's performance is continuing to improve,
securing a higher value of contracts than the corresponding period
last year with this momentum expected to continue.
-- Early months in current financial year confirm realisation of the GBP2.0m cost savings.
-- Given the disappointment of last year, we are being prudent
with our outlook, with market expectations of a relatively modest
recovery (low double digit growth) in revenues with small adjusted
profitability.
- 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 / María Gómez www.arden-partners.com
de Olea
Notes to Editors
Trakm8 is a UK-based technology leader in fleet management,
insurance telematics, connected car, and optimisation. Through
IP-owned technology, the Group analyses data collected by its
installed base of telematics units to fine tune the algorithms that
are used to produce its solutions; these monitor driver behaviour,
identify crash events and monitor vehicle health to provide
actionable insights to continuously improve the security and
operational efficiency of both company fleets and private
drivers.
The Group's product portfolio includes the latest data and
reporting portal (Trakm8 Insight), integrated telematics/cameras,
self-installed telematics units and one of the widest ranges of
installed telematics devices. Trakm8 has over 240,000
connections.
Headquartered in Coleshill near Birmingham alongside its
manufacturing facility, the Group supplies to the Fleet,
Optimisation, Insurance and Automotive sectors to many well-known
customers in the UK and internationally including the AA, Saint
Gobain, EON, Iceland Foods, Direct Line Group and Young
Marmalade.
Trakm8 has been listed on the AIM market of the London Stock
Exchange since 2005.
www.trakm8.com / @Trakm8
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
EXECUTIVE CHAIRMAN'S STATEMENT
Results
FY-2019 was a disappointing year in terms of financial results.
We failed to meet our revenue, profit and cash generation
expectations due to a number of sales related events. Our largest
customer had a significant reduction in market share in the young
driver insurance market reducing revenues and installed base. We
had expected reductions due to lower prices at the customer when
the contract had been renewed early in the year but this only
compounded the loss of the reduced volume. We had expected that
volume from new insurances customers would have made a material
difference to the second half of the financial year, but delays in
their programmes significantly hit our revenues. The delays in
programme launch of the connected car proposition by breakdown
companies was unexpected and substantially impacted revenues
particularly in the second half. The Fleet Management sales team
simply failed to win enough business to meet our expectations.
Political and economic uncertainty certainly played their part, and
the effect of US sanctions on Iran impacted a multi-million-pound
contract for the supply of Insurance solutions into Iran. Change
was needed and the replacement with new resources started to make a
significant difference in the final quarter of the year but it was
too little, too late.
The revenues of the business fell by 35% and the Group posted an
adjusted loss before tax of GBP1.5m. Connections fell by 3% to
243,000. The total fleet management connections increased by 4%
over the year to 76,000 (FY-2018: 73,000). Telematics for
insurance/automotive connections for the reasons explained above
reduced. At the year-end we had 167,000 insurance/automotive
connections (FY-2018: 178,000), which is a
reduction of 6%. Recurring service revenues reduced by 7% to GBP10.1m (FY-2018: GBP10.8 m).
However, FY-2019 was a year of excellent progress in many
internally focussed activities. The Group continued to focus on
operations, fully consolidating the acquisitions from earlier years
of Roadsense and Routemonkey. Engineering solutions improved
considerably, maintaining the market leading technology we have.
Efficiency improvements in many aspects of our operations reduced
direct and indirect costs. During the year we secured the services
of a number of highly talented and experienced sales staff for our
Fleet Management sales team, and as the year progressed their
contribution started to make a difference.
The investment in engineering resources, whilst some GBP0.5m
less than the previous year, has continued to deliver
market-leading software and hardware solutions. Trakm8's Insight
platform provides superb customer experience and data, enabling
vehicle operators to significantly improve operational efficiencies
and reduction in risk. The RoadHawk 600 integrated telematics and
camera product is the first in the UK using 4G technology and has
been implemented by large and small enterprises. A technical
challenge with the product lead us to implement a product update
and replacement in the field of a large number of units, which
addressed the field issue and has enabled EU deployment. Presently,
almost 5,000 units are deployed. A further generation of the
self-fit telematics devices has been introduced.
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 announced contracts with two additional
insurance companies.
Research and development ('R&D')
Trakm8 has maintained a significant level of investment in
R&D although slightly 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 resolve problems
more easily than our competitors.
The R&D investment has concentrated on building out the
latest self-fit device, the improved camera, algorithms for crash
and risk, Advanced Driver-Assistance Systems (ADAS) and
optimisation, and the capability of the Insight platform to provide
best-in-class data analytics. As identified in previous years, the
requirement to do more for less cost remains a key strategy as this
widens the opportunity to expand the rate of growth as the ROI for
our customers improves.
Governance
Of the two widely recognised formal corporate governance codes,
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. 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.
Dividend
The Group does not propose to recommend a dividend for the year
at the forthcoming AGM. However, the Board will continue to review
its dividend policy in light of future results and investment
requirements.
People
The number of people Trakm8 employs has reduced slightly during
FY-2019 as reductions in operational headcount were partially
offset by increases in our sales and marketing teams. In total our
staff numbers have reduced by 8% over the year.
In a year when the business did not perform to expectations, the
teams had to devote themselves even more diligently to the cause.
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
We continue to drive efficiencies and maintain product
enhancements, and we are aiming to focus on a smaller number of
activities and execute them much better. The bulk of the available
resource and energy is focused on marketing and selling.
Our Fleet sales team's performance is continuing to improve,
securing a higher value of contracts than the corresponding period
last year with this momentum expected to continue. This and the new
contract awards from two further insurance companies is expected to
deliver growth in the first half of this financial year compared to
the first half last year.
The AA Smart Breakdown launch and the two major new insurance
contract wins are expected to provide a lift to revenues in the
second half of the financial year. As many Fleet deals take some
time to deploy the good recent progress in contract wins will
impact the second half more than the first half, so this too makes
the expected trading performance of the group to be more
significantly second half loaded than ideal.
Trading to date confirm the realisation of operational and
efficiency cost savings of GBP2.0m that were actioned in the prior
financial year.
Given the disappointing failure to predict the outcome last
year, it is prudent to be tempered in our outlook but current
market expectations are for a relatively modest recovery (low
double digit growth) in our revenues and very modest adjusted
profitability for the financial year as a whole. The Board is
confident that this will be achieved.
John Watkins
EXECUTIVE CHAIRMAN
5 July 2019
FINANCIAL REVIEW
TRADING RESULTS
2019 2018 Change
Restated(2)
Group Revenue (GBP'000) 19,145 29,361 -35%
--------- ------------- -------
of which, Solutions Revenue
(GBP'000) 19,145 26,088 -27%
--------- ------------- -------
of which, Recurring Revenue
(GBP'000) 10,087 10,826 -7%
--------- ------------- -------
(Loss)/ Profit before tax
(GBP'000) (3,563) 453 n/a
--------- ------------- -------
Adjusted (Loss)/ Profit
before tax(1) (GBP'000) (1,452) 2,074 n/a
--------- ------------- -------
Basic (loss)/ earnings per
share (p) (6.20) 2.72 n/a
--------- ------------- -------
Adjusted basic (loss)/ earnings
per share (p) (1.89) 6.51 n/a
--------- ------------- -------
(1) Before exceptional costs and share based payments
(2) Restatement due to adoption of IFRS15, details provided in
note 13
Revenue
Group revenue decreased by 35% to GBP19.1m (FY-2018: GBP29.4m),
this was due to Product revenues which decreased from GBP3.3m to
GBPnil following the planned exit from CEM activities. All
sub-contract electronic manufacturing activities had ceased by end
of 2018 financial year. Additionally Solutions revenue reduced by
27% to GBP19.1m (FY-2018: GBP26.1m) due to a significant reduction
in market share in the young driver market at our largest customer,
delays from new insurance customers and delays in the launch of the
connected car proposition by breakdown companies. Additionally new
business sales in the Fleet Management part of our business failed
to meet our expectations. Recurring revenue generated from service
and maintenance fees decreased by 7% to GBP10.1m (FY-2018:
GBP10.8m) due to the reduction in Connections and lower prices in
our largest customer contract.
(Loss)/ Profit before tax
The Group reported a loss before tax of GBP3.6m (FY-2018: Profit
GBP0.5m). This deterioration in profitability was due to the
decline in revenue, which was delivered at slightly improved gross
margins (due to change in mix) resulting in a GBP3.9m decline in
gross profit. Additionally other income decreased by GBP0.1m,
non-recurring exceptional costs increased by GBP0.5m (as detailed
below) and GBP0.4m increase in depreciation and amortisation,
primarily from capitalised development costs, reflecting the
significant investment undertaken by the group in earlier years.
These were offset by other overheads decreasing by GBP0.9m which
reflects the cost saving initiatives we have put in place.
Adjusted (Loss)/ Profit before tax
The disappointing trading performance resulted in adjusted
profit before tax decreasing to a loss of GBP1.5m (FY-2018: Profit
GBP2.1m). The GBP3.9m reduction in gross profit converted into
adjusted profit before tax, with administrative costs excluding
exceptional costs, depreciation and amortisation down GBP0.8m on
prior year offset by GBP0.4m increase in depreciation and
amortisation and a GBP0.1m reduction in other income. During the
year the company has increased its investment in sales and
marketing with headcount increasing by 7%, however overall costs
remained flat due to a reduction in commission due to the poor
performance. Overhead savings resulted from reduction in expensed
R&D spend of GBP0.5m and a reduction in other overheads of
GBP0.3m as a result on ongoing efficiency savings.
Exceptional Costs
Exceptional costs total GBP1.9m (FY-2018: GBP1.4m) include
integration and restructuring costs relating to prior year
acquisitions and additional costs relating to the acquisition of
Roadsense Technology Limited. Additionally, significant product
component refit costs were incurred on a recently launched product,
these issues have been fixed by year end. The Group also rolled out
an enhanced hardware product to two existing customers following a
product upgrade to drive increases in market opportunity. Also, the
Group provided for the cost of work and solutions supplied in the
prior year under a contract to supply insurance solutions to
Iran.
Balance Sheet
2019 2018
Restated(1)
GBP'000 GBP'000
-------- -------------
Non-Current Assets 22,736 21,534
-------- -------------
Net Current Assets 5,765 6,159
-------- -------------
Non-Current Liabilities 6,407 6,313
-------- -------------
Net Assets 22,094 21,380
-------- -------------
(1) Restatement due to adoption of IFRS15, details provided in
note 13
Net Assets increased by GBP0.7m to GBP22.1m (FY-2018: GBP21.4m)
reflecting the GBP3.0m subscription during the financial year,
offset by the loss for the year.
Non-current assets increased by GBP1.2m to GBP22.7m (FY-2018:
GBP21.5m). This is due to the continued investment in development
in both software and hardware with capitalised development costs in
the year totaling GBP3.4m (FY-2018: GBP3.4m), offset by a GBP0.4m
increase in amortisation to GBP1.5m (FY-2018: GBP1.1m). The balance
of the movement relates to the sale of the freehold property,
reduction in the receivable due on assets leased out and
amortisation of other intangible assets.
Cash Flow
2019 2018
Restated(2)
GBP'000 GBP'000
--------------------------------- -------------------------------
Net Cash generated from
operations (1,752) 4,735
--------------------------------- -------------------------------
Investing activities (3,179) (3,716)
--------------------------------- -------------------------------
Free Cash Flow(1) (4,931) 1,019
--------------------------------- -------------------------------
Financing activities 2,664 463
--------------------------------- -------------------------------
Change in Cash in Year (2,267) 1,482
--------------------------------- -------------------------------
Net Debt(3) 5,629 3,300
--------------------------------- -------------------------------
(1) Cash generated from operating activities less cash used in
investing activities (excluding cashflows related to
acquisitions)
(2) Restatement due to adoption of IFRS15, details provided in
note 13
(3) Total borrowings less cash and cash equivalents
Cash from operating activities decreased in the year to an
outflow of GBP1.8m (FY-2018: GBP4.7m inflow), which included
R&D tax credit cash receipts of GBP1.0m (FY-2018: GBP1.6m). The
R&D tax credit cash receipt reflects the Group's investment in
development. The operational cash outflow is reflective of the
reported loss and change in working capital.
Free cash outflow of GBP4.9m (FY-2018: inflow GBP1.0m) is due to
the decline in trading, with cash outflows from investing
activities reducing by GBP0.5m to GBP3.2m (FY-2018: GBP3.7m).
Reduction in cash outflow from investing activities was due to the
sale and leaseback of the Shaftesbury property that was completed
in February 2019.
Financing activities generated GBP2.7m (FY-2018: GBP0.5m) due to
the subscription in December which raised approximately GBP3.0m
(net of expenses) to fund general working capital requirements and
further strengthen the Group's balance sheet, which was offset by
debt repayments of GBP0.4m.
Net Debt
Net debt increased by GBP2.3m to GBP5.6m (FY-2018: GBP3.3m).
Cash balances total GBP1.2m (FY-2018: GBP3.5m) and total borrowings
GBP6.8m (FY-2018: GBP6.8m) of which GBP1.8m (FY-2018: GBP2.8m) was
a term loan with HSBC, GBP4.4m (FY-2018: GBP3.4m) were amounts
drawn under our GBP5m revolving credit facility with HSBC and
GBP0.6m (FY-2018: GBP0.5m) were obligations under finance
leases.
Consolidated Statement of Comprehensive Income For The Year Ended
31 March 2019
Note Year ended Year ended
31 March 31 March
2019 2018
Restated*
GBP'000 GBP'000
REVENUE 4 19,145 29,361
Cost of sales (8,890) (15,232)
---------------------- --------------------------
Gross profit 10,255 14,129
Other income 5 436 566
Administrative expenses excluding exceptional
costs (12,101) (12,681)
Exceptional administrative costs 7 (1,930) (1,405)
---------------------- --------------------------
Total administrative costs (14,031) (14,086)
OPERATING (LOSS)/PROFIT 6 (3,340) 609
Finance income 10 33
Finance costs 8 (233) (189)
---------------------- --------------------------
(LOSS)/PROFIT BEFORE TAXATION (3,563) 453
Income tax 1,057 520
(LOSS)/PROFIT FOR THE YEAR (2,506) 973
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified
to profit or loss:
Exchange differences on translation of
foreign operations (5) 9
---------------------- --------------------------
TOTAL OTHER COMPREHENSIVE INCOME (5) 9
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR
THE YEAR ATTRIBUTABLE TO OWNERS OF THE
PARENT (2,511) 982
---------------------- --------------------------
ADJUSTED (LOSS)/PROFIT BEFORE TAX 6 (1,452) 2,074
(Loss)/Profit before taxation (3,563) 453
Exceptional administrative costs 1,930 1,405
IFRS2 Share based payments charge 181 216
---------------------- --------------------------
EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE
TO OWNERS OF THE PARENT
Basic 9 (6.20p) 2.72p
Diluted 9 (6.02p) 2.68p
The results relate to continuing operations.
* See note 13 for details regarding the restatement as a result
of changes in accounting policies.
Consolidated Statement of Changes in Equity For The Year Ended
31 March 2019
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 2017
as previously
reported 357 11,674 1,138 199 (4) 6,866 20,230
Change in
accounting
policy 13 - - - - - (164) (164)
Restated
balance
as at 1 April
2017 357 11,674 1,138 199 (4) 6,702 20,066
--------- ------------- ---------- ----------------- ------------ ------------ ----------
Comprehensive
income
Profit for the
year
(restated*) 13 - - - - - 973 973
Other comprehensive
income
Exchange
differences
on
translation
of overseas
operations - - - 9 - - 9
Total comprehensive
income - - - 9 - 973 982
--------- ------------- ---------- ----------------- ------------ ------------ ----------
Transactions with
owners
Shares issued 2 76 - - - - 78
IFRS2
Share-based
payments
charge - - - - - 216 216
Tax recognised
directly in
equity
(Note 11) - - - - - 38 38
Transactions with
owners 2 76 - - - 254 332
--------- ------------- ---------- ----------------- ------------ ------------ ----------
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
loss - - - (5) - (2,506) (2,511)
--------- ------------- ---------- ----------------- ------------ ------------ ----------
Transactions with
owners
Issue of share
capital 141 2,941 - - - - 3,082
IFRS2 Share
based
payments
charge - - - - - 181 181
Tax recognised
directly in
equity - - - - - (38) (38)
Transactions
with owners 141 2,941 - - - 143 3,225
--------- ------------- ---------- ----------------- ------------ ------------ ----------
Balance as at 31
March
2019 500 14,691 1,138 203 (4) 5,566 22,094
--------- ------------- ---------- ----------------- ------------ ------------ ----------
* See note 13 for details regarding the restatement as a result
of changes in accounting policies.
Consolidated Statement of Financial Position As At 31 March 2019
Note As at 31 March As at 31 March
2019 2018
Restated*
ASSETS GBP'000 GBP'000
NON CURRENT ASSETS
Intangible assets 10 21,165 19,460
Property, plant and equipment 1,432 1,756
Amounts receivable under finance
leases 139 318
22,736 21,534
--------------------- --------------------
CURRENT ASSETS
Inventories 2,736 2,556
Trade and other receivables 8,345 9,926
Corporation tax receivable 1,050 1,001
Cash and cash equivalents 1,205 3,472
13,336 16,955
--------------------- --------------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (6,307) (9,598)
Borrowings (1,237) (1,151)
Provisions (27) (47)
(7,571) (10,796)
--------------------- --------------------
CURRENT ASSETS LESS CURRENT LIABILITIES 5,765 6,159
TOTAL ASSETS LESS CURRENT LIABILITIES 28,501 27,693
NON CURRENT LIABILITIES
Trade and other payables (607) (525)
Borrowings (5,597) (5,621)
Provisions (115) (94)
Deferred income tax liability (88) (73)
(6,407) (6,313)
--------------------- --------------------
NET ASSETS 22,094 21,380
--------------------- --------------------
EQUITY
Share capital 11 500 359
Share premium 14,691 11,750
Merger reserve 1,138 1,138
Translation reserve 203 208
Treasury reserve (4) (4)
Retained earnings 5,566 7,929
TOTAL EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT 22,094 21,380
--------------------- --------------------
Consolidated Statement of Cash-Flows For The Year Ended 31 March
2019
Note Year ended Year ended
31 March 31 March
2019 2018
Restated*
GBP'000 GBP'000
NET CASH GENERATED FROM OPERATING ACTIVITIES 12 (1,752) 4,735
------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (103) (91)
Purchases of software (158) (236)
Proceeds from sale of property 495 -
Capitalised development costs (3,413) (3,389)
NET CASH USED IN INVESTING ACTIVITIES (3,179) (3,716)
------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares 3,082 78
Increase in bank loan 2,000 2,600
Repayment of bank loans (2,026) (1,880)
Repayment of obligations under hire purchase
agreements (187) (146)
Interest paid (205) (189)
NET CASH GENERATED FROM FINANCING ACTIVITIES 2,664 463
------------------- ---------------------
NET INCREASE / (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,267) 1,482
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 3,472 1,990
CASH AND CASH EQUIVALENTS AT OF YEAR 1,205 3,472
------------------- ---------------------
* See note 13 for details regarding the restatement as a result
of changes in accounting policies.
Notes To The Consolidated Financial Statements
--------------------------------------------------------------------------------------------------------------
1 GENERAL INFORMATION
Trakm8 Holdings PLC ("Company") and its subsidiaries (together
the "Group") manufacture, distribute and sell telematics devices
and services.
Trakm8 Holdings PLC is a public limited company incorporated
in the United Kingdom (registration number 05452547). The
Company is domiciled in the United Kingdom and its registered
office address is 4 Roman Park, Roman Way, Coleshill, West
Midlands, B46 1HG. The Company's Ordinary shares are traded
on the AIM market of the London Stock Exchange. The Company
is registered in England and is limited by shares.
The Group's principal activity is the development, manufacture,
marketing and distribution of vehicle telematics equipment
and services. The Company's principal activity is to act as
a holding company for its subsidiaries.
The condensed consolidated financial statements are presented
in Sterling and all values are rounded to the nearest thousand
(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 2019 and
audited information for the year ended 31 March 2018 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 2019 which will be delivered to the Registrar
of Companies in due course. Statutory financial statements
for the year ended 31 March 2018 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 2019 and 2018 respectively on these financial statements
were unqualified and did not include a statement under section
498 of the Companies Act 2006.
These financial statements are presented on a going concern
basis. 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
on a monthly basis. These projections are updated on a regular
basis and progress against the projections is closely monitored
by the Board and the finance team. The projections include
assessments against the covenants agreed with our bank. On
27 June 2019 the Group entered into an Amendment and Restatement
Agreement with HSBC that amended the covenants on both the
term loan and revolving credit facility, following the waiver
of existing covenants during the year. The recently agreed
covenants relate to cashflow cover, EBITDA and leverage. At
the year end the Group had cash balances of GBP1,205,000 and
undrawn revolving credit facilities of GBP650,000 at 31 March
2019. The 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 we would still have cash reserves in all these scenarios
and would meet our covenants. This sensitivity analysis showed
that if either a 32% reduction in Adjusted EBITDA, or a 50%
reduction in net cashflow from operating activities for the
full financial year 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.
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)
and Hardware as Discrete Devices (Products) as part of their
internal reporting. Products is the sale of Contract Electronic
Manufacturing services (now ceased) and other third party hardware
only supply. Solutions represents the sale of the Group's full
vehicle telematics and optimisation services, engineering services,
professional services and mapping solutions to customers.
A breakdown of revenues within these streams
are as follows:
Year ended Year ended
31 March 31 March
2019 2018
Restated
GBP'000 GBP'000
Solutions 19,145 26,088
Products - 3,273
19,145 29,361
----------- ------------------------------
A geographical analysis of revenue by destination
is as follows:
Year ended 31 March Year ended 31 March
2019 2018
----------------------------------------- -----------------------------------------------
Solutions Products Total Solutions Products Total
Restated Restated Restated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
United
Kingdom 18,910 - 18,910 25,764 3,068 28,832
North
America 12 - 12 56 - 56
Norway 4 - 4 58 - 58
Rest of
Europe 111 - 111 73 197 270
Rest of
World 108 - 108 137 8 145
19,145 - 19,145 26,088 3,273 29,361
--------------- --------- ------------- --------------- -------------- --------------
OTHER
5 INCOME
Year ended Year
31 March ended
2019 31 March
2018
GBP'000 GBP'000
Grant
income 449 531
R&D tax
credit 5 35
R&D tax credit adjustment in (18) -
respect of prior periods
436 566
-------------- --------------
6 OPERATING LOSS/ PROFIT
The following items have been included in arriving at operating
loss/ profit:
Year ended Year ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Depreciation
- owned fixed assets 242 261
- assets on hire purchase 71 60
Amortisation of intangible assets
(see note 10) 1,866 1,484
Operating lease rentals
- Land and buildings 208 159
- Other 183 263
Research and development
expenditure 933 1,485
(Gain)/Loss on foreign exchange transactions (3) (59)
Staff costs 6,533 7,936
(Profit)/Loss on disposal of property
plant & equipment (106) 26
Exceptional administrative
costs 1,930 1,405
Auditors' remuneration
- Fees payable to the Company's auditors for
the audit of the parent company
and consolidated financial statements 93 103
Fees payable to the Company's auditors
for other services:
- Share based payments advisory
services - 8
Adjusted loss/ profit before tax is monitored by the
Board and measured as follows:
Year ended Year ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Restated
(Loss)/ profit before tax (3,563) 453
Exceptional administrative
costs (note 7) 1,930 1,405
Share based payments 181 216
Adjusted (loss)/profit before
tax (1,452) 2,074
--------------------- ---------------------
7 EXCEPTIONAL ADMINISTRATIVE
COSTS
Year ended Year ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Acquisition costs 102 256
Integration & restructuring
costs 707 501
Head office relocation - 238
Contract manufacturing closure
costs - 410
New product component refit 453 -
costs
Exceptional communication 375 -
correction costs
Iranian bad debt 293 -
1,930 1,405
------------------- -------------------
The acquisition costs incurred in 2019 and 2018 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 terminates on
31 July 2019, and the second agreement terminated on 31 March 2019.
The Company 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
the activities of Route Monkey Limited, Roadsense Limited and DCS Systems 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.
- Head Office relocation costs in the prior year are non-underlying costs incurred in moving
the Head Office and associated administrative functions from Shaftesbury to the West Midlands.
- Contract manufacturing closure costs in the prior year relate to residual inventory costs
and contract exit costs following cessation of manufacturing contracts with third parties.
The Company has also incurred the following exceptional in the current financial year:
- In the current year product component refit costs incurred relate to significant component
and software issues that arose during the financial year on a recently launched product. These
issues have been fixed by year-end. However significant re-visit and material costs have been
incurred as a result of the project to remedy these issues. No customers have been lost as
a result of these issues.
- In the current year communication correction costs incurred relate to an intermittent fault
uncovered with one of our communication elements during our joint extended testing. This resulted
in a reduction in signal strength as the component searched for the supplier's network signal,
rather than the strongest signal available. This affected two customers. We upgraded the product
with an alternative which now provides much enhanced roaming capability across Europe. The
enhanced signal will also enable us to deliver a wider range of products. The customers have
subsequently ordered further devices from the Group.
- In the current 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 previous financial year have been provided for.
8 FINANCE COSTS
Year ended Year ended
31 March 31 March
2019 2018
GBP'000 GBP'000
Interest on bank loans 172 147
Amortisation of debt issue costs 28 13
Interest on Hire Purchase and similar agreements 33 29
233 189
------------------------- -------------------------
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 31 March
2019 2018
Restated
GBP'000 GBP'000
(Loss)/Profit for the year after
taxation (2,506) 973
Exceptional administrative costs 1,930 1,405
Share based payments 181 216
Tax effect of adjustments (367) (267)
Adjusted (loss)/profit for the year
after taxation (762) 2,327
---------------------------- ----------------------------
No. No.
Number of Ordinary shares of 1p each
at 31 March 50,004,002 35,898,254
Basic weighted average number of Ordinary
shares of 1p each 40,397,188 35,740,877
Diluted weighted average number of Ordinary
shares of 1p each 41,629,797 36,297,287
Basic (loss)/earnings per share (6.20p) 2.72p
Diluted (loss)/earnings per share (6.02p) 2.68p
Adjust for effects of:
Exceptional costs 3.87p 3.18p
Share based payments 0.45p 0.60p
Adjusted basic (loss)/earnings per
share (1.89p) 6.51p
Adjusted diluted (loss)/earnings
per share (1.83p) 6.41p
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
2017 10,417 1,920 100 7,234 1,426 21,097
Additions -
Internal
developments - - - 2,707 117 2,824
Additions -
External
purchases - - - 680 332 1,012
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
As at 31 March
2018 10,417 1,920 100 10,621 1,875 24,933
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
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
AMORTISATION
As at 1 April
2017 - 1,671 22 1,978 318 3,989
Charge for
year - 117 34 1,123 210 1,484
Amortisation - - - - - -
on
disposals
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
As at 31 March
2018 - 1,788 56 3,101 528 5,473
Charge for
year - 61 33 1,531 241 1,866
Amortisation - - - - - -
on
disposals
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
As at 31 March
2019 - 1,849 89 4,632 769 7,339
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
NET BOOK
AMOUNT
As at 31 March
2019 10,417 71 11 9,402 1,264 21,165
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
As at 31 March
2018 10,417 132 44 7,520 1,347 19,460
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
As at 1 April
2017 10,417 249 78 5,256 1,108 17,108
--------------------- ----------------- ----------------- -------------------- ----------------- --------------
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 2019/20 which have been reviewed and approved by the Board.
Forecasts for the subsequent 4 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 a sensitivity analysis has been undertaken and
indicates that an impairment will be triggered by making the
following combined changes to the assumptions:
1. Decrease in annual growth rates to 6.5% per annum for five
years (terminal growth rate of 2%)
2. Increase in the discount rate to 11%
3. Decrease in 2020 free cash
flow of 50%
Amortisation expenses of GBP1,866,000 (2018: GBP1,484,000)
have been charged to Administrative expenses in the Consolidated
Statement of Comprehensive Income.
11 SHARE CAPITAL
As at 31 March As at 31 March
2019 2018
No's GBP'000 No's GBP'000
Authorised: '000's '000's
Ordinary shares of 1p each 200,000 200,000 200,000 200,000
Allotted, issued and fully
paid:
Ordinary shares of 1p each 50,004 500 35,898 359
Movement in share capital:
As at As at
31 March 31 March
2019 2018
GBP'000 GBP'000
As at 1 April 359 357
New shares issued 141 2
As at 31 March 500 359
-------------------- -------------------
The Company currently holds 29,000 Ordinary shares in treasury
representing 0.06% (2018: 0.08%) of the Company's issued share
capital. The number of 1 pence Ordinary shares that the Company
has in issue less the total number of Treasury shares is 49,975,002.
During the year the following shares were issued:
Date Description Shares Share Premium
Capital
No's
'000's GBP'000 GBP'000
Exercise of options over Ordinary
04/08/2018 Shares by an employee 175 2 49
06/12/2018 Subscription of Ordinary Shares 13,931 139 2,892
14,106 141 2,941
------------------ -------------------- -------------------
The weighted average price for share options exercised
during the year was 29.1p.
12 NET CASH GENERATED FROM
OPERATIONS
As at 31 As at 31
March 2019 March 2018
Restated
GBP'000 GBP'000
(Loss)/Profit before
tax (3,563) 453
Depreciation 313 321
(Profit)/Loss on disposal
of fixed assets (106) 26
Net bank and other
interest 223 156
Amortisation of intangible
assets 1,866 1,484
Share based payments 181 216
---------------------- ---------------------
Operating cash flows before movement
in working capital (1,086) 2,656
Movement in inventories (180) 1,118
Movement in trade and other
receivables 1,732 (4,614)
Movement in trade and other
payables (3,214) 3,957
Movement in provisions 1 (21)
---------------------- ---------------------
Cash generated from
operations (2,747) 3,096
Interest
received 10 33
Income taxes received 985 1,606
----------------------
Net cash (outflow)/inflow from operating
activities (1,752) 4,735
---------------------- ---------------------
13 CHANGES IN ACCOUNTING POLICIES
This note explains the impact of the adoption of IFRS15 Revenue
from Contracts with Customers on the group's financial statements
and also discloses the new accounting policies that have been
applied from 1 April 2018, where they are different to those
in prior period.
Impact on the financial statements:
As a result of the changes in the entity's accounting policies,
prior year financial statements had to be restated. As explained
in note 4 above, IFRS 15 was adopted with restated comparative
information.
The following table shows the adjustments recognised for each
of the individual line item. Line items that were not affected
by the changes have not been included. As a result, the sub-totals
and the totals disclosed cannot be recalculated from the numbers
provided. The adjustments are explained in more detail below.
The group has adopted IFRS 15 Revenue from Contracts with Customers
from 1 April 2018 which resulted in changes in accounting policies
and adjustments to the amounts recognised in the financial
statements. In accordance with the transition provision in
IFRS 15, the group has adopted the new rules retrospectively
and has restated comparatives for the 2017 financial year.
In summary, the following adjustments were made to the amounts
recognised in the balance sheet at the date of initial application
(1 April 2018):
The benefit to the results for the twelve months to 31 March
2019 from the prior year restatement following the adoption
of IFRS 15 is not material.
Consolidated Statement of Financial
Position (extract)
Year to Year to
31 March 31 March
2018 2018
Presented IFRS 15 Restated*
GBP'000 GBP'000 GBP'000
---------- -------- -------------
Non-current assets/(liabilities)
Deferred income tax asset/(liability) (229) 156 (73)
Current assets
Trade and other receivables 10,844 (918) 9,926
Current assets less current liabilities 7,077 (918) 6,159
Total assets less current liabilities 28,611 (918) 27,693
Net assets 22,142 (762) 21,380
---------- -------- -------------
Equity
Balance as at 1 April 2017 6,866 (164) 6,702
Balance as at 1 April 2018 8,691 (762) 7,929
Profit for the period ended 31 March
2018 1,571 (598) 973
Total equity attributable to equity
holders of the Parent 22,142 (762) 21,380
---------- -------- -------------
Consolidated Statement of Comprehensive
Income (extract)
Year Year
to to
31 March 31 March
2018 2018
IFRS
Presented 15 Restated*
GBP'000 GBP'000 GBP'000
---------- -------- ----------
Revenue 30,081 (720) 29,361
Gross profit 14,849 (720) 14,129
Operating profit 1,329 (720) 609
Profit before taxation 1,173 (720) 453
Income tax 398 122 520
Profit for the year 1,571 (598) 973
Total comprehensive income for the
year attributable to owners of the
Parent 1,580 (598) 982
Adjusted profit before tax 2,794 (720) 2,074
14 POST BALANCE SHEET EVENTS
As explained in note 3, on the 27 June 2019 the Group entered
into an Amendment and Restatement Agreement with HSBC that amended
the covenants and amended the margin on both the term loan and
revolving credit facility to 4.5% above base rate and LIBOR respectively.
All other terms of the facilities remained unchanged.
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FR CKODKABKDOOK
(END) Dow Jones Newswires
July 08, 2019 02:00 ET (06:00 GMT)
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