Final Results

Trakm8 Holdings PLC

04 July 2023

 

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.

4 July 2023

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 2023 (FY-2023).

FINANCIAL SUMMARY:

	FY-2023	FY-2022
Group revenue	£20.2m	£18.1m
of which, Recurring revenue1	£10.5m	£9.8m
Adjusted Profit before tax2	£0.3m	£0.0m
(Loss) before tax	(£1.2m)	(£0.1m)
(Loss)/Profit after tax	(£0.8m)	£0.2m
Net cash inflow generated from operations	£4.3m	£3.8m
Net debt3	£5.6m	£5.4m
Adjusted basic earnings per share2	0.95p	0.41p
Basic (loss)/earnings per share	(1.57p)	0.37p

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-2023 net debt excludes £1.3m IFRS 16 lease liability.

OPERATIONAL OVERVIEW

·      12% increase in revenues

·      32% increase to over 348,000 connected devices in operation (FY-2022: 264,000)

·      7% increase in recurring revenues to £10.5m (FY-2022: £9.8m)

·      54% increase in software revenues to £2.1m (FY-2022: £1.4m)

·      Substantial contract extensions with Iceland Foods and Sainsburys

·      Significant reduction in indirect costs following strategic review

·      Successfully navigated a large number of supply chain challenges but at an increased cost

·      Continued inflationary costs pressures across all areas of operations

OUTLOOK

·      Insurance expected to be impacted by reinsurance cost and capacity issues in H1

·      H1 revenues expected to be in line with prior year but with lower operating costs

·      The Board expects full year to continue trend of improved performance with strong second half revenues, including from a significant software contract

- Ends -

For further information:

Trakm8 Holdings plc
John Watkins, Executive Chairman	Tel: [phone]
Jon Edwards, Chief Financial Officer	www.trakm8.com
Allenby Capital Limited (Nominated Adviser & Broker)	Tel: [phone]
David Hart/ Vivek Bhardwaj, Corporate Finance Tony Quirke/ Joscelin Pinnington, Sales and Corporate Broking	www.allenbycapital.com

Notes to Editors

Trakm8 is a UK based technology leader in fleet management, insurance telematics, connected car, and optimisation. Through IP owned technology, the Group uses AI data analytics collected from its installed base of telematics units to fine tune the algorithms that are used to produce its solutions; these monitor driver behaviour, identify crash events and monitor vehicle health to provide actionable insights to continuously improve the security and operational efficiency of both company fleets and private drivers.

The Group's product portfolio includes the latest data analytics and reporting portal (Trakm8 Insight), integrated telematics/cameras/optimisation, self-installed telematics units and one of the widest ranges of installed telematics devices. Trakm8 has over 348,000 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 Direct Line Group, Ticker, Howden, Sainsburys, Iceland Foods, AA, EON, GSF, and Saint Gobain.

Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005. Trakm8 is also recognised with the LSE Green Economy Mark.

www.trakm8.com / @Trakm8

EXECUTIVE CHAIRMAN'S STATEMENT

Results

The revenues of the business increased by 12% and posted an adjusted profit before tax of £0.3m (FY-2022: £0.0m). Loss before tax was £1.2m (FY-2022: £0.1m) and Loss after Tax was £0.8m (FY-2022: profit £0.2m). 

In September last year, the Company announced a restructuring to focus on those market and products where we have been most successful. This was largely completed during the year and once complete will reduce our annual cash outflow by over £2.5m, helping to mitigate the effect of inflationary pressures on remaining costs. We reduced our headcount down to 121 which did not impact our rate of order entry overall and resulted in a profitable second half to the year.

Connections grew by 32% to 348,000 (FY-2022: 264,000). Telematics for insurance/automotive connections increased by 45%.  At the year-end, we had 279,000 insurance/automotive connections (FY-2022: 193,000).  The total number of fleet management connections decreased by 3% over the year to 69,000 (FY-2022: 71,000).  Recurring service revenues increased by 7% to £10.5m (FY-2022: £9.8m).

The impact of the war in Ukraine on inflation and COVID induced component shortages have been widely reported. Trakm8 navigated through these, avoiding any missed customer deliveries and managed to develop revised devices to ensure continued supply where necessary. This did however negatively impact direct costs.

It was pleasing to maintain strong cash generation in the business with a cash flow from operations of £4.3m (FY-2022: £3.8m). The Company paid down the final £0.9m of HMRC deferred payments on VAT/PAYE/NI. This resulted in a free cash flow of £0.9m (FY-2022: £0.6m) and net debt, excluding IFRS16 lease liabilities, increased by £0.3m to £5.6m.  The Group had £1.1m cash on hand and an undrawn overdraft facility of £0.5m.

The Group issued unsecured convertible loan notes amounting to £1.58m with a repayment or conversion in September 2025. The Group also extended its loan facilities with HSBC to 31 July 2024 maintaining existing terms.

Overheads excluding exceptional costs increased by 16% to £11.9m with the restructuring and cost saving completed mid way through the year. Headcount reduced by 24% during the year with underlying overall payroll costs 16% lower than at the end of the previous year despite significant salary inflation.

Trakm8 has also made good progress with the process of Science Based Targets with the goal of achieving net zero emissions by 2050.

A good number of contract wins and renewals were secured with both fleet and insurance clients showing our commitment to long term customer relationships.

Research and development ('R&D')

Trakm8 has maintained a significant level of investment in R&D for another year but following a period of significant investment has been able to reduce the amount invested going forward.  The Board believes that this new lower level of investment is necessary and sufficient to retain a portfolio of market-leading technology.  Over time as revenues grow, we expect that this investment as a proportion of revenues will further decline. Trakm8 continues to focus on owning the intellectual property ('IP') we use in our solutions, and we see this as one of our key competitive advantages.  Telematics systems are complex; but because we own all the elements that encompass a solution (with the exception of the mobile networks) we have the ability to understand and resolve problems more easily than our competitors.

The R&D investment has concentrated on the update of all our devices to the most modern and most available components, finalisation of a multi-camera solution, development of the feature set in Insight particularly for our two major optimisation clients, and further development of our Insurance Broker platform.  As identified in previous years, the requirement to do more for less cost remains a key strategy as this widens the opportunity to expand the rate of growth as the return on their investment for our customers improves.

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 for further reducing their carbon footprint.

Trakm8 is also committed to Science Based Target initiative (SBTi) with the objective to reduce our Scope 1 and Scope 2 emissions and reach Net Zero by 2025. All our company cars are now fully electric and we are analysing all our uses of energy to minimise our impact on the environment through further internal projects. We will also work with our supply chain to try to minimise our sourcing from suppliers not committed to reducing their carbon impact.

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.

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-2023 with reductions across the business.  In total, our staff numbers have reduced by 24% over the year.

Trakm8 has an exceptionally talented team and I would like to thank everyone for their hard work, dedication and contribution to the ongoing success of the business.

Outlook

In the trading update in April this year, we advised the market that there had been a significant impact on the insurance market with increased re-insurance costs and some insurance capacity being removed from the market. We expected that this would impact revenues for the first quarter. This has turned out to be correct and we now expect that this will continue to significantly impact the second quarter of the financial year.

We expect that Group revenues in the first half of the year will be broadly in line with last year but with much lower operating costs.

We secured several new Insurance contracts this year and last. The capacity constraints are expected to diminish in the last calendar quarter of 2023 and therefore the Insurance activity is expected to be strong in the second half of the year. As with last year, we expect that trading will be significantly loaded on the second half of the financial year when we also expect to secure a significant software contract. The Board expects that FY2024 will continue the trend of recent years with improving operational and financial results.

John Watkins

EXECUTIVE CHAIRMAN

3 July 2023

FINANCIAL REVIEW

TRADING RESULTS

	2023	2022	Change
Group Revenue (£'000)	20,197	18,111	+12%
of which, Recurring Revenue (£'000)	10,466	9,806	+7%
(Loss) before tax (£'000)	(1,243)	(122)	-919%
(Loss)/Profit after tax (£'000)	(783)	187	-512%
Adjusted Profit before tax1 (£'000)	306	3	+10,100%
Basic (Loss)/earnings per share (p)	(1.57)	0.37	-516%
Adjusted basic earnings per share (p)	0.95	0.41	+137%

¹ Before exceptional costs and share based payments

Revenue

Group revenue increased by 12% to £20.2m (FY-2022: £18.1m) with strong second half revenues of £11.2m versus first half revenues of £9.0m.

Insurance and Automotive revenues grew by 26% to £8.7m (FY-2022: £6.9m) and benefitted from a full year of shipments to new customers launched late last year, driving both increased device sales and associated service and maintenance fees. The latter part of the period saw further contract wins and extensions adding additional customers to increase the diversity and size of our Insurance client base.

Fleet and Optimisation revenues increased to £11.4m (FY-2022: £11.3m) inclusive of £1.9m of software sales (FY-2022: £1.2m) following strong contract extensions in the second half of the period with both Iceland and Sainsburys. This resulted in second half revenues increasing to £6.57m versus £4.83m for the first six months. Recurring revenues remained strong at £7.0m (FY-2022: £6.9m) with slightly higher attrition in device connections being offset by increased service fees per device as we continue to add features and benefits to our solutions to both new and existing customers alike.

Loss before tax

The Group reported a loss before tax of £1.2m (FY2022: £0.1m). Gross margin value for the year, inclusive of exceptional cost of sales, increased to £12.5m (FY-2022: £11.1m) and percentages were slightly increased to 61.8% (FY-2022: 61.3%). The ongoing impact of COVID continued to drive significant cost pressures in material procurement during the first half of the year, including £0.2m of exceptional costs as we maintained continuity of supply to our customers. This was offset in the second half with significant high margin software sales and the supply of materials returning to a less distressed state and therefore lower exceptional costs of just £0.05m.

Whilst total administration costs increased during the year, we did complete a change in strategy as announced in September 2022 which significantly reduced operational costs ensuring a reduced cost base for future periods. This coupled with improved, higher margin trading resulted in a profit before tax of £1.2m in the second half of the year as expected, compared to a first half loss before tax of £2.4m. This was despite inflationary pressures in our remaining costs.

Adjusted Profit before tax

The Group maintained the progress of the prior year with an adjusted profit of £0.3m (FY-2022: £0.0m). Improved gross margins were offset by inflationary pressures and increased costs with the most significant increases being Real Estate costs, Interest and Amortisation of £0.2m, £0.1m and £0.2m respectively.

The reduction in headcount did result in monthly payroll spend reducing by 28% helping reduce second half expensed staff costs by £0.6m.

Exceptional Costs

Exceptional costs totalled £1.5m (FY-2022: £0.5m) and were dominated by the costs of our restructuring efforts as previously discussed. These costs include staff costs as our head count reduced from the beginning of the period by 24% to 121 along with associated professional fees incurred in executing our plan. £0.3m of premium material costs were incurred to ensure delivery of products to our customers. Other COVID costs include a contract write down as termination for a Fleet customer's contracts was agreed due to their trading performance during and since the pandemic.

Balance Sheet

	2023	2022
	£'000	£'000
Non-Current Assets	26,200	25,874
Net Current Assets	1,582	1,704
Non-Current Liabilities	8,653	7,702
Net Assets	19,129	19,876

Net Assets decreased by £0.7m to £19.1m (FY-2022: £19.9m) reflecting the loss for the year, after deducting the IFRS2 Share based payments charges. 

Non-current assets increased by £0.3m to £26.2m (FY-2022: £25.9m).  This is due to a £0.3m reduction in right of use assets due to depreciation offset by a £0.3m increase in Intangible assets and £0.3m increase in Property, plant and equipment.  Intangible assets increased due to the continued, albeit reduced, investment in development in both software and hardware with capitalised development costs in the year totaling £2.7m (FY-2022: £2.9m), offset by amortisation of £2.3m (FY-2022: £2.1m).

Non-Current Liabilities increased during the year with the issue of a new £1.58m convertible loan note which helped finance our change of strategy and restructure. This was offset by a full year of capital repayments to both HSBC and Maven following their recommencement in the second half of FY-2022.

Cash Flow

	2023	2022
	£'000	£'000
Net Cash generated from operations	4,314	3,810
Investing activities	(3,419)	(3,254)
Free Cash Flow1	895	556
Financing activities	(780)	(1,992)
Increase/(Decrease) in Cash in Year	115	(1,366)
Net Debt2	5,618	5,395

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. 

Cash from operating activities increased by £0.5m to £4.3m (FY-2022: £3.8m) with improved working capital management. This was despite the final repayment of £0.9m to HMRC under the time to pay agreement negotiated at the end of FY-2021. Cash from operating activities also included R&D tax credit cash receipts of £0.7m (FY-2022: £0.7m) which reflects the Group's continued investment in cutting edge development.

Free cash inflow of £0.9m (FY-2022: £0.6m) 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 £3.4m (FY-2022: £3.2m). 

Financing activities was an outflow of £0.8m (FY-2022: £2.0m). A full year of repayments in relation to our agreements with HSBC and Maven drove outflows of £1.1m (FY2022: £0.7m) but new unsecured convertible loan notes were issued totaling £1.58m which assisted the financing of our restructuring activities.

Net Debt 

Net debt excluding IFRS 16 lease liability of £1.3m (FY-2022 £1.6m) increased by £0.3m to £5.6m (FY-2022: £5.4m).  Cash balances total £1.1m (FY-2022: £1.0m) and total borrowings including IFRS16 lease liability of £1.3m totals £6.9m (FY-2022: £6.9m).  Borrowing comprised £4.1m (FY-2022: £4.9m) term loan with HSBC, a £0.8m (FY-2022: £1.2m) term loan with MEIF WM Debt LP, Unsecured Convertible Loan Notes of £1.6m (FY-2022: £nil) and £1.6m (FY-2022: £2.0m) of obligations under Right-to-use lease liabilities.  In addition, at the year end, the Group had a £0.5m unused overdraft facility with HSBC. 

Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2023
									Note			Year ended 31 March 2023			Year ended 31 March 2022
												£'000			£'000
REVENUE									4			20,197			18,111
Cost of sales												(7,445)			(7,004)
Exceptional cost of sales												(261)			-
												(7,706)			(7,004)
Gross profit												12,491			11,107
Other income									5			16			13
Administrative expenses excluding exceptional costs												(11,860)			(10,193)
Exceptional administrative costs									7			(1,272)			(568)
Total administrative costs												(13,132)			(10,761)
OPERATING PROFIT/(LOSS)									6			(625)			359
Finance income												50			67
Finance costs									8			(668)			(548)
LOSS BEFORE TAXATION												(1,243)			(122)
Corporation tax												460			309
PROFIT/(LOSS) FOR THE YEAR												(783)			187
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations												9			10
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS)												9			10
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT												(774)			197
LOSS BEFORE TAXATION												(1,243)			(122)
Exceptional cost of sales												261			-
Exceptional administrative costs												1,272			568
IFRS2 Share based payments charge												16			(443)
ADJUSTED PROFIT/(LOSS) BEFORE TAX												306			3
PROFIT/(LOSS) PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic												(1.57p)			0.37p
Diluted												(1.57p)			0.37p
The results all relate to continuing operations.
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2023
		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 2021		500		14,691		1,138		193		(4)		-		3,604		20,122
Comprehensive loss
Income for the year				-		-		-		-		-		187		187
Other comprehensive loss
Exchange differences on translation of overseas operations		-		-		-		10		-		-		-		10
Total comprehensive income		-		-		-		10		-		-		187		197
Transactions with owners
IFRS2 Share-based payments release		-		-		-		-		-		-		(443)		(443)
Transactions with owners		-		-		-		-		-		-		(443)		(443)
Balance as at 1 April 2022		500		14,691		1,138		203		(4)		-		3,348		19,876
Comprehensive income
Loss for the year		-		-		-		-		-		-		(783)		(783)
Other comprehensive income
Exchange differences on translation of overseas operations		-		-		-		9		-		-		-		9
Total comprehensive loss		-		-		-		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 31 March 2023		500		14,691		1,138		212		(4)		11		2,581		19,129

Consolidated Statement of Financial Position As At 31 March 2023
	Note	As at 31 March 2023	As at 31 March 2022
ASSETS		£'000	£'000
NON CURRENT ASSETS
Intangible assets	10	23,382	23,012
Property, plant and equipment		1,103	803
Right of use assets		1,711	2,032
Amounts receivable under finance leases		4	27
		26,200	25,874
CURRENT ASSETS
Inventories		2,426	1,322
Trade and other receivables		7,948	7,944
Corporation tax receivable		856	709
Cash and cash equivalents		1,119	1,004
		12,349	10,979
LIABILITIES
CURRENT LIABILITIES
Trade and other payables		(9,196)	(7,521)
Borrowings		(1,031)	(1,115)
Right of use liability		(466)	(612)
Provisions		(74)	(27)
		(10,767)	(9,275)
CURRENT ASSETS LESS CURRENT LIABILITIES		1,582	1,704
TOTAL ASSETS LESS CURRENT LIABILITIES		27,782	27,578
NON CURRENT LIABILITIES
Trade and other payables		(828)	(626)
Borrowings		(5,435)	(4,855)
Right of use liability		(1,113)	(1,367)
Provisions		(166)	(112)
Deferred income tax liability		(1,111)	(742)
		(8,653)	(7,702)
NET ASSETS		19,129	19,876
EQUITY
Share capital	11	500	500
Share premium		14,691	14,691
Merger reserve		1,138	1,138
Translation reserve		212	203
Treasury reserve		(4)	(4)
Convertible loan reserve		11	-
Retained earnings		2,581	3,348
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		19,129	19,876
Consolidated Statement of Cash Flows For The Year Ended 31 March 2023

	Notes	Year ended 31 March 2023	Year ended 31 March 2022
		£'000	£'000
NET CASH GENERATED FROM OPERATING ACTIVITIES	12	4,314	3,810
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(749)	(420)
Proceeds from sale of property, plant and equipment		-	125
Purchases of software		(12)	(48)
Capitalised development costs		(2,658)	(2,911)
NET CASH USED IN INVESTING ACTIVITIES		(3,419)	(3,254)
CASH FLOWS FROM FINANCING ACTIVITIES
New Convertible loan note		1,580	-
Loan arrangement fees		(36)	(5)
Repayment of loans		(1,095)	(743)
Repayment of obligations under lease agreements		(619)	(674)
Interest paid		(610)	(500)
NET CASH USED IN FINANCING ACTIVITIES		(780)	(1,922)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		115	(1,366)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		1,004	2,370
CASH AND CASH EQUIVALENTS AT END OF YEAR		1,119	1,004

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 Financial Reporting 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 2023 and audited information for the year ended 31 March 2022 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 2023 which will be delivered to the Registrar of Companies in due course.  Statutory financial statements for the year ended 31 March 2022 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 2023 and 2022 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 52% of revenues that provide a strong underlying base. The Group extended its debt facilities with HSBC in March 2023 in line with the existing arrangement inclusive of quarterly covenant tests of both Leverage and Debt Service. In addition the HMRC arrangement to repay £1.7m of VAT and PAYE accrued during the COVID-19 pandemic was settled during the year. During the year a new Convertible Loan note with existing shareholders was secured totalling £1.58m, helping to finance a significant restructure following a review of the company strategy. At the year end the Group has cash balances of £1,119,000 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 2023	Year ended 31 March 2022
							£'000	£'000
	Solutions:						20,197	18,111
	Fleet and optimisation						11,475	11,217
	Insurance and automotive						8,722	6,894
	A geographical analysis of revenue by destination is as follows:
							Year ended 31 March 2023	Year ended 31 March 2022
							£'000	£'000
	United Kingdom						19,769	17,784
	North America						-	-
	Norway						-	-
	Rest of Europe						397	272
	Rest of World						31	55
							20,197	18,111
5	OTHER INCOME
							Year ended 31 March 2023	Year ended 31 March 2022
							£'000	£'000
	Grant income						16	13
							16	13

6	OPERATING (LOSS)/PROFIT
	The following items have been included in arriving at operating (loss)/profit:
				Year ended 31 March 2023	Year ended 31 March 2022
				£'000	£'000
	Depreciation
	- owned assets (see note 15)			227	176
	- right of use assets (see note 16)			540	630
	Amortisation of intangible assets
	- owned assets (see note 14)			2,300	2,134
	Other operating lease rentals			96	34
	Research and development expenditure			395	669
	Loss on disposal of property plant and equipment			222	263
	Loss on foreign exchange transactions			32	22
	Staff costs (note 12)			5,693	5,187
	Exceptional cost of sales (see note 9)			261	-
	Exceptional administrative costs (see note 9)			1,272	568
	Auditors' remuneration
	- Fees payable to the Company's auditors for the audit of the parent
	company and consolidated financial statements			100	77
	Adjusted profit before tax is monitored by the Board and measured as follows:
				Year ended 31 March 2023	Year ended 31 March 2022
				£'000	£'000
	Loss before tax			(1,243)	(122)
	Exceptional costs (note 9)			1,533	568
	Share based payments			16	(443)
	Adjusted profit before tax			306	3

7	EXCEPTIONAL COSTS
				Year ended 31 March 2023	Year ended 31 March 2022
				£'000	£'000
	Exceptional costs of sales
	Covid-19 - component acquisition			261	-
				261	-
	Exceptional administrative costs
	Covid-19 - other costs			234	646
	Integration & restructuring costs			1,038	107
	Furlough grant income			-	(185)
	Total exceptional administrative costs			1,272	568
	Total exceptional costs			1,533	568

During the 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 it's hardware platforms and narrowed its product range accordingly. Costs were incurred during the period through a reduction in headcount, inventory write down, non-refundable marketing event deposits and associated professional service costs.

In the prior year, restructuring costs were also incurred as a result of headcount reduction.
The Group incurred exceptional costs in the current and prior financial year relating to the COVID-19 pandemic. These costs include the increased cost of temporarily buying 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.

In the prior year, the Group received furlough grant income that relates to income received from the Coronavirus Job Retention Scheme for employees furloughed as a result of Covid-19.

8	FINANCE COSTS
			Year ended 31 March 2023	Year ended 31 March 2022
			£'000	£'000
	Interest on loans		510	388
	Amortisation of debt issue costs		58	48
	Interest on lease liabilities		100	112
			668	548

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 2023	Year ended 31 March 2022
			£'000	£'000
	(Loss)/Profit for the year after taxation		(783)	187
	Exceptional administrative costs		1,533	568
	Share based payments		16	(443)
	Tax effect of adjustments		(291)	(108)
	Adjusted profit for the year after taxation		475	204
			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		(1.57p)	0.37p
	Diluted (loss)/profit per share		(1.57p)	0.37p
	Adjust for effects of:
	Exceptional costs		2.48p	0.92p
	Share based payments		0.03p	(0.89p)
	Adjusted basic earnings per share		0.95p	0.41p
	Adjusted diluted earnings per share		0.95p	0.41p

10	INTANGIBLE ASSETS
			Goodwill	Intellectual property	Customer relationships			Development costs		Software	Total
			£'000	£'000	£'000			£'000		£'000	£'000
	COST
	As at 1 April 2021		10,417	1,920	100			19,242		1,759	33,438
	Additions - Internal developments		-	-	-			2,521		46	2,567
	Additions - External purchases		-	-	-			390		2	392
	As at 31 March 2022		10,417	1,920	100			22,153		1,807	36,397
	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
	AMORTISATION
	As at 1 April 2021		-	1,920	100			7,974		1,257	11,251
	Charge for year		-	-	-			1,943		191	2,134
	As at 31 March 2022		-	1,920	100			9,917		1,448	13,385
	Charge for year		-	-	-			2,125		175	2,300
	As at 31 March 2023		-	1,920	100			12,042		1,623	15,685
	NET BOOK AMOUNT
	As at 31 March 2023		10,417	-	-			12,769		196	23,382
	As at 31 March 2022		10,417	-	-			12,236		359	23,012
	As at 1 April 2021		10,417	-	-			11,268		502	22,187

	Goodwill arose in relation to the Group's acquisition of 100% of the share capital of Roadsense Technology Limited (Roadsense), Route Monkey Limited (Route Monkey), Box Telematics Limited (Box) and DCS Systems Limited (DCS).
	Since the acquisition Roadsense, Box, Route Monkey and DCS have been incorporated into the Trakm8 business. These businesses have therefore been assessed as one cash generating unit for an impairment test on Goodwill.
	The impairment review has been performed using a value in use calculation.
	The impairment review has been based on the Group's budgets for FY-2024 which have been reviewed and approved by the Board and projections for FY-2025.  Forecasts for the subsequent 3 years have been produced based on 7% (a prudent growth rate for the 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 show 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 £8m.
	2. A decrease in the growth rate to 3% shows headroom of £15m.
	3. A decrease in the terminal growth rate to 1% shows headroom of £20m.
	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 14%.
	Or triggered by:
	1. Decrease in net cash generated from operating activities for FY-2024 and FY-2025 of 14%.
	Amortisation expenses of £2,300,000 (2022: £2,134,000) have been charged to Administrative expenses in the Consolidated Statement of Comprehensive Income.

11	SHARE CAPITAL
					As at 31 March 2023			As at 31 March 2022
					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% (2022: 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 2023	As at 31 March 2022
							£'000	£'000
	Loss before tax						(1,243)	(122)
	Depreciation						767	806
	(Profit)/Loss on disposal of fixed assets						222	263
	Net bank and other interest						618	481
	Exceptional costs						1,533	568
	Amortisation of intangible assets						2,300	2,134
	Exchange movement						9	10
	Share based payments						16	(443)
	Operating cash flows before movement in working capital						4,222	3,697
	Movement in inventories						(1,104)	87
	Movement in trade and other receivables						19	(1,242)
	Movement in trade and other payables						1,877	1,184
	Movement in provisions						101	(78)
	Cash generated from operations before exceptional costs						5,115	3,648
	Cash outflow from exceptional costs						(1,533)	(568)
	Cash generated from operations						3,582	3,080
	Interest received						50	67
	Income taxes received						682	663
	Net cash inflow from operating activities						4,314	3,810

 

END