Final Results
27 August 2008
Embargoed to 07:00
TRAKM8 HOLDINGS PLC
("Trakm8" or "the Company")
Final Results
Trakm8 today announces its final results for the year ended 31 March 2008.
Financial Highlights:
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Turnover down 27% at £4.67m (2007: £6.37m)
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Gross profit £2.02m (2007: £2.49m)
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Gross profit margin increased by 4.4% to 43.5%
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Loss before tax of £0.90m (2007: profit £0.09m)
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Net assets increased to £1.57m (2007: £1.48m)
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Net cash of £0.15m (2007: £0.44m)
Operational Highlights
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Acquisition of PJSoft
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Launch of T6
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Government Grant projects commenced
Year ended 31st March 2008
Year ended 31st March 2007 (restated)
£000's
£000's
Revenue
4,656
6,370
Gross Profit
2,024
2,490
Gross Profit %
43.5%
39.1%
Other income
79
-
Operating (Loss)/Profit
(891)
115
Operating (Loss)/Profit %
(19.1%)
1.8%
Profit on ordinary activities before taxation
(958)
90
Net Cash and cash equivalents
153
439
Net Assets
1,572
1,483
Commenting on the results, Cary Knapton, CEO of Trakm8 said:
"The headline operating result set out in this report, whilst disappointing, reflects the challenges we have faced over the last year. Nevertheless margins are holding and whilst we have not achieved profitability this year the Directors' believe that the Group is on track to generate shareholder value.
The launch of the T6 significantly improves our hardware product capability and the Group is well placed to capitalise on the opportunities presenting themselves in the market place. I believe that the combination of revitalised organic sales direction and R&D leadership positions the Group for improved financial performance in the coming year.
The Group therefore looks forward to the future with enthusiasm. We remain firmly on course to complete the transition to integrated TSP and I remain confident we will deliver our innovative products to market with increased success."
For further information please contact:
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Trakm8 Holdings plc Cary Knapton, Chief Executive Officer Tim Couling, Finance Director |
0870 380 0531 |
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Tavistock Communications Simon Hudson Paul Youens |
020 7920 3150 07843 260 623 |
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Arbuthnot Securities Paul Vanstone |
020 7012 2000 |
Copies of the full report will be posted to shareholder shortly and are also available either from the Company's offices or as a download from the Company's website www.trakm8.com.
CHAIRMANS STATEMENT
Overview
The past 12 months has been demanding for the Group as we continue the transformation strategy from pure telematics hardware design and manufacture to an integrated telematics service provider.
The headline operating result set out in this report, whilst disappointing, reflects the challenges we have faced over the last year. Nevertheless, margins are holding and whilst we have not achieved profitability this year the Directors' believe that the Group is on track to generate shareholder value.
The Group remains committed to its transition to a fully integrated Telematics Service provider (TSP) and I believe we are firmly on track to achieve this. Revenue and operating profit declined in the first half due to a period of brand impact from our reported supplier issue (April 2007) and a delay in orders as customers waited for the T6 launch. These two identified issues were compounded in the second half by a sharp decline in the Euro/GBP exchange rate which increased the cost of the Group's proprietary hardware platforms by 11% on average, an increase which has not been passed on to customers. Additionally, whilst initially seeing an increase in sales from Trakm8 SWIFT® during the first half of the year, sales growth slowed in the latter half.
In seeking to mitigate the impact of these latter two events the Group was mindful of considerable interest in an early launch of T6. However the Directors took the practical view that it was inadvisable to bring forward the planned March 2008 launch of the T6 product without incurring additional technical risk to a new platform. Nevertheless the Group recognised the need to address the sales strategy of the Group and therefore accelerated the recruitment of a senior sales professional and I am pleased to report that the recruitment process was successfully concluded in January with encouraging results to date.
The Board
As announced late April 2007, Tim Evans, the Strategy and Marketing Director resigned from the Board to pursue other opportunities. There is no current intention to appoint a replacement.
The Group also announced on 2 June 2008 that Tim Couling, the Group's Finance Director, was stepping down for personal reasons and would leave the Board and the Company later in the year. The Board has identified a replacement, whose appointment is expected to be announced when Tim formally leaves the position. On behalf of the Board I would like to thank Tim for his hard work over the last four years and wish him well for the future.
Outlook
The Executive team remain fully committed to the delivery of higher margin sales growth and a return to profitability. The Group will continue to develop our business and, as noted at half year, will continue to examine expansion by acquisition, organically or other means. I would like to close by thanking all Trakm8 personnel for their continued commitment to the Group over the last year.
DAWSON BUCK
CHAIRMAN
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
The last year has seen the Group continue to develop its service offerings, centred on enhancements to Trakm8 SWIFT®. The Group has also been successful in securing participation in two government grant-funded R&D projects. The acquisition of PJSoft s.r.o. (PJSoft) has also proved positive for the Group, increasing our R&D capability at an important time. In late March 2008 the Group launched our newest hardware platform, the Trakm8 T6 (T6) which represents a significant step forward in high functionality, low cost telematics hardware.
During the second half of the year the Group was successful in recruiting a senior sales professional to head up Group sales. Initial indications are very positive and recent sales performance shows an encouraging trend. This dedicated sales leadership role fills an important position within the business and the Directors are confident that renewed focus in this area will yield significant benefits. This is a pivotal role as the Group's transition strategy continues and new products and services are delivered to market.
Operational Review
Trakm8 continues the transformation journey to fully integrated TSP which we began over a year ago. The launch of our next generation platform, the T6, which was rolled out in late March 2008, brings further improvement to the Group's competitive edge in terms of functionality, form factor and ease of installation.
The markets in which the Group operates have proved challenging in the year with strong competition emerging across the product range. Revenue has declined over the year in part due to continued brand impact from our reported supplier issue (April 07) having an extended impact on hardware sales. Another factor affecting sales performance was the evidenced delay in orders as customers appeared to wait for the launch of the T6.
These factors have been compounded by a strengthening of the Euro in the second half year which has pushed the Group's cost of hardware up correspondingly. This latter change, together with the weakening of the US Dollar, has substantially reduced the Group's competitiveness in Dollar denominated countries (principally the United States of America ("US")). Concurrent to this the Group was notified by its major US customer that it was ceasing to take our product for competitive reasons which resulted in the Group losing significant but low margin hardware sales in the US.
As a result the Group has unfortunately not been profitable this year.
Strategy
The Group's strategic transition to a fully integrated TSP remains on course. Achieving success means closely interweaving the threads of innovative R&D with excellence in sales; and thereby delivering sustainable, growing, profitability. The Group is some way down this road and success is in sight.
As a result of the acquisition of PJSoft and our involvement in the government sponsored projects the Group's R&D activities have been significantly scaled up. This R&D effort is expected to allow for early commercial exploitation of various project & customer lead initiatives in areas such as driver behaviour monitoring, duty of care and vehicle emissions monitoring as well as in the data management software area.
The government sponsored projects bring together leading industry players in our sector with academia and major transport data users. The Group's selection by the Technology Strategy Board (TSB) to lead the Trusted Road Users - Emissions Profiling project is further clear evidence that the Group can effectively shape and lead major advanced telematics R&D programmes and is a major sign of confidence in the Group. In addition the Group's participation in the Future Intelligent Transport Systems - Freeflow project places us close to major regional initiatives in road tolling, congestion charging and vehicle workplace safety.
The Group's transition to integrated TSP continues to move forward, though now reinforced with the increased value that these collaborative R&D programmes bring. Additionally the recruitment of the senior sales professional has enabled greater sales focus and increasing sales leadership within the Group. Thus the transition strategy for the business is strengthened and I am confident that the Group is entering the final phase of this difficult, but necessary, period.
Financial Review
This is the first full year we have had to prepare our financial statements under International Financial Reporting Standards (IFRS).
Revenue for the year ended 31 March 2008 was £4.66m (2007: £6.37m), a decrease of 26.8%. Gross profit decreased to £2.02m (2007: £2.49m). Gross margins have increased to 43.5% (2007: 39.1%). Increased administrative expenses of £2.99m (2007: £2.38m), have resulted in the Group announcing a loss on ordinary activities before taxation for the period of £0.96m (2007: profit £0.09m).
In the second half of the year the strengthening of the Euro has had a corresponding increase in the cost of the Group's hardware. The net increase in hardware costs directly attributable to exchange rate fluctuations in the second half of the year was between 8.6% and 13.3% depending on product. The Group has not passed on this increase to customers.
The Group is encouraged to note that whilst operating in a relatively competitive industry our products are not materially suffering from the continued pricing and margin pressures that we have experienced in the past. Trakm8 SWIFT® has seen somewhat slower sales growth than anticipated, however the Directors perceive this to be due to an increased number of competitors with consequential increased order closure timescales. Nevertheless in like-for-like sales situations Trakm8 SWIFT® remains competitive and it is the Group's firm belief that a proportion of the reported revenue shortfall is therefore likely to have been delayed but not lost.
The Group responded to the revenue shortfall with a review of operating expenses, which had increased in the period primarily due to Trakm8 SWIFT® service and airtime costs. Non-impacting savings were therefore identified which included a reduction in contract staff and a necessary reduction in permanent headcount, thereby reducing core overheads. The Group however was able to bring forward elements of the international roll-out of Trakm8 SWIFT® through the unexpected availability of key in-country personnel. The resultant necessary costs of set-up in country, although mitigated wherever possible, largely negated the anticipated savings from the review of operating expenses.
In summary therefore the operating losses reported above were primarily due to slower than planned recovery in sales from the period of brand impact, the flatter sales profile of Trakm8 SWIFT®, international launch costs and the significant strengthening of the Euro/GBP and USD/GBP exchange rates.
Acquisition of PJSoft s.r.o.
As announced on 7 August 2007 the Group acquired PJSoft; a Czech software house with significant expertise in cartographic technologies. This acquisition brought the last external elements of our product intellectual property in-house and allows the Group to further leverage our software offerings in a cost effective manner. As noted at the time PJSoft had a close working relationship with the Group and no significant integration issues were anticipated. I am pleased to report that no significant integration issues have been encountered and PJSoft are currently preparing for the launch of Trakm8 SWIFT® into the Czech Republic and Eastern Europe.
Outlook
The transition strategy is on course for completion in the coming financial year and I believe that this strategic shift for the Group will be enhanced by our participation in the government sponsored projects which we announced in December 2007 and March 2008.
I believe that our products and services now span the telematics value chain and the Group expects to derive revenues from all areas of the portfolio. Our supplier and customer agreements demonstrate the Group's commitment and confidence in our products and service offerings. Our enhanced and renewed sales focus together with our collaborative R&D programme will cement the transition of the business to a fully integrated TSP. We expect that these developments will contribute to driving the business forward and enable the delivery of profitability and increased shareholder value.
The Group continues to identify international sales opportunities for its hardware platforms and I am pleased to report that our pipeline currently includes major bids in the UK, Europe, South Africa and South America. The Group is also actively pursuing organic growth routes in other countries for Trakm8 SWIFT®.
CARY KNAPTON
CHIEF EXECUTIVE OFFICER
PRODUCTS AND MARKETS
Marketplace
As with previous years Trakm8 has derived the majority of its revenues from the fleet management market and continues to consolidate its established worldwide presence.
The primary markets for the Group are the UK, Europe and South Africa. The SWIFT proposition has recently been test marketed in the USA and the Group views this territory as essential to its sales expansion strategy. The Group has also maintained its presence in Ireland, South America, the Middle East and other locations through third party distributors.
The European telematics hardware and services market continues to develop at varying regional rates. The Group perceives the UK continuing to lead the way both in maturity of utilisation and political leadership. The past year has seen a number of UK competitors emerge and then fall away for a variety of reasons. The Group is therefore pleased to note that the Group's hardware and service products have proved resilient to competition in terms of both pricing and functionality. Elsewhere in Europe the Benelux countries and Germany are seeing some maturity for commercial uses of telematics. Our expectation is that the continental European market is expected to grow in a similar vein to the UK market and the Directors believe that the Group is well positioned to access a share of this growing market.
Product Portfolio Developments
During the course of the year the Group has, in partnership with Tyco Electronics, continued the development of its next-generation Advanced Telematics Platform, the T6.
T6 Advanced Telematics Platform
Launched in the last quarter of the year, the T6 family of products has been designed to improve the Group's competitive positioning and open up previously closed markets. Take up has been encouraging with several Telematics Service Providers (TSPs) impressed by the significant improvements in standard feature delivery coupled with the introduction of integrated Controller Area Network (CAN) and Fleet Management Systems (FMS) capability. The T6 also allows web-based user configuration management and allows for Over-The-Air commissioning post installation. In addition the T6 has full international approvals for all major markets and full backward compatibility with past Group products.
Building on Trakm8's reputation for feature-rich, reliable products, T6 now also delivers advanced integration functionality connecting with vehicle management systems as well as other tracking and Business Process Management software applications.
Evolving the Proposition
The last year has seen a number of important steps in the evolution of the Group's service propositions.
During the course of the year the Group has also been successful in securing a number of licensing contracts for the Trakm8 SWIFT® software platform and the Directors believe that there are further opportunities in this area.
The Group is confident that other market segments such as Retail, Logistics & Distribution, Central & Local Government and Construction will soon start to recognise the benefits that telematics can bring to their management of remote assets. That being the case the Directors believe that the take up of telematics propositions will increase and that the Group's products and services are well positioned to tap these segments.
The Group has demonstrated that incremental fuel efficiency, increased profitability and reducing risk are some of the quantifiable benefits that can be obtained through business use of telematics applications. The introduction of the T6 and in particular its CAN and FMS integration capability further increase the available benefits to telematics users and place the Group in a good position to increase sales in these areas.
In addition to the above opportunities, the vehicle OEM market remains largely un-tapped and the Group believes this area is set for sizeable growth in the coming years. The T6, with its CAN interface, is well positioned to penetrate this area. The Group expects that its partnership with Omitec to further develop CAN applications will unlock some early exploitation of this segment.
The Group has continued to build brand awareness, primarily by having a presence at selective trade shows. Our presence at the Commercial Vehicle Show has again proved to be a valuable exercise with significant leads being generated, particularly for Trakm8 SWIFT®. Further initiatives are in the pipeline.
Overall the Group is well placed to take advantage of increased telematics awareness and interest at a time of economic challenge. Greater scrutiny of vehicle operational costs and the potential environmental advantages of improved vehicle efficiency are the key emergent business drivers at this time. Trakm8 looks forward to exploiting these trends in the future.
DIRECTORS REPORT
The Directors submit their report and financial statements of Trakm8 Holdings PLC for the year ended 31 March 2008.
Trakm8 Holdings PLC is a public listed company incorporated and domiciled in England (Company Number 05452547) whose shares are quoted on the Alternative Investment Market (AIM) of the London Stock Exchange.
PRINCIPAL ACTIVITY
The principal activity of the Trakm8 Group is the marketing, manufacture and distribution of vehicle telematics equipment and services. Trakm8 Holdings PLC is the holding company for the Trakm8 Group.
REVIEW OF THE BUSINESS
The review of the business is contained in the Chairman's & Chief Executive Officer's reports.
The Directors monitor Key Performance Indicators (KPI) on a regular basis to ensure sustained progress is made towards the Group's overall objectives. These KPI include sales revenues; margins (gross and product); cash balances; units despatched; customer service performance levels; returns and rework; debtors and creditors balances.
RESULTS AND DIVIDENDS
The Group results for the year ended 31 March 2008 are shown in the Income Statement. The Directors do not recommend the payment of a dividend.
OUTLOOK
The outlook of the business is contained in the Chairman's & Chief Executive Officer's reportsF.
RESEARCH AND DEVELOPMENT
The Board considers that the Group's research and development activity plays an important role in the operational and financial success of the business.
The Group continues to identify exciting technology developments in the telematics arena. These form the centre point of the Group's product strategy and will enable the delivery of new and enhanced products and services in the coming year. This investment continues to complement prior year spend on the Trakm8 SWIFT® proposition and now includes participation in two government sponsored projects, as announced previously.
GOING CONCERN
The Directors confirm that they are satisfied that the Group has adequate resources and facilities to continue in business for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. This is detailed in Note 4 to the financial statements.
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DIRECTORS |
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The following directors have held office since 1 April 2007: |
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C D Buck |
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T Couling |
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M Cowley |
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T Cowley |
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T D Evans |
Resigned 24 April 2007 |
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C P Knapton |
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J Watkins |
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DIRECTORS AND THEIR INTERESTS
Details of Directors' share interests and of their rights to subscribe for shares are shown in the Directors' Remuneration Report
SUBSTANTIAL SHAREHOLDING
The Directors have been notified, or are aware of, the following interests in 3% or more of the ordinary share capital of the Company (excluding Directors) as at 30 July 2008:
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|
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Ordinary shares at 1p each |
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|
Number |
Percentage |
|
Redmayne Nominees |
|
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1,577,748 |
11.7% |
|
Pershing Nominees |
|
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1,169,042 |
8.7% |
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R White |
|
|
965,042 |
7.1% |
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Edric Property and Investment Company (and related parties) |
644,240 |
4.8% |
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LR Nominees Limited |
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712,463 |
5.3% |
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Barclayshare Nominees |
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524,515 |
3.9% |
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HSDL Nominees |
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451,655 |
3.3% |
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HSBC Global Custody Nominees (UK) Limited |
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407,120 |
3.0% |
CREDITORS PAYMENT POLICY
It is the Group's policy to establish payment terms with suppliers and to adhere to those terms, provided that the goods and services are in accordance with the agreed terms and conditions. Trade creditors for the parent company at the year end represented 67 days of purchases (2007: 58 days).
EMPLOYMENT POLICY
During the year, the Group has consulted with employees in matters likely to affect their interests and is committed to involving them in the performance and development of the Group.
DISABLED EMPLOYEES
The Group gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately fulfilled by a handicapped or disabled person.
Should existing employees become disabled, it is the Group's policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training, career development and promotion to such employees as appropriate.
POLITICAL AND CHARITABLE DONATIONS
The Group made charitable donations in the year of £1,084 (2007 £ nil).
FINANCIAL INSTRUMENTS
The Group raises finance through equity and borrowings and places surplus cash on short-term deposits. The primary source of borrowings is the bank facility which is in place for use as required.
The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk, credit and currency risk. The policies for managing these are reviewed by the board.
Interest rate - The Group uses fixed and floating interest rates where appropriate in order to minimise any interest rate risks.
Liquidity - The Group operates a long-term business, and its policy is to finance it primarily with equity and short to medium-term borrowings. Short-term flexibility is achieved by cash balances and overdraft facilities.
Credit risk - The Group aims to minimise its exposure to credit risk through a mixture of credit insurance, credit limits and credit checks on new customers.
Currency risk - Historically the Group has not used hedging instruments to minimise currency risk as the exposure is limited. If foreign currency exposure increases, the use of foreign currency hedging instruments will be reviewed as necessary.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR
The Directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditor is unaware. Each of the Directors have confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.
AUDITOR
A resolution to reappoint Baker Tilly UK Audit LLP, Chartered Accountants, as auditor, will be put to the members at the annual general meeting.
By approval of the Board on 26 August 2008.
C D Buck
Chairman
CORPORATE GOVERNANCE
Whilst the 2006 FRC Combined Code ("the code") on Corporate Governance formally applies only to companies listed on the London Stock Exchange, the Group has developed and deployed procedures to ensure that, as far as is practicable and having regard to the size of the Group, it is able to comply with most of the main principles of the Combined Code. As the Group expands, the Directors intend to continue to develop further measures for compliance with the Combined Code.
The Directors review the internal controls of the Group on a regular basis, normally not less than twice a year. Taking into consideration the size and complexity of the Group it is the Directors view that the Group does not need an internal audit function although this is reviewed periodically.
Board of Directors and Committees
The Board, currently comprising four executive Directors and two non-executive Directors, meets regularly throughout the year.
During the reporting period, Tim Evans resigned as executive Director on 24 April 2007 and subsequently left the Company during his contractual notice period as part of a restructuring programme. In order to adjust the board balance between executive and non executive Directors, the decision was made not to appoint a replacement.
The Board of Trakm8 Holdings PLC is responsible for the strategic direction of the Group's businesses. The Board's specific roles include corporate governance policy and direction; as well as strategy formation and monitoring the achievement of the Group against the business plan. The day-to-day management of the Group is the responsibility of the team of executive Directors under the CEO. The Board meetings of Trakm8 Holdings PLC cover matters required to be covered by the Boards of the Group's subsidiary entities.
The Board members have operated Audit, Remuneration and Nomination Committees throughout the period, although the Nomination Committee met outside of the reporting period on the 18 April 2008. These bodies operate under formally delegated duties and responsibilities and seek advice from independent third parties as the need arises. The committees have comprised of two non-executive Directors (C D Buck and J F Watkins). Both non executives bring extensive and diverse commercial experience for the benefit of the Group. C D Buck is considered by the Board to be a fully independent non-executive Director.
For the financial year ended 31 March 2008 the Directors' attendance at Board and Committee meetings has been as follows:
|
Type |
Board |
Audit |
Nomination |
Remuneration |
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Total Held in period |
13 |
2 |
0 |
1 |
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T Couling |
12 |
2 |
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M Cowley |
13 |
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T Cowley |
11 |
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C D Buck |
12 |
2 |
- |
1 |
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C Knapton |
12 |
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J F Watkins |
12 |
2 |
- |
1 |
The Audit Committee is responsible for ensuring that the Group's financial performance is properly monitored, controlled and reported. It meets and reviews reports from the auditor on a regular basis. The Finance Director and other Directors attend as required. The committee and the external auditor have safeguards to avoid a potential compromise of auditor's objectivity and independence. These include the adoption of a policy that segregates the supply of audit and non-audit services and requires committee approval for the supply of services such as tax services and acquisition related due diligence.
The Remuneration Committee's terms of reference include making recommendations on Directors' compensation packages to ensure that the Group Board enjoys and retains an appropriate level of motivated resources. The Committee engages with external consultants as and where it is deemed beneficial.
The Group has adopted and operates a share dealing code for Directors in accordance with the requirements of the Combined Code.
Operational and Internal Controls
The Board is ultimately responsible for the Group's system of internal measurement and control processes and for reviewing their effectiveness. This system is designed to identify, quantify and manage rather than eliminate all risk and can therefore only provide reasonable and not absolute assurance against material misstatement or loss.
The key elements of the Group's control system are currently:
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A comprehensive budgeting system with an annual budget approved by the Board.
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Actual results compared on a monthly basis with budgets and past results as appropriate.
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All significant capital expenditure and organisational changes reviewed and approved by the Board.
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The integrity and competence of personnel to be ensured through high recruitment standards, aligned personal objectives with associated appraisal mechanisms and subsequent training and personal development planning.
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A clearly defined organisation structure.
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High quality personnel being seen as an essential part of the control environment.
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Board reviews of KPI's, and periodic assessment as to the effectiveness and completeness of those KPI's in relation to the business environment.
The process of monitoring and updating internal controls and procedures and monitoring their effectiveness continued throughout the year.
Performance Evaluation
During the period the Remuneration and Nomination committees evaluated the performance of the executive team along with the individual performances of the Directors. As a result various actions and development plans are being developed where appropriate.
DIRECTORS REMUNERATION REPORT
Trakm8 Holdings PLC is an AIM listed company and is not required to produce a Directors' Remuneration Report. However given the structure of the Board of Directors, the levels of equity held by the Directors and taking into consideration the guidance contained within the 2006 FRC Combined Code on Corporate Governance, the Company takes the view that an appropriate level of disclosure of Directors' Remuneration is desirable. The disclosures contained in this section of the report are therefore given as additional information only and are not intended or required to comply with the Full Listing rules requirement of London Stock Exchange.
Directors and their Interests
The present members of the Board reflecting the changes that occurred during the year are as listed in the Directors Report. The Directors' interests in the shares of the Company are detailed below:-
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1p ordinary shares At 31 March 2008 |
% of issued ordinary share capital (13,517,033 ordinary shares) |
1p ordinary shares At 1 Apr 2007 or on subsequent date of appointment |
% of issued ordinary share capital (11,472,423 ordinary shares) |
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C D Buck |
- |
- |
- |
- |
|
T Couling |
37,520 |
0.28% |
37,520 |
0.33% |
|
M Cowley |
773,178 |
5.72% |
771,750 |
6.73% |
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T Cowley |
759,756 |
5.62% |
759,756 |
6.62% |
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T Evans¹ |
- |
n/a |
35,760 |
0.31% |
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C Knapton |
1,717,021 |
12.70% |
1,623,021 |
14.15% |
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J F Watkins² |
1,066,328 |
7.89% |
- |
- |
¹ Resigned 24 April 2007
² Beneficial interest in a Self Invested Pension Plan (SIPP) legally held by trustees Hornbuckle Mitchell Group plc
The Directors had no interest in the share capital of the Company's subsidiary undertakings at 31 March 2008 or on the date on which these financial statements were approved.
Directors' Remuneration Policy
The remuneration policy for the Executive Directors is determined by the Remuneration Committee, which as previously stated consists solely of the Non Executive Directors. The current members of the Committee are C D Buck and J F Watkins. The Committee acts within its agreed terms of reference.
Within the framework of the agreed remuneration policy the Committee determines the remuneration packages of the Executive Directors including the size of, and conditions applying to, awards made under the Company's cash bonus and share option schemes. In preparation for the annual salary review the Committee met on 18 April 2007. The Committee's policy on Executive Directors remuneration will continue to apply for the year to 31 March 2009 and, so far as is practicable, for future years.
The Committee aims to provide Executive Directors' with packages which are sufficiently competitive to attract, retain and motivate individuals of the quality required to achieve the objectives of the Company and thereby enhance shareholder value. Each package consists of a basic salary, discretionary cash bonus and share option plan.
Directors' Remuneration
The Directors' remuneration for the year ended 31 March 2008 was:
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31 March 2008 |
31 March 2007 |
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Table Data Audited
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Salary £ |
Bonus £ |
Total £ |
Total £ |
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Executive Director |
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C Knapton |
87,780 |
- |
87,780 |
98,500 |
|
T Couling |
73,150 |
1,688 |
74,838 |
73,833 |
|
M Cowley |
62,700 |
1,447 |
64,147 |
67,000 |
|
T Cowley |
60,610 |
1,399 |
62,009 |
54,508 |
|
T Evans (Resigned 24 April 2007) |
2,479 |
1,414 |
3,893 |
59,655 |
|
|
-------------- |
---------------- |
------------------- |
-------------------- |
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286,719 |
5,948 |
292,667 |
353,496 |
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-------------- |
-------------- |
------------------- |
-------------------- |
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Non Executive Director |
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C D Buck |
30,000 |
- |
30,000 |
24,582 |
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J Watkins (Appointed 29 January 2007) |
20,000 |
- |
20,000 |
4,167 |
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A R D White (Resigned 16 October 2006) |
- |
- |
- |
31,731 |
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|
-------------------- |
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50,000 |
- |
50,000 |
60,480 |
During the course of the year no Director exercised any share options.
Directors' Service Contracts
After 12 months from appointment, Executive Directors' service contracts provide termination provisions of 6 months notice in writing by either side.
The service contracts for Executive Directors do not provide for any predetermined compensation amounts in the event of early termination other than a standard payment in lieu of notice provision applicable at the Company's discretion.
Non Executive Directors are engaged under letters of appointment for an initial period of 12 months subject to termination by either party upon 3 months notice.
All Executive and Non Executive Directors are subject to retirement and re-election by shareholders in line with the Company's Articles of Association. The Directors do not receive any pension entitlement through their appointment to the Board of the Company.
|
|
Appointment date |
Contract Date |
|
Executive Director |
|
|
|
T Couling |
20/10/2005 |
24/11/2005 |
|
M Cowley |
20/10/2005 |
24/11/2005 |
|
C Knapton |
20/10/2005 |
24/11/2005 |
|
T Cowley |
26/05/2006 |
26/05/2006 |
|
Non Executive Director |
|
|
|
C D Buck |
23/02/2006 |
23/02/2006 |
|
J F Watkins |
29/01/2007 |
29/01/2007 |
Directors' Share Options
At 31 March 2008 the following options had been granted to the Company's Directors and remain current and unexercised:
|
|
Option Exercise price |
Balance as at 31 March 2007 |
Granted during year |
Exercised during year |
Expired/ forfeited during year |
Balance as at 31 March 2008 |
Expiry Date |
|
T Couling |
£0.25 £0.26 |
25,750
|
|
|
|
25,750 114,725 |
31 March 2010 31 March 2010 |
|
M Cowley |
£0.25 |
25,750 |
- |
- |
- |
25,750 |
31 March 2010 |
|
T Cowley |
£0.25 £0.26 |
10,000 |
20,305 |
|
|
10,000 20,305 |
31 March 2010 31 March 2010 |
|
C Knapton |
£0.25 |
37,080 |
- |
- |
- |
37,080 |
31 March 2010 |
The highest share price during the year was £0.340. The lowest share price during the year was £0.225. The closing price of the Company's shares on 31 March 2008 was £0.225 (2007: £0.250).
STATEMENT OF DIRECTORS RESPONSIBILITIES IN THE PREPERATION OF FINANCIAL STATMENTS
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
UK Company law requires the Directors to prepare Group and Company Financial Statements for each financial year. Under that law the Directors are required to prepare Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and have elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
The group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the group; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.
The company financial statements are required by law to give a true and fair view of the state of affairs of the company.
In preparing each of the group and company financial statements, the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and estimates that are reasonable and prudent;
c. for the group financial statements, state whether they have been prepared in accordance with
IFRSs adopted by the EU; and for the company financial statements state whether applicable
UK accounting standards have been followed, subject to any material departures disclosed and
explained in the company financial statements; and
d. prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the group and the company will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the requirements of the Companies Act 1985. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TRAKM8 HOLDINGS PLC
We have audited the group and parent company financial statements which comprise the Consolidated Income Statement, the Consolidated and Parent Company Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated Statement of Recognised Income and Expense, and the related notes.
This report is made solely to the Company's members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
The Directors' responsibilities for preparing the Annual Report, and the group financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union ("EU"), and for preparing the parent company financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the financial statements. The information given in the Directors' Report includes that specific information presented in the Chairman and Chief Executive Officer's reports that is cross referenced from the Review of Business and Outlook sections of the Directors' Report.
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding Directors' remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises only the Highlights, the Chairman's Statement, the Chief Executive Officer's Review, Products & Market, Directors' Report, the Corporate Governance Report and the Directors' Remuneration Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group's and Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion
-
the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the Group's affairs as at 31 March 2008 and of its loss for the year then ended;
-
the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the parent company's affairs as at 31 March 2008;
-
the financial statements have been properly prepared in accordance with the Companies Act 1985; and the information given in the Directors' Report is consistent with the financial statements.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in Note 4 to the financial statements concerning the Group's ability to continue as a going concern. The Group incurred a net loss of £901,165 during the year ended 31 March 2008 and, as of that date, the Group's current liabilities exceeded its current assets by £197,286. These conditions, along with the other matters explained in Note 4 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.
BAKER TILLY UK AUDIT LLP
Registered Auditor
Chartered Accountants
Hartwell House
55-61 Victoria Street
Bristol
BS1 6AD
26 August 2008
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2008
|
|
Notes |
2008 |
2007 |
|
|
|
|
|
|
|
|
|
|
£ |
£ |
|
|
CONTINUING OPERATIONS |
|
|
|
|
|
REVENUE |
6 |
4,656,124 |
6,370,007 |
|
|
Cost of sales |
|
(2,631,725) |
(3,879,599) |
|
|
|
|
|
||
|
Gross profit |
2,024,399 |
2,490,408 |
||
|
|
|
|
|
|
|
Other income |
7 |
78,779 |
- |
|
|
|
|
|
||
|
|
2,103,178 |
2,490,408 |
||
|
|
|
|
||
|
Administrative expenses |
(2,994,453) |
(2,375,739) |
||
|
|
|
|
|
|
|
(LOSS)/PROFIT FROM OPERATIONS |
7 |
(891,275) |
114,669 |
|
|
|
|
|
|
|
|
Finance income |
|
9,547 |
15,052 |
|
|
|
|
|
|
|
|
|
|
(881,728) |
129,721 |
|
|
|
|
|
|
|
|
Finance costs |
8 |
(76,561) |
(39,301) |
|
|
|
|
|
||
|
(LOSS)/PROFIT BEFORE TAXATION |
(958,289) |
90,420 |
||
|
|
|
|
|
|
|
Income tax |
9 |
57,124 |
18,309 |
|
|
|
|
|
||
|
(LOSS)/PROFIT FOR YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF PARENT |
22 |
(901,165) |
108,729 |
|
|
|
|
|
||
|
|
|
|
|
|
|
EARNINGS / (LOSS) PER ORDINARY SHARE (PENCE) |
|
|
|
|
|
Basic EPS |
11 |
(7.6) |
1.0 |
|
|
|
|
|
|
|
|
Diluted EPS |
11 |
(7.6) |
0.9 |
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 March 2008
|
|
|
2008 |
2007 |
|
|
|
|
|
|
|
|
£ |
£ |
|
|
|
|
|
|
Exchange differences on translation of overseas operations |
|
202,930 |
- |
|
|
|
|
|
|
Net income for the year directly recognised in equity |
|
202,930 |
- |
|
|
|
|
|
|
(Loss)/profit for the year |
|
(901,165) |
108,729 |
|
|
|
|
|
|
|
|
|
|
|
Total recognised (expense)/income for the year attributable to the equity holders of the parent company |
|
(698,235) |
108,729 |
CONSOLIDATED BALANCE SHEET
As at March 2008
|
|
|
Group |
||
|
|
|
2008 |
2007 |
|
|
|
|
|
|
|
|
|
Notes |
£ |
£ |
|
|
NON-CURRENT ASSETS |
|
|
|
|
|
Intangible assets |
12 |
1,597,781 |
822,635 |
|
|
Property, plant and equipment |
13 |
478,061 |
508,931 |
|
|
|
|
|
||
|
|
2,075,842 |
1,331,566 |
||
|
|
|
|
||
|
CURRENT ASSETS |
||||
|
Inventories |
15 |
146,027 |
332,522 |
|
|
Trade and other receivables |
16 |
809,751 |
1,272,057 |
|
|
Current tax assets |
|
32,902 |
- |
|
|
Cash and cash equivalents |
|
363,371 |
708,588 |
|
|
|
|
|
||
|
|
1,352,051 |
2,313,167 |
||
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
Bank overdrafts |
19 |
(210,280) |
(269,294) |
|
|
Bank and other loans |
19 |
(50,269) |
(49,209) |
|
|
Trade and other payables |
18 |
(1,287,183) |
(950,477) |
|
|
Obligations under finance leases and hire purchase arrangements |
20 |
(1,605) |
(12,188) |
|
|
Current tax liabilities |
|
- |
(25,091) |
|
|
|
|
|
|
|
|
|
|
(1,549,337) |
(1,306,259) |
|
|
|
|
|
|
|
|
|
|
|
||
|
CURRENT ASSETS LESS CURRENT LIABILITIES |
(197,286) |
1,006,908 |
||
|
|
|
|
||
|
TOTAL ASSETS LESS CURRENT LIABILITIES |
1,878,556 |
2,338,474 |
||
|
|
|
|
||
|
NON CURRENT LIABILITIES |
|
|
|
|
|
Bank and other loans |
19 |
(287,470) |
(837,718) |
|
|
Deferred tax liabilities |
17 |
(18,674) |
(17,805) |
|
|
|
|
|
||
|
NET ASSETS |
1,572,412 |
1,482,951 |
||
|
|
|
|
||
|
EQUITY |
|
|
||
|
Share capital |
21 |
135,170 |
114,724 |
|
|
Share premium account |
22 |
1,256,334 |
754,279 |
|
|
Shares to be issued |
22 |
246,032 |
- |
|
|
Merger reserve account |
22 |
509,837 |
509,837 |
|
|
Share based payment reserve |
22 |
47,787 |
28,624 |
|
|
Translation reserve |
22 |
202,930 |
- |
|
|
Retained earnings |
22 |
(825,678) |
75,487 |
|
|
|
|
|
|
|
|
TOTAL EQUITY ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF THE PARENT |
|
1,572,412 |
1,482,951 |
|
|
|
|
|
|
|
These financial statements were approved by the Directors and authorised for issue on 26 August 2008 and are signed on their behalf by:
C D Buck T Couling
Director Director
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 March 2008
|
|
|
|
|
|
|
Notes |
2008 |
2007 |
|
|
|
|
|
|
|
|
£ |
£ |
|
NET CASH INFLOW FROM OPERATING ACTIVITIES |
24 |
238,909 |
425,622 |
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
Purchases of property, plant and equipment |
|
(23,153) |
(71,203) |
|
Proceeds on disposal of property, plant and equipment |
1,479 |
999 |
|
|
Expenditure on product development |
(124,094) |
(220,420) |
|
|
Acquisition of subsidiary net of cash acquired |
(319,573) |
(189,475) |
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(465,341) |
(480,099) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Repayment of loans |
(59,771) |
(244,565) |
|
|
Issue of Loan Stock |
- |
500,000 |
|
|
|
|
|
|
|
NET CASH (USED IN)/FROM FINANCING ACTIVITIES |
(59,771) |
255,435 |
|
|
|
|
|
|
|
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS |
(286,203) |
200,958 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
439,294 |
238,336 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR |
153,091 |
439,294 |
|
Cash and cash equivalents comprise 'Cash and cash equivalents' and 'Bank overdrafts'.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
1. GENERAL INFORMATION
Trakm8 Holdings PLC is a public limited company ("Company") incorporated in the United Kingdom under the Companies Act 1985 (registration number 05452547). The Company is domiciled in the United Kingdom and its registered address is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. The Company's Ordinary Shares are traded on the Alternative Investment Market ("AIM").
The Group's principal activity is the marketing, manufacture and distribution of vehicle telematics equipment and services. The Company's principal activity is to act as a holding company for its subsidiaries.
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 International Financial Reporting Interpretations Committee ("IFRIC") interpretations as endorsed by the European Union, and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS.
3. BASIS OF PREPARATION
These are the Group's first financial statements prepared under IFRS and IFRS 1 "First Time Adoption of International Financial Reporting Standards" has been applied. The last financial statements under UK Generally Accepted Accounting Principles ("UK GAAP") were for the year to 31 March 2007 and the comparatives have been restated to comply with IFRS. The transition from UK GAAP to IFRS is explained in note 28.
The accounting policies set out in note 4 have been applied consistently to all periods presented in these consolidated financial statements and in preparing an opening balance sheet at 1 April 2006 for the purposes of transition to IFRS.
4. ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions which are based on management's best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and
assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes.
From these financial statements the Group decided for operational reasons to reclassify licence fees paid from Cost of Sales to Operating Expenses. The 2007 comparatives have been adjusted to similarly reclassify the licence fees paid.
GOING CONCERN
These financial statements have been prepared on a going concern basis. The Directors believe that the Group has sufficient funds for the foreseeable future and have an expectation of improved trading for the coming year. Based on these assessments the Directors are confident that the current year losses shown on the Income Statement and the Net Current Liabilities shown on the Balance Sheet are exceptional rather than indicative of any long term trend.
During the year the Group incurred a loss after tax of £901,165 and ended the year with net current liabilities of £197,286. In preparing these financial statements on a going concern basis the Directors considered the Group's overall financial position and its strategy; and made a number of decisions to re-focus the activities of the Group. The Directors have prepared detailed forecasts which set out the ongoing cash requirements of the business, taking into account such items as anticipated trading performance, R&D government grant funding, relevant currency exchange rates and including planned manufacturing efficiencies. There are inherent uncertainties in the preparation of such forecasts where elements of such forecasts are not fully under the Group's control. Nevertheless the Directors believe that the assumptions used in these forecasts are reasonable and that they have taken into account all factors which may reasonably be expected to be identified in the preparation of such forecasts. Based on these forecasts and monthly management accounts to the date of these statements the Directors are confident that it is appropriate to prepare the financial statements on the going concern basis and the financial statements do not include any adjustments that would result from the Group not being able to meet its liabilities as they fall due.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
The trading results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
All intra-group transactions, balances, income and expenditure are eliminated on consolidation.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date irrespective of the extent of any minority interest. The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition) is recognised directly in the income statement.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.
SHARE-BASED PAYMENTS
The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.
The fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. No expense is recognised for awards that do not ultimately vest.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables are recognised and carried at original invoice amount less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due. The impairment is recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. For the purposes of the cashflow statement, cash and cash equivalents includes bank overdrafts.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Trade payables
Trade payables are recognised at original invoice amount.
Convertible loan notes
Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of the issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.
The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.
GOODWILL
Goodwill arising on consolidation is recorded as an intangible asset and is the surplus of the cost of acquisition over the Group's interest in the fair value of identifiable net assets acquired. Goodwill is reviewed annually for impairment. Any impairment identified as a result of the review is charged in the income statement. Negative goodwill is written off in the year in which it arises.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
INTANGIBLE ASSETS OTHER THAN GOODWILL
An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. An annual impairment review is undertaken on all intangible assets and any impairment identified is charged to the income statement. Such intangible assets are carried at cost less amortisation. Amortisation is charged to 'Administrative expenses' in the Income statement on a straight line basis over the intangible assets' useful economic life (1-10 years).
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development expenditure is capitalised as an intangible asset only if the following conditions are met:
-
an asset is created that can be identified;
-
it is probable that the asset created will generate future economic benefit;
-
the development cost of the asset can be measured reliably;
-
it meets the Group's criteria for technical and commercial feasibility; and
-
sufficient resources are available to meet the development to either sell or use as an asset.
Development expenditure thus capitalised is amortised on a straight-line basis over its useful life. Where the criteria are not met, development expenditure is recognised as an expense in the 'Administrative expenses' line of the Income statement.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less any subsequent accumulated depreciation or impairment losses. With the exception of freehold buildings held at 31 March 2006 (the date of transition to IFRS), cost represents purchase price together with any incidental costs to acquisition. As permitted by IFRS 1, the cost of freehold buildings at 31 March 2006 represents deemed cost, being the market value of the property for existing use at that date.
Depreciation is provided on all property, plant and equipment, other than freehold land, at rates calculated to write each asset down to its estimated residual value over its expected useful life, as follows:
|
Buildings |
2% |
straight line |
|
Furniture, fixtures and equipment |
25% |
reducing balance |
|
Computer equipment |
33% |
straight line |
Assets held under finance leases or hire purchase arrangements are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant agreement.
The assets' residual values and useful lives are reviewed at each balance sheet date and adjusted if appropriate. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
INVENTORIES
Inventories are valued at the lower of cost and net realisable value. In general cost is determined on a first in first out basis and includes all direct expenditure and production overheads based on a normal level of activity. Net realisable value is the price at which the stocks can be sold in the normal course of business after allowing for the costs of realisation and where appropriate for the costs of conversion from its existing state to a finished condition. Provision is made for obsolete, slow moving and defective stocks.
LEASES
Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have been transferred to the Group, are capitalised in the balance sheet and depreciated over the shorter of the lease term or their useful lives. The asset is recorded at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease. The capital elements of future obligations under finance leases are included in liabilities in the balance sheet and analysed between current and non-current amounts. The interest elements of future obligations under finance leases are charged to the income statement over the periods of the leases and represent a constant proportion of the balance of capital repayments outstanding in accordance with the effective interest rate method.
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. The cost of operating leases (net of any incentives received from the lessor) is charged to the income statement on a straight line basis over the periods of the leases.
FOREIGN CURRENCIES
Foreign currency assets and liabilities are converted to sterling at the rates of exchange ruling at the end of the financial year. Transactions in foreign currencies are converted to sterling at the rates of exchange ruling at the transaction date. All of the resulting exchange differences are recognised in the Income Statement as they arise.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are classified as equity and transferred to the Group's reserves. Such translation differences are recognised as income or expense in the period in which the operation is disposed of.
TAXATION
The tax expense represents the sum of the current tax expense and deferred tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted.
REVENUE RECOGNITION
Revenue represents the total of amounts receivable for goods and services provided excluding value added tax. Revenue is recognised on the delivery of the goods to the customer. Where a service is provided covering a future period the applicable revenue is shown as deferred income under Current Liabilities.
WARRANTY CLAIMS
Provision is made for liabilities arising in respect of expected warranty claims.
GOVERNMENT GRANTS
Government grants towards research and development projects are recognised as income over the periods necessary to match them with the related costs and are included within Other income.
SEGMENTAL REPORTING
A segment is a distinguishable component of the Group that is engaged in providing products and services. As the risks and rates of return are predominantly affected by differences in these products and services, the primary format for reporting segment information is based on business segments.
EQUITY
Equity comprises the following:
-
Share capital represents the nominal value of equity shares.
-
Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.
-
Shares to be issued represents the equity element of deferred consideration arising on business combinations.
-
Merger Reserve represents the excess over nominal value of the fair value of consideration received for equity shares issued on reverse acquisition of subsidiaries, net of expenses of the share issue prior to the date of transition to IFRS
-
Share based payment reserve represents the cumulative periodic charge for outstanding commitments to equity settled share based payments under IFRS 2.
-
Translation reserve represents cumulative foreign exchange gains and losses on retranslation of overseas operations.
-
Retained earnings represents retained profits.
STANDARDS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) NOT EFFECTIVE FOR THE CURRENT YEAR AND NOT ADOPTED BY THE GROUP
The following standards and interpretations have been issued by the IASB. They become effective after the current year and have not been early adopted by the Group:
|
International Financial Reporting Standards (IFRS) |
Effective date commencing |
To be adopted by the Group during years |
|
|
IFRS 8 |
Operating Segments |
01.01.2009 |
31.03.2009 |
|
IAS1(a) |
Amendment - Presentation of Financial Statements |
01.01.2009 |
31.03.2009 |
|
IAS 23 |
Amendment - Borrowing Costs |
01.01.2009 |
31.03.2009 |
|
|
|
|
|
|
International Financial Reporting Interpretations Committee (IFRIC) |
|
|
|
|
IFRIC 12 |
Service concession agreements |
01.01.2008 |
31.03.2009 |
|
IFRIC 13 |
Customer loyalty programmes |
01.07.2008 |
31.03.2010 |
|
IFRIC 14 |
IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction |
01.01.2008 |
31.03.2009 |
|
IFRIC 15 |
Agreements for construction of real estate |
01.01.2009 |
31.03.2009 |
|
IFRIC 16 |
Hedges of a net investment in foreign operations |
01.01.2009 |
31.03.2009 |
The impact on the Group's financial statements is not expected to be material.
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
Critical judgements in applying the group's accounting policies
In the process of applying the Group's accounting policies, which are described in note 4, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
Valuation of intellectual property on acquisition of subsidiaries
Note 14 details the fair values ascribed by management to the assets and liabilities acquired by the Group when it acquired the share capital of PJSoft s.r.o. on 7 August 2007. In assessing the fair value of the intellectual property acquired, management have considered the current and likely future performance of PJSoft. Particular attention has been paid to the potential introduction of new products and services to the PJSoft portfolio and the return anticipated from these and existing product sales. The Directors therefore believe that the fair value of the acquisition is both appropriate and a realistic assessment of its long term value to the Group.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Recoverability of internally-generated intangible asset
During the year, management reconsidered the recoverability of its internally generated intangible asset which is included in its balance sheet at £344,514. The projects continue to progress satisfactorily and management continue to believe that the anticipated revenues will enable the carrying amount to be recovered in full.
6. SEGMENTAL ANALYSIS
The Group's primary segmental reporting format is based on the Group's management and internal reporting structure of it's business segments. Secondary information is reported by geographical area of sales.
Business segments
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items include central overhead expenses, assets and liabilities, which cannot be reasonably allocated. Inter-segment transactions are conducted on an arm's length basis in a manner similar to transactions with third parties.
Segment results include transfers between business segments. Those transfers are eliminated on consolidation. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.
|
Year ended 31 March 2008 |
Telematics £ |
Projects £ |
Unallocated £ |
Total £ |
|
|
|
|
|
|
|
Segment revenue |
4,656,124 |
- |
- |
4,656,124 |
|
Other income |
- |
78,779 |
- |
78,779 |
|
Segment result |
485,527 |
(238,478) |
(1,138,324) |
(891,275) |
|
Finance costs |
- |
- |
(67,014) |
(67,014) |
|
Profit/(Loss) before tax |
485,527 |
(238,478) |
(1,205,338) |
(958,289) |
|
Income tax |
- |
- |
57,124 |
57,124 |
|
Profit/(Loss) for year |
485,527 |
(238,478) |
(1,180,084) |
(901,165) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
2,419,805 |
78,779 |
929,310 |
3,427,893 |
|
|
|
|
|
|
|
Segment liabilities |
705,078 |
- |
844,259 |
1,549,337 |
|
|
|
|
|
|
|
Other information |
|
|
|
|
|
- Purchase of non-current assets |
124,094 |
- |
23,153 |
147,247 |
|
- Depreciation and amortisation |
178,304 |
- |
59,264 |
237,568 |
|
|
|
|
|
|
|
Year ended 31 March 2007 |
Telematics £ |
Projects £ |
Unallocated £ |
Total £ |
|
|
|
|
|
|
|
Segment revenue |
6,370,007 |
- |
- |
6,370,007 |
|
Segment result |
1,337,268 |
(445,520) |
(777,079) |
114,669 |
|
Finance costs |
- |
- |
(24,249) |
(24,249) |
|
Profit/(Loss) before tax |
1,337,268 |
(445,520) |
(801,328) |
90,420 |
|
Income tax |
- |
- |
18,309 |
18,309 |
|
Profit/(Loss) for year |
1,337,268 |
(445,520) |
(783,019) |
108,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
2,335,240 |
- |
1,309,493 |
3,644,733 |
|
|
|
|
|
|
|
Segment liabilities |
613,823 |
- |
692,436 |
1,306,259 |
|
|
|
|
|
|
|
Other information |
|
|
|
|
|
- Purchase of non-current assets |
220,420 |
- |
71,203 |
291,623 |
|
- Depreciation and amortisation |
114,436 |
- |
55,574 |
170,010 |
Geographical segments
The Group's operations are located in the UK and the Czech Republic. The following table provides an analysis of the Group's sales by geography based upon location of the Group's customers. Segment assets and capital expenditure are based on the geographical location of assets.
|
|
Revenue |
Other Income |
Segment assets |
Capital expenditure |
||||
|
|
2008 |
2007 |
2008 |
2007 |
2008 |
2007 |
2008 |
2007 |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
United Kingdom |
2,709,333 |
3,440,539 |
78,779 |
- |
2,423,809 |
3,644,733 |
147,247 |
1,077,864 |
|
Europe |
1,056,139 |
2,248,965 |
- |
- |
840,967 |
- |
836,076 |
- |
|
Rest of the World |
890,652 |
680,503 |
- |
- |
163,117 |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
4,656,124 |
6,370,007 |
78,779 |
- |
3,427,893 |
3,644,733 |
983,323 |
1,077,864 |
|
|
|
|
|
|
|
|
|
|
Additions to capital expenditure include additions resulting from acquisitions through business combinations.
7. (LOSS)/PROFIT FROM OPERATIONS
|
|
2008 |
2007 |
||
|
|
£ |
£ |
||
|
(Loss)/profit from operations is stated after charging / (crediting): |
|
|
||
|
|
|
|
||
|
Other income - Government grant |
(78,779) |
- |
||
|
|
|
|
||
|
Depreciation - owned fixed assets - assets on finance leases |
52,272 6,992 |
48,467 7,107 |
||
|
Negative goodwill written off |
- |
(14,198) |
||
|
Amortisation of intangible assets |
178,304 |
114,436 |
||
|
Operating lease rentals |
|
|
||
|
Equipment |
5,145 |
19,436 |
||
|
Land and buildings |
19,339 |
27,025 |
||
|
Research and development |
43,309 |
59,470 |
||
|
Loss on foreign exchange transactions |
11,106 |
18,834 |
||
|
Write-downs of inventories recognised as an expense |
91,608 |
- |
||
|
Staff costs (note 10) |
1,549,331 |
1,519,964 |
||
|
|
|
|
||
|
|
2008 |
2007 |
||
|
|
£ |
£ |
||
|
Auditor's remuneration |
|
|
||
|
Baker Tilly UK Audit LLP and associates |
|
|
||
|
- audit services |
|
|
||
|
Parent Company and consolidation |
8,200 |
7,000 |
||
|
Subsidiary audits |
32,000 |
31,000 |
||
|
- tax advisory services |
15,525 |
18,129 |
||
|
- other services |
6,250 |
4,750 |
||
8. FINANCE COSTS
|
|
2008 |
2007 |
|
|
£ |
£ |
|
|
|
|
|
Bank interest payable |
42,404 |
25,802 |
|
Interest on loan stock |
33,754 |
12,482 |
|
Interest on finance leases |
403 |
1,017 |
|
|
|
|
|
|
76,561 |
39,301 |
|
|
|
|
9. TAXATION
|
|
2008 |
2007 |
|
|
|
|
|
|
£ |
£ |
|
Current tax |
- |
25,091 |
|
|
|
|
|
Adjustment in respect of prior period |
(25,091) |
- |
|
R&D Tax Credit |
(32,902) |
(47,699) |
|
|
|
|
|
|
(57,993) |
(22,608) |
|
Deferred tax |
|
|
|
Deferred tax charge for current year |
(163) |
4,299 |
|
Adjustment in respect of prior periods |
1,032 |
- |
|
|
|
|
|
|
|
|
|
tax credit |
(57,124) |
(18,309) |
Factors affecting the tax charge
The tax assessed for the years are lower than the applicable rate of corporation tax in the UK. The difference is explained below:
|
|
2008 |
2007 |
|
|
|
|
|
|
£ |
£ |
|
(Loss)/profit on ordinary activities before tax |
(958,289) |
90,420 |
|
(Loss)/profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2007: 30%) |
(287,487) |
27,126 |
|
|
|
|
|
Effects of: |
|
|
|
Expenses not deductible/income not taxable |
56,712 |
8,499 |
|
Share Option adjustment |
3,491 |
6,385 |
|
Temporary differences |
15,624 |
(1,999) |
|
Tax losses for which no deferred income tax asset was recognised |
211,497 |
- |
|
Marginal relief |
- |
(10,621) |
|
Adjustment in respect of previous periods |
(56,961) |
(47,699) |
|
|
|
|
|
Total tax |
(57,124) |
(18,309) |
10. EMPLOYEES
|
|
2008 |
2007 |
|
|
No. |
No. |
|
The average monthly number of persons (including Directors) employed by the Group was: |
|
|
|
Research and development |
7 |
5 |
|
Selling and distribution |
17 |
8 |
|
Production |
12 |
11 |
|
Administration |
12 |
12 |
|
|
|
|
|
|
48 |
36 |
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Staff costs for the employees and Directors (included under Administrative expenses): |
|
|
|
|
|
|
|
Wages and salaries |
1,366,380 |
1,353,197 |
|
Social Security costs |
163,788 |
145,485 |
|
Share Based Payments |
19,163 |
21,282 |
|
|
|
|
|
|
1,549,331 |
1,519,964 |
Included in the above are costs relating to Directors, who are the key management personnel of the Group, as follows:
|
Directors' emoluments |
342,667 |
413,976 |
The Directors in office during the year ended 31 March 2008 received no pension contributions (2007: Nil).
Emoluments disclosed above include the following amounts paid to the highest paid director:-
|
Emoluments for qualifying services |
87,780 |
98,500 |
Further details of Directors' remuneration can be found in the Directors' Remuneration report.
11. (LOSS)/EARNINGS PER ORDINARY SHARE
The (loss)/earnings per ordinary share has been calculated using the (loss)/profit for the year and the weighted average number of ordinary shares in issue during the year as follows:
|
|
|
2008 |
2007 |
|
|
|
£ |
£ |
|
(Loss)/profit for the year after taxation |
|
(901,165) |
108,729 |
|
|
|
|
|
|
|
|
No. |
No. |
|
Number of ordinary shares of 1p each |
|
13,517,033 |
11,472,423 |
|
|
|
|
|
|
Number of ordinary shares of 1p each (diluted) |
|
14,096,212 |
12,596,941 |
|
|
|
|
|
|
Basic weighted average number of ordinary shares of 1p each |
|
11,926,158 |
11,175,215 |
|
Basic weighted average number of ordinary shares of 1p each (diluted) |
|
11,926,158 |
11,760,871 |
|
|
|
= |
|
|
Basic (loss)/earnings (pence per share) |
|
(7.6)p |
1.0p |
|
|
|
|
|
|
Diluted (loss)/earnings (pence per share) |
|
(7.6)p |
0.9p |
In 2008 the weighted average number of shares for the purpose of calculating the diluted earnings per ordinary share is identical to that used for the basic earnings per ordinary share as any adjustment to the number of ordinary shares would be anti-dilutive.
|
12. |
INTANGIBLE ASSETS |
|
||||
|
|
|
Goodwill |
Development Costs |
Intellectual Property |
Total |
|
|
|
|
£ |
£ |
£ |
£ |
|
|
|
COST |
|
|
|
|
|
|
|
As at 1 April 2006 |
- |
- |
- |
- |
|
|
|
Acquisition of IPL |
(14,198) |
- |
716,651 |
702,453 |
|
|
|
Additions |
- |
220,420 |
- |
220,420 |
|
|
|
Charged to income |
14,198 |
- |
- |
14,198 |
|
|
|
|
|
|
|
|
|
|
|
As at 31 March 2007 |
- |
220,420 |
716,651 |
937,071 |
|
|
|
Acquisition of PJSoft |
- |
- |
633,022 |
633,022 |
|
|
|
Additions |
- |
124,094 |
- |
124,094 |
|
|
|
Exchange Difference |
- |
- |
196,334 |
196,334 |
|
|
|
|
|
|
|
|
|
|
|
As at 31 March 2008 |
- |
344,514 |
1,546,007 |
1,890,521 |
|
|
|
|
|
|
|
|
|
|
|
AMORTISATION |
|
|
|
|
|
|
|
As at 1 April 2006 |
- |
- |
- |
- |
|
|
|
Charged to income |
- |
42,771 |
71,665 |
114,436 |
|
|
|
|
|
|
|
|
|
|
|
As at 31 March 2007 |
- |
42,771 |
71,665 |
114,436 |
|
|
|
Charged to income |
- |
70,742 |
107,562 |
178,304 |
|
|
|
|
|
|
|
|
|
|
|
As at 31 March 2008 |
- |
113,513 |
179,227 |
292,740 |
|
|
|
|
|
|
|
|
|
|
|
NET BOOK VALUE |
|
|
|
|
|
|
|
As at 31 March 2008 |
- |
231,001 |
1,366,780 |
1,597,781 |
|
|
|
|
|
|
|
|
|
|
|
As at 31 March 2007 |
- |
177,649 |
644,986 |
822,635 |
|
|
|
|
|
|
|
|
|
Amortisation expenses of £178,304 (2007: £114,436) have been charged in Administrative expenses.
13. PLANT, PROPERTY & EQUIPMENT
|
|
|
Freehold property |
Furniture, fixtures and equipment |
Computer equipment |
Total |
|
|
|
£ |
£ |
£ |
£ |
|
COST |
|
|
|
|
|
|
As at 1 April 2006 |
|
420,000 |
22,773 |
44,563 |
487,336 |
|
Additions |
|
- |
23,529 |
47,674 |
71,203 |
|
Acquired with IPL |
|
- |
50,204 |
33,584 |
83,788 |
|
Disposals |
|
- |
(1,141) |
- |
(1,141) |
|
|
|
|
|
|
|
|
As at 31 March 2007 |
|
420,000 |
95,365 |
125,821 |
641,186 |
|
Additions |
|
- |
419 |
22,734 |
23,153 |
|
Acquired with PJSoft |
|
- |
20,188 |
5,038 |
25,226 |
|
Exchange differences |
|
- |
5,582 |
1,563 |
7,145 |
|
Disposals |
|
- |
(4,387) |
- |
(4,387) |
|
|
|
|
|
|
|
|
As at 31 March 2008 |
|
420,000 |
117,167 |
155,156 |
692,323 |
|
|
|
|
|
|
|
|
DEPRECIATION |
|
|
|
|
|
|
As at 1 April 2006 |
|
- |
7,779 |
23,116 |
30,895 |
|
Charged to income |
|
4,408 |
16,198 |
34,968 |
55,574 |
|
Acquired with IPL |
|
- |
18,683 |
27,245 |
45,928 |
|
Disposals |
|
- |
(142) |
- |
(142) |
|
|
|
|
|
|
|
|
As at 31 March 2007 |
|
4,408 |
42,518 |
85,329 |
132,255 |
|
Charged to income |
|
4,408 |
15,968 |
38,888 |
59,264 |
|
Acquired with PJSoft |
|
- |
16,718 |
3,038 |
19,756 |
|
Exchange differences |
|
- |
4,952 |
943 |
5,895 |
|
Disposals |
|
- |
(2,908) |
- |
(2,908) |
|
|
|
|
|
|
|
|
As at 31 March 2008 |
|
8,816 |
77,248 |
128,198 |
214,262 |
|
|
|
|
|
|
|
|
NET BOOK VALUE |
|
|
|
|
|
|
As at 31 March 2008 |
|
411,184 |
39,919 |
26,958 |
478,061 |
|
|
|
|
|
|
|
|
As at 31 March 2007 |
|
415,592 |
52,847 |
40,492 |
508,931 |
Included within freehold property is £199,585 (2007: £199,585) relating to land which is not depreciated. The net book value of plant and computer equipment includes £14,032 (2007: £21,071) in respect of assets held under finance leases and hire purchase contracts. The depreciation charge in respect of these assets was £6,992 (2007: £7,107).
Total depreciation expenses of £59,264 (2007: £55,574) have been charged in Administrative expenses.
14. ACQUISITION OF PJSOFT S.R.O. ("PJS")
On 7 August 2007 the Company acquired the entire issued share capital of PJ Soft s.r.o.. The consideration was €385,000 in cash paid to the vendors on 7 August 2007, €150,000 payable on 7 August 2008 and 340,136 and 453,516 Ordinary shares to be allotted and issued to the vendors on 7 August 2008 and 7 August 2009 respectively.
The deferred cash consideration of €150,000 has been discounted at a rate of 8% in order to arrive at the present value as at the date of acquisition. The Ordinary shares have been valued at 31.0 pence being the mid market closing share price of Trakm8 Holdings at the date of acquisition. The transaction has been accounted for by the purchase method of accounting as detailed in IFRS3 (Business combinations).
The following assets and liabilities were acquired at the date of acquisition:
|
|
|
Book Value as at August 2007 £ |
Fair Value as at August 2007 £ |
|
Intangible Assets |
|
- |
633,022 |
|
Property, plant and equipment |
|
5,470 |
5,470 |
|
Inventories |
|
3,407 |
3,407 |
|
Trade and other receivables |
|
21,326 |
21,326 |
|
Cash and cash equivalents |
|
4,672 |
4,672 |
|
Trade and other payables |
|
(4,091) |
(4,091) |
|
|
|
|
|
|
|
|
30,784 |
663,806 |
|
|
|
|
|
|
Goodwill |
|
|
- |
|
|
|
|
|
|
Total Consideration |
|
|
663,806 |
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
|
|
|
|
|
Cash |
|
|
259,259 |
|
Deferred cash |
|
|
93,528 |
|
Costs of acquisition |
|
|
64,986 |
|
Fair value of shares issued |
|
|
246,033 |
|
|
|
|
|
|
|
|
|
663,806 |
The results of PJS have been consolidated in the Income statement for the Group for the eight months from the date of acquisition to 31 March 2008.
Intangible assets represent Intellectual Property owned by PJS. The Directors have reviewed the fair value of these assets and revalued them at the date of acquisition. The valuation has been based on the expected licence fee income to be received over the next 10 years.
PJS contributed £96,277 of revenue and £13,454 to the Group's loss before tax for the period between the date of acquisition and the balance sheet date.
If the acquisition of PJS. had been completed on the first day of the financial year, Group revenues for the period would have been increased by £37,278 and the Group Loss attributable to equity holders of the parent would have been increased by £10,283.
15. INVENTORIES
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Finished goods and goods for resale |
146,027 |
332,522 |
The cost of inventories recognised as an expense and included in the cost of sales amounted to £2,631,725 (2007: £3,879,599).
16. TRADE AND OTHER RECEIVABLES
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Trade receivables |
675,997 |
1,180,083 |
|
Other receivables |
78,779 |
6,356 |
|
Prepayments |
54,975 |
55,110 |
|
VAT recoverable |
- |
30,508 |
|
|
|
|
|
|
809,751 |
1,272,057 |
The analysis of trade receivables by currency is as follows:
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Euro |
9,566 |
362,786 |
|
Pound sterling |
639,934 |
817,297 |
|
Other |
26,497 |
- |
|
|
|
|
|
|
675,997 |
1,180,083 |
An allowance for impairment is made where there is an identified event which, based on previous experience, is evidence of a reduction in the recoverability of the outstanding amount. An allowance has been made for estimated irrecoverable trade receivables of £26,065 (2007: £ Nil). Trade receivables of £30,745 are past due, but not provided for.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair values.
|
|
2008 |
2007 |
|
|
|
|
|
|
£ |
£ |
|
|
|
|
|
As at 1 April |
(17,805) |
(13,506) |
|
|
|
|
|
Charged to income (note 9) |
(869) |
(4,299) |
|
|
|
|
|
Balance at 31 March |
(18,674) |
(17,805) |
|
|
|
|
|
Revaluation of building |
(18,674) |
(18,837) |
|
|
|
|
|
Accelerated tax depreciation |
- |
1,032 |
|
|
|
|
|
|
(18,674) |
(17,805) |
At the balance sheet date, the Group had unused tax losses of £1,079,000 (2007: £396,396) available for offset against future profits. No deferred tax asset has been recognised in respect of this due to the unpredictability of future profit streams.
18. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Trade payables |
766,337 |
793,714 |
|
Taxation and social security |
89,294 |
36,426 |
|
Other payables |
140,021 |
21,518 |
|
Accruals and deferred income |
291,531 |
98,819 |
|
|
|
|
|
|
1,287,183 |
950,477 |
|
|
|
|
The Directors consider that the carrying amount of trade payables approximates to their fair value.
19. BORROWINGS
|
|
2008 |
2007 |
|
|
|
£ |
£ |
|
|
Bank overdrafts |
210,280 |
269,294 |
|
|
Bank Loan |
235,060 |
248,534 |
|
|
DTi Loans |
102,679 |
138,393 |
|
|
Loan Stock |
- |
500,000 |
|
|
|
|
|
|
|
|
548,019 |
1,156,221 |
|
|
|
|
|
|
|
|
|
|
|
|
On demand or within one year - Overdraft |
210,280 |
269,294 |
|
|
- Other loans |
50,269 |
49,209 |
|
|
After one and within two years |
51,415 |
550,271 |
|
|
After two and within five years |
86,165 |
117,878 |
|
|
After five years |
149,890 |
169,569 |
|
|
|
|
|
|
|
|
548,019 |
1,156,221 |
|
|
Less: Amount due for settlement within one year (shown as current liabilities) |
(260,549) |
(318,503) |
|
|
|
|
|
|
|
Amount due for settlement after more than one year |
287,470 |
837,718 |
|
|
|
|
|
|
Bank overdrafts are repayable on demand and secured by a floating charge over the assets of the Group. Interest is payable at 2.5% over base rate and the effective interest rate was 8.0% (2007: 7.3%).
The bank loan is secured by a fixed and floating charge on all the assets of Trakm8 Limited. It is repayable by instalments of £2,660 per month until 2019 and bears interest at a fixed rate of 7.60%.
The DTi loans were provided to IPL in 2006 by National Westminster Bank under the Small Firms Loan Guarantee Scheme. The two loans are each repayable at the rate of £1,488 per month and interest is payable at the rate of 3.5% over Base rate. The average effective interest rate on the loans was 9.0% (2007: 8.3%). During 2007 the loans were transferred to HSBC under the same terms.
In January 2007 the Company issued £500,000 of 9% Convertible Unsecured Loan Stock. On 31 December 2007 the subscribers elected to convert their holdings into 2,044,610 ordinary shares which were admitted to AIM on 11 January 2008.
20. OBLIGATIONS UNDER FINANCE LEASES
|
|
Minimum lease payments |
Present value of minimum lease payments |
||
|
|
2008 |
2007 |
2008 |
2007 |
|
|
£ |
£ |
£ |
£ |
|
Amounts payable under finance leases: |
|
|
|
|
|
Due within one year |
1,655 |
12,596 |
1,605 |
12,188 |
|
Less future finance charges |
(50) |
(408) |
|
|
|
|
|
|
|
|
|
Present value |
1,605 |
12,188 |
|
|
|
|
|
|
|
|
All lease obligations are denominated in sterling and are secured by the lessor's rights over the leased assets. The fair value of the lease obligations approximates to their carrying amount.
21. SHARE CAPITAL
|
|
2008 |
2007 |
||
|
|
No's '000's |
£ |
No's '000's |
£ |
|
Authorised |
|
|
|
|
|
Ordinary shares of 1p each |
200,000 |
2,000,000 |
200,000 |
2,000,000 |
|
|
|
|
|
|
|
Allotted, issued and fully paid |
|
|
|
|
|
Ordinary shares of 1p each |
13,517 |
135,170 |
11,472 |
114,724 |
On 7 August 2007 the Company acquired the entire issued share capital of PJSoft s.r.o, full details of which are given in note 14 above. In part consideration the Company is to issue 340,136 ordinary shares on 7 August 2008 and a further 453,516 ordinary shares on 7 August 2009.
On 10 January 2008 the total value of the Loan Stock (£522,500) inclusive of accrued interest of £22,500 was converted into 2,044,610 ordinary shares of 1p each.
22. RESERVES
|
|
Share Capital |
Share premium |
Shares to be issued |
Merger Reserve |
Share based payment reserve |
Translation reserve |
Retained Earnings |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
31 March 2006 |
110,260 |
435,087 |
- |
509,837 |
7,342 |
- |
(33,242) |
1,029,284 |
|
|
|
|
|
|
|
|
|
|
|
Shares Issued |
4,464 |
319,192 |
- |
- |
- |
- |
- |
323,656 |
|
IFRS2 Share based payments |
- |
- |
- |
- |
21,282 |
- |
- |
21,282 |
|
Profit for the year |
- |
- |
- |
- |
- |
- |
108,729 |
108,729 |
|
|
|
|
|
|
|
|
|
|
|
As at 31 March 2007 |
114,724 |
754,279 |
- |
509,837 |
28,624 |
- |
75,487 |
1,482,951 |
|
|
|
|
|
|
|
|
|
|
|
Shares issued |
20,446 |
502,055 |
- |
- |
- |
- |
- |
522,501 |
|
Shares to be issued |
- |
- |
246,032 |
- |
- |
- |
- |
246,032 |
|
Exchange differences on translation of overseas operations |
- |
- |
- |
- |
- |
202,930 |
- |
202,930 |
|
IFRS2 Share based payments |
- |
- |
- |
- |
19,163 |
- |
- |
19,163 |
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(901,165) |
(901,165) |
|
|
|
|
|
|
|
|
|
|
|
As at 31 March 2008 |
135,170 |
1,256,334 |
246,032 |
509,837 |
47,787 |
202,930 |
(825,678) |
1,572,412 |
|
|
|
|
|
|
|
|
|
|
23. SHARE-BASED PAYMENTS
Trakm8 Holdings PLC has issued options (under the Trakm8 Approved Option Scheme) to subscribe for ordinary shares of 1p in the Company. The purpose of the Option Scheme is to retain and motivate eligible employees.
The exercise price and number of shares to which the options relate are as follows:
|
Option Exercise Price |
Balance as at 31 March 2007 |
Granted during year |
Exercised during year |
Expired/forfeited during the year |
Balance as at 31 March 2008 |
Expiry Date |
|
25p |
291,185 |
229,450 |
- |
166,885 |
353,750 |
31 March 2010 |
|
26p |
- |
225,429 |
- |
- |
225,429 |
30 September 2010 |
|
Totals |
291,185 |
454,879 |
- |
166,885 |
579,179 |
|
The Group charged £19,163 to the Income Statement in respect of Share-Based Payments for the financial year ended 31 March 2008 (2007: £21,282).
The highest share price during the year was £0.34. The lowest share price during the year was £0.225. The closing share price on 31 March 2008 was £0.225 (2007: £0.25). The exercise of all share options is the closing market price on the day of grant.
The fair value of the equity settled share options granted is estimated as at the date of grant using the Black Scholes option pricing model taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the years ended 31 March 2007 and 31 March 2008:
|
|
|
|
Historical volatility |
8.9% |
|
Dividend Yield (declared) |
0.0% |
|
Risk-free interest rate |
4.8% |
A vesting period of 1 or 2 years is applicable according to the terms of grant.
24. CASH FLOWS
|
|
|
|
|
|
|
|
2008 |
2007 |
|
|
|
£ |
£ |
|
A |
Reconciliation of (loss)/profit before tax to net cash flow from operating activities |
|
|
|
|
(Loss)/profit before tax |
(958,289) |
90,420 |
|
|
Depreciation |
59,264 |
55,574 |
|
|
Bank and other interest charges |
67,014 |
24,249 |
|
|
Amortisation of intangible assets |
178,304 |
114,436 |
|
|
Negative goodwill written off |
- |
(14,198) |
|
|
Share based payments |
19,163 |
21,282 |
|
|
|
|
|
|
|
Net loss (profit) before changes in working capital |
(634,544) |
291,763 |
|
|
Movement on retranslation of overseas operations |
5,346 |
- |
|
|
Movement in inventories |
189,902 |
107,417 |
|
|
Movement in trade and other receivables |
483,632 |
(158,967) |
|
|
Movement in trade and other payables |
261,587 |
166,421 |
|
|
|
|
|
|
|
Cash generated from operations |
305,923 |
406,634 |
|
|
|
|
|
|
|
Interest paid |
(76,561) |
(39,301) |
|
|
Interest received |
9,547 |
15,052 |
|
|
Income taxes received |
- |
43,237 |
|
|
|
|
|
|
|
Net cash flow from operating activities |
238,909 |
425,622 |
Cash and cash equivalents comprise cash at bank, other short-term highly liquid investments with a maturity of three months or less (together presented as 'Cash and cash equivalents' on the face of the balance sheet) and bank overdrafts (presented as a single class of liability on the face of the balance sheet).
25. FINANCIAL COMMITMENTS
At the balance sheet date, the Group had outstanding commitments for future minimum operating lease payments under non-cancellable operating leases, which fall due as follows:
|
|
2008 |
2007 |
|
Operating Leases |
£ |
£ |
|
|
|
|
|
Land and buildings |
|
|
|
Within one year |
26,097 |
10,000 |
|
In the second to fifth years inclusive |
68,433 |
34,167 |
|
|
|
|
|
Other |
|
|
|
Within one year |
5,088 |
13,691 |
|
In the second to fifth years inclusive |
5,177 |
1,673 |
Land and buildings under operating leases represent payables by the Group on its two principle office properties. The leases expire in 2010 and 2011.
26. RELATED PARTY TRANSACTIONS
Details of the remuneration of the directors, who are the key management personnel of the Group, are disclosed in note 10 above. There were no other related party transactions.
27. FINANCIAL INSTRUMENTS
Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Where appropriate, the Group seeks to mitigate potential adverse effects on its financial performance.
Foreign exchange rate risk
The Group's principal exposure to foreign exchange rate risk arises with the purchase of inventory, which is predominantly denominated in Euros. Historically the Group has not used derivative instruments to hedge against possible risks arising from fluctuations in foreign currency exchange rates as the exposure is limited. If foreign currency exposure increases, the use of foreign currency hedging instruments will be reviewed as a means of reducing the effect of exchange rate fluctuations on the Group's results.
Interest rate risk
The Group mitigates its exposure to interest rate fluctuations by using fixed rates or interest rate derivatives where appropriate.
Liquidity risk
The Group's objective is to maintain a balance between continuity and flexibility of funding through the use of borrowings and financial assets with a range of maturities.
Credit risk
The Group's principal financial assets are bank balances, cash and trade and other receivables. The Group's credit risk is primarily attributable to its trade receivables and the Group attaches considerable importance to the collection and management of trade receivables. The Group minimises its credit risk through the application of appropriate credit limits to customers based on an assessment of net worth and trading history with the Group. Standard credit terms are net 30 days from date of invoice. Overdue trade receivables are managed through a phased escalation culminating in legal action.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expense are recognised, in respect of each class of financial asset, liability and equity instrument are disclosed in note 4 to the financial statements.
Foreign currency risk
The group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.
The carrying amount of the Group's foreign currency denominated monetary assets and liabilities at the reporting date is as follows:
|
|
Assets |
Liabilities |
||
|
|
2008 |
2007 |
2008 |
2007 |
|
|
£ |
£ |
£ |
£ |
|
Euro |
44,824 |
500,276 |
617,301 |
532,554 |
|
Other |
29,367 |
115,132 |
22,491 |
16,172 |
|
|
|
|
|
|
|
|
74,191 |
615,408 |
639,792 |
548,726 |
|
GBP |
1,098,931 |
1,365,237 |
1,197,015 |
1,595,251 |
|
|
|
|
|
|
|
|
1,173,122 |
1,980,645 |
1,836,807 |
2,143,977 |
|
|
|
|
|
|
Foreign currency sensitivity
The Group is mainly exposed to the Euro. The following table details the Group's sensitivity to a 10% strengthening of the Euro against GBP. This has been determined assuming a Euro rate 10% stronger than the actual rate achieved during the period.
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Loss |
(89,179) |
(47,134) |
The Group's sensitivity to the Euro has increased due to the reduction in sales denominated in Euros during the second half of the 2008 financial year.
Interest rate and liquidity risk
Interest rate sensitivity
The sensitivity analysis has been based on the average exposure to floating rate debt during the period. It has been assumed that floating interest rates were 50 basis point higher than those actually incurred.
The effect of such a change would be to increase the loss before tax for the year by £1,565 (2007 - reduce the profit before tax by £2,122).
Liquidity and interest risk tables
The following table details the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted contractual maturities of the financial liabilities (including interest that will accrue to maturity). The discount column reflects the adjustments necessary to reconcile to the carrying amounts of the financial liabilities.
|
2008 |
Weighted average effective interest rate |
Less than 1 month or on demand |
1-3 months |
3-12 months |
1-5 years |
More than 5 years |
Discount |
Total |
|
|
% |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
Fixed rate |
|
|
|
|
|
|
|
|
|
Bank loan |
7.6% |
- |
3,536 |
11,019 |
70,615 |
149,890 |
- |
235,060 |
|
Deferred consideration |
8.0% |
- |
- |
124,416 |
- |
- |
- |
124,416 |
|
Obligations under finance leases |
6.2% |
138 |
276 |
1,241 |
- |
- |
(50) |
1,605 |
|
|
|
|
|
|
|
|
|
|
|
Floating rate |
|
|
|
|
|
|
|
|
|
Bank overdrafts |
8.0% |
210,280 |
- |
- |
- |
- |
- |
210,280 |
|
Other loans |
9.0% |
- |
8,929 |
26,785 |
66,965 |
- |
- |
102,679 |
|
Trade payables |
- |
766,337 |
- |
- |
- |
- |
- |
766,337 |
|
|
|
|
|
|
|
|
|
|
|
2007 |
Weighted average effective interest rate |
Less than 1 month |
1-3 months |
3-12 months |
1-5 years |
More than 5 years |
Discount |
Total |
|
|
% |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
Fixed rate |
|
|
|
|
|
|
|
|
|
Bank loans |
7.6% |
- |
3,279 |
10,217 |
65,471 |
169,567 |
- |
248,534 |
|
Loan Stock |
9.0% |
- |
- |
- |
500,000 |
- |
- |
500,000 |
|
Obligations under finance leases |
6.7% |
1,050 |
2,099 |
9,446 |
- |
- |
(407) |
12,188 |
|
|
|
|
|
|
|
|
|
|
|
Floating rate |
|
|
|
|
|
|
|
|
|
Bank overdrafts |
7.3% |
269,294 |
- |
- |
- |
- |
- |
269,294 |
|
Other loans |
8.3% |
- |
8,929 |
26,785 |
102,679 |
- |
- |
138,393 |
|
Trade Payables |
- |
793,714 |
- |
- |
- |
- |
- |
793,714 |
Fair values
There is no material difference between the book value and the fair value of the Group's financial assets or liabilities.
28. REPORTING UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS
This annual report is the first to be prepared under IFRS. The comparative figures have been prepared on the same basis and have therefore been restated from those previously prepared under UK GAAP. The commentary below details the key changes that have arisen due to the transition to reporting under IFRS. The Group's date of transition is 31 March 2006, which is the beginning of the comparative period for the 2006/2007 financial year. Therefore the opening balance sheet for IFRS purposes is that reported at 31 March 2006 as amended for changes due to IFRS.
To explain the impact of the transition, reconciliations are included below that show the changes made to the statements previously reported under UK GAAP. The following reconciliations are included:
-
Reconciliation of Group balance sheet at 31 March 2006 from UK GAAP to IFRS,
-
Reconciliation of Group balance sheet at 31 March 2007 from UK GAAP to IFRS;
-
Reconciliation of Group income statement for the year ended 31 March 2007 from UK GAAP to IFRS;
The transition from UK GAAP to IFRS does not affect the cash flows generated by the Group. The IFRS cash flow statement is presented in a different format than that required under UK GAAP. The reconciling items between the UK GAAP format and the IFRS format have no net impact on the cash flows generated and accordingly reconciliations have not been presented.
The accounting policies used for IFRS are set out in note 4.
The Group has applied the provisions of IFRS 1 - First Time Adoption of International Financial Reporting Standards which, generally, requires that IFRS accounting policies be applied retrospectively in determining the opening balance sheet at the date of transition. IFRS 1 contains both mandatory and optional exemptions to the principle of retrospective application. Where the Group has made use of an exemption it is noted below.
The significant first time adoption choices made by the Group are as follows:
-
Business combinations completed prior to 1 January 2006 have not been restated under IFRS 3 'Business combinations';
-
Aside from freehold buildings, the opening fair values of fixed assets have been deemed to be their accounting values as at 31 March 2006, after reviewing for impairment as appropriate. Deemed cost for freehold buildings is their open market value for existing use.
IFRS 1 'First time adoption of IFRS'
The carrying values of fixed assets have been reviewed on first time adoption of IFRS. As permitted by IFRS 1 the company has opted to value its freehold land and buildings at deemed cost. The deemed cost has been assessed as the open market value of the property at transition date (1 April 2006). Accordingly the opening net assets of the group have been increased by £63,331 reflecting the difference between the market value and net book value of the property at that date. The historical cost of the property was £368,264.
Increased depreciation of £543 pa has been charged to the income statement for the years ended 31 March 2007 and 31 March 2008 to reflect the increased carrying value.
IAS 38 'Intangible assets'
The fair value of intangible assets arising on the acquisition of Interactive Projects Limited (IPL) has been revisited using the 'relief from royalty' method permitted by IAS38. On this basis the value of the intellectual property acquired, as a result of the transaction in May 2006, has been increased by £116,651 to £716,651. Goodwill arising on consolidation has been reduced by the same amount resulting in negative goodwill arising of £14,198. The negative goodwill has been written off immediately to the Income Statement and the charge for amortisation of intangible non-current assets has increased by £1,420 pa.
Accordingly net assets at 31 March 2007 and the profit for the year then ended have been increased by £12,778. Net assets at 31 March 2008 have been increased by £11,358 and the profit for the year then ended has been decreased by £1,420. There is no impact on the balance sheet at 31 March 2006.
IAS 12 'Income taxes'
Under UK GAAP, deferred tax is not provided on revaluation of fixed assets, unless the entity has entered into a binding agreement to sell the asset and has recognised the gain expected to arise on that sale. Under IFRS the entity is required to account for the impact of deferred tax on all timing differences.
Accordingly, a deferred tax liability of £19,000 has been recognised at 31 March 2006 to reflect the tax arising on the increase in carrying value of the freehold property to its market value at that date. A tax credit of £163 pa has been charged to the income statement for the years ended 31 March 2007 and 31 March 2008 to reflect the increased depreciation charge arising.
Reconciliation of the Group Balance Sheet under UK GAAP to IFRS at 31 March 2006
|
|
UK GAAP under IFRS presentation |
Property deemed cost |
Income taxes |
IFRS |
|
|
£ |
£ |
£ |
£ |
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
393,110 |
63,331 |
- |
456,441 |
|
|
|
|
|
|
|
|
393,110 |
63,331 |
- |
456,441 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
398,306 |
- |
- |
398,306 |
|
Trade and other receivables |
1,065,490 |
- |
- |
1,065,490 |
|
Deferred tax |
5,494 |
- |
(5,494) |
- |
|
Cash and cash equivalents |
402,454 |
- |
- |
402,454 |
|
|
|
|
|
|
|
|
1,871,744 |
- |
(5,494) |
1,866,250 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Bank overdrafts |
(164,118) |
- |
- |
(164,118) |
|
Bank loans |
(12,175) |
- |
- |
(12,175) |
|
Trade payables |
(565,683) |
- |
- |
(565,683) |
|
Other payables |
(99,698) |
- |
- |
(99,698) |
|
Other loans |
(185,091) |
- |
- |
(185,091) |
|
|
|
|
|
|
|
|
(1,026,765) |
- |
- |
(1,026,765) |
|
|
|
|
|
|
|
Current assets less current liabilities |
844,979 |
- |
(5,494) |
839,485 |
|
|
|
|
|
|
|
Total assets less current liabilities |
1,238,089 |
63,331 |
(5,494) |
1,295,926 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Bank loans |
(253,136) |
- |
- |
(253,136) |
|
Other loans |
- |
- |
- |
- |
|
Deferred tax liabilities |
- |
- |
(13,506) |
(13,506) |
|
|
|
|
|
|
|
|
(253,136) |
- |
(13,506) |
(266,642) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
984,953 |
63,331 |
(19,000) |
1,029,284 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
110,260 |
- |
- |
110,260 |
|
Share premium account |
435,087 |
- |
- |
435,087 |
|
Shares to be issued |
- |
- |
- |
- |
|
Merger reserve |
509,837 |
- |
- |
509,837 |
|
Share based payment reserve |
7,342 |
- |
- |
7,342 |
|
Retained earnings |
(77,573) |
63,331 |
(19,000) |
(33,242) |
|
|
|
|
|
|
|
Total equity attributable to equity shareholders of the parent |
984,953 |
63,331 |
(19,000) |
1,029,284 |
|
|
|
|
|
|
Reconciliation of the Group Profit and loss Account under UK GAAP to the Group Income Statement under IFRS for the year ended 31 March 2007
|
|
UK GAAP under IFRS presentation |
Intellectual property |
Property deemed cost |
Income taxes |
IFRS |
|
|
£ |
£ |
£ |
£ |
£ |
|
Continuing operations |
|
|
|
|
|
|
Revenue |
6,370,007 |
- |
- |
- |
6,370,007 |
|
Cost of sales |
(3,879,599) |
- |
- |
- |
(3,879,599) |
|
|
|
|
|
|
|
|
Gross profit |
2,490,408 |
- |
- |
- |
2,490,408 |
|
Administrative expenses |
(2,387,974) |
12,778 |
(543) |
- |
(2,375,739) |
|
|
|
|
|
|
|
|
Profit from operations |
102,434 |
12,778 |
(543) |
- |
114,669 |
|
Interest receivable |
15,052 |
- |
- |
- |
15,052 |
|
|
|
|
|
|
|
|
|
117,486 |
12,778 |
(543) |
- |
129,721 |
|
Bank and other interest charges |
(39,301) |
- |
- |
- |
(39,301) |
|
|
|
|
|
|
|
|
Profit before taxation |
78,185 |
12,778 |
(543) |
- |
90,420 |
|
Taxation |
18,146 |
- |
- |
163 |
18,309 |
|
|
|
|
|
|
|
|
Profit for the year attributable to equity shareholders of parent |
96,331 |
12,778 |
(543) |
163 |
108,729 |
|
|
|
|
|
|
|
Reconciliation of the Group Balance Sheet under UK GAAP to IFRS at 31 March 2007
|
|
UK GAAP under IFRS presentation |
Intellectual property |
Property deemed cost |
Income taxes |
IFRS |
|
|
£ |
£ |
£ |
£ |
£ |
|
Non-current assets |
|
|
|
|
|
|
Intangible assets |
809,857 |
12,778 |
- |
- |
822,635 |
|
Property, plant and equipment |
446,143 |
- |
62,788 |
- |
508,931 |
|
|
|
|
|
|
|
|
|
1,256,000 |
12,778 |
62,788 |
- |
1,331,566 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Inventories |
332,522 |
- |
- |
- |
332,522 |
|
Trade and other receivables |
1,272,057 |
- |
- |
- |
1,272,057 |
|
Deferred tax |
1,032 |
- |
- |
(1,032) |
- |
|
Cash and cash equivalents |
708,588 |
- |
- |
- |
708,588 |
|
|
|
|
|
|
|
|
|
2,314,199 |
- |
- |
(1,032) |
2,313,167 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Bank overdrafts |
(269,294) |
- |
- |
- |
(269,294) |
|
Bank loans |
(13,495) |
- |
- |
- |
(13,495) |
|
Trade payables |
(793,714) |
- |
- |
- |
(793,714) |
|
Other payables |
(156,763) |
- |
- |
- |
(156,763) |
|
Obligations under finance leases and hire purchase arrangements |
(12,188) |
- |
- |
- |
(12,188) |
|
Current tax |
(25,091) |
- |
- |
- |
(25,091) |
|
Other loans |
(35,714) |
- |
- |
- |
(35,714) |
|
|
|
|
|
|
|
|
|
(1,306,259) |
- |
- |
- |
(1,306,259) |
|
|
|
|
|
|
|
|
Current assets less current liabilities |
1,007,940 |
- |
- |
(1,032) |
1,006,908 |
|
|
|
|
|
|
|
|
Total assets less current liabilities |
2,263,940 |
12,778 |
62,788 |
(1,032) |
2,338,474 |
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Bank loans |
(235,039) |
- |
- |
- |
(235,039) |
|
Other loans |
(602,679) |
- |
- |
- |
(602,679) |
|
Deferred tax liabilities |
- |
- |
- |
(17,805) |
(17,805) |
|
|
|
|
|
|
|
|
|
(837,718) |
- |
- |
(17,805) |
(855,523) |
|
|
|
|
|
|
|
|
Net assets |
1,426,222 |
12,778 |
62,788 |
(18,837) |
1,482,951 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
114,724 |
- |
- |
- |
114,724 |
|
Share premium account |
754,279 |
- |
- |
- |
754,279 |
|
Merger reserve |
509,837 |
- |
- |
- |
509,837 |
|
Share based payment reserve |
28,624 |
- |
- |
- |
28,624 |
|
Retained earnings |
18,758 |
12,778 |
62,788 |
(18,837) |
75,487 |
|
|
|
|
|
|
|
|
Total equity attributable to equity shareholders of the parent |
1,426,222 |
12,778 |
62,788 |
(18,837) |
1,482,951 |
|
|
|
|
|
|
|
COMPANY BALANCE SHEET
As at 31 March 2008
|
|
Notes |
2008 |
2007 |
|||
|
|
|
£ |
£ |
|||
|
FIXED ASSETS |
|
|
|
|||
|
Investments |
3 |
1,285,224 |
595,519 |
|||
CURRENT ASSETS |
|
|
||||
|
Debtors |
4 |
47,103 |
313,679 |
|||
|
Cash at bank |
294,144 |
508,347 |
||||
|
|
|
|
|
|||
|
|
341,247 |
822,026 |
||||
|
|
|
|
||||
|
CREDITORS: Amounts falling due within one year |
5 |
(182,747) |
(61,960) |
|||
|
|
|
|
||||
|
NET CURRENT ASSETS |
158,500 |
760,066 |
||||
|
|
|
|
||||
|
TOTAL ASSETS LESS CURRENT LIABILITIES |
1,443,724 |
1,355,585 |
||||
|
|
|
|
||||
|
|
|
|
||||
|
CREDITORS: Amounts falling due after more than one year |
6 |
- |
(500,000) |
|||
|
|
|
|
||||
|
NET ASSETS |
1,443,724 |
855,585 |
||||
|
|
|
|
||||
|
CAPITAL AND RESERVES |
|
|
||||
|
Called up share capital |
7 |
135,170 |
114,724 |
|||
|
Share premium |
8 |
1,256,334 |
754,279 |
|||
|
Share based payment reserve |
8 |
47,787 |
28,624 |
|||
|
Shares to be issued |
8 |
246,032 |
- |
|||
|
Profit and loss account |
8 |
(241,599) |
(42,042) |
|||
|
|
|
|
|
|||
|
SHAREHOLDERS' FUNDS |
|
1,443,724 |
855,585 |
|||
These financial statements were approved by the Directors and authorised for issue on 26 August 2008 and are signed on their behalf by:
C D Buck T Couling
Director Director
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 March 2008
1. ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention in accordance with the applicable accounting standards.
SHARE-BASED PAYMENTS
The company has applied the requirements of FRS 20 Share-based Payments. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006.
The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.
The fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. No expense is recognised for awards that do not ultimately vest.
FINANCIAL INSTRUMENTS
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of the issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Company, is included in equity.
Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.
The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.
INVESTMENTS
Fixed asset investments are stated at cost less impairment against the cost of investments. The carrying values of investments in subsidiaries are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.
FOREIGN CURRENCIES
Foreign currency assets and liabilities are converted to sterling at the rates of exchange ruling at the end of the financial year. Transactions in foreign currencies are converted to sterling at the rates of exchange ruling at the transaction date. All of the resulting exchange differences are recognised in the profit and loss account as they arise.
DEFERRED TAXATION
Provision is made for deferred taxation in respect of all material timing differences that have originated but not reversed by the balance sheet date. Timing differences represent differences
between gains and losses recognised for tax purposes in periods different from those in which they are recognised in the financial statements. No deferred tax is recognised on permanent differences between the Company's taxable gains and losses and its results as stated in the financial statements. Deferred tax assets and liabilities are included without discounting.
2. PROFIT AND LOSS ACCOUNT
As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the Company is not presented as part of these financial statements.
The loss before tax for the year in the Company is £199,557 (2007: profit £2,748).
3. INVESTMENTS
|
|
|
Subsidiaries |
|
Cost |
|
£ |
|
At 1 April 2007 |
|
595,519 |
|
Additions |
|
689,705 |
|
|
|
|
|
At 31 March 2008 |
|
1,285,224 |
|
Name of subsidiary |
Country of incorporation |
Class of holding |
Proportion held and voting rights |
Nature of business |
|
|
|
|
|
|
|
Trakm8 Limited |
England and Wales |
Ordinary |
100% |
Marketing and distribution of vehicle telematics |
|
Interactive Projects Limited |
England and Wales |
Ordinary |
100% |
Project management and design |
|
PJSoft s.r.o. |
Czech Republic |
Ordinary |
100% |
Mapping services |
|
Purple Reality Limited |
England and Wales |
Ordinary |
100% |
Dormant |
|
Trakm8 Inc. |
USA |
Ordinary |
100% |
Dormant |
|
Trakm8 Pty Ltd |
Australia |
Ordinary |
100% |
Dormant |
4. DEBTORS
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Amounts due from subsidiary undertakings |
37,297 |
291,144 |
|
VAT recoverable |
3,139 |
- |
|
Prepayments |
6,667 |
22,535 |
|
|
|
|
|
|
47,103 |
313,679 |
5. CREDITORS: Amounts falling due within one year
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Trade creditors |
46,393 |
29,987 |
|
Taxation and social security |
- |
19,032 |
|
Accruals and other creditors |
136,354 |
12,941 |
|
|
|
|
|
|
182,747 |
61,960 |
6. CREDITORS: Amounts falling due after more than one year
|
|
2008 |
2007 |
|
|
£ |
£ |
|
Loan Stock |
- |
500,000 |
|
|
|
|
|
|
|
|
|
|
2008 |
2007 |
|
|
£ |
£ |
|
After one and within two years |
- |
500,000 |
In January 2007 the Company issued £500,000 of 9% Convertible Unsecured Loan Stock. On 31 December 2007 the subscribers elected to convert, at a conversion price of 25.55 pence, their holdings into ordinary shares of the Company in line with the provisions of the agreement.
7. SHARE CAPITAL
Details of share capital and share options are shown in notes 21 and 23 to the consolidated accounts above.
8. RESERVES
|
|
Share premium |
Shares to be issued |
Share based payment reserve |
Profit and loss account |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
|
At 1 April 2007 |
754,279 |
- |
28,624 |
(42,042) |
740,861 |
|
Shares issued |
502,055 |
- |
- |
- |
502,055 |
|
Shares to be issued |
- |
246,032 |
- |
- |
246,032 |
|
Loss for the year |
- |
- |
- |
(199,557) |
(199,557) |
|
FRS20 Share based payments |
- |
- |
19,163 |
- |
19,163 |
|
|
|
|
|
|
|
|
As at 31 March 2008 |
1,256,334 |
246,032 |
47,787 |
(241,599) |
1,308,554 |
9. RELATED PARTIES
The Company has taken advantage of the exemptions conferred by FRS 8 from the requirement to disclose transactions between subsidiary undertakings, 90% or more of whose voting rights are controlled within the Group.
This information is provided by RNS
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