Final Results

RNS Number : 4480R

Trakm8 Holdings PLC

30 June 2020

 

30 June 2020

TRAKM8 HOLDINGS PLC

('Trakm8' or 'the Group' or 'the Company')

Final Results

Trakm8 Holdings plc (AIM: TRAK), the global telematics and data insight provider, announces its final results for the year ended 31 March 2020 (FY-2020).

FINANCIAL SUMMARY:

	FY-2020	FY-2019	Change
Group revenue	£19.6m	£19.1m	2%
of which, Recurring revenue1	£9.8m	£10.1m	-3%
Loss before tax	(£1.7m)	(£3.6m)	52%
Adjusted loss before tax2	(£0.2m)	(£1.5m)	85%
Loss after tax	(£1.1m)	(£2.5m)	56%
Net cash inflow/(outflow) generated from operations	£4.1m	(£1.8m)	n/a
Net debt3	£5.6m	£5.6m	0%
Basic loss per share	2.19p	6.20p	n/a
Adjusted basic earnings/(loss) per share2	0.28p	(1.89p)	n/a

¹ Recurring revenues are generated from ongoing service and maintenance fees

²  Before exceptional costs and share based payments

³  Total borrowings less cash and cash equivalents. FY-2020 net debt excludes £2.3m IFRS 16 lease liability.

OPERATIONAL OVERVIEW

· Modest return to growth (+2%) despite Covid-19 impact late March.

· Significant improvement in financial performance to close to breakeven adjusted profit.

· Strong continued reduction in direct and indirect costs.

· Strengthened Group with appointment of Group Sales and Marketing Director

· Production launch of new insurance self-fit hardware products.

· Over 245,000 connected units in operation (FY-2019: 243,000).

· New contract wins with two new significant Insurance companies.

· Contract renewals with two large long term customers (E.ON and Bibby) and a significant enhancement to the solution for Iceland Foods

· R&D spend down 7%, however still £4.1m invested.

OUTLOOK

· Momentum established in last year disrupted by Covid-19.

· The new financial year has begun with new contract awards from two further insurance companies, with revenues already commenced.

· Revenues from new insurance contract wins now compensating for the impact of Covid-19 on the overall market with recent device shipments ahead of last year.

· The AA Smart Breakdown sales now underway albeit impacted by Covid-19.

· Fleet sales negatively impacted by Covid-19 but recent weeks show progress.

· Early months in current financial year benefitting from the various Government initiatives.

· Given the uncertainty of the impact and timing due to the Covid-19 pandemic the Group is not providing any guidance to the results for the current financial year.

- Ends -

For further information:

Trakm8 Holdings plc
John Watkins, Executive Chairman	Tel: [phone]
Jon Furber, Finance Director	www.trakm8.com
Arden Partners plc (Nominated Adviser & Broker)	Tel: [phone]
Paul Shackleton	www.arden-partners.com

Notes to Editors

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

The Group's product portfolio includes the latest data analytics and reporting portal (Trakm8 Insight), integrated telematics/cameras/optimisation, self-installed telematics units and one of the widest ranges of installed telematics devices. Trakm8 has over 245,000 connections.

Headquartered in Coleshill near Birmingham alongside its manufacturing facility, the Group supplies to the Fleet, Optimisation, Insurance and Automotive sectors to many well-known customers in the UK and internationally including the AA, Saint Gobain, EON, Iceland Foods, Scottish Power, Direct Line Group, LexisNexis and Ingenie.

Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005.

www.trakm8.com / @Trakm8

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

EXECUTIVE CHAIRMAN'S STATEMENT

Results

FY-2020 was a productive year in terms of financial results.  We delivered on our promise to return to growth and but for a Covid-19 induced disruption in the final two weeks of the financial year, we would have achieved our plan to deliver a modest adjusted profit. Notwithstanding that, we did achieve a significant improvement with a small adjusted loss. 

Revenue grew by 2% and the Group posted an adjusted loss before tax of £0.2m. Connections grew by 1% to 245,000. The total fleet management connections increased by 1% over the year to 77,000 (FY-2019: 76,000). Telematics for insurance/automotive connections also increased by 1%. At the year-end we had 168,000 insurance/automotive connections (FY-2019: 167,000). Recurring service revenues reduced by 3.3% to £9.8m (FY-2019: £10.1 m).

It was pleasing to improve cash generation significantly with cash flow from operations of £4.1m (FY-2019: -£1.8m). In achieving this, the Group only deferred £0.2m under the Government tax deferral support schemes.  This resulted in a free cash flow of £0.8m (FY-2019 -£4.9m) and net debt unchanged at £5.6m (pre-IFRS 16). The Group had £1.7m cash on hand and an undrawn RCF of £0.5m.

FY-2020 was another year of excellent progress in many internally focussed activities. The Group continued to focus on improving efficiency of our operations and engineering activities. Significant reductions in direct and indirect costs were delivered during the year. During the year restructuring of the engineering department led to the COO taking direct responsibility for the engineering teams. Improved testing and software coding standards have been implemented to address some of the technical challenges we have experienced. The investment in engineering resources, whilst some £0.3m less than last year, has continued to deliver market-leading software and hardware solutions. Trakm8's Insight platform provides superb customer experience and data, enabling vehicle operators both to improve operational efficiencies and reduce risk significantly.

We have continued to invest in our software solutions, algorithms and devices, ensuring that Trakm8 retains market-leading solutions with the widest and deepest offer in the market today.

Post-year end, we have concluded contracts with two additional insurance companies.

Research and development ('R&D')

Trakm8 has maintained a significant level of investment in R&D although for a second year below the level of the previous year. The Board believes that this level of investment is necessary to retain a portfolio of market-leading technology. Trakm8 continues to focus on owning the intellectual property ('IP') we use in our solutions, and we see this as one of our key competitive advantages. Telematics systems are complex; but because we own all the elements that encompass a solution (with the exception of the mobile networks) we have the ability to understand and more easily resolve problems.

The R&D investment has concentrated on building out a range of self-fit devices, improved cameras, development of the feature set in Insight, including a SaaS optimisation product. As identified in previous years, the requirement to do more at a lower cost remains a key strategy as this widens the opportunity to expand the rate of growth as the ROI for our customers improves.

Trakm8 was pleased to be granted two patents in the year, a patent for the ADAS algorithm it developed for detection of tailgating situations and a patent for monitoring the health of a vehicle battery for its Connectedcare solution.

Governance

In the prior financial year we adopted the Quoted Companies Alliance's (QCA) Corporate Governance Code for small and mid-size quoted companies, which the Board considers the most appropriate for the size and structure of the Group. The Board annually reviews its Corporate Governance policies and procedures, these were last reviewed on 18 June 2020. More information can be found in the Governance Report section of this report and our website.

Post year end the Group appointed a third Non-Executive Director, Penny Searles who brings greater diversity to the Board and increases the Group's compliance with the code.

Please see https://www.trakm8.com/investor-relations/corporate-governance for our full compliance statement.

Dividend

The Group does not propose to recommend a dividend for the year at the forthcoming AGM.  However, the Board will continue to review its dividend policy in light of future results and investment requirements.

People

The number of people Trakm8 employs has reduced further during FY-2020 with reductions in operational and engineering headcount. In total our actual staff numbers have reduced by 15% over the year.

The turnaround in performance has taken extraordinary efforts. We have an exceptional team and I would like to thank everyone for their hard work, dedication and contribution to the ongoing success of the business.

Outlook

The momentum established in the business last year has been disrupted by the Covid-19 epidemic. We had returned to growth in our Fleet business and had finally launched with three new Insurance customers. The AA had launched Smart Breakdown. Two more insurance customers have been secured since year end. Prior to the current lock down, this year was expected to be one of very significant growth.

Our new year started in the early stage of the lockdown and unsurprisingly April saw very significant reductions in new business. May saw slight improvements and June has improved further still.

The total value of new Fleet contracts signed in April was 83% down on the prior year, 50% lower in May compared to the prior year and is expected to be 22% lower in June compared to the prior year. 

Insurance shipments in April at 3,867 devices were 39% below last year, May shipments at 5,447 devices were in line with the prior year. Currently June shipments are expected to be 26% higher than last year.

With a significant proportion of revenues derived from the service fees of the installed base, the first two months of the year revenues were 27% lower than the previous year but resulted in a significantly reduced loss because of lower direct and indirect costs.

We are confident that the growth potential in our chosen markets is good and that we have the solutions and sales teams to deliver on this opportunity. It is simply a matter of timing and landscape as the crisis subsides. The solutions we provide significantly improve the customer's efficiencies and so that market driver remains. We cannot predict how many of our existing and potential customers will no longer be at the scale they were.

We have continued to drive operational efficiency savings in direct and indirect costs, both those made last year that will benefit the full year and some made this year.

Trakm8 has availed itself of various support measures from the government including the cash deferment of VAT and PAYE/NI and is benefitting from the payroll support through the furlough scheme.

Trakm8 has agreed capital repayment holidays with our debt providers and agreed covenants that we are confident are achievable. Based on current forecasts and scenario planning that Trakm8 has undertaken, along with the agreed capital repayment holidays we believe this provides appropriate cash headroom, therefore the Group are not currently progressing with a CBILS loan.

Despite the positive trends of the year to date, the uncertainty due to Covid-19 is such that the Group is not able to provide forward guidance at this time but will do so as soon as there is more certainty in the market.

John Watkins

EXECUTIVE CHAIRMAN

29 June 2020

FINANCIAL REVIEW

TRADING RESULTS

	2020	2019	Change
Group Revenue (£'000)	19,550	19,145	2%
of which, Recurring Revenue (£'000)	9,753	10,087	-3%
Loss before tax (£'000)	1,705	3,563	n/a
Adjusted Loss before tax1 (£'000)	224	1,452	n/a
Basic loss per share (p)	2.19	6.20	n/a
Adjusted basic earnings/(loss) per share (p)	0.28	(1.89)	n/a

¹   Before exceptional costs and share based payments

Revenue

Group revenue increased by 2% to £19.6m (FY-2019: £19.1m). Fleet revenues increased by 11% to £12.0m, primarily due to additional Optimisation revenues, this was offset by a 9% reduction in Insurance and Automotive revenues to £7.5m.  The recently launched Insurance and Automotive customers resulted in the second half revenue being 19% higher than the first half reversing some of the full year decline.  Recurring revenue generated from service and maintenance fees decreased by 3% to £9.8m (FY-2019: £10.1m) due to the reduction in Connections from Insurance customers earlier in the year, which were not offset by the growth from the newly launched customers towards the end of the financial year.

Loss before tax

The Group reported a loss before tax of £1.7m (FY-2019: £3.6m).  This significant reduction in losses was primarily due to the significant efficiencies the Group realised through both cost of sales and administrative costs.  Gross margin improved by 5% points to 59% primarily due to a change in mix in revenue, but also due to lower cost hardware products and improved efficiency on communication and installation costs.  Total administrative costs reduced by £0.8m of which £0.6m was a reduction in non-recurring exceptional costs (detailed below).  Other administrative costs (excluding exceptional costs and depreciation and amortisation) reduced by £0.9m due to headcount reductions as a result of the cost saving initiatives implemented, offset by a £0.7m increase in depreciation and amortisation, £0.3m from capitalised development costs, reflecting the significant investment undertaken by the group in earlier years and £0.4m due to the adoption of IFRS16. 

Adjusted Loss before tax

The improved trading performance and significantly reduced cost base resulted in adjusted loss before tax decreasing to a loss of £0.2m (FY-2019: £1.5m).  The £1.3m improvement in gross profit as detailed above fully converted into a significant reduction in Adjusted Loss before tax.  Administrative costs (excluding exceptional costs and depreciation and amortisation) were £0.9m lower than the previous year, offset by a £0.7m increase in amortisation and depreciation as detailed above, and a £0.2m increase in finance costs.

Exceptional Costs

Exceptional costs totaling £1.3m (FY-2019: £1.9m) include integration and restructuring costs relating to initiatives to streamline and rationalize the operations of the business and additional costs relating to the acquisition of Roadsense Technology Limited.  Additionally, significant product component refit costs relating to ongoing re-visit and material costs were incurred to remedy significant component and software issues relating to the prior year, these issues have been fixed by year end. The Group also incurred a number of one-off costs as a result of the Covid-19 pandemic, these relate to employee costs, cancelled marketing events and bad debts.

Balance Sheet

	2020	2019
	£'000	£'000
Non-Current Assets	25,759	22,736
Net Current Assets	4,437	5,765
Non-Current Liabilities	9,017	6,407
Net Assets	21,179	22,094

Net Assets decreased by £0.9m to £21.2m (FY-2019: £22.1m) reflecting the loss for the year, after adding back the IFRS2 Share based payments charge. 

Non-current assets increased by £3.0m to £25.8m (FY-2019: £22.7m).  This is due to the adoption of IFRS 16 in the current year, with no adjustment to the prior year which resulted in £2.8m of leased assets being capitalised, offset by depreciation charge in the year of £0.6m.  Continued investment in development in both software and hardware with capitalised development costs in the year totaling £3.2m (FY-2014: £3.4m), offset by a £0.3m increase in amortisation to £1.8m (FY-2019: £1.5m). 

Cash Flow

	2020	2019
	£'000	£'000
Net Cash generated from operations	4,115	(1,752)
Investing activities	(3,199)	(3,179)
Free Cash Flow1	916	(4,931)
Financing activities	(456)	2,664
Change in Cash in Year	460	(2,267)
Net Debt2	5,643	5,629

¹ Cash generated from operating activities less cash used in investing activities (excluding cash flows related to acquisitions)

²   Total borrowings less cash and cash equivalents. FY-2020 net debt excludes £2.3m IFRS 16 lease liability. 

Cash from operating activities significantly improved by £5.9m during this year to an inflow of £4.1m (FY-2019: £1.8m outflow), which included R&D tax credit cash receipts of £1.0m (FY-2019: £1.0m).  The R&D tax credit cash receipt reflects the Group's investment in development.  The operational cash flow improvement is due to the significantly reduced operating loss increasing operating cash flows (£2.9m) and £3.0m improvement year on year from enhanced working capital management.

Free cash inflow of £0.9m (FY-2019: outflow £4.9m) is due to the £4.1m Net Cash generated from operating activities as detailed above offset by cash outflows from investing activities which remained flat at £3.2m (FY-2019: £3.2m).  The ongoing investing activities outflow has decreased by £0.5m to £3.2m, with the prior year investment of £3.7m offset by the one-off £0.5m from the proceeds of the property disposal.

Financing activities was an outflow of £0.5m (FY-2019: Inflow £2.7m).  This outflow is net of £2.0m new loans which includes the £1.5m growth capital loan from MEIF WM Debt LP.  The decrease from prior year was due to the subscription in December 2018 which raised approximately £3.1m (net of expenses) to fund general working capital requirements and further strengthen the Group's balance sheet.

Net Debt 

Net debt excluding IFRS 16 lease liability of £2.3m remained flat at £5.6m (FY-2019: £5.6m).  Cash balances total £1.7m (FY-2019: £1.2m) and total borrowings including IFRS16 lease liability of £2.3m totals £9.6m (FY-2019: £6.8m) of which £0.9m (FY-2019: £1.8m) was a term loan with HSBC, £1.5m (FY-2019: nil) was a term loan with MEIF WM Debt LP, £4.5m (FY-2019: £4.4m) were amounts drawn under our £5m revolving credit facility with HSBC and £2.8m (FY-2019: £0.6m) were obligations under Right of use lease liabilities, which includes finance lease liabilities from the prior year.

Consolidated Statement of Comprehensive Income For The Year Ended  31 March 2020
	Note	Year ended 31 March 2020	Year ended 31 March 2019
		£'000	£'000
REVENUE	4	19,550	19,145
Cost of sales		(7,991)	(8,890)
Gross profit		11,559	10,255
Other income	5	364	436
Administrative expenses excluding exceptional costs		(11,926)	(12,101)
Exceptional administrative costs	7	(1,296)	(1,930)
Total administrative costs		(13,222)	(14,031)
OPERATING LOSS	6	(1,299)	(3,340)
Finance income		12	10
Finance costs	8	(418)	(233)
LOSS BEFORE TAXATION		(1,705)	(3,563)
Income tax		612	1,057
LOSS FOR THE YEAR		(1,093)	(2,506)
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations		(7)	(5)
TOTAL OTHER COMPREHENSIVE INCOME		(7)	(5)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT		(1,100)	(2,511)
LOSS BEFORE TAXATION		(1,705)	(3,563)
Exceptional administrative costs		1,296	1,930
IFRS2 Share based payments charge		185	181
ADJUSTED LOSS BEFORE TAX		(224)	(1,452)
LOSS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic	9	(2.19p)	(6.20p)
Diluted	9	(2.19p)	(6.20p)
The results relate to continuing operations.

Consolidated Statement of Changes in Equity For The Year Ended 31 March 2020
	Note	Share capital	Share premium	Merger  reserve	Translation reserve	Treasury reserve	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 April 2018		359	11,750	1,138	208	(4)	7,929	21,380
Comprehensive loss
Loss for the year		-	-	-	-	-	(2,506)	(2,506)
Other comprehensive loss
Exchange differences on translation of overseas operations		-	-	-	(5)	-	-	(5)
Total comprehensive income		-	-	-	(5)	-	(2,506)	(2,511)
Transactions with owners
Shares issued		141	2,941	-	-	-	-	3,082
IFRS2 Share-based payments charge		-	-	-	-	-	181	181
Tax recognised directly in equity (Note 11)		-	-	-	-	-	(38)	(38)
Transactions with owners		141	2,941	-	-	-	143	3,225
Balance as at 1 April 2019		500	14,691	1,138	203	(4)	5,566	22,094
Comprehensive loss
Loss for the year		-	-	-	-	-	(1,093)	(1,093)
Other comprehensive loss
Exchange differences on translation of overseas operations		-	-	-	(7)	-	-	(7)
Total comprehensive loss		-	-	-	(7)	-	(1,093)	(1,100)
Transactions with owners
IFRS2 Share based payments charge		-	-	-	-	-	185	185
Transactions with owners		-	-	-	-	-	185	185
Balance as at 31 March 2020		500	14,691	1,138	196	(4)	4,658	21,179

Consolidated Statement of Financial Position As At 31 March 2020
			Note			As at 31 March 2020			As at 31 March 2019
ASSETS						£'000			£'000
NON CURRENT ASSETS
Intangible assets			10			21,997			21,165
Property, plant and equipment						717			1,432
Right of use assets			13			3,004			-
Amounts receivable under finance leases						41			139
						25,759			22,736
CURRENT ASSETS
Inventories						2,043			2,736
Trade and other receivables						7,854			8,345
Corporation tax receivable						863			1,050
Cash and cash equivalents						1,665			1,205
						12,425			13,336
LIABILITIES
CURRENT LIABILITIES
Trade and other payables						(6,180)			(6,307)
Borrowings						(1,125)			(1,237)
Right of use liability			13			(656)			-
Provisions						(27)			(27)
						(7,988)			(7,571)
CURRENT ASSETS LESS CURRENT LIABILITIES						4,437			5,765
TOTAL ASSETS LESS CURRENT LIABILITIES						30,196			28,501
NON CURRENT LIABILITIES
Trade and other payables						(713)			(607)
Borrowings						(5,675)			(5,597)
Right of use liability			13			(2,162)			-
Provisions						(157)			(115)
Deferred income tax liability						(310)			(88)
						(9,017)			(6,407)
NET ASSETS						21,179			22,094
EQUITY
Share capital			11			500			500
Share premium						14,691			14,691
Merger reserve						1,138			1,138
Translation reserve						196			203
Treasury reserve						(4)			(4)
Retained earnings						4,658			5,566
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT						21,179			22,094
The loss for the Company for the year determined in accordance with the Companies Act 2006 was £236,000 (2019: loss £242,000)
The notes on pages 45 to 81 are an integral part of these consolidated financial statements. These financial statements on pages 41 to 81 were approved by the Board of directors and authorised for issue on 29 June 2020 and are signed on its behalf by:
John Watkins - Director		Jon Furber - Director
Consolidated Statement of Cash-Flows For The Year Ended 31 March 2020
				Note			Year ended 31 March 2020			Year ended 31 March 2019
							'000			'000
NET CASH GENERATED FROM OPERATING ACTIVITIES				12			4,115			(1,752)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment							(20)			(103)
Purchases of software							(23)			(158)
Proceeds from sale of property							-			495
Capitalised development costs							(3,156)			(3,413)
NET CASH USED IN INVESTING ACTIVITIES							(3,199)			(3,179)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares							-			3,082
Increase in loans							2,000			2,000
Repayment of loans							(1,440)			(2,026)
Repayment of obligations under lease agreements							(630)			(187)
Interest paid							(386)			(205)
NET CASH GENERATED FROM FINANCING ACTIVITIES							(456)			2,664
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS							460			(2,267)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR							1,205			3,472
CASH AND CASH EQUIVALENTS AT END OF YEAR							1,665			1,205

Notes To The Consolidated Financial Statements
1	GENERAL INFORMATION
	Trakm8 Holdings PLC ("Company") and its subsidiaries (together the "Group") develop, manufacture, distribute and sell telematics devices and services and optimisation solutions.
	Trakm8 Holdings PLC is a public limited company incorporated in the United Kingdom (registration number 05452547). The Company is domiciled in the United Kingdom and its registered office address is 4 Roman Park, Roman Way, Coleshill, West Midlands, B46 1HG. The Company's Ordinary shares are traded on the AIM market of the London Stock Exchange. The Company is registered in England and is limited by shares.
	The Group's principal activity is the development, manufacture, marketing and distribution of vehicle telematics equipment and services and optimisation solutions. The Company's principal activity is to act as a holding company for its subsidiaries.
	The condensed consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand (£'000) except where otherwise indicated.
2	AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
	The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") interpretations as endorsed by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
3	BASIS OF PREPARATION
	The audited financial information included in this preliminary results announcement for the year ended 31 March 2020 and audited information for the year ended 31 March 2019 does not comprise statutory accounts within the meaning of section 434 Companies Act 2006.  The information has been extracted from the audited statutory financial statements for the year ended 31 March 2020 which will be delivered to the Registrar of Companies in due course.  Statutory financial statements for the year ended 31 March 2019 were approved by the Board of directors and have been delivered to the Registrar of Companies.  The report of the independent auditors for the year ended 31 March 2020 and 2019 respectively on these financial statements were unqualified and did not include a statement under section 498 of the Companies Act 2006.
	These financial statements are prepared on a going concern basis after assessing the principal risks and having considered the impact of Covid-19.  To monitor the future cash position the Group produces projections of its working capital and long term funding requirements covering three months in detail and 1 and 2 year future projections.  These projections are updated on a regular basis and have been re-assessed in light of the Covid-19 pandemic through which the Group has continued trading albeit at reduced volume.  The Group has a substantial recurring revenue base that accounted for 50% of revenues in the FY-2020 and has taken advantage of some of the various government support schemes to protect the business.  Whilst the impact of Covid-19 and the speed at which trading returns to normal levels continues to evolve, the Group has revised its forecasts for plausible downside scenarios.  Further consideration to the risks associated with Covid-19 and other significant risks and the mitigations the Group has developed are detailed on page 20 of the FY-2020 Annual report and accounts.  In addition the Group recently entered into Amendment and Restatement Agreements with HSBC that extended the term of all facilities to 30 September 2021, deferred all scheduled capital repayments from June 2020, with these recommencing in April 2021 and amended the covenants.  The recently agreed covenants relate to cash flow cover, next tested on 31 March 2021 and leverage next tested on 30 September 2020.  The Group also recently entered into an Amendment and Restatement Agreement with MEIF EM Debt LP that deferred the commencement date of capital repayments to 30 June 2021 and amended the covenants in line with the agreement with HSBC.  At the year end the Group had cash balances of £1,665,000 and undrawn revolving credit facilities of £500,000 at 31 March 20.  These revised projections for twelve months from date of signing the financial statements show that the Group has sufficient cash resources and will meet its covenants with ample headroom for the foreseeable future.  The Group has undertaken a number of adverse sensitivities against its projections, these show that the Group would still have cash reserves in all these scenarios and would meet the agreed covenants.  This sensitivity analysis showed that if either a 50% reduction in Adjusted EBITDA, or a 50% reduction in free cash flow materialised that covenants would still be met.  On this basis the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operation for the foreseeable future and therefore it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

4	SEGMENTAL ANALYSIS
	The chief operating decision maker ("CODM") is identified as the Board. It continues to define all the Group's trading under the single Integrated Telematics Technology segment and therefore review the results of the group as a whole.  Consequently all of the Group's revenue, expenses, assets and liabilities are in respect of one Integrated Telematics Technology segment.
	The Board as the CODM review the revenue streams of Integrated Fleet, Optimisation, Insurance and Automotive Solutions (Solutions) as part of their internal reporting. Solutions represents the sale of the Group's full vehicle telematics and optimisation services, engineering services, professional services and mapping solutions to customers.
	A breakdown of revenues within these streams are as follows:
							Year ended 31 March 2020	Year ended 31 March 2019
							£'000	£'000
	Solutions:						19,550	19,145
	Fleet and optimisation						12,034	10,845
	Insurance and automotive						7,516	8,300
	A geographical analysis of revenue by destination is as follows:
							Year ended 31 March 2020	Year ended 31 March 2019
							£'000	£'000
	United Kingdom						19,181	18,910
	North America						7	12
	Norway						-	4
	Rest of Europe						67	111
	Rest of World						295	108
							19,550	19,145
5	OTHER INCOME
							Year ended 31 March 2020	Year ended 31 March 2019
							£'000	£'000
	Grant income						361	449
	R&D tax credit						4	5
	R&D tax credit adjustment in respect of prior periods						(1)	(18)
							364	436

6	OPERATING LOSS
	The following items have been included in arriving at operating loss:
							Year ended 31 March 2020			Year ended 31 March 2019
							£'000			£'000
	Depreciation
	- owned assets (see note 15)						149			242
	- right of use assets (see note 31)						550			71
	Amortisation of intangible assets
	- owned assets (see note 14)						2,194			1,866
	Operating lease rentals
	- Land and buildings						-			208
	- Other						80			183
	Research and development expenditure						896			933
	Loss /(Gain) on foreign exchange transactions						2			(3)
	Staff costs (note 12)						6,730			7,126
	Profit on disposal of property plant & equipment						-			(106)
	Exceptional administrative costs						1,296			1,930
	Auditors' remuneration
	- Fees payable to the Company's auditors for the audit of the parent
	company and consolidated financial statements						73			93
	Adjusted loss before tax is monitored by the Board and measured as follows:
							Year ended 31 March 2020			Year ended 31 March 2019
							£'000			£'000
	Loss before tax						(1,705)			(3,563)
	Exceptional administrative costs (note 9)						1,296			1,930
	Share based payments						185			181
	Adjusted loss profit before tax						(224)			(1,452)
7	EXCEPTIONAL ADMINISTRATIVE COSTS
							Year ended 31 March 2020			Year ended 31 March 2019
							£'000			£'000
	Acquisition costs						52			102
	Integration  & restructuring costs						602			707
	New product component refit costs						442			453
	Covid-19 costs						200			-
	Product enhancement costs						-			375
	Iranian bad debt						-			293
							1,296			1,930
		The acquisition costs incurred in 2020 and 2019 relate to non-underlying charges under two separate agreements linked to the acquisition in 2017.  The costs incurred are directly linked to the acquisition and not as part of the underlying business.  One agreement terminated on 31 July 2019, and the second agreement terminated on 31 March 2019. The Group has incurred significant costs relating to its ongoing project to streamline and rationalise the operations of the business.  This has resulted in the following non-underlying, one-off costs: - In the current and prior year, integration and restructuring costs incurred relate to integrating theactivities of Route Monkey Limited and Roadsense Limited that were acquired in previous financial years and include costs associated with office closures and costs and profits incurred as part of its long-term real estate plan.   - Restructuring costs incurred as a result of a headcount reduction activity undertaken during the current financial year The Product component refit costs incurred in the current and prior year relate to significant component and software issues that arose during the financial year on a recently launched product.  These issues were fixed by the end of the previous financial year.  However significant re-visit and material costs have been incurred in both the current and financial year as a result of the project to remedy these issues.  No customers have been lost as a result of these issues. In the prior year product enhancement costs incurred relate to product upgrade costs incurred as a result of a decision to roll out an enhanced hardware product with increased functionality to just two existing customers to enable much greater roaming capability across Europe and increase the range of services that can therefore be provided. In the prior year, it was considered inappropriate to proceed with a contract to supply insurance solutions into Iran due to the impact of US sanctions, therefore the cost of the work and solutions supplied in the previously have been provided for. The Group has also incurred exceptional costs in the current financial year relating to the Covid-19 pandemic.  These costs relate to a variety of overheads including employee costs, cancelled marketing events and bad debts resulting from Covid-19.
8		FINANCE COSTS
						Year ended 31 March 2020		Year ended 31 March 2019
						£'000		£'000
		Interest on bank loans				284		172
		Amortisation of debt issue costs				32		28
		Interest on right of use assets				102		33
						418		233

9	EARNINGS PER ORDINARY SHARE
	The earnings per Ordinary share have been calculated in accordance with IAS 33 using the profit for the year and the weighted average number of Ordinary shares in issue during the year as follows:
			Year ended 31 March 2020	Year ended 31 March 2019
			£'000	£'000
	Loss for the year after taxation		(1,093)	(2,506)
	Exceptional administrative costs		1,296	1,930
	Share based payments		185	181
	Tax effect of adjustments		(246)	(367)
	Adjusted profit/(loss) for the year after taxation		142	(762)
			No.	No.
	Number of Ordinary shares of 1p each at 31 March		50,004,002	50,004,002
	Basic weighted average number of Ordinary shares of 1p each		50,004,002	40,397,188
	Diluted weighted average number of Ordinary shares of 1p each		50,004,002	40,397,188
	Basic loss per share		(2.19p)	(6.20p)
	Diluted loss per share		(2.19p)	(6.20p)
	Adjust for effects of:
	Exceptional costs		2.10p	3.87p
	Share based payments		0.37p	0.45p
	Adjusted basic earnings/(loss) per share		0.28p	(1.89p)
	Adjusted diluted earnings/(loss) per share		0.28p	(1.89p)

10	INTANGIBLE ASSETS
				Goodwill	Intellectual property		Customer relationships	Development costs	Software		Total
				£'000	£'000		£'000	£'000	£'000		£'000
	COST
	As at 1 April 2018			10,417	1,920		100	10,621	1,875		24,933
	Additions - Internal developments			-	-		-	2,844	144		2,988
	Additions - External purchases			-	-		-	569	14		583
	As at 31 March 2019			10,417	1,920		100	14,034	2,033		28,504
	Reclassification of right of use assets1			-	-		-	-	(153)		(153)
	Additions - Internal developments			-	-		-	2,763	-		2,763
	Additions - External purchases			-	-		-	393	23		416
	As at 31 March 2020			10,417	1,920		100	17,190	1,903		31,530
	AMORTISATION
	As at 1 April 2018			-	1,788		56	3,101	528		5,473
	Charge for year			-	61		33	1,531	241		1,866
	As at 31 March 2019			-	1,849		89	4,632	769		7,339
	Charge for year			-	61		11	1,847	275		2,194
	As at 31 March 2020			-	1,910		100	6,479	1,044		9,533
	NET BOOK AMOUNT
	As at 31 March 2020			10,417	10		-	10,711	859		21,997
	As at 31 March 2019			10,417	71		11	9,402	1,264		21,165
	As at 1 April 2018			10,417	132		44	7,520	1,347		19,460
	Goodwill arose in relation to the Group's acquisition of 100% of the share capital of Roadsense Technology Limited (Roadsense), Route Monkey Limited (Route Monkey), Box Telematics Limited (Box) and DCS Systems Limited (DCS).
	Since the acquisition Roadsense, Box, Route Monkey and DCS have been incorporated into the Trakm8 business. These businesses have therefore been assessed as one cash generating unit for an impairment test on Goodwill. The impairment review has been performed using a value in use calculation.
	The impairment review has been based on the Group's budgets revised for the impact of Covid-19 for FY-2021 which have been reviewed and approved by the Board and projections for FY-2022.  Forecasts for the subsequent 3 years have been produced based on 7% (a prudent growth rate for telematics market) growth rates in revenue and EBITDA in each year.  A net present value has been calculated using a pre-tax discount rate of 10% (Group's weighted average cost of capital) which is deemed to be a reasonable rate taking account of the Group's cost of funds and an extra element for risk.  A terminal value has been calculated and included in the discounted cash flow forecasts used within the model to fully support the goodwill value. A growth rate of 2% was used to determine the terminal value.
	In addition sensitivity analysis has been undertaken and indicates that an impairment will be triggered by:
	1.  Decrease in annual growth rates from 7% to 5.7% (terminal growth rate of 2%)
	Or triggered by:
	1.  Decrease in net cash generated from operating activities for FY-2021 and FY-2022 of 24%
	Amortisation expenses of £2,194,000 (2019: £1,866,000) have been charged to Administrative expenses in the Consolidated Statement of Comprehensive Income.
	1 Amounts previously recognised as finance lease assets have been reclassified to right of use assets upon transition to IFRS 16 on 1 April 2019. Refer to note 31 - Leases for further details.

11	SHARE CAPITAL
			As at 31 March 2020		As at 31 March 2019
			No's	£'000	No's	£'000
	Authorised:		'000's		'000's
	Ordinary shares of 1p each		200,000	2,000	200,000	2,000
	Allotted, issued and fully paid:
	Ordinary shares of 1p each		50,004	500	50,004	500
	Movement in share capital:
					As at 31 March 2019	As at 31 March 2018
					£'000	£'000
	As at 1 April 2019				500	500
	New shares issued				-	-
	As at 31 March 2020				500	500
	The Company currently holds 29,000 Ordinary shares in treasury representing 0.06% (2019: 0.06%) of the Company's issued share capital.  The number of 1 penny Ordinary shares that the Company has in issue less the total number of Treasury shares is 49,975,002.

12	CASH GENERATED FROM OPERATIONS
							As at 31 March 2020	As at 31 March 2019
							£'000	£'000
	Loss before tax						(1,705)	(3,563)
	Depreciation						699	313
	Profit on disposal of fixed assets						-	(106)
	Net bank and other interest						406	223
	Amortisation of intangible assets						2,194	1,866
	Exchange movement						(7)	-
	Share based payments						185	181
	Operating cash flows before movement in working capital						1,772	(1,086)
	Movement in inventories						693	(180)
	Movement in trade and other receivables						589	1,732
	Movement in trade and other payables						(21)	(3,214)
	Movement in provisions						42	1
	Cash generated from operations						3,075	(2,747)
	Interest received						12	10
	Income taxes received						1,028	985
	Net cash inflow/ (outflow) from operating activities						4,115	(1,752)

13	CHANGES IN ACCOUNTING POLICIES
	The following tables set out the reconciliation from operating lease commitments disclosed in the 2019 Consolidated Financial Statements and the financial impact of adopting IFRS 16 for the year ended 31 March 2020:
	Reconciliation of lease liabilities
									£'000
	Lease liabilities recognised on adoption of IFRS 16								2,510
	Add: finance leases recognised in borrowings as at 31 March 2019								626
	Lease liabilities as at 1 April 2019								3,136
	Lease additions								342
	Payments of lease liabilities								(630)
	Lease terminated								(30)
	Interest expense on lease liabilities								59
	Interest paid on lease liabilities								(59)
	Lease liabilities as at 31 March 2020								2,818
	Of which:
		Current lease liabilities							656
		Non-current lease liabilities							2,162
									2,818
	Reconciliation of right of use assets
	Right of use assets recognised on adoption of IFRS 16								2,510
	Add: net book value of assets relating to finance leases recognised in PP&E and Intangible assets as at 31 March 2019								739
	Right of use assets as at 1 April 2019								3,249
	Lease additions								342
	Leases terminated								(37)
	Depreciation of right of use assets								(550)
	Foreign exchange								-
	Right of use assets as at 31 March 2020								3,004
	Of which:
		Real estate and other							2,560
		Motor Vehicles							444
									3,004
	Upon adoption of IFRS 16 at 1 April 2019, there was an increase in both deferred tax assets and deferred tax liabilities of £477,000.
	For the year ended 31 March 2020, expenses related to short-term leases and low-value leases of £80,000 were recognised in the Consolidated Statement of Comprehensive Income.
	The Group's Consolidated Statement of Comprehensive Income for the year ended 31 March 2020 includes a net expense of £33,000 as a result of adopting IFRS 16. Total cash outflow of IFRS 16 lease liabilities including interest for the year ended 31 March 2020 was £689,000.

14 POST BALANCE SHEET EVENTS
The Group recently entered into Amendment and Restatement Agreements with HSBC that extended the term of the facilities to 30 September 2021, deferred all scheduled capital repayments from June 2020, with these recommencing in April 2021 and amended the covenants.  The Group also recently entered into an Amendment and Restatement Agreement with MEIF EM Debt LP that deferred the commencement date of capital repayments to 30 June 2021 and amended the covenants in line with the agreement with HSBC.  All other terms of the facilities remained unchanged.

 

END

 

 

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