29 June 2021
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 2021 (FY-2021).
FINANCIAL SUMMARY:
|
FY-2021 |
FY-2020 |
Change |
Group revenue |
£16.0m |
£19.6m |
-18% |
of which, Recurring revenue1 |
£9.4m |
£9.8m |
-4% |
Loss before tax |
(£1.9m) |
(£1.7m) |
+10% |
Adjusted loss before tax2 |
(£0.3m) |
(£0.2m) |
+53% |
Loss after tax |
(£1.2m) |
(£1.1m) |
+9% |
Net cash inflow generated from operations |
£4.7m |
£4.1m |
+15% |
Net debt3 |
£4.9m |
£5.6m |
-13% |
Basic loss per share |
2.47p |
2.19p |
+13% |
Adjusted basic earnings per share2 |
0.07p |
0.28p |
-75% |
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-2021 net debt excludes £1.9m IFRS 16 lease liability.
OPERATIONAL OVERVIEW
· 3 periods of lockdown impacted revenues significantly by an estimated £4m.
· Strong continued reduction in direct and indirect costs.
· 4% increase to over 254,000 connected units in operation (FY-2020: 245,000).
· New contract wins with four new Insurance companies.
· Contract awards with the Parts Alliance and a major UK retailer.
· A second significant European road side assistance company launched in volume during the year.
· R&D spend down 28%, however still £2.9m invested.
· Successfully navigated a large number of supply chain challenges.
· Renewed Banking facilities for 2 years through to 31 October 2023, including delayed capital repayments.
· Recurring revenues continue to be significant although slightly down from £9.8m to £9.4m.
OUTLOOK
· Revenues in the current financial year from insurance clients increasing following the resumption of driving tests with recent device shipments 16% ahead of last year resulting in revenues to end of May being 28% ahead of last year. However the recovery from lockdown is slower than the corresponding period last year.
· Fleet sales showing good progress with revenues in current financial year to end of May 24% ahead of last year.
· Group revenues in current financial year to end of May 26% ahead of last year.
· Assuming no further lockdowns or unmanageable supply chain issues the Company expects to return to pre-Covid-19 revenues and deliver a profit.
- Ends -
For further information:
Trakm8 Holdings plc |
|
John Watkins, Executive Chairman |
Tel: +44 (0) 1675 434 200 |
Jon Furber, Finance Director |
|
|
|
Arden Partners plc (Nominated Adviser & Broker) |
Tel: +44 (0) 20 7614 5900 |
Paul Shackleton
|
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 254,000 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, The Parts Alliance Group, 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 2021 was a year like no other in our memories. The impact of Covid-19 on our personal and business lives has been huge. Trakm8 has been affected like so many others from its exposure to the motor insurance industry; almost 6 months of no driving tests and higher levels of vehicles registered off the road (SORN) resulted in a much reduced pool of drivers buying new policies. However the high level of recurring revenue (over 50% in FY-2021) mitigated the impact of Covid-19 on the financial performance of the Group.
The first quarter of the year saw a significant reduction in Fleet connections with high levels of attrition from small customers and reductions in fleet size from some larger customers. Thereafter, the level of Fleet connections stabilised with new sales matching a return to a more normal level of losses from the existing base.
The problems with the supply chain of electronic components have been widely reported. The major IT suppliers had first grab of chip manufacturing capacity and the car companies have had a battle to get their demand met. As a result we, too, have had to fight our corner. The benefit of a vertically integrated business is that our engineers and purchasing teams can solve these challenges quickly. As a result, the year's revenues were not impacted by these issues.
The revenues of the business fell by 18% but the Group, with lower direct and indirect costs posted a broadly similar adjusted loss before tax of £0.3m (FY-2020: £0.2m). Connections grew by 4% to 254,000. The total number of fleet management connections decreased by 9% over the year to 70,000 (FY-2020: 77,000). Telematics for insurance/automotive connections increased by 10%. At the year-end we had 184,000 insurance/automotive connections (FY-2020: 168,000). Recurring service revenues reduced by 3.8% to £9.4m (FY-2020: £9.8 m).
It was pleasing to maintain the strong cash generation of the business with a cash flow from operations of £4.7m (FY-2020: £4.1m). This resulted in a free cash flow of £2.1m (FY-2020: £0.9m) and net debt reduced by £0.7m at £4.9m (pre-IFRS 16). The Group had £2.4m cash on hand and an undrawn overdraft facility of £0.5m. It was satisfying to see the vigorous actions taken reduced the inventory in the business by £0.6m. The Company also benefitted from £1.8m of HMRC deferred payments on VAT/PAYE/NI, which is scheduled for repayment over the next two financial years almost equally.
A broadly similar adjusted loss to the previous year on revenues 18% lower was achieved through the Group's continued focus on improving efficiency of our operations and engineering activities. Significant reductions in direct and indirect costs were delivered during the year. The Company benefitted from the Job Retention Support Scheme with £0.9m in cash received from the government. The investment in engineering resources, whilst some £1.2m less (£0.8m less if the cost of engineering resources on furlough are included) than the previous year, has continued to deliver market-leading software and hardware solutions. Trakm8's Insight platform provides superb customer experience and data, enabling vehicle operators to make significant improvements to operational efficiencies and to reduce risk.
Renewed Banking facilities were agreed with HSBC for over two years. The new agreements comprise a Term Loan of £5.3m and a £0.5m overdraft facility. Capital repayments commence in September 2021, with appropriate 'carve out' in covenants to cover the Covid-19 impacted financial year. These facilities are in place until October 2023. In addition, the capital repayment holiday of our loan with Maven (£1.4m outstanding) has been extended, such that repayments will now re-commence in September 2021. Interest on the loans continues to be paid monthly.
Research and development ('R&D')
Trakm8 has maintained a significant level of investment in R&D for another year although below the level of the previous year. The Board believes that this level of investment is necessary to retain a portfolio of market-leading technology. Trakm8 continues to focus on owning the intellectual property ('IP') we use in our solutions, and we see this as one of our key competitive advantages. Telematics systems are complex; but because we own all the elements that encompass a solution (with the exception of the mobile networks) we have the ability to understand and resolve problems more easily than our competitors.
The R&D investment has concentrated on the development of self-fit devices, additional improvements to camera solutions, development of the feature set in Insight, and further development of our Insurance Broker platform. As identified in previous years, the requirement to do more for less cost remains a key strategy as this widens the opportunity to expand the rate of growth as the return on their investment for our customers improves.
Trakm8 was pleased to be granted another patent in the year, bringing the total number of patents to four that Trakm8 holds to protect its market leading IP in its software and hardware solutions.
Governance
The Group has adopted the Quoted Companies Alliance's (QCA) Corporate Governance Code for small and mid-size quoted companies, which the Board considers the most appropriate for the size and structure of the Group. More information can be found in the Governance Report section of this report and our website.
Please see https://www.trakm8.com/investor-relations/corporate-governance for our full compliance statement.
Dividend
The Group does not propose to recommend a dividend for the year at the forthcoming AGM. However, the Board will continue to review its dividend policy in light of future results and investment requirements.
People
The number of people Trakm8 employs has reduced further during FY-2021 with reductions across the business. In total our staff numbers have reduced by 10% over the year.
Working successfully in the Covid-19 remote working world has been a credit to our colleagues. We have an exceptional team and I would like to thank everyone for their hard work, dedication and contribution to the ongoing success of the business.
Outlook
We start the new financial year assuming that the worst of the impact of Covid-19 is behind us.
With April still in lockdown our Insurance deliveries continued to be 55% lower than the peak of September/October 2020, however May and June have started a growth phase, but at a slower rate than the corresponding period last year. Currently Insurance devices supplied amount to 16% more than the corresponding period last year.
Fleet deliveries have been reasonably good with new unit shipments 116% greater than the corresponding period last year. More importantly the attrition during the period has been more normal.
April and May revenues were 26% higher than the corresponding period of the previous year.
We expect that this year will benefit from improved direct and indirect costs as a result of actions taken last year. We do not envisage utilising the Job Retention Scheme as much this year.
Based on no more lockdowns or unsurmountable supply chains challenges we expect the revenues to return to pre-Covid-19 levels and as a result return the group to profitability.
John Watkins
EXECUTIVE CHAIRMAN
28 June 2021
FINANCIAL REVIEW
TRADING RESULTS
|
2021 |
2020 |
Change |
Group Revenue (£'000) |
15,961 |
19,550 |
-18% |
of which, Recurring Revenue (£'000) |
9,379 |
9,753 |
-4% |
Loss before tax (£'000) |
1,867 |
1,705 |
+10% |
Adjusted Loss before tax1 (£'000) |
342 |
224 |
+53% |
Basic loss per share (p) |
2.47 |
2.19 |
+13% |
Adjusted basic earnings/(loss) per share (p) |
0.07 |
0.28 |
-75% |
1 Before exceptional costs and share based payments
Revenue
Group revenue decreased by 18% to £16.0m (FY-2020: £19.6m) due to the impact of Covid-19. Fleet revenues decreased by 21% to £9.5m and Insurance and Automotive revenues decreased by 14% to £6.4m. Despite the last lockdown, revenues in H2 were 18% higher than H1 due to recovery in trading after the first lock down. The last lock down did impact trading, but not to the same extent as the first lock down. The growth in H2 was driven by more normal level of new business sales in Fleet and Optimisation, and by the onboarding of new insurance customers and launch of the Automotive connected car solution. Recurring revenue generated from service and maintenance fees decreased by 4% to £9.4m (FY-2020: £9.8m) due to the reduction in Fleet connections in H1 as a result of Covid-19. This resulted in higher than normal levels of attrition from small customers and some reduction in fleets in larger customers.
Loss before tax
The Group reported a loss before tax of £1.9m (FY-2020: £1.7m). The loss remained broadly similar to the prior year despite the reduction in revenue resulting in £2.2m less Gross Margin. This was achieved by a £2.3m reduction in total administrative costs offset by £0.2m reduction in Grant Income. Total administrative costs reduced by £2.3m of which £0.9m was due to income received under the Coronavirus Job Retention Scheme, £0.9m reduction in one off exceptional integration and restructuring and new product component refit costs, £0.3m due to lower headcount and £0.1m reduction in depreciation and amortisation.
Adjusted Loss before tax
Despite the £3.6m reduction in revenue, the Group reported an adjusted loss of £0.3m, only £0.1m higher than the prior year. The £2.2m of reduction in Gross margin that resulted from the revenue reduction was offset by £1.3m lower headcount costs, of which £1.0m were reclassified to exceptional costs as they related to the cost of employees whilst on furlough, and £0.3m due to lower headcount. In addition other overheads (excluding exceptional items and depreciation and amortisation) reduced by £0.9m from lower marketing spend and other costs due to Covid-19, grant income was £0.2m lower and depreciation and amortisation was £0.1m lower .
Exceptional Costs
Exceptional costs total £1.3m (FY-2020: £1.3m) and primarily include £2.1m of one-off costs relating to Covid-19. These include costs of employees whilst on furlough of £1.6m, costs relating to the cancellation of internal and external projects totaling £0.5m and some costs relating to cancelled marketing events and bad debts. These costs were offset by £0.9m received under the Coronavirus Job Retention Scheme. Additionally £0.2m of restructuring costs relating to initiatives to streamline and rationalise the operations of the business were incurred.
Balance Sheet
|
2021 |
2020 |
|
£'000 |
£'000 |
Non-Current Assets |
25,640 |
25,759 |
Net Current Assets |
4,169 |
4,437 |
Non-Current Liabilities |
9,687 |
9,017 |
Net Assets |
20,122 |
21,179 |
Net Assets decreased by £1.1m to £20.1m (FY-2020: £21.2m) reflecting the loss for the year, after adding back the IFRS2 Share based payments charge.
Non-current assets decreased by £0.2m to £25.6m (FY-2020: £25.8m). This is due to £0.5m reduction in right of use assets due to depreciation offset by a £0.2m increase in Intangible assets and £0.2m increase in Property, plant and equipment. Intangible assets increased due to the continued investment in development in both software and hardware with capitalised development costs in the year totaling £2.3m (FY-2020: £3.2m), offset by amortisation of £1.7m (FY-2020: £1.8m). Additionally £0.2m was written off to exceptional costs relating to capitalised software costs, due to Covid-19 resulting in an internal software project being cancelled.
Cash Flow
|
2021 |
2020 |
|
£'000 |
£'000 |
Net Cash generated from operations |
4,737 |
4,115 |
Investing activities |
(2,667) |
(3,199) |
Free Cash Flow1 |
2,070 |
916 |
Financing activities |
(1,365) |
(456) |
Change in Cash in Year |
705 |
460 |
Net Debt2 |
4,887 |
5,643 |
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-2021 net debt excludes £1.9m IFRS 16 lease liability.
Cash from operating activities improved by £0.6m during this year to £4.7m (FY-2020: £4.1m), which included R&D tax credit cash receipts of £0.9m (FY-2020: £1.0m). The R&D tax credit cash receipt reflects the Group's investment in development. The operational cash flow improvement is due to £0.6m improvement year on year from improved working capital management. This improvement in working capital includes £1.8m of HMRC deferred payments for VAT, PAYE & NI. The Group has a Time to Pay agreement with HMRC to repay this almost equally over the next two financial years.
Free cash inflow of £2.1m (FY-2020: £0.9m) is due to the Net Cash generated from operating activities as detailed above offset by cash outflows from investing activities which decreased by £0.5m to £2.7m (FY-2020: £3.2m).
Financing activities was an outflow of £1.4m (FY-2020: £0.5m). The increased cash outflow is due to the previous year including the receipt of the new £1.5m growth capital loan from MEIF WM Debt LP, and lower loan capital repayments in the current year due to deferment of capital repayments from 30 June 2020. The current year also includes the refinance of the HSBC facilities that resulted in a new £5.3m term loan repaying £4.5m outstanding under the old HSBC credit facility and £0.7m under the old term loan.
Net Debt
Net debt excluding IFRS 16 lease liability of £1.9m (FY-2020 £2.3m) reduced by £0.7m to £4.9m (FY-2020: £5.6m). Cash balances total £2.4m (FY-2020: £1.7m) and total borrowings including IFRS16 lease liability of £1.9m totals £9.1m (FY-2020: £9.6m). Borrowing comprise £5.3m (FY-2020: £0.9m) term loan with HSBC, £1.4m (FY-2020: £1.5m) term loan with MEIF WM Debt LP, nil (FY-2020: £4.5m) amounts drawn under the old £5m revolving credit facility with HSBC and £2.4m (FY-2020: £2.8m) of obligations under Right-to-use lease liabilities. In addition at the year end the Group has a £0.5m unused overdraft facility with HSBC.
Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2021 |
|
||||||||||
|
|
|
|
|
|
||||||
|
|
Note |
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
||||||
|
|
|
£'000 |
£'000 |
|
||||||
|
REVENUE |
4 |
15,961 |
19,550 |
|
||||||
|
Cost of sales |
|
(6,643) |
(7,991) |
|
||||||
|
|
|
|
|
|||||||
|
Gross profit |
9,318 |
11,559 |
|
|||||||
|
|
|
|
|
|
||||||
|
Other income |
5 |
194 |
364 |
|
||||||
|
|
|
|
|
|
||||||
|
Administrative expenses excluding exceptional costs |
|
(9,585) |
(11,926) |
|
||||||
|
Exceptional administrative costs |
7 |
(1,342) |
(1,296) |
|
||||||
|
Total administrative costs |
|
(10,927) |
(13,222) |
|
||||||
|
|
|
|
|
|
||||||
|
OPERATING LOSS |
6 |
(1,415) |
(1,299) |
|
||||||
|
|
|
|
|
|
||||||
|
Finance income |
|
78 |
12 |
|
||||||
|
Finance costs |
8 |
(530) |
(418) |
|
||||||
|
|
|
|
|
|
||||||
|
LOSS BEFORE TAXATION |
|
(1,867) |
(1,705) |
|
||||||
|
Income tax |
|
630 |
612 |
|
||||||
|
|
|
|
|
|||||||
|
LOSS FOR THE YEAR |
|
(1,237) |
(1,093) |
|
||||||
|
|
|
|
|
|
||||||
|
OTHER COMPREHENSIVE INCOME |
|
|
|
|
||||||
|
Items that may be subsequently reclassified to profit or loss: |
|
|
|
|
||||||
|
Exchange differences on translation of foreign operations |
|
(3) |
(7) |
|
||||||
|
TOTAL OTHER COMPREHENSIVE INCOME |
|
(3) |
(7) |
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|||||||
|
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT |
|
(1,240) |
(1,100) |
|
||||||
|
|
|
|
|
|
||||||
|
LOSS BEFORE TAXATION |
|
(1,867) |
(1,705) |
|
||||||
|
Exceptional administrative costs |
|
1,342 |
1,296 |
|
||||||
|
IFRS2 Share based payments charge |
|
183 |
185 |
|
||||||
|
ADJUSTED LOSS BEFORE TAX |
6 |
(342) |
(224) |
|
||||||
|
|
|
|
|
|
||||||
|
LOSS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT |
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
Basic |
9 |
(2.47p) |
(2.19p) |
|
||||||
|
Diluted |
9 |
(2.47p) |
(2.19p) |
|
||||||
|
|
|
|||||||||
|
The results relate to continuing operations.
|
|
|||||||||
|
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2021 |
||||||||||
|
|
|
|
|
|
|
|
|
|
||
|
|
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 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 income |
|
- |
- |
- |
(7) |
- |
(1,093) |
(1,100) |
||
|
|
|
|
|
|
|
|
|
|
||
|
Transactions with owners |
|
|
|
|
|
|
|
|
||
|
IFRS2 Share-based payments charge |
|
- |
- |
- |
- |
- |
185 |
185 |
||
|
Transactions with owners |
|
- |
- |
- |
- |
- |
185 |
185 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Balance as at 1 April 2020 |
|
500 |
14,691 |
1,138 |
196 |
(4) |
4,658 |
21,179 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Comprehensive loss |
|
|
|
|
|
|
|
|
||
|
Loss for the year |
|
- |
- |
- |
- |
- |
(1,237) |
(1,237) |
||
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
||
|
Exchange differences on translation of overseas operations |
|
- |
- |
- |
(3) |
- |
- |
(3) |
||
|
Total comprehensive loss |
|
- |
- |
- |
(3) |
- |
(1,237) |
(1,240) |
||
|
|
|
|
|
|
|
|
|
|
||
|
Transactions with owners |
|
|
|
|
|
|
|
|
||
|
IFRS2 Share based payments charge |
|
- |
- |
- |
- |
- |
183 |
183 |
||
|
Transactions with owners |
|
- |
- |
- |
- |
- |
183 |
183 |
||
|
Balance as at 31 March 2021 |
|
500 |
14,691 |
1,138 |
193 |
(4) |
3,604 |
20,122 |
||
Consolidated Statement of Financial Position As At 31 March 2021 |
||||||
|
Note |
As at 31 March 2021 |
As at 31 March 2020 |
|||
ASSETS |
|
£'000 |
£'000 |
|||
NON CURRENT ASSETS |
|
|
|
|||
Intangible assets |
10 |
22,187 |
21,997 |
|||
Property, plant and equipment |
|
891 |
717 |
|||
Right of use assets |
|
2,512 |
3,004 |
|||
Amounts receivable under finance leases |
|
50 |
41 |
|||
|
25,640 |
25,759 |
||||
CURRENT ASSETS |
|
|
|
|||
Inventories |
|
1,409 |
2,043 |
|||
Trade and other receivables |
|
6,679 |
7,854 |
|||
Corporation tax receivable |
|
690 |
863 |
|||
Cash and cash equivalents |
|
2,370 |
1,665 |
|||
|
11,148 |
12,425 |
||||
LIABILITIES |
|
|
|
|||
CURRENT LIABILITIES |
|
|
|
|||
Trade and other payables |
|
(5,417) |
(6,180) |
|||
Borrowings |
|
(855) |
(1,125) |
|||
Right of use liability |
|
(680) |
(656) |
|||
Provisions |
|
(27) |
(27) |
|||
|
|
(6,979) |
(7,988) |
|||
|
|
|
|
|||
CURRENT ASSETS LESS CURRENT LIABILITIES |
4,169 |
4,437 |
||||
|
|
|
||||
TOTAL ASSETS LESS CURRENT LIABILITIES |
29,809 |
30,196 |
||||
|
|
|
||||
NON CURRENT LIABILITIES |
|
|
|
|||
Trade and other payables |
|
(1,546) |
(713) |
|||
Borrowings |
|
(5,815) |
(5,675) |
|||
Right of use liability |
|
(1,767) |
(2,162) |
|||
Provisions |
|
(190) |
(157) |
|||
Deferred income tax liability |
|
(369) |
(310) |
|||
|
|
(9,687) |
(9,017) |
|||
|
|
|
|
|||
NET ASSETS |
20,122 |
21,179 |
||||
|
|
|
||||
EQUITY |
|
|
|
|||
Share capital |
11 |
500 |
500 |
|||
Share premium |
|
14,691 |
14,691 |
|||
Merger reserve |
|
1,138 |
1,138 |
|||
Translation reserve |
|
193 |
196 |
|||
Treasury reserve |
|
(4) |
(4) |
|||
Retained earnings |
|
3,604 |
4,658 |
|||
|
|
|
|
|||
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT |
|
20,122 |
21,179 |
|||
|
|
|
|
|||
The loss for the Company for the year determined in accordance with the Companies Act 2006 was £257,000 (2020: loss £236,000). |
||||||
The notes on pages 42 to 79 are an integral part of these consolidated financial statements. These financial statements on pages 38 to 79 were approved by the Board of directors and authorised for issue on 28 June 2021 and are signed on its behalf by:
|
||||||
John Watkins - Director |
Jon Furber - Director |
|
||||
Consolidated Statement of Cash Flows For The Year Ended 31 March 2021 |
|
|||||
|
|
|
|
|
||
|
Notes |
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
||
|
|
'000 |
'000 |
|
||
NET CASH GENERATED FROM OPERATING ACTIVITIES |
12 |
4,737 |
4,115 |
|
||
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
||
Purchases of property, plant and equipment |
|
(330) |
(20) |
|
||
Purchases of software |
|
(47) |
(23) |
|
||
Capitalised development costs |
|
(2,290) |
(3,156) |
|
||
|
|
|
|
|
||
NET CASH USED IN INVESTING ACTIVITIES |
|
(2,667) |
(3,199) |
|
||
|
|
|
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|||
Increase in loans |
|
5,300 |
2,000 |
|
||
Loan arrangement fees |
|
(86) |
- |
|
||
Repayment of loans |
|
(5,379) |
(1,440) |
|
||
Repayment of obligations under lease agreements |
|
(670) |
(630) |
|
||
Interest paid |
|
(530) |
(386) |
|
||
|
|
|
|
|
||
NET CASH GENERATED FROM FINANCING ACTIVITIES |
|
(1,365) |
(456) |
|
||
|
|
|
|
|
||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
705 |
460 |
|
||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
|
1,665 |
1,205 |
|
||
CASH AND CASH EQUIVALENTS AT END OF YEAR |
|
2,370 |
1,665 |
|
||
Notes to the Consolidated Financial Statements
1 |
GENERAL INFORMATION |
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|
Trakm8 Holdings PLC ("Company") and its subsidiaries (together the "Group") develop, manufacture, distribute and sell telematics devices and services and optimisation solutions. |
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|
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. |
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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. |
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|
The consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand (£'000) except where otherwise indicated. |
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2 |
PREPARATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS |
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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. |
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3 |
BASIS OF PREPARATION |
|
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|
The audited financial information included in this preliminary results announcement for the year ended 31 March 2021 and audited information for the year ended 31 March 2020 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 2021 which will be delivered to the Registrar of Companies in due course. Statutory financial statements for the year ended 31 March 2020 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 2021 and 2020 respectively on these financial statements were unqualified and did not include a statement under section 498 of the Companies Act 2006. |
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|
These financial statements are prepared on a going concern basis after assessing the principal risks. To monitor the future cash position the Group produces projections of its working capital and long term funding requirements covering 3 months in detail and 1 and 2 year projections. These projections are updated on a regular basis to reflect current trading and latest information on future trading. The Group does have a substantial recurring revenue base that accounts for 50% of revenues that provide a strong underlying base, and the Group is still taking advantage of the Job Retention scheme as trading recovers following relaxation of lock down rules. Further consideration of other significant risks and the mitigations the Group has developed are detailed in page 18 of the audited statutory financial statements.
The Group renewed its debt facilities with HSBC in March 2021. The new agreement comprises a Term Loan of £5,300,000 and a £500,000 overdraft facility. Capital repayments commence in September 2021 at £86,000 per month with a final payment of the outstanding balance on 31 October 2023, which is when these facilities are in place until. In addition, the capital repayment holiday of our loan with Maven (£1,400,000 outstanding) has been extended, such that repayments will now recommence in September 2021. In addition the company has reached an agreement with HMRC on a time to pay agreement to spread £1,759,000 of VAT, PAYE & NI payment deferments that resulted from the Covid-19 lockdowns almost equally over the next two financial years. Covenants agreed with both HSBC and Maven reflect the impact of trading due to Covid-19 over the preceding twelve months, as such the main covenant test over the next financial year relates to an absolute EBITDA tested quarterly through to end of the financial year, with a cash flow cover and leverage covenant only started to be tested in June 2022.
At the year end the Group has cash balances of £2,370,000 and an unused overdraft facility of £500,000. The Groups latest projections for twelve months from the date of signing the financial statements show that the Group has sufficient cash resources and will meet its covenants with ample headroom for the foreseeable future. The Group has undertaken a number of adverse sensitivities against its projections to reflect much slower recovery post the lock down at the end of the last financial year. The Groups base line projection has a 10% headroom against its EBITDA covenant, its downside sensitivity analysis shows that a £2.4m reduction in revenue only reduces EBITDA by 3%, with minimal impact on cash. This downside scenario still passes all covenants with the Group having additional mitigating actions not included in the projections. One of the current risks is cost pressure and long lead times due to the electronics supply chain being materially impacted by Covid-19. The Group is in a strong position to mitigate that risk due to the strong long-term relationships with its suppliers, and due to it being a fully vertically integrated business which means the design engineers working closed with supply chain. However, the Group's sensitivity analysis demonstrated headroom in its latest projection of a 15% increase in component prices. On this basis the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operation for the foreseeable future and therefore it is appropriate to adopt the going concern basis of accounting in preparing the financial statements.
|
||||||||||||||||
4 |
SEGMENTAL ANALYSIS |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
The chief operating decision maker ("CODM") is identified as the Board. It continues to define all the Group's trading under the single Integrated Telematics Technology segment and therefore review the results of the group as a whole. Consequently all of the Group's revenue, expenses, assets and liabilities are in respect of one Integrated Telematics Technology segment. |
|||||||
|
The Board as the CODM review the revenue streams of Integrated Fleet, Optimisation, Insurance and Automotive Solutions ("Solutions") as part of their internal reporting. Solutions represents the sale of the Group's full vehicle telematics and optimisation services, engineering services, professional services and mapping solutions to customers. |
|||||||
|
A breakdown of revenues within these streams are as follows: |
|
|
|||||
|
|
|
|
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
|
|
|
|
|
|
£'000 |
£'000 |
|
Solutions: |
|
|
|
|
|
15,961 |
19,550 |
|
Fleet and optimisation |
|
|
|
|
|
9,520 |
12,034 |
|
Insurance and automotive |
|
|
|
|
|
6,441 |
7,516 |
|
|
|
|
|
|
|
|
|
|
A geographical analysis of revenue by destination is as follows: |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
|
|
|
|
|
|
£'000 |
£'000 |
|
United Kingdom |
|
|
|
|
|
15,647 |
19,181 |
|
North America |
|
|
|
|
|
4 |
7 |
|
Norway |
|
|
|
|
|
2 |
- |
|
Rest of Europe |
|
|
|
|
|
293 |
67 |
|
Rest of World |
|
|
|
|
|
15 |
295 |
|
|
|
|
|
|
|
15,961 |
19,550 |
5 |
OTHER INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
|
|
|
|
|
|
£'000 |
£'000 |
|
Grant income |
|
|
|
|
|
194 |
361 |
|
R&D tax credit |
|
|
|
|
|
- |
4 |
|
R&D tax credit adjustment in respect of prior periods |
|
|
|
- |
(1) |
||
|
|
|
|
|
|
|
194 |
364 |
6 |
OPERATING LOSS |
|
|
|
|
|
|
|
|
|
|
|
The following items have been included in arriving at operating loss: |
||||
|
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
|
|
|
£'000 |
£'000 |
|
Depreciation |
|
|
|
|
|
- owned assets |
|
|
156 |
149 |
|
- right of use assets |
|
|
625 |
550 |
|
Amortisation of intangible assets |
|
|
|
|
|
- owned assets (see note 10) |
|
|
1,992 |
2,194 |
|
Other operating lease rentals |
|
|
13 |
80 |
|
Research and development expenditure |
|
|
637 |
896 |
|
Loss on disposal of property plant and equipment |
|
318 |
- |
|
|
Loss on foreign exchange transactions |
|
|
1 |
2 |
|
Staff costs |
|
|
6,465 |
6,730 |
|
Exceptional administrative costs (note 7) |
|
|
1,342 |
1,296 |
|
Auditors' remuneration |
|
|
|
|
|
- Fees payable to the Company's auditors for the audit of the parent |
|
|
||
|
company and consolidated financial statements |
|
73 |
73 |
|
|
|
|
|
|
|
|
Adjusted loss before tax is monitored by the Board and measured as follows: |
|
|
||
|
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
|
|
|
£'000 |
£'000 |
|
Loss before tax |
|
|
(1,867) |
(1,705) |
|
Exceptional administrative costs (note 7) |
|
|
1,342 |
1,296 |
|
Share based payments |
|
|
183 |
185 |
|
Adjusted loss before tax |
|
|
(342) |
(224) |
|
|
|
|
|
|
7 |
EXCEPTIONAL ADMINISTRATIVE COSTS |
|
|
|
|
|
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|
|
|
|
£'000 |
£'000 |
|
Acquisition costs |
|
|
- |
52 |
|
Integration & restructuring costs |
|
|
168 |
602 |
|
New product component refit costs |
|
|
- |
442 |
|
Covid-19 costs |
|
|
2,109 |
200 |
|
Furlough grant income |
|
|
(935) |
- |
|
|
|
|
1,342 |
1,296 |
|
The acquisition costs incurred in 2020 relate to non-underlying charges under a separate agreement linked to the acquisition in 2017. The costs incurred are directly linked to the acquisition and not as part of the underlying business. This agreement terminated on 31 July 2019. |
|
- Restructuring costs incurred as a result of a headcount reduction activity undertaken during the current financial year |
8 |
FINANCE COSTS |
|
|
|
|||
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|||
|
|
|
£'000 |
£'000 |
|||
|
Interest on bank loans |
|
373 |
284 |
|||
|
Amortisation of debt issue costs |
37 |
32 |
||||
|
Interest on right of use assets |
|
120 |
102 |
|||
|
|
|
530 |
418 |
|||
9 |
EARNINGS PER ORDINARY SHARE |
||||||
|
|
|
|
|
|||
|
The earnings per Ordinary share have been calculated in accordance with IAS 33 using the loss for the year and the weighted average number of Ordinary shares in issue during the year as follows: |
||||||
|
|
|
Year ended 31 March 2021 |
Year ended 31 March 2020 |
|||
|
|
|
£'000 |
£'000 |
|||
|
Loss for the year after taxation |
|
(1,237) |
(1,093) |
|||
|
Exceptional administrative costs |
|
1,342 |
1,296 |
|||
|
Share based payments |
|
183 |
185 |
|||
|
Tax effect of adjustments |
|
(255) |
(246) |
|||
|
Adjusted profit for the year after taxation |
|
33 |
142 |
|||
|
|
|
|
|
|||
|
|
|
No. |
No. |
|||
|
Number of Ordinary shares of 1p each at 31 March |
|
50,004,002 |
50,004,002 |
|||
|
|
|
|
|
|||
|
Basic weighted average number of Ordinary shares of 1p each |
50,004,002 |
50,004,002 |
||||
|
Diluted weighted average number of Ordinary shares of 1p each |
50,004,002 |
50,004,002 |
||||
|
|
|
|
|
|||
|
Basic loss per share |
|
(2.47p) |
(2.19p) |
|||
|
Diluted loss per share |
|
(2.47p) |
(2.19p) |
|||
|
|
|
|
|
|||
|
Adjust for effects of: |
|
|
|
|||
|
Exceptional costs |
|
2.17p |
2.10p |
|||
|
Share based payments |
|
0.37p |
0.37p |
|||
|
|
|
|
|
|||
|
Adjusted basic earnings per share |
|
0.07p |
0.28p |
|||
|
Adjusted diluted earnings per share |
|
0.07p |
0.28p |
|||
10 |
INTANGIBLE ASSETS |
|
|
|
|
|
|
|
|
|
|
Goodwill |
Intellectual property |
Customer relationships |
Development costs |
Software |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
COST |
|
|
|
|
|
|
|
|
As at 1 April 2019 |
|
10,417 |
1,920 |
100 |
14,034 |
2,033 |
28,504 |
|
Reclassification of right of use assets(a) |
- |
- |
- |
- |
(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 |
|
Additions - Internal developments |
- |
- |
- |
2,119 |
- |
2,119 |
|
|
Additions - External purchases |
- |
- |
- |
171 |
47 |
218 |
|
|
Impairments |
|
- |
- |
- |
- |
(155) |
(155) |
|
Disposals |
- |
- |
- |
(238) |
(36) |
(274) |
|
|
As at 31 March 2021 |
|
10,417 |
1,920 |
100 |
19,242 |
1,759 |
33,438 |
|
AMORTISATION |
|
|
|
|
|
|
|
|
As at 1 April 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 |
|
Charge for year |
|
- |
10 |
- |
1,733 |
249 |
1,992 |
|
Disposals |
- |
- |
- |
(238) |
(36) |
(274) |
|
|
As at 31 March 2021 |
|
- |
1,920 |
100 |
7,974 |
1,257 |
11,251 |
|
NET BOOK AMOUNT |
|
|
|
|
|
|
|
|
As at 31 March 2021 |
|
10,417 |
- |
- |
11,268 |
502 |
22,187 |
|
|
|
|
|
|
|
|
|
|
As at 31 March 2020 |
|
10,417 |
10 |
- |
10,711 |
859 |
21,997 |
|
|
|
|
|
|
|
|
|
|
As at 1 April 2019 |
|
10,417 |
71 |
11 |
9,402 |
1,264 |
21,165 |
|
|
|
|
|
|
|
|
|
|
Goodwill arose in relation to the Group's acquisition of 100% of the share capital of Roadsense Technology Limited (Roadsense), Route Monkey Limited (Route Monkey), Box Telematics Limited (Box) and DCS Systems Limited (DCS). |
|||||||
|
|
|
||||||
|
Since the acquisition Roadsense, Box, Route Monkey and DCS have been incorporated into the Trakm8 business. These businesses have therefore been assessed as one cash generating unit for an impairment test on Goodwill. |
|||||||
|
The impairment review has been performed using a value in use calculation. |
|||||||
|
|
|
|
|
|
|
|
|
|
The impairment review has been based on the Group's budgets for FY-2022 which have been reviewed and approved by the Board and projections for FY-2023. 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. |
|||||||
|
The forecast show sufficient headroom of cash flow above the net assets value when we have performed sensitivity analysis: |
|||||||
|
1. An increase in the discount rate to 12% shows headroom of £4m. |
|
|
|
||||
|
2. A decrease in the growth rate to 5% shows headroom of £10m. |
|
|
|
||||
|
3. A decrease in the terminal growth rate to 1% shows headroom of £10m. |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
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 2% and decrease in terminal growth rate from 2% to 1% and increase the discount rate from 10% to 11%. |
|||||||
|
Or triggered by: |
|
|
|
|
|
|
|
|
1. Decrease in net cash generated from operating activities for FY-2022 and FY-2023 of 22%. |
|||||||
|
|
|
|
|
|
|
|
|
|
Amortisation expenses of £1,992,000 (2020: £2,194,000) have been charged to Administrative expenses in the Consolidated Statement of Comprehensive Income. |
|||||||
|
|
|
|
|
|
|
|
|
|
(a) 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 11 - Right of Use Assets for further details.
|
11 |
SHARE CAPITAL |
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
As at 31 March 2021 |
As at 31 March 2020 |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
No's |
£'000 |
No's |
£'000 |
|
||||||||||
|
Authorised: |
|
|
|
'000's |
|
'000's |
|
|
||||||||||
|
Ordinary shares of 1p each |
|
|
200,000 |
2,000 |
200,000 |
2,000 |
|
|||||||||||
|
Allotted, issued and fully paid: |
|
|
|
|
|
|
|
|||||||||||
|
Ordinary shares of 1p each |
|
|
50,004 |
500 |
50,004 |
500 |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
The Company currently holds 29,000 Ordinary shares in treasury representing 0.06% (2020: 0.06%) of the Company's issued share capital. The number of 1 pence Ordinary shares that the Company has in issue less the total number of Treasury shares is 49,975,002.
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12 |
CASH GENERATED FROM OPERATIONS |
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
As at 31 March 2021 |
As at 31 March 2020 |
|
||||||||||
|
|
|
|
|
|
|
£'000 |
£'000 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Loss before tax |
|
|
|
|
(1,867) |
(1,705) |
|
|||||||||||
|
Depreciation |
|
|
|
|
781 |
699 |
|
|||||||||||
|
(Profit)/Loss on disposal of fixed assets |
|
|
318 |
- |
|
|||||||||||||
|
Net bank and other interest |
|
|
|
487 |
406 |
|
||||||||||||
|
Amortisation of intangible assets |
|
|
|
1,992 |
2,194 |
|
||||||||||||
|
Exchange movement |
|
|
|
(3) |
(7) |
|
||||||||||||
|
Share based payments |
|
|
|
183 |
185 |
|
||||||||||||
|
Operating cash flows before movement in working capital |
|
1,891 |
1,772 |
|
||||||||||||||
|
Movement in inventories |
|
|
|
634 |
693 |
|
||||||||||||
|
Movement in trade and other receivables |
|
|
1,166 |
589 |
|
|||||||||||||
|
Movement in trade and other payables |
|
|
70 |
(21) |
|
|||||||||||||
|
Movement in provisions |
|
|
|
33 |
42 |
|
||||||||||||
|
Cash generated from operations |
|
|
|
3,794 |
3,075 |
|
||||||||||||
|
Interest received |
|
|
|
|
78 |
12 |
|
|||||||||||
|
Income taxes received |
|
|
|
865 |
1,028 |
|
||||||||||||
|
Net cash inflow from operating activities |
|
|
4,737 |
4,115 |
|
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