TIDMTRAK

RNS Number : 3948D

Trakm8 Holdings PLC

29 June 2021

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                           GBP16.0m    GBP19.6m     -18% 
                                        ----------  ----------  ------- 
 of which, Recurring revenue(1)           GBP9.4m     GBP9.8m     -4% 
                                        ----------  ----------  ------- 
 Loss before tax                         (GBP1.9m)   (GBP1.7m)    +10% 
                                        ----------  ----------  ------- 
 Adjusted loss before tax(2)             (GBP0.3m)   (GBP0.2m)    +53% 
                                        ----------  ----------  ------- 
 Loss after tax                          (GBP1.2m)   (GBP1.1m)    +9% 
                                        ----------  ----------  ------- 
 Net cash inflow generated from 
  operations                              GBP4.7m     GBP4.1m     +15% 
                                        ----------  ----------  ------- 
 Net debt(3)                              GBP4.9m     GBP5.6m     -13% 
                                        ----------  ----------  ------- 
 Basic loss per share                      2.47p       2.19p      +13% 
                                        ----------  ----------  ------- 
 Adjusted basic earnings per share(2)      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 GBP1.9m IFRS 16 lease liability.

OPERATIONAL OVERVIEW

   --      3 periods of lockdown impacted revenues significantly by an estimated GBP4m. 
   --      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 GBP2.9m 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 GBP9.8m to GBP9.4m.

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                      www.trakm8.com 
 
Arden Partners plc (Nominated Adviser  Tel: +44 (0) 20 7614 5900 
 & Broker) 
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 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 GBP0.3m (FY-2020: GBP0.2m). 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 GBP9.4m (FY-2020: GBP9.8 m).

It was pleasing to maintain the strong cash generation of the business with a cash flow from operations of GBP4.7m (FY-2020: GBP4.1m). This resulted in a free cash flow of GBP2.1m (FY-2020: GBP0.9m) and net debt reduced by GBP0.7m at GBP4.9m (pre-IFRS 16). The Group had GBP2.4m cash on hand and an undrawn overdraft facility of GBP0.5m. It was satisfying to see the vigorous actions taken reduced the inventory in the business by GBP0.6m. The Company also benefitted from GBP1.8m 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 GBP0.9m in cash received from the government. The investment in engineering resources, whilst some GBP1.2m less (GBP0.8m 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 GBP5.3m and a GBP0.5m 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 (GBP1.4m 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 (GBP'000)           15,961   19,550     -18% 
                                  -------  -------  ------- 
 of which, Recurring Revenue 
  (GBP'000)                         9,379    9,753      -4% 
                                  -------  -------  ------- 
 Loss before tax (GBP'000)          1,867    1,705     +10% 
                                  -------  -------  ------- 
 Adjusted Loss before tax(1) 
  (GBP'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 GBP16.0m (FY-2020: GBP19.6m) due to the impact of Covid-19. Fleet revenues decreased by 21% to GBP9.5m and Insurance and Automotive revenues decreased by 14% to GBP6.4m. 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 GBP9.4m (FY-2020: GBP9.8m) 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 GBP1.9m (FY-2020: GBP1.7m). The loss remained broadly similar to the prior year despite the reduction in revenue resulting in GBP2.2m less Gross Margin. This was achieved by a GBP2.3m reduction in total administrative costs offset by GBP0.2m reduction in Grant Income. Total administrative costs reduced by GBP2.3m of which GBP0.9m was due to income received under the Coronavirus Job Retention Scheme, GBP0.9m reduction in one off exceptional integration and restructuring and new product component refit costs, GBP0.3m due to lower headcount and GBP0.1m reduction in depreciation and amortisation.

Adjusted Loss before tax

Despite the GBP3.6m reduction in revenue, the Group reported an adjusted loss of GBP0.3m, only GBP0.1m higher than the prior year. The GBP2.2m of reduction in Gross margin that resulted from the revenue reduction was offset by GBP1.3m lower headcount costs, of which GBP1.0m were reclassified to exceptional costs as they related to the cost of employees whilst on furlough, and GBP0.3m due to lower headcount. In addition other overheads (excluding exceptional items and depreciation and amortisation) reduced by GBP0.9m from lower marketing spend and other costs due to Covid-19, grant income was GBP0.2m lower and depreciation and amortisation was GBP0.1m lower .

Exceptional Costs

Exceptional costs total GBP1.3m (FY-2020: GBP1.3m) and primarily include GBP2.1m of one-off costs relating to Covid-19. These include costs of employees whilst on furlough of GBP1.6m, costs relating to the cancellation of internal and external projects totaling GBP0.5m and some costs relating to cancelled marketing events and bad debts. These costs were offset by GBP0.9m received under the Coronavirus Job Retention Scheme. Additionally GBP0.2m of restructuring costs relating to initiatives to streamline and rationalise the operations of the business were incurred.

Balance Sheet

 
                               2021      2020 
                            GBP'000   GBP'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 GBP1.1m to GBP20.1m (FY-2020: GBP21.2m) reflecting the loss for the year, after adding back the IFRS2 Share based payments charge.

Non-current assets decreased by GBP0.2m to GBP25.6m (FY-2020: GBP25.8m). This is due to GBP0.5m reduction in right of use assets due to depreciation offset by a GBP0.2m increase in Intangible assets and GBP0.2m 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 GBP2.3m (FY-2020: GBP3.2m), offset by amortisation of GBP1.7m (FY-2020: GBP1.8m). Additionally GBP0.2m 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 
                                       GBP'000   GBP'000 
                                      --------  -------- 
 Net Cash generated from operations      4,737     4,115 
                                      --------  -------- 
 Investing activities                  (2,667)   (3,199) 
                                      --------  -------- 
 Free Cash Flow(1)                       2,070       916 
                                      --------  -------- 
 Financing activities                  (1,365)     (456) 
                                      --------  -------- 
 Change in Cash in Year                    705       460 
                                      --------  -------- 
 Net Debt(2)                             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 GBP1.9m IFRS 16 lease liability.

Cash from operating activities improved by GBP0.6m during this year to GBP4.7m (FY-2020: GBP4.1m), which included R&D tax credit cash receipts of GBP0.9m (FY-2020: GBP1.0m). The R&D tax credit cash receipt reflects the Group's investment in development. The operational cash flow improvement is due to GBP0.6m improvement year on year from improved working capital management. This improvement in working capital includes GBP1.8m 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 GBP2.1m (FY-2020: GBP0.9m) is due to the Net Cash generated from operating activities as detailed above offset by cash outflows from investing activities which decreased by GBP0.5m to GBP2.7m (FY-2020: GBP3.2m).

Financing activities was an outflow of GBP1.4m (FY-2020: GBP0.5m). The increased cash outflow is due to the previous year including the receipt of the new GBP1.5m 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 GBP5.3m term loan repaying GBP4.5m outstanding under the old HSBC credit facility and GBP0.7m under the old term loan.

Net Debt

Net debt excluding IFRS 16 lease liability of GBP1.9m (FY-2020 GBP2.3m) reduced by GBP0.7m to GBP4.9m (FY-2020: GBP5.6m). Cash balances total GBP2.4m (FY-2020: GBP1.7m) and total borrowings including IFRS16 lease liability of GBP1.9m totals GBP9.1m (FY-2020: GBP9.6m). Borrowing comprise GBP5.3m (FY-2020: GBP0.9m) term loan with HSBC, GBP1.4m (FY-2020: GBP1.5m) term loan with MEIF WM Debt LP, nil (FY-2020: GBP4.5m) amounts drawn under the old GBP5m revolving credit facility with HSBC and GBP2.4m (FY-2020: GBP2.8m) of obligations under Right-to-use lease liabilities. In addition at the year end the Group has a GBP0.5m unused overdraft facility with HSBC.

 
 Consolidated Statement of Comprehensive Income For The Year Ended 
  31 March 2021 
 
                                                                           Note              Year ended                 Year ended 
                                                                                               31 March                   31 March 
                                                                                                   2021                       2020 
                                                                                                GBP'000                    GBP'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          Share      Merger       Translation                Treasury                   Retained             Total 
                           capital        premium     reserve           reserve                 reserve                   earnings            equity 
                           GBP'000        GBP'000     GBP'000           GBP'000                 GBP'000                    GBP'000           GBP'000 
  Balance as at 1 April 
   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                 As at 
                                                                                  March 2021              31 March 
                                                                                                              2020 
 ASSETS                                                                              GBP'000               GBP'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 GBP257,000 (2020: loss GBP236,000). 
 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              Year ended 
                                                            31 March                31 March 
                                                                2021                    2020 
                                                             GBP'000                 GBP'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 OF 
  YEAR                                                         2,370                   1,665 
                                                 -------------------  ---------------------- 
 
 

Notes to the Consolidated Financial Statements

 
   1    GENERAL INFORMATION 
 
       Trakm8 Holdings PLC ("Company") and its subsidiaries (together 
        the "Group") develop, manufacture, distribute and sell telematics 
        devices and services and optimisation solutions. 
 
       Trakm8 Holdings PLC is a public limited company incorporated in 
        the United Kingdom (registration number 05452547). The Company 
        is domiciled in the United Kingdom and its registered office address 
        is 4 Roman Park, Roman Way, Coleshill, West Midlands, B46 1HG. 
        The Company's Ordinary shares are traded on the AIM market of the 
        London Stock Exchange. The Company is registered in England and 
        is limited by shares. 
 
       The Group's principal activity is the development, manufacture, 
        marketing and distribution of vehicle telematics equipment and 
        services and optimisation solutions. The Company's principal activity 
        is to act as a holding company for its subsidiaries. 
 
       The consolidated financial statements are presented in Sterling 
        and all values are rounded to the nearest thousand (GBP'000) except 
        where otherwise indicated. 
 
   2   PREPARATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE 
        WITH IFRS 
 
       The Group's financial statements have been prepared in accordance 
        with 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 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. 
 
     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 GBP5,300,000 and a GBP500,000 
      overdraft facility. Capital repayments commence in September 2021 
      at GBP86,000 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 (GBP1,400,000 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 GBP1,759,000 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 GBP2,370,000 and 
      an unused overdraft facility of GBP500,000. 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 GBP2.4m 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               Year ended 
                                                                           31 March                 31 March 
                                                                               2021                     2020 
                                                                            GBP'000                  GBP'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               Year ended 
                                                                           31 March                 31 March 
                                                                               2021                     2020 
                                                                            GBP'000                  GBP'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               Year ended 
                                                                           31 March                 31 March 
                                                                               2021                     2020 
                                                                            GBP'000                  GBP'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               Year ended 
                                                                      31 March                 31 March 
                                                                          2021                     2020 
                                                                       GBP'000                  GBP'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                                   318                        - 
       and equipment 
  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               Year ended 
                                                                      31 March                 31 March 
                                                                          2021                     2020 
                                                                       GBP'000                  GBP'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               Year ended 
                                                                      31 March                 31 March 
                                                                          2021                     2020 
                                                                       GBP'000                  GBP'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. 
 
    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 the activities 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 prior year 
    relate to significant component and software issues that arose 
    in 2019 on a new product. These issues were fixed by the end 
    of 2019. However significant re-visit and material costs were 
    incurred in previous financial year as a result of the project 
    to remedy these issues. No customers have been lost as a result 
    of these issues. 
 
    The Group also incurred exceptional costs in the current financial 
    year relating to the Covid-19 pandemic. These costs mainly 
    relate to the cost of employees whilst on furlough (GBP1,607,000) 
    and the cancellation of internal and external projects (GBP476,000), 
    and some costs relating to cancelled marketing events and bad 
    debts (GBP26,000). 
 
    Furlough grant income relates to other income received from 
    the Coronavirus Job Retention Scheme for employees furloughed 
    as a result of Covid-19. 
 
 
  8   FINANCE COSTS 
                                                                          Year ended                    Year ended 
                                                                            31 March                      31 March 
                                                                                2021                          2020 
                                                                             GBP'000                       GBP'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                    Year ended 
                                                                       31 March 2021                 31 March 2020 
                                                                             GBP'000                       GBP'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           Customer           Development         Software       Total 
                                                       property      relationships                 costs 
                                     GBP'000            GBP'000            GBP'000               GBP'000          GBP'000     GBP'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 GBP4m. 
  2. A decrease in the growth rate to 5% shows 
   headroom of GBP10m. 
  3. A decrease in the terminal growth rate to 
   1% shows headroom of GBP10m. 
 
  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 GBP1,992,000 (2020: GBP2,194,000) 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                As at 31 March 
                                                          2021                     2020 
 
                                                     No's        GBP'000                     No's                GBP'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. 
 12     CASH GENERATED FROM OPERATIONS 
                                                                                         As at 31               As at 31 
                                                                                       March 2021             March 2020 
                                                                                          GBP'000                GBP'000 
 
        Loss before 
         tax                                                                              (1,867)                (1,705) 
        Depreciation                                                                          781                    699 
        (Profit)/Loss on disposal of                                                          318                      - 
         fixed assets 
        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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