Trakm8 Holdings PLC
Annual Report 2013

Plain-text annual report

Holdings PLC REPORT AND FINANCIAL STATEMENTS for the year ended 31 March 2013 OVERVIEW We are a leading Fleet Management solutions provider, with headquarters in Shaftesbury, Dorset. Fundamenatally a UK based company, we are now rapidly expanding into Europe and the rest of the World by increasing focus on integrated solutions through our SWIFT product - establishing a growing base of recurring revenue. Financial Highlights Revenue £4.75m (2012: £5.22m) Recurring revenues up by 9.9% to an annualised £2.15m Gross profit margin up to 71.9% (2012: 63.7%) EBITDA £0.31m (2012: £0.36m) Profit before tax £0.04m (2012: £0.08m) Cash balances up 29.2% to £1.41m at year end Net assets increased to £2.52m (2012: £2.38m) Operational Highlights Investment for Growth strategy successfully implemented Successful transition to recurring revenue business model Strong year for new product and service launches, including: • Trakm8 ecoN, Logistics, and Tacho Telematics Solutions Encouraging order pipeline and sales opportunities Expanding range of international opportunities Completion of product transfer agreement with Visilink Current trading Highlights Investments in new products and sales resource expected to positively impact the second half of new financial year and beyond Successful integration of Visilink customers Year to date revenues are 23% ahead of last year Monthly Recurring Revenue (£’s) Year End 31 March 2013 Revenue (£’s) 4.75m (2012: £5.22m) Gross profit margin (%) 71.9% (2012: 63.7%) Profit before tax (£’s) 0.04m (2012: £0.08m) Net Assets (£’s) 2.52m (2012: £2.38m) 200,000 150,000 100,000 50,000 0 2 2009 2010 2011 2012 2013 Company Number 05452547 Holdings PLCHoldings PLC Percentage share of revenue between core business areas Percentage share of revenue between geographical business areas CORE AREAS OF BUSINESS Solutions: 64% £3,035,466 Products: 28% £1,308,627 • Software, servers and web-based portal • Recurring contracts • Products hardware • Product functionality key point of differentiator Engineering Services: 8% £405,823 • Telematic consultancy work (this can also act as a lead generator for SWIFT/Products sales) WORLDWIDE DISTRIBUTION UK 73% £3,465,740 Europe 14% £679,576 Rest of World 13% £604,600 CONTENTS 4 5 6 8 12 Officers and Advisers Chairman’s Statement CEO’s Statement Directors’ Report Statement of Directors’ Responsibilities 13 14 15 16 Independent Auditors’ Report to the members of Trakm8 Holdings PLC Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Financial Position 17 18 42 43 Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Parent Company Balance Sheet Notes to the Parent Company Financial Statements 2009 2010 2011 2012 2013 3 Holdings PLCHoldings PLCCompany Number 05452547 OFFICERS AND ADVISERS DIRECTORS C D Buck M Cowley T Cowley J Hedges J Watkins P Wilson SECRETARY J Hedges REGISTERED OFFICE Lydden House Wincombe Business Park Shaftesbury Dorset SP7 9QJ BANKERS HSBC Bank plc HSBC House Mitchell Way Southampton SO18 2XU AUDITOR Milsted Langdon LLP Winchester House Deane Gate Avenue Taunton TA1 2UH NOMAD and BROKER finnCap Limited 60 New Broad Street London EC2M 1JJ FINANCIAL PUBLIC RELATIONS MHP Communications 60 Great Portland Street London W1W 7RT 4 Company Number 05452547 Holdings PLCHoldings PLC CHAIRMAN’S STATEMENT I am pleased to report that Trakm8’s strategy of reinvesting in the business in order to drive long term growth is bearing fruit. Trakm8 has successfully introduced a number of new products and software solutions that have been well received by the market. The strength of the Trakm8 financial model where little profit is taken on the original sales is demonstrated by the improvement in cash balances to £1.41m and rising recurring revenues which continues to be the key focus of our strategy. I am encouraged by the outlook for the business. The Group is well positioned with a strong balance sheet in a growing market. With the increasingly advanced solutions offered by the Company’s technology, I am confident that the business will continue to grow profitably and take advantage of opportunities as and when they arrive. As announced separately, I have decided to step down after seven years as Chairman and non-executive Director of Trakm8. John Watkins, currently our Chief Executive, has become Executive Chairman, a new role. At the same time we are appointing Keith Evans, a former partner of PricewaterhouseCoopers, as non-executive director. It has been a pleasure contributing to the development of the Trakm8 story and I am confident that its future is bright and secure. Dawson Buck Chairman 5 Holdings PLCHoldings PLCCompany Number 05452547 CEO’S STATEMENT I am pleased with the progress summarised in the Chairman’s Statement. The decision was taken last year and implemented early in the second half, to make a game changing investment in engineering, sales and support staff. This increased our operating costs by approximately £50,000 per month. This decision has also negatively impacted the profit and loss during the period as our revenues have as expected lagged these investments. Due to delays on some product sales which took longer to complete than expected, overall revenues declined somewhat; although disappointing, this is a reflection of the increased emphasis on solutions sales and engineering services. The transition from the hardware supplier Trakm8 was five years ago to the full solutions supplier of today has made the revenue line move from one off sales today to long term recurring service revenues. As a result the top line can be strongly influenced by individual major contracts but the underlying revenue security of the Group continues to improve. Trakm8 has enjoyed a significant improvement in sales of complete solutions and engineering services during the period. This has resulted in strong growth in recurring revenues and higher margins. The Group revenues are accounted for in three segments: Products This is the segment where Trakm8 supplies other Telematics Service Providers with hardware solutions. In most cases this also includes our market leading unit configuration firmware. This has been a year of transition. Many of our UK customers for our products in the past have migrated to alternative suppliers that do not compete with them in the solutions market. This migration is perhaps a validation of our success in competing at the end user level. Following the appointment of an International Business Development Manager early in the year, we have increased our international sales of hardware. This has taken some time to build traction as customers conduct extensive trials to ensure that the hardware meets their requirements. New customers have started to buy units from us in North and South America. Overall, the total number of units sold to third parties declined during the year, but the trend towards year-end was positive. The highlight of the year was the significant sales of hardware to Motorola as announced on 2 July 2012. Whilst the sales of hardware to third party integrators help us to ensure our manufactured cost of products are as low as can be achieved, these revenues are at lower margins and have no on-going recurring revenues. As such they remain important to us but not the most strategically important segment. Solutions This segment is where Trakm8 supplies customers with a fully integrated service provision. Customers include the AA, E.ON and Jewson. This solution is also provided through a partner in South Africa. The number of units reporting to Swift has continued to grow steadily throughout the year and this has increased the base of recurring monthly revenue, which provides the improved security and predictability to future income. By the end of the financial year the monthly recurring revenue had increased by 9.9% on the previous year to an annualised £2.15m. The majority of these revenues are not taken as upfront payments ensuring our cash receipts are close to sales booked. We were pleased to announce on 25 April 2013 the completion of a product transfer agreement with Visilink, a Cheshire based Telematics Service Provider. Under the agreement Visilink’s entire customer base was offered the opportunity to transfer to our Swift solution. This process proved that we could communicate with third party hardware via our Stream servers. No revenues accrued during the year to March 2013 but we expect over 500 units to eventually migrate onto Swift, providing a lift in recurring revenues for the new financial year. During the year the Company enhanced the engineering investments in new solutions and launched updated versions of Swift and ecoN. We also launched a new fleet management routing and scheduling package called Logistics. This package has three early adopters and has an encouraging number of other inquiries. Another new product developed during the year but launched in the last month is the Tachograph range of solutions that integrate the digital tachograph information into mobile applications for driver and 6 Company Number 05452547 Holdings PLCHoldings PLCCEO’S STATEMENT (continued) operator status reporting and provide operators with the legal compliance data required to meet the driver hours regulations. Again early adopters have expressed positive feedback and the pipeline of opportunities is growing. The new solutions and agreements we have announced since the year end will provide additional revenues and opportunities in the current financial year and after the first two months of trading our revenues are ahead of last year. With our strong balance sheet, good cash generation, and robust business model Trakm8 is in a position to consider augmenting growth through selective acquisitions alongside our current organic growth strategy. Any acquisition will need to meet our narrow market segment objectives and financial criteria. Finally, I would like to thank all the Trakm8 staff for their tremendous hard work over the past twelve months. John Watkins CEO We have also undertaken a considerable amount of development to white label our ecoN solution for a new customer. This has been a considerable engineering task and no solutions revenues were derived during the period. There are, however, good opportunities as a result of this development. It is encouraging that this product is taking market share from more established competitors. The Solutions segment is the core value enhancing activity of the Group and, overall our revenues grew by 9.3% during the period. Engineering Services This is the segment where Trakm8 undertakes bespoke software development for customers. The customer specific application engineering has been a major feature of the product development team as the larger customers have demanded their particular requirements. This has also helped improve our core products. These engineering projects provide profitable consultancy activities in themselves, but also help to integrate customers to Trakm8 solutions, and provide on-going support and maintenance revenues. Projects for Jewson, St Gobain and others have been undertaken in the past 12 months and whilst this activity remains a small percentage of the Group revenues it is considered a key differentiator, skill and value added capability. This segment increased by £0.19m over the previous year to £0.41m. Outlook The Board is confident that our investments in new products and sales resources will positively impact the second half of new financial year and beyond. In the meantime we have a strong pipeline of new products and solutions and we are confident that our recurring revenues will carry on growing. We continue to receive inquiries for increasing levels of engineering services work. 7 Holdings PLCHoldings PLCCompany Number 05452547 DIRECTOR’S REPORT The Directors submit their report and financial statements of Trakm8 Holdings PLC for the year ended 31 March 2013. Trakm8 Holdings PLC is a public listed company incorporated and domiciled in England (Company Number 05452547) whose shares are quoted on AIM, a market operated by the London Stock Exchange plc. PRINCIPAL ACTIVITIES The principal activities of the Trakm8 Group are the manufacture, marketing and distribution of vehicle telematics equipment and services. Trakm8 Holdings PLC is the holding company for the Trakm8 Group. REVIEW OF THE BUSINESS The review of the business is contained in the Chairman’s and CEO’s Statement on pages 5 to 7. RESULTS AND DIVIDENDS The Group results for the year ended 31 March 2013 are shown in the Consolidated Statement of Comprehensive Income on page 14. The Directors do not recommend the payment of a dividend. FUTURE DEVELOPMENTS Future developments of the business is contained in the Chairman’s and CEO’s Statement on pages 5 to 7. RESEARCH AND DEVELOPMENT The Board considers that the Group’s research and development activity plays an important role in the operational and financial success of the business. During the year we announced a strategic investment in our research and development activities in order to further enhance the Group’s development resources and products for future years. KEY PERFORMANCE INDICATORS The key performance indicators used to assess the performance and financial status of the Group are as follows:- 1. Operating profit. The Group produced an operating profit of £39,577 compared to last year’s operating profit of £88,345. The decrease in operating profit was as a result of our investment in sales, marketing and engineering activities. 2. Borrowings. The Group monitors its cash and borrowings position and updates cash flow forecasts for the following twelve months on a daily basis. During the year total borrowings decreased from £219,316 to £163,083 at the year end. 3. Customer services. A weekly analysis is undertaken of outstanding customer service cases to ensure compliance with our service level agreements. 4. Credit control. All overdue accounts are reviewed and where necessary contacted on a weekly basis. GOING CONCERN The Directors confirm that they are satisfied that the Group has adequate resources and facilities to continue in business for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. DIRECTORS The following Directors have held office during the year: C D Buck M Cowley T Cowley J Hedges J Watkins P Wilson 8 Company Number 05452547 Holdings PLCHoldings PLC DIRECTOR’S REPORT (continued) DIRECTORS AND THEIR INTERESTS The present members of the Board are as listed on page 4. The Directors’ interests in the shares of the Company are detailed below:- 1p ordinary shares At 31 March 2013 % of issued ordinary share capital (18,864,731 ordinary shares) 1p ordinary shares At 1 Apr 2012 or on subsequent date of appointment % of issued ordinary share capital (18,764,731 ordinary shares) 641,994 1,269,203 1,534,002 1,470,808 4,581,162 555,512 3.37% 6.66% 8.05% 7.72% 24.05% 2.86% 541,994 1,194,203 1,459,002 1,171,025 3,852,738 420,512 2.87% 6.33% 7.73% 6.21% 20.42% 2.23% C D Buck M Cowley T Cowley J Hedges J Watkins P Wilson The Directors had no interest in the share capital of the Company’s subsidiary undertakings at 31 March 2013 or on the date on which these financial statements were approved. Directors’ Remuneration The Directors’ remuneration for the year ended 31 March 2013 was: Audited D Buck M Cowley T Cowley J Hedges J Watkins P Wilson Total Salaries & Fees Bonuses Benefits Share Options £ 35,000 78,925 82,106 82,106 £ - 893 929 929 101,656 75,338 455,131 7,749 852 11,352 £ - 5,581 5,581 5,770 11,047 9,429 37,408 £ 748 2,243 2,243 2,990 4,110 2,243 14,577 Total 31 March 2013 £ Total 31 March 2012 £ 35,748 87,642 90,859 91,795 124,562 87,862 518,468 35,000 81,712 84,798 84,723 84,769 83,094 454,096 9 Holdings PLCHoldings PLCCompany Number 05452547 DIRECTOR’S REPORT (continued) Directors’ Share Options At 31 March 2013 the following options had been granted to the Company’s Directors and remain current and unexercised: Option exercise price Balance as at 31 March 2012 Granted during year Exercised during year Expired/ forfeited during year Balance as at 31 March 2013 Expiry date £0.06 £0.13 £0.06 £0.13 £0.06 £0.13 £0.13 £0.06 £0.13 £0.06 £0.13 100,000 - (100,000) - 50,000 - 75,000 - (75,000) - 150,000 - 75,000 - (75,000) - - 150,000 200,000 - - 200,000 - (200,000) - 275,000 - 100,000 - (100,000) - 150,000 - - - - - - - - - - - - - - 50,000 30/07/22 - - 150,000 30/07/22 - - 150,000 30/07/22 200,000 30/07/22 - - 275,000 30/07/22 - - 150,000 30/07/22 D Buck M Cowley T Cowley J Hedges J Watkins P Wilson The Group provides indemnity cover for the Directors. 10 Company Number 05452547 Holdings PLCHoldings PLCDIRECTOR’S REPORT (continued) STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR The Directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditor is unaware. Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor. AUDITORS A resolution to reappoint Milsted Langdon LLP, Chartered Accountants, as auditors, will be put to the members at the annual general meeting. By approval of the Board on 28 June 2013. J Hedges Secretary SUPPLIERS PAYMENT POLICY It is the Group’s policy to establish payment terms with suppliers and to adhere to those terms, provided that the goods and services are in accordance with the agreed terms and conditions. Trade payables for the parent company at the year end represented 68 days of purchases (2012: 45 days). EMPLOYMENT POLICY During the year, the Group has consulted with employees in matters likely to affect their interests and is committed to involving them in the performance and development of the Group. DISABLED EMPLOYEES The Group gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately fulfilled by a disabled person. Should existing employees become disabled, it is the Group’s policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training, career development and promotion to such employees as appropriate. PRINCIPAL RISKS AND UNCERTAINTIES The following are identified as the principle risks and uncertainties facing the Group:- Technology risk - The Group invests in research and development to enable the delivery of new and enhanced products and services. Liquidity risk - The Group operates a long-term business, and its policy is to finance it primarily with equity and short to medium-term borrowings. Short-term flexibility is achieved by cash balances and overdraft facilities. Credit risk - The Group aims to minimise its exposure to credit risk through a mixture of credit insurance, credit limits and credit checks on new customers. Foreign currency risk - Historically the Group has not used hedging instruments to minimise currency risk as the exposure is limited. If foreign currency exposure increases, the use of foreign currency hedging instruments will be reviewed as necessary. 11 Holdings PLCHoldings PLCCompany Number 05452547 STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN THE PREPARATION OF FINANCIAL STATEMENTS The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and Company financial statements for each financial year. The Directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and have elected under company law to prepare the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The Group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the Group; the Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing each of the Group and Company financial statements, the Directors are required to: a. select suitable accounting policies and then apply them consistently; b. make judgements and accounting estimates that are reasonable and prudent; c. for the Group financial statements, state whether they have been prepared in accordance with IFRS adopted by the EU and for the Company financial statements state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the Group and Company financial statements; and d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Trakm8 Holdings PLC website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. We have audited the financial statements of Trakm8 Holdings PLC for the year ending 31st March 2013 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Parent Company Balance Sheet and the related Notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. 12 Company Number 05452547 Holdings PLCHoldings PLC INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TRAKM8 HOLDINGS PLC We have audited the financial statements of Trakm8 Holdings PLC for the year ending 31st March 2013 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Parent Company Balance Sheet and the related Notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As more fully explained in the Directors’ Responsibilities Statement set out on page 12, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm. Opinion on the financial statements In our opinion the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2013 and of the Group’s profit for the year then ended; the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or the Parent Company financial statements are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or we have not received all the information and ex planations we require for our audit. Nigel Fry (Senior Statutory Auditor) For and behalf of Milsted Langdon LLP Chartered Accountants and Statutory Auditors Winchester House Deane Gate Avenue Taunton TA1 2UH 28 June 2013 13 Holdings PLCHoldings PLCCompany Number 05452547 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March 2013 REVENUE Cost of sales Gross profit Other income Administrative expenses OPERATING PROFIT Finance income Finance costs PROFIT BEFORE TAXATION Income tax credit PROFIT FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF THE PARENT OTHER COMPREHENSIVE INCOME Currency translation differences TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT Notes 2013 £ 2012 £ 6 7 7 8 9 4,749,916 5,215,565 (1,332,833) (1,889,499) 3,417,083 3,326,066 - 5,039 3,417,089 3,331,105 (3,377,506) (3,242,760) 39,577 88,345 2,423 788 42,000 89,133 (4,478) (5,249) 37,522 83,884 112,537 50,666 150,059 134,550 (1,615) 1,493 148,444 136,043 Basic Diluted 11 11 0.79p 0.78p 0.71p 0.70p There were no discontinued operations in 2013 or 2012. Accordingly the results relate to continuing operations. 14 Company Number 05452547 Holdings PLCHoldings PLCCONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2013 Share Capital Share premium Merger Reserve Translation reserve Retained Earnings £ £ £ £ £ Total equity attributable to owners of the parent £ Balance as at 1 April 2011 187,647 1,719,402 509,837 206,321 (387,218) 2,235,989 Comprehensive income Profit for the year Other comprehensive income Exchange differences on translation of overseas operations Total comprehensive income Transactions with owners - - - - - - Shares issued 1,000 4,250 IFRS2 Share based payments - - Transactions with owners 1,000 4,250 - - - - - - - 134,550 134,550 (1,493) - (1,493) (1,493) 134,550 133,057 - - - - 5,250 5,537 5,537 5,537 10,787 Balance as at 1 April 2012 188,647 1,723,652 509,837 204,828 (247,131) 2,379,833 Comprehensive income Profit for the year Other comprehensive income Exchange differences on translation of overseas operations Total comprehensive income Transactions with owners - - - - - - Shares issued 5,500 27,500 Purchase of own shares IFRS2 Share based payments - - - - Transactions with owners 5,500 27,500 - - - - - - - - 150,059 150,059 (1,615) - (1,615) (1,615) 150,059 148,444 - - - - - 33,000 (57,924) (57,924) 19,656 19,656 111,791 143,176 Balance as at 31 March 2013 194,147 1,751,152 509,837 203,213 (135,340) 2,523,009 15 Holdings PLCHoldings PLCCompany Number 05452547 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 March 2013 NON CURRENT ASSETS Intangible assets Property and equipment Deferred income tax asset CURRENT ASSETS Inventories Trade and other receivables Current tax assets Cash and cash equivalents CURRENT LIABILITIES Trade and other payables Borrowings CURRENT ASSETS LESS CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES NON CURRENT LIABILITIES Borrowings Provisions NET ASSETS EQUITY Share capital Share premium account Merger reserve account Translation reserve Retained earnings Notes 2013 £ 2012 £ 12 13 16 14 15 9 17 18 18 19 868,530 1,005,107 560,175 517,118 110,290 98,421 1,538,995 1,620,646 548,143 410,016 643,172 782,375 100,668 15,488 1,405,133 1,087,474 2,697,116 2,295,353 (1,532,349) (1,250,672) (46,740) (56,223) (1,579,089) (1,306,895) 1,118,027 988,458 2,657,022 2,609,104 (116,343) (17,670) (163,093) (66,178) 2,523,009 2,379,833 21 194,147 188,647 1,751,152 1,723,652 509,837 509,837 203,213 204,828 (135,340) (247,131) TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT 2,523,009 2,379,833 These financial statements were approved by the Board of Directors and authorised for issue on 28 June 2013 and are signed on their behalf by: J Watkins Director 16 J Hedges Director Company Number 05452547 Holdings PLCHoldings PLC CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 March 2013 NET CASH INFLOW FROM OPERATING ACTIVITIES 23 496,650 110,845 Notes 2013 £ 2012 £ CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment Purchases of intangible assets NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Issue of new shares Purchase of Treasury shares (97,834) - (91,232) (89,241) (97,834) (180,473) 33,000 5,250 (57,924) - (Repayment) / new obligations under hire purchase agreements (35,125) 53,296 Repayment of loans NET CASH (USED IN) /FROM FINANCING ACTIVITIES (21,108) (81,157) (20,471) 38,075 NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 317,659 (31,553) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,087,474 1,119,027 CASH AND CASH EQUIVALENTS AT END OF YEAR 1,405,133 1,087,474 17 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 1. GENERAL INFORMATION 4. ACCOUNTING POLICIES Trakm8 Holdings PLC (“Company”) is a public limited company incorporated in the United Kingdom (registration number 05452547). The Company is domiciled in the United Kingdom and its registered address is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. The Company’s Ordinary Shares are traded on the AIM market of the London Stock Exchange. The Group’s principal activity is the manufacture, marketing and distribution of vehicle telematics equipment and services. The Company’s principal activity is to act as a holding company for its subsid- iaries. 2. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations as endorsed by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. 3. BASIS OF PREPARATION The accounting policies set out in note 4 have been applied consistently to all periods presented in these consolidated financial statements. These financial statements are presented in ster- ling as that is considered to be the currency of the primary economic environment in which the Group operates. This decision was based on the Group’s workforce being based in the UK and that sterling is the currency in which management reporting and decision making is based. Basis of Accounting The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions which are based on management’s best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The trading results of subsidiaries acquired or disposed of during the year are included in the consolidated Statement of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income and expenditure are eliminated on consolidation. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date irrespective of the extent of any minority interest. The excess of cost of acquisition over the fair values of the Group’s share of identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition) is recognised directly in the Statement of Comprehensive Income. 18 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 4. ACCOUNTING POLICIES (continued) Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. Share-based Payments The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006. The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. The fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. No expense is recognised for awards that do not ultimately vest. Financial Instruments Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument. Trade receivables Trade receivables are initially recognised at fair value and subsequently measured at their amortised cost using the effective interest method less any provision for impairment. A provision for impairment is made where there is objective evidence, (including customers with financial difficulties or in default on payments), that amounts will not be recovered in accordance with original terms of the agreement. A provision for impairment is established when the carrying value of the receivable exceeds the present value of the future cash flow discounted using the original effective interest rate. The carrying value of the receivable is reduced through the use of an allowance account and any impairment loss is recognised in the Statement of Comprehensive Income. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. For the purposes of the Cash Flow Statement, cash and cash equivalents includes bank overdrafts. Financial liabilities and equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Bank borrowings Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accruals basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Trade payables Trade payables are initially recognised at fair value and subsequently at amortised cost using the effective interest method. Goodwill Goodwill arising on consolidation is recorded as an intangible asset and is the surplus of the cost of acquisition over the Group’s interest in the fair value of identifiable net assets acquired. Goodwill is reviewed annually for impairment. Any impairment identified as a result of the review is charged in the Statement of Comprehensive Income. Negative goodwill is written off in the year in which it arises. On disposal of a subsidiary, associate or jointly con- trolled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 19 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 4. ACCOUNTING POLICIES (continued) Intangible Assets other than Goodwill An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. Such intangible assets are carried at cost less amortisation. Amortisation is charged to ‘Administrative expenses’ in the Statement of Comprehensive Income on a straight line basis over the intangible assets’ useful economic life (1-10 years). Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development expenditure is capitalised as an intangible asset only if the following conditions are met: an asset is created that can be identified; it is probable that the asset created will generate future economic benefit; the development cost of the asset can be measured reliably; it meets the Group’s criteria for technical and commercial feasibility; and sufficient resources are available to meet the development to either sell or use as an asset. Development expenditure thus capitalised is amortised on a straight-line basis over its useful life. Where the criteria are not met, development expenditure is recognised as an expense in the ‘Administrative expenses’ line of the Statement of Comprehensive Income. Property, Plant and Equipment Property, plant and equipment are stated at cost less any subsequent accumulated depreciation or impairment losses. With the exception of freehold buildings held at 31 March 2006 (the date of transition to IFRS), cost represents purchase price together with any incidental costs to acquisition. As permitted by IFRS 1, the cost of freehold buildings at 31 March 2006 represents deemed cost, being the market value of the property for existing use at that date. Depreciation is provided on all property, plant and equipment, other than freehold land, at rates calculated to write each asset down to its estimated residual value over its expected useful life, as follows: Buildings 2% straight line Furniture, fixtures and equipment Computer equipment 25% reducing balance 33% straight line Assets held under finance leases or hire purchase arrangements are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant agreement. The assets’ residual values and useful lives are reviewed at each balance sheet date and adjusted if appropriate. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Inventories Inventories are valued at the lower of cost and net realisable value. In general cost is determined on a first in first out basis and includes all direct expenditure and production overheads based on a normal level of activity. Net realisable value is the price at which the stocks can be sold in the normal course of business after allowing for the costs of realisation and where appropriate for the costs of conversion from its existing state to a finished condition. Provision is made for obsolete, slow moving and defective stocks. 20 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 4. ACCOUNTING POLICIES (continued) Leases Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have been transferred to the Group, are capitalised in the balance sheet and depreciated over the shorter of the lease term or their useful lives. The asset is recorded at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease. The capital elements of future obligations under finance leases are included in liabilities in the balance sheet and analysed between current and non-current amounts. The interest elements of future obligations under finance leases are charged to the Statement of Comprehensive Income over the periods of the leases and represent a constant proportion of the balance of capital repayments outstanding in accordance with the effective interest rate method. Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. The cost of operating leases (net of any incentives received from the lessor) is charged to the Statement of Comprehensive Income on a straight line basis over the periods of the leases. Foreign Currencies Foreign currency assets and liabilities are converted to sterling at the rates of exchange ruling at the end of the financial year. Transactions in foreign currencies are converted to sterling at the rates of exchange ruling at the transaction date. All of the resulting exchange differences are recognised in the Statement of Comprehensive Income as they arise. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are classified as equity and transferred to the Group’s reserves. Such translation differences are recognised as income or expense in the period in which the operation is disposed of. Taxation The tax expense represents the sum of the current tax expense and deferred tax expense. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted. Revenue Recognition Revenue represents the total of amounts receivable for goods and services provided excluding value added tax. Revenue is recognised on the delivery of the goods to the customer. Where a service is provided covering a future period the applicable revenue is shown as Deferred Income under Current Liabilities. Warranty Claims Provision is made for liabilities arising in respect of expected warranty claims. Government grants Government grants towards research and development projects are recognised as income over the periods necessary to match them with the related costs and are included within Other Income. 21 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 4. ACCOUNTING POLICIES (continued) Segmental Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. Equity Equity comprises the following: Share capital represents the nominal value of equity shares. Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. Merger reserve represents the excess over nominal value of the fair value of consideration received for equity shares issued on reverse acquisition of subsidiaries, net of expenses of the share issue prior to the date of transition to IFRS. Translation reserve represents cumulative foreign exchange gains and losses on retranslation of overseas operations. Retained earnings represents retained losses. Changes in Accounting Standards and Disclosures a. The Group has not adopted any new interpretations or amendments to existing standards in the year ended 31 March 2013. b. There are no standards or interpretations that have been issued by the IASB that will have a material impact on the Group’s financial statements. 22 Company Number 05452547 Holdings PLCHoldings PLC NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY Critical judgements in applying the Group’s accounting policies Recoverability of trade debtors The withdrawal or reduction of credit facilities from Banks and leasing companies is affecting a wide range of businesses. Management are particularly conscious of the financial weakness of some companies and is closely monitoring its outstanding debtor book in order to minimise the risk associated with future bad debts. Weekly cash receipts are analysed and future supplies are stopped if accounts remain overdue. An increasing number of customers taking the Group’s services pay by direct debit and this is reducing the Group’s exposure to the non-recoverability of trade debtors in the future. In the process of applying the Group’s accounting policies, which are described in note 4, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below). Valuation of intellectual property In assessing the fair value of the intellectual property, management have considered the underlying value of the income streams. Attention has been paid to the potential introduction of new products and services and the return anticipated from these and existing product sales. The Directors believe that the fair value of the intellectual property is both appropriate and a realistic assessment of its long term value to the Group. Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Recoverability of internally-generated intangible asset During the year, management reconsidered the recoverability of its internally generated intangible asset which is included in the balance sheet at £237,281. The costs relate to the development of the Group’s portfolio of hardware and software products and management continue to believe that the anticipated revenues will enable the carrying amount to be recovered in full. Assumptions have been made on the number of years over which the costs will be recovered based on management’s best expectations and these could turn out to be longer or shorter although any subsequent adjustment is not expected to be material. 23 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 6. SEGMENTAL ANALYSIS The format of segmental reporting is based on the Group’s management and internal reporting of the segments below which carry different risks and rewards and are used to make strategic decisions. Products is the sale of hardware through the Group’s distributors. Solutions represents the sale of the Group’s full vehicle telematics service direct to customers. Engineering services comprises bespoke professional services and mapping solutions. The Board review the revenue results by segment and the gross margin. Cost of sales comprise hardware costs and have been allocated to the segments based on the number of units sold. Administration costs and assets and liabilities are not separated out by segment. Year ended 31 March 2013 Products Solutions £ £ Engineering services £ Unallocated Total £ £ Segment revenue Gross profit 1,308,627 3,035,466 405,823 - 4,749,916 306,945 2,704,315 405,823 - 3,417,083 Depreciation & amortisation (117,841) (66,569) (90,052) - (274,462) Finance income Finance costs Income tax - - - 2,423 2,423 - - - (4,478) (4,478) - - - 112,537 112,537 Year ended 31 March 2012 Products Solutions £ £ Engineering services £ Unallocated Total £ £ Segment revenue Gross profit 2,226,230 2,776,872 212,463 - 5,215,565 789,858 2,323,746 212,462 - 3,326,066 Government grant income - - 5,039 - 5,039 Depreciation & amortisation (124,058) (53,703) (93,230) - (270,991) Finance income Finance costs Income tax - - - 788 788 - - - (5,249) (5,249) - - - 50,666 50,666 24 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 6. SEGMENTAL ANALYSIS (continued) The Group’s operations are located in the UK and the Czech Republic. The following table provides an analysis of the Group’s revenue by geography based upon location of the Group’s customers. Year ended 31 March 2013 Products Solutions United Kingdom Europe Africa Rest of the World £ 219,703 608,186 93,000 387,738 £ 2,942,885 65,744 - 26,837 Engineering services £ Total £ 303,152 3,465,740 5,646 90,525 6,500 679,576 183,525 421,075 1,308,627 3,035,466 405,823 4,749,916 The Group had one customer who accounted for more than 10% of the Group revenue (2012: one). Year ended 31 March 2012 Products Solutions United Kingdom 1,291,621 2,767,583 £ £ Europe Africa Rest of the World 171,772 214,928 547,909 9,289 - - Engineering services £ 98,205 24,258 90,000 - Total £ 4,157,409 205,319 304,928 547,909 2,226,230 2,776,872 212,463 5,215,565 25 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 7. PROFIT FROM OPERATIONS Profit from operations is stated after charging/ (crediting): Other income - Government grant Loss on disposal of fixed assets Depreciation - owned fixed assets - assets on hire purchase Amortisation of intangible assets Operating lease rentals - Land and buildings - Other Loss on foreign exchange transactions Staff costs (note 10) Auditor’s remuneration - audit services Parent Company and consolidation - tax advisory services Subsidiary audits R&D Cost - - Expensed Amortised 2013 £ 2012 £ - (5,039) 2,633 - 33,560 18,417 30,205 6,417 219,852 234,369 17,729 76,187 14,251 31,123 6,936 11,180 1,945,388 1,714,323 2013 £ 4,825 11,250 2,340 2013 £ 457,067 66,978 2012 £ 4,680 10,920 2,285 2012 £ 598,818 55,109 26 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 8. FINANCE COSTS Interest on finance leases Interest on other loans 9. INCOME TAX R&D tax credit Recognition of deferred tax 2013 £ - 4,478 4,478 2012 £ 54 5,195 5,249 2013 £ (100,668) (40,868) 2012 £ (15,488) (112,689) Current year deferred tax movement 28,999 77,511 Income tax credit (112,537) (50,666) Factors affecting the tax charge The tax assessed for the year is lower (2012: lower) than the applicable rate of corporation tax in the UK. The difference is explained below: Profit before tax 37,522 83,884 Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 24% (2011: 26%) 9,005 21,810 Effects of: Expenses not deductible/income not taxable 1,687 23,167 2013 £ 2012 £ Share option adjustment Temporary differences Change in deferred tax rates Deferred tax brought forward recognised R&D tax credit Total tax (4,717) (706) 4,717 16,979 18,307 16,261 (40,868) (100,668) (112,537) (112,689) (15,488) (50,666) 27 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 10. EMPLOYEES The average monthly number of persons (including Directors) employed by the Group was: Research and development Selling and distribution Production Administration 2013 No. 2012 No. 18 24 1 10 53 15 19 1 10 45 Staff costs for the employees and Directors (included under Administrative expenses): Wages and salaries Social security costs Share based payments Costs relating to the Directors who are the key management of the Group: Wages and salaries Benefits Social security costs Share based payments 2013 £ 2012 £ 1,707,001 1,509,854 218,731 19,656 198,931 5,537 1,945,388 1,714,322 2013 £ 466,483 37,408 53,525 14,577 571,993 2012 £ 434,337 19,759 49,659 1,103 504,858 Further details of Directors’ fees and salaries, bonuses and pensions are given in the Directors’ Report on page 9. 28 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 11. EARNINGS PER ORDINARY SHARE The earnings per ordinary share has been calculated using the profit for the year and the weighted average number of ordinary shares in issue during the year as follows: Earnings for the year after taxation Number of ordinary shares of 1p each Basic weighted average number of ordinary shares of 1p each Basic weighted average number of ordinary shares of 1p each (diluted) Basic profit pence per share Diluted profit pence per share 2013 £ 150,059 No. 19,044,731 18,999,526 2012 £ 134,550 No. 18,864,731 18,820,621 19,208,565 19,159,446 0.79p 0.78p 0.71p 0.70p 29 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 12. INTANGIBLE ASSETS COST As at 1 April 2011 Additions As at 31 March 2012 Additions Reduction in acquisition cost As at 31 March 2013 AMORTISATION As at 1 April 2011 Charge for year As at 31 March 2012 Charge for year As at 31 March 2013 NET BOOK VALUE As at 31 March 2013 As at 31 March 2012 As at 1 April 2011 Intellectual property £ Development costs £ Total £ 1,673,863 486,510 2,160,373 - 89,241 89,241 1,673,863 575,751 2,249,614 - 126,375 126,375 (43,100) - (43,100) 1,630,763 702,126 2,332,889 Intellectual property £ Development costs £ 667,381 179,260 846,641 152,874 999,515 631,248 827,222 1,006,482 342,757 55,109 397,866 66,978 464,844 237,282 177,885 143,753 Total £ 1,010,138 234,369 1,244,507 219,852 1,464,359 868,530 1,005,107 1,150,235 Development costs have been internally generated. Amortisation expenses of £219,852 (2012: £234,369) have been charged to Administrative expenses in the Consolidated Statement of Comprehensive Income. Development costs will be fully amortised within the next four years and Intellectual Property will be fully amortised within the next four years. 30 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 13. PROPERTY & EQUIPMENT COST As at 1 April 2011 Additions Exchange differences As at 31 March 2012 Additions Exchange differences Disposals As at 31 March 2013 DEPRECIATION As at 1 April 2011 Charge for year Exchange differences As at 31 March 2012 Charge for year Exchange differences Disposals As at 31 March 2013 NET BOOK VALUE As at 31 March 2013 As at 31 March 2012 As at 1 April 2011 Freehold property £ Furniture, fixtures and equipment £ Computer equipment £ Total £ 420,000 84,269 181,165 685,434 10,498 80,734 91,232 - - (504) - 420,000 94,263 261,899 900 76,659 20,275 - - (172) (23,418) (177) (60,265) (504) 776,162 97,834 (349) (83,683) 420,900 147,332 221,732 789,964 Freehold property £ Furniture, fixtures and equipment £ Computer equipment £ Total £ 22,040 41,191 159,196 222,427 4,408 11,332 20,882 36,622 - (5) - (5) 26,448 52,518 180,078 259,044 4,419 10,148 37,410 51,977 - - (3) (20,787) (177) (60,265) (180) (81,052) 30,867 41,876 157,046 229,789 390,033 105,456 64,686 560,175 393,552 41,745 81,821 517,118 397,960 43,078 21,969 463,007 Included within freehold property is £199,585 (2012: £199,585) relating to land which is not depreciated. The net book value of computer equipment includes £33,333 (2012: £51,750) in respect of assets held under finance leases and hire purchase contracts. The depreciation charge in respect of these assets was £18,417 (2012: £6,417). Total depreciation expenses of £51,977 (2012: £36,622) have been charged to administrative expenses in the Consolidated Statement of Comprehensive Income. 31 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 14. INVENTORIES Finished goods and goods for resale 2013 £ 548,143 2012 £ 410,016 The cost of inventories recognised as an expense and included in cost of sales amounted to £1,332,833 (2012: £1,889,499). During the year old inventory lines totalling £35,000 (2012: £40,947) were written down and charged to cost of sales in the Consolidated Statement of Comprehensive income. 15. TRADE AND OTHER RECEIVABLES Trade receivables Prepayments The analysis of trade receivables by currency is as follows: Pound sterling Euro Other 2013 £ 543,390 99,782 643,172 2013 £ 519,433 - 23,957 543,390 2012 £ 690,354 92,021 782,375 2012 £ 570,532 54,147 65,675 690,354 An allowance for impairment is made where there is an identified event which, based on previous experience, is evidence of a reduction in the recoverability of the outstanding amount. The allowance that has been made for estimated irrecoverable trade receivables is nil (2012: £20,500). As at 31 March 2013 trade receivables of £192,177 were past due but not impaired. The ageing analysis of these trade receivables is as follows:- Up to 3 months 3 to 6 months 2013 £ 187,806 4,371 192,177 2012 £ 359,411 14,721 374,132 The Directors consider that the carrying amount of trade and other receivables approximates to their fair values. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. 32 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 16. DEFERRED TAX The analysis of deferred tax assets and deferred tax liabilities is as follows: Deferred tax asset Deferred tax asset to be recovered after more than 12 months 128,149 116,443 Deferred tax liability Deferred tax liability to be recovered after more than 12 months (17,859) (18,022) Deferred tax asset net 110,290 98,421 2013 £ 2012 £ The movement in the deferred income tax assets and liabilities during the year is as follows:- Deferred tax assets As at 1 April 2012 Charged to the income statement At 31 March 2013 Deferred tax liabilities As at 1 April 2011 Credited to the income statement At 31 March 2012 Credited to the income statement At 31 March 2013 Accelerated tax depreciation £ (16,739) (6,829) (23,568) Utilisation of unrecognised losses £ 133,182 18,535 151,717 Total £ 116,443 11,706 128,149 Building revaluation £ (18,185) 163 (18,022) 163 (17,859) 33 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 17. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES Trade payables Taxation and social security Other payables Accruals and deferred income 2013 £ 684,417 146,277 14,400 687,255 2012 £ 429,574 136,333 14,801 669,964 1,532,349 1,250,672 The Directors consider that the carrying amount of trade payables approximates to their fair value. 18. BORROWINGS Bank loan Obligations under finance leases and hire purchase arrangements (see note 20) On demand or within one year After one and within two years After two and within five years After five years Less: Amount due for settlement within one year (shown as current liabilities) 2013 £ 138,083 25,000 2012 £ 159,191 60,125 163,083 219,316 2013 £ 2012 £ 46,740 56,223 22,402 46,740 71,377 69,269 22,564 47,084 163,083 219,316 (46,740) (56,223) Amount due for settlement after more than one year 116,343 163,093 The bank loan is secured by a fixed and floating charge on all the assets of the Group. It is repayable by monthly instalments until 2019 and bears interest at a floating rate of 2.50% over base rate. 34 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 19. PROVISIONS As at 1 April Decrease during the year At 31 March 2013 £ 2012 £ 66,178 70,000 (48,508) (3,822) 17,670 66,178 The provision relates to the estimated additional costs payable under the terms of the contract for the acquisition of the telematics assets from Vincotech Gmbh. The costs relate to commission payable and have been estimated based on the anticipated numbers of units that will be sold. 20. OBLIGATIONS UNDER HIRE PURCHASE CONTRACTS Gross hire purchase liabilities – minimum payments: No later than 1 year Later than 1 year and no later than 5 years Less future finance charges Present value The present value of minimum hire purchase payments is analysed as follows: No later than 1 year Later than 1 year and no later than 5 years 2013 £ 25,000 - 25,000 - 25,000 2013 £ 25,000 - 25,000 2012 £ 35,125 25,000 60,125 - 60,125 2012 £ 35,125 25,000 60,125 All contracts are denominated in sterling and are secured on the assets. The fair value of the hire purchase obligations approximates to their carrying amount. 35 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 21. SHARE CAPITAL No’s ‘000’s 2013 £ No’s ‘000’s 2012 £ Authorised Ordinary shares of 1p each 200,000 2,000,000 200,000 2,000,000 Allotted, issued and fully paid Ordinary shares of 1p each 19,414 194,147 18,864 188,647 Movement in share capital: As at 1 April New shares issued As at 31 March 2013 £ 188,647 5,500 194,147 2012 £ 187,647 1,000 188,647 The Company currently holds 370,000 Ordinary Shares in treasury representing 1.9% 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 19,044,731. 36 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 22. SHARE-BASED PAYMENTS Trakm8 Holdings PLC has issued options (under the Trakm8 Approved Option Scheme) to subscribe for ordinary shares of 1p in the Company. The purpose of the Option Scheme is to retain and motivate eligible employees. The exercise price and number of shares to which the options relate are as follows: Option Exercise Price 6p 15.5p 12.5p 13p Balance as at 31 March 2012 550,000 300,000 100,000 - Granted during year Exercised during year Expired/ forfeited during the year - - - (550,000) - - - Balance as at 31 March 2013 - 300,000 100,000 - - - - 1,225,000 Grant date Option & expected Life (years) Risk free rate of return Volatility 30/07/09 30/04/10 31/07/11 30/07/12 3.0 3.0 3.0 10.0 - 3.02% 3.02% 3.02% - 54% 54% 54% The share price was 13.5 pence on 1 May 2012 being the date of exercise of the above 550,000 options. The weighted average exercise price of share options which were outstanding as at 31 March 2013 was 13.5 pence. The exercise of all share options is the closing market price on the day of grant. A vesting period of 1 to 3 years is applicable according to the terms of each scheme. The fair value of the equity settled share options granted is estimated as at the date of grant using the Black Scholes option pricing model taking into account the terms and conditions upon which the options were granted. The volatility has been based on historic share prices and the dividend yield has been assumed to be 0% for all schemes. The Group charged £19,659 to the Statement of Comprehensive Income in respect of Share-Based Payments for the financial year ended 31 March 2013 (2012: £5,537). Share options exercisable at the 31 March 2013 were 400,000. 37 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 23. CASH FLOWS Reconciliation of profit before tax to net cash flow from operating activities: Profit before tax Depreciation Bank and other interest charges Amortisation of intangible assets Capitalised development costs Share based payments Development costs £ Total £ 37,522 83,884 54,610 36,622 2,055 4,461 219,852 234,369 (126,375) - 19,656 5,537 Operating cash flows before movement in working capital 207,320 364,873 Movement on retranslation of overseas operations Movement in inventories Movement in trade and other receivables Movement in trade and other payables Cash generated from operations Interest paid Interest received Income taxes received Net cash inflow from operating activities (1,446) (138,127) (994) (150,974) 139,203 110,797 276,267 (226,224) 483,217 97,478 (4,478) (5,249) 2,423 788 15,488 17,828 496,650 110,845 Cash and cash equivalents comprise cash at bank, other short-term highly liquid investments with a maturity of three months or less (together presented as ‘Cash and cash equivalents’ on the face of the balance sheet). 38 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 24. FINANCIAL COMMITMENTS At the balance sheet date, the Group had outstanding commitments for future minimum operating lease payments under non-cancellable operating leases, which fall due as follows: Operating Leases Land and buildings Within one year In the second to fifth years inclusive Other Within one year In the second to fifth years inclusive 2013 £ 17,729 53,186 86,898 62,995 2012 £ 17,522 70,086 34,112 36,646 Land and buildings under operating leases represents one lease payable by the Group which has an expiry date in March 2017. 25. RELATED PARTY TRANSACTIONS Details of the remuneration and share transactions with the company of the Directors, who are the key management personnel of the Group, are disclosed in the Directors’ report. J Watkins was a Director and shareholder of Omitec Group Limited until 2 July 2012 when the Group was sold to Continental. Omitec Limited was a wholly owned subsidiary of Omitec Group Limited. Since that date Linda Watkins, wife of John Watkins, remained a Director of Omitec Limited but resigned on the 31 March 2013. During the year ended 31 March 2013 a total of £1,263,349 was invoiced to Trakm8 Limited by Omitec Limited (2012: £1,678,110) and Trakm8 Limited invoiced Omitec Limited £12,673 (2012: £20,056). 39 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 26. FINANCIAL INSTRUMENTS Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. Where appropriate, the Group seeks to mitigate potential adverse effects on its financial performance. Liquidity risk The Group’s objective is to maintain a balance between continuity and flexibility of funding through the use of borrowings and financial assets with a range of maturities. Borrowing facilities are monitored against the Group’s forecast requirements and it is the Group’s policy to mitigate the risk by maintaining undrawn overdraft facilities and cash reserves. The bank overdraft facility is £250,000 and as at 31 March 2013 this facility was not being utilised. Credit risk The Group’s principal financial assets are bank balances, cash and trade and other receivables. The Group’s credit risk is primarily attributable to its trade receivables and the Group attaches considerable importance to the collection and management of trade receivables. The Group minimises its credit risk through the application of appropriate credit limits to customers based on an assessment of net worth and trading history with the Group. Standard credit terms are net 30 days from date of invoice. Overdue trade receivables are managed through a phased escalation culminating in legal action. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expense are recognised, in respect of each class of financial asset, liability and equity instrument are disclosed in note 4 to the financial statements. Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as debt divided by total capital. Debt is calculated as total borrowings including “current and non-current borrowings” as shown in the consolidated balance sheet. Total capital is calculated as “equity” as shown in the consolidated balance sheet plus debt. The Group’s strategy has been to reduce gearing and to increase cash and cash equivalents. This has been successfully achieved through the profits generated during the year. 40 Company Number 05452547 Holdings PLCHoldings PLC NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 26. FINANCIAL INSTRUMENTS (continued) Total borrowings (note 18) Total equity Total capital Gearing ratio Financial instruments by category Assets per balance sheet Trade and other receivables excluding prepayments Cash and cash equivalents Liabilities as per balance sheet Borrowings (excluding finance lease liabilities) Hire purchase Trade and other payables excluding statutory liabilities 2013 £ 163,083 2,523,009 2,686,092 6% 2012 £ 219,316 2,379,833 2,599,149 8% Loan and receivables 2013 £ 644,058 1,405,133 2,049,191 2012 £ 705,842 1,087,474 1,793,316 Financial liabilities at amortised cost 2013 £ 138,083 25,000 1,386,072 1,549,155 2012 £ 159,191 60,125 1,114,339 1,333,655 41 Holdings PLCHoldings PLCCompany Number 05452547 PARENT COMPANY BALANCE SHEET as at 31 March 2013 FIXED ASSETS Investments CURRENT ASSETS Debtors Cash at bank CREDITORS: Amounts falling due within one year NET CURRENT ASSETS NET ASSETS CAPITAL AND RESERVES Called up share capital Share premium Profit and loss account SHAREHOLDERS’ FUNDS Notes 2013 £ 2012 £ 3 4 5 6 7 7 801,782 801,782 150,005 894,364 1,049,958 312,375 1,199,963 1,206,739 (42,455) (34,134) 1,157,508 1,172,605 1,959,290 1,974,387 194,147 188,647 1,751,152 1,723,652 13,991 62,088 1,959,290 1,974,387 These financial statements were approved by the Directors and authorised for issue on 28 June 2013 and are signed on their behalf by: J Watkins Director J Hedges Director 42 Company Number 05452547 Holdings PLCHoldings PLC NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS for the year ended 31 March 2013 Foreign Currencies Foreign currency assets and liabilities are converted to sterling at the rates of exchange ruling at the end of the financial year. Transactions in foreign currencies are converted to sterling at the rates of exchange ruling at the transaction date. All of the resulting exchange differences are recognised in the profit and loss account as they arise. Deferred Taxation Provision is made for deferred taxation in respect of all material timing differences that have originated but not reversed by the balance sheet date. Timing differences represent differences between gains and losses recognised for tax purposes in periods different from those in which they are recognised in the financial statements. No deferred tax is recognised on permanent differences between the Company’s taxable gains and losses and its results as stated in the financial statements. Deferred tax assets and liabilities are included without discounting. 2. PROFIT AND LOSS ACCOUNT As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented as part of these financial statements. The (loss)/profit after tax for the year in the Company is (£9,829) (2012: Profit £2,953). 1. ACCOUNTING POLICIES Basis of Accounting The financial statements have been prepared under the historical cost convention in accordance with the applicable accounting standards. Share-based payments The company has applied the requirements of FRS 20 Share-based Payments. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006. The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. The fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. No expense is recognised for awards that do not ultimately vest. Financial Instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Investments Fixed asset investments are stated at cost less impairment against the cost of investments. The carrying values of investments in subsidiaries are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. 43 Holdings PLCHoldings PLCCompany Number 05452547 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 3. INVESTMENTS Cost At 1 April 2012 and 31 March 2013 Subsidiaries £ 801,782 Name of subsidiary Country of incorporation Class of holding Proportion held and voting rights Nature of business Trakm8 Limited England and Wales Ordinary Trakm8 s.r.o. (formally PJsoft s.r.o.) Interactive Projects Limited Purple Reality Limited Czech Republic Ordinary England and Wales Ordinary England and Wales Ordinary 100% Marketing and distribution of vehicle telematics 100% Mapping services 100% 100% Dormant Dormant 4. DEBTORS Amounts due from subsidiary undertakings Prepayments 5. CREDITORS: Amounts falling due within one year Trade creditors Accruals and other creditors 2013 £ 149,633 372 150,005 2013 £ 22,115 20,340 42,455 2012 £ 887,619 6,745 894,364 2012 £ 14,649 19,485 34,134 44 Company Number 05452547 Holdings PLCHoldings PLCNOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS for the year ended 31 March 2013 (continued) 6. SHARE CAPITAL Details of share capital and share options are shown in notes 21 and 22 to the consolidated accounts above. 7. RESERVES At 1 April 2011 Shares issued FRS20 Share based payments Profit for the year At 1 April 2012 Shares issued FRS20 Share based payments Purchase of own shares Loss for the year As at 31 March 2013 Share Capital Share premium £ 187,647 1,000 - - 188,647 5,500 - - - Profit and loss reserve £ Total £ 1,719,402 53,598 1,960,647 4,250 - - 5,250 5,537 5,537 2,953 2,953 1,723,652 62,088 1,974,387 27,500 - 33,000 19,656 19,656 (57,924) (9,829) 13,991 (57,924) (9,829) 1,959,290 £ - - - 194,147 1,751,152 8. FINANCIAL COMMITMENTS At the balance sheet date, the company had outstanding commitments for future minimum operating lease payments under non-cancellable operating leases, which fall due as follows: Operating Leases Motor Vehicles Within one year In the second to fifth years inclusive 9. RELATED PARTIES 2013 £ 4,464 6,325 2012 £ - - The Company has taken advantage of the exemptions conferred by FRS 8 from the requirement to disclose transactions between wholly owned subsidiary undertakings. 45 Holdings PLCHoldings PLCCompany Number 05452547 

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