ReposiTrak, Inc. Annual Report 2015

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FY2015 Annual Report · ReposiTrak, Inc.

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Annual Report &
Financial Statements

for the year ended 31 March 2015

Company Number 05452547

Trakm8 Holdings PLC

Annual Report
& Financial
Statements For
Trakm8 Holdings PLC

Contents

Highlights

Executive Chairman’s Statement

Strategic Report

Corporate Governance

Directors’ Report

Statement of Directors’
Responsibilities

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

Consolidated Statement
of Cash Flows

Notes to the Consolidated
Financial Statements

Parent Company Balance Sheet

Notes to the Parent Company
Financial Statements

69 Officers and Advisers

Financial
• Results ahead of expectations

• Revenue up 95% at £17.9m (2014: £9.2m)

• Recurring revenues up by 65% to an

annualised £7.5m (2014: £4.6m)

• Like for like orders received up 38%

during the year

• Adjusted EBITDA* £2.60m (2014: £1.24m)

• Adjusted Profit before tax* £1.82m

(2014: £0.88m)

• Profit before tax £1.70m (2014: £0.40m)

• Adjusted Earnings per share* 6.24p

(2014: 4.08p)

• Strong cash position £3.4m

• Significant recurring revenue growth

*before exceptional costs and share based payments

Tracking More Than
45 Million
Journeys
per annum

Highlights For
Year End
31 March 2015

Operating
• Significantly increased banking

facilities agreed

• Major contracts secured with
Marmalade and Saint-Gobain

• Successful integration of BOX Telematics
Ltd and ongoing consolidation of their
telematics systems with Trakm8’s

• Encouraging order pipeline and sales

opportunities

Current trading and post
year end events
• Completion of £3.3m acquisition

of the trade and assets of
DCS Systems Ltd (“DCS”)

• Strengthening of the Board with second

independent non-executive appointed and
two additional Board members

• Year to date revenues are ahead of

last year and management now expect
to modestly exceed previous market
expectations for the year

• Continuing to secure significant

customer contracts

Revenue
£17.9m

(2014: £9.2m)

EBITDA*
£2.60m

(2014: £1.24m)

Net Profit*
£1.82m

(2014: £0.88m)

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Cash
£3.4m

(2014: £1.32m)

Net Assets
£7.0m

(2014: £5.13m)

*before exceptional costs and share based payments

UK Installed Units

Strategic Overview
• Primarily focus on increasing the number

of installed units

• To continue to own the full intellectual

property in the value chain

• To build intelligence based services

derived from data aggregation, including
video data

• To sell both complete solutions to end

users and elements of these to integrators

• To continue to seek complementary

acquisitions that benefit organic growth

Monthly Recurring Revenue
as at 31 March

Operating Brands

£179,157

2013

£377,953

2014

£624,883

2015

+65%

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Trakm8
Overview

Trakm8’s operational activities are divided
into two segments, Solutions and Products.
The Group strategy remains to provide
machine to machine (“M2M”) solutions and
products that grow the installed base of
connections with service revenues, thus
ensuring predictable revenues
and cash flows.

Solutions
The Group owns the IP used to develop its
solutions, and this ownership includes the
whole supply chain process, including both
the engineering and the manufacturing of the
hardware from the Coleshill site.

The solutions have been developed to
cater for a variety of markets including
Automotive, Plant, and Insurance, as well
as the core Fleet Management. Whilst there
are continual developments to the flagship
SWIFT 6 software, the next financial year
will see major development into the seventh
generation which will continue to push the
boundaries of vehicle tracking as well as
the additional benefits of enhanced vehicle
health monitoring and First Notification
of Loss (FNOL).

It is from the ongoing development of these
solutions based on our Fleet Management
software that Trakm8 continues to grow its
service fees, thus ensuring the predictable
revenue as mentioned before.

Trakm8 Group’s Engineering Services
continue to support the business by tailoring
the core solutions for corporate customers.
Examples over the last 12 months include an
extension to the Fleet Management system
supplied to Saint Gobain, development of a
bespoke logistics platform to new customer,
Downtons, and enhancements to the
Insurance Solution for Young Marmalade.

Products
The design and development of our
telematics hardware units continues to
be driven in house which enables Trakm8
to respond quickly to market demands.
Customers are frequently invited to the
facility to see where the solutions and
products are developed, manufactured
and shipped.

Insurance

Research and
Development

Automotive

Products and
Solutions

Plant

Trakm8 predominantly sells turnkey
solutions to customers, but the Group also
manufactures hardware for those who wish
to integrate these goods into their own
systems. The hardware is sold globally to
customers across the commercial fleet and
consumer telematics sectors.

There is ongoing work into the development
of the expansion of the newer T10 range to
replace the older generation of products,
and this will bring all of the manufacturing of
Trakm8 Group’s telematics devices in house.

Next generation T10 hardware

The Manufacturing Services business
acquired with the purchase of Box
Telematics in October 2013 gives the
Group complete control over the hardware
offered to customers. In the FY2014/15 BOX
manufactured over £1.8m worth of goods for
Trakm8 customers.

In the Spring of 2015, the Group was awarded
the Made in Britain accreditation marque
which is now applied to many of its products,
giving customers heightened trust in the
manufacturing it offers.

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Research and Development
The Group invests heavily into the
development of both the next generation of
solutions and additional lines to the portfolio.
As part of this investment, there is an in
house team of Big Data research scientists
focussing on utilising mathematical data
mining techniques (Big Data) to gain further
insights into vehicle telematics data.

The scientists study information such
as vehicle CANBus data and raw sensor
information from the 2 billion miles worth
of data the Group collects annually. It can
then provide accurate indications of vehicle
prognostics and diagnostics including crash
analysis, battery health monitoring, state
of health, prediction of vehicle failures and
driver behaviour analysis. These all work
together to develop the group’s solutions for
reducing insurance risk and improving
driving efficiency.

The team has worked towards developing
an accurate algorithm to identify a potential
insurance loss event. This has included
many months of development of a classifier
that can determine between potholes and
genuine accidents. Alongside this, the
battery health monitoring algorithm has also
been greatly enhanced, meaning Trakm8 can
offer customers a solution that gives a higher
prevention rate of roadside breakdowns due
to battery failure.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Executive
Chairman’s
Statement

John Watkins
Executive Chairman

Introduction
I am pleased to report on another excellent
year for Trakm8 with our results being ahead
of expectations. Our strategy of increasing
the numbers of units reporting to our servers
is proving very successful. Strong growth in
installed units and the consequent service
revenues has been at the core of significantly
improved financial results.

As part of the strategy to develop the
Group organically, Trakm8 has successfully
introduced a number of new products and
software solutions that have been well
received by the market. These products
and solutions are distributed by our Trakm8
and BOX brands into all market segments.
The Group now has market leading Fleet
Management solutions and has introduced
the latest in Insurance risk, First Notification
of Loss (“FNOL”) and crash reconstruction
software. The Group has also established
market leading automotive vehicle diagnostic
expertise for over-the-air vehicle condition
monitoring and service predictions.

The strength of the Trakm8 financial model is
that it delivers very strong cash generation.
Our operating cash flow before movement
in working capital for the year was £2.60m
(2014: £0.80m), and the year-end cash
balance was £3.4m.

Organic revenue growth at Trakm8 was 73%
supplemented by a full 12 months of trading
in BOX Telematics Ltd (“BOX”).

The year saw significant investment by
the Group in improving many elements of
the operations of the businesses. Most of
the internal activities were consolidated to
minimise costs and maximise effectiveness. A
major IT infrastructure investment improved
our ERP, CRM and QA processes. A second
new assembly line for electronic PCB
assembly was purchased in anticipation of
the higher levels of demand for our
hardware devices.

Due to higher margins than anticipated when
we issued our trading statement in April
2015 we have reported a slightly higher than
expected pre tax profit of £1.7m and which
compares to last year’s result of £0.40m.

Board Changes and Post
Year End Events
Following the year end we decided to
strengthen the Board in line with the rapid
growth of the Group. We were delighted
to welcome Bill Duffy to the Board as
the second Independent Non-Executive
Director. Bill brings a wealth of experience
and expertise. We also decided Sean
Morris Group Engineering Director and
Mark Watkins Group Operations Director
should join the Board. These appointments
are expected to enhance our corporate
governance and ensure we have the
management team to implement our growth
plans and integrate acquisitions successfully.

We also announced that we have recently
completed the acquisition of the trade
and assets of DCS. This business trades
predominantly as RoadHawk™ supplying
camera systems into the vehicle market.
The integration of camera technology
into telematics based fleet and insurance
solutions represent real opportunities
for future growth.

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Operational Review
Trakm8’s core activity is the provision of
integrated fleet management and insurance
telematics based services. Trakm8 also
undertakes bespoke development and
integration of our data into the customer’s
own Management Information systems.
Customers include Direct Line Insurance, the
AA, E.ON and Saint-Gobain Group.

BOX was purchased in October 2013 and the
business has been successfully integrated
into the Trakm8 Group. Our Development,
Customer services, Technical support and
Finance teams have been combined for
both companies and hardware and software
platforms are largely consolidated.

Following the integration of BOX the Group
now accounts for all its trading in the single
integrated telematics technology segment.
We continue to report the revenues in a
number of streams.

Revenues at Trakm8 increased by 73% to
£9.3m and this was supplemented by £8.6m
of revenues from the full year contribution
from BOX. In addition BOX supplied £1.8m
of telematics devices to Trakm8. The Group
gross margin percentage was 45.2% for the
year (2014: 57.2%). This drop was due to the
inclusion of a full year of BOX trading which
has lower margin contract manufacturing
revenues. In addition we have reanalysed
sim costs to be part of our cost of sales.
Adjusted Earnings before interest, tax,
depreciation, amortisation and share based
payments (“Adjusted EBITDA”) increased to
£2.6m (2014: £1.2m).

The success in both Fleet Management and
Insurance solutions during the period has
increased the numbers of units reporting to
our servers to over 102,000. The recurring
revenues amounted to an annualised £7.5m.
This represents an increase of 65% over the
previous year end. Significantly the March
recurring revenue also exceeded the Group
underlying overheads in the month for the
first time in the Group’s history.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Executive Chairman’s
Statement (continued)

We have broadened the customer base both
in the UK and internationally. Significant
contract wins with SAGA in Norway,
Downton, Saint-Gobain and Marmalade
were announced along with a wide range of
smaller orders.

A significant part of our engineering effort
is directed towards the use of the data we
generate to create powerful algorithms
for the prediction of risk, vehicle service
requirements including battery status, and
crash event identification (FNOL).

Sales of hardware as discrete devices were
12% lower at Trakm8 but were supplemented
with £6.1m from a full 12 months trading at
BOX. The largest revenue generator in this
segment is the JCB Live Link telematics
device. Sales of T10 hardware extended the
number of clients buying telematics devices.

We have employed mathematicians to help
us analyse our Big Data and we anticipate
substantial benefits as we seek to monetise
the value and analysis of this asset over the
coming years. We believe that Trakm8 is
establishing a market leading position
in this field.

Improved manufacturing capacity and quality
was introduced early in the financial year
enabling a higher output to be achieved. As a
result over 100,000 telematics devices were
built during the period.

Whilst the sales of hardware to third
party integrators helps 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.

During the year the Company significantly
expanded its engineering resources including
a new leadership team. It has delivered
excellent product derivatives of the T10,
Swift and Insurance solutions.

This, along with the emphasis we place
on automotive expertise, gives us a
unique capability when compared to our
conventional competitors.

We have found that skills and features
developed for the insurance sector once
integrated into the fleet management
solutions have expanded the customer
base as a result.

We have also expanded our sales team to
support the company’s growing customer
base. Particular focus has been given to build
a senior corporate sales team focussing
on major clients.

It is pleasing to report that our start-up sales
activity in Prague is now self-funding and
further expansion of the sales and support
team is planned to grow revenues
in the region.

At the time of our Interim Statement we
announced we had a record number of
opportunities in our sales pipeline and it
was pleasing to bring a number of these
to a positive conclusion. Most of these did
not impact the results during the period
significantly, but are expected to benefit the
new financial year.

We have continued to build the sales pipeline
and remain confident that many of these
opportunities will also be secured over the
next twelve months. We continue to have a
large number of trials in progress.

Trakm8 also undertakes bespoke software
development for customers. The customer
specific application engineering has been a
major feature of the product development
team as larger customers have demanded
their particular requirements. These in turn
help to improve our core products.

A number of projects this year were
associated with several customers in the UK,
Europe and USA. The largest project was for
the Direct Line Group

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Outlook
The Board is confident that our investments
in acquisitions, operational efficiency
improvements, engineering resources, new
products and additional sales resources
together with the benefit of new contract
wins will positively impact the new financial
year and beyond. Overall the first three
months of trading are ahead of last year and
we now expect to modestly exceed previous
market expectations for the year ending
31 March 2016.

The acquisition of the trade and assets
of DCS brings an associated product
line, customer base and the established
RoadHawk™ camera brand to Trakm8. We
expect to develop the products, integrating
them into our portfolio and to expand
the customer base through the existing
sales channels. DCS is expected to be an
immediately earnings enhancing acquisition.

Although our primary strategy this year
is to focus on maintaining strong organic
growth and to maximise the potential of
DCS, we continue to assess opportunities
which augment growth through further
selective acquisitions. Any acquisition being
considered will need to meet our clearly
defined market segment objectives and
financial criteria. To that end we have agreed
a £2m increase in our debt facility with HSBC
bringing it to £5.7m, of which £3.7m
has been drawn.

Lastly, I would like to thank all the Trakm8
staff for their exceptional commitment
and hard work in order to accomplish the
significant progress made over the
past twelve months.

John Watkins
Executive Chairman

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015
Trakm8 Holdings PLC - Annual Report 2015

Strategic
Report

The Directors present their Strategic Report
on the Group for the year ended
31 March 2015.

Business Review and
Principal Activities
Trakm8 Holdings PLC and its subsidiaries
(“the Group”) design, manufacture and sell
fleet management and insurance solutions
and associated hardware components.

These solutions are used in a wide
variety of applications from heavy duty
commercial vehicles to light CVs, cars, earth
moving equipment and a number of niche
applications such a golf carts and industrial
cleaning machines.

The solutions provide data for customers
to more effectively use their vehicles by
reducing journey times, reducing fuel
consumption and accidents, improving
utilisation and serviceability, expense
tracking, and integration into customers
ERP systems.

The data is also used to identify driver
profiles for risk prediction, trigger cash alerts,
assist in crash reconstruction and to predict
vehicle service requirements.

The market for these solutions is growing
as the cost of providing them reduces and
the benefit of the data is becoming more
valuable. Indeed the scale of the opportunity
and the rate of growth could be materially
increased if the solutions’ costs could be
further significantly reduced.

However, the competition is also growing
and there remains pricing pressure being
mitigated by the increased functionality of
the solutions. The market remains largely
fragmented although consolidation is
occurring, particularly driven by interest in
the space from venture capital companies.

12
12

Trakm8 and BOX have consolidated most of
the operational and finance functions. They
share common engineering hardware and
software solutions, only maintaining separate
sales and marketing channels. As a result
Trakm8 too has been playing a part in the
consolidation process underway
in this market.

The results for the year show a 95% increase
in our revenues to £17.9m (2014: £9.2m)
and an adjusted EBITDA of £2.60m (2014:
£1.24m). Strong organic growth and the
supplemented BOX installed base has
grown the installed base of units reporting
to our servers with recurring revenues now
accounting for 31% of our total turnover.

Statement of Financial
Position
The Group has a strong balance sheet as
at 31 March 2015 with net assets of £7.0m
(2014: £5.1m). We continued our investment
in the business with £0.36m spent on new
plant and IT assets together with £0.86m
on development costs enhancing our
solutions for calculating insurance risk, First
Notification of Loss, crash detection and
vehicle diagnostic data.

Our cash balances at the year end were
£3.4m (2014: £2.9m) and total bank
borrowings were £2.8m (2014: £2.3m).
During the year the Group repaid the
outstanding Clydesdale loan of £2.0m with
a new facility from HSBC comprising a £3m
term loan repayable over 5 years plus a new
3 year £1m revolving credit facility which had
not been drawn as at 31 March 2015.

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Strategy
The Group strategy remains to provide
machine to machine (“M2M”) products
and services that grow the installed base
of connections with service revenues, thus
ensuring predictable revenues and cash
flows. We will continue to increase our
focus on utilisation of the accumulating
server data to create the algorithms that will
improve the fuel economy scoring and the
driver insurance risk calculations, crash event
identification and reconstruction.

Trakm8 installed vehicles cover over two
billion miles each year. This data along with
the statistical analysis now available with
latest computing techniques will continue
to drive the next stages of improved returns
on investment in the technology. It will also
create opportunities in itself to drive both
sales of data and devices as part of the use
of Big Data for marketing and promotion
planning by retailers.

Trakm8 will also utilise its extensive vehicle
electrical knowledge to drive vehicle service
algorithms to reduce breakdowns, improve
serviceability and reduce cost of ownership.
This too will drive increased opportunities for
telematics and data within the automotive
aftermarket and road side assistance sectors.

Trakm8 will provide hardware and software
solutions on a stand-alone basis to third
parties so long as they are part of Trakm8’s
core offerings.

The long term strategy is to expand from our
UK centric base for solutions and introduce
the business model into new markets.
The market for our solutions is growing
across the globe. Trakm8 can be one of the
providers to benefit from this and grow into
a very significant business. This strategy
provides the shareholders with the prospect
of continued increase in shareholder value
over the medium and long terms.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Strategic
Report (continued)

Organic Growth

The Group will continue to drive organic
growth through widening the customer base,
increasing the range of solutions offered and
broadening the geographic coverage. Trakm8
has built a strong and profitable base in the
UK and will consider expanding into
new territories.

With every size of vehicle type now
addressed from the smallest fleets to the
largest, from passenger cars to heavy duty
trucks and industrial equipment, Trakm8 has
a sales channel and product suitable for all.

Trakm8 will continue to invest heavily in
engineering new products and solutions to
ensure that these are market leading.

Acquisitions
After the year end the Group announced it
had acquired on 16 June 2015 the business
and assets of DCS Systems Ltd (“DCS”) for
a cash consideration of £3.3 million. DCS
specialises in the design and distribution of
camera systems for the motor vehicle, bicycle
and security markets. DCS’s last unaudited
accounts for its financial year ending
30 April 2015 reported revenues of £2.8
million and profit before tax of £0.6 million.
The acquisition was funded from the Group’s
existing cash and bank facilities.

The Group will continue to seek acquisitions
that complement our organic growth
strategies. These will be businesses in the
M2M and Big Data space, where we can drive
value for the shareholders and enhance the
range of markets and services we address.

Environmental
The Group provides products and
services that are targeted at reducing the
consumption of the world’s natural resources.
As a Group we also strive to ensure that
we minimise the use of these resources
ourselves. Trakm8 is accredited to ISO 14001
as part of its commitment to best practice on
Environmental matters. We monitor various
environmental impacts that the Group has,
such as CO2 emitted by company vehicles,
and has clear strategies in place
to reduce these.

Principal Risks and
Uncertainties
The Board has analysed the risks to the
Group and considered the probability and
magnitude of the effect of each one. From
this analysis the Board reviewed the controls
and procedures in order to mitigate these
risks. The principal risks and uncertainties
facing the Group are set below.

1. Significant operational system failure
Our long term strategy is to move our
operational systems into the Cloud,
consequently we are currently operating
systems both within the Cloud and within
a traditional data centre environment.

Non Cloud based services: We provide
no single point of failure which entails
diversity of datacentres from separate
suppliers and replication of data between
data centres. Daily point in time backups
are taken offsite.

Cloud based: The cloud approach does
not require symmetric hardware between
datacentres because it only takes
minutes to deploy replacement server(s).
To this end we ensure the data is backed
up over separate Cloud regions.

You Drive. We think.

2. Attracting, maintaining and motivating
highly skilled engineers and developers
We provide interesting work within a
growing business and maintaining this
is key to employee retention. We have
improved the working environment,
developed employment compensation
arrangements that provide “modern
benefits”, engaged in more staff
participation events and expanded the
staff briefing process to monthly.

3. Competitors taking an increasing market

share due to our failure to develop
our products
We have recruited a new senior
leadership team and expanded the
breadth and depth of the product and
planning functions with strong innovation
skills. We believe that we have the
resources to stay in the forefront
of technology.

4. A deterioration in the
economic climate
Daily monitoring of sales orders,
invoicing and cash flow. Monthly reviews
of overheads against budget. Tight
control of all accounts to ensure they do
not become overdue.

5. Adverse Mobile Network Changes

1) Trakm8 has a mix of mobile network
suppliers, so in the event of a mobile
outage 100% of the installed service base
will not be affected.

2) Trakm8 provide a configuration
manager which allows remote upgrade
of the installed base and this can be used
to address system wide issues as long as
basic GPRS communications exist.

3) Trakm8 relies on the mobile phone
suppliers to provide a quality of service
and investment in suitable reliable
infrastructure. The same is true for the
GPS network (we don’t own our own
satellites) and the Internet (we rely on a
diverse inter connected network which is
supplied by 3rd parties).

6. Access to finance and debt

We have been conservative in raising
debt finance and in addition look to
maintain sensible levels of cash balances.
We closely monitor cash generated
from our operations together with
new investments in fixed assets and
capitalised development costs.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Strategic
Report (continued)

Key Performance Indicators
The key performance indicators used to assess the performance and financial status of the Group
are as follows:-

Adjusted EBITDA
Adjusted Earnings before interest, tax,
depreciation, amortisation, exceptional costs
and share based payments. The Group monitors
adjusted EBITDA and the result for the year was
much improved. The improvement stemmed
from increased revenues at Trakm8 and a full
twelve months contribution from BOX, along with
the integration of the manufacture of Trakm8’s
telematics devices.

Invoiced Units
Units being invoiced for telematics services
increased by 72% to in excess of 102,000 units.
This was due to success in both the Fleet
Management sector and Insurance market.

Monthly recurring revenues
The annualised recurring revenues increased by
65% to £7.5m due to increased numbers
of units reporting.

Cash and cash equivalents
The Group monitors the cash position of the
company daily and establishes banking facilities
with current and future requirements in mind.
As a result of new banking facilities and strong
operational cash generation the available cash to
the business increased during the period.

2015
£

2014
£

2,596,573

1,237,734

102,231

59,602

624,883

377,953

3,407,959

2,910,786

You Drive. We think.

Employee Matters
The Group recognises that the employees are the key asset of the business. The Board of
Directors has employee satisfaction monitoring processes and has succession planning in place.
There are company-wide communication activities both in person and via the Group intranet.
The Company provides competitive compensation plans and has a scheme whereby the staff
share in the success of the Group.

Trakm8 secured accreditation to ISO 18001 as part of its commitment to best practice on the
management of Health and Safety.

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. The
Group has committed to gaining accreditation to ISO 27001 as part of its commitment to
data security.

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.

John Watkins
Executive Chairman

Company Number 05452547

Corporate
Governance

Board of Directors and
Committees
During the financial year the Board,
comprised of five executive Directors and
one non-executive Director, met regularly
throughout the year.

The Board of Trakm8 Holdings PLC is
responsible for the strategic direction of
the Group’s businesses. The Board’s specific
roles include corporate governance policy
and direction; as well as strategy formation
and monitoring the achievement of the
Group against the business plan. The day-
to-day management of the Group is the
responsibility of the team of executive
Directors under the executive Chairman. The
Board meetings of Trakm8 Holdings PLC
cover matters required to be covered by the
Boards of the Group’s subsidiary entities.

The Board members have operated Audit,
Remuneration and Nomination Committees
throughout the period, although the
Nomination Committee met outside of the
reporting period on the 28 May 2015. These
bodies operate under formally delegated
duties and responsibilities and seek advice
from independent third parties as the need
arises. The committees during the year have
comprised of one non-executive Director
(K Evans) and the Executive Chairman
(J Watkins).

Trakm8 Holdings PLC - Annual Report 2015
Trakm8 Holdings PLC - Annual Report 2015

18
18

You Drive. We think.

Three new Directors were appointed to the Board on the 1 July 2015 to enhance its corporate
governance and ensure the management team implement the Group’s growth planes and
integrate acquisitions successfully.

Bill Duffy has joined as an additional independent Non Executive Director together with Sean
Morris (Group Engineering Director) and Mark Watkins (Managing Director of BOX Telematics).

For the financial year ended 31 March 2015 the Directors’ attendance at Board and Committee
meetings has been as follows:
v

Type

K Evans

M Cowley

T Cowley

J Hedges

J Watkins

P Wilson

Total held in period

Board

Audit

Nomination

Remuneration

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Corporate
Governance (continued)

Nominations Committee

The committee met in May 2015 and decided
to strengthen the Board by appointing Bill
Duffy as an additional independent
Non Executive Director. Bill has considerable
commercial experience having been CEO
of Andrew Page, Halfords Autocentres
and a number of other leading automotive
aftermarket companies. He has also been a
consultant to the Board over the
past twelve months.

In addition we have appointed two executives
to be Directors of the Group: Sean Morris,
as Group Engineering Director and Mark
Watkins as Group Operations Director. Sean
joined the Group six months ago following
senior engineering positions at Continental
UK, RAC and Aston Martin. Mark joined the
Group fifteen months ago as the Managing
Director of BOX Telematics following a
successful career in IT and operations at
Continental UK and Ford Motor Co.

Audit Committee
The Audit Committee is responsible
for ensuring that the Group’s financial
performance is properly monitored,
controlled and reported. The Finance Director
and other Directors attend as required.

Following good corporate governance
the Audit committee initiated a rotational
review of our external auditors. Two
firms were shortlisted and assessed and
PricewaterhouseCoopers LLP were selected
in December 2014 as the Group’s
new auditors.

The committee and the external auditor have
safeguards to avoid a potential compromise
of auditor’s objectivity and independence.
These include the adoption of a policy that
segregates the supply of audit and non-audit
services and requires committee approval for
the supply of services such as tax services
and acquisition related due diligence.

The key issues considered by the Audit
committee included revenue recognition,
capitalisation of development costs and
impairment review of Goodwill.

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Remuneration Committee

The Remuneration Committee’s terms of
reference include making recommendations
on Directors’ compensation packages to
ensure that the Group Board enjoys and
retains an appropriate level of motivated
resources. The Committee engages with
external consultants as and where it is
deemed beneficial.

The Group has adopted and operates a share
dealing code for Directors in accordance with
the requirements of the Combined Code.

Relations with Shareholders
The Board values and attaches the utmost
importance to the maintenance of good
relationships with shareholders. During
the period the Board conducted a series
of ‘shareholders update presentations’ at
venues throughout the United Kingdom and
the intention is to continue the programme
during the current financial year. These
presentations are attended by the
Non Executive Directors.

By approval of the Board on 3 July 2015

J Hedges
Company Secretary

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015
Trakm8 Holdings PLC - Annual Report 2015

Directors’
Report

The Directors submit their Directors’ Report
and the audited financial statements of
Trakm8 Holdings PLC for the year ended
31 March 2015.

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.

Financial Risk Management
The Group manages its key financial risks as
follows. Further details can be found
in Note 26.

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. It
is also the Group’s policy to mitigate the risk
of borrowings by maintaining cash reserves.

Currency Risk
The Group endeavours to minimise its foreign
currency exposure by trading in Sterling
wherever possible. The two principal foreign
currencies used are the US Dollar and the
Euro and where possible we endeavour to
match inflows and outflows.

Credit Risk
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.

22
22

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Further consideration on the future
developments and exciting prospects of
the Group, has been taken in the Executive
Chairman’s Statement and the Strategic
Report. The Group expects to expand the
fleet management and insurance solutions
with the integration of camera technologies.

The Group also expects that the enlarged
sales and marketing teams will continue
to generate organic growth in the UK and
international markets. Further acquisitions
will be assessed and, if our strict criteria are
met, will be progressed.

Directors
The following Directors have held office
during the period:

K Evans

M Cowley

T Cowley

J Hedges

J Watkins

P Wilson

The following additional Directors were
appointed after the year end on 1 July 2015:

W Duffy

S Morris

M Watkins

Results and Dividends
The Group results for the year ended
31 March 2015 are shown in the Consolidated
Statement of Comprehensive Income on
page 32. The Directors do not recommend
the payment of a dividend.

Research and Development
The Group has continued to expand the
investment in research and development to
ensure the future success of the business.
Our focus is to continuously enrich our
telematics data and the telematics services
we can offer. This includes Insurance risk,
First Notification of Loss (“FNOL”) and crash
reconstruction software. The Group has
also established market leading automotive
vehicle diagnostic expertise for over-the-air
vehicle condition monitoring and service
predictions. During the year we capitalised
development costs of £861,849 and a
further £350,177 was expensed. The Group
broadened the capability of the development
team and established new leadership in order
to further enhance the Group’s development
resources and products for future years.

Going Concern
The Directors report that, having reviewed
current performance and forecasts, they
have a reasonable expectation that the
Group has adequate resources to continue
its operations for the foreseeable future. For
this reason, they have continued to adopt the
going concern basis in preparing the
financial statements.

Future Developments
On 16 June 2015 the Group announced it
had acquired the business and assets of DCS
Systems Ltd (“DCS”) for a cash consideration
of £3.3 million. DCS specialises in the design
and distribution of camera systems for the
motor vehicle, bicycle and security markets.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Directors’
Report (continued)

Directors And Their Interests
At 31 March 2015 the Directors’ interests in the shares of the Company are detailed below:-

This table is audited

1p Ordinary shares at
31 March 2015

% of issued Ordinary
share capital
(28,973,821 Ordinary
shares)

1p Ordinary shares at
1 April 2014

% of issued Ordinary
share capital
(28,873,821 Ordinary
shares)

1,540,357

1,897,638

2,152,626

6,149,344

691,876

5.32%

6.55%

7.43%

21.22%

2.39%

1,540,357

1,897,638

2,152,626

6,399,344

691,876

5.33%

6.57%

7.46%

22.16%

2.40%

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 2015 or on the date on which these financial statements were approved.

Directors’ Remuneration
The Directors’ remuneration for the year ended 31 March 2015 was:

This table is audited

Salaries &
benefits

Bonuses

Pension
contributions

28,000

92,941

107,354

107,738

198,428

91,739

626,200

2,142

2,500

4,250

10,053

21,445

2,138

1,990

4,128

K Evans2

M Cowley

T Cowley

J Hedges

J Watkins

P Wilson

C D Buck1

Total

1 Resigned 1 July 2013
2 Appointed 1 July 2013

Total
year ended
31 March 2015
£

Restated Total
year ended
31 March 2014
£

28,000

95,083

109,854

112,376

202,678

103,782

651,773

18,750

118,074

118,315

221,960

98,321

17,500

710,994

The prior year comparatives have been restated to show the full net value receivable to Directors
in respect of share options granted in the year.

The Directors bonuses were payable based on the outturn of sales and profits for the year ended
31 March 2015.

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Directors’ Share Options
At 31 March 2015 the following options had been granted to the Company’s Directors and remain
current and unexercised:

This table is audited

Option
exercise
price

Balance as
at 1 April
2014

Granted
during year

Exercised
during year

Expired/
forfeited
during year

Balance as
at 31 March
2015

Expiry date

M Cowley

T Cowley

J Hedges

J Watkins

P Wilson

£0.130
£0.445

150,000
125,000

200,000
125,000

275,000
250,000

150,000
50,000

-
-

150,000
125,000

200,000
125,000

275,000
250,000

150,000
50,000

30/07/22
21/01/24

All share options were issued at the open market price on the day the options were granted.

The Group provides qualifying third party indemnity provisions for the Directors which was in
place throughout the year and has remained in place since the year end.

Treasury Shares
At 1 April 2014 the Company held 150,000 of its own 1p Ordinary shares. During the year 75,000
of these shares were sold for a total consideration of £48,888 leaving 75,000 held by the
company as at 31 March 2015 (representing 0.26% of the called up share capital).

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 appoint PricewaterhouseCoopers LLP, Chartered Accountants, as auditors, will be
put to the members at the Annual General Meeting.

By approval of the Board on 3 July 2015

J Hedges
Company Secretary

Company Number 05452547

Statement of Directors’
Responsibilities In
The Preparation of
Financial Statements

The directors are responsible for preparing
the Annual Report, the Directors’
Remuneration Report and the financial
statements in accordance with applicable law
and regulations.

Company law requires the directors to
prepare financial statements for each
financial year. Under that law the directors
have prepared the group financial statements
in accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union, and the parent
company financial statements in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards and applicable law).

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
these financial statements, the directors are
required to:

•

select suitable accounting policies and
then apply them consistently;

• make judgements and accounting
estimates that are reasonable
and prudent;

•

state whether IFRSs as adopted by
the European Union and applicable
UK Accounting Standards have been
followed, subject to any material
departures disclosed and explained in
the group and parent company financial
statements respectively;

• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
company will continue in business.

Trakm8 Holdings PLC - Annual Report 2015
Trakm8 Holdings PLC - Annual Report 2015

26
26

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The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the company’s
transactions and disclose with reasonable
accuracy at any time the financial position
of the company and the group and enable
them to ensure that the financial statements
and the Directors’ Remuneration Report
comply with the Companies Act 2006 and,
as regards the group financial statements,
Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of the
company and the group and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.

The directors are responsible for the
maintenance and integrity of the company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.

The directors consider that the annual
report and accounts, taken as a whole, is fair,
balanced and understandable and provides
the information necessary for shareholders
to assess a company’s performance, business
model and strategy.

Each of the directors, whose names are listed
in the directors’ report confirm that, to the
best of their knowledge:

•

the group financial statements, which
have been prepared in accordance with
IFRSs as adopted by the EU, give a true
and fair view of the assets, liabilities,
financial position and profit of the
group; and

the directors’ report includes a fair review
of the development and performance
of the business and the position of the
group, together with a description of the
principal risks and uncertainties
that it faces.

By approval of the Board on 3 July 2015

J Hedges
Company Secretary

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015
Trakm8 Holdings PLC - Annual Report 2015

28
28

Independent Auditors’
Report To The
Members Of
Trakm8 Holdings PLC

Report On The Financial
Statements
In our opinion:

• Trakm8 Holdings PLC’s group financial

statements and parent company financial
statements (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 2015 and of the
group’s profit and cash flows for the year
then ended;

•

the group financial statements have
been properly prepared in accordance
with International Financial Reporting
Standards (“IFRSs”) 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.

What We Have Audited
Trakm8 Holdings PLC’s financial statements
comprise:

•

the consolidated statement of financial
position as at 31 March 2015;

the parent company balance sheet as at
31 March 2015;

the consolidated statement of
compehensive income for the year
then ended;

the consolidated statement of cash flows
for the year then ended;

the consolidated statement of changes in
equity for the year then ended; and

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•

the notes to the financial statements,
which include a summary of significant
accounting policies and other
explanatory information.

Certain required disclosures have been
presented elsewhere in the Report And
Financial Statements, rather than in the notes
to the financial statements. These are cross-
referenced from the financial statements and
are identified as audited.

The financial reporting framework that has
been applied in the preparation of the group
financial statements is applicable law and
IFRSs 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).

In applying the financial reporting framework,
the directors have made a number of
subjective judgements, for example in
respect of significant accounting estimates.
In making such estimates, they have made
assumptions and considered future events.

Opinion On Other Matter
Prescribed By The
Companies Act 2006
In our opinion, the information given in the
Strategic Report and the Directors’ Report
for the financial year for which the financial
statements are prepared is consistent with
the financial statements.

Other Matters On Which We
Are Required To Report By
Exception

Adequacy of accounting records and
information and explanations received
Under the Companies Act 2006 we are
required to report to you if, in our opinion:

• we have not received all the information

and explanations we require for
our audit; or

•

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.

We have no exceptions to report arising from
this responsibility.

Directors’ remuneration
Under the Companies Act 2006 we are
required to report to you if, in our opinion,
certain disclosures of directors’ remuneration
specified by law are not made. We have no
exceptions to report arising from
this responsibility.

Company Number 05452547

What an audit of financial
statements involves
We conducted our audit in accordance
with ISAs (UK & Ireland). An audit involves
obtaining evidence about the amounts
and disclosures in the financial statements
sufficient to give reasonable assurance
that the financial statements are free from
material misstatement, whether caused by
fraud or error. This includes an assessment of:

• whether the accounting policies are

appropriate to the group’s and the parent
company’s circumstances and have been
consistently applied and
adequately disclosed;

•

the reasonableness of significant
accounting estimates made by the
directors; and

the overall presentation of the
financial statements.

We primarily focus our work in these areas
by assessing the directors’ judgements
against available evidence, forming our own
judgements, and evaluating the disclosures in
the financial statements.

Trakm8 Holdings PLC - Annual Report 2015

Independent Auditors’
Report (continued)

Responsibilities For The
Financial Statements And
The Audit

Our responsibilities and those of the directors
As explained more fully in the Statement of
Directors’ Responsibilities set out on
page 26, 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) (“ISAs (UK & Ireland)”). Those
standards require us to comply with the
Auditing Practices Board’s Ethical
Standards for Auditors.

This report, including the opinions, has been
prepared for and only for the company’s
members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act
2006 and for no other purpose. We do not,
in giving these opinions, accept or assume
responsibility for any other purpose or to any
other person to whom this report is shown
or into whose hands it may come save where
expressly agreed by our prior
consent in writing.

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We test and examine information, using
sampling and other auditing techniques, to
the extent we consider necessary to provide
a reasonable basis for us to draw conclusions.
We obtain audit evidence through testing
the effectiveness of controls, substantive
procedures or a combination of both.

In addition, we read all the financial and non-
financial information in the Annual Report
and Financial Statements to identify material
inconsistencies with the audited financial
statements and to identify any information
that is apparently materially incorrect based
on, or materially inconsistent with, the
knowledge acquired by us in the course of
performing the audit. If we become aware
of any apparent material misstatements or
inconsistencies we consider the implications
for our report.

Matthew Hall (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP

Chartered Accountants and
Statutory Auditors

Southampton

6 July 2015

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Statement of
Comprehensive Income
For The Year Ended 31 March 2015

Revenue

Cost of sales

Gross profit

Administrative expenses before exceptional costs

Operating Profit before exceptional costs

Exceptional administrative costs

Operating Profit

Finance income

Finance costs

Profit Before Taxation

Income tax

Profit For The Year Attributable To The
Owners of The Parent

Other Comprehensive Income

Items that may be subsequently
reclassified to profit or loss:
Currency translation differences

Total Comprehensive Income For The Year
Attributable To The Owners of The Parent

Notes

2015
£

2014
£

17,853,436

9,193,073

(9,791,655)

(3,931,987)

8,061,781

5,261,086

(6,301,424)

(4,398,516)

1,760,357

862,570

(433,351)

1,760,357

429,219

388

2,618

(58,439)

1,702,306

(35,314)

396,523

(13,241)

1,689,065

74,955

471,478

(4,460)

(3,150)

1,684,605

468,328

Adjusted EBITDA

2,596,573

1,237,734

Earnings Per Ordinary Share (Pence)
Attributable To Owners of The Parent

Basic

Diluted

5.84p

5.48p

2.01p

1.90p

There were no discontinued operations in 2015 or 2014. Accordingly the results relate to
continuing operations.

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Total Equity
Attributable
To Owners of
The Parent
£

Consolidated Statement of
Changes in Equity
For The Year Ended 31 March 2015

Share
Capital

Share
Premium

Merger
Reserve

Translation
Reserve

Treasury
Reserve

Retained
Earnings

Balance as at 1 April 2013

194,147

1,751,152 509,837

203,213

Comprehensive Income

Profit for the year

Other Comprehensive Income

Exchange differences on
translation of overseas operations

Total Comprehensive Income

Transactions with owners

Shares issued

Share placing fees

Sale of own shares

IFRS2 Share based payments

94,591

1,981,909

(91,500)

Transactions With Owners

94,591

1,890,409

(3,150)

Balance as at 1 April 2014

288,738

3,641,561 509,837

200,063

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

Reclassification of previous
Treasury share transactions

Sale of own shares

IFRS2 Share based payments

11,500

67,076

37,263

Transactions with owners

1,000

115,839

(4,460)

(135,340)

2,523,009

471,478

(3,150)

471,478

468,328

2,076,500

(91,500)

101,750

53,989

101,750

53,989

155,739

2,140,739

491,877

5,132,076

1,689,065

(4,460)

1,689,065

1,684,605

12,500

(23,250)

(43,826)

11,625

(11,625)

116,932

73,106

48,888

116,932

178,320

Balance as at 31 March 2015

289,738 3,757,400 509,837

195,603

(11,625)

2,254,048

6,995,001

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Statement of
Financial Position
As At 31 March 2015

Assets

Non Current Assets

Intangible assets

Property and equipment

Deferred income tax asset

Current Assets

Inventories

Trade and other receivables

Cash and cash equivalents

Liabilities

Current Liabilities

Trade and other payables

Borrowings

Provisions

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

Treasury reserve

Retained earnings

Total Equity Attributable To Owners of The Parent

Notes

2015
£

2014
£

3,599,307

3,249,408

1,299,565

665,688

1,157,222

753,134

5,564,560

5,159,764

1,493,417

1,280,609

4,911,525

3,269,643

3,407,959

2,910,786

9,812,901

7,461,038

(5,430,702)

(5,035,873)

(575,644)

(499,992)

(92,193)

(6,098,539)

(5,535,865)

3,714,362

1,925,173

9,278,922

7,084,937

(2,236,001)

(1,791,675)

(47,920)

(161,186)

6,995,001

5,132,076

289,738

288,738

3,757,400

3,641,561

509,837

195,603

(11,625)

509,837

200,063

2,254,048

491,877

6,995,001

5,132,076

The notes on pages 36 to 62 are an integral part of these consolidated financial statements.
These financial statements on pages 32 to 62 were approved by the Board of Directors and
authorised for issue on 3 July 2015 and are signed on their behalf by:

J Watkins - Director

J Hedges - Director

Consolidated Statement of
Cash Flows
For The Year Ended 31 March 2015

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Net Cash Infow From Operating Activities

1,127,641

1,936,262

Notes

2015
£

2014
£

Cash Infow From Investing Activities

Interest received

Acquisition of subsidiary undertaking
(net of cash acquired)

Purchases of property, plant and equipment

Proceeds from sale of plant and equipment

Capitalised development costs

Net Cash Used In Investing Activities

Cash Flows From Financing Activities

Issue of new shares

Sale of Treasury shares

New bank Loan

Repayment of loans

Repayment of obligations under hire purchase
agreements

388

2,618

(5,175)

(2,991,500)

(355,087)

(302,510)

9,888

10,000

(861,849)

(614,551)

(1,211,835)

(3,895,943)

12,500

48,888

1,985,000

101,750

3,000,000

2,500,000

(2,480,021)

(1,096,416)

(25,000)

Net Cash From Financing Activities

581,367

3,465,334

Net Increase In Cash And Cash Equivalents

Cash And Cash Equivalents At Beginning Of Year

Cash And Cash Equivalents At End Of Year

497,173

1,505,653

2,910,786

1,405,133

3,407,959

2,910,786

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015
Trakm8 Holdings PLC - Annual Report 2015

36
36

Notes To The
Consolidated
Financial
Statements

1. General Information

Trakm8 Holdings PLC (“Company”)
and its subsidiaries (together the
“Group”) manufacture, distribute and sell
telematics devices and services.

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 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 subsidiaries.

2. Authorisation of Financial Statements

And Statement of Compliance With IFRS
The Group’s financial statements
have been prepared in accordance
with International Financial Reporting
Standards (“IFRS”) and 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 accounting policies set out in note
4 have been applied consistently to all
periods presented in these consolidated
financial statements made up to
31 March 2015.

These financial statements are presented
on a going concern basis. The Group has
cash balances of £3,407,962 at
31 March 2015 and the Directors have a
reasonable expectation that the Group
will have adequate financial resources to
continue in operation for the foreseeable
future.

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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.

Where necessary, adjustments are made
to the financial statements of subsidiaries
to bring the accounting policies used in
line with those used by other members
of the Group.

The preparation of the financial
statements in conformity with IFRS
requires the use of certain critical
accounting estimates and management
to exercise its judgement in the process
of applying the Group’s accounting
policies as disclosed within note 4 and 5.

4. Accounting Policies
Basis of Accounting
The financial statements have been
prepared on the going concern basis
under the historical cost convention in
accordance with the applicable
accounting standards.

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.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

Share-based Payments
The Group has applied the requirements
of IFRS 2 Share-based payment.

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 Statement
of Financial Position 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 the 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 Statement of Cash
Flows, 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 as the proceeds
received, net of direct issue costs.
Finance charges, including premiums
payable on settlement or redemption, are
accounted for at fair value 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. They are
then amortised over the period to
which they relate.

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.

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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:

Freehold
property

Furniture, fixtures
and equipment

Computer
equipment

Motor
vehicles

2% Straight line

25%

33%

25%

Reducing
balance

Straight
line

The assets’ residual values and useful
lives are reviewed at each Statement of
Financial Position 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.

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 controlled entity, the attributable
amount of goodwill is included in the
determination of the profit or
loss on disposal.

Intangible Assets Other Than Goodwill
An intangible asset, which is an
identifiable non-monetary asset without
physical substance, is recognised to the
extent that it is probable that the
expected future economic benefits
attributable to the asset will flow to the
Group and that its cost can be measured
reliably. 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. The
remaining amortisation period
is 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 costs to either

sell or use as an asset.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

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.

Operating Leases
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
Sterling is considered to be the functional
currency of the Group. This is 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.

Foreign currency monetary 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
Statement of Financial Position 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.

Current tax is based on taxable profits 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 Statement
of Financial Position 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 Statement of
Financial Position 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 in the foreseeable future.

Deferred tax is calculated at the tax rates
that are expected to apply to the period
when the asset is realised or the liability
is settled based upon tax rates that have
been enacted or substantively enacted.

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Revenue Recognition
Revenue represents the total of amounts
receivable for goods and services
provided excluding value added tax.
Revenue on the sale of telematics devices
and other hardware is recognised on the
delivery of the goods to the customer, or
where bill and hold arrangements exist
on acceptance of the goods by the
customer. Telematics services, being the
provision of data to customers, is
recognised over the period to which it
relates and the appropriate portion of
service revenues covering a future period
is shown as deferred income under
current liabilities.

The relevant proportion of revenue for
engineering services is recognised when
the project is substantially complete and
the outcome is reasonably certain.

Warranty Claims
Provision is made for liabilities arising in
respect of expected warranty claims.

Exceptional Items
Exceptional items are those items that, in
the Directors’ view, are required to be
separately disclosed by virtue of their
size or incidence to enable a full
understanding of the Group’s
financial performance.

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.

The Board have assessed that there is
now just one segment following the
integration of the Trakm8 and BOX
businesses. This segment has two
separate revenue streams distinguished
by whether the revenues arise from solely
hardware sales (Products) or hardware
with ongoing service fees (Solutions).

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

• Treasury reserve represents the cost

of shares held in Treasury.

• Retained earnings represents retained
profits and the share based
payment reserve.

Treasury Shares
The profit on the sale of Treasury shares
in the previous year has been reclassified
between Share Premium, Treasury
reserve and Retained earnings. This
reclassification was not considered
material to justify a prior
year restatement.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

Changes In Accounting Standards And
Disclosures
• The Group has not adopted any new
interpretations or amendments to
existing standards in the year ended
31 March 2015.

• There are no new standards or

interpretations that have been issued
by the IASB that will have a material

impact on the Group’s
financial statements.

5. Critical Accounting Judgements And Key

Sources of Estimation Uncertainty
Critical judgements in applying the
Group’s accounting policies
In the process of applying the Group’s
accounting policies, which are described
in note 4, management has made
the following judgements that have
a significant effect on the amounts
recognised in the financial statements
(apart from those involving estimations,
which are dealt with below).

Revenue recognition
Revenue on development projects
is recognised when the work has
been substantially completed and
management have assessed that the
outcome is reasonably certain.

Goodwill carrying value
A full impairment review has been
performed on a “value in use” basis,
which requires estimation of future net
operating cash flows, the time period
over which they will occur, an appropriate
discount rate and an appropriate
growth rate. Further details, including a
sensitivity analysis, are given in Note 13
and the accounting policy is set out
in Note 4.

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 Statement
of Financial Position 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.
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.

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Recoverability of trade receivables
Management are particularly conscious of the financial weakness of some companies and
closely monitors 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 receivables in the future.

Recoverability of deferred tax asset
During the year, management have reconsidered the recoverability of the deferred tax asset.
The projections demonstrate that the deferred tax asset will be utilised in the foreseeable
future. Assumptions have been made on the number of years over which the tax losses 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.

Fair value adjustments
On the date of acquisition, management have fair valued the assets and liabilities of BOX
Telematics Limited to ensure they are consolidated at the correct amount. Management have
used judgement in calculating the fair values using their knowledge of the Company and its
surroundings. The assumptions made are anticipated to give a true and fair view on the
date of acquisition.

6. Segmental Analysis

The chief operating decision maker (“CODM”) is identified as the Board and as per the
Executive Chairman’s Statement, the CODM now define all it’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, results, assets and liabilities are in
respect of one Integrated Telematics Technology segment.

The CODM review the revenue streams of Integrated Fleet Management and Insurance
Solutions (Solutions) and Hardware as Discrete Devices (Products) as part of their internal
reporting. Products is the sale of hardware through the Group’s distributors. Solutions
represents the sale of the Group’s full vehicle telematics service to customers, engineering
services, professional services and mapping solutions.

A breakdown of revenues within these streams are as follows:

Solutions

Products

2015
£

10,981,695

6,871,741

17,853,436

2014
£

5,784,866

3,408,207

9,193,073

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

A geographical analysis of revenue by destination is as follows:

Products
£

2015
Solutions
£

Total
£

Products
£

2014
Solutions
£

Total
£

United Kingdom 6,174,260 10,268,761

16,443,021

2,691,092

5,583,851 8,274,943

USA

Canada

Norway

191,744

226,146

98,534

290,278

360

226,506

377,043

Rest of Europe

46,760

132,040

UAE

175,880

Rest of World

56,951

104,957

211,176

210,233

4,887

4,835

170

216,011

210,233

5,057

34,577

94,705

129,282

222,056

34,186

11,305

135,491

377,043

178,800

175,880

161,908

6,871,741

10,981,695 17,853,436

3,408,207 5,784,866

9,193,073

All non current assets are located in the UK with the exception of £5,023 (2014: £5,835)
which are held in Europe.

7. Operating Profit

The following items have been included in arriving at operating profit:

Depreciation:

owned fixed assets

assets on hire purchase

Amortisation of intangible assets

Operating lease rentals:

Land and buildings

Other

Research and development expenditure

Loss on foreign exchange transactions

2015
£

202,159

517,125

51,862

142,838

350,177

18,227

2014
£

102,300

16,667

202,208

47,411

105,781

26,797

13,373

Staff costs (note 11)

4,479,252

2,892,974

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2014
£

8,760

26,475

3,900

2014
£

429,219

118,967

202,208

750,394

433,351

53,989

1,237,734

2014
£

365,512

67,839

433,351

Auditors’ Remuneration

Fees payable to the Company’s auditor for the audit of the
parent company and consolidated financial statements

Fees payable to the Company’s auditor for other services:

The audit of the Company’s subsidiaries

Tax advisory services

2015
£

10,000

30,000

7,500

Adjusted EBITDA is monitored by the Board and measured as follows:-

Operating Profit

Add back:

Depreciation

Amortisation

EBITDA

Exceptional administrative costs

Share based payments

Adjusted EBITDA

8. Exceptional Costs

Acquisition costs

Integration costs

2015
£

1,760,357

202,159

517,125

2,479,641

116,932

2,596,573

2015
£

The acquisition costs related to the purchase of BOX Telematics Limited in October 2013.
The integration costs related to the reorganisation of management following the acquisition.
These costs have been included as part of Administration costs.

9. Finance Costs

Interest on bank loans

2015
£

58,439

2014
£

35,314

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

10. Income Tax

R&D tax credit

Adjustment for previous R&D tax credit

Recognition of deferred tax movement

Income tax charge / (credit)

2015
£

(74,205)

87,446

13,241

2014
£

(10,853)

(64,102)

(74,955)

Factors affecting the tax charge
The tax assessed for the year is lower (2014: lower) than the applicable rate of corporation
tax in the UK. The difference is explained below:

Profit before tax

Profit on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 20% (2014: 20%)

Effects of:

Expenses not deductible/income not taxable

Capital allowances in excess of depreciation

R&D relief enhanced deduction

Deferred tax brought forward adjustment

Other deferred tax movement

Utilisation of tax losses not recognised as
a deferred tax asset

R&D tax credit

Total tax charge / (credit)

2015
£

2014
£

1,702,306

396,523

340,461

79,305

69,460

(213,381)

96,145

(205,239)

(74,205)

13,241

84,078

20,587

(262,392)

(16,343)

(163)

30,826

(10,853)

(74,955)

11. Employees

The average monthly number of persons (including Directors) employed by the Group was:

Research and development

Selling and distribution

Production

Administration

2015

157

2014

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Staff costs for the employees and Directors
(included under Administrative expenses):

2015
£

2014
£

Salaries and other short-term employee benefits

3,828,339

2,488,392

Social security costs

Share based payments

Post-employment benefits

The compensation for key management personnel was
as follows (included under Administrative expenses):

Salaries and other short-term employee benefits

Post-employment benefits

Share based payments

496,755

116,932

37,226

337,757

53,989

12,836

4,479,252

2,892,974

2015
£

816,740

5,085

85,063

906,888

2014
£

511,356

1,960

26,894

540,210

The key management personnel are the Directors and in addition the BOX Managing
Director, the Trakm8 Limited Sales Director and the Group Engineering Director.

Details of Directors’ fees and salaries, bonuses and pensions (including of that of the highest
paid Director) have been audited and are given in the Directors’ Report on page 22.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

12. Earnings Per Ordinary Share

The earnings per Ordinary share have 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 Earnings per share

Adjust for effects of:

Exceptional costs

Share based payments

Adjusted earnings per share

Diluted earnings per share

2015
£

1,689,065

2014
£

471,478

2015

28,973,821

28,944,151

2014

28,873,821

23,476,997

30,823,153

24,767,077

5.84p

0.40p

6.24p

5.48p

2.01p

1.84p

0.23p

4.08p

1.90p

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13. Intangible Assets

Cost

As at 1 April 2013

Additions

Goodwill

1,979,114

Intellectual
property
£

Development
costs
£

Total

1,630,763

702,126

614,551

2,332,889

2,593,665

Reduction in acquisition cost

(10,579)

As at 31 March 2014

1,979,114

1,620,184

1,316,677

4,915,975

Additions

5,175

861,849

867,024

As at 31 March 2015

1,984,289

1,620,184

2,178,526

5,782,999

Amortisation

As at 1 April 2013

Charge for year

As at 31 March 2014

Charge for year

As at 31 March 2015

Net Book Value

As at 31 March 2015

As at 31 March 2014

As at 1 April 2013

999,515

150,661

1,150,176

153,617

1,303,793

464,844

1,464,359

51,547

202,208

516,391

363,508

879,899

1,666,567

517,125

2,183,692

1,984,289

1,979,114

316,391

1,298,627

3,599,307

470,008

631,248

800,286

3,249,408

237,282

868,530

Goodwill arose in relation to the Group’s acquisition of BOX Telematics Limited
on 25 October 2013.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

Since the acquisition the two main trading entities, Trakm8 Ltd and BOX Telematics Ltd
have been closely integrated. BOX now manufacturers all of the new T10 range of hardware
products which is sold by both trading entities. In addition both companies have combined
their customer support, development and finance functions. The two businesses have
therefore been assessed as one cash generating unit for an impairment test on Goodwill.

The impairment review has been based on the Group’s budgets for 2015/16 which have
been reviewed and approved by the Board. Forecasts for the subsequent 3 years have been
produced based on 7% growth rates in each year. A net present value has been calculated
using a pre tax discount rate of 10% which is deemed to be a prudent rate taking account
of the Group’s cost of funds and an extra element for risk. No terminal value has been
calculated as the discounted cash flow forecasts used within the model fully support the
goodwill value.

In addition a sensitivity analysis has been undertaken by making the following changes:-

1. Reduction in annual growth rates to 3% per annum
2. Increase in the discount rate to 13%

The conclusion of this review is that no impairment in the goodwill figure is necessary.

Development costs have been internally generated. Amortisation expenses of £517,125
(2014: £202,208) have been charged to Administrative expenses in the Consolidated
Statement of Comprehensive Income.

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14. Property And Equipment

Freehold
Property

Furniture,
fixtures and
equipment

Computer
Equipment

Motor
Vehicles

Total

Cost

As at 1 April 2013

Additions

420,900

86,784

Acquisition of BOX
Telematics

Exchange differences

Disposals

As at 31 March 2014

507,684

Additions

Exchange differences

Disposals

As at 31 March 2015

507,684

Deprication

As at 1 April 2013

Charge for year

Exchange differences

Disposals

As at 31 March 2014

Charge for year

Exchange differences

Disposals

30,867

4,460

35,327

4,460

As at 31 March 2015

39,787

147,332

156,702

380,145

(544)

(10,000)

673,635

147,444

(740)

(21,235)

799,104

41,876

63,452

(27)

105,301

97,953

(44)

(11,346)

191,864

9,793

789,964

302,510

424,021

(1,102)

(10,000)

9,793

1,505,393

355,087

(1,500)

(21,235)

221,732

59,024

34,083

(558)

314,281

207,643

(760)

521,164

9,793

1,837,745

157,046

49,373

(558)

205,861

95,884

(760)

1,682

3,862

300,985

5,544

229,789

118,967

(585)

348,171

202,159

(804)

(11,346)

538,180

Net Book Value

As at 31 March 2015

As at 31 March 2014

As at 1 April 2013

467,897

472,357

390,033

607,240

568,334

105,456

220,179

108,420

64,686

4,249

1,299,565

8,111

1,157,222

560,175

Included within freehold property is £284,585 (2014: £284,585) relating to land which is
not depreciated.

Total depreciation expenses of £202,159 (2014: £118,967) have been charged to
Administrative expenses in the Consolidated Statement of Comprehensive Income.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

15. Inventories

Raw materials

Work in progress

Finished goods and goods for resale

2015
£

928,859

147,137

417,421

2014
£

339,145

369,456

572,008

1,493,417

1,280,609

The cost of inventories recognised as an expense and included in cost of sales amounted to
£6,731,681 (2014: £3,459,102). During the year old inventory lines totalling £11,559
(2014: £8,205) were written down and charged to cost of sales in the Consolidated
Statement of Comprehensive income.

16. Trade And Other Receivables

Trade receivables

Other receivables

Prepayments

The analysis of trade receivables by currency

Pound sterling

Dollar

Other

2015
£

4,257,337

538,754

115,434

4,911,525

2014
£

2,537,339

276,333

455,971

3,269,643

2015
£

2014
£

4,061,940

2,534,081

177,467

17,930

3,258

4,257,337

2,537,339

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
£8,600 (2014: £109,065).

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As at 31 March 2015 trade receivables of £743,621 were past due but not impaired. The
ageing analysis of these trade receivables is as follows:-

Up to 3 months past due

3 to 6 months past due

2015
£

679,104

64,517

743,621

2014
£

588,368

65,655

654,023

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.

17. Deferred Tax

The analysis of deferred tax assets and deferred tax liabilities is as follows:

Deferred tax asset

2015
£

Deferred tax asset to be recovered after more than 12 months 578,242

Deferred tax asset to be recovered within 12 months

87,446

665,688

2014
£

753,134

In addition to the deferred tax asset shown above, the Group has trading losses of
£2,068,000 (2014: £3,031,000) not recognised as a deferred tax asset because recovery is
not expected in the near future.

The movement in the deferred income tax asset during the year is as follows:-

As at 1 April 2013

Acquired in the year

Credited to the Statement of Comprehensive Income

At 31 March 2014

Debited to the Statement of Comprehensive Income

At 31 March 2015

110,290

578,741

64,103

753,134

(87,446)

665,688

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

18. Current Liabilities - Trade And Other Payables

Trade payables

Social security and other taxes

Other payables

Accruals and deferred income

2015
£

3,041,087

716,770

246,001

1,426,844

5,430,702

2014
£

2,190,908

681,271

221,954

1,941,740

5,035,873

The Directors consider that the carrying amount of trade payables approximates to
their fair value.

19. Borrowings

Bank Loan

Current

Non Current

On demand or within one year

After one and within two years

After two and within five years

After five years

2015
£

575,644

2,236,001

2,811,645

2015
£

575,644

590,005

1,645,996

2014
£

499,992

1,791,675

2,291,667

2014
£

499,992

1,291,683

2,811,645

2,291,667

Less: Amount due for settlement within one year
(shown as current liabilities)

(575,644)

(499,992)

Amount due for settlement after more than one year

2,236,001

1,791,675

All borrowings are held in sterling and the Directors consider their carrying amount
approximates to their fair values.

During 2014 the term loan from Clydesdale was repaid in full and replaced by a new term
loan of £3m with HSBC. The new 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 1.95% over Base rate.

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In addition HSBC granted a new £1m revolving credit facility which is repayable in full at the
end of the three year term. The loan bears an interest rate of 1.5% over LIBOR on the drawn
amount and a fee of 0.75% on the undrawn facility. As at 31 March 2015 the Group had not
drawn down any of this credit facility.

20. Provisions

As at 1 April 2014

Arising during the year

Utilised

Reversal of unused amounts

At 31 March 2015

161,186

67,699

(67,699)

(21,073)

140,113

The provision related to the potential warranty claims that may come into fruition in the near
future. This provision is expected to be utilised as follows

Current

Non-current

21. Share Capital

Authorised

92,193

47,920

140,113

No’s
‘000’s

2015
£

No’s
‘000’s

2014
£

Ordinary shares of 1p each

200,000 2,000,000

Allotted, issued and fully paid

Ordinary shares of 1p each

28,974

289,738

28,874

288,738

Movement in share capital:

As at 1 April 2014

New shares issued

As at 31 March 2015

2015
£

288,738

1,000

289,738

2014
£

194,147

94,591

288,738

The Company currently holds 75,000 Ordinary shares in treasury representing 0.5% 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 28,898,821.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (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 of all share options is the closing market price on the day of grant. A vesting
period of three years is applicable according to the terms of each scheme which specify the
options will vest providing employees remain in service for three years from the
date of grant.

The fair value of the equity settled share options granted is estimated as at the date of grant
using the Black Scholes option pricing model taking into account the terms and conditions
upon which the options were granted. No performance conditions were included in the fair
value calculations. During the year three new sets of options were awarded and the inputs to
our Black Scholes pricing model were:

Option Scheme

Grant date

7/4/2014

31/7/2014

18/12/2014

Weighted average FV (pence)

Weighted average SP (pence)

Exercise price (pence)

Expected volatility (%)

Expected life of option

Dividend yield (%)

Risk free (%)

28.43

57.75

57.1%

5 years

0 %

1.20 %

40.77

81.5

57.1%

5 years

0 %

1.20 %

43.26

87.5

57.4%

5 years

0 %

1.20 %

The risk free rate of return is the yield on government gilt market price and the volatility has
been based on historic share prices.

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Options granted during the year were:-

Grant date

07/04/14

31/07/14

18/12/14

No. of shares

Option exercise price

Date of expiry

200,000

125,000

300,000

625,000

57.75p

81.50p

87.50p

06/04/24

30/07/24

17/12/24

A reconciliation of option movements over the year to 31 March 2015 is shown below;

2015

Weighted
average
exercise

Share
options

2014

Weighted
average
exercise

Share
options

No.

Price (p)

No.

Price (p)

Outstanding at beginning of the year

2,625,000

23.3 1,625,000

Granted during the period

625,000

76.8

1,350,000

Lapsed during the period

Exercised during the period

Outstanding at the end of the year

(300,000)

(100,000)

3,150,000

12.5

34.3

(50,000)

2,625,000

13.4

33.1

15.5

13.0

23.3

The share price at the date of exercise of the above 100,000 options was 81.5 pence. The
range of exercise prices of the outstanding options is 13.0 pence to 87.5 pence and the
weighted average remaining contractual life is 8.3 years. The Group charged £116,932 to the
Statement of Comprehensive Income in respect of Share-Based Payments for the financial
year ended 31 March 2015 (2014: £53,989). Share options exercisable at the 31 March 2015
were nil (2014: 100,000).

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

23. Cash Generated From Operations

Reconciliation of profit before tax to net cash flow from
operating activities:

Profit before tax

Depreciation

Bank and other interest

Amortisation of intangible assets

Share based payments

2015
£

1,702,306

202,159

58,051

517,125

116,932

Operating cash flows before movement in working capital

2,596,573

Movement on retranslation of overseas operations

Movement in inventories

Movement in trade and other receivables

Movement in trade and other payables

Movement in provisions

Cash generated from operations

Interest paid

Income taxes received

Net cash inflow from operating activities

(3,764)

(212,808)

(1,641,882)

394,829

(21,073)

1,111,875

(58,439)

74,205

1,127,641

2014
£

396,523

118,967

32,696

202,208

53,989

804,383

(2,634)

250,694

(1,041,130)

1,848,741

1,860,055

(35,314)

111,521

1,936,262

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24. Financial Commitments

At the Statement of Financial Position 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

Over 5 years

Other

Within one year

In the second to fifth years inclusive

2015
£

86,362

356,087

456,000

122,594

111,379

1,132,422

2014
£

86,362

121,087

107,967

108,248

423,664

Land and buildings under operating leases represents two leases payable by the Group
which have expiry dates of March 2017 and March 2026 respectively.

25. Related Party Transactions

In January 2014 220,000 treasury shares were sold to a key management employee and
a further 35,000 treasury shares were sold to the same employee in April 2014. A total of
500,000 share options were granted during the year to three key management employees.
Transactions with the Directors have been detailed in the Directors’ Report.

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (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 cash reserves.

Currency risk
The Group operates internationally although the majority of its sales are in sterling.
Purchases of components are also made in US Dollars and Euros. The Group endeavours to
minimise its foreign currency exposure by trading in Sterling wherever possible

The following table details the Group’s sensitivity to a 10% decrease in the Sterling against
the US Dollar and the Euro and the resulting effect on profit. The sensitivity analysis of
the Group’s exposure to foreign currency risk at the year end has been determined based
upon the assumption that the increase in US Dollar and Euro exchange rates is effective
throughout the financial year and all other variables remain constant.

US Dollar

Euro

2015
£

(43,694)

(72,500)

2014
£

(13,454)

(20,462)

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 the date of invoice. Overdue trade receivables
are managed through a phased escalation culminating in legal action.

The credit risk on cash and cash equivalents can be assessed by reference to the external
credit ratings of the banks where the deposits are held.

Credit rating (S&P)

AA-

BBB+

2015
£

3,045,749

362,210

3,407,959

2014
£

1,640,609

1,270,177

2,910,786

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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 total borrowings divided by total capital. Total borrowings
include “current and non-current borrowings” as shown in the Consolidated Statement
of Financial Position. Total capital is calculated as “equity” as shown in the Consolidated
Statement of Financial Position plus total borrowings.

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.

Total borrowings (note 19)

Total equity

Total capital

Gearing ratio

2015
£

2,811,645

6,995,001

9,806,646

29%

2014
£

2,291,667

5,132,076

7,423,743

31%

At the year end the Group had total cash net of borrowings of £596,314 (2014: £619,119).

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Consolidated Financial
Statements (continued)

Financial instruments by category

Assets as per Statement of Financial Position

Loans and receivables

Trade and other receivables excluding prepayments

Cash and cash equivalents

2015
£

4,796,091

3,407,959

8,204,050

2014
£

2,813,672

2,910,786

5,724,458

Liabilities as per Statement of Financial Position

Financial liabilities at amortised cost

Borrowings

Trade and other payables excluding statutory liabilities

2015
£

2,811,645

4,713,932

7,525,577

2014
£

2,291,667

4,354,602

6,646,269

Cash and cash equivalents
Cash and cash equivalents comprise solely of cash in hand held by Group.

27. Post Balance Sheet Events

On 16 June 2015 the Group announced it had acquired the business and assets of DCS
Systems Ltd (“DCS”) for a cash consideration of £3.3 million. DCS specialises in the design
and distribution of camera systems for the motor vehicle, bicycle and security markets.
DCS’s last unaudited accounts for its financial year ending 30 April 2015 reported revenues
of £2.8 million and profit before tax of £0.6 million. The acquisition was funded from the
Group’s existing cash and bank facilities.

The Group also announced it had obtained a further debt facility from HSBC Bank of an
additional £2 million taking the total debt facility to £5.7m of which £3.7m has been drawn
down following the acquisition of DCS.

Parent Company
Balance Sheet
As At 31 March 2015

Fixed Assets

Investments

Current Assets

Debtors

Cash at bank

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Notes

2015
£

2014
£

5,296,148

5,021,782

1,539,043

964,235

103,068

71,591

1,642,111

1,035,826

Creditors: Amounts falling due within one year

(632,078)

(539,182)

Net Current Assets

1,010,033

496,644

Total Assets Less Current Liabilities

6,306,181

5,518,426

Creditors: Amounts falling due after more than one year

(2,236,001)

(1,791,675)

Net Assets

4,070,180

3,726,751

Capital And Reserves

Called up share capital

Share premium

Treasury reserve

Profit and loss account

Shareholders’ Funds

289,738

288,738

3,757,400

3,641,561

(11,625)

34,667

(203,548)

4,070,180

3,726,751

These financial statements on pages 63 to 68 were approved by the Directors and authorised for
issue on 3 July 2015 and are signed on their behalf by:

J Watkins
Director

J Hedges
Director

Company Number 05452547

Notes To The
Parent Company
Financial Statements

1. Accounting Policies
Basis of Accounting
The financial statements have been
prepared on the going concern basis
under the historical cost convention
in accordance with the Companies
Act 2006 and applicable accounting
standards in the United Kingdom.

Cash Flow Statement
The Company has taken advantage of
the exemption in Financial Reporting
Standard No. 1 (Revised 1996) from the
requirement to produce a cash flow
statement on the grounds that it is a
subsidiary undertaking where 90% or
more of the voting rights are controlled
within the group.

Share-based Payments
The grant by the Company of options
over its equity instruments to the
employees of a subsidiary undertaking
in the Group is treated as a capital
contribution. The fair value of employee
services received, measured by reference
to the grant date fair value of the
equity instrument, is recognised over
the vesting period as an increase to
investment in subsidiary undertakings,
with a corresponding credit to equity. At
each balance sheet date, the Company
revises its estimates of the number of
options or shares that are expected to
vest. The impact of any revision, if any, is
recognised as a capital contribution with
a corresponding adjustment to reserves.

Trakm8 Holdings PLC - Annual Report 2015
Trakm8 Holdings PLC - Annual Report 2015

64
64

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Financial Instrument
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.

Bank Borrowings
Interest-bearing bank loans and
overdrafts are recorded as the proceeds
received, net of direct issue costs.
Finance charges, including premiums
payable on settlement or redemption, are
accounted for at fair value 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. They are
then amortised over the period to
which they relate.

Investments
Fixed asset investments are stated at
cost less impairment against the cost
of investments. The carrying values of
investments in subsidiaries are reviewed
for impairment if events or changes in
circumstances indicate the carrying value
may not be recoverable.

Foreign Currencies
Foreign currency assets and liabilities
are converted to sterling at the rates
of exchange ruling at the end of the
financial year. Transactions in foreign
currencies are converted to sterling
at the rates of exchange ruling at the
transaction date. All of the resulting
exchange differences are recognised in
the profit and loss account as they arise.

Deferred Taxation
Provision is made for deferred taxation in
respect of all material timing differences
that have originated but not reversed
by the balance sheet date. Timing
differences represent differences
between gains and losses recognised for
tax purposes in periods different from
those in which they are recognised in
the financial statements. No deferred tax
is recognised on permanent differences
between the Company’s taxable gains
and losses and its results as stated in the
financial statements. Deferred tax assets
and liabilities are included
without discounting.

Related Party Transactions
The Company has taken advantage of
the exemption in FRS 8 “Related Party
Disclosures” from disclosing transactions
with Group companies.

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 profit after tax for the year in the
Company is £12,851
(2014: Loss £373,278).

Audit fees for the Company for the year
were £3,000 (2014: £2,500).

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Parent Company Financial
Statements (continued)

Investments

Cost

As at 1 April 2014

Additional cost re acquisition of Box Telematics

Capital contribution in respect of share based payment

At 31 March 2015

Subsidiaries
£

5,021,782

5,176

269,190

5,296,148

The Directors believe that the carrying value of the investments is supported by their
underlying net assets.

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

Czech Republic

Ordinary

BOX Telematics Limited

England and Wales

Ordinary

Interactive Projects Limited

England and Wales

Ordinary

Data Driven Telematics

England and Wales

Ordinary

100% Marketing and distribution
of vehicle telematics

100%

Mapping services

Manufacture and
distribution of telematics

Dormant

4. Debtors

Amounts due from subsidiary undertakings

Prepayments

5. Creditors: Amounts falling due within one year

Bank Loan

Trade Creditors

Accruals and other creditors

2015
£

1,523,892

15,151

1,539,043

2015
£

575,644

24,358

32,076

632,078

2014
£

938,053

26,182

964,235

2014
£

499,992

10,253

28,937

539,182

6. Creditors: Amounts falling due after more than one year

Bank Loan

The bank loan is repayable as follows:

Within one year

After one year and within two years

After two years and within five years

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2015
£

2014
£

2,236,001

1,791,675

2015
£

575,644

590,005

1,645,996

2,811,645

2014
£

499,992

1,291,683

2,291,667

7. Called Up Share Capital

Details of share capital and share options are shown in notes 21 and 22 to the consolidated
financial statements above.

8. Reserves

At 1 April 2013

Shares issued

FRS20 Share based
payments

Sale of own shares

Loss for the year

At 1 April 2014

Share
Capital
£

194,147

Share
Premium
£

1,751,152

94,591

1,890,409

288,738

3,641,561

Shares issued

1,000

11,500

FRS20 Share based
payments reallocation

FRS20 charge for year

Reclassification of previous
Treasury share transactions

Sale of own shares

Profit for the year

Treasury
Reserve
£

Profit And
Loss Reserve
£

Total

13,991

1,959,290

1,985,000

53,989

101,750

(373,278)

(203,548)

3,726,751

12,500

152,258

116,932

67,076

(23,250)

(43,826)

37,263

11,625

12,851

48,888

12,851

As at 31 March 2015

289,738

3,757,400

(11,625)

34,667 4,070,180

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Parent Company Financial
Statements (continued)

9. 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

2015
£

1,512

2014
£

4,536

1,512

10. Guarantee

The Company has guaranteed the bank borrowings of its subsidiary companies Trakm8 Ltd
and BOX Telematics Ltd. During 2014 the term loan from Clydesdale was repaid in full and
replaced by a new term loan of £3m with HSBC. The new loan is secured by a fixed and
floating charge on all the assets of the Group. It is repayable by monthly instalments until
2018 and bears interest at a floating rate of 1.95% over Base rate.

11. Related Parties

The Company has taken advantage of the exemptions conferred by FRS 8 from the
requirement to disclose transactions between wholly owned subsidiary undertakings.

12. Employees And Directors

The Directors of the Company were paid by Trakm8 Ltd and BOX Telematics Ltd for their
services to the Group. It is not practical to perform any reallocation of these emoluments
between individual group companies and therefore no charge has been made to the
Company. Total emoluments are disclosed in the financial statements of the Group. The
Company had no employees during the year (other than the Directors).

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Officers and
Advisers for
Trakm8
Holdings
PLC

Directors
M Cowley
T Cowley
W Duffy
K Evans
J Hedges
S Morris
J Watkins
M Watkins
P Wilson

Secretary
J Hedges

Registered Office
Lydden House
Wincombe Business Park
Shaftesbury
Dorset
SP7 9QJ

Principal Bankers
HSBC Bank plc
6 Broad Street
Worcester
WR1 2EJ

Auditor
PricewaterhouseCoopers LLP
Savannah House
3 Ocean Way
Ocean Village
Southampton
SO14 3TJ

Nominated Adviser and Broker
finnCap Limited
60 New Broad Street
London
EC2M 1JJ

Financial Public Relations
MHP Communications
6 Agar Street
London
WC2N 4HN

Company Number 05452547

Trakm8 Holdings PLC - Annual Report 2015

Notes

Trakm8 Holdings PLC

Registered Office
Lydden House
Wincombe Business Park
Shaftesbury
Dorset
SP7 9QJ

+44 (0) 1747 858444
www.trakm8holdings.co.uk