2019
Annual report and accounts 2019
Trakm8 Holdings PLC
Company Number 05452547
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Trakm8 Holdings PLC
Through innovative products, Trakm8 collects billions of miles worth of data annually.
Trakm8 analyses data and provides actionable insights to customers so that they improve efficiency and
reduce risk.
STRATEGIC REPORT
Highlights
At a Glance
Executive Chairman’s Statement
Our Strategy
Finance Director’s Report
Key Performance Indicators
Corporate Social Responsibility
Risk Management Framework
Principle Risks and Uncertainties
GOVERNANCE REPORT
Board of Directors
DIRECTORS’ REPORT
Directors’ Report
FINANCIAL STATEMENTS
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 Statement of Financial Position
Parent Company Statement of Changes in Equity
Notes to the Parent Company Financial Statements
Officers and Advisors
Visit us online at trakm8.com
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Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report
OVERVIEW
Financial
Revenue
£19.1m
FY-2018: £29.4m
(Loss)/ Profit before tax
(£3.6m)
FY-2018: £0.5m
Adjusted (loss)/profit before tax
(£1.5m)
FY-2018: £2.1m
Net cash generated from operations
(£1.8m)
FY-2018: £4.7m
Adjusted basic (loss)/earnings per share
(1.89p)
FY-2018: 6.51p
Basic (loss)/earnings per share
(6.20p)
FY-2018: 2.72p
Operational
Sales related challenges and contract delays significantly impacted revenue in the year
Implemented further reduction of annualised operating costs by £2.0m, including the final
consolidation of Roadsense and Routemonkey, with savings reinvested into sales and marketing.
Re-structured Fleet Management sales team including recruiting new management with dedicated
Direct and Channel teams.
Production launch of new insurance self-fit hardware product.
Over 243,000 connected units in operation (FY-2018: 251,000).
New contract wins with LexisNexis and Ingenie, with launch inventory for both supplied in quarter 4.
R&D spend down 10%, however still £4.3m invested.
Outlook
The new financial year has begun with new contract awards from two further insurance companies,
with revenues already commenced.
Revenues from new insurance contract wins expected to impact strongly the second half of the new
financial year.
The AA Smart Breakdown launch is expected to provide a lift to revenues in the second half of the
financial year.
Fleet sales team’s performance is continuing to improve, securing a higher value of contracts than the
corresponding period last year with this momentum expected to continue.
Early months in current financial year confirm realisation of the £2.0m cost savings.
Given the disappointment of last year, we are being prudent with our outlook, with market
expectations of a relatively modest recovery (low double digit growth) in revenues with small
adjusted profitability.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
AT A GLANCE
Connected Business
Trakm8 is a UK-based big data company. As leaders in the fleet management, insurance and automotive
sectors, we enable businesses to enhance their operations through a wide-range of telematics, camera and
optimisation solutions. Collecting data through intellectual property (‘IP’)-owned hardware, Trakm8 fine-tunes
algorithms and creates solutions that assist private drivers and commercial fleets with the reduction of risk,
fuel consumption and insurance premiums, while improving productivity, safety and compliance.
As a fully integrated business designing, manufacturing and supporting our own solutions we provide the best
customer service possible by not having to rely on third parties (apart from the cellular network).
Pioneering solutions
The Group’s product portfolio includes a range of telematics devices, from self-install dongles to 4G integrated
telematics cameras. We currently have almost a quarter of a million devices in operation.
Number of connected units
243,000 (FY-2018: 251,000)
Fleet Management & Optimisation
Fleet Management
Trakm8 has market leading software solutions for the entire fleet management activities built out in the
Insight platform. A combination of telematics, cameras, tachograph data retrieval, EPOD and route
optimisation and scheduling software empowers businesses to make informed decisions about fleet
operations - and to tackle a diverse range of obstacles. Benefits to fleets include the introduction of safer
driving practices, reductions in fuel, obtaining lower insurance premiums, having a smaller carbon footprint
and automating administrative tasks. Advanced algorithms are deployed to measure risk and efficiency driving
behaviours, feeding back to the driver on apps and in cab displays. Advanced Driver Assistance Systems
feature on the cameras to warn the driver, reducing the cost of accidents
Optimisation
Through the development and application of pioneering algorithms, we are able to improve the operational
efficiency and productivity of our customers. Our optimisation algorithms can be administered to a number of
sectors including transport and logistics, energy management, mobility and electric vehicles (EVs). Trakm8 has
a fully integrated optimization solution built into the core Insight solution and provides customer specific
bespoke solutions when this is required.
Revenue
£10.8m (FY-2018: £13.5m)
Number of connected units
76,000 (FY-2018: 73,000)
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
AT A GLANCE (CONTINUED)
Insurance & Automotive
Insurance
Insurers and brokers use our telematics hardware and data to better calculate risk among policyholders. Our
self-install and fitted to vehicle devices monitor high-risk driving styles and enable businesses to calculate
relative premiums based on real-world driving data. In addition, our leading algorithms allow insurance
companies to speed up and better control the first notification of loss (FNOL) claims process. Post year end we
launched “Driveably” a plug and play insurance telematics software solution aimed at smaller brokers, who
can launch a telematics based insurance solution in minimal time and with low investment costs in systems.
Automotive
Our automotive team works with businesses to supply aftermarket connected vehicle technologies to its end
users to predict and report vehicles faults. Automotive solutions include the remote identification of vehicle
and battery faults, breakdown assistance apps, and reminders for MOT dates, servicing and tax renewals.
Specialist applications include electric vehicle system monitoring and tailored solutions to the vehicle leasing
companies to reduce costs in the management of service, repair and maintenance outcomes.
Revenue
£8.3m (FY-2018: £12.6m)
Number of connected units
167,000 (FY-2018: 178,000)
Clients
The Group has built client relationships with large corporates, SME’s, down to sole traders either directly or via
partners who provide intermediary marketing support. These relationships often enable us to cross-sell
solutions and facilitate a high rate of contract renewals and extensions.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
EXECUTIVE CHAIRMAN’S STATEMENT
FY-2019 was a disappointing year in terms of financial results. We failed to meet our revenue, profit and cash
generation expectations due to a number of sales related events. Our largest customer had a significant
reduction in market share in the young driver insurance market reducing revenues and installed base. We had
expected reductions due to lower prices at the customer when the contract had been renewed early in the
year but this only compounded the loss of the reduced volume. We had expected that volume from new
insurances customers would have made a material difference to the second half of the financial year, but
delays in their programmes significantly hit our revenues. The delays in programme launch of the connected
car proposition by breakdown companies was unexpected and substantially impacted revenues particularly in
the second half. The Fleet Management sales team simply failed to win enough business to meet our
expectations. Political and economic uncertainty certainly played their part, and the effect of US sanctions on
Iran impacted a multi-million-pound contract for the supply of Insurance solutions into Iran. Change was
needed and the replacement with new resources started to make a significant difference in the final quart of
the year but it was too little, too late.
The revenues of the business fell by 35% and the Group posted an adjusted loss before tax of £1.5m.
Connections fell by 3% to 243,000. The total fleet management connections increased by 4% over the year to
76,000 (FY-2018: 73,000). Telematics for insurance/automotive connections for the reasons explained above
reduced. At the year-end we had 167,000 insurance/automotive connections (FY-2018: 178,000), which is a
reduction of 6%. Recurring service revenues reduced by 6% to £10.1m (FY-2018: £10.8 m)
However, FY-2019 was a year of excellent progress in many internally focussed activities. The Group continued
to focus on operations, fully consolidating the acquisitions from earlier years of Roadsense and Routemonkey.
Engineering solutions improved considerably, maintaining the market leading technology we have. Efficiency
improvements in many aspects of our operations reduced direct and indirect costs. During the year we
secured the services of a number of highly talented and experienced sales staff for our Fleet Management
sales team, and as the year progressed their contribution started to make a difference.
The investment in engineering resources, whilst some £0.5m less than the previous year, has continued to
deliver market-leading software and hardware solutions. Trakm8’s Insight platform provides superb customer
experience and data, enabling vehicle operators to significantly improve operational efficiencies and reduction
in risk. The RoadHawk 600 integrated telematics and camera product is the first in the UK using 4G technology
and has been implemented by large and small enterprises. A technical challenge with the product lead us to
implement a product update and replacement in the field of a large number of units, which addressed the field
issue and has enabled EU deployment. Presently, almost 5,000 units are deployed. A further generation of the
self-fit telematics devices has been introduced.
We have continued to invest in our software solutions, algorithms and devices, ensuring that Trakm8 retains
market-leading solutions with the widest and deepest offer in the market today.
Post-year end, we have announced contracts with two additional insurance companies.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
Research and development (‘R&D’)
Trakm8 has maintained a significant level of investment in R&D although slightly below the level of the
previous year. The Board believes that this level of investment is necessary to retain a portfolio of market-
leading technology. Trakm8 continues to focus on owning the intellectual property (‘IP’) we use in our
solutions, and we see this as one of our key competitive advantages. Telematics systems are complex; but
because we own all the elements that encompass a solution (with the exception of the mobile networks) we
have the ability to understand and resolve problems more easily than our competitors.
The R&D investment has concentrated on building out the latest self-fit device, the improved camera,
algorithms for crash and risk, Advanced Driver-Assistance Systems (ADAS) and optimisation, and the capability
of the Insight platform to provide best-in-class data analytics. As identified in previous years, the requirement
to do more for less cost remains a key strategy as this widens the opportunity to expand the rate of growth as
the ROI for our customers improves.
Governance
Of the two widely recognised formal corporate governance codes, we adopted the Quoted Companies
Alliance’s (QCA) Corporate Governance Code for small and mid-size quoted companies, which the Board
considers the most appropriate for the size and structure of the Group. More information can be found in the
Governance Report section of this report and our website.
Please see https://www.trakm8.com/investor-relations/corporate-governance
statement.
for our
full compliance
Dividend
The Group does not propose to recommend a dividend for the year at the forthcoming AGM. However, the
Board will continue to review its dividend policy in light of future results and investment requirements.
People
The number of people Trakm8 employs has reduced slightly during FY-2019 as reductions in operational
headcount were partially offset by increases in our sales and marketing teams. In total our staff numbers have
reduced by 8% over the year.
In a year when the business did not perform to expectations, the teams had to devote themselves even more
diligently to the cause. We have an exceptional team and I would like to thank everyone for their hard work,
dedication and contribution to the ongoing success of the business.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
Outlook
We continue to drive efficiencies and maintain product enhancements, and we are aiming to focus on a
smaller number of activities and execute them much better. The bulk of the available resource and energy is
focused on marketing and selling.
Our Fleet sales team’s performance is continuing to improve, securing a higher value of contracts than the
corresponding period last year with this momentum expected to continue. This and the new contract awards
from two further insurance companies is expected to deliver growth in the first half of this financial year
compared to the first half last year.
The AA Smart Breakdown launch and the two major new insurance contract wins are expected to provide a lift
to revenues in the second half of the financial year. As many Fleet deals take some time to deploy the good
recent progress in contract wins will impact the second half more than the first half, so this too makes the
expected trading performance of the group to be more significantly second half loaded than ideal.
Trading to date confirm the realisation of operational and efficiency cost savings of £2.0m that were actioned
in the prior financial year.
Given the disappointing failure to predict the outcome last year, it is prudent to be tempered in our outlook
but current market expectations are for a relatively modest recovery (low double digit growth) in our revenues
and very modest adjusted profitability for the financial year as a whole. The Board is confident that this will be
achieved.
John Watkins
EXECUTIVE CHAIRMAN
5 July 2019
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
OUR STRATEGY
OUR MISSION
Trakm8 is an innovative and diverse UK-based technology company, focused on fleet management, insurance
and automotive telematics, and optimisation. Trakm8 strives to proactively provide actionable insights which
reduce risk and improve efficiency for its customers. From a firm foundation of integrity and family values,
Trakm8 encourages and develops its talented people to create world-leading solutions that are ethically
sourced, proudly manufactured, and professionally sold. By upholding these ideals, Trakm8 aims to deliver
growth in long-term value to shareholders.
OUR STRATEGY
1) Increasing our market share
The Group will continue to expand the number of connections in operation, with a particular focus on
expanding outside of the UK.
Progress in 2019
The total number of units in operation reduced by 3% in FY-2019. A wide number of Fleet contract wins
increased the Fleet installed base by 4%. The Group also secured two major insurance telematics contracts
with launch stocks delivered, but not connected. The Group invested significantly in Sales and Marketing
resources during the year, restructuring the Fleet Management sales team and overall sales and marketing
headcount increasing by 6 on the prior year. With the expansion of the number of roadside assistance
companies deploying Trakm8 technology internationally, the company made some progress on the strategy of
expanding the percentage of revenues generated outside of the UK.
Focus for 2020
Increased investment in sales and marketing will allow us to maximise solution sales via our targeted routes to
market, including: direct sales, channel and via our relaunched digital strategy. A modest increase in sales
team headcount will ensure the Group maximizes value from existing client partnerships to boost further sales
opportunities; while ensuring our order pipeline from new customers remains strong. As we introduce new
integrated services and further develop our digital sales platform, we aim to expand geographically in Europe
and Asia.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
OUR STRATEGY (CONTINUED)
2) Delivering a cutting-edge solutions portfolio
We plan to reduce again modestly the level of investment in research and development whilst maintaining our
market-leading product portfolio and meet the demands of our customers.
Progress in 2019
We focused heavily on enhancing our existing solutions: Connect 330, Insight and updated RoadHawk 600
products. We have built out improved algorithms for risk, crash, Advanced Driver-Assistance Systems (ADAS)
and optimisation. We have created an insurance broker specific, out of the box complete solution, called
Driveably that will allow customers to quickly deploy an insurance telematics solution without integration. Our
Connectedcare solution is further enhanced enabling service, maintenance and repair propositions to work
more effectively, giving both parts companies and breakdown assistance businesses an aftermarket solution to
the connected car challenges.
Focus for 2020
We will reduce our expenditure in R&D again modestly this year by being more focused on our core areas of
expertise. We will continue developing products and solutions to meet the demands of our customers and
market trends. This strategy will see further investment in algorithms and software to increase relevance of
propositions to market; improved features for our Trakm8connectedcare solution; improving crash detection
algorithms; and the continued development of ADAS. We will further progress the integration of fuel
management, insurance, and vehicle servicing.
3) Streamlining our internal operations
The Group will continue to focus on improving operational efficiencies and its cost as a percentage of
revenues.
Progress in 2019
The Group found another £2m of annualised operational cost savings in both direct and indirect costs. We did
not implement the Enterprise Level ERP system as planned due to some unexpected issues with the MRP
functionality. We did invest in market leading test and assembly equipment for the new self-fit device, halving
throughput times. We did not make the move into the new factory as the demand did not justify it.
Focus in 2020
Now that the MRP issues are resolved, we will be implementing the ERP system which will continue to
transform our internal operations and processes, in order to provide the foundation for our next stages of
growth. We will continue to drive out costs through better utilisation of hosting and technology. Currently, we
do not expect we will need to utilise in the current financial year the additional space for manufacturing but
the plans are in place should demand grow significantly later in the year.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
FINANCE DIRECTOR’S REPORT
Group Revenue (£’000)
of which, Solutions Revenue (£’000)
of which, Recurring Revenue (£’000)
(Loss)/ Profit before tax (£’000)
Adjusted (Loss)/ Profit before tax1 (£’000)
Basic (loss)/earnings per share (p)
Adjusted basic (loss)/earnings per share (p)
1
Before exceptional costs and share based payments
2
Restatement due to adoption of IFRS15, details provided in note 31
Revenue
2019
19,145
19,145
10,087
(3,563)
(1,452)
(6.20)
(1.89)
2018
Restated2
29,361
26,088
10,826
453
2,074
2.72
6.51
Change
-35%
-27%
-7%
n/a
n/a
n/a
n/a
Group revenue decreased by 35% to £19.1m (FY-2018: £29.4m), this was due to Product revenues which
decreased from £3.3m to £nil following the planned exit from CEM activities. All sub-contract electronic
manufacturing activities had ceased by end of 2018 financial year. Additionally Solutions revenue reduced by
27% to £19.1m (FY-2018: £26.1m) due to a significant reduction in market share in the young driver market
at our largest customer, delays from new insurance customers and delays in the launch of the connected car
proposition by breakdown companies. Additionally new business sales in the Fleet Management part of our
business failed to meet our expectations. Recurring revenue generated from service and maintenance fees
decreased by 7% to £10.1m (FY-2018: £10.8m) due to the reduction in Connections and lower prices in our
largest customer contract.
(Loss)/ Profit before tax
The Group reported a loss before tax of £3.6m (FY-2018: Profit £0.5m). This deterioration in profitability was
due to the decline in revenue, which was delivered at slightly improved gross margins (due to change in mix)
resulting in a £3.9m decline in gross profit. Additionally other income decreased by £0.1m, non-recurring
exceptional costs increased by £0.5m (as detailed below) and £0.4m increase in depreciation and amortisation,
primarily from capitalised development costs, reflecting the significant investment undertaken by the group in
earlier years. These were offset by other overheads decreasing by £0.9m which reflects the cost saving
initiatives we have put in place.
Adjusted (Loss)/ Profit before tax
The disappointing trading performance resulted in adjusted profit before tax decreasing to a loss of £1.5m (FY-
2018: Profit £2.1m). The £3.9m reduction in gross profit converted into adjusted profit before tax, with
administrative costs excluding exceptional costs, depreciation and amortisation down £0.8m on prior year
offset by £0.4m increase in depreciation and amortisation and a £0.1m reduction in other income. During the
year the company has increased its investment in sales and marketing with headcount increasing by 7%,
however overall costs remained flat due to a reduction in commission due to the poor performance. Overhead
savings resulted from reduction in expensed R&D spend of £0.5m and a reduction in other overheads of £0.3m
as a result on ongoing efficiency savings.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
FINANCE DIRECTOR’S REPORT (CONTINUED)
Exceptional Costs
Exceptional costs total £1.9m (FY-2018: £1.4m) include integration and restructuring costs relating to prior
year acquisitions and additional costs relating to the acquisition of Roadsense Technology Limited.
Additionally, significant product component refit costs were incurred on a recently launched product, these
issues have been fixed by year end. The Group also rolled out an enhanced hardware product to two existing
customers following a product upgrade to drive increases in market opportunity. Also, the Group provided for
the cost of work and solutions supplied in the prior year under a contract to supply insurance solutions to Iran.
Balance Sheet
2019
Non-Current Assets
Net Current Assets
Non-Current Liabilities
Net Assets
2
Restatement due to adoption of IFRS15, details provided in note 31
£’000
22,736
5,765
6,407
22,094
2018
Restated2
£’000
21,534
6,159
6,313
21,380
Net Assets increased by £0.7m to £22.1m (FY-2018: £21.4m) reflecting the £3.0m subscription during the
financial year, offset by the loss for the year.
Non-current assets increased by £1.2m to £22.7m (FY-2018: £21.5m). This is due to the continued investment
in development in both software and hardware with capitalised development costs in the year totaling £3.4m
(FY-2018: £3.4m), offset by a £0.4m increase in amortisation to £1.5m (FY-2018: £1.1m). The balance of the
movement relates to the sale of the freehold property, reduction in the receivable due on assets leased out
and amortisation of other intangible assets.
Cash Flow
2019
Net Cash generated from operations
Investing activities
Free Cash Flow1
Financing activities
Change in Cash in Year
Net Debt3
1
Cash generated from operating activities less cash used in investing activities (excluding cashflows related to acquisitions)
2
Restatement due to adoption of IFRS15, details provided in note 31
3
Total borrowings less cash and cash equivalents
£’000
(1,752)
(3,179)
(4,931)
2,664
(2,267)
5,629
2018
Restated2
£’000
4,735
(3,716)
1,019
463
1,482
3,300
Cash from operating activities decreased in the year to an outflow of £1.8m (FY-2018: £4.7m inflow), which
included R&D tax credit cash receipts of £1.0m (FY-2018: £1.6m). The R&D tax credit cash receipt reflects the
Group’s investment in development. The operational cash outflow is reflective of the reported loss and
change in working capital.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
FINANCE DIRECTOR’S REPORT (CONTINUED)
Cash Flow (Continued)
Free cash outflow of £4.9m (FY-2018: inflow £1.0m) is due to the decline in trading, with cash outflows from
investing activities reducing by £0.5m to £3.2m (FY-2018: £3.7m). Reduction in cash outflow from investing
activities was due to the sale and leaseback of the Shaftesbury property that was completed in February 2019.
Financing activities generated £2.7m (FY-2018: £0.5m) due to the subscription in December which raised
approximately £3.0m (net of expenses) to fund general working capital requirements and further strengthen
the Group’s balance sheet, which was offset by debt repayments of £0.4m.
Net Debt
Net debt increased by £2.3m to £5.6m (FY-2018: £3.3m). Cash balances total £1.2m (FY-2018: £3.5m) and
total borrowings £6.8m (FY-2018: £6.8m) of which £1.8m (FY-2018: £2.8m) was a term loan with HSBC, £4.4m
(FY-2018: £3.4m) were amounts drawn under our £5m revolving credit facility with HSBC and £0.6m (FY-2018:
£0.5m) were obligations under finance leases.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
KEY PERFORMANCE INDICATORS
Achieving our objectives
The Board monitors the following key performance indicators to ensure the objective of the Group are being
achieved.
Solutions Revenue Recurring Service
£19.1m: 2019
£26.1m: 2018
£21.1m: 2017
£17.2m: 2016
Revenue
£10.1m: 2019
£10.8m: 2018
£9.8m: 2017
£8.3m: 2016
Connected units -
Insurance/Automotive
167,000: 2019
178,000: 2018
124,000: 2017
92,000: 2016
Connected units –
Fleet Management
76,000: 2019
73,000: 2018
66,000: 2017
59,000: 2016
Performance in
2019
Total Solutions
revenue decreased
by 27% to £19.1m.
This decline was
across both our
fleet &
optimisation
business and
insurance &
automotive
businesses due to
delays in contracts
and disappointing
performance by
the sales team.
Focus for 2020
Continuing driving
increasing level of
performance from
the Fleet
Management Sales
and Marketing
teams, and
converting the
recently won
contracts in the
insurance and
automotive
businesses to
consistent month
on month
revenues.
Performance in
2019
Total recurring
revenues earned
during the year
reduced by 7% to
£10.1m due to the
reduction in
connections and
lower unit prices in
our largest
customer contract.
Fleet recurring
revenues per unit
per month
increased due to
higher service fees
with Camera
customers
Focus for 2020
Despite the market
trend for richer
data for lower
costs, continued
growth will be
achieved by
increasing the
number of devices
in operation and
driving higher
service fees either
from our
integrated cameras
and by increasing
our data analytics
services.
Performance in 2019
This refers to the
amount of telematics
devices reporting in
operation from our
insurance &
automotive customers.
Connected Units in
this market decreased
by 6%.
Performance in
2019
This refers to the
amount of
telematics devices
in operation from
our fleet
customers. The
total number of
units from our Fleet
business increased
by 4%.
Focus for 2020
We expect
restructured Fleet
Management sales
and marketing
teams will result in
continued, but
higher growth in
fleet connections in
2020.
Focus for 2020
Converting recently
won contracts in this
business to consistent
revenue will drive
increases in
connections. Also
selling the new
“Driveably” platform
to new customers will
enable new customers
to convert to revenue
much quicker.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
KEY PERFORMANCE INDICATORS (CONTINUED)
Adjusted (loss)/ profit
before tax
£1.5m Loss: 2019
£2.1m Profit: 2018
£1.1m Profit: 2017
£3.8m Profit: 2016
Gross Margin
53.6%: 2019
48.1%: 2018
49.0%: 2017
48.3%: 2016
Performance in 2019
Adjusted Loss before Tax
(before exceptional costs
and share based
payments) decreased by
£3.5m due to the poor
trading performance
despite a £0.8m
reduction in other
overheads.
Focus for 2020
Delivering a positive
adjusted profit before tax
for the financial year by
delivering revenue
growth at consistent
gross margin whilst
maintaining tight control
over overheads.
Performance in 2019
Gross margin percentage
improved to 54% despite
the overall decline in
Gross Profit. This is due
to the change in revenue
mix, with the higher
margin software and
service revenues being a
higher proportion of
revenue compared to the
prior year. This is
reflective of the
significant reduction in
hardware sales due to
the challenges already
explained.
Focus for 2020
Strategy is to continue to
drive growth in our
recurring service
revenues through
enhanced data diagnostic
services and optimisation
benefits. This is expected
to lead to increases in
our gross margins.
Net cash generated from
Operating Activities
(£1.8m): 2019
£4.7m: 2018
£0.7m: 2017
£4.5m: 2016
Performance in 2019
Our cash generation from
operating activities
significantly declined on
the prior year due to the
poor trading
performance and
movement in working
capital.
Focus for 2020
Return to positive cash
generation by returning
to profit and delivering
continued improvements
in our working capital
cycles. However, cash
generation is expected to
continue to be impacted
by more customers
moving to monthly
payment models
(including SaaS).
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
CORPORATE SOCIAL RESPONSIBILITY
Protecting customer data, delivering results
Data Protection
Successfully renewed ISO27001 during 2019
continued to invest in our IT platforms to allow us to identify and address potential issues more
successfully and to better defend against malware, viruses or malicious attacks
continued to train all of our staff in Data Protection and Information Security
Successfully passed a number of independent penetration tests during the financial year
Quality
Successfully renewed ISO9001 during 2019
All manufacturing staff have been trained to IPC standards to improve both quality levels and
productivity
Enhanced electrostatic discharge controls put in place within manufacturing, assembly and stores
Overhauled our Supplier Monitoring strategy to ensure our supply chain is performing to our
expectations and to ensure Trakm8 expectations regarding corporate social responsibility are being
met by our suppliers.
All staff trained for TCF, Anti-Bribery and Modern Slavery
Environmental
Successfully renewed ISO14001 during 2019
Update training on environmental legislation delivered to Compliance team members
Successfully underwent an independent audit of our waste management strategy by Waste Care (our
waste compliance partners)
Health & Safety
Continued our good H&S record with no significant accidents or incidents being recorded and a
significant reduction in number of minor accidents following a program of staff education and training
on correct use of PPE
Key staff have been trained in the last 12 months on IOSH and NEBOSH standards
Company Number 05452547
16
Trakm8 Holdings PLC
Strategic Report (Continued)
CORPORATE SOCIAL RESPONSIBILITY (CONTINUED)
In addition to improving internal processes, Trakm8 is committed to providing technology which contributes to
improving road safety and reducing the environmental impact of motor vehicles in the UK and beyond.
Feedback from our customers indicates we have delivered the following benefits:
20% reduction in fuel usage
31% reduction in engine idling
18% reduction in CO2 per mile
Cost of idling down 69%
30% increase in productivity
Up to 20% reduction in accident rates
13% reduction in speeding events
Insurance premium reduction of 10%
Company Number 05452547
17
Trakm8 Holdings PLC
Strategic Report (Continued)
RISK MANAGEMENT FRAMEWORK
Our risk management process is designed to improve the likelihood of delivering our business objectives, to
protect the interests of our key stakeholders, to enhance the quality of our decision making, and to assist in
the safeguarding of our assets. This includes people, finances, property and our reputation.
The Board takes overall responsibility for risk management, evaluating our exposure to individual strategic
risks, overseeing our risk governance structure and internal control framework. Strategic decisions are
evaluated against our tolerance levels to the risks identified and the Board continues to monitor these trends
in order to implement mitigation activities in line with our long-term strategy.
Approach to Risk Management
Each year the Board carries out a robust assessment of the principal risks facing the Group, including those
that would threaten our business model, future performance, solvency or liquidity. The report overleaf
summarises these possible risks and how they are being managed or mitigated.
The Executive Chairman and the senior management team take responsibility for reviewing the effectiveness
of the risk management process and the risk register is subjected to detailed review and discussion.
This group identifies all the key risks to the business and ensures our elimination and mitigation processes are
robust and up to date to minimise any possible impact. Risk identification is embedded in other processes,
including product development, contract approvals and other operational activities. Trakm8’s corporate
strategy is designed to optimise our business model and accept risk, with the required controls on an informed
basis.
To create value for our shareholders, we set varying risk tolerances and associated criteria. We continue to
accept risk and manage our risk environment on the following basis:
• Strategic – medium to low tolerance for risks arising from poor business decisions or substandard execution
of business objectives.
• Operational – low to near-zero tolerance for risks arising from business processes including the technical,
quality, and project management or organisational risk associated with programmes and products. During the
year we enhanced our testing procedures for new product launches following the issues experienced in the
previous financial year.
• Corporate – low to near-zero tolerance for compliance and reputational risks including those related to the
law, health, safety and the environment.
• Financial – zero tolerance for financial risks including failure to provide adequate liquidity to meet our
obligations and manage currency, interest rate and credit risks.
Company Number 05452547
18
Trakm8 Holdings PLC
Strategic Report (Continued)
RISK MANAGEMENT FRAMEWORK (CONTINUED)
RISK MANAGEMENT PROCESS
Risk management is a key element of the Group’s decision making process as there is a risk element in all areas
of its activities and these risks need to be managed appropriately. Alongside the strong governance structure
and effective internal controls, the risk management process gives the Board assurance that risks are being
appropriately identified and managed.
The Risk Management Process is set up in the following way:
• An annual business review to set strategies, objectives and agreed initiatives to achieve its goals, taking
account of the risk appetite set by the Board.
• Day-to-day operations are supported by a clear schedule of authority limits that define processes and
procedures for approving material decisions. This ensures that projects are approved at the appropriate level
of management, with the largest and most complex projects being approved by the Board.
• The Group’s Executive Directors also compile their own risk assessment, ensuring that a top-down approach
is undertaken when considering the Group-wide environment.
• The Group’s Audit and Risk Committee assists the Board in assessing and monitoring risk management across
the Group. The role of the Committee is to ensure the timely identification and robust management of
inherent and emerging risks. The Committee reviews the risk register as it develops, to ensure net risk and
proposed further actions are together consistent with the risk appetite set by the Board.
Company Number 05452547
19
Trakm8 Holdings PLC
Strategic Report (Continued)
PRINCIPAL RISKS AND UNCERTAINTIES
Link to strategic priorities
1
Delivering a
cutting-edge
solutions portfolio
2
Increasing our
market share
3
Streamlining our
internal operations
Principal Risk
Potential Impact
Mitigation
Significant
operational system
failure
Reputational impact
Deterioration in
customer relations
Our systems are both within the Cloud and within a traditional
data centre environment. We provide no single point of failure as
there is diversity of datacentres from separate suppliers and
replication of data between data centres.
2
Cyber-attack and
data security
2
Brexit and a
deteriorating
economic climate
1, 2
Operating in a fast
moving technology
industry where we
will always be at
risk from new
products being
launched
1, 2
Reduction in revenues,
profitability and cash
generation
Daily point-in-time backups are also taken offsite.
Insurances are maintained to financially mitigate any risk relating
to an event that causes significant interruption at our single site
manufacturing facility.
Reputational Impact
We have been re-approved for our ISO 27001 accreditation.
Deterioration in
customer relations
We continue to make considerable investments in security and
systems for both our internal and customer data.
We operate a secure development lifecycle and undertake regular
independent penetration testing of our devices and hosting
environments.
Continuous product development and operational efficiency
improvements to compensate for any potential component
increases. It is estimated that at worst a hard Brexit would only
result in import tariffs up to a maximum of 5% on WTO terms for
some component supplies.
Geographical expansion will provide opportunities to build natural
currency hedges.
Continued focus in Sales & Marketing on demonstrating the ROI
from the solution to ensure it is compelling financially for our
customers.
We heavily invest in research and development to ensure we are
at the forefront of telematics technology.
We are device agnostic and will interface into OEMs and
autonomous vehicles as a central data hub.
Liability claims
A potential hard Brexit
could impact cost of
goods further impact
the exchange rates and
provide legislative
uncertainty. We've
assessed the greatest
potential impact to be
on our supply chain &
product approvals
Brexit has already had a
sales impact as a result
of uncertainty delaying
customer decisions
Decelerating sales
growth and affecting
profit
Delay in achieving
projected revenues
OEM fit telematics to all
strategy
Autonomous cars
Company Number 05452547
20
Trakm8 Holdings PLC
Strategic Report (Continued)
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Principal Risk
Adverse mobile
network changes
2
Potential Impact
Reputational Impact
Deterioration in
customer relations
Reduction in
revenues, profitability
and cash generation
Attracting and
maintaining high
quality employees
Loss of key personnel
Potential business
disruption
Mitigation
We 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.
We rely on mobile phone suppliers to provide a quality of service
and investment in suitable reliable infrastructure. The same is true
for the GPS network and the Internet.
We provide interesting work within a growing sector where we have
significant opportunity and maintaining this is key to employee
retention.
1, 2, 3
Breakdown of
communication and
misalignment
Knowledge of our bespoke systems are spread across a larger pool
of individuals to mitigate the risk of a key individual leaving the
business.
We are now a sponsor on the government highly skilled migrant
program
We maintain regular discussions with banks and other financial
institutions.
We regularly review medium term capital requirements
Work with world class distributors and manufacturers to mitigate
the supply chain risk
Access to long
term and working
capital
1, 2
Electronics supply
chain under
constraint
2
Ability to deliver
business plans
Long lead-times
Single source
suppliers
By order of the Board
Jon Furber
COMPANY SECRETARY
5 July 2019
Company Number 05452547
21
Trakm8 Holdings PLC
Governance Report
BOARD OF DIRECTORS
John Watkins
Executive Chairman
John Watkins has a Master’s Degree in Engineering Science from the University of Oxford. Through his
extensive career he has acquired considerable M&A and sales experience. He has been a Director of several
Public companies, Managing Director of a wide range of private and subsidiaries/divisions of public companies
and Chairman of two very successful private equity companies that exited with significantly better than
average IRRs.
Keith Evans
Senior Independent Non- Executive Deputy Chairman
Keith graduated from the University of Cambridge with a degree in Economics. Keith is a former partner for
over 25 years at PricewaterhouseCoopers LLP with very extensive experience of commercial and financial roles
having worked with companies operating in the financial services, automotive and information technology
sectors.
Bill Duffy
Independent Non-Executive Director
Bill Duffy started working with the company in April 2014 supporting our business and strategy development
as a Consultant and joined the Board in July 2015. Bill also runs his own consultancy business and is Chairman
of MotorEasy, a pioneering motoring services platform for UK drivers. He was formerly CEO of Andrew Page
Limited and CEO of Halfords Autocentres Limited. He has extensive strategic and operational capability in the
automotive sector and successful private equity experience.
Nadeem Raza
Non-Executive Director
Nadeem Raza joined the Board in January 2019 following the strategic investment by Microlise Group Holdings
Limited. As CEO of Microlise, Nadeem has complete responsibility for the operational management and
control of all Microlise business activities. During his 20 year career with Microlise, Nadeem has fulfilled
various responsibilities and gained experience across all elements of the business, including sales, system
integration, marketing, operations and business computing.
Jon Furber
Group Finance Director
Jon joined Trakm8 as Finance Director to the Group in September 2017. Jon has previously held senior finance
roles at technology growth businesses; he was CFO at AppSense and at Vistorm/HP Information Security (UK),
and most recently interim CFO at Intrinsic Technology. Jon is a chartered accountant having trained and
qualified at KPMG.
Matt Cowley
Big Data Director
One of the founders of Trakm8 along with his brother Tim Cowley, Matt is a highly experienced software
Engineering Director with over 25 years’ experience within the Telematics and Telecommunications industry.
Awarded an MSc Software Engineering with distinction from University of Oxford in 1998, Matt now leads the
in-house Big Data team and is passionate about algorithms, machine learning, computer vision and data
science.
22
Company Number 05452547
Trakm8 Holdings PLC
Governance Report (Continued)
BOARD OF DIRECTORS (CONTINUED)
Tim Cowley
Group Strategy Director
Tim Cowley has 30 years’ experience in the Engineering & Technology sector. After graduating with a degree in
Electronics Engineering in 1988 from Brunel University, Tim was awarded a prestigious Michael Cobham
scholarship, and stayed with the Cobham Group for eleven years. Alongside his brother Matt, he founded
Trakm8 is 2002 and is now responsible for the Group Product Strategy and the Advanced Engineering function.
Sean Morris
Managing Director – Insurance and Automotive
Sean Morris has over 30 years’ experience in automotive electrical and electronic engineering at various OEMs
and Tier 1 suppliers, including Continental, BMW, Honda, and Land Rover, and was Chief Engineer Electrical &
Electronics, of Aston Martin. Sean has also run a successful turnkey engineering company providing services to
OEMs such as JLR, Bentley and McLaren. He is now responsible for leading Trakm8’s Insurance and Automotive
business unit.
Mark Watkins
Chief Operating Officer
Mark has a Master’s Engineering degree and worked for Ford Motor Co in the group IT team. He has previously
held positions in IT and Operations having been Head of Manufacturing Operations at Continental UK for
several years. In 2014 he joined Trakm8 Holdings as Managing Director of BOX Telematics following its
acquisition and is now responsible for all operational and engineering matters for the Group.
Company Number 05452547
23
Trakm8 Holdings PLC
Governance Report (Continued)
BOARD OF DIRECTORS AND COMMITTEES
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 and 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 has operated Audit and Risk, Remuneration and Nomination Committees throughout the period.
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 the two non-executive
Directors and the Executive Chairman.
For the financial year ended 31 March 2019 the Directors’ attendance at Board and Committee meetings has
been as follows:
Type
Total Held in period
Board Audit Nomination Remuneration
1
14
2
5
John Watkins
Keith Evans
Matt Cowley
Tim Cowley
Bill Duffy
Jon Furber
Sean Morris
Mark Watkins
Nadeem Raza1
1
Attended 3 out of 3 Board meetings, 1 out of 1 Audit Committee meetings and 2 out of 2 Remuneration Committee meetings whilst in
office
14
14
14
13
14
14
13
12
3
1
1
-
-
1
-
-
-
-
5
5
-
-
5
-
-
-
2
1
2
-
-
2
-
-
-
1
Nominations committee
The committee met once during the year and appointed Nadeem Raza as Independent Non-Executive Director.
Audit and Risk Committee
The Audit and Risk 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.
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 and Risk Committee included revenue recognition, capitalisation of
development costs and impairment review of Goodwill. The Audit and Risk Committee also reviewed in detail
financial projections in concluding on its’ Going Concern assertion.
Company Number 05452547
24
Trakm8 Holdings PLC
Governance Report (Continued)
Remuneration committee
The Remuneration Committee’s terms of reference include making recommendations on Directors’
compensation packages to ensure that the Group 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 and employees 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. The Executive Chairman and the Finance Director meet investors immediately after publication
of the annual and interim results, at the Annual General Meeting and on an ongoing basis as required
throughout the year. In addition we provided a number of shareholders update presentations and the
intention is to continue this programme during the new financial year.
By order of the Board
Jon Furber
COMPANY SECRETARY
5 July 2019
Company Number 05452547
25
Trakm8 Holdings PLC
Directors’ Report
DIRECTORS’ REPORT
The Directors submit their Directors’ Report and the audited financial statements of the Group for the year
ended 31 March 2019.
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 development, manufacture, marketing and distribution of
vehicle and plant 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 27.
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. The Group currently has an unused revolving bank credit facility of
£0.7m.
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.
Interest rate risk
The Group regularly monitors the risk of increasing interest rate and the effect this would have on our total
interest charges. Currently our bank borrowings are linked to variable interest rates and the Group would
move to fixed if it was deemed appropriate to minimise the effects of further interest rate rises.
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.
RESULTS AND DIVIDENDS
The Group results for the year ended 31 March 2019 are shown in the Consolidated Statement of
Comprehensive Income on page 38. The Directors do not recommend the payment of a dividend (2018: £nil).
Company Number 05452547
26
Trakm8 Holdings PLC
Directors’ Report (Continued)
RESEARCH AND DEVELOPMENT
The Group has continued to expand the investment in research and development to ensure the future success
of the business. During the year the Group capitalised development costs of £3.4m and a further £0.9m was
expensed. Further details about the Group’s approach to R&D can be found in the Strategic Report.
GOING CONCERN
These financial statements are presented on a going concern basis. The Groups projections for the next 12
months, and downside sensitivity analysis against its projections along with closing cash balances of £1.2m
and undrawn revolving credit facilities of £0.65m at 31 March 2019 provide the Directors a reasonable
expectation that the Group will have adequate financial resources to continue in operation for the
foreseeable future. Detailed considerations by the Directors are detailed in note 4 on page 51.
FUTURE DEVELOPMENTS
Consideration on the future developments and exciting prospects of the Group, has been made in the
Executive Chairman’s Statement in the Strategic Report. The Group is focused on a smaller number of activities
with the focus of executing much better. The Group expects to the re-structured fleet management sales
team to deliver an increasing rate of organic growth in the UK and international markets. Revenues are also
expected to increase during the financial year from existing and recently won contracts in the Insurance and
Automotive sectors.
The Group will continue to invest in our software solutions, algorithms and devices to ensure that the Group
retains the market-leading solutions with the widest and deepest offer in the market today.
Further acquisitions will be assessed and only if our strict criteria are met will be progressed.
EMPLOYEES
The Group’s employment policies are designed to ensure that they meet the statutory, social and market
practices where the Group operates. The Group regularly provides employees with information about the
progress of the Group, wider economic factors and also matters likely to be of concern to them. The Group
recognises the importance of its employees and their training and conducts annual appraisals with each
member of staff.
The Group is committed to employment policies, which follow best practices and are based on equal
opportunities for all employees regardless of sex, race, colour, disability or marital status. The Group gives full
and fair consideration to applications for employment for disabled persons, having regard to their particular
aptitudes and abilities. If members of staff become disabled the Group will continue their employment either
in the same or an alternative position, with appropriate retraining being given if necessary.
POST BALANCE SHEET EVENTS
On the 27 June 2019 the Group entered into an Amendment and Restatement Agreement with HSBC that
amended the covenants and amended the margin on both the term loan and revolving credit facility to 4.5%
above base rate and LIBOR respectively. All other terms of the facilities remained unchanged.
Company Number 05452547
27
Trakm8 Holdings PLC
Directors’ Report (Continued)
DIRECTORS
The Directors of the company who were in office during the year and up to the date of signing the financial
statements were:
John Watkins
Keith Evans
Matt Cowley
Tim Cowley
Bill Duffy
Sean Morris
Mark Watkins
Jon Furber
Nadeem Raza (appointed 9 January 2019)
DIRECTORS AND THEIR INTERESTS
At 31 March 2019 the Directors’ interests in the shares of the Company are detailed below:
This table is audited
1p Ordinary
shares at 31
March 2019
% of issued Ordinary
share capital
(50,004,002 Ordinary
shares)
1p Ordinary
shares at 1 April
2018
% of issued
Ordinary share
capital (35,723,254
Ordinary shares)
7,768,768
381,119
1,994,203
2,268,127
375,000
596,503
-
318,310
178,622
15.54%
0.76%
3.99%
4.54%
0.75%
1.19%
-
0.64%
0.36%
6,177,859
153,846
1,744,203
1,949,945
140,000
28,321
-
250,128
-
17.29%
0.43%
4.88%
5.46%
0.39%
0.08%
-
0.70%
-
John Watkins
Keith Evans
Matt Cowley
Tim Cowley
Bill Duffy
Jon Furber
Sean Morris
Mark Watkins
Nadeem Raza*
*Nadeem Raza is the CEO and principle shareholder in Microlise which holds 10,000,000 ordinary shares in the Company.
The Directors had no interest in the share capital of the Company’s subsidiary undertakings at 31 March 2019
or on the date on which these financial statements were approved.
Company Number 05452547
28
Trakm8 Holdings PLC
Directors’ Report (Continued)
DIRECTORS’ REMUNERATION
The Directors’ remuneration for the year ended 31 March 2019 was:
This table is audited
£’000
John Watkins
Keith Evans
Matt Cowley
Tim Cowley
Bill Duffy
Jon Furber
Sean Morris
Mark Watkins
Nadeem Raza
Total
Salaries &
benefits
Fees
Total
remuneration
to year ended
31 March 2019
Pension
contribution
Total aggregate
emoluments to
year ended 31
March 2019
Total aggregate
emoluments to
year ended 31
March 2018
285
36
103
119
36
166
106
152
-
1,003
-
-
-
-
-
-
-
-
-
-
285
36
103
119
36
166
106
152
-
1,003
-
1
3
3
-
9
5
7
-
28
285
37
106
122
36
175
111
159
-
1,031
285
32
100
115
31
90
118
148
-
919
Company Number 05452547
29
Trakm8 Holdings PLC
Directors’ Report (Continued)
DIRECTORS’ SHARE OPTIONS
At 31 March 2019 the following options had been granted to the Company's Directors and remain current and
unexercised:
This table is audited
John Watkins
Option
exercise
price
£0.45
£1.93
£0.99
£0.34
£0.34
Balance as at
1 April 2018
Granted
during
year
-
-
-
- 125,000
- 300,000
250,000
225,000
75,000
Keith Evans
£0.99
75,000
-
Matt Cowley
Tim Cowley
Bill Duffy
Sean Morris
Mark Watkins
Jon Furber
£0.45
£1.93
£0.34
£0.45
£1.93
£0.34
£0.99
£0.34
£0.34
£0.88
£1.93
£0.90
£0.34
£0.58
£1.93
£0.99
£0.90
£0.34
£0.34
£1.38
£0.34
£0.34
125,000
25,000
-
125,000
50,000
-
75,000
-
-
-
-
25,000
-
-
50,000
-
50,000
75,000
175,000
75,000
-
-
- 100,000
- 350,000
200,000
75,000
75,000
-
-
-
- 100,000
- 125,000
- 250,000
475,000
-
- 125,000
- 475,000
Exercised
during
year
-
-
-
-
-
Expired/
forfeited
during year
-
225,000
75,000
-
-
Balance as at
31 March
2019
250,000
-
-
125,000
300,000
Expiry date
21/01/2024
21/09/2025
03/07/2027
04/03/2029
04/03/2029
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
03/07/2027
-
25,000
-
-
50,000
-
75,000
-
-
175,000
75,000
100,000
-
-
75,000
75,000
100,000
-
-
475,000
-
-
125,000
-
25,000
125,000
-
50,000
-
50,000
75,000
-
-
-
350,000
200,000
-
-
-
125,000
250,000
-
125,000
475,000
21/01/2024
21/09/2025
04/03/2029
21/01/2024
21/09/2025
04/03/2029
03/07/2027
02/03/2029
04/03/2029
17/12/2024
21/09/2025
30/06/2028
04/03/2029
06/04/2024
21/09/2025
03/07/2027
30/06/2028
02/03/2029
04/03/2029
26/11/2027
02/03/2029
04/03/2029
All share options were issued at the open market price on the day the options were granted, except the
options issued on the 5 March 2019, which have an exercise price at a 20% premium to the mid-market closing
share price on 4 March 2019.
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 2018 and 31 March 2019 the Company held 29,000 of its own 1p Ordinary shares representing 0.06%
(2018: 0.08%) of the called up share capital. There were no purchases or sales by the Company during the
year.
30
Company Number 05452547
Trakm8 Holdings PLC
Directors’ Report (Continued)
STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITORS
Each Director who was in office on the date of approval of these financial statements has confirmed, as far as
they are aware, that there is no relevant audit information of which the auditors are 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.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulation.
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 parent company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, 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 parent company and of the profit or loss of the group and parent company for
that period. In preparing the financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
state whether applicable IFRSs as adopted by the European Union have been followed for the group
financial statements and United Kingdom Accounting Standards, comprising FRS 101, have been
followed for the company financial statements, subject to any material departures disclosed and
explained in the financial statements;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the group and parent company will continue in business.
The directors are also responsible for safeguarding the assets of the group and parent company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the group and parent company's transactions and disclose with reasonable accuracy at any time the financial
position of the group and parent company and enable them to ensure that the financial statements comply
with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
The directors are responsible for the maintenance and integrity of the parent company’s website. Legislation
in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
INDEPENDENT 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 5 July 2019
Jon Furber
Company Secretary
Company Number 05452547
31
Trakm8 Holdings PLC
Independent Auditors Report
Independent auditors’ report to the members of
Trakm8 Holdings Plc
Report on the audit of the financial statements
Opinion
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 2019 and of the group’s loss 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 (United Kingdom Accounting Standards, comprising
FRS 101 “Reduced Disclosure Framework”, and applicable law); and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual
Report”), which comprise: the Consolidated Statement of Financial Position as at 31 March 2019, the Parent
Company Statement of Financial Position as at 31 March 2019, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash-Flows and the
Parent Company Statement of Changes in Equity for the year then ended; and the notes to the financial
statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the
audit of the financial statements section of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
Overall group materiality: £190,000 (2018: £301,395), based on 1% of revenues.
Overall parent company materiality: £180,500 (2018: £121,000), based on 1% of
total assets (capped at £180,500 based on allocation of Group materiality to
the component).
We conducted a full-scope audit over four legal entities, including the parent
company.
99% of consolidated revenue is covered through the audit of these four legal
entities.
Risk of error in revenue recognition for multi-element arrangements.
Capitalisation of internally generated intangible assets.
Goodwill impairment assessment.
Company Number 05452547
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Trakm8 Holdings PLC
Independent Auditors Report
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that
are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our procedures thereon, were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our
audit.
Key audit matter
How our audit addressed the key audit matter
Risk of error in revenue recognition for multi-element
arrangements
The Group enters into contracts where there is more
than one deliverable to be provided to the customer.
These typically include the provision of hardware,
software and services, or software and services. The
accounting for these contracts involves a higher degree
of judgement, including:
Determining whether the contract contains
performance obligations which should be separated
for revenue recognition purposes and whether each
of those elements should be recognised at a point in
time or over time;
Determining the allocation of consideration on a fair
value basis between components of multi-element
contracts; and
Determining the point at which it is appropriate to
recognise revenues where revenues are recognised
in advance of billings.
Given the above, there is a risk that revenue is not
accounted for appropriately.
We have tested the accounting for multi-element
contracts and the associated revenues recognised in the
year. Our procedures included:
Review of a sample of contracts with customers to
ensure that separate deliverables within contracts have
been identified in line with contractual terms. Where
separate deliverables have been identified we have
ensured that the revenue recognition methodology
applied appropriately separates out each deliverable;
Testing of the fair values of revenues attributed to
different deliverables within the contract by reference
to appropriate supporting evidence, including stand-
alone selling prices for different elements of revenue
or, where these do not exist, similar objective evidence
derived from contract pricing over a number of years;
and
Review of contractual terms to ensure that where
revenues are recognised in advance of billings, the
Group has an enforceable right to receive consideration
in the future.
Based on the work performed we found that contracts
containing more than one deliverable had been
appropriately identified, and revenues had been
separately identified and allocated between different
deliverables on a reasonable basis. Where revenues
had been recognised in advance of billings we found
that the Group had an enforceable right to receive
consideration in the future.
Capitalisation of internally generated intangible
assets
The Group continues to incur material expenditure on
development activities (including software). This
expenditure is capitalised when the development
project meets the criteria of International Accounting
Standard 38 'Intangible Assets' (IAS 38). During the
year the Group capitalised £3.4m of development and
software expenditure on internally generated
intangible assets. The capitalised costs consist of
internal labour and external bought in costs.
IAS 38 sets out specific criteria that must be met for an
asset to be capitalised. These include whether it is
probable that the expected future economic benefits
We tested a sample of projects against which costs had
been capitalised during the year to validate that the
projects met each of the relevant criteria within IAS 38
to support the capitalisation of costs.
We also tested a sample of costs capitalised during the
year to confirm that the cost of the asset could be
reliably measured and had been accurately recorded by
agreeing the capitalised costs back to appropriate audit
evidence, for example timesheet records, invoices or
similar supporting documentation.
Based on our work performed we found that
management’s assessment of projects against the
capitalisation criteria within IAS 38 was reasonable,
and that costs capitalised within projects were
Company Number 05452547
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Trakm8 Holdings PLC
Independent Auditors Report
Key audit matter
How our audit addressed the key audit matter
attributable to the asset will flow to the Group; the cost
of the asset can be measured reliably; the technical
feasibility of completing the asset can be demonstrated
such that it will be available for use or sale; there is an
intention to complete the asset and use or sell it; the
Group has the ability to use or sell the asset; and the
Group has adequate technical, financial and other
resources to complete the development and to use or
sell the asset.
Management apply judgement in determining whether
or not these criteria are met and there is therefore a
risk that expenditure may be incorrectly capitalised.
Goodwill impairment assessment
The Group has a material goodwill balance which is
required to be tested for impairment on an annual
basis in accordance with International Audit Standard
36 'Impairment of Assets' (IAS 36). Total goodwill at
year end was £10.4m.
Goodwill has been tested by reference to its value in
use. Valuations of this nature are inherently subjective
and involve a high degree of estimation, for example
over future cash flows of the group, discount rates
applied to those cash flows and terminal growth rates.
This gives rise to an increased risk of error in the
calculation of value in use and therefore in the overall
impairment assessment.
recorded on an appropriate basis.
We have performed audit procedures over
management's impairment assessment, including
testing of the integrity of the cash flow model, the
methodology applied and assessing key assumptions
including future cash flows, discount rates and growth
rates, including sensitivity of these assumptions.
We have agreed future cash flows to Board approved
budgets and considered the appropriateness of these
budgets by reference to historical performance of the
Group, including understanding revenue split between
recurring and non-recurring, as well as sales orders
and pipeline. We have also considered 3 year extended
forecasts approved by the board. We have also
assessed the terminal growth rate against long-term
GDP growth in the UK and tested the calculation of the
discount rate and tested the discount rate.
We have performed sensitivity analysis over key
assumptions, in particular testing what level of
sensitivity in the assumptions would cause an
impairment.
Based on our audit procedures performed we found the
model itself, the methodology, the forecasts and the
assumptions used in the calculation were appropriate
and we concluded that there was no impairment of
goodwill. We also found that the related sensitivity
disclosures in the financial statements were
appropriate.
We determined that there were no key audit matters applicable to the parent company to communicate in our
report.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the group and the parent company, the
accounting processes and controls, and the industry in which they operate.
The Trakm8 Holdings Plc Group (the "Group") is structured by legal entity and the Group financial statements
are a consolidation of eight individual legal entities.
Of these eight individual legal entities, we performed audits of the complete financial information of Trakm8
Holdings Plc (the parent company), Trakm8 Limited and Route Monkey Limited. All of the above were
considered to be significant components of the Group, either due to their contribution to revenues and profits of
the Group as a whole or, in the case of Trakm8 Holdings Plc, due to being the parent entity within the Group
holding the external debt on behalf of the Group.
The accounting for all components and the Group consolidation is performed centrally in the UK, with all audit
work being performed by the Group audit engagement team. Therefore, there is no requirement to utilise
separate component auditors.
99% of the Group's consolidated revenue is accounted for by legal entities where we performed audits of their
complete financial information.
The parent company audit was scoped based on the materiality set out above.
Company Number 05452547
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Trakm8 Holdings PLC
Independent Auditors Report
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a
whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as
follows:
Group financial statements
Parent company financial
statements
Overall materiality
£190,000 (2018: £301,395).
£180,500 (2018: £121,000).
How we determined
it
1% of revenues.
Rationale for
benchmark applied
The group is in the technology sector
where revenue is the key measure used by
the directors, management and users of
the financial statements in assessing
business performance. On this basis, we
believe revenue is the key benchmark on
which to base materiality..
1% of total assets (capped at £180,500
based on allocation of Group materiality
to the component).
This entity does not trade and has no
revenue, therefore an appropriate
benchmark is considered to be 1% of total
assets, capped at £180,500 based on
allocation of Group materiality to the
component..
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across components was between £95,000 and £180,500.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit
above £9,500 (Group audit) (2018: £15,000) and £9,500 (Parent company audit) (2018: £6,000) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
ISAs (UK) require us to report to you when:
the directors’ use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s and parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
We have nothing to report in respect of the above matters.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
group’s and parent company’s ability to continue as a going concern. For example, the terms on which the United
Kingdom may withdraw from the European Union are not clear, and it is difficult to evaluate all of the potential
implications on the group’s trade, customers, suppliers and the wider economy.
Company Number 05452547
35
Trakm8 Holdings PLC
Independent Auditors Report
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent
material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required
by the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK)
require us also to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
Report and Directors’ Report for the year ended 31 March 2019 is consistent with the financial statements and
has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent company and their environment obtained in
the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’
Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities set out on page 31, the directors are
responsible for the preparation of the financial statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view. The directors are also responsible for such internal control as
they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent 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.
Company Number 05452547
36
Trakm8 Holdings PLC
Independent Auditors Report
Other required reporting
Companies Act 2006 exception reporting
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
certain disclosures of directors’ remuneration specified by law are not made; 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.
Mark Skedgel (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
5 July 2019
Company Number 05452547
37
Trakm8 Holdings PLC
Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2019
Note
Year ended 31
March 2019
Year ended 31
March 2018
Restated*
£'000
29,361
(15,232)
£'000
19,145
(8,890)
REVENUE
Cost of sales
Gross profit
Other income
Administrative expenses excluding exceptional costs
Exceptional administrative costs
Total administrative costs
OPERATING (LOSS)/PROFIT
Finance income
Finance costs
(LOSS)/PROFIT BEFORE TAXATION
Income tax
(LOSS)/PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations
TOTAL OTHER COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
ATTRIBUTABLE TO OWNERS OF THE PARENT
ADJUSTED (LOSS)/PROFIT BEFORE TAX
(Loss)/Profit before taxation
Exceptional administrative costs
IFRS2 Share based payments charge
EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO
OWNERS OF THE PARENT
Basic
Diluted
The results relate to continuing operations.
6
7
9
8
10
11
8
13
13
10,255
14,129
436
566
(12,101)
(1,930)
(14,031)
(12,681)
(1,405)
(14,086)
(3,340)
609
10
(233)
33
(189)
(3,563)
1,057
453
520
(2,506)
973
(5)
(5)
9
9
(2,511)
982
(1,452)
(3,563)
1,930
181
2,074
453
1,405
216
(6.20p)
(6.20p)
2.72p
2.68p
* See note 31 for details regarding the restatement as a result of changes in accounting policies.
Company Number 05452547
38
Trakm8 Holdings PLC
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2019
Note
Share
capital
£'000
Share
premium
£'000
Merger
reserve
£'000
Translation
reserve
£'000
Treasury
reserve
£'000
Retained
earnings
£'000
Total
equity
£'000
357
11,674
1,138
199
(4)
6,866
20,230
31
-
-
-
-
-
(164)
(164)
357
11,674
1,138
199
(4)
6,702
20,066
Balance as at 1 April
2017 as previously
reported
Change in accounting
policy
Restated balance as at 1
April 2017
31
Comprehensive income
Profit for the year
(restated*)
Other comprehensive income
Exchange differences on
translation of overseas
operations
Total comprehensive income
Transactions with owners
Shares issued
IFRS2 Share-based
payments charge
Tax recognised directly
in equity (Note 11)
Transactions with owners
-
-
-
-
-
-
-
973
973
-
9
-
-
9
-
-
-
9
-
973
982
2
76
-
-
-
-
-
-
-
-
-
-
-
-
-
78
216
216
-
38
38
2
76
-
-
-
254
332
Balance as at 1 April 2018
359
11,750
1,138
208
(4)
7,929
21,380
Comprehensive loss
Loss for the year
Other comprehensive loss
Exchange differences on
translation of overseas
operations
Total comprehensive loss
Transactions with owners
Issue of share capital
IFRS2 Share based
payments charge
Tax recognised directly
in equity (Note 11)
Transactions with
owners
Balance as at 31 March 2019
-
-
-
-
-
-
-
-
(2,506)
(2,506)
(5)
-
-
(5)
-
-
-
(5)
-
(2,506)
(2,511)
141
2,941
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,082
181
181
(38)
(38)
141
2,941
-
-
-
143
3,225
500
14,691
1,138
203
(4)
5,566
22,094
* See note 31 for details regarding the restatement as a result of changes in accounting policies.
Company Number 05452547
39
Trakm8 Holdings PLC
Consolidated Statement of Financial Position As At 31 March 2019
Note
As at 31 March
2019
ASSETS
NON CURRENT ASSETS
Intangible assets
Property, plant and equipment
Amounts receivable under finance leases
CURRENT ASSETS
Inventories
Trade and other receivables
Corporation tax receivable
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
Trade and other payables
Borrowings
Provisions
Deferred income tax liability
NET ASSETS
EQUITY
Share capital
Share premium
Merger reserve
Translation reserve
Treasury reserve
Retained earnings
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT
14
15
17
16
17
19
20
21
19
20
21
18
22
As at 31 March
2018
Restated*
£'000
19,460
1,756
318
21,534
2,556
9,926
1,001
3,472
16,955
£'000
21,165
1,432
139
22,736
2,736
8,345
1,050
1,205
13,336
(6,307)
(1,237)
(27)
(7,571)
(9,598)
(1,151)
(47)
(10,796)
5,765
6,159
28,501
27,693
(607)
(5,597)
(115)
(88)
(6,407)
(525)
(5,621)
(94)
(73)
(6,313)
22,094
21,380
500
14,691
1,138
203
(4)
5,566
359
11,750
1,138
208
(4)
7,929
22,094
21,380
* See note 31 for details regarding the restatement as a result of changes in accounting policies.
The loss for the Company for the year determined in accordance with the Companies Act 2006 was £242,000
(2018: loss £153,000)
The notes on pages 42 to 77 are an integral part of these consolidated financial statements. These financial
statements on pages 38 to 77 were approved by the Board of directors and authorised for issue on 5 July 2019
and are signed on its behalf by:
John Watkins - Director
Jon Furber - Director
Company Number 05452547
40
Trakm8 Holdings PLC
Consolidated Statement of Cash-Flows For The Year Ended 31 March 2019
Note
Year ended 31
March 2019
Year ended 31
March 2018
NET CASH GENERATED FROM OPERATING ACTIVITIES
24
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment
Purchases of software
Proceeds from sale of property
Capitalised development costs
£'000
(1,752)
Restated*
£'000
4,735
(103)
(158)
495
(3,413)
(91)
(236)
-
(3,389)
NET CASH USED IN INVESTING ACTIVITIES
(3,179)
(3,716)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares
Increase in bank loan
Repayment of bank loans
Repayment of obligations under hire purchase agreements
Interest paid
3,082
2,000
(2,026)
(187)
(205)
78
2,600
(1,880)
(146)
(189)
NET CASH GENERATED FROM FINANCING ACTIVITIES
2,664
463
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
(2,267)
3,472
1,482
1,990
CASH AND CASH EQUIVALENTS AT END OF YEAR
1,205
3,472
* See note 31 for details regarding the restatement as a result of changes in accounting policies.
Company Number 05452547
41
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements
1
GENERAL INFORMATION
Trakm8 Holdings PLC (“Company”) and its subsidiaries (together the “Group”) develop, manufacture,
distribute and sell telematics devices and services.
Trakm8 Holdings PLC is a public limited company incorporated in the United Kingdom (registration number
05452547). The Company is domiciled in the United Kingdom and its registered office address is 4 Roman
Park, Roman Way, Coleshill, West Midlands, B46 1HG. The Company’s Ordinary shares are traded on the AIM
market of the London Stock Exchange. The Company is registered in England and is limited by shares.
The Group’s principal activity is the development, manufacture, marketing and distribution of vehicle
telematics equipment and services. The Company’s principal activity is to act as a holding company for its
subsidiaries.
The consolidated financial statements are presented in Sterling and all values are rounded to the nearest
thousand (£'000) except where otherwise indicated.
2 AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
The Group’s financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) and IFRS Interpretations Committee (“IFRS IC”) interpretations as endorsed by the
European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under
IFRS.
3 BASIS OF PREPARATION
The 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 2019.
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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
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.
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 when the
Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
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. All acquisition expenses have been reported within the
consolidated Statement of Comprehensive Income immediately.
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability
is recognised in accordance with IFRS 3 either in profit or loss or as a change to other 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 Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006
not to publish its individual Statements of Comprehensive Income and related notes.
Company Number 05452547
43
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Revenue represents the total of amounts receivable for goods and services provided excluding value added
tax.
The Group has adopted IFRS 15 "Revenue from contracts with Customers" with effect from 1 April 2018. IFRS
15 establishes a five-step model to accounting for revenue arising from contracts with customers. It requires
revenue to be recognised when/as control of a good or service transfers to a customer at an amount that
reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or
services to a customer.
The Group enters into sale of multi-element contracts, which contain a combination of separate performance
obligations which can include hardware, software and different services, including telematics services,
software maintenance, installation and customisation and configuration contracts. Each performance
obligation is allocated a transaction price based on the stand-alone selling prices. Where stand-alone prices
are not directly observable, they are estimated based on expected cost plus margin.
Revenue on the sale of telematics devices and other hardware is recognised when control transfers to a
customer, or where bill and hold arrangements exist, when the products are identified separately as
belonging to the customer and currently ready for physical transfer to the customer. If the contracts include
the installation of hardware, revenue for the hardware is recognised at a point in time when the hardware is
delivered, the legal title passed and the customer has accepted the hardware.
Revenue for telematics services, being the provision of data and data analytics to customers, is recognised in
the accounting period in which the services are rendered. The appropriate portion of service revenue invoiced
in advance covering future periods is shown as deferred income within current and non-current liabilities.
Revenue for installation services is recognised when the performance obligation per the contract is complete.
Revenue from the sale of perpetual software license is recognised when the software is made available for
use by the customers. Revenue from the development of software and the integration of software with
customers’ existing systems is recognised over the life of the development project by reference to percentage
of completion. Revenue for engineering services is recognised as the services are provided.
Revenue from software maintenance contracts is based on the allocated transaction price based on the stand-
alone selling prices, recognised over the support term. Where the stand-alone price is not directly observable,
they are estimated based on expected cost plus margin.
Revenue from SaaS (software as a service) contracts is based on the allocated transaction price based on the
stand-alone selling prices, recognised over the contract term. Where the stand-alone price is not directly
observable, they are estimated based on expected cost plus margin.
Revenue from customisation/configuration contracts is based on the allocated transaction price based on the
stand-alone selling prices, recognised as related services are performed. Where the stand-alone price is not
directly observable, they are estimated based on expected cost plus margin.
Rental income from operating leases and rental of equipment is recognised on a straight-line basis over the
term of the lease or rental period.
Company Number 05452547
44
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION (CONTINUED)
Assets sold by the Group where substantially all the risk and rewards of ownership of the assets have been
transferred to the customer, of which the customer is paying over a number of future periods are classified as
finance leases. Revenue is recognised at the present value of the minimum lease payments at the inception of
the lease. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of
return on the Group's net investment outstanding in respect of the leases.
Invoicing for all revenue streams is undertaken in accordance with the terms of the agreement with the
customer. Where this is different to revenue recognition either accrued or deferred income is recognised on
the statement of financial position as appropriate.
In cases where customers pay for the goods and services over an agreed period, the fair value of the
consideration is determined by discounting all future receipts using an imputed rate of interest. The
difference between the fair value and the nominal amount of the consideration is recognised as investment
income over the payment period.
GRANT INCOME
Government grants for revenue expenditure are recognised in the Statement of Comprehensive Income on a
systematic basis over the periods in which the entity recognises expenses for the related costs for which the
grants are intended to compensate. For grants relating to assets the grant is deducted from the carrying
amount of the asset.
OPERATING LEASES - LEASEE
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.
OPERATING LEASES - LESSOR
Leases where the Group retains substantially all the risks and rewards of ownership are classified as operating
leases. The lease income from the operating leases is charged to the Statement of Comprehensive Income on
a straight-line basis over the periods of the leases.
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. See note 9 for
further details.
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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
TAXATION (CONTINUED)
Research and Development tax credits (SME R&D tax relief) are shown as part of the current tax charge for the
year in the Statement of Comprehensive Income.
Research and Development Expenditure Credit ('RDEC') in relation to research and development costs not
claimed under SME R&D tax relief are shown as part of other income in the Statement of Comprehensive
Income.
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 on share based payments is recognised in the Statement of Comprehensive Income to the extent
that the future tax deduction does not exceed the charge in the Statement of Comprehensive Income.
Deferred tax for the excess is recognised directly in Statement of Changes in Equity.
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.
SHARE-BASED PAYMENTS
The Group issues equity-settled share-based payments to certain employees. The Group has applied the
requirements of IFRS 2 Share-based payment, the corresponding entry to the expense in the Statement of
Comprehensive Income is recognised in equity within the Statement of Changes in Equity. 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.
GOODWILL
Goodwill arising on consolidation is recorded as an intangible asset and is the surplus of the fair value of the
consideration over the Group’s interest in the fair value of identifiable net assets (including intangible assets)
acquired. Goodwill is tested for impairment annually as at 31 March and when circumstances indicate that the
carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount
of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less
than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be
reversed in future periods. Any impairment identified as a result of the review is charged in the Statement of
Comprehensive Income.
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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS OTHER THAN GOODWILL
An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to
the extent that it is probable that the expected future economic benefits attributable to the asset will flow to
the Group and that its cost can be measured reliably. Such intangible assets are carried at cost less
amortisation. Amortisation is charged to ‘Administrative expenses’ in the Statement of Comprehensive
Income on a straight-line basis over the intangible assets’ useful economic life. The nature of intangible assets
recognised and their estimated useful lives are as follows:
Software
Development cost
20 - 100% Straight line
10 - 40% Straight line
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.
INTANGIBLE ASSETS ACQUIRED AS PART OF A BUSINESS COMBINATION
For acquisitions, the Group recognises intangible assets separately from goodwill provided they are separable
or arise from contractual or other legal rights and their fair value can be measured reliably. Intangible assets
are initially recognised at fair value, which is regarded as their cost. Intangible assets are subsequently held at
cost less accumulated amortisation and impairment losses. Where intangible assets have finite lives, their cost
is amortised on a straight-line basis over those lives. The nature of intangible assets recognised and their
estimated useful lives are as follows:
Software
Websites
Intellectual property
Customer relationships
10 - 20% Straight line
33 - 50% Straight line
20% Straight line
33% 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 intangible assets are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable.
Company Number 05452547
47
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
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. In summary the
depreciation rates used for each category is as follows:
Freehold property
Furniture, fixtures and equipment
Computer equipment
Motor vehicles
2% Straight line
5% - 10% Straight line
20% Straight line
25% Straight line
PROPERTY, PLANT AND EQUIPMENT IMPAIRMENT
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.
INVENTORIES
Inventories are valued at the lower of cost and net realisable value. In general cost is determined on weighted
average cost 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.
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. The IAS 39 category, Loans and
Receivables, required assets to be measured at amortised cost and therefore the change in category in the
adoption of IFRS 9 does not in fact result in a change in measurement of trade receivables.
The Group recognises an allowance for Expected Credit Losses (ECLs) for trade receivables. IFRS 9 requires an
impairment provision to be recognised on origination of a trade receivable, based on its ECL.
The directors have taken the simplification available under IFRS 9.5.5.15 which allows the loss amount in
relation to a trade receivable to be measured at initial recognition and throughout its life at an amount equal
to lifetime ECL. This simplification is permitted where there is either no significant financial component (such
as customer receivables where the customer is expected to repay the balance in full prior to interest accruing)
or where there is a significant financial component (such as where the customer expects to repay only the
minimum amount each month), but the directors make an accounting policy choice to adopt the
simplification.
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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
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 where applicable.
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. Financial liabilities and equity instruments are initially
recognised at fair value and subsequently at amortised cost using the effective interest method.
BANK BORROWINGS
Borrowings are initially recognised at fair value, being proceeds received less directly attributable transaction
costs incurred. Borrowings are subsequently measured at amortised cost with any transaction costs amortised
to the Statement of Comprehensive Income over the period of the borrowings using the effective interest
method.
TRADE PAYABLES
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payables are initially recognised at fair value and subsequently at amortised
cost using the effective interest method.
FINANCE LEASES - LESSEE
Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership
of the assets have been transferred to the Group, are capitalised in the Statement of Financial Position and
depreciated over the shorter of the lease term or their useful lives. The asset is recorded at the lower of its
fair value and the present value of the minimum lease payments at the inception of the lease. The capital
elements of future obligations under finance leases are included in liabilities in the Statement of Financial
Position and analysed between current and non-current amounts. The interest elements of future obligations
under finance leases are charged to the Statement of Comprehensive Income over the periods of the leases
and represent a constant proportion of the balance of capital repayments outstanding in accordance with the
effective interest rate method.
PROVISIONS
Provisions are recognised when the Group has a present obligation as a result of past event and it is probable
that the Group will be required to settle that obligation. Provisions are measured at the Directors' best
estimate of the net expenditure required to settle the obligation at the year-end date and are discounted to
present value where the effect is material.
Company Number 05452547
49
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
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. Where any group company purchases the
company’s equity share capital (treasury shares), the consideration paid, including any directly attributable
incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders
until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any
consideration received, net of any directly attributable incremental transaction costs and the related income
tax effects, is included in equity attributable to the company’s equity holders.
Retained earnings represent retained profits and the share based payment reserve.
FOREIGN CURRENCIES
Sterling is the presentational currency of the Group. The functional currency of the companies within the
Group is sterling. 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.
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.
Company Number 05452547
50
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
SEGMENTAL REPORTING (CONTINUED)
The Board have assessed that there continues to be just one segment following the continued integration of
the Trakm8, DCS, Route Monkey and Roadsense 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). With effect from 1 April 2019, the Group ceased the sale of Contract Electronic
Manufacturing services (Products) and other third party hardware only supply.
GOING CONCERN
These financial statements are presented on a going concern basis. To monitor the future cash position the
Group produces projections of its working capital and long term funding requirements covering three months
in detail and 1 and 2 year future projections on a monthly basis. These projections are updated on a regular
basis and progress against the projections is closely monitored by the Board and the finance team.
Projections include assessments against the covenants agreed with our bank. On 27 June 2019 the Group
entered into an Amendment and Restatement Agreement with HSBC that amended the covenants on both
the term loan and revolving credit facility, following the waiver of existing covenants during the year. The
recently agreed covenants relate to cashflow cover, EBITDA and leverage. At the year end the Group had cash
balances of £1,205,000 and undrawn revolving credit facilities of £650,000 at 31 March 2019. The projections
for twelve months from date of signing the financial statements show that the Group has sufficient cash
resources and will meet its covenants with ample headroom for the foreseeable future. The Group has
undertaken a number of adverse sensitivities against its projections, these show that we would still have cash
reserves in all these scenarios and would meet our covenants. This sensitivity analysis showed that if either a
32% reduction in Adjusted EBITDA, or a 50% reduction in net cashflow from operating activities for the full
financial year materialised that covenants would still be met. On this basis the Directors have a reasonable
expectation that the Group will have adequate financial resources to continue in operation for the
foreseeable future.
CHANGES IN ACCOUNTING STANDARDS AND DISCLOSURES
The Group has adopted the following new standards, or new provisions of amended standards:
Number
IFRS 2
IFRS 9
IFRS 15
IFRIC 22
IAS 7
2014-2016 Cycle
Other than the standards discussed below, none are expected to have a material impact on the Group.
Title
Amendments to Share Based Payments
Financial Instruments
Revenue from Contracts with Customers
Foreign Currency Transactions and Advance Consideration
Disclosure Initiative
Annual Improvements to IFRSs
IFRS 9 Financial Instruments
IFRS 9 'Financial Instruments' replaces IAS 39 'Financial Instruments: Recognition and Measurement' for
annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for
financial instruments: classification and measurement; impairment; and hedge accounting. The Group has
applied IFRS 9 retrospectively, with the initial application date of 1 April 2018. There are no material
classification or measurement changes to financial assets or liabilities as a result of the change in standard.
Company Number 05452547
51
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
CHANGES IN ACCOUNTING STANDARDS AND DISCLOSURES (CONTINUED)
IFRS 15 Revenue from contracts with customers
IFRS 15 and its related amendments supersede IAS11 'Construction Contracts' and IAS 8 'Revenue' and related
interpretations. It applies to all revenue arising from contracts with its customers and became effective for
annual periods beginning on or after 1 January 2018. IFRS 15 establishes a five-step model to account for
revenue arising from contracts with customers. It requires revenue to be recognised when/as control of a
good or service transfers to a customer at an amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods or services to a customer.
IFRS 15 requires entities to exercise judgement, taking into consideration all the relevant facts and
circumstances when applying each step of the model to contracts with their customers. The standard also
specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to
fulfilling a contract. In addition, the standard requires enhanced and extensive disclosure about revenue to
help investors better understand the nature, amount, timing and uncertainty of revenue and cash flows from
contracts with customers.
The Group has adopted IFRS 15 using the full retrospective method of adoption and have considered all
aspects of IFRS 15. Refer to note 31 for the current and prior year impact of adopting IFRS 15 using the full
retrospective method.
OUTLOOK FOR ADOPTIONS OF FUTURE STANDARDS (new and amended)
At the date of authorisation of the consolidated financial information, the following standards and
interpretations which have not yet been adopted early in these consolidated financial statements were in
issue but not yet effective (and in some cases had not yet been adopted by the EU):
Number
IFRS 16
IFRIC 23
IFRS 9
IAS 28
IAS 19
IFRS 3
IFRS 11
IAS 12
Title
Leases
Uncertainty over Income Tax Treatments
Prepayment Features with Negative Compensation
Long-term Interests in Associates and Joint Ventures
Plan Amendment, Curtailment or Settlement
Previously held Interests in a joint operation
Previously held Interests in a joint operation
Income tax consequences of payments on financial
instruments classified as equity
Effective
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
Borrowing costs eligible for capitalisation
2015-2017 Cycle
IAS 23
Annual Improvements
Amendments to IFRS 3, ‘Business combinations’, definition of a business
Amendments to IAS 1 and IAS 8
Amendments to the Conceptual framework
Other than the standards discussed below, none are expected to have a material impact on the Group.
1 January 2019
Not yet endorsed
Not yet endorsed
Not yet endorsed
Not yet endorsed
Company Number 05452547
52
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (CONTINUED)
CHANGES IN ACCOUNTING STANDARDS AND DISCLOSURES (CONTINUED)
IFRS 16 Leases
IFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet by
lessees, as the distinction between operating and finance leases is removed. Under the new standard, an
asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only
exceptions are short-term and low-value leases.
The Group has reviewed all of the Group’s leasing arrangements over the last year in light of the new lease
accounting rules in IFRS 16. The standard will affect primarily the accounting for the Group’s operating leases.
As at the reporting date, the Group has non-cancellable operating lease commitments of £2,430,000, see note
25. Of these commitments, approximately £26,000 relate to short-term leases and £3,000 to low value leases
which will both be recognised on a straight-line basis as expense in profit or loss.
For the remaining lease commitments the group expects to recognise right-of-use assets of approximately
£2,326,000 on 1 April 2019, lease liabilities of £2,326,000 (after adjustments for prepayments and accrued
lease payments recognised as at 31 March 2019) and deferred tax assets of £395,000. Overall net assets will
be approximately £395,000 higher, and net current assets will be £429,000 lower due to the presentation of a
portion of the liability as a current liability.
The group expects that net profit after tax will decrease by approximately £23,000 for 2019 as a result of
adopting the new rules. Adjusted PBT used to measure segment results is expected to increase by
approximately £429,000, as the operating lease payments were included in PBT, but the amortisation of the
right-of-use assets and interest on the lease liability are excluded from this measure.
Operating cash flows will increase and financing cash flows decrease by approximately £399,000 as
repayment of the principal portion of the lease liabilities will be classified as cash flows from financing
activities.
The Group’s activities as a lessor are not material and hence the group does not expect any significant impact
on the financial statements. However, some additional disclosures will be required from next year.
The Group will apply the standard from accounting period beginning on 1 April 2019. The Group intends to
apply the simplified transition approach and will not restate comparative amounts for the year prior to first
adoption. Right-of-use assets for property leases will be measured on transition as if the new rules had always
been applied. All other right-of-use assets will be measured at the amount of the lease liability on adoption
(adjusted for any prepaid or accrued lease expenses).
Company Number 05452547
53
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
5 CRITICAL JUDGEMENTS AND ESTIMATES 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 is recognised with reference to the fair value of contracts.
Based on revenue recognition criteria in note 4 above, the allocation of transaction price to different
performance obligations was identified as the only part of the criteria that is a significant judgement.
Management applies judgement on contracts which involve more than one deliverable. Each deliverable is
assigned to one or more separate element of revenue and the contract consideration is allocated to each
element based on its relative fair value. Determining the fair value of each element can require complex
estimates due to the nature of goods and services provided. A fair value is estimated for each element
based on equivalent sales prices where it is sold on a standalone basis after considering volume discounts
when applicable.
The split between initial recognition for products supplied and subsequent recognition for service revenue
over the contract period and allocating the fair value between these elements is another key judgement
made by management in ensuring appropriate revenue recognition.
Management also assesses the state of completion of engineering services, software development and
integration projects by reference to work done, elements delivered and services provided to the customer.
CAPITALISED DEVELOPMENT COSTS
At the start of a project, management assesses whether or not the project meets the criteria for
capitalisation under the requirements of IAS 38. Subsequently, the recoverability of capitalised development
costs is dependent on assessments of the future commercial viability of the relevant products and processes.
Management assess this viability based on market knowledge and demand from customers for
improvements to existing product, service and software capabilities.
Company Number 05452547
54
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
5 CRITICAL JUDGEMENTS AND ESTIMATES IN APPLYING THE GROUP’S ACCOUNTING POLICIES (CONTINUED)
KEY SOURCES OF ESTIMATION UNCERTAINTY
The key assumptions concerning the future and other key estimations 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 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. Active credit
control management is undertaken with a credit approval process in place and active monitoring of accounts
resulting in future supplies being stopped if debts 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.
The Group recognises an allowance for Expected Credit Losses (ECLs) for trade receivables. IFRS 9 requires an
impairment provision to be recognised on origination of a trade receivable, based on its ECL.
The directors have taken the simplification available under IFRS 9.5.5.15 which allows the loss amount in
relation to a trade receivable to be measured at initial recognition and throughout its life at an amount equal
to lifetime ECL. This simplification is permitted where there is either no significant financial component (such
as customer receivables where the customer is expected to repay the balance in full prior to interest
accruing) or where there is a significant financial component (such as where the customer expects to repay
only the minimum amount each month), but the directors make an accounting policy choice to adopt the
simplification.
IMPAIRMENT OF GOODWILL
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation
of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use
requires the Group to make an estimate of the expected future cash flows from the cash generating unit and
also to choose a suitable discount rate in order to calculate the present value of those cash flows. Further
details are given in note 14.
Company Number 05452547
55
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
6 SEGMENTAL ANALYSIS
The chief operating decision maker (“CODM”) is identified as the Board. It continues to define all the Group's
trading under the single Integrated Telematics Technology segment and therefore review the results of the
group as a whole. Consequently all of the Group’s revenue, expenses, assets and liabilities are in respect of
one Integrated Telematics Technology segment.
The Board as the CODM review the revenue streams of Integrated Fleet, Optimisation, Insurance and
Automotive Solutions (Solutions) and Hardware as Discrete Devices (Products) as part of their internal
reporting. Products is the sale of Contract Electronic Manufacturing services (now ceased) and other third
party hardware only supply. Solutions represents the sale of the Group’s full vehicle telematics and
optimisation services, engineering services, professional services and mapping solutions to customers.
A breakdown of revenues within these streams are as follows:
Solutions
Products
A geographical analysis of revenue by destination is as follows:
Year ended
31 March
2019
£'000
19,145
-
19, 145
Year ended
31 March
2018
Restated
£'000
26,088
3,273
29,361
Year ended 31 March 2019
Products
Solutions
Total
United Kingdom
North America
Norway
Rest of Europe
Rest of World
7 OTHER INCOME
£'000
18,910
12
4
111
108
19,145
£'000
-
-
-
-
-
-
£'000
18,910
12
4
111
108
19,145
Grant income
R&D tax credit
R&D tax credit adjustment in respect of prior periods
Year ended 31 March 2018
Products
Restated
£'000
3,068
-
-
197
8
3,273
Solutions
Restated
£'000
25,764
56
58
73
137
26,088
Total
Restated
£'000
28,832
56
58
270
145
29,361
Year
ended 31
March
2019
£'000
449
5
(18)
436
Year
ended 31
March
2018
£'000
531
35
-
566
Company Number 05452547
56
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
8 OPERATING LOSS/ PROFIT
The following items have been included in arriving at operating (loss)/profit:
Depreciation (see note 15)
- owned fixed assets
- assets on hire purchase
Amortisation of intangible assets (see note 14)
Operating lease rentals
- Land and buildings
- Other
Research and development expenditure
(Gain)/Loss on foreign exchange transactions
Staff costs (note 12)
(Profit)/Loss on disposal of property, plant & equipment
Exceptional administrative costs
Auditors’ remuneration
- Fees payable to the Company’s auditors for the audit of the parent company
and consolidated financial statements
Fees payable to the Company’s auditors for other services:
- Share based payments advisory services
Year ended
31 March
2019
£'000
Year ended
31 March
2018
£'000
242
71
1,866
261
60
1,484
208
183
933
(3)
6,533
(106)
1,930
159
263
1,485
(59)
7,936
26
1,405
93
103
-
8
Adjusted loss/ profit before tax is monitored by the Board and measured as follows:
(Loss)/ profit before tax
Exceptional administrative costs (note 9)
Share based payments
Adjusted (loss)/profit before tax
9 EXCEPTIONAL ADMINISTRATIVE COSTS
Acquisition costs
Integration & restructuring costs
Head office relocation
Contract manufacturing closure costs
New product component refit costs
Exceptional communication correction costs
Iranian bad debt
Year ended
31 March
2019
£'000
(3,563)
1,930
181
(1,452)
Year ended
31 March
2018
£'000
Restated
453
1,405
216
2,074
Year ended
31 March
2019
£'000
102
707
-
-
453
375
293
1,930
Year ended
31 March
2018
£'000
256
501
238
410
-
-
-
1,405
Company Number 05452547
57
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
9 EXCEPTIONAL ADMINISTRATIVE COSTS (CONTINUED)
The acquisition costs incurred in 2019 and 2018 relate to non-underlying charges under two separate
agreements linked to the acquisition in 2017. The costs incurred are directly linked to the acquisition and
not as part of the underlying business. One agreement terminates on 31 July 2019, and the second
agreement terminated on 31 March 2019.
The Company has incurred significant costs relating to its ongoing project to streamline and rationalise the
operations of the business. This has resulted in the following non-underlying, one-off costs:
- In the current and prior year, integration and restructuring costs incurred relate to integrating the activities
of Route Monkey Limited, Roadsense Limited and DCS Systems that were acquired in previous financial years
and include costs associated with office closures and costs and profits incurred as part of its long-term real
estate plan.
- Head Office relocation costs in the prior year are non-underlying costs incurred in moving the Head Office
and associated administrative functions from Shaftesbury to the West Midlands.
- Contract manufacturing closure costs in the prior year relate to residual inventory costs and contract exit
costs following cessation of manufacturing contracts with third parties.
The Company has also incurred the following exceptional in the current financial year:
- In the current year product component refit costs incurred relate to significant component and software
issues that arose during the financial year on a recently launched product. These issues have been fixed by
year-end. However significant re-visit and material costs have been incurred as a result of the project to
remedy these issues. No customers have been lost as a result of these issues.
- In the current year communication correction costs incurred relate to an intermittent fault uncovered with
one of our communication elements during our joint extended testing. This resulted in a reduction in signal
strength as the component searched for the supplier’s network signal, rather than the strongest signal
available. This affected two customers. We upgraded the product with an alternative which now provides
much enhanced roaming capability across Europe. The enhanced signal will also enable us to deliver a wider
range of products. The customers have subsequently ordered further devices from the Group.
- In the current year, it was considered inappropriate to proceed with a contract to supply insurance
solutions into Iran due to the impact of US sanctions, therefore the cost of the work and solutions supplied in
the previous financial year have been provided for.
10 FINANCE COSTS
Interest on bank loans
Amortisation of debt issue costs
Interest on Hire Purchase and similar agreements
Year ended 31
March 2019
£'000
172
28
33
233
Year ended 31
March 2018
£'000
147
13
29
189
Company Number 05452547
58
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
11
INCOME TAX
Tax credit for the year
Our tax credit for the year is shown below. Tax is made up of current and deferred tax. Current tax is the
amount payable/(receivable) on the taxable income in the year and any adjustments to the tax
payable/(receivable) in the previous years. Deferred tax is explained in note 18.
Current tax
Deferred tax
current year credit
prior year adjustment
sub total
current year charge
prior year adjustment
sub total
Year ended 31
March 2019
£'000
(1,034)
-
(1,034)
Year ended 31
March 2018
Restated
£'000
(972)
10
(962)
(12)
(11)
(23)
630
(188)
442
Income tax credit
Total
(1,057)
(520)
Tax recognised directly in equity
In addition to the amount credited to the income statement, tax movements recognised in equity were as
follows:
Deferred tax:
Share based payment
Tax debit/ (credit) in the statement of changes in equity
Year ended 31
March 2019
£'000
Year ended 31
March 2018
£'000
38
38
(38)
(38)
Company Number 05452547
59
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
11
INCOME TAX (CONTINUED)
Factors affecting the tax charge
The tax assessed for the year is lower (2018: lower) than the applicable rate of corporation tax in the UK. The
difference is explained below:
(Loss)/Profit before tax
Year ended 31
March 2019
£'000
(3,563)
Year ended 31
March 2018
Restated
£'000
453
(Loss)/Profit on ordinary activities multiplied by the standard rate of
corporation tax in the UK of 19% (2018: 19%)
(677)
86
Effects of:
Expenses not deductible/income not taxable
R&D relief enhanced deduction
Opening and closing deferred tax rate adjustment
Adjustments in respect of prior periods:
Deferred tax
Current tax
Other movements
Total tax credit
R&D relief enhanced deduction
42
(463)
(5)
162
(559)
-
(12)
-
58
(1,057)
(188)
10
(31)
(520)
This deduction is available on research and development work done by the Group to develop and enhance its
data analytics functionality and telematics hardware.
Prior year adjustment
The prior year adjustment mainly relates to the R&D tax credits that were finalised during the year.
Finance Act 2016 was substantively enacted on 6 September 2016 and reduced the main rate of corporation
tax in the UK to 17% with effect from 1 April 2020.
Company Number 05452547
60
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
12
EMPLOYEES
Year ended
31 March
2019
No.
Year ended
31 March
2018
No.
The average monthly number of persons (including Directors) employed by the Group was:
Engineering
Sales & marketing
Production
Administration
75
90
44
24
233
76
84
59
25
244
Staff costs for the employees and Directors (included under Administrative expenses and Cost of sales):
Wages and Salaries
Social security costs
Share based payments
Other pension costs
Year ended
31 March
2019
£'000
5,438
666
181
248
6,533
Year ended
31 March
2018
£'000
6,772
639
216
309
7,936
The compensation for key management personnel was as follows (included under Administrative expenses
and Cost of sales):
Salaries and other short-term employee benefits
Post-employment benefits
Share based payments
Year ended
31 March
2019
£'000
Year ended
31 March
2018
£'000
1,375
35
175
1,585
1,466
51
175
1,692
The key management personnel are the Directors and four senior managers who became key management
personnel during the prior year.
The key management personnel made gains of £88,000 (2018: £62,000) on the exercise of share options
during the year.
Details of Directors’ fees and salaries, bonuses and pensions (including that of the highest paid Director)
have been audited and are given in the Directors’ Report on page 29.
Company Number 05452547
61
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
13 EARNINGS PER ORDINARY SHARE
The earnings per Ordinary share have been calculated in accordance with IAS 33 using the profit for the year
and the weighted average number of Ordinary shares in issue during the year as follows:
(Loss)/Profit for the year after taxation
Exceptional administrative costs
Share based payments
Tax effect of adjustments
Adjusted (loss)/profit for the year after taxation
Number of Ordinary shares of 1p each at 31 March
Basic weighted average number of Ordinary shares of 1p each
Diluted weighted average number of Ordinary shares of 1p each
Basic (loss)/earnings per share
Diluted (loss)/earnings per share
Adjust for effects of:
Exceptional costs
Share based payments
Adjusted basic (loss)/earnings per share
Adjusted diluted (loss)/earnings per share
Year ended 31
March 2019
£'000
(2,506)
1,930
181
(367)
(762)
Year ended 31
March 2018
Restated
£'000
973
1,405
216
(267)
2,327
No.
50,004,002
40,397,188
40,397,188
No.
35,898,254
35,740,877
36,297,287
(6.20p)
(6.20p)
3.87p
0.45p
(1.89p)
(1.89p)
2.72p
2.68p
3.18p
0.60p
6.51p
6.41p
Company Number 05452547
62
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
14
INTANGIBLE ASSETS
COST
As at 1 April 2017
Additions - Internal
developments
Additions - External
purchases
As at 31 March 2018
Additions - Internal
developments
Additions - External
purchases
As at 31 March 2019
AMORTISATION
As at 1 April 2017
Charge for year
Amortisation on disposals
As at 31 March 2018
Charge for year
Amortisation on disposals
As at 31 March 2019
NET BOOK AMOUNT
As at 31 March 2019
Goodwill
£'000
Intellectual
property
£'000
Customer
relationships
£'000
Development
costs
£'000
Software
£'000
Total
£'000
10,417
1,920
100
7,234
1,426
21,097
-
-
-
2,707
117
2,824
-
10,417
-
1,920
-
100
680
10,621
332
1,875
1,012
24,933
-
-
-
2,844
144
2,988
-
10,417
-
1,920
-
100
569
14,034
14
2,033
583
28,504
- 1,671
117
-
-
-
- 1,788
61
-
-
-
- 1,849
22
34
-
56
33
-
89
1,978
1,123
-
3,101
1,531
-
4,632
318
210
-
528
241
-
769
3,989
1,484
-
5,473
1,866
-
7,339
10,417
71
11
9,402
1,264
21,165
As at 31 March 2018
10,417
132
44
7,520
1,347
19,460
As at 1 April 2017
10,417
249
78
5,256
1,108
17,108
Goodwill arose in relation to the Group’s acquisition of 100% of the share capital of Roadsense Technology
Limited (Roadsense), Route Monkey Limited (Route Monkey), Box Telematics Limited (Box) and DCS Systems
Limited (DCS).
Since the acquisition Roadsense, Box, Route Monkey and DCS have been incorporated into the Trakm8 business.
These businesses have therefore been assessed as one cash generating unit for an impairment test on Goodwill.
The impairment review has been performed using a value in use calculation.
The impairment review has been based on the Group’s budgets for 2019/20 which have been reviewed and
approved by the Board. Forecasts for the subsequent 4 years have been produced based on 7% (a prudent
growth rate for telematics market) growth rates in revenue and EBITDA in each year. A net present value has
been calculated using a pre-tax discount rate of 10% (Group's weighted average cost of capital) which is deemed
to be a reasonable rate taking account of the Group’s cost of funds and an extra element for risk. A terminal
value has been calculated and included in the discounted cash flow forecasts used within the model to fully
support the goodwill value. A growth rate of 2% was used to determine the terminal value. In addition a
sensitivity analysis has been undertaken and indicates that an impairment will be triggered by making the
following combined changes to the assumptions:
1. Decrease in annual growth rates to 6.5% per annum for five years (terminal growth rate of 2%)
2. Increase in the discount rate to 11%
3. Decrease in 2020 free cash flow of 50%
Amortisation expenses of £1,866,000 (2018: £1,484,000) have been charged to Administrative expenses in the
Consolidated Statement of Comprehensive Income.
Company Number 05452547
63
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
15 PROPERTY, PLANT AND EQUIPMENT
Freehold
property
£'000
Furniture,
fixtures and
equipment
£'000
Computer
equipment
£'000
Motor
vehicles
£'000
508
-
-
-
508
59
(420)
147
1,600
78
2
(278)
1,402
229
(58)
1,573
730
168
1
(218)
681
90
-
771
7
-
-
-
7
-
-
7
49
4
-
-
53
8
(56)
5
488
170
2
(262)
398
176
(33)
541
446
147
(1)
(208)
384
129
-
513
7
-
-
-
7
-
-
7
Total
£'000
2,845
246
3
(496)
2,598
378
(478)
2,498
990
321
1
(470)
842
313
(89)
1,066
142
1,032
258
-
1,432
COST
As at 1 April 2017
Additions
Exchange differences
Disposals
As at 31 March 2018
Additions
Disposals
As at 31 March 2019
DEPRECIATION
As at 1 April 2017
Charge for year
Exchange differences
Disposals
As at 31 March 2018
Charge for year
Disposals
As at 31 March 2019
NET BOOK AMOUNT
As at 31 March 2019
As at 31 March 2018
455
1,004
297
-
1,756
As at 1 April 2017
459
1,112
284
-
1,855
Included within freehold property is £85,000 (2018: £285,000) relating to land which is not depreciated.
The Group’s obligations under finance leases (see note 20) are secured by the lessors’ title to the leased
assets, which have a carrying amount of £564,000 (2018: £320,000) included within Property, Plant and
Equipment. This consists of Furniture, fixtures and equipment £382,000 (2018: £134,000) and computer
equipment £182,000 (2018: £186,000).
Total depreciation expenses of £313,000 (2018: £321,000) have been charged to administrative expenses in
the Consolidated Statement of Comprehensive Income.
16
INVENTORIES
Raw materials
Work in progress
Finished goods and goods for resale
As at 31
March 2019
£'000
1,158
212
1,366
2,736
As at 31
March 2018
£'000
431
566
1,559
2,556
The cost of inventories recognised as an expense and included in cost of sales amounted to £3,657,000
(2018: £8,253,000). During the year old inventory lines totalling £127,000 (2018: £306,000) were written
down and charged to cost of sales in the Consolidated Statement of Comprehensive. Residual inventory costs
following cessation of Contract Electronic Manufacturing contracts with third-parties totalling £nil (2018:
£60,000) were written down and charged to exceptional administrative costs (note 9) in the Consolidated
Statement of Comprehensive Income.
Company Number 05452547
64
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
17
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Amounts receivable under finance
leases
Prepayments
Assets recognised for goods and
services delivered but not billed
(contract asset)
Non-current assets
As at 31
March 2019
As at 31
March 2018
Restated
£'000
-
-
£'000
-
-
Current assets
As at 31
March 2019
£'000
4,488
253
As at 31
March 2018
Restated
£'000
5,730
97
139
318
179
174
-
-
-
-
412
367
3,013
3,558
139
318
8,345
9,926
The analysis of trade receivables by currency is as follows:
Pound Sterling
Dollar
Euro
Other
As at 31
March 2019
£'000
4,374
-
28
86
4,488
As at 31
March 2018
£'000
5,700
2
28
-
5,730
An allowance is made for Expected Credit Losses (ECLs) for trade receivables. IFRS 9 requires an
impairment provision to be recognised on origination of a trade receivable, based on its ECL. The
allowance that has been made for ECL for trade receivables is £720,000 (2018: £505,000). In addition a
credit note provision of £nil (2018: £220,000) has been made against revenue for a specific contract.
As at 31 March 2019 trade receivables of £1,346,000 (2018: £1,141,000) 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
As at 31
March 2019
£'000
832
514
1,346
As at 31
March 2018
£'000
975
166
1,141
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.
The analysis of amounts receivable under finance leases is as follows:
Within one year
After one and within two years
After two and within five years
Minimum lease payments
2018
£'000
185
184
142
511
2019
£'000
185
142
-
327
Present value of
minimum lease
payments
2019
£'000
179
139
-
318
2018
£'000
174
179
139
492
The interest rate inherent in the leases is fixed at the contract date for the entire lease term. The average
effective interest contract is approximately 2.45% (2018: 2.45%) per annum.
Company Number 05452547
65
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
18 DEFERRED TAX
The analysis of deferred tax liability is as
follows:
Deferred tax liability
Deferred tax liability to be released within 12 months
Deferred tax liability to be released after more than 12 months
The deferred tax liability consists of the following:
Trading losses
Short term timing differences
Accelerated tax depreciation
As at 31
March 2019
£'000
(47)
(41)
(88)
As at 31
March 2018
Restated
£'000
(39)
(34)
(73)
As at 31
March 2019
£'000
1,525
(56)
(1,557)
(88)
As at 31
March 2018
Restated
£'000
1,169
3
(1,245)
(73)
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the
related tax benefit through future taxable profits is probable.
The movement in the deferred income tax asset during the year is as
follows:
At 31 March 2018 (restated)
Credited / (debited) to the Statement of
Comprehensive Income
Credited / (debited) to the Statement of
Changes in Equity
At 31 March 2019
Trading
losses
£'000
1,169
Accelerated
tax
depreciation
£'000
(1,245)
Short term
timing
differences
£'000
3
356
(312)
-
-
1,525
(1,557)
(21)
(38)
(56)
TOTAL
£'000
(73)
23
(38)
(88)
Company Number 05452547
66
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
19 TRADE AND OTHER PAYABLES
Non-current liabilities
Trade payables
Social security and other taxes
Other payables
Accruals
Payments received in advance of service delivery
(contract liability)
£'000
As at 31
March 2019
As at 31
March 2018
Restated
£'000
- -
- -
- -
-
-
Current liabilities
As at 31
March 2019
As at 31
March 2018
Restated
£'000
4,741
1,886
139
1,122
£'000
3,003
953
144
965
607
607
525
525
1,242
6,307
1,710
9,598
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Revenue recognised in the current reporting period relating to carried-forward contract liabilities was £2.9m
(2018: £3.2m).
20
BORROWINGS
As at 31 March 2019
As at 31 March 2018
Bank loan
Arrangement
fee
£'000
Gross
£'000
Net
£'000
Obligations
under
finance
leases
£'000
Bank loan
Total
£'000
Gross
£'000
Arrangement
fee
£'000
Net
£'000
Obligations
under
finance
leases
Total
£'000 £'000
Current 1,028
Non-
Current
5,229
(28)
1,000
237 1,237
1,004
(28)
976
175 1,151
(21)
5,208 389 5,597
5,307
(49)
5,258
363 5,621
6,257
(49)
6,208 626 6,834
6,311
(77)
6,234
538 6,772
All borrowings are held in sterling and the Directors consider their carrying amount approximates to their fair
values.
Bank loans comprise the following:
A £5.0m term loan with HSBC. The loan is secured by a fixed and floating charge on all the assets of the
Group. It is repayable by monthly instalments until 2021 and bears interest at a floating rate of 1.95% over
base rate. As at 31 March 2019 the Group owed £1.9m (2018: £2.9m).
A £5.0m revolving credit facility with HSBC which is repayable in full on 31 December 2020. The loan bears an
interest rate of 1.75% over LIBOR on the drawn amount and a fee of 0.75% on the undrawn facility. As at 31
March 2019 the Group had drawn down £4.4m of this credit facility (2018: £3.4m).
The interest rate increased to 4.5% on both facilities from 27 June 2019.
The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets (see note
15).
Total borrowings as at 31 March 2019 were £6.8m and at 31 March 2018 were £6.8m. The movement in total
borrowings between these dates relate to changes arising from cash flows and non-cash changes ,being,
increases in borrowings due to new finance leases of £0.3m, additional draw-downs under the revolving credit
facility of £2.0m which were offset by loan repayments of £2m, repayments of finance leases of £0.2m and
the release of the arrangement fee of £0.04m.
Company Number 05452547
67
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
21
PROVISIONS
As at 1 April 2017
Arising during the year
Released during the year
As at 1 April 2018 (restated)
Arising during the year
Utilised during the year
At 31 March 2019
Dilapidation
Warranty
£'000
35
21
-
56
21
-
77
£'000
106
-
(41)
65
-
-
65
Onerous
Lease
£'000
-
20
-
20
-
(20)
-
Total
£'000
141
41
(41)
141
21
(20)
142
In the current year, the Group included dilapidation provision in note 21 resulting in the prior year provision
amounts being restated. The dilapidation provision relates to repair obligations that the Group has under its
leased property. The liability under these repair obligations would be realised at the end of the lease in 2026.
The warranty provision relates to the potential warranty claims that may come to fruition in the near future.
The onerous lease provision relates to the Livingstone site that Route Monkey Limited leased before moving out
prior to expiry of the lease agreement. The company continued paying rentals until 31 September 2018 when the
lease expired.
These provisions are expected to be utilised as follows:
Current
Non-Current
22
SHARE CAPITAL
Authorised:
Ordinary shares of 1p each
Allotted, issued and fully paid:
Ordinary shares of 1p each
Movement in share capital:
As at 1 April
New shares issued
As at 31 March
As at 31
March 2019
£'000
27
115
142
As at 31
March 2018
Restated
£'000
47
94
141
As at 31 March 2019
As at 31 March 2018
No’s
‘000’s
200,000
£'000
200,000
No’s
‘000’s
200,000
£'000
200,000
50,004
500
35,898
359
As at 31
March 2019
£'000
359
141
500
As at 31
March 2018
£'000
357
2
359
The Company currently holds 29,000 Ordinary shares in treasury representing 0.06% (2018: 0.08%) of the
Company’s issued share capital. The number of 1 pence Ordinary shares that the Company has in issue less the
total number of Treasury shares is 49,975,002.
During the year the following shares were issued:
Date
Description
Shares
Premium
Share
Capital
04/08/2018
06/12/2018
Exercise of options over Ordinary Shares by an
employee
Subscription of Ordinary Shares
No's
'000's
£'000
£'000
175
2
49
13,931
14,106
139
141
2,892
2,941
The weighted average price for share options exercised during the year was 29.1p.
Company Number 05452547
68
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
23 SHARE-BASED PAYMENTS
Trakm8 Holdings PLC has issued options (under the Trakm8 2017 Unapproved Share Option Plan) to
subscribe for Ordinary shares of 1p in the Company. The purpose of the Option Scheme is to retain and
motivate eligible employees.
In the prior year, Trakm8 Holding PLC issued options (under the Trakm8 2017 Unapproved Share Option
Plan) to subscribe for ordinary shares of 1p in the Company.
The exercise price of all share options is the closing market price on the day of grant, except the options
issued on the 5 March 2019 which have an exercise at a 20% premium to the mid-market closing share price
on 4 March 2019. A vesting period of 3 years is applicable according to the terms of each scheme which
specify the options will vest providing employees remain in service for 3 years from the date of grant. The
maximum term of options granted is 10 years from grant date. All share options are equity settled.
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
tranches of options were awarded, tranche Y, Z and AA. The inputs to our Black Scholes pricing model were:
Grant date
Weighted average FV (pence)
Weighted average exercise price
(pence)
Expected volatility (%)
Expected life of option
Dividend yield (%)
Risk free (%)
Tranch Y
03-Jul-18
47.00
Tranch Z
11-Feb-19
22.00
Tranch AA
05-Mar-19
19.00
Tranch RP
05-Mar-19
19.00
Tranch AB
29-Mar-19
15.00
90.00
30.50
33.50
33.50
23.00
61.1%
5.0
0.0%
1.0%
95.7%
5.0
0.0%
0.8%
95.7%
5.0
0.0%
0.8%
95.7%
5.0
0.0%
0.8%
95.7%
5.0
0.0%
0.8%
The risk free rate of return is the yield on government gilt market price and the volatility has been based on
historic share prices.
Options granted during the year were:
Grant date
03 July 2018
11 February 2019
05 March 2019
05 March 2019
29 March 2019
No of shares Option Exercise
Price
90p
31p
34p
34p
23p
450,000
125,000
425,000
2,050,000
250,000
Date of expiry
30/06/2028
08/02/2029
02/03/2029
02/03/2029
26/03/2029
A reconciliation of option movements over the year to 31 March 2019 is shown below;
Outstanding at beginning of the year
Granted during the period
Forfeited during the period
Exercised during the period
Outstanding at the end of the year
As at 31 March 2019
As at 31 March 2018
Share
options
No
3,531,812
3,300,000
(2,706,812)
(175,000)
3,950,000
Weighted
average
Exercise
Price (p)
117
40
144
29
38
Share
options
No
2,871,226
1,225,000
(389,414)
(175,000)
3,531,812
Weighted
average
Exercise
Price (p)
130
114
239
45
117
Company Number 05452547
69
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
23 SHARE-BASED PAYMENTS (CONTINUED)
The range of exercise prices of the outstanding options is 20.0 pence to 33.5 pence (2018: 17 pence to 333
pence) and the weighted average remaining contractual life is 7.4 years (2018: 7.6 years).
The Group charged £181,000 to the Statement of Comprehensive Income in respect of Share-Based
Payments for the financial year ended 31 March 2019 (2018: £249,000).
Share options exercisable at 31 March 2019 were 900,000 (2018: 1,425,000).
Reissued options
The following directors and PDMRs have had certain existing options cancelled and the following reissued
options granted, such that number of options cancelled equal the number of reissued options:
Directors
John Watkins
Jon Furber
Mark Watkins
Bill Duffy
Matt Cowley
Tim Cowley
Sean Morris
Matt Monnington (PDMR)
*Issued at a 20% premium to the mid-market closing share price on 4 March 2019
Position
Executive Chairman
Group Finance Director
Chief Operating Officer
Non-Executive Director
Big Data Director
Strategy Director
MD - Insurance and Automotive
Chief Technology Officer
No of shares
300,000
475,000
250,000
75,000
25,000
50,000
350,000
200,000
Exercise
price*
33.5p
33.5p
33.5p
33.5p
33.5p
33.5p
33.5p
33.5p
Vesting conditions: The reissued options vest on 5 March 2022 and require that the recipients remain in
employment with the Group at the date of exercise. All of the above reissued options may only be exercised
if the mid-market share price is 50 pence or more at the time of exercise.
Employee options
In addition to the directors' options described above, 325,000 existing options have been cancelled and the
same number of options have been reissued to certain other employees of the Group on the same terms as
the reissued options to the directors and PDMRs.
In addition to the New Options and Reissued Options noted above, there are 1,605,000 existing options
outstanding to certain directors, PDMRs and other employees of the Company. As detailed in the table
below, the existing options together with the Reissued Options and New Options, would, if fully exercised,
result in the issue of an additional 4,080,000 Ordinary Shares of 1 pence each in the Company, representing
8.2 per cent. of the current issued share capital of 50,004,002 Ordinary Shares (of which 29,000 shares are
held in treasury) as at 5 March 2019.
Company Number 05452547
70
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
24 NET CASH GENERATED FROM OPERATIONS
(Loss)/Profit before tax
Depreciation
(Profit)/Loss on disposal of fixed assets
Net bank and other interest
Amortisation of intangible assets
Share based payments
Operating cash flows before movement in working capital
Movement in inventories
Movement in trade and other receivables
Movement in trade and other payables
Movement in provisions
Cash generated from operations
Interest received
Income taxes received
Net cash (outflow)/inflow from operating activities
25 FINANCIAL COMMITMENTS
As at 31
March 2019
£'000
As at 31
March 2018
Restated
£'000
(3,563)
313
(106)
223
1,866
181
(1,086)
(180)
1,732
(3,214)
1
(2,747)
10
985
(1,752)
453
321
26
156
1,484
216
2,656
1,118
(4,614)
3,957
(21)
3,096
33
1,606
4,735
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:
As at 31
March 2019
£'000
As at 31
March 2018
£'000
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
282
1,085
867
2,234
147
480
232
859
124
189
72
196
131
320
Land and buildings under operating leases represents four leases payable by the Group which have expiry
dates from 2023 to 2029.
26 RELATED PARTY TRANSACTIONS
A total of 2,500,000 (2018: 925,000) share options were granted during the year to ten (2018: seven) key
management personnel.
Company Number 05452547
71
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
27 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.
Interest rate risk
The Group's borrowings are linked to LIBOR and the base rate, the following table details the Group's
sensitivity to an increase of 2% and 5% in these two rates.
LIBOR
Base rate
LIBOR
Base rate
2%
As at 31
March 2019
Profit
£'000
(87)
(38)
5%
Profit
£'000
(218)
(95)
As at 31
March
2018
Profit
£'000
(68)
(57)
Profit
£'000
(170)
(142)
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, or otherwise match inflows and outflows in its principal
trading currencies.
The following table details the Group’s sensitivity to a 10% and a 20% decrease and increase in the value of
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.
10% decrease
10 % increase
Year ended
31 March
2019
Year ended
31 March
2018
Year ended
31 March
2019
US Dollar
Euro
US Dollar
Euro
Profit &
equity
£'000
(109)
(78)
20% decrease
Profit &
equity
£'000
(245)
(175)
Profit &
equity
£'000
(340)
(191)
Profit &
equity
£'000
(765)
(429)
Company Number 05452547
Year
ended 31
March
2018
Profit &
equity
£'000
278
156
Profit &
equity
£'000
89
64
20 % increase
Profit &
equity
£'000
164
117
Profit &
equity
£'000
510
286
72
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
27 FINANCIAL INSTRUMENTS (CONTINUED)
The Group has the following exposure to foreign currency denominated monetary assets and monetary
liabilities in the Balance Sheet, translated into the sterling at the relevant year-end exchange rates:
Financial assets / liabilities
US Dollar
Euro
Sterling
Total
Credit risk
Year ended
31 March
2019
Year ended
31 March
2019
Year ended
31 March
2018
Year ended
31 March
2018
Monetary
Assets
£'000
3
28
31
9,107
9,138
Monetary
Liabilities
£'000
200
339
539
16,022
16,561
Monetary
Assets
£'000
2
28
30
13,001
13,031
Monetary
Liabilities
£'000
120
696
816
12,500
13,316
The Group’s principal financial assets are bank balances, 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 quality of cash balances that are neither past due nor impaired can be ascertained with reference
to the banks external credit ratings. All remaining financial assets are unrated.
Credit rating (Fitch)
AA-
Financial instruments by category
As at 31
March
2019
£'000
1,205
1,205
As at 31
March
2018
£'000
3,472
3,472
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. The
directors do not consider that any of the cash balances are impaired.
Company Number 05452547
73
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
27
FINANCIAL INSTRUMENTS (CONTINUED)
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.
The group's external borrowings are subject to covenants which are assessed periodically throughout the
year. The covenants relate to cash flow and leverage requirements. The covenants were reset during the
current year and the company complied with all imposed covenant requirements during the period. The
Group expects to meet the covenant requirements in the future periods.
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
“capital and reserves” as shown in the Consolidated Statement of Financial Position plus total borrowings.
The Group’s strategy has been to maintain gearing. This has been successfully achieved through the capital
issue and profitable trading in prior financial year.
Total borrowings (note 20)
Total capital and reserves
Total capital
Gearing ratio
As at 31
March 2019
£'000
6,834
22,094
As at 31
March 2018
£'000
6,772
21,380
28,928
24%
28,152
24%
At the year end the Group had total net borrowings of £5,629,000 (2018: £3,300,000 ).
Assets as per Statement of Financial Position
Trade and other receivables excluding prepayments
Cash and cash equivalents
Borrowings
Trade and other payables excluding statutory liabilities and deferred revenue
Receivables and Cash
As at 31
March 2019
£'000
7,933
1,205
9,138
As at 31
March 2018
£'000
9,559
3,472
13,031
Financial liabilities at
amortised cost
As at 31
March 2019
£'000
6,834
3,811
10,645
As at 31
March 2018
£'000
6,772
6,544
13,316
Company Number 05452547
74
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
27 FINANCIAL INSTRUMENTS (CONTINUED)
Payable as follows
On demand or within one year
After one and within two years
After two and within five years
Cash and cash equivalents
As at 31
March 2019
£'000
5,048
1,035
4,562
10,645
As at 31
March 2018
£'000
7,695
1,272
4,349
13,316
Cash and cash equivalents comprise solely of cash in hand held by the Group.
28 BUSINESS COMBINATIONS
Roadsense Technology Limited
In 2017 financial year, the Group purchased 100% of the share capital of Roadsense Technology Limited. The
acquisition costs incurred in 2019 of £102,000 (2018: £256,000) relate to non-underlying charges under two
separate agreements linked to the acquisition in the prior year. The costs incurred are directly linked to the
acquisition and not as part of the ongoing underlying business. One agreement terminates on 31 July 2019,
and the second agreement terminated on 31 March 2019.
These costs have been recognised as an exceptional administrative expense in the consolidated statement of
comprehensive income. Exceptional administrative expenses have been analysed in Note 9.
29 DIVIDENDS
The Company is not proposing a final dividend for the year (2018: nil).
No Dividend was paid during the year (2018: nil).
30 OPERATING LEASES
The group rents out equipment under operating leases. Equipment rental income earned during the year
was £175,000 (2018: £219,000). At the year end the group had contracted with lessees of the group for the
following future minimum lease payments under non-cancellable operating leases.
Within 1 year
After one and within five years
As at 31
March 2019
£'000
104
43
147
As at 31
March 2018
£'000
175
149
324
Company Number 05452547
75
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
31 CHANGES IN ACCOUNTING POLICIES
This note explains the impact of the adoption of IFRS15 Revenue from Contracts with Customers on the
group's financial statements and also discloses the new accounting policies that have been applied from 1
April 2018, where they are different to those in prior period.
Impact on the financial statements:
As a result of the changes in the entity's accounting policies, prior year financial statements had to be
restated. As explained in note 4 above, IFRS 15 was adopted with restated comparative information.
The following table shows the adjustments recognised for each of the individual line item. Line items that
were not affected by the changes have not been included. As a result, the sub-totals and the totals disclosed
cannot be recalculated from the numbers provided. The adjustments are explained in more detail below.
The group has adopted IFRS 15 Revenue from Contracts with Customers from 1 April 2018 which resulted in
changes in accounting policies and adjustments to the amounts recognised in the financial statements. In
accordance with the transition provision in IFRS 15, the group has adopted the new rules retrospectively and
has restated comparatives for the 2017 financial year. In summary, the following adjustments were made to
the amounts recognised in the balance sheet at the date of initial application (1 April 2018):
The benefit to the results for the twelve months to 31 March 2019 from the prior year restatement following
the adoption of IFRS 15 is not material.
Consolidated Statement of Financial Position (extract)
Non-current assets/(liabilities)
Deferred income tax asset/(liability)
Current assets
Trade and other receivables
Current assets less current liabilities
Total assets less current liabilities
Net assets
Equity
Balance as at 1 April 2017
Balance as at 1 April 2018
Profit for the period ended 31 March 2018
Year to
31 March
2018
Presented
£'000
Year to
31 March
2018
Restated*
£'000
IFRS 15
£'000
(229)
156
(73)
10,844
7,077
28,611
22,142
6,866
8,691
1,571
(918)
(918)
(918)
(762)
(164)
(762)
(598)
9,926
6,159
27,693
21,380
6,702
7,929
973
Total equity attributable to equity holders of the Parent
22,142
(762)
21,380
Company Number 05452547
76
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
31 CHANGES IN ACCOUNTING POLICIES (CONTINUED)
Consolidated Statement of Comprehensive Income (extract)
Revenue
Gross profit
Operating profit
Profit before taxation
Income tax
Profit for the year
Year to
31 March
2018
Presented
£'000
Year to
31 March
2018
IFRS 15 Restated*
£'000
£'000
30,081
(720)
29,361
14,849
(720)
14,129
1,329
(720)
1,173
(720)
398
122
1,571
(598)
609
453
520
973
Total comprehensive income for the year attributable to
owners of the Parent
1,580
(598)
982
Adjusted profit before tax
2,794
(720)
2,074
32 POST BALANCE SHEET EVENTS
As explained in note 4 page 51, on the 27 June 2019 the Group entered into an Amendment and
Restatement Agreement with HSBC that amended the covenants and amended the margin on both the term
loan and revolving credit facility to 4.5% above base rate and LIBOR respectively. All other terms of the
facilities remained unchanged.
Company Number 05452547
77
Trakm8 Holdings PLC
Parent Company Statement of Financial Position As At 31 March 2019
ASSETS
NON CURRENT ASSETS
Investments
Deferred tax asset
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
CURRENT ASSETS LESS CURRENT LIABILITIES
TOTAL ASSETS LESS CURRENT LIABILITIES
NON CURRENT LIABILITIES
Borrowings
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Merger reserve
Treasury reserve
Retained earnings
Note
As at 31 March
2019
£'000
As at 31 March
2018
£'000
4
5
6
7
7
8
11,061
74
11,135
10,880
34
10,914
10,943
532
11,475
8,692
67
8,759
(176)
(1,000)
(1,176)
(234)
(976)
(1,210)
10,299
7,549
21,434
18,463
(5,208)
(5,258)
16,226
13,205
500
14,691
627
(4)
412
359
11,750
627
(4)
473
TOTAL SHAREHOLDERS’ FUNDS
16,226
13,205
The parent company has taken the exemption conferred by s.408 Companies Act 2006 not to publish the
statement of Comprehensive Income of the parent company with these accounts. The loss dealt with for the year
in the parent company's financial statements was £242,000 (2018: loss £153,000).
These financial statements on pages 78 to 86 were approved by the Board of Directors and authorised for issue on
5 July 2019 and are signed on their behalf by:
John Watkins - Director
Jon Furber - Director
Company Number 05452547
78
Trakm8 Holdings PLC
Parent Company Statement of Changes in Equity For The Year Ended 31 March 2019
Called up
share
capital
£'000
357
2
Share
premium
account
£'000
11,674
76
Merger
reserve
Treasury
reserve
Retained
earnings
£'000
627
-
£'000
(4)
-
£'000
410
-
TOTAL
SHAREHOLDERS'
FUNDS
£'000
13,064
78
-
-
-
-
216
216
-
359
-
11,750
-
627
-
(4)
(153)
473
(153)
13,205
141
2,941
-
-
-
-
-
-
-
-
-
3,082
-
181
181
-
(242)
(242)
500
14,691
627
(4)
412
16,226
Balance as at 1 April 2017
Shares issued
IFRS2 Share-Based payment
charge
Loss for the year
Balance as at 1 April 2018
Shares issued
IFRS2 Share-Based payment
charge
Loss for the year
Balance as at 31 March
2019
Company Number 05452547
79
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements
1 ACCOUNTING POLICIES
BASIS OF PREPARATION
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements made up to 31 March 2019.
The financial statements of the parent company have been prepared in accordance with United Kingdom
Accounting Standards - Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (“FRS 101”). The
financial statements have been prepared on the going concern basis, under the historical cost convention and
in accordance with the Companies Act 2006 as applicable to companies using FRS 101.
The Company has taken advantage of the legal dispensation contained in Section 408 of the Companies Act
2006 allowing it not to publish a separate income statement and related notes. The Company has also taken
advantage of the legal dispensation contained in Section 408 of the Companies Act 2006 allowing it not to
publish a separate statement of other comprehensive income.
The following exemptions from the requirements of IFRS have been applied in the preparation of these
financial statements, in accordance with FRS 101:
• Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share—based payment’ (details of the number and weighted—
average exercise prices of share options, and how the fair value of goods or services received was determined)
• IFRS 7, ‘Financial Instruments: Disclosures’
• Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs
used for fair value measurement of assets and liabilities)
• Paragraph 38 of ‘International Accounting Standard 1, Presentation of financial statements’ (IAS1)
comparative information requirements in respect of paragraph 79(a)(iv) of IAS1
• The following paragraphs of IAS1, ‘Presentation of financial statements’:
− 10(d) (statement of cash flows)
− 16 (statement of compliance with all IFRS)
− 38A (requirement for minimum of two primary statements, including cash flow statements)
− 38B-D (additional comparative information)
− 111 (cash flow statement information)
− 134-136 (capital management disclosures)
• IAS 7, ‘Statement of cash flows’
• Paragraphs 30 and 31 of IAS 8, ‘Accounting policies, changes in accounting estimates and errors’
(requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued
but is not yet effective)
• Paragraph 17 and 18A of IAS 24, ‘Related party disclosures (key management compensation)
• The requirements of IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into
between two or more members of a group
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. Cost includes directly attributable acquisition expenses.
Company Number 05452547
80
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements (Continued)
1 ACCOUNTING POLICIES (CONTINUED)
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 where applicable.
TRADE PAYABLES
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payables are initially recognised at fair value and subsequently at amortised
cost using the effective interest method.
BANK BORROWINGS
Borrowings are initially recognised at fair value, being proceeds received less directly attributable transaction
costs incurred. Borrowings are subsequently measured at amortised cost with any transaction costs
amortised to the statement of comprehensive income over the period of the borrowings using the effective
interest method.
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 Company’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.
Company Number 05452547
81
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements (Continued)
1 ACCOUNTING POLICIES (CONTINUED)
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.
Treasury reserve represents the cost of shares held in Treasury. Where any Group company purchases the
company’s equity share capital (treasury shares), the consideration paid, including any directly attributable
incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders
until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any
consideration received, net of any directly attributable incremental transaction costs and the related income
tax effects, is included in equity attributable to the company’s equity holders.
Retained earnings represents retained profits and the share based payment reserve.
SHARE-BASED PAYMENTS
The Company has applied the requirements of IFRS 2 Share-based payment.
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.
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.
2 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the process of applying the Group’s accounting policies, which are described in note 1, 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).
Company Number 05452547
82
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements (Continued)
2 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED)
INVESTMENTS 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.
3 PROFIT AND LOSS ACCOUNT
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the
Company is not presented as part of these financial statements.
The loss after tax for the year in the Company is £242,000 (2018: loss £153,000). Audit fees for the Company
for the year were £3,000 (2018: £3,000).
4
INVESTMENTS
Cost
As at 1 April 2018
Capital contribution in respect of share based payments
At 31 March 2019
Subsidiaries
£'000
10,880
181
11,061
The Directors believe that the carrying value of the investments is supported by their underlying net assets.
Name of subsidiary Country of
Nature of business
Registered Office
incorporation
Trakm8 Limited
England and
Wales
Trakm8 s.r.o.
Czech
Republic
Development,
manufacture,
marketing and
distribution of
vehicle telematics
Mapping services
and distribution of
vehicle telematics
BOX Telematics
Limited
England and
Wales
Non-trading
Route Monkey
Limited
Scotland
Route optimisation
4 Roman Park,
Roman Way,
Coleshill, West
Midlands, B46 1HG
A7 Office Centre
Praha 7 U Pruhonu
1588/11a 170 00
Czech Republic
4 Roman Park,
Roman Way,
Coleshill, West
Midlands, B46 1HG
4 Roman Park,
Roman Way,
Coleshill, West
Midlands, B46 1HG
Class of
holding
Proportion
held and
voting rights
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Company Number 05452547
83
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements (Continued)
4
INVESTMENTS (CONTINUED)
Name of subsidiary Country of
Nature of business
Registered Office
incorporation
Interactive Projects
Limited
England and
Wales
Dormant
Data Driven
Telematics Limited
England and
Wales
Dormant
DCS Systems
Limited
England and
Wales
Dormant
Roadsense
Technology Limited
England and
Wales
Non-trading
Trakm8 HK Limited Hong Kong
Non-trading
4 Roman Park,
Roman Way,
Coleshill, West
Midlands, B46 1HG
4 Roman Park,
Roman Way,
Coleshill, West
Midlands, B46 1HG
4 Roman Park,
Roman Way,
Coleshill, West
Midlands, B46 1HG
4 Roman Park,
Roman Way,
Coleshill, West
Midlands, B46 1HG
Prosperity Centre,
25 Chong Yip
Street, Kwun Tong,
Hong Kong
Class of
holding
Proportion
held and
voting rights
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
The following dormant companies within the Group will take the exemption from preparing and filing financial
statements for the year ended 31 March 2019 (by virtue of s394A and 448A of Companies Act 2006
respectively). As the ultimate parent company, Trakm8 Holdings PLC has guaranteed the debts and liabilities
held within these companies as required under section 394C of the Companies Act 2006
Company
Interactive Projects Limited
Data Driven Telematics Limited
DCS Systems
Limited
Company
registration
number
4327499
5785552
9641691
The following companies within the Group will adopt the Department for Business, Innovation and skills audit
exemption for the year ended 31 March 2019. As the ultimate parent company, Trakm8 Holdings PLC has
guaranteed the debts and liabilities held within these companies as required under section 479A of the
Companies Act 2006
Company
Company
registration
number
Trakm8 Limited
BOX Telematics Limited
Route Monkey Limited
Roadsense Technology Limited
Company Number 05452547
4415597
3947199
SC353016
8300339
84
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements (Continued)
5 TRADE AND OTHER RECEIVABLES
Amounts due from subsidiary undertakings
Social security and other taxes
Prepayments and other receivables
As at 31
March 2019
£'000
10,916
16
11
10,943
As at 31
March
2018
£'000
8,677
10
5
8,692
Amounts due from subsidiary undertakings are unsecured, interest free and repayable on demand.
6 TRADE AND OTHER PAYABLES
Trade creditors
Amounts due to subsidiary undertakings
Accruals and other creditors
As at 31
March 2019
£'000
60
26
90
176
As at 31
March
2018
£'000
48
11
175
234
Amounts due to subsidiary undertakings are unsecured, interest free and repayable on demand.
7 BORROWINGS
Current
Non-current
As at 31 March 2019
Bank loan
Arrangement
fee
£'000
(28)
(21)
(49)
Gross
£'000
1,028
5,229
6,257
Bank loan
The Bank loan is repayable as follows:
Within one year
After one and within two years
After two and within five years
As at 31 March 2018
Bank loan
Arrangement
fee
£'000
(28)
(49)
(77)
Gross
£'000
1,004
5,307
6,311
Net
£'000
976
5,258
6,234
6,234
Net
£'000
1,000
5,208
6,208
6,208
£'000
1,000
858
4,350
6,208
£'000
976
1,000
4,258
6,234
A £5.0m term loan with HSBC. The loan is secured by a fixed and floating charge on all the assets of the
Group. It is repayable by monthly instalments until 2021 and bears interest at a floating rate of 1.95% over
base rate. As at 31 March 2019 the Group owed £1.9m (2018: £2.9m).
A £5.0m revolving credit facility with HSBC which is repayable in full on 31 December 2020. The loan bears an
interest rate of 1.75% over LIBOR on the drawn amount and a fee of 0.75% on the undrawn facility. As at 31
March 2019 the Group had drawn down £4.4m of this credit facility (2018: £3.4m).
The interest rate increased to 4.5% on both facilities on 27 June 2019.
Company Number 05452547
85
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements (Continued)
8
CALLED UP SHARE CAPITAL AND RESERVES
Details of share capital and share options are shown in notes 22 and 23 to the consolidated financial
statements above.
Details of the Company's other reserves are shown in note 4 to the consolidated financial statements.
9
GUARANTEE
The borrowings of the company are guaranteed by the assets of subsidiary company, Trakm8 Limited.
10 RELATED PARTIES
The company has taken advantage of the exemptions conferred by IAS 24 from the requirement to disclose
transactions between wholly owned subsidiary undertakings.
A total of 2,500,000 (2018: 925,000) share options were granted during the year to ten (2018: seven) key
management personnel.
11 EMPLOYEES AND DIRECTORS
The Directors of the Company were paid by Trakm8 Ltd for their services to the Group. The Company had no
employees (2018: nil) during the year (other than the Directors). See remuneration report on page 29 for
further details.
Details of Group Directors’ fees and salaries, bonuses and pensions (including that of the highest paid
Director) have been audited and are given in the Directors’ Report on page 26.
12 DIVIDENDS
The Company is not proposing a final dividend for the year (2018: nil).
No Dividend was paid during the year (2018: nil).
13 POST BALANCE SHEET EVENTS
On the 27 June 2019 the Group entered into an Amendment and Restatement Agreement with HSBC that
amended the covenants and amended the margin on both the term loan and revolving credit facility to 4.5%
above base rate and LIBOR respectively. All other terms of the facilities remained unchanged.
.
Company Number 05452547
86
Trakm8 Holdings PLC
Officers and Advisors for Trakm8 Holdings PLC
Directors
Matthew Cowley
Tim Cowley
William Duffy
Keith Evans
Jon Furber
Sean Morris
John Watkins
Mark Watkins
Nadeem Raza
Company Secretary
Jon Furber
Registered Office
4 Roman Park Roman Way, Coleshill, Birmingham,
West Midlands, United Kingdom, B46 1HG
Principal Bankers
HSBC Bank plc, 6 Broad Street, Worcester, WR1 2EJ
Independent Auditors
PricewaterhouseCoopers LLP, Cornwall Court, 19
Cornwall Street, Birmingham, B3 2DT
Nominated Adviser and Broker
Arden Partners
Address: 125 Old Broad Street, London, EC2N 1AR
Significant Shareholders
Significant Shareholder
Number of shares
Percentage Holding
Microlise Group Holdings Limited
John Watkins
Edric Property & Investment Company
James Hedges
Hargreaves Lansdown
Tim Cowley
Matt Cowley
HSDL Nominees
10,000,000
7,768,768
3,815,000
2,438,766
2,343,452
2,268,127
1,994,203
1,715,858
20.0%
15.6%
7.6%
4.9%
4.7%
4.5%
4.0%
3.4%
Company Number 05452547
87