2020
Annual report and accounts 2020
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
Overview
At a Glance
Executive Chairman’s Statement
Our Strategy
Finance Director’s Report
Key Performance Indicators
Corporate Social Responsibility
Risk Management Framework
Principal 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
£19.6m
FY-2019: £19.1m
Loss before tax
£1.7m
FY-2019: £3.6m
Adjusted loss before tax1
£0.2m
FY-2019: £1.5m
Net cash inflow/ (outflow) generated from operations
£4.1m
FY-2019: (£1.8m)
Adjusted basic earnings/ (loss) per share
0.28p
FY-2019: (1.89p)
Basic (loss) per share
(2.19p)
FY-2019: (6.20p)
Operational
Modest return to growth (+2%) despite Covid-19 impact late March.
Significant improvement in financial performance to close to breakeven adjusted profit.
Strong continued reduction in direct and indirect costs.
Strengthened Group with appointment of Group Sales and Marketing Director
Production launch of new insurance self-fit hardware products.
Over 245,000 connected units in operation (FY-2019: 243,000).
New contract wins with two new significant Insurance companies.
Contract renewals with two large long term customers (E.ON and Bibby) and a significant
enhancement to the solution for Iceland Foods
R&D spend down 7%, however still £4.1m invested.
Outlook
Momentum established in last year disrupted by Covid-19.
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 now compensating for the impact of Covid-19 on the
overall market with recent device shipments ahead of last year.
The AA Smart Breakdown sales now underway albeit impacted by Covid-19.
Fleet sales negatively impacted by Covid-19 but recent weeks show progress.
Early months in current financial year benefitting from the various Government initiatives.
Given the uncertainty of the impact and timing due to the Covid-19 pandemic the Group is not
providing any guidance to the results for the current financial year.
1
Before exceptional costs and share based payments
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.
Number of connected units
245,000 (FY-2019: 243,000)
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 (ADAS)
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, and for our last mile delivery customers deliver a solution that
improves their customer experience by combining with our epod solution. 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 optimisation solution built into the core Insight platform
and provides customer specific bespoke solutions when this is required.
Revenue
£12.0m (FY-2019: £10.8m) of which £6.8m is recurring revenue (FY-2019: £6.8m)
Number of connected units
77,000 (FY-2019: 76,000)
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 an extended range of devices to widen the self-fit options for our customers.
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
£7.5m (FY-2019: £8.3m) of which £2.9m is recurring revenue down by 11% (FY-2019: £3.3m)
Number of connected units
168,000 (FY-2019: 167,000)
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-2020 was a productive year in terms of financial results. We delivered on our promise to return to growth
and but for a Covid-19 induced disruption in the final two weeks of the financial year, we would have achieved
our plan to deliver a modest adjusted profit. Notwithstanding that, we did achieve a significant improvement
with a small adjusted loss.
Revenues grew by 2% and the Group posted an adjusted loss before tax of £0.2m. Connections grew by 1% to
245,000. The total fleet management connections increased by 1% over the year to 77,000 (FY-2019: 76,000).
Telematics for insurance/automotive connections also increased by 1%. At the year-end we had 168,000
insurance/automotive connections (FY-2019: 167,000). Recurring service revenues reduced by 3.3% to £9.8m
(FY-2019: £10.1 m).
It was pleasing to improve cash generation significantly with cash flow from operations of £4.1m (FY-2019: -
£1.8m). In achieving this, the Group only deferred £0.2m under the Government tax deferral support schemes.
This resulted in a free cash flow of £0.9m (FY-2019 -£4.9m) and net debt unchanged at £5.6m (pre-IFRS 16).
The Group had £1.7m cash on hand and an undrawn RCF of £0.5m.
FY-2020 was another year of excellent progress in many internally focussed activities. The Group continued to
focus on improving efficiency of our operations and engineering activities. Significant reductions in direct and
indirect costs were delivered during the year. During the year restructuring of the engineering department led
to the COO taking direct responsibility for the engineering teams. Improved testing and software coding
standards have been implemented to address some of the technical challenges we have experienced. The
investment in engineering resources, whilst some £0.3m 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 both improve operational efficiencies and reduce risk
significantly.
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 concluded contracts with two additional insurance companies.
Research and development (‘R&D’)
Trakm8 has maintained a significant level of investment in R&D although for a second year 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 more easily resolve problems.
The R&D investment has concentrated on building out a range of self-fit devices, improved cameras,
development of the feature set in Insight, including a SaaS optimisation product. As identified in previous
years, the requirement to do more at a lower cost remains a key strategy as this widens the opportunity to
expand the rate of growth as the ROI for our customers improves.
Trakm8 was pleased to be granted two patents in the year, a patent for the ADAS algorithm it developed for
detection of tailgating situations and a patent for monitoring the health of a vehicle battery for its
Connectedcare solution.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
EXECUTIVE CHAIRMAN’S STATEMENT (CONTINUED)
Governance
In the prior financial year 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. The Board annually reviews its Corporate Governance policies and procedures, these
were last reviewed on 18 June 2020. More information can be found in the Governance Report section of this
report and our website.
Post year end the Group appointed a third Non-Executive Director, Penny Searles who brings greater diversity
to the Board and increases the Group’s compliance with the code.
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 further during FY-2020 with reductions in operational and
engineering headcount. In total our actual staff numbers have reduced by 15% over the year.
The turnaround in performance has taken extraordinary efforts. 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
The momentum established in the business last year has been disrupted by the Covid-19 epidemic. We had
returned to growth in our Fleet business and had finally launched with three new Insurance customers. The AA
had launched Smart Breakdown. Two more insurance customers have been secured since year end. Prior to
the current lock down, this year was expected to be one of very significant growth.
Our new year started in the early stage of the lockdown and unsurprisingly April saw very significant
reductions in new business. May saw slight improvements and June has improved further still.
The total value of new Fleet contracts signed in April was 83% down on the prior year, 50% lower in May
compared to the prior year and is expected to be 22% lower in June compared to the prior year.
Insurance shipments in April at 3,867 devices were 39% below last year, May shipments at 5,447 devices were
in line with the prior year. Currently June shipments are expected to be 26% higher than last year.
With a significant proportion of revenues derived from the service fees of the installed base, the first two
months of the year revenues were 27% lower than the previous year but resulted in a significantly reduced
loss because of lower direct and indirect costs.
We are confident that the growth potential in our chosen markets is good and that we have the solutions and
sales teams to deliver on this opportunity. It is simply a matter of timing and landscape as the crisis subsides.
The solutions we provide significantly improve the customer’s efficiencies and so that market driver remains.
We cannot predict how many of our existing and potential customers will no longer be at the scale they were.
We have continued to drive operational efficiency savings in direct and indirect costs, both those made last
year that will benefit the full year and some made this year.
Trakm8 has availed itself of various support measures from the government including the cash deferment of
VAT and PAYE/NI and is benefitting from the payroll support through the furlough scheme.
Trakm8 has agreed capital repayment holidays with our debt providers and agreed covenants that we are
confident are achievable. Based on current forecasts and scenario planning that Trakm8 has undertaken, along
with the agreed capital repayment holidays we believe this provides appropriate cash headroom, therefore
the Group is not currently pursuing a CBILS loan.
Despite the positive trends of the year to date, the uncertainty due to Covid-19 is such that the Group is not
able to provide forward guidance at this time but will do so as soon as there is more certainty in the market.
John Watkins
EXECUTIVE CHAIRMAN
29 June 2020
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
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 2020
The total number of units in operation increased by 1% in FY-2020. A wide number of Fleet contract wins
increased the Fleet installed base by 1%. The increased number of Insurance customers that did finally launch
during the year more than offset the decline at our other customers and resulted in a 1% increase in
connections. These new customers provided the platform for Insurance connections to increase significantly,
before Covid-19 impacted demand.
Trakm8 secured a new relationship with a distribution partner in Scandinavia that has potential to be
significantly revenue additive.
Focus for 2021
We aim to minimize the negative impact of Covid-19 through innovative marketing and salesmanship. We
expect to limit the attrition given that the high proportion of our connections are with large fleets. We are
assuming that the attrition rate will be circa 20%, twice that of previous years. It will be a good result if we
maintain our current fleet installed base. We will continue to seek international distribution partners to
expand our non-UK revenues.
With a much larger customer base of insurance telematics we expect to significantly grow market share in the
UK. The extent that this equates to increased connections depends on the timing of return to driving tests and
the driving schools. It also depends on the overall economic situation and young people’s ability to afford cars.
The take up of the AA’s Smart Breakdown will impact the overall success. The Group is confident that there will
be an increase in insurance and automotive connections this year but the quantum is unclear. The
international expansion of our automotive program is also expected but timing is uncertain.
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 2020
The Group focused on expanding and improving the range of devices, including an improved camera and an
expanded line of self-fit devices (Connect 200). The Insight Optimisation solution targeted at SME customers
on a SaaS basis was launched. Improved algorithms for crash detection, driver scoring and ADAS continued to
be developed.
Focus for 2021
We are driven to continue to make improvements in software and component testing focusing on doing less
but better. We will strive to take more time to be certain products are fully functional whilst maintaining our
agility. 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. We expect during the year to improve our fleet solutions particularly in the HGV space, the
integrated optimisation package to include customer communications and ongoing development of our
automotive capability particularly in EV.
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 2020
The Group’s continued focus on cost control and operational efficiencies resulted in another £1.8m of
annualised operational cost savings in both direct and indirect costs through reduced headcount and other
cost reductions.
Focus in 2021
We will continue to drive out costs through better utilisation of hosting and technology, reduced device costs
and reduced communication costs.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
FINANCE DIRECTOR’S REPORT
Group Revenue (£’000)
of which, Recurring Revenue (£’000)
Loss before tax (£’000)
Adjusted Loss before tax1 (£’000)
Basic loss per share (p)
Adjusted basic earnings/(loss) per share (p)
1
Before exceptional costs and share based payments
Revenue
2020
19,550
9,753
1,705
224
2.19
0.28
2019
19,145
10,087
3,563
1,452
6.20
(1.89)
Change
2%
-3%
n/a
n/a
n/a
n/a
Group revenue increased by 2% to £19.6m (FY-2019: £19.1m). Fleet revenues increased by 11% to £12.0m,
primarily due to additional Optimisation revenues, this was offset by a 9% reduction in Insurance and
Automotive revenues to £7.5m. The recently launched Insurance and Automotive customers resulted in the
second half revenue being 19% higher than the first half reversing some of the full year decline. Recurring
revenue generated from service and maintenance fees decreased by 3% to £9.8m (FY-2019: £10.1m) due to
the reduction in Connections from Insurance customers earlier in the year, which were not offset by the
growth from the newly launched customers towards the end of the financial year.
Loss before tax
The Group reported a loss before tax of £1.7m (FY-2019: £3.6m). This significant reduction in losses was
primarily due to the significant efficiencies the Group realised through both cost of sales and administrative
costs. Gross margin improved by 5% points to 59% primarily due to a change in mix in revenue, but also due to
lower cost hardware products and improved efficiency on communication and installation costs. Total
administrative costs reduced by £0.8m of which £0.6m was a reduction in non-recurring exceptional costs
(detailed below). Other administrative costs (excluding exceptional costs and depreciation and amortisation)
reduced by £0.9m due to headcount and external cost reductions as a result of the cost saving initiatives
implemented, offset by a £0.7m increase in depreciation and amortisation, £0.3m from capitalised
development costs, reflecting the significant investment undertaken by the group in earlier years and £0.4m
due to the adoption of IFRS16.
Adjusted Loss before tax
The improved trading performance and significantly reduced cost base resulted in adjusted loss before tax
decreasing to a loss of £0.2m (FY-2019: £1.5m). The £1.3m improvement in gross profit as detailed above fully
converted into a significant reduction in Adjusted Loss before tax. Administrative costs (excluding exceptional
costs and depreciation and amortisation) were £0.9m lower than the previous year, offset by a £0.7m increase
in amortisation and depreciation as detailed above, and a £0.2m increase in finance costs.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
FINANCE DIRECTOR’S REPORT (CONTINUED)
Exceptional Costs
Exceptional costs totaling £1.3m (FY-2019: £1.9m) include integration and restructuring costs relating to
initiatives to streamline and rationalize the operations of the business and additional costs relating to the
acquisition of Roadsense Technology Limited. Additionally, significant product component refit costs relating
to ongoing re-visit and material costs were incurred to remedy significant component and software issues
relating to the prior year, these issues have been fixed by year end. The Group also incurred a number of
one-off costs as a result of the Covid-19 pandemic, these relate to employee costs, cancelled marketing events
and bad debts.
Balance Sheet
Non-Current Assets
Net Current Assets
Non-Current Liabilities
Net Assets
2020
£’000
25,759
4,437
9,017
21,179
2019
£’000
22,736
5,765
6,407
22,094
Net Assets decreased by £0.9m to £21.2m (FY-2019: £22.1m) reflecting the loss for the year, after adding back
the IFRS2 Share based payments charge.
Non-current assets increased by £3.0m to £25.8m (FY-2019: £22.7m). This is due to the adoption of IFRS 16 in
the current year, with no adjustment to the prior year which resulted in £2.8m of leased assets being
capitalised, offset by depreciation charge in the year of £0.6m. Continued investment in development in both
software and hardware with capitalised development costs in the year totaling £3.2m (FY-2014: £3.4m), offset
by a £0.3m increase in amortisation to £1.8m (FY-2019: £1.5m).
Cash Flow
Net Cash generated from operations
Investing activities
Free Cash Flow1
Financing activities
Change in Cash in Year
Net Debt2
1
Cash generated from operating activities less cash used in investing activities (excluding cash flows related to acquisitions)
2
Total borrowings less cash and cash equivalents. FY-2020 net debt excludes £2.3m IFRS 16 lease liability.
2020
£’000
4,115
(3,199)
916
(456)
460
5,643
2019
£’000
(1,752)
(3,179)
(4,931)
2,664
(2,267)
5,629
Cash from operating activities significantly improved by £5.9m during this year to an inflow of £4.1m (FY-2019:
£1.8m outflow), which included R&D tax credit cash receipts of £1.0m (FY-2019: £1.0m). The R&D tax credit
cash receipt reflects the Group’s investment in development. The operational cash flow improvement is due
to the significantly reduced operating loss increasing operating cash flows (£2.9m) and £3.0m improvement
year on year from enhanced working capital management.
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Trakm8 Holdings PLC
Strategic Report (Continued)
FINANCE DIRECTOR’S REPORT (CONTINUED)
Cash Flow (Continued)
Free cash inflow of £0.9m (FY-2019: outflow £4.9m) is due to the £4.1m Net Cash generated from operating
activities as detailed above offset by cash outflows from investing activities which remained flat at £3.2m (FY-
2019: £3.2m). The ongoing investing activities outflow has decreased by £0.5m to £3.2m, with the prior year
investment of £3.7m offset by the one-off £0.5m from the proceeds of the property disposal.
Financing activities was an outflow of £0.5m (FY-2019: Inflow £2.7m). This outflow is net of £2.0m new loans
which includes the £1.5m growth capital loan from MEIF WM Debt LP. The decrease from prior year was due
to the subscription in December 2018 which raised approximately £3.1m (net of expenses) to fund general
working capital requirements and further strengthen the Group’s balance sheet.
Net Debt
Net debt excluding IFRS 16 lease liability of £2.3m remained flat at £5.6m (FY-2019: £5.6m). Cash balances
total £1.7m (FY-2019: £1.2m) and total borrowings including IFRS16 lease liability of £2.3m totals £9.6m (FY-
2019: £6.8m) of which £0.9m (FY-2019: £1.8m) was a term loan with HSBC, £1.5m (FY-2019: nil) was a term
loan with MEIF WM Debt LP, £4.5m (FY-2019: £4.4m) were amounts drawn under our £5m revolving credit
facility with HSBC and £2.8m (FY-2019: £0.6m) were obligations under Right of use lease liabilities, which
includes finance lease liabilities from the prior year.
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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 objectives of the Group are being
achieved.
Solutions Revenue
£19.6m: 2020
£19.1m: 2019
£26.1m: 2018
£21.1m: 2017
Recurring Service
Revenue
£9.8m: 2020
£10.1m: 2019
£10.8m: 2018
£9.8m: 2017
Connected units -
Insurance/Automotive
168,000: 2020
167,000: 2019
178,000: 2018
124,000: 2017
Connected units –
Fleet Management
77,000: 2020
76,000: 2019
73,000: 2018
66,000: 2017
Performance in 2020
The Group returned to
growth during the
financial year, with
revenues up 2% to
£19.6m. The growth was
from our Fleet and
Optimisation business
which increased by 11%,
offset by a 9% decline in
Insurance and
Automotive revenues.
Performance in 2020
Total recurring revenues
earned during the year
reduced by 3% to £9.8m
due to the reduction in
connections during the
year from our Insurance
customers, which were
not offset by growth from
newly launched Insurance
customers towards the
end of the financial year.
Performance in 2020
This refers to the amount
of telematics devices
reporting in operation
from our insurance &
automotive customers.
Connected Units in this
market increased by 1%,
with newly launched
customers towards the
end of the financial year
contributing to growth.
Performance in 2020
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 1%.
Focus for 2021
Protecting the base
during Covid-19 and
ensuring the Group is well
position to win new
customers as the
economy re-opens.
Focus for 2021
Continued expansion with
our recently launched
customers and converting
new opportunities will
drive increases in
connections. Also selling
the new “Driveably”
platform to new
customers will enable
new customers to convert
to revenue much quicker.
Focus for 2021
Minimising the impact of
Covid-19 through
innovative marketing and
salesmanship to ensure
we are strongly
positioned to win new
customers as the
economy opens up post
Covid-19. Additionally
through both our existing
Optimisation solution and
our newly launched SME
focused SaaS platform
drive incremental
Optimisation revenues.
Continued unit expansion
with our recently
launched insurance
customers driving
consistent month on
month revenue
improvement. The extent
of this is unclear given the
impact of Covid-19.
Focus for 2021
We expect to limit the
attrition due to Covid-19
given the high proportion
of our connections are
with large fleets. The
growth of insurance
connections with new
customers that will have
lower attrition in their
first year should positively
impact the level of
recurring revenues.
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 or by increasing
our data analytics
services.
Company Number 05452547
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Trakm8 Holdings PLC
Strategic Report (Continued)
KEY PERFORMANCE INDICATORS (CONTINUED)
Adjusted (loss)/ profit before tax
Gross Margin
£0.2m Loss: 2020
£1.5m Loss: 2019
£2.1m Profit: 2018
£1.1m Profit: 2017
59.1%: 2020
53.6%: 2019
48.1%: 2018
49.0%: 2017
Performance in 2020
Adjusted Loss before Tax (before
exceptional costs and share based
payments) significantly improved
due to the £1.3m improvement in
Gross Profit. In addition the Group
reduced overheads (excluding
exceptional costs and depreciation
and amortisation) by £0.9m which
was offset by a £0.7m increase in
depreciation and amortisation and
£0.2m increase in finance costs.
Focus for 2021
Due to the economic uncertainty as
a result of Covid-19 the group is
focused on maintaining a tight
control on overheads, maximising
Government support to minimise
the impact of Covid-19 on the
profitability of the Group and leave
the Group well positioned to deliver
strong profitability in the following
financial year.
Performance in 2020
Gross margin percentage improved
to 59% which resulted in a £1.3m
improvement 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 along with direct cost
reduction measures taken.
Focus for 2021
Strategy is to maintain our gross
margin percentage by continuing to
drive growth in our recurring service
revenues through enhanced data
analytic services and optimisation
benefits. We expect to continue to
deliver ongoing direct cost
reductions.
Net cash generated from Operating
Activities
£4.1m: 2020
(£1.8m): 2019
£4.7m: 2018
£0.7m: 2017
Performance in 2020
Our cash generation from operating
activities significantly improved on
the prior year due to improved
trading performance and improved
working capital management.
Focus for 2021
To deliver positive cash generation
from Operating Activities despite
the impact of Covid-19.
Company Number 05452547
15
Trakm8 Holdings PLC
Strategic Report (Continued)
CORPORATE SOCIAL RESPONSIBILITY
Protecting customer data, delivering results
Data Protection/ Information Security
Successfully renewed ISO27001 and Cyber Essentials during 2020
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 2020
Continued improvement to our Supplier Due Diligence and Monitoring to ensure our supply chain
continues to perform despite Covid-19 disruptions and to ensure Trakm8’s expectations and
standards regarding Corporate Social responsibility are being maintained by our supply base
All staff trained for TCF (Treating Customers Fairly), Anti-Bribery and Modern Slavery
All manufacturing staff trained to IPC standards to improve both quality levels and productivity
Environmental
Successfully renewed ISO14001 during 2020
Continued training of Compliance team members on relevant environmental legislation
Commenced phased replacement of company car fleet with electric vehicles
Health & Safety
Continued our good H&S record with no significant accidents or incidents being recorded
Review of all site working practices in light of Covid-19
Redesign of office and manufacturing facilities and internal processes in light of Covid-19
Key staff trained on IOSH and NEBOSH standards
Charity & Community
The Company has identified a plan to extend the commitment made by the Company and its’ staff to
local community support activities and will be undertaking various activities towards a specific cause
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
Increasing our market share
2
Delivering a cutting-edge solutions
portfolio
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
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 maintained our ISO 27001 accreditation.
Deterioration in
customer relations
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 had a sales
impact as a result of
uncertainty delaying
customer decisions
We continue to make considerable investments in security and
systems for both our internal and customer data, including a
review by an independent CISO.
We operate a secure development lifecycle and undertake regular
independent penetration testing of our devices and hosting
environments from CREST certified testers.
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.
Company Number 05452547
20
Trakm8 Holdings PLC
Strategic Report (Continued)
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Principal Risk
Operating in a fast
moving
technology
industry where
we will always be
at risk from new
products being
launched
1, 2
Potential Impact
Decelerating sales
growth affecting
profit
Loss of significant
customer or market
Delay in achieving
projected revenues
OEM fit telematics to
all strategy
Autonomous cars
Product failure
Adverse mobile
network changes
Reputational Impact
2
Attracting and
maintaining high
quality employees
1, 2, 3
Deterioration in
customer relations
Reduction in
revenues, profitability
and cash generation
Loss of key personnel
Potential business
disruption
Breakdown of
communication and
misalignment
Mitigation
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.
Expansion of number of significant customers reduces the risk of an
individual customer loss.
We undertake rigorous testing using our in-house testing team,
synthetic testing has been enhanced by retrofitting greatly enhanced
automated test suites for unit and integration testing, an additional
set of test resource focussed on trials of real world test cases, edge
cases and specific customer solutions to test the broadest possible
functionality has been introduced into the release process. Release
retrospectives complement this activity to drive kaizen
improvements into our software test & release process.
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.
Companywide program of training and personal development
including promotion from within.
Knowledge of our bespoke systems is spread across a larger pool of
individuals to mitigate the risk of a key individual leaving the
business.
We are a sponsor on the government highly skilled migrant program.
Access to long
term and working
capital
1, 2
Ability to deliver
business plans
We maintain regular discussions with banks and other financial
institutions.
We regularly review medium term capital requirements.
Electronics supply
chain under
constraint
Long lead-times
Single source
suppliers
2
Work with world class distributors and manufacturers to mitigate
the supply chain risk.
Company Number 05452547
21
Trakm8 Holdings PLC
Strategic Report (Continued)
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Principal Risk
Covid-19
impacting internal
and operational
capacity and
significant
economic impact
1, 2, 3
Potential Impact
Potential business
disruption
Reduction in
revenues, profitability
and cash generation
Mitigation
We have successfully relocated most teams to home working and
are following government guidance in relation to working practices,
and to protect our two separate UK sites have banned all travel
between the sites for the foreseeable future.
We have detailed plans in place to enable a return to more normal
working and we maintain a dual site capacity.
We are maintaining regular communication and training with all
staff, including furloughed staff to ensure a smooth return to work.
We have taken steps to secure components through supply chain
and increased our safety stocks.
As an agile business the Executive team is reviewing the situation
daily and making continuous adjustments to the operations of the
business.
We are utilising the various government support schemes to protect
the business, alongside a substantial recurring revenue base Trakm8
will manage the cash position carefully into the medium term.
By order of the Board
Jon Furber
COMPANY SECRETARY
29 June 2020
Company Number 05452547
22
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.
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.
Penny Searles
Independent Non-Executive Director
Penny joined the Board in June 2020. Penny has worked in Financial Services for over 25 years, latterly as CEO
and founder of two successful FinTech Companies; Wunelli Ltd which was purchased by LexisNexis in 2014 and
SmartDriverClub purchased by Calamp in 2020. Penny brings her impressive operational experience in both
Motor Insurance and Telematics to the Group.
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.
Company Number 05452547
23
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 in 2002 and is now responsible for the Group Product Strategy and the Advanced Engineering function.
Mark Watkins
Chief Operating Officer
Mark has a Master’s in 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.
Peter Mansfield
Group Sales and Marketing Director
Peter joined the Board in March 2020 following his appointment as the Group Sales and Marketing Director.
Previously Peter has held senior roles in technology and data businesses including CEO of Deko, a fintech
business and as Managing Director of the Credit Solutions Division of Callcredit. Peter’s early career was as an
officer in the British Army and started his commercial career in financial services. He has a Master’s Degree
from Northumbria Business School.
Company Number 05452547
24
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 2020 the Directors’ attendance at Board and Committee meetings has
been as follows:
Type
Total Held in period
Board
11
Audit
2
Nomination
1
Remuneration
5
5
John Watkins
5
Keith Evans
-
Matt Cowley
-
Tim Cowley
Bill Duffy1
2
-
Jon Furber
-
Sean Morris
-
Mark Watkins
5
Nadeem Raza
Peter Mansfield2
-
1
Attended 5 out of 6 Board meetings, 1 out of 1 Audit Committee meetings and 2 out of 2 Remuneration Committee meetings whilst in
office
2
No Board meetings were held whilst in office
11
11
9
11
5
11
8
10
10
-
1
2
-
-
1
-
-
-
1
-
1
1
-
-
-
-
-
-
1
-
Nominations committee
The committee met once during the year and appointed Peter Mansfield as Group Sales and Marketing
Director. The committee met post year end to appoint Penny Searle 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, valuation of accrued income 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
25
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
29 June 2020
Company Number 05452547
26
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 2020.
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
telematics equipment and services and fleet optimisation solutions. 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
£0.5m.
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 2020 are shown in the Consolidated Statement of
Comprehensive Income on page 41. The Directors do not recommend the payment of a dividend (2019: £nil).
Company Number 05452547
27
Trakm8 Holdings PLC
Directors’ Report (Continued)
RESEARCH AND DEVELOPMENT
The Group continues to invest in research and development to ensure the future success of the business.
During the year the Group capitalised development costs of £3.2m 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, which have been revised for a plausible downside scenario due to Covid-19, and downside
sensitivity analysis against its projections along with closing cash balances of £1.7m and undrawn revolving
credit facilities of £0.5m at 31 March 2020 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 57.
FUTURE DEVELOPMENTS
Consideration on the impact of the Covid-19 pandemic has been made in the Executive Chairman’s Statement
in the Strategic Report. Despite this impact of this pandemic the Group is still confident of the growth
potential in its chosen markets and that we have the solutions and sales teams to deliver on this opportunity.
The Group’s Fleet solutions significantly improve customer’s efficiencies so this market driver is as relevant
now as ever and therefore we expect this part of the business to return to growth as the impact of the
pandemic subsides. Revenues are also expected to increase during the financial year from existing and
recently launched insurance customers.
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.
Company Number 05452547
28
Trakm8 Holdings PLC
Directors’ Report (Continued)
POST BALANCE SHEET EVENTS
The Group recently entered into Amendment and Restatement Agreements with HSBC that extended the term
of the facilities to 30 September 2021, deferred all scheduled capital repayments from June 2020, with these
recommencing in April 2021 and amended the covenants. The Group also recently entered into an
Amendment and Restatement Agreement with MEIF EM Debt LP that deferred the commencement date of
capital repayments to 30 June 2021 and amended the covenants in line with the agreement with HSBC. All
other terms of the facilities remained unchanged.
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 (resigned 30 September 2019)
Sean Morris (resigned 31 March 2020)
Mark Watkins
Jon Furber
Nadeem Raza
Peter Mansfield (appointed 26 March 2020)
Penny Searles (appointed 18 June 2020)
DIRECTORS AND THEIR INTERESTS
At 31 March 2020 the Directors’ interests in the shares of the Company are detailed below:
1p Ordinary shares at
31 March 2020
% of issued Ordinary
share capital
(50,004,002 Ordinary
shares)
1p Ordinary shares at
31 March 2019
% of issued Ordinary
share capital
(50,004,002 Ordinary
shares)
7,768,768
381,119
1,994,203
2,268,127
375,000
596,503
-
318,310
278,622
-
-
15.55%
0.76%
3.99%
4.54%
0.75%
1.19%
-
0.64%
0.56%
-
-
7,768,768
381,119
1,994,203
2,268,127
375,000
596,503
-
318,310
178,622
-
-
15.55%
0.76%
3.99%
4.54%
0.75%
1.19%
-
0.64%
0.36%
-
-
John Watkins
Keith Evans
Matt Cowley
Tim Cowley
Bill Duffy
Jon Furber
Sean Morris
Mark Watkins
Nadeem Raza*
Peter Mansfield
Penny Searle
*Nadeem Raza is the CEO and principal 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 2020
or on the date on which these financial statements were approved.
Company Number 05452547
29
Trakm8 Holdings PLC
Directors’ Report (Continued)
DIRECTORS’ REMUNERATION
The Directors’ remuneration for the year ended 31 March 2020 was:
£’000
Salaries &
benefits
Fees
Total
remuneration
to year ended
31 March 2020
Pension
contribution
Total aggregate
emoluments to
year ended 31
March 2020
Total aggregate
emoluments to
year ended 31
March 2019
John Watkins
Keith Evans
Matt Cowley
Tim Cowley
Bill Duffy
Jon Furber
Sean Morris
Mark Watkins
Nadeem Raza
Peter Mansfield
Total
289
36
105
120
27
166
170
159
45
9
1,126
-
-
-
-
-
-
-
-
-
-
-
289
36
105
120
27
166
170
159
45
9
1,126
-
1
3
3
-
14
13
14
1
-
49
289
37
107
123
27
179
183
173
46
9
1,173
285
37
106
122
36
181
119
165
-
-
1,051
Company Number 05452547
30
Trakm8 Holdings PLC
Directors’ Report (Continued)
DIRECTORS’ SHARE OPTIONS
At 31 March 2020 the following options had been granted to the Company's Directors and remain current and
unexercised:
John Watkins
Keith Evans
Matt Cowley
Tim Cowley
Bill Duffy
Sean Morris
Mark Watkins
Jon Furber
Option
exercise
price
£0.45
£0.34
£0.34
Balance as
at 1 April
2019
250,000
125,000
300,000
£0.99
£0.34
£0.34
£0.45
£0.34
£0.45
£0.34
£0.34
£0.34
£0.34
£0.58
£0.34
£0.34
£0.34
£0.34
75,000
-
-
125,000
25,000
125,000
50,000
50,000
75,000
350,000
200,000
125,000
250,000
125,000
475,000
Granted
during year
Exercised
during year
-
-
-
-
75,000
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Expired/
forfeited
during year
-
-
-
Balance as
at 31 March
2020
250,000
125,000
300,000
75,000
-
-
-
75,000
50,000
Expiry date
21/01/2024
04/03/2029
04/03/2029
03/07/2027
27/05/2029
27/05/2029
-
-
-
-
125,000
25,000
21/01/2024
04/03/2029
125,000
50,000
21/01/2024
04/03/2029
50,000
75,000
-
-
02/03/2029
04/03/2029
-
-
-
-
-
-
350,000
04/03/2029
200,000
125,000
250,000
06/04/2024
04/03/2029
04/03/2029
125,000
475,000
04/03/2029
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 and the options issued on the 28 May 2019 which have an exercise price at a 50%
premium to the mid-market closing share price on 27 May 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 2019 and 31 March 2020 the Company held 29,000 of its own 1p Ordinary shares representing 0.06%
(2019: 0.06%) of the called up share capital. There were no purchases or sales by the Company during the
year.
Company Number 05452547
31
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.
Company Number 05452547
32
Trakm8 Holdings PLC
Directors’ Report (Continued)
SECTION 172 STATEMENT
The Directors of the Company are required to act in accordance with a set of general duties. These duties are
detailed in section 172 of the UK Companies Act 2006 which is summarised as follows: “A director of a
company must act in the way they consider, in good faith, would be most likely to promote the success of the
company for the benefit of its shareholders as a whole”.
The Directors are aware of their obligations with regards to the matters under section 172, namely:
the likely consequences of any decision in the long term;
the interests of the company’s employees;
the need to foster the company’s business relationships with suppliers, customers and others;
the impact of the company’s operations on the community and the environment;
the desirability of the company maintaining a reputation for high standards of business conduct; and
the need to act fairly between members of the company.
The Strategic Report on page 3, the Governance Report on page 23 and the Directors’ Report on page 27 set
out the ways in which these duties are fulfilled.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP resigned as auditors on 13 January 2020 and Cooper Parry Group Limited was
appointed in their place. A resolution to appoint Cooper Parry Group Limited, as auditors, will be put to the
members at the Annual General Meeting.
By approval of the Board on 29 June 2020
Jon Furber
Company Secretary
Company Number 05452547
33
Trakm8 Holdings PLC
Independent Auditors Report
Independent auditors’ report to the members of Trakm8 Holdings Plc
Opinion
We have audited the financial statements of Trakm8 Holdings plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 March 2020 which comprise the consolidated statement of total
comprehensive income, the consolidated statement of changes in equity, the consolidated statement of
financial position, the consolidated statement of cash flows, the company statement of financial position, the
company statement of changes in equity and the related notes to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The
financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 March 2020 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the group and parent company
in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
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 ability or the 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.
Company Number 05452547
34
Trakm8 Holdings PLC
Independent Auditors Report
Emphasis of matter
We draw attention to note 4 in the financial statements, which refers to the fact that the Coronavirus has
created financial uncertainty within the economy and therefore there is increased difficulty in forecasting
future results for the Group. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our 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) we identified, 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 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.
Risk of error in revenue recognition for multi-element arrangements
Matter
The Group enters into contracts where there are multiple deliverables 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.
Response
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 standalone 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.
Company Number 05452547
35
Trakm8 Holdings PLC
Independent Auditors Report
Capitalisation of internally generated intangible assets
Matter
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 £3.2m 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 attributable to the asset will flow to the
Group;
that the cost of the asset can be measured reliably;
that 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.
Response
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 recorded on an appropriate basis.
Goodwill impairment assessment
Matter
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.
Company Number 05452547
36
Trakm8 Holdings PLC
Independent Auditors Report
Response
We have performed audit procedures over management's impairment assessment, including the following
procedures:
Testing of the integrity of the cash flow model and the methodology applied;
Assessing key assumptions including future cash flows, discount rates and growth rates, including
sensitivity of these assumptions.
Agreeing 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.
Considering 3 year extended forecasts approved by the board.
Assessing the terminal growth rate against long-term GDP growth in the UK and testing the calculation of
the discount rate.
Performing sensitivity analysis over key assumptions, in particular testing what level of sensitivity in the
assumptions would cause 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.
Going concern and impairment consideration relating to Coronavirus
Matter
During March 2020, the potential impact of Coronavirus became significant. As a result, management
(including the Board and Audit Committee) invested a significant amount of time to fully consider the
implications on Trakm8. Management considered implications for the Group’s going concern assessment,
impairment of certain assets and appropriate disclosure in the Annual Report and accounts, by developing
forecasts based on various scenarios to model potential impacts.
Response
We reviewed management’s forecast scenarios including levers available to management to mitigate the
impacts. Based on the information available at the time of the directors’ approval of the financial statements
and our signing of our audit opinion, we consider the scenarios to be reasonable whilst noting that the impact
of Coronavirus on future sales and other inputs is currently difficult to quantify.
We challenged management on the key assumptions included in the scenarios and confirmed that
management’s mitigating actions are within their control. We considered the potential impact on the balance
sheet, specifically around trade and other receivables, inventory, intangible assets and right of use assets and
do not consider there to be any indicators of material impairment as at the balance sheet date or subsequently
(for disclosure only). We reviewed management’s disclosures in relation to the Coronavirus potential impact
and found them to be consistent with the forecast scenarios performed.
Company Number 05452547
37
Trakm8 Holdings PLC
Independent Auditors Report
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in determining the nature, timing
and extent of our audit procedures, in evaluating the effect of any identified misstatements, and in forming
our audit opinion.
The materiality for the group financial statements as a whole was set at £196,000. This has been determined
with reference to the benchmark of the group’s revenue which we consider to be an appropriate measure for
a group of companies such as these. Materiality represents 1% of group revenue.
The materiality for the parent company financial statements as a whole was set at £146,000. This has been
determined with reference to the benchmark of the parent company’s net assets which we consider to be an
appropriate measure for a parent company such as this. Materiality represents 0.9% of the parent company
net assets, as a result of us restricting parent company materiality to 80% of the materiality used for the group
financial statements.
An overview of the scope of our audit
We adopted a risk based audit approach. We gained a detailed understanding of the group’s business, the
environment it operates in and the risks it faces.
The key elements of our audit approach were as follows:
Our Group audit scope focused on the Group’s principal trading subsidiaries, Trakm8 Limited and Route
Monkey Limited which were subject to a full scope audit. Together with the parent company and its group
consolidation, which was also subject to a full scope audit, these entities represent the principal business units
of the Group and account for 97% of the Group’s revenue, 101% of the Group’s loss before tax and 100% of
the Group’s net assets. In performing our testing we utilised performance materiality of £147,000, equating to
75% of materiality.
In order to address the matters described in the Key audit matters section we performed focused audit
procedures over these areas, including reference to external market data and publicly available market
information in relation to assumptions used.
The accounting for all significant components in the group is located in the UK, with all audit work over these
components performed by the group audit team. Therefore, there is no requirement to utilise separate
component auditors.
Company Number 05452547
38
Trakm8 Holdings PLC
Independent Auditors Report
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion 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 such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in 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 in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns;
or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Company Number 05452547
39
Trakm8 Holdings PLC
Independent Auditors Report
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 32, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors 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.
Auditor’s 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 auditor’s 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 Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent
company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the parent company and the parent company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Katharine Warrington (Senior Statutory Auditor)
For and on behalf of Cooper Parry Group Limited
Chartered Accountants and Statutory Auditor
One Central Boulevard
Blythe Valley Business Park
Solihull
West Midlands
B90 8BG
Date: 29 June 2020
Company Number 05452547
40
Trakm8 Holdings PLC
Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2020
REVENUE
Cost of sales
Gross profit
Other income
Administrative expenses excluding exceptional costs
Exceptional administrative costs
Total administrative costs
OPERATING LOSS
Finance income
Finance costs
LOSS BEFORE TAXATION
Income tax
LOSS 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 FOR THE YEAR ATTRIBUTABLE TO
OWNERS OF THE PARENT
LOSS BEFORE TAXATION
Exceptional administrative costs
IFRS2 Share based payments charge
ADJUSTED LOSS BEFORE TAX
LOSS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS
OF THE PARENT
Basic
Diluted
The results relate to continuing operations.
Note
6
7
9
8
10
11
8
13
13
Year ended 31
March 2020
£'000
19,550
(7,991)
Year ended 31
March 2019
£'000
19,145
(8,890)
11,559
10,255
364
436
(11,926)
(1,296)
(13,222)
(12,101)
(1,930)
(14,031)
(1,299)
(3,340)
12
(418)
10
(233)
(1,705)
612
(3,563)
1,057
(1,093)
(2,506)
(7)
(7)
(5)
(5)
(1,100)
(2,511)
(1,705)
1,296
185
(224)
(3,563)
1,930
181
(1,452)
(2.19p)
(6.20p)
(2.19p)
(6.20p)
Company Number 05452547
41
Trakm8 Holdings PLC
Consolidated Statement of Changes in Equity For The Year Ended 31 March 2020
Note
Share
capital
Share
premium
Merger
reserve
Translation
reserve
Treasury
reserve
Retained
earnings
Total
equity
Balance as at 1 April 2018
359
11,750
1,138
208
(4)
7,929
21,380
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Comprehensive loss
Loss for the year
Other comprehensive loss
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)
-
-
-
-
-
(2,506)
(2,506)
-
-
-
(5)
-
-
(5)
-
-
-
(5)
-
(2,506)
(2,511)
141
2,941
-
-
-
-
-
-
-
-
-
-
-
-
3,082
-
181
181
-
(38)
(38)
Transactions with owners
141
2,941
-
-
-
143
3,225
Balance as at 1 April 2019
500
14,691
1,138
203
(4)
5,566
22,094
Comprehensive loss
Loss for the year
Other comprehensive loss
Exchange differences on
translation of overseas
operations
Total comprehensive loss
Transactions with owners
IFRS2 Share based payments
charge
Transactions with owners
Balance as at 31 March 2020
-
-
-
-
-
-
-
-
(1,093)
(1,093)
(7)
-
-
(7)
-
-
-
(7)
-
(1,093)
(1,100)
-
-
-
-
-
185
185
-
500
-
14,691
-
1,138
-
196
-
(4)
185
4,658
185
21,179
Company Number 05452547
42
Trakm8 Holdings PLC
Consolidated Statement of Financial Position As At 31 March 2020
ASSETS
NON CURRENT ASSETS
Intangible assets
Property, plant and equipment
Right of use assets
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
Right of use liability
Provisions
CURRENT ASSETS LESS CURRENT LIABILITIES
TOTAL ASSETS LESS CURRENT LIABILITIES
NON CURRENT LIABILITIES
Trade and other payables
Borrowings
Right of use liability
Provisions
Deferred income tax liability
NET ASSETS
EQUITY
Share capital
Share premium
Merger reserve
Translation reserve
Treasury reserve
Retained earnings
Note
As at 31
March 2020
£'000
As at 31
March 2019
£'000
14
15
31
17
16
17
19
20
20
21
19
20
20
21
18
22
21,997
717
3,004
41
25,759
21,165
1,432
-
139
22,736
2,043
7,854
863
1,665
12,425
2,736
8,345
1,050
1,205
13,336
(6,180)
(1,125)
(656)
(27)
(7,988)
(6,307)
(1,237)
-
(27)
(7,571)
4,437
5,765
30,196
28,501
(713)
(5,675)
(2,162)
(157)
(310)
(9,017)
(607)
(5,597)
-
(115)
(88)
(6,407)
21,179
22,094
500
14,691
1,138
196
(4)
4,658
500
14,691
1,138
203
(4)
5,566
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
21,179
22,094
The loss for the Company for the year determined in accordance with the Companies Act 2006 was £236,000 (2019:
loss £242,000)
The notes on pages 45 to 82 are an integral part of these consolidated financial statements. These financial
statements on pages 41 to 82 were approved by the Board of directors and authorised for issue on 29 June 2020
and are signed on its behalf by:
John Watkins - Director
Jon Furber - Director
Company Number 05452547
43
Trakm8 Holdings PLC
Consolidated Statement of Cash-Flows For The Year Ended 31 March 2020
NET CASH GENERATED FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment
Purchases of software
Proceeds from sale of property
Capitalised development costs
Year ended
31 March
2020
£'000
4,115
Year ended
31 March
2019
£'000
(1,752)
Note
24
(20)
(23)
-
(3,156)
(103)
(158)
495
(3,413)
NET CASH USED IN INVESTING ACTIVITIES
(3,199)
(3,179)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares
Increase in loans
Repayment of loans
Repayment of obligations under lease agreements
Interest paid
-
2,000
(1,440)
(630)
(386)
3,082
2,000
(2,026)
(187)
(205)
NET CASH GENERATED FROM FINANCING ACTIVITIES
(456)
2,664
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
460
1,205
(2,267)
3,472
CASH AND CASH EQUIVALENTS AT END OF YEAR
1,665
1,205
Company Number 05452547
44
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 and optimisation solutions.
Trakm8 Holdings PLC is a public limited company incorporated in the United Kingdom (registration number
05452547). The Company is domiciled in the United Kingdom and its registered office address is 4 Roman
Park, Roman Way, Coleshill, West Midlands, B46 1HG. The Company’s Ordinary shares are traded on the AIM
market of the London Stock Exchange. The Company is registered in England and is limited by shares.
The Group’s principal activity is the development, manufacture, marketing and distribution of vehicle
telematics equipment and services and optimisation solutions. The Company’s principal activity is to act as a
holding company for its subsidiaries.
The consolidated financial statements are presented in Sterling and all values are rounded to the nearest
thousand (£'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 2020.
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 statement of comprehensive income 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
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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 configuration consulting 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 configuration consulting 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
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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.
LEASES
The Group has adopted IFRS 16 Leases this year with effect from 1 April 2019 using the modified retrospective
approach and therefore the comparative information has not been restated and continues to be reported
under IAS 17 and IFRIC 4. The detailed accounting policies under IAS 17 and IFRIC 4 are disclosed separately if
they are different from those under IFRS 16.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
LEASES (Continued)
Policy applicable for accounting periods starting 1 April 2019
At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Group assesses whether:
- The contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should
be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier
has a substantive substitution right, then the asset is not identified.
- The Group has the right to obtain substantially all of the economic benefits from use of the asset through
the period of use; and
- The Group has the right to direct the use of the asset. The Group has this right when it has the decision-
making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases
where the decision about how and for what purpose the asset is used is predetermined, the Group has the
right to direct the use of the asset if either:
o The Group has the right to operate the asset; or
o The Group designed the asset in a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of their relative stand-alone prices.
However, for the leases of land and buildings in which it is a lessee, the Group has elected to separate non-
lease components and therefore accounts for the lease and non-lease components as separate lease
components.
Group as lessee
At inception of a contract the Group assesses whether the contract is or contains a lease as detailed above.
Where a lease is identified the Group recognises a right of use asset and a corresponding lease liability, except
for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets.
Lease liability – initial recognition
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date. The lease payments are discounted at the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
• fixed lease payments (including in-substance fixed payments), less any lease incentives;
• variable lease payments such as those that depend on an index or rate (such as RPI), initially measured
using the index or rate at the commencement date;
• the amount expected to be payable by the lessee under residual value guarantees;
• the exercise price of purchase options where the Group is reasonably certain to exercise the options; and
• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the Consolidated Statement of Financial Position, split
between current and non-current liabilities.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
LEASES (Continued)
Lease liability – subsequent measurement
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease
payments made.
Lease liability – re-measurement
The lease liability is re-measured where:
• there is a change in the assessment of exercise of a purchase option, in which case the lease liability is re-
measured by discounting the revised lease payments using a revised discount rate or;
• the lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease liability is re-measured by discounting the revised lease
payments using the initial discount rate (unless the lease payments change is due to a change in a floating
interest rate, in which case a revised discount rate is used) or;
• the lease contract is modified and the lease modification is not accounted for as a separate lease, in which
case the lease liability is re-measured by discounting the revised lease payments using a revised discount rate.
When the lease liability is re-measured, an equivalent adjustment is made to the right of use asset unless its
carrying amount is reduced to zero, in which case any remaining amount is recognised in the Statement of
Comprehensive Income.
Where the lease liability is denominated in a foreign currency it is retranslated at the Statement of Financial
Position date with foreign exchange gains and losses recognised in the Statements of Comprehensive Income.
Right of use asset – initial recognition
The right of use asset comprises the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement date and any initial direct costs. They are subsequently measured at
cost less accumulated depreciation and impairment losses.
Where the Group has an obligation for costs to dismantle and remove a leased asset, restore the site on
which it is located or restore the underlying asset to the condition required by the terms and conditions of the
lease, a provision is recognised and measured under IAS 37. The costs are charged to the Statement of
Comprehensive Income on a straight line basis over the life of the lease.
The right of use asset is presented as a separate line in the Statement of Financial Position.
Right of use asset – subsequent measurement
Right of use assets are depreciated over the shorter of the lease term and useful life of the underlying asset.
Impairment
The Group applies IAS 36 to determine whether a right of use asset is impaired and accounts for any identified
impairment loss as described in the ‘Impairment – non-financial assets’ policy.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease
liability and the right of use asset. The related payments are recognised as an expense in the period in which
the event or condition that triggers those payments occurs.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account
for any lease and associated non-lease components as a single arrangement. The Group has not used this
practical expedient.
Short term leases and low value assets
For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis
over the term of the lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
LEASES (Continued)
Under IAS 17
In the comparative period, as a lessee the Group classified leases that transfer substantially all of the risk and
rewards of ownership as finance lease. When this was the case, the leased assets were measured initially at
an amount equal to the lower of their fair value and the present value of the minimum lease payments.
Minimum lease payments were the payments over the lease term that the lessee was required to make,
excluding any contingent rent.
Subsequently, the asset was accounted for in accordance with the accounting policy applicable to that asset.
Assets held under other leases were classified as operating leases and were not recognised in the Group’s
statement of financial position. Payments made under operating lease were recognised in profit and loss on a
straight-line basis other the term of the lease. Lease incentives received were recognised as an integral part of
the total lease expense, over the team of the lease.
The Group as lessor
The Group enters into lease agreements as a lessor with respect to telematics units.
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a
finance lease. All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognised on a straight-line basis over the lease term.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s
net investment in the leases. 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.
The accounting policies applicable to the Group as a lessor in the comparative period were not different from
IFRS 16.
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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
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.
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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
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.
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
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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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
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.
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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
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.
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 represents 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.
Company Number 05452547
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Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors.
The Board have assessed that there continues to be just one segment following the integration of the Trakm8
and Route Monkey businesses. This segment has one separate revenue stream of Integrated Telematics
Technology.
GOING CONCERN
These financial statements are prepared on a going concern basis after assessing the principal risks and having
considered the impact of Covid-19. 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. These projections are updated on a regular basis and have been re-assessed in light of the Covid-
19 pandemic through which the Group has continued trading albeit at reduced volume.
The Group has a substantial recurring revenue base that accounted for 50% of revenues in the FY-2020 and
has taken advantage of some of the various government support schemes to protect the business. Whilst the
impact of Covid-19 and the speed at which trading returns to normal levels continues to evolve, the Group has
revised its forecasts for plausible downside scenarios. Further consideration to the risks associated with
Covid-19 and other significant risks and the mitigations the Group has developed are detailed on page 20. In
addition the Group recently entered into Amendment and Restatement Agreements with HSBC that extended
the term of all facilities to 30 September 2021, deferred all scheduled capital repayments from June 2020,
with these recommencing in April 2021 and amended the covenants. The recently agreed covenants relate to
cash flow cover, next tested on 31 March 2021 and leverage next tested on 30 September 2020. The Group
also recently entered into an Amendment and Restatement Agreement with MEIF EM Debt LP that deferred
the commencement date of capital repayments to 30 June 2021 and amended the covenants in line with the
agreement with HSBC. At the year end the Group had cash balances of £1,665,000 and undrawn revolving
credit facilities of £500,000 at 31 March 20. These revised 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 the
Group would still have cash reserves in all these scenarios and would meet the agreed covenants. This
sensitivity analysis showed that if either a 50% reduction in Adjusted EBITDA, or a 50% reduction in free cash
flow 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 and
therefore it appropriate to adopt the going concern basis of accounting in preparing the financial statements.
Company Number 05452547
57
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
CHANGES IN ACCOUNTING STANDARDS AND DISCLOSURES
The Group has adopted the following new standards, or new provisions of amended standards:
For the financial period ended 31 March 2020 the Group has adopted IFRS 16 “Leases” for the first time. The
nature and effect of these changes is disclosed below.
Several other amendments and interpretations apply for the first time in 2020, but do not have an impact on
the financial statements of the Group. The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not effective.
IFRS16
The Group adopted IFRS 16 on 1 April 2019, which introduced changes to lessee accounting by removing the
distinction between operating and finance leases, and required the recognition of a right of use asset and a
lease liability at the lease commencement for most leases.
Finance leases existing at the date of adoption continue to be treated as finance leases and have been
reclassified from borrowings to lease liabilities in the Consolidated Statement of Financial Position. For
operating leases existing at the date of adoption, the Group has applied the modified retrospective approach
by measuring the right of use asset at an amount equal to the lease liability and therefore comparative
information has not been restated. Upon transition the Group also applied the following practical expedients:
– Application of a single discount rate to a portfolio of leases with similar characteristics;
– Excluded initial direct costs from the right of use assets;
– Used hindsight when assessing the lease term; and
– Not to reassess whether a contract is or contains a lease.
The Group has elected to apply the recognition exemptions to all:
– Leases with a term of 12 months or less and containing no purchase options (“short-term leases”); and
– Leases where the underlying asset has a value of less than £5,000 (“low-value leases”).
The lease liability was initially measured at the present value of the lease payments that were not paid at the
transition date, discounted by using the rate implicit in the lease. If this rate could not be readily determined,
the Group has used its incremental borrowing rate, which was 2.5% at the date of transition.
Generally, the Group uses its incremental borrowing rate as the discount rate. Options such as lease
extensions or terminations on lease contracts are considered on a case-by-case basis by regular management
assessment. The right of use asset is being depreciated on a straight-line basis.
Company Number 05452547
58
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
4 ACCOUNTING POLICIES (Continued)
CHANGES IN ACCOUNTING STANDARDS AND DISCLOSURES (Continued)
The following tables set out the reconciliation from operating lease commitments disclosed in the 2019
Consolidated Financial Statements and the financial impact of adopting IFRS 16 for the year ended 31 March
2020:
Reconciliation of lease liabilities
Lease liabilities recognised on adoption of IFRS 16
Add: finance leases recognised in borrowings as at 31 March 2019
Lease liabilities as at 1 April 2019
Lease additions
Payments of lease liabilities
Lease terminated
Interest expense on lease liabilities
Interest paid on lease liabilities
Lease liabilities as at 31 March 2020
Of which:
Current lease liabilities
Non-current lease liabilities
Reconciliation of right of use assets
Right of use assets recognised on adoption of IFRS 16
Add: net book value of assets relating to finance leases recognised in PP&E and Intangible
assets as at 31 March 2019
Right of use assets as at 1 April 2019
Lease additions
Leases terminated
Depreciation of right of use assets
Foreign exchange
Right of use assets as at 31 March 2020
Of which:
Real estate and other
Motor Vehicles
£'000
2,510
626
3,136
342
(630)
(30)
59
(59)
2,818
656
2,162
2,818
2,510
739
3,249
342
(37)
(550)
-
3,004
2,560
444
3,004
Upon adoption of IFRS 16 at 1 April 2019, there was an increase in both deferred tax assets and deferred tax
liabilities of £477,000.
For the year ended 31 March 2020, expenses related to short-term leases and low-value leases of £80,000
were recognised in the Consolidated Statement of Comprehensive Income.
The Group’s Consolidated Statement of Comprehensive Income for the year ended 31 March 2020 includes a
net expense of £33,000 as a result of adopting IFRS 16. Total cash outflow of IFRS 16 lease liabilities including
interest for the year ended 31 March 2020 was £689,000.
Refer to note 31 – Leases for disclosure on the impact of IFRS 16 for the year ended 31 March 2020.
Company Number 05452547
59
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
OUTLOOK FOR ADOPTIONS OF FUTURE STANDARDS (new and amended)
At the date of authorisation of these Consolidated Financial Statements, there were no new or revised IFRSs,
amendments or interpretations in issue but not yet effective that are potentially relevant for the Group and
which have not yet been applied.
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
60
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
61
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) as part of their internal reporting. Solutions represents the sale of the
Group’s full vehicle telematics and optimisation services, engineering services, professional services and
mapping solutions to customers.
A breakdown of revenues within these streams are as follows:
Solutions:
Fleet and optimisation
Insurance and automotive
A geographical analysis of revenue by destination is as follows:
United Kingdom
North America
Norway
Rest of Europe
Rest of World
7 OTHER INCOME
Grant income
R&D tax credit
R&D tax credit adjustment in respect of prior periods
Year ended
31 March
2020
£'000
19,550
12,034
7,516
Year ended
31 March
2019
£'000
19,145
10,845
8,300
Year ended
31 March
2020
£'000
19,181
7
-
67
295
19,550
Year ended
31 March
2019
£'000
18,910
12
4
111
108
19,145
Year ended
31 March
2020
£'000
361
4
(1)
Year ended
31 March
2019
£'000
449
5
(18)
364
436
Company Number 05452547
62
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
8 OPERATING LOSS
The following items have been included in arriving at operating loss:
Depreciation
- owned assets (see note 15)
- right of use assets (see note 31)
Amortisation of intangible assets
- owned assets (see note 14)
Operating lease rentals
- Land and buildings
- Other
Research and development expenditure
Loss/(Gain) on foreign exchange transactions
Staff costs (note 12)
Profit 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
Adjusted loss before tax is monitored by the Board and measured as follows:
Loss before tax
Exceptional administrative costs (note 9)
Share based payments
Adjusted loss profit before tax
9 EXCEPTIONAL ADMINISTRATIVE COSTS
Acquisition costs
Integration & restructuring costs
New product component refit costs
Covid-19 costs
Product enhancement costs
Iranian bad debt
Year ended
31 March
2020
Year ended
31 March
2019
£'000
£'000
149
550
242
71
2,194
1,866
-
80
896
2
6,730
-
1,296
208
183
933
(3)
7,126
(106)
1,930
73
93
Year ended
31 March
2020
£'000
(1,705)
1,296
185
(224)
Year ended
31 March
2019
£'000
(3,563)
1,930
181
(1,452)
Year ended
31 March
2020
£'000
52
602
442
200
-
-
1,296
Year ended
31 March
2019
£'000
102
707
453
-
375
293
1,930
Company Number 05452547
63
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
9 EXCEPTIONAL ADMINISTRATIVE COSTS (continued)
The acquisition costs incurred in 2020 and 2019 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 terminated on 31 July 2019, and the second
agreement terminated on 31 March 2019.
The Group has incurred significant costs relating to its ongoing project to streamline and rationalise the
operations of the business. This has resulted in the following non-underlying, one-off costs:
- In the current and prior year, integration and restructuring costs incurred relate to integrating the
activities of Route Monkey Limited and Roadsense Limited that were acquired in previous financial years and
include costs associated with office closures and costs and profits incurred as part of its long-term real estate
plan.
- Restructuring costs incurred as a result of a headcount reduction activity undertaken during the current
financial year.
The Product component refit costs incurred in the current and prior year relate to significant component and
software issues that arose during the financial year on a recently launched product. These issues were fixed
by the end of the previous financial year. However significant re-visit and material costs have been incurred
in both the current and financial year as a result of the project to remedy these issues. No customers have
been lost as a result of these issues.
In the prior year product enhancement costs incurred relate to product upgrade costs incurred as a result of
a decision to roll out an enhanced hardware product with increased functionality to just two existing
customers to enable much greater roaming capability across Europe and increase the range of services that
can therefore be provided.
In the prior 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
previously have been provided for.
The Group has also incurred exceptional costs in the current financial year relating to the Covid-19
pandemic. These costs relate to a variety of overheads including employee costs, cancelled marketing
events and bad debts resulting from Covid-19.
10 FINANCE COSTS
Interest on bank loans
Amortisation of debt issue costs
Interest on right of use assets
Year ended 31
March 2020
£'000
284
32
102
418
Year ended 31
March 2019
£'000
172
28
33
233
Company Number 05452547
64
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
11
INCOME TAX
Tax credit for the year
The 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 2020
£'000
(855)
21
(834)
Year ended 31
March 2019
£'000
(1,034)
-
(1,034)
169
53
222
(12)
(11)
(23)
Income tax credit
Total
(612)
(1,057)
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 credit in the statement of changes in equity
Year ended 31
March 2020
£'000
Year ended 31
March 2019
£'000
-
-
38
38
Company Number 05452547
65
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 (2019: lower) than the applicable rate of corporation tax in the UK. The
difference is explained below:
Loss before tax
Year ended 31
March 2020
£'000
(1,705)
Year ended 31
March 2019
£'000
(3,563)
Loss on ordinary activities multiplied by the standard rate of
corporation tax in the UK of 19% (2019: 19%)
(324)
(677)
Effects of:
Expenses not deductible/income not taxable
R&D relief enhanced deduction
Adjustments in respect of
prior periods:
Deferred tax
Current tax
Other movements
Total tax credit
Tax on exceptional items
41
(376)
42
(463)
53
21
(27)
(612)
(12)
-
53
(1,057)
The tax effect of exceptional items is to increase the tax credit by £246,000 (2019: £367,000).
R&D relief enhanced deduction
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.
Company Number 05452547
66
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
12
EMPLOYEES
The average monthly number of persons (including Directors) employed
by the Group was:
Engineering
Sales & marketing
Production
Administration
Year ended 31
March 2020
Year ended 31
March 2019
No.
No.
66
82
39
21
208
75
90
44
24
233
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 2020
£'000
5,740
675
185
130
6,730
Year ended 31
March 2019
£'000
6,036
721
181
188
7,126
Management have reclassified the reported categories of staff costs which has resulted in a restatement of
prior year reported numbers to align with current year classification.
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 2020
£'000
Year ended 31
March 2019
£'000
1,295
58
148
1,501
1,375
66
175
1,616
The key management personnel are the Directors and two senior managers who have previously been
identified as key management personnel.
The key management personnel made gains of £nil (2019: £88,000) 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) are
given in the Directors’ Report on page 30.
Company Number 05452547
67
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 for the year after taxation
Exceptional administrative costs
Share based payments
Tax effect of adjustments
Adjusted profit/(loss) 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 per share
Diluted loss per share
Adjust for effects of:
Exceptional costs
Share based payments
Adjusted basic earnings/(loss) per share
Adjusted diluted earnings/(loss) per share
Year ended 31
March 2020
£'000
(1,093)
1,296
185
(246)
142
Year ended 31
March 2019
£'000
(2,506)
1,930
181
(367)
(762)
No.
50,004,002
50,004,002
50,004,002
No.
50,004,002
40,397,188
40,397,188
(2.19p)
(2.19p)
2.10p
0.37p
0.28p
0.28p
(6.20p)
(6.20p)
3.87p
0.45p
(1.89p)
(1.89p)
Company Number 05452547
68
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
14
INTANGIBLE ASSETS
COST
As at 1 April 2018
Additions - Internal developments
Additions - External purchases
As at 31 March 2019
Reclassification of right of use
assets1
Additions - Internal developments
Additions - External purchases
As at 31 March 2020
AMORTISATION
As at 1 April 2018
Charge for year
As at 31 March 2019
Charge for year
As at 31 March 2020
NET BOOK AMOUNT
As at 31 March 2020
Goodwill
£'000
Intellectual
property
£'000
Customer
relationships
£'000
Development
costs
£'000
Software
£'000
10,417
-
1,920
-
-
10,417
-
1,920
100
-
-
100
10,621
2,844
569
14,034
1,875
144
14
2,033
Total
£'000
24,933
2,988
583
28,504
-
-
-
-
(153)
(153)
-
-
-
2,763
-
2,763
-
10,417
-
1,920
-
100
393
17,190
23
1,903
416
31,530
-
-
-
-
-
1,788
61
1,849
61
1,910
56
33
89
11
100
3,101
1,531
4,632
1,847
6,479
528
241
769
275
1,044
5,473
1,866
7,339
2,194
9,533
10,417
10
-
10,711
859
21,997
As at 31 March 2019
10,417
71
11
9,402
1,264
21,165
As at 1 April 2018
10,417
132
44
7,520
1,347
19,460
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 revised for the impact of Covid-19 for FY-2021 which
have been reviewed and approved by the Board and projections for FY-2022. Forecasts for the subsequent 3 years
have been produced based on 7% (a prudent growth rate for telematics market) growth rates in revenue and EBITDA
in each year. A net present value has been calculated using a pre-tax discount rate of 10% (Group's weighted
average cost of capital) which is deemed to be a reasonable rate taking account of the Group’s cost of funds and an
extra element for risk. A terminal value has been calculated and included in the discounted cash flow forecasts used
within the model to fully support the goodwill value. A growth rate of 2% was used to determine the terminal value.
In addition sensitivity analysis has been undertaken and indicates that an impairment will be triggered by:
1. Decrease in annual growth rates from 7% to 5.7% (terminal growth rate of 2%)
Or triggered by:
1. Decrease in net cash generated from operating activities for FY-2021 and FY-2022 of 24%
Amortisation expenses of £2,194,000 (2019: £1,866,000) have been charged to Administrative expenses in the
Consolidated Statement of Comprehensive Income.
1 Amounts previously recognised as finance lease assets have been reclassified to right of use assets upon transition
to IFRS 16 on 1 April 2019. Refer to note 31 – Leases for further details.
Company Number 05452547
69
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
15 PROPERTY, PLANT AND EQUIPMENT
COST
As at 1 April 2018
Additions
Exchange differences
Disposals
As at 31 March 2019
Reclassification of right of use
assets1
Additions
As at 31 March 2020
DEPRECIATION
As at 1 April 2018
Charge for year
Disposals
As at 31 March 2018
Reclassification of right of use
assets1
Charge for year
As at 31 March 2019
NET BOOK AMOUNT
As at 31 March 2020
Freehold
property
£'000
Furniture,
fixtures and
equipment
£'000
Computer
equipment
£'000
Motor
vehicles
£'000
Total
£'000
508
59
-
(420)
147
1,402
229
-
(58)
1,573
681
90
-
-
771
7
-
-
-
7
2,598
378
-
(478)
2,498
-
(526)
(230)
-
(756)
- 18
1,065
147
2
543
-
7
20
1,762
53
8
(56)
5
398
176
(33)
541
384
129
-
513
7
-
-
7
842
313
(89)
1,066
-
(80)
(90)
-
(170)
6
11
107
568
36
459
-
7
149
1,045
136
497
84
-
717
As at 31 March 2019
142
1,032
258
-
1,432
As at 1 April 2018
455
1,004
297
-
1,756
Included within freehold property is £85,000 (2019: £85,000) relating to land which is not depreciated.
Total depreciation expenses of £149,000 (2019: £313,000) have been charged to administrative expenses in
the Consolidated Statement of Comprehensive Income.
1 Amounts previously recognised as finance lease assets have been reclassified to right of use assets upon
transition to IFRS 16 on 1 April 2019. Refer to note 31 – Leases for further details.
16
INVENTORIES
Raw materials
Work in progress
Finished goods and goods for resale
As at 31
March 2020
£'000
621
715
707
2,043
As at 31
March 2019
£'000
1,158
212
1,366
2,736
The cost of inventories recognised as an expense and included in cost of sales amounted to £3,746,000
(2019: £3,657,000). During the year old inventory lines totalling £111,000 (2019: £127,000) were written
down and charged to cost of sales in the Consolidated Statement of Comprehensive Income.
Company Number 05452547
70
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
Current assets
As at 31 March
2020
£'000
-
-
41
-
As at 31
March 2019
£'000
-
-
139
-
As at 31
March 2020
£'000
3,294
73
98
344
As at 31
March 2019
£'000
4,488
253
179
412
-
-
4,045
3,013
41
139
7,854
8,345
The analysis of trade receivables by currency is as follows:
Pound Sterling
Dollar
Euro
Other
As at 31
March 2020
£'000
3,271
-
23
-
3,294
As at 31
March 2019
£'000
4,374
-
28
86
4,488
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 £415,000 (2019: £720,000).
Movement in provision for impairment of trade receivables:
Opening provision for impairment of trade receivables
Arising during the year
Utilised during the year
Released during the year
Closing provision for impairment of trade receivables
As at 31
March 2020
£'000
720
As at 31
March 2019
£'000
398
208
(409)
(104)
415
693
(220)
(151)
720
As at 31 March 2020 trade receivables of £1,675,000 (2019: £1,346,000) 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 2020
£'000
1,438
237
1,675
As at 31
March 2019
£'000
832
514
1,346
Company Number 05452547
71
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
17 TRADE AND OTHER RECEIVABLES (continued)
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
2019
£'000
185
142
-
327
2020
£'000
100
41
-
141
Present value of minimum
lease payments
2020
£'000
98
41
-
139
2019
£'000
179
139
-
318
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% (2019: 2.45%) per annum.
18 DEFERRED TAX
The analysis of deferred tax liability is as follows:
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 2020
£'000
(165)
(145)
(310)
As at 31
March 2019
£'000
(47)
(41)
(88)
As at 31
March 2020
As at 31
March 2019
£'000
1,525
(29)
(1,806)
(310)
£'000
1,525
(56)
(1,557)
(88)
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 2019
Credited / (debited) to the Statement of
Comprehensive Income
Credited / (debited) to the Statement of Changes in
Equity
Trading
losses
£'000
1,525
Accelerated
tax
depreciation
£'000
(1,557)
Short term
timing
differences
£'000
(56)
TOTAL
£'000
(88)
-
(249)
27
(222)
-
-
-
-
At 31 March 2020
1,525
(1,806)
(29)
(310)
Company Number 05452547
72
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
19 TRADE AND OTHER PAYABLES
Trade payables
Social security and other taxes
Other payables
Accruals and deferred income
Payments received in advance of service delivery
(contract liability)
Non-current liabilities
As at 31
March 2020
£'000
-
-
-
-
As at 31
March 2019
£'000
-
-
-
-
Current liabilities
As at 31
March 2020
£'000
2,950
1,257
-
859
As at 31
March 2019
£'000
3,003
953
144
965
713
713
607
607
1,114
6,180
1,242
6,307
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 £1.0m
(2019: £2.9m).
20
BORROWINGS
As at 31 March 2020
As at 31 March 2019
Bank loan
Arrangement
fee
£'000
Gross
£'000
Net
£'000
Obligations
under
finance
leases
Total
£'000 £'000
Bank loan
Arrangement
Gross
£'000
fee Net
£'000 £'000
Obligations
under
finance
leases
Total
£'000 £'000
Current 1,160
Non-
Current
5,719
(35)
1,125
656 1,781
1,028
(28) 1,000
237 1,237
(44)
5,675
2,162 7,837
5,229
(21) 5,208
389 5,597
6,879
(79)
6,800
2,818 9,618
6,257
(49) 6,208
626 6,834
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 2020 the Group owed £0.9m (2019: £1.9m).
A £5.0m revolving credit facility with HSBC which is repayable in full on 30 September 2021. The loan bears an
interest rate of 4.5% over LIBOR on the drawn amount and a fee of 0.8% on the undrawn facility. As at 31 March
2020 the Group had drawn down £4.5m of this credit facility (2019: £4.4m).
£1.5m growth capital loan with MEIF WM Debt LP. The loan bears a fixed interest rate of 8% per annum and is
repayable in 13 quarterly instalments commencing on 30 June 2021.
The Group’s obligations under right of use assets are secured by the lessors’ title to the leased assets (see note
31).
Company Number 05452547
73
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
21 PROVISIONS
As at 1 April 2018
Arising during the year
Released during the year
As at 1 April 2019
Arising during the year
Utilised during the year
At 31 March 2020
Dilapidations
Warranty
Onerous
Lease
Total
£'000
56
21
-
77
£'000
65
-
-
65
£'000
20
-
(20)
-
£'000
141
21
(20)
142
42
-
119
-
-
65
-
-
-
42
-
184
The warranty provision relates to the potential warranty claims that may come to fruition in the near future.
The dilapidation provision relates to the cost for restoring leased buildings to the original state at inception of
the lease agreement.
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 2019
New shares issued
As at 31 March 2020
As at 31
March 2020
£'000
27
157
184
As at 31
March 2019
£'000
27
115
142
As at 31 March 2020
As at 31 March 2019
No’s
‘000’s
200,000
£'000
2,000
No’s
‘000’s
200,000
£'000
2,000
50,004
500
50,004
500
As at 31
March 2020
£'000
500
-
500
As at 31
March 2019
£'000
500
-
500
The Company currently holds 29,000 Ordinary shares in treasury representing 0.06% (2019: 0.06%) of the
Company’s issued share capital. The number of 1 penny Ordinary shares that the Company has in issue less
the total number of Treasury shares is 49,975,002.
Company Number 05452547
74
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.
The Exercise price of all options is the closing market price on the day of grant, except the options issued on
5 March 2019 which have an exercise price at a 20% premium to the mid-market closing share price on 4
March 2019 and the options issued on 28 May 2019 which have an exercise price at a 46% premium to the
mid-market closing share price on 27 May 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 one
tranche of options was awarded, tranche AC, and one tranche were reissued options, tranche RP1. 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 (%)
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:
28-May-19
16.00
33.50
95.5%
5.0
0.0%
0.8%
Tranche AC
Tranche
RP1
28-May-19
16.00
33.50
95.5%
5.0
0.0%
0.8%
Grant date
28-May-19
28-May-19
No of
shares
50,000
75,000
Date of
expiry
Option
Exercise
Price
34p 27/05/2029
34p 27/05/2029
A reconciliation of option movements over the year to 31 March 2020 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 2020
As at 31 March 2019
Share
options
No
3,950,000
125,000
(650,000)
-
3,425,000
Weighted
average
Exercise
Price (p)
38
34
53
-
35
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
The range of exercise prices of the outstanding options is 19.5 pence to 192.5 pence (2019: 19.5 pence to
192.5 pence) and the weighted average remaining contractual life is 6.4 years (2019: 7.4 years).
The Group charged £185,000 to the Statement of Comprehensive Income in respect of Share-Based
Payments for the financial year ended 31 March 2020 (2019: £181,000).
Share options exercisable at 31 March 2020 were 675,000 (2019: 900,000).
75
Company Number 05452547
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
23 SHARE-BASED PAYMENTS (CONTINUED)
Reissued options
The following Director has had certain existing options cancelled and the following reissued options granted
under tranche RP1, such that number of options cancelled equal the number of reissued options:
Directors
Keith Evans
Position
Non-Executive Director
No of
shares
75,000
Exercise
price*
33.5p
*Issued at a 46% premium to the mid-market closing share price on 27 May 2019
Vesting conditions: The reissued options vest on 28 May 2022 and require that the recipients remain in
employment with the Group at the date of exercise. The reissued options may only be exercised if the mid-
market share price is 50 pence or more at the time of exercise.
Company Number 05452547
76
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
24 CASH GENERATED FROM OPERATIONS
Loss before tax
Depreciation
Profit on disposal of fixed assets
Net bank and other interest
Amortisation of intangible assets
Exchange movement
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 inflow /(outflow) from operating activities
25 FINANCIAL COMMITMENTS
As at 31
March 2020
As at 31
March 2019
£'000
£'000
(1,705)
699
-
406
2,194
(7)
185
1,772
693
589
(21)
42
3,075
12
1,028
4,115
(3,563)
313
(106)
223
1,866
-
181
(1,086)
(180)
1,732
(3,214)
1
(2,747)
10
985
(1,752)
At the Statement of Financial Position date, the Group had outstanding commitments for future minimum
operating lease payments under non-cancellable operating leases, which fall due as follows:
Operating Leases
Land and buildings:
Within one year
In the second to fifth years inclusive
Over 5 years
Other:
Within one year
In the second to fifth years inclusive
As at 31
March 2020
As at 31
March 2019
£'000
£'000
-
-
-
-
282
1,085
867
2,234
15
27
42
124
72
196
During the current year, the Group applied IFRS16 and capitalised buildings and motor vehicle leases that
were accounted as operating leases in the prior year. See note 31.
26 RELATED PARTY TRANSACTIONS
A total of 125,000 (2019: 2,500,000) share options were granted during the year to one (2019: ten) key
management personnel.
Company Number 05452547
77
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 2020
As at 31
March 2019
Profit
£'000
(90)
(48)
5%
Profit
£'000
(225)
(119)
Profit
£'000
(87)
(38)
Profit
£'000
(218)
(95)
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.
US Dollar
Euro
10% decrease
10 % increase
Year ended
31 March
2020
Profit &
equity
£'000
(97)
(107)
Year ended
31 March
2019
Profit &
equity
£'000
(109)
(78)
Year ended
31 March
2020
Profit &
equity
£'000
79
88
Year ended
31 March
2019
Profit &
equity
£'000
89
64
Company Number 05452547
78
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
27 FINANCIAL INSTRUMENTS (CONTINUED)
US Dollar
Euro
20% decrease
20 % increase
Profit &
equity
£'000
(219)
(241)
Profit &
equity
£'000
(245)
(175)
Profit &
equity
£'000
146
161
Profit &
equity
£'000
164
117
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
2020
Year ended
31 March
2020
Year ended
31 March
2019
Year ended
31 March
2019
Monetary
Assets
£'000
Monetary
Liabilities
£'000
Monetary
Assets
£'000
Monetary
Liabilities
£'000
3
22
25
9,150
9,175
69
240
309
13,166
13,475
3
28
31
9,107
9,138
200
339
539
16,022
16,561
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
2020
£'000
1,665
1,665
As at 31
March
2019
£'000
1,205
1,205
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
79
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
27 FINANCIAL INSTRUMENTS (CONTINUED)
Financial instruments by category (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 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 was achieved (removing IFRS 16 impact) through
improved trading and working capital management.
During the current year, the Group applied IFRS 16 for the first time with no adjustments to the comparatives.
The adoption of IFRS 16 resulted in increase in the borrowing by £2.3m in the current year.
Total borrowings (note 20)
Total borrowings (excluding IFRS 16 impact)
Total capital and reserves
Total capital
Total capital (excluding IFRS 16 impact)
Gearing ratio
Gearing ratio (excluding IFRS 16 impact)
As at 31
March 2020
As at 31
March 2019
£'000
9,618
7,308
21,179
30,797
28,487
£'000
6,834
6,834
22,094
28,928
28,928
31%
26%
24%
24%
At the year end the Group had total net borrowings of £7,953,000 (2019: £5,629,000). This includes IFRS16
impact of £2,310,000.
Assets as per Statement of Financial Position
Receivables and Cash
As at 31
March 2019
£'000
7,933
1,205
9,138
As at 31
March 2020
£'000
7,510
1,665
9,175
Trade and other receivables excluding prepayments
Cash and cash equivalents
Borrowings
Trade and other payables excluding statutory liabilities and deferred revenue
Company Number 05452547
Financial liabilities at
amortised cost
As at 31
March 2020
As at 31
March 2019
£'000
9,618
3,857
13,475
£'000
6,834
3,811
10,645
80
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
After five years
Cash and cash equivalents
As at 31
March 2020
£'000
4,462
5,699
2,655
659
13,475
As at 31
March 2019
£'000
5,048
1,035
4,562
-
10,645
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 2020 of £52,000 (2019: £102,000) 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 terminated 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 (2019: nil).
No Dividend was paid during the year (2019: nil).
30 OPERATING LEASES AS LESSOR
The group rents out equipment under operating leases. Equipment rental income earned during the year was
£104,000 (2019: £175,000). 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 2020
£'000
43
-
43
As at 31
March 2019
£'000
104
43
147
Company Number 05452547
81
Trakm8 Holdings PLC
Notes To The Consolidated Financial Statements (Continued)
31
LEASES
The Group principally leases real estate and motor vehicles. Leases are recognised as a right of use asset with
a corresponding liability recorded at the date at which the leased asset is available for use by the Group.
The movements in right of use assets were as follows:
Furniture,
fixtures
and
equipment
£'000
-
446
63
-
Freehold
property
£'000
2,098
-
-
-
As at 1 April 2019
Reclassification1
Lease additions
Lease terminated
Depreciation of right of
use assets
As at 31 March 2020
(264)
1,834
(49)
460
Computer
equipment
-
140
35
-
(62)
113
Motor
vehicles
£'000
412
-
244
(37)
(175)
444
Software
-
153
-
-
-
153
Total
£'000
2,510
739
342
(37)
(550)
3,004
1 Amounts previously recognised as finance lease assets have been reclassified to right of use assets upon
transition to IFRS 16 on 1 April 2019. Refer to note 14 - Intangible assets and note 15 – Property, plant and
equipment for further details.
Lease liabilities by category at 31 March 2020 were as follows:
Furniture,
fixtures
and
equipment
£'000
105
170
275
Freehold
property
£'000
242
1,621
1,863
Computer
equipment
34
46
80
Motor
vehicles
£'000
215
232
447
Software
60
93
153
Current
Non-current
Total
The maturity of lease liabilities at 31 March 2020 were as follows:
Furniture,
fixtures
and
equipment
£'000
105
70
100
-
275
Freehold
property
£'000
242
248
714
659
1,863
Computer
equipment
Motor
vehicles
£'000
Software
35
26
19
-
80
215
159
73
-
447
60
63
30
-
153
Within 1 year
1 to 2 years
2 to 5 years
More than 5 years
Total
32 POST BALANCE SHEET EVENTS
Total
£'000
656
2,162
2,818
Total
£'000
657
566
936
659
2,818
The Group recently entered into Amendment and Restatement Agreements with HSBC that extended the
term of the facilities to 30 September 2021, deferred all scheduled capital repayments from June 2020, with
these recommencing in April 2021 and amended the covenants. The Group also recently entered into an
Amendment and Restatement Agreement with MEIF EM Debt LP that deferred the commencement date of
capital repayments to 30 June 2021 and amended the covenants in line with the agreement with HSBC. All
other terms of the facilities remained unchanged.
Company Number 05452547
82
Trakm8 Holdings PLC
Parent Company Statement of Financial Position As At 31 March 2020
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
2020
£'000
As at 31 March
2019
£'000
4
5
6
7
7
8
11,246
127
11,373
11,061
74
11,135
11,197
1,009
12,206
10,943
532
11,475
(604)
(1,125)
(1,729)
(176)
(1,000)
(1,176)
10,477
10,299
21,850
21,434
(5,675)
(5,208)
16,175
16,226
500
14,691
627
(4)
361
500
14,691
627
(4)
412
TOTAL SHAREHOLDERS’ FUNDS
16,175
16,226
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 £236,000 (2019: loss £242,000).
These financial statements on pages 83 to 92 were approved by the Board of Directors and authorised for issue on
29 June 2020 and are signed on their behalf by:
John Watkins - Director
Jon Furber - Director
Company Number 05452547
83
Trakm8 Holdings PLC
Parent Company Statement of Changes in Equity For The Year Ended 31 March 2020
Called up
share
capital
£'000
359
141
Share
premium
account
£'000
11,750
2,941
Merger
reserve
Treasury
reserve
Retained
earnings
£'000
627
-
£'000
(4)
-
£'000
473
-
TOTAL
SHAREHOLDERS'
FUNDS
£'000
13,205
3,082
-
-
-
-
-
-
-
181
181
-
(242)
(242)
500
14,691
627
(4)
412
16,226
-
-
-
-
-
-
-
185
185
-
(236)
(236)
500
14,691
627
(4)
361
16,175
Balance as at 1 April 2018
Shares issued
IFRS2 Share-Based payment
charge
Loss for the year
Balance as at 31 March
2019
IFRS2 Share-Based payment
charge
Loss for the year
Balance as at 31 March
2020
Company Number 05452547
84
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 2020.
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 informa(cid:415)on)
− 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
85
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
86
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
CRITICAL JUDGEMENTS IN APPLYING THE GROUP’S ACCOUNTING POLICIES
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
87
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 £236,000 (2019: loss £242,000). Audit fees for the Company
for the year were £3,000 (2019: £3,000).
4
INVESTMENTS
Cost
At 31 March 2019
Capital contribution in respect of share based payments
At 31 March 2020
Subsidiaries
£'000
11,061
185
11,246
The Directors believe that the carrying value of the investments is supported by their underlying net assets.
Name of
subsidiary
Country of
incorporation
Nature of
business
Registered
Office
Trakm8 Limited
England and
Wales
Development,
manufacture,
marketing and
distribution of
vehicle
telematics
Trakm8 s.r.o.
Czech Republic Mapping
services and
distribution of
vehicle
telematics
Non-trading
BOX Telematics
Limited
England and
Wales
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
Ordinary
and voting
rights
100%
Ordinary
100%
Ordinary
100%
Ordinary
100%
Company Number 05452547
88
Trakm8 Holdings PLC
Notes To The Parent Company Financial Statements (Continued)
4
INVESTMENTS (continued)
Name of subsidiary
Country of
incorporation
Nature of
business
Registered Office
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
Dormant
Trakm8 HK Limited
Hong Kong
Dormant
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 2020 (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 2020. 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
Route Monkey Limited
BOX Telematics Limited
Roadsense Technology Limited
Company Number 05452547
4415597
SC353016
3947199
8300339
89
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 2020
£'000
11,175
6
16
11,197
As at 31
March 2019
£'000
10,916
16
11
10,943
Amounts due from subsidiary undertakings is 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 2020
£'000
24
471
109
604
As at 31
March 2019
£'000
60
26
90
176
Amounts due to subsidiary undertakings is unsecured, interest free and repayable on demand.
7 BORROWINGS
As at 31 March 2020
Loans
As at 31 March 2019
Loans
Current
Non-current
Gross
£'000
1,160
5,719
6,879
Arrangement
fee
£'000
(35)
(44)
Net
£'000
1,125
5,675
Gross
£'000
1,028
5,229
Arrangement
fee
£'000
(28)
(21)
(79)
6,800
6,257
(49)
Bank loan
The Bank loan is repayable as follows:
Within one year
After one and within two years
After two and within five years
6,800
£'000
1,125
4,862
813
6,800
Net
£'000
1,000
5,208
6,208
6,208
£'000
1,000
858
4,350
6,208
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 2020 the Group owed £0.9m (2019: £1.9m).
A £5.0m revolving credit facility with HSBC which is repayable in full on 30 September 2021. The loan bears
an interest rate of 4.5% over LIBOR on the drawn amount and a fee of 0.8% on the undrawn facility. As at 31
March 2020 the Group had drawn down £4.5m of this credit facility (2019: £4.4m).
£1.5m growth capital loan with MEIF WM Debt LP. The loan bears a fixed interest rate of 8% per annum and is
repayable in 13 quarterly instalments commencing on 30 June 2021.
Company Number 05452547
90
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 is 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 125,000 (2019: 2,500,000) share options were granted during the year to one (2019: ten) 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 (2019: nil) during the year (other than the Directors). See remuneration report on page 30 for
further details.
Details of Group Directors’ fees and salaries, bonuses and pensions (including that of the highest paid
Director) are given in the Directors’ Report on page 30.
12 DIVIDENDS
The Company is not proposing a final dividend for the year (2019: nil).
No Dividend was paid during the year (2019: nil).
Company Number 05452547
91
Trakm8 Holdings PLC
Officers and Advisors for Trakm8 Holdings PLC
Directors
Matthew Cowley
Tim Cowley
Keith Evans
Jon Furber
John Watkins
Mark Watkins
Peter Mansfield (appointed 26 March 2020)
Penny Searles (appointed 18 June 2020)
William Duffy (resigned 30 September 2019)
Sean Morris (resigned 31 March 2020)
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
Cooper Parry Group Limited, Park View, One Central
Boulevard, Blythe Valley Park, Solihull, B90 8BG
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
Hargreaves Lansdown
James Hedges
Tim Cowley
HSDL Nominees
Matt Cowley
Interactive Investor Trading Limited
Barclays Stockbrokers Limited
10,000,000
7,768,768
3,815,000
3,705,652
2,438,766
2,268,127
2,134,001
1,994,203
1,622,344
1,504,506
Company Number 05452547
20.0%
15.6%
7.6%
7.4%
4.9%
4.5%
4.3%
4.0%
3.3%
3.0%
92