Final Results

RNS Number : 0721C
Trakm8 Holdings PLC
27 August 2008
 

27 August 2008

Embargoed to 07:00


TRAKM8 HOLDINGS PLC

("Trakm8" or "the Company")

Final Results

Trakm8 today announces its final results for the year ended 31 March 2008.


Financial Highlights:

  • Turnover down 27% at £4.67m (2007: £6.37m)

  • Gross profit £2.02m (2007: £2.49m) 

  • Gross profit margin increased by 4.4% to 43.5%

  • Loss before tax of £0.90m (2007: profit £0.09m)

  • Net assets increased to £1.57m (2007: £1.48m)

  • Net cash of £0.15m (2007: £0.44m)


Operational Highlights

  • Acquisition of PJSoft

  • Launch of T6

  • Government Grant projects commenced


    Year ended 31st March 2008

    Year ended 31st March 2007 (restated)


    £000's

    £000's




    Revenue

    4,656

    6,370

    Gross Profit

    2,024

    2,490

    Gross Profit %

    43.5%

    39.1%

    Other income

    79

    -

    Operating (Loss)/Profit

    (891)

    115

    Operating (Loss)/Profit %

    (19.1%)

    1.8%

    Profit on ordinary activities before taxation

    (958)

    90

    Net Cash and cash equivalents

    153

    439

    Net Assets

    1,572

    1,483


Commenting on the results, Cary Knapton, CEO of Trakm8 said: 

"The headline operating result set out in this report, whilst disappointing, reflects the challenges we have faced over the last year. Nevertheless margins are holding and whilst we have not achieved profitability this year the Directors' believe that the Group is on track to generate shareholder value.


The launch of the T6 significantly improves our hardware product capability and the Group is well placed to capitalise on the opportunities presenting themselves in the market place. I believe that the combination of revitalised organic sales direction and R&D leadership positions the Group for improved financial performance in the coming year. 


The Group therefore looks forward to the future with enthusiasm. We remain firmly on course to complete the transition to integrated TSP and I remain confident we will deliver our innovative products to market with increased success."


For further information please contact:

Trakm8 Holdings plc

Cary Knapton, Chief Executive Officer

Tim Couling, Finance Director


0870 380 0531

Tavistock Communications

Simon Hudson

Paul Youens


020 7920 3150

07843 260 623

Arbuthnot Securities

Paul Vanstone


020 7012 2000


Copies of the full report will be posted to shareholder shortly and are also available either from the Company's offices or as a download from the Company's website www.trakm8.com.




CHAIRMANS STATEMENT


Overview


The past 12 months has been demanding for the Group as we continue the transformation strategy from pure telematics hardware design and manufacture to an integrated telematics service provider.


The headline operating result set out in this report, whilst disappointing, reflects the challenges we have faced over the last year. Nevertheless, margins are holding and whilst we have not achieved profitability this year the Directors' believe that the Group is on track to generate shareholder value.


The Group remains committed to its transition to a fully integrated Telematics Service provider (TSP) and I believe we are firmly on track to achieve this. Revenue and operating profit declined in the first half due to a period of brand impact from our reported supplier issue (April 2007) and a delay in orders as customers waited for the T6 launch. These two identified issues were compounded in the second half by a sharp decline in the Euro/GBP exchange rate which increased the cost of the Group's proprietary hardware platforms by 11% on average, an increase which has not been passed on to customers. Additionally, whilst initially seeing an increase in sales from Trakm8 SWIFT® during the first half of the year, sales growth slowed in the latter half.  


In seeking to mitigate the impact of these latter two events the Group was mindful of considerable interest in an early launch of T6. However the Directors took the practical view that it was inadvisable to bring forward the planned March 2008 launch of the T6 product without incurring additional technical risk to a new platform. Nevertheless the Group recognised the need to address the sales strategy of the Group and therefore accelerated the recruitment of a senior sales professional and I am pleased to report that the recruitment process was successfully concluded in January with encouraging results to date.


The Board


As announced late April 2007, Tim Evans, the Strategy and Marketing Director resigned from the Board to pursue other opportunities. There is no current intention to appoint a replacement.


The Group also announced on 2 June 2008 that Tim Couling, the Group's Finance Director, was stepping down for personal reasons and would leave the Board and the Company later in the year. The Board has identified a replacement, whose appointment is expected to be announced when Tim formally leaves the position. On behalf of the Board I would like to thank Tim for his hard work over the last four years and wish him well for the future.


Outlook


The Executive team remain fully committed to the delivery of higher margin sales growth and a return to profitability. The Group will continue to develop our business and, as noted at half year, will continue to examine expansion by acquisition, organically or other means. I would like to close by thanking all Trakm8 personnel for their continued commitment to the Group over the last year.




DAWSON BUCK

CHAIRMAN





CHIEF EXECUTIVE OFFICER'S REVIEW


Introduction


The last year has seen the Group continue to develop its service offerings, centred on enhancements to Trakm8 SWIFT®. The Group has also been successful in securing participation in two government grant-funded R&D projects. The acquisition of PJSoft s.r.o. (PJSoft) has also proved positive for the Group, increasing our R&D capability at an important time. In late March 2008 the Group launched our newest hardware platform, the Trakm8 T6 (T6) which represents a significant step forward in high functionality, low cost telematics hardware.


During the second half of the year the Group was successful in recruiting a senior sales professional to head up Group sales. Initial indications are very positive and recent sales performance shows an encouraging trend. This dedicated sales leadership role fills an important position within the business and the Directors are confident that renewed focus in this area will yield significant benefits. This is a pivotal role as the Group's transition strategy continues and new products and services are delivered to market.


Operational Review



Trakm8 continues the transformation journey to fully integrated TSP which we began over a year ago. The launch of our next generation platform, the T6, which was rolled out in late March 2008, brings further improvement to the Group's competitive edge in terms of functionality, form factor and ease of installation.  


The markets in which the Group operates have proved challenging in the year with strong competition emerging across the product range.  Revenue has declined over the year in part due to continued brand impact from our reported supplier issue (April 07) having an extended impact on hardware sales. Another factor affecting sales performance was the evidenced delay in orders as customers appeared to wait for the launch of the T6. 


These factors have been compounded by a strengthening of the Euro in the second half year which has pushed the Group's cost of hardware up correspondingly. This latter change, together with the weakening of the US Dollar, has substantially reduced the Group's competitiveness in Dollar denominated countries (principally the United States of America ("US")). Concurrent to this the Group was notified by its major US customer that it was ceasing to take our product for competitive reasons which resulted in the Group losing significant but low margin hardware sales in the US.  


As a result the Group has unfortunately not been profitable this year.


Strategy


The Group's strategic transition to a fully integrated TSP remains on course. Achieving success means closely interweaving the threads of innovative R&D with excellence in sales; and thereby delivering sustainable, growing, profitability. The Group is some way down this road and success is in sight.


As a result of the acquisition of PJSoft and our involvement in the government sponsored projects the Group's R&D activities have been significantly scaled up. This R&D effort is expected to allow for early commercial exploitation of various project & customer lead initiatives in areas such as driver behaviour monitoring, duty of care and vehicle emissions monitoring as well as in the data management software area.  


The government sponsored projects bring together leading industry players in our sector with academia and major transport data users. The Group's selection by the Technology Strategy Board (TSB) to lead the Trusted Road Users - Emissions Profiling project is further clear evidence that the Group can effectively shape and lead major advanced telematics R&D programmes and is a major sign of confidence in the Group. In addition the Group's participation in the Future Intelligent Transport Systems - Freeflow project places us close to major regional initiatives in road tolling, congestion charging and vehicle workplace safety. 


The Group's transition to integrated TSP continues to move forward, though now reinforced with the increased value that these collaborative R&D programmes bring. Additionally the recruitment of the senior sales professional has enabled greater sales focus and increasing sales leadership within the Group. Thus the transition strategy for the business is strengthened and I am confident that the Group is entering the final phase of this difficult, but necessary, period.  


Financial Review


This is the first full year we have had to prepare our financial statements under International Financial Reporting Standards (IFRS).  


Revenue for the year ended 31 March 2008 was £4.66m (2007: £6.37m), a decrease of 26.8%. Gross profit decreased to £2.02m (2007: £2.49m). Gross margins have increased to 43.5% (2007: 39.1%). Increased administrative expenses of £2.99m (2007: £2.38m), have resulted in the Group announcing a loss on ordinary activities before taxation for the period of £0.96m (2007: profit £0.09m). 


In the second half of the year the strengthening of the Euro has had a corresponding increase in the cost of the Group's hardware. The net increase in hardware costs directly attributable to exchange rate fluctuations in the second half of the year was between 8.6% and 13.3% depending on product. The Group has not passed on this increase to customers.


The Group is encouraged to note that whilst operating in a relatively competitive industry our products are not materially suffering from the continued pricing and margin pressures that we have experienced in the past. Trakm8 SWIFT® has seen somewhat slower sales growth than anticipated, however the Directors perceive this to be due to an increased number of competitors with consequential increased order closure timescales. Nevertheless in like-for-like sales situations Trakm8 SWIFT® remains competitive and it is the Group's firm belief that a proportion of the reported revenue shortfall is therefore likely to have been delayed but not lost.  


The Group responded to the revenue shortfall with a review of operating expenses, which had increased in the period primarily due to Trakm8 SWIFT® service and airtime costs. Non-impacting savings were therefore identified which included a reduction in contract staff and a necessary reduction in permanent headcount, thereby reducing core overheads. The Group however was able to bring forward elements of the international roll-out of Trakm8 SWIFT® through the unexpected availability of key in-country personnel. The resultant necessary costs of set-up in country, although mitigated wherever possible, largely negated the anticipated savings from the review of operating expenses. 


In summary therefore the operating losses reported above were primarily due to slower than planned recovery in sales from the period of brand impact, the flatter sales profile of Trakm8 SWIFT®, international launch costs and the significant strengthening of the Euro/GBP and USD/GBP exchange rates. 


Acquisition of PJSoft s.r.o.


As announced on 7 August 2007 the Group acquired PJSoft; a Czech software house with significant expertise in cartographic technologies. This acquisition brought the last external elements of our product intellectual property in-house and allows the Group to further leverage our software offerings in a cost effective manner. As noted at the time PJSoft had a close working relationship with the Group and no significant integration issues were anticipated. I am pleased to report that no significant integration issues have been encountered and PJSoft are currently preparing for the launch of Trakm8 SWIFT® into the Czech Republic and Eastern Europe.


Outlook


The transition strategy is on course for completion in the coming financial year and I believe that this strategic shift for the Group will be enhanced by our participation in the government sponsored projects which we announced in December 2007 and March 2008.  


I believe that our products and services now span the telematics value chain and the Group expects to derive revenues from all areas of the portfolio. Our supplier and customer agreements demonstrate the Group's commitment and confidence in our products and service offerings. Our enhanced and renewed sales focus together with our collaborative R&D programme will cement the transition of the business to a fully integrated TSP. We expect that these developments will contribute to driving the business forward and enable the delivery of profitability and increased shareholder value.


The Group continues to identify international sales opportunities for its hardware platforms and I am pleased to report that our pipeline currently includes major bids in the UK, Europe, South Africa and South America. The Group is also actively pursuing organic growth routes in other countries for Trakm8 SWIFT®




CARY KNAPTON

CHIEF EXECUTIVE OFFICER




PRODUCTS AND MARKETS


Marketplace


As with previous years Trakm8 has derived the majority of its revenues from the fleet management market and continues to consolidate its established worldwide presence.


The primary markets for the Group are the UK, Europe and South Africa. The SWIFT proposition has recently been test marketed in the USA and the Group views this territory as essential to its sales expansion strategy. The Group has also maintained its presence in Ireland, South America, the Middle East and other locations through third party distributors.


The European telematics hardware and services market continues to develop at varying regional rates. The Group perceives the UK continuing to lead the way both in maturity of utilisation and political leadership. The past year has seen a number of UK competitors emerge and then fall away for a variety of reasons. The Group is therefore pleased to note that the Group's hardware and service products have proved resilient to competition in terms of both pricing and functionality. Elsewhere in Europe the Benelux countries and Germany are seeing some maturity for commercial uses of telematics. Our expectation is that the continental European market is expected to grow in a similar vein to the UK market and the Directors believe that the Group is well positioned to access a share of this growing market.


Product Portfolio Developments


During the course of the year the Group has, in partnership with Tyco Electronics, continued the development of its next-generation Advanced Telematics Platform, the T6.


T6 Advanced Telematics Platform


Launched in the last quarter of the year, the T6 family of products has been designed to improve the Group's competitive positioning and open up previously closed markets. Take up has been encouraging with several Telematics Service Providers (TSPs) impressed by the significant improvements in standard feature delivery coupled with the introduction of integrated Controller Area Network (CAN) and Fleet Management Systems (FMS) capability. The T6 also allows web-based user configuration management and allows for Over-The-Air commissioning post installation. In addition the T6 has full international approvals for all major markets and full backward compatibility with past Group products.


Building on Trakm8's reputation for feature-rich, reliable products, T6 now also delivers advanced integration functionality connecting with vehicle management systems as well as other tracking and Business Process Management software applications. 


Evolving the Proposition


The last year has seen a number of important steps in the evolution of the Group's service propositions.


During the course of the year the Group has also been successful in securing a number of licensing contracts for the Trakm8 SWIFT® software platform and the Directors believe that there are further opportunities in this area.


The Group is confident that other market segments such as Retail, Logistics & Distribution, Central & Local Government and Construction will soon start to recognise the benefits that telematics can bring to their management of remote assets. That being the case the Directors believe that the take up of telematics propositions will increase and that the Group's products and services are well positioned to tap these segments.


The Group has demonstrated that incremental fuel efficiency, increased profitability and reducing risk are some of the quantifiable benefits that can be obtained through business use of telematics applications. The introduction of the T6 and in particular its CAN and FMS integration capability further increase the available benefits to telematics users and place the Group in a good position to increase sales in these areas.


In addition to the above opportunities, the vehicle OEM market remains largely un-tapped and the Group believes this area is set for sizeable growth in the coming years. The T6, with its CAN interface, is well positioned to penetrate this area. The Group expects that its partnership with Omitec to further develop CAN applications will unlock some early exploitation of this segment.


The Group has continued to build brand awareness, primarily by having a presence at selective trade shows. Our presence at the Commercial Vehicle Show has again proved to be a valuable exercise with significant leads being generated, particularly for Trakm8 SWIFT®. Further initiatives are in the pipeline.


Overall the Group is well placed to take advantage of increased telematics awareness and interest at a time of economic challenge. Greater scrutiny of vehicle operational costs and the potential environmental advantages of improved vehicle efficiency are the key emergent business drivers at this time. Trakm8 looks forward to exploiting these trends in the future.




DIRECTORS REPORT


The Directors submit their report and financial statements of Trakm8 Holdings PLC for the year ended 31 March 2008.


Trakm8 Holdings PLC is a public listed company incorporated and domiciled in England (Company Number 05452547) whose shares are quoted on the Alternative Investment Market (AIM) of the London Stock Exchange.


PRINCIPAL ACTIVITY


The principal activity of the Trakm8 Group is the marketing, manufacture and distribution of vehicle telematics equipment and services. Trakm8 Holdings PLC is the holding company for the Trakm8 Group.


REVIEW OF THE BUSINESS


The review of the business is contained in the Chairman's & Chief Executive Officer's reports.  


The Directors monitor Key Performance Indicators (KPI) on a regular basis to ensure sustained progress is made towards the Group's overall objectives. These KPI include sales revenues; margins (gross and product); cash balances; units despatched; customer service performance levels; returns and rework; debtors and creditors balances.


RESULTS AND DIVIDENDS


The Group results for the year ended 31 March 2008 are shown in the Income Statement. The Directors do not recommend the payment of a dividend.


OUTLOOK


The outlook of the business is contained in the Chairman's & Chief Executive Officer's reportsF.  


RESEARCH AND DEVELOPMENT


The Board considers that the Group's research and development activity plays an important role in the operational and financial success of the business.


The Group continues to identify exciting technology developments in the telematics arena. These form the centre point of the Group's product strategy and will enable the delivery of new and enhanced products and services in the coming year. This investment continues to complement prior year spend on the Trakm8 SWIFT® proposition and now includes participation in two government sponsored projects, as announced previously. 


GOING CONCERN


The Directors confirm that they are satisfied that the Group has adequate resources and facilities to continue in business for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. This is detailed in Note 4 to the financial statements.


DIRECTORS






The following directors have held office since 1 April 2007:






C D Buck 


T Couling


M Cowley


T Cowley


T D Evans

Resigned 24 April 2007

C P Knapton


J Watkins



DIRECTORS AND THEIR INTERESTS


Details of Directors' share interests and of their rights to subscribe for shares are shown in the Directors' Remuneration Report 


SUBSTANTIAL SHAREHOLDING


The Directors have been notified, or are aware of, the following interests in 3% or more of the ordinary share capital of the Company (excluding Directors) as at 30 July 2008:





Ordinary shares at 1p each




Number

Percentage

Redmayne Nominees



1,577,748

11.7%

Pershing Nominees



1,169,042

8.7%

R White



965,042

7.1%

Edric Property and Investment Company (and related parties) 

644,240

4.8%

LR Nominees Limited



712,463

5.3%

Barclayshare Nominees



524,515

3.9%

HSDL Nominees



451,655

3.3%

HSBC Global Custody Nominees (UK) Limited



407,120

3.0%


CREDITORS PAYMENT POLICY


It is the Group's policy to establish payment terms with suppliers and to adhere to those terms, provided that the goods and services are in accordance with the agreed terms and conditions. Trade creditors for the parent company at the year end represented 67 days of purchases (2007: 58 days).


EMPLOYMENT POLICY


During the year, the Group has consulted with employees in matters likely to affect their interests and is committed to involving them in the performance and development of the Group. 


DISABLED EMPLOYEES


The Group gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately fulfilled by a handicapped or disabled person.


Should existing employees become disabled, it is the Group's policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training, career development and promotion to such employees as appropriate.


POLITICAL AND CHARITABLE DONATIONS


The Group made charitable donations in the year of £1,084 (2007 £ nil).


FINANCIAL INSTRUMENTS


The Group raises finance through equity and borrowings and places surplus cash on short-term deposits. The primary source of borrowings is the bank facility which is in place for use as required.


The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk, credit and currency risk. The policies for managing these are reviewed by the board.


Interest rate - The Group uses fixed and floating interest rates where appropriate in order to minimise any interest rate risks.


Liquidity - The Group operates a long-term business, and its policy is to finance it primarily with equity and short to medium-term borrowings. Short-term flexibility is achieved by cash balances and overdraft facilities.


Credit risk - The Group aims to minimise its exposure to credit risk through a mixture of credit insurance, credit limits and credit checks on new customers.


Currency risk - Historically the Group has not used hedging instruments to minimise currency risk as the exposure is limited. If foreign currency exposure increases, the use of foreign currency hedging instruments will be reviewed as necessary. 

 

STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR


The Directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditor is unaware. Each of the Directors have 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.


AUDITOR


A resolution to reappoint Baker Tilly UK Audit LLP, Chartered Accountants, as auditor, will be put to the members at the annual general meeting.


By approval of the Board on 26 August 2008.



C D Buck

Chairman



CORPORATE GOVERNANCE


Whilst the 2006 FRC Combined Code ("the code") on Corporate Governance formally applies only to companies listed on the London Stock Exchange, the Group has developed and deployed procedures to ensure that, as far as is practicable and having regard to the size of the Group, it is able to comply with most of the main principles of the Combined Code. As the Group expands, the Directors intend to continue to develop further measures for compliance with the Combined Code.


The Directors review the internal controls of the Group on a regular basis, normally not less than twice a year. Taking into consideration the size and complexity of the Group it is the Directors view that the Group does not need an internal audit function although this is reviewed periodically.


Board of Directors and Committees


The Board, currently comprising four executive Directors and two non-executive Directors, meets regularly throughout the year.


During the reporting period, Tim Evans resigned as executive Director on 24 April 2007 and subsequently left the Company during his contractual notice period as part of a restructuring programme. In order to adjust the board balance between executive and non executive Directors, the decision was made not to appoint a replacement.


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


The Board members have operated Audit, Remuneration and Nomination Committees throughout the period, although the Nomination Committee met outside of the reporting period on the 18 April 2008. These bodies operate under formally delegated duties and responsibilities and seek advice from independent third parties as the need arises. The committees have comprised of two non-executive Directors (C D Buck and J F Watkins). Both non executives bring extensive and diverse commercial experience for the benefit of the Group. C D Buck is considered by the Board to be a fully independent non-executive Director.


For the financial year ended 31 March 2008 the Directors' attendance at Board and Committee meetings has been as follows:


Type

Board

Audit

Nomination

Remuneration

Total Held in period

13

2

0

1






T Couling

12

2



M Cowley

13




T Cowley

11




C D Buck

12

2

-

1

C Knapton

12




J F Watkins 

12

2

-

1


The Audit Committee is responsible for ensuring that the Group's financial performance is properly monitored, controlled and reported. It meets and reviews reports from the auditor on a regular basis. 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 Remuneration Committee's terms of reference include making recommendations on Directors' compensation packages to ensure that the Group Board enjoys and retains an appropriate level of motivated resources. The Committee engages with external consultants as and where it is deemed beneficial.


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


Operational and Internal Controls


The Board is ultimately responsible for the Group's system of internal measurement and control processes and for reviewing their effectiveness. This system is designed to identify, quantify and manage rather than eliminate all risk and can therefore only provide reasonable and not absolute assurance against material misstatement or loss.


The key elements of the Group's control system are currently:


  • A comprehensive budgeting system with an annual budget approved by the Board.


  • Actual results compared on a monthly basis with budgets and past results as appropriate.


  • All significant capital expenditure and organisational changes reviewed and approved by the Board.


  • The integrity and competence of personnel to be ensured through high recruitment standards, aligned personal objectives with associated appraisal mechanisms and subsequent training and personal development planning.


  • A clearly defined organisation structure. 


  • High quality personnel being seen as an essential part of the control environment.


  • Board reviews of KPI's, and periodic assessment as to the effectiveness and completeness of those KPI's in relation to the business environment.


The process of monitoring and updating internal controls and procedures and monitoring their effectiveness continued throughout the year.


Performance Evaluation


During the period the Remuneration and Nomination committees evaluated the performance of the executive team along with the individual performances of the Directors. As a result various actions and development plans are being developed where appropriate.




DIRECTORS REMUNERATION REPORT


Trakm8 Holdings PLC is an AIM listed company and is not required to produce a Directors' Remuneration Report. However given the structure of the Board of Directors, the levels of equity held by the Directors and taking into consideration the guidance contained within the 2006 FRC Combined Code on Corporate Governance, the Company takes the view that an appropriate level of disclosure of Directors' Remuneration is desirable. The disclosures contained in this section of the report are therefore given as additional information only and are not intended or required to comply with the Full Listing rules requirement of London Stock Exchange.


Directors and their Interests


The present members of the Board reflecting the changes that occurred during the year are as listed in the Directors Report. The Directors' interests in the shares of the Company are detailed below:-




1p ordinary shares

At 31 March 2008

% of issued

ordinary share capital (13,517,033 ordinary shares)

1p ordinary shares

At 1 Apr 2007

or on subsequent date of appointment

% of issued

ordinary share capital

(11,472,423 ordinary shares)

C D Buck

-  

-  

-  

-  

T Couling

37,520

0.28%

37,520

0.33%

M Cowley 

773,178

5.72%

771,750

6.73%

T Cowley 

759,756

5.62%

759,756

6.62%

T Evans¹

-  

n/a

35,760

0.31%

C Knapton 

1,717,021

12.70%

1,623,021

14.15%

J F Watkins²

1,066,328

7.89%

-

-


¹ Resigned 24 April 2007 

²       Beneficial interest in a Self Invested Pension Plan (SIPP) legally held by trustees Hornbuckle Mitchell Group plc


The Directors had no interest in the share capital of the Company's subsidiary undertakings at 31 March 2008 or on the date on which these financial statements were approved.


Directors' Remuneration Policy


The remuneration policy for the Executive Directors is determined by the Remuneration Committee, which as previously stated consists solely of the Non Executive Directors. The current members of the Committee are C D Buck and J F Watkins. The Committee acts within its agreed terms of reference.


Within the framework of the agreed remuneration policy the Committee determines the remuneration packages of the Executive Directors including the size of, and conditions applying to, awards made under the Company's cash bonus and share option schemes. In preparation for the annual salary review the Committee met on 18 April 2007. The Committee's policy on Executive Directors remuneration will continue to apply for the year to 31 March 2009 and, so far as is practicable, for future years.


The Committee aims to provide Executive Directors' with packages which are sufficiently competitive to attract, retain and motivate individuals of the quality required to achieve the objectives of the Company and thereby enhance shareholder value. Each package consists of a basic salary, discretionary cash bonus and share option plan.  


Directors' Remuneration


The Directors' remuneration for the year ended 31 March 2008 was:



31 March 2008

31 March 2007

Table Data Audited

   

Salary

£  

Bonus

£

Total

£

Total

£






Executive Director





C Knapton

87,780

-

87,780

98,500

T Couling

73,150

1,688

74,838

73,833

M Cowley

62,700

1,447

64,147

67,000

T Cowley

60,610

1,399

62,009

54,508

T Evans 

(Resigned 24 April 2007)

2,479

1,414

3,893

59,655


--------------

----------------

-------------------

--------------------


286,719

5,948

292,667

353,496


--------------


--------------

-------------------

--------------------






Non Executive Director





C D Buck

30,000

-

30,000

24,582

J Watkins 

(Appointed 29 January 2007)

20,000

-

20,000

4,167

A R D White (Resigned 16 October 2006)

-

-

-

31,731





--------------------




50,000

50,000

60,480


During the course of the year no Director exercised any share options.


Directors' Service Contracts


After 12 months from appointment, Executive Directors' service contracts provide termination provisions of 6 months notice in writing by either side. 


The service contracts for Executive Directors do not provide for any predetermined compensation amounts in the event of early termination other than a standard payment in lieu of notice provision applicable at the Company's discretion.


Non Executive Directors are engaged under letters of appointment for an initial period of 12 months subject to termination by either party upon 3 months notice.


All Executive and Non Executive Directors are subject to retirement and re-election by shareholders in line with the Company's Articles of Association. The Directors do not receive any pension entitlement through their appointment to the Board of the Company.



Appointment

date

Contract 

Date

Executive Director



T Couling

20/10/2005

24/11/2005

M Cowley

20/10/2005

24/11/2005

C Knapton

20/10/2005

24/11/2005

T Cowley

26/05/2006

26/05/2006

Non Executive Director



C D Buck

23/02/2006

23/02/2006

J F Watkins

29/01/2007

29/01/2007


Directors' Share Options


At 31 March 2008 the following options had been granted to the Company's Directors and remain current and unexercised:



Option Exercise price

Balance as at 31 March 2007

Granted during year

Exercised during year

Expired/ forfeited during year

Balance as at 31 March 2008

Expiry Date

T Couling

£0.25

£0.26

25,750


 


114,725


-


-

25,750

114,725

31 March 2010

31 March 2010

M Cowley

£0.25

25,750

-

-

-

25,750

31 March 2010

T Cowley

£0.25

£0.26

10,000



20,305


-


-

10,000

20,305

31 March 2010

31 March 2010

C Knapton

£0.25

37,080

-

-

-

37,080

31 March 2010


The highest share price during the year was £0.340. The lowest share price during the year was £0.225. The closing price of the Company's shares on 31 March 2008 was £0.225 (2007: £0.250).




STATEMENT OF DIRECTORS RESPONSIBILITIES IN THE PREPERATION OF FINANCIAL STATMENTS


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

 

UK Company law requires the Directors to prepare Group and Company Financial Statements for each financial year.  Under that law the Directors are required to prepare Group financial statements in accordance with International Financial Reporting Standards ("IFRS")  as adopted by the EU and have elected to prepare the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

 

The group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the group; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.


The company financial statements are required by law to give a true and fair view of the state of affairs of the company. 

 

In preparing each of the group and company financial statements, the directors are required to:

 

a.    select suitable accounting policies and then apply them consistently;

 

b.    make judgements and estimates that are reasonable and prudent;

 

c.    for the group financial statements, state whether they have been prepared in accordance with 
       IFRSs adopted by the EU; and for the company financial statements state whether applicable 
       UK accounting standards have been followed, subject to any material departures disclosed and
       explained in the company financial statements; and

 

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

 

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the requirements of the Companies Act 1985.  They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.


Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.




INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TRAKM8 HOLDINGS PLC


We have audited the group and parent company financial statements which comprise the Consolidated Income Statement, the Consolidated and Parent Company Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated Statement of Recognised Income and Expense, and the related notes.


This report is made solely to the Company's members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.


Respective responsibilities of directors and auditor


The Directors' responsibilities for preparing the Annual Report, and the group financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union ("EU"), and for preparing the parent company financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors' Responsibilities.


Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).


We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the financial statements. The information given in the Directors' Report includes that specific information presented in the Chairman and Chief Executive Officer's reports that is cross referenced from the Review of Business and Outlook sections of the Directors' Report.


In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding Directors' remuneration and other transactions is not disclosed.


We read other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. This other information comprises only the Highlights, the Chairman's Statement, the Chief Executive Officer's Review, Products & Market, Directors' Report, the Corporate Governance Report and the Directors' Remuneration Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.


Basis of audit opinion


We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group's and Company's circumstances, consistently applied and adequately disclosed.


We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.



Opinion


In our opinion 


  • the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the Group's affairs as at 31 March 2008 and of its loss for the year then ended;


  • the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the parent company's affairs as at 31 March 2008;


  • the financial statements have been properly prepared in accordance with the Companies Act 1985; and the information given in the Directors' Report is consistent with the financial statements.



Emphasis of matter - going concern


In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in Note 4  to the financial statements  concerning the Group's ability to continue as a going concern. The Group incurred a net loss of £901,165 during the year ended 31 March 2008 and, as of that date, the Group's current liabilities exceeded its current assets by £197,286. These conditions, along with  the other matters  explained in Note 4  to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.






BAKER TILLY UK AUDIT LLP

Registered Auditor

Chartered Accountants

Hartwell House

55-61 Victoria Street

Bristol

BS1 6AD


26 August 2008





CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2008


Notes

2008

2007







£

£

CONTINUING OPERATIONS




REVENUE

6

4,656,124 

6,370,007

Cost of sales


(2,631,725)

(3,879,599)




Gross profit

2,024,399 

2,490,408





Other income

7

78,779

-





2,103,178 

2,490,408




Administrative expenses

(2,994,453)

(2,375,739)





(LOSS)/PROFIT FROM OPERATIONS

7

(891,275)

114,669





Finance income


9,547 

15,052







(881,728)

129,721





Finance costs

8

(76,561)

(39,301)




(LOSS)/PROFIT BEFORE TAXATION

(958,289)

90,420





Income tax

9

57,124 

18,309




(LOSS)/PROFIT FOR YEAR ATTRIBUTABLE TO EQUITY

  SHAREHOLDERS OF PARENT

22


(901,165)

108,729








EARNINGS / (LOSS) PER ORDINARY SHARE (PENCE)




Basic EPS

11

(7.6)

1.0





Diluted EPS

11

(7.6)

0.9







CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

For the year ended 31 March 2008



2008

2007







£

£





Exchange differences on translation of overseas operations


202,930 





Net income for the year directly recognised in equity


202,930 

-   





(Loss)/profit for the year


(901,165)

108,729 









Total recognised (expense)/income for the year attributable to the equity holders of the parent company


(698,235)

108,729 




CONSOLIDATED BALANCE SHEET

As at March 2008



Group



2008

2007






Notes

£

£

NON-CURRENT ASSETS




Intangible assets

12

1,597,781 

822,635 

Property, plant and equipment

13

478,061 

508,931 





2,075,842 

1,331,566 




CURRENT ASSETS

Inventories

15

146,027 

332,522 

Trade and other receivables

16

809,751 

1,272,057 

Current tax assets


32,902 

-  

Cash and cash equivalents


363,371 

708,588 





1,352,051 

2,313,167 





CURRENT LIABILITIES




Bank overdrafts

19

(210,280)

(269,294)

Bank and other loans

19

(50,269)

(49,209)

Trade and other payables

18

(1,287,183)

(950,477)

Obligations under finance leases and hire purchase arrangements

20

(1,605)

(12,188)

Current tax liabilities


-  

(25,091)







(1,549,337)

(1,306,259)








CURRENT ASSETS LESS CURRENT LIABILITIES

(197,286)

1,006,908 




TOTAL ASSETS LESS CURRENT LIABILITIES

1,878,556 

2,338,474 




NON CURRENT LIABILITIES




Bank and other loans

19

(287,470)

(837,718)

Deferred tax liabilities

17

(18,674)

(17,805)




NET ASSETS

1,572,412 

1,482,951 




  EQUITY



  Share capital 

21

135,170 

114,724 

  Share premium account

22

1,256,334 

754,279 

  Shares to be issued

22

246,032 

-  

  Merger reserve account

22

509,837 

509,837 

  Share based payment reserve

22

47,787 

28,624 

  Translation reserve

22

202,930 

-  

  Retained earnings

22

(825,678)

75,487 





TOTAL EQUITY ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF THE PARENT


1,572,412 

1,482,951 





These financial statements were approved by the Directors and authorised for issue on 26 August 2008 and are signed on their behalf by:



C D Buck                            T Couling

Director                                Director





CONSOLIDATED CASHFLOW STATEMENT

For the year ended 31 March 2008





Notes

2008

2007







£

£

NET CASH INFLOW FROM OPERATING ACTIVITIES 

24

238,909 

425,622 





INVESTING ACTIVITIES




Purchases of property, plant and equipment


(23,153)

(71,203)

Proceeds on disposal of property, plant and equipment

1,479 

999 

Expenditure on product development

(124,094)

(220,420)

Acquisition of subsidiary net of cash acquired

(319,573)

(189,475)









NET CASH USED IN INVESTING ACTIVITIES 


(465,341)

(480,099)











FINANCING ACTIVITIES



Repayment of loans

(59,771)

(244,565)

Issue of Loan Stock

-  

500,000   




NET CASH (USED IN)/FROM FINANCING ACTIVITIES

(59,771)

255,435 




NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(286,203)

200,958 





CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

439,294 

238,336 





CASH AND CASH EQUIVALENTS AT END OF YEAR

153,091 

439,294 


Cash and cash equivalents comprise 'Cash and cash equivalents' and 'Bank overdrafts'.




NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2008


1.    GENERAL INFORMATION


Trakm8 Holdings PLC is a public limited company ("Company") incorporated in the United Kingdom under the Companies Act 1985 (registration number 05452547). The Company is domiciled in the United Kingdom and its registered address is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. The Company's Ordinary Shares are traded on the Alternative Investment Market ("AIM").


The Group's principal activity is the marketing, manufacture and distribution of vehicle telematics equipment and services. The Company's principal activity is to act as a holding company for its subsidiaries.

 

2.    AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE 

       WITH IFRS


The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as endorsed by the European Union, and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. 

 

3.    BASIS OF PREPARATION


These are the Group's first financial statements prepared under IFRS and IFRS 1 "First Time Adoption of International Financial Reporting Standards" has been applied. The last financial statements under UK Generally Accepted Accounting Principles ("UK GAAP") were for the year to 31 March 2007 and the comparatives have been restated to comply with IFRS. The transition from UK GAAP to IFRS is explained in note 28.


The accounting policies set out in note 4 have been applied consistently to all periods presented in these consolidated financial statements and in preparing an opening balance sheet at 1 April 2006 for the purposes of transition to IFRS.

 

4.    ACCOUNTING POLICIES


BASIS OF ACCOUNTING


The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions which are based on management's best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and 

assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes.  


From these financial statements the Group decided for operational reasons to reclassify licence fees paid from Cost of Sales to Operating Expenses. The 2007 comparatives have been adjusted to similarly reclassify the licence fees paid. 


GOING CONCERN


These financial statements have been prepared on a going concern basis. The Directors believe that the Group has sufficient funds for the foreseeable future and have an expectation of improved trading for the coming year. Based on these assessments the Directors are confident that the current year losses shown on the Income Statement and the Net Current Liabilities shown on the Balance Sheet are exceptional rather than indicative of any long term trend. 


During the year the Group incurred a loss after tax of £901,165 and ended the year with net current liabilities of £197,286. In preparing these financial statements on a going concern basis the Directors considered the Group's overall financial position and its strategy; and made a number of decisions to re-focus the activities of the Group. The Directors have prepared detailed forecasts which set out the ongoing cash requirements of the business, taking into account such items as anticipated trading performance, R&D government grant funding, relevant currency exchange rates and including planned manufacturing efficiencies. There are inherent uncertainties in the preparation of such forecasts where elements of such forecasts are not fully under the Group's control. Nevertheless the Directors believe that the assumptions used in these forecasts are reasonable and that they have taken into account all factors which may reasonably be expected to be identified in the preparation of such forecasts. Based on these forecasts and monthly management accounts to the date of these statements the Directors are confident that it is appropriate to prepare the financial statements on the going concern basis and the financial statements do not include any adjustments that would result from the Group not being able to meet its liabilities as they fall due.


BASIS OF CONSOLIDATION


The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.


The trading results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement 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, plus costs directly attributable to the acquisition. 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 income statement.  


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


SHARE-BASED PAYMENTS


The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006.


The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.


The fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. No expense is recognised for awards that do not ultimately vest. 


FINANCIAL INSTRUMENTS


Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.


Trade receivables


Trade receivables are recognised and carried at original invoice amount less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due. The impairment is recognised in the income statement.


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 cashflow statement, cash and cash equivalents includes bank overdrafts. 


Financial liabilities and equity


Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.


Bank borrowings


Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.


Trade payables


Trade payables are recognised at original invoice amount.


Convertible loan notes


Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of the issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity.


Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.


The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.


GOODWILL 


Goodwill arising on consolidation is recorded as an intangible asset and is the surplus of the cost of acquisition over the Group's interest in the fair value of identifiable net assets acquired. Goodwill is reviewed annually for impairment. Any impairment identified as a result of the review is charged in the income statement. Negative goodwill is written off in the year in which it arises.


On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.


INTANGIBLE ASSETS OTHER THAN GOODWILL


An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. An annual impairment review is undertaken on all intangible assets and any impairment identified is charged to the income statement. Such intangible assets are carried at cost less amortisation. Amortisation is charged to 'Administrative expenses' in the Income statement on a straight line basis over the intangible assets' useful economic life (1-10 years).


Expenditure on research activities is recognised as an expense in the period in which it is incurred.  


Development expenditure is capitalised as an intangible asset only if the following conditions are met:


  • an asset is created that can be identified;

  • it is probable that the asset created will generate future economic benefit; 

  • the development cost of the asset can be measured reliably;

  • it meets the Group's criteria for technical and commercial feasibility; and

  • sufficient resources are available to meet the development to either sell or use as an asset.


    Development expenditure thus capitalised is amortised on a straight-line basis over its useful life. Where the criteria are not met, development expenditure is recognised as an expense in the 'Administrative expenses' line of the Income statement.

 

        PROPERTY, PLANT AND EQUIPMENT


Property, plant and equipment are stated at cost less any subsequent accumulated depreciation or impairment losses. With the exception of freehold buildings held at 31 March 2006 (the date of transition to IFRS), cost represents purchase price together with any incidental costs to acquisition. As permitted by IFRS 1, the cost of freehold buildings at 31 March 2006 represents deemed cost, being the market value of the property for existing use at that date.


Depreciation is provided on all property, plant and equipment, other than freehold land, at rates calculated to write each asset down to its estimated residual value over its expected useful life, as follows:


Buildings

2% 

straight line

Furniture, fixtures and equipment

25%

reducing balance

Computer equipment

33%

straight line


Assets held under finance leases or hire purchase arrangements are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant agreement.


The assets' residual values and useful lives are reviewed at each balance sheet date and adjusted if appropriate. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.


INVENTORIES


Inventories are valued at the lower of cost and net realisable value. In general cost is determined on a first in first out basis and includes all direct expenditure and production overheads based on a normal level of activity. Net realisable value is the price at which the stocks can be sold in the normal course of business after allowing for the costs of realisation and where appropriate for the costs of conversion from its existing state to a finished condition. Provision is made for obsolete, slow moving and defective stocks.


LEASES


Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have been transferred to the Group, are capitalised in the balance sheet and depreciated over the shorter of the lease term or their useful lives. The asset is recorded at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease. The capital elements of future obligations under finance leases are included in liabilities in the balance sheet and analysed between current and non-current amounts. The interest elements of future obligations under finance leases are charged to the income statement over the periods of the leases and represent a constant proportion of the balance of capital repayments outstanding in accordance with the effective interest rate method.


Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. The cost of operating leases (net of any incentives received from the lessor) is charged to the income statement on a straight line basis over the periods of the leases.


FOREIGN CURRENCIES


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


For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are classified as equity and transferred to the Group's reserves. Such translation differences are recognised as income or expense in the period in which the operation is disposed of.


TAXATION


The tax expense represents the sum of the current tax expense and deferred tax expense.


The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.


Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. 


Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the taxable profit nor the accounting profit.


Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse 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. 


REVENUE RECOGNITION


Revenue represents the total of amounts receivable for goods and services provided excluding value added tax. Revenue is recognised on the delivery of the goods to the customer. Where a service is provided covering a future period the applicable revenue is shown as deferred income under Current Liabilities.


WARRANTY CLAIMS


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


GOVERNMENT GRANTS


Government grants towards research and development projects are recognised as income over the periods necessary to match them with the related costs and are included within Other income.


SEGMENTAL REPORTING


A segment is a distinguishable component of the Group that is engaged in providing products and services. As the risks and rates of return are predominantly affected by differences in these products and services, the primary format for reporting segment information is based on business segments.


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. 

  • Shares to be issued represents the equity element of deferred consideration arising on business combinations.

  • 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

  • Share based payment reserve represents the cumulative periodic charge for outstanding commitments to equity settled share based payments under IFRS 2.

  • Translation reserve represents cumulative foreign exchange gains and losses on retranslation of overseas operations.

  • Retained earnings represents retained profits.



STANDARDS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) NOT EFFECTIVE FOR THE CURRENT YEAR AND NOT ADOPTED BY THE GROUP


The following standards and interpretations have been issued by the IASB. They become effective after the current year and have not been early adopted by the Group:


International Financial Reporting Standards (IFRS) 

Effective date commencing

To be adopted by the Group during years

IFRS 8

Operating Segments

01.01.2009

31.03.2009

IAS1(a)

Amendment - Presentation of Financial Statements

01.01.2009

31.03.2009

IAS 23

Amendment - Borrowing Costs

01.01.2009

31.03.2009





International Financial Reporting Interpretations Committee (IFRIC)



IFRIC 12

Service concession agreements

01.01.2008

31.03.2009

IFRIC 13

Customer loyalty programmes

01.07.2008

31.03.2010

IFRIC 14

IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction



01.01.2008



31.03.2009

IFRIC 15

Agreements for construction of real estate

01.01.2009

31.03.2009

IFRIC 16

Hedges of a net investment in foreign operations

01.01.2009

31.03.2009


The impact on the Group's financial statements is not expected to be material.


5.    CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
       UNCERTAINTY
 


Critical judgements in applying the group's accounting policies


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



Valuation of intellectual property on acquisition of subsidiaries


Note 14 details the fair values ascribed by management to the assets and liabilities acquired by the Group when it acquired the share capital of PJSoft s.r.o. on 7 August 2007. In assessing the fair value of the intellectual property acquired, management have considered the current and likely future performance of PJSoft. Particular attention has been paid to the potential introduction of new products and services to the PJSoft portfolio and the return anticipated from these and existing product sales. The Directors therefore believe that the fair value of the acquisition is both appropriate and a realistic assessment of its long term value to the Group.


Key sources of estimation uncertainty


The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.


Recoverability of internally-generated intangible asset


During the year, management reconsidered the recoverability of its internally generated intangible asset which is included in its balance sheet at £344,514. The projects continue to progress satisfactorily and management continue to believe that the anticipated revenues will enable the carrying amount to be recovered in full.

 

6.    SEGMENTAL ANALYSIS


The Group's primary segmental reporting format is based on the Group's management and internal reporting structure of it's business segments. Secondary information is reported by geographical area of sales.


Business segments


Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items include central overhead expenses, assets and liabilities, which cannot be reasonably allocated. Inter-segment transactions are conducted on an arm's length basis in a manner similar to transactions with third parties.


Segment results include transfers between business segments. Those transfers are eliminated on consolidation. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.


Year ended 31 March 2008

Telematics

£

Projects

£

Unallocated

£

Total

£






Segment revenue

4,656,124

-  

-  

4,656,124

Other income

-  

78,779

-  

78,779

Segment result

485,527

(238,478)

(1,138,324)

(891,275)

Finance costs

-  

-  

(67,014)

(67,014)

Profit/(Loss) before tax

485,527

(238,478)

(1,205,338)

(958,289)

Income tax

-  

-  

57,124 

57,124 

Profit/(Loss) for year

485,527

(238,478)

(1,180,084)

(901,165)











Segment assets

2,419,805

78,779 

929,310

3,427,893






Segment liabilities

705,078

-

844,259

1,549,337






Other information





-    Purchase of non-current assets

124,094

-

23,153

147,247

-    Depreciation and amortisation

178,304

-

59,264

237,568






Year ended 31 March 2007

Telematics

£

Projects

£

Unallocated

£

Total

£






Segment revenue

6,370,007

-

-

 6,370,007 

Segment result

1,337,268

(445,520)

(777,079)

114,669 

Finance costs

-

-

(24,249)

(24,249)

Profit/(Loss) before tax

1,337,268

(445,520)

(801,328)

90,420

Income tax

-

-

        18,309 

18,309

Profit/(Loss) for year

1,337,268

(445,520)

(783,019)

108,729











Segment assets

2,335,240

-

1,309,493

3,644,733






Segment liabilities

613,823

-

692,436

1,306,259






Other information





-    Purchase of non-current assets

220,420

-

71,203

291,623

-    Depreciation and amortisation

114,436

-

55,574

170,010


Geographical segments


The Group's operations are located in the UK and the Czech Republic. The following table provides an analysis of the Group's sales by geography based upon location of the Group's customers. Segment assets and capital expenditure are based on the geographical location of assets.



Revenue

Other Income

Segment assets

Capital expenditure


2008 

2007 

2008

2007

2008 

2007 

2008 

2007 


£

£

£

£

£

£

£

£

United Kingdom

2,709,333

3,440,539

78,779

-

2,423,809

3,644,733

147,247

1,077,864

Europe

1,056,139

2,248,965

-

-

840,967

-

836,076

-

Rest of the World

890,652

680,503

-

-

163,117

-

-

-











4,656,124

6,370,007

78,779

-

3,427,893

3,644,733

983,323

1,077,864










Additions to capital expenditure include additions resulting from acquisitions through business combinations.

 

7.    (LOSS)/PROFIT FROM OPERATIONS



2008

2007


£

£

(Loss)/profit from operations is stated after charging / (crediting):






Other income - Government grant

(78,779)




Depreciation - owned fixed assets

  - assets on finance leases

52,272 

6,992

48,467 

7,107 

Negative goodwill written off

(14,198)

Amortisation of intangible assets 

178,304 

114,436 

Operating lease rentals



    Equipment

5,145 

19,436 

    Land and buildings

19,339 

27,025 

Research and development

43,309 

59,470 

Loss on foreign exchange transactions

11,106 

18,834 

Write-downs of inventories recognised as an expense

91,608

Staff costs (note 10)

1,549,331

1,519,964





2008

2007


£

£

Auditor's remuneration



    Baker Tilly UK Audit LLP and associates



        - audit services



                Parent Company and consolidation

8,200

7,000

                Subsidiary audits

32,000

31,000  

        - tax advisory services

15,525

18,129

        - other services

6,250

4,750



8.    FINANCE COSTS



2008

2007


£

£




Bank interest payable

42,404

25,802

Interest on loan stock

33,754

12,482

Interest on finance leases

403

1,017





76,561

39,301






9.    TAXATION

    



2008

2007





£

£

Current tax

-  

25,091




Adjustment in respect of prior period

(25,091) 

-

R&D Tax Credit

(32,902) 

(47,699)





(57,993) 

(22,608)

Deferred tax



Deferred tax charge for current year

(163) 

4,299

Adjustment in respect of prior periods

1,032

-  







tax credit

(57,124) 

(18,309)


Factors affecting the tax charge


    The tax assessed for the years are lower than the applicable rate of corporation tax in the UK. The difference is explained below:



2008

2007





£

£

(Loss)/profit on ordinary activities before tax

(958,289)

90,420



(Loss)/profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% (2007: 30%)

(287,487) 

27,126




Effects of:



Expenses not deductible/income not taxable

56,712

8,499

Share Option adjustment

3,491

6,385

Temporary differences

15,624

(1,999) 

Tax losses for which no deferred income tax asset was recognised

211,497

-  

Marginal relief

-  

(10,621)

Adjustment in respect of previous periods

(56,961) 

(47,699) 




Total tax

(57,124) 

(18,309) 



10.    EMPLOYEES



2008

2007


No. 

No. 

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




    Research and development

7

5

    Selling and distribution

17

8

    Production

12

11

    Administration

12

12





48

36


    

2008

2007


£

£

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






Wages and salaries

1,366,380

1,353,197

Social Security costs

163,788

145,485

Share Based Payments

19,163

21,282






1,549,331


1,519,964


    Included in the above are costs relating to Directors, who are the key management personnel of the Group, as follows:


Directors' emoluments

342,667

413,976


    The Directors in office during the year ended 31 March 2008 received no pension contributions (2007: Nil).


    Emoluments disclosed above include the following amounts paid to the highest paid director:-


Emoluments for qualifying services

87,780

98,500


Further details of Directors' remuneration can be found in the Directors' Remuneration report.



11.    (LOSS)/EARNINGS PER ORDINARY SHARE


The (loss)/earnings per ordinary share has been calculated using the (loss)/profit for the year and the weighted average number of ordinary shares in issue during the year as follows:




2008

2007



£

£

(Loss)/profit for the year after taxation


(901,165)

108,729







No.

No.

Number of ordinary shares of 1p each


13,517,033

11,472,423





Number of ordinary shares of 1p each (diluted)



14,096,212

12,596,941





Basic weighted average number of ordinary shares of 1p each 



11,926,158

  

 11,175,215

Basic weighted average number of ordinary shares of 1p each (diluted)


11,926,158

11,760,871



  =


Basic (loss)/earnings (pence per share)


(7.6)p

1.0p





Diluted (loss)/earnings (pence per share)


(7.6)p

0.9p


    In 2008 the weighted average number of shares for the purpose of calculating the diluted earnings per ordinary share is identical to that used for the basic earnings per ordinary share as any adjustment to the number of ordinary shares would be anti-dilutive.


12.

INTANGIBLE ASSETS




Goodwill

Development Costs

Intellectual Property

Total



  £

  £

  £

£


COST






As at 1 April 2006

-  

-  

-  

-  


Acquisition of IPL

(14,198)

-  

716,651 

702,453 


Additions

-  

220,420

-  

220,420 


Charged to income

14,198 

-  

-  

14,198 








As at 31 March 2007

-  

220,420 

716,651 

937,071 


Acquisition of PJSoft

-  

-  

633,022 

633,022 


Additions

-  

124,094 

-  

124,094 


Exchange Difference

-  

-  

196,334 

196,334 








As at 31 March 2008

-  

344,514

1,546,007

1,890,521 








AMORTISATION






As at 1 April 2006

-  

-  

-  

-  


Charged to income

-  

42,771 

71,665 

114,436 








As at 31 March 2007

-  

42,771 

71,665 

114,436 


Charged to income

-  

70,742 

107,562 

178,304 








As at 31 March 2008

-  

113,513 

179,227 

292,740 








NET BOOK VALUE






As at 31 March 2008

-  

231,001 

1,366,780 

1,597,781 








As at 31 March 2007

-  

177,649 

644,986 

822,635 








Amortisation expenses of £178,304 (2007: £114,436) have been charged in Administrative expenses. 


13.     PLANT, PROPERTY & EQUIPMENT




Freehold property

Furniture, fixtures and equipment

Computer equipment

Total



£

£ 

£ 

£ 

COST






As at 1 April 2006


420,000 

22,773 

44,563 

487,336 

Additions


-   

23,529 

47,674 

71,203 

Acquired with IPL


-   

50,204 

33,584 

83,788 

Disposals


-   

(1,141)

-  

(1,141)







As at 31 March 2007


420,000 

95,365 

125,821 

641,186 

Additions


-   

419 

22,734 

23,153 

Acquired with PJSoft


-   

20,188 

5,038 

25,226 

Exchange differences


-   

5,582 

1,563 

7,145 

Disposals


-   

(4,387)

-  

(4,387)







As at 31 March 2008


420,000 

117,167 

155,156

692,323 







DEPRECIATION






As at 1 April 2006


-   

7,779 

23,116 

30,895 

Charged to income


4,408 

16,198 

34,968 

55,574 

Acquired with IPL


-   

18,683 

27,245 

45,928 

Disposals


-   

(142)

-  

(142)







As at 31 March 2007


4,408 

42,518 

85,329 

132,255 

Charged to income


4,408 

15,968 

38,888 

59,264 

Acquired with PJSoft


-   

16,718 

3,038 

19,756 

Exchange differences


-   

4,952 

943 

5,895 

Disposals


-   

(2,908)

-  

(2,908)







As at 31 March 2008


8,816 

77,248 

128,198 

214,262 







NET BOOK VALUE






As at 31 March 2008


411,184 

39,919 

26,958 

478,061 







As at 31 March 2007


415,592 

52,847 

40,492 

508,931 


Included within freehold property is £199,585 (2007: £199,585) relating to land which is not depreciated. The net book value of plant and computer equipment includes £14,032 (2007: £21,071) in respect of assets held under finance leases and hire purchase contracts. The depreciation charge in respect of these assets was £6,992 (2007: £7,107).


Total depreciation expenses of £59,264 (2007: £55,574) have been charged in Administrative expenses. 

 

14.    ACQUISITION OF PJSOFT S.R.O. ("PJS") 


On 7 August 2007 the Company acquired the entire issued share capital of PJ Soft s.r.o.. The consideration was €385,000 in cash paid to the vendors on 7 August 2007, €150,000 payable on 7 August 2008 and 340,136 and 453,516 Ordinary shares to be allotted and issued to the vendors on 7 August 2008 and 7 August 2009 respectively.  


The deferred cash consideration of €150,000 has been discounted at a rate of 8% in order to arrive at the present value as at the date of acquisition. The Ordinary shares have been valued at 31.0 pence being the mid market closing share price of Trakm8 Holdings at the date of acquisition. The transaction has been accounted for by the purchase method of accounting as detailed in IFRS3 (Business combinations).


The following assets and liabilities were acquired at the date of acquisition:




Book Value as at August 2007


£

Fair Value

as at August 2007


£

Intangible Assets


-

633,022

Property, plant and equipment


5,470

5,470

Inventories


3,407

3,407

Trade and other receivables


21,326

21,326

Cash and cash equivalents


4,672

4,672

Trade and other payables


(4,091)

(4,091)







30,784

663,806





Goodwill



-





Total Consideration



663,806





Satisfied by:








Cash



259,259

Deferred cash



93,528

Costs of acquisition



64,986

Fair value of shares issued



246,033








663,806


The results of PJS have been consolidated in the Income statement for the Group for the eight months from the date of acquisition to 31 March 2008.


Intangible assets represent Intellectual Property owned by PJS. The Directors have reviewed the fair value of these assets and revalued them at the date of acquisition. The valuation has been based on the expected licence fee income to be received over the next 10 years.


PJS contributed £96,277 of revenue and £13,454 to the Group's loss before tax for the period between the date of acquisition and the balance sheet date.


If the acquisition of PJS. had been completed on the first day of the financial year, Group revenues for the period would have been increased by £37,278 and the Group Loss attributable to equity holders of the parent would have been increased by £10,283.


15.    INVENTORIES



2008

2007


£

£

Finished goods and goods for resale

146,027

332,522


The cost of inventories recognised as an expense and included in the cost of sales amounted to £2,631,725 (2007: £3,879,599).


16.    TRADE AND OTHER RECEIVABLES



2008

2007


£

£

Trade receivables

675,997

1,180,083 

Other receivables

78,779

6,356 

Prepayments 

54,975

55,110 

VAT recoverable

-  

30,508 





809,751

1,272,057 


The analysis of trade receivables by currency is as follows:


2008

2007


£

£

Euro

9,566

362,786

Pound sterling

639,934

817,297

Other

26,497

-





675,997

1,180,083 


An allowance for impairment is made where there is an identified event which, based on previous experience, is evidence of a reduction in the recoverability of the outstanding amount. An allowance has been made for estimated irrecoverable trade receivables of £26,065 (2007: £ Nil). Trade receivables of £30,745 are past due, but not provided for.


The Directors consider that the carrying amount of trade and other receivables approximates to their fair values.


 

17.  DEFERRED TAX


 


2008

2007





£

£




As at 1 April

(17,805)

(13,506)




Charged to income (note 9)

(869)

(4,299)




Balance at 31 March

(18,674)

(17,805)




Revaluation of building

(18,674)

(18,837)




Accelerated tax depreciation

-

1,032





(18,674)

(17,805)


At the balance sheet date, the Group had unused tax losses of £1,079,000 (2007: £396,396) available for offset against future profits. No deferred tax asset has been recognised in respect of this due to the unpredictability of future profit streams.


18.    CURRENT LIABILITIES - TRADE AND OTHER PAYABLES 



2008

2007


£

£

Trade payables

766,337

793,714

Taxation and social security

89,294

36,426

Other payables

140,021

21,518

Accruals and deferred income

291,531

98,819





1,287,183

950,477




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


19.    BORROWINGS



2008

2007


£

£

Bank overdrafts

210,280

269,294

Bank Loan

235,060

248,534

DTi Loans

102,679

138,393

Loan Stock

-  

500,000  





548,019

1,156,221







On demand or within one year - Overdraft

210,280

269,294

  - Other loans

50,269

49,209

After one and within two years

51,415

550,271

After two and within five years

86,165

117,878

After five years

149,890

169,569





548,019

1,156,221

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

(260,549)

(318,503)




Amount due for settlement after more than one year

287,470

837,718





    Bank overdrafts are repayable on demand and secured by a floating charge over the assets of the Group. Interest is payable at 2.5% over base rate and the effective interest rate was 8.0% (2007: 7.3%).


    The bank loan is secured by a fixed and floating charge on all the assets of Trakm8 Limited. It is repayable by instalments of £2,660 per month until 2019 and bears interest at a fixed rate of 7.60%.


The DTi loans were provided to IPL in 2006 by National Westminster Bank under the Small Firms Loan Guarantee Scheme. The two loans are each repayable at the rate of £1,488 per month and interest is payable at the rate of 3.5% over Base rate. The average effective interest rate on the loans was 9.0% (2007: 8.3%). During 2007 the loans were transferred to HSBC under the same terms.


In January 2007 the Company issued £500,000 of 9% Convertible Unsecured Loan Stock. On 31 December 2007 the subscribers elected to convert their holdings into 2,044,610 ordinary shares which were admitted to AIM on 11 January 2008.


20.    OBLIGATIONS UNDER FINANCE LEASES



Minimum lease payments

Present value of minimum lease payments


2008

2007

2008

2007


£

£

£

£

Amounts payable under finance leases:





    Due within one year

1,655

12,596

1,605

12,188

Less    future finance charges

(50)

(408)








Present value 

1,605

12,188









All lease obligations are denominated in sterling and are secured by the lessor's rights over the leased assets. The fair value of the lease obligations approximates to their carrying amount.


21.    SHARE CAPITAL



2008

2007


No's 

'000's

£

No's

 '000's

£

Authorised





Ordinary shares of 1p each

200,000

2,000,000

200,000

2,000,000






Allotted, issued and fully paid





Ordinary shares of 1p each

13,517

135,170

11,472

114,724


On 7 August 2007 the Company acquired the entire issued share capital of PJSoft s.r.o, full details of which are given in note 14 above. In part consideration the Company is to issue 340,136 ordinary shares on 7 August 2008 and a further 453,516 ordinary shares on 7 August 2009. 


On 10 January 2008 the total value of the Loan Stock (£522,500) inclusive of accrued interest of £22,500 was converted into 2,044,610 ordinary shares of 1p each. 



22.    RESERVES



Share Capital

Share premium

Shares to be issued

Merger 

Reserve

Share based payment reserve

Translation reserve

Retained Earnings

Total


£

£

£

£ 

£

£

£ 

£ 

31 March 2006

110,260

435,087

-  

509,837

7,342

-  

(33,242)

1,029,284










Shares Issued

  4,464

319,192

-  

-  

-  

-  

-  

323,656

IFRS2 Share based payments

-  

-  

-  

-  

21,282

-  

-  

21,282

Profit for the year

-  

-  

-  

-  

-  

-  

108,729 

108,729










As at 31 March 2007

114,724

754,279

-  

509,837

28,624

-  

75,487 

1,482,951










Shares issued

20,446

502,055

-  

-  

-  

-  

-  

522,501

Shares to be issued

-  

-  

246,032

-  

-  

-  

-  

246,032

Exchange differences on

translation of overseas 

operations

-  

-  

-  

-  

-  

202,930

-  

202,930

IFRS2 Share based payments

-  

-  

-  

-  

19,163

-  

-  

19,163

Loss for the year

-  

-  

-  

-  

-  

-  

(901,165)

(901,165)










As at 31 March 2008

135,170

1,256,334

246,032

509,837

47,787

202,930

(825,678)

1,572,412











23.    SHARE-BASED PAYMENTS


Trakm8 Holdings PLC has issued options (under the Trakm8 Approved Option Scheme) to subscribe for ordinary shares of 1p in the Company. The purpose of the Option Scheme is to retain and motivate eligible employees. 


The exercise price and number of shares to which the options relate are as follows:


Option Exercise Price

Balance as at 31 March 2007

Granted during year

Exercised during year

Expired/forfeited during the year

Balance as at 31 March 2008

Expiry Date

25p

291,185

229,450

-

166,885

353,750

31 March 2010

26p

-

225,429

-

-

225,429

30 September 2010

Totals

291,185

454,879

-

166,885

579,179



The Group charged £19,163 to the Income Statement in respect of Share-Based Payments for the financial year ended 31 March 2008 (2007: £21,282).


The highest share price during the year was £0.34. The lowest share price during the year was £0.225. The closing share price on 31 March 2008 was £0.225 (2007: £0.25). The exercise of all share options is the closing market price on the day of grant. 


The fair value of the equity settled share options granted is estimated as at the date of grant using the Black Scholes option pricing model taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the years ended 31 March 2007 and 31 March 2008:




Historical volatility

8.9%

Dividend Yield (declared)

0.0%

Risk-free interest rate

4.8%


A vesting period of 1 or 2 years is applicable according to the terms of grant.



24.    CASH FLOWS







2008

2007



£

£

A

Reconciliation of (loss)/profit before tax to net cash flow from operating activities





(Loss)/profit before tax

(958,289)

90,420 


Depreciation

59,264 

55,574 


Bank and other interest charges

67,014 

24,249 


Amortisation of intangible assets

178,304 

114,436 


Negative goodwill written off

-   

(14,198)


Share based payments

19,163 

21,282 






Net loss (profit) before changes in working capital

(634,544)

291,763 


Movement on retranslation of overseas operations

5,346 

-   


Movement in inventories

189,902 

107,417 


Movement in trade and other receivables

483,632 

(158,967)


Movement in trade and other payables

261,587 

166,421 






Cash generated from operations

305,923 

406,634 






Interest paid

(76,561)

(39,301)


Interest received

9,547 

15,052 


Income taxes received

-   

43,237 






Net cash flow from operating activities

238,909 

425,622 


Cash and cash equivalents comprise cash at bank, other short-term highly liquid investments with a maturity of three months or less (together presented as 'Cash and cash equivalents' on the face of the balance sheet) and bank overdrafts (presented as a single class of liability on the face of the balance sheet).



25.    FINANCIAL COMMITMENTS


    At the balance sheet date, the Group had outstanding commitments for future minimum operating lease payments under non-cancellable operating leases, which fall due as follows:


2008

2007

Operating Leases

£

£ 




Land and buildings



 Within one year

26,097

10,000

 In the second to fifth years inclusive

68,433

34,167




Other



 Within one year

5,088

13,691 

 In the second to fifth years inclusive

5,177

1,673 


Land and buildings under operating leases represent payables by the Group on its two principle office properties. The leases expire in 2010 and 2011.

 

26.    RELATED PARTY TRANSACTIONS


Details of the remuneration of the directors, who are the key management personnel of the Group, are disclosed in note 10 above. There were no other related party transactions.

 

27.    FINANCIAL INSTRUMENTS


Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Where appropriate, the Group seeks to mitigate potential adverse effects on its financial performance.


Foreign exchange rate risk

The Group's principal exposure to foreign exchange rate risk arises with the purchase of inventory, which is predominantly denominated in Euros.  Historically the Group has not used derivative instruments to hedge against possible risks arising from fluctuations in foreign currency exchange rates as the exposure is limited. If foreign currency exposure increases, the use of foreign currency hedging instruments will be reviewed as a means of reducing the effect of exchange rate fluctuations on the Group's results.


Interest rate risk

The Group mitigates its exposure to interest rate fluctuations by using fixed rates or interest rate derivatives where appropriate.


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.

 

Credit risk

The Group's principal financial assets are bank balances, cash and trade and other receivables. The Group's credit risk is primarily attributable to its trade receivables and the Group attaches considerable importance to the collection and management of trade receivables. The Group minimises its credit risk through the application of appropriate credit limits to customers based on an assessment of net worth and trading history with the Group. Standard credit terms are net 30 days from date of invoice. Overdue trade receivables are managed through a phased escalation culminating in legal action.


The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.


Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expense are recognised, in respect of each class of financial asset, liability and equity instrument are disclosed in note 4 to the financial statements.


Foreign currency risk

The group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.


The carrying amount of the Group's foreign currency denominated monetary assets and liabilities at the reporting date is as follows:


Assets

Liabilities


2008

2007

2008

2007


£

£

£

£

Euro

44,824

500,276

617,301

532,554

Other

29,367

115,132

22,491

16,172







74,191

615,408

639,792

548,726

GBP

1,098,931

1,365,237

1,197,015

1,595,251







1,173,122

1,980,645

1,836,807

2,143,977







Foreign currency sensitivity

The Group is mainly exposed to the Euro. The following table details the Group's sensitivity to a 10% strengthening of the Euro against GBP. This has been determined assuming a Euro rate 10% stronger than the actual rate achieved during the period.



2008

2007


£

£

Loss

(89,179)

(47,134)


The Group's sensitivity to the Euro has increased due to the reduction in sales denominated in Euros during the second half of the 2008 financial year.


Interest rate and liquidity risk


Interest rate sensitivity

The sensitivity analysis has been based on the average exposure to floating rate debt during the period. It has been assumed that floating interest rates were 50 basis point higher than those actually incurred.


The effect of such a change would be to increase the loss before tax for the year by £1,565 (2007 - reduce the profit before tax by £2,122).


Liquidity and interest risk tables

The following table details the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted contractual maturities of the financial liabilities (including interest that will accrue to maturity). The discount column reflects the adjustments necessary to reconcile to the carrying amounts of the financial liabilities.


2008


Weighted average effective interest rate

Less than 1 month or on demand

1-3 months

3-12 months

1-5

 years

More than 5 years 

Discount

Total


%

£

£ 

£

£

£

£ 

£ 

Fixed rate










Bank loan

7.6%

-  

3,536

11,019

70,615

149,890

-  

235,060

Deferred consideration

8.0%

-  

-  

124,416

-  

-  

-  

124,416

Obligations under finance leases

6.2%

138

276

1,241

-  

-  

(50)

1,605










Floating rate










Bank overdrafts

8.0%

210,280

-  

-  

-  

-  

-  

210,280

Other loans

9.0%

-  

8,929

26,785

66,965

-  

-  

102,679

Trade payables

-  

766,337

-  

-  

-  

-  

-  

766,337










2007


Weighted average effective interest rate

Less than 1 month

1-3 months

3-12 months

1-5

 years

More than 5 years

Discount

Total


%

£

£ 

£

£

£

£ 

£ 

Fixed rate










Bank loans

7.6%

-  

3,279

10,217

65,471

169,567

-  

248,534

Loan Stock

9.0%

-  

-  

-  

500,000

-  

-  

500,000

Obligations under finance leases

6.7%

1,050

2,099

9,446

-  

-  

(407)

12,188










Floating rate










Bank overdrafts

7.3%

269,294

-  

-  

-  

-  

-  

269,294

Other loans

8.3%

-  

8,929

26,785

102,679

-  

-  

138,393

Trade Payables

-  

793,714

-  

-  

-  

-  

-  

793,714


Fair values

There is no material difference between the book value and the fair value of the Group's financial assets or liabilities.


28.    REPORTING UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS


This annual report is the first to be prepared under IFRS. The comparative figures have been prepared on the same basis and have therefore been restated from those previously prepared under UK GAAP. The commentary below details the key changes that have arisen due to the transition to reporting under IFRS. The Group's date of transition is 31 March 2006, which is the beginning of the comparative period for the 2006/2007 financial year. Therefore the opening balance sheet for IFRS purposes is that reported at 31 March 2006 as amended for changes due to IFRS.


To explain the impact of the transition, reconciliations are included below that show the changes made to the statements previously reported under UK GAAP. The following reconciliations are included:


  • Reconciliation of Group balance sheet at 31 March 2006 from UK GAAP to IFRS,

  • Reconciliation of Group balance sheet at 31 March 2007 from UK GAAP to IFRS;

  • Reconciliation of Group income statement for the year ended 31 March 2007 from UK GAAP to IFRS;


The transition from UK GAAP to IFRS does not affect the cash flows generated by the Group. The IFRS cash flow statement is presented in a different format than that required under UK GAAP. The reconciling items between the UK GAAP format and the IFRS format have no net impact on the cash flows generated and accordingly reconciliations have not been presented.


The accounting policies used for IFRS are set out in note 4.


The Group has applied the provisions of IFRS 1 - First Time Adoption of International Financial Reporting Standards which, generally, requires that IFRS accounting policies be applied retrospectively in determining the opening balance sheet at the date of transition. IFRS 1 contains both mandatory and optional exemptions to the principle of retrospective application. Where the Group has made use of an exemption it is noted below.


The significant first time adoption choices made by the Group are as follows:


  • Business combinations completed prior to 1 January 2006 have not been restated under IFRS 3 'Business combinations';

  • Aside from freehold buildings, the opening fair values of fixed assets have been deemed to be their accounting values as at 31 March 2006, after reviewing for impairment as appropriate. Deemed cost for freehold buildings is their open market value for existing use.


IFRS 1 'First time adoption of IFRS'


The carrying values of fixed assets have been reviewed on first time adoption of IFRS. As permitted by IFRS 1 the company has opted to value its freehold land and buildings at deemed cost. The deemed cost has been assessed as the open market value of the property at transition date (1 April 2006). Accordingly the opening net assets of the group have been increased by £63,331 reflecting the difference between the market value and net book value of the property at that date. The historical cost of the property was £368,264.


Increased depreciation of £543 pa has been charged to the income statement for the years ended 31 March 2007 and 31 March 2008 to reflect the increased carrying value.


IAS 38 'Intangible assets'


The fair value of intangible assets arising on the acquisition of Interactive Projects Limited (IPL) has been revisited using the 'relief from royalty' method permitted by IAS38. On this basis the value of the intellectual property acquired, as a result of the transaction in May 2006, has been increased by £116,651 to £716,651. Goodwill arising on consolidation has been reduced by the same amount resulting in negative goodwill arising of £14,198. The negative goodwill has been written off immediately to the Income Statement and the charge for amortisation of intangible non-current assets has increased by £1,420 pa.


Accordingly net assets at 31 March 2007 and the profit for the year then ended have been increased by £12,778. Net assets at 31 March 2008 have been increased by £11,358 and the profit for the year then ended has been decreased by £1,420. There is no impact on the balance sheet at 31 March 2006.


IAS 12 'Income taxes'


Under UK GAAP, deferred tax is not provided on revaluation of fixed assets, unless the entity has entered into a binding agreement to sell the asset and has recognised the gain expected to arise on that sale. Under IFRS the entity is required to account for the impact of deferred tax on all timing differences.  


Accordingly, a deferred tax liability of £19,000 has been recognised at 31 March 2006 to reflect the tax arising on the increase in carrying value of the freehold property to its market value at that date. A tax credit of £163 pa has been charged to the income statement for the years ended 31 March 2007 and 31 March 2008 to reflect the increased depreciation charge arising.


Reconciliation of the Group Balance Sheet under UK GAAP to IFRS at 31 March 2006


UK GAAP under IFRS presentation

Property deemed cost

Income taxes

IFRS


£

£

£

£

Non-current assets




 

Property, plant and equipment

393,110 

63,331

-   

456,441







393,110 

63,331

-   

456,441






Current assets




 

Inventories

398,306 

-   

-   

398,306

Trade and other receivables

1,065,490 

-   

-   

1,065,490

Deferred tax

5,494 

-   

(5,494)

-   

Cash and cash equivalents

402,454 

-   

-   

402,454







1,871,744 

-   

(5,494)

1,866,250






Current liabilities




 

Bank overdrafts

(164,118)

-   

-   

(164,118)

Bank loans

(12,175)

-   

-   

(12,175)

Trade payables

(565,683)

-   

-   

(565,683)

Other payables

(99,698)

-   

-   

(99,698)

Other loans

(185,091)

-   

-   

(185,091)







(1,026,765)

-   

-   

(1,026,765)






Current assets less current liabilities

844,979 

-   

(5,494)

839,485





 

Total assets less current liabilities

1,238,089 

63,331

(5,494)

1,295,926





 

Non-current liabilities




 

Bank loans

(253,136)

-   

-   

(253,136)

Other loans

-   

-   

-   

-   

Deferred tax liabilities

-   

-   

(13,506)

(13,506)







(253,136)

-   

(13,506)

(266,642)











Net assets

984,953 

63,331

(19,000)

1,029,284






Equity




 

Share capital

110,260 

-   

-   

110,260

Share premium account

435,087 

-   

-   

435,087

Shares to be issued

-   

-   

-   

-   

Merger reserve

509,837 

-   

-   

509,837

Share based payment reserve

7,342 

-   

-   

7,342

Retained earnings

(77,573)

63,331  

(19,000)

(33,242)






Total equity attributable to equity

  shareholders of the parent

984,953 

63,331

(19,000)

1,029,284







Reconciliation of the Group Profit and loss Account under UK GAAP to the Group Income Statement under IFRS for the year ended 31 March 2007


UK GAAP under IFRS presentation

Intellectual property

Property deemed cost

Income taxes

IFRS


£

£

£

£

£

Continuing operations





 

Revenue

6,370,007 

-   

-   

-   

6,370,007 

Cost of sales

(3,879,599)

-   

-   

-   

(3,879,599)







Gross profit

2,490,408 

-   

-   

-   

2,490,408 

Administrative expenses

(2,387,974)

12,778 

(543)

-   

(2,375,739)







Profit from operations

102,434 

12,778 

(543)

-   

114,669 

Interest receivable

15,052 

-   

-   

-   

15,052 








117,486 

12,778 

(543)

-   

129,721 

Bank and other interest charges

(39,301)

-   

-   

-   

(39,301)







Profit before taxation

78,185 

12,778 

(543)

-   

90,420 

Taxation

18,146 

-   

-   

163 

18,309 







Profit for the year attributable to

  equity shareholders of parent

96,331 


12,778 

(543)

163   

108,729 








Reconciliation of the Group Balance Sheet under UK GAAP to IFRS at 31 March 2007



UK GAAP under IFRS presentation

Intellectual property

Property deemed cost

Income taxes

IFRS


£

£

£

£

£

Non-current assets





 

Intangible assets

809,857 

12,778 

-   

-   

822,635 

Property, plant and equipment

446,143 

-  

62,788 

-   

508,931 








1,256,000 

12,778 

62,788 

-   

1,331,566 







Current assets





 

Inventories

332,522 

-   

-   

-   

332,522 

Trade and other receivables

1,272,057 

-   

-   

-   

1,272,057 

Deferred tax

1,032 

-   

-   

(1,032)

-   

Cash and cash equivalents

708,588 

-   

-   

-   

708,588 








2,314,199 

-   

-  

(1,032)

2,313,167







Current liabilities





 

Bank overdrafts

(269,294)

-   

-   

-   

(269,294)

Bank loans

(13,495)

-   

-   

-   

(13,495)

Trade payables

(793,714)

-   

-   

-   

(793,714)

Other payables

(156,763)

-   

-   

-   

(156,763)

Obligations under finance leases and

  hire purchase arrangements

(12,188)

-   

-   

-   

(12,188)

Current tax

(25,091)

-   

-   

-   

(25,091)

Other loans

(35,714)

-   

-   

-   

(35,714)








(1,306,259)

-   

-   

-   

(1,306,259)







Current assets less current liabilities

1,007,940 

-   

-   

(1,032)

1,006,908 







Total assets less current liabilities

2,263,940 

12,778 

62,788 

(1,032)

2,338,474 







Non-current liabilities





 

Bank loans

(235,039)

-   

-   

-   

(235,039)

Other loans

(602,679)

-   

-   

-   

(602,679)

Deferred tax liabilities

-   

-   

-   

(17,805)

(17,805)








(837,718)

-   

-   

(17,805)

(855,523)







Net assets

1,426,222 

12,778 

62,788 

(18,837)

1,482,951 







Equity





 

Share capital

114,724 

-   

-   

-   

114,724 

Share premium account

754,279 

-   

-   

-   

754,279 

Merger reserve

509,837 

-   

-   

-   

509,837 

Share based payment reserve

28,624 

-   

-   

-   

28,624 

Retained earnings

18,758 

12,778 

62,788

(18,837)

75,487 







Total equity attributable to equity

  shareholders of the parent

1,426,222 


12,778 

62,788 

(18,837)

1,482,951 









COMPANY BALANCE SHEET

As at 31 March 2008


Notes

2008

2007



£

£

FIXED ASSETS




Investments

3

1,285,224

595,519




CURRENT ASSETS



Debtors 

4

47,103

313,679

Cash at bank

294,144

508,347






341,247

822,026




CREDITORS: Amounts falling due within one year

5

(182,747)

(61,960)




NET CURRENT ASSETS

158,500

760,066




TOTAL ASSETS LESS CURRENT LIABILITIES

1,443,724

1,355,585







CREDITORS: Amounts falling due after more than one year

6

-

(500,000)




NET ASSETS

1,443,724

855,585




CAPITAL AND RESERVES



Called up share capital 

7

135,170

114,724

Share premium

8

1,256,334

754,279

Share based payment reserve

8

47,787

28,624

Shares to be issued

8

246,032

-  

Profit and loss account

8

(241,599)

(42,042)





SHAREHOLDERS' FUNDS 


1,443,724

855,585


These financial statements were approved by the Directors and authorised for issue on 26 August 2008 and are signed on their behalf by:



C D Buck                            T Couling

Director                                Director




NOTES TO THE COMPANY FINANCIAL STATEMENTS

For the year ended 31 March 2008

 

1.    ACCOUNTING POLICIES


    BASIS OF ACCOUNTING


    The financial statements have been prepared under the historical cost convention in accordance with the applicable accounting standards.


SHARE-BASED PAYMENTS


The company has applied the requirements of FRS 20 Share-based Payments. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006. 


The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.


The fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations. No expense is recognised for awards that do not ultimately vest. 


FINANCIAL INSTRUMENTS


Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. Instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.


Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of the issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Company, is included in equity.


Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.


The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.


    INVESTMENTS


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


FOREIGN CURRENCIES


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


DEFERRED TAXATION


Provision is made for deferred taxation in respect of all material timing differences that have originated but not reversed by the balance sheet date. Timing differences represent differences 

between gains and losses recognised for tax purposes in periods different from those in which they are recognised in the financial statements. No deferred tax is recognised on permanent differences between the Company's taxable gains and losses and its results as stated in the financial statements. Deferred tax assets and liabilities are included without discounting. 

 

2.    PROFIT AND LOSS ACCOUNT


As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the Company is not presented as part of these financial statements.


The loss before tax for the year in the Company is £199,557 (2007: profit £2,748).  

 

3.    INVESTMENTS




Subsidiaries

Cost 


£

At 1 April 2007


595,519 

Additions


  689,705  




At 31 March 2008


1,285,224 


Name of subsidiary



Country of incorporation

Class of holding

Proportion held and voting rights

Nature of business






Trakm8 Limited

England and Wales

Ordinary


100%


Marketing and distribution of vehicle telematics

Interactive Projects Limited

England and Wales

Ordinary

100%

Project management and design

PJSoft s.r.o.

Czech Republic

Ordinary

100%

Mapping services

Purple Reality Limited

England and Wales

Ordinary

100%

Dormant

Trakm8 Inc.

USA

Ordinary

100%

Dormant

Trakm8 Pty Ltd

Australia

Ordinary

100%

Dormant

 

4.    DEBTORS



2008

2007


£

£

Amounts due from subsidiary undertakings

37,297

291,144 

VAT recoverable

3,139

-

Prepayments 

6,667

22,535 





47,103

313,679 

 

5.    CREDITORS: Amounts falling due within one year



2008

2007


£

£

Trade creditors

46,393

29,987 

Taxation and social security

-

19,032 

Accruals and other creditors

136,354

12,941 





182,747

61,960 

 

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



2008

2007


£

£

Loan Stock

-  

500,000  








2008

2007 


£

£ 

After one and within two years

-  

500,000  


In January 2007 the Company issued £500,000 of 9% Convertible Unsecured Loan Stock. On 31 December 2007 the subscribers elected to convert, at a conversion price of 25.55 pence, their holdings into ordinary shares of the Company in line with the provisions of the agreement.  

 

7.    SHARE CAPITAL


Details of share capital and share options are shown in notes 21 and 23 to the consolidated accounts above.

 

8.    RESERVES



Share premium

Shares to be issued

Share based payment reserve

Profit and 

loss account

Total


£ 

£ 

£ 

£

£ 

At 1 April 2007

754,279

-  

28,624

(42,042)

740,861 

Shares issued

502,055

-  

-  

-  

502,055

Shares to be issued

-  

246,032

-  

-  

246,032 

Loss for the year

-  

-  

-  

(199,557)

(199,557)

FRS20 Share based payments

-  

-  

19,163

-  

19,163 







As at 31 March 2008

1,256,334

246,032

47,787

(241,599)

1,308,554 

 

9.    RELATED PARTIES


The Company has taken advantage of the exemptions conferred by FRS 8 from the requirement to disclose transactions between subsidiary undertakings, 90% or more of whose voting rights are controlled within the Group.  


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR FKAKQOBKDPFB
UK 100

Latest directors dealings