Trakm8 : Final Results

2 July 2018

TRAKM8 HOLDINGS PLC

('Trakm8' or 'the Group' or 'the Company')

Final Results

Migration to a Telematics Service Provider now complete

with progress in core telematics division driving higher recurring revenues

Trakm8 Holdings plc (AIM: TRAK), a leading telematics and data supplier to global markets, announces its final results for the year ended 31 March 2018 (FY-2018).

FINANCIAL SUMMARY:

	FY-2018	FY-2017	Change
Group revenue	£30.1m	£26.8m	+12%
Solutions revenue	£26.8m	£21.3m	+26%
Recurring revenue1	£10.8m	£9.8m	+10%
Operating Profit	£1.3m	£0.9m	+55%
Profit before tax	£1.2m	£0.7m	+69%
Adjusted profit before tax2	£2.8m	£1.2m	+142%
Profit after tax	£1.6m	£1.5m	+7%
Cash generated from operations	£4.7m	£0.7m	+608%
Net debt3	£3.3m	£3.9m	-£0.5m
Basic earnings per share	4.40p	4.51p	-2%
Adjusted earnings per share2	8.19p	5.81p	+41%

¹Recurring revenues are generated from ongoing service and maintenance fees

² Before exceptional costs and share based payments

³Total borrowings less cash

OPERATIONAL HIGHLIGHTS

· Successful exit from non-core Contract Electronics Manufacturing ('CEM') activities

· Achieved planned reduction of annual operating costs by £1.5mwith savings reinvested into sales and marketing - particularly in Fleet Management

· Core telematics business revenue (Solutions Revenue) grew by 26% and Group adjusted profit before tax grew by 142%.

· Recurring Service revenue increased by 10%

· Solutions Revenue now represents 90% of total revenue (FY-2017: 80%)

· Over 251,000 connected units in operation (FY-2017: 190,000)

· Launch of Trakm8's Insight software platform and RoadHawk 600 4G integrated telematics camera

· New contract wins with Intelematics, Mecalac and Calor Gas UK; and contract extensions with Iceland Foods, Marmalade, and Direct Line Group

· Maintained considerable investment in R&D

· Further streamlining of operational activities to Coleshill and Prague through the closure of Trakm8's Bodmin and Livingston offices

· Board strengthened with the appointment of new Finance Director

OUTLOOK

· Due to customer inventory build-up in Q4-FY2018 and the terminated CEM activities, revenue and profit for the first half of FY-2019 is expected to be below the figure reported at H1-2018; although the full year result is anticipated to be in line with market expectations and higher than FY-2018

· The new financial year has begun with a new contract award from Intelematics Australia, a contract extension from FMG and a positive growth in connections

· Trakm8 has decided to expand its existing facilities in Coleshill to meet demand for both product and people resources

Commenting on the Final Results, John Watkins, Executive Chairman said:

'It is pleasing to report very strong progress during the past year. Our ambition to reduce annual operating costs by £1.5m was successfully achieved by the half year, and delivered full year savings of £2m with these savings reinvested into our sales and marketing resources. Coupled with our decision to continue a high level of investment in R&D, this resulted in core telematics service revenues increasing by 26% and adjusted profit before tax having increased by 142%.

'We have continued to develop market leading software and hardware solutions and during the year launched the new Insight software platform and the RoadHawk 600, which have provided the Group with a strong pipeline of opportunities. During the year, we announced new contracts with Intelematics, Calor Gas UK and Mecalac, and a number of contract extensions with Marmalade, Iceland Foods, and Direct Line Group.

'Since year end, the Group is also pleased to announce a contract award from Intelematics Australia, and a contract extension from FMG.

'Although revenues for H1-FY2019 are expected to be lower than last year following the termination of CEM contracts and a customer inventory build-up in Q4-FY2018, new contracts in the insurance sector will start deliveries in the second half. As a result, we expect the second half of FY-2019 will be considerably better than last year resulting in a year on year growth.

'In addition to continuing to grow our UK operations, we are focused on expanding our international business in Europe and Asia. Trakm8's pipeline is strong and the Board is confident of meeting market expectations for the full year ending 31 March 2019.'

A presentation for analysts is being hosted today (2 July 2018) at 9.30am at Buchanan's offices, 107 Cheapside, London EC2V 6DN. For further information, please contact Buchanan [e-mail]

For further information:

Trakm8 Holdings plc
John Watkins, Executive Chairman	Tel: [phone]
Jon Furber, Finance Director	www.trakm8.com
Arden Partners plc(Nominated Adviser & Broker)	Tel: [phone]
Paul Shackleton / Alex Penney	www.arden-partners.com

Media enquiries:

Buchanan
Chris Lane / Tilly Abraham	Tel: [phone]
[e-mail]	www.buchanan.uk.com

Notes to Editors

Trakm8 is a UK-based technology leader in fleet management, insurance telematics, connected car, and optimisation. Through IP-owned technology, the Group analyses data collected by its installed base of telematics units to fine tune the algorithms that are used to produce its solutions; these monitor driver behaviour, identify crash events and monitor vehicle health to provide actionable insights to continuously improve the security and operational efficiency of both company fleets and private drivers.

The Group's product portfolio includes the latest data and reporting portal (Trakm8 Insight), integrated telematics/cameras, self-installed telematics units and one of the widest ranges of installed telematics devices. Trakm8 has over 250,000 connections.

Headquartered in Coleshill near Birmingham alongside its manufacturing facility, the Group supplies to the Fleet, Optimisation, Insurance and Automotive sectors to many well-known customers in the UK and internationally including the AA, Saint Gobain, EON, Iceland Foods, Direct Line Group and Young Marmalade.

Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005.

www.trakm8.com/ @Trakm8

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

EXECUTIVE CHAIRMAN'S STATEMENT

A YEAR OF STRONG PROGRESS

FY-2018 was a year of strong progress for Trakm8. During the year we successfully exited from all Contract Electronics Manufacturing (CEM) and third-party hardware supply to focus on our core telematics services without distraction and associated overheads. The benefits of this increased focus are already coming through and provided the necessary capacity for the second half growth in device demand. This demand came through later than originally expected, but fully utilised our production capacity in the last two months of the year.

The revenues of the core telematics business grew by 26% and the Group adjusted profit before tax grew by 142%. Connections grew by 32% to 251,000. Revenues generated from providing data and analytics services increased by 10%.

We also started the year with the ambition to reduce annual operations costs by £1.5m, which by the half year we had fully achieved and delivered full year savings of £2m. We repurposed that saving into increased sales and marketing expenditure with a particular focus on Fleet activities. As a result, we have seen an increase in new contracts and extensions including those from ScottishPower, General Traffic, COLAS CZ, HW Martin Group, and Strategic Analytics Team. We have also secured many contracts within the SME and small fleet sector via our digital sales strategy. We decided to maintain the significant level of R&D spend that we had established the previous year. We are confident that these two initiatives will drive Trakm8's future growth. The operational cost reduction focus has continued with the closure of our offices in Bodmin and Livingston, consolidating those activities in Coleshill and Prague, with the additional benefit of closer cooperation between the teams. We have embarked on implementing a new ERP system, provided by Epicor, which we expect will lead to further efficiency improvements.

The investment in sales and marketing expense was rewarded with a wide range of contract extensions and new customer contract awards both in the UK and internationally. The pipeline is strong and the Sales and Marketing teams have continued to expand. Trakm8 launched its first fully internet-based sales strategy in the UK, under the Trakm8 Prime banner, and traction of this has been good.

The investment in engineering resources has delivered market-leading software and hardware solutions. Trakm8's Insight platform, which was launched with Iceland Foods and Calor Gas UK, provides superb customer experience and data, enabling vehicle operators to significantly improve operational efficiencies and reduction in risk. Insight is available as a mobile app experience as well as via web portals. The RoadHawk 600 integrated telematics and camera product is the first in the UK using 4G technology and has been implemented by large and small enterprises. 3,000 units were deployed in the second half of the year. The latest self-fit telematics devices, both in 2G and 4G, have best-in-class functionality and fit rates; they are being deployed in volume across Europe and Asia by major customers.

Solutions

Solutions sales are the core of our telematics offerings and comprise revenues from customers where they pay for service fees in addition to the cost of the hardware, installation and other bespoke services. Revenues increased by 26% to £26.8m (2017: £21.3m). Recurring service revenues grew by 10% to £10.8m. Solutions revenues increased from 80% of the Group's total revenues in 2017 to 90% in the 2018 Year.

In total, we had in excess of 251,000 connections (FY-2017: 190,000) at the year-end. Our solutions sales cover both the fleet management and insurance/automotive market sectors. The total fleet management connections increased by 11% over the year to 73,000 (FY-2017: 66,000). Telematics for insurance/automotive is experiencing higher levels of growth. At the year-end we had 178,000 insurance/automotive connections (FY-2017: 124,000), which is an increase of 44%.

The key outcomes in the year were the contract renewal with Direct Line Group, new contract awards with Intelematics and Calor Gas UK, along with the contract extension with Iceland Foods. A contract was also secured with a leading global vehicle leasing company to supply devices based on our Trakm8connectedcare software and hardware.

We have continued to invest in our software solutions, algorithms and devices, ensuring that Trakm8 retains market-leading solutions with the widest and deepest offer in the market today.

Post-period end, we have announced a contract with Intelematics Australia and a contract extension with FMG.

Products

Product sales are predominantly revenue from CEM, along with hardware-only sales to other telematics service providers and integrators and sales of third-party manufactured camera products. We terminated all CEM activity during FY-2018 and as a result, total product revenues reduced by 41% to £3.3m (FY-2017: £5.5m). Consequently, Product sales accounted for just 10% of total revenues down from 20% in FY-2017.

Included in FY-2018 is £2.0m of revenues from the terminated CEM activities and therefore this will be the last year that we report Product sales as a category. The migration to a Telematics Service Provider is now complete.

Research and development ('R&D')

Trakm8 has maintained the significant level of investment in R&D from the previous year. Although as a percentage of revenue this is reducing, the Board believes that this level of investment is necessary to retain a portfolio of market-leading technology. Trakm8 continues to focus on owning the intellectual property ('IP') we use in our solutions, and we see this as one of our key competitive advantages. Telematics systems are complex; but because we own all the elements that encompass a solution (with the exception of the mobile networks) we have the ability to understand and resolve problems more easily than our competitors.

The R&D investment has concentrated on building out the capability of the Insight platform to provide best-in-class data analytics and customer experience, creating algorithms with increasingly accurate driver profiling for efficiency and risk, crash detection and video feature recognition. All the technologies within the Group are now consolidated into a single solution. Trakm8 also expects to launch soon a range of devices with new and enhanced functionality and smaller size to address market opportunities not currently served.

As identified in previous years, the requirement to do more for less cost remains a key strategy as this widens the opportunity to expand the rate of growth as the ROI for our customers improves.

Dividend

The Group does not propose to recommend a dividend for the year at the forthcoming AGM. However, the Board will continue to review its dividend policy in light of future results and investment requirements.

People

The number of people Trakm8 employs has reduced slightly during FY-2018 as reductions in operational headcount were partially offset by increases in our customer service, sales and marketing teams. In total our staff numbers have reduced by 8% over the year. As a result, revenue per employee increased by 22%.

It has been a demanding year as the Group has worked through the very high levels of change. We have an exceptional team and I would like to thank everyone for their hard work, dedication and contribution to the ongoing success of the business.

Outlook

Our focus is on organic growth driven by the implementation of the strategy outlined above and we continue to make solid progress. The new financial year has started very much as the previous year left off with new contract awards and growth in connections. The final £2.0m reduction in revenues related to terminated CEM activities will impact FY2019, but we are positive that the growth of our Telematics Services will more than offset this over the full year. The £2.0m year-on-year reduction in terminated CEM activities is mostly a first half reduction.

Due to customer inventory build-up in Q4-FY2018 and the terminated CEM activities, revenue for the first half of FY-2019 is expected to be below the figure reported at H1-2018 although the full year result is anticipated to be in line with market expectations and higher than FY-2018.

To ensure that we can meet the demand expected over the coming years, both for manufactured product and people resources, Trakm8 has decided to expand its existing manufacturing and distribution facilities in Coleshill. During the year, Trakm8 will expect to invest over £1.5m to create state-of-the-art facilities, to increase capacity to circa 1m devices per annum - and do so with high levels of automation in assembly and test.

We expect to expand our international business in Europe and Asia, whilst continuing to grow our domestic business in the UK. Overall, we expect that the percentage of connections from outside the UK will grow. In addition, we will continue to invest in our digital sales strategy.

The pipeline of features for the Insight data platform and camera products is strong, so we expect to maintain our position as a provider of market-leading solutions.

The Board is confident that FY-2019 will result in further progress and growth as we deliver our strategy and is confident of meeting market expectations for the year.

John Watkins

Executive Chairman

2 July 2018

FINANCIAL REVIEW

TRADING RESULTS

	2018	2017	Change
	£000	£000
Group Revenue	30,081	26,759	+12%
Solutions Revenue	26,808	21,256	+26%
Recurring Revenue	10,826	9,842	+10%
Profit before tax	1,173	693	+71%
Adjusted Profit before tax1	2,794	1,156	+142%
Basic earnings per share	4.40p	4.51p	-2%
Adjusted earnings per share	8.19p	5.81p	+41%

¹ Before exceptional costs and share based payments

Revenue

Group revenue increased by 12% to £30.1m (2017: £26.8m), with Solutions revenue growth of 26% from the core continuing activities of the Group offset by a reduction in product revenues following the strategic decision to exit from Contract Electronic Manufacturing (CEM) activities.

The solutions revenue growth of 26% to £26.8m (2017: £21.3m) reflect the continued growth in telematics connections across our core Fleet, Insurance and Automotive sectors and continued growth in sales of Optimisation solutions. Recurring revenue generated from service and maintenance fees increased by 10% to £10.8m (2017: £9.8m). Growth in recurring revenue will always lag behind headline growth in new unit sales given that the service and maintenance revenues are recognized over the life time of the contract.

Product revenues decreased from £5.5m to £3.3m following the planned exit from CEM activities. All sub-contract electronic manufacturing activities had ceased by the year end.

Profit before tax

Profit before tax increased by 71% to £1.2m (2017: £0.7m). This significant improvement was generated by the strong solutions revenue growth being delivered at gross margin percentages in line with the prior year resulting in a £1.6m increase in gross profit. Additionally other income increased by £0.2m. This was offset by £1.2m increase of non-recurring exceptional costs that are detailed further below and £0.3m increase in depreciation and amortisation, primarily resulting from capitalised development costs, reflecting the significant investment undertaken by the group in earlier years. Other overheads decreased by £0.1m.

Adjusted Profit before tax

As detailed above, the improved trading performance resulted in adjusted profit before tax increasing by 142% to £2.8m (2017: £1.2m). The improvement in gross profit converted into adjusted profit before tax, with administrative costs excluding exceptional costs only up £0.2m on prior year. During the year the company has increased its investment in sales and marketing by 54% all part of a strategy to increase market share. This investment was funded by streamlining of activities resulting in other overheads (excluding Sales, Marketing and Engineering costs) before exceptional costs and depreciation and amortisation decreasing by 31%.

Exceptional Costs

Exceptional costs total £1.4m (2017: £0.2m) relating to three projects undertaken to streamline activities and additional costs relating to the acquisition of Roadsense Technology Limited in the previous financial year. The projects to streamline activities were to fully integrate the acquisitions made in prior years including closing two offices, relocating the head office and administrative functions to our core site in the West Midlands and costs associated with the exit from contract electronic manufacturing. This project has resulted in operating costs (excluding Sales & Marketing costs and Engineering costs) decreasing £2m year on year.

Balance Sheet

	2018	2017
	£000	£000
Non- Current Assets	21,534	19,759
Net Current Assets	6,848	5,800
Non-Current Liabilities	6,240	5,329
Net Assets	22,142	20,230

Net Assets increased by £1.9m to £22.1m (2017: £20.2m). This reflects the significant improvement in trading performance and profitability in the year, with retained profit for the year of £1.6m.

Non-current assets increased by £1.7m to £21.5m (2017: £19.8m). This is due to the continued investment in development in both our software and hardware with capitalised development costs totalling £3.4m (2017: £3.2m).

Cash Flow

	2018	2017
	£000	£000
Cash generated by operations	4,735	668
Investing activities	(3,716)	(4,447)
Free Cash Flow1	1,019	(3,016)
Financing activities	463	1,898
Change in Cash in Year	1,482	(1,881)
Net Debt	3,300	3,867

¹Cash generated from operating activities less cash used in investing activities (excluding cashflow relating to acquisitions)

Cash generated from operating activities increased significantly in the year to £4.7m (2017: £0.7m), which included R&D tax credit cash receipts of £1.6m (2017: £0.1m). The R&D tax credit cash receipt reflects the Group's investment in development. Cash generation excluding the impact of the R&D tax credit cash is still £3.1m (2017: £0.6m).

Free cash flow improved to an inflow of £1.0m (2017: outflow £3.0m). This represents a 90% conversion of profit before tax to cash. As we have stated, our strategy in the next couple of years is to maintain our current level of investment in development which will reduce as a proportion of revenue and profit. We anticipate this improved leverage will continue to improve the conversion of adjusted profit before tax into cash in the medium term. If as planned, we make the considerable investment in manufacturing capacity and quality equipment then this will also impact our free cash flow and net debt for 2019.

Net Debt

Net debt decreased by £0.6m to £3.3m (2017: £3.9m). Cash balances total £3.5m (2017: £2.0m) and total borrowings £6.8m (2017: £5.9m) of which £2.9m was our term loan with HSBC and £3.4m (2017: £1.7m) were amounts drawn under our £5m revolving credit facility with HSBC. During the year the revolving credit facility was extended by 2 years and is repayable in December 2020.

Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2018
	Note	Year ended 31 March 2018	Year ended 31 March 2017
		£'000	£'000
REVENUE	4	30,081	26,759
Cost of sales		(15,232)	(13,550)
Gross profit		14,849	13,209
Other income	5	566	325
Administrative expenses excluding exceptional costs		(12,681)	(12,462)
Exceptional administrative costs	7	(1,405)	(214)
Total administrative costs		(14,086)	(12,676)
OPERATING PROFIT	6	1,329	858
Finance income		33	-
Finance costs	8	(189)	(165)
PROFIT BEFORE TAXATION		1,173	693
Income tax		398	777
PROFIT FOR THE YEAR		1,571	1,470
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations		9	(1)
TOTAL OTHER COMPREHENSIVE INCOME		9	(1)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT		1,580	1,469
ADJUSTED PROFIT BEFORE TAX	6	2,794	1,156
EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic	9	4.40p	4.51p
Diluted	9	4.33p	4.36p
The results relate to continuing operations.

Consolidated Statement of Changes in Equity For The Year Ended 31 March 2018
	Share capital	Share premium	Merger reserve	Translation reserve	Treasury reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 April 2016	320	9,641	1,122	200	(4)	5,796	17,075
Comprehensive income
Profit for the year	-	-	-	-	-	1,470	1,470
Other comprehensive income
Exchange differences on translation of overseas operations	-	-	-	(1)	-	-	(1)
Total comprehensive income	-	-	-	(1)	-	1,470	1,469
Transactions with owners
Shares issued	37	2,142	16	-	-	-	2,195
Equity Dividend	-	-	-	-	-	(649)	(649)
Share placing fees	-	(109)	-	-	-	-	(109)
IFRS2 Share-based payments	-	-	-	-	-	249	249
Transactions with owners	37	2,033	16	-	-	(400)	1,686
Balance as at 1 April 2017	357	11,674	1,138	199	(4)	6,866	20,230
Comprehensive income
Profit for the year	-	-	-	-	-	1,571	1,571
Other comprehensive income
Exchange differences on translation of overseas operations	-	-	-	9	-	-	9
Total comprehensive income	-	-	-	9	-	1,571	1,580
Transactions with owners
Shares issued	2	76	-	-	-	-	78
IFRS2 Share based payments	-	-	-	-	-	216	216
Tax recognised directly in equity (Note 11)	-	-	-	-	-	38	38
Transactions with owners	2	76	-	-	-	254	332
Balance as at 31 March 2018	359	11,750	1,138	208	(4)	8,691	22,142

	Consolidated Statement of Financial Position As At 31 March 2018
		Note			As at 31 March 2018		As at 31 March 2017
	ASSETS				£'000		£'000
	NON CURRENT ASSETS
	Intangible assets	10			19,460		17,108
	Property, plant and equipment				1,756		1,855
	Deferred income tax asset				-		297
	Amounts receivable under finance leases				318		499
					21,534		19,759
	CURRENT ASSETS
	Inventories				2,556		3,674
	Trade and other receivables				10,844		6,076
	Corporation tax receivable				1,001		1,645
	Cash and cash equivalents				3,472		1,990
					17,873		13,385
	LIABILITIES
	CURRENT LIABILITIES
	Trade and other payables				(9,598)		(6,471)
	Borrowings				(1,151)		(1,052)
	Provisions				(47)		(62)
	Deferred income tax liability				(229)		-
					(11,025)		(7,585)
	CURRENT ASSETS LESS CURRENT LIABILITIES				6,848		5,800
	TOTAL ASSETS LESS CURRENT LIABILITIES				28,382		25,559
	NON CURRENT LIABILITIES
	Trade and other payables				(581)		(480)
	Borrowings				(5,621)		(4,805)
	Provisions				(38)		(44)
	NET ASSETS				22,142		20,230
	EQUITY
	Share capital	11			359		357
	Share premium				11,750		11,674
	Merger reserve				1,138		1,138
	Translation reserve				208		199
	Treasury reserve				(4)		(4)
	Retained earnings				8,691		6,866
	TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT				22,142		20,230
Consolidated Statement of Cash-Flows For The Year Ended 31 March 2018
			Notes	Year ended 31 March 2018		Year ended 31 March 2017
				£'000		£'000
NET CASH GENERATED FROM OPERATING ACTIVITIES			12	4,735		668
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary undertaking (net of cash acquired)				-		(763)
Purchases of property, plant and equipment				(91)		(181)
Purchases of software				(236)		(262)
Proceeds from sale of plant and equipment				-		-
Capitalised development costs				(3,389)		(3,241)
NET CASH USED IN INVESTING ACTIVITIES				(3,716)		(4,447)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares				78		2,070
Increase in bank loan				2,600		2,700
Repayment of bank loans				(1,880)		(1,954)
Repayment of obligations under hire purchase agreements				(146)		(104)
Interest paid				(189)		(165)
Dividends paid to owners of the parent				-		(649)
NET CASH GENERATED FROM FINANCING ACTIVITIES				463		1,898
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS				1,482		(1,881)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR				1,990		3,871
CASH AND CASH EQUIVALENTS AT END OF YEAR				3,472		1,990

Notes To The Consolidated Financial Statements
1	GENERAL INFORMATION
	Trakm8 Holdings PLC ('Company') and its subsidiaries (together the 'Group') manufacture, distribute and sell telematics devices and services.
	Trakm8 Holdings PLC is a public limited company incorporated in the United Kingdom (registration number 05452547). The Company is domiciled in the United Kingdom and its registered office address is 4 Roman Park, Roman Way, Coleshill, West Midlands, B46 1HG. The Company's Ordinary shares are traded on the AIM market of the London Stock Exchange. The Company is registered in England and is limited by shares.
	The Group's principal activity is the development, manufacture, marketing and distribution of vehicle telematics equipment and services. The Company's principal activity is to act as a holding company for its subsidiaries.
	The condensed consolidated financial statements are presented in Sterling and all values are rounded to the nearest thousand (£'000) except where otherwise indicated.
2	AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
	The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRS Interpretations Committee ('IFRS IC') interpretations as endorsed by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
3	BASIS OF PREPARATION
	The audited financial information included in this preliminary results announcement for the year ended 31 March 2018 and audited information for the year ended 31 March 2017 does not comprise statutory accounts within the meaning of sections 404 and 435 Companies Act 2006. The information has been extracted from the audited statutory financial statements for the year ended 31 March 2018 which will be delivered to the Registrar of Companies in due course. Statutory financial statements for the year ended 31 March 2017 were approved by the Board of directors and have been delivered to the Registrar of Companies. The report of the independent auditors for the year ended 31 March 2018 and 2017 respectively on these financial statements were unqualified and did not include a statement under section 498 of the Companies Act 2006.
	These financial statements are presented on a going concern basis. The Group has cash balances of £3,472,000 and undrawn revolving credit facilities of £1,600,000 at 31 March 2018 therefore the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operation for the foreseeable future. A cash flow forecast for the next 12 months prepared by the Directors has indicated that the Group will have adequate financial resources to continue in operation for the foreseeable future.

4	SEGMENTAL ANALYSIS
	The chief operating decision maker ('CODM') is identified as the Board. It continues to define all the Group's trading under the single Integrated Telematics Technology segment and therefore review the results of the group as a whole. Consequently all of the Group's revenue, expenses, results, assets and liabilities are in respect of one Integrated Telematics Technology segment.
	The Board as the CODM review the revenue streams of Integrated Fleet Insurance and Automotive Solutions (Solutions) and Hardware as Discrete Devices (Products) as part of their internal reporting. Products is the sale of Contract Electronic Manufacturing services (now ceased) and other third party hardware only supply. Solutions represents the sale of the Group's full vehicle telematics and optimisation services, engineering services, professional services and mapping solutions to customers.
	A breakdown of revenues within these streams are as follows:
								Year ended 31 March 2018	Year ended 31 March 2017
								£'000	£'000
	Solutions							26,808	21,256
	Products							3,273	5,503
								30,081	26,759
	A geographical analysis of revenue by destination is as follows:
		Year ended 31 March 2018					Year ended 31 March 2017
		Solutions	Products	Total			Solutions	Products	Total
		£'000	£'000	£'000			£'000	£'000	£'000
	United Kingdom	26,484	3,068	29,552			20,922	5,405	26,327
	North America	56	-	56			-	18	18
	Norway	58	-	58			71	-	71
	Rest of Europe	73	197	270			260	14	274
	Rest of World	137	8	145			3	66	69
		26,808	3,273	30,081			21,256	5,503	26,759

5	OTHER INCOME
							Year ended 31 March 2018	Year ended 31 March 2017
							£'000	£'000
	Grant income						531	325
	R&D tax credit						35	-
							566	325

6	OPERATING PROFIT
	The following items have been included in arriving at operating profit:
				Year ended 31 March 2018		Year ended 31 March 2017
				£'000		£'000
	Depreciation
	- owned fixed assets			261		282
	- assets on hire purchase			60		22
	Amortisation of intangible assets			1,484		1,157
	Operating lease rentals
	- Land and buildings			159		129
	- Other			263		230
	Research and development expenditure			1,485		1,314
	Loss on foreign exchange transactions			(59)		40
	Staff costs			7,936		7,302
	Loss on disposal of property plant & equipment			26		-
	Exceptional administrative costs			1,405		214
	Auditors' remuneration
	- Fees payable to the Company's auditors for the audit of the parent
	company and consolidated financial statements			103		71
	Fees payable to the Company's auditors for other services:
	- Share based payments advisory services			8		-
	- Tax compliance services			-		10
	- Tax advisory services			-		10
	Adjusted profit before tax is monitored by the Board and measured as follows:-
					Year ended 31 March 2018	Year ended 31 March 2017
					£'000	£'000
	Profit before tax				1,173	693
	Exceptional administrative costs (note 9)				1,405	214
	Share based payments				216	249
	Adjusted profit before tax				2,794	1,156

7		EXCEPTIONAL ADMINISTRATIVE COSTS
								Year ended 31 March 2018	Year ended 31 March 2017
								£'000	£'000
		Acquisition costs						256	63
		Integration costs						501	90
		Head Office relocation						238	-
		Contract manufacturing closure costs						410	61
								1,405	214
			The acquisition costs incurred in 2018 relate to non-underlying charges under two separate agreements linked to the acquisition in the prior year. The costs incurred are directly linked to the acquisition and not as part of the ongoing underlying business. One agreement terminates on 31 July 2019, and the second agreement on 31 March 2019. The 2017 acquisition costs relate to the actual acquisition itself. The Company has incurred significant costs relating to a project to streamline and rationalise the operations of the business. This has resulted in the following non-underlying, one-off costs: - In the current and prior year, integration costs relate to costs incurred integrating the activities of Route Monkey Limited and DCS Systems Limited that were acquired in previous financial years and include costs associated with office closures. This integration project is now complete. - Head Office relocation costs are non-underlying costs incurred in moving the Head Office and associated administrative functions from Shaftesbury to the West Midlands which was completed by the end of the financial year. - In the current and prior year, contract manufacturing closure costs relate to residual inventory costs and contract exit costs following cessation of manufacturing contracts with third-parties. All these contracts have now ceased.

8	FINANCE COSTS
			Year ended 31 March 2018	Year ended 31 March 2017
			£'000	£'000
	Interest on bank loans		147	148
	Amortisation of debts issue costs		13	-
	Interest on Hire Purchase and similar agreements		29	17
			189	165

9	EARNINGS PER ORDINARY SHARE
	The earnings per Ordinary share have been calculated in accordance with IAS 33 using the profit for the year and the weighted average number of Ordinary shares in issue during the year as follows:
			Year ended 31 March 2018	Year ended 31 March 2017
			£'000	£'000
	Profit for the year after taxation		1,571	1,470
	Exceptional administrative costs		1,405	214
	Share based payments		216	249
	Tax effect of adjustments		(267)	(43)
	Adjusted profit for the year after taxation		2,925	1,890
			No.	No.
	Number of Ordinary shares of 1p each		35,898,254	35,723,254
	Basic weighted average number of Ordinary shares of 1p each		35,740,877	32,594,891
	Diluted weighted average number of Ordinary shares of 1p each		36,297,287	33,708,702
	Earnings per share		4.40p	4.51p
	Diluted earnings per share		4.33p	4.36p
	Adjust for effects of:
	Exceptional costs		3.18p	0.53p
	Share based payments		0.61p	0.77p
	Adjusted earnings per share		8.19p	5.81p
	Adjusted diluted earnings per share		8.06p	5.61p

10	INTANGIBLE ASSETS
			Goodwill	Intellectual property	Customer relationships	Development costs	Software	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	COST
	As at 1 April 2016		9,752	1,920	-	4,052	1,104	16,828
	Additions - Internal developments		-	-	-	2,822	263	3,085
	Additions - External purchases		-	-	-	419	-	419
	Acquisition of RSL		665	-	100	-	-	765
	Reclassified		-	-	-	(59)	59	-
	As at 31 March 2017		10,417	1,920	100	7,234	1,426	21,097
	Additions - Internal developments		-	-	-	2,707	117	2,824
	Additions - External purchases		-	-	-	680	332	1,012
	As at 31 March 2018		10,417	1,920	100	10,621	1,875	24,933
	AMORTISATION
	As at 1 April 2016		-	1,479	-	1,221	132	2,832
	Charge for year		-	192	22	757	186	1,157
	Amortisation on disposals		-	-	-	-	-	-
	As at 31 March 2017		-	1,671	22	1,978	318	3,989
	Charge for year		-	117	34	1,123	210	1,484
	Amortisation on disposals		-	-	-	-	-	-
	As at 31 March 2018		-	1,788	56	3,101	528	5,473
	NET BOOK AMOUNT
	As at 31 March 2018		10,417	132	44	7,520	1,347	19,460
	As at 31 March 2017		10,417	249	78	5,256	1,108	17,108
	As at 1 April 2016		9,752	441	-	2,831	972	13,996

11	SHARE CAPITAL
			As at 31 March 2018		As at 31 March 2017
			No's	£'000	No's	£'000
	Authorised:		'000's		'000's
	Ordinary shares of 1p each		200,000	200,000	200,000	200,000
	Allotted, issued and fully paid:
	Ordinary shares of 1p each		35,898	359	35,723	357
	Movement in share capital:
					As at 31 March 2018	As at 31 March 2017
					£'000	£'000
	As at 1 April				357	320
	New shares issued				2	37
	As at 31 March				359	357
	The Company currently holds 29,000 Ordinary shares in treasury representing 0.08% (2017: 0.08%) of the Company's issued share capital. The number of 1 pence Ordinary shares that the Company has in issue less the total number of Treasury shares is 35,869,254.
	During the year the following shares were issued:
	Date	Description		Shares	Share Capital	Premium
				No's '000's	£'000	£'000
	27/11/2017	Exercise of options over Ordinary Shares by an employee		50	1	22
	29/03/2018	Exercise of options over Ordinary Shares by an employee		125	1	54
				175	2	76

12	CASH GENERATED FROM OPERATIONS
							As at 31 March 2018	As at 31 March 2017
							£'000	£'000
	Profit before tax						1,173	693
	Depreciation						321	304
	Loss on disposal of fixed assets						26	-
	Net bank and other interest						156	165
	Amortisation of intangible assets						1,484	1,157
	Share based payments						216	249
	Operating cash flows before movement in working capital						3,376	2,568
	Movement in inventories						1,118	(1,377)
	Movement in trade and other receivables						(4,614)	499
	Movement in trade and other payables						3,237	(1,105)
	Movement in provisions						(21)	(46)
	Cash generated from operations						3,096	539
	Interest received						33	-
	Income taxes received						1,606	129
	Net cash inflow from operating activities						4,735	668