![](https://tracker.live.rns-distribution.com/track.live-rns/4335700_75d1671758db0ed18eba2dbba83793b2.png)
12 April 2022
MICROLISE GROUP PLC
("Microlise", the Company or "the Group")
Final Results for the 18 months ended 31 December 2021
Resilient performance in line with market expectations
Microlise Group plc (AIM: SAAS), a leading provider of transport management software to fleet operators, announces its results for the 18 months ended 31 December 2021.
Financial Highlights
£'m unless otherwise stated
|
|
| Statutory Results (Audited) |
| Calendar Year Results (1) (Unaudited) | |||
|
|
| FY21 18-months to Dec-21 | FY20 12 months to Jun-20 |
| 12 months to Dec-21 | 12 months to Dec-20 | Change (12 months) % |
|
|
|
| |||||
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
Revenue |
|
| 88.2 | 50.0 |
| 60.3 | 51.6 | 17% |
Recurring Revenue |
|
| 54.0 | 32.0 |
| 36.7 | 33.5 | 9% |
Gross Profit |
|
| 50.5 | 28.4 |
| 34.5 | 30.1 | 14% |
Gross Profit Margin % |
|
| 57% | 57% |
| 57% | 58% | (1)% |
Adjusted EBITDA (2) |
|
| 11.3 | 5.7 |
| 7.8 | 6.3 | 24% |
Adjusted EBITDA % |
|
| 13% | 11% |
| 13% | 12% | 6% |
Profit/(loss) before tax |
|
| (0.0) | 0.7 |
| (0.8) | 1.3 | (160)% |
Adjusted Profit/(loss) before tax (3) |
|
| 3.4 | 0.7 |
| 2.6 | 1.3 | 104% |
Net Cash (4) |
|
| 13.2 | 7.6 |
| 13.2 | 8.0 | 65% |
Short term borrowings |
|
| 0.0 | (2.4) |
| 0.0 | (2.5) | (100)% |
Cash and cash equivalents |
|
| 13.2 | 10.1 |
| 13.2 | 10.5 | 26% |
|
|
|
|
|
|
|
|
|
Non Financial |
|
|
|
|
|
|
|
|
ARR run rate (5) |
|
| 38.9 | 29.7 |
| 38.9 | 35.7 | 9% |
Number of like-for-like subscriptions (6) |
|
|
|
|
| 551,000 | 502,000 | 10% |
Long-term contract customer churn by value |
|
|
|
|
| 0.1% | 0.5% | (80)% |
(1) To assist users of the accounts with understanding the underlying business trading, the Group is presenting a set of unaudited calendar year results on a like-for-like basis with the current reporting period covering the 12 months ended 31 December 2021 (CY21) and the comparative period covering the 12 months ended 31 December 2020 (CY20).
(2) Adjusted EBITDA excludes exceptional costs in relation to the IPO, depreciation, amortisation, share of loss of associate, interest, and tax
(3) Adjusted Profit / (loss) before taxation excludes IPO costs of £3.4m
(4) Net cash is cash and cash equivalents less short-term borrowings
(5) ARR Run rate change figure and % compare the annualised recurring revenue figure for December 2021 with the annualised recurring
revenue figure for December 2020
(6) Like-for-like subscriptions change figure and % compare the subscriptions as at 31 December 2021 with the subscriptions as at 31 December
2020
· Strong progress across the Group has driven an increase in revenue to £88.2m for the 18 months ended 31 December 2021 (12 months ended 30 June 2020: £50.0m)
· On a comparable calendar year basis, revenue for the 12 months ended 31 December 2021 (CY21) has increased 17% to £60.3m (12 months ended 31 December 2020 (CY20): £51.6m)
· Recurring revenue (+9% to £36.7m) for the 12 months ended 31 December 2021 (CY21), supported by the renewal of several major customer contracts and new customer wins (CY20: £33.5m)
· Increased gross profit (+14% to £34.5m) for the 12 months ended 31 December 2021 (CY21), at a gross profit margin of 57% (CY20: £30.1m at a margin of 58%)
· Adjusted profit before tax (+104% to £2.6m); for the 12 months ended 31 December 2021 (CY21), with margin up 1.8% pts to 4.3% (CY20: 2.5%)
· Loss before tax of £0.8m for the 12 months ended 31 December 2021 (CY21) compared with a profit before tax of £1.3m for the 12 months ended 31 December 2021 (CY21)
· Net cash of £13.2m and a renewed £20m undrawn Revolving Credit Facility
· Growth in subscriptions (+10% annual increase to 551,000) driven by continued growth in our existing customers together with new customer wins, despite COVID-19 and component shortage headwinds (CY20: 502,000),
· Annual recurring revenue (ARR) run rate of £38.9m at period end, growing 9% in last 12 months.
· The Group added over 65 new customers in the last 12 months ended 31 December 2021 (CY21) and long-term contract customer churn rate by value remained very low at 0.1%.
Current Trading and Outlook
· Microlise has entered FY22 with a strong order book and significant demand for both existing and new solutions, leading to a strong sales pipeline
· The board is confident of delivering a performance for the full year in line with current market expectations, given a strong start to trading in the first quarter.
· Well-funded to continue to invest in our growth opportunities. In addition, the Group is actively reviewing opportunities that would add expertise, particularly within new product development as well as entering new geographies and markets where we see exciting opportunities.
Nadeem Raza, CEO of Microlise, said: "The eighteen-month period to 31 December 2021 was one of considerable achievement for the Group. We strengthened our business through the growth of our global customer base; the renewal of several major customer contracts, including a new 5-year contract with our largest customer JCB; the launch of new products; ongoing recruitment and team expansion; and the completion of a successful IPO in July 2021 to fund the acceleration of our growth strategy. Whilst we have been dealing with chip shortages for the past 18 months, the industry opinion is that from Q3 2022, the situation will improve and return to pre-pandemic levels by Q3 2023, which will enable us to meet our customer demand"
For further information, please contact:
Microlise Group plc | c/o SEC Newgate |
Nadeem Raza, CEO / Bill Wynn, CFO
|
|
Singer Capital Markets (NOMAD & Broker) Steve Pearce / James Moat / Harry Gooden
| Tel: +44 20 7496 3000
|
SEC Newgate (Financial PR) Bob Huxford / Isabelle Smurfit / Max Richardson
| Tel: 020 3757 6880 Email: microlise@secnewgate.co.uk
|
About Microlise
Microlise is a leading provider of transport management software to fleet operators helping them to improve efficiency, safety, and reduce emissions. These improvements are delivered through reduced fuel use, reduced mileage travelled, improved driver performance, fewer accidents, elimination of paperwork and delivery of an enhanced customer experience.
Established in 1982, Microlise is an award-winning business with over 400 enterprise customers.
Chairman's Statement
The Company successfully floated on the London Stock Exchange's AIM market in July 2021, raising £61.2m, of which £42.6m was for selling shareholders and £18.6m was new growth capital for the Company. Our strategy and team and the benefits we deliver to customers and stakeholders was well received and we secured strong support from institutional investors.
The past twenty-four months have been a tremendously difficult time for many people, both personally and professionally, and our thoughts are with those who have been negatively impacted by the effects of the Covid-19 pandemic. The transport and logistics sector that we serve has seen some of the more significant challenges over this period, such as driver shortages, lack of new vehicle supply and rising fuel costs. I am glad to say our solutions, ranging from fleet telematics to planning and optimisation, that integrate our hardware devices and SAAS software, have helped our customers make the most productive use of their vehicle fleet, fuel and drivers over this time.
As a business, Microlise is committed to driving the road transport industry forward, and empowering operators to work as smartly, efficiently, and sustainably as possible. We have successfully positioned ourselves as a technology company that supports customers to secure improved sustainability outcomes nationally and internationally. This has been achieved in a number of territories, for example delivering transport software solution and hardware to Carlsberg across Europe and the UK.
Financial Performance
The resilience of the Group due to solid levels of recurring revenues and high levels of customer retention, was evident throughout the Period. We are pleased to report the business delivered successfully against management expectations for the year, achieving its revenue, profit, and cash targets, including revenue growth of 17% and adjusted EBITDA growth of 24% for the 12-month period ended 31 December (CY21) over CY20 (the 12-month period to 31 December 2020).
Our People
Collaboration has always been central to our working environment, but the past Period has been pivotal for our diverse workplace culture and strategy as we reimagined how and where we work within a different context. As COVID-19 reached pandemic status, 90% of our global workforce shifted to remote work, while continuing to meet the needs of our clients and communities.
We believe that our staff and culture are critical to our success. We have invested further in the development of our staff across all levels, through training, and our employee engagement programmes. This has resulted in higher employee satisfaction scores than ever before, and in our India office, achieving 'Great Place to Work' accreditation. We firmly believe that having enthusiastic and engaged staff drives improved performance and higher service levels to our customers.
Governance
From its earliest days, Microlise has been run with a keen eye on supporting expansion, ensuring depth of management and the capacity to deal with operational change. The Group has strong fundamentals and business oversight, two factors which left us well placed to support our customers to the standard they have come to expect when we transitioned to remote working.
As Chairman, I am responsible for leading the Board and ensuring it is focused on strategic matters and that the highest governance standards are in place. As part of our continuing commitment to strengthen our Governance, we were delighted to welcome Lucy Sharman-Munday as an independent Non-Executive Director, who joined the Board in February 2022, and will be the Chair of the Audit Committee going forward.
With over 16 years of experience in the technology sector, Lucy brings a strong knowledge of finance in software companies and a complementary skill set to the Board.
Looking Ahead
The transport management and supply chain sector is becoming more complex, more demanding, more regulated, and more competitive than ever. There is an increasing need for optimisation, scalability, security, compliance, and improved environmental outcomes. The need to deliver excellent customer service at a competitive price, and to rapidly scale up or down as consumer patterns dictate, are all challenges being faced by fleet operators across the globe. These factors are driving demand for end-to-end transport management technologies that manage and counter these challenges. In many ways, the Covid-19 pandemic amplified and accelerated this trend.
It is clear that Microlise, thanks to its proven and expanding product portfolio, is in a strong position to capitalise on these growth opportunities within its established and growing markets. We continue to invest heavily in R&D, both in the UK and India, to expand our product range and capability, including enhancing our products to maximise their benefits as our customers transition to alternative fuels and electric vehicles. We also invest in expanding our geographic presence to enable us to deliver our product range to a wider set of customers. We will also look at selective acquisitions to help accelerate our strategy where appropriate.
The year ahead will not be without its challenges as the world emerges from the disruption of Covid-19 and the crisis in Ukraine and we look to overcome hardware component shortages where they occur.
However, despite short-term challenges, our year has started off positively and we are confident of reaching our FY22 targets. Beyond FY22 the future looks more buoyant, as our customers are already seeing an increase in projected demand, which we anticipate will result in increased order volume across the Microlise product set.
On a final note, I would like to pay a particular tribute to our staff who, in the face of very challenging circumstances, have enabled us to continue to deliver on our commitments to customers worldwide and make progress on our broader objectives. Their positive attitude, commitment & support are what drives our success.
Jon Lee, Non-Executive Chairman
CEO's Statement
The eighteen-month period to 31 December 2021 was one of considerable achievement for the Group. We strengthened our business through the growth of our global customer base; the renewal of several major customer contracts, including a new 5-year contract with our largest customer JCB; the launch of new products; ongoing recruitment and team expansion; and the completion of a successful IPO to fund the acceleration of our growth strategy.
This was all set against a challenging backdrop for the transport and logistics industry caused by the Covid-19 pandemic, Brexit disruptions and driver and microchip shortages. The impact of Covid-19 on the Group varied across the Period. Initially we saw delays to customer site 'go-lives', and we supported many of our customers through challenging periods of peaks and troughs of workload. Later in the Period we had to adapt to driver shortages as well as the ongoing global microchip crisis. The Group provided free support to frontline health workers and also provided additional product capability where customers needed to scale up at speed.
Financial Performance
Notwithstanding the current uncertainty in the wider environment, in particular the significant challenges presented by the global microchip shortage and other supply chain issues, we remain confident for FY22 and beyond.
We continue to see strong fundamentals in terms of revenue and growth with a 10% increase in subscriptions, a churn rate of 0.1% and a 9% increase in ARR run rate for the 12-month period ended 31 December 2021.
Ukraine Crisis
We have watched in horror as the conflict in the Ukraine and its developing humanitarian crisis has unfolded. From a business perspective, we have reviewed customer and supplier risk resulting from this global disruption as well as the likely consequence of the numerous sanctions that have been imposed. We are confident that the direct business impact is not significant at this time, and we will continue to review the risks as the situation develops. We are also providing support to our staff who have family or friends that are impacted by the conflict. We are exploring how we can support the humanitarian effort through monetary donations, free use of our products and services for logistics support, as well as by sponsoring individuals to come to the UK.
A Growing Customer Base
For over 30 years we have been working closely alongside our customers to shape our offering, ensuring it meets their needs and helps to promote an efficient, safe, cost-effective, sustainable and compliant environment.
We have a strong track record of building long term relationships with our customers and growing our engagement over time, through product expansion across new functions and geographies. Overall customer churn remained low during the Period at less than 0.1%. This strong performance reflects the Company's continued success in maintaining these long-term relationships with customers through our award-winning technology platforms.
During CY21 we added over 65 new customers, and the Company grew vehicle subscriptions by 10% to a total of 551,000 at the Period end.
The Group also increased investment in sales and product development to capture the growing opportunity in international markets, such as France and Australia. We have seen an increase in demand across all regions, as COVID restrictions have been lifted. Our largest customer in Australia has also renewed their contract for a further 5 years.
An Expanded Offering
In order to maintain our market leading position as provider of the best-in-class solution, we released a number of new products during the Period. These were specifically targeted at our customers' needs and have already generated new customer orders and helped to increase recurring revenues from existing customers.
Most notably, we launched our new Planning & Optimisation software only module which delivers faster, more flexible, and more accurate route planning to operators, reducing driver hours and mileage and thereby reducing costs and emissions. Through TruTac we also launched TruFleet, the Earned Recognition DVSA approved fleet management software that helps transport managers to plan, organise and control day-to-day fleet and Operator Licence management.
People
We continued to recruit during the period under review with average staff numbers rising from 551 to 611. This has broadened Microlise's capabilities and will enable us to better meet the many opportunities we see ahead. Recruitment occurred across the business but with particular emphasis on strengthening our Operations and Development teams. The Board was also strengthened post-period end through the appointment of Lucy Sharman-Munday as an independent Non-Executive Director and chair of the Audit Committee.
Successful IPO
A key event in the Period was our admission to trading on the AIM market of the London Stock Exchange, which provided us with the funds to accelerate our growth strategy and the enhanced profile and credibility that PLC status brings. We welcome all of our new shareholders and look forward to growing with them in the years ahead.
Strategic Focus for The Year Ahead
The Group has a clear and singular focus on growth, and we continue to work to advance our strategic ambitions, by building on our strengths and adapting to changes in the business environment.
Internally we are accelerating our development capacity to expand our product portfolio and ensure our solution remains best-in-class and continues to meet our clients' evolving needs. We are also investing in the data mining capability of our sales and customer service teams, to maximise enterprise level opportunities for customer expansion and cross sales.
We maintain a laser focus on strengthening our position in the UK and adjacent markets. Having already secured the majority of large fleets (over 500 vehicles) in the UK as customers, we now see an opportunity for many small and medium sized businesses to benefit from our solutions. We have therefore invested in growing our sales team, focusing on fleets in the 50 to 500 vehicle space. This is already resulting in good growth in orders and our sales pipeline. We are also actively assessing a number of potential acquisition targets to broaden the value proposition offered to both large and SME fleets.
We see major opportunities to make a significant impact in the adjacent markets of France, Australia, and New Zealand and, with Covid-19 restrictions easing, these opportunities are currently growing. We have therefore expanded our sales and consultancy teams in these regions in the aim of capitalising upon this growth. To exploit opportunities in adjacent markets, we have also established a New Markets team to work on the incubation of new products and services that will enable us to better evaluate new markets.
Selective M&A
We continue to actively assess acquisition opportunities, particularly where they could add clear technological capability or international market growth.
Outlook
Our purpose is to improve efficiencies, increase safety, and reduce emissions for our clients. Our solutions deliver this through reduced mileage and fuel consumption, improved driver performance, fewer accidents, elimination of paperwork and delivery of an enhanced customer experience.
These solutions are becoming ever more important as, in my view, the most impactful companies in the post-pandemic world will be ran by good corporate citizens, who maintain a strategic focus on Environmental, Social and Governance (ESG) matters, complemented by strong financial performance. Microlise is beginning to build its formal ESG credentials but already has a solid track record in this field and a culture of questioning how things might be done better.
I am incredibly proud of everything the Group has achieved to date, and particularly in the support we have given our customers during this tumultuous period. However, we are still very much at the start of our journey. Increasing regulation, stricter environmental targets and changing consumer demand means that transport technology requirements are becoming more complex. As the world recalibrates, we see a clear and growing need for our scalable and sustainable products.
We continue to invest in our future growth, which is underpinned by long-term structural drivers. Despite the short-term market disruption caused by the ongoing global microchip shortage, Microlise has entered FY22 with a strong order book and significant demand for both existing and new solutions, leading to excellent pipeline visibility. Whilst we have been dealing with chip shortages for past 18 months, the industry opinion is that from Q3 2022, the situation will improve and return to pre-pandemic levels by Q3 2023. However, the Group's management will continue to implement and execute its plans to mitigate the impact. Trading in the first quarter of the current year is in line with Board expectations and we are confident of delivering a performance for the full year in line with market expectations.
Nadeem Raza, Chief Executive Officer
CFO's Statement
The financial results for the eighteen-month period to 31 December 2021 reflect another period of profitable growth (before exceptional IPO costs) for Microlise despite the challenges widely reported across all industry sectors.
Key Performance Indicators
The following key performance indicators for the 18-month period to 31 December 2021 also include the calendar year to 31 December 2021 and calendar year to 31 December 2020.
£'m unless otherwise stated
|
|
| Statutory Results (Audited) |
| Calendar Year Results (1) (Unaudited) | |||
|
|
| FY21 18-months to Dec-21 | FY20 12 months to Jun-20 |
| 12 months to Dec-21 | 12 months to Dec-20 | Change (12 months) % |
|
|
|
| |||||
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
Revenue |
|
| 88.2 | 50.0 |
| 60.3 | 51.6 | 17% |
Recurring Revenue |
|
| 54.0 | 32.0 |
| 36.7 | 33.5 | 9% |
Gross Profit |
|
| 50.5 | 28.4 |
| 34.5 | 30.1 | 14% |
Gross Profit Margin % |
|
| 57% | 57% |
| 57% | 58% | (1)% |
Adjusted EBITDA (2) |
|
| 11.3 | 5.7 |
| 7.8 | 6.3 | 24% |
Adjusted EBITDA % |
|
| 13% | 11% |
| 13% | 12% | 6% |
Profit/(loss) before tax |
|
| (0.0) | 0.7 |
| (0.8) | 1.3 | (160)% |
Adjusted Profit/(loss) before tax (3) |
|
| 3.4 | 0.7 |
| 2.6 | 1.3 | 104% |
Net Cash (4) |
|
| 13.2 | 7.6 |
| 13.2 | 8.0 | 65% |
Short term borrowings |
|
| 0.0 | (2.4) |
| 0.0 | (2.5) | (100)% |
Cash and cash equivalents |
|
| 13.2 | 10.1 |
| 13.2 | 10.5 | 26% |
|
|
|
|
|
|
|
|
|
Non Financial |
|
|
|
|
|
|
|
|
ARR run rate (5) |
|
| 38.9 | 29.7 |
| 38.9 | 35.7 | 9% |
Number of like-for-like subscriptions (6) |
|
|
|
|
| 551,000 | 502,000 | 10% |
Long-term contract customer churn by value |
|
|
|
|
| 0.1% | 0.5% | (80)% |
(1) To assist users of the accounts with understanding the underlying business trading, the Group is presenting a set of unaudited calendar year
results on a like-for-like basis with the current reporting period covering the 12 months ended 31 December 2021 (CY21) and the comparative
period covering the 12 months ended 31 December 2020 (CY20).
(2) Adjusted EBITDA excludes exceptional costs in relation to the IPO, depreciation, amortisation, share of loss of associate, interest, and tax
(3) Adjusted Profit / (loss) before taxation excludes IPO costs of £3.4m
(4) Net cash is cash and cash equivalents less short-term borrowings, and lease liabilities
(5) ARR Run rate change figure and % compare the annualised recurring revenue figure for December 2021 with the annualised recurring
revenue figure for December 2020
(6) Like-for-like subscriptions change figure and % compare the subscriptions as at 31 December 2021 with the subscriptions as at 31 December
2020
Group Results
Revenue
Total Revenue for the period was £88.2m. Revenue for the 12 months ended 31 December 2021 was £60.3m, an increase of 17% from CY20. Both recurring and non-recurring revenues showed strong growth following an increase in win rate with 65 new customers in the CY21. Recurring SAAS revenues in the Period were £54.0m, with recurring revenues in the 12 months ended 31 December 2021 of £36.7m, an increase of 9% compared to £33.5m in CY20. New customer wins, together with growth in our existing customer's fleets resulted in 9% growth in ARR to £38.9m as at 31 December 2021 from £35.7m on 31 December 2020.
Non-recurring revenue for the period was £34.2m. Non-recurring revenue for the 12 months ended 31 December 2021 grew particularly strongly with an increase of 31% to £23.6m (CY20: £18.1m) as a result of the installation of hardware units for new customers and a bounce back in hardware and installation revenues from OEM customers that closed their factories for approximately three months in the comparative period due to the pandemic.
In addition to winning new business and deepening existing accounts, the Group successfully maintained an extremely low rate of customer churn by value at 0.1% (CY20: 0.5%). This reflects the mission critical importance of Microlise's software solutions in our customers' operations.
Gross Profit
Gross profit for the period was £50.5m. In the 12 months ended 31 December 2021 gross profit grew 14% to £34.5m (CY20: £30.1m) with a slight reduction in gross margin % from 58% in CY20 to 57% in CY21. The reduction in gross margins was driven by further investment in our data centres and associated costs which we expect to see coming through as benefits in later years. Non-recurring gross margin increased to 30% from 24% in CY20 notwithstanding having to pay premium pricing on certain electronic components due to supply shortages.
Operating Expenses
Despite the global uncertainties caused by the COVID-19 pandemic, the Group has continued to invest in product development, operations, and sales & marketing. Operating expenses in the period were £40.4m. Operating expenses in the 12-month period ended 31 December 2021 increased 11% to £27.4m (CY20: £24.7m). This cost represents employee costs, premises costs, marketing costs, research & development (net of capitalised costs), finance charges, and administration costs.
The 11% increase in staff costs in the 12 months ended 31 December 2021 to £24.3m (CY20: £21.8m) reflected our increase in headcount in line with our growth as well as standard annual pay awards and increased commissions/ bonuses reflecting the increased new customer win rate and the Group's strong EBITDA performance. The increase also included an average headcount increase in operations due to the strategy of bringing more installation work in-house. Average headcount in the Period was 611 and 618 in the 12 months ended 31 December 2021 (CY20: 586) overall, with 23 of the increase within Operations and development.
Capitalised research & development costs in the period were £1.8m and in the 12 months ended 31 December 2021 was £1.3m (CY20: £0.5m), whilst amortisation of capitalised development costs in the period was £0.6m and in the 12 months ended 31 December 2021 was £0.5m (CY20: £0.2m).
Adjusted EBITDA and Adjusted Profit Before Tax
The adjusted EBITDA in the Period was £11.3m. The growth in revenue and control of costs have resulted in a significant increase in adjusted EBITDA in the 12 months ended 31 December 2021 by 24% to £7.8m (CY20: £6.3m) for the year, with EBITDA margin improving to 13% (CY20: 12%). To provide a better guide to the underlying business performance, adjusted EBITDA excludes IPO costs.
The adjusted profit before taxation in the period was £3.4m. In the 12 months ended 31 December 2021 the profit before taxation was up 104% to £2.6m (CY20: profit of £1.3m).
EPS and Dividend
The Group made a reported loss after taxation in the period of £2.2m (in the year ended 30 June 2020: profit of £1.4m) due to exceptional costs and a taxation charge of £2.2m (in the year ended 30 June 2020: credit of £0.7m). The significant taxation charge movement is due primarily to:
1. the change in the Group's R&D claim status which, as a consequence, reports the R&D tax credit as other operating income in the period (£0.9m), rather than a tax credit, as in the year ended 30 June 2020 (£1.1m).
2. the change in corporation tax from 19% to 25% from April 2023. This has resulted in a recalculation of deferred taxation balances in the period of £1.4m in FY21 (in the year ended 30 June 2020: £0.3m)
As a result, the reported basic and diluted loss per share was 2.09p for the 18 months period ended 31 December 2021 (FY21) (12 months ended 30 June 2020 (FY20): 1.40p profit per share).
The Board does not feel it appropriate at this time to commence paying dividends and continues to invest in its growth strategy.
Group Statement of Financial Position
The Group had net assets of £72.0m at 31 December 2021 (30 June 2020: £56.1m). The movement in net assets reflects the £17.6m net proceeds raised at IPO.
Current assets increased by £2.5m, primarily due to an increase in debtors driven by higher revenues in the year and the timing of significant receipts, combined with the net proceeds from new shares issued during the IPO. Total liabilities reduced by £16.4m due to repayment of Group borrowings, offset by an increase in deferred income.
Cashflow and Net Cash
The Group ended the 18-month period to 31 December 2021 with net cash of £13.2m (30 June 2020: net cash of £7.6m) ahead of than the Board's expectations. During FY20, the Group made use of a number of COVID-19 linked schemes in order to manage its working capital, including the deferral of VAT and PAYE in the UK.
As a result, £3.3m of cash outflow was deferred from FY20 to FY21 with a further £0.2m deferred to FY22 in line with agreed payment plans. Stripping out the impact of these schemes, the underlying net cash inflow for the period was £6.4m (30 June 2020: £1.3m inflow).
Overall net cash inflow for the period was £3.2m (30 June 2020: inflow of £4.8m).
Banking Facility
The Group agreed a £20.0m committed revolving cash flow facility with HSBC Bank PLC upon IPO. The Group has not utilised any of this facility to date. The Group's gross cash of £13.2m and the undrawn £20.0m facility gives the Group £33.2m of cash, which the Directors believe is sufficient to support the Group's existing growth plans as set out at IPO.
Bill Wynn, Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the eighteen month period ended 31 December 2021
|
| 18 month period ended | Year ended |
|
| 2021 | 2020 |
| Note | £'000 | £'000 |
Revenue | 1 | 88,168 | 49,999 |
Cost of sales |
| (37,690) | (21,559) |
Gross profit |
| 50,478 | 28,440 |
Other operating income | 3 | 1,143 | 537 |
Exceptional IPO related costs |
| (3,415) | - |
Other administrative expenses |
| (47,246) | (27,771) |
Total administrative expenses |
| (50,661) | (27,771) |
Operating profit | 3 | 960 | 1,206 |
|
|
|
|
Interest income | 5 | 72 | 285 |
Interest expense | 6 | (905) | (708) |
Share of loss of associate net of tax | 11 | (132) | (73) |
(Loss)/profit before taxation
|
| (5) | 710 |
Taxation | 7 | (2,213) | 719 |
|
|
|
|
(Loss)/profit for the period/year |
| (2,218) | 1,429 |
|
|
|
|
Other comprehensive income for the period/year |
|
|
|
Currency translation differences |
| (71) | 19 |
|
|
|
|
Total comprehensive income for the period/year attributable to the equity shareholders of Microlise Group plc |
| (2,289) | 1,448 |
|
|
|
|
Basic and diluted (loss)/earnings per share (pence) | 8 | (2.09) | 1.40 |
|
|
|
|
|
|
|
|
The notes on pages 25 to 44 form part of these financial statements.
Consolidated Statement of Changes in Equity
| Share Capital | Share Premium Account | Merger Reserve | Retained earnings | Total Equity |
| £'000 | £'000 | £'000 | £'000 | £'000 |
At 30 June 2019 | 44 | - | 55,172 | (600) | 54,616 |
Comprehensive income for the year to 30 June 2020 |
|
|
|
|
|
Profit for the year | - | - | - | 1,429 | 1,429 |
Other comprehensive income | - | - | - | 19 | 19 |
Total comprehensive income for the year | - | - | - | 1,448 | 1,448 |
|
|
|
|
|
|
At 30 June 2020 | 44 |
- | 55,172 | 848 | 56,064 |
|
|
|
|
|
|
Comprehensive income for the 18 month period to 31 December 2021 |
|
|
|
|
|
Profit for the period | - | - | - | (2,218) | (2,218) |
Other comprehensive income | - | - | - | (71) | (71) |
Total comprehensive income for the period | - | - | - | (2,289) | (2,289) |
|
|
|
|
|
|
Share based payment (note 22) | - | - | - | 129 | 129 |
Bonus issue of shares (note 21) | 55,172 | - | (55,172) | - | - |
Reduction of share capital (note 21) | (55,114) | - | - | 55,114 | - |
Shares issued in the period (note 21) | 14 | 17,630 | - | - | 17,644 |
Total transactions with owners | 72 | 17,630 | (55,172) | 55,243 | 17,773 |
At 31 December 2021 | 116 |
17,630 | - | 53,802 | 71,548 |
|
|
|
|
|
|
Company Statement of Changes in Equity
| Share Capital | Share Premium Account | Merger Reserve | Retained earnings | Total Equity |
| £'000 | £'000 | £'000 | £'000 | £'000 |
At 30 June 2019 | 44 | - | 55,172 | 5 | 55,221 |
Comprehensive expense for the year to 30 June 2020 |
|
|
|
|
|
Loss for the year | - | - | - | (600) | (600) |
Other comprehensive income | - | - | - | - | - |
Total comprehensive expense for the year | - | - | - | (600) | (600) |
|
|
|
|
|
|
At 30 June 2020 | 44 |
- | 55,172 | (595) | 54,621 |
|
|
|
|
|
|
Comprehensive income for the 18 month period to 31 December 2021 |
|
|
|
|
|
Loss for the period | - | - | - | (5,466) | (5,466) |
Other comprehensive income | - | - | - | - | - |
Total comprehensive expense for the period | - | - | - | (5,466) | (5,466) |
|
|
|
|
|
|
Share based payment (note 22) |
|
|
| 129 | 129 |
Bonus issue of shares (note 21) | 55,172 | - | (55,172) | - | - |
Reduction of share capital (note 21) | (55,114) | - | - | 55,114 | - |
Shares issued in the period (note 21) | 14 | 17,630 | - | - | 17,644 |
Total transactions with owners | 72 | 17,630 | (55,172) | 55,243 | 17,773 |
At 31 December 2021 | 116 |
17,630 | - | 49,182 | 66,928 |
Consolidated Statement of Financial Position
as at 31 December 2021
|
| 31 December | 30 June |
|
| 2021 | 2020 |
| Note | £'000 | £'000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 9 | 8,573 | 8,636 |
Intangible assets | 10 | 75,987 | 77,133 |
Investments in associate | 11 | 1,846 | 1,978 |
Deferred tax | 12 | - | 1,307 |
Trade and other receivables | 14 | 2,710 | 3,465 |
Total non-current assets |
| 89,116 | 92,519 |
|
|
|
|
Current assets |
|
|
|
Inventories | 13 | 2,941 | 3,604 |
Trade and other receivables | 14 | 15,143 | 15,126 |
Corporation tax recoverable |
| 932 | 988 |
Cash and cash equivalents | 15 | 13,210 | 10,061 |
Total current assets |
| 32,226 | 29,779 |
Total assets |
| 121,342 | 122,298 |
|
|
|
|
Current liabilities |
|
|
|
Lease liabilities | 17 | (717) | (787) |
Borrowings | 16 | - | (2,445) |
Trade and other payables | 18 | (25,780) | (25,393) |
Total current liabilities |
| (26,497) | (28,625) |
|
|
|
|
Non current liabilities |
|
|
|
Lease liabilities | 17 | (994) | (582) |
Borrowings | 16 | - | (15,129) |
Trade and other payables | 18 | (17,312) | (17,779) |
Deferred tax | 12 | (4,991) | (4,119) |
Total non current liabilities |
| (23,297) | (37,609) |
|
|
|
|
Total liabilities |
| (49,794) | (66,234) |
|
|
|
|
Net assets |
| 71,548 | 56,064 |
|
|
|
|
Equity |
|
|
|
Issued share capital | 21 | 116 | 44 |
Share premium account |
| 17,630 | - |
Merger reserve |
| - | 55,172 |
Retained earnings |
| 53,802 | 848 |
Total equity |
| 71,548 | 56,064 |
The notes on pages 25 to 44 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board and were signed on its behalf 11th April 2022
Group Chief Financial Officer
Microlise Group plc Registered number 11553192
Company Statement of Financial Position
as at 31 December 2021
|
| 31 December | 30 June |
|
| 2021 | 2020 |
| Note | £'000 | £'000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 9 | 4,940 | - |
Investments | 11 | 79,943 | 79,291 |
Total non-current assets |
| 84,883 | 79,291 |
|
|
|
|
Current assets |
|
|
|
Trade and other receivables | 14 | 253 | 3,575 |
Cash and cash equivalents | 15 | 1,090 | 5,055 |
Total current assets |
| 1,343 | 8,630 |
Total assets |
| 86,226 | 87,921 |
|
|
|
|
Current liabilities |
|
|
|
Borrowings | 16 | - | (1,895) |
Trade and other payables | 18 | (18,298) | (14,456) |
Total current liabilities |
| (18,298) | (16,351) |
|
|
|
|
Non current liabilities |
|
|
|
Borrowings | 16 | - | (14,949) |
Trade and other payables | 18 | (1,000) | (2,000) |
Total non current liabilities |
| (1,000) | (16,949) |
|
|
|
|
Total liabilities |
| (19,298) | (33,300) |
|
|
|
|
Net assets |
| 66,928 | 54,621 |
|
|
|
|
Equity |
|
|
|
Issued share capital | 21 | 116 | 44 |
Share premium account |
| 17,630 | - |
Merger reserve |
| - | 55,172 |
Retained earnings |
| 49,182 | (595) |
Total equity |
| 66,928 | 54,621 |
The Company has elected to take the exemption under section 408 of the Companies Act not to present the parent Company profit and loss account. The loss for the parent Company for the 18 month period was £5,466,000 (2020: loss of £600,000).
The notes on pages 25 to 44 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board and were signed on its behalf 11th April 2022
Group Chief Financial Officer
Microlise Group plc Registered number 11553192
Consolidated Statement of Cash Flows
for the 18 month period ended 31 December 2021
|
| 18 month period ended | Year ended |
| Note | 2021 | 2020 |
|
| £'000 | £'000 |
Cash flows from operating activities |
|
|
|
Cash generated from operations | A | 9,132 | 8,913 |
Tax received |
| 660 | 1,820 |
Net cash generated from operating activities |
| 9,792 | 10,733 |
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment |
| (1,499) | (1,235) |
Additions to intangible assets |
| (2,166) | (778) |
Purchase of subsidiaries, net of cash acquired | 24 | (1,000) | (3,087) |
Interest received |
| - | 108 |
Net cash used in investing activities |
| (4,665) | (4,992) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Issue of share capital |
| 18,600 | - |
Share issue expenses paid |
| (956) | - |
Interest paid |
| (676) | (650) |
Lease liability payments |
| (1,219) | (803) |
Receipt of bank loans |
| - | 2,500 |
Repayment of bank loans |
| (16,975) | (1,219) |
Repayment of other loans |
| (729) | (802) |
Net cash generated used in financing activities |
| (1,955) | (974) |
|
|
|
|
Net increase in cash and cash equivalents |
| 3,172 | 4,767 |
Cash and cash equivalents at beginning of period/year |
| 10,061 | 5,287 |
Foreign exchange (losses)/gains |
| (23) | 7 |
Cash and cash equivalents at end of period/year | B | 13,210 | 10,061 |
The notes on pages 25 to 44 form part of these financial statements.
Notes to the cash flow statements
A. Cash generated from operations
The reconciliation of profit for the period to cash generated from operations is set out below:
|
| 18 month period ended | Year ended |
|
| 2021 | 2020 |
|
| £'000 | £'000 |
(Loss)/profit for the period |
| (2,218) | 1,429 |
Adjustments for: |
|
|
|
Depreciation |
| 3,085 | 2,176 |
Amortisation |
| 3,803 | 2,151 |
Loss on disposal of fixed assets |
| - | 30 |
Share based payments |
| 129 | - |
Foreign exchange loss |
| (23) | - |
Net interest costs |
| 833 | 423 |
Share of loss of associate |
| 132 | 73 |
Tax charge/(credit) |
| 2,213 | (719) |
|
| 7,954 | 5,563 |
|
|
|
|
Decrease/(increase) in inventories |
| 663 | (1,087) |
(Increase)/decrease in trade and other receivables |
| (110) | 713 |
Increase in trade and other payables |
| 625 | 3,724 |
Cash generated from operations |
| 9,132 | 8,913 |
Major non cash items
£1,506,000 of additions to right of use assets and lease liabilities represent non cash movements in the period ended 31 December 2021 (2020: £266,000).
B. Analysis of net debt
| At 1 July | Cash flow | On acquisition | Non-cash changes | At |
| 2019 |
|
|
| 2020 |
| £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
Bank loans | (15,529) | (1,281) | - | (29) | (16,839) |
Other loans | (1,531) | 802 | - | - | (729) |
Lease liabilities | (1,758) | 866 | (148) | (329) | (1,369) |
Liabilities arising from financing activities | (18,818) | 387 |
(148)
| (358) | (18,937) |
|
|
|
|
|
|
Cash and cash equivalents | 5,287 | 4,767 | - | 7 | 10,061 |
Net debt | (13,531) | 5,154 | (148) | (351) | (8,876) |
| At 1 July | Cash flow | Non-cash changes | At |
| 2020 |
|
| 2021 |
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
Bank loans | (16,839) | 16,975 | (136) | - |
Other loans | (729) | 729 | - | - |
Lease liabilities | (1,369) | 1,291 | (1,633) | (1,711) |
Liabilities arising from financing activities | (18,937) | 18,995 | (1,769) | (1,711) |
|
|
|
|
|
Cash and cash equivalents | 10,061 | 3,172 | (23) | 13,210 |
Net debt | (8,876) | 22,167 | (1,792) | 11,499 |
Summary Of Significant Accounting Policies
General information
Microlise Group plc is a holding and management services company. Its subsidiaries are telematics businesses providing technological transport solutions that enable customers to reduce costs and environmental impact by maximising the efficiency of their transportation. The company is a public limited company, incorporated and domiciled in England. The address of the registered office is Farrington Way, Eastwood, Nottingham, NG16 3AG.
Accounting policies
A. Basis of preparation
The financial statements have been prepared in accordance with the historical cost convention and International Accounting Standards in conformity with the requirements of the Companies Act 2006. The stated accounting policies have been consistently applied to all periods presented. Microlise Group plc prepared and published its consolidated financial statements for the year ended 30 June 2020 under UK GAAP. During 2021, in connection with an Initial Public Offering (IPO), it published listing documents containing IFRS consolidated financial information for the period from incorporation to 30 June 2020 including a reconciliation of transitional adjustments. The IFRS financial information included in the listing documents included an unreserved statement of compliance with IFRS.
The parent company financial statements have been prepared under applicable United Kingdom Accounting Standards (FRS101). The following FRS 101 disclosure exemptions have been taken in respect of the parent company only information:
· IAS 7 Statement of cash flows;
· IFRS 7 Financial instruments disclosures;
· IAS 24 Key management remuneration.
These are the first period of statutory financial statements prepared under FRS 101 for the company. FRS101 has been applied with a transition date effective from the incorporation of the company on 5 September 2018, with no adoption exemptions applied and with no transition adjustments arising.
The financial statements including the notes are presented in thousands of pounds sterling ('£'000'), the functional and presentation currency of the Group, except where otherwise indicated.
The principal accounting policies adopted in preparation of the financial statements are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated.
Judgements made by the Directors in the application of the accounting policies that have a significant effect on the historical financial information and estimates with significant risk of material adjustment in the next year are discussed in note C.
Going concern
The directors have considered working capital forecasts prepared for the period to December 2023.The Group had cash balances of £13.2m at the period end, no borrowings and a £20m undrawn working capital facility. The Group also has a significant recurring income base with inflationary clauses in the main contracts.
A range of sensitivities have been run on the working capital model, and the directors consider a scenario in which the business will face liquidity issues is remote. As part of the sensitivity analysis the directors have considered the impact of a reduction in turnover from their principal customer and the impact on working capital as well as cost and supply issues that might arise in the context of the current events in Ukraine and are satisfied that the Group has sufficient resources to respond to reasonably foreseeable scenarios. The Directors conclude that a scenario that would result in the need for the Group to require additional funding to be remote.
Based on the forecasts, the Directors are satisfied that the Group can meet its day-to-day cash flow requirements and operate within the terms of its working capital banking facilities if required. Accordingly, the financial statements have been prepared on a going concern basis.
B. Accounting policies
Consolidation
The consolidated financial statements include the results of Microlise Group plc and its subsidiary undertakings. The results of the subsidiary undertakings are included from the date that effective control passed to the company.
On acquisition, all the subsidiary undertakings' assets and liabilities at that date of acquisition are recorded under purchase accounting at fair value, having regard to condition at the date of acquisition. All changes to those assets and liabilities and the resulting gains and losses that arise after the company gained control are included in the post-acquisition results. Sales, profits and balances between group companies are eliminated on consolidation.
The Group has taken advantage of the exemption not to disclose transactions between wholly owned entities in the group.
Associates
Entities in which the Group holds a participating interest and over whose operating and financial policies the group exercises a significant influence are treated as associates. In the Group financial statements, associates are accounted for using the equity method.
Revenue recognition
Revenue comprises revenue recognised by the Group in respect of goods and services supplied during the year, based on the consideration specified in a contract, exclusive of Value Added Tax and trade discounts.
The Group enters into the sale of multi-element contracts, which combine separate performance obligations including hardware, installation, managed service contracts (software-as-a-service or SaaS), software licences, professional services (which includes bespoke software development, project management (incorporating activities including project and installation planning, managing change control and stage boundaries and project reporting), consultancy, training), and support and maintenance services relating to these products. In accordance with IFRS 15, these are considered to be distinct.
Each performance obligation is allocated a transaction price based on the stand-alone selling prices. Where stand-alone prices are not directly observable, they are based on expected cost plus margin.
Revenue is recognised depending upon the revenue stream to which it relates, as follows:
· The fair value of hardware and installation revenue is recognised at a point in time when control is transferred to the customer on despatch and/or upon installation;
· Revenue from the SaaS arrangement is recognised over a period of time, based on the term of the contract on a straight line basis. Revenue recognition over time is considered appropriate based on provisions of IFRS 15 paragraph 35 as the customer simultaneously receives and consumes the benefits provided by the Group. The contractual term for average SaaS agreements are approximately 5 years;
· Professional services typically include implementation, configuration, training and other similar services to create optimised interfaces between the Group's software and customers systems. Revenue from professional services is recognised over a period of time using the input method as professional services are being performed, as this best depicts the timing of how the value is transferred to the customer;
· Support and maintenance turnover is deferred at the point of sale and recognised in the Statement of Comprehensive Income over a period of time of the contractual life, utilising the output method, generally on a straight line basis as the customer simultaneously receives and consumes the benefits provided by the Group.
Invoicing for all revenue streams is undertaken in accordance with the terms of the agreement with the customer. When an invoice is due for payment at the statement of financial position date but the associated performance obligations have not been fulfilled the amounts due are recognised as trade receivables and a contact liability is recognised for the sales value of the performance obligations that have not been provided. If payment is received in advance of the delivery of the associated performance obligation a contract liability is recognised.
In cases where customers pay for the goods and services over an agreed period, the fair value of the consideration is determined by discounting future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of the consideration is recognised as finance income over the payment period.
Contract costs
Under IFRS 15, the Group capitalises commission fees as costs of obtaining a contract when they are incremental and, if they are expected to be recovered, it amortises them consistently with the pattern of revenue for the related contract. If the expected amortisation period is one year or less, then the commission is expensed when incurred. Contract costs are capitalised to trade and other receivables, due within and after one year.
The Group in certain circumstances incurs costs to deliver its services and fulfil specific contracts. These costs may include process mapping and design, scoping and configuration. Contract fulfilment costs are divided into costs that deliver an asset and costs that are expensed as incurred.
Under IFRS 15, the Group capitalises these contract fulfilment costs when they directly relate to a specifically identifiable contract or anticipated contract, will enhance or generate resources used to satisfy future performance obligations and they are expected to be recovered. Where capitalised, it amortises them consistently with the pattern of revenue for the related contract.
At each reporting date, the Group determines whether or not the contract assets are impaired by comparing the carrying amount of the asset to the remaining amount of consideration that the Group expects to receive less the costs that relate to providing services under the relevant contract.
Employee benefits
The Group operates a defined contribution pension scheme. Contributions are recognised in the Statement of Comprehensive Income in the year in which they become payable in accordance with the rules of the scheme.
Short term employee benefits including holiday pay are recognised as an expense in the period in which the service is rendered.
Share based payment
The Group operates an equity-settled share based compensation plan in which the Group receives services from directors and certain employees as consideration for share options. The fair value of the services is recognised as an expense over the estimated vesting period, determined by reference to the fair value of the options granted.
Taxation
The taxation expense or credit comprises current and deferred tax recognised in the profit for the financial period or in other comprehensive income or equity if it arises from amounts recognised in other comprehensive income or directly in equity. Current tax is provided at amounts expected to be paid (or recovered) in respect of the taxable profits for the period using tax rates and laws that have been enacted or substantively enacted by the reporting date. The tax credit also includes the benefit of enhanced SME research and development allowances. Microlise, as a large company from 1 July 2020 for tax R&D purposes, no longer qualifies for these and the large company RDECs are included as grant income within other operating income.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset and where the deferred tax balances relate to the same taxation authority.
Exceptional items
The Group classifies certain one-off charges or credits that have a material impact on the financial results as 'exceptional items'. These are disclosed separately to provide further understanding of the financial performance of the group.
Government grants
Grants are accounted under the accruals model, and grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure. Government grants relate to the receipt of Coronavirus Job Retention Scheme income, innovation grants and large company research and development expenditure credits ('RDEC' s).
Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling on the date of the transaction. Monetary assets or liabilities denominated in foreign currencies at the Statement of Financial Position date are translated at the rate ruling on that date and all translation differences are charged or credited in the Statement of Comprehensive Income.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
Intangible assets
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the fair value of the net assets acquired at the acquisition date. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment in the investee.
Intangible assets acquired separately from a business are recognised at cost. Intangible assets acquired as part of an acquisition are recognised separately from goodwill if the fair value can be measured reliably on initial recognition. Intangible assets created within the business are not recognised, other than for qualifying development expenditure, and expenditure is charged against profits in the year in which it is incurred.
Subsequent to initial recognition, intangible assets are stated at cost less accumulated recognised and accumulated impairment. Intangible assets are amortised on a straight line basis within administrative expenses over their estimated useful lives as follows:
Asset class Amortisation period
Brands 15 years
Customer relationships 11 to 16 years
Technology assets 5 to 10 years
Software 3-5 years
Intangible assets are tested for impairment when an event that might affect asset values has occurred. Any such impairment in carrying value is written off to the Statement of Comprehensive Income immediately.
Research and development expenditure
An internally generated intangible asset arising from development (or the development phase) of an internal project is recognised if, and only if, all of the following have been demonstrated:
· It is technically feasible to complete the development such that it will be available for use, sale or licence;
· There is an intention to complete the development;
· The method by which probable future economic benefits will be generated is known;
· There are adequate technical, financial and other resources required to complete the development;
· There are reliable measures that can identify the expenditure directly attributable to the project during its development.
The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above. Expenses capitalised as "Technology" within intangible assets consist of employee costs incurred on development. Where the above criteria are not met, development expenditure is charged to the consolidated statement of comprehensive income in the period in which it is incurred. The expected life of internally generated intangible assets varies based on the anticipated useful life, currently ranging from five to seven years.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and impairment losses. Amortisation is charged on a straight-line basis over the estimated useful life in which the intangible asset has economic benefit and is reported within administrative expenses in the consolidated statement of comprehensive income.
Research expenditure is recognised as an expense in the period in which it is incurred.
Research and development expenditure tax credits arise in the UK. Those relevant to a large company for tax purposes are credited to other operating income as a grant with any associated tax in the tax charge and the benefit of the enhanced SME allowances are included in the tax credit for the period.
Financial assets
Financial assets, including trade and other receivables, cash and cash equivalent balances are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are subsequently carried at amortised cost using the effective interest method. Cash and cash equivalents comprise cash held at bank which is available on demand.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. The group measures loss allowances at an amount equal to lifetime ECL, which is estimated using past experience of the group's historical credit losses experienced over the three year period prior to the period end. Historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the group's customers, such as inflation rates. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.
To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
The group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost to the extent that these are material. The group has determined that there is no material impact of ECLs on the historical financial information.
Financial liabilities
Financial liabilities, including trade and other payables, lease liabilities and bank borrowings are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Borrowings are initially stated at the fair value of the consideration received after deduction of wholly attributable issue costs. Borrowings are subsequently stated at amortised cost using the effective interest method.
Right-of-use assets and lease liabilities
Under IFRS 16, leases are recognised as right-of-use assets, presented as a separate category within property, plant and equipment included in the consolidated statement of financial position, and with a corresponding lease liability from the date at which the leased asset is available for use by the Group. This has been adopted and applied on a full retrospective basis.
Assets and liabilities arising from a lease are initially measured at the present value of the lease payments and payments to be made under the terms of the lease. Reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or the incremental borrowing rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal, presented as a separate category within liabilities, and finance cost. The finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received and any initial direct costs. Leasehold dilapidations are recognised in relation to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms.
Depreciation is charged on a straight line basis over the period of the lease and assets are subject to impairment reviews where circumstances indicate their value may not be recoverable of if they are not being utilised.
Payments associated with short-term leases of property, plant and equipment and leases of low-value assets continue to be recognised on a straight-line basis as an expense. Short-term leases are leases with a lease term of 12 months or less.
Property, plant and equipment
Property, plant and equipment assets are stated at cost less depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided on all property, plant and equipment assets at rates calculated to write off the cost of each asset on a straight line basis over its expected useful life, as follows:
Asset class Depreciation method rate
Freehold property 2% straight line
Leasehold improvements Over the period of the lease
Equipment, fixtures and fittings 20-33% straight line basis
Investments
Investments in subsidiaries are stated at cost or at the fair value of shares issued as consideration less provision for any impairment. Investments in associates are stated at fair value through the profit and loss.
Inventories
Inventories are valued at the lower of purchase cost and net realisable value, after due regard for any slow moving items. Net realisable value is based on selling price less anticipated costs to completion and selling costs. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, inventories are assessed for impairment. If inventory is impaired, the carrying amount is reduced to its net realisable value. The impairment loss is recognised immediately in the consolidated statement of comprehensive income.
Share capital and reserves
Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a financial liability. The parent company's ordinary shares are classified as equity instruments.
The share premium account represents the amount by which the issue price of shares exceeds the nominal value of the shares less any share issue expenses.
The merger reserve represents the difference between the fair value of the shares issued as part of the consideration for Microlise Holdings Limited and the nominal value of the shares issued.
Retained earnings comprises opening retained earnings and total comprehensive income for the year, net of dividends paid.
New or revised accounting standards and interpretations
IFRS interpretations and amendments issued but not yet applicable by the Group in these financial statements have been reviewed and assessed. All IFRS effective at the reporting date of 31 December 2021 have been applied.
There are no other new standards, interpretations and amendments which are not yet effective in these financial statements, expected to have a material effect or to be relevant to the Group's future financial statements.
C. Critical accounting estimates and assumptions
Critical judgements in applying the accounting policies
The preparation of the financial statements under IFRS requires the use of certain critical accounting assumptions and requires management to exercise its judgement and to make estimates in the process of applying the Company's and Group's accounting policies. Management bases its estimates on historical experience and on various other assumptions that management believes to be reasonable in the circumstances. The key estimates used in the preparation of these financial statements that could result in a material change in the carrying value of assets or liabilities within the next twelve months are as follows:
Estimates and assumptions
Fair values and intangible assets on acquisition of a business
Fair values are applied on the acquisition of a subsidiary which involve a degree of judgement and estimation in particular in the identification and evaluation of intangible assets. The most significant valuation related to brands, technology and customer relationship assets which have been valued using a relief from royalty method for brand and technology and an excess earnings method for customers using cash flow forecasts derived from business plans and assumptions based on experience and factors relevant to the nature of the business activity.
The determination of the fair values attributed to acquired assets and liabilities requires estimates to be made about the outcome of future events, including the condition of acquired assets, the ongoing value to the business of intangible assets and the recoverability of other assets. For liabilities, an assessment is required to identify any unrecorded liabilities or disputed amounts to determine whether liabilities should be recognised at the point of acquisition.
More detail on the intangible assets recognised are included in note 10, and business combinations are included in note 24.
Useful economic lives of intangible assets
The annual amortisation charge for intangible assets is sensitive to changes in the estimated useful economic lives of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments and economic utilisation.
There is no current indication that the Group's businesses will not continue to trade profitably and hence the life may differ or be longer than the estimates used to amortise intangible assets.
Capitalisation of development expenditure
Management have used their judgement in respect of the capitalisation of development costs against the criteria in the policy. The viability of the new technology and know-how is supported by the results of testing and by forecasts for the overall value and margins from future sales to support the approach taken.
Impairment of intangible assets including goodwill and investments
Investments made by the Company and intangible assets acquired in a business combination capitalised with goodwill by the Group are subject to annual impairment tests and other intangibles amortised over their estimated useful lives subject to an assessment of impairment.
Subsequent impairment tests for investments and intangible assets are based on risk adjusted future cash flows discounted using appropriate discount rates. These future cash flows are based on forecasts which include estimated factors and are inherently judgemental. Future events could cause the assumptions to change which could have an adverse effect on the future results of the Group. Further detail is given in note 10.
Right-of-use assets and lease liabilities
In respect of right-of-use leased assets key estimates are a combination of the incremental borrowing rate used to discount the total cash flows and the term of the leases where breaks or extensions fall within the Group's control. These are used to derive both the opening asset value and lease liability as well as the consequential depreciation and financing charges. A 1% change in the discount rate used would increase interest charges and decreased depreciation by approximately £10,000 a year with an immaterial impact on assets and liabilities.
Notes to the financial statements for the 18 month period ended 31 December 2021
1. Revenue and segmental analysis
Recurring revenue represents the sale of the group's full vehicle telematics solutions, support and maintenance. Non-recurring revenue represents the sale of hardware, installation, and professional services. Revenue is defined as per the accounting policies.
Revenue in respect of the setup, supply of hardware and software installation is recognised at a point in time. Professional services including project management, managed services and support services income is recognised over the period when services are provided.
| 18 month period ended 2021 | Year ended 2020 |
| £'000 | £'000 |
By type |
|
|
Revenue recognised at a point in time Supply of hardware and installation | 29,336 | 15,398 |
| 29,336 | 15,398 |
Revenue recognised over time Professional services including project management |
4,817 |
2,605 |
Managed service agreement income | 48,911 | 28,003 |
Other support and maintenance services | 5,104 | 3,993 |
| 58,832 | 34,601 |
| 88,168 | 49,999 |
By destination: |
|
|
UK | 78,230 | 44,765 |
Rest of Europe | 2,677 | 1,405 |
Rest of the World | 7,261 | 3,829 |
Total revenue | 88,168 | 49,999 |
Revenue in respect of one customer amounted to £22.6m representing 26% of the revenue for the 18 month period ended 31 December 2021 (year ended 30 June 2020: £13.4m and 27%).
The split of the disaggregated revenue between segments is summarised below.
The chief operating decision maker ("CODM") is identified as the Board. It continues to define all the Group's trading as operating in the telematics market with two complementary segments. The Board as the CODM also review the revenue streams of recurring and non-recurring revenue as part of their internal reporting.
The directors consider the Microlise business to be one segment related to fleet management and the separately acquired Trutac business to be a complementary segment related to tachograph specific software and analysis services.
|
| Microlise | Trutac | 18 month period ended 2021 | Microlise | Trutac | Year ended 2020 Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Revenue |
| 83,109 | 5,059 | 88,168 | 49,276 | 723 | 49,999 |
|
|
|
|
|
|
|
|
Depreciation and amortisation |
| 6,197 | 691 | 6,888 | 4,227 | 100 | 4,327 |
|
|
|
|
|
|
|
|
Operating (loss)/profit |
| 178 | 782 | 960 | 1,141 | 65 | 1,206 |
Net interest |
| (824) | (9) | (833) | (423) | - | (423) |
Share of associate loss |
| (132) |
| (132) | (73) | - | (73) |
(Loss)/profit before tax |
| (778) | 773 | (5) | 645 | 65 | 710 |
|
|
|
|
|
|
|
|
Segment assets |
| 111,720 | 9,622 | 121,342 | 116,636 | 5,662 | 122,298 |
Segment liabilities |
| (48,009) | (1,785) | (49,794) | (64,256) | (1,978) | (66,234) |
Additions to non-current assets |
| 4,878 | 826 | 5,704 | 2,114 | 165 | 2,279 |
All of Trutac's revenue relates to the UK. Trutac's revenue is primarily from managed service agreements with the exception of £661,000 of hardware revenue in 2021. All remaining revenue relates to the Microlise business.
The group's non-current assets comprising investments, tangible and intangible fixed assets and the net assets by geographical location are:
| 31 December 2021 | 30 June 2020 | ||
| Non-current assets | Net assets | Non-current assets | Net assets |
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
United Kingdom | 88,729 | 70,367 | 91,837 | 54,593 |
France | 3 | 34 | 18 | 152 |
Australia | 3 | 12 | 2 | 460 |
India | 381 | 1,135 | 662 | 859 |
| 89,116 | 71,548 | 92,519 | 56,064 |
2. Adjusted results
The Group's primary results measure, which is considered by the directors of the Group to better represent the underlying and continuing performance of the Group, is adjusted EBITDA as set out below. EBITDA is a commonly used measure in which earnings are stated before net finance income, amortisation and depreciation as a proxy for cash generated from trading.
The group now qualifies for large company R&D tax reliefs with the £920,000 RDEC credit included in other operating income above operating profit for the period ended 30 June 2021 and in line with common practice is included in the Group's calculation of EBITDA.
The measure has been adjusted in the current period by the IPO expenses and in the prior period by acquisition costs expensed under IFRS which are considered to be non-recurring and non-trading in nature.
|
|
18 month period ended 2021 | Year ended 2020 |
|
| £'000 | £'000 |
|
|
|
|
Operating profit before interest and share of associate |
| 960 | 1,206 |
Exceptional IPO costs (2020: acquisition expenses) |
| 3,415 | 138 |
Depreciation |
| 3,085 | 2,176 |
Amortisation of intangible assets |
| 3,803 | 2,151 |
Adjusted EBITDA |
| 11,263 | 5,671 |
3. Operating profit
The operating profit is stated after charging/(crediting):
| 18 month period ended 2021 |
Year ended 2020 |
| £'000 | £'000 |
Auditors remuneration: |
|
|
Audit of the Group and Company financial statements | 184 | 40 |
Non-audit services* | 295 | 52 |
Depreciation of property, plant and equipment | 1,858 | 1,363 |
Depreciation of right-of-use assets | 1,227 | 813 |
Amortisation of intangible assets | 3,803 | 2,151 |
Cost of inventory sold | 20,056 | 10,986 |
Research and development costs | 6,767 | 5,379 |
Foreign exchange losses | 180 | 22 |
In other operating income: |
|
|
Government job retention scheme income | (127) | (537) |
Government innovation grants | (96) | - |
Research and Development Expenditure Credit | (920) | - |
*The 2021 Group auditors, BDO LLP, also provided £295,000 of assurance services as the reporting accountants for the AIM listing. The prior auditors for 2020, Cooper Parry Group Limited, provided tax services.
The group previously qualified for SME research and development allowances and as a result the prior year tax credit benefitted from these. The company now claims RDEC credits which are treated as other operating income and reflected in the profit before tax.
4. Information regarding directors and employees
Employees
The aggregate remuneration of employees comprised:
| Group |
| Company |
|
| 18 month period ended 2021 |
Year ended 2020 | 18 month period ended 2021 |
Year ended 2020 |
| £'000 | £'000 | £'000 | £'000 |
Wages and salaries | 36,630 | 19,175 | 636 | - |
Social security costs | 3,312 | 1,872 | 29 | - |
Pensions | 1,399 | 777 | 9 | - |
Share based payment | 129 | - | 129 | - |
Total | 41,470 | 21,824 | 803 | - |
Average number of employees
The average number of employees in the period/year was:
| Group |
| Company |
|
| 18 month period ended 2021 |
Year ended 2020 | 18 month period ended 2021 |
Year ended 2020 |
Sales and distribution | 76 | 71 | - | - |
Operations and development | 438 | 379 | - | - |
Production and warehouse | 22 | 24 | - | - |
Administration | 75 | 77 | 1 | - |
Total | 611 | 551 | 1 | - |
The directors were previously employed and paid by a subsidiary and then with 5 directly employed by the company
from September 2021.
Directors' remuneration
| 18 month period ended 2021 | Year ended 2020 |
| £'000 | £'000 |
Directors' remuneration - aggregate emoluments | 1,074 | 610 |
Group pension contributions in respect of 4 Share based payment | 24 69 | 12 |
| 1,167 | 622 |
Remuneration of the highest paid director | 461 |
273 |
Group pension contributions Share based payment | 7 31 | 4 |
| 499 | 277 |
Key management compensation
| 18 month period ended 2021 |
Year ended 2020 |
| £'000 | £'000 |
Short term employee benefits | 2,596 | 641 |
Post employment benefits | 71 | 86 |
Share based payment | 129 | - |
Total key management remuneration | 2,796 | 727 |
Key management is defined as those persons having authority and responsibility for planning, directing, and controlling the activities of the Group, directly or indirectly, including any directors (whether executive or otherwise) of the Group which has been more clearly defined in the period for the key management roles (2020: directors only).
5. Interest receivable
| 18 month period ended 2021 |
Year ended 2020 |
| £'000 | £'000 |
Interest receivable |
|
|
Bank interest receivable | - | 86 |
Other interest receivable | - | 22 |
Unwinding of discount on financing transactions | 72 | 177 |
| 72 | 285 |
6. Interest payable
| 18 month period ended 2021 |
Year ended 2020 |
| £'000 | £'000 |
Interest payable |
|
|
Interest on bank and other borrowings | 734 | 622 |
Lease liability financing charges | 72 | 63 |
Other interest | 99 | 23 |
| 905 | 708 |
7. Taxation on profit
| 18 month period ended 2021 |
Year ended 2020 |
| £'000 | £'000 |
Current taxation |
|
|
UK corporation tax (charge)/credit | - | 982 |
Foreign tax | (198) | - |
Adjustments in respect of previous periods | (100) | 65 |
| (298) | 1,047 |
Deferred taxation |
|
|
Origination and reversal of timing differences | (645) | (5) |
Charge due to change in tax rate | (1,416) | (323) |
Adjustments in respect of previous periods | 146 | - |
| (1,915) | (328) |
Tax (charge)/credit on (loss)/profit | (2,213) | 719 |
Factors affecting the tax charge/(credit) for the period
The tax charge/(credit) on the (loss)/profit for the period differs from applying the standard rate of corporation tax in the UK of 19% (2020: 19%). The differences are reconciled below:
| 18 month period ended 2021 |
Year ended 2020 |
| £'000 | £'000 |
(Loss)/profit before taxation | (5) | 710 |
|
|
|
Corporation tax at standard rate | (1) | 135 |
Factors affecting charge for the period/year: |
|
|
Disallowable expenses | 781 | 55 |
Income not taxed | - | (59) |
Research and development allowances | 36 | (1,359) |
Reduced rate on surrender of R&D losses for tax credit | - | 305 |
Other timing differences | - | (54) |
Overseas tax rates | 27 | - |
Adjustments in respect of previous periods | (46) | (65) |
Charge/(credit) due to change in tax rate | 1,416 | 323 |
Tax charge/(credit) on profit | 2,213 | (719) |
In March 2020, the Chancellor of the Exchequer announced that the tax rate from 1 April 2020 remained at 19% rather than the previously enacted reduction to 17%.
In May 2021 a change in the corporation tax rate from 19% to 25% from April 2023 was substantively enacted in the Finance Act 2021 and accordingly has been applied to deferred tax balances at 31 December 2021. The rate of 25% (2020: 19%) is accordingly applied to applicable UK deferred taxation balances.
8. Earnings per share
| 18 month period ended 2021 |
Year ended 2020 |
(Loss)/profit used in calculating EPS (£'000) | (2,218) | 1,429 |
Weighted average number of shares for basic EPS ('000) | 106,266 | 102,168 |
Weighted average number of shares for diluted EPS ('000) | 106,266 | 102,168 |
Basic and diluted earnings per share (pence) | (2.09) | 1.40 |
1,107,848 share options were granted on 21 July 2021 which are potentially dilutive to a profit.
The comparative number of shares has been restated to reflect bonus issues and sub-divisions subsequently made, consistent with 2021. Costs relating to the IPO have resulted in a loss for the current period compared with a profit in the prior period, Adjusting for this factor, the earnings per share would be 1.13 pence for the current period (2020: 1.40 pence for the period)
9. Property, plant and equipment
Group | Freehold property | Right-of-use property | Leasehold building Improvements | Right-of-use equipment | Equipment, fixtures and fittings | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 1 July 2019 | 5,449 | 1,332 | 377 | 420 | 1,586 | 9,164 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
At 1 July 2019 | 5,525 | 1,676 | 384 | 651 | 2,429 | 10,665 |
Acquisitions (note 24) | - | 148 | - |
| 17 | 165 |
Additions | - | 130 | - | 136 | 1,235 | 1,501 |
Disposals | - | - | (30) | - | - | (30) |
Exchange adjustments | - | - | (25) | - | 23 | (2) |
At 30 June 2020 | 5,525 | 1,954 | 329 | 787 | 3,704 | 12,299 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
At 1 July 2019 | 76 | 344 | 7 | 231 | 843 | 1,501 |
Charge for the year | 102 | 521 | 68 | 292 | 1,193 | 2,176 |
Disposals | - | - | - | - | - | - |
Exchange adjustments | - | - | - | - | (14) | (14) |
At 30 June 2020 | 178 | 865 | 75 | 523 | 2,022 | 3,663 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 30 June 2020 | 5,347 | 1,089 | 254 | 264 | 1,682 | 8,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
At 1 July 2020 | 5,525 | 1,954 | 329 | 787 | 3,704 | 12,299 |
Additions | - | 1,048 | - | 458 | 1,554 | 3,060 |
Reclassification | (254) | - |
|
| 254 | - |
Transfer to intangibles | - | - | - | - | (27) | (27) |
Exchange adjustments | - | - | (23) | - | (25) | (48) |
At 31 December 2021 | 5,271 | 3,002 | 306 | 1,245 | 5,460 | 15,284 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
At 1 July 2020 | 178 | 865 | 75 | 523 | 2,022 | 3,663 |
Charge for the period | 153 | 834 | 99 | 393 | 1,606 | 3,085 |
Transfer to intangibles | - | - | - | - | (14) | (14) |
Exchange adjustments | - | - | (5) | - | (18) | (23) |
At 31 December 2021 | 331 | 1,699 | 169 | 916 | 3,596 | 6,711 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 31 December 2021 | 4,940 | 1,303 | 137 | 329 | 1,864 | 8,573 |
Company | Freehold property |
| £'000 |
|
|
Cost |
|
At 1 July 2020 | - |
Additions | 4,965 |
At 31 December 2021 | 4,965 |
|
|
Depreciation |
|
At 1 July 2020 | - |
Charge for the period | 25 |
At 31 December 2021 | 25 |
|
|
Net book value |
|
At 30 June 2019 and 2020 | - |
At 31 December 2021 | 4,940 |
|
|
The property was transferred from a subsidiary company by a dividend in specie.
10. Intangible assets
|
|
| Customer relationships |
|
|
|
|
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Net book value |
|
|
|
|
|
|
|
At 1 July 2019 |
| 49,208 | 15,126 | 4,775 | 2,415 | - | 71,524 |
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
|
At 1 July 2019 |
| 49,208 | 15,893 | 5,355 | 2,546 | - | 73,002 |
Additions |
| - | - | 359 | - | 419 | 778 |
Acquisitions (note 24) |
| 3,092 | 1,887 | 1,838 | 165 | - | 6,982 |
At 30 June 2020 |
| 52,300 | 17,780 | 7,552 | 2,711 | 419 | 80,762 |
|
|
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
|
|
At 1 July 2019 |
| - | 767 | 580 | 131 | - | 1,478 |
Charge for the year |
| - | 1,039 | 939 | 173 | - | 2,151 |
At 30 June 2020 |
| - | 1,806 | 1,519 | 304 | - | 3,629 |
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
At 30 June 2020 |
| 52,300 | 15,974 | 6,033 | 2,407 | 419 | 77,133 |
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
|
At 1 July 2020 |
| 52,300 | 17,780 | 7,552 | 2,711 | 419 | 80,762 |
Additions |
| 478 | - | 1,821 | - | 345 | 2,644 |
Transfer from tangible assets |
| - | - | - | - | 27 | 27 |
At 31 December 2021 |
| 52,778 | 17,780 | 9,373 | 2,711 | 791 | 83,433 |
|
|
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
|
|
At 1 July 2020 |
| - | 1,806 | 1,519 | 304 | - | 3,629 |
Charge for the period |
| - | 1,708 | 1,711 | 271 | 113 | 3,803 |
Transfer from tangible assets |
| - | - | - | - | 14 | 14 |
At 31 December 2021 |
| - | 3,514 | 3,230 | 575 | 127 | 7,446 |
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
At 31 December 2021 |
| 52,778 | 14,266 | 6,143 | 2,136 | 664 | 75,987 |
|
|
|
|
|
|
|
|
The £478,000 of additions to the goodwill in respect of Microlise relate to recognition of additional deferred tax liabilities that arise on consolidation only and which had previously been omitted.
Goodwill considered significant in comparison to the Group's total carrying amount of such assets has been allocated to cash generating units or groups of cash generating units as follows:
|
| 31 December | 30 June |
|
| 2021 | 2020 |
|
| £'000 | £'000 |
|
|
|
|
Microlise |
| 49,686 | 49,208 |
Trutac |
| 3,092 | 3,092 |
|
| 52,778 | 52,300 |
The Group tests goodwill annually for impairment, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Microlise carrying value is assessed for impairment purposes by calculating the value in use using the net present value (NPV) of future cash flows arising from the originally acquired businesses discounted at a pre-tax rate of 11.6% (2020: 11.2%) and for the Trutac business at a pre-tax rate of 11.6% (2020: 12.4%).
The Microlise goodwill has been tested by reference to a 4 year management approved plan and Trutac by reference to a 4 year plan with a 2% long term growth rate considered applicable to the UK market applied to the terminal period. This includes consideration of the impact of cost inflationary pressures in the December 2021 tests and forecasts at that date and taking account of the corresponding inflationary price terms within the group's contracts with customers. The businesses achieved the FY21 forecasts used in the prior year test and no impairment is indicated although they are sensitive to forecast increases in EBITDA. The Microlise NPV exceeds carrying values by £19.9m (2020: £2.65m) and Trutac NPV exceeds carrying values by £2.5m (2020: £0.75m). Reasonable changes in the discount rate or terminal growth rate do not result in a risk of impairment of Microlise or Trutac goodwill.
At 31 December 2021, the Microlise plan subject to the impairment test to support the carrying value of goodwill, forecast £9.2m and required £7.1m of recurring EBITDA which compares with £6.8m recorded for 2021 and an expected increase to £7m for FY22 as a result of the growth trends in the Microlise revenues, supported by significant investment in the development of technology and ongoing operational efficiencies to be made (30 June 2020: forecast £8.34m and required £8.0m of recurring EBITDA in the long term).
The 31 December 2021 Trutac plan assessed for the impairment test to support the carrying value of goodwill forecast £1.27m and a required £0.95m compared to the current EBITDA of some £1.0m. The growth trends in Trutac revenues within the forecast is a result of continued investment into the underlying technologies, the release of new products and features as well as access to an enlarged customer base, a benefit of being part of the Microlise Group (30 June 2020: forecast £1.23m and required £1.1m of recurring EBITDA).
11. Investments
Group |
|
|
| Associate |
|
|
|
| £'000 |
At 1 July 2019 |
|
|
| 2,051 |
Share of loss for the period |
|
|
| (73) |
At 30 June 2020 |
|
|
| 1,978 |
Share of loss for the period |
|
|
| (132) |
At 31 December 2021 |
|
|
| 1,846 |
Company |
|
|
| Subsidiary undertakings |
| Associate | Total |
|
|
|
| £'000 |
| £'000 | £'000 |
At 1 July 2019 |
|
|
| 70,583 |
| 2,200 | 72,783 |
Additions |
|
|
| 7,108 |
| - | 7,108 |
Decrease in fair value |
|
|
| - |
| (600) | (600) |
At 30 June 2020 |
|
|
| 77,691 |
| 1,600 | 79,291 |
Additions |
|
|
| 16,622 |
| - | 16,622 |
Increase in fair value |
|
|
| - |
| 650 | 650 |
Return of capital |
|
|
| (16,621) |
| - | (16,621) |
At 31 December 2021 |
|
|
| 77,692 |
| 2,250 | 79,942 |
Subsidiary undertaking | Principal activity | Class of | % share |
Microlise Limited | Telematics services | Ordinary | 100% |
Microlise Holdings Limited | Intermediate holding company | Ordinary | 100% |
Microlise Midco Limited | Dormant company | Ordinary | 100% |
Microlise Engineering Limited | Dormant company | Ordinary | 100% |
Trutac Limited | Telematics services | Ordinary | 100% |
Microlise Pty Limited (Australia)
| Telematics services | Ordinary | 100% |
Microlise SAS (France) | Telematics services | Ordinary | 100% |
Microlise Telematics Private Limited (India)
| Telematics services | Ordinary | 100% |
Trutac Training Limited
| Dormant company | Ordinary | 100% |
Trucontrol Ltd
| Dormant company | Ordinary | 100% |
Trulogix Limited | Dormant company | Ordinary | 100% |
All the UK subsidiary companies are registered in England at the same registered office as the Company. Microlise Pty Limited is registered at Level 1, 20 Albert Street, Blackburn, Victoria, 3130 Australia, Microlise SAS at Les Hauts de la Duranne, 505 Avenue Galilee, 13290 Aix-en-Provence, France and Microlise Telematics Private Limited at 4th Floor, Pride Accord, Baner Road, Pune, 411045, India.
The group agrees to guarantee the liabilities of Microlise Midco Limited (01670983), Microlise Holdings Limited (06479107) and Microlise Engineering Limited (02211125) thereby allowing them to take exemption from having an audit under section 479A of the Companies Act 2006.
Investments in associates consist of a 20% holding in Trakm8 Holdings plc acquired on 22 December 2018 and measured in accordance with the accounting policy. The company is listed on AIM and at 31 December 2021 the market value of the shareholding was £2.25m (30 June 2020: £1.6m).
The primary business of Trakm8 Holdings plc is the development, manufacture, distribution and sale of telematics devices, services and optimisation solutions. The principal place of business is 4 Roman Park, Roman Way, Coleshill, Birmingham, West Midlands, B46 1HG.
The Group also has an interest of £1 in a jointly controlled not for profit community investment company, Road to Logistics C.I.C. This had commenced activity funded by a government grant and incurs neither a profit nor a loss. The principal place of business is Farrington Way, Eastwood, Nottingham, NG16 3AG.
Summarised financial information (material associates)
Trakm8 Holdings plc
Trakm8 Holdings plc has a year end of 31 March, and the summarised financial information disclosed is based on their published annual statements to 31 March 2020 and 2021 together with interim financial statements to 30 September 2021, prepared under IFRS.
|
| 30 September | 31 March |
|
| £'000 | £'000 |
Assets - non-current |
| 25,705 | 25,759 |
Assets - current |
| 9,558 | 12,425 |
Liability - non-current |
| (7,187) | (9,017) |
Liability - current |
| (7,586) | (7,988) |
Net assets (100%) |
| 20,490 | 21,179 |
Group share of net assets (20%) |
| 4,098 | 4,236 |
|
| 18 months ended 30 September | Year ended 31 March 2020 |
|
| £'000 | £'000 |
Revenues |
| 24,982 | 19,550 |
Loss from continuing operations |
| (964) | (1,093) |
Other comprehensive income |
| 1 | (7) |
Total comprehensive expense |
| (963) | (1,100) |
12. Deferred tax assets and liabilities
|
|
|
|
|
|
|
| ||||||
Group | Intangible assets
| Accelerated capital allowances | Freehold property | Tax losses | Other | Total | |||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||||||
At 30 June 2019 | (3,784) | 37 | - | 1,483 | 20 | (2,244) | |||||||
Arising on acquisition | (740) | - | - | 500 | - | (240) | |||||||
Credit/(charge) for the year | (115) | (61) | - | (143) | (9) | (328) | |||||||
At 30 June 2020 | (4,639) | (24) | - | 1,840 | 11 | (2,812) | |||||||
Foreign exchange movement | - | - |
| - | 2 | 2 | |||||||
RDEC credit | - | - | - | - | 212 | 212 | |||||||
Adjustment to goodwill | - | - | (847) | 369 | - | (478) | |||||||
Charge for the period | (829) | (55) | (309) | (381) | (341) | (1,915) | |||||||
At 31 December 2021 | (5,468) | (79) | (1,156) | 1,828 | (116) | (4,991) | |||||||
Deferred tax has been recognised at an average rate of 25% (2020: 19%).
The deferred tax is presented as:
|
| 31 December 2021 | 30 June |
|
| £'000 | £'000 |
Asset - non-current |
| - | 1,307 |
Liability - non-current |
| (4,991) | (4,119) |
Total |
| (4,991) | (2,812) |
13. Inventories
Group | 31 December 2021 | 30 June |
| £'000 | £'000 |
Raw materials and consumables | 1,092 | 1,816 |
Work in progress | 15 | 32 |
Finished goods and goods for resale | 1,834 | 1,756 |
| 2,941 | 3,604 |
An impairment loss of £202,000 in respect of inventory was recorded in the period ended 31 December 2021 (year ended 30 June 2020: £120,000).
14. Trade and other receivables
| Group |
| Company |
|
| |||
| 31 December 2021 | 30 June | 31 December 2021 | 30 June |
| |||
| £'000 | £'000 | £'000 | £'000 |
| |||
Current |
|
|
|
|
| |||
Trade receivables | 11,533 | 11,093 | - | - |
| |||
Provision for impairment of trade receivables | (303) | (154) | - | -- |
| |||
Trade receivables net | 11,230 | 10,939 | - | - |
| |||
Contract cost assets | 1,449 | 717 | - |
|
| |||
Amounts owed by group undertakings | - | - | - | 3,450 |
| |||
Other receivables | 206 | 1,416 | 28 | 50 |
| |||
Prepayments | 2,258 | 2,054 | 225 | 75 |
| |||
Total | 15,143 | 15,126 | 253 | 3,575 |
| |||
Non-current |
|
|
|
|
| |||
Trade receivables | 344 | 1,313 | - | - |
| |||
Contract cost assets | 2,366 | 2,152 | - | - |
| |||
Total | 2,710 | 3,465 | - | - | ||||
|
|
|
|
| ||||
Total | 17,853 | 18,591 | 253 | 3,575 | ||||
Analysis of expected credit losses is included in note 19.
The movements in Group contract related balances in the period/year are as follows:
|
18 month period ended 31 December 2021 |
Year ended 30 June |
| |||
Contract cost assets |
| £'000 |
| £'000 |
| |
Opening balance |
| 2,869 |
| 2,553 |
| |
Amortised to income statement |
| (1,116) |
| (686) |
| |
Incurred in the period |
| 2,062 |
| 1,002 |
| |
Closing balance |
| 3,815 |
| 2,869 |
| |
|
|
|
|
| ||
15. Cash and cash equivalents
| Group |
| Company |
|
| 31 December 2021 | 30 June | 31 December 2021 | 30 June |
| £'000 | £'000 | £'000 | £'000 |
Cash at bank and in hand | 13,210 | 10,061 | 1,090 | 5,055 |
16. Borrowings
| Group |
| Company |
|
| 31 December 2021 | 30 June | 31 December 2021 | 30 June |
Current | £'000 | £'000 | £'000 | £'000 |
Bank loans | - | 1,895 | - | 1,895 |
Other loans | - | 550 | - | - |
| - | 2,445 | - | 1,895 |
Non-current |
|
|
|
|
Bank loans | - | 14,950 | - | 14,949 |
Other loans | - | 179 | - | - |
| - | 15,129 | - | 14,949 |
|
|
|
|
|
Total | - | 17,574 | - | 16,844 |
Bank loans were secured by fixed and floating charges over the assets of the group and bore interest at rates of 1.75% to 2.7% over LIBOR. The loan liabilities were stated net of unamortised loan issue costs as at 30 June 2020 of £136,000 which has been fully amortised on full repayment of the loans in 2021.
Other loans were used to finance specific trading arrangements, had a term of 4 years and bore interest at 15%. They were repaid during the period.
17. Lease liabilities
| Group |
| Company |
|
| 31 December 2021 | 30 June | 31 December 2021 | 30 June |
| £'000 | £'000 | £'000 | £'000 |
Current | 717 | 787 | - | - |
Non-current | 994 | 582 | - | - |
Total | 1,711 | 1,369 | - | - |
Leases
The group has entered into lease contracts in respect of property in the jurisdictions from which it operates, use of data centres and vehicles which are typically for terms of 3 to 5 years. In respect of data centre contracts there are options to extend the initial period with these factored into the liabilities where the group plans to use these for a longer period. For property leases, it is customary for lease contracts to be reset periodically to market rental rates. Leases of equipment, data centre usage and vehicles comprise only fixed payments over the lease terms.
Right of use assets, additions and amortisation are included in note 9. Interest expenses relating to lease liabilities are included in note 6.
Other amounts relating to leases were as follows:
|
| 31 December 2021 | 30 June |
|
| £'000 | £'000 |
Short term lease expense |
| - | 7 |
Low value lease expense |
| 109 | 30 |
Total cash outflow for leases |
| 1,400 | 903 |
The maturity of lease liabilities at 30 June 2020 were as follows:
|
| Property | Equipment and vehicles | Total |
|
| £'000 | £'000 | £000 |
Within 1 year |
| 599 | 188 | 787 |
1-2 years |
| 368 | 61 | 429 |
2-5 years |
| 153 | - | 153 |
Total |
| 1,120 | 249 | 1,369 |
The maturity of lease liabilities at 31 December 2021 were as follows:
|
| Property | Equipment and vehicles | Total |
|
| £'000 | £'000 | £000 |
Within 1 year |
| 513 | 204 | 717 |
1-2 years |
| 389 | 146 | 535 |
2-5 years |
| 394 | 65 | 459 |
Total |
| 1,296 | 415 | 1,711 |
18. Trade and other payables
| Group |
| Company |
|
| 31 December 2021 | 30 June | 31 December 2021 | 30 June |
| £'000 | £'000 | £'000 | £'000 |
Current |
|
|
|
|
Trade payables | 4,068 | 3,024 | 27 | - |
Taxation and social security | 944 | 4,799 | 28 | - |
Amounts owed to group undertakings | - | - | 16,574 | 13,456 |
Other payables | 1,231 | 1,986 | 1,000 | 1,000 |
Accruals | 4,222 | 2,883 | 669 | - |
Contract liabilities | 15,315 | 12,701 | - | - |
Total | 25,780 | 25,393 | 18,298 | 14,456 |
|
|
|
|
|
Non-current |
|
|
|
|
Contract liabilities | 16,150 | 15,905 | - | - |
Deferred grant income | 196 | - | - | - |
Other payables | 966 | 1,874 | 1,000 | 2,000 |
Total | 17,312 | 17,779 | 1,000 | 2,000 |
|
|
|
|
|
Total | 43,092 | 43,172 | 19,298 | 16,456 |
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature. Contract liabilities relates principally to service income received in advance. The timing of recognition of Group contract liabilities are as follows:
| Less than one year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | Total |
|
At 31 December 2021 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Contract liabilities | 15,315 | 7,813 | 4,692 | 2,696 | 949 | 31,465 |
| Less than one year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | Total |
At 30 June 2020 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Contract liabilities | 12,701 | 7,853 | 4,969 | 2,542 | 541 | 28,606 |
The movements in Group contract related balances in the period/year are as follows:
|
|
18 month period ended 31 December 2021 |
| Year ended 30 June 2020 |
|
| £'000 |
| £'000 |
Revenue related contract liabilities |
|
|
|
|
Opening balance |
| (28,606) |
| (27,163) |
Invoiced in the period |
| (50,423) |
| (26,527) |
Recognised as revenue in the period |
| 47,564 |
| 25,084 |
Closing balance |
| (31,465) |
| (28,606) |
|
|
|
|
|
19. Financial Instruments
Financial risk management
The determination of financial risk management policies and the treasury function is managed by the CFO. Policies are set to reduce risk as far as possible without unduly affecting the operating effectiveness of the Group.
The Group's activities expose it to a variety of financial risks, the most significant being credit risk, liquidity risk and interest rate risk together with a degree of foreign currency risk as discussed below.
Categories of financial instruments
The Group has the below categories of financial instruments:
|
| 31 December 2021 | 30 June |
Recognised at amortised cost |
| £'000 | £'000 |
Cash and bank balances |
| 13,210 | 10,061 |
Trade receivables - net |
| 11,574 | 13,229 |
Other receivables |
| 206 | 1,416 |
Total financial assets |
| 24,990 | 24,706 |
|
|
|
|
Trade payables |
| 4,068 | 3,024 |
Other payables |
| 6,419 | 6,742 |
Bank loans |
| - | 16,845 |
Other loans |
| - | 729 |
Lease liabilities |
| 1,711 | 1,369 |
Total financial liabilities |
| 12,198 | 28,709 |
There were no assets or liabilities at 31 December 2021 or 30 June 2020 that were recognised and measured at fair value in the historical financial information.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss for the Group. Financial instruments, which potentially subject the Group to concentration of credit risk, consist primarily of cash and cash equivalents and trade accounts receivable including accrued income.
The Group places its cash and cash equivalents with major financial institutions, which management assesses to be of high-credit quality in order to limit the exposure of each cash deposit to a minimal level.
Trade receivables
Trade accounts receivable are derived primarily from non-recurring hardware sales and monthly service income and generally have 30-60 day terms. With the exception of one large customer who accounts for 31% (2020: 14%) of the trade receivable invoiced balance, credit risk with respect to accounts receivable is dispersed due to the large number of customers. Collateral is not required for accounts receivable. The credit worthiness of customers with balances in trade receivables not yet due has been assessed as high.
The aging of past due trade receivables according to their original due date is detailed below:
| 31 December | 30 June |
| 2021 | 2020 |
Past due | £'000 | £'000 |
0-60 days | 3,076 | 1,770 |
60-120 days | 186 | 654 |
121+ days | 1,014 | 779 |
Expected credit loss provision | (303) | (154) |
Total | 3,973 | 3,049 |
A majority of the expected credit loss provision relates to balances that are more than 120 days overdue. The expected credit loss on balances less than 120 days is immaterial. A substantial majority of the overdue debt has been collected since the period end date with the unprovided amounts considered to be collectible.
As at 30 June 2020 the lifetime expected loss provision for trade receivables is as follows:
Past due | Expected loss rate | Gross carrying amount £'000 | Loss provision £'000 |
0-60 days | 0% | 1,770 | - |
60-120 days | 2% | 654 | 13 |
121+ days | 18% | 799 | 141 |
Total |
| 3,223 | 154 |
As at 31 December 2021 the lifetime expected loss provision for trade receivables was as follows:
Past due | Expected loss rate | Gross carrying amount £'000 | Loss provision £'000 |
0-60 days | 0% | 3,076 | - |
60-120 days | 0% | 186 | - |
121+ days | 30% | 1,014 | 303 |
Total |
| 4,276 | 303 |
At each of the Statement of Financial Position dates, a portion of the trade receivables were impaired and provided for. The movement in the provision for trade receivables in each of the periods is as follows:
|
| 18 month period ended | Year ended |
|
| 31 December | 30 June |
|
| 2021 | 2020 |
|
| £'000 | £'000 |
At 1 July |
| 154 | 79 |
Provision charged |
| 149 | 93 |
Receivables written off in the period/year |
| - | (18) |
|
|
|
|
At period/year end |
| 303 | 154 |
Oher receivables are considered to bear similar risks to trade receivables or are owed by government bodies. Hence any expected credit loss on other financial assets is considered to be immaterial.
Liquidity risk
The Group now funds its business through equity and from cash generated from operations and also has a £20m undrawn working capital facility available. Details of the Group's borrowings are discussed in note 16. The Group monitors and manages cash to mitigate any liquidity risk it may face. The following table shows the Group's contractual maturities of financial liabilities based on undiscounted cash flows including interest charges and the earliest date on which the Group is obliged to make repayment:
| Less than one year | 1-2 years | 2-5 years | More than 5 years | Total |
At 31 December 2021 | £'000 | £'000 | £'000 | £'000 | £'000 |
Trade and other payables | 9,521 | 1,000 | - | - | 10,521 |
Lease liabilities | 764 | 858 | 473 | - | 2,095 |
Total | 10,285 | 1,858 | 473 | - | 12,606 |
| Less than one year | 1-2 years | 2-5 years | More than 5 years | Total |
At 30 June 2020 | £'000 | £'000 | £'000 | £'000 | £'000 |
Trade and other payables | 9,766 | - | - | - | 9,766 |
Bank loans | 2,351 | 2,561 | 12,372 | 922 | 18,206 |
Other loans | 631 | 179 | - | - | 810 |
Lease liabilities | 783 | 507 | 176 | - | 1,466 |
Total | 13,531 | 3,247 | 12,548 | 922 | 30,248 |
Interest rate risk
The bank loans were subject to interest at rates of 1.75 to 2.7% over LIBOR. A 0.5% increase in interest rates would therefore have had an impact of an increase in finance costs of approximately £85,000 in the last year.
Currency risk
The Group operates predominantly in the UK with sterling being its functional currency and has a degree of exposure to foreign currency risk, with this spread across income and expenses in Euros, US dollars and Australian dollars for sales and purchasing operations together with an outflow only of Indian rupees for the costs of development and operational support activity. The impact of a 10% fluctuation in all foreign exchange rates moving in the same direction against GBP has been assessed to be an overall impact of up to £300,000 which would be mitigated by some matching of income and expenses.
The net exposure to the dollar has reduced and ongoing costs in Indian rupees are now being managed by the use of forward contracts to fix the rate within the next year. The net underlying foreign currency balances, comprising overseas assets and liabilities, cash, receivables and payables in the UK, in the Group statement of financial position by underlying currency at the period end were:
| USD | Euro | AUD | INR | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 |
At 31 December 2021 | 3,249 | 460 | 599 | 1,152 | 5,460 |
At 30 June 2020 | 963 | 285 | 460 | 859 | 2,567 |
Capital management
The Group's capital comprises share capital, share premium and retained earnings. The Group's objectives when maintaining capital are:
To safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The capital structure of the Group consists of shareholders equity as set out in the consolidated statement of changes in equity. The longer-term funding requirements for acquisitions were financed from cash reserves and term bank debt which was fully repaid from the equity proceeds on listing. All working capital requirements are financed from existing cash resources.
The Group sets the amount of capital it requires in proportion to risk in conjunction with the retained earnings. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
20. Pensions
Defined contributions pension scheme
The group operates a number of defined contribution pension schemes. Contributions totalling £194,000 (2020: £140,000) were included in payables and due to the defined contribution scheme at the end of the year. The total contributions are disclosed in note 3.
21. Share capital
Group and Company |
|
|
Allotted, called up and fully paid | At | At 30 June |
| 2021 | 2020 |
| £ | £ |
115,945,956 ordinary shares of £0.001 each | 115,946 | - |
33,902 A ordinary shares of £1 each | - | 33,902 |
5,962 B ordinary shares of £1.55 each | - | 9,241 |
325 C ordinary shares of £1.00 each | - | 325 |
363 D ordinary shares of £1.00 each | - | 363 |
| 115,946 | 43,831 |
Movements in share capital have been as follows:
|
| A ordinary | B ordinary | C ordinary | D ordinary | Total |
At 1 July 2020 |
|
|
|
|
|
|
Number of shares |
| 33,902 | 5,962 | 325 | 363 | 40,552 |
Nominal value/£'000 |
| 34 | 9 | - | 1 | 44 |
Bonus issue on 18 June 2021 |
|
|
|
|
|
|
Number of shares |
| 42,673,062 | 7,504,477 | 409,083 | 456,915 | 51,043,537
|
Nominal value/£'000 |
| 42,673 | 11,633 | 409 | 457 | 55,172 |
Share capital reduction 7 July 2021 |
|
|
|
| ||
Nominal value/£'000 |
| (42,622) | (11,627) | (408) | (457) | (55,114) |
Subdivision and redesignation on 14 July 2021 |
|
|
|
| ||
Number of shares |
| 59,461,214 | (7,510,439) | (409,408) | (457,278) | 51,084,089 |
Nominal value/£'000 |
| 17 | (15) | (1) | (1) | - |
Issue of share capital |
|
|
|
|
|
|
Number of shares |
| 13,777,778 | - | - | - | 13,777,778 |
Nominal value/£'000 |
| 14 | - | - | - | 14 |
At 31 December 2021 |
|
|
|
|
|
|
Number of £0.001 shares |
| 115,945,956 | - | - | - | 115,945,956 |
Nominal value/£'000 |
| 116 | - | - | - | 116 |
On 18 June 2021, 51,043,537 bonus shares were issued as above utilising the merger reserve. This was followed by a share capital reduction on 7 July 2021 reducing the nominal value from £1 for A,C and D ordinary shares and from £1.55 for B ordinary shares to £0.002 per share with the reduction in capital transferred to retained earnings.
On 14 July 2021, all A,B,C and D £0.002 ordinary shares were subdivided and redesignated as £0.001 ordinary shares with equal rights.
The company listed on AIM on 22 July 2021 and issued 13,777,778 new £0.001 shares for cash at £1.35 each resulting in a share premium of £17,630,000 after deducting the issue expenses of £956,000.
All shares rank equally in respect of income and capital distributions.
22. Share based payments
The Company granted options on 22 July 2021 over 1,107,848 shares at an exercise price of £0.001 per share.
100,000 of the options were granted to non-executive directors and are subject only to continuing employment or good leaver conditions. The fair value is assessed as £1.35 per option using a Black Scholes model with a volatility of 60% and risk free rates of 0.5%. They are exercisable three years after grant for a period of a year.
1,007,848 options were granted to executive employees subject to a 3 year Total Shareholder Return condition from the date of grant of a minimum of 8% annual growth in the share price up to an 18% return for 100% to be exercised. The fair value is assessed as £0.88 per option based on a Monte Carlo pricing model with a volatility of 60% and risk-free rates of 0.5%. The exercise period is within a year of the 3 year return being assessed.
The average vesting period is estimated at 3.5 years and the share based payment charge was £129,000 for the period (2020: £nil).
All options remain exercisable at 31 December 2021 with a weighted average vesting period of 3 years.
23. Related party transactions
The remuneration of key management personnel and directors is set out in note 4.
Loans have been advanced to directors of the company. In the year ended 30 June 2020, £1,440,000 was advanced to directors and repayments were made of £941,000. Interest of £21,580 was charged and the balance of £520,580 owed is included in other debtors at 30 June 2020. This was fully repaid in the following period.
During the period, and prior to the Group being listed on AIM, close relatives of directors were employed by the Group with aggregate remuneration and benefits of £1,200,000 paid by the Group.
24. Business combinations
FY20 acquisition
On 9 March 2020, the Group acquired the entire share capital of Trutac Limited, a provider of tachograph logistics and analysis software services for consideration of £6,790,000. The acquisition strengthens the group's presence in the HGV and PSV sectors and complements existing services. The goodwill arising of £3,092,000 is attributable to the workforce and expected future growth in customers and earnings. The transaction has been accounted for under the purchase method of accounting. The principal adjustments relate to £165,000 in respect of the brand and £1,887,000 of customer relationships together with the related deferred taxation liability of £390,000. The deferred tax liability was partly offset by recognition of an asset in respect of losses carried forward of £151,000. The revenue accounting policy was also aligned with the Group resulting in additional contract liabilities of £823,000 and a right of use asset and equal lease liabilities of £201,000 recorded under IFRS 16.
Trutac has contributed £723,000 of revenue and recorded a profit of £113,000 included in the consolidated income statement from 10 March 2020 to 30 June 2020 (excluding acquisition expenses and amortisation of intangible assets arising on consolidation).
Had Trutac been consolidated from 1 July 2019 it would have contributed another £2,200,000 of revenue and a further profit before tax of £395,000 to the year (excluding acquisition expenses and amortisation of intangible assets arising on consolidation).
|
|
| Book value | Fair value adjustments |
|
|
|
| £'000 | £'000 | £'000 |
Intangible assets |
|
| 1,818 | 2,072 | 3,890 |
Property, plant and equipment |
|
| 17 | 148 | 165 |
Inventories |
|
| 56 | - | 56 |
Cash and cash equivalents |
|
| 813 | - | 813 |
Receivables |
|
| 641 | - | 641 |
Payables |
|
| (657) | (823) | (1,480) |
Lease liabilities |
|
| - | (148) | (148) |
Deferred taxation liability |
|
| - | (239) | (239) |
Net assets acquired |
|
|
|
| 3,698 |
Goodwill |
|
|
|
| 3,092 |
|
|
|
|
| 6,790 |
Consideration satisfied by: |
|
|
|
|
|
Cash |
|
|
|
| 3,940 |
Deferred consideration |
|
|
|
| 3,000 |
Discounted for 3 year payment period |
|
|
|
| (150) |
|
|
|
|
| 6,790 |
The Group incurred acquisition related costs of £138,000 related to stamp duty, legal and professional fees. These costs have been included in administrative expenses in the group's consolidated statement of comprehensive income.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.