CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2011

 

	Notes	2011	2010
		£	£
NET CASH INFLOW FROM OPERATING ACTIVITIES	23	609,832	429,616
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(49,758)	(7,368)
Purchase of intellectual property		(96,411)	-
		------------------------------------	------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES		(146,169)	(7,368)
		------------------------------------	------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares net of expenses		-	269,513
Repayment of obligations under hire purchase agreements		(16,894)	(11,275)
Repayment of loans		(19,880)	(87,902)
		------------------------------------	------------------------------------------
NET CASH (USED IN) /FROM FINANCING ACTIVITIES		(36,774)	170,336
		------------------------------------	------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS		426,889	592,583
		------------------------------------	------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		692,138	99,555
		------------------------------------	------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR		1,119,027	692,138
		========================	========================

 

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2011

 

1.     GENERAL INFORMATION

 

Trakm8 Holdings PLC is a public limited company ("Company") incorporated in the United Kingdom (registration number 05452547). The Company is domiciled in the United Kingdom and its registered address is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. The Company's Ordinary Shares are traded on the AIM market of the London Stock Exchange.

 

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

 

2.     AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS

 

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as endorsed by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

3.     BASIS OF PREPARATION

 

The accounting policies set out in note 4 have been applied consistently to all periods presented in these consolidated financial statements.

 

These financial statements are presented in sterling as that is considered to be the currency of the primary economic environment in which the Group operates.  This decision was based on the Group's workforce being based in the UK and that sterling is the currency in which management reporting and decision making is based.

 

4.     ACCOUNTING POLICIES

 

        BASIS OF ACCOUNTING

 

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements.  If in the future such estimates and assumptions which are based on management's best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.  Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes. 

 

4.     ACCOUNTING POLICIES (continued)

 

 

 BASIS OF CONSOLIDATION

 

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

 

The trading results of subsidiaries acquired or disposed of during the year are included in the consolidated Statement of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

 

All intra-group transactions, balances, income and expenditure are eliminated on consolidation.

 

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.  The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.  Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date irrespective of the extent of any minority interest.  The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as goodwill.  Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (i.e. discount on acquisition) is recognised directly in the Statement of Comprehensive Income. 

 

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

 

 

SHARE-BASED PAYMENTS

 

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

 

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

 

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

 

4.     ACCOUNTING POLICIES (continued)

 

FINANCIAL INSTRUMENTS

 

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

 

Trade receivables

Trade receivables are initially recognised at fair value and subsequently measured at their amortised cost using the effective interest method less any provision for impairment.  A provision for impairment is made where there is objective evidence, (including customers with financial difficulties or in default on payments), that amounts will not be recovered in accordance with original terms of the agreement.  A provision for impairment is established when the carrying value of the receivable exceeds the present value of the future cash flow discounted using the original effective interest rate.  The carrying value of the receivable is reduced through the use of an allowance account and any impairment loss is recognised in the Statement of Comprehensive Income.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.  For the purposes of the Cash Flow Statement, cash and cash equivalents includes bank overdrafts.

 

Financial liabilities and equity

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

 

Bank borrowings

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

 

Trade payables

Trade payables are initially recognised at fair value and subsequently at amortised cost using the effective interest method.

 

GOODWILL

 

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

 

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

4.     ACCOUNTING POLICIES (continued)

 

INTANGIBLE ASSETS OTHER THAN GOODWILL

 

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

 

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

 

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

 

·      an asset is created that can be identified;

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

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

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

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

 

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

 

        PROPERTY, PLANT AND EQUIPMENT

 

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

 

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

 

Buildings	2%	straight line
Furniture, fixtures and equipment	25%	reducing balance
Computer equipment	33%	straight line

 

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

 

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

4.     ACCOUNTING POLICIES (continued)

 

INVENTORIES

 

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

 

LEASES

 

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

 

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

 

FOREIGN CURRENCIES

 

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

 

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

 

4.     ACCOUNTING POLICIES (continued)

 

TAXATION

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

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

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

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted.

 

REVENUE RECOGNITION

 

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

 

WARRANTY CLAIMS

 

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

 

GOVERNMENT GRANTS

 

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

 

4.     ACCOUNTING POLICIES (continued)

 

SEGMENTAL REPORTING

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.  The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors.

 

EQUITY

 

Equity comprises the following:

 

-    Share capital represents the nominal value of equity shares.

-    Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

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

-    Merger reserve represents the excess over nominal value of the fair value of consideration received for equity shares issued on reverse acquisition of subsidiaries, net of expenses of the share issue prior to the date of transition to IFRS.

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

-    Retained earnings represents retained losses.

 

 

CHANGES IN ACCOUNTING STANDARDS AND DISCLOSURES

 

a) The Group has adopted the following new Interpretations and amendments to existing standards in the year ended 31 March 2011:-

 

 

-     IFRS 3 (Revised)            'Business Combinations' effective 1 July 2009

-     IAS 27 (Revised)            'Consolidated and Separate Financial Statements' effective 1 July 2009

-     IAS 28 (Amendment)      'Investments in Associates' effective 1 July 2009

-     IAS 31 (Amendment)      'Investments in Joint ventures' effective 1 July 2009

-     IAS 32 (Amendment)      'Financial Instruments: Presentation' effective 1 February 2010

-     IAS 39 (Amendment)      'Financial instruments: Recognition and measurement' effective 1 July 2009

-     IFRIC 17                        'Distributions of Non-cash Assets to Owners' effective 1 July 2009

-     IFRIC 18                        'Transfers of Assets from Customers' effective 1 July 2009

 

 

4.     ACCOUNTING POLICIES (continued)

 

The adoption of these Interpretations and amendments to existing standards has not led to any changes in the Group's accounting policies.

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

 

-     IFRS 9                           'Financial Instruments' effective 1 January 2013

-     IAS 24 (Amendment)      'Related Party Disclosures' effective 1 January 2011

-     IFRIC 14 (Amendment)   'Prepayments of a minimum Funding Requirement' effective 1 January 2011

-     IFRIC 19                        'Extinguishing Financial Liabilities with Equity Instruments' effective 1 July 2010

 

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

 

 

5.    CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

 

Critical judgements in applying the Group's accounting policies

 

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

 

Valuation of intellectual property

 

In assessing the fair value of the intellectual property, management have considered the underlying value of the income streams.  Attention has been paid to the potential introduction of new products and services and the return anticipated from these and existing product sales.  The Directors believe that the fair value of the intellectual property is both appropriate and a realistic assessment of its long term value to the Group.

 

Key sources of estimation uncertainty

 

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

 

Recoverability of internally-generated intangible asset

 

During the year, management reconsidered the recoverability of its internally generated intangible asset which is included in the balance sheet at £69,895.  The costs relate to the development of the Group's portfolio of hardware and software products and management continue to believe that the anticipated revenues will enable the carrying amount to be recovered in full.  Assumptions have been made on the number of years over which the costs will be recovered based on management's best expectations and these could turn out to be longer or shorter although any subsequent adjustment is not expected to be material.

 

 

5.    CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (continued)

 

Recoverability of trade debtors

 

The withdrawal or reduction of credit facilities from Banks and leasing companies is affecting a wide range of businesses.  Management are particularly conscious of the financial weakness of some companies and is closely monitoring its outstanding debtor book in order to minimise the risk associated with future bad debts.    Weekly cash receipts are analysed and future supplies are stopped if accounts remain overdue.  An increasing number of customers taking the Group's services pay by direct debit and this is reducing the Group's exposure to the non-recoverability of trade debtors in the future.

 

6.     SEGMENTAL ANALYSIS

 

The format of segmental reporting is based on the Group's management and internal reporting of the segments below which carry different risks and rewards and are used to make strategic decisions.  Telematics is the sale of hardware through the Group's distributors.  Trakm8 SWIFT represents the sale of the Group's full vehicle telematics service direct to customers.  Development and other services comprises bespoke professional services and mapping solutions.

 

The Board review the revenue results by segment and the gross margin.  Cost of sales comprise hardware costs and have been allocated to the segments based on the number of units sold.  Administration costs and assets and liabilities are not separated out by segment.

 

Year ended 31 March 2011	Telematics     £	Trakm8 SWIFT   £	Development & other services £	Unallocated     £	Total     £
Segment revenue	1,394,998	2,553,876	237,390	-	4,186,264
Gross profit	489,081	2,060,747	237,390	-	2,787,218
Other income	-	-	361,542	-	361,542
Depreciation & amortisation	(127,182)	(41,668)	(95,714)	-	(264,564)
Finance income	-	-	-	979	979
Finance costs	-	-	-	(6,557)	(6,557)
Income tax	-	-	-	(117,094)	(117,094)

 

6.     SEGMENTAL ANALYSIS (continued)

 

 

Year ended 31 March 2010	Telematics     £	Trakm8 SWIFT   £	Development & other services £	Unallocated     £	Total     £
Segment revenue	1,680,640	1,398,767	346,746	-	3,426,153
Gross profit	787,897	1,167,926	346,746	-	2,302,569
Other income	-	-	582,979	-	582,979
Depreciation & amortisation	(99,388)	(80,360)	(96,094)	-	(275,842)
Finance income	-	-	-	152	152
Finance costs	-	-	-	(14,975)	(14,975)
Income tax	-	-	83,504	216,676	300,180

 

 

The Group's operations are located in the UK and the Czech Republic.  The following table provides an analysis of the Group's revenue by geography based upon location of the Group's customers. 

 

Year ended 31 March 2011	Telematics   £	Trakm8 SWIFT   £	Development & other services £	Total   £
United Kingdom	502,235	2,543,862	114,983	3,161,080
Europe	193,874	10,014	58,450	262,338
Africa	278,361	-	47,000	325,361
Rest of the World	420,528	-	16,957	437,485
	1,394,998	2,553,876	237,390	4,186,264

 

The Group had two customers where each accounted for more than 10% of the Group revenue (2010: two).

 

Year ended 31 March 2010	Telematics   £	Trakm8 SWIFT   £	Development & other services £	Total   £
United Kingdom	1,000,334	1,395,132	220,030	2,615,496
Europe	268,966	3,635	120,216	392,817
Africa	352,532	-	6,500	359,032
Rest of the World	58,808	-	-	58,808
	1,680,640	1,398,767	346,746	3,426,153

 

 

7.     PROFIT FROM OPERATIONS

 

	2011	2010
	£	£
Profit from operations is stated after (crediting)/charging:
Other income - Government grant	(359,760)	(582,979)
Depreciation - owned fixed assets                    - assets on hire purchase	18,955 11,684	24,544 5,967
Amortisation of intangible assets	233,925	243,912
Operating lease rentals
Land and buildings	14,222	28,420
Other	11,587	5,775
Research and development	104	704
(Profit)/loss on foreign exchange transactions	(3,987)	5,707
Staff costs (note 10)	1,517,374	1,415,778

 

	2011	2010
	£	£
Auditor's remuneration
- audit services
Parent Company and consolidation	4,500	5,000
Subsidiary audits	10,500	20,000
- tax advisory services	2,200	4,175
	====================	====================

 

 

8.     FINANCE COSTS

 

	2011	2010
	£	£
Bank interest payable	62	7,770
Interest on finance leases	790	2,156
Interest on other loans	5,705	5,049
	---------------------------------	---------------------------------
	6,557	14,975
	====================	====================

 

9.     INCOME TAX

       

	2011	2010
	£	£
R&D tax credit	(17,828)	(83,504)
Recognition of deferred tax	-	(331,300)
Current year movement	134,922	114,624
	---------------------------------	---------------------------------
Income tax charge / (credit)	117,094	(300,180)
	===================	===================

 

Factors affecting the tax charge

 

        The tax assessed for the years are higher (2010: lower) than the applicable rate of corporation tax in the UK. The difference is explained below:

 

	2011	2010
	£	£
Profit before tax	323,133	260,996
	========================	========================

 

Profit / (loss) on ordinary activities multiplied by the standard rate of corporation tax in the UK of 28% (2010: 28%)	90,477	73,079
Effects of:
Expenses not deductible/income not taxable	61,593	41,545
Share option adjustment	2,778	1,612
Temporary differences	(2,988)	(1,612)
Change in deferred tax rates	3,015	-
Deferred tax brought forward recognised	(19,953)	(331,300)
R&D tax credit	(17,828)	(83,504)
	-------------------------------------	-------------------------------
Total tax	117,094	(300,180)
	======================	==================

 

 

10.   EMPLOYEES

	2011	2010
	No.	No.
The average monthly number of persons (including Directors) employed by the Group was:
Research and development	13	11
Selling and distribution	14	11
Production	3	5
Administration	11	11
	----------------------------	----------------------------
	41	38
	=================	=================

 

10.   EMPLOYEES (continued)

 

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

 

	2011	2010
	£	£
Wages and salaries	1,336,898	1,247,631
Social Security costs	170,555	162,390
Share Based Payments	9,921	5,757
	-------------------------------------	-------------------------------------
	1,517,374	1,415,778
	=====================	=====================

 

        Costs relating to the Directors who are the key management of the Group:

	2011	2010
	£	£
Wages and salaries	411,079	350,722
Pension	-	20,000
Social Security costs	41,840	37,055
Share Based Payments	3,236	4,203
	-------------------------------------	-------------------------------------
	456,155	411,980
	=====================	=====================

 

Further details of Directors' fees and salaries, bonuses and pensions are given in the Directors' Report on page 9.

 

 

11.   EARNINGS PER ORDINARY SHARE

 

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

 

		2011	2010
		£	£
Earnings for the year after taxation		206,039	561,176
		========================	========================
		No.	No.
Number of ordinary shares of 1p each		18,764,731	18,764,731
Basic weighted average number of ordinary shares of 1p each		18,764,731	18,165,144
Basic weighted average number of ordinary shares of 1p each (diluted)		19,180,873	18,359,713
		======================    ==	======================    ==
Basic profit pence per share		1.10p	3.09p
Diluted profit pence per share		1.07p	3.06p
		======================    ==	======================    ==

 

 

12.		INTANGIBLE ASSETS
									Intellectual property	Development costs	Total
									£	£	£
	COST
	As at 1 April 2009								1,546,007	344,514	1,890,521
	Additions								-	-	-
									───────	───────	───────
	As at 31 March 2010								1,546,007	344,514	1,890,521
	Additions								127,856	141,996	269,852
									───────	───────	───────
	As at 31 March 2011								1,673,863	486,510	2,160,373
									───────	───────	───────

 

							Intellectual property	Development Costs	Total
							£	£	£
	AMORTISATION
	As at 1 April 2009						336,922	195,379	532,301
	Charge for year						164,672	79,240	243,912
							──────	──────	──────
	As at 31 March 2010						501,594	274,619	776,213
	Charge for year						165,787	68,138	233,925
							──────	──────	──────
	As at 31 March 2011						667,381	342,757	1,010,138
							──────	──────	──────
	NET BOOK VALUE
	As at 31 March 2011						1,006,482	143,753	1,150,235
							──────	──────	──────
	As at 31 March 2010						1,044,413	69,895	1,114,308
							======================	======================	======================
	As at 1 April 2009						1,209,085	149,135	1,358,220
							======================	======================	======================

           

The intellectual property has been purchased from third parties.  Development costs have been internally generated.

 

Amortisation expenses of £233,925 (2010: £243,912) have been charged to Administrative expenses in the Consolidated Statement of Comprehensive Income.  Development costs will be fully amortised within the next four years and Intellectual Property will be fully amortised within the next six years.  

 

 

13.   PROPERTY & EQUIPMENT

 

		Freehold property	Furniture, fixtures and equipment	Computer equipment	Total
		£	£	£	£

        COST

As at 1 April 2009		420,000	61,507	171,239	652,746
Additions		-	590	31,128	31,718
Exchange differences		-	-	236	236
Disposals		-	-	-	-
		___________	____________	____________	____________
As at 31 March 2010		420,000	62,097	202,603	684,700
Additions		-	37,469	12,289	49,758
Exchange differences		-	-	215	215
Disposals			(15,297)	(33,942)	(49,239)
		____________	____________	____________	____________
As at 31 March 2011		420,000	84,269	181,165	685,434
		====================	====================	====================	====================

 

 

 

		Freehold property	Furniture, fixtures and equipment	Computer equipment	Total
		£	£	£	£

        DEPRECIATION

As at 1 April 2009		13,224	47,705	149,187	210,116
Charge for year		4,408	3,633	22,470	30,511
Exchange differences		-	-	195	195
Disposals		-	-	-	-
		_____________	_____________	_____________	_____________
As at 31 March 2010		17,632	51,338	171,852	240,822
Charge for year		4,408	5,150	21,081	30,639
Exchange differences		-	-	205	205
Disposals		-	(15,297)	(33,942)	(49,239)
		_____________	_____________	________	________
As at 31 March 2011		22,040	41,191	159,196	222,427
		======================	======================	======================	======================

        NET BOOK VALUE

As at 31 March 2011		397,960	43,078	21,969	463,007
		======================	======================	======================	======================
As at 31 March 2010		402,368	10,759	30,751	443,878
		======================	======================	======================	======================
As at 1 April 2009		406,776	13,802	22,052	442,630
		======================	======================	======================	======================

 

Included within freehold property is £199,585 (2010: £199,585) relating to land which is not depreciated. The net book value of plant and computer equipment includes £8,167 (2010: £15,235) in respect of assets held under finance leases and hire purchase contracts. The depreciation charge in respect of these assets was £11,684 (2010: £5,967).

 

Total depreciation expenses of £30,639 (2010: £30,511) have been charged to administrative expenses in the Consolidated Statement of Comprehensive Income.

 

14.   INVENTORIES

 

	2011	2010
	£	£
Finished goods and goods for resale	259,042	106,636
	==================	==================

 

The cost of inventories recognised as an expense and included in cost of sales amounted to £1,399,045 (2010: £1,123,584).  During the year old inventory lines totalling nil (2010: £22,994) were written down and charged to cost of sales in the Consolidated Statement of Comprehensive income.

 

 

15.   TRADE AND OTHER RECEIVABLES

 

	2011	2010
	£	£
Trade receivables	757,160	529,990
Other receivables	63,237	116,620
Prepayments & accrued income	72,775	54,719
	----------------------------------------	----------------------------------------
	893,172	701,329
	========================	========================

 

The analysis of trade receivables by currency is as follows:

	2011	2010
	£	£
Pound sterling	638,604	423,143
Euro	111,188	92,706
Other	7,368	14,141
	----------------------------------------	----------------------------------------
	757,160	529,990
	========================	========================

 

An allowance for impairment is made where there is an identified event which, based on previous experience, is evidence of a reduction in the recoverability of the outstanding amount.  An allowance has been made for estimated irrecoverable trade receivables of £6,000 (2010: £2,000). 

 

As at 31 March 2011 trade receivables of £354,524 were past due but not impaired.  The ageing analysis of these trade receivables is as follows:-

 

						2011	2010
						£	£
	Up to 3 months					295,477	105,812
	3 to 6 months					59,047	-
						──────	──────
						354,524	105,812
						══════	══════

 

The Directors consider that the carrying amount of trade and other receivables approximates to their fair values.  The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.

 

16.	DEFERRED TAX

 

  The analysis of deferred tax assets and deferred tax liabilities is as follows:

						2011	2010
	Deferred tax asset					£	£
	Deferred tax asset to be recovered after more than 12 months					81,428	216,513
						──────	──────
	Deferred tax liability Deferred tax asset Deferred tax asset					£	£
	Deferred tax liability to be recovered after more than 12 months					(18,185)	(18,348)
						──────	──────
	Deferred tax asset net					63,243	198,165
						══════	══════

 

  The movement in the deferred income tax assets and liabilities during the year is as follows:-

 

	Deferred tax assets				Accelerated tax depreciation	Utilisation of unrecognised losses	Total
					£	£	£
	As at 1 April 2010				16,404	200,109	216,513
	Charged to the income statement				(18,093)	(116,992)	(135,085)
					══════	══════	══════
	At 31 March 2011				(1,689)	83,117	81,428
					══════	══════	══════

 

 

	Deferred tax liabilities						Building revaluation
							£
	As at 1 April 2009						(18,511)
	Credited to the income statement						163
							══════
	At 31 March 2010						(18,348)
	Credited to the income statement						163
							══════
	At 31 March 2011						(18,185)
							══════

 

17.   CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

 

	2011	2010
	£	£
Trade payables	481,688	502,102
Taxation and social security	224,093	153,544
Other payables	43,588	31,136
Accruals and deferred income	723,705	410,891
	----------------------------------	----------------------------------
	1,473,074	1,097,673
	======================	======================

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

 

 

18.   BORROWINGS

 

	2011	2010
	£	£
Bank loan	179,661	199,543
Obligations under finance leases and hire purchase arrangements (see note 19)	6,830	23,722
	--------------------------------	--------------------------------
	186,491	223,265
	======================	======================

 

 

	2011	2010
	£	£
On demand or within one year	27,305	36,764
After one and within two years	21,099	27,305
After two and within five years	67,225	65,239
After five years	70,862	93,957
	----------------------------------	----------------------------------
	186,491	223,265
Less: Amount due for settlement within one year (shown as current liabilities)	(27,305)	(36,764)
	----------------------------------	----------------------------------
Amount due for settlement after more than one year	159,186	186,501
	======================	======================

 

       The bank loan is secured by a fixed and floating charge on all the assets of the Group. It is repayable by monthly instalments until 2019 and bears interest at a floating rate of 2.50% over base rate.

 

19.   PROVISIONS

 

	2011	2010
	£	£
Increase during the year	70,000	-
	--------------------------------	--------------------------------
	70,000	-
	======================	======================

 

The provision relates to the estimated additional costs payable under the terms of the contract for the acquisition of the telematics assets from Vincotech Gmbh.  The costs relate to commission payable and have been estimated based on the anticipated numbers of units that will be sold.

 

20.   OBLIGATIONS UNDER HIRE PURCHASE CONTRACTS

 

				2011	2010
				£	£
Gross hire purchase liabilities - minimum payments:
No later than 1 year				6,884	17,682
Later than 1 year and no later than 5 years				-	6,884
				6,884	24,566
Less future finance charges				(54)	(844)
Present value				6,830	23,722

       

The present value of minimum hire purchase payments is analysed as follows:

			2011		2010
				£	£
No later than 1 year				6,830	16,893
Later than 1 year and no later than 5 years				-	6,829
				6,830	23,722

All contracts are denominated in sterling and are secured on the assets.  The fair value of the hire purchase obligations approximates to their carrying amount.

 

 

21.   SHARE CAPITAL

 

	2011		2010
	No's '000's	£	No's  '000's	£
Authorised
Ordinary shares of 1p each	200,000	2,000,000	200,000	2,000,000
	========================	========================	========================	========================
Allotted, issued and fully paid
Ordinary shares of 1p each	18,764	187,647	18,764	187,647
	========================	========================	========================	========================

 

 

22.   SHARE-BASED PAYMENTS

 

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

 

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

 

Option Exercise Price	Balance as at 31 March 2010	Granted during year	Exercised during year	Expired/ forfeited during the year	Balance as at 31 March 2011	Grant date	Option & expected Life (years)	Risk free rate of return	Volatility
5.25p	100,000	-	-	-	100,000	30/11/08	3.0	3.02%	54%
6.0p	550,000	-	-	-	550,000	30/07/09	3.0	3.02%	54%
15.5p	-	400,000	-	100,000	300,000	30/04/10	3.0	3.02%	60%
Total	650,000	400,000	-	100,000	950,000

 

The weighted average exercise price of share options outstanding as at 31 March 2011 was 8.9 pence.

 

The exercise of all share options is the closing market price on the day of grant.  A vesting period of 1 or 2 years is applicable according to the terms of each scheme.

 

The fair value of the equity settled share options granted is estimated as at the date of grant using the Black Scholes option pricing model taking into account the terms and conditions upon which the options were granted. The volatility has been based on historic share prices and the dividend yield has been assumed to be 0% for all schemes.

 

The Group charged £9,921 to the Statement of Comprehensive Income in respect of Share-Based Payments for the financial year ended 31 March 2011 (2010: £5,757).

 

 

23.   CASH FLOWS

 

				2011	2010
				£	£
		Reconciliation of profit before tax to net cash flow from operating activities:
		Profit before tax		323,133	260,996
		Depreciation		30,639	30,511
		Bank and other interest charges		5,578	14,823
		Amortisation of intangible assets		233,925	243,912
		Capitalised development costs		(103,441)	-
		Share based payments		9,922	5,757
				---------------------------------	-------------------------------------
		Net profit before changes in working capital		499,756	555,999
		Movement on retranslation of overseas operations		998	1,012
		Movement in inventories		(152,406)	52,517
		Movement in trade and other receivables		(191,843)	(1,321)
		Movement in trade and other payables		375,401	(173,149)
				----------------------------------	-----------------------------------
		Cash generated from operations		531,906	435,058
		Interest paid		(6,557)	(14,975)
		Interest received		979	152
		Income taxes received		83,504	9,381
				-----------------------------------	-----------------------------------
		Net cash inflow from operating activities		609,832	429,616
				=====================	=====================

 

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

 

24.	FINANCIAL COMMITMENTS

       

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

		2011	2010
	Operating Leases	£	£
	Land and buildings
	Within one year	14,222	22,587
	In the second to fifth years inclusive	-	13,815
	Other
	Within one year	12,078	2,640
	In the second to fifth years inclusive	19,131	615

 

Land and buildings under operating leases represents one lease payable by the Group which has an expiry date in December 2011.

 

25.   RELATED PARTY TRANSACTIONS

 

Details of the remuneration of the directors, who are the key management personnel of the Group, are disclosed in the Directors' report.

 

J Watkins is a Director and shareholder of Omitec Group Limited.  Omitec Limited is a wholly owned subsidiary of Omitec Group Limited and is a Partner of Trakm8 Limited working on the Trusted Road Usage Emissions Profiling Government Project for the Technology Strategy Board.

 

It was announced on 21 June 2010 that a manufacturing agreement had been signed with Omitec for the production of the new T8 telematics platform.  On 25 February 2011 it was announced that a further manufacturing agreement had been entered into with Omitec for the production of the new T8 Mini telematics hardware.  During the year ended 31 March 2011 a total of £579,339 was invoiced to Trakm8 Limited by Omitec Limited (2010: £21,926) and Trakm8 Limited invoiced Omitec Limited £10,668 (2010: £24,973).  The net balance due on 31 March 2011 from Trakm8 Limited to Omitec Limited was £68,817 (2010: £2,609).  

 

 

26.   FINANCIAL INSTRUMENTS

 

Financial risk factors

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

 

Liquidity risk

The Group's objective is to maintain a balance between continuity and flexibility of funding through the use of borrowings and financial assets with a range of maturities.  Borrowing facilities are monitored against the Group's forecast requirements and it is the Group's policy to mitigate the risk by maintaining undrawn overdraft facilities and cash reserves. The bank overdraft facility is £250,000 and as at 31 March 2011 this facility was not being utilised. 

     

Credit risk

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

 

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

26.   FINANCIAL INSTRUMENTS (continued)

 

Significant accounting policies

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

 

Capital risk management

 

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

 

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

 

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio.  This ratio is calculated as debt divided by total capital.  Debt is calculated as total borrowings including "current and non-current borrowings" as shown in the consolidated balance sheet.  Total capital is calculated as "equity" as shown in the consolidated balance sheet plus debt.

 

The Group's strategy has been to reduce gearing and to increase cash and cash equivalents.  This has been successfully achieved through the profits generated during the year.

 

 

		2011	2010
		£	£
Total borrowings (note 18)		186,491	223,265
Total equity		2,371,073	2,019,021
Total capital		2,557,565	2,242,286
Gearing ratio		7%	10%

 

Financial instruments by category

 

Assets as per balance sheet		Loans and receivables
		2011	2010
		£	£
Trade and other receivables excluding prepayments		820,397	646,610
Cash and cash equivalents		1,119,207	692,138
		1,939,604	1,338,748
Liabilities as per balance sheet		Financial liabilities at amortised cost
		2011	2010
		£	£
Borrowings (excluding finance lease liabilities)		179,661	199,543
Hire purchase		6,830	23,722
Trade and other payables excluding statutory liabilities		1,248,981	835,960
		1,435,472	1,059,225

 

PARENT COMPANY BALANCE SHEET

As at 31 March 2011

 

			As restated
	Notes	2011	2010
		£	£
FIXED ASSETS
Investments	3	801,782	991,023
		----------------------------------------	----------------------------------------

CURRENT ASSETS

Debtors	4	564,804	673,136
Cash at bank		626,229	504,389
		----------------------------------------	----------------------------------------
		1,191,033	1,177,525
CREDITORS: Amounts falling due within one year	5	(32,168)	(267,493)
		---------------------------------------	----------------------------------------
NET CURRENT ASSETS		1,158,865	910,032
		----------------------------------------	----------------------------------------
NET ASSETS		1,960,647	1,901,055
		========================	========================

 

 

CAPITAL AND RESERVES

Called up share capital	6	187,647	187,647
Share premium	7	1,719,402	1,719,402
Share based payment reserve	7	-	63,152
Profit and loss account	7	53,598	(69,146)
		----------------------------------------	----------------------------------------
SHAREHOLDERS' FUNDS		1,960,647	1,901,055
		========================	========================

 

 

These financial statements were approved by the Directors and authorised for issue on 22 June 2011 and are signed on their behalf by:

 

 

 

 

 

 

D Buck                                                                                       J Hedges

Director                                                                                     Director

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

For the year ended 31 March 2011

 

1.     ACCOUNTING POLICIES

 

        BASIS OF ACCOUNTING

 

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

 

SHARE-BASED PAYMENTS

 

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

 

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

 

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

 

FINANCIAL INSTRUMENTS

 

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

 

INVESTMENTS

 

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

 

FOREIGN CURRENCIES

 

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

 

1.    ACCOUNTING POLICIES (continued)

 

       DEFERRED TAXATION

 

Provision is made for deferred taxation in respect of all material timing differences that have originated but not reversed by the balance sheet date. Timing differences represent differences between gains and losses recognised for tax purposes in periods different from those in which they are recognised in the financial statements. No deferred tax is recognised on permanent differences between the Company's taxable gains and losses and its results as stated in the financial statements.  Deferred tax assets and liabilities are included without discounting.

 

PRIOR YEAR ADJUSTMENT

 

During the year ended 31 March 2010 the Intellectual Property owned by the subsidiary Interactive Projects Ltd ('IPL') was transferred at cost to the subsidiary Trakm8 Limited.  The cost of the Intellectual Property was calculated by reference to the original cost to IPL which after amortisation was £4,800.  The Directors consider that this cost did not reflect the cost to the Group where the Intellectual Property was purchased for £600,000 as part of the assets held within IPL.  In addition the transfer did not reflect the fall in the value of the investment in IPL resulting from the transfer.  The Balance Sheet for the year ended 31 March 2010 has been restated to reflect the transfer of the value of the Intellectual Property in the Group accounts at 31 March 2010 of £359,200.  The value of the investment in IPL at 31 March 2010 has also been reduced by £294,201 to the value of the net assets that remained in IPL at 31 March 2010.  The amount due to the Company has been increased by £359,200 to reflect the transfer of the Intellectual Property at cost to the Group.  The restatement has had an effect of an increase of £60,199 in net profit for the year ended 31 March 2010 and net assets at 31 March 2010.  The prior period adjustment did not have any impact on taxation for the year. 

 

2.     PROFIT AND LOSS ACCOUNT

 

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented as part of these financial statements.

 

The loss after tax for the year in the Company is £10,528 (2010: profit £285,868). 

 

3.     INVESTMENTS

 

		Subsidiaries
Cost		£
At 1 April 2010 as restated		991,023
Dividend paid during the year		(189,241)
		--------------------------------------
At 31 March 2011		801,782
		======================

 

Name of subsidiary	Country of incorporation	Class of holding	Proportion held and voting rights	Nature of business
Trakm8 Limited	England and Wales	Ordinary	100%	Marketing and distribution of vehicle telematics
PJSoft s.r.o.	Czech Republic	Ordinary	100%	Mapping services
Interactive Projects Limited	England and Wales	Ordinary	100%	Non trading
Purple Reality Limited	England and Wales	Ordinary	100%	Dormant

 

4.     DEBTORS

 

		As restated
	2011	2010
	£	£
Amounts due from subsidiary undertakings	558,971	667,303
Prepayments	5,833	5,833
	----------------------------------------	----------------------------------------
	564,804	673,136
	========================	========================

 

5.     CREDITORS: Amounts falling due within one year

 

	2011	2010
	£	£
Trade creditors	14,627	15,404
Amounts owed to subsidiary undertakings	-	247,589
Accruals and other creditors	17,541	4,500
	----------------------------------	----------------------------------
	32,168	267,493
	======================	======================

 

6.     SHARE CAPITAL

 

Details of share capital and share options are shown in notes 21 and 22 to the consolidated accounts above.

 

7.     RESERVES

 

	Share Capital	Share premium	Shares to be issued	Share based payment reserve	Profit and loss reserve	Total
	£	£	£	£	£	£
At 1 April 2009	138,571	1,358,375	140,590	57,395	(355,014)	1,339,917
Shares issued	49,076	361,027	(140,590)	-	-	269,513
Loss for the year	-	-	-	-	285,868	285,868
FRS20 Share based payments	-	-	-	5,757	-	5,757
	-------------------	---------------------	-----------------------	----------------------	-------------------	--------------------------
At 1 April 2010	187,647	1,719,402	-	63,152	(69,146)	1,901,055
Prior year adjustment	-	-	-	-	60,199	60,199
Transfer share based payment reserve to profit and loss reserve	-	-	-	(63,152)	63,152	-
FRS20 Share based payments	-	-	-	-	9,921	9,921
Loss for the year	-	-	-	-	(10,528)	(10,528)
	--------------------	----------------------	------------------------	-----------------------	--------------------	---------------------------
As at 31 March 2011	187,647	1,719,402	-	-	53,598	1,960,647
	=============	=============	=============	===============	============	==============

 

8.     RELATED PARTIES

 

The Company has taken advantage of the exemptions conferred by FRS 8 from the requirement to disclose transactions between wholly owned subsidiary undertakings.