2008 1 Trakm8 Holdings PLC
Contents
2 Officers and Advisers
3 Highlights
4 Chairman’s Statement
5 Chief Executive Officer’s Review
7 Products and Market
9 Directors’ Report
11 Corporate Governance
13 Directors’ Remuneration Report
16 Statement of Directors’ Responsibilities
17 Independent Auditor’s Report to the members of Trakm8 Holdings PLC
18 Consolidated Income Statement
18 Consolidated Statement of Recognised Income and Expense
19 Consolidated Balance Sheet
20 Consolidated Cashflow Statement
21 Notes to the Consolidated Financial Statements
44 Parent Company Balance Sheet
45 Notes to the Parent Company Financial Statements 2 Trakm8 Holdings PLC
Officers and Advisers
”
Directors
C D Buck
C P Knapton
M Cowley
T Cowley
T Couling
J Watkins
Secretary
C Giles
Registered Office
Lydden House
Wincombe Business Park
Shaftesbury
Dorset
SP7 9QJ
Bankers
HSBC Bank plc
165 High Street
Southampton
SO14 2NZ
Auditor
Baker Tilly UK Audit LLP
Chartered Accountants
Hartwell House
55-61 Victoria Street
Bristol
BS1 6AD
Financial Public Relations
Tavistock Communications
131 Finsbury Pavement
London
EC2A 1NT 3 Trakm8 Holdings PLC
Highlights
Year ended 31 March 2008 Year ended 31 March 2007
£000’s £000’s
Cost
Revenue 4,656 6,370
Gross Profit 2,024 2,490
Gross Profit % 43.5% 39.1%
Other income 79 -
Operating (Loss) / Profit (891) 115
(Loss) / Profit on ordinary activities before taxation (958) 90
Net Cash and cash equivalents 153 439
Net Assets 1,572 1,483
Financial Highlights
• Gross Profit % up 4.4%
• Turnover down 27% at £4.67m
• Loss before tax of £0.90m
• Net assets increased to £1.57m (2007: £1.48m)
• Net cash of £0.15m (2007: £0.44m)
Operational Highlights
• Acquisition of PJSoft
• Launch of T6
• Government Grant projects commenced 4 Trakm8 Holdings PLC
Chairman’s Statement
Overview
The past 12 months has been demanding for
the Group as we continue the
transformation strategy from pure telematics
hardware design and manufacture to an
integrated telematics service provider.
The headline operating result set out in this
report, whilst disappointing, reflects the
challenges we have faced over the last year.
Nevertheless, margins are holding and whilst
we have not achieved profitability this year
the Directors’ believe that the Group is on
track to generate shareholder value.
The Group remains committed to its
transition to a fully integrated Telematics
Service provider (TSP) and I believe we are
firmly on track to achieve this. Revenue and
operating profit declined in the first half due
to a period of brand impact from our
reported supplier issue (April 2007) and a
delay in orders as customers waited for the
T6 launch. These two identified issues were
compounded in the second half by a sharp
decline in the Euro/GBP exchange rate which
increased the cost of the Group’s proprietary
hardware platforms by 11% on average, an
increase which has not been passed on to
customers. Additionally, whilst initially
seeing an increase in sales from Trakm8
SWIFT® during the first half of the year, sales
growth slowed in the latter half.
In seeking to mitigate the impact of these
latter two events the Group was mindful of
considerable interest in an early launch of T6.
However the Directors took the practical
view that it was inadvisable to bring forward
the planned March 2008 launch of the T6
product without incurring additional
technical risk to a new platform.
Nevertheless the Group recognised the need
to address the sales strategy of the Group
and therefore accelerated the recruitment of
a senior sales professional and I am pleased
to report that the recruitment process was
successfully concluded in January with
encouraging results to date.
The Board
As announced late April 2007, Tim Evans,
the Strategy and Marketing Director resigned
from the Board to pursue other
opportunities. There is no current intention
to appoint a replacement.
The Group also announced on 2 June 2008
that Tim Couling, the Group’s Finance
Director, was stepping down for personal
reasons and would leave the Board and the
Company later in the year. The Board has
identified a replacement, whose
appointment is expected to be announced
when Tim formally leaves the position. On
behalf of the Board I would like to thank Tim
for his hard work over the last four years and
wish him well for the future.
Outlook
The Executive team remain fully committed
to the delivery of higher margin sales growth
and a return to profitability. The Group will
continue to develop our business and, as
noted at half year, will continue to examine
expansion by acquisition, organically or other
means. I would like to close by thanking all
Trakm8 personnel for their continued
commitment to the Group over the last year.
DAWSON BUCK
Chairman
The Executive team
remain fully committed
to the delivery of
higher margin sales
growth and a return to
profitability.
Dawson Buck
Chairman
“
” 5 Trakm8 Holdings PLC
Chief Executive Officer’s Review
I believe that
the combination of
revitalised organic sales
direction and R&D
leadership positions the
Group for improved
financial performance
in the coming year.
Cary Knapton
Chief Executive Officer
“
”
Introduction
The last year has seen the Group continue to
develop its service offerings, centred on
enhancements to Trakm8 SWIFT®. The
Group has also been successful in securing
participation in two government grant-
funded R&D projects. The acquisition of
PJSoft s.r.o. (PJSoft) has also proved positive
for the Group, increasing our R&D capability
at an important time. In late March 2008
the Group launched our newest hardware
platform, the Trakm8 T6 (T6) which
represents a significant step forward in high
functionality, low cost telematics hardware.
During the second half of the year the Group
was successful in recruiting a senior sales
professional to head up Group sales. Initial
indications are very positive and recent sales
performance shows an encouraging trend.
This dedicated sales leadership role fills an
important position within the business and
the Directors are confident that renewed
focus in this area will yield significant
benefits. This is a pivotal role as the Group’s
transition strategy continues and new
products and services are delivered to market.
Operational Review
Trakm8 continues the transformation
journey to fully integrated TSP which we
began over a year ago. The launch of our
next generation platform, the T6, which was
rolled out in late March 2008, brings further
improvement to the Group’s competitive
edge in terms of functionality, form factor
and ease of installation.
The markets in which the Group operates
have proved challenging in the year with
strong competition emerging across the
product range. Revenue has declined over
the year in part due to continued brand
impact from our reported supplier issue
(April 07) having an extended impact on
hardware sales. Another factor affecting
sales performance was the evidenced delay
in orders as customers appeared to wait for
the launch of the T6.
These factors have been compounded by a
strengthening of the Euro in the second half
year which has pushed the Group’s cost of
hardware up correspondingly. This latter
change, together with the weakening of the
US Dollar, has substantially reduced the
Group’s competitiveness in Dollar
denominated countries (principally the
United States of America (“US”)).
Concurrent to this the Group was notified by
its major US customer that it was ceasing to
take our product for competitive reasons
which resulted in the Group losing significant
but low margin hardware sales in the US.
As a result the Group has unfortunately not
been profitable this year.
Strategy
The Group’s strategic transition to a fully
integrated TSP remains on course. Achieving
success means closely interweaving the
threads of innovative R&D with excellence in
sales; and thereby delivering sustainable,
growing, profitability. The Group is some
way down this road and success is in sight.
As a result of the acquisition of PJSoft and
our involvement in the government
sponsored projects the Group’s R&D activities
have been significantly scaled up. This R&D
effort is expected to allow for early
commercial exploitation of various project &
customer lead initiatives in areas such as
driver behaviour monitoring, duty of care
and vehicle emissions monitoring as well as
in the data management software area.
The government sponsored projects bring
together leading industry players in our
sector with academia and major transport
data users. The Group’s selection by the
Technology Strategy Board (TSB) to lead the
Trusted Road Users – Emissions Profiling
project is further clear evidence that the
Group can effectively shape and lead major
advanced telematics R&D programmes and is
a major sign of confidence in the Group. In
addition the Group’s participation in the
Future Intelligent Transport Systems –
Freeflow project places us close to major
regional initiatives in road tolling, congestion
charging and vehicle workplace safety. 6 Trakm8 Holdings PLC
The Group’s transition to integrated TSP
continues to move forward, though now
reinforced with the increased value that
these collaborative R&D programmes bring.
Additionally the recruitment of the senior
sales professional has enabled greater sales
focus and increasing sales leadership within
the Group. Thus the transition strategy for
the business is strengthened and I am
confident that the Group is entering the final
phase of this difficult, but necessary, period.
Financial Review
This is the first full year we have had
to prepare our financial statements
under International Financial Reporting
Standards (IFRS).
Revenue for the year ended 31 March 2008
was £4.66m (2007: £6.37m), a decrease of
26.8%. Gross profit decreased to £2.02m
(2007: £2.49m). Gross margins have
increased to 43.5% (2007: 39.1%).
Increased administrative expenses of £2.99m
(2007: £2.38m), have resulted in the Group
announcing a loss on ordinary activities
before taxation for the period of £0.96m
(2007: profit £0.09m).
In the second half of the year the
strengthening of the Euro has had a
corresponding increase in the cost of the
Group’s hardware. The net increase in
hardware costs directly attributable to
exchange rate fluctuations in the second half
of the year was between 8.6% and 13.3%
depending on product. The Group has not
passed on this increase to customers.
The Group is encouraged to note that whilst
operating in a relatively competitive industry
our products are not materially suffering
from the continued pricing and margin
pressures that we have experienced in the
past. Trakm8 SWIFT® has seen somewhat
slower sales growth than anticipated,
however the Directors perceive this to be due
to an increased number of competitors with
consequential increased order closure
timescales. Nevertheless in like-for-like sales
situations Trakm8 SWIFT® remains
competitive and it is the Group’s firm belief
that a proportion of the reported revenue
shortfall is therefore likely to have been
delayed but not lost.
The Group responded to the revenue
shortfall with a review of operating
expenses, which had increased in the period
primarily due to Trakm8 SWIFT® service and
airtime costs. Non-impacting savings were
therefore identified which included a
reduction in contract staff and a necessary
reduction in permanent headcount, thereby
reducing core overheads. The Group
however was able to bring forward elements
of the international roll-out of Trakm8
SWIFT® through the unexpected availability
of key in-country personnel. The resultant
necessary costs of set-up in country,
although mitigated wherever possible,
largely negated the anticipated savings from
the review of operating expenses.
In summary therefore the operating losses
reported above were primarily due to slower
than planned recovery in sales from the
period of brand impact, the flatter sales
profile of Trakm8 SWIFT®, international
launch costs and the significant
strengthening of the Euro/GBP and USD/GBP
exchange rates.
Acquisition of PJSoft s.r.o.
As announced on 7 August 2007 the Group
acquired PJSoft; a Czech software house
with significant expertise in cartographic
technologies. This acquisition brought the
last external elements of our product
intellectual property in-house and allows the
Group to further leverage our software
offerings in a cost effective manner. As
noted at the time PJSoft had a close working
relationship with the Group and no
significant integration issues were
anticipated. I am pleased to report that no
significant integration issues have been
encountered and PJSoft are currently
preparing for the launch of Trakm8 SWIFT®
into the Czech Republic and Eastern Europe.
Outlook
The transition strategy is on course for
completion in the coming financial year and
I believe that this strategic shift for the Group
will be enhanced by our participation in the
government sponsored projects which we
announced in December 2007 and March
2008.
I believe that our products and services now
span the telematics value chain and the
Group expects to derive revenues from all
areas of the portfolio. Our supplier and
customer agreements demonstrate the
Group’s commitment and confidence in our
products and service offerings. Our
enhanced and renewed sales focus together
with our collaborative R&D programme will
cement the transition of the business to a
fully integrated TSP . We expect that these
developments will contribute to driving the
business forward and enable the delivery of
profitability and increased shareholder value.
The Group continues to identify international
sales opportunities for its hardware platforms
and I am pleased to report that our pipeline
currently includes major bids in the UK,
Europe, South Africa and South America.
The Group is also actively pursuing
organic growth routes in other countries for
Trakm8 SWIFT®.
The launch of the T6 significantly improves
our hardware product capability and the
Group is well placed to capitalise on the
opportunities presenting themselves in the
market place. I believe that the combination
of revitalised organic sales direction and R&D
leadership positions the Group for improved
financial performance in the coming year.
The Group therefore looks forward to the
future with enthusiasm. We remain firmly
on course to complete the transition to
integrated TSP and I remain confident we will
deliver our innovative products to market
with increased success.
CARY KNAPTON
Chief Executive Officer
Chief Executive Officer’s Review
...continued 7
Trakm8 Holdings PLC
Products and Market
Marketplace
As with previous years Trakm8 has derived the
majority of its revenues from the fleet
management market and continues to
consolidate its established worldwide
presence.
The primary markets for the Group are the UK,
Europe and South Africa. The SWIFT
proposition has recently been test marketed in
the USA and the Group views this territory as
essential to its sales expansion strategy. The
Group has also maintained its presence in
Ireland, South America, the Middle East and
other locations through third party distributors.
The European telematics hardware and
services market continues to develop at
varying regional rates. The Group perceives
the UK continuing to lead the way both in
maturity of utilisation and political leadership.
The past year has seen a number of UK
competitors emerge and then fall away for a
variety of reasons. The Group is therefore
pleased to note that the Group’s hardware and
service products have proved resilient to
competition in terms of both pricing and
functionality. Elsewhere in Europe the Benelux
countries and Germany are seeing some
maturity for commercial uses of telematics.
Our expectation is that the continental
European market is expected to grow in a
similar vein to the UK market and the Directors
believe that the Group is well positioned to
access a share of this growing market
PRODUCT PORTFOLIO DEVELOPMENTS
During the course of the year the Group has,
in partnership with Tyco Electronics, continued
the development of its next-generation
Advanced Telematics Platform, the T6.
T6 Advanced Telematics Platform
Launched in the last quarter of the year, the
T6 family of products has been designed to
improve the Group’s competitive positioning
and open up previously closed markets. Take
up has been encouraging with several
Telematics Service Providers (TSPs) impressed
by the significant improvements in standard
feature delivery coupled with the
introduction of integrated Controller Area
Network (CAN) and Fleet Management
Systems (FMS) capability. The T6 also allows
web-based user configuration management
and allows for Over-The-Air commissioning
post installation. In addition the T6 has full
international approvals for all major markets
and full backward compatibility with past
Group products.
Building on Trakm8’s reputation for feature-
rich, reliable products, T6 now also delivers
advanced integration functionality connecting
with vehicle management systems as well as
other tracking and Business Process
Management software applications.
Evolving the Proposition
The last year has seen a number of important
steps in the evolution of the Group’s service
propositions.
During the course of the year the Group has
also been successful in securing a number of
licensing contracts for the Trakm8 SWIFT®
software platform and the Directors believe
that there are further opportunities in this area.
The Group is confident that other market
segments such as Retail, Logistics &
Distribution, Central & Local Government and
Construction will soon start to recognise the
benefits that telematics can bring to their
management of remote assets. That being the
case the Directors believe that the take up of
telematics propositions will increase and that
the Group’s products and services are well
positioned to tap these segments.
The Group has demonstrated that incremental
fuel efficiency, increased profitability and
reducing risk are some of the quantifiable
benefits that can be obtained through
business use of telematics applications. The
introduction of the T6 and in particular its CAN
and FMS integration capability further increase 8 Trakm8 Holdings PLC
the available benefits to telematics users and
place the Group in a good position to increase
sales in these areas.
In addition to the above opportunities, the
vehicle OEM market remains largely un-tapped
and the Group believes this area is set for
sizeable growth in the coming years. The T6,
with its CAN interface, is well positioned to
penetrate this area. The Group expects that its
partnership with Omitec to further develop
CAN applications will unlock some early
exploitation of this segment.
The Group has continued to build brand
awareness, primarily by having a presence at
selective trade shows. Our presence at the
Commercial Vehicle Show has again proved to
be a valuable exercise with significant leads
being generated, particularly for Trakm8
SWIFT®. Further initiatives are in the pipeline.
Overall the Group is well placed to take
advantage of increased telematics awareness
and interest at a time of economic challenge.
Greater scrutiny of vehicle operational costs
and the potential environmental advantages of
improved vehicle efficiency are the key
emergent business drivers at this time. Trakm8
looks forward to exploiting these trends in the
future.
Products and Market
...continued 9 Trakm8 Holdings PLC
Directors’ Report
The Directors submit their report and
financial statements of Trakm8 Holdings PLC
for the year ended 31 March 2008.
Trakm8 Holdings PLC is a public listed
company incorporated and domiciled in
England (Company Number 05452547)
whose shares are quoted on the Alternative
Investment Market (AIM) of the London
Stock Exchange.
Principal Activity
The principal activity of the Trakm8 Group is
the marketing, manufacture and distribution
of vehicle telematics equipment and services.
Trakm8 Holdings PLC is the holding company
for the Trakm8 Group.
Review of the Business
The review of the business is contained in the
Chairman’s & Chief Executive Officer’s
reports on pages 4 to 6.
The Directors monitor Key Performance
Indicators (KPI) on a regular basis to ensure
sustained progress is made towards the
Group’s overall objectives. These KPI include
sales revenues; margins (gross and product);
cash balances; units despatched; customer
Substantial Shareholding
The Directors have been notified, or are aware of, the following interests in 3% or more of the ordinary share capital of the Company (excluding
Directors) as at 15 July 2008:
service performance levels; returns and
rework; debtors and creditors balances.
Results and Dividends
The Group results for the year ended 31
March 2008 are shown in the Income
Statement on page 18. The Directors do not
recommend the payment of a dividend.
Outlook
The outlook of the business is contained in
the Chairman’s & Chief Executive Officer’s
reports on pages 4 to 6.
Research and Development
The Board considers that the Group’s
research and development activity plays an
important role in the operational and
financial success of the business.
The Group continues to identify exciting
technology developments in the telematics
arena. These form the centre point of the
Group’s product strategy and will enable the
delivery of new and enhanced products and
services in the coming year. This investment
continues to complement prior year spend
on the Trakm8 SWIFT® proposition and now
includes participation in two government
sponsored projects, as announced previously.
Going Concern
The Directors confirm that they are satisfied
that the Group has adequate resources and
facilities to continue in business for the
foreseeable future. For this reason they
continue to adopt the going concern basis in
preparing the financial statements. This is
detailed in Note 4 to the financial
statements.
Directors
The following directors have held office since
1 April 2007:
C D Buck
T Couling
M Cowley
T Cowley
T D Evans – Resigned 24 April 2007
C P Knapton
J Watkins
Directors and Their Interests
Details of Directors’ share interests and of
their rights to subscribe for shares are shown
in the Directors’ Remuneration Report on
pages 13 to 15.
Ordinary shares at 1p each Ordinary shares at 1p each
Number Percentage
Redmayne Nominees 1,577,748 11.7%
Pershing Nominees 1,169,042 8.7%
R White 965,042 7.1%
Edric Property and Investment Company (and related parties) 644,240 4.8%
LR Nominees Limited 712,463 5.3%
Barclayshare Nominees 524,515 3.9%
HSDL Nominees 451,655 3.3%
HSBC Global Custody Nominees (UK) Limited 407,120 3.0% 10 Trakm8 Holdings PLC
Creditors Payment Policy
It is the Group's policy to establish payment
terms with suppliers and to adhere to those
terms, provided that the goods and services
are in accordance with the agreed terms and
conditions. Trade creditors for the parent
company at the year end represented 67
days of purchases (2007: 58 days).
Employment Policy
During the year, the Group has consulted
with employees in matters likely to affect
their interests and is committed to involving
them in the performance and development
of the Group.
Disabled Employees
The Group gives full consideration to
applications for employment from disabled
persons where the requirements of the job
can be adequately fulfilled by a handicapped
or disabled person.
Should existing employees become disabled,
it is the Group's policy wherever practicable
to provide continuing employment under
normal terms and conditions and to provide
training, career development and promotion
to such employees as appropriate.
Political and Charitable Donations
The Group made charitable donations in the
year of £1,084 (2007 £ nil).
Financial Instruments
The Group raises finance through equity and
borrowings and places surplus cash on short-
term deposits. The primary source of
borrowings is the bank facility which is in
place for use as required.
The main risks arising from the Group’s
financial instruments are interest rate risk,
liquidity risk, credit and currency risk. The
policies for managing these are reviewed by
the board.
Interest rate - The Group uses fixed and
floating interest rates where appropriate in
order to minimise any interest rate risks.
Liquidity - The Group operates a long-term
business, and its policy is to finance it
primarily with equity and short to medium-
term borrowings. Short-term flexibility is
achieved by cash balances and overdraft
facilities.
Credit risk - The Group aims to minimise its
exposure to credit risk through a mixture of
credit insurance, credit limits and credit
checks on new customers.
Currency risk - Historically the Group has not
used hedging instruments to minimise
currency risk as the exposure is limited. If
foreign currency exposure increases, the use
of foreign currency hedging instruments will
be reviewed as necessary.
Statement as to Disclosure of
Information to the Auditor
The Directors who were in office on the date
of approval of these financial statements
have confirmed, as far as they are aware,
that there is no relevant audit information of
which the auditor is unaware. Each of the
Directors have confirmed that they have
taken all the steps that they ought to have
taken as directors in order to make
themselves aware of any relevant audit
information and to establish that it has been
communicated to the auditor.
Auditor
A resolution to reappoint Baker Tilly UK
Audit LLP , Chartered Accountants, as auditor,
will be put to the members at the annual
general meeting.
By approval of the Board on 26 August 2008
Dawson Buck
Chairman
Directors’ Report
...continued 11 Trakm8 Holdings PLC 11 Trakm8 Holdings PLC
Corporate Governance
Whilst the 2006 FRC Combined Code (“the
code”) on Corporate Governance formally
applies only to companies listed on the
London Stock Exchange, the Group has
developed and deployed procedures to
ensure that, as far as is practicable and
having regard to the size of the Group, it is
able to comply with most of the main
principles of the Combined Code. As the
Group expands, the Directors intend to
continue to develop further measures for
compliance with the Combined Code.
The Directors review the internal controls of
the Group on a regular basis, normally not
less than twice a year. Taking into
consideration the size and complexity of the
Group it is the Directors view that the Group
does not need an internal audit function
although this is reviewed periodically.
Board of Directors and Committees
The Board, currently comprising four
executive Directors and two non-executive
Directors, meets regularly throughout
the year.
For the financial year ended 31 March 2008 the Directors’ attendance at Board and Committee meetings has been as follows:
During the reporting period, Tim Evans
resigned as executive Director on 24 April
2007 and subsequently left the Company
during his contractual notice period as part
of a restructuring programme. In order to
adjust the board balance between executive
and non executive Directors, the decision
was made not to appoint a replacement.
The Board of Trakm8 Holdings PLC is
responsible for the strategic direction of the
Group’s businesses. The Board’s specific roles
include corporate governance policy and
direction; as well as strategy formation and
monitoring the achievement of the Group
against the business plan. The day-to-day
management of the Group is the
responsibility of the team of executive
Directors under the CEO. The Board
meetings of Trakm8 Holdings PLC cover
matters required to be covered by the Boards
of the Group’s subsidiary entities.
The Board members have operated Audit,
Remuneration and Nomination Committees
throughout the period, although the
Nomination Committee met outside of the
reporting period on the 18 April 2008. These
bodies operate under formally delegated
duties and responsibilities and seek advice
from independent third parties as the need
arises. The committees have comprised of
two non-executive Directors (C D Buck and
J F Watkins). Both non executives bring
extensive and diverse commercial experience
for the benefit of the Group. C D Buck is
considered by the Board to be a fully
independent non-executive Director.
Type Board Audit Nomination Remuneration
Total Held in period 13 20 1
T Couling 12 2
M Cowley 13
T Cowley 11
C D Buck 12 2- 1
C Knapton 12
J F Watkins 12 2- 1 12 Trakm8 Holdings PLC 12 Trakm8 Holdings PLC
Corporate Governance
...continued
The Audit Committee is responsible for
ensuring that the Group’s financial
performance is properly monitored,
controlled and reported. It meets and reviews
reports from the auditor on a regular basis.
The Finance Director and other Directors
attend as required. The committee and the
external auditor have safeguards to avoid a
potential compromise of auditor’s objectivity
and independence. These include the
adoption of a policy that segregates the
supply of audit and non-audit services and
requires committee approval for the supply
of services such as tax services and
acquisition related due diligence.
The Remuneration Committee’s terms of
reference include making recommendations
on Directors’ compensation packages to
ensure that the Group Board enjoys and
retains an appropriate level of motivated
resources. The Committee engages with
external consultants as and where it is
deemed beneficial.
The Group has adopted and operates a share
dealing code for Directors in accordance with
the requirements of the Combined Code.
Operational and Internal Controls
The Board is ultimately responsible for the
Group’s system of internal measurement and
control processes and for reviewing their
effectiveness. This system is designed to
identify, quantify and manage rather than
eliminate all risk and can therefore only
provide reasonable and not absolute
assurance against material misstatement
or loss.
The key elements of the Group’s control
system are currently:
•
A comprehensive budgeting system with
an annual budget approved by the Board.
•
Actual results compared on a monthly
basis with budgets and past results
as appropriate.
•
All significant capital expenditure and
organisational changes reviewed and
approved by the Board.
•
The integrity and competence of
personnel to be ensured through high
recruitment standards, aligned personal
objectives with associated appraisal
mechanisms and subsequent training and
personal development planning.
•
A clearly defined organisation structure.
•
High quality personnel being seen as an
essential part of the control environment.
•
Board reviews of KPI’s, and periodic
assessment as to the effectiveness and
completeness of those KPI’s in relation to
the business environment.
The process of monitoring and updating
internal controls and procedures and
monitoring their effectiveness continued
throughout the year.
Performance Evaluation
During the period the Remuneration and
Nomination committees evaluated the
performance of the executive team along
with the individual performances of the
Directors.
As a result various actions and development
plans are being developed where
appropriate. 13 Trakm8 Holdings PLC 13 Trakm8 Holdings PLC 13 Trakm8 Holdings PLC
Directors’ Remuneration Report
Trakm8 Holdings PLC is an AIM listed
company and is not required to produce a
Directors’ Remuneration Report. However
given the structure of the Board of Directors,
the levels of equity held by the Directors and
taking into consideration the guidance
contained within the 2006 FRC Combined
Code on Corporate Governance, the
Company takes the view that an appropriate
level of disclosure of Directors’ Remuneration
is desirable. The disclosures contained in this
section of the report are therefore given as
additional information only and are not
intended or required to comply with the Full
Listing rules requirement of London Stock
Exchange.
Directors’ Remuneration Policy
The remuneration policy for the Executive
Directors is determined by the Remuneration
Committee, which as previously stated
consists solely of the Non Executive Directors.
The current members of the Committee are
C D Buck and J F Watkins. The Committee
acts within its agreed terms of reference.
Within the framework of the agreed
remuneration policy the Committee
determines the remuneration packages of
the Executive Directors including the size of,
and conditions applying to, awards made
under the Company’s cash bonus and share
option schemes. In preparation for the
annual salary review the Committee met on
18 April 2007. The Committee’s policy on
Executive Directors remuneration will
continue to apply for the year to 31 March
2009 and, so far as is practicable, for
future years.
The Committee aims to provide Executive
Directors’ with packages which are
sufficiently competitive to attract, retain and
motivate individuals of the quality required
to achieve the objectives of the Company
and thereby enhance shareholder value.
Each package consists of a basic salary,
discretionary cash bonus and share
option plan.
% of issued 1p ordinary shares % of issued
1p ordinary shares ordinary share capital At 1 Apr 2007 ordinary share capital
At 31 March 2008 (13,517,033 or on subsequent ( 1 1 , 4 7 2 , 4 2 3
ordinary shares) date of appointment ordinary shares)
C D Buck - - - -
T Couling 37,520 0.28% 37,520 0.33%
M Cowley 773,178 5.72% 771,750 6.73%
T Cowley 759,756 5.62% 759,756 6.62%
T Evans
1
- 35,760 0.31%
C Knapton 1,717,021 12.70% 1,623,021 14.15%
J F Watkins
2
1,066,328 7.89% --
Directors and their Interests
The present members of the Board reflecting the changes that occurred during the year are as listed on page 2. The Directors’ interests in the
shares of the Company are detailed below:-
1
Resigned 24 April 2007
2
Beneficial interest in a Self Invested Pension Plan (SIPP) legally held by trustees Hornbuckle Mitchell Group plc
The Directors had no interest in the share capital of the Company’s subsidiary undertakings at 31 March 2008 or on the date on which these
financial statements were approved.
n/a 14 14 Trakm8 Holdings PLC
Directors’ Service Contracts
After 12 months from appointment,
Executive Directors’ service contracts provide
termination provisions of 6 months notice in
writing by either side.
The service contracts for Executive Directors
do not provide for any predetermined
compensation amounts in the event of early
termination other than a standard payment
in lieu of notice provision applicable at the
Company’s discretion.
Non Executive Directors are engaged under
letters of appointment for an initial period of
12 months subject to termination by either
party upon 3 months notice.
Directors’ Remuneration Report
...continued
31 March 2008 31 March 2007
Table Data Audited Salary £ Bonus £ Total £ Total £
Executive Director
C Knapton 87,780 - 87,780 98,500
T Couling 73,150 1,688 74,838 73,833
M Cowley 62,700 1,447 64,147 67,000
T Cowley 60,610 1,399 62,009 54,508
T Evans
(Resigned 24 April 2007) 2,479 1,414 3,893 59,655
286,719 5,948 292,667 353,496
31 March 2008 31 March 2007
Table Data Audited Salary £ Bonus £ Total £ Total £
Non Executive Director
C D Buck 30,000 - 30,000 24,582
J Watkins
(Appointed 29 January 2007) 20,000 - 20,000 4,167
A R D White
(Resigned 16 October 2006) -- - 31,731
50,000 - 50,000 60,480
Directors’ Remuneration
The Directors’ remuneration for the year ended 31 March 2008 was:
During the course of the year no Director exercised any share options. 15 Trakm8 Holdings PLC 15 Trakm8 Holdings PLC 15 Trakm8 Holdings PLC 15 Trakm8 Holdings PLC
Directors’ Remuneration Report
...continued
All Executive and Non Executive Directors are
subject to retirement and re-election by
shareholders in line with the Company’s
Articles of Association. The Directors do not
Directors’ Share Options
At 31 March 2008 the following options had been granted to the Company's Directors and remain current and unexercised:
The highest share price during the year was £0.340. The lowest share price during the year was £0.225. The closing price of the Company's shares
on 31 March 2008 was £0.225 (2007: £0.250).
receive any pension entitlement through
their appointment to the Board of the
Company.
Appointment Contract
Date Date
Executive Director
T Couling 20/10/2005 24/11/2005
M Cowley 20/10/2005 24/11/2005
C Knapton 20/10/2005 24/11/2005
T Cowley 26/05/2006 26/05/2006
Non Executive Director
C D Buck 23/02/2006 23/02/2006
J F Watkins 29/01/2007 29/01/2007
Option Balance as at Granted Exercised Expired/ Balance as at Expiry Date
Exercise 31 March during year during year forfeited 31 March
Price 2007 during year 2008
T Couling £0.25 25,750 -- 25,750 31 March 2010
£0.26 114,725 114.725 31 March 2010
M Cowley £0.25 25,750 -- - 25,750 31 March 2010
T Cowley £0.25 10,000 -- 10,000 31 March 2010
£0.26 20,305 20,305 31 March 2010
C Knapton £0.25 37,080 -- - 37,080 31 March 2010 16 Trakm8 Holdings PLC 16 Trakm8 Holdings PLC 16 Trakm8 Holdings PLC
The Directors are responsible for preparing
the Annual Report and the financial
statements in accordance with applicable law
and regulations.
UK Company law requires the Directors to
prepare Group and Company Financial
Statements for each financial year. Under
that law the Directors are required to prepare
Group financial statements in accordance
with International Financial Reporting
Standards ("IFRS") as adopted by the EU and
have elected to prepare the company
financial statements in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards and applicable law).
The group financial statements are required
by law and IFRS adopted by the EU to present
fairly the financial position and performance
of the group; the Companies Act 1985
provides in relation to such financial
statements that references in the relevant
part of that Act to financial statements giving
a true and fair view are references to their
achieving a fair presentation.
The company financial statements are
required by law to give a true and fair view
of the state of affairs of the company.
In preparing each of the group and company
financial statements, the directors are
required to:
a select suitable accounting policies and
then apply them consistently;
b make judgements and estimates that are
reasonable and prudent;
c for the group financial statements, state
whether they have been prepared in
accordance with IFRSs adopted by the
EU; and for the company financial
statements state whether applicable UK
accounting standards have been
followed, subject to any material
departures disclosed and explained in the
company financial statements; and
d prepare the financial statements on the
going concern basis unless it is
inappropriate to presume that the group
and the company will continue
in business.
The Directors are responsible for keeping
proper accounting records which disclose
with reasonable accuracy at any time the
financial position of the company and to
enable them to ensure that the financial
statements comply with the requirements of
the Companies Act 1985. They are also
responsible for safeguarding the assets of
the group and hence for taking reasonable
steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
company's website.
Legislation in the United Kingdom governing
the preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Statement of Directors’ Responsibilities in
the Preparation of Financial Statements 17 Trakm8 Holdings PLC
Independent Auditor’s Report to the
Members of Trakm8 Holdings PLC
We have audited the financial statements on
pages 18 to 47.
This report is made solely to the Company’s
members, as a body, in accordance with
section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we
might state to the Company’s members
those matters we are required to state to
them in an auditor’s report and for no other
purpose. To the fullest extent permitted by
law, we do not accept or assume
responsibility to anyone other than the
Company and the Company’s members as a
body, for our audit work, for this report, or
for the opinions we have formed.
Respective responsibilities of directors
and auditor
The Directors’ responsibilities for preparing
the Annual Report, and the group financial
statements in accordance with applicable
law and International Financial Reporting
Standards (IFRSs) as adopted by the
European Union (“EU”), and for preparing
the parent company financial statements in
accordance with applicable law and United
Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting
Practice) are set out in the Statement of
Directors’ Responsibilities.
Our responsibility is to audit the financial
statements in accordance with relevant legal
and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether
the financial statements give a true and fair
view and whether the financial statements
have been properly prepared in accordance
with the Companies Act 1985. We also
report to you whether in our opinion the
information given in the Directors’ Report is
consistent with the financial statements. The
information given in the Directors’ Report
includes that specific information presented
in the Chairman and Chief Executive Officer’s
reports that is cross referenced from the
Review of Business and Outlook sections of
the Directors’ Report.
In addition we report to you if, in our
opinion, the Company has not kept proper
accounting records, if we have not received
all the information and explanations we
require for our audit, or if information
specified by law regarding Directors’
remuneration and other transactions is
not disclosed.
We read other information contained in the
Annual Report, and consider whether it is
consistent with the audited financial
statements. This other information
comprises only the Highlights, the
Chairman’s Statement, the Chief Executive
Officer’s Review, Products & Market,
Directors’ Report, the Corporate
Governance Report and the Directors’
Remuneration Report. We consider the
implications for our report if we become
aware of any apparent misstatements or
material inconsistencies with the financial
statements. Our responsibilities do not
extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis,
of evidence relevant to the amounts and
disclosures in the financial statements. It also
includes an assessment of the significant
estimates and judgements made by the
Directors in the preparation of the financial
statements, and of whether the accounting
policies are appropriate to the Group’s and
Company’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as
to obtain all the information and
explanations which we considered necessary
in order to provide us with sufficient
evidence to give reasonable assurance that
the financial statements are free from
material misstatement, whether caused by
fraud or other irregularity or error. In forming
our opinion we also evaluated the overall
adequacy of the presentation of information
in the financial statements.
Opinion
In our opinion
•
the group financial statements give a
true and fair view, in accordance with
IFRSs as adopted by the European Union,
of the state of the Group’s affairs as at 31
March 2008 and of its loss for the year
then ended;
•
the parent company financial statements
give a true and fair view, in accordance
with United Kingdom Generally
Accepted Accounting Practice, of the
state of the parent company’s affairs as
at 31 March 2008;
•
the financial statements have been
properly prepared in accordance with the
Companies Act 1985; and the information
given in the Directors’ Report is
consistent with the financial statements.
Emphasis of matter – going concern
In forming our opinion on the financial
statements, which is not qualified, we have
considered the adequacy of the disclosure
made in Note 4 to the financial statements
concerning the Group's ability to continue as
a going concern. The Group incurred a net
loss of £901,165 during the year ended 31
March 2008 and, as of that date, the
Group's current liabilities exceeded its
current assets by £197,286. These
conditions, along with the other matters
explained in Note 4 to the financial
statements, indicate the existence of a
material uncertainty which may cast
significant doubt about the Group's ability to
continue as a going concern. The financial
statements do not include the adjustments
that would result if the group was unable to
continue as a going concern.
BAKER TILLY UK AUDIT LLP
Registered Auditor
Chartered Accountants
Hartwell House,
55-61 Victoria Street
Bristol BS1 6AD
26 August 2008 18 Trakm8 Holdings PLC
Consolidated Income Statement
for the year ended 31 March 2008
Consolidated Statement of Recognised
Income and Expense
for the year ended 31 March 2008
Notes 2008 2007
£ £
CONTINUING OPERATIONS REVENUE 6 4,656,124 6,370,007
Cost of sales (2,631,725) (3,879,599)
Gross profit 2,024,399 2,490,408
Other income 7 78,779 -
2,103,178 2,490,408
Administrative expenses (2,994,453) (2,375,739)
(LOSS) / PROFIT FROM OPERATIONS 7 (891,275) 114,669
Finance income 9,547 15,052
(881,728) 129,721
Finance costs 8 (76,561) (39,301)
(LOSS )/ PROFIT BEFORE TAXATION (958,289) 90,420
Income tax 9 57,124 18,309
(LOSS) / PROFIT FOR YEAR ATTRIBUTABLE TO EQUITY
SHAREHOLDERS OF PARENT 22 (901,165) 108,729
EARNINGS / (LOSS) PER ORDINARY SHARE (PENCE)
Basic EPS 11 (7.6) 1.0
Diluted EPS 11 (7.6) 0.9
2008 2007
££
Exchange differences on translation of overseas operations 202,930 -
Net income for the year directly recognised in equity 202,930 -
(Loss) / profit for the year (901,165) 108,729
Total recognised (expense) / income for the year (698,235) 108,729
attributable to the equity holders of the parent company 19 Trakm8 Holdings PLC
Consolidated Balance Sheet
as at 31 March 2008
Notes 2008 2007
£ £
NON-CURRENT ASSETS
Intangible assets 12 1,597,781 822,635
Property, plant and equipment 13 478,061 508,931
2,075,842 1,331,566
CURRENT ASSETS
Inventories 15 146,027 332,522
Trade and other receivables 16 809,751 1,272,057
Current tax assets 32,902 -
Cash and cash equivalents 363,371 708,588
1,352,051 2,313,167
CURRENT LIABILITIES
Bank overdrafts 19 (210,280) (269,294)
Bank and other loans 19 (50,269) (49,209)
Trade and other payables 18 (1,287,183) (950,477)
Obligations under finance leases and hire purchase arrangements 20 (1,605) (12,188)
Current tax liabilities - (25,091)
(1,549,337) (1,306,259)
CURRENT ASSETS LESS CURRENT LIABILITIES (197,286) 1,006,908
TOTAL ASSETS LESS CURRENT LIABILITIES 1,878,556 2,338,474
NON CURRENT LIABILITIES
Bank and other loans 19 (287,470) (837,718)
Deferred tax liabilities 17 (18,674) (17,805)
NET ASSETS 1,572,412 1,482,951
EQUITY
Share capital 21 135,170 114,724
Share premium account 22 1,256,334 754,279
Shares to be issued 22 246,032 -
Merger reserve account 22 509,837 509,837
Share based payment reserve 22 47,787 28,624
Translation reserve 22 202,930 -
Retained earnings 22 (825,678) 75,487
TOTAL EQUITY ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS 1,572,412 1,482,951
OF THE PARENT
These financial statements were approved by the Directors and authorised for issue on 26 August 2008 and
are signed on their behalf by:
C D Buck T Couling
Director Director 20 Trakm8 Holdings PLC
Consolidated Cash Flow
Statement
for the year ended 31 March 2008
Notes 2008 2007
£ £
NET CASH INFLOW FROM OPERATING ACTIVITIES 24 238,909 425,622
INVESTING ACTIVITIES
Purchases of property, plant and equipment (23,153) (71,203)
Proceeds on disposal of property, plant and equipment 1,479 999
Expenditure on product development (124,094) (220,420)
Acquisition of subsidiary net of cash acquired (319,573) (189,475)
NET CASH USED IN INVESTING ACTIVITIES (465,341) (480,099)
FINANCING ACTIVITIES
Repayment of loans (59,771) (244,565)
Issue of Loan Stock - 500,000
NET CASH (USED IN)/FROM FINANCING ACTIVITIES (59,771) 255,435
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (286,203) 200,958
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 439,294 238,336
CASH AND CASH EQUIVALENTS AT END OF YEAR 153,091 439,294
Cash and cash equivalents comprise ‘Cash and cash equivalents’ and ‘Bank overdrafts’. 21 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008
1. GENERAL INFORMATION
Trakm8 Holdings PLC is a public limited
company (“Company”) incorporated in
the United Kingdom under the Companies
Act 1985 (registration number 05452547).
The Company is domiciled in the United
Kingdom and its registered address
is Lydden House, Wincombe Business
Park, Shaftesbury, Dorset, SP7 9QJ. The
Company’s Ordinary Shares are traded on
the Alternative Investment Market (“AIM”).
The Group’s principal activity is the
marketing, manufacture and distribution of
vehicle telematics equipment and services.
The Company’s principal activity is to act as a
holding company for its subsidiaries.
2. AUTHORISATION OF FINANCIAL
STATEMENTS AND STATEMENT OF
COMPLIANCE WITH IFRS
The Group’s financial statements have
been prepared in accordance with
International Financial Reporting Standards
(“IFRS”) and International Financial
Reporting Interpretations Committee
(“IFRIC”) interpretations as endorsed by the
European Union, and with those parts of
the Companies Act 1985 applicable to
companies reporting under IFRS.
3. BASIS OF PREPARATION
These are the Group’s first financial
statements prepared under IFRS and IFRS 1
“First Time Adoption of International
Financial Reporting Standards” has been
applied. The last financial statements under
UK Generally Accepted Accounting Principles
(“UK GAAP”) were for the year to 31 March
2007 and the comparatives have been
restated to comply with IFRS. The transition
from UK GAAP to IFRS is explained in note 28.
The accounting policies set out in note 4
have been applied consistently to all periods
presented in these consolidated financial
statements and in preparing an opening
balance sheet at 1 April 2006 for the
purposes of transition to IFRS.
4. ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The preparation of the financial statements
requires management to make estimates and
assumptions that affect the reported
amounts of revenues, expenses, assets and
liabilities, and the disclosure of contingent
liabilities at the date of the financial
statements. If in the future such estimates
and assumptions which are based on
management’s best judgement at the date of
the financial statements, deviate from the
actual circumstances, the original estimates
and assumptions will be modified as
appropriate in the year in which the
circumstances change. Where necessary, the
comparatives have been reclassified or
extended from the previously reported
results to take into account presentational
changes.
From these financial statements the Group
decided for operational reasons to reclassify
licence fees paid from Cost of Sales to
Operating Expenses. The 2007 comparatives
have been adjusted to similarly reclassify the
licence fees paid.
GOING CONCERN
These financial statements have been
prepared on a going concern basis. The
Directors believe that the Group has
sufficient funds for the foreseeable future
and have an expectation of improved trading
for the coming year. Based on these
assessments the Directors are confident that
the current year losses shown on the Income
Statement and the Net Current Liabilities
shown on the Balance Sheet are exceptional
rather than indicative of any long term trend.
During the year the Group incurred a loss
after tax of £901,165 and ended the year
with net current liabilities of £197,286. In
preparing these financial statements on a
going concern basis the Directors considered
the Group’s overall financial position and its
strategy; and made a number of decisions to
re-focus the activities of the Group. The
Directors have prepared detailed forecasts
which set out the ongoing cash
requirements of the business, taking into
account such items as anticipated trading
performance, R&D government grant
funding, relevant currency exchange rates
and including planned manufacturing
efficiencies. There are inherent uncertainties
in the preparation of such forecasts where
elements of such forecasts are not fully
under the Group’s control. Nevertheless the
Directors believe that the assumptions used
in these forecasts are reasonable and that
they have taken into account all factors
which may reasonably be expected to be
identified in the preparation of such
forecasts. Based on these forecasts and
monthly management accounts to the date
of these statements the Directors are
confident that it is appropriate to prepare
the financial statements on the going
concern basis and the financial statements
do not include any adjustments that would
result from the Group not being able to meet
its liabilities as they fall due.
BASIS OF CONSOLIDATION
The consolidated financial statements
incorporate the financial statements of the
Company and entities controlled by the
Company (its subsidiaries) made up to 31
March each year. Control is achieved where
the Company has the power to govern the
financial and operating policies of an
investee entity so as to obtain benefits from
its activities.
The trading results of subsidiaries acquired or
disposed of during the year are included in
the consolidated income statement from the
effective date of acquisition or up to the
effective date of disposal, as appropriate.
All intra-group transactions, balances,
income and expenditure are eliminated on
consolidation.
The purchase method of accounting is used
to account for the acquisition of subsidiaries
by the Group. The cost of an acquisition is
measured as the fair value of the assets
given, equity instruments issued and 22 Trakm8 Holdings PLC
liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to
the acquisition. Identifiable assets acquired
and liabilities and contingent liabilities
assumed in a business combination are
initially measured at fair value at the
acquisition date irrespective of the extent of
any minority interest. The excess of cost of
acquisition over the fair values of the Group’s
share of identifiable net assets acquired is
recognised as goodwill. Any deficiency of
the cost of acquisition below the fair value of
identifiable net assets acquired (i.e. discount
on acquisition) is recognised directly in the
income statement.
Where necessary, adjustments are made to
the financial statements of subsidiaries to
bring the accounting policies used into line
with those used by other members of the
Group.
SHARE-BASED PAYMENTS
The Group has applied the requirements of
IFRS 2 Share-based Payment. In accordance
with the transitional provisions, IFRS 2 has
been applied to all grants of equity
instruments after 7 November 2002 that
were unvested as of 1 April 2006.
The Group issues equity-settled share-based
payments to certain employees. Equity-
settled share-based payments are measured
at fair value at the date of grant. The fair
value determined at the grant date of equity-
settled share-based payments is expensed on
a straight-line basis over the vesting period,
based on the Group’s estimate of shares that
will eventually vest.
The fair value is measured by use of the
Black-Scholes option pricing model. The
expected life used in the model has been
adjusted, based on management’s best
estimate, for the effect of non-transferability,
exercise restrictions, and behavioural
considerations. No expense is recognised for
awards that do not ultimately vest.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are
recognised in the Group’s balance sheet
when the Group becomes a party to the
contractual provisions of the instrument.
Trade receivables
Trade receivables are recognised and carried
at original invoice amount less provision for
impairment. A provision for impairment is
established when there is objective evidence
that the Group will not be able to collect all
amounts due. The impairment is recognised
in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on
hand and demand deposits, and other short-
term highly liquid investments that are
readily convertible to a known amount of
cash and are subject to an insignificant risk
of change in value. For the purposes of the
cashflow statement, cash and cash
equivalents includes bank overdrafts.
Financial liabilities and equity
Financial liabilities and equity instruments are
classified according to the substance of the
contractual arrangements entered into. An
equity instrument is any contract that
evidences a residual interest in the assets of
the group after deducting all of its liabilities.
Bank borrowings
Interest-bearing bank loans and overdrafts
are recorded at the proceeds received, net of
direct issue costs. Finance charges, including
premiums payable on settlement or
redemption, are accounted for on an accrual
basis and are added to the carrying amount
of the instrument to the extent that they are
not settled in the period in which they arise.
Trade payables
Trade payables are recognised at original
invoice amount.
Convertible loan notes
Convertible loan notes are regarded as
compound instruments, consisting of a
liability component and an equity
component. At the date of issue, the fair
value of the liability component is estimated
using the prevailing market interest rate for
similar non-convertible debt. The difference
between the proceeds of the issue of the
convertible loan notes and the fair value
assigned to the liability component,
representing the embedded option to
convert the liability into equity of the Group,
is included in equity.
Issue costs are apportioned between the
liability and equity components of the
convertible loan notes based on their relative
carrying amounts at the date of issue. The
portion relating to the equity component is
charged directly against equity.
The interest expense on the liability
component is calculated by applying the
prevailing market interest rate for similar
non-convertible debt to the liability
component of the instrument. The
difference between this amount and the
interest paid is added to the carrying amount
of the convertible loan note.
GOODWILL
Goodwill arising on consolidation is recorded
as an intangible asset and is the surplus of
the cost of acquisition over the Group’s
interest in the fair value of identifiable net
assets acquired. Goodwill is reviewed
annually for impairment. Any impairment
identified as a result of the review is charged
in the income statement. Negative goodwill
is written off in the year in which it arises.
On disposal of a subsidiary, associate or
jointly controlled entity, the attributable
amount of goodwill is included in the
determination of the profit or loss on
disposal.
INTANGIBLE ASSETS OTHER THAN
GOODWILL
An intangible asset, which is an identifiable
non-monetary asset without physical
substance, is recognised to the extent that it
is probable that the expected future
economic benefits attributable to the asset
will flow to the Group and that its cost can
be measured reliably. An annual impairment
review is undertaken on all intangible assets
and any impairment identified is charged to
the income statement. Such intangible
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued 23 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
assets are carried at cost less amortisation.
Amortisation is charged to ‘Administrative
expenses’ in the Income statement on a
straight line basis over the intangible assets’
useful economic life (1-10 years).
Expenditure on research activities is
recognised as an expense in the period in
which it is incurred.
Development expenditure is capitalised as an
intangible asset only if the following
conditions are met:
•
an asset is created that can be identified;
•
it is probable that the asset created will
generate future economic benefit;
•
the development cost of the asset can be
measured reliably;
•
It meets the Group’s criteria for technical
and commercial feasibility; and
•
sufficient resources are available to meet
the development to either sell or use as
an asset.
Development expenditure thus capitalised
is amortised on a straight-line basis
over its useful life. Where the criteria
are not met, development expenditure is
recognised as an expense in the
‘Administrative expenses’ line of the
Income statement.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated
at cost less any subsequent accumulated
depreciation or impairment losses. With
the exception of freehold buildings held
at 31 March 2006 (the date of transition
to IFRS), cost represents purchase price
together with any incidental costs to
acquisition. As permitted by IFRS 1, the cost
of freehold buildings at 31 March 2006
represents deemed cost, being the market
value of the property for existing use at
that date.
Depreciation is provided on all property,
plant and equipment, other than freehold
land, at rates calculated to write each asset
down to its estimated residual value over its
expected useful life, as follows:
Buildings 2% straight line
Furniture, fixtures 25% reducing
and equipment balance
Computer 33% straight line
equipment
Assets held under finance leases or hire
purchase arrangements are depreciated over
their expected useful lives on the same basis
as owned assets or, where shorter, over the
term of the relevant agreement.
The assets’ residual values and useful lives
are reviewed at each balance sheet date and
adjusted if appropriate. The carrying values
of property, plant and equipment are
reviewed for impairment when events or
changes in circumstances indicate that the
carrying value may not be recoverable.
INVENTORIES
Inventories are valued at the lower of cost
and net realisable value. In general cost is
determined on a first in first out basis and
includes all direct expenditure and
production overheads based on a normal
level of activity. Net realisable value is the
price at which the stocks can be sold in the
normal course of business after allowing for
the costs of realisation and where
appropriate for the costs of conversion from
its existing state to a finished condition.
Provision is made for obsolete, slow moving
and defective stocks.
LEASES
Assets held under finance leases, which are
leases where substantially all the risks and
rewards of ownership of the asset have been
transferred to the Group, are capitalised in
the balance sheet and depreciated over the
shorter of the lease term or their useful lives.
The asset is recorded at the lower of its fair
value and the present value of the minimum
lease payments at the inception of the lease.
The capital elements of future obligations
under finance leases are included in liabilities
in the balance sheet and analysed between
current and non-current amounts. The
interest elements of future obligations under
finance leases are charged to the income
statement over the periods of the leases and
represent a constant proportion of the
balance of capital repayments outstanding
in accordance with the effective interest
rate method.
Leases where the lessor retains substantially
all the risks and rewards of ownership are
classified as operating leases. The cost of
operating leases (net of any incentives
received from the lessor) is charged to the
income statement on a straight line basis
over the periods of the leases.
FOREIGN CURRENCIES
Foreign currency assets and liabilities are
converted to sterling at the rates of exchange
ruling at the end of the financial year.
Transactions in foreign currencies are
converted to sterling at the rates of exchange
ruling at the transaction date. All of the
resulting exchange differences are recognised
in the Income Statement as they arise.
For the purpose of presenting consolidated
financial statements, the assets and liabilities
of the Group’s foreign operations are
translated at exchange rates prevailing on
the balance sheet date. Income and expense
items are translated at the average exchange
rates for the period. Exchange differences
arising are classified as equity and
transferred to the Group’s reserves. Such
translation differences are recognised as
income or expense in the period in which the
operation is disposed of.
TAXATION
The tax expense represents the sum of the
current tax expense and deferred tax expense.
The tax currently payable is based on taxable
profit for the year. Taxable profit differs from
net profit as reported in the income
statement because it excludes items of
income or expense that are taxable or
deductible in other years and it further
excludes items that are never taxable or
deductible. The Group’s liability for current
tax is calculated by using tax rates that have
been enacted or substantively enacted by
the balance sheet date. 24 Trakm8 Holdings PLC
Deferred tax is the tax expected to be payable
or recoverable on differences between the
carrying amount of assets and liabilities in the
financial statements and the corresponding
tax bases used in the computation of taxable
profit, and is accounted for using the balance
sheet liability method.
Deferred tax liabilities are recognised for all
taxable temporary differences and deferred
tax assets are recognised to the extent that it
is probable that taxable profits will be
available against which deductible temporary
differences can be utilised. Such assets and
liabilities are not recognised if the temporary
difference arises from the initial recognition of
goodwill or from the initial recognition (other
than in a business combination) of other
assets and liabilities in a transaction which
affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for
taxable temporary differences arising on
investments in subsidiaries and associates, and
interests in joint ventures, except where the
Group is able to control the reversal of the
temporary difference and it is probable that
the temporary difference will not reverse in
the foreseeable future.
Deferred tax is calculated at the tax rates that
are expected to apply to the period when the
asset is realised or the liability is settled based
upon tax rates that have been enacted or
substantively enacted.
REVENUE RECOGNITION
Revenue represents the total of amounts
receivable for goods and services provided
excluding value added tax. Revenue is
recognised on the delivery of the goods to the
customer. Where a service is provided covering
a future period the applicable revenue is shown
as deferred income under Current Liabilities.
WARRANTY CLAIMS
Provision is made for liabilities arising in
respect of expected warranty claims.
GOVERNMENT GRANTS
Government grants towards research and
development projects are recognised as
income over the periods necessary to match
them with the related costs and are included
within Other income.
SEGMENTAL REPORTING
A segment is a distinguishable component of
the Group that is engaged in providing
products and services. As the risks and rates of
return are predominantly affected by
differences in these products and services, the
primary format for reporting segment
information is based on business segments.
EQUITY
Equity comprises the following:
- Share capital represents the nominal
value of equity shares.
- Share premium represents the excess
over nominal value of the fair value of
consideration received for equity shares,
net of expenses of the share issue.
- Shares to be issued represents the equity
element of deferred consideration arising
on business combinations.
- Merger Reserve represents the excess
over nominal value of the fair value of
consideration received for equity shares
issued on reverse acquisition of
subsidiaries, net of expenses of the share
issue prior to the date of transition to IFRS
- Share based payment reserve represents
the cumulative periodic charge for
outstanding commitments to equity
settled share based payments under IFRS 2.
- Translation reserve represents cumulative
foreign exchange gains and losses on
retranslation of overseas operations.
- Retained earnings represents retained
profits.
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
Effective date To be adopted
commencing by the Group
International Financial Reporting Standards (IFRS) during years
IFRS 8 Operating Segments 01.01.2009 31.03.2009
IAS1(a) Amendment – Presentation of Financial Statements 01.01.2009 31.03.2009
IAS 23 Amendment – Borrowing Costs 01.01.2009 31.03.2009
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 12 Service concession agreements 01.01.2008 31.03.2009
IFRIC 13 Customer loyalty programmes 01.07.2008 31.03.2010
IFRIC 14 IAS 19 – The limit on a Defined Benefit Asset,
Minimum Funding Requirements and their interaction 01.01.2008 31.03.2009
IFRIC 15 Agreements for construction of real estate 01.01.2009 31.03.2009
IFRIC 16 Hedges of a net investment in foreign operations 01.01.2009 31.03.2009
STANDARDS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) NOT EFFECTIVE FOR THE CURRENT YEAR AND
NOT ADOPTED BY THE GROUP
The following standards and interpretations have been issued by the IASB. They become effective after the current year and have not been early
adopted by the Group:
The impact on the Group’s financial statements is not expected to be material. 25 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
5. CRITICAL ACCOUNTING JUDGEMENTS
AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
Critical judgements in applying the group’s
accounting policies
In the process of applying the Group’s
accounting policies, which are described in
note 4, management has made the following
judgements that have the most significant
effect on the amounts recognised in the
financial statements (apart from those
involving estimations, which are dealt
with below).
Valuation of intellectual property on
acquisition of subsidiaries
Note 14 details the fair values ascribed by
management to the assets and liabilities
acquired by the Group when it acquired the
share capital of PJSoft s.r.o. on 7 August 2007.
In assessing the fair value of the intellectual
property acquired, management have
considered the current and likely future
performance of PJSoft. Particular attention has
been paid to the potential introduction of new
products and services to the PJSoft portfolio
and the return anticipated from these and
existing product sales. The Directors therefore
believe that the fair value of the acquisition is
both appropriate and a realistic assessment of
its long term value to the Group.
Key sources of estimation uncertainty
The key assumptions concerning the future,
and other key sources of estimation
uncertainty at the balance sheet date, that
have a significant risk of causing a material
adjustment to the carrying amounts of assets
and liabilities within the next financial year
are discussed below.
Recoverability of internally-generated
intangible aset
During the year, management reconsidered
the recoverability of its internally generated
intangible asset which is included in its
balance sheet at £344,514. The projects
continue to progress satisfactorily and
management continue to believe that the
anticipated revenues will enable the carrying
amount to be recovered in full.
6. SEGMENTAL ANALYSIS
The Group’s primary segmental reporting
format is based on the Group’s management
and internal reporting structure of it’s
business segments. Secondary information
is reported by geographical area of sales.
Business segments
Segment results, assets and liabilities include
items directly attributable to a segment as
well as those that can be allocated on a
reasonable basis. Unallocated items include
central overhead expenses, assets and
liabilities, which cannot be reasonably
allocated. Inter-segment transactions are
conducted on an arm’s length basis in a
manner similar to transactions with third
parties.
Segment results include transfers between
business segments. Those transfers are
eliminated on consolidation. Segment capital
expenditure is the total cost incurred during
the period to acquire segment assets that are
expected to be used for more than one
period. 26 Trakm8 Holdings PLC
6. SEGMENTAL ANALYSIS (continued)
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
Year ended 31 March 2008 Telematics Projects Unallocated Total
£ ££
Segment revenue 4,656,124 - - 4,656,124
Other income - 78,779 - 78,779
Segment result 485,527 (238,478) (1,138,324) (891,275)
Finance costs - - (67,014) (67,014)
Profit/(Loss) before tax 485,527 (238,478) (1,205,338) (958,289)
Income tax - - 57,124 57,124
Profit/(Loss) for year 485,527 (238,478) (1,180,084) (901,165)
Segment assets 2,419,805 78,779 929,310 3,427,893
Segment liabilities 705,078 - 844,259 1,549,337
Other information
- Purchase of non-current assets 124,094 - 23,153 147,247
- Depreciation and amortisation 178,304 - 59,264 237,568
Year ended 31 March 2007 Telematics Projects Unallocated Total
££ £
Segment revenue 6,370,007 -- 6,370,007
Segment result 1,337,268 (445,520) (777,079) 114,669
Finance costs -- (24,249) (24,249)
Profit/(Loss) before tax 1,337,268 (445,520) (801,328) 90,420
Income tax -- 18,309 18,309
Profit/(Loss) for year 1,337,268 (445,520) (783,019) 108,729
Segment assets 2,335,240 - 1,309,493 3,644,733
Segment liabilities 613,823 - 692,436 1,306,259
Other information
- Purchase of non-current assets 220,420 - 71,203 291,623
- Depreciation and amortisation 114,436 - 55,574 170,010
Revenue Other Income Segment assets Capital expenditure
2008 2007 2008 2007 2008 2007 2008 2007
££ £ £ £ £ £ £
United Kingdom 2,709,333 3,440,539 78,779 - 2,423,809 3,644,733 147,247 1,077,864
Europe 1,056,139 2,248,965 -- 840,967 - 836,076 -
Rest of the World 890,652 680,503 -- 163,117 -- -
4,656,124 6,370,007 78,779 - 3,427,893 3,644,733 983,323 1,077,864
Geographical segments
The Group’s operations are located in the UK and the Czech Republic. The following table provides an analysis of the Group’s sales by geography
based upon location of the Group’s customers. Segment assets and capital expenditure are based on the geographical location of assets.
Additions to capital expenditure include additions resulting from acquisitions through business combinations. 27 Trakm8 Holdings PLC
7. (LOSS)/PROFIT FROM OPERATIONS
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
2008 2007
££
(Loss)/profit from operations is stated after charging / (crediting):
Other income - Government grant (78,779) -
Depreciation - owned fixed assets 52,272 48,467
- assets on finance leases 6,992 7,107
Negative goodwill written off - (14,198)
Amortisation of intangible assets 178,304 114,436
Operating lease rentals
Equipment 5,145 19,436
Land and buildings 19,339 27,025
Research and development 43,309 59,470
Loss on foreign exchange transactions 11,106 18,834
Write-downs of inventories recognised as an expense 91,608 -
Staff costs (note 10) 1,549,331 1,519,964
2008 2007
££
Auditor’s remuneration
Baker Tilly UK Audit LLP and associates
- audit services
Parent Company and consolidation 8,200 7,000
Subsidiary audits 32,000 31,000
- tax advisory services 15,525 18,129
- other services 6,250 4,750
2008 2007
££
Bank interest payable 42,404 25,802
Interest on loan stock 33,754 12,482
Interest on finance leases 403 1,017
76,561 39,301
8. FINANCE COSTS 28 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
9. TAXATION
2008 2007
££
Current tax - 25,091
Adjustment in respect of prior period (25,091) -
R&D Tax Credit (32,902) (47,699)
(57,993) (22,608)
Deferred tax
Deferred tax charge for current year (163) 4,299
Adjustment in respect of prior periods 1,032 -
tax credit (57,124) (18,309)
2008 2007
££
(Loss)/profit on ordinary activities before tax (958,289) 90,420
(Loss)/profit on ordinary activities multiplied by the standard rate of corporation tax
in the UK of 30% (2007: 30%) (287,487) 27,126
Effects of:
Expenses not deductible/income not taxable 56,712 8,499
Share Option adjustment 3,491 6,385
Temporary differences 15,624 (1,999)
Tax losses for which no deferred income tax asset was recognised 211,497 -
Marginal relief - (10,621)
Adjustment in respect of previous periods (56,961) (47,699)
Total tax (57,124) (18,309)
Factors affecting the tax charge
The tax assessed for the years are lower than the applicable rate of corporation tax in the UK. The difference is explained below: 29 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
2008 2007
No. No.
The average monthly number of persons (including Directors) employed by the Group was:
Research and development 75
Selling and distribution 17 8
Production 12 11
Administration 12 12
48 36
2008 2007
££
Staff costs for the employees and Directors (included under Administrative expenses):
Wages and salaries 1,366,380 1,353,197
Social Security costs 163,788 145,485
Share Based Payments 19,163 21,282
1,549,331 1,519,964
2008 2007
££
Directors' emoluments 342,667 413,976
2008 2007
££
Emoluments for qualifying services 87,780 98,500
Included in the above are costs relating to Directors, who are the key management personnel of the Group, as follows:
The Directors in office during the year ended 31 March 2008 received no pension contributions (2007: Nil).
Emoluments disclosed above include the following amounts paid to the highest paid director:-
Further details of Directors’ remuneration can be found in the Directors’ Remuneration report on pages 13 to 15.
10. EMPLOYEES 30 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
2008 2007
££
(Loss)/profit for the year after taxation (901,165) 108,729
No. No.
Number of ordinary shares of 1p each 13,517,033 11,472,423
Number of ordinary shares of 1p each (diluted) 14,096,212 12,596,941
Basic weighted average number of ordinary shares of 1p each 11,926,158 11,175,215
Basic weighted average number of ordinary shares of 1p each (diluted) 11,926,158 11,760,871
Basic (loss)/earnings (pence per share) (7.6)p 1.0p
Diluted (loss)/earnings (pence per share) (7.6)p 0.9p
Goodwill Development Costs Intellectual Property Total
££ £ £
COST
As at 1 April 2006 - - - -
Acquisition of IPL (14,198) - 716,651 702,453
Additions - 220,420 - 220,420
Charged to income 14,198 - - 14,198
As at 31 March 2007 - 220,420 716,651 937,071
Acquisition of PJSoft - - 633,022 633,022
Additions - 124,094 - 124,094
Exchange Difference - - 196,334 196,334
As at 31 March 2008 - 344,514 1,546,007 1,890,521
AMORTISATION
As at 1 April 2006 - - - -
Charged to income - 42,771 71,665 114,436
As at 31 March 2007 - 42,771 71,665 114,436
Charged to income - 70,742 107,562 178,304
As at 31 March 2008 - 113,513 179,227 292,740
NET BOOK VALUE
As at 31 March 2008 - 231,001 1,366,780 1,597,781
As at 31 March 2007 - 177,649 644,986 822,635
11. (LOSS)/EARNINGS PER ORDINARY SHARE
The (loss)/earnings per ordinary share has been calculated using the (loss)/profit for the year and the weighted average number of ordinary shares
in issue during the year as follows:
12. INTANGIBLE ASSETS
In 2008 the weighted average number of shares for the purpose of calculating the diluted earnings per ordinary share is identical to that used for
the basic earnings per ordinary share as any adjustment to the number of ordinary shares would be anti-dilutive.
Amortisation expenses of £178,304 (2007: £114,436) have been charged in Administrative expenses. 31 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
Freehold Furniture, fixtures Computer Total
property and equipment equipment
££ £ £
COST
As at 1 April 2006 420,000 22,773 44,563 487,336
Additions - 23,529 47,674 71,203
Acquired with IPL - 50,204 33,584 83,788
Disposals - (1,141) - (1,141)
As at 31 March 2007 420,000 95,365 125,821 641,186
Additions - 419 22,734 23,153
Acquired with PJSoft - 20,188 5,038 25,226
Exchange differences - 5,582 1,563 7,145
Disposals - (4,387) - (4,387)
As at 31 March 2008 420,000 117,167 155,156 692,323
DEPRECIATION
As at 1 April 2006 - 7,779 23,116 30,895
Charged to income 4,408 16,198 34,968 55,574
Acquired with IPL - 18,683 27,245 45,928
Disposals - (142) - (142)
As at 31 March 2007 4,408 42,518 85,329 132,255
Charged to income 4,408 15,968 38,888 59,264
Acquired with PJSoft - 16,718 3,038 19,756
Exchange differences - 4,952 943 5,895
Disposals - (2,908) - (2,908)
As at 31 March 2008 8,816 77,248 128,198 214,262
NET BOOK VALUE
As at 31 March 2008 411,184 39,919 26,958 478,061
As at 31 March 2007 415,592 52,847 40,492 508,931
13. PLANT, PROPERTY & EQUIPMENT
Included within freehold property is £199,585 (2007: £199,585) relating to land which is not depreciated. The net book value of plant and
computer equipment includes £14,032 (2007: £21,071) in respect of assets held under finance leases and hire purchase contracts. The depreciation
charge in respect of these assets was £6,992 (2007: £7,107).
Total depreciation expenses of £59,264 (2007: £55,574) have been charged in Administrative expenses. 32 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
Book Value Fair Value
as at August 2007 as at August 2007
££
Intangible Assets - 633,022
Property, plant and equipment 5,470 5,470
Inventories 3,407 3,407
Trade and other receivables 21,326 21,326
Cash and cash equivalents 4,672 4,672
Trade and other payables (4,091) (4,091)
30,784 663,806
Goodwill -
Total Consideration 663,806
Satisfied by:
Cash 259,259
Deferred cash 93,528
Costs of acquisition 64,986
Fair value of shares issued 246,033
663,806
14. ACQUISITION OF PJSOFT S.R.O. (“PJS”)
On 7 August 2007 the Company acquired the entire issued share capital of PJ Soft s.r.o.. The consideration was €385,000 in cash paid to the
vendors on 7 August 2007, €150,000 payable on 7 August 2008 and 340,136 and 453,516 Ordinary shares to be allotted and issued to the
vendors on 7 August 2008 and 7 August 2009 respectively.
The deferred cash consideration of €150,000 has been discounted at a rate of 8% in order to arrive at the present value as at the date of
acquisition. The Ordinary shares have been valued at 31.0 pence being the mid market closing share price of Trakm8 Holdings at the date of
acquisition. The transaction has been accounted for by the purchase method of accounting as detailed in IFRS3 (Business combinations).
The following assets and liabilities were acquired at the date of acquisition:
The results of PJS have been consolidated in the Income statement for the Group for the eight months from the date of acquisition to
31 March 2008.
Intangible assets represent Intellectual Property owned by PJS. The Directors have reviewed the fair value of these assets and revalued them at the
date of acquisition. The valuation has been based on the expected licence fee income to be received over the next 10 years.
PJS contributed £96,277 of revenue and £13,454 to the Group’s loss before tax for the period between the date of acquisition and the balance sheet date.
If the acquisition of PJS had been completed on the first day of the financial year, Group revenues for the period would have been increased by
£37,278 and the Group Loss attributable to equity holders of the parent would have been increased by £10,283. 33 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
15. INVENTORIES
2008 2007
££
Finished goods and goods for resale 146,027 332,522
2008 2007
££
Trade receivables 675,997 1,180,083
Other receivables 78,779 6,356
Prepayments 54,975 55,110
VAT recoverable - 30,508
809,751 1,272,057
2008 2007
££
Euro 9,566 362,786
Pound sterling 639,934 817,297
Other 26,497 -
675,997 1,180,083
16. TRADE AND OTHER RECEIVABLES
2008 2007
££
As at 1 April (17,805) (13,506)
Charged to income (note 9) (869) (4,299)
Balance at 31 March (18,674) (17,805)
Revaluation of building (18,674) (18,837)
Accelerated tax depreciation - 1,032
(18,674) (17,805)
17. DEFERRED TAX
The analysis of trade receivables by currency is as follows:
An allowance for impairment is made where there is an identified event which, based on previous experience, is evidence of a reduction in the
recoverability of the outstanding amount. An allowance has been made for estimated irrecoverable trade receivables of £26,065 (2007: £ Nil).
Trade receivables of £30,745 are past due, but not provided for.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair values.
At the balance sheet date, the Group had unused tax losses of £1,079,000 (2007: £396,396) available for offset against future profits. No deferred
tax asset has been recognised in respect of this due to the unpredictability of future profit streams.
The cost of inventories recognised as an expense and included in the cost of sales amounted to £2,631,725 (2007: £3,879,599). 34 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
2008 2007
£ £
Trade payables 766,337 793,714
Taxation and social security 89,294 36,426
Other payables 140,021 21,518
Accruals and deferred income 291,531 98,819
1,287,183 950,477
18. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
The Directors consider that the carrying amount of trade payables approximates to their fair value.
2008 2007
££
Bank overdrafts 210,280 269,294
Bank Loan 235,060 248,534
DTi Loans 102,679 138,393
Loan Stock - 500,000
548,019 1,156,221
2008 2007
££
On demand or within one year - Overdraft 210,280 269,294
- Other loans 50,269 49,209
After one and within two years 51,415 550,271
After two and within five years 86,165 117,878
After five years 149,890 169,569
548,019 1,156,221
Less: Amount due for settlement within one year (shown as current liabilities) (260,549) (318,503)
Amount due for settlement after more than one year 287,470 837,718
19. BORROWINGS
Bank overdrafts are repayable on demand and secured by a floating charge over the assets of the Group. Interest is payable at 2.5% over base
rate and the effective interest rate was 8.0% (2007: 7.3%).
The bank loan is secured by a fixed and floating charge on all the assets of Trakm8 Limited. It is repayable by instalments of £2,660 per month
until 2019 and bears interest at a fixed rate of 7.60%.
The DTi loans were provided to IPL in 2006 by National Westminster Bank under the Small Firms Loan Guarantee Scheme. The two loans are each
repayable at the rate of £1,488 per month and interest is payable at the rate of 3.5% over Base rate. The average effective interest rate on the
loans was 9.0% (2007: 8.3%). During 2007 the loans were transferred to HSBC under the same terms.
In January 2007 the Company issued £500,000 of 9% Convertible Unsecured Loan Stock. On 31 December 2007 the subscribers elected to convert
their holdings into 2,044,610 ordinary shares which were admitted to AIM on 11 January 2008. 35 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
20. OBLIGATIONS UNDER FINANCE LEASES
All lease obligations are denominated in sterling and are secured by the lessor’s rights over the leased assets. The fair value of the lease obligations
approximates to their carrying amount.
On 7 August 2007 the Company acquired the entire issued share capital of PJSoft s.r.o, full details of which are given in note 14 above. In part
consideration the Company is to issue 340,136 ordinary shares on 7 August 2008 and a further 453,516 ordinary shares on 7 August 2009.
On 10 January 2008 the total value of the Loan Stock (£522,500) inclusive of accrued interest of £22,500 was converted into 2,044,610 ordinary
shares of 1p each.
Minimum lease payments Present value of minimum
lease payments
2008 2007 2008 2007
££ £ £
Amounts payable under finance leases:
Due within one year 1,655 12,596 1,605 12,188
Less future finance charges (50) (408)
Present value 1,605 12,188
2008 2007
No’s ‘000’s £ No’s ‘000’s £
Authorised
Ordinary shares of 1p each 200,000 2,000,000 200,000 2,000,000
Allotted, issued and fully paid
Ordinary shares of 1p each 13,517 135,170 11,472 114,724
21. SHARE CAPITAL
22. RESERVES
Share Share Shares to Merger Share based Translation Retained Total
Capital premium be issued Reserve payment reserve Earnings
reserve
££ £ £ ££ £ £
31 March 2006 110,260 435,087 - 509,837 7,342 - (33,242) 1,029,284
Shares Issued 4,464 319,192 - - - - - 323,656
IFRS2 Share based payments - - - - 21,282 - - 21,282
Profit for the year - - - - - - 108,729 108,729
As at 31 March 2007 114,724 754,279 - 509,837 28,624 - 75,487 1,482,951
Shares issued 20,446 502,055 - - - - - 522,501
Shares to be issued - - 246,032 - - - - 246,032
Exchange differences on -- - - - 202,930 - 202,930
translation of overseas
operations
IFRS2 Share based payments - - - - 19,163 - - 19,163
Loss for the year - - - - - - (901,165) (901,165)
As at 31 March 2008 135,170 1,256,334 246,032 509,837 47,787 202,930 (825,678) 1,572,412 36 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
Option Balance as at Granted Exercised Expired/forfeited Balance as at Expiry Date
Exercise Price 31 March 2007 during year during year during the year 31 March 2008
25p 291,185 229,450 - 166,885 353,750 31 March 2010
26p - 225,429 -- 225,429 30 September 2010
Totals 291,185 454,879 - 166,885 579,179
Historical volatility 8.9%
Dividend Yield (declared) 0.0%
Risk-free interest rate 4.8%
23. SHARE-BASED PAYMENTS
Trakm8 Holdings PLC has issued options (under the Trakm8 Approved Option Scheme) to subscribe for ordinary shares of 1p in the Company. The
purpose of the Option Scheme is to retain and motivate eligible employees.
The exercise price and number of shares to which the options relate are as follows:
24. CASH FLOWS
The Group charged £19,163 to the Income Statement in respect of Share-Based Payments for the financial year ended 31 March 2008 (2007: £21,282).
The highest share price during the year was £0.34. The lowest share price during the year was £0.225. The closing share price on 31 March 2008
was £0.225 (2007: £0.25). The exercise price of all share options is the closing market price on the day of grant.
The fair value of the equity settled share options granted is estimated as at the date of grant using the Black Scholes option pricing model taking
into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the years
ended 31 March 2007 and 31 March 2008:
A vesting period of 1 or 2 years is applicable according to the terms of grant.
Cash and cash equivalents comprise cash at bank, other short-term highly liquid investments with a maturity of three months or less (together
presented as ‘Cash and cash equivalents’ on the face of the balance sheet) and bank overdrafts (presented as a single class of liability on the face
of the balance sheet).
A Reconciliation of (loss)/profit before tax to net cash flow from operating activities 2008 2007
££
(Loss)/profit before tax (958,289) 90,420
Depreciation 59,264 55,574
Bank and other interest charges 67,014 24,249
Amortisation of intangible assets 178,304 114,436
Negative goodwill written off - (14,198)
Share based payments 19,163 21,282
Net loss (profit) before changes in working capital (634,544) 291,763
Movement on retranslation of overseas operations 5,346 -
Movement in inventories 189,902 107,417
Movement in trade and other receivables 483,632 (158,967)
Movement in trade and other payables 261,587 166,421
Cash generated from operations 305,923 406,634
Interest paid (76,561) (39,301)
Interest received 9,547 15,052
Income taxes received - 43,237
Net cash flow from operating activities 238,909 425,622 37 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
25. FINANCIAL COMMITMENTS
At the balance sheet date, the Group had outstanding commitments for future minimum operating lease payments under non-cancellable
operating leases, which fall due as follows:
Land and buildings under operating leases represent payables by the Group on its two principle office properties. The leases expire in 2010
and 2011.
Operating Leases 2008 2007
££
Land and buildings
Within one year 26,097 10,000
In the second to fifth years inclusive 68,433 34,167
Other
Within one year 5,088 13,691
In the second to fifth years inclusive 5,177 1,673
26. RELATED PARTY TRANSACTIONS
Details of the remuneration of the directors,
who are the key management personnel of
the Group, are disclosed in note 10 above.
There were no other related party
transactions.
27. FINANCIAL INSTRUMENTS
Financial risk factors
The Group’s activities expose it to a variety of
financial risks: market risk (including currency
risk, interest rate risk and price risk), credit
risk and liquidity risk. Where appropriate,
the Group seeks to mitigate potential
adverse effects on its financial performance.
Foreign exchange rate risk
The Group’s principal exposure to foreign
exchange rate risk arises with the purchase
of inventory, which is predominantly
denominated in Euros. Historically the
Group has not used derivative instruments to
hedge against possible risks arising from
fluctuations in foreign currency exchange
rates as the exposure is limited. If foreign
currency exposure increases, the use of
foreign currency hedging instruments will be
reviewed as a means of reducing the effect
of exchange rate fluctuations on the
Group’s results.
Interest rate risk
The Group mitigates its exposure to interest
rate fluctuations by using fixed rates or
interest rate derivatives where appropriate.
Liquidity risk
The Group’s objective is to maintain a
balance between continuity and flexibility of
funding through the use of borrowings and
financial assets with a range of maturities.
Credit risk
The Group’s principal financial assets are
bank balances, cash and trade and other
receivables. The Group’s credit risk is
primarily attributable to its trade receivables
and the Group attaches considerable
importance to the collection and
management of trade receivables. The
Group minimises its credit risk through the
application of appropriate credit limits to
customers based on an assessment of net
worth and trading history with the Group.
Standard credit terms are net 30 days from
date of invoice. Overdue trade receivables
are managed through a phased escalation
culminating in legal action.
The credit risk on liquid funds is limited
because the counterparties are banks with
high credit-ratings assigned by international
credit-rating agencies.
Significant accounting policies
Details of the significant accounting policies
and methods adopted, including the criteria
for recognition, the basis of measurement
and the basis on which income and expense
are recognised, in respect of each class of
financial asset, liability and equity instrument
are disclosed in note 4 to the financial
statements. 38 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
27. FINANCIAL INSTRUMENTS (continued)
Foreign currency risk
The group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise.
The carrying amount of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date is as follows:
Foreign currency sensitivity
The Group is mainly exposed to the Euro. The following table details the Group’s sensitivity to a 10% strengthening of the Euro against GBP . This
has been determined assuming a Euro rate 10% stronger than the actual rate achieved during the period.
The Group’s sensitivity to the Euro has increased due to the reduction in sales denominated in Euros during the second half of the
2008 financial year.
Assets Liabilities
2008 2007 2008 2007
£ ££ £
Euro 44,824 500,276 617,301 532,554
Other 29,367 115,132 22,491 16,172
74,191 615,408 639,792 548,726
GBP 1,098,931 1,365,237 1,197,015 1,595,251
1,173,122 1,980,645 1,836,807 2,143,977
2008 2007
££
Loss (89,179) (47,134) 39 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
Fair values
There is no material difference between the book value and the fair value of the Group’s financial assets or liabilities.
27. FINANCIAL INSTRUMENTS (continued)
Interest rate and liquidity risk
Interest rate sensitivity
The sensitivity analysis has been based on the
average exposure to floating rate debt
during the period. It has been assumed that
floating interest rates were 50 basis point
higher than those actually incurred.
The effect of such a change would be to
increase the loss before tax for the year by
£1,565 (2007 – reduce the profit before tax
by £2,122).
Liquidity and interest risk tables
The following table details the Group’s
remaining contractual maturity for its
financial liabilities. The tables have been
drawn up based on the undiscounted
contractual maturities of the financial
liabilities (including interest that will accrue
to maturity). The discount column reflects
the adjustments necessary to reconcile to the
carrying amounts of the financial liabilities.
Weighted Less than 1-3 3-12 1-5 More than Discount Total
average 1 month months months years 5 years
effective or on
interest rate demand
%£ £ £ ££ £ £
Fixed rate
Bank loan 7.6% - 3,536 11,019 70,615 149,890 - 235,060
Deferred consideration 8.0% - - 124,416 - - - 124,416
Obligations under 6.2% 138 276 1,241 - - (50) 1,605
finance leases
Floating rate
Bank overdrafts 8.0% 210,280 - - - - - 210,280
Other loans 9.0% - 8,929 26,785 66,965 - - 102,679
Trade payables - 766,337 - - - - - 766,337
2008
Weighted Less than 1-3 3-12 1-5 More than Discount Total
average 1 month months months years 5 years
effective or on
interest rate demand
%£ £ £ ££ £ £
Fixed rate
Bank loans 7.6% - 3,279 10,217 65,471 169,567 - 248,534
Loan Stock 9.0% - - - 500,000 - - 500,000
Obligations under 6.7% 1,050 2,099 9,446 - - (407) 12,188
finance leases
Floating rate
Bank overdrafts 7.3% 269,294 - - - - - 269,294
Other loans 8.3% - 8,929 26,785 102,679 - - 138,393
Trade Payables - 793,714 - - - - - 793,714
2007 40 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
28. REPORTING UNDER INTERNATIONAL
FINANCIAL REPORTING STANDARDS
This annual report is the first to be prepared
under IFRS. The comparative figures have
been prepared on the same basis and have
therefore been restated from those
previously prepared under UK GAAP . The
commentary below details the key changes
that have arisen due to the transition to
reporting under IFRS. The Group’s date of
transition is 31 March 2006, which is the
beginning of the comparative period for the
2006/2007 financial year. Therefore the
opening balance sheet for IFRS purposes is
that reported at 31 March 2006 as amended
for changes due to IFRS.
To explain the impact of the transition,
reconciliations are included below that show
the changes made to the statements
previously reported under UK GAAP . The
following reconciliations are included:
1. Reconciliation of Group balance sheet at
31 March 2006 from UK GAAP to IFRS,
2. Reconciliation of Group balance sheet at
31 March 2007 from UK GAAP to IFRS;
3. Reconciliation of Group income statement
for the year ended 31 March 2007 from UK
GAAP to IFRS;
The transition from UK GAAP to IFRS does
not affect the cash flows generated by the
Group. The IFRS cash flow statement is
presented in a different format than that
required under UK GAAP . The reconciling
items between the UK GAAP format and the
IFRS format have no net impact on the cash
flows generated and accordingly
reconciliations have not been presented.
The accounting policies used for IFRS are set
out in note 4.
The Group has applied the provisions of IFRS
1 – First Time Adoption of International
Financial Reporting Standards which,
generally, requires that IFRS accounting
policies be applied retrospectively in
determining the opening balance sheet at
the date of transition. IFRS 1 contains both
mandatory and optional exemptions to the
principle of retrospective application. Where
the Group has made use of an exemption it
is noted below.
The significant first time adoption choices
made by the Group are as follows:
•
Business combinations completed prior
to 1 January 2006 have not been restated
under IFRS 3 ‘Business combinations’;
•
Aside from freehold buildings, the
opening fair values of fixed assets have
been deemed to be their accounting
values as at 31 March 2006, after
reviewing for impairment as appropriate.
Deemed cost for freehold buildings is
their open market value for existing use.
IFRS 1 ‘First time adoption of IFRS’
The carrying values of fixed assets have been
reviewed on first time adoption of IFRS. As
permitted by IFRS 1 the company has opted
to value its freehold land and buildings at
deemed cost. The deemed cost has been
assessed as the open market value of the
property at transition date (1 April 2006).
Accordingly the opening net assets of the
group have been increased by £63,331
reflecting the difference between the market
value and net book value of the property at
that date. The historical cost of the property
was £368,264.
Increased depreciation of £543 pa has been
charged to the income statement for the
years ended 31 March 2007 and 31 March
2008 to reflect the increased carrying value.
IAS 38 ‘Intangible assets’
The fair value of intangible assets arising on
the acquisition of Interactive Projects Limited
(IPL) has been revisited using the ‘relief from
royalty’ method permitted by IAS38. On this
basis the value of the intellectual property
acquired, as a result of the transaction in
May 2006, has been increased by £116,651
to £716,651. Goodwill arising on
consolidation has been reduced by the same
amount resulting in negative goodwill arising
of £14,198. The negative goodwill has been
written off immediately to the Income
Statement and the charge for amortisation
of intangible non-current assets has
increased by £1,420 pa.
Accordingly net assets at 31 March 2007 and
the profit for the year then ended have been
increased by £12,778. Net assets at 31
March 2008 have been increased by
£11,358 and the profit for the year then
ended has been decreased by £1,420. There
is no impact on the balance sheet at 31
March 2006.
IAS 12 ‘Income taxes’
Under UK GAAP , deferred tax is not provided
on revaluation of fixed assets, unless the
entity has entered into a binding agreement
to sell the asset and has recognised the gain
expected to arise on that sale. Under IFRS
the entity is required to account for the
impact of deferred tax on all timing
differences.
Accordingly, a deferred tax liability of
£19,000 has been recognised at 31 March
2006 to reflect the tax arising on the
increase in carrying value of the freehold
property to its market value at that date. A
tax credit of £163 pa has been charged to
the income statement for the years ended 31
March 2007 and 31 March 2008 to reflect
the increased depreciation charge arising. 41 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
UK GAAP under Property Income IFRS
IFRS presentation deemed cost taxes
£ ££ £
Non-current assets
Property, plant and equipment 393,110 63,331 - 456,441
393,110 63,331 - 456,441
Current assets
Inventories 398,306 - - 398,306
Trade and other receivables 1,065,490 - - 1,065,490
Deferred tax 5,494 - (5,494) -
Cash and cash equivalents 402,454 - - 402,454
1,871,744 - (5,494) 1,866,250
Current liabilities
Bank overdrafts (164,118) - - (164,118)
Bank loans (12,175) - - (12,175)
Trade payables (565,683) - - (565,683)
Other payables (99,698) - - (99,698)
Other loans (185,091) - - (185,091)
(1,026,765) - - (1,026,765)
Current assets less current liabilities 844,979 - (5,494) 839,485
Total assets less current liabilities 1,238,089 63,331 (5,494) 1,295,926
Non-current liabilities
Bank loans (253,136) - - (253,136)
Other loans - - - -
Deferred tax liabilities - - (13,506) (13,506)
(253,136) - (13,506) (266,642)
Net assets 984,953 63,331 (19,000) 1,029,284
Equity
Share capital 110,260 - - 110,260
Share premium account 435,087 - - 435,087
Shares to be issued - - - -
Merger reserve 509,837 - - 509,837
Share based payment reserve 7,342 - - 7,342
Retained earnings (77,573) 63,331 (19,000) (33,242)
Total equity attributable to equity
shareholders of the parent 984,953 63,331 (19,000) 1,029,284
Reconciliation of the Group Balance Sheet under UK GAAP to IFRS at 31 March 2006 42 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
UK GAAP Intellectual Property Income IFRS
under IFRS property deemed cost taxes
presentation
££ £ £ £
Continuing operations
Revenue 6,370,007 - - - 6,370,007
Cost of sales (3,879,599) - - - (3,879,599)
Gross profit 2,490,408 - - - 2,490,408
Administrative expenses (2,387,974) 12,778 (543) - (2,375,739)
Profit from operations 102,434 12,778 (543) - 114,669
Interest receivable 15,052 - - - 15,052
117,486 12,778 (543) - 129,721
Bank and other interest charges (39,301) - - - (39,301)
Profit before taxation 78,185 12,778 (543) - 90,420
Taxation 18,146 - - 163 18,309
Profit for the year attributable to
equity shareholders of parent 96,331 12,778 (543) 163 108,729
Reconciliation of the Group Profit and Loss account under UK GAAP to the Group Income Statement
under IFRS for the year ended 31 March 2007 43 Trakm8 Holdings PLC
Notes to the Financial Statements
for the year ended 31 March 2008 ...continued
UK GAAP Intellectual Property Income IFRS
under IFRS property deemed cost taxes
presentation
£ ££ £ £
Non-current assets
Intangible assets 809,857 12,778 - - 822,635
Property, plant and equipment 446,143 - 62,788 - 508,931
1,256,000 12,778 62,788 - 1,331,566
Current assets
Inventories 332,522 - - - 332,522
Trade and other receivables 1,272,057 - - - 1,272,057
Deferred tax 1,032 - - (1,032) -
Cash and cash equivalents 708,588 - - - 708,588
2,314,199 - - (1,032) 2,313,167
Current liabilities
Bank overdrafts (269,294) - - - (269,294)
Bank loans (13,495) - - - (13,495)
Trade payables (793,714) - - - (793,714)
Other payables (156,763) - - - (156,763)
Obligations under finance leases and
hire purchase arrangements (12,188) - - - (12,188)
Current tax (25,091) - - - (25,091)
Other loans (35,714) - - - (35,714)
(1,306,259) - - - (1,306,259)
Current assets less current liabilities 1,007,940 - - (1,032) 1,006,908
Total assets less current liabilities 2,263,940 12,778 62,788 (1,032) 2,338,474
Non-current liabilities
Bank loans (235,039) - - - (235,039)
Other loans (602,679) - - - (602,679)
Deferred tax liabilities - - - (17,805) (17,805)
(837,718) - - (17,805) (855,523)
Net assets 1,426,222 12,778 62,788 (18,837) 1,482,951
Equity
Share capital 114,724 - - - 114,724
Share premium account 754,279 - - - 754,279
Merger reserve 509,837 - - - 509,837
Share based payment reserve 28,624 - - - 28,624
Retained earnings 18,758 12,778 62,788 (18,837) 75,487
Total equity attributable to equity
shareholders of the parent 1,426,222 12,778 62,788 (18,837) 1,482,951
Reconciliation of the Group Balance Sheet under UK GAAP to IFRS at 31 March 2007 44 Trakm8 Holdings PLC
Company Balance Sheet
as at 31 March 2008
Notes 2008 2007
£ £
FIXED ASSETS
Investments 3 1,285,224 595,519
CURRENT ASSETS
Debtors 4 47,103 313,679
Cash at bank 294,144 508,347
341,247 822,026
CREDITORS: Amounts falling due within one year 5 (182,747) (61,960)
NET CURRENT ASSETS 158,500 760,066
TOTAL ASSETS LESS CURRENT LIABILITIES 1,443,724 1,355,585
CREDITORS: Amounts falling due after more than one year 6- (500,000)
NET ASSETS 1,443,724 855,585
CAPITAL AND RESERVES
Called up share capital 7 135,170 114,724
Share premium 8 1,256,334 754,279
Share based payment reserve 8 47,787 28,624
Shares to be issued 8 246,032 -
Profit and loss account 8 (241,599) (42,042)
SHAREHOLDERS’ FUNDS 1,443,724 855,585
These financial statements were approved by the Directors and authorised for issue on 26 August 2008
and are signed on their behalf by:
C D Buck T Couling
Director Director 45 Trakm8 Holdings PLC
Notes to the Company Financial
Statements ...continued
for the year ended 31 March 2008
1. ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared
under the historical cost convention in
accordance with the applicable accounting
standards.
SHARE-BASED PAYMENTS
The company has applied the requirements
of FRS 20 Share-based Payments. In
accordance with the transitional provisions,
FRS 20 has been applied to all grants of
equity instruments after 7 November 2002
that were unvested as of 1 April 2006.
The Company issues equity-settled share-
based payments to certain employees.
Equity-settled share-based payments are
measured at fair value at the date of grant.
The fair value determined at the grant date
of equity-settled share-based payments is
expensed on a straight-line basis over the
vesting period, based on the Company’s
estimate of shares that will eventually vest.
The fair value is measured by use of the
Black-Scholes option pricing model. The
expected life used in the model has been
adjusted, based on management’s best
estimate, for the effect of non-transferability,
exercise restrictions, and behavioural
considerations. No expense is recognised for
awards that do not ultimately vest.
FINANCIAL INSTRUMENTS
Financial liabilities and equity instruments are
classified according to the substance of the
contractual arrangements entered into.
Instruments issued by the Company are
recorded at the proceeds received, net of
direct issue costs.
Convertible loan notes are regarded as
compound instruments, consisting of a
liability component and an equity
component. At the date of issue, the fair
value of the liability component is estimated
using the prevailing market interest rate for
similar non-convertible debt. The difference
between the proceeds of the issue of the
convertible loan notes and the fair value
assigned to the liability component,
representing the embedded option to
convert the liability into equity of the
Company, is included in equity.
Issue costs are apportioned between the
liability and equity components of the
convertible loan notes based on their relative
carrying amounts at the date of issue. The
portion relating to the equity component is
charged directly against equity.
The interest expense on the liability
component is calculated by applying the
prevailing market interest rate for similar
non-convertible debt to the liability
component of the instrument. The
difference between this amount and the
interest paid is added to the carrying amount
of the convertible loan note.
INVESTMENTS
Fixed asset investments are stated at cost less
impairment against the cost of investments.
The carrying values of investments in
subsidiaries are reviewed for impairment if
events or changes in circumstances indicate
the carrying value may not be recoverable.
FOREIGN CURRENCIES
Foreign currency assets and liabilities are
converted to sterling at the rates of
exchange ruling at the end of the financial
year. Transactions in foreign currencies are
converted to sterling at the rates of
exchange ruling at the transaction date. All
of the resulting exchange differences are
recognised in the profit and loss account as
they arise.
DEFERRED TAXATION
Provision is made for deferred taxation in
respect of all material timing differences that
have originated but not reversed by the
balance sheet date. Timing differences
represent differences between gains and
losses recognised for tax purposes in periods
different from those in which they are
recognised in the financial statements. No
deferred tax is recognised on permanent
differences between the Company’s taxable
gains and losses and its results as stated in
the financial statements. Deferred tax assets
and liabilities are included without
discounting.
2. PROFIT AND LOSS ACCOUNT
As permitted by Section 230 of the
Companies Act 1985, the profit and loss
account of the Company is not presented as
part of these financial statements.
The loss before tax for the year in the
Company is £199,557 (2007: profit £2,748). 46 Trakm8 Holdings PLC
Notes to the Company Financial
Statements ...continued
for the year ended 31 March 2008
Subsidiaries
Cost £
At 1 April 2007 595,519
Additions 689,705
At 31 March 2008 1,285,224
3. INVESTMENTS
4. DEBTORS
Name of subsidiary Country of Class of Proportion held Nature of
incorporation holding and voting rights business
Trakm8 Limited England and Wales Ordinary 100% Marketing and
distribution of
vehicle telematics
Interactive Projects Limited England and Wales Ordinary 100% Project management
and design
PJSoft s.r.o. Czech Republic Ordinary 100% Mapping services
Purple Reality Limited England and Wales Ordinary 100% Dormant
Trakm8 Inc. USA Ordinary 100% Dormant
Trakm8 Pty Ltd Australia Ordinary 100% Dormant
2008 2007
££
Amounts due from subsidiary undertakings 37,297 291,144
VAT recoverable 3,139 -
Prepayments 6,667 22,535
47,103 313,679
5. CREDITORS: Amounts falling due within one year
2008 2007
££
Trade creditors 46,393 29,987
Taxation and social security - 19,032
Accruals and other creditors 136,354 12,941
182,747 61,960 47 Trakm8 Holdings PLC
Notes to the Company Financial
Statements ...continued
for the year ended 31 March 2008
6. CREDITORS: Amounts falling due after more than one year
2008 2007
££
Loan Stock - 500,000
2008 2007
££
After one and within two years - 500,000
In January 2007 the Company issued £500,000 of 9% Convertible Unsecured Loan Stock. On 31 December 2007 the subscribers elected to
convert, at a conversion price of 25.55 pence, their holdings into ordinary shares of the Company in line with the provisions of the agreement.
7. SHARE CAPITAL
Details of share capital and share options are shown in notes 21 and 23 to the consolidated accounts above.
8. RESERVES
Share Shares to Share based Profit Total
premium be issued payment and loss
reserve account
££ £ £ £
At 1 April 2007 754,279 - 28,624 (42,042) 740,861
Shares issued 502,055 - - - 502,055
Shares to be issued - 246,032 - - 246,032
Loss for the year - - - (199,557) (199,557)
FRS20 Share based payments - - 19,163 - 19,163
As at 31 March 2008 1,256,334 246,032 47,787 (241,599) 1,308,554
9. RELATED PARTIES
The Company has taken advantage of the exemptions conferred by FRS 8 from the requirement to disclose transactions between subsidiary
undertakings, 90% or more of whose voting rights are controlled within the Group. 48 Trakm8 Holdings PLC
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