Results for the year ended 31 December 2024

27 March 2025

Microlise Group plc

("Microlise", "the Group" or "the Company")

Results for the year ended 31 December 2024

Strong performance driven by consistent strategic execution

Microlise Group plc (AIM: SAAS), a leading provider of transport management software to fleet operators, announces its audited results for the twelve months ended 31 December 2024 ("FY24" or the "Period").

(1) Adjusted Revenue and Adjusted Recurring Revenue excludes revenue reversals relating to the cyber security incident, which are expected to be fully covered by insurance.

(2) Adjusted EBITDA excludes, exceptional costs in relation to the cyber incident, acquisitions, restructuring, depreciation, amortisation, share of loss of associate, interest, tax and share based payments

(3) Adjusted Operating Profit excludes amortisation on business combinations, exceptional costs in relation to the cyber incident, acquisitions, restructuring costs and share based payments.

(4) Adjusted Profit / (loss) before taxation excludes amortisation on business combinations, exceptional costs in relation to the cyber incident, acquisitions, restructuring costs, share based payments and loss of share of associate.

Financial Highlights

· The Group delivered an increase in adjusted revenue, which excludes revenue reversal relating to the cyber security incident, which are expected to be fully covered by insurance, of 13% to £81.0m for FY24 (FY23: £71.7m). Reported Group revenue for the period was £79.5m (FY23: £71.7m).

· Adjusted recurring revenue increased 21% to £54.7m (FY23: £45.0m), due to the acquisitions made in the year and the delivery key contract wins which contributed towards 11% organic recurring revenue growth. Reported recurring revenue was £53.1m (FY23: £45.0m).

· Annual recurring revenue (ARR) run rate +18.8% to £56.6m, of which 9.4% represented organic growth at 31 December 2024 from £47.7m on 31 December 2023.

· A total of £4.4m, relating to the cyber incident are expected to be covered in full by the Group's cyber security insurance:

o  Revenue service credits of £1.5m reflecting the period during which the Group's network and services were unavailable to customers;

o  Costs of £0.4m cost reflecting costs incurred by the Group in rectifying the cyber security incident;

o  £2.4m of provisions in respect of claims for consequential losses from the disruption to the Company's customers' own businesses.

· Adjusted EBITDA increased 20% to £11.3m (FY23: £9.4m) with adjusted EBITDA margin increasing to 14.0% (FY23: 13.2%).

· Adjusted operating profit increased 13% to £6.3m (FY23: £5.5m). Reported operating loss for the period was £2.3m (FY23: £2.3m profit), following the exceptional costs incurred from the cyber incident and increases in amortisation charges as a result of business combinations.

· Continued strong underlying cash conversion exceeding 90% reflecting growth in subscription revenue and continued good working capital management.

· Robust balance sheet with £11.4m cash and cash equivalents (FY23: £16.8m), following consideration of £7.3m paid during the period in relation to the acquisitions of ESS and Vita Software .

· The Board are recommending the payment of a final dividend of 1.24 pence per ordinary share subject to shareholder approval, payable on 27 June 2025 to shareholders on the register at the close of business on 6 June 2025.

Strategic and operational highlights

· Over 375 new customers were gained across the Group, including companies such as GSF, Woolies, STAF and FSSI, and 52 contracts were renewed during the period including as JCB, Bidfood, Sainsbury's and Cemex.

· Strong international growth with new direct customers secured in Australia, New Zealand and France further establishing the Company's expanding positions in those markets.

· Integration of ESS, K-Safe and Vita is continuing in line with expectations, with MicroliseOne launched post period end. The Group has already completed a number of upsells of the acquired TMS solutions to existing customers.

· Long-term contract customer churn rate by value remained very low at 0.7% (FY23: 0.7%)

· Subscriptions +36%, driven by completed acquisitions, continued growth in our existing customers together and new direct customer wins (FY23: 640,000).

Current Trading & Outlook

· The Group delivered a record performance in 2024, with cash levels and adjusted EBITDA exceeding market expectations.

· With a strong pipeline, growing international footprint, and improving market conditions the Company is confident in the Group's prospects for 2025.

· Our enhanced and expanded product set continues to gain traction, our end markets are improving, and our new Chief Revenue Officer is further refining our sales and marketing processes.

Nadeem Raza, CEO of Microlise, commented: 

"Microlise delivered record performance in FY24, exceeding market expectations in cash levels and adjusted EBITDA which is reflective of our comprehensive growth strategy and continually improving customer offerings. We have continued to secure major customer contracts and have renewed our longstanding partnerships with longstanding customers such as JCB.

Toward the end of the year, the hard work of the Microlise team and our previous commitment to cyber security ensured that we successfully navigated a cyber security incident, loosing no customers and we have continued to build and convert our new business pipeline.

We remain focused on improving our customer offering and expanding our international business in key geographies such as Australia, New Zealand and France. Our strong pipeline, paired with our growing international footprint gives us much to look forward to in 2025 and I would like to thank everyone at Microlise for their hard work in the period."

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About Microlise

Established in 1982, Microlise Group Plc is a leading SaaS provider of Transport and fleet management solutions. Its technology is designed to help businesses improve efficiency, reduce emissions, lower costs, and increase safety on the road.

With a range of products and services used by more than 400 enterprise clients globally, Microlise helps companies of all shapes and sizes - across a wide range of industries - to better manage their entire operation.

Backed by a team of experienced professionals who provide excellent customer service, the Group has won a number of awards, including three Queens Awards for Innovation (2019, 2020).

Headquartered in the United Kingdom, the company also has offices in France, Australia, and India with a global staff base of more than 800 industry professionals. 

Handling over 873,000 subscriptions annually, Microlise joined the Alternative Investment Market (AIM) in 2021, qualifying for the London Stock Exchange's Green Economy Mark.

Chairman's Statement

The Company has delivered another year of strong performance, achieving solid revenue and profit growth driven by organic expansion and the ongoing integration of recent acquisitions.

During the 12 months ended 31 December 2024, the Group delivered a robust financial performance, reflecting the strength of our offering and the continued demand for our solutions. We saw strong momentum across all core markets, with the Group's international businesses in Australia, New Zealand and France performing particularly strongly by all securing material new direct customer wins.

Adjusted revenue increased by 12.9% to £81m (FY23: £71.7m). Adjusted recurring revenue grew by 21.4% to £54.7m (FY23: £45.0), with organic growth accounting for 11.1%. Annual Recurring Revenue (ARR) grew by 18.8% to £56.6m (FY23: £47.7m), including 9.4% organic growth. Adjusted EBITDA grew 20% during the period, ahead of market expectations.

A key challenge during the period was the cyber security incident the Company faced in October 2024. Thanks to the Microlise team's quick response and our prior investment in comprehensive security measures, we were able to restore services within 2.5 weeks, and most importantly, ensure that no customer systems data was compromised. Thanks to the response of the team, the Group has been able to bounce back strongly, having not lost any existing customers and continuing to add new customers following the incident. Going forward, we will continue to invest in our security to prevent such incidents, ensuring the highest forms of protection for our customers and colleagues.

The completion of the acquisition of Enterprise Software Systems (ESS) in January 2024 and the continued integration of K-Safe and Vita throughout 2024 have strengthened our market-leading position, particularly in transport management systems ("TMS"). We have already made steady progress with our TMS acquisitions, delivering sales of these products to both new and existing customers. During the period, we have continued to integrate these acquisitions into our broader product offering to create MicroliseOne; a single interface and technology stack for all the Group's solutions. This will accelerate cross-sell and upsell opportunities of our end-to-end product suite and reduce costs.

Market conditions significantly improved in the latter stages of 2024, with supply chain disruptions and vehicle production delays now expected to be fully behind us, with the Group adding a total of 375 new customers. Looking to the year ahead, our primary focus will remain on driving operational efficiency and enhancing profitability within the business. We have multiple initiatives in progress to improve EBITDA margins and the efficiency of our business by streamlining internal processes, enabling us to scale more effectively. At the same time, we will continue to review strategic growth opportunities through both organic expansion and potential acquisitions that may complement our existing portfolio.

Finally, I would like to thank our customers for their continued trust and our employees for their dedication, particularly in overcoming the challenge of the cyber incident. Their efforts have ensured that Microlise remains a resilient, innovative, and forward-looking business.

Jon Lee, Non-Executive Chairman

CEOs Statement

Microlise delivered a record performance in 2024, with cash levels and adjusted EBITDA exceeding market expectations. This performance reflects the effectiveness of our growth strategy and the continued strength of our offerings.

During the period we made significant progress on a number of strategic growth objectives, including adding 375 new direct clients; expanding our presence in targeted international geographies; completing, and making substantial progress in integrating, the acquisitions of Enterprise Software Systems (ESS) and K-Safe; and successfully cross-selling products from our enhanced and extended product portfolio.

With a strong pipeline, growing international footprint, and improving market conditions we are confident in the Company's prospects for 2025.

Market

2024 was a year of robust growth for our markets with the global supply chain issues and chip shortages, which negatively affected our financial performance in previous years, mostly behind us.

In Australia, initial delays caused by new vehicle availability led to a temporary vehicle and component supply shortage. However, we are pleased to report that in the second half of the year vehicle supply conditions normalised and, as a result, we are now experiencing accelerated growth in the region as our new customers roll out our products across their fleet.

In addition, Microlise experienced a slowdown in business with OEM customers, both in the automotive and construction industries, during the latter half of the year. This was due to these markets processing an excess of orders fulfilled following resolution of the supply chain problems of prior years, alongside the removal of certain tax incentives.

We are encouraged to see that activity amongst our OEM customers are trending towards normal levels during 2025.

Customers

During the period Microlise secured 375 new clients, while customer churn remained extremely low at 0.7%. The excellent client retention highlights the critical importance of Microlise's offerings to its client base and our strong customer relationships.

The Company continued to secure new customers in the UK throughout 2024, further building upon its market-leading position. Expansion into the international target markets of France, Australia and New Zealand were especially strong, where Microlise is increasingly becoming recognised as a major industry player.

Microlise also secured 52 client renewals during the period, with many of these taking up an enhanced offering as part of the renewal. Notable examples include a five-year extension with JCB, building further upon a relationship already in its 14th year.

Post-period end the Company has continued to build upon the performance of 2024 with our customer pipeline showing strong growth.

Product Offering

At the beginning of 2024, Microlise announced the completion of its acquisition of Enterprise Software Systems (ESS), a leading provider of Transport Management System (TMS) solutions. This acquisition enhanced the Group's existing TMS solution which helps customers manage transport operations from order receipt to invoice creation.

The acquisition immediately contributed to both revenue and earnings and the Group's TMS solution is being fully integrated into Microlise's growing products suite, enhancing its end-to-end service offering, which now covers the entire delivery journey, from order receipt to the consumer's doorstep. Several cross-sales have been made of the TMS product since acquisition, and we are confident that it will gain further traction in the year ahead.

Additionally, Microlise fully integrated the software from its K-Safe acquisition during the period. This added the Driver Hazard Warning (DHW) safety solution to the Company's product suite, ensuring two-wheeled vehicles such as cyclists, motorcyclists, and e-scooters are visible to drivers even when in their blind spot.

At our renowned Microlise Transport Conference on 18 March, attended by over 1,200 delegates, we officially announced MicroliseOne, our new single integrated interface for the full suite of our enhanced product offering. MicroliseOne will reduce costs and create a seamless integration of our end-to-end offering, making it easier for clients to use and add more of our products across their operations. We look forward to this complete end-to-end service being adopted by more of our customers.

Other product developments made by Microlise in the year include improvements to hardware with the release of several new models. In addition, support has been introduced for several new third party camera solutions.

Cyber Security Incident

On 31 October 2024, Microlise announced it had experienced a cyber security incident involving unauthorised activity detected on its network. The Microlise team reacted immediately, taking a number of actions to contain the situation such that the Company's network and services were fully restored within 2.5 weeks.

The Group expects the exceptional costs associated with the incident to be fully covered by its cyber security insurance.

As a result of Microlise having prioritised investment into enhancing the security of its systems, the Company was able to ensure that no customer systems data was compromised during the incident. Since the event, Microlise has accelerated its investment plan on cyber security measures ensuring that its data, and that of its customers, remains safe and secure.

The incident has had a limited effect on the Company's ability to retain and secure business. Importantly, the Group has not lost any clients as a result of the attack, and its pipeline is robust and continues to grow, with 375 new customers signed since the restoration of the network.

We would like to thank all of our customers for their understanding during the incident and are grateful for their continued support throughout 2025.

Strategic Focus

We are currently focused on the following core strategic objectives:

Bringing our three recent acquisitions into the Microlise architecture

Technical integration is progressing well which will enable us to more effectively upsell and cross-sell products and attract new customers. This programme of work is externally named MicroliseOne, launched at the Group's transportation conference in March 2025, as we look to reduce costs and continue to build on our differentiator of being an end-to-end integrated solution for transport operators.

Combining all of our products into a single, seamlessly integrated product suite

Our R&D team is currently developing our systems architecture across all our products to ensure each is fully integrated. This will allow for common functionality across the suite of programmes. This will make our product suite still more attractive to potential customers while also facilitating the sale of more products to existing customers.

Improving margins through greater efficiencies

We have multiple initiatives underway to improve the efficiency of our business by further streamlining internal processes, allowing us to reduce costs, improve margins and scale the business more effectively.

Greater product integration with partners

We are strategically increasing our support for 3rd party hardware products, extending the portfolio of solutions we can offer to our customers. This expansion will reduce the costs of installing the Microlise platform, encouraging customers to utilise a greater number of our solutions to manage their business operations with our SaaS platform.

Continued investment into security measures for our blue-chip customer base

In an increasingly challenging cyber threat landscape, a number of our clients have experienced attacks in recent years, including ourselves in 2024. Thanks to prior investment and swift action, our services were fully restored quickly, with no customer data compromised.

With the broader industry context, this has reinforced the importance of continued investment in our cyber defences. We have accelerated our security programme, including enhancements to our enterprise firewalls and increased use of our Exposure Management Platform, which includes real-time monitoring for software vulnerabilities.

While this area represents our largest capital investment, it is essential to ensure the resilience of our business-critical systems. Our customers, particularly in the logistics sector, depend on our solutions to maintain seamless operations and we remain committed to delivering the assurance and security they require.

International Expansion

During the period, we have remained focussed on international expansion, and we have made material progress across a number of key geographies, particularly in Australia and New Zealand where we signed new contracts with leading grocery retailers. This demonstrates the market leading nature of our products in the region and we have therefore committed increased investment to our sales function to ensure accelerate growth in the region.

M&A

Accretive M&A remains a core part of our strategy and we continue to see a robust pipeline of opportunities. We continue to assess acquisition opportunities, with a current focus on international business. We will act appropriately should acquisition opportunities align with our immediate and long-term strategic focus.

Microlise Transport Conference

The 2025 Microlise Transport Conference took place on 18th March at the Coventry Building Society Arena. 1200 delegates attended the event making it the biggest and most successful conference in our history. Each year we have an impressive range of keynote speakers to addressed crucial topics the audience. In addition, there were four further stages at the show featuring talks from SMEs from across the logistics industry, and OEMs, such as DAF, Mercedes-Benz, Volvo and Renault Trucks showcasing their latest electric vehicle offerings to delegates.

People

In September 2024, we appointed Mike Blackburn as Chief Revenue Officer. Mike has a proven track record in fostering innovation, scaling sales, and orchestrating business transformation. He has been instrumental in two major private equity exits, as well as securing new customers and driving growth through cross-sell and upsell strategies across multiple markets.

With extensive experience in SaaS, technology, and professional services, Mike is responsible for leading the sales and marketing teams at Microlise in driving revenue generation and accelerating growth.

Since his appointment, Mike has already implemented several new initiatives. These include changes to the structure of the sales and marketing teams to drive efficiency and targeted investment in systems and capacity to ensure Microlise is optimally equipped to capture the growing opportunities within its markets.

ESG

Microlise's solutions provide material benefits to customers in terms of reducing emissions, improving safety for drivers, and lengthening the life of assets, through ensuring they are driven and maintained effectively - lengthening the useful life of assets. As well as reducing costs to our customers, these benefits improve the environment for everybody, both in terms of lowering pollutants in the atmosphere and improving the safety of our roads.

Microlise is committed to meeting its net zero goals and continues to improve its ESG credentials. To ensure ESG remains a priority to the Company, the incentive plan for Microlise's executive team relates in part to the company meeting its sustainability objectives.

During the first half of the year, we also completed the installation of 502 solar panels and doubled the number of EV charge points at our Nottingham HQ, with the objective of reducing the site's annual carbon footprint by over 80 tonnes of CO2. We have also ordered a new fleet of hybrid vans for our engineering teams, to replace an existing aged mixed fleet of diesel vehicles.

In terms of the social element of ESG, we achieved 'Great Place to Work' accreditation for the 3rd year in a row, with the categories "Best Large Workplaces" and "Best Workplaces in Tech" also being achieved within this.

Outlook

Looking ahead, we remain confident in our ability to deliver continued growth. We currently have a strong customer pipeline which is experiencing accelerated growth post the cyber-securing incident. Our enhanced and expanded product set continues to gain traction, our end markets are improving, and our new Chief Revenue Officer is further refining our sales and marketing processes. We are therefore well positioned to build upon our strong 2024 performance and deliver further growth in the year ahead.

Nadeem Raza, CEO

CFO's Statement

The financial results for the twelve-month period to 31 December 2024 reflect another period of profitable growth for Microlise.

Key Performance Indicators

The following key performance indicators for the 12-month period to 31 December 2024

Exceptional costs

During the period, the Group incurred a number of one off, exceptional costs in relation to the cyber incident, totalling £4.4m. These exceptional costs include £1.5m reversal in revenue in relation to service level credits, £0.4m of professional services costs in relation to managing technical restoration of services, and £2.4m of provisions in respect of claims for consequential losses from the disruption to the customers' own businesses. The group considers that its related insurance policies will cover these liabilities and that it is likely to be reimbursed a materially similar amount in due course once the insurance claims are evaluated and processed with insurance receipts due to be recognised in FY25 as exceptional other income. During the period, the Group also incurred a number of one-off charges relating to acquisition fees and subsequent restructuring. The total of these charges in the period ended 31 December 2024 was £0.4m (FY23: £0.4m).

To assist users of the financial statements with understanding underlying business trading, the Group will present KPI's excluding exceptional items, including exceptional cyber costs and revenue reversals. All exceptional costs are disclosed separately in note 2 of the financial statements.

(1) Adjusted Revenue and Adjusted Recurring Revenue excludes revenue reversals relating to the cyber security incident, which are expected to be fully covered by insurance.

(2) Adjusted EBITDA excludes, exceptional costs in relation to acquisitions, restructuring and cyber related costs, depreciation, amortisation, share of loss of associate, interest, tax and share based payments

(3) Adjusted Operating Profit excludes amortisation on business combinations, exceptional costs in relation to the cyber incident, acquisitions, restructuring costs and share based payments.

(4) Adjusted Profit / (loss) before taxation excludes amortisation on business combinations, exceptional costs in relation to the cyber incident, acquisitions, restructuring costs, share based payments and loss of share of associate.

Adjusted Group revenue for the 12 months ended 31 December 2024 (FY24) was £81m, an increase of 12.9% from 31 December 2023 (FY23), driven by strong growth in adjusted recurring revenues which have grown 21.4% to £54.7m (FY23: £45m). Delivery increases towards the end of the prior year against its strong direct customer orderbook with key contract wins such as BCA, McCulla and LF&E contributing towards the 11% organic recurring revenue growth. Recurring revenues contributed 66.9% to overall revenue (FY23: 62.8%). Reported Group revenue and recurring revenues for the period were £79.5m (FY23: £71.7m) and £53.1m (FY23: £45.0m) respectively.

ARR increased 18.8% (9.4% organic) to £56.6m (FY23: £47.7m) with further contributions from key contract wins in the period such as Woolworths, GSF, Foodstuffs North Island and STAF have continued to positively impact as deliveries continued in H2. Looking forward, the Group expects ARR to continue to grow as customers won over the past year continue to roll out Microlise's products across their fleets, alongside further customer wins.

Non-recurring revenues decreased by 1.4% to £26.3m (FY23: £26.7m). An anticipated slowdown in both the con-struction and automotives industries has impacted hardware shipments to our OEM(3) customers which has driven a decrease of 6.1% to £19.4m (FY23: £20.6m). This decrease was partially offset by an increase in hardware revenues in both Australia and France as new contracts are rolled out and vehicles availability issues in Australia have eased.

Professional services and installation revenues have increased by 27% to £3.8m (FY23: £3m) and 3% to 3.2m (FY23: £3.1m) respectively, driven by implementation and integration support for both projects with direct and OEM customers.

Gross Profit

Adjusted gross profit(4) for the 12 months ended 31 December 2024 increased by 23% to £53.5m (FY23 £43.6m). Adjusted gross margin % increased from 61% to 66% reflecting margin improvements in both recurring and non-recurring revenue coupled with an increasing mix of the Group towards higher margin recurring revenues. Non-recurring margins have increased due to an increasing mix towards higher margin direct customer sales. Recurring margin saw a c.1.0% increase in gross margin as a result of increased subscription revenues coupled with effective cost management and efficiency programmes, this was impacted by less favourable gross margins from ESS which will improve over time as the service in integrated into Microlise's technology platform. Reported gross profit for the 12 months ended 31 December 2024 is £52.0m (FY23: £43.6m).

Administrative Expenses & Operating Profit

Adjusted administrative expenses(5) before exceptional administrative charges and share based payment charges, in the 12-month period ended 31 December 2024 increased 23% to £50.7m (FY23: £41.2m). On an organic basis, this increase is 16.1%

Staff costs in the 12 months ended 31 December 2024 increased 21% to £36.2m (FY23: £30m) reflecting our investment into our international teams, the impact of the ESS acquisitions, as well as annual pay awards and increased commissions/bonuses reflecting the increased new customer win rate and the Group's strong Adjusted EBITDA performance. Average headcount in the Period was 805 (FY23: 715) overall, 39 of this headcount increase relates to the acquisition of ESS with a further 11 employees joining our graduate training programme. The increase in operations includes additional engineering resource to support the strategy of bringing more installation work inhouse which supports our margin enhancement strategy. A further 9 staff were added in sales & marketing including increases in staff numbers in Australia and France to drive growth in these regions.

Marketing costs increased during the period by £0.1m to £1.3m as the Group has continued to focus on growth with targeted marketing spend in key strategic geographies. This includes an increased number of exhibitions globally, the implementation of global prospecting tools and the product launch of Microlise TMS (Vita software and ESS).

Legal, professional and IT costs increased during the period by a net £1.3m. The Group has continued to invest significantly in its security posture increasing spend by c.0.4m on the prior year. Investment in its internal business systems has also continued to increase as it continues to leverage efficiency improvements to support growth and scalability. The Group has also absorbed 3rd party licensing cost increase.

Depreciation and amortisation charges in the period increased 29% to £7.9m (FY23: 6.1m). Depreciation charges increased as a result of increased levels of fixed asset investment in the Group's data centres and improvements to its headquarters. Amortisation charges increased as a result of business combinations following the recent acquisitions, and a continuation of levels of investment in internally developed technologies.

Capitalised development costs in the period were £2.7m (FY23: £2.5m), reflecting the ongoing levels of investment into the product portfolio including integration of recent acquisitions, architecture and security whilst amortisation of capitalised development costs in the period ended 31 December 2024 was £1.7m (FY23: £1.2m).

Operating profit for the 12 months ended 31 December 2024 after adjusting for exceptional costs, share based payments, amortisation charges as a result of business combinations increased by 13.2% to £6.3m (FY23: £5.5m). Reported operating loss for the 12 months ended 31 December 2024 was £2.3m (FY23: £2.3m profit), the principal factors driving this are cyber related exceptional costs and increases in amortisation charges as a result of business combinations due to the acquisition of ESS.

Adjusted EBITDA & Profit Before Tax

The growth in revenue and gross margin has enabled the Group to deliver an adjusted EBITDA(6) ahead of market expectations at £11.3m in the 12 months ended 31 December 2024, an increase of 20% (FY23: £9.4m). Adjusted EBITDA margin has increased to 14% (FY23: 13%). To provide a better guide to the underlying business performance, adjusted EBITDA excludes the impact of the cyber incident (£4.4m) and exceptional costs in relation to acquisitions, restructuring costs, depreciation, amortisation, share of loss of associate, interest, tax and share based payments.

Adjusted profit before taxation for the 12 months ended 31 December 2024 increased 16% to £6.5m (FY23: £5.6m). The adjusted profit before taxation excludes exceptional costs in relation to acquisitions, restructuring and cyber costs, amortisation charges of £2.8m as a result of business combinations (FY23: £2.2m), share of loss of associate and share based payments. Reported loss before taxation in the period was £2.3m (FY23: £2.5m profit).

Taxation

The tax credit in the 12 months ended 31 December 2024 was £0.3m (FY23: £0.9m charge). The effective tax rate for the year is higher than the standard rate of corporation tax and this is driven by the share of associate loss not deductible and non-deductible expenses for share-based payments as the intrinsic value of the options has been assessed as £nil. Underlying deferred tax credits relate to the amortisation of intangible assets and utilisation of accelerated allowances offset by the utilisation of tax losses brought forward.

From 1 July 2020, Microlise has been classified as a large company for tax research and development purposes and benefits from the Research and Development Ex-penditure Credit scheme (RDEC) with any benefit being reflected as grant income within other operating income. In the period ended 31 December 2024 the pre-tax value of the credit was £0.4m (FY23: £0.6m).

Profit After Tax, EPS and Dividend

Adjusted profit after tax increased 21.4% to £4.9m (FY23: £4.0m). As a result, adjusted earnings per share(7) the for the 12 months period ended 31 December 2024 increased 21.4% to 4.19p (FY23: 3.45p). Reported basic loss per share for the 12-month period ended 31 December 2024 was 1.77p (FY23: 1.36p earnings) and diluted loss per share was 1.77p for the 12 months period ended 31 December 2024 (FY23: 1.36p earnings). For further information on earnings per share, please refer to note 8 of the financial statements. Reported loss after tax for the 12 months period ended 31 December 2024 was £2.1m (FY23: £1.6m profit).

During the period, the Group announced the introduction of its dividend policy and paid a full year dividend of 1.72 pence per share and an interim dividend of 0.57 pence per share. The Board are recommending the payment of a final dividend of 1.24 pence per ordinary share. Subject to shareholder approval at the Annual General Meeting to be held on 28 May 2025, the dividend will be paid on 27 June 2025 to shareholders on the register at the close of business on 12 June 2025.

Group Statement of Financial Position

The Group had net assets of £71.9m at 31 December 2024 (FY23: £75.7m). Intangible assets increased by £7.7m reflecting the £9.6m of acquired intangible assets and goodwill resulting from the acquisition of ESS, capital-ised development costs less amortisation charges. Cur-rent assets decreased by £4.1m, primarily due to a de-crease in cash offset by an increase in debtors driven by higher revenues in the year. Total liabilities increased by £7.2m due to an increase in deferred income and trade payables and the provisions relating to 3rd party claims resulting from the cyber incident. The Group typically in-voices for software subscriptions monthly, quarterly, an-nually or for the life of the subscription in advance which drives a strong balance sheet with significant cash bal-ances. Revenue is recognised in the month the service is provided with deferred income disclosed as contract lia-bilities in current and non-current liabilities. As at the end of December 2024 total Trade and other payables was £52.4m (FY23: £48.3m) of this balance £38.8m (FY23: £34.5m) is deferred income and relates to future con-tracted revenue recognition.

Adjusted Cashflow(8) & Net Cash

Adjusted cash flows generated from operations (8) re-mains healthy at £10.3m in the period (FY23: £9.3m), this represents a cash conversion rate (9) of 91% (FY23: 98%). Reported cash flows generated from operations in the period was £9.7m (FY23: £8.8m)

The Group ended the 12-month period to 31 December 2024 with cash and cash equivalents of £11.4m (FY23: £16.8m). Overall, the net cash outflow was £5.7m with the main movements being; £7.1m for the acquisition of ESS; repayments of tax £1.2m, (FY23: nil), FY23 dividend and FY24 interim dividend totalling £2.7m (FY23: nil), purchases of plant, property and equipment of £1.4m (FY23 £2.2m), investment into product and development of £2.8m (FY23: £2.5m), pay-ments in respect of lease liabilities £1.2m (FY23: £1.1m).

Banking Facility

In April 2024, the Group renewed its facility with HSBC with an agreed £10.0m committed revolving cash flow facility and a £20m accordion. The Group has not utilised any of this facility to date and therefore remains com-fortably within its banking covenants. The Group's cash of £11.4m (FY23: £16.8m) and the undrawn £10.0m facil-ity gives the Group £21.4m of cash availability, which the Directors believe provides ample headroom for Microlise to deliver against its strategic goals. Given the level of headroom in the business forecasts the Board consider it appropriate to prepare the financial statements on the going concern basis. Details of the Board's going con-cern assessment is provided in the basis of preparation note in the financial statements.

Additional Notes

1. Adjusted Revenue adds back the impact of credit notes related to the cyber incident.

2. Annual Recurring Revenue (ARR) is calculated by multiplying the December 2024 monthly recurring revenue by 12

3. OEM is an abbreviation for Original Equipment Manufac-turers

4. Adjusted gross margin adds back the impact of credit notes related to the cyber incident

5. Adjusted Administrative Expenses & Operating Profit adds back the impact of credit notes and exceptional costs related to the cyber incident, exceptional costs in relation to acquisitions and restructuring costs.

6. Adjusted EBITDA excludes, exceptional costs in relation to acquisitions and restructuring costs, costs in relation to the cyber incident, depreciation, amortisation, share of loss of associate, interest, tax and share based payments.

7. Adjusted EPS excludes exceptional costs in relation to acquisitions and restructuring costs, costs in relation to the cyber incident, share based payments and amortisation of intangible assets resulting from business combinations.

8. Adjusted cash flow generated from operations adds back exceptional costs in relation to acquisitions and restructuring costs.

9. Cash conversion is calculated by dividing adjusted cash flow generated from operations by adjusted EBITDA.

Nick Wightman, Chief Financial Officer

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2024

Consolidated Statement of Financial Position

as at 31 December 2024

Consolidated Statement of Changes in Equity

Company Statement of Financial Position

as at 31 December 2024

Company Statement of Changes in Equity

Consolidated Statement of Cash Flows

for the year ended 31 December 2024

Notes to the cash flow statements

A. Cash generated from operations

The reconciliation of (loss)/profit for the period to cash generated from operations is set out below:

B. Analysis of net funds

Major non cash items

£406,000 of additions to right of use assets and lease liabilities are included in non cash movements in the year ended 31 December 2024 (2023: £862,000) together with £500,000 of acquired lease assets and liabilities (2023: none).

Summary of Significant Accounting Policies

General information Microlise Group plc is a holding and management services company. Its subsidiaries are telematics businesses providing technological transport solutions that enable customers to reduce costs and environmental impact by maximising the efficiency of their transportation. The company is a public limited company, traded on the Alternative Investment Market ("AIM") of the London Stock Exchange, and  incorporated and domiciled in England. The address of the registered office is Farrington Way, Eastwood, Nottingham, NG16 3AG.

 Accounting policies

A. Basis of preparation

The consolidated financial statements have been prepared in accordance with the historical cost convention and UK adopted International Accounting Standards ('UK IFRS'). The stated accounting policies have been consistently applied to all periods presented.

The financial information does not constitute the Company's statutory accounts for the years ended 31 December 2024 or 31 December 2023 but is derived from those accounts. Statutory accounts for the year ended 31 December 2024 will be delivered to the Registrar of Companies in due course. The Auditor has reported on the 2024 accounts; his reports (i) were unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying his report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The parent company financial statements have been prepared under applicable United Kingdom Accounting Standards (FRS101). The following FRS 101 disclosure exemptions have been taken in respect of the parent company only information:

· IAS 7 Statement of cash flows;

· IFRS 7 Financial instruments disclosures; and

· IAS 24 Key management remuneration.

The financial statements including the notes are presented in thousands of pounds sterling ('£'000'), the functional and presentation currency of the Group, except where otherwise indicated.

The principal accounting policies adopted in preparation of the financial statements are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated.

Judgements made by the Directors in the application of the accounting policies that have a significant effect on the historical financial information and estimates with significant risk of material adjustment in the next year are discussed in note C.

Going concern

The directors have considered working capital forecasts prepared for the period to December 2026. The Group had cash balances of £11.4m at the year end, no borrowings and a £20m undrawn working capital facility which is not forecast to be utilised. The Group also has a significant recurring income base with inflationary clauses in the main contracts.

A range of sensitivities have been run on the working capital model, and the directors consider a scenario in which the business will face liquidity issues is remote. As part of the sensitivity analysis the directors have considered the impact of a reduction in turnover from their principal customer and the impact on working capital as well as cost and supply issues that might arise in the context of the current international conflicts and are satisfied that the Group has sufficient resources to respond to reasonably foreseeable scenarios. The Directors conclude that a scenario that would result in the need for the Group to require additional funding to be remote.

Based on the forecasts, the Directors are satisfied that the Group can meet its day-to-day cash flow requirements and operate within the terms of its working capital banking facilities if required. Accordingly, the financial statements have been prepared on a going concern basis.

B. Accounting policies

Consolidation

The consolidated financial statements include the results of Microlise Group plc and its subsidiary undertakings. The results of the subsidiary undertakings are included from the date that effective control passed to the company.

On acquisition, all the subsidiary undertakings' assets and liabilities at that date of acquisition are recorded under purchase accounting at fair value, having regard to condition at the date of acquisition. All changes to those assets and liabilities and the resulting gains and losses that arise after the company gained control are included in the post-acquisition results. Sales, profits and balances between group companies are eliminated on consolidation.

The Group has taken advantage of the exemption not to disclose transactions between wholly owned entities in the group.

Associates

Entities in which the Group holds a participating interest and over whose operating and financial policies the group exercises a significant influence are treated as associates. In the Group financial statements, Trakm8 Holdings plc is accounted for as an associate using the equity method. The initial investment was accounted for at cost and the subsequent share of associate profits or losses reported in the Statement of Comprehensive Income and are added to or deducted from the carrying value of the investment.

Revenue recognition

Revenue comprises revenue recognised by the Group in respect of goods and services supplied during the year, based on the consideration specified in a contract, exclusive of Value Added Tax and trade discounts.

The Group enters into the sale of multi-element contracts, which combine separate performance obligations including hardware, installation, managed service contracts (software-as-a-service or SaaS), software licences, professional services (which includes bespoke software development, project management (incorporating activities including project and installation planning, managing change control and stage boundaries and project reporting), consultancy, training), and support and maintenance services relating to these products. In accordance with IFRS 15, these are considered to be distinct. 

Each performance obligation is allocated a transaction price based on the stand-alone selling prices. Where stand-alone prices are not directly observable, they are based on expected cost plus margin.

Revenue is recognised depending upon the revenue stream to which it relates, as follows:

· The fair value of hardware and installation revenue is recognised at a point in time when control is transferred to the customer on despatch and/or upon installation;

· Revenue from the SaaS arrangement is recognised over a period of time, based on the term of the contract on a straight line basis. Revenue recognition over time is considered appropriate based on provisions of IFRS 15 paragraph 35 as the customer simultaneously receives and consumes the benefits provided by the Group. The contractual term for average SaaS agreements are approximately 5 years;

· Professional services typically include implementation, configuration, training and other similar services to create optimised interfaces between the Group's software and customers systems. Revenue from professional services is recognised over a period of time using the input method as professional services are being performed, as this best depicts the timing of how the value is transferred to the customer; and

· Support and maintenance turnover is deferred at the point of sale and recognised in the Statement of Comprehensive Income over a period of time of the contractual life, utilising the output method, generally on a straight line basis as the customer simultaneously receives and consumes the benefits provided by the Group.

Invoicing for all revenue streams is undertaken in accordance with the terms of the agreement with the customer. When an invoice is due for payment at the statement of financial position date but the associated performance obligations have not been fulfilled the amounts due are recognised as trade receivables and a contact liability is recognised for the sales value of the performance obligations that have not been provided. If payment is received in advance of the delivery of the associated performance obligation a contract liability is recognised. When an invoice is not due for payment at the statement of financial position date and the associated performance obligation has not been fulfilled no amounts are recognised in the financial statements.

In cases where customers pay for the goods and services over an agreed period, the fair value of the consideration is determined by discounting future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of the consideration is recognised as finance income over the payment period.

Contract assets

Under IFRS 15, the Group capitalises commission fees as costs of obtaining a contract when they are incremental and, if they are expected to be recovered, it amortises them consistently with the pattern of revenue for the related contract. If the expected amortisation period is one year or less, then the commission is expensed when incurred. Contract costs are capitalised to trade and other receivables, due within and after one year.

The Group in certain circumstances incurs costs to deliver its services and fulfil specific contracts. These costs may include process mapping and design, scoping and configuration. Contract fulfilment costs are divided into costs that deliver an asset and costs that are expensed as incurred.

Under IFRS 15, the Group capitalises these contract fulfilment costs when they directly relate to a specifically identifiable contract or anticipated contract, will enhance or generate resources used to satisfy future performance obligations and they are expected to be recovered. Where capitalised, it amortises them consistently with the pattern of revenue for the related contract. 

At each reporting date, the Group determines whether or not the contract assets are impaired by comparing the carrying amount of the asset to the remaining amount of consideration that the Group expects to receive less the costs that relate to providing services under the relevant contract.

Employee benefits

The Group operates a defined contribution pension scheme. Contributions are recognised in the Statement of Comprehensive Income in the year in which they become payable in accordance with the rules of the scheme.

Short term employee benefits including holiday pay are recognised as an expense in the period in which the service is rendered.

Share based payment

The Group operates an equity-settled share based compensation plan in which the Group receives services from directors and certain employees as consideration for share options. The fair value of the services is recognised as an expense over the estimated vesting period, determined by reference to the fair value of the options granted.

The taxation expense or credit comprises current and deferred tax recognised in the profit for the financial period or in other comprehensive income or equity if it arises from amounts recognised in other comprehensive income or directly in equity. Current tax is provided at amounts expected to be paid (or recovered) in respect of the taxable profits for the period using tax rates and laws that have been enacted or substantively enacted by the reporting date. Microlise, as a large company from 1 July 2020 for tax R&D purposes, qualifies for the large company RDECs which are included as grant income within other operating income. 

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. 

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset and where the deferred tax balances relate to the same taxation authority.

Exceptional items

The Group classifies certain one-off charges or credits that have a material impact on the financial results as 'exceptional items'. These are disclosed separately to provide further understanding of the financial performance of the group.

Government grants

Grants are accounted under the accruals model, and grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure. Government grants relate to innovation grants and large company research and development expenditure credits ('RDEC' s).

Foreign exchange

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the fair value of the net assets acquired at the acquisition date. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment in the investee.

Intangible assets acquired separately from a business are recognised at cost. Intangible assets acquired as part of an acquisition are recognised separately from goodwill if the fair value can be measured reliably on initial recognition. Intangible assets created within the business are not recognised, other than for qualifying development expenditure, and expenditure is charged against profits in the year in which it is incurred.

Subsequent to initial recognition, intangible assets are stated at cost less accumulated recognised and accumulated impairment. Intangible assets are amortised on a straight line basis within administrative expenses over their estimated useful lives as follows:

Brands 3 to 15 years

Customer relationships 7 to 16 years

Technology assets 5 to 13 years

Software 3 to 5 years

Research and development expenditure

An internally generated intangible asset arising from development (or the development phase) of an internal project is recognised if, and only if, all of the following have been demonstrated:

· It is technically feasible to complete the development such that it will be available for use, sale or licence;

· There is an intention to complete the development;

· The method by which probable future economic benefits will be generated is known;

· There are adequate technical, financial and other resources required to complete the development; and

· There are reliable measures that can identify the expenditure directly attributable to the project during its development.

The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above. Expenses capitalised as "Technology" within intangible assets consist of employee costs incurred on development. Where the above criteria are not met, development expenditure is charged to the consolidated statement of comprehensive income in the period in which it is incurred. The expected life of internally generated intangible assets varies based on the anticipated useful life, currently ranging from five to seven years.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and impairment losses. Amortisation is charged on a straight-line basis over the estimated useful life in which the intangible asset has economic benefit and is reported within administrative expenses in the consolidated statement of comprehensive income.

Research expenditure is recognised as an expense in the period in which it is incurred.

Research and development expenditure tax credits arise in the UK. Those relevant to a large company for tax purposes are credited to other operating income as a grant.

Financial assets

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. The group measures loss allowances at an amount equal to lifetime ECL, which is estimated using past experience of the group's historical credit losses experienced over the three year period prior to the period end. Historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the group's customers, such as inflation rates. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.

To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.

The group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost to the extent that these are material. The group has determined that there is no material impact of ECLs on the historical financial information.

Contingent assets

A contingent asset is a possible asset that arises from past events and whose existence as of the reporting date will be confirmed only by the occurrence or non‑occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets are not recognised at the financial period end. The nature and circumstances relating to the contingent asset are disclosed.

Financial liabilities

Financial liabilities, including trade and other payables, lease liabilities and bank borrowings are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Right-of-use assets and lease liabilities

Under IFRS 16, leases are recognised as right-of-use assets, presented as a separate category within property, plant and equipment included in the consolidated statement of financial position, and with a corresponding lease liability from the date at which the leased asset is available for use by the Group. This has been adopted and applied on a full retrospective basis.

Assets and liabilities arising from a lease are initially measured at the present value of the lease payments and payments to be made under the terms of the lease. Reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or the incremental borrowing rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal, presented as a separate category within liabilities, and finance cost. The finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received and any initial direct costs. Leasehold dilapidations are recognised in relation to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms. 

Depreciation is charged on a straight line basis over the period of the lease and assets are subject to impairment reviews where circumstances indicate their value may not be recoverable of if they are not being utilised.

Payments associated with short-term leases of property, plant and equipment and leases of low-value assets continue to be recognised on a straight-line basis as an expense. Short-term leases are leases with a lease term of 12 months or less.

Freehold property 2% straight line

Investments in subsidiaries are stated at cost or at the fair value of shares issued as consideration less provision for any impairment. Investments in associates are stated at fair value through the profit and loss.

At each reporting date, inventories are assessed for impairment. If inventory is impaired, the carrying amount is reduced to its net realisable value. The impairment loss is recognised immediately in the consolidated statement of comprehensive income.

Provisions

The share premium account represents the amount by which the issue price of shares exceeds the nominal value of the shares less any share issue expenses.

The merger reserve represents the difference between the fair value of the shares issued as part of the consideration for Microlise Holdings Limited and the nominal value of the shares issued.

Retained earnings comprises opening retained earnings and total comprehensive income/expense for the year, net of dividends paid.

New or revised accounting standards and interpretations

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after 1 January 2025 and which the Group has chosen not to adopt early. These include the following standards which may be relevant to the Group:

- Amendments to IFRS 9 and IFRS 7 mandatory for periods commencing 1 January 2026 - Amendments to the Classification and Measurement of Financial Instruments made to address diversity in accounting practice by clarifying requirements in two specific areas:• classification of financial assets with environmental, social and corporate governance (ESG) and similar features; and• timing of derecognition of financial liabilities settled through electronic payment systems.

- IFRS 18 Presentation and Disclosure in Financial Statements mandatory for periods commencing 1 January 2027. IFRS 18 introduces three key new requirements:• specified categories and defined subtotals in the statement of profit or loss;• improved principles for aggregation and disaggregation of information; and• disclosures about management-defined performance measures

As a result of initial review of the new standards, interpretations and amendments which are not yet effective in these financial statements, none are expected to have a material effect on the Company or Group's future financial statements. All IFRS effective at the reporting date of 31 December 2024 have been applied.  

C. Critical accounting estimates and assumptions

Critical judgements in applying the accounting policies

The preparation of the financial statements under IFRS requires the use of certain critical accounting assumptions and requires management to exercise its judgement and to make estimates in the process of applying the Company's and Group's accounting policies. Management bases its estimates on historical experience and on various other assumptions that management believes to be reasonable in the circumstances. The key judgements and estimates used in the preparation of these financial statements that could result in a material change in the carrying value of assets or liabilities within the next twelve months are as follows:

Fair values and intangible assets on acquisition of a business

Fair values have been applied on the acquisition of subsidiaries which involve a degree of judgement and estimation in particular in the identification and evaluation of intangible assets. The values are derived from the business cash flow forecasts and assumptions based on experience and factors relevant to the nature of the business activity.

Useful economic lives of intangible assets

The annual amortisation charge for intangible assets is sensitive to changes in the estimated useful economic lives of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments and economic utilisation. There is no current indication that the Group's businesses will not continue to trade profitably and hence the life may differ or be longer than the estimates used to amortise intangible assets.

Capitalisation of development expenditure

Management have used their judgement in respect of the capitalisation of development costs against the criteria in the policy. The viability of the new technology and know-how is supported by the results of testing and by forecasts for the overall value and margins from future sales to support the approach taken. 

Impairment of intangible assets including goodwill and investments

Investments made by the Company and intangible assets acquired in a business combination capitalised with goodwill by the Group are subject to annual impairment tests and other intangibles amortised over their estimated useful lives subject to an assessment of impairment.

Subsequent impairment tests for investments and intangible assets are based on risk adjusted future cash flows discounted using appropriate discount rates. These future cash flows are based on forecasts which include estimated factors and are inherently judgemental. Future events could cause the assumptions to change which could have an adverse effect on the future results of the Group. Further detail including sensitivities is given in note 10.

Provisions

Provisions have been recognised in relation to settlement of claims from customers relating to the cyber breach. Provisions, by their nature, include an element of estimation of the most likely outcomes in circumstances where claims have not been able to be fully evaluated at the reporting date. Whilst they are based on review of support provided and the terms of customer agreements the final payments may vary from the claim submitted. Further detail of the assumptions applied including sensitivities is included in note 19.

Share based payment

The fair values in respect of share based payments are estimated using a number of inputs to an appropriate valuation models including the probability that performance conditions may be met. Further detail of the assumptions applied is included in note 23.

Notes to the financial statements for the year ended 31 December 2024

1. Revenue and segmental analysis

Recurring revenue represents the sale of the group's full vehicle telematics solutions, support and maintenance. Non-recurring revenue represents the sale of hardware, installation, and professional services. Revenue is defined as per the accounting policies.

Revenue in respect of the setup, supply of hardware and software installation is recognised at a point in time. Professional services including project management, managed services and support services income is recognised over the period when services are provided.

Revenue in respect of one customer amounted to £26.1m representing 32% of the revenue for the year (2023: £23.1m representing 32% of the revenue).

The split of the disaggregated revenue between segments is summarised below.

The chief operating decision maker ("CODM") is identified as the Board. The Board as the CODM reviews the revenue streams of recurring and non-recurring revenue as part of their internal reporting. 

The directors previously considered the Group to comprise two complementary segments in respect of fleet management services (Microlise) and tachograph specific software and analysis services (TruTac). Further acquisitions have since been made, broadening the range of fleet management services and with all acquired businesses now transferred and integrated within Microlise Limited. The board no longer reviews the results of a distinct Trutac segment and views operations as one business with a focus on areas within this including geographical expansion and selling complementary services to the existing customer base. 

The group's non-current assets comprising investments, tangible and intangible fixed assets and the net assets by geographical location are:

2. Adjusted results and exceptional costs

In reporting financial information, the Group presents alternative performance measures (APMs), which are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide depth and understanding to the users of the financial statements to allow for further assessment of the underlying performance of the Group. The Group's primary results measure, which is considered by the directors of the Group to represent the underlying and continuing performance of the Group, is adjusted EBITDA as set out below. EBITDA is a commonly used measure in which earnings are stated before net finance income, tax, amortisation and depreciation as a proxy for cash generated from trading.

The group qualifies for large company R&D tax reliefs with the RDEC credits included in other operating income above operating profit/(loss) which in line with common practice is included in the Group's calculation of EBITDA. 

The measure has been adjusted by acquisition related costs and the material costs of managing and compensating customers for an unexpected cyber security incident in the year which are considered to be non-recurring and non-trading in nature together with the share based payment charge as it represents a non cash item to provide a clearer picture of cash operating performance.

The group was subject to a cyber attack on 31 October 2024 where the actions to mitigate and contain the attack resulted in a number of customers not receiving all the managed services they subscribed for in the weeks following the incident. As a result, the group has incurred a number of exceptional costs totalling £4,380,000 which arise as follows: £429,000 of professional and related fees in respect of managing the technical restoration of services; £1,520,000 reduction in revenue and credit note provision recorded against trade receivables in respect of the value of invoiced services not available to customers in that period; £2,431,000 of provisions have been made in respect of claims for consequential losses from the disruption to the customers' own businesses.

The group considers that its related insurance policies cover these liabilities and that it is likely to be reimbursed a materially similar amount of income in due course once the insurance claims are evaluated and processed. However, confirmation that the policies cover the circumstances was received after the reporting date and in accordance with IAS 37 this is therefore determined to be a contingent asset for the purpose of these financial statements and will be recognised in the next financial period.

In view of the highly material amounts that are expected to be incurred, the primary income statement has been presented to show the result before as well as after these exceptional costs.

3. Operating (loss)/profit

The operating (loss)/profit is stated after charging/(crediting):

The Group claims RDEC credits which are treated as other operating income and reflected in the profit/(loss) before tax.

4. Information regarding directors and employees

Employees

The aggregate remuneration of employees comprised:

Average number of employees

The average number of employees in the year was:

Directors' remuneration

Full information by director is disclosed in the remuneration report.

Key management compensation

Key management is defined as those persons having authority and responsibility for planning, directing, and controlling the activities of the Group, directly or indirectly, including any directors (whether executive or otherwise) of the Group.

5. Interest receivable

6. Interest payable

7. Taxation on (loss)/profit

Factors affecting the tax (credit)/charge for the year

The tax (credit)/charge on the (loss)/profit for the year differs from applying the average standard rate of corporation tax in the UK of 25% (2023: 23.5%). The differences are reconciled below:

In May 2021 a change in the corporation tax rate from 19% to 25% from April 2023 was substantively enacted in the Finance Act 2021 and accordingly has been applied to deferred tax balances at 31 December 2023 and 2024.

8. Earnings per share

There were 4,276,815 unexercised share options in place at 31 December 2024 (2023: 3,701,954) of which 239,462 were potentially dilutive in respect of the year (2023: 141,509 included in the weighted average for diluted EPS).

9. Dividends

The directors have proposed a final dividend for FY24 of 1.24p per share to be paid on 27 June 2025.

10. Property, plant and equipment