Results for the year ended 31 December 2025

About this update from Microlise Group Plc

[{"type":"text","content":"\n \n   \n 14 May 2026 \n   \n Microlise Group plc \n (\"Microlise\", \"the Group\" or \"the Company\") \n   \n Results for the year ended 31 December 2025 \n Strong direct customer growth and continued cash generation \n   \n 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 2025 (\"FY25\" or the \"Period\"). \n To provide a clearer view of underlying business performance, the Group has detailed the below Alternative Performance Measures (APMs) and Statutory Measures: \n   \n \n \n \n \n \n \n \n FY25 \n \n \n FY24 \n \n \n Change \n \n \n \n \n APMs \n \n \n Adjusted Revenue (1) \n \n \n £84.0m \n \n \n £81.0m \n \n \n 4% \n \n \n \n \n Adjusted Recurring Revenue (1) \n \n \n £58.8m \n \n \n £54.7m \n \n \n 8% \n \n \n \n \n Annual Recurring Revenue (ARR) (6) \n \n \n £59.2m \n \n \n £56.6m \n \n \n 5% \n \n \n \n \n Adjusted EBITDA (2) \n \n \n £8.3m \n \n \n £11.3m \n \n \n (27%) \n \n \n \n \n Adjusted Profit before Tax (3) \n \n \n £2.7m \n \n \n £6.5m \n \n \n (59%) \n \n \n \n \n Adjusted EPS (p) (4) \n \n \n 1.72p \n \n \n 4.19p \n \n \n (59%) \n \n \n \n \n Adjusted Cash Flow Generated from Operations (5) \n \n \n £13.3m \n \n \n £10.3m \n \n \n 29% \n \n \n \n \n Statutory Measures \n \n \n Revenue \n \n \n £84.0m \n \n \n £79.5m \n \n \n 6% \n \n \n \n \n Recurring Revenue \n \n \n £58.8m \n \n \n £53.1m \n \n \n 11% \n \n \n \n \n Operating Loss \n \n \n £(2.4)m \n \n \n £(2.3)m \n \n \n (4%) \n \n \n \n \n Loss before Tax \n \n \n £(2.5)m \n \n \n £(2.3)m \n \n \n (9%) \n \n \n \n \n Basic EPS (p) \n \n \n (1.87)p \n \n \n (1.77)p \n \n \n (5%) \n \n \n \n \n Cash and cash equivalents \n \n \n £16.7m \n \n \n £11.4m \n \n \n 47% \n \n \n \n \n   \n 1.       Adjusted Revenue and Adjusted Recurring Revenue exclude revenue reversals relating to the cyber security incident, which are expected to be fully covered by insurance. \n 2.       Adjusted EBITDA excludes exceptional income and costs in relation to acquisitions, restructuring and the cyber incident, depreciation, amortisation, share of loss of associate, loss on disposal of interest in associate, interest, tax and share based payments. \n 3.       Adjusted Profit before Tax excludes amortisation on business combinations, share based payments, share of loss of associate, loss on disposal of interest in associate and exceptional income and costs in relation to the cyber incident, acquisitions, and restructuring costs. \n 4.       Adjusted EPS and Adjusted Profit after Tax excludes amortisation on business combinations, share based payments, share of loss of associate, loss on disposal of interest in associate, exceptional income and costs in relation to the cyber incident, acquisitions, and restructuring costs and the associated tax effect of the above excluded items. \n 5.       Adjusted cash flow generated from operations adds back exceptional cash flows in relation to restructuring. \n 6.       Annual Recurring Revenue (ARR) is calculated by multiplying the December 2025 monthly recurring revenue by 12. \n 7.       Net Revenue Retention (NRR) represents the change in recurring revenue from existing customers over a 12 month period, after reflecting expansions, contractions and churn, excluding new customer wins. \n 8.       For the purposes of this announcement, the Group understands that market consensus for FY25 is for revenue of approximately £84 million and adjusted EBITDA of approximately £8.3 million. For FY26, the Group understands that market consensus is for revenue in the range of £87.2 million to £87.5 million and adjusted EBITDA in the range of £11.2 million to £12.0 million as at 13 May 2026. \n   \n   \n   \n   \n \n Financial Highlights \n ·      Adjusted Revenue 1 increased 3.7% to £84.0m (FY24: £81.0m), in line with revised market expectations 8 , driven by strong expansion across direct customers in all core geographies, offset by lower OEM volumes and the delay of a small number of direct customer contract wins into FY26. \n ·      Adjusted EBITDA 2 of £8.3m (FY24: £11.3m), with margin of 9.9% (FY24: 14.0%) reflecting revenue headwinds. \n ·      Adjusted Profit before Tax 3 of £2.7m (FY24: £6.5m), partly driven by reduced operating profit and increased amortisation reflecting continued investment in technology development including rollout of the Microlise One platform. \n ·      Adjusted EPS 4 of 1.72p (FY24: 4.19p). \n ·      Strong cash generation with adjusted operating cash flow 5 of £13.3m (FY24: £10.3m), and a robust balance sheet with £16.7m of cash (FY24: £11.4m) and a £30m undrawn debt facility, consisting of a £10m committed revolving cash flow facility and a £20m accordion with HSBC. \n ·      Dividends of £2.1m paid (FY24: £2.7m), with a proposed final dividend of 1.30p (FY24: 1.24p), in line with the Board's progressive dividend policy. \n   \n Operational Highlights \n ·      Group Annual Recurring Revenue (ARR) 6 increased to £59.2m (FY24: £56.6m) reflecting our high quality subscription-based recurring revenue model. \n ·      ARR 6 for direct customers increased 12.1% (FY24: 18.3%) to £44.2m (FY24: £39.4m) driven by a record order intake including commercial momentum in the Australian and French markets. The year-on-year movement was partly due to managed churn of smaller customers acquired from recent acquisitions, which is not expected to repeat in 2026 together with reduced OEM activity. \n ·      Net Revenue Retention (NRR) 7 for direct customers was 108% (FY24: 113%), driven by continued low churn of 1.4% (FY24: 0.7%) and good expansion across existing customers through increasing adoption of higher-value modules, supporting long-term revenue visibility and profit margin expansion. \n ·      £5m of annualised cost savings delivered through restructuring at the end of FY25, supporting future margin expansion.417 new customers added (FY24: 375) across core markets. \n ·      Expansion of Microlise One platform, including API integrations with vehicle refrigeration. \n   \n   \n Current Trading & Outlook \n ·      Trading in the first quarter of FY26 is in line with the Board's expectations, supported by continued expansion within existing enterprise customers including increasing adoption of our TMS module together with an expanded pipeline. \n ·      We continue to expect FY26 revenues from OEM customers to be below FY25. \n ·      Following the appointment of a new CTO in FY25 and review of the Company's product roadmap, the Board has decided to accelerate investment in the Group's products, infrastructure and go-to-market team to capitalise on growing demand from direct customers. \n ·      The investment programme will include updating the architecture of our cloud platform, product investment to accelerate both the implementation of the TMS module and the Group's mid-market offering. Sales headcount will also increase to support expected growth across target customers in all core geographies.  \n ·      As a result of the above investment and a challenging market environment we expect FY26 revenues to be slightly below current market expectations and adjusted EBITDA to be at the lower end of current market expectations. 8 \n   \n Nadeem Raza, CEO, Microlise said: \n \"Against a tough market backdrop Microlise delivered a resilient performance in FY25, with continued revenue growth and strong momentum in our direct customer business, despite a more mixed trading environment and weaker OEM demand. This reflects the strength of our strategy, the quality of our customer relationships and the increasing relevance of our solutions in supporting operational efficiency across the transport sector. \n During the year, we took decisive action to improve the efficiency of the business, completing a targeted restructuring programme with £5 million of annualised cost savings realised in Q4. \n Trading in the first quarter of FY26 is in line with the Board's expectations, against a more complex operating environment, including ongoing supply chain disruptions linked to geopolitical tensions in the Middle East and emerging cost pressures associated with shortage of electronic components, in particular memory devices. \n Looking ahead, 2026 will be an important investment year for Microlise as we deliberately allocate capital behind the areas of the business where we see the strongest long-term growth opportunity. This includes investment in our cloud infrastructure, product roadmap, TMS capability, mid-market proposition and go-to-market teams across our core geographies. The Board believes this will deliver the right balance between accelerating long term organic growth, expanding scalable and higher margin recurring revenues combined with profit margin expansion through enhanced operational efficiencies and revenue mix improvement accretive to margins. These actions are a clear reflection of our direction of travel: to build a more scalable, higher-quality and higher-margin business, with the benefits of this investment expected to support growth in 2027 and beyond.\" \n   \n For further information, please contact: \n   \n Microlise Group plc \n   \n Nadeem Raza, CEO                                                                                                               C/O SEC Newgate \n Nick Wightman, CFO \n   \n Canaccord Genuity Limited (Nominated Adviser & Broker) \n Simon Bridges / Harry Gooden / Andrew Potts / Elizabeth Halley-Stott                    Tel: +44 (0) 20 7523 8000 \n   \n SEC Newgate (Financial Communications) \n Bob Huxford / Harry Handyside / Rhea Xigaki                                                                [email protected] \n                 \n   \n   \n About Microlise \n   \n Microlise Group Plc is a leading provider of transport and fleet technology to transport and logistic operators helping them to improve efficiency, safety, and reduce emissions. These improvements are delivered through reduced fuel use, reduced mileage travelled, improved driver performance, fewer accidents, elimination of paperwork and delivery of an enhanced customer experience. \n   \n Established in 1982, Microlise is an award-winning business with over 2,500 clients, and a global workforce of 730 across the Group's headquarters in Nottingham in the UK, and offices in France, Australia, and India. \n   \n Microlise is listed on the AIM market of the London Stock Exchange (AIM: SAAS) and qualifies for the London Stock Exchange's Green Economy Mark. \n   \n   \n Inside Information: This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain. \n   \n   \n   \n   \n \n Chairman's Statement \n   \n 2025 has been a year of significant operational progress for Microlise, during which we undertook a successful restructuring that has resulted in a more efficient organisation, better positioned to deliver long-term sustainable growth in revenue and earnings. \n   \n Adjusted revenue increased by 3.7% to £84.0m (FY2024: £81.0m). Annual Recurring Revenue (ARR) grew by 4.6% to £59.2m (FY2024: £56.6m). The Adjusted Revenue was below previous expectations due to lower OEM volumes and delayed direct customer projects.  Adjusted recurring revenue increased by 7.6% to £58.8m (FY2024: £54.7m), supported by 16% recurring revenue growth from direct customers. \n   \n Adjusted EBITDA was £8.3m (FY2024: £11.3m), representing a margin of 10% (FY2024: 14%), reflecting the impact of lower OEM volumes, the timing of certain customer deployments, and continued investment in the business. \n   \n The Group ended the year with cash and cash equivalents of £16.7m (FY2024: £11.4m), reflecting strong cash generation and disciplined working capital management. \n   \n Operationally, the year has been characterised by focus and decisive action. The restructuring programme implemented at the end of 2025 has delivered a leaner and more flexible organisation, with a clearer emphasis on execution and delivery. Cost savings were mostly focussed on operations rather than our go to market teams, and resulted in a headcount reduction of over 100 FTEs. These actions are expected to deliver c.£5m of annualised cost savings, supporting future margin improvement. \n   \n We have also strengthened our leadership team. Dean Garvey-North joined the Group in November 2025 and, following a transition period with Duncan McCreadie, assumed full responsibility as Chief Technology Officer from 1 January 2026. \n   \n Strategically, strong progress continues across our international markets, particularly in Australia and New Zealand, where we are seeing encouraging growth in key sectors including food and chilled logistics. We are also gaining traction within smaller fleet segments, supported by our digital sales capabilities and increasingly accessible product offering. \n   \n Looking ahead, the Group's most significant opportunities remain in its direct customer business and across international markets. We are accelerating our investment in product, infrastructure and the go-to-market team to support future growth , while maintaining a disciplined approach to costs and capital allocation. \n   \n On behalf of the Board, I would like to thank our customers for their continued trust, our employees for their commitment and innovation, and our shareholders for their ongoing support. \n   \n   \n   \n \n \n   \n CEO's Statement \n   \n Introduction \n   \n Microlise made solid strategic progress during the year under review, strengthening the foundations of the Group while navigating a more mixed trading environment. The restructuring actions undertaken towards the end of the year have materially improved efficiency and are expected to deliver c.£5m of annualised cost savings from 2026 onwards. As a result, the Group is now a more agile and focused organisation, well positioned to deliver higher quality, higher margin growth. \n   \n While OEM-related demand was weaker than anticipated during 2025, we are beginning to see signs of stabilisation. We remain appropriately cautious and currently still expect OEM revenues in 2026 to be lower than 2025 levels. \n   \n A number of direct customer projects were delayed during 2025 due to cyber-related incidents impacting clients. These projects are now progressing, and we expect the associated revenues to be recognised in the 2026 financial year. \n   \n Notwithstanding these project delays, our direct-to-customer business performed strongly, delivering 16% growth in recurring revenue. This growth was broad-based across all geographies and reflects continued demand for our solutions, as well as the increasing depth of our customer relationships. \n   \n Customers are also adopting a wider range of our products, supported by the continued development of the Microlise One platform. This has improved the accessibility of our solutions and driven momentum in cross-sell and upsell activity, underpinning our confidence in the Group's medium-term growth prospects. \n   \n Recent increases in fuel prices are placing additional pressure on customer cost bases. Given that our solutions typically deliver fuel savings of 4-6%, and potentially more where multiple products are deployed, we would expect sustained higher fuel costs to support increased demand for our offerings over time. \n   \n Market \n   \n Australia continues to represent a highly attractive market for Microlise. Despite a smaller population than the UK, its larger fleet size and long-distance logistics requirements provide a structurally supportive environment for our solutions. The market remains relatively underpenetrated, offering significant long-term growth potential. \n   \n We are also seeing encouraging traction among mid-tier customers in the UK van segment, as we expand beyond our traditional large fleet customer base in line with our strategic priorities. \n   \n Demand from direct customers remains strong, and we are increasing investment in our go-to-market capabilities to capture this opportunity. OEM volumes have shown some improvement in the early part of 2026, although we are still expecting annual OEM revenues to be lower than 2025. \n   \n Electric vehicle adoption moderated during 2025 as customers prioritised maximising utilisation and efficiency from existing fleets, with new vehicle investment remaining predominantly diesel-led due to cost considerations. While the transition from internal combustion engine to alternative fuelled vehicles continues, it remains a long-term, capital-intensive programme representing a relatively small proportion of overall fleet volumes. Against this backdrop, customers still require consistent tools to manage increasingly complex mixed fleets, and Microlise is well positioned to support this transition, providing continuity of fleet management capabilities across both conventional and alternative fuel vehicles. We view the current pace of adoption as cyclical rather than structural. \n   \n Customers \n   \n Microlise secured 417 new customers in FY2025 (FY2024: 375), while maintaining low churn of 1.4% (FY2024: 0.7%). This reflects the critical role our solutions play within customers' operations and the strength of our customer relationships. \n   \n Adoption of multiple products continues to increase, supported by the rollout of the Microlise One platform. Our Transport Management Solutions (TMS) module is gaining strong commercial traction, particularly within the direct customer segment, further embedding our solutions within customers' operational workflows. Our focus is now on deepening engagement with this growing direct customer base, driving further cross-sell and upsell opportunities, and enhancing our go-to-market execution. \n   \n Product and Technology \n   \n Product innovation remains central to our strategy. We are launching enhanced camera-based Advanced Driver Assistance Systems (ADAS), incorporating increased use of AI, including driver monitoring and external safety features. \n   \n In addition, we are developing AI-driven data analytics tools for both internal use and customers, with both standard and premium offerings. Our extensive dataset provides a strong competitive advantage, and we see significant long-term potential in leveraging this data to deliver enhanced operational insights and value for customers. \n   \n We view artificial intelligence as a natural extension of our data-led platform, enhancing the value we deliver to customers rather than operating as a standalone capability. By embedding AI across Microlise One, we will enable customers to move from insight to action, supporting more informed decision-making, improving operational efficiency and strengthening safety outcomes. Our focus is on the practical application of AI within transport operations, including predictive analytics, anomaly detection and assisted planning, with a clear pathway over time towards more automated and controlled decision-making. We believe our scale of high-quality operational data, combined with our integrated platform approach, positions Microlise strongly to capitalise on the growing role of AI within the transport and logistics sector. \n   \n Strategic Focus \n   \n Our strategic priorities remain: \n   \n •      Increased investment in direct customer growth  \n We are allocating capital to additional resources to our go-to-market teams to support continued expansion in our higher-quality, higher-margin direct customer business. \n   \n •      Improving margins through greater efficiency  \n The restructuring actions undertaken in 2025 have created a more efficient cost base. We will continue to drive operational efficiencies to support margin expansion and scalable growth. \n   \n •      Continued development of the Microlise One platform  \n We are enhancing our integrated platform, including the rollout of Microlise One Analytics, enabling customers to derive greater value from their data. \n   \n •      International expansion  \n We continue to make progress across our existing international markets, with particular focus on Australia, where we see the greatest opportunity. \n   \n •      M&A  \n We continue to evaluate acquisition opportunities that align with our strategic and financial objectives. \n   \n •      Technology Partnerships  \n We are expanding our ecosystem through partnerships in adjacent sectors, including temperature-controlled logistics, passenger transport, and last-mile delivery. \n   \n Microlise Transport Conference \n   \n Our annual Microlise Transport Conference took place in mid-May at the Co-op Arena in Manchester. It remains one of Europe's largest events for commercial road transport, bringing together industry participants to share insights and best practice. \n   \n People and Leadership \n   \n Duncan McCreadie, our former Chief Technology Officer, retired in April 2026 after ten years of service. We thank him for his significant contribution. \n   \n Dean Garvey-North joined the Group in November 2025 and worked alongside Duncan during a transition period. Dean assumed full responsibility as Chief Technology Officer from 1 January 2026, with a strong focus on leveraging AI and maximising the value of our data assets. \n   \n ESG \n   \n We continue to strengthen our ESG credentials. Our own fleet has transitioned to hybrid vehicles, with plans to move towards EVs over time. More broadly, our solutions help customers reduce emissions, improve safety, and enhance asset utilisation. \n   \n Current Trading & Outlook \n   \n We expect continued strong growth in our direct customer business, supported by an expanded pipeline and increased go-to-market investment, although OEM-related activity continues to be expected lower than 2025 levels. The Group continues to navigate a more complex operating environment, including ongoing supply chain disruptions linked to geopolitical tensions in the Middle East and emerging cost pressures associated with shortage of electronic components, in particular memory devices. \n   \n Looking ahead, we expect to increase targeted investment in 2026 across product, infrastructure and go-to-market capability. This will include investment in cloud infrastructure, product development to accelerate implementation of the TMS module and mid-market offering, and additional sales resource to support growth across target customers and partners in core geographies. \n   \n The Board anticipates the investments will support revenue growth from 2027 and are being made from a strong capital position, with £16.7m of cash at year end and a £30m undrawn debt facility, consisting of a £10.0m committed revolving cash flow facility and a £20m accordion with HSBC. \n   \n While this investment will be managed within the Group's disciplined approach to cost control and capital allocation, it is expected to absorb part of the near term cost benefit realised from the £5m of annualised cost savings delivered through the restructuring programme in 2025. As a result of the above investment and a challenging market environment we expect FY26 revenues to be slightly below current market expectations and adjusted EBITDA to be at the lower end of current market expectations 8 \n   \n The Board believes this will deliver the right balance between accelerating long term organic growth, expanding scalable and higher margin recurring revenues combined with profit margin expansion through enhanced operation efficiencies and revenue mix improvement accretive to margins. \n   \n   \n   \n   \n CFO Statement \n   \n The financial results for the twelve-month period to 31 December 2025 reflect continued revenue growth, alongside a period of investment and operational transition to support future margin improvement. \n   \n To provide a clearer view of underlying business performance, the Group has detailed the below Alternative Performance Measures (APMs) and Statutory Measures for the 12-month period to 31 December 2025 : \n   \n \n \n \n \n \n \n \n FY25 \n \n \n FY24 \n \n \n Change \n \n \n \n \n APMs \n \n \n Adjusted Revenue (1) \n \n \n £84.0m \n \n \n £81.0m \n \n \n 4% \n \n \n \n \n Adjusted Recurring Revenue (1) \n \n \n £58.8m \n \n \n £54.7m \n \n \n 8% \n \n \n \n \n Annual Recurring Revenue (ARR) (6) \n \n \n £59.2m \n \n \n £56.6m \n \n \n 5% \n \n \n \n \n Adjusted EBITDA (2) \n \n \n £8.3m \n \n \n £11.3m \n \n \n (27%) \n \n \n \n \n Adjusted Profit before Tax (3) \n \n \n £2.7m \n \n \n £6.5m \n \n \n (59%) \n \n \n \n \n Adjusted EPS (p) (4) \n \n \n 1.72p \n \n \n 4.19p \n \n \n (59%) \n \n \n \n \n Adjusted Cash Flow Generated from Operations (5) \n \n \n £13.3m \n \n \n £10.3m \n \n \n 29% \n \n \n \n \n Statutory Measures \n \n \n Revenue \n \n \n £84.0m \n \n \n £79.5m \n \n \n 6% \n \n \n \n \n Recurring Revenue \n \n \n £58.8m \n \n \n £53.1m \n \n \n 11% \n \n \n \n \n Operating Loss \n \n \n £(2.4)m \n \n \n £(2.3)m \n \n \n (4%) \n \n \n \n \n Loss before Tax \n \n \n £(2.5)m \n \n \n £(2.3)m \n \n \n (9%) \n \n \n \n \n Basic EPS (p) \n \n \n (1.87)p \n \n \n (1.77)p \n \n \n (5%) \n \n \n \n \n Cash and cash equivalents \n \n \n £16.7m \n \n \n £11.4m \n \n \n 47% \n \n \n \n \n   \n Exceptional costs \n Following the cyber security incident disclosed in FY24, the Group incurred an additional £0.3m of exceptional costs in FY25 relating to the completion of remediation activities and the management of associated claims. In addition, the Group undertook targeted restructuring actions during the year, giving rise to exceptional restructuring costs of £2.4m. As anticipated, insurance recoveries in respect of the FY24 cyber incident were received during the year, with £1.2m recognised as exceptional other income in FY25, the Board remain confident that the impact of the cyber incident will be fully covered by its cyber insurance. Taken together, these items reflect the continued closeout of the cyber incident and related matters, alongside actions taken to strengthen the Group's operational cost base. \n   \n To assist users of the financial statements with understanding underlying business trading, the Group present KPI's excluding exceptional items, including exceptional cyber cost revenue reversals, cyber incident insurance proceeds. All exceptional costs are disclosed separately in note 2 of the financial statements. \n   \n 1.       Adjusted Revenue and Adjusted Recurring Revenue exclude revenue reversals relating to the cyber security incident, which are expected to be fully covered by insurance. \n 2.       Adjusted EBITDA excludes exceptional income and costs in relation to acquisitions, restructuring and the cyber incident, depreciation, amortisation, share of loss of associate, loss on disposal of interest in associate, interest, tax and share based payments. \n 3.       Adjusted Profit before Tax excludes amortisation on business combinations, share based payments, share of loss of associate, loss on disposal of interest in associate and exceptional income and costs in relation to the cyber incident, acquisitions, and restructuring costs. \n 4.       Adjusted EPS and Adjusted Profit after Tax excludes amortisation on business combinations, share based payments, share of loss of associate, loss on disposal of interest in associate, exceptional income and costs in relation to the cyber incident, acquisitions, and restructuring costs and the associated tax effect of the above excluded items. \n 5.       Adjusted cash flow generated from operations adds back exceptional cash flows in relation to restructuring. \n 6.       Annual Recurring Revenue (ARR) is calculated by multiplying the December 2025 monthly recurring revenue by 12. \n 7.       Net Revenue Retention (NRR) represents the change in recurring revenue from existing customers over a 12 month period, after reflecting expansions, contractions and churn, excluding any new customer wins. \n 8.       For the purposes of this announcement, the Group understands that market consensus for FY25 is for revenue of approximately £84 million and adjusted EBITDA of approximately £8.3 million. For FY26, the Group understands that market consensus is for revenue in the range of £87.2 million to £87.5 million and adjusted EBITDA in the range of £11.2 million to £12.0 million as at 13 May 2026. \n   \n   \n   \n \n \n   \n Group Results Revenue \n   \n \n \n \n \n KPIs for the twelve months ended 31 December 2025 \n \n \n FY25 \n \n \n FY24 \n \n \n Change \n \n \n \n \n Revenue \n \n \n £84.0m \n \n \n £79.5m \n \n \n 5.7% \n \n \n \n \n Recurring Revenue \n \n \n £58.8m \n \n \n £53.1m \n \n \n 10.7% \n \n \n \n \n Adjusted Revenue (1) \n \n \n £84.0m \n \n \n £81.0m \n \n \n 3.7% \n \n \n \n \n Adjusted Recurring Revenue (1) \n \n \n £58.8m \n \n \n £54.7m \n \n \n 7.6% \n \n \n \n \n Non-recurring Revenue \n \n \n £25.2m \n \n \n £26.3m \n \n \n (4.3%) \n \n \n \n \n Annual Recurring Revenue (ARR) (6) \n \n \n £59.2m \n \n \n £56.6m \n \n \n 4.6% \n \n \n \n \n Direct Customer ARR (6) growth \n \n \n 12.1% \n \n \n 18.3% \n \n \n (6.2%) \n \n \n \n \n Net Revenue Retention (NRR) (7) - Direct Customers \n \n \n 108% \n \n \n 113% \n \n \n (5%) \n \n \n \n \n Net Revenue Retention (NRR) (7) - Group \n \n \n 101% \n \n \n 109% \n \n \n (8%) \n \n \n \n \n   \n Adjusted revenue (1) for the 12 months ended 31 December 2025 (FY25) was £84m, an increase of 3.7% from 31 December 2024 (FY24). Adjusted recurring revenues have grown 7.6% to £58.8m (FY24: £54.7m). During the period order volumes for our global OEM (9) customers in the automotive and construction sectors have weakened, which has resulted in a reduction in both recurring and non-recurring revenue. This is predominantly due to trading disruptions caused by the impact of tariffs together with general weakness in the wider macro environment. ARR (6) relating to OEM customers reduced by 12.8% (FY24: 6.6% reduction) to £15.0m (FY24: £17.2m). \n   \n A key highlight of the year has been the continued growth of the Group's direct customer business, which delivered 16% recurring revenue growth during the year (FY24: 17%). This is despite delays with a small number of planned customer projects that we anticipate will result in revenue being recognised in FY26 as the software and hardware products are deployed. \n   \n ARR increased by 4.6% to £59.2m (FY24: £56.6m), driven primarily by expansion within the direct customer business. Growth was supported by strong momentum in Australia and France during H1, reflecting a combination of new customer wins and continued expansion across existing customer fleets as projects to deploy Microlise's products and services were rolled out. Notwithstanding the delays noted above, alongside the cessation of a low margin legacy contract, direct customer ARR remained strong in the period growing at 12.1% (FY24: 18.3%) to £44.2m (FY24: £39.4m). \n   \n In FY25, direct customer ARR growth moderated as selected customers optimised fleet sizes following customer acquisition ‑ led expansion, and certain low ‑ margin contracts were intentionally exited, rather than due to any deterioration in underlying customer relationships. The direct customer segment represents the most significant long-term opportunity for Microlise, providing higher quality recurring revenue streams and stronger margins over time. \n   \n Net Revenue Retention (NRR) (7) for direct customers was 108% (FY24: 113%), reflecting contract deployment delays noted above and a lower level of incremental expansion from certain large customers. In the prior year, growth within these customers was partially driven by customers acquisition ‑ led fleet expansion, where Microlise products and services were deployed across customers expanded fleets; this was subsequently followed by fleet reductions as customers consolidated operations and implemented efficiency measures. Additional impacts included managed churn. Total Group NRR was 101% (FY24: 109%), with the year ‑ on ‑ year reduction primarily driven by lower OEM revenues. \n   \n Non-recurring revenues decreased by 4.3% to £25.2m (FY24: £26.3m). The slowdown in both the construction and automotive industries has impacted hardware shipments to our OEM customers which has driven a decrease in hardware revenues of 5.7% to £18.3m (FY24: £19.4m). This decrease was partially offset by an increase in hardware revenues in Australia as new contracts continued to be rolled out in H1. Professional services revenues have decreased by 13.2% to £3.3m (FY24: £3.8m) whilst installation revenues increased 8.4% to £3.4m (FY24: £3.2m) reflecting the increased H1 activity in Australia. \n   \n Gross Profit \n Adjusted gross profit (10) for the period increased by 1.2% to £54.1m (FY24 £53.5m), with an adjusted gross margin % of 64% (FY24: 66%). Reported gross profit was £54.1m (FY24: £52.0m). \n \n \n   \n Administrative Expenses & Operating Profit \n Adjusted administrative expenses (11) before exceptional administrative charges and share based payment charges, in the Period increased 8% to £54.6m (FY24: £50.7m). Staff costs increased 6% to £38.5m (FY24: £36.2m). Average headcount in the period was 816 (FY24: 805). In November 2025, the Group announced cost saving and efficiency measures across parts of the Group that included organisational restructuring, optimisation of internal processes and several targeted cost saving programmes, mostly focussed on operations rather than our go to market teams. These initiatives coupled with other ongoing initiatives have generated £5m of annualised cost savings and headcount reduction of over 100 FTEs. Part of these cost savings will be reinvested back into the Company, primarily into our go to market teams to drive new business activity. \n   \n Our margin enhancement programme continues into FY26, focusing on further cost reductions and process improvements to support profitable growth. During the year, elevated IT hardware costs and supply constraints increased the cost and extended the delivery timelines of certain infrastructure investments, resulting in the rephasing of a number of initiatives. As a result, associated benefits are now expected to be realised over a longer period. These impacts do not alter the Group's medium term margin ambitions, although the timing of achieving this remains uncertain. \n   \n Marketing investment increased to c.£1.8m in FY25 (FY24: £1.3m) to support the Group's international growth strategy and medium-term pipeline objectives. Spend was directed towards strengthening our market presence in priority regions, enhancing campaign capability, and expanding events activity as a direct pipeline driver. The implementation of scalable marketing automation has improved targeting, lead management and performance measurement, supporting a more disciplined and data-led approach to marketing investment. \n   \n Legal, professional and IT costs increased during the period by a net £0.8m. The main driver for this increase was continued investment into Microlise's security posture where spending increased by c.£0.6m on the prior year. Depreciation and amortisation charges in the period increased 9% to £8.5m (FY24: £7.9m). 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 continued investment in internally developed technologies. \n   \n Capitalised development costs in FY25 were £2.7m (FY24: £2.7m), reflecting the ongoing levels of investment into the product portfolio including integration of recent acquisitions, architecture and security. Amortisation of capitalised development costs in FY25was £2.2m (FY24: £1.7m). \n   \n Operating profit for FY25 after adjusting for exceptional items, share based payments, and amortisation charges as a result of business combinations was £2.6m (FY24: £6.3m). Reported operating loss for the period was £2.4m (FY24: £2.3m loss), the principal factors driving this are cyber related exceptional costs and increases in amortisation charges from continued investment in internally developed technologies. \n   \n Adjusted EBITDA (2) & Profit Before Tax \n To provide a clearer view of underlying business performance, Adjusted EBITDA excludes exceptional items relating to restructuring and the impact of the 2024 cyber incident, together with depreciation, amortisation, share of loss of associate, loss on disposal of interest in associate, interest, tax and share based payments. Adjusted EBITDA for the year was £8.3m (FY24: £11.3m), representing a 27% reduction year on year. \n   \n The reduction reflects a combination of temporary trading impacts and deliberate structural investments. Looking into FY26, the Group expects to increase targeted investment in product, infrastructure and go-to-market capability. This will include investment in cloud infrastructure, product development to accelerate implementation of the TMS module and mid-market offering, and additional sales resource to support growth across target customers in core geographies. These investments are being made from a position of balance sheet strength, with £16.7m of cash at year end and no drawn debt and are intended to support revenue growth from 2027 onwards. \n   \n While this investment will be managed within the Group's disciplined approach to cost control and capital allocation, it is expected to absorb part of the benefit from the £5m of annualised cost savings delivered through the restructuring programme in Q4. The Board believes this is the right balance between near-term margin discipline and long-term growth investment, supporting the Group's objective of building a more scalable, higher-margin and recurring revenue-led business. \n   \n Adjusted profit before taxation (3) for the period decreased 59% to £2.7m (FY24: £6.5m), reflecting the lower Adjusted EBITDA and higher depreciation and amortisation charges associated with capitalised development costs. The adjusted profit before taxation excludes exceptional costs in relation to restructuring and cyber security costs, amortisation charges of £2.7m as a result of business combinations (FY24: £2.8m), share of loss of associate and share based payments. Reported loss before taxation in the period was £2.5m (FY24: £2.3m loss). \n   \n Taxation \n The tax credit in the 12 months ended 31 December 2025 was £0.4m (FY24: £0.3m credit). 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. 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. \n   \n 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 Expenditure Credit scheme (RDEC) with any benefit being reflected as grant income within other operating income. In the period ended 31 December 2025 the pretax value of the credit was £0.1m (FY24: £0.4m). \n   \n Profit After Tax, EPS and Dividend \n Adjusted profit after tax (4) for the year decreased 58.9% to £2.0m (FY24: £4.9m). As a result, adjusted earnings per share (4) in the period decreased 58.9% to 1.72p (FY24: 4.19p). Reported basic loss per share was 1.87p (FY24: 1.77p loss) and diluted loss per share was 1.87p (FY24: 1.77p loss). For further information on earnings per share, please refer to note 8 of the financial statements. Reported loss after tax for the 12 months ended 31 December 2025 was £2.2m (FY24: £2.1m loss). \n   \n During the period, the Group paid a FY24 final dividend of 1.24 pence per share and a FY25 interim dividend of 0.60 pence per share. The Board is recommending the payment of a FY25 final dividend of 1.30 pence per ordinary share. Subject to shareholder approval at the Annual General Meeting to be held on 24 June 2026, the dividend will be paid on 24 July 2026 to shareholders on the register at the close of business on 3 July 2026. \n   \n Group Statement of Financial Position \n The Group had net assets of £68m at 31 December 2025 (FY24: £71.9m). Total assets decreased by £1.8m to £132.9m (FY24: £134.6m). During FY25 the Group disposed of its investment in Trakm8 Holdings Plc (Trakm8), which was sold to Brillian UK Limited via an all cash offer at 9.5 pence per share. The transaction completed in July 2025, resulting in Microlise disposing of its full equity interest in Trakm8. As part of the transaction framework, Microlise's £1.0 million convertible loan was converted into equity at 8.1 pence per share and subsequently disposed of as part of the cash offer. Trade debtors reduced by 24% to £16m (FY24: £21.1m) as a result of strong cash collection across the customer base. \n   \n Total liabilities increased by £2.1m due to an increase in lease liabilities resulting from increased data centre capacity as part of the strategy to reduce third party hosting costs, as well as an increase in vehicle leasing costs driven by the transition to hybrid vehicles for our mobile engineering teams. The Group typically invoices for software subscriptions monthly, quarterly, annually or for the life of the subscription in advance which drives a strong balance sheet with significant cash balances. Revenue is recognised in the month the service is provided with deferred income disclosed as contract liabilities in current and non current liabilities. As at the end of December 2025 total Trade and other payables was £52.9m (FY24: £52.4m). Of this balance £38.5m (FY24: £38.8m) is deferred income and relates to future contracted revenue recognition. \n   \n Adjusted Cashflow (5) & Net Cash \n Adjusted cash flows generated from operations (5) remains healthy at £13.3m in the period (FY24: £10.3m), and this represents a cash conversion rate (12) of 142% (FY24: 91%). Reported cash flows generated from operations in the period was £11.9m (FY24: £9.7m). The Group ended the 12-month period to 31 December 2025 with cash and cash equivalents of £16.7m (FY24: £11.4m). Overall, the net cash inflow was £5.4m with the main movements being; reduction in Trade Debtors of £5.2m (FY24: £2.1m increase); net tax payments of £0.6m, (FY24: £0.9 receipt), FY24 final dividend and FY25 interim dividend totalling £2.1m (FY24: £2.7), purchases of plant, property and equipment of £2.5m (FY24: £1.4m), investment into product and development of £2.7m (FY24: £2.7m), and payments in respect of lease liabilities £1.4m (FY24: £1.2m). \n   \n Banking Facility \n In April 2024, the Group renewed its debt 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 the Group remains comfortably within its banking covenants. The Group's cash of £16.7m (FY24: £11.4m) and the undrawn £10.0m facility gives the Group £26.7m 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 concern assessment is provided in the basis of preparation note in the financial statements. \n   \n   \n Additional Notes \n 1.       Adjusted Revenue and Adjusted Recurring Revenue exclude revenue reversals relating to the cyber security incident, which are expected to be fully covered by insurance. \n 2.       Adjusted EBITDA excludes exceptional income and costs in relation to acquisitions, restructuring and the cyber incident, depreciation, amortisation, share of loss of associate, loss on disposal of interest in associate, interest, tax and share based payments. \n 3.       Adjusted Profit before Tax excludes amortisation on business combinations, share based payments, share of loss of associate, loss on disposal of interest in associate and exceptional income and costs in relation to the cyber incident, acquisitions, and restructuring costs. \n 4.       Adjusted EPS and Adjusted Profit after Tax excludes amortisation on business combinations, share based payments, share of loss of associate, loss on disposal of interest in associate, exceptional income and costs in relation to the cyber incident, acquisitions, and restructuring costs and the associated tax effect of the above excluded items. \n 5.       Adjusted cash flow generated from operations adds back exceptional cash flows in relation to restructuring. \n 6.       Annual Recurring Revenue (ARR) is calculated by multiplying the December 2025 monthly recurring revenue by 12. \n 7.       Net Revenue Retention (NRR) represents the change in recurring revenue from existing customers over a 12 month period, after reflecting expansions, contractions and churn, excluding any new customer wins. \n 8.       For the purpose of this announcement, the Group believes market consensus for FY25 to be revenues of £84 million and adjusted EBITDA of £8.3 million. \n 9.       OEM is an abbreviation for Original Equipment Manufacturers. \n 10.     Adjusted gross profit adds back the impact of credit notes related to the cyber incident. \n 11.     Adjusted Administrative Expenses adds back exceptional costs related to the cyber incident, and exceptional costs in relation to acquisitions and restructuring. \n 12.     Cash conversion is calculated by dividing adjusted cash flow generated from operations by adjusted EBITDA. \n   \n   \n   \n \n Financial Statements \n   \n Consolidated Statement of Comprehensive Income \n for the year ended 31 December 2025 \n   \n \n \n \n \n \n \n \n \n \n \n 2025 \n Underlying results \n \n \n 2025 \n Exceptional cyber and restructuring costs \n (note 2) \n \n \n 2025 \n Total \n   \n \n \n 2024 \n Underlying results \n \n \n 2024 \n Exceptional cyber and restructuring costs \n (note 2) \n \n \n 2024 \n Total \n   \n \n \n \n \n \n \n \n Note \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Revenue \n \n \n 1 \n \n \n 84,027 \n \n \n - \n \n \n 84,027 \n \n \n 80,995 \n \n \n (1,520) \n \n \n 79,475 \n \n \n \n \n Cost of sales \n \n \n \n \n \n (29,888) \n \n \n - \n \n \n (29,888) \n \n \n (27,474) \n \n \n - \n \n \n (27,474) \n \n \n \n \n Gross profit \n \n \n \n \n \n 54,139 \n \n \n - \n \n \n 54,139 \n \n \n 53,521 \n \n \n (1,520) \n \n \n 52,001 \n \n \n \n \n Other operating income \n \n \n 3 \n \n \n 219 \n \n \n 1,153 \n \n \n 1,372 \n \n \n 640 \n \n \n - \n \n \n 640 \n \n \n \n \n Administrative expenses \n \n \n \n \n \n (55,251) \n \n \n (2,678) \n \n \n (57,929) \n \n \n (52,089) \n \n \n (2,860) \n \n \n (54,949) \n \n \n \n \n   \n Operating (loss)/profit \n \n \n 3 \n \n \n (893) \n \n \n (1,525) \n \n \n (2,418) \n \n \n 2,072 \n \n \n (4,380) \n \n \n (2,308) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Interest income \n \n \n 5 \n \n \n 361 \n \n \n - \n \n \n 361 \n \n \n 452 \n \n \n - \n \n \n 452 \n \n \n \n \n Interest expense \n \n \n 6 \n \n \n (259) \n \n \n - \n \n \n (259) \n \n \n (250) \n \n \n - \n \n \n (250) \n \n \n \n \n Share of loss of associate net of tax \n \n \n 12 \n \n \n - \n \n \n - \n \n \n - \n \n \n (229) \n \n \n - \n \n \n (229) \n \n \n \n \n Gain on conversion of loan to associates \n \n \n 12 \n \n \n 181 \n \n \n - \n \n \n 181 \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Loss on disposal of interest in associate \n \n \n 12 \n \n \n (414) \n \n \n - \n \n \n (414) \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n   \n (Loss)/profit before taxation \n   \n \n \n \n \n \n (1,024) \n \n \n   \n (1,525) \n \n \n (2,549) \n \n \n 2,045 \n \n \n   \n (4,380) \n \n \n (2,335) \n \n \n \n \n Taxation \n \n \n 7 \n \n \n 3 \n \n \n 381 \n \n \n 384 \n \n \n (814) \n \n \n 1,095 \n \n \n 281 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n (Loss)/profit for the year \n \n \n \n \n \n (1,021) \n \n \n (1,144) \n \n \n (2,165) \n \n \n 1,231 \n \n \n (3,285) \n \n \n (2,054) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Other comprehensive expense for the year \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Currency translation differences \n \n \n \n \n \n (257) \n \n \n - \n \n \n (257) \n \n \n (34) \n \n \n - \n \n \n (34) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Total comprehensive (expense)/income for the year attributable to the equity shareholders of Microlise Group plc \n \n \n \n \n \n   \n (1,278) \n   \n \n \n   \n (1,144) \n   \n \n \n (2,422) \n \n \n   \n   \n   \n \n \n   \n (3,285) \n   \n \n \n (2,088) \n \n \n \n \n Basic earnings per share (pence) \n \n \n 8 \n \n \n (0.88) \n \n \n (0.99) \n \n \n (1.87) \n \n \n 1.06 \n \n \n (2.83) \n \n \n (1.77) \n \n \n \n \n Diluted earnings per share (pence) \n \n \n 8 \n \n \n (0.88) \n \n \n (0.99) \n \n \n (1.87) \n \n \n 1.06 \n \n \n (2.83) \n \n \n (1.77) \n \n \n \n \n   \n   \n \n   \n Consolidated Statement of Financial Position \n as at 31 December 2025 \n   \n \n \n \n \n \n \n \n \n \n \n 31 December \n \n \n 31 December \n \n \n \n \n \n \n \n \n \n \n 2025 \n \n \n 2024 \n \n \n \n \n \n \n \n Note \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Property, plant and equipment \n \n \n 10 \n \n \n 11,628 \n \n \n 8,702 \n \n \n \n \n Intangible assets \n \n \n 11 \n \n \n 81,673 \n \n \n 83,914 \n \n \n \n \n Investments in associate \n \n \n 12 \n \n \n - \n \n \n 1,364 \n \n \n \n \n Trade and other receivables \n \n \n 14 \n \n \n 2,996 \n \n \n 3,201 \n \n \n \n \n Total non-current assets \n \n \n   \n \n \n 96,297 \n \n \n 97,181 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Inventories \n \n \n 13 \n \n \n 2,753 \n \n \n 3,212 \n \n \n \n \n Loan to associate \n \n \n 12 \n \n \n - \n \n \n 1,000 \n \n \n \n \n Trade and other receivables \n \n \n 14 \n \n \n 15,990 \n \n \n 21,104 \n \n \n \n \n Corporation tax recoverable \n \n \n \n \n \n 1,100 \n \n \n 746 \n \n \n \n \n Cash and cash equivalents \n \n \n 15 \n \n \n 16,743 \n \n \n 11,401 \n \n \n \n \n Total current assets \n \n \n \n \n \n 36,586 \n \n \n 37,463 \n \n \n \n \n Total assets \n \n \n \n \n \n 132,883 \n \n \n 134,644 \n   \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Lease liabilities \n \n \n 16 \n \n \n (1,188) \n \n \n (809) \n \n \n \n \n Trade and other payables \n \n \n 17 \n \n \n (35,147) \n \n \n (36,409) \n \n \n \n \n Total current liabilities \n \n \n \n \n \n (36,335) \n \n \n (37,218) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Lease liabilities \n \n \n 16 \n \n \n (2,689) \n \n \n (500) \n \n \n \n \n Trade and other payables \n \n \n 17 \n \n \n (17,742) \n \n \n (16,051) \n \n \n \n \n Deferred tax \n \n \n 18 \n \n \n (5,464) \n \n \n (6,114) \n \n \n \n \n Provisions \n \n \n 19 \n \n \n (2,611) \n \n \n (2,862) \n \n \n \n \n Total non-current liabilities \n \n \n \n \n \n (28,506) \n \n \n (25,527) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total liabilities \n \n \n \n \n \n (64,841) \n \n \n (62,745) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n 68,042 \n \n \n 71,899 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity \n \n \n \n \n \n \n \n \n \n \n \n \n \n Issued share capital \n \n \n 22 \n \n \n 116 \n \n \n 116 \n \n \n \n \n Share premium account \n \n \n \n \n \n 17,630 \n \n \n 17,630 \n \n \n \n \n Retained earnings \n \n \n \n \n \n 50,296 \n \n \n 54,153 \n \n \n \n \n Total equity \n \n \n \n \n \n 68,042 \n \n \n 71,899 \n \n \n \n \n   \n   \n \n   \n Consolidated Statement of Changes in Equity \n \n \n \n \n \n \n \n Share Capital \n \n \n Share Premium Account \n \n \n Retained earnings \n \n \n Total Equity \n \n \n \n \n \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n At 31 December 2023 \n \n \n 116 \n \n \n 17,630 \n \n \n 57,927 \n \n \n 75,673 \n \n \n \n \n Comprehensive expense for the year ended 31 December 2024 \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Loss for the year \n \n \n - \n \n \n - \n \n \n (2,054) \n \n \n (2,054) \n \n \n \n \n Other comprehensive expense \n \n \n - \n \n \n - \n \n \n (34) \n \n \n (34) \n \n \n \n \n Total comprehensive expense for the year \n \n \n - \n \n \n - \n \n \n (2,088) \n \n \n (2,088) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Share based payment (note 23) \n \n \n - \n \n \n - \n \n \n 975 \n \n \n 975 \n \n \n \n \n Dividends paid (note 9) \n \n \n - \n \n \n - \n \n \n (2,661) \n \n \n (2,661) \n \n \n \n \n Total transactions with owners \n \n \n - \n \n \n - \n \n \n (1,686) \n \n \n (1,686) \n \n \n \n \n   \n At 31 December 2024 \n \n \n 116 \n \n \n   \n 17,630 \n \n \n 54,153 \n \n \n 71,899 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Comprehensive expense for the year ended 31 December 2025 \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Loss for the year \n \n \n - \n \n \n - \n \n \n (2,165) \n \n \n (2,165) \n \n \n \n \n Other comprehensive expense \n \n \n - \n \n \n - \n \n \n (257) \n \n \n (257) \n \n \n \n \n Total comprehensive expense for the year \n \n \n - \n \n \n - \n \n \n (2,422) \n \n \n (2,422) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share based payment (note 23) \n \n \n - \n \n \n - \n \n \n 698 \n \n \n 698 \n \n \n \n \n Dividends paid (note 9) \n \n \n - \n \n \n - \n \n \n (2,133) \n \n \n (2,133) \n \n \n \n \n Total transactions with owners \n \n \n - \n \n \n - \n \n \n (1,435) \n \n \n (1,435) \n \n \n \n \n   \n At 31 December 2025 \n \n \n 116 \n \n \n   \n 17,630 \n \n \n 50,296 \n \n \n 68,042 \n \n \n \n \n   \n   \n   \n \n \n   \n Company Statement of Financial Position \n as at 31 December 2025 \n   \n \n \n \n \n \n \n \n \n \n \n 31 December \n \n \n 31 December \n \n \n \n \n \n \n \n \n \n \n 2025 \n \n \n 2024 \n \n \n \n \n \n \n \n Note \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Property, plant and equipment \n \n \n 10 \n \n \n 4,532 \n \n \n 4,634 \n \n \n \n \n Investments  \n \n \n 12 \n \n \n 94,020 \n \n \n 94,094 \n \n \n \n \n Deferred tax \n \n \n 18 \n \n \n 2 \n \n \n 1 \n \n \n \n \n Total non-current assets \n \n \n   \n \n \n 98,554 \n \n \n 98,729 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n Loan to associate \n \n \n 12 \n \n \n - \n \n \n 1,000 \n \n \n \n \n Trade and other receivables \n \n \n 14 \n \n \n 375 \n \n \n 51 \n \n \n \n \n Corporation tax recoverable \n \n \n \n \n \n 361 \n \n \n - \n \n \n \n \n Cash and cash equivalents \n \n \n 15 \n \n \n 229 \n \n \n 55 \n \n \n \n \n Total current assets \n \n \n \n \n \n 965 \n \n \n 1,106 \n \n \n \n \n   \n Total assets \n \n \n \n \n \n 99,519 \n \n \n 99,835 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n 17 \n \n \n (23,905) \n \n \n (23,311) \n \n \n \n \n Total current liabilities \n \n \n \n \n \n (23,905) \n \n \n (23,311) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total liabilities \n \n \n \n \n \n (23,905) \n \n \n (23,311) \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Net assets \n \n \n \n \n \n 75,614 \n \n \n 76,524 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity \n \n \n \n \n \n \n \n \n \n \n \n \n \n Issued share capital \n \n \n 22 \n \n \n 116 \n \n \n 116 \n \n \n \n \n Share premium account \n \n \n \n \n \n 17,630 \n \n \n 17,630 \n \n \n \n \n Retained earnings \n \n \n \n \n \n 57,868 \n \n \n 58,778 \n \n \n \n \n Total equity \n \n \n \n \n \n 75,614 \n \n \n 76,524 \n \n \n \n \n   \n   \n   \n   \n Company Statement of Changes in Equity \n \n \n \n \n \n \n \n Share Capital \n \n \n Share Premium Account \n \n \n Retained earnings \n \n \n Total Equity \n \n \n \n \n \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n At 31 December 2023 \n \n \n 116 \n \n \n   \n 17,630 \n \n \n 55,806 \n \n \n 73,552 \n \n \n \n \n Comprehensive income for the year to 31 December 2024 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n 4,643 \n \n \n 4,643 \n \n \n \n \n Other comprehensive income \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Total comprehensive income for the year \n \n \n - \n \n \n - \n \n \n 4,643 \n \n \n 4,643 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share based payment (note 23) \n \n \n - \n \n \n - \n \n \n 990 \n \n \n 990 \n \n \n \n \n Dividends paid (note 9) \n \n \n \n \n \n \n \n \n (2,661) \n \n \n (2,661) \n \n \n \n \n Total transactions with owners \n \n \n - \n \n \n - \n \n \n (1,671) \n \n \n (1,671) \n \n \n \n \n   \n At 31 December 2024 \n \n \n 116 \n \n \n   \n 17,630 \n \n \n 58,778 \n \n \n 76,524 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Comprehensive income for the year to 31 December 2025 \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n 525 \n \n \n 525 \n \n \n \n \n Other comprehensive income \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Total comprehensive income for the year \n \n \n - \n \n \n - \n \n \n 525 \n \n \n 525 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Share based payment (note 23) \n \n \n - \n \n \n - \n \n \n 698 \n \n \n 698 \n \n \n \n \n Dividends paid (note 9) \n \n \n - \n \n \n - \n \n \n (2,133) \n \n \n (2,133) \n \n \n \n \n Total transactions with owners \n \n \n - \n \n \n - \n \n \n (1,435) \n \n \n (1,435) \n \n \n \n \n   \n At 31 December 2025 \n \n \n 116 \n \n \n   \n 17,630 \n \n \n 57,868 \n \n \n 75,614 \n \n \n \n \n   \n   \n \n   \n Consolidated Statement of Cash Flows \n for the year ended 31 December 2025 \n   \n \n \n \n \n   \n \n \n   \n \n \n Year ended \n31 December \n \n \n Year ended \n31 December \n \n \n \n \n   \n \n \n  Note \n \n \n 2025 \n \n \n 2024 \n \n \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Cash flows from operating activities \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Cash generated from operations \n \n \n   A \n \n \n 12,503 \n \n \n 8,820 \n \n \n \n \n Tax received \n \n \n \n \n \n 496 \n \n \n 1,211 \n \n \n \n \n Tax paid \n \n \n \n \n \n (1,055) \n \n \n (334) \n \n \n \n \n Net cash generated from operating activities \n \n \n   \n \n \n 11,944 \n \n \n 9,697 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Purchase of property, plant and equipment \n \n \n \n \n \n (2,478) \n \n \n (1,421) \n \n \n \n \n Proceeds from disposals of property, plant and equipment \n \n \n \n \n \n 2 \n \n \n 1 \n \n \n \n \n Additions to intangible assets \n \n \n \n \n \n (2,783) \n \n \n (2,765) \n \n \n \n \n Proceeds on sale of shares in associate \n \n \n \n \n \n 2,180 \n \n \n - \n \n \n \n \n Purchase of subsidiary net of cash acquired \n \n \n 26 \n \n \n - \n \n \n (7,063) \n \n \n \n \n Purchase of subsidiaries deferred consideration paid \n \n \n \n \n \n - \n \n \n (200) \n \n \n \n \n Interest received \n \n \n \n \n \n 312 \n \n \n 452 \n \n \n \n \n Net cash used in investing activities \n \n \n   \n \n \n (2,767) \n \n \n (10,996) \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Cash flows from financing activities \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Interest paid \n \n \n \n \n \n (259) \n \n \n (250) \n \n \n \n \n Lease liability payments \n \n \n \n \n \n (1,411) \n \n \n (1,150) \n \n \n \n \n Dividends paid \n \n \n \n \n \n (2,133) \n \n \n (2,661) \n \n \n \n \n Net cash used in financing activities \n \n \n   \n \n \n (3,803) \n \n \n (4,061) \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net increase/(decrease) in cash and cash equivalents \n \n \n   \n \n \n 5,374 \n \n \n (5,360) \n \n \n \n \n Cash and cash equivalents at beginning of year \n \n \n \n \n \n 11,401 \n \n \n 16,800 \n \n \n \n \n Foreign exchange losses \n \n \n \n \n \n (32) \n \n \n (39) \n \n \n \n \n Cash and cash equivalents at end of year \n \n \n  B \n \n \n 16,743 \n \n \n 11,401 \n \n \n \n \n   \n   \n \n \n Notes to the cash flow statements \n   \n A. Cash generated from operations \n The reconciliation of the loss for the year to cash generated from operations is set out below: \n   \n \n \n \n \n   \n \n \n Year ended \n31 December \n \n \n Year ended \n31 December \n \n \n \n \n   \n \n \n 2025 \n \n \n 2024 \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Loss for the year \n \n \n (2,165) \n \n \n (2,054) \n \n \n \n \n Adjustments for: \n \n \n \n \n \n \n \n \n \n \n Depreciation of property, plant and equipment \n \n \n 3,517 \n \n \n 3,174 \n \n \n \n \n Amortisation of intangible assets \n \n \n 5,024 \n \n \n 4,689 \n \n \n \n \n Loss on disposal of property, plant and equipment \n \n \n - \n \n \n 1 \n \n \n \n \n Share based payments \n \n \n 698 \n \n \n 975 \n \n \n \n \n Foreign exchange movements \n \n \n (226) \n \n \n 4 \n \n \n \n \n Interest income \n \n \n (361) \n \n \n (452) \n \n \n \n \n Interest expense \n \n \n 259 \n \n \n 250 \n \n \n \n \n Loss on disposal/share of loss of associate \n \n \n 233 \n \n \n 229 \n \n \n \n \n Gain on conversion of loan to associate \n \n \n (181) \n \n \n - \n \n \n \n \n Loss on disposal of interest in associate \n \n \n 414 \n \n \n - \n \n \n \n \n Tax credit \n \n \n (384) \n \n \n (281) \n \n \n \n \n   \n \n \n 6,595 \n \n \n 6,535 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n Decrease in inventories \n \n \n 459 \n \n \n 136 \n \n \n \n \n Decrease/(increase) in trade and other receivables \n \n \n 5,221 \n \n \n (2,138) \n \n \n \n \n Increase in trade and other payables \n \n \n 479 \n \n \n 1,425 \n \n \n \n \n (Decrease)/increase in provisions \n \n \n (251) \n \n \n 2,862 \n \n \n \n \n Cash generated from operations \n \n \n 12,503 \n \n \n 8,820 \n \n \n \n \n   \n   \n B. Analysis of net funds \n   \n   \n \n \n \n \n   \n \n \n At 1 January \n \n \n Cash flow \n \n \n Non-cash changes \n \n \n At \n31 December \n \n \n \n \n   \n \n \n 2025 \n \n \n   \n \n \n   \n \n \n 2025 \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Lease liabilities \n \n \n (1,309) \n \n \n 1,411 \n \n \n (3,979) \n \n \n (3,877) \n \n \n \n \n Liabilities arising from financing activities \n \n \n (1,309) \n \n \n 1,411 \n \n \n (3,979) \n \n \n (3,877) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash and cash equivalents \n \n \n 11,401 \n \n \n 5,374 \n \n \n (32) \n \n \n 16,743 \n \n \n \n \n Net funds \n \n \n 10,092 \n \n \n 6,785 \n \n \n (4,011) \n \n \n 12,866 \n \n \n \n \n   \n   \n \n \n \n \n   \n \n \n At 1 January \n \n \n Cash flow \n \n \n Non-cash changes \n \n \n At \n31 December \n \n \n \n \n   \n \n \n 2024 \n \n \n   \n \n \n   \n \n \n 2024 \n \n \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Lease liabilities \n \n \n (1,553) \n \n \n 1,284 \n \n \n (1,040) \n \n \n (1,309) \n \n \n \n \n Liabilities arising from financing activities \n \n \n (1,553) \n \n \n 1,284 \n \n \n (1,040) \n \n \n (1,309) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash and cash equivalents \n \n \n 16,800 \n \n \n (5,360) \n \n \n (39) \n \n \n 11,401 \n \n \n \n \n Net funds \n \n \n 15,247 \n \n \n (4,076) \n \n \n (1,079) \n \n \n 10,092 \n \n \n \n \n   \n Major non cash items \n £3,979,000 of additions to right of use assets and lease liabilities are included in non cash movements in the year ended 31 December 2025 (2024: £406,000) together with £nil of acquired lease assets and liabilities (2024: £500,000). \n \n \n \n Summary of Material Accounting Policies \n   \n General information               \n  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. \n A.         Basis of preparation \n 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. \n The financial information does not constitute the Company's statutory accounts for the years ended 31 December 2025 or 31 December 2024 but is derived from those accounts. Statutory accounts for the year ended 31 December 2025 will be delivered to the Registrar of Companies in due course.  The Auditor has reported on the 2025 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. \n   \n The parent company financial statements have been prepared under applicable United Kingdom Accounting Standards (FRS 101). The following FRS 101 disclosure exemptions have been taken in respect of the parent company only information: \n ·      IAS 7 Statement of cash flows; \n ·      IFRS 7 Financial instruments disclosures; and \n ·      IAS 24 Key management remuneration. \n   \n 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. \n   \n 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. \n   \n 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. \n   \n Going concern \n The directors have considered working capital forecasts prepared for the period to December 2027. The Group had cash balances of £16.7m at the year end, no borrowings and a £10m 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. \n   \n 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, a reduction in sales orders from its wider customer base and the associated impact on working capital. The Directors are satisfied that the Group has sufficient resources to respond to reasonably foreseeable scenarios and conclude that a scenario that would result in the need for the Group to require additional funding to be remote. \n   \n 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. \n   \n \n \n   \n B.         Accounting policies \n Consolidation \n 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. \n   \n 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. \n   \n The Group has taken advantage of the exemption not to disclose transactions between wholly owned entities in the group. \n   \n Associates \n 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. \n   \n Revenue recognition \n 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. \n   \n 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.  \n   \n 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. \n   \n Revenue is recognised depending upon the revenue stream to which it relates, as follows: \n ·      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; \n ·      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; \n ·      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   \n ·      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. \n 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 contract 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. \n 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. \n   \n   \n Contract costs \n 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. \n   \n 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. \n   \n 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.  \n   \n 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. \n   \n Employee benefits \n 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. \n   \n Short term employee benefits including holiday pay are recognised as an expense in the period in which the service is rendered. \n   \n Share based payment \n 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. \n   \n Taxation \n 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.  \n   \n 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. \n   \n Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.  \n   \n 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. \n   \n Exceptional items \n Exceptional items are significant items of income or expense which, because of their size, nature and infrequency of the events giving rise to them, merit separate presentation to provide further understanding of the underlying financial performance of the Group during the period \n   \n Government grants \n 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). \n \n   \n Foreign exchange \n Transactions denominated in foreign currencies are translated into sterling at the rates ruling on the date of the transaction. Monetary assets or liabilities denominated in foreign currencies at the Statement of Financial Position date are translated at the rate ruling on that date and all translation differences are charged or credited in the Statement of Comprehensive Income. \n   \n 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. \n   \n Intangible assets \n 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. \n   \n 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. \n   \n 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: \n   \n Asset class                                                                Amortisation period \n Brands                                                                       3 to 15 years                         \n Customer relationships                                            7 to 16 years \n Technology assets                                                   5 to 13 years \n Software                                                                   3 to 5 years \n   \n Intangible assets are tested for impairment when an event that might affect asset values has occurred. Any such impairment in carrying value is written off to the Statement of Comprehensive Income immediately. \n   \n Research and development expenditure \n 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: \n   \n ·      It is technically feasible to complete the development such that it will be available for use, sale or licence; \n ·      There is an intention to complete the development; \n ·      The method by which probable future economic benefits will be generated is known; \n ·      There are adequate technical, financial and other resources required to complete the development; and \n ·      There are reliable measures that can identify the expenditure directly attributable to the project during its development. \n   \n The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above.  Expenses capitalised as \"Developed 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. \n   \n 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. \n   \n Research expenditure is recognised as an expense in the period in which it is incurred. \n   \n 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.  \n   \n Financial assets \n Financial assets, including trade and other receivables, cash and cash equivalent balances are initially recognised at transaction price. Such assets are subsequently carried at amortised cost using the effective interest method. Cash and cash equivalents comprise cash held at bank which is available on demand. \n   \n 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. \n 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. \n 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. \n Contingent assets \n 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. \n   \n Financial liabilities \n 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. \n   \n Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. \n   \n Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires. \n   \n Borrowings are initially stated at the fair value of the consideration received after deduction of wholly attributable issue costs. Borrowings are subsequently stated at amortised cost using the effective interest method. \n   \n   \n Right-of-use assets and lease liabilities \n 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. \n   \n 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. \n   \n 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.  \n   \n 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. \n   \n 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. \n   \n Property, plant and equipment \n Property, plant and equipment assets are stated at cost less depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided on all property, plant and equipment assets at rates calculated to write off the cost of each asset on a straight line basis over its expected useful life, as follows: \n   \n Asset class                                                                Depreciation method rate \n Freehold property                                                     2% straight line \n Leasehold improvements                                         Over the period of the lease \n Equipment, fixtures and fittings                              20-33% straight line basis \n   \n Investments \n   \n 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. \n   \n Inventories \n Inventories are valued at the lower of purchase cost and net realisable value, after due regard for any slow moving items.  Net realisable value is based on selling price less anticipated costs to completion and selling costs.  Cost is based on the cost of purchase on a weighted average basis.  Work in progress and finished goods include labour and attributable overheads. \n   \n 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. \n   \n   \n Provisions \n Provisions are recognised for probable liabilities of uncertain timing or amount including elements of claims for reimbursement relating to a cyber incident that impacted services to customers. The provision is measured at the best estimate of the expenditure required to settle an obligation existing at the reporting date. Possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company and hence where an outflow of economic benefit is not probable are not provided for and are disclosed as contingent liabilities. \n   \n Share capital and reserves \n Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a financial liability. The parent company's ordinary shares are classified as equity instruments. \n   \n 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. \n   \n 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. \n   \n Retained earnings comprises opening retained earnings and total comprehensive income for the year, net of dividends paid. \n New or revised accounting standards and interpretations \n Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after 1 Janu...

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