Annual

Report
12 Months To 31 December 2023
 Overview

Group Revenue Gross Profit Operating profit2 Adjusted EBITDA1

£71.7M £43.6M £2.3M £9.4M

*12m to 31/12/22 £63.2m (+13%) *12m to 31/12/22 £37.6m (+16%) *12m to 31/12/22 £2.2m (0%) *12m to 31/12/22 £8.2m (+15%)

Annual Recurring Cash & Cash Subscriptions Churn3

Revenue (ARR)4 Equivalents

£47.7M £16.8M 640K 0.7%

*12m to 31/12/22 £42.6m (+12%) *12m to 31/12/22 £16.7m *12m to 31/12/22 599k (+6.8%) *12m to 31/12/22 0.4% (-0.3%)

1
Adjusted EBITDA excludes exceptional costs acquisition, depreciation, amortisation, share of loss of associate, interest,tax and share based payments

2
Operating Profit is before interest and share of loss of associate

3
Revenue churn measures the percentage of recurring revenue lost from existing customers, calculated by subtracting lost monthly recurring revenue from the

starting monthly recurring revenue, and dividing by the starting monthly recurring revenue.

4
Annual Recurring Revenue (ARR) is calculated by multiplying the December 2023 monthly recurring revenue by 12

Financial Highlights
• The Group has driven an increase in total revenue to £71.7m (13%) for the 12 months ended 31 December 2023 (FY22:

£63.2m).

• Growth in the period was a result of continued strong demand from Original Equipment Manufacturer (OEM) customers

and increased revenue from direct customers towards the end of the year as an improvement of new vehicle availability
in H2 enabled the Company to deliver against its record orderbook.

• Recurring revenue +11% to £45m, ahead of market expectations, supported by the renewal of several major customer

contracts and new customer wins (FY22: £40.5m).

• Gross profit +16% to £43.6m (FY22: £37.6m), at a gross profit margin of 61% (FY22: 60%) due to the increased gross

margin % from both recurring and non-recurring revenues in the period.

• Adjusted EBITDA +15% to £9.4m (FY22: £8.2m), ahead of market expectations. Adjusted EBITDA percentage has been

marginally increased at 13.1% (FY22: 13.0%). Operating margins flat following the previously announced commencement

of the Group’s investment programme to improve its go-to-market and product offering and support further growth.

• Continued strong underlying cash conversion exceeding 90% reflecting growth in subscription revenue and continued

good working capital management.

• Robust balance sheet with £16.8m cash and cash equivalents (FY22: £16.7m), £10m undrawn Revolving Credit Facility and

£20m accordion facility available until April 2027 with option to extend.

• Maiden final ordinary dividend of 1.72 pence per share (FY22: nil) payable on 28 June 2024 to shareholders on the register

at close of business on 7 June 2024.

01
Strategic and Operational Highlights
• Subscriptions +6.8%, driven by continued growth in our existing customers together with new customer wins (FY22:

599,000).

• Annual recurring revenue (ARR) run rate +12% to £47.7m, of which 11.8% represented organic growth at 31 December 2023

from £42.6m on 31 December 2022.

• The Group added over 450 new customers in the period and long-term contract customer churn rate by value remained

very low at 0.7% (FY22: 0.4%)

Current Trading & Outlook

• Microlise enters FY24 with good momentum driven by consistent strategic execution. Looking ahead, the Board expects

organic growth to improve from current levels as we move through the year supported by a healthy orderbook and

pipeline of opportunities across OEM and direct customer divisions. Operating margins are expected to trend upwards in

FY24 and beyond, as we focus on careful management of the cost base and efficiently scaling the Group.

• We started the new financial year in line with our expectations and remain very confident with the opportunities we have

in front of us, and in our ability to deliver against market expectations.

• Recent acquisitions of Transportation Management System (TMS) providers, Enterprise Software Systems and Vita

Software, as well as vulnerable road user app supplier K-Safe are trading in-line with our expectations.

Company Highlights

Over 450 New Customers 40 Contract Renewals Acquisition of Vita

across the Group including Bidfood, Software
Sainsbury’s and Cemex

2 3

Acquisition of K-Safe Acquisition of Enterprise UK Office Great Place to

(Flare & Flare Aware) Software - Post Year End in Work Accreditation Secured
January 2024 Two Years Running

02
 Table of Contents
Overview 01

Financial Highlights 01

Current Trading & Outlook 02

Company Highlights 02

Strategic Report 04

Who We Are 05

Our Products 09

Research & Development 10

Product Roadmap 11

Driving Operational Efficiency, Safety & Compliance For Our Customers 12

Some of Our Customers 12

Customer Success 13

Chairman’s Statement 15

CEO’s Statement 16

CFO’s Statement 20

Market Overview 24

Principal Risks & Uncertainties 25

Section 172 Statement 30

Our People & Operations 33

Our People 34

Recruitment & Retention 35

Diversity & Inclusion 35

Employee Engagement 35

Health & Wellbeing 35

ESG 36

Managing & Governing 61

Meet The Board 62

Our Senior Leadership Team 63

Corporate Governance Statement 64

Remuneration Report 68

Audit Committee Report 74

Directors’ Report 77

Statement Of Directors’ Responsibilities 80

Financial Statements 81

Company Information 126

03
Strategic
Report

04
 Who We Are
Established in 1982, Microlise is a leading Software as a Service (SaaS) technology provider of fleet management and Industrial

Internet of Things (IIoT) solutions.

Our technology is designed to help businesses bring connectivity to their products and operations, improve efficiency, reduce

emissions, lower costs, and increase safety.

With a range of products and services used by more than 400 enterprise clients globally, we help companies of all shapes and

sizes – across a wide range of industries – to better manage their entire logistics operation and products.

Backed by a team of experienced professionals who provide excellent customer service, we have won a number of awards

historically, including three Queens Awards for Enterprise, two for Innovation (2019, 2020) and one International Trade (2018).

Our software products are licensed on a per-user or per-asset basis, which includes SaaS service, ongoing support, and access

to future upgrades.

In addition to hardware and software offerings, we provide a comprehensive “service-wrap” that helps our customers extract

the maximum value from their investment. Our dedicated Account Managers, Business Transformation team, Customer

Success team, Data Science & Operational Research team, and other experts offer ongoing support to optimise operations

and help achieve business goals.

Headquartered in the United Kingdom, we have a total of 7 offices across the UK, France, Australia, and India with a global

staff base of more than 715 industry professionals.

We joined the Alternative Investment Market (AIM) in 2021, qualifying for the London Stock Exchange’s Green Economy Mark.

Over 640,000
subscriptions annually

Hull, UK
Altrincham, UK

Nottingham, UK
Coventry, UK

Marseille, France

Pune, India

Melbourne, Australia

05
The Challenges We Solve
Microlise solutions enable global enterprises to run highly complex logistics operations. Acting as a central intelligence system,

our end-to-end solutions connect assets, people, and processes to increase ROI, support agile decision-making and manage

operational complexity. Our product set includes Fleet & Vehicle Telematics, Safety, Health & Compliance including a multi-

camera solution, Journey Management and Proof of Delivery.

By connecting devices and locations so that real-time data can be analysed, our technology supports businesses to make

improvements across a range of KPIs including cost and productivity, environmental, safety, compliance and customer service

and communication.

Microlise’s IIoT offering is aimed at the manufacturers of smart remote assets.

By connecting those assets, manufacturers are able to:

• Improve their support of customers

• Provide innovative finance programs

• Improve productivity, safety and sustainability in the use of their products

How We Generate Revenue

We deliver a globally enabled SaaS platform that digitises the business processes of enterprise organisations running highly

complex logistics operations. Our software products are licensed on a per user or per asset basis and licences include the

provision of the SaaS service, support, and access to future upgrades.

Microlise offers a range of hardware devices, including tablets, telematics devices, sensors and vehicle camera solutions,
which are designed to integrate with its software products to provide real-time visibility and control over logistics operations.

In addition to our technology-based solutions, Microlise provides a ‘service-wrap’ to help customers to maximise the value

from their investment, with support coming from dedicated account managers, our Business Transformation team and from

our Data Science & Operational Research team amongst others.

06
 How We Deliver Stakeholder Value
Customers:

We support our customers to deliver services more efficiently and effectively. Our proprietary modular platform, along with

our service and support, unlocks efficiencies, saves costs and addresses growing ESG considerations, through reduced fuel

use, reduced mileage travelled, improved driver performance, fewer accidents, elimination of paperwork and delivery of an

enhanced customer experience.

Employees:

Our business is shaped by our culture which guides the way we behave, the way we work, the way we connect with our

customers and communities, and the way we support and develop our people.

By bringing cross-functional groups together with shared goals and collective responsibility, ownership & autonomy we are

working to shape better outcomes for ourselves and our customers, making Microlise the best it can be and giving everyone a

greater understanding of how the work they do fits the ‘why’ of our business.

Our Learning & Development Academy and our apprentice and graduate programme attract recruits from diverse

backgrounds and disadvantaged groups.

Our recent partnership with Speakers for Schools, a registered charity, will further support our ambitions to ensure our

programmes have widespread appeal.

We firmly believe that we never stop learning and invest significant resources in lifelong learning and talent development via

our Academy programme which is available to apprentices and graduates right through to senior managers.

Everyone has access to our online learning platform and can control the pace of their own development. We typically deliver
more than 30 different in-house or offsite courses and train over 300 staff members across a range of accredited and

non-accredited programmes and courses.

With an average employee length of service of over five years, we are proud to be ISO27001, ISO9001, ISO20000, and

TickITplus accredited, and are also a proactive member of the Armed Forces Covenant.

07
Investors:

Our solutions align with the culture and core values of our organisation - that put people, community, and innovation at the

heart of everything we do.

We continue to focus on innovating - for the good of our customers and our investors.

We work to identify and develop the solutions and services our customers need, as they need them, and to grow our market

presence within our selected geographies.

By using data creatively, we deliver new and innovative customer solutions across our three core markets of transport

operations solutions providers, Industrial Internet of Things (IIOT) platform providers for asset lifecycle service value chains

and trusted data-propelled industry partners who are shaping the future of connected mobility.

We work with our team to harness their skills and passion, supporting them through learning and development, and

challenging them to problem-solve and design solutions that continue to raise the bar in our Industry, delivering sustainable

and profitable outcomes for our customers, our investors, and our business.

Communities:

Enhancing the communities in which we work is core to our values and we invest both time and money in supporting local

community groups, charities, and events.

Now recognised as one of the largest events of its kind in Europe, the annual Microlise Transport Conference, a free-to-attend

event, brings approximately 1,000 delegates together to share knowledge and address key sectoral issues to provide solutions

wherever possible. Alongside the conference, the Microlise Driver of the Year Awards celebrates the UK’s most talented

and dedicated HGV drivers, through analysis of more than 240,000 drivers’ telematics data, and via industry nominated

categories.

The national, government-backed training programme, Road To Logistics (RTL), established in 2016 by Microlise and the RHA,
encourages new and diverse talent into the transport industry by focusing on individuals who need extra support to access

employment (e.g. long-term carers, people with mental health challenges, ex-service men and women and former offenders.)

We actively encourage business-wide and individual community support and have a community Engagement Group

(CEG) that manages business-wide initiatives. Our support extends from being a proud corporate sponsor of large

charitable organisations such as Transaid, to supporting local orphanages in India, providing sports kits to local clubs,

books and resources to primary schools and supplies for foodbanks across local communities in and around Derbyshire and

Nottinghamshire.

08
 Our Products

TMS Fleet Performance

Transportation Management Track assets in real-time and
System retrospectively

Building, costing and invoicing Maximise utilisation & boost ROI

of orders Improve driver performance

Journey Management Planning &

Proactive customer experience Optimisation
Monitor resource performance Do more with less resources
vs the plan
Reduce planning time by many
Understand planned vs actual hours

Produce highly accurate plans

Fleet Compliance Fleet Safety

Manage compliance effectively Protects drivers

Boost vehicle uptime Understand incident fault &

liability
Raise safety standards
Improve safety standards

Driver Connected Vulnerable Road Users

Mobility Network (Flare)
Ruggedised hardware options
Live proximity notifications to
for logistics environments
vehicle operators
Manage driver communications
Incident Avoidance

Automatic Incident Detection

09
Research & Development
At Microlise, we harness cutting-edge technologies, including the Industrial Internet of Things (IIoT), advanced ‘Big Data’

analytics, and Artificial Intelligence (AI).

These sophisticated digital tools play a pivotal role in enhancing our operational efficiency, facilitating communication,

enabling in-depth data analysis, and supporting informed decision-making. Moreover, they empower us to deliver valuable

insights derived from extensive datasets to our customers.

Our approach remains market-oriented, ensuring that our solutions align with industry-wide needs rather than being narrowly

tailored to specific client use cases.

During the recent period, we have successfully executed several noteworthy pilot projects and research initiatives, which

include:

Continued development for the Electric BSA Motorbike

as part of the Innovate UK and APC funded consortium

Integrating further advanced Driver Safety AI

technologies to deliver solutions for TFL’s Direct Vision
Standards 2024 regulations into Microlise existing
successful Risk Reduction portfolio

Delivery of the Microlise Truly Wireless extended long-

range unpowered asset monitoring services

10
 Product Roadmap
During the reporting period, we introduced a series of new and substantially improved product and service value propositions.

We also invested in the refinement of our underlying platforms and fortified data security, simultaneously ensuring the

consistent availability and distribution of its global Smart Gateway hardware products.

New Transport Management System Capabilities:

• The acquisition of Vita and ESS will enable our customers to manage a broader range of

needs across their operations, with planned Product integrations enabling the availability

of consistent master data across the portfolio, and with a greater set of user journeys

driving a greater level of operational outcomes.

Planning and Optimisation service enhancements:

• Further enhancements to enable our customers in all geographies to use our core Planning

and Optimisation capabilities, as well as increasing the range of industry sectors to which

the solution can target.

Fleet Safety:

• Addition of an integrated Driver Safety AI camera into the existing Risk Reduction product

set, further extending the options and capabilities for our customers

• Addition of integrated 2024 regulation ready Direct Vision Standards sensors into the

existing Risk Reduction product set, again further extending the options and capabilities for

customers operating in different environments and conditions.

• Acquisition of the Flare Aware product provides an integrated live Hazard and Vulnerable

Road User Warning capability for drivers.

Driver Efficiency:
• Launch enhanced Microlise Driver Excellence application to support drivers and managers

in delivering safe & compliant transport operations.

• TruDocuments Premium launched for document management and sign off for drivers via

the TruTac App. With full audit and sign off visibility.

• Support for eCMR within Microlise SmartPOD mobile workforce solution

Remote Asset Management & IIoT:

• Addition of Satellite Communications capabilities for remote assets

• Fuel & Emissions monitoring for alternative fuel source assets (Electric, CNG / LNG)

• Truly Wireless Proximity Beacons for unpowered asset visibility

Product Integration Programme - Microlise Complete:

• Integration programme of newly acquired and existing Microlise platforms

• Enablement of seamless user experience, creating single operating system for customers

11
Driving Operational Efficiency, Safety &
Compliance For Our Customers

Reduced Mileage Improved Driver Reduced Fuel Reduced Reduced Vehicle

Travelled Performance Use Emissions Wear & Tear

Reduced Reduced Insurance Improved Fleet Elimination of Delivery Enhanced Customer

Accidents Premiums Efficiency & Utilisation Paperwork Experience

Some of Our Customers

12
 Customer Success
Our Customer Success team works to foster effortless and seamless collaborations with its clients. Consistently delivering a

service that sets global standards, we ensure that customers extract the utmost value from our products to strengthen both

success and satisfaction.

Over the past 12 months, the team has introduced five new Objectives and Key Results (OKRs) to help customers reach their

business objectives. These include:

1. Well Maintained Systems

2. Driver Excellence

3. Paperless Office

4. Reduced Transport Operating Costs

5. Fleet Performance

Each new OKR highlights the value of our systems, services, and products, and as we continue working closely with our

customers highlighting benefits and value, we will look to expand of OKR offering.

For next year we have already started to review the following areas:

• Compliance

• Best Practice

Customer Feedback
John Lewis

“I just wanted to highlight the positive influence and hard work our Customer Success Manager (CSM) who recently put

into a great session he held for us here at John Lewis Primary Transport.

“Our CSM really does strive to make our Microlise journey as positive and fulfilled as possible.”

GXO

“Fantastic feature Driver view playback – Customer Success showcased this feature, and it will really assist the team at

the Depot to challenge Driver decisions and identify where there have been excessive unplanned stops.

“The team will also be able to ascertain at a glance that Drivers are taking their time when they have additional loads.”

PD Ports

“I wanted to write a quick note of thanks for the work you did recently going through templates and giving us a better

understanding of them.

“We are now confident in amending them when we want to target certain areas i.e. speeding, harsh cornering and

braking. This understanding will give us the confidence to engage with our Drivers so we can get the best out of them in

both road safety and performance.”

Sainsburys

“I wanted to drop you a line to thank you for your support in our recent meetings.

“The information you have provided us to demonstrate what is achievable has been excellent and made me feel

confident we can deliver some great changes on productivity and driving standards.”

13
Proactive tasks and help

• Release Notes – new available features will be showcased and discussed if we believe there is a benefit for the customer.

• Products & Services (that the customer does not have) will be showcased and discussed if we believe there is a benefit for

the customer.

• Review driving metrics with customers annually to help improve driver scores.

System health

• We have a new suite of queries developed to provide insight into the quality of the data required for good system health,

in general the output will provide pointers to help improve the input quality.

• The queries cover The Plan, Location (Sites & Geofences) Journey Execution (operational practices and tracking). The

Business Rules and System Events currently provides a summary and detailed views for actions to be derived.

• Each element of the output will be described with hints on how to interpret the data.

Voice of the customer (VOC)

VOC is a new initiative at Microlise – we want to be able to listen to our customers and react to their feedback; with this in mind

our main three areas are:

1. Easy To Do Business With

2. Customer Value From our Products & Services

3. World Class Service

All feedback is reviewed, and repeatable feedback is selected for the next internal quarterly OKRs with the aim improve our

internal processes and our customer interactions.

Our current topics for improvement are:

1. Invoice Data

2. On-Boarding

3. Streamlining Vehicle “Configuration” settings

4. Service Visit/Install Times

14
 Jon Lee,
Non-Executive Chairman

Chairman’s Statement
Microlise has delivered another strong performance in FY23. We started the financial year with considerable momentum,

building upon the success of FY22 to achieve another record revenue year.

Revenue grew 13% to £71.7m for the 12-month period ended 31 December 2023 (FY22: £63.2m), while ARR grew 12% to £47.2m
(FY22: £42.6m). Adjusted EBITDA grew 15% during the period, ahead of market expectations. Operating profit increased 3%
to £2.3m (FY22:£2.2m).

The Group’s financial performance in FY23 exceeded the Board’s expectations, driven by continued high demand from OEM
customers and, towards the end of the year, increased revenue from direct customers. This was facilitated by an improvement
in new vehicle availability in the second half of the year, enabling the Company to deliver against its record order book.

During the first half of the year, the Company, alongside the wider transport industry, continued to contend with global supply
chain challenges, which in turn impacted the availability of new vehicles. Throughout the second half of the year, we saw these
issues significantly diminish as the back log of demand was fulfilled. As we enter FY24, it is reassuring to note that both these
challenges have been resolved.

We were pleased to announce the acquisitions of two Transport Management Systems (TMS) companies during the period,
Vita Software on 14 March 2023 and Enterprise Software Systems (ESS) on 30 November 2023, which completed in January
2024. A third acquisition of road safety company, K-Safe, completed in December 2023 and was announced post period end
in January 2024. We’re already seeing the positive impact of these acquisitions, with successful sales of Vita software’s TMS
offering and a growing pipeline for the ESS and Flare Aware (K-Safe Product) products with our existing customers.

Our strategic focus for the year will be on progressing the integration of our recent acquisitions into the Microlise product
architecture, enabling us to ensure our customers benefit through the broader use of our comprehensive integrated product
range. In addition, we will continue to focus on driving efficiency and enhancing profitability within the business.

At the time of the Company’s IPO in 2021 the Board stated that given the cash generative nature of the Group’s activities
it would, if commercially prudent to do so, commence the payment of dividends in the medium term. Having undertaken a
review of the Group’s capital allocation policy, and the availability of resources and distributable reserves, the Board has
determined that it is now appropriate to commence the distribution of dividends to shareholders. The Board has therefore
declared a final dividend for the 2023 financial year of 1.725 pence per share and will henceforth adopt a progressive dividend
policy.

As well as returning capital to shareholders, the Board will continue to prioritise balance sheet strength which will allow the
Group to continue to invest in its’ technology platform, infrastructure and security whilst retaining an ability to pursue selective
acquisitions which accelerate the Company’s strategic development.

If approved by shareholder at May’s Annual General Meeting on 22 May 2024, the dividend will be paid on 28 June 2024 to
shareholders on the register at close of business on 7 June 2024.

Microlise has an exceptionally talented team and our progress during the year was made possible as a result of their hard
work, expertise and passion. I would like to thank everyone for their dedication and contribution to the ongoing success of the
business. We look forward to a successful 2024.

15
Nadeem Raza,
Chief Executive Officer

CEO Statement
Microlise delivered a strong performance in FY23, outperforming both our internal and market expectations. The

supply chain issues experienced in prior years are now firmly behind us and lead times on new vehicles are no longer

extended, such that the market has fully returned to normality. Sales to OEM customers have been especially

positive and this performance has continued into 2024, providing confidence that the year ahead will be another

record year for OEM sales.

Microlise added 450 new customers during the year, an 80% increase over the 250 customers signed in FY22.

Notable names signed during the period included BCA/ECM, the UK’s largest used vehicles business, and the retailer

Woolworths Australia.

In addition, we extended 40 contracts with existing large enterprise customers. Examples include Sainsbury’s, Cemex,
Sports Direct and Bidfood. The critical importance of our solutions to our customers’ operations also resulted in our

churn rate remaining extremely low at 0.7%.

Aside from organic growth we also commenced a series of acquisitions in FY23. Microlise expanded its offering into

the Transport Management Solutions (TMS) space with two acquisitions; Vita Software, completed in March 2023,

and Enterprise Software Solutions (ESS), announced in November 2023 and completed post year end in January

2024. Transport Management Solutions go beyond the vehicle to provide a suite of associated services to fleet

logistics operators, such as resource and transport costing, subcontractor management and invoicing solutions.

The TMS acquisitions have both been immediately earnings enhancing, with the Vita TMS already resulting in the

successful sale to a new customer, Crowfoots.

In December 2023, Microlise also completed the acquisition of K-Safe, the provider of a safety product which warns

drivers that cyclists are near their vehicle, providing them with the position of the cyclist. This innovative solution is

hugely important in helping drivers avoid common accidents caused by a lack of visibility where bikes are concerned.

This product also takes Microlise into the last mile of delivery, a new market for Microlise, such that our offerings

now provide end-to-end coverage of the road delivery sector from the warehouse to the consumer. K-Safe has

brought with it a number of new customers in the last mile delivery space, including Deliveroo, JustEat and Voi and

engagement with them to date has been very positive.

16
 including Tesco, Bidfood and Pall-ex.
Market
During the period we adapted our software solutions to
At the beginning of 2023, our business and that of our enable compatibility with certain third-party products.
customers continued to be negatively affected by global This has removed barriers for potential customers who
supply chain issues and chip shortages, which in turn led to might otherwise be unable to utilise our solutions, thereby
greatly extended lead times on new vehicles. By the end of increasing our addressable market. It is also expected that
the first half of the year, the global supply chain issues and this development will alter our revenue mix resulting in a
chip shortages had greatly diminished. However, lead times positive effect on margins over time.
on new vehicles had not improved at this stage owing to a
Our low customer churn reflects the essential nature of
three-to-six-month time lag between vehicle manufacturer’s
Microlise’s solutions to its customers, the high regard in which
receipt of now-available components and subsequent
we are held, and the loyalty of our valued customer base.
production of vehicles.

Throughout the second half of the year, we have

Product Offering and M&A
experienced steady market growth as conditions continued

to improve. The time lag on new vehicles has now all but Microlise’s solutions help our customers make the most

disappeared such that the market has now returned to pre- efficient use of their assets, reducing fuel, the time drivers

pandemic conditions. With a substantial backlog of orders are on the road, wear and tear on vehicles, accidents and

across the logistics market, we are now in an environment of more.

robust and sustained growth, despite the less certain macro- During 2023 Microlise has expanded its product set to
economic backdrop. encompass more elements of the logistics process such that

Prior supply issues also led to many smaller companies the Company offers a true end to end suite of products from

within the logistics market entering administration and this the warehouse direct to the end consumer.

has benefited larger companies which have been able to In March 2023, in line with the Company’s strategic growth
consolidate these distressed businesses into their operations. plan, Microlise completed its first acquisition since flotation
This has accelerated the growth of the larger companies, with an initial cash payment of £1.86m for Vita Software,
and these are typical of Microlise’s customer base. As such, a Transport Management Solutions (TMS) provider. This
Microlise now finds itself extremely well positioned, firmly expanded the Group’s suite of technology solutions beyond
within the sweet spot of the growing logistics market. the vehicle to include such offerings as resource and
transport costing, subcontractor management and invoicing

Customer Base solutions and is applicable to fleets of any size. Immediately

earnings enhancing, the product has performed well since

During the year we continued to focus on securing and
acquisition and has resulted in numerous upsells and cross-
retaining customers as a priority. This resulted in us
sells.
securing 450 new customers, an 80% increase over 2022.
Microlise complemented this with the acquisition of ESS, also
These included new contracts with Irish logistics company,
a provider of Transport Management Solutions, announced
McCulla; BCA, the UK’s largest used vehicle business; and UK
in November 2023 and completed post year end. ESS was
nationwide logistics company LF&E Refrigerated Transport.
purchased for a maximum net consideration of £8.5m
Further afield, and in line with our strategic objective of
in cash, having delivered £5.1m revenue, of which 75% is
geographic expansion, significant new contracts were signed
recurring, and £1m adjusted EBITDA, in the year to 31 August
with two of Australia’s leading grocery retailers in September
2023. This further strengthens Microlise’s TMS credentials
2023, one of which further expanded its engagement in
and is expected to accelerate sales of its TMS solutions. In
December 2023. These contracts demonstrate the clear
December 2023, Microlise also acquired the assets of K-Safe
traction we are developing in our target markets, and we are
Limited for £0.14m, the parent company to the road safety
hopeful of providing updates on further geographic growth
products Flare and Flare Aware. Flare is a multi-award-
in the near future.
winning platform with over 3.5 million regular users of its
In addition, we signed 40 renewals with existing customers app. This helps leading brands such as Deliveroo and Just

17
Eat, as well as any individual on a two-wheeled vehicles sales of more products to existing customers.

(cyclists, motorcyclists, e-scooters), to better understand and Improving margins through greater efficiencies
react to mobility risk and safety issues.
We have multiple initiatives underway to improve the
Flare Aware is a dynamic driver hazard warning system, efficiency of our business by streamlining internal processes,
jointly developed with Microlise, which utilises the data allowing us to scale the business more efficiently. Details on
captured from the Flare mobile app user network, to provide these initiatives are in part commercially sensitive but our
awareness and alerts to the drivers of vehicles when they are aim is to increase margins.
near cyclists and motorcyclists using the Flare app.
Continued investment into product development
K-Safe has brought Microlise into the last mile of delivery
We will continue to invest heavily into product development
services as well as into the two-wheel vehicle sector. The
to ensure that we remain at the forefront of our industry,
acquisition will further improve Microlise’s safety solutions
bringing new, innovative solutions to our platform that
while at the same time adding some of the biggest names in
benefit our customers.
consumer delivery services as customers.
Continued investment into security measures for our blue-
Microlise’s prime focus at present is on ensuring the full
chip customer base
integration, and interoperability of the solutions, of its
A number of our clients have come under heavy attack
latest acquisitions. However, the Company remains alert to
from Ransomware and so we have continued to invest
further acquisition opportunities, particularly internationally,
in replacement enterprise firewalls. We also continue
both in markets in which we already operate as well as new
to leverage our Exposure Management Platform with
geographies.
Monitoring Dashboards for Software Vulnerabilities. These

attacks have not impacted Microlise directly but their

Strategic Focus
effects on our clients could cause major disruption to their

We are currently focused on the following core strategic operations. Logistics companies are relied upon to deliver

objectives: goods in a very short space of time and cannot afford for

their operations to be put on hold. Therefore assurance and

Bringing our three recent acquisitions into the Microlise
resilience of our business-critical systems are of paramount
architecture
importance to our customers. Of all of our strategic
This is progressing well with fully integrating our acquisitions
initiatives, this is responsible for the largest capital spend but
will enable us to more effectively upsell and cross-sell
the outlay is necessary to ensure we both attract and retain
products and attract new customers. This programme of
customers.
work is externally named Microlise Complete, as we continue
International Expansion
to drive our USP of being an end-to-end integrated solution

for transport operators. During the period, we have remained focussed on

international expansion, and we have made solid progress

Combining all of our products into a single, seamlessly
across a number of key geographies, particularly in Australia
integrated product suite
and New Zealand where we signed two new contracts with
Our R&D team is currently developing our systems
leading grocery retailers. This demonstrates the market
architecture across all of our products to ensure each is
leading nature of our products in the region and we are
fully integrated. This will enable data to be shared across all
therefore committing increased investment to our sales
products such that, for example, when driver information is
function to ensure we further accelerate growth and capture
updated in one product it automatically updates in others.
all available opportunities.
In addition, it will allow for common functionality across

the suite of programmes so that, for example, there is a

single login from which customers can use, and purchase,

multiple products. This will make our product suite still more

attractive to potential customers while also facilitating the

18
 Company has now introduced an ESG element to its
M&A
executive team’s incentive plan, ensuring all management
M&A remains a core part of our strategy and we continue
are aligned and encouraged in meeting Microlise’s
to see a robust pipeline of opportunities. We continue to
sustainability objectives.
assess further acquisition opportunities, with a current focus
During the first half of the year, we also completed the
on international business, both in new geographies and in
installation of 502 solar panels at our Nottingham HQ, with
those in which we already operate, and will act appropriately
the objective of reducing the site’s annual carbon footprint
should they align with our immediate and long-term strategic
by over 80 tonnes of CO2.
focus.

Everybody at Microlise has worked hard toward making the

Microlise Transport Company’s net zero goals a reality during FY23. This work

will remain at the forefront of our efforts during FY24 and

Conference we look forward to updating the market on our continued

progress going forward.

The 2024 Microlise Transport Conference took place on

19 March at the Coventry Building Society Arena. 1200 In terms of the social element of ESG, we achieved ‘Great

delegates attended the event making it the biggest and Place to Work’ and ‘Great Place to Work for Women’

most successful conference in our history. 14 keynote accreditations in April 2023, when we were officially ranked

speakers addressed the audience, including MP Guy 29th among large organisations for the best wellbeing

Opperman (Minister for Roads and Local Transport) and category.

representatives from JCB, showcasing their hydrogen We were also quoted as one of the Top 100 places to
combustion engine technology. In addition, there were work in the UK, as well as specifically in the tech industry,
four further stages at the show featuring talks from SMEs for recognising our commitment to improving the work
from across the logistics industry, and OEMs, such as DAF, experience of our employees and their wellbeing.
Mercedes-Benz and Volvo showcasing their latest electric

vehicle offerings to delegates.

Outlook
People Microlise delivered a strong performance in FY23 exceeding

our expectations, despite supply chain issues remaining in the

In August 2023 Shenny Remtulla was appointed to the first half of the year and their residual effects on new vehicle
senior leadership team as Strategy and M&A Director, with availability persisting into the second half. We are now
responsibility for enabling and accelerating the Company’s confident that these issues are fully behind us, and we have
profitable, sustainable growth. emerged a stronger and more resilient business as a result.

We experienced record sales into OEMs in FY23 and direct

ESG business sales have grown strongly since the latter part of

the year as new vehicle availability began to improve. These

We take great pride in the fact that our solutions help
are trends we expect to continue in FY24, both in the UK and
customers reduce emissions, improve safety for their
internationally.
drivers, and ensure their vehicles are driven and maintained

effectively – lengthening the useful life of their assets. This growth will be complemented by the additional

Together, these benefits reduce costs to our customers but capabilities provided by our recent acquisitions; the greater

they also improve the environment for everybody, both in compatibility of our solutions with third-party products; and

terms of lowering pollutants in the atmosphere and also in the increasingly interoperable nature of our product suite.

making our roads a safer place. This growth is also expected to flow through into profitability

and enhance the earnings of the Company going forward.

Microlise is committed to meeting its net zero goals and

continues to improve its ESG credentials. As such, the

19
 Nick Wightman,
Chief Financial Officer

CFO Statement
The financial results for the twelve-month period to 31 December 2023 reflect another period of profitable

growth for Microlise.

Key Performance Indicators

The following key performance indicators for the 12-month period to 31 December 2023 include a

comparison to the audited statutory results for the 12-months to 31 December 2022.

Calendar Year Results

Audited Audited Change
12 months 12 months (12 months)
Dec-23 Dec-22 %
Revenue £71.7m £63.2m 13%
Recurring Revenue £45.0m £40.5m 11%
Recurring revenue as % of Group revenue 63% 64% -1%
Gross Profit £43.6m £37.6m 16%
Gross Profit Margin % 61% 60% 1%
Operating Profit £2.3m £2.2m 3%
Financial

(1)
Adjusted EBITDA £9.4m £8.2m 15%
Adjusted EBITDA % 13.1% 13.0% 0.1%
Profit before tax £2.5m £1.4m 74%
(2)
Adjusted Profit before tax £5.6m £4.8m 17%
Adjusted Profit before tax % 7% 7% -
Basic EPS (p) 1.36p 1.17p 16%
Cash and cash equivalents £16.8m £16.7m 1%

(3)
ARR run rate £47.7m £42.6m 12%
Financial
Non

(4)
Number of like-for-like subscriptions 640,000 599,000 6.8%
Long-term contract customer churn by value 0.7% 0.4% 0.3%

20
 1. EBITDA excludes depreciation, amortisation, share of loss of associate, interest, tax and share based payments.

Adjusted EBITDA excludes, exceptional costs in relation to acquisitions and restructuring costs, depreciation, amortisation, share of loss of associate, interest,
tax and share based payments.
2. Adjusted Profit / (loss) before taxation excludes exceptional costs in relation to acquisitions and restructuring costs, share based payments and loss of share of
associate.

3. ARR run rate change figure and % compare the annualised recurring revenue figure for December 2023 with the annualised recurring revenue figure for
December 2022.

4. Like-for-like subscriptions change figure and % compare the subscriptions as at 31 December 2023 with the subscriptions as at 31 December 2022

Group Results
Revenue Gross Profit
Gross profit for the 12 months ended 31 December 2023
Total Revenue for the 12 months ended 31 December 2023
increased by 16% to £43.6m (FY22 £37.6m). Gross margin %
(FY23) was £71.7m, an increase of 13% from 31 December
increased from 60% to 61% reflecting margin improvements in
2022 (FY22) as a result of both record levels of OEM(1) sales
recurring and non-recurring revenue. Non recurring margin
and increased revenue from direct customers. The Group
increased by c.2.0% driven primarily by strong performance
delivered an increased win rate in the year, with over 450
in H2 due to increased revenues from direct customers as
new direct customers (2022: 250) which led to strong revenue
vehicle availability improved. Recurring margin also saw a
growth towards the end of the year as an improvement of
c.2.0% increase as a result of increased subscription revenues
new vehicle availability in H2 enabled delivery against many
coupled with effective cost management and efficiency
of these new customers.
programmes.
Strong customer wins, record OEM sales, together with

growth in our existing customer’s fleets resulted in recurring

SaaS revenues growing to £45m, an increase of 11% Administrative Expenses

compared to £40.5m in FY22 and 12% growth in ARR, of The Group has continued to invest in product and
which 11.8% represented organic growth, to £47.7m as at development, operations, and sales & marketing.
31 December 2023 from £42.6m on 31 December 2022.
Administrative expenses before exceptional administrative
Recurring revenues represented 63% of total revenue (FY22
charges, amortisation relating to acquisitions and share
64.1%).
based payment charges, in the 12-month period ended 31
Hardware revenue increased 10% to £19.9m (FY22: £18.0m) December 2023 increased 16% to £35.1m (FY22: £30.3m).
as a result of the continued strong demand from OEM
Staff costs in the 12 months ended 31 December 2023
customers as well as the ability to deliver direct customer
increased 16% to £30m (FY22: £25.8m) reflecting our
orders as vehicle availability improved in H2. The strong
increase in headcount in line with our growth, the impact
demand from direct customers in H2 also drove a 46%
of the acquisitions of Vita Software and K-Safe, as well as
increase in services revenue, which comprises of installation
annual pay awards and increased commissions/bonuses
services, project management and integration services, to
reflecting the increased new customer win rate and the
£6.8m (FY22: £4.7m).
Group’s strong EBITDA performance. Average headcount in
In addition to winning new business and deepening existing the Period was 715 (FY22: 661) overall, with 31 of the increase
accounts, the Group successfully maintained an extremely within operations, product and development reflecting
low rate of customer churn by value at 0.7% (FY22: 0.4%). our continued focus on the product roadmap, platform
This reflects the mission critical importance of Microlise’s integration, enhanced user experience and enhanced
software solutions in our customers’ operations. security measures. A further 10 staff were added in sales &

marketing including increases in staff numbers in Australia

and France to drive growth in these regions. The increase

in operations includes additional engineering resource to

21
support the strategy of bringing more installation work in- Exceptional Costs
house which supports our margin enhancement strategy.
During FY23 the Group incurred a number of one-off
Marketing costs increased during the period by £0.1m to charges relating to acquisition fees and subsequent
£1.1m as the Group has continued to focus on growth with restructuring. These are disclosed separately in note 2 of
targeted marketing spend in key strategic geographies. This the financial statements to provide a better guide to the
includes an increased number of exhibitions globally, the underlying financial performance of the Group. The total of
implementation of global prospecting tools and the product these charges in the period ended 31 December 2023 was
launch of Microlise TMS (Vita software). £0.4m (FY22: £0.2m).

Administration costs increased during the period by a

net £0.1m as the Group continues to invest significantly

Taxation
in its internal business systems to drive efficiencies and
The tax charge in the 12 months ended 31 December 2023
improvements in its security posture, this increased level of
increased to £0.9m (FY22: £0.1m). The principal factor
spend is offset by reduced spend in other areas.
driving this increase is deferred tax charges that relate to the
Capitalised development costs in the period were £2.5m
reassessment of the likelihood of future deductions from the
(FY22: £1.8m), reflecting the ongoing levels of investment
exercise of share options. Underlying deferred tax charges
into the product portfolio, whilst amortisation of capitalised
relate to the utilisation of accelerated allowances together
development costs in the period ended 31 December 2023
with losses brought forward to reduce UK corporation tax
was £1.2m (FY22: £0.8m).
for the 12 months, offset by the deferred tax credit relating

to the amortisation of intangible assets. Due to these factors

EBITDA (2)
& Profit Before Tax the effective tax rate for the period of 37% (FY22: 6%) which

is higher than the main rate of corporation tax of 25%. For

The growth in revenue and gross margin has enabled the
future periods we expect the effective rate to align more
Group to deliver an adjusted EBITDA ahead of market
closely with the main corporation tax rate.
expectations at £9.4m in the 12 months ended 31 December

2023, an increase of 15% (FY22: £8.2m). Adjusted EBITDA From 1 July 2020, Microlise has been classified as a large

margin has increased to 13.1% (FY22: 13.0%). To provide company for tax research and development purposes and

a better guide to the underlying business performance, benefits from the Research and Development Expenditure

adjusted EBITDA excludes exceptional costs in relation Credit scheme (RDEC) with any benefit being reflected as
to acquisitions and restructuring costs, depreciation, grant income within other operating income. In the period

amortisation, share of loss of associate, interest, tax and ended 31 December 2023 the pre tax value of the credit was

share based payments. £0.6m (FY22: £0.6m)

The adjusted profit before taxation excludes exceptional

costs in relation to acquisitions and restructuring costs, EPS and Dividend

amortisation charges of £2.2m as a result of business
The Group reported an increase in profit after taxation in
combinations (FY22: £2.1m), share of loss of associate and
the period of 17% to £1.6m (FY22: £1.4m). As a result, the
share based payments. Adjusted profit before taxation for
reported basic earnings per share for the 12 month period
the 12 months ended 31 December 2023 increased 17% to
ended 31 December 2023 was 1.359p (FY22: 1.167p) and
£5.6m (FY22: £4.8m). Reported profit before taxation in the
diluted earnings per share was 1.358p for the 12 months
period increased 74% to £2.5m (FY22: £1.4m).
period ended 31 December 2023 (FY22: 1.165). For further

information on earnings per share, please refer to note 8 of

the financial statements.

22
 The Group is pleased to announce the introduction of its advancements in both customer and internal business

dividend policy and proposes a full year dividend of 1.72 systems as well as security.

pence per share that will be payable on 28 June 2024 to

shareholders on the register at close of business on 7 June

Banking Facility
2024.
The Group has renewed its facility with HSBC with an agreed

£10.0m committed revolving cash flow facility and a £20m

Group Statement of accordion. The Group has not utilised any of this facility to
Financial Position date. The Group’s gross cash of £16.8m (FY22: £16.7m) and

The Group had net assets of £75.7m at 31 December 2023 the undrawn £10.0m facility gives the Group £26.8m of cash,

(FY22: £73.5m). Intangible assets increased by £1.2m which the Directors believe provides ample headroom for

reflecting the £2.4m of acquired intangible assets and Microlise to deliver against its strategic goals. Given the level

goodwill resulting from the acquisition of Vita Software of headroom in the business forecasts the board consider

Limited, capitalised development costs less amortisation it appropriate to prepare the financial statements on the

charges. Current assets increased by £4.2m, primarily due going concern basis. Details of the board’s going concern

to an increase in debtors driven by higher revenues in the assessment is provided in the basis of preparation note in the

year combined with the timing of several large receipts financial statements on page 98.

which have been received in full post period end. Total

liabilities increased by £2.9m due to an increase in deferred Additional Notes

income and trade payables. The Group typically invoices for 1. OEM is an abbreviation for Original Equipment
software subscriptions monthly, quarterly, annually or for Manufacturers
the life of the subscription in advance which drives a strong
2. Adjusted EBITDA excludes, exceptional costs in relation
balance sheet with significant cash balances. Revenue is
to acquisitions and restructuring costs, depreciation,
recognised in the month the service is provided with deferred
amortisation, share of profit or loss of associate,
income disclosed as contract liabilities in current and non
interest, tax and share based payments.
current liabilities. As at the end of December 2023 total
3. Adjusted cash flow generated from operations adds
Trade and other payables was £48.3m (FY22: £46.1m) of
back exceptional costs in relation to acquisitions and
this balance £34.5m (FY22: £33.3m) is deferred income and
relates to future contracted revenue recognition. restructuring costs

4. Cash conversion is calculated by dividing adjusted cash

flow generated from operations by adjusted EBITDA.

Adjusted Cashflow(4) & Net
Cash
Nick Wightman, Chief Financial Officer
The Group ended the 12-month period to 31 December

2023 with cash and cash equivalents of £16.8m, a small

increase on FY22 (FY22: £16.7m). This was partly due to the

timing of several large receipts totalling £1.2m, which have

been received in full post period end. Adjusted cash flows

generated from operations (5) remains healthy at £9.3m in

the period (FY22: £9.9m), this represents a cash conversion

rate (6) of 98% (FY22: 121%). Reported cash flows generated

from operations in the period was £8.8m (FY22: £9.7m)

During the period, the Group increased investment into

product and development as well as plant, property and

equipment, particularly IT infrastructure to support ongoing

23
Market Overview
The Group has had a strong period, despite the challenges presented by the impacts of global microchip shortage and

continues to be successful across its chosen markets in both the UK and internationally. The Company has secured new

business through existing and new customers and has also extended contracts with several key customers. By upselling &

cross-selling, the Group has increased penetration with existing customers and experienced exceptionally low customer

churn (at <1%).

We continue to see a very healthy demand environment across Microlise’s current and prospective customer base,

meaning the long-term picture remains very encouraging.

In 2023, Microlise completed 2 acquisitions, Vita Software and K-Safe. Vita Software were a UK based company,

Vita provides a SaaS Transportation Management System (TMS) for fleet operators. The software only system is

applicable to fleets of all sizes, supporting the Group’s strategy to expand its value proposition further into medium

sized fleets, with an enriched product offering. K-Safe were the parent company to the road safety products Flare and

Flare Aware. Flare is a multi-award-winning platform with over 3.5 million regular users of its app. A third acquisition

was announced in November 2023, with completion post CMA approval in January 2024. Enterprise (ESS) is market

leading TMS solution provider, who is utilised by a number of exisiting key Microlise customer already, including existing

integration with Microlise products due to its combined customer base. These acquisitions provide the Group with a strong

value propisition for transport & logistics customers to be able to operate from, with the product roadmap focusing

strategically focused on completing the integration of all platforms, to create a seamless operating system.

We continue to review additional M&A opportunities that allow us to target international companies with add-on

technology and/or a strong customer footprint in our chosen geographies.

24
 Principal Risks & Uncertainties

The Group faces various risks and uncertainties that have the potential to impact the Group financially, operationally,

strategically and reputationally.

While it is not possible to identify or anticipate every risk, the principal risks and uncertainties faced by the Group and the

steps they take to mitigate these risks are outlined below. The Board has overall responsibility for risk management and

internal controls, with full support from the Audit Committee.

Platform Robustness

The Group is largely dependent on its technical capabilities, and relies, to a large degree, on the
Potential
efficient and uninterrupted operation of its software and data systems. Any malfunctioning of the
Impact:
Group’s technology and systems could result in a lack of confidence in the Group’s products and result

in an adverse effect on the Group’s business and financial results.

The Group has service level agreements with some of its customers in which it provides various

guarantees regarding levels of service. The Group may not be able to meet these levels of service

due to a variety of factors, within and outside of the Group’s control. If the Group fails to provide the

levels of service required, customers may be entitled to terminate their contracts or may choose not to

enter into new work orders with the Group which may damage the Group’s reputation and customer

confidence and reduce its capacity to retain existing customers and attract new ones.

Mitigation: The Group’s platforms and data infrastructure provides enhanced performance reliability, security,

and capability benefit. Our multiple data centre locations support resilience and continuity of service

and operate according to internationally recognised data centre standards.

The Group is ISO9001 and ISO27001 accredited and applies rigorous change control and software

development processes to ensure that any work undertaken on its software and technology
infrastructure minimises customer impact.

25
 Dependence on Key Customers

The Group’s business is dependent on several key customers. If the Group’s commercial relationship
Potential
with these customers terminate or reduce for any reason, its financial results could be materially
Impact:
adversely affected.

Mitigation: Microlise is investing in Customer Success, a business-wide customer relationship-focused philosophy

to ensure customers achieve their desired outcomes by fully utilising our products and services.

The core objectives of Customer Success at Microlise are to:

• Lead our customers to success

• Improve our customer experience

• Drive increased contract value and recurring revenue by providing our customers with products

and services that resolve both current and future challenges

• Create customer advocacy

• Eliminate Churn

In parallel with the above initiative, Microlise is rolling out a more streamlined customer service

process, in which the tiered structure of customer service will be replaced by highly qualified

operatives, who will own an issue or customer ticket from start to finish. In addition, Microlise has

implemented health scores against each customer, encompassing various performance indicators

such as NPS (Net Promotor Score), CSAT (Customer Satisfaction Score,) and CES (Customer Effort

Score). This data will also be invaluable in helping us to identify customer improvement opportunities.

Dependence on Key Suppliers

Any business dependant on key suppliers has an element of risk due to the disruption in operations
Potential
they could cause. This could lead to delays in the delivery of goods or services to Microlise, which in
Impact:
turn impact the company’s ability to fulfil customer orders, leading to lost revenue and damage to

the company’s reputation. Additionally, if Microlise had limited options for sourcing key materials or

services, it could lead to increased costs or reduced profitability.

We take several steps to mitigate the risk of being dependent on key suppliers. To reduce our reliance
Mitigation:
on a single supplier, we dual-source key materials or services from two different suppliers. This

strategy helps to make us less vulnerable to supply chain disruptions.

We also maintain appropriate stock levels of tangible goods or goods for resale. By keeping enough

inventory on hand, we are better positioned to weather any disruptions that may occur in the supply

chain. To achieve this, we work with suppliers to ensure adequate lead times for deliveries and monitor

inventory levels to ensure they are sufficient to meet customer demand.

Furthermore, we have identified key suppliers and developed strong relationships with them. This

involves regular communication and collaboration to ensure that both parties are aware of each

other’s needs and priorities. By building strong relationships with our key suppliers, we can work

together to identify potential supply chain risks and develop strategies to mitigate them.

26
 Technological Advances & Competition
Potential The Group expects new technology to continue to emerge and develop. Although Microlise believes
that significant barriers to entry exist in the markets in which the Group operates, most notably
Impact:
the product knowledge and expertise necessary to design an end-to-end modular and scalable
solution, the risk exists that new technology may be superior to, or render obsolete or unmarketable,
the products that the Group currently offers. AI technology poses a potential risk to technology
companies by enabling their customers to develop technical products in-house with greater ease. As
AI capabilities become more accessible and user-friendly, customers may opt to leverage these tools
to undertake tasks traditionally outsourced to technology companies, such as software development
or data analysis.

Mitigation: The Group continues to update its products and to invest significantly in ongoing research and
development, as well as anticipating and adapting to the impact of technological change. Evidence of
this is the recent acquisition of the Transportation Management System providers Vita Software and
Enterprise, which brings new high value services to the product portfolio. Microlise already harnesses
AI technology within existing and future products , including within its operations. The inclusion of AI
within our own product roadmaps enables the leverage that customers would seek to benefit from
a lower level of competence, harnessed at a much higher level of expertise which customers look to
receive from a technology partner.

Growth Strategy In New Geographies

The Group’s growth strategy is in part predicated on acquiring new customers in new geographies, in
Potential
particular mainland Europe and the Asia Pacific region. In the event that it is constrained in its ability
Impact:
to do this, the Group’s growth could be adversely impacted.

Mitigation: The Group continues to invest into France and Australia, supporting both customers and new business

wins, with the addition of sales and marketing personnel. New marketing approach is being taken to

enable more bespoke support for the regions to improve lead generation, with in country resource a

key part of this approach.

Recruitment & Retention Of A Skilled Workforce

Continuing to attract and retain employees with the appropriate expertise and skills cannot be
Potential
guaranteed and can be costly. The Group’s future development and prospects depend to a significant
Impact:
extent on the experience, performance, and continued service of its senior management team.

Effective product development and innovation, upon which the Group’s success and future growth

hinges, is also dependent on attracting and retaining talented technical and operational employees.

Mitigation: The Group is continuously looking to bring a competitive remuneration policy which plays an important

role in attracting and retaining personnel. The Group now offers UK personnel access to a electric

vehicle salary sacrifice scheme, to support both the accessibility of new electric cars and the reduction

of the business’ carbon footprint.

The Group is also completing market salary benchmarking analysis, to maintain strong recruitment

and retention capabilities. Effective succession planning for key staff, tailored development and

training programmes and competitive retention and incentive packages supports our retention

strategy. Evidence of the Groups success can be seen in the Great Place to Work accreditation

obtained by both the India and UK operations.

27
 Data & Cyber Security

The Group relies on information technology systems to conduct its business and is therefore at risk
Potential
from cyber-attacks. Cyber-attacks, whether because of global instability, or because of a deliberate
Impact:
or unintentional act, may include but not be limited to, third parties gaining unauthorised access to

the Group’s products, corrupting data, or causing operational disruption. If the Group suffers from

a cyber-attack, whether by a third party or insider, it may incur significant costs and suffer other

negative consequences, such as damage to the Group’s network infrastructure and systems and/

or fines from the Information Commissioner’s Office or third-party claims. The Group may also

suffer reputational damage and loss of investor confidence or be exposed to potential financial and

reputational harm.

Mitigation: The Group has continuous investment into the security of both its products and business, employing

security testing measures for the software it deploys and for its internal systems. The Group’s

technology function manages strict security protocols and policies to mitigate against any potential

security breaches, including obtaining and maintaining external IT and security certifications. The

Group also communicates regularly with its employees to provide updates on IT risks and threats and

to share best practice relating to data security. Future product platforms are being developed with

market leading security architecture at their core, enabling the Group to mitigate future threats.

Inflationary & Exchange Rate Pressures

As is the case for many organisations, the Group is currently facing broad-based price inflation
Potential
increases, ranging from salaries, wages, and utilities. As the Group’s footprint continues to grow
Impact:
internationally, exchange rate fluctuations could have a material effect on the Group’s profitability or

the price competitiveness of its services

Mitigation: We are realigning our talent recruitment strategies to reduce the impact of wage inflation by looking
beyond ‘traditional’ talent pools to include freelancers, part-timers, and career restarters. The

Group has actively looked to limit any costs passed on to customers, but RPI increases have been

implemented to limit the impact of pressures. The Group is exposed to currency risk as a result of its

operations.

However, given the size of the operation and level of foreign currency transactions, the cost of

managing the exposure through the use of derivative financial instruments exceeds any potential

benefits, and as such, no derivative financial instruments are used to hedge any risks. The Group

minimises currency risk exposure by operating foreign company bank accounts to offset foreign

currency receipts and payments, and makes timely currency exchanges based on the Group’s financial

currency, where appropriate.

28
 Climate Change

Climate change is impacting global weather patterns such as increased levels of rain fall, flooding,
Potential
heat waves and drought. Microlise recognises that this will have medium and long term impacts on
Impact:
businesses, infrastructure and the global population. The longer term impact is likely to include a

continued focus on fossil fuel consumption and the transition to alternative fuels which will impact both

customers and suppliers operating models and cost structures.

Mitigation: We’re committed to ongoing initiatives aimed at reducing both our customers and our own carbon

footprint. Our products and services actively support our customers in reducing their carbon footprint

through efficient use and management of their assets. This impact has been quantified in the ESG

report section, in litres of fuel and subsequent carbon emissions saved. The impact of climate change

on the various aspects of our business operations, including supply chain and component availability is

reviewed on a continual basis through our risk management framework. The Microlise newly produced

Climate-related Financial Disclosure (Regulations 2022) also enables the Group to analyse, indentify

and mitigate the climate related impacts of its business operations.

£
Macroeconomic Conditions
The Board and senior leadership continue to proactively monitor external geopolitical risks such as the
Potential
impact of future pandemics, and the ongoing conflict in Ukraine, Gaza and China’s recent aggression
Impact: towards Taiwan, to respond and adapt at speed.

An agile business model leaves us well placed to meet and overcome challenges as they arise. Covid-19
Business
continues to be mitigated with the majority of existing and new staff on a hybrid working contract,
Community: enabling a more flexible workforce, with the senior leadership monitoring any new variants and new
infectious diseases publised by the government. Most of our customers continue to operate normally
and our established business model, which is predicated on long term contracted revenues, solidifies
our position.

Microlise continues to monitor the ongoing global geopolitical events to make informed decisions on its
business operations, including the upcoming elections for major global players such as the US, as well
as the conflict in Gaza and growing tension with Russia. Microlise does not have any dependency on
material supply from the Ukraine region.

The impact on the wider economy of the conflict could impact Microlise through inflationary pressures
and volatility in the foreign exchange rates. Interest rate exposure is not considered to be a material
issue whilst the RCF facility is not utilised. Ongoing assessments will be undertaken prior to any draw
down. With respect to foreign exchange, Microlise operates bank accounts in various currencies
and utilises funds by matching non-GBP denominated payments and receipts wherever possible to
mitigate transactional impacts. Our customer base will experience a significant impact from fuel
price inflation and historically Microlise has always seen an increase in opportunities during these
periods as our hardware and software solutions provide fleet operators with opportunities to increase
efficiencies and reduce costs.

Mitigation A stringent set of safety procedures and protocols are in place for field staff and those who are office
based. The business continues to manage internal outbreaks with regular onsite testing as well as the
- People
balance of our staff continues to work from home with returning staff adopting hybrid work patterns
Wellbeing: to limit staff numbers across our office locations

29
Section 172 statement
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their

decision-making.

Our Key Stakeholders

Investors

Customers & Suppliers

Our People

Community & Environment

Why We Engage
Microlise’s strategy focuses on enabling a safe, efficient and sustainable connected world.

As a collaborative partner to our customers, we deliver transformational solutions and value-adding actionable insights from

connected assets for fleet operators and product manufacturers.

As a global business, we engage with a range of key stakeholders to ensure we understand the interests and concerns of all of

our stakeholder groups.

Effective engagement with stakeholders at Board level and throughout our business is crucial to fulfilling Microlise’s core

purpose. We collaborate with all stakeholder groups including investors, customers and suppliers, employees and regulators,

to listen and take on board feedback while remaining open to change.

Throughout this Annual Report, we provide examples of how we:

Take into Understand

Foster Understand the Demonstrate
account the likely our impact
relationships importance of the importance
consequences on our local
with engaging with of behaving
of long-term community & the
stakeholders our employees responsibly
decisions environment

Investors
Our business model, supported by our strategy, aims to deliver sustainable long-

term growth and returns to our shareholders. Focus areas

The Directors recognise that effective engagement with shareholders is key. In • Focus on sustainable growth
addition to engaging through the Company’s annual general meeting (AGM) and
• Prioritise growth investment
through stock exchange announcements, the Executive Directors, supported by

the Company’s broker, also meet with institutional shareholders and analysts.

These meetings involve discussion of the Company’s strategy, performance and objectives, and provide a valuable forum for

investors to offer feedback. Investors and other stakeholders can also access information about the Company on our website.

30
 Customers & Suppliers
Microlise endeavours to be open and transparent in all its dealings across our supply chain extending from employees, through

to customers, sub-contractors and suppliers.

We are committed to providing our customers with the highest quality products and we believe the best method of meeting

this commitment is to build a strong relationship with like-minded suppliers who share our values and ethical standards, and

conduct their business in a similar way to ours. Our supplier relationships are based on trust and transparency.

We also consider the ethical and environmental obligations of all of our activities, including sourcing from reputable and

sustainable suppliers and procuring as locally as possible, wherever possible. Microlise has established supplier assessment

procedures in place to seek to maintain best practice standards.

Customer focus areas Supplier focus areas

• Technical expertise • Security of supply

• Market-led approach • Fast lead times

• Collaboration across the supply chain • Compliance, oversight & quality

• Solutions-driven culture • Reliability & flexibility

• Quality customer support

Our People
Microlise is committed to its employees, recognising that they

are fundamental to its success. The company’s early-stage

Focus areas

talent programme through its Academy brings new skills to • Innovative culture

the business while also providing opportunities for growth and • Highly motivated and talented employees
development for its employees. Microlise’s commitment to
• High retention rate and appropriate
lifelong learning and professional development is reflected in its
reward
ongoing efforts to deliver a series of courses across the entire
• Safety & Wellbeing
business. The company has been accredited as a Great Place to

Work, which demonstrates its dedication to creating a positive • Diversity and inclusion agenda

and supportive work environment for its employees.

Microlise’s focus on communication and engagement has also served it well, particularly throughout the Covid-19 pandemic

and as the company has expanded. Through various forums, the company keeps its staff informed of key developments,

business performance, and other issues that may affect both their working and personal lives. Overall, Microlise’s commitment

to investing in its employees, providing ongoing learning opportunities, and fostering a positive work environment is reflected

in its success and its dedication to continued growth and development.

Community & Environment

We actively encourage business-wide and employee support for local communities and good causes and have established a

Group-wide Community Engagement Group (CEG) to manage initiatives. Our support extends from being a proud corporate

sponsor to large charitable organisations such as Transaid, to supporting local orphanages in India, providing sports kits to

clubs, books and resources to primary schools, and supplying local food banks in and around Derbyshire and Nottinghamshire.

31
In conjunction with the Road Haulage Association, Microlise created Road to Logistics, a not-for-profit, community interest

company (CIC). Road to Logistics provides a national training programme to encourage new talent into the transport and

logistics industry from sections of society where individuals need help and support. The road logistics industry relies heavily

on its drivers and the current driver shortage particularly in the UK, has been well documented. These training programmes

are helping to close the gap and support diversity as they encourage women, ex-offenders, the long-term unemployed and

individuals from other disadvantaged backgrounds to apply.

Sound environmental practices and the impact of our operations are factors of great importance to Microlise. The Group’s

Environmental Policy seeks to adhere to local, state and national environmental legislation in all jurisdictions in which we

operate and to promote the adoption of responsible environmental practices. We operate our facilities as efficiently as

possible and have shared our current ESG objectives and outcomes on pages 36 and 58.

As a business, we challenge ourselves to develop smarter ideas and

Focus areas
to constantly improve our technology to enable our customers to
• Sustainability agenda
meet both business and sustainability goals. We reinvest in product

innovation with an annual R&D spend of *£3.4 million and have won • Sustainable solutions

a number of prestigious awards for our products & solutions. • Resource efficiency/maximise resources

Our technology delivered tangible results to many of the UK’s • Social Responsibility
largest retailers, leading hauliers and third-party logistics

providers.

This contributes to positive impacts on environmental performance, improvements in air quality and urban environments

while reducing consumption through intelligent planning and route optimisation. Other positive impacts include a reduction in

accidents through improved driver behaviour and fewer vehicle breakdowns thanks to our vehicle health monitoring system.

Cumulatively these products support reduced emissions, congestion and the negative societal impacts of both.

Our products are designed and manufactured to take account of end-of-life recycling and disposal. Our businesses comply

with The Waste Electrical and Electronic Equipment Regulations (“the WEEE Regulations”) and work in full compliance with

The Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Regulations 2004 (“the

RoHS Regulations”). The environmental performance of Microlise continues to improve through our efforts to reduce energy

consumption and waste and increase recycling efforts.

How We Conduct our Business

Focus areas
As a business, Microlise is committed to delivering to a high standard and
• Adherence to international standards
seeks to benchmark itself against internationally recognised standards.
• Top down culture of integrity,
The business has held ISO9001 (quality management system) for a
accountability & transparency
number of years and has more recently, also added ISO2000 (IT Service

Management), ISO27001 (Information Security Management System)

Microlise expects that all of its business is conducted in compliance with high ethical standards of business practice. We apply

these standards across all of our dealings with employees, customers, suppliers and other stakeholders.

Our Ethics Policy has been developed to ensure that our business is conducted with adherence to the highest ethical and legal

principles and sets standards of professionalism and integrity that is expected from all of our employees across all of our

operations.

*This is value of qualifying spend under the RDEC scheme

32
 Our People &
Operations

33
Our people
We’re dedicated to doing business the right way – with honesty, integrity, and a strong sense of social responsibility. Our Core

Values are more than just words; they’re woven into our everyday work life. They’re the compass that helps us hire, evaluate,

and reward our team members.

These values are the backbone of our company culture, shaping how we interact with our colleagues, customers, suppliers, and

the local community. In the past year and looking ahead to 2024, we’ve made our people practices even better.

Our Core Values, ‘We Care’ and ‘Continuously Improve,’ are at the core of everything we do. And our efforts have paid off,

with our Great Place to Work™ accreditation renewed in 2023.

34
 Recruitment & Retention
Our team members drive our success, so we make sure everyone feels included and valued. We encourage growth and

learning by giving our team the tools they need to succeed and keeping them motivated.

Regularly evaluating our offerings, we ensure that our career advancement programs and employee benefits remain

competitive while catering to the diverse needs of our staff.

In our latest assessment, we introduced a new benefit for employees in the UK, providing dental, optical, and audiological

insurance through Vitality and despite a challenging labour market, our average headcount increased by 8% globally.

Diversity & Inclusion

We foster an inclusive culture and diverse working environment throughout the entire employment journey – from recruitment

to retirement – ensuring all our employees feel valued.

We support every member of our team, helping them to reach their full potential – and our targeted initiatives help to enhance

diversity representation and social mobility.

In 2023, we expanded medical insurance in India to include LGBT+ partners, alongside enhanced maternity benefits and an

extra week of paternity leave for our Indian employees.

Furthermore, we’ve established a dedicated team within our Employee Experience group to focus on LGBT+ inclusivity,

organising outreach events at local schools.

And we’re proud to have been recognised as the 82nd ‘Best Large Workplace for Women’ by Great Place to Work™.

Employee Engagement
We work closely with our employees to better understand and support them. In 2023, as a result of employee engagement

surveys, we were listed in the top 50 ‘Best Large Places to Work’ in the UK, and top 30 ‘Best Workplace in Tech (Large and

Super Large)’ by Great Place to Work™.

Our events program has also evolved to improve engagement in hybrid work settings, with employees actively involved in
designing valued events. Last year, we offered 24 engagement activities in the UK and 10 in India.

In the Great Place to Work™ survey, we scored an impressive 94%, reflecting the culture of celebrating special events within

our organisation.

Health & Wellbeing

Our wellbeing initiatives have received high praise from employees, and this is reflected in our ranking as the 29th ‘Best Large

Workplace for Wellbeing’ by Great Place to Work™.

Moreover, we are proud to be listed as one of the UK’s Best Workplaces™ for Wellbeing in 2023, underscoring our commitment

to employee wellbeing. We now have 16 Mental Health First Aiders and 39 Mental Health Champions across the business.

In the UK and India, we offer free health checks, and in India specifically, we’ve implemented a new Wellbeing team and

strategy to further enhance employee wellness.

35
ESG
Environmental
At the heart of everything we do lies our commitment to the environment, which shapes every aspect of our work, from

product development to how we conduct business.

We work closely with our customers to streamline operations in the transport industry, while also helping them cut down on

their environmental impact. Saving fuel is a big part of how our products add value.

With our Driver Excellence Monitoring software, drivers and operators get a direct look at their driving habits, from quick

starts to sudden stops. Our customers use our software to encourage better driving, which not only saves fuel but also cuts

down on accidents and wear and tear for their fleet vehicles.

4% average fuel saving per customer.

59,144,548 litres of fuel - the equivalent of

24 Olympic swimming pools.

And is the equivalent saving of:

2,611,154 trees planted over a

ten-year period.

42 wind turbines running

for one year.

36
 The Sustainability of our Operations

Last year was marked by significant challenges for people worldwide. Despite these hardships, our company remained

steadfast in fulfilling its responsibility to support customers, employees, and communities.

Our resilience during this time can be attributed to the investments we’ve made over the years in building a strong, sustainable,

and adaptable company. We’ve maintained robust risk, financial, and operating controls, prioritised our customers and

communities, invested in our employees, and promoted a culture of integrity, fairness, and personal responsibility.

What some call environmental, social, and governance management, we view as the right and intelligent way to do business.

Our company’s focus is on transitioning to a sustainable, low-carbon future, collaborating with our clients to support their

decarbonisation strategies. Although many of our near-term initiatives are still in the implementation phase, we have set a

clear objective of achieving quantifiable results by 2025.

In 2023, we successfully implemented the following initiatives that help to reduce our carbon consumption:

• The installation of 502 solar panels at our Head Office, with estimated savings of 55t CO2 per year

• New LED lighting in the UK Head Office, with an expected carbon saving of 8t CO2 per year

We continue to roll out lease renewal opportunities to replace our fleet of vans and cars with electric or hybrid vehicles, and

in 2024 we plan to add more solar panels to our buildings in the UK. We will also have committed plans to expand onsite EV

charging points at the HQ in Q1 2024.

Going forward, these initiatives will be managed by a new, cross-functional team that will focus on our carbon consumption.

37
Current Initiatives
Emissions reduction initiatives

Including:

• EV salary sacrifice scheme for all staff fully implemented. Suitable for cars under 75g/per kilometre, there’s the

opportunity for 68% of staff to benefit from this initiative.

• Implementation of new company regulation that prohibits the use of vehicles that exceed 130g/per kilometre CO2

emission is underway. This new regulation applies to engineers and field-based employees.

• We continue to offer an off-setting scheme for car fuel where our fuel card provider off-sets based on our per annum

financial expenditure.

Energy reduction initiatives

Including:

• Gas and electricity supplied to the Head Office continue to be green energy. This initiative was first implemented in

August 2021.

Planned Initiatives for 2024

Emissions reduction initiatives

Including:

• Investment in lease renewal opportunities to replace our fleet of vans and cars with electric or hybrid vehicles. Our entire

fleet will eventually be replaced with greener vehicles.

Energy reduction initiatives

Including:

• Plans to implement a further 85 to the currently installed 502 solar panel units at the HQ are underway. Once complete,

the total energy generated is predicted to provide one third of our HQ’s electrical energy requirements.

• Implementation of LED lighting at our Head Office, with an expected carbon saving of 8 carbon tonnes per year.

38
 SECR Report
The following table provides a summary of greenhouse gas (GHG) emissions during the reporting period and corresponding

periods, including emissions from stationary consumption (such as electricity and gas used in our office facilities) and mobile

consumption (from our vehicle fleet). The data was gathered from supplier invoices and expense claims for company mileage.

To address carbon-related issues, we used the SECR methodology outlined in the “Environmental Reporting Guidelines,” which

includes both Streamlined Energy and Carbon Reporting and GHG reporting. We also employed GHG reporting conversion

factors provided by the government.

Actual Actual Actual Actual

12 Months 18 Months 12 Months 12 Months

June 30 Dec 31 Dec 31 Dec 31

2021 2021 2022 2023

Total energy use covering electricity, kWh 2,103,610 3,310,391 2,386,337 2,599,509

gas and transport

Total emissions generated through tCO2e 24 40 27 16.3

Total emissions generated through tCO2e 292 449 296 321.1

use of purchased electricity

Total emissions generated through tCO2e 321 514 405 354.5

business travel

Total gross emissions tCO2e 637 1,003 728 691.9

Intensity ratio (total gross emissions) kgCO2e per sqft 13.6 19.61 14.2 11.2%

1 ) This metric captures an 18-month period energy usage and associated emissions. When adjusted on a consistent basis the

intensity ratio would be 13.03. We have included total group emissions including all non-UK subsidiaries.

39
Climate-related Financial Disclosure (Regulations 2022)
The regulations requires disclosures on the following four elements within financial disclosures:

1. Governance – Top Management (the Board or equivalent) oversight and how management assesses climate-related risks

and opportunities.

2. Strategy – Identified climate-related risks and opportunities, what their overall impact is and how the organisation is

managing them.

3. Risk Management – How the organisation identifies, assesses and manages climate-related risks and how this is

integrated into the organisations overall risk management.

4. Metrics and Targets – The metrics used by the organisation to assess climate-related risks and opportunities, disclosure

of Scope 1, 2 and, if appropriate, Scope 3 carbon emissions and the climate-related targets currently in place.

Governance

a. Board Oversight of climate-related risks and opportunities

The Board, which includes the Non-Executive Chairman, the Chief Executive officer (CEO), the Chief Financial Officer (CFO),

and two Non-Executive Directors, is responsible for directing the Group and developing the overall business strategy. The

CEO and CFO are responsible for identifying and managing climate change risks and opportunities. They also lead the Senior

Leadership Team (SLT), ensuring sustainability and climate change are central considerations among top management. The

non-executive members of the Board have responsibility for reviewing and challenging the climate change strategy.

Our Microlise Board formally meets at least ten times per annum, with at least two meetings per annum discussing ESG,

sustainability and climate change matters and four of these directly reviewing the identified corporate risks. The Board aims

to increase the frequency of formally discussing climate-related issues to at least quarterly in FY24.

The SLT hold a monthly Integrated Management System (IMS) meeting where relevant standards and the company-wide risk
register are reviewed. Climate-change risks and opportunities are discussed within this meeting to determine their ongoing

severity and how they are appropriately managed. As members of the Board, the CEO and CFO then raise appropriate risks

and opportunities discussed during SLT meetings at subsequent Board meetings.

The CEO and CFO are pivotal roles within Microlise in ensuring appropriate climate-change issues are understood at the most

senior level and leading the SLT in implementing actions which address identified climate change risks and opportunities. They

also have responsibility for assessing the effectiveness of these actions, making sure climate change risks are appropriately

managed.

In the near future, to further enhance current climate change management practices, a new subcommittee will be formed

which will focus on climate change risks and opportunities. The core members of this committee will include key departmental

staff, ensuring that all aspects of the organisation are equally represented, and the potential impacts of climate-change are

understood throughout the business. The frequency and content of the meetings are yet to be confirmed, this will be reported

in future TCFD responses. However, the output from these meetings will be discussed in the monthly SLT IMS meetings and

reported to the Board by the CEO and CFO.

40
 Some good examples of how climate-related matters influence the business strategy include:

1. We are committing to reducing its climate impact through setting Net Zero targets for Scope 1 & 2 emissions by 2030.

2. The implementation of several carbon and energy saving initiatives, including the installation of a solar PV system at the

Microlise Head Office in Nottingham, UK.

3. The development of a relocation and consolidation strategy to improve the resilience of the portfolio against inefficiencies

and the effects of physical climate change events.

4. Linking a carbon reduction target with the Long-Term Incentive Plan (LTIPs).

We aim to expand its carbon measurement strategy (currently Scope 1, 2 and part Scope 3) to incorporate all relevant Scope 3

sub-categories. Following this, additional targets and climate change reduction strategies will be developed.

b. Management’s role in assessing and managing climate-related risks and opportunities

Our Board is supported by a cross functional Senior Leadership Team (SLT) headed by the CEO and CFO. The SLT includes the

following members:

• Chief Executive Officer (CEO)

• Chief Financial Officer (CFO)

• Product Director

• Operations Director

• Business Development Director

• Chief Technology Officer

• Human Resources Director

• Strategy & M&A Director

The SLT formally meet monthly to review the IMS and risk register. This regular meeting with these standing agenda points

ensures climate change issues are regularly reviewed and assessed. The SLT identify climate change risks and opportunities

through the following:

1. Continual professional development (CPD) from attendance at relevant exhibitions and conferences.

2. Supplier Engagement where climate change issues are discussed and raised. E.g., carbon reporting requirements and

how potential climate-change impacts could impact service.

3. External specialists who provide compliance support with climate change related legislation such as SECR and ESOS.

4. Government bodies such as the Environment Agency who provide details and enforce climate-related regulations.

5. Other stakeholders including the local communities and investors who share and identify their climate change concerns.

41
We maintain a corporate risk register, which is populated and reviewed by the Senior Leadership Team. The risk register

is reviewed periodically by the Board. Currently, the risk register is managed at a Group level. However, more recently a

qualitative scenario analysis was undertaken where the different Microlise subsidiaries (e.g., Trutac, Microlise Pty Limited

(Australia), Microlise SAS (France), Microlise Telematics Private Limited (India)) and the countries where they operate (UK,

Australia, New Zealand, France and India) were reviewed to determine how climate change transitional and physical impacts

and opportunities could potentially affect the organisation (See section “Strategy, c.” for further details). The results from this

analysis are being assessed and are in the process of being incorporated into the corporate risk register.

In the near future, a climate-change subcommittee with representatives across all major business functions will be

established. The main objective of this subcommittee will be to enhance climate change risk and opportunities identification

and management throughout the business. The frequency and content of the meetings are yet to be confirmed, this will be

reported in future TCFD responses.

Strategy

a. Climate-related risks and opportunities in the short, medium, and long term

Based on our business model, product life cycle, product development and typical length of customer contracts, it considers

short, medium, and long-term as follows:

Time Horizon Time (yrs)

Short-term 1 to 3 years

Medium-term 3 to 5 years

Climate-change risks and opportunities are assessed and reviewed by the Board at least quarterly. It is estimated that at

least 40% of the currently identified risks are either partially or fully influenced by climate-change. Risks are assessed against

two key criteria; probability and potential impact (which includes material financial impact). This assessment determines an

appropriate rating for each risk from 1 (low) to 25 (high). Any identified risk with a rating of 10 or higher is prioritised and

appropriate mitigation measures are then identified, assessed, and implemented.

To support climate change management, a qualitative scenario analysis was recently undertaken (See section “Strategy, c.” for

further details). The results are currently being incorporated within the corporate risk register.

The following two tables provide a summary of the specific Transitional and Physical climate-related risks and opportunities

that have been identified as being relevant to Microlise:

42
 Transitional Climate Change Risk Summary Table

Climate Change
Ref. Short-Term Medium-Term Long-Term
Impact
Risks Risks
Certain country specific legisla�on There could be an increase in the number of climate
requires that Microlise reports on its change related regula�ons. Examples include the
carbon emissions, energy consump�on Corporate Sustainability Repor�ng Direc�ve (CSRD)
and climate change impacts. Currently, which will require qualifying organisa�ons to carry out
climate change regula�ons which affect double materiality assessments. This has the poten�al to
Microlise’s opera�ons appear to be UK impact over the medium to long-term.
centred (e.g., ESOS and SECR). However, in
an�cipa�on of increasing awareness of
climate change repor�ng requirements in
other countries, Microlise already reports
voluntarily on its other global carbon
emissions and energy consump�on where
possible.

Non-compliance with climate change

related regula�ons could poten�ally result
in fines and reputa�onal damage.

In addi�on, climate change taxes and

1. Policy and Legal levies will also likely increase in number
and overall cost for high energy users and
carbon producers. This will not necessarily
directly impact Microlise, however it could
increase its suppliers’ costs. In par�cular,
data centre and telecommunica�on
suppliers which are cri�cal to Microlise’s
business offering. This could increase the
cost of Microlise’s products and services.
Opportuni�es Opportuni�es
Microlise’s main product offering can help Microlise is introducing a number of key ini�a�ves to
organisa�ons with transport fleets to beter posi�on itself against future regulatory
capture carbon emissions and help them requirements. This includes Microlise’s commitment to
comply with their own climate change implement appropriate management systems such as
regulatory requirements. ISO 45001 and ISO 14001 by the end of 2025,
incorpora�ng Scope 3 into exis�ng carbon measurement
prac�ces and establishing a subcommitee dedicated to
reducing the business’s climate-change impact. It is
expected that these ini�a�ves will strengthen Microlise’s
business offering.

Risks Risks
Microlise’s main offering is technology based. Poten�al climate change Depending on the severity
impacts could disrupt supplies through acute climate-change related of the climate change
weather events (e.g., severe storms). These disrup�ons could affect impact, different products
produc�vity and the ability to meet customer demands. and services may need to
be developed to operate
Energy costs could poten�ally rise, which will increase Microlise’s within the more extreme
suppliers opera�ng costs. For example, data centre providers, who are climate condi�ons. This
cri�cal to Microlise’s provision of services, may increase their costs. includes external
2. Technology equipment installed on
customer vehicles e.g.,
camera housing units and
sensors. Produc�on costs
could poten�ally increase
as alterna�ve materials
may need to be used to
operate within these
extreme climate
condi�ons.

43
 Climate Change
Ref. Short-Term Medium-Term Long-Term
Impact
Opportuni�es Opportuni�es
There is an opportunity to enhance business offerings by inves�ga�ng There is poten�al for
ways in which Microlise could develop technology. This could include Microlise to adapt and
enhancing ways to obtain data directly from customer assets, enabling improve its business
pro-ac�ve diagnos�cs for a range of environmental factors. offering. Examples of
future opportuni�es could
include designing
monitoring equipment for
other applica�ons,
increasing the data
capturing poten�al of
installed equipment or
developing alterna�ve
methods of data
acquisi�on from exis�ng
customer technology and
equipment.
Risks Risks
Due to carbon emission reduc�on Poten�al climate-change impacts could see a decrease in
demand, there is a noted increase in the number of vehicles being u�lised in favour of other
organisa�ons inves�ga�ng ways to lower carbon methods of transporta�on (e.g., rail).
improve their climate change impacts, However, due to the versa�lity of Microlise’s offering
e.g., u�lising electric vehicles (EV) as main they will s�ll be able to offer their data acquisi�on
mode of travel. If Microlise does not keep services for a variety of vehicular and non-vehicular
up to date with these market changes, applica�ons.
there is a chance they could poten�ally
lose customers and revenue.

However, due to Microlise’s unique data

3. Market
acquisi�on business offering being
adaptable to a variety of vehicle and non-
vehicle applica�ons, this risk is considered
low.
Opportuni�es Opportuni�es
There has been a noted increase in There is poten�al to diversify and iden�fy other
demand for commercial vehicle carbon poten�al products and services which would benefit
repor�ng. Therefore, there is an commercial and industrial customers. Diversifica�on of
opportunity for Microlise to enhance and product is already in progress (e.g., tracking of entries
refine its main business offering to further and exits for gates) and could provide alterna�ve
meet this increasing demand. revenue streams for the business.

Risks
There has been an increased customer demand for Microlise to demonstrate good climate change
management prac�ces. If no ac�on is taken there is poten�al to lose customers and revenue.
Repor�ng requirements appear to be intensifying, therefore reputa�onal climate change risk is
considered applicable across all �mescales.

4. Reputa�on Opportuni�es
Microlise could generate a compe��ve advantage if it could support its customers in mee�ng their
climate change needs. This could secure exis�ng and new work. In addi�on, by reducing its own
climate-change impact Microlise will also lower its energy consump�on and associated costs. It is
expected that the climate-change repor�ng demands will increase and therefore be applicable to all
�mescales.

44
 Climate Change
Ref. Short-Term Medium-Term Long-Term
Impact
Risks Risks
Effec�ve climate change As climate change impacts worsen over �me, transporta�on costs
management is becoming more will likely increase. This will reduce the acceptable commu�ng
of a necessity for organisa�ons distance for employees which could encourage them to look for
to atract and retain a talented work opportuni�es closer to their homes. This also could
workforce. Not being able to poten�ally reduce the catchment area for new employees should
demonstrate good climate role opportuni�es arise.
change management prac�ces
could encourage staff to source Climate change could result in nega�ve impacts on staff health
working opportuni�es making it difficult for them to get to work and increasing the
elsewhere and reduce the amount of notable sick days they take, resul�ng in greater costs for
interest received when the organisa�on. The impact of this risk is reduced by Microlise’s
Microlise adver�ses job u�lisa�on of hybrid working.
opportuni�es.
5. People

Opportuni�es Opportuni�es
Good climate change Being able to effec�vely mi�gate the poten�al nega�ve impacts of
management will likely increase climate change will likely secure the workforce and atract more
the poten�al pool of talent people should job opportuni�es arise. Mi�ga�on measures could
Microlise would be able to draw include the working from home policy.
from when adver�sing job
opportuni�es. In addi�on, this
will help with employee
reten�on.

Physical Climate Change Risk Summary Table

Climate
Ref. Short-Term Medium-Term Long-Term
Change Impact
Risks Risks
Severe weather incidents It is anticipated that climate-change acute weather incidents
resulting from climate-change will continue to increase in frequency as global temperatures
have been increasing in recent rise. The impact of these incidents could also potentially
years. These events have the increase in size and magnitude which could disrupt supply
potential to impact the supply routes or impact data centre operation. Therefore, mitigation
and delivery of Microlise’s costs would likely increase.
products and services to its
customers. Due to existing
business continuity plans, this
potential impact has been
minimised in the short-term.

6. Acute
Opportunities Opportunities
Ensuring that the service to Acute climate change risk management encourages research
customers is not severely and development into providing alternative products and
impacted by climate change is services which are less dependent on hardware solutions,
one of the many reasons why thereby reducing dependency on supply chains. This could
Microlise is considered a provide additional markets that Microlise could operate
leader in telematics and within, generating additional revenue streams.
technological transport
solutions for fleet
management. Maintaining this
market position will likely
attract new customers, secure
business and increase revenue.
Risks
Chronic climate-change weather conditions, such as increases in seasonal extreme temperature
variations, are being experienced in the short-term and have the potential to worsen in the
medium to long term. These impacts could cause disruptions to data centres which are utilised
by Microlise to provide its services to its customers. It could also increase the operational costs of
facilities due to the increased energy consumed by HVAC systems to mitigate these changing
conditions. Technological advances and current remote working practices could potentially
offset the impact of these identified chronic climate change issues.

7. Chronic
45
Opportunities
 technological transport
solutions for fleet
management. Maintaining this
market position will likely
attract new customers, secure
business and increase revenue.
Risks
Chronic climate-change weather conditions, such as increases in seasonal extreme temperature
variations, are being experienced in the short-term and have the potential to worsen in the
medium to long term. These impacts could cause disruptions to data centres which are utilised
by Microlise to provide its services to its customers. It could also increase the operational costs of
facilities due to the increased energy consumed by HVAC systems to mitigate these changing
conditions. Technological advances and current remote working practices could potentially
offset the impact of these identified chronic climate change issues.

7. Chronic

Opportunities
Similarly to the acute climate change risk section above, chronic climate change risks encourage
research and development into alternative products and services. This will likely generate
alternative revenue streams.

b. Impact of climate-related risks and opportunities on business, strategy, and financial planning

The impacts of the previously identified climate change issues and how they impact across multiple business areas have been

summarised in the following table. This demonstrates how climate change risks and opportunities impacts the business, its

strategy and financial planning.

Related Climate
Business / Strategy
Impacts on businesses, strategy, and financial planning Change Impact
Area
Ref.
As the carbon reporting requirements expand for all large commercial and
industrial organisations, there is potential for an increased need for the products
and services offered by Microlise. Microlise’s technological transport solutions
include capturing and reporting fuel consumption and driver behaviour data.
This information would provide accurate carbon emission information for
organisations with transportation fleets and identify ways to improve them. This
opportunity is a core element to the Microlise business strategy as it aims to
continue to achieve “Best in Class”. 1. Policy and Legal
Products and
Services The largest impact this will have on business, strategy, and financial planning is 2. Technology
research and development. Maintaining competitive pricing whilst providing
improved service offering which enables customers to reduce carbon emissions is
a continual process.

A number of stakeholders have been identified as part of Microlise’s value chain.

These include but are not limited to:

1. Customers
2. Employees
3. Suppliers
4. Shareholders 3. Market
5. Local community
4. Reputation
Each identified stakeholder has their own climate-change requirements e.g.,
Supply Chain /
customers expect ethical business practices from their suppliers. In order to 5. People
Value Chain
meet the needs of the value chain Microlise is establishing a subcommittee
dedicated to sustainability and climate-change impact improvement. The 6. Acute
committee will consist of key divisional representatives and their findings will be
discussed during Board meetings as appropriate. This strategic decision will 7. Chronic
ensure alignment of the business with the needs of the value chain.

Development and efficient use of facilities is part of Microlise’s business strategy.

Recent examples of capital investments to mitigate Scope 1 and 2 carbon
emissions can be seen with the installation of a solar PV system on the main head
1. Policy and Legal
office building, replacement of lighting with LED energy efficient type and
currently the investigation of optimising the onsite data centre.
Adaption and 2. Technology
Mitigation 46
Compliance with the ESOS Phase 3 legislation has identified a number of energy
Activities 6. Acute
saving opportunities. These are currently being investigated to develop a
 ensure alignment of the business with the needs of the value chain.

Development and efficient use of facilities is part of Microlise’s business strategy.

Recent examples of capital investments to mitigate Scope 1 and 2 carbon
emissions can be seen with the installation of a solar PV system on the main head
1. Policy and Legal
office building, replacement of lighting with LED energy efficient type and
currently the investigation of optimising the onsite data centre.
Adaption and 2. Technology
Mitigation
Compliance with the ESOS Phase 3 legislation has identified a number of energy
Activities 6. Acute
saving opportunities. These are currently being investigated to develop a
prioritised list.
7. Chronic
Related Climate
Business / Strategy
Future consideration
Impacts is being
on businesses, given
strategy, tofinancial
and replacingplanning
the current transportation fleet Change Impact
Area
with more energy efficient alternatives e.g., electric and hybrid. Ref.
The main Microlise business offering centres around transport, delivery and
journey management, safety, health and compliance, and tracking solutions for
HGVs. As such, hardware and software improvement is a key aspect of the
business strategy. Investment into research and development is a continual
practice to ensure that customer needs are being met.
1. Policy and Legal
Investment in Future technological advancements which are currently being explored include
Research and ways to reduce the need for hardware to obtain the necessary information 2. Technology
Development required by customers. This would reduce the carbon emissions associated with
the manufacturing, transportation, installation, and servicing of equipment. 3. Market

Reviewing climate change impact on business operations has caused the

following strategic impacts:

1. Transportation fleet replacement – Microliseis currently reviewing

viable options to replace the existing vehicles to reduce carbon
emissions and climate change impact. This must be balanced with
customer expectations and being able to keep or exceed current levels
of service. 1. Policy and Legal

2. Consolidation of offices – utilising remote working has reduced the 5. People

Operations office space size requirement. This will likely reduce the amount of
energy needed to operate facilities resulting in reduced Scope 1 and 2 6. Acute
carbon emissions.
7. Chronic
Once the Scope 3 carbon emissions measurement exercise has been completed
then additional operational carbon emissions performance improvement
opportunities will be identified.

Microlise incorporates climate-change in the consideration process of any major

acquisition or divestments. Some recent examples are the purchases of Vita 2. Technology
Software and Enterprise Software Systems, which strengthen Microlise’s
Transportation Management System solutions. These acquisitions will enable 3. Market
Microlise to offer its customers enhanced order management solutions including
fleet logistics, operators, resource and transport costing, subcontractor 4. Reputation
Acquisitions and
management and invoicing solutions. This improved transparency could help
Divestments
customers better understand their Scope 1, 2 and 3 carbon emissions. 5. People

Moving forward, as the businesses grows, more commercial space could 6. Acute
potentially be required for Microlise’s operations. The energy performance of
any future building acquisition will be more heavily considered, ensuring that 7. Chronic
climate-change impact is continually reviewed and reduced where possible.

47
 Related Climate
Business / Strategy
Impacts on businesses, strategy, and financial planning Change Impact
Area
Ref.
It was noted that there is a significant lack of access to capital based on
improving a business’s climate change impact alone. However, it is noted that
certain major retail banks are now focusing on Environmental, Social and
Governance (ESG) credentials and are offering preferential rates to
organisations with good ESG performance. It is expected in the medium to long
term, that more capital options will be provided to help organisations reduce
carbon emissions.
2. Technology
Another access to capital consideration which is currently being explored, is
utilising Energy Performance Contracts in order to raise the investment needed 5. People
Access to Capital to implement energy saving opportunities. Suppliers will use industry accepted
practices (e.g., IMPVP) in order to quantify the potential impact of the identified 6. Acute
energy saving opportunity, provide the capital investment and take a proportion
of the savings over a period of time. After which the implemented equipment / 7. Chronic
solution will be owned by the organisation.

As discussed previously, circa 40% of all currently identified risks are partially or fully influenced by climate change. These are

reviewed by the Board twice a year and are assessed over the short, medium, and long term. We are planning to increase

the frequency of the climate change Board reviews to quarterly. This high-level oversight of potential climate change

issues ensures a proactive approach is taken by Microlise to reduce its carbon emissions. To improve the climate change

management practices, we are in the process of establishing a dedicated climate-change subcommittee that will periodically

review climate change issues, support the implementation of any agreed climate change impact mitigation measure and

provide the Board with greater oversight of how climate change issues could potentially impact the business.

Currently, climate change issues are assessed based on probability of occurrence and potential impact. These are then given

a rating between 1 (low) and 25 (high) and captured within a central risk register. A risk that receives a score of 10 or higher

is prioritised and appropriate mitigation measures are identified and implemented. These measures are further assessed in
subsequent Board meetings to ensure that the desired outcome is being achieved.

The impact of climate-change on our financial performance is currently difficult to determine. This is due to the main product

and service offering already incorporating climate-change reduction solutions (vehicle tracking of fuel consumption and

driver behaviour). Microlise is looking to potentially capture this information in future customer engagement. However,

Microlise was awarded the London Stock Exchange Green Economy Mark by being able to demonstrate that more than 50%

of its revenue from products and services has been identified as contributing to the achievement of customers’ environmental

objectives.

48
 We have set a Scope 1 and 2 Carbon Net Zero target to be achieved by 2030. To transition to a low carbon economy, it is also

undertaking the following:

1. Improved measurement of Scope 1, 2 and 3 carbon emissions to establish an appropriate baseline and to begin to

quantify the investment required to achieve Carbon Net Zero.

2. Implementation of management systems (ISO 45001 and ISO 14001) to enhance risk management practices and to

ensure environmental performance remains central to Microlise’s business.

c. Resilience of the strategy, taking into consideration different climate-related scenarios, including a 2oC or lower scenario

A qualitative scenario analysis was recently undertaken using the International Panel on Climate Change Assessment Report

6 (IPPC AR6). The IPPC AR6 provides details on five global Shared Socio-Economic Pathways (SSPs) over the near (2021 to

2040), medium (2041 to 2060) and long term (2081 to 2100). The information summarised within the APPC AR6 complements

the Representative Concentration Pathways (RCPs) which expresses global warming in terms of radiative forcing (W/m2)

rather than oC. This model was chosen as the basis of the scenario analysis as it provides a good overview of how the climate

(temperature, wind, precipitation, snowfall, and air quality) will potentially change in the countries in which Microlise operates

(including the UK, Australia, New Zealand, France and India) as well as detailing the potential socio-economic impacts.

This expanded view of assessing the likely physical and transitional impacts resulting from climate change provides a good

understanding of how we would likely need to adapt or mitigate.

Of the five scenarios used:

• SSP 1 – 2.6 (Sustainable Development Scenario or below 2oC). This assumes that carbon emissions worldwide rapidly

reduce, however, ‘Net Zero’ is achieved after 2050. Global temperatures increase but by less than 2oC. Societies adopt

environmentally friendly practices, where there is a noted shift from economic growth to general well-being. Investments

in education and health increase and inequality decreases. Severe weather events are more frequent, and the world has

avoided some consequences of climate change.

• SSP 3 – 7.0 (Regional Rivalry Scenario). This assumes that carbon emissions and global temperatures continue to increase

and by 2100 they have risen by circa 3.6oC. Countries become more competitive with each other, prioritizing issues of

national and food security.

In addition, only near-term (to 2040) and medium-term (2041 to 2060) were reviewed. These two scenarios and two

timeframes were considered a good basis for our first climate change scenario analysis as they provide an overview of

extreme scenarios. When the exercise is repeated in 2024, the number of scenarios reviewed will increase and quantitative

assessment may also be used.

A summary of the key findings has been presented below:

49
 SSP 1
SSP3
Term (Sustainable Development
(Regional Rivalry Scenario)
Scenario)
Negative impact on transport Increased carbon emissions and
infrastructure from weather and pollution could negatively impact
climate change could increase the health of staff, customers, and
costs of importing goods and the local community. In the near-
services from overseas. This could term, this would not necessarily be
result in the need to source more too severe but would start showing
local suppliers. This is currently in the amount of sick leave staff
being reviewed and appropriate would be taking. This could
mitigation measures are being potentially impact overall business
determined. performance and negatively
impact revenue. This risk is
Adaption of current hardware currently being reviewed and
offering could be required as appropriate mitigation measures
weather conditions worsen. This is are being determined. This climate
needed to preserve the longevity of change issue impact is reduced due
products and services. Mitigation to Microlise’s utilisation of hybrid
of this potential risk is embedded working.
into existing research and
development strategies. The amount and intensity of
extreme weather events will likely
Increase in surface water and increase, causing disruption to
fluvial flooding could potentially transport networks. This could
disrupt operations at some sites. potentially impact Microlise by
Near-Term
This risk is currently being reviewed increasing the amount of remote
(to 2040)
to determine the viability of working being utilised. In contrast,
increasing remote working. it also provides opportunity for
additional services which will help
Increases in energy costs could also customers navigate disrupted
cause data centre operational travel routes in order to deliver
costs to rise. This in turn could goods and services on time.
potentially increase the cost of
Microlise’s products and services. Adaption methods could include
sourcing more local suppliers to
Carbon taxes, levies, and prices will reduce the risk of potential
also likely increase. This may have disruptions to the supply chain. This
more of an impact on Microlise’s would increase costs.
suppliers who are larger energy
users and carbon producers. This in
turn could increase Microlise’s own
costs to mitigate supplier increases.
In addition, these carbon taxes will
likely promote the implementation
of carbon reduction initiatives.

It is also likely that Scope 3 carbon

emission reduction will become
even more relevant. This will include

50
 SSP 1
SSP3
Term (Sustainable Development
(Regional Rivalry Scenario)
Scenario)
engagement with suppliers to
better understand their carbon
emissions and how this impacts
Microlise.

It is expected that achieving More disruptive global climate

Carbon Net Zero by 2050 will conditions could potentially
become a mandatory requirement increase Microlise’s operational
for organisations. This will require costs e.g., sourcing local suppliers.
significant investment into greener
technologies, renewable energy In addition, energy security could
and potentially adapting current potentially become an issue as
business offerings. This is part of resultant changes in climate could
the current business strategy and is cause power cuts, disrupting
Medium-Term
currently being implemented e.g., business operations. Therefore
(from 2041 to
Solar PV system installed on the significant investment would be
2060)
main Microlise Head Office. needed to install self-generating
alternatives.
In addition, not achieving Carbon
Net Zero status could negatively Buildings may need to be
impact Microlise’s reputation and redesigned / refurbished to deal
reduce revenue. with harsher environments. This will
likely result in increased costs either
from relocation or refurbishment of
existing building stock.

In summary, the SSP1 scenario analysis showed that many of the climate change issues are being addressed or will be

addressed through existing risk management strategies. As such, many of the mitigation measures identified have or will

be budgeted for in the near future. There is an acceptance that energy and carbon costs will rise worldwide, subsequently
increasing costs for both our business and its suppliers. However, this may also lead to an increased demand of our products

and services.

The SSP3 scenario analysis showed little costs associated with implementing mitigation measures. However, the long-term

potential negative impacts of the “business as usual approach” were identified as being significant enough to cause disruption

to both the supply chain and customer services. A need for our services was still evident however, a significant increase in

operational costs could potentially be less than revenue increases.

51
Risk Management

a. The processes for identifying and assessing climate-related risks

Identification and assessment of climate change risks are incorporated into the existing risk management practices and

processes. Climate change risks are initially identified from a number of internal and external sources including attendance

at relevant exhibitions and conferences, and interaction with suppliers, customers, employees, external specialists and

government bodies. These identified risks are then presented at the monthly IMS meeting and assessed to determine their

overall potential impact on the business. If deemed significant, these are then presented to the Board during their review

of the Risk Register, where appropriate mitigation strategies are discussed, developed, and implemented. To enhance this

existing process further, a climate-change subcommittee is currently being established involving relevant senior employees

from each department. Their periodic meetings will not only help with the identification and quantification of climate-change

risks, but also support with the implementation of agreed mitigation measures.

Existing and emerging climate-change related regulations are identified as part of the company risk management process.

Examples of relevant climate- change related regulations includes the UK ESOS and SECR legislation which require the

periodic assessment and reporting of energy and carbon emissions. The compliance requirements are discussed during the

quarterly Board meetings to determine if compliance can be managed through existing internal resources or whether external

specialist support will be needed. The success of the existing risk management system can be seen with Microlise being fully

compliant with the SECR and ESOS regulations.

Climate change risks are assessed on probability of occurrence and potential impact. These are then given a rating between

1 (low) and 25 (high) and captured within a central risk register. A risk that receives a score of 10 or higher is prioritised and

appropriate mitigation measures are identified and implemented.

d. The processes for managing climate-related risks

Climate Change Issue

Process for managing Climate Change Risk
Category
Policy and legal climate related issues are first assessed to
determine the compliance need. This leads to the identification of
the resource requirements and whether external support would be
needed. A plan is then developed, taking into consideration relevant
compliance requirements. Following the implementation of the
Policy and Legal action plan, an assessment is carried out to determine whether the
compliance requirement has been met. Microlise is in the process of
implementing relevant management systems (ISO 45001 and ISO
14001) which will further support how climate change related policy
and legal issues are managed. They are on track to have these fully
implemented by the end of 2025.

52
 Central to Microlise’s business offering is technology. As customer
needs expand, and the impact of chronic and acute climate change
worsens, there could be a potential constraint on technological
requirements e.g., disruption to data centres through power
outages or extreme weather events. To ensure that these issues are
fully understood Microlise regularly engages customers through its
Product Strategy and Customer Success Teams. This combined with
Technology
Microlise’s other climate change and risk gathering processes
provides them with efficient “horizonal scanning” to predict
potential issues and when they will likely have an impact. This
information is then used by the product development team to
research potential ways Microlise’s offerings could be improved and
adapted. Once these changes have gone through necessary testing,
they are then released to market.
As stated earlier within this TCFD response, Microlise’s main product
and service offering helps its customers to better manage their
vehicle fleets and assets. One of the benefits of this is reduced fuel
consumption and associate carbon emissions. This green position
not only attracts customers but also investors. This has been
recognised by the London Stock Exchange where Microlise received
the Green Economy Mark. In order to receive this more than 50% of
Microlise’s revenue from products and services have been identified
as contributing to the achievement of customers’ environmental
objectives.
Market
If business operations do not align with the company’s products’
green image, there is potential for loss of revenue. Microlise is
managing this by:

1. Calculating its Scope 1, 2 and 3 carbon emissions.

2. Implementing appropriate management systems (ISO 45001
and ISO 14001)
3. Setting challenging Carbon Net Zero Targets

Very much linked to the Market section above, Microlise wants to

continue to develop its reputation as a Green organisation. The
processes used to develop this include utilisation of the Sales and
Product teams to engage customers to not only identify how goods
and services can be developed to better meet their needs but to also
confirm the green credential requirements they expect from their
Reputation
suppliers.

In addition, Microlise has an ISO 9001:2015 Quality Management

System, which provides a framework to engage customers, ensuring
that high quality of its products and services is achieved. This is also
being used to manage customers’ needs and expectations.

53
 The business continuity plan addresses the processes Microlise
utilises in order to mitigate the potential impacts of acute climate
related events. A good example of this is the potential for data
centres to be negatively affected by power cuts or flooding.
Provisions have been made to ensure that if part of the data centres
are unable to function, then another data centre located elsewhere
can be utilised to ensure no / limited disruption to the customer’s
service. In addition, Microlise can also utilise cloud-based services
like AWS or Microsoft Azure to further manage this climate change
Acute
issue.

In addition, there is also potential to protect customers from the

negative impacts from acute climate change events which could
cause disruptions to fleet travel routes. Providing detail on how to
navigate around negatively affected areas ensures good fuel
management for their customers which ultimately reduces carbon
emissions and climate change impact.

Chronic climate change impacts have been identified as those that

would potentially affect the day-to-day operations of the business.
E.g. greater variance in seasonal extremes will negatively impact
sites’ heating ventilation and air conditioning (HVAC) systems,
causing increased energy consumption and greater mechanical
strain.

Chronic Microlise manages this climate-change issue by critically planning

for building enhancement. Recent examples include the installation
of a Solar PV system on the main head office site. This reduces the
electrical draw from the national grid and reduces carbon
emissions. Future considerations include expansion of the existing
Solar PV array, redesign of data centres controlled by Microlise and
implementing building fabric improvements to reduce overheating in
the summer.

e. How processes for identifying, assessing, and managing climate-related risks are integrated into overall risk management

As previously mentioned, we identify, assess, and manage climate change related risks using the following process:

1. Identification of climate change risks through a variety of external and internal sources including liaising with customers,

employees, external specialists and government bodies and attending relevant exhibitions and conferences events.

2. Identified climate change risks are reviewed in the monthly SLT IMS meeting. The severity and magnitude are determined,

and appropriate actions are proposed.

3. The CEO and CFO (who lead the SLT) raised the climate change risks, and opportunities and suggested mitigation

measures at least quarterly during Board meetings. Climate change risks are then incorporated within the central

corporate risk register.

54
 4. The CEO and CFO present identified climate change risks, mitigation and adaption strategies at least quarterly to the

Board. The non-executive members review and challenge these to ensure the robustness of the proposed actions.

5. Risks are given a risk rating of between 1 (low) and 25 (high) based on probability and severity. Any risk which receives a

score of 10 or higher is prioritised and appropriate mitigation measures are identified.

6. Specifically with regards to climate change risks, mitigation measures are planned and given to the SLT to be

implemented as appropriate. The mitigation progress, successes and challenges are reported back to the CEO and CFO

during the monthly IMS meeting who in turn present these findings to the Board as appropriate.

7. Subsequent quarterly Board meetings review implemented climate change mitigation measures to ensure that the

desired outcome is achieved. Where needed, these plans are adapted.

Metrics and Targets

a. The metrics used to assess climate-related risks and opportunities in line with strategy and the risk management process

We utilise intensity metrics to compare carbon emissions and measure their climate change impact. The preferred intensity

metric for measuring carbon is number of employees (FTE). The following table demonstrates the FY23 results and how they

compare to the baseline year of FY22:

Metric tons CO2e per unit FTE

Baseline Year Reporting % change to
Scope
(FY22) Year (FY23) baseline year
Scope 1 0.53 0.39 -26.4%
Scope 2
0.45 0.45 0%
(Location Based)
Scope 3 - Grey Fleet & Hire
0.12 0.14 16.7%
Car
Total 1.10 0.98 -10.9%

In FY23, we grew through additional work and acquisitions, and nearly 50 additional employees joined the Microlise team.

Despite this growth, there were some significant reductions in the carbon emissions we had direct operational control over

(e.g., natural gas consumption at the Microlise locations). This can be seen in the reductions to the Scope 1 intensity metric from

FY22 to FY23.

Intensity metrics are also utilised in interim targets. As previously mentioned in the Governance section, SLT members have

climate-related targets and KPIs that are linked to additional remuneration. Progress made towards these targets are linked

to and therefore measured with metrics, including the above identified tCO2e/FTE metric.

At least 50% of our revenue is generated from products and services that contribute to climate change mitigation and

adaptation, as verified and evidenced by the awarding of a Green Economy Mark from the London Stock Exchange.

55
b. Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions and the related risks

We have calculated our greenhouse gas (GHG) emissions for our global operations, in accordance with the GHG Protocol

methodology and for Streamlined Energy Carbon Reporting (SECR) compliance for Scope 1, 2 and part Scope 3 (Grey Fleet

and Hire Cars). FY22 and FY23 carbon emissions have been summarised below:

FY22 GHG FY23 GHG % change to

Scope
Emissions (tCO2e) Emissions (tCO2e) previous year

Scope 1 348.7 276.9 -20.6%

Scope 2
297.9 319.5 7.3%
(Location Based)
Scope 3, Grey Fleet
79.8 100.3 25.7%
& Hire Car
Total 726.4 696.7 -4.1%

To improve future carbon emission monitoring and reporting, we have committed to calculating their full Scope 3 emissions
starting in FY24. Additional metrics and targets will likely be developed and included within the existing remuneration schemes
once the full carbon footprint has been calculated.

c. Targets to manage climate-related risks and opportunities, and performance against targets

We have committed to achieve Carbon Net Zero in both Scope 1 and 2 carbon emissions by 2030. We define Carbon Net Zero
as initially reducing carbon emissions through energy efficiency improvements, then using renewable energy tariffs and carbon
offsetting to address the remaining emissions.

Using 2030 as the desired target deadline clearly demonstrates our desire to reduce its climate change impact well before the
“less than 2oC” widely accepted target of 2050.
In addition, to cement the target within the organisation, an intensity target has also now been incorporated within the Long-
Term Investment Plan (LTIPs). A portion of the company’s Performance Share Plan is now linked on achieving relative Scope 1, 2
and 3 (Grey Fleet and Hire Car) Carbon Net Zero (tCO2e/FTE).

Achieving these targets reduces the likely impact from increases in energy and carbon costs, allowing us to continue to be
competitive by keeping its operational costs as low as possible. It will enhance the organisations image, thus improving its market
performance and reputation. It shows internal and external stakeholders that climate change management is becoming a central
part of our business strategy.

The 2023 results from these two targets have been summarised in the following tables and line graphs:

Carbon Net Zero Carbon Net Zero

Target Reference
AB1. IT1.
Type of target Absolute Intensity
100% reduction of
100% reduction of Scope 1, 2 and part 3
Target and Coverage Scope 1 and 2 (Grey Fleet & Hire
emissions by 2030 Cars) compared to
FTE by 2030
Base year (FY22) result 646.6 tCO2e 1.10 tCO2e / FTE
Expected result in target year
0 tCO2e 0 tCO2e / FTE
(FY30)
% of target achieved in FY23,
7.8% 10.5%
relative to base year

56
 Carbon Net Zero Absolute Target Carbon Net Zero Intensity Target
100% reduction
100% reduction in
in Scope
Scope 11 and
and 22 carbon
carbon 100% reduction
100% reduction in
in Scope
Scope 1,
1, 22 and
and 33 (Grey
(Grey
emissions by
emissions by FY30
FY30 Fleet &
Fleet & Hire
Hire Car)
Car) carbon
carbon emissions
emissions vs
vs
FTE by
FTE by FY2030
FY2030
700.0
700.0
1.20
1.20
600.0
600.0
1.00
1.00
500.0
500.0

FTE
0.80

tCO2e //FTE
0.80
400.0
tCO2e

400.0
tCO2e

0.60
0.60

tCO2e
300.0
300.0
0.40
0.40
200.0
200.0
0.20
0.20
100.0
100.0
0.00
0.00
0.0
0.0

0
222

223

224

225

226

227

228

229

330
FY22FY23FY24FY25FY26FY27FY28FY29FY30
FY22FY23FY24FY25FY26FY27FY28FY29FY30

FFYY

FFYY

FFYY

FFYY

FFYY

FFYY

FFYY

FFYY

FFYY
Actual
Actual Projected Target
Projected Target Actual
Actual Projected Target
Projected Target

We can demonstrate a reduction in both its absolute and intensity targets of 7.8% and 10.5% respectively. We have also recently
engaged an external specialist to support with the calculation of its complete Scope 1, 2 and 3 carbon footprint and to help
develop its Carbon Net Zero strategy. Following this support, additional targets will likely be implemented further addressing the
climate change risks and opportunities.

57
Social

In upholding our fundamental principle of ‘We Care,’ we ensure that every action we take positively impacts our community and
stakeholders. Notably, in 2023, we upheld our Great Place to Work™ accreditations for the entire Microlise Group.

This continued recognition is significant and offers valuable insights into our workforce’s perspectives, guiding our future
strategies.

During the 2023 assessment conducted by Great Place to Work™ (GPTW), our UK employees rated us as follows:

96% of participants believe that Microlise is a physically safe place to work

95% of participants were made to feel welcome when they joined the company

97% of participants said that people are treated fairly, regardless of their sexual orientation.
95% of participants said that people are treated fairly, regardless of their race.
95% of participants said they are treated fairly, regardless of their gender.

Health & Wellbeing Initiatives:

In 2023, we introduced free health checks in the UK and India and hosted a number of wellbeing events for employees in both

countries.

Governance

At Microlise, we place a high priority on good governance and are committed to upholding the highest standards of corporate
governance in all areas of our operations. Our commitment to good governance is demonstrated through our adherence to
the 10 principle QCA code, which provides a framework for transparent, accountable, and responsible operations. Microlise’s
Corporate Governance Statement section can be found on pages 64 to 67.

To ensure that all of our employees operate in a responsible and sustainable manner, we provide comprehensive iHasco training
covering ethical decision-making, risk management, and compliance with laws and regulations. This training promotes a culture
of responsibility and accountability throughout our organisation.

In addition to our training programs, we have established policies and procedures to ensure good governance across all areas of
our operations. We have clear lines of responsibility and accountability, robust risk management processes, and regular reporting
to our Board of Directors on key governance issues. We also engage with our stakeholders to ensure that we understand their
needs and concerns and that we are responsive to their feedback.

We have established policies and procedures to manage potential conflicts of interest, and our board regularly reviews its own
composition and performance to ensure that it remains effective and independent.

At Microlise, we believe that good governance is essential for building trust and confidence among our stakeholders, and for
achieving our strategic objectives over the long term. We are committed to continually improving our governance practices and
processes to ensure that we operate in a responsible, sustainable, and ethical manner.

58
 Learning & Development

Training Investment
£183,000 includes £94K of apprenticeship levy (2020)

£276,000 includes £104K of apprenticeship levy (2021)

£ 318,000 includes £130K of apprenticeship levy (2022)

£ 502,000 includes £104K of apprenticeship levy (2023)

The Learning and Development Academy, now in its fifth year of operation, is available to all employees across the Group.

The Academy offers skills development for all departments, as well as an early-stage talent programme that provides both

learning and practical experience to develop our people.

In 2023, a total of 39 people with ‘Graduate’ in their job title worked at Microlise, with zero leavers from this group. Of these

39, 10 started during 2023.

‘Graduate’ job titles include:

Graduate Engineer (33)

Product & Operations Graduate (4)

Graduate Data Scientist (1)

HR Graduate (1)

We currently employ 11 Apprentices in the UK, 1 who started in 2023 and 10 who joined prior to this.

In India:

Year Joined Still with us

2021 13 10

2022 0 0

2023 8 7

At the end of 2023, the combined number of Graduates and Apprentices employed by Microlise was 102 (FY22: 83), up 22% on

the previous year.

59
Learning & Development Opportunities:

Our focus on learning and development is all about connecting with our HR strategy to attract and keep great people.

We need skilled employees to stay ahead and keep on innovating. And by developing talent, we are also paving the way

for our expansion plans and preparing future leaders through our Leaders of Tomorrow programme.

In 2023 we:

• Hosted a ‘Leader of Tomorrow’ programme for 17 employees.

• Introduced a new online learning platform, Datacamp, to deliver advanced skills to Data Engineers and Scientists

In total, we invested £502,000 into learning and development – including £104,000 of apprenticeship levy – delivering

2,563 hours of face-to-face learning, 1,530 hours of that via LinkedIn Learning.

APPROVAL

This Strategic Report was approved by the Board and signed on its behalf by:

Nadeem Raza, Chief Executive Officer, Microlise Group 8th April 2024

60
 Managing &
Governing

61
Meet the Board

Jon Lee Nadeem Raza

Non-Executive Chief Executive
Chairman Officer
Jon is currently Non-Executive Chairman of Nadeem has complete responsibility for the operational
Essensys PLC & has extensive experience in running management & control of all Microlise business activities. During
software businesses in the UK, US & Europe. He is an his 20 year career with Microlise, Nadeem has fulfilled various roles
experienced company director, having held multiple & gained experience across all areas of the business, including
board positions, including at London Bridge Software sales, system integration, marketing, operations & business
Holdings PLC, where he was CEO. Jon has an MBA computing.
from MIT, is a Chartered Engineer & a Chartered

Management Accountant. Jon is also a founder of a

venture capital fund, The Technology & Innovation

Constantino (Dino)
Fund LP, focussed on the B2B software sector. Jon
Rocos
joined the Board of Microlise in April 2021. Non-Executive
Director
Dino is currently Chairman at Segura Systems Limited. Dino is a

Fellow of the Chartered Institute of Logistics & Transport and a

Nick Wightman highly experienced supply chain leader bringing with him over forty

years’ retail industry experience at the omni-channel retailer,

Chief Financial
Officer John Lewis Partnership. Dino served at John Lewis Partnership

for many years as a senior management board member with

responsibility for the development of supply chain strategies

Nick joined Microlise in 2012 & joined the Board of working within the industry to develop propositions, capabilities &
Microlise as Chief Financial Officer in April 2023.
fulfilment solutions. Dino joined the Board of Microlise in April 2021.
Nick played a leading role in the Group’s refinancing

& reorganisation in 2018, its acquisition of TruTac in

2020, the IPO in 2021, acquisitions of Vita Software,

Enterprise Software Systems and K-Safe in 2023 & Lucy Sharman-

in establishing the Group’s offices in India, France Munday
& Australia. Prior to joining Microlise, Nick held

senior financial roles at Ardagh Group, Bombardier

Non-Executive
Transportation, & Airfoil Technologies. Nick is a
Director
Chartered Management Accountant and has an Lucy has over 16 years’ experience in the technology sector; she has

ACCA Diploma in International Financial Reporting. worked for 5one Group, Adapt Group Ltd and iSOFT PLC. She has

been a Non-Executive Director and Audit Committee Chair of Fonix

Mobile PLC. She currently holds the position of CFO for Eagle Eye

Solutions Group PLC (since 2014). Lucy began her career at KPMG

and is a member of the ICAEW. Lucy joined the Board of Microlise

in February 2022.

62
 Our Senior Leadership team

Shenny Remtulla
Strategy & M&A
Director

Stephen Watson
Product Director

Trevor McGahan
Operations Director

Paul Jurevicius
Business Development
Director

Duncan McCreadie
Chief Technology
Officer

Jackie Mitchell
Human Resources
Director

63
Corporate Governance Statement
The Directors recognise the importance of sound corporate governance and confirm that the Group is complying with the

QCA Corporate Governance Code. The QCA Code hinges on 10 broad principles and a set of disclosures.

The Directors consider that the Group adheres to the principles of the QCA Code as follows:

1. The Board is responsible for delivering shareholder value by developing the overall strategy and

supporting the development and direction of the Group. The Board works to organise and direct
Establish a
the affairs of the Group in a manner most likely to promote the success of the Company for the
strategy and
benefit of all of its stakeholders, whilst complying with legal and regulatory frameworks.
business model
The Group’s business model is predicated on developing and maintaining strong relationships with
which promote
our employees, customers, investors, and other sectoral interest groups. The Board is conscious
long-term value
of its responsibility towards all stakeholders and believes this is an important consideration for the
for shareholders
long-term growth of the business.

The diverse experience and background of the Non-Executive Directors ensures that they can

provide rigorous debate and constructively challenge management, both in relation to the

development of strategy, and when reviewing the Group’s operational and financial performance.

Responsibility for developing and implementing strategy within the Group and for the day-to-

day management of the business is delegated to the Chief Executive Officer (CEO) who, as the

head of the Senior Leadership team, cascades this responsibility through the Group. The CEO is

empowered by the Board to handle all business activities up to a designated level of authorisation

and to report to the Board for guidance, support and approval on other matters which require

Board input. The members of the Senior Leadership team are listed on page 63.

The Board is accountable to its shareholders & seeks to balance these interests with those of a
2.
wider range of stakeholders. The Board has ultimate responsibility for the Group’s internal control
Seek to procedures & for reviewing their effectiveness to guide & direct the Group’s activities to support
understand and delivery of its strategic, financial, operational & other objectives.
meet shareholder
Stakeholder engagement & feedback is prioritised throughout the Group. In addition to engaging
needs and
through the Company’s annual general meeting (AGM) & through stock exchange announcements,
expectations
the Executive Directors, supported by the Company’s broker, also meet with institutional

shareholders & analysts during they year, particularly after the announcement of full-year &

half-year results. These meetings cover topics including the Group’s strategy, performance &

objectives, & provide a valuable forum for investor feedback. Investors & other stakeholders can

also access information about the Group on our website. The Group places considerable value

on the involvement of our employees and keeps them informed on matters affecting them & on

the various factors affecting the performance of the Group. This is achieved through formal and

informal meetings, & through information available on the Company’s website and Intranet. The

Group also uses virtual & social media channels to engage with its internal & external stakeholders.

64
 3. The Board recognises that it is responsible to shareholders and to a wider group of stakeholders,

both internally (members of staff) and externally (customers, suppliers, regulators and others).
Take into account
The Group acts with integrity and values its people and the communities with which it engages.
wider stakeholder
and social The Board has a range of processes and systems in place to ensure there is close oversight and

responsibilities contact with key stakeholders and takes this feedback into account when in discussions relating to

and their the Group’s strategy.

implications for The Group’s Section 172 statement can be reviewed at page 30.
long-term success

4. The Board does not delegate overall responsibility for the approval of the risk management policy

to either the Audit Committee or management.

Embed effective
risk management, Through weekly meetings at both an operational and senior leadership level, the management

considering both framework ensures that the identification and management of risks is something that is ingrained

opportunities into the day-to-day running of the business.

and threats, The business maintains departmental risk registers based on a consistent 5 x 5 rating system with
throughout the any high impact or highly probable risks captured on our corporate risk register, which is owned by
organisation the Executive directors and is reviewed quarterly.

There is a robust financial planning process in place that ensures all cost drivers and revenue

streams are thoroughly reviewed as part of the annual budget setting process, which is reviewed

and approved by the Board. Monthly financial results are reported with key variances against

budget identified and investigated. We review our financial projections on a regular basis to

ensure we will meet our financial targets.

Microlise has held the ISO9001:2015 standard for a number of years which requires us to take

a risk-based approach to our quality management system. Furthermore, we hold ISO27001

standard, which requires the relevant risks to be captured in the statement of applicability. This

is managed by the information security team and reviewed with the executive Board and senior

management team on a quarterly basis.

5. The Board’s role is to provide effective leadership of the Group and to establish and align the

Group’s purpose, strategy, values and culture. It is the primary decision-making body for all
Maintain the
material matters affecting the Group, providing leadership and guidance, and setting our
board as a well-
strategic direction.
functioning,
The Board is satisfied that the size of the Board and its committees, and the balance of Executive
balanced team led
and Non-executive members is appropriate. At the date of this report the Board comprised
by the chair
Jon Lee, Nadeem Raza, Constantino (Dino) Rocos, Lucy Sharman-Munday and Nick Wightman

(please see page 62 for further information).

65
 The Group has established a Board with a balance of skills, backgrounds, experience and
6.
knowledge required to compliment the promotion of the long-term success of the Group.
Ensure that Individual directors have sufficient capacity to make a valuable contribution that aligns to the
between them the Group’s activities.
directors have
the necessary
up-to-date
experience, skills
and capabilities

7. The Board has extensive operational experience and many years of detailed knowledge of the

transport and SaaS sectors. The Board also benefits from significant financial, transactional, risk
Evaluate board
management and public company expertise.
performance
The Board evaluates its performance by conducting an annual 360º board assessment that
based on clear
assesses the objectives, strategy and remit of the Board, performance management, risk
and relevant
management and the experience, skills and capabilities of the Directors to manage the business.
objectives,
seeking This assessment is owned by the Chairman who will use feedback to improve reporting processes

continuous and oversight. The executive leadership team similarly conducts appraisals that are held twice

improvement yearly and are analysed and discussed at the Remuneration Committee.

8. The Board is responsible for the performance and proper conduct of the business and of ensuring

that a positive culture is supported.

Promote a
The Group has a range of ethical and values-related policies and procedures in place including:
corporate culture
that is based on • Anti-corruption & bribery policy

ethical values and • Anti-harassment & bullying policy

behaviours
• Corporate social responsibility statement

• Equality & diversity policy

• Employee handbook

• Employee privacy statement

• Mental health policy

• Whistle blowing policy

• Modern slavery statement

66
 9. The Group has an established governance framework for the Board, Committees and the Senior

Leadership Team. This framework aligns to and operates within the Group´s global framework
Maintain
of operating rules, policies and delegations of authority. In this way, team objectives, goals and
governance
targets cascade down through the business to align with Group strategy and any risks or issues
structures and
that cannot be resolved at a team level, are fed back up to senior leadership or to the Board.
processes that
are fit for purpose
and support good
decision-making
by the board

10. Communication between the Group and its shareholders is an essential element of a sound

governance framework. The main day-to-day engagement with shareholders and prospective
Communicate
investors is carried out by the Chief Executive Officer and Chief Financial Officer. During the
how the company
year, requested meetings and calls took place, primarily after our trading update, and a formal
is governed and
programme of meetings with analysts and institutional investors took place immediately after our
is performing
results for the period ended 31 December 2022 were announced.
by maintaining
Feedback from these meetings and regular market updates prepared by the Group’s broker and
a dialogue with
other advisers are presented to the Board to ensure the Directors have a good understanding of
shareholders and
shareholders’ views.
other relevant
stakeholders The Group has a dedicated investors section on its website (https://www.microlise.com/

investors/) which includes a wide range of information on the Group’s activities, and all regulatory

announcements.

The AGM will be held at Microlise’s head office at 9:00am on 22nd May 2024. There will be an

option to join. The notice of the AGM is available on the Group’s website and sets out the business

of the meeting and an explanatory note. In line with good governance, voting on all resolutions at

this year’s AGM will be conducted by way of a poll. Should a shareholder have a question that they

would have raised at the meeting, they are able to send this by email to microlise@secnewgate.
co.uk.

Answers to questions will be published on the website following the AGM.

67
Remuneration Report

Dino Rocos
Chairman of Remuneration Committee

As chair of the Remuneration Committee

of the Board, I am pleased to present the
Microlise Directors’ Remuneration Report
for the year ended 31 December 2023.

68
 Committee Meetings & Attendance
The Remuneration Committee is currently chaired by myself and its members are Non-Executive Chairman, Jon Lee, and Non-

Executive Director, Lucy Sharman-Munday.

The Committee is required by its Terms of Reference to meet as frequently as the Committee Chairman shall require and at

regular intervals to deal with routine matters, and in any event, at least twice a year in December and March.

The Remuneration Committee and associated policies were implemented shortly prior to admission to AIM and with the

guidance from KPMG who continue to provide support to the Remuneration Committee.

Remuneration Policy For The Year Ended 31 December 2023

The Remuneration Committee determines the Company’s policy on the structure of Executive Directors’ and senior

management’s remuneration operated by the Group. In setting the Remuneration Policy for Executive Directors, the

Remuneration Committee considers:

• The need to attract, retain and motivate high quality executive directors;

• The need for an uncomplicated link between performance and rewards;

• The need for an appropriate balance between fixed and variable remuneration and short term and long term rewards

and alignment with shareholder interests; and

• Corporate governance best practice and remuneration trends.

69
Committee Objectives & Responsibilities
The Committee’s main responsibilities can be summarised as follows:

• To determine the policy for Directors’ remuneration and setting remuneration for the Executive Directors and senior

management below Board level, including the Company Secretary.

• In line with corporate governance best practice, to design remuneration policies and practices with the objective of

ensuring that Executive Directors and senior management are provided with appropriate incentives to encourage

enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the

success of the Company without paying more than is necessary, having regard to the views of its shareholders and

other stakeholders.

• In determining remuneration policy, take into account all other factors which it deems necessary including relevant

legal and regulatory requirements and applicable corporate governance codes. The objective of such policy shall be

to attract, retain and motivate executive management of the quality required to run the company successfully.

• Review the ongoing appropriateness and relevance of the remuneration policy.

• Approve the design of, and determine targets for, any performance-related pay schemes operated by the Group

and approve the total annual payments made under such schemes. A significant proportion of remuneration should

be structured so as to link rewards to corporate and individual performance and designed to promote the long-term

success of the Group.

• Review the design of all share incentive plans for approval by the Board and, where required, shareholders.

• For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards,

the individual awards for Executive Directors and senior managers, and the performance targets to be used.

• Ensure that contractual terms on termination, and any payments made, are fair to the individual and the Company,

that failure is not rewarded and that the duty to mitigate loss is fully recognised.

• Review broader workforce remuneration and related policies.

• Review, at least annually, the Group’s obligations, including changes to employment and discrimination law and

relevant regulations as well as the effect of any changes to tax law or rates of tax.

• Oversee any major changes in employee benefits structures throughout the Group.

70
 Directors’ Remuneration
Annual Salaries
The Remuneration Committee will review the salaries for the Executive Directors and senior management below Board level,

including the Company Secretary, annually in July taking into account inflation, salaries with comparative groups, personal

and Company performance and economic landscape. The Board as a whole decides the remuneration of the Chairman and

Non- Executive Directors.

Name and Position Annual Salary FY2023 Annual Salary FY2022

Nadeem Raza, CEO £285,000 £250,000

Nick Wightman, CFO* £150,000 N/A

Bill Wynn, CFO* £200,000 £200,000

Jon Lee, Chairman £84,000 £80,000

Dino Rocos, NED £57,500* £55,000*

Lucy Sharman-Munday, NED £57,500* £55,000*

*Nick Wightman was appointed to the Board of Microlise as an Executive Director in the role of Chief Financial Officer (CFO)

on April 16th 2023. Nick replaced Bill Wynn, who retired after 15 years with the Company on 31st May 2023. Lucy Sharman-

Munday’s salary includes an additional fee of £5,000 for chairing the Audit Committee. Dino Rocos’ salary contains an

additional fee of £5,000 for chairing the Remuneration Committee.

Performance Bonus
The Group operates a performance bonus scheme that is based on achievement of recurring revenue targets, profitability

targets and personal objectives linked to business objectives and is applicable to the Executive Directors and the Group’s

senior management.

For FY 2024 the maximum performance bonus opportunity for Executive Directors is 100% of their annual salary. There are

performance conditions attached to this bonus including EBITDA, Annual Recurring Revenue, Cash and also personal targets
linked to the Group’s strategic aims.

71
Long Term Incentives
The Company operates a Performance Share Plan (“PSP”), the Non-Employee Performance Share Plan (NEPSP) and, during

2022, the Company introduced a Company Share Option Plan (CSOP).

On 22nd December 2023, the Company granted 464,151 nominal cost options under the PSP to Nadeem Raza and Nick

Wightman. 90% of these awards are subject to a performance condition requiring achievement of total shareholder return

(“TSR”) targets (growth in share price plus dividends). In order for a maximum number of awards to vest in full, compound

annual TSR of 18 (eighteen) %. must be achieved over a period of three years (starting on January 1st 2023, being the

commencement of the Performance Period). In respect of the TSR condition, 25%. of the Award will vest on achievement of

8%. compound annual TSR, with the remainder of the Award vesting on a straight-line basis between 8%. and

18%. The baseline share price for the TSR performance condition for FY2023 options is 133p, being the share price on the day

immediately prior to the commencement of the Performance Period of January 1st 2023. The remaining 10% of the award

is linked to the achievement of net zero carbon emissions by 2030. The maximum 10% of the award will vest if the Company

achieves a target of TC02e / FTE of 0.7 from the 2022 base line year of 1.1. However, the award will start vest if the Company

achieves a trigger point of 0.9 TC02e / FTE with straight line vesting between those points (0.9 – 0.7). Vesting against both

performance conditions will be measured at the end of the Performance Period and a further two year holding period will

apply to any shares that vest (subject to the ability of the option holders to sell sufficient shares to meet any tax arising at

exercise). Further details of employee share schemes are set out in note 21 to the financial statements.

No awards have been made to members of the board under the terms of the CSOP. A number of below board level executives

have been granted a combination of CSOP and PSP awards. Each award made to below board level employees has been

granted in the form of a market value option, with no associated performance conditions or holding period.

A breakdown of all of the current outstanding Director’s long term incentives awards is set out below:

Name Date of Grant Number of Exercise Vesting Lapse Date Performance

options price Date
per
share (£)

Nadeem Raza 22nd July 2021 277,778 £0.001 22nd July 2024 22nd July 2034 Yes

Nadeem Raza 28th July 2022 283,019 £0.001 28th July 2025 28th July 2035 Yes

Nadeem Raza 22nd December 322,642 £0.001 31st December 31st December Yes

2023 2025 2035

Nick Wightman 22nd December 141,509 £0.001 31st December 31st December Yes

2023 2025 2035

Jon Lee 22nd July 2021 59,259 £0.001 22nd July 2024 22nd July 2034 No

Dino Rocos 22nd July 2021 40,741 £0.001 22nd July 2024 22nd July 2034 No

Lucy Sharman- 28th July 2022 41,509 £0.001 28th July 2025 28th July 2036 No

Munday

72
 A total of 373,864 nominal cost options granted to Bill Wynn lapsed when he retired from the Board on May 31st 2023.

A proportion of the awards pro rata to the normal vesting period would have been exercisable to the extent which the

Performance Condition had been satisfied. Nick Wightman holds 283,277 options in total.

Name and Position Salary Bonus Benefits 1 Pension Long Term 2023 Total

Contribution Incentives 2

Nadeem Raza CEO £267,500 £116,173 £10,143 £10,700 £0 £404,516

Bill Wynn CFO* £83,333 £0 £5,697 £4,253 £0 £93,283

Nick Wightman CFO** £112,500 £62,791 £1,243 £5,004 £0 £181,538

Jon Lee Chairman £82,000 £0 £0 £3,280 £0 £85,280

Dino Rocos NED £56,250 £0 £0 £0 £0 £56,250

Lucy Sharman-Munday NED £56,250 £0 £0 £0 £0 £56,250

* Bill Wynn retired from the Board on May 31st and these figures represent his remuneration for the period he was in office.

**Nick Wightman was formally appointed to the Board on April 16th, these figures represent his remuneration from April 1st

2023.

Name and Position Salary Bonus Benefits 1 Pension Long Term 2022 Total

Contribution Incentives 2

Nadeem Raza CEO £250,000 £52,378 £3,593 £10,091 £0 £316,062

Bill Wynn CFO £200,000 £42,190 £14,976 £10,398 £0 £267,564

Jon Lee Chairman £81,250 £0 £0 £3,229 £0 £84,479

Dino Rocos NED £55,000 £0 £0 £0 £0 £55,000

Lucy Sharman -Munday NED £49,583 £0 £0 £0 £0 £49,583

1
This figure includes car allowance and medical insurance.

2
No long term incentives vested in the period (FY22 also nil).

Remuneration Policy For Non-Executive Directors

I and the other Non-Executive Directors each receive a fee for our services as Directors, which is approved by the Board,

mindful of the time commitment and responsibilities of our roles and of current market rates for comparable organisations

and appointments.

Dino Rocos, Chair of Remuneration Committee

73
Audit Committee Report

Lucy Sharman-Munday,
Chairperson of the Audit Committee

As the Chairperson of the Audit

Committee of the Company
(“Committee”), I present my Committee
Report for the period ended 31 December
2023, which has been prepared by the
Committee and approved by the Board.

74
 Committee Meetings & Attendance
The members of the Committee are me, as chair, Dino Rocos, and Jon Lee. The Board considers that I have sufficient, relevant

financial experience to chair the Committee given that I am a chartered accountant with previous audit committee chair

experience, and currently CFO of another AIM listed business. The Committee is required by its Terms of Reference to meet as

frequently as the Committee Chairperson shall require, and at regular intervals to deal with routine matters and, in any event,

at least three times in each financial year.

The CEO, CFO and FD attend by invitation, together with the Auditors, BDO LLP.

Committee Activities
The Committee is responsible for reviewing and reporting to the Board on the Company’s financial performance, monitoring

the integrity of the Company’s financial statements (including Annual and Interim Accounts and results announcements),

reviewing internal control and risk management, and reviewing/monitoring the performance, independence and effectiveness

of the Company’s external auditors and agreeing auditor fees.

The Committee’s primary activities over the period comprised meeting with the external auditors, considering the audit

approach, scope and timetable. In addition, the Committee reviewed the audit provided by BDO LLP, the Group’s external

auditors. The Committee concluded that BDO LLP are delivering the necessary audit scrutiny.

Responsibilities & Objectives

In fulfilment of these objectives the Committee:

• Reviews the Group’s financial statements and finance-related announcements, including compliance with statutory and

listing requirements. Compliance is reviewed each year with the Chief Financial Officer and enhancements are made as

appropriate;

• Considers whether these statements and announcements provide a fair, balanced and understandable view of the

Group’s strategy and performance, and of the associated risks. Further consideration of these matters is also provided

by the Board as a whole;

• Considers the appropriateness of accounting policies and significant accounting judgements and the disclosure of these

in the financial statements, these include judgements in relation to revenue recognition and capitalisation of development

costs.

• Reviews the effectiveness of financial controls and systems. The Group does not have an internal audit function and the

Committee continues to be of the view that the Group is not yet of a size and complexity to warrant the establishment of

such a function; and

• Oversees the relationship with and performance of the external auditors.

75
Board & Sub Committee Meeting Attendance

Remuneration
Board Meeting (BM) Audit Committee (AC)
Committee (RC)

Possible Attended Possible Attended Possible Attended

Lucy Sharman-Munday (AC Chair) 10 10 4 4 3 3

Jon Lee (BM Chair) 10 10 4 4 3 3

Dino Rocos (RC Chair) 10 10 4 4 3 3

Nadeem Raza* 10 10 4 4 3 3

Bill Wynn** 5 3 1 1 1 1

Nick Wightman 10 10 4 4 3 3

• *Nadeem Raza, Bill Wynn & Nick Wightman attended Remuneration Committee and Audit Committee by invitation

• **Bill Wynn retired from role of CFO on 31st May 2023.

76
 Directors’ Report
The Directors present their annual report and the audited consolidated financial statements for the 12-month period

ending 31 December 2023.

Principal Activities, Business Review & Future Developments

The principal activity of the group is the provision of technological transport solutions that enable customers to reduce costs

and environmental impact, while increasing safety, efficiency, and compliance.

Corporate Status
Microlise Group PLC (the ‘Company’) is a public limited company domiciled in the United Kingdom and was incorporated in

England & Wales with company number 11553192 on 5th September 2018. The Company has its registered office at

Farrington Way, Eastwood, Nottingham, NG16 3AG. The principal place of business of the Group are its offices in Nottingham.

Directors
Nadeem Raza

Bill Wynn (Retired 31st of May 2023)

Nick Wightman (Appointed 16th of April 2023)

Jon Lee

Dino Rocos

Lucy Sharman-Munday

The Company has agreed to indemnify its Directors against third party claims which may be brought against them and has

put in place a Directors’ and Officers’ insurance policy.

The market price of the Company’s shares at the end of the financial year was £1.02 and the range of the market price during

Substantial Shareholdings
At 31 December 2023, the Directors have been notified of the following beneficial interests in excess of 3% of the issued share

capital of the Company ( excluding those shares held in treasury ).

77
Shareholders By Holding

31 December 2023

Rank Shareholder Shares %IC %FF Cum %FF

1 Mr. Nadeem Raza 58,032,442 50.05 50.05 50.05

2 Liontrust Asset Mgt 13,864,344 11.96 11.96 60.01

3 Mr Robert Harbey 6,479,481 5.59 5.59 67.6

4 BGF Investments 5,925,926 5.11 5.11 72.71

5 Columbia Threadneedle Investment 5,076,781 4.38 4.38 77.09

6 Canaccord Genuity Wealth Mgt 4,797,500 4.14 4.14 81.22

7 Mr. Roy Allum 4,287,751 3.7 3.7 84.92

8 Stonehage Fleming Family & Partners 2,455,301 2.12 2.12 87.04

9 Rowan Dartington & Co 2,231,628 1.92 1.92 88.96

10 Mr William Wynn 1,874,208 1.62 1.62 90.58

Research & Development

Details of the Group’s policy for the recognition of expenditure on research and development are set out in pages 100 and 101

respectively of the consolidated financial statements.

Risk Management Objectives & Policies

Details of the Group’s financial risk management objectives and policies are set out in note 18 of the consolidated financial

statements.

Related Party Transactions

Details of the Group’s transactions and year end balances with related parties are set out in note 23 of the consolidated

financial statements.

Dividends
The Directors recommend an ordinary dividend of 1.725 pence per share (FY22: nil) payable on 28 June 2024 to shareholders

on the register at close of business on 7 June 2024.

Promote A Corporate Culture Based On Open Dialogue

The Board promotes a corporate culture that is based on sound ethical principles and behaviours. The Board recognises that

the tone set by its decisions regarding strategy and risk may impact the corporate culture of the Group as a whole and on the

way that employees and other stakeholders behave, which in turn can impact the performance of the Company.

78
 The Group operates in a manner that encourages an open dialogue with employees, customers and other stakeholders and

the Board considers that two-way communication and sound ethical values and behaviours are crucial to the ability of the

Group to achieve its corporate objectives.

The Directors believe that the Group has a transparent and communicative culture supporting comprehensive dialogue and

feedback and enabling positive and constructive challenge, and suggested solutions for improvement. The Board keeps staff

updated through CEO updates and through a question-and-answer facility on the intranet. The Group promotes a healthy

corporate culture through use of its weekly team meetings, its staff intranet, regular business updates and employee surveys.

Twice yearly CEO updates that are linked to staff social events, allow senior leadership to keep staff apprised of the key

financial and strategic activity of the Group.

Strategic Report
The Company has chosen in accordance with Companies Act 2006, section 414C (11) to set out in the Company’s strategic

report on pages 04 - 60. Information required to be contained in the Directors’ Report by Large and Medium-sized

Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7, where not already disclosed in the Directors’

Report.

Statement As To Disclosure Of Information To The Auditor

The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are

aware, there is no relevant audit information of which the auditor is unaware. Each of the Directors has confirmed that they

have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit

information and to establish that it has been communicated to the auditor.

Auditor
BDO LLP was appointed for the year ended 31 December 2023 and have indicated their willingness to continue in office.

By Order Of The Board

Nick Wightman, Company Secretary 8th April 2024

Farrington Way, Eastwood, Nottingham NG16 3AG

79
Statement Of Directors’ Responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law

and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are

required to prepare the Group financial statements in accordance with UK adopted international accounting standards and

have elected to prepare the Company financial statements in accordance with (United Kingdom Accounting Standards and

applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they

give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether the Group financial statements have been prepared in accordance with UK adopted international

accounting standards subject to any material departures disclosed and explained in the financial statements;

• state whether the Company financial statements have been prepared in accordance with applicable UK Accounting

Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the

company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s

transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to

ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for

safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and

other irregularities.

Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a website.

Financial statements are published on the company’s website in accordance with legislation in the United Kingdom governing

the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The

maintenance and integrity of the company’s website is the responsibility of the directors. The directors’ responsibility also

extends to the ongoing integrity of the financial statements contained therein.

80
 Financial
Statements

81
Independent auditor’s report to the members
of Microlise Group PLC
Opinion on the financial statements

In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31

December 2023 and of the Group’s profit for the year then ended;

• the Group financial statements have been properly prepared in accordance with UK adopted international accounting

standards;

• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Microlise Group PLC (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for
the year ended 31 December 2023 which comprise the Consolidated statement of comprehensive income, the Consolidated and
Company statements of changes in equity, the Consolidated statement of financial position, the Company statement of financial
position, the Consolidated statement of cash flows and notes to the financial statements, including a summary of significant
accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law
and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation
of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Independence

We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting included:

• Obtaining an understanding of how the Directors undertook the going concern assessment process to determine if we

considered it to be appropriate for the circumstances by way of enquiry with the Directors in regards to who prepared

the assessment and the information and individuals consulted in the process

• Obtaining the Directors’ trading forecasts underlying the going concern assessment and challenging the Directors on

the key estimates and assumptions within the forecasts around the forecast levels of revenue, gross profit and working

capital cycles, through analysis and comparison of forecasts with prior year actuals;

• Performing data verification and logic checks to confirm the mathematical accuracy of the forecast model;

• Analysing post period end trading results compared to forecast and current period to evaluate the accuracy and

82
 achievability of forecasts;

• Obtaining the new banking facilities and agreeing the disclosures are consistent with the contracted facilities at the date

of approval of the financial statements;

• Assessing the sensitivities undertaken against the level of available cash and level of banking facilities. We considered

the results of stress tested sensitivities undertaken by the Directors and assessed the reasonableness of the Directors’

assessment that the scenario that could result in the Group facing a cash shortfall was remote in light of the historic

trading results. As part of our assessment of the forecasts and stressed scenarios we considered factors such as the

wider macro-economic implications of the high inflation and rising interest rates; and

• Reviewing the disclosures in the Annual report to ensure that they are in accordance with relevant requirements and

provided meaningful and transparent information for the users of the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, in-
dividually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.

Overview

76% (2022: 94%) of Group profit before tax

Coverage 91% (2022: 99%) of Group revenue
94% (2022: 97%) of Group total assets

2023 2022
Key audit matters
Fraud or error in recognition of revenue  

Group financial statements as a whole

Materiality
£0.72m (2022:£0.63m) based on 1% (2022: 1%) of total annualised revenue

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of
internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of man-
agement override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.

The Group manages its central operations from the head office in Nottingham to support its subsidiaries day to day operations
with regional offices at various locations across the globe. As at the statement of financial position date, the Group consists of the
Parent Company, two trading subsidiaries in the UK, three trading subsidiaries in India, Australia and France respectively and four
non-trading subsidiaries.

The UK trading subsidiary, Microlise Limited is considered to be the only significant component of the Group. The Group engage-
ment team carried out a full scope audit on this significant component of the Group.

For the non- significant components Trutac Limited, Vita Software Limited, Microlise India, Microlise Australia Pty Limited, Mi-
crolise France SAS, Microlise Holdings Limited, Microlise Midco Limited, and Microlise Engineering Ltd, the Group engagement
team have performed audit procedures which were limited to analytical review and discussions with Group management. A full
scope audit was carried out on the Parent Company.

83
Climate change
Our work on the assessment of potential impacts of climate-related risks on the Group’s operations and financial statements
included:

• Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and

their potential impacts on the financial statements and adequately disclose climate-related risks within the annual report;

• Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate

change affects this particular sector; and

• Review of the minutes of Board and Audit Committee meeting and any other relevant party and other papers related to

climate change and performed a risk assessment as to how the impact of the Group’s actions may affect the financial

statements and our audit.

We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives and
commitments, if applicable, have been reflected, where appropriate, in the Directors’ going concern assessment.

We also assessed the consistency of managements disclosures included as Statutory Other Information on page 128 with the
financial statements and with our knowledge obtained from the audit.

Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate-
related risks and related commitments.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

84
 Key audit matter How the scope of our audit addressed the key audit matter

Fraud or error The Group has multiple revenue streams as We obtained a breakdown of the recurring revenue earned
in recognition part of the provision of the services to custom- in the period. To verify the accuracy of the breakdown we
ers. The different performance obligations agreed a sample of entries to supporting contracts and pay-
of revenue.
are often included in single contracts with cus- ment from customers, agreeing the inputs to the calculation
(See
tomers and need to be carefully analysed to of revenue recognised and deferred income and checking the
accounting establish the selling price for the relevant per- integrity of the calculation.
policies and formance obligations and therefore the point
note 1) of revenue recognition in accordance with the For all customers that contributed a material amount of re-
accounting policies. curring revenue and a sample of other customers that recur-
ring revenue was earned from in the year we obtained the
The nature of the services therefore increases customer contract. We identified the different performance
the inherent risk of error in the revenue recog- obligations relevant for the period and checked that the allo-
nition due to the complexity. The application cated selling price for each performance obligation was ap-
of relevant accounting standards also impacts propriate and in line with our understanding of the contract.
on the presentation of trade receivables and We checked that revenue for each performance obligation
deferred revenue in the statement of finan- delivered in the period had been recognised in financial re-
cial position and given the high volume of low cords in accordance with the Group’s accounting policy and
value transactions there is a risk of error in the was supported and had not been manipulated or overstated.
presentation of these balances.
For each customer contract reviewed we reperformed the
Due to the complexity of the contracts, the calculation of deferred revenue and agreed this to manage-
payment profile of certain customers with ments calculation and checked the presentation included in
payment received in advance of services the financial statements was in accordance with the relevant
delivered and the volume of transactions accounting standards.
we consider there is also an opportunity for
fraudulent manipulation of reported revenue. We selected a sample of credit notes raised during the pe-
We have identified the following areas of spe- riod, and after the period end substantiating to supporting
cific focus: evidence to check the reasons for the credit note were valid
and were not indicative of manipulation of revenue. For credit
a) Manipulation in timing of revenue notes raised after the year end we checked that revenue in the
recognition during the period by period had been correctly reversed.
adjusting the levels of income allo-
cated to the different performance For non-recurring revenue we selected a sample of revenue
obligations and thus reducing the transactions and agreed to evidence of service delivery in the
level of deferred revenue; and period to check that revenue had been earned in period.
b) Manipulation of the classification
and presentation of the revenue to Key observations:
increase the amount of managed Based on the procedures performed we are satisfied that
service revenue (recurring) com- revenue has been accurately recognised in accordance with
pared to non-recurring revenue Group’s accounting policy and relevant accounting standards
streams. and that there is no evidence of manipulation nor bias.

We have therefore determined that revenue

recognition is a key audit matter.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materi-
ality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

85
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:

Group financial statements Parent company financial statements

2023 2022 2023 2022

£ ‘000 £’000 £’000 £’000

Materiality 720 630 440 424

Basis for determining

1% of revenue. 0.5% of total assets.
materiality

Rationale for the We have determined the revenue as The total assets were considered an

benchmark applied appropriate benchmark given the nature appropriate benchmark as the main purpose
of the sector and the importance of of the Parent Company was to hold invest-
the recurring and nonrecurring revenue ment in subsidiaries.
in assessing the performance of the
business. Based on industry analysis
carried out revenue is regularly used as
the benchmark for assessing materiality
in the sector.

Performance materiality 540 424 330 318

Basis for determining 75% of materiality which is considered appropriate to mitigate potential aggregation risk

performance materiality across the various financial statement areas. These levels have been applied in determining
the testing approach and sample sizes.

Rationale for the Our rationale is that it is the third year of our appointment as auditor and the history of
unadjusted differences over our period of appointment is low. Performance materiality of
percentage applied for
75% of financial statement materiality was considered to give suitable level to determine
performance materiality
the nature of and extent of testing required.

Component materiality

We separately considered the benchmark amount of each significant component while setting their materiality. We set the
materiality for the trading subsidiary (Microlise Limited) as 1% of the revenue. Component materiality is £670,000 (2022: £81,000
to £580,000), we further applied performance materiality levels of 75% (2022: 75%) of the component materiality to our testing to
ensure that the risk of errors exceeding component materiality was appropriately mitigated.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £36,000 (2022:
£31,500). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual
report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

86
 We have nothing to report in this regard.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Com-
panies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report In our opinion, based on the work undertaken in the course of the audit:

and Directors’
> the information given in the Strategic report and the Directors’ report for the financial year
for which the financial statements are prepared is consistent with the financial statements;
report
and
> the Strategic report and the Directors’ report have been prepared in accordance with appli-
cable legal requirements.

In the light of the knowledge and understanding of the Group and Parent Company and
its environment obtained in the course of the audit, we have not identified material mis-
statements in the strategic report or the Directors’ report.

Matters on which We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
we are required to

report by exception > adequate accounting records have not been kept by the Parent Company, or returns ade-
quate for our audit have not been received from branches not visited by us; or
> the Parent Company financial statements are not in agreement with the accounting records
and returns; or
> certain disclosures of Directors’ remuneration specified by law are not made; or
> we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors de-
termine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:

87
Non-compliance with laws and regulations

Based on:
• Our understanding of the Group and the industry in which it operates;

• Discussion with management and those charged with governance; and

• Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and regulations

We considered the significant laws and regulations to be the applicable accounting framework, UK tax legislation, the AIM Listing
Rules.

The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the
amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws
and regulations to be health and safety legislation, employment law and data protection regulations.

Our procedures in respect of the above included:

• Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and

regulations;

• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and

regulations;

• Review of financial statement disclosures and agreeing to supporting documentation;

• Involvement of tax specialists in the audit; and

• Review of legal expenditure accounts to understand the nature of expenditure incurred.

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment proce-
dures included:
• Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;

• Obtaining an understanding of the Group’s policies and procedures relating to:

• Detecting and responding to the risks of fraud; and

• Internal controls established to mitigate risks related to fraud.

• Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;

• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;

• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material

misstatement due to fraud; and

• Considering remuneration incentive schemes and performance targets and the related financial statement areas

impacted by these.

Based on our risk assessment, we considered the areas most susceptible to fraud were:

• Manipulation in timing of revenue recognition during the period by adjusting the levels of income allocated to the different

performance obligations and thus reducing the level of deferred revenue and thereby increasing reported profit;

• Manipulation of the classification and presentation of the revenue to increase the amount of managed service revenue

(recurring) compared to non-recurring revenue streams which may influence user assessment of the performance;

• Manipulation of development cost capitalised as intangible assets and there is judgement required in relation to the point

at which development costs are capitalised, which would increase reported earnings; and

88
 • Inappropriate journals posted in to the financial system to manipulate the reported results or conceal inappropriate

activity.

Our procedures in respect of the above included:

• Testing journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;

• Verification, on a sample basis, of costs capitalised as product development to check that the relevant recognition criteria

had been met and costs were not being capitalised to manipulate reported earnings;

• Review sample of contracts and identify the different performance obligations relevant for the period and agree that

the allocated selling price for each performance obligation appeared appropriate in line with our understanding of the

contract and that it had been recognised in accordance with the Group’s accounting policy;

• For non-recurring revenue testing sample of revenue transactions and agreed to evidence of service delivery in the

period to check that revenue had been earned in period; and

• Review of revenue nominal accounts for unusual transactions.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who
were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compli-
ance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limita-
tions in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsre-
sponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.

Gareth Singleton (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor
Birmingham, UK
8th April 2024

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

89
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023

Year Year
ended ended
31 December 31 December

2023 2022

Note £’000 £’000

Revenue 1 71,716 63,211

Cost of sales (28,132) (25,577)

Gross profit 43,584 37,634

Other operating income 3 973 876

Administrative expenses (42,302) (36,326)

Operating profit 3 2,255 2,184

Interest income 5 360 45

Interest expense 6 (333) (312)

Share of profit/(loss) of associate net of tax 11 225 (478)

Profit before taxation 2,507 1,439

Taxation 7 (931) (86)

Profit for the year 1,576 1,353

Other comprehensive (expense)/ income for the year

Currency translation differences (102) 6

Total comprehensive income for the year attributable to

1,474 1,359
the equity shareholders of Microlise Group plc

Basic earnings per share (pence) 8 1.36 1.17

Diluted earnings per share (pence) 8 1.36 1.17

The notes on pages 104 to 126 form part of these financial statements.

90
 Consolidated Statement of Financial Position
as at 31 December 2023

31 December 31 December

2023 2022

Note £’000 £’000

Assets

Non-current assets

Property, plant and equipment 9 8,947 8,292

Intangible assets 10 76,228 75,031

Investments in associate 11 1,593 1,368

Loan to associate 11 - 1,000

Trade and other receivables 14 2,841 3,078

Total non-current assets 89,609 88,769

Current assets

Inventories 13 3,348 2,635

Loan to associate 11 1,000 -

Trade and other receivables 14 18,757 16,760

Corporation tax recoverable 1,665 1,289

Cash and cash equivalents 15 16,800 16,683

Total current assets 41,570 37,367

Total assets 131,179 126,136

Current liabilities

Lease liabilities 16 (907) (821)

Trade and other payables 17 (32,630) (29,183)

Total current liabilities (33,537) (30,004)

Non current liabilities

Lease liabilities 16 (646) (926)

Trade and other payables 17 (15,701) (16,898)

Deferred tax 12 (5,622) (4,840)

Total non current liabilities (21,969) (22,664)

Total liabilities (55,506) (52,668)

Net assets 75,673 73,468

Equity

Issued share capital 20 116 116

Share premium account 17,630 17,630

Retained earnings 57,927 55,722

Total equity 75,673 73,468

The notes on pages 104 to 126 form part of these financial statements.

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 08/04/2024

Group Chief Financial Officer

Microlise Group plc Registered number 11553192

91
Consolidated Statement of Changes in Equity
Share
Share Premium Retained
Capital Account earnings Total Equity

£’000 £’000 £’000 £’000

At 31 December 2021 116 17,630 53,802 71,548

Comprehensive income for the year ended 31 December 2022

Profit for the year - - 1,353 1,353

Other comprehensive income - - 6 6

Total comprehensive income for the year - - 1,359 1,359

Share based payment (note 21) - - 561 561

Total transactions with owners - - 561 561

At 31 December 2022 116 17,630 55,722 73,468

Comprehensive income for the year ended 31 December 2023

Profit for the year - - 1,576 1,576

Other comprehensive expense - - (102) (102)

Total comprehensive income for the year - - 1,474 1,474

Share based payment (note 21) - - 731 731

Total transactions with owners - - 731 731

At 31 December 2023 116 17,630 57,927 75,673

92
 Company Statement of Financial Position
as at 31 December 2023

31 December 31 December

2023 2022

Note £’000 £’000

Assets

Non-current assets

Property, plant and equipment 9 4,736 4,838

Investments 11 83,005 79,192

Loan to associate 11 - 1,000

Deferred tax 12 1 111

Total non-current assets 87,742 85,141

Current assets

Loan to associate 11 1,000 -

Trade and other receivables 14 158 26

Cash and cash equivalents 15 86 69

Total current assets 1,244 95

Total assets 88,986 85,236

Current liabilities

Trade and other payables 17 (15,434) (17,928)

Total current liabilities (15,434) (17,928)

Total liabilities (15,434) (17,928)

Net assets 73,552 67,308

Equity

Issued share capital 20 116 116

Share premium account 17,630 17,630

Retained earnings 55,806 49,562

Total equity 73,552 67,308

The Company has elected to take the exemption under section 408 of the Companies Act not to present the parent Company profit
and loss account. The profit for the parent Company for the year was £5,529,000 (2022: loss of £182,000).

The notes on pages 104 to 126 form part of these financial statements.

The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 08/04/2024

Group Chief Financial Officer

Microlise Group plc Registered number 11553192

93
Company Statement of Changes in Equity
Share
Share Premium Retained Total
Capital Account earnings Equity

£’000 £’000 £’000 £’000

At 31 December 2021 116 17,630 49,183 66,929

Comprehensive expense for the year to 31 December 2022

Loss for the year - - (182) (182)

Other comprehensive income - - - -

Total comprehensive expense for the year - - (182) (182)

Share based payment (note 21) - - 561 561

Total transactions with owners - - 561 561

At 31 December 2022 116 17,630 49,562 67,308

Comprehensive income for the year to 31 December 2023

Profit for the year - - 5,529 5,529

Other comprehensive income - - - -

Total comprehensive income for the year - - 5,529 5,529

Share based payment (note 21) - - 715 715

Total transactions with owners - - 715 715

At 31 December 2023 116 17,630 55,806 73,552

94
 Consolidated Statement of Cash Flows
for the year ended 31 December 2023

Year ended Year ended

31 December 31 December
Note 2023 2022
£’000 £’000

Cash flows from operating activities

Cash generated from operations A 8,906 9,719

Tax paid (144) (34)

Net cash generated from operating activities 8,762 9,685

Cash flows from investing activities

Purchase of property, plant and equipment (2,195) (979)

Proceeds from disposals of tangible fixed assets 54 -

Additions to intangible assets (2,543) (2,080)

Loan advanced to associate - (1,000)

Purchase of business net of cash acquired (1,966) -

Purchase of subsidiaries deferred consideration paid (1,000) (1,000)

Interest received 360 45

Net cash used in investing activities (7,290) (5,014)

Cash flows from financing activities

Interest paid (283) (283)

Lease liability payments (1,056) (915)

Net cash used in financing activities (1,339) (1,198)

Net increase in cash and cash equivalents 133 3,473

Cash and cash equivalents at beginning of year 16,683 13,210

Foreign exchange losses (16) -

Cash and cash equivalents at end of year B 16,800 16,683

The notes on pages 104 to 126 form part of these financial statements.

95
Notes to the cash flow statements

A. Cash generated from operations

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

Year ended Year ended

31 December 31 December

2023 2022
£’000 £’000

Profit for the year 1,576 1,353

Adjustments for:

Depreciation 2,585 2,212

Amortisation 3,492 3,036

Profit on disposal of tangible fixed assets (19) -

Share based payments 731 561

Foreign exchange movements (65) -

Net interest costs (27) 267

Share of (profit)/loss of associate (225) 478

Tax charge 931 86

8,979 7,993

(Increase)/decrease in inventories (713) 306

Increase in trade and other receivables (2,315) (2,545)

Increase in trade and other payables 2,955 3,965

Cash generated from operations 8,906 9,719

96
 B. Analysis of net funds

At
At 1 January Cash flow Non-cash changes
31 December

2023 2023
£’000 £’000 £’000 £’000

Lease liabilities (1,747) 1,163 (969) (1,553)

Liabilities arising from financing

(1,747) 1,163 (969) (1,553)
activities

Cash and cash equivalents 16,683 133 (16) 16,800

Net funds 14,936 1,296 (985) 15,247

At
At 1 January Cash flow Non-cash changes
31 December

2022 2022
£’000 £’000 £’000 £’000

Lease liabilities (1,711) 979 (1,015) (1,747)

Liabilities arising from financing

(1,711) 979 (1,015) (1,747)
activities

Cash and cash equivalents 13,210 3,473 - 16,683

Net funds 11,499 4,452 (1,015) 14,936

Major non cash items

£862,000 of additions to right of use assets and lease liabilities are included in non cash movements in the year ended 31 December
2023 (2022: £951,000).

97
Summary of Significant Accounting Policies

General information

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

Accounting policies

A. Basis of preparation

The consolidated financial statements have been prepared in accordance with the historical cost convention and UK adopted Inter-
national Accounting Standards (‘UK IFRS’). The stated accounting policies have been consistently applied to all periods presented.
The parent company financial statements have been prepared under applicable United Kingdom Accounting Standards (FRS101).
The following FRS 101 disclosure exemptions have been taken in respect of the parent company only information:

• IAS 7 Statement of cash flows;

• IFRS 7 Financial instruments disclosures; and

• IAS 24 Key management remuneration.

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

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

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

Going concern
The directors have considered working capital forecasts prepared for the period to December 2025. The Group had cash balances
of £16.8m at the year end, of which a net £6.2m was utilised to make an acquisition in January, no borrowings and a £20m undrawn
working capital facility which is not forecast to be utilised. The current working capital facility term was due to run to July 2024.
On the 5th April 2024, a replacement facility was been agreed with HSBC, with £10.0m committed revolving cash flow facility and
a £20m accordion on more favourable terms, which is available until 5th April 2027. The Group also has a significant recurring
income base with inflationary clauses in the main contracts.
A range of sensitivities have been run on the working capital model, and the directors consider a scenario in which the business will
face liquidity issues is remote. As part of the sensitivity analysis the directors have considered the impact of a reduction in turnover
from their principal customer and the impact on working capital as well as cost and supply issues that might arise in the context of
the current international conflicts and are satisfied that the Group has sufficient resources to respond to reasonably foreseeable sce-
narios. The Directors conclude that a scenario that would result in the need for the Group to require additional funding to be remote.
Based on the forecasts, the Directors are satisfied that the Group can meet its day-to-day cash flow requirements and operate
within the terms of its working capital banking facilities if required. Accordingly, the financial statements have been prepared on a
going concern basis.

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

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

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

Associates
Entities in which the Group holds a participating interest and over whose operating and financial policies the group exercises a sig-
nificant 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.

98
 Revenue recognition
Revenue comprises revenue recognised by the Group in respect of goods and services supplied during the year, based on the
consideration specified in a contract, exclusive of Value Added Tax and trade discounts.

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

Each performance obligation is allocated a transaction price based on the stand-alone selling prices. Where stand-alone prices are
not directly observable, they are based on expected cost plus margin.
Revenue is recognised depending upon the revenue stream to which it relates, as follows:

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

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

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

• Support and maintenance turnover is deferred at the point of sale and recognised in the Statement of Comprehensive
Income over a period of time of the contractual life, utilising the output method, generally on a straight line basis as the

customer simultaneously receives and consumes the benefits provided by the Group.

Invoicing for all revenue streams is undertaken in accordance with the terms of the agreement with the customer. When an invoice
is due for payment at the statement of financial position date but the associated performance obligations have not been fulfilled
the amounts due are recognised as trade receivables and a contact liability is recognised for the sales value of the performance
obligations that have not been provided. If payment is received in advance of the delivery of the associated performance
obligation a contract liability is recognised. When an invoice is not due for payment at the statement of financial position date and
the associated performance obligation has not been fulfilled no amounts are recognised in the financial statements.
In cases where customers pay for the goods and services over an agreed period, the fair value of the consideration is determined
by discounting future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of
the consideration is recognised as finance income over the payment period.

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

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

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

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

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

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

Share based payment

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

99
Taxation
The taxation expense or credit comprises current and deferred tax recognised in the profit for the financial period or in other
comprehensive income or equity if it arises from amounts recognised in other comprehensive income or directly in equity. Current
tax is provided at amounts expected to be paid (or recovered) in respect of the taxable profits for the period using tax rates and laws
that have been enacted or substantively enacted by the reporting date. Microlise, as a large company from 1 July 2020 for tax R&D
purposes, qualifies for the large company RDECs which are included as grant income within other operating income.

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

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

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

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

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

Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling on the date of the transaction. Mon-
etary assets or liabilities denominated in foreign currencies at the Statement of Financial Position date are translated at the rate
ruling on that date and all translation differences are charged or credited in the Statement of Comprehensive Income.

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

Intangible assets

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

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

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

Asset class Amortisation period

Brands 15 years
Customer relationships 11 to 16 years
Technology assets 5 to 13 years
Software 3-5 years

Intangible assets are tested for impairment when an event that might affect asset values has occurred. Any such impairment in
carrying value is written off to the Statement of Comprehensive Income immediately.

Research and development expenditure

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

100
 • It is technically feasible to complete the development such that it will be available for use, sale or licence;

• There is an intention to complete the development;

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

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

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

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

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

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

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

Financial assets
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 com-
prise cash held at bank which is available on demand.

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

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

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

Financial liabilities

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

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from sup-
pliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as
non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost
using the effective interest method.

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, can-
celled or expires.

Borrowings are initially stated at the fair value of the consideration received after deduction of wholly attributable issue costs.
Borrowings are subsequently stated at amortised cost using the effective interest method.

Right-of-use assets and lease liabilities

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

Assets and liabilities arising from a lease are initially measured at the present value of the lease payments and payments to be
made under the terms of the lease. Reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or the in-

101
cremental borrowing rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

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

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

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

Property, plant and equipment

Property, plant and equipment assets are stated at cost less depreciation. Cost includes the original purchase price of the asset and
the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided on all property,
plant and equipment assets at rates calculated to write off the cost of each asset on a straight line basis over its expected useful
life, as follows:

Asset class Depreciation method rate

Freehold property 2% straight line
Leasehold improvements Over the period of the lease

Equipment, fixtures and fittings 20-33% straight line basis

Investments

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

Inventories

Inventories are valued at the lower of purchase cost and net realisable value, after due regard for any slow moving items. Net
realisable value is based on selling price less anticipated costs to completion and selling costs. Cost is based on the cost of purchase
on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.

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

Share capital and reserves

Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a finan-
cial liability. The parent company’s ordinary shares are classified as equity instruments.

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

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

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

New or revised accounting standards and interpretations

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for
accounting periods beginning on or after 1 January 2024 and which the Group has chosen not to adopt early. These include the
following standards which may be relevant to the Group:

• Amendment to IAS 1 regarding the classification of liabilities being based on an entity’s rights at the end of a reporting
period and disclosure in respect of post period end covenants that have to be met in the 12 months post period end;

• IAS 7/IFRS 7 amendments in respect of supplier finance arrangements and disclosures that allow an investor to
understand the nature of these;

102
 • IFRS 16 Amendments to clarify how a seller-lessee subsequently measures sale and leaseback transactions.

As a result of initial review of the new standards, interpretations and amendments which are not yet effective in these financial
statements, none are expected to have a material effect on the Company or Group’s future financial statements. All IFRS effective
at the reporting date of 31 December 2023 have been applied.

C. Critical accounting estimates and assumptions

Critical judgements in applying the accounting policies

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

Useful economic lives of intangible assets

The annual amortisation charge for intangible assets is sensitive to changes in the estimated useful economic lives of the assets.
The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current esti-
mates, based on technological advancement, future investments and economic utilisation.

There is no current indication that the Group’s businesses will not continue to trade profitably and hence the life may differ or be
longer than the estimates used to amortise intangible assets.

Capitalisation of development expenditure

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

Impairment of intangible assets including goodwill and investments

Investments made by the Company and intangible assets acquired in a business combination capitalised with goodwill by the Group
are subject to annual impairment tests and other intangibles amortised over their estimated useful lives subject to an assessment
of impairment.
Subsequent impairment tests for investments and intangible assets are based on risk adjusted future cash flows discounted using
appropriate discount rates. These future cash flows are based on forecasts which include estimated factors and are inherently
judgemental. Future events could cause the assumptions to change which could have an adverse effect on the future results of the
Group. Further detail including sensitivities is given in note 10.

Right-of-use assets and lease liabilities

In respect of right-of-use leased assets key estimates are a combination of the incremental borrowing rate used to discount the
total cash flows and the term of the leases where breaks or extensions fall within the Group’s control. These are used to derive
both the opening asset value and lease liability as well as the consequential depreciation and financing charges. A 1% change in
the discount rate used would increase interest charges and decreased depreciation by approximately £10,000 a year with an
immaterial impact on assets and liabilities.

Share based payment

The fair values in respect of share based payments are estimated using a number of inputs to an appropriate valuation models
including the probability that perforrnance conditions may be met. Further detail of the assumptions applied is included in note 21.

103
Notes to the financial statements for the
year ended 31 December 2023
1. Revenue and segmental analysis

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

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

Year ended
Year ended
31 December
31 December 2023
2022
£’000 £’000

By type

Revenue recognised at a point in time

23,707 19,975
Supply of hardware and installation

23,707 19,975

Revenue recognised over time

Professional services including project management 2,987 2,721

Managed service agreement income 41,614 37,360

Other support and maintenance services 3,408 3,155

48,009 43,236

71,716 63,211

By destination:

UK 65,670 58,037

Rest of Europe 1,514 1,195

Rest of the World 4,532 3,979

Total revenue 71,716 63,211

Revenue in respect of one customer amounted to £23.1m representing 32% of the revenue for the year (2022: £20.9m representing
33% of the revenue).

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

The chief operating decision maker (“CODM”) is identified as the Board. It continues to define all the Group’s trading as operating
in the telematics market with two complementary segments. The Board as the CODM also review the revenue streams of recurring
and non-recurring revenue as part of their internal reporting.

The directors consider the Microlise business to be one segment related to fleet management and the separately acquired TruTac
business to be a complementary segment related to tachograph specific software and analysis services.

104
 Microlise TruTac Year ended Microlise TruTac Year ended
31 December 31 December
2023 2022
£’000 £’000 £’000 £’000 £’000 £’000

Revenue 66,526 5,190 71,716 59,147 4,064 63,211

Depreciation and amor- 5,369 708 4,645 603

6,077 5,248
tisation

Operating profit 1,278 977 2,255 1,559 625 2,184

Net interest (15) 42 27 (263) (4) (267)

Share of associate profit/ 225 - (478) -

225 (478)
(loss)

Profit before tax 1,488 1,019 2,507 818 621 1,439

Segment assets 118,805 12,374 131,179 115,216 10,920 126,136

Segment liabilities (52,327) (3,179) (55,506) (50,059) (2,609) (52,668)

Additions to non-current 7,573 430 3,037 973

8,003 4,010
assets

All of TruTac’s revenue relates to the UK. TruTac’s revenue is primarily from managed service agreements with the exception of
£659,000 of hardware revenue in 2023 (2022: £562,000). All remaining revenue relates to the Microlise business.

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

31 December 2023 31 December 2022

Non-current Net assets Non-current Net assets

assets assets
£’000 £’000 £’000 £’000

United Kingdom 89,316 73,787 88,434 71,895

France 15 25 29 22

Australia 7 150 2 80

India 271 1,711 304 1,471

89,609 75,673 88,769 73,468

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

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

The measure has been adjusted by acquisition related costs which are considered to be non-recurring and non-trading in nature
together with the share based payment charge as it represents a non cash item.

105
 Year
Year ended
ended
31 December
31 December
2022
2023
£’000 £’000

Operating profit before interest and share of associate 2,255 2,184

Exceptional transaction and subsequent restructuring costs 374 202

Depreciation 2,585 2,212

Amortisation of intangible assets 3,492 3,036

Share based payment 731 561

Adjusted EBITDA 9,437 8,195

3. Operating profit

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

Year Year
ended ended
31 December 31 December
2023 2022
£’000 £’000

Auditors remuneration:

Audit of the Group and Company financial statements 279 251

Depreciation of property, plant and equipment 1,553 1,316

Profit on disposal of tangible fixed assets (19) -

Depreciation of right-of-use assets 1,032 896

Amortisation of intangible assets 3,492 3,036

Cost of inventory sold 15,520 14,198

Research and development costs 2,021 3,292

Foreign exchange losses/(gains) 211 (259)

Acquisition evaluation costs 196 202

In other operating income:

Other income (158) (161)

Government innovation grants (170) (111)

Research and Development Expenditure Credit (645) (604)

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

106
 4. Information regarding directors and employees

Employees

The aggregate remuneration of employees comprised:

Group Company

Year ended Year ended Year ended Year ended

31 December 31 December 31 December 31 December
2023 2022 2023 2022
£’000 £’000 £’000 £’000

Wages and salaries 31,353 26,636 864 863

Social security costs 3,071 2,685 108 88

Pensions 1,149 1,046 25 29

Share based payment 731 561 334 561

Total 36,304 30,928 1,331 1,541

Average number of employees

The average number of employees in the year was:

Group Company

Year ended Year ended Year ended Year ended

31 December 31 December 31 December 31 December
2023 2022 2023 2022

Sales and distribution 101 87 - -

Operations and development 528 492 - -

Administration 86 82 6 6

Total 715 661 6 6

Directors’ remuneration

Year ended Year ended

31 December 31 December
2023 2022
£’000 £’000

Directors’ remuneration – aggregate emoluments 852 749

Group pension contributions in respect of 4 23 24

(2022: 3) directors
334 246
Share based payment

1,209 1,019

Remuneration of the highest paid director 393 306

Group pension contributions 11 10

Share based payment 162 116

566 432

Full information by director is disclosed in the remuneration report on pages 71 to 73.

107
Key management compensation

Year ended Year ended

31 December 31 December
2023 2022
£’000 £’000

Short term employee benefits 2,346 1,910

Post employment benefits 71 70

Share based payment 559 430

Total key management remuneration 2,976 2,410

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

5. Interest receivable

Year ended Year ended

31 December 31 December
2023 2022

£’000 £’000

Interest receivable

Bank interest receivable 240 21

Loan interest receivable 120 -

Unwinding of discount on financing transactions - 24

360 45

6. Interest payable

Year ended Year ended

31 December 31 December
2023 2022

£’000 £’000

Interest payable
Interest on bank and other borrowings 220 248

Lease liability financing charges 107 64

Other interest 6 -

333 312

108
 7. Taxation on profit

Year ended Year ended

31 December 31 December
2023 2022
£’000 £’000

Current taxation

UK corporation tax charge 104 -

Foreign tax 135 126

Adjustments in respect of previous periods 8 5

247 131

Deferred taxation

Origination and reversal of timing differences 732 249

Credit due to change in tax rate - (89)

Adjustments in respect of previous periods (48) (205)

684 (45)

Tax charge on profit 931 86

Factors affecting the tax charge for the year

The tax charge on the profit for the year differs from applying the average standard rate of corporation tax in the UK of 23.5%
(2022: 19%). The differences are reconciled below:

Year ended Year ended

31 December 31 December
2023 2022
£’000 £’000

Profit before taxation 2,507 1,439

Corporation tax at standard rate 589 273

Factors affecting charge for the year:

Disallowable expenses 235 168

Share of associate profit not taxed (53) -

Reassessment of share option related deferred tax 172 -

Other differences including capital superdeductions (26) (93)

Overseas tax rates (15) 27

Adjustments in respect of previous periods (40) (200)

Differing corporate and deferred tax rates 69 -

Credit due to change in tax rate - (89)

Tax charge on profit 931 86

In May 2021 a change in the corporation tax rate from 19% to 25% from April 2023 was substantively enacted in the Finance Act 2021
and accordingly has been applied to deferred tax balances at 31 December 2022 and 2023.

109
 8. Earnings per share

Year ended Year ended

31 December 31 December
2023 2022

Profit used in calculating EPS (£’000) 1,576 1,353

Weighted average number of shares for basic EPS (‘000) 115,946 115,946

Weighted average number of shares for diluted EPS (‘000) 116,087 116,104

Basic earnings per share (pence) 1.36 1.17

Diluted earnings per share (pence) 1.36 1.17

There were 3,701,954 unexercised share options in place at 31 December 2023 (2022: 3,088,969) of which 141,509 (2022:
1,159,383) were potentially dilutive in respect of the year and are included in the weighted average for diluted EPS.

110
 9. Property, plant and equipment

Group Freehold Right- Right-of-use Equipment,

Leasehold building
property of-use equipment fixtures and Total
Improvements
property fittings
£’000 £’000 £’000 £’000 £’000 £’000

Net book value

At 1 January 2022 4,940 1,303 137 329 1,864 8,573

Cost

At 1 January 2022 5,271 3,002 306 1,245 5,460 15,284

Additions - 567 - 384 979 1,930

Disposals - (1,689) - (612) (19) (2,320)

Exchange adjustments - - 2 - 2 4

At 31 December 2022 5,271 1,880 308 1,017 6,422 14,898

Depreciation

At 1 January 2022 331 1,699 169 916 3,596 6,711

Charge for the year 102 558 67 338 1,147 2,212

Disposals - (1,689) - (612) (19) (2,320)

Reclassification from - 88 (88)

- - -
intangible assets

Exchange adjustments - - 1 - 2 3

At 31 December 2022 433 656 237 554 4,726 6,606

Net book value

At 31 December 2022 4,838 1,224 71 463 1,696 8,292

Cost

At 1 January 2023 5,271 1,880 308 1,017 6,422 14,898

Additions - 176 - 686 2,219 3,081

Acquisitions - - - - 14 14

Disposals - - - - (1,712) (1,712)

Reclassification from - - -
- 246 246
intangible assets

Exchange adjustments - - (19) - (31) (50)

At 31 December 2023 5,271 2,056 289 1,703 7,158 16,477

Depreciation

At 1 January 2023 433 656 237 554 4,726 6,606

Charge for the year 102 673 52 359 1,399 2,585

Disposals - - - - (1,653) (1,653)

Reclassification from - - -
- 27 27
intangible assets

Exchange adjustments - - (14) - (21) (35)

At 31 December 2023 535 1,329 275 913 4,478 7,530

Net book value

At 31 December 2023 4,736 727 14 790 2,680 8,947

111
Company Freehold property
£’000

Cost

At 31 December 2022 and 2023 4,965

Accumulated depreciation

At 31 December 2022 127

Charge for the year 102

At 31 December 2023 229

Net book value

At 31 December 2022 4,838

At 31 December 2023 4,736

112
 10. Intangible assets

Technology – Total business

Customer Developed
Goodwill business Brands combination Software Total
relationships technology
combinations assets

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Net book value
At 1 January 2022 52,778 14,266 4,096 2,136 73,276 2,047 664 75,987

Cost
At 1 January 2022 52,778 17,780 6,422 2,711 79,691 2,951 791 83,433
Additions - - - - - 1,780 300 2,080
At 31 December 2022 52,778 17,780 6,422 2,711 79,691 4,731 1,091 85,513

Amortisation
At 1 January 2022 - 3,514 2,326 575 6,415 904 127 7,446
Charge for the year - 1,138 773 181 2,092 760 184 3,036
At 31 December 2022 - 4,652 3,099 756 8,507 1,664 311 10,482

Net book value

At 31 December 2022 52,778 13,128 3,323 1,955 71,184 3,067 780 75,031

Cost
At 1 January 2023 52,778 17,780 6,422 2,711 79,691 4,731 1,091 85,513
Additions - - - - - 2,523 20 2,543
Acquisitions (note 24) 1,513 406 446 - 2,365 - - 2,365
Reclassification to
property, plant & - - - - - - (246) (246)
equipment
Exchange adjustments - - - - - - (1) (1)
At 31 December 2023 54,291 18,186 6,868 2,711 82,056 7,254 864 90,174

Amortisation
At 1 January 2023 - 4,652 3,099 756 8,507 1,664 311 10,482
Charge for the year - 1,185 818 181 2,184 1,152 156 3,492
Reclassification to
property, plant & - - - - - - (27) (27)
equipment
Exchange adjustments - - - - - - (1) (1)
At 31 December 2023 - 5,837 3,917 937 10,691 2,816 439 13,946

Net book value

At 31 December 2023 54,291 12,349 2,951 1,774 71,365 4,438 425 76,228

113
Goodwill considered significant in comparison to the Group’s total carrying amount of such assets has been allocated to cash
generating units or groups of cash generating units as follows:

31 31 Decem-
December ber

2023 2022

£’000 £’000

Microlise 51,199 49,686

TruTac 3,092 3,092

54,291 52,778

The Group tests goodwill annually for impairment, or more frequently if events or changes in circumstances indicate that the asset
might be impaired. The acquired Vita Software business has been hived across and fully integrated into the Microlise business,
forming part of that cash generating unit. The Microlise carrying value is assessed for impairment purposes by calculating the
value in use using the net present value (NPV) of future cash flows arising from the originally acquired businesses discounted at a
pre-tax rate of 17% (2022: 15%) and for the TruTac business at a pre-tax rate of 17% (2022: 15%).

The Microlise goodwill has been tested by reference to a 3 year management approved plan and TruTac by reference to a 3 year
plan with a 2% long term growth rate considered applicable to the UK market applied to the terminal period. This includes consider-
ation of the impact of cost inflationary pressures in the December tests and forecasts at that date and taking account of the cor-
responding inflationary price terms within the group’s contracts with customers. The businesses achieved the FY23 forecasts used
in the prior year test and no impairment is indicated although they are sensitive to forecast increases in EBITDA. The Microlise NPV
exceeds carrying values by £5m (2022: £8.8m) and TruTac NPV exceeds carrying values by £8.6m (2022: £1.1m) with this increase
reflecting an increase in overall growth over the forecast period. Reasonable changes in the discount rate or terminal growth rate
do not result in a risk of impairment of Microlise or TruTac goodwill.

At 31 December 2023, the Microlise plan subject to the impairment test to support the carrying value of goodwill, forecast over
£11.5m and a required £11m of recurring EBITDA which compares with £7.8m on the same basis recorded for 2023 and an expected
increase to over £9.7m for FY25 as a result of the growth trends in the Microlise revenues, supported by significant investment in
the development of technology (2022: forecast £8.9m and required £7.9m of recurring EBITDA in the long term).

The 31 December 2023 TruTac plan assessed for the impairment test to support the carrying value of goodwill forecast over £2m
and a required £1.4m compared to the current EBITDA of some £1.5m. The growth trends in TruTac revenues within the forecast
is a result of continued investment into the underlying technologies, the release of new products and features as well as access to
an enlarged customer base, a benefit of being part of the Microlise Group (2022: forecast £1.25m and required £1.1m of recurring
EBITDA).

114
 11. Investments and loan receivables

Group Associate
£’000

At 1 January 2022 1,846

Share of loss for the year (478)

At 31 December 2022 1,368

Share of profit for the year 225

At 31 December 2023 1,593

Company Subsidiary undertakings Associate Total

£’000 £’000 £’000
At 1 January 2022 77,693 2,250 79,943

Additions – fair value of share

options held by subsidiary 249 - 249
company employees

Decrease in fair value - (1,000) (1,000)

At 31 December 2022 77,942 1,250 79,192
Additions (note 24) 3,132 - 3,132

Additions – fair value of share

options held by subsidiary 381 - 381
company employees

Increase in fair value - 300 300

At 31 December 2023 81,455 1,550 83,005

Class of % share
Subsidiary undertaking Principal activity
shares held holding

Microlise Limited Transport management technology solutions Ordinary 100%

Microlise Holdings Limited Intermediate holding company Ordinary 100%

Microlise Midco Limited Dormant company Ordinary 100%

Microlise Engineering Limited Non trading company Ordinary 100%

TruTac Limited Transport management technology solutions Ordinary 100%

Microlise Pty Limited (Australia) Transport management technology solutions Ordinary 100%

Microlise SAS (France) Transport management technology solutions Ordinary 100%

Microlise Telematics Private Limited

Transport management technology solutions Ordinary 100%
(India)

Microlise India Private Ltd Non trading company Ordinary 100%

Vita Software Limited Transport management technology solutions Ordinary 100%

TruTac Training Limited Dormant company (Dissolved 6 February 2024) Ordinary 100%

Trucontrol Ltd Dormant company (Dissolved 6 February 2024) Ordinary 100%

Trulogix Limited Dormant company (Dissolved 6 February 2024) Ordinary 100%

All the UK subsidiary companies are registered in England at the same registered office as the Company. Microlise Pty Limited is
registered at Level 1, 20 Albert Street, Blackburn, Victoria, 3130 Australia, Microlise SAS at Les Hauts de la Duranne, 505 Avenue
Galilee, 13290 Aix-en-Provence, France,Microlise Telematics Private Limited and Microlise India Private Limited at 4th Floor, Pride
Accord, Baner Road, Pune, 411045, India.

The Group agrees to guarantee the liabilities of Microlise Midco Limited (01670983), Microlise Holdings Limited (06479107), Mi-
crolise Engineering Limited (02211125), TruTac Limited (02521511) and Vita Software Limited (08230638) thereby allowing them
to take exemption from having an audit under section 479A of the Companies Act 2006.

115
Investments in associates consist of a 20% holding in Trakm8 Holdings plc acquired on 22 December 2018 and measured in accor-
dance with the accounting policy. The company is listed on AIM and at 31 December 2023 the market value of the shareholding
was £1.55m (2022: £1.25m).

The primary business of Trakm8 Holdings plc is the development, manufacture, distribution and sale of telematics devices, services
and optimisation solutions. The principal place of business is 4 Roman Park, Roman Way, Coleshill, Birmingham, West Midlands,
B46 1HG.

The Group also has an interest of £1 in a jointly controlled not for profit community investment company, Road to Logistics C.I.C.
This had commenced activity funded by a government grant and incurs neither a profit nor a loss. The principal place of business
is Market Chambers, 2b Market Place, Shifnal, Shropshire, England, TF11 9AZ.
Summarised financial information (material associates)

Trakm8 Holdings plc

Trakm8 Holdings plc has a year end of 31 March, and the summarised financial information disclosed is based on their published
annual statements to 31 March 2022 and 2023 together with interim financial statements to 30 September 2022 and 2023, pre-
pared under IFRS.

30 September 30 September
2023 2022
£’000 £’000

Assets – non-current 26,516 26,101

Assets – current 10,910 10,834

Liability – non-current (14,936) (10,190)

Liability – current (3,255) (8,616)

Net assets (100%) 19,235 18,129

Group share of book net assets (20%) 3,847 3,626

The differing carrying value above reflects the equity accounting policy applied.

Year ended Year ended

30 September 30 September
2023 2022

£’000 £’000

Revenues 19,722 18,102

Profit/(loss) from continuing opera-
1,103 (1,863)
tions

Other comprehensive (expense)/

(8) 8
income

Total comprehensive income/(ex-

1,095 (1,855)
pense)

116
 Group and company

£’000

At 1 January 2022 -

Cash subscribed for loan notes 1,000

At 31 December 2022 and 2023 1,000

12. Deferred tax assets and liabilities

Intangible Accelerated Freehold prop-

Group assets capital allow- erty Tax losses Other Total
ances

£’000 £’000 £’000 £’000 £’000 £’000

At 1 January 2022 (5,468) (79) (1,156) 1,828 (116) (4,991)

RDEC credit - - - - 106 106

Credit for the year 124 (152) 19 (303) 357 45

At 31 December 2022 (5,344) (231) (1,137) 1,525 347 (4,840)

On acquisition (172) (4) - - - (176)

RDEC credit - - - - 84 84

Foreign exchange - - -
- (6) (6)
movement

Credit/(charge) for 182 (240) 24

(641) (9) (684)
the year

At 31 December 2023 (5,334) (475) (1,113) 884 416 (5,622)

Company

Share
based
payment
£’000

At 31 December 2022 111

Charge for the year (111)

At 31 December 2023 -

Deferred tax has been recognised at an average rate of 25% (2022: 25%).

117
13. Inventories

31 December 31 December
Group
2023 2022

£’000 £’000

Raw materials and consumables 1,331 1,146

Work in progress 28 18

Finished goods and goods for resale 1,989 1,471

3,348 2,635

An impairment release of £425,000 in respect of inventory was recorded in the year ended 31 December 2023 (2022: charge of
£209,000).

14. Trade and other receivables

Group Company
31-Dec 31-Dec 31-Dec 31-Dec
2023 2022 2023 2022
£’000 £’000 £’000 £’000
Current
Trade receivables 15,288 13,247 - -
Provision for impairment
(457) (402) - -
of trade receivables
Trade receivables net 14,831 12,845 - -
Contract cost assets 1,431 1,466 - -
Other receivables 222 163 - -
Prepayments 2,273 2,286 158 26
Total 18,757 16,760 158 26

Non-current
Trade receivables 353 593 - -
Contract cost assets 2,488 2,485 - -
Total 2,841 3,078 - -

Total 21,598 19,838 158 26

Analysis of expected credit losses is included in note 18.

118
 The movements in Group contract related balances in the year are as follows:

Year Year
ended ended
31 December 31 December
2023 2022

Contract cost assets £’000 £’000

Opening balance 3,952 3,815

Amortised to income statement (1,774) (1,115)

Incurred in the year 1,741 1,252

Closing balance 3,919 3,952

15. Cash and cash equivalents

Group Company

31 December 31 December 31 December 31 December

2023 2022 2023 2022

£’000 £’000 £’000 £’000

Cash at bank and in hand 16,800 16,683 86 69

16. Lease liabilities

Group Company

31 December 31 December 31 December 31 December

2023 2022 2023 2022

£’000 £’000 £’000 £’000

Current 907 821 - -

Non-current 646 926 - -

Total 1,553 1,747 - -

Leases
The group has entered into lease contracts in respect of property in the jurisdictions from which it operates, use of data centres
and vehicles which are typically for terms of 3 to 5 years. In respect of data centre contracts there are options to extend the initial
period with these factored into the liabilities where the group plans to use these for a longer period. For property leases, it is cus-
tomary for lease contracts to be reset periodically to market rental rates. Leases of equipment, data centre usage and vehicles
comprise only fixed payments over the lease terms.

Right of use assets, additions and amortisation are included in note 9. Interest expenses relating to lease liabilities are included in
note 6.

Other amounts relating to leases were as follows:

31 December 31 December
2023 2022

£’000 £’000

Short term lease expense 46 11

Total cash outflow for leases 1,163 979

119
The maturity of lease liabilities at 31 December 2023 were as follows:

Equipment and Total

Property
vehicles

£’000 £’000 £000

Within 1 year 711 196 907

1-2 years 370 85 455

2-5 years 174 17 191

Total 1,255 298 1,553

The maturity of lease liabilities at 31 December 2022 were as follows:

Equipment and Total

Property
vehicles
£’000 £’000 £000

Within 1 year 548 273 821

1-2 years 450 160 610

2-5 years 267 49 316

Total 1,265 482 1,747

17. Trade and other payables

Group Company

31 December 31 December 31 December 31 December

2023 2022 2023 2022
£’000 £’000 £’000 £’000

Current

Trade payables 6,372 4,637 63 7

Taxation and social security 2,612 1,963 33 34

Amounts owed to group undertakings - 14,231 16,206

Other payables 556 1,447 205 1,006

Accruals 4,195 4,316 902 675

Contract liabilities 18,895 16,820 - -

Total 32,630 29,183 15,434 17,928

Non-current

Contract liabilities 15,587 16,463 - -

Deferred grant income 114 152 - -

Accruals - 283 - -

Total 15,701 16,898 - -

Total 48,331 46,081 15,434 17,928

120
 The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term
nature. Contract liabilities relates principally to service income received in advance. The timing of recognition of Group contract
liabilities are as follows:

Less than one 3-4 4-5

1-2 years 2-3 years Total
year years years

At 31 December 2023 £’000 £’000 £’000 £’000 £’000 £’000

Contract liabilities 19,448 9,134 4,112 1,364 424 34,482

Less than one

1-2 years 2-3 years 3-4 years 4-5 years Total
year

At 31 December 2022 £’000 £’000 £’000 £’000 £’000 £’000

Contract liabilities 16,820 8,962 4,919 1,986 596 33,283

The movements in Group contract related balances in the year are as follows:

Year
Year ended
ended
31 December
31 December
2022
2023
£’000 £’000

Revenue related contract liabilities

Opening balance (33,283) (31,465)

Invoiced in the year (42,813) (39,178)

Recognised as revenue in the year 41,614 37,360

Closing balance (34,482) (33,283)

18. Financial Instruments

Financial risk management

The determination of financial risk management policies and the treasury function is managed by the CFO. Policies are set to re-
duce risk as far as possible without unduly affecting the operating effectiveness of the Group.

The Group’s activities expose it to a variety of financial risks, the most significant being credit risk, liquidity risk and interest rate risk
together with a degree of foreign currency risk as discussed below.

Categories of financial instruments

The Group has the below categories of financial instruments:

31 December 31 December
2023 2022

Recognised at amortised cost £’000 £’000

Cash and bank balances 16,800 16,683

Trade receivables - net 15,184 13,438

Other receivables 1,222 1,163

Total financial assets 33,206 31,284

Trade payables 6,372 4,637

Other payables 4,751 6,046

Lease liabilities 1,553 1,747

Total financial liabilities 12,676 12,430

There were no assets or liabilities at 31 December 2023 or 2022 that were recognised and measured at fair value in the historical
financial information.

121
Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss for the Group.
Financial instruments, which potentially subject the Group to concentration of credit risk, consist primarily of cash and cash equiv-
alents and trade accounts receivable including accrued income.

The Group places its cash and cash equivalents with major financial institutions, which management assesses to be of high-credit
quality in order to limit the exposure of each cash deposit to a minimal level.

Trade receivables

Trade accounts receivable are derived primarily from non-recurring hardware sales and monthly service income and general-
ly have 30-60 day terms. With the exception of one large customer who accounts for 24% (2022: 27%) of the trade receivable
invoiced balance, credit risk with respect to accounts receivable is dispersed due to the large number of customers. Collateral is
not required for accounts receivable. The credit worthiness of customers with balances in trade receivables not yet due has been
assessed as high.

The aging of past due trade receivables according to their original due date is detailed below:

31 December 31 December

2023 2022

Past due £’000 £’000

0-60 days 5,202 3,903

60-120 days 833 443

121+ days 1,000 499

Expected credit loss provision (457) (402)

Total 6,578 4,443

A majority of the expected credit loss provision relates to balances that are more than 120 days overdue. The expected credit loss
on balances less than 120 days is immaterial. A substantial majority of the overdue debt has been collected since the period end
date with the unprovided amounts considered to be collectible.

As at 31 December 2023 the lifetime expected loss provision for trade receivables is as follows:

Expected loss Gross carrying

Loss provision
Past due rate amount
£’000
£’000

0-60 days 0% 5,202 -

60-120 days 0% 833 -

121+ days 46% 1,000 457

Total 7% 7,035 457

As at 31 December 2022 the lifetime expected loss provision for trade receivables was as follows:

Expected loss rate Gross carrying

Loss provision
Past due amount
£’000
£’000

0-60 days 0% 3,903 -

60-120 days 0% 443 -

121+ days 81% 499 402

Total 8% 4,845 402

122
 At each of the Statement of Financial Position dates, a portion of the trade receivables were impaired and provided for. The
movement in the provision for trade receivables in each of the periods is as follows:

Year Year
ended period ended
31 December 31 December
2023 2022
£’000 £’000

At 1 January 402 303

Provision charged 55 99

At year end 457 402

Other receivables are considered to bear similar risks to trade receivables or are owed by government bodies. Hence any expect-
ed credit loss on other financial assets is considered to be immaterial.

Liquidity risk

The Group now funds its business through equity and from cash generated from operations and also has a £20m undrawn working
capital facility available. Details of the Group’s borrowings are discussed in note 16. The Group monitors and manages cash to
mitigate any liquidity risk it may face. The following table shows the Group’s contractual maturities of financial liabilities based on
undiscounted cash flows including interest charges and the earliest date on which the Group is obliged to make repayment:

Less than one

1-2 years 2-5 years Total
year

At 31 December 2023 £’000 £’000 £’000 £’000

Trade and other payables 11,123 - - 11,123

Lease liabilities 1,021 521 193 1,735

Total 12,144 521 193 12,858

Less than one

1-2 years 2-5 years Total
year

At 31 December 2022 £’000 £’000 £’000 £’000

Trade and other payables 10,688 - - 10,688

Lease liabilities 883 648 338 1,869

Total 11,571 648 338 12,557

Interest rate risk

There are no borrowings or liabilities subject to variable interest rates.

Currency risk

The Group operates predominantly in the UK with sterling being its functional currency and has a degree of exposure to foreign
currency risk, with this spread across income and expenses in Euros, US dollars and Australian dollars for sales and purchasing op-
erations together with an outflow only of Indian rupees for the costs of development and operational support activity. The impact
of a 10% fluctuation in all foreign exchange rates moving in the same direction against GBP has been assessed to be an overall
impact of up to £300,000 which would be mitigated by some matching of income and expenses.

The net exposure to the dollar is offset by significant purchases made in dollars. The net underlying foreign currency balances,
comprising overseas assets and liabilities, cash, receivables and payables in the UK, in the Group statement of financial position by
underlying currency at the period end were:

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 USD Euro AUD INR Total
£’000 £’000 £’000 £’000 £’000

At 31 December 2023 4,608 710 183 18 5,519

At 31 December 2022 8,317 673 913 559 10,462

Capital management

The Group’s capital comprises share capital, share premium and retained earnings. The Group’s objectives when maintaining cap-
ital are:

To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and ben-
efits for other stakeholders and to provide an adequate return to shareholders by pricing products and services commensurately
with the level of risk.

The capital structure of the Group consists of shareholders equity as set out in the consolidated statement of changes in equity. The
longer-term funding requirements for acquisitions were financed from cash reserves and term bank debt which was fully repaid
from the equity proceeds on listing. All working capital requirements are financed from existing cash resources.

The Group sets the amount of capital it requires in proportion to risk in conjunction with the retained earnings. The Group manages
its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to share-
holders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

19. Pensions

Defined contributions pension scheme

The group operates a number of defined contribution pension schemes. Contributions totalling £278,000 (2022: £223,000) were
included in payables and due to the defined contribution scheme at the end of the year. The total contributions are disclosed in
note 4.

20. Share capital

Group and Company

At At
Allotted, called up and fully paid
31 December 31 December

2023 2022
£ £

115,945,956 ordinary shares of £0.001 each 115,946 115,946

All shares rank equally in respect of income and capital distributions.

21. Share based payments

Weighted
average
Options Number
exercise
price

At 1 January 2023 £0.51 3,088,969

Granted in the year £0.001 1,049,226

Lapsed in the year £0.21 (436,221)

At 31 December 2023 £0.38 3,701,974

The Company granted options on 22 July 2021 at an exercise price of £0.001 per share. 100,000 of the options were granted to
non-executive directors and are subject only to continuing employment or good leaver conditions. The fair value was assessed as
£1.35 per option using a Black Scholes model with a volatility of 60% and risk free rates of 0.5%. They are exercisable three years
after grant for a period of a year. 1,007,848 options were granted to executive employees subject to a 3 year Total Shareholder
Return condition from the date of grant of a minimum of 8% annual growth in the share price up to an 18% return for 100% to be
exercised. The fair value is assessed as £0.88 per option based on a discounted Black Scholes pricing model with a volatility of 60%
and risk-free rates of 0.5%. The exercise period is within a year of the 3 year return being assessed.

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 1,132,160 options were granted to employees on 23 May 2022 at an exercise price of £1.45 subject to a 3 year vesting period only.
The fair value was assessed as £0.515 per option using a Black Scholes model with a volatility of 60% and risk free rates of 2%.

The Company granted options on 28 July 2022 at an exercise price of £0.001 per share. 41,509 of the options were granted to a
non-executive director and are subject only to continuing employment or good leaver conditions. The fair value was assessed as
£1.32 per option using a Black Scholes model with a volatility of 50% and risk free rates of 2%. They are exercisable three years after
grant for a period of a year. 973,811 options were granted to executive employees subject to a 3 year Total Shareholder Return
condition from the date of grant of a minimum of 8% annual growth in the share price up to an 18% return for 100% to be exercised.
The fair value is assessed as £0.86 per option based on a discounted Black Scholes pricing model with a volatility of 50% and risk-
free rates of 2%.

The Company granted 1,049,226 options on 22 December 2023 to executive employees at an exercise price of £0.001 per share.
They are exercisable from 31 December 2025 with 10% subject to carbon reduction targets and 90% subject to a Total Shareholder
Return condition from the date of grant of a minimum of 8% annual growth in the share price up to an 18% return for 100% to be
exercised. The fair value of the carbon reduction target options has been assessed at an average fair value of £0.17 per option
using a Black Scholes model and the TSR options at £0.88 using a Monte Carlo model, both applying a volatility of 45%, risk free
rates of 3.58% and a dividend yield of 1.93%

The average vesting period for all options is estimated at 3 years and the share based payment charge was £731,000 for the
year (2022: £561,000). The weighted average vesting period is 1.7 years (2022: 2.2 years).

22. Capital commitments

The Group had capital commitments contracted but not provided for of £119,000 at 31 December 2023 (2022: £1,105,000). The
company had no capital commitments (2022: £nil).

23. Related party transactions

The remuneration of key management personnel and directors is set out in note 4 and transactions with the associate in note 11.

24. Business combinations

On 13 March 2023, the Group acquired the entire share capital of Vita Software Limited, a provider of fleet logistics services for
consideration of £3,123,000. The goodwill arising of £1,513,000 is attributable to the workforce, synergies and expected future
growth in customers and earnings. The transaction has been accounted for under the purchase method of accounting. The princi-
pal adjustments relate to £283,000 in respect of the technology and £406,000 of customer relationships together with the related
deferred taxation liability of £172,000.

The Vita software business has been transferred and integrated into Microlise Limited and as such it is not possible to separately
identify the post acquisition results.

Had Vita been consolidated from 1 January 2023 it would have contributed another £104,000 of revenue and a further profit
before tax of £60,000 to the year (excluding acquisition expenses and amortisation of intangible assets arising on consolidation).

Fair value
Book value adjustments Fair value

£’000 £’000 £’000

Intangible assets - 689 689

Property, plant and equipment 14 - 14

Cash and cash equivalents 1,120 - 1,120

Receivables 94 - 94

Payables (45) - (45)

Corporation tax (86) - (86)

Deferred taxation liability (4) (172) (176)

Net assets acquired 1,610

Goodwill 1,513

3,123

Consideration satisfied by:

Cash 2,923

Deferred consideration (payable March 2024) 200

3,123

The Group incurred acquisition related costs of £0.1m related to stamp duty, legal and professional fees. These costs have been
included in administrative expenses in the group’s consolidated statement of comprehensive income.

The Group also acquired another small business in the year comprising only intangible assets of £163,000.

125
25. Subsequent events

On 10 January 2024, the group acquired 100% of Enterprise Software Systems Limited, a leading provider of transportation man-
agement system solutions. The acquisition is expected to further expand Microlise’s suite of transport technology solutions. The
total consideration of £11.4m includes £0.85m of deferred consideration payable six months from the date of acquisition. The
acquisition was funded from the Group’s cash resources and the identifiable assets acquired included £4.4m cash of which £3.5m
is considered to be excess cash. Synergies are expected to arise by combining the management of operations and providing a
broader service offering to all Group customers. The draft initial fair value of the assets and liabilities acquired are as follows:

Fair value

£’000

Intangible assets – customer, tradename, technology 3,708

Property, plant and equipment 998

Cash and cash equivalents 4,373

Receivables 1,032

Payables (3,044)

Lease liabilities (500)

Corporation tax (124)

Deferred taxation liability (1,017)

Net assets acquired 5,426

Goodwill 6,010

11,436

Consideration satisfied by:

Cash 10,586

Deferred consideration 850

11,436

Acquisition costs of £0.2m were incurred relating to the acquisition and expensed in the year ended 31 December 2023. Other than
the acquisition costs the acquisition was not included in the reported results for the year ended 31 December 2023.

126
 Company
Information

127
Notice of AGM
The AGM will be held at Microlise’s head office at 9:00am on 22nd May 2024.

There will be an option to join. The notice of the AGM is available on the Group’s website and sets out the business of the

meeting and an explanatory note. In line with good governance, voting on all resolutions at this year’s AGM will be conducted

by way of a poll. Should a shareholder have a question that they would have raised at the meeting, they are able to send this

by email to [email protected].

Answers to questions will be published on the website following the AGM.

Other Information Bankers

Directors
HSBC UK Bank PLC
Nadeem Raza
East Midlands Corporate Banking Centre
Nick Wightman
Second Floor, Donington Court
Jon Lee
Pegasus Business Park
Dino Rocos
Castle Donington
Lucy Sharman-Munday
DE74 2BU

Company Secretary Registrars

Nick Wightman Link Group

Central Square

Company Number 29 Wellington Street

11553192 Leeds

LS1 4DL

Registered Office
Farrington Way Legal Advisors

Eastwood DWF Law LLP

Nottingham 1 Snow Hill

NG16 3AG Queensway

Birmingham

Nominated Advisor & Broker B4 6GA

Singer Capital markets

1 Bartholomew Lane Independent Auditor

London BDO LLP
EC2N 2AX 2 Snow Hill

Queensway

Birmingham

B4 6GA

128
Microlise Limited

Farrington Way, Eastwood, Nottinghamshire, NG16 3AG

Registered in England & Wales with Company No. 03037936

phone +44 (0)1773 537000 envelope [email protected] globe www.microlise.com

Microlise Group PLC

Farrington Way, Eastwood, Nottinghamshire, NG16 3AG

Registered in England & Wales with Company No. 11553192