Notes to the Interim Statements

Basis of preparation

The interim financial statements for the six months ended 30 June 2020 have been prepared in accordance with the AIM Rules and the recognition and measurement requirements of IFRSs as adopted by the EU.   The interim financial information should be read in conjunction with the Group's Annual Report and Financial Statements for the year ended 31 December 2019, which were prepared in accordance with IFRSs as adopted by the EU.

The comparative figures for the financial year ended 31 December 2019 are not the company's statutory accounts for that financial year.  Those accounts have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) included a reference to matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The Group's business activities together with the factors that are likely to affect its future developments, performance and position are set out in the Update.  The interim financial statements were approved by the Board of Directors on 28 September 2020.

Going Concern

The Group holds significant cash reserves and no material debt. The Group has concluded that its cash reserves together with ongoing operating cash flows will be sufficient to fund the ongoing operations of the Group's activities together with any future needs of those businesses, and the settlement of legacy matters. 

On this basis, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Directors have not identified any material uncertainties that would cast significant doubt on the ability of the Group to continue as a going concern. Therefore the Directors continue to adopt the Going Concern basis of accounting in the preparation of the Financial Statements.

Statement of Directors' responsibilities

The Directors confirm that, to the best of their knowledge, this condensed set of consolidated financial statements have been prepared in accordance with the AIM Rules.

Significant Accounting Policies

The accounting policies applied by the Group in this condensed set of consolidated financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2019, except for the adoption of new standards and interpretations as of 1 January 2020.  None of these standards have any significant impact on the accounting policies, financial position or performance of the Group, as noted below:

• Amendments to References to Conceptual Framework in IFRS Standards

• Definition of Material (Amendments to IAS 1 and IAS 8)

• Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

In the process of applying the Group's accounting policies, management has made a number of judgements, and the preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The key management judgements together with assumptions concerning the future and other key sources of estimation uncertainty at 30 June 2020 that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities during the current financial year are discussed below.

Judgement: Classification of businesses as discontinued and held for sale

At 30 June 2020, the Group was committed to a plan to dispose of its ingenie business and to primarily realise value from this business through sale.  Similarly, at 30 December 2019, the Group was committed to the sale of its Healthcare Services business.  For a business to be classified as held for sale the business must be available for immediate sale in its present condition and the sale must be highly probable. 

In management's view both of these conditions have been met at the Statement of Financial Position date and consequently the assets and liabilities of these businesses have been included within assets and liabilities held for sale.  By virtue of being held for sale, the results of these businesses are also classified as Discontinued within the Condensed Consolidated Income Statement.  Comparatives are restated on a consistent basis.

Estimate and judgement: Provisions

The Group is aware of a number of legal and regulatory matters which, by their nature, are subject to significant judgement and uncertainty. This includes judgements around both the quantum of any related cash outflows and also the timing. The judgements are specific to the facts surrounding each case and often involve historical transactions. All such matters are periodically assessed with the assistance of external professional advisers, where appropriate, to determine the likelihood of the Group incurring a liability and to evaluate the extent to which a reliable estimate of any liability can be made.

Judgement: Classification of underlying and non-underlying results

Management is required to exercise its judgement in the classification of certain items as exceptional and outside of the Group's underlying results.   The determination of whether an item should be separately disclosed as an exceptional item or other adjustments requires judgement on its nature and incidence, as well as whether it provides clarity on the Group's underlying trading performance. In exercising this judgement, Management take appropriate regard of IAS 1 "Presentation of financial statements'' as well as guidance issued by the Financial Reporting Council and the European Securities and Markets Authority on the reporting of exceptional items and Alternative Performance Measures.

Estimate and judgement: Revenue (within discontinued operations)

The Group treats a number of contractual promises as single performance obligations since they are not capable of being distinct.  Management must apply judgement in making this assessment which has the impact of changing the timing at which revenue is recognised.  Furthermore, where performance obligations are recognised over time management have assessed that the most appropriate method is to apportion the revenue evenly over the duration of the agreement since this best represents the timing of the transfer of the benefits to the customer.

Where management have reviewed an agreement and consider that it contains multiple performance obligations the total transaction price is allocated to each performance obligation, this allocation may be different to amounts specified in a contract.  Where possible this allocation is made with reference to separate selling prices.  This estimate impacts the timing of recognition of revenue for these agreements.

In instances where further agreements are made with a customer, or changes to existing agreements are made, management must apply judgement in determining if the changes are distinct and therefore represent a new contract or instead, a contract amendment. The outcome of this judgement results in the additional revenues either being recognised entirely prospectively or retrospectively from the start of the existing agreement.

Judgement: Identifying performance obligations within contracts with customers

The Group must identify the performance obligations within its contracts against which revenue is subsequently recognised.  Judgement is applied in determining if the related good or service is capable of being distinct or if it is distinct in the context of the contract.  In particular, this applies to telematics services and devices and one-off fees in relation to licences and system delivery to B2B customers.

It is management's judgement that the telematics device and the related service represent a single performance obligation delivered over time and the set-up fees with the related license represent a single performance obligation recognised over time.  The consequence of this judgement is to spread revenues relating to elements of the contract over longer periods than if the goods and services were deemed to be separate performance obligations.

Judgement: Recognition of liabilities arising under the Distribution Incentive Scheme

As discussed in note 14 and the Directors' Remuneration Report of the 2019 Annual Report and Financial Statements the Group Chief Executive Officer is entitled to 5.43% of any distribution over and above a prescribed distribution hurdle ("DIS Hurdle").  No amounts have been recognised in these Condensed Consolidated Financial Statements in respect of this liability despite a distribution being planned at 30 June 2020 as it is the judgement of management that the liability does not crystallise, and is materially uncertain, until Court approval has been obtained for the related capital reduction and cash return. The impact of this judgement in relation to the distribution approved on 21 July 2020 is £634,000.  The impact of any future distributions is 5.43% of the amounts to be distributed.