Telematics provider Minorplanet Systems has blamed falling demand, a reliance on SME business and difficulty securing lease funding for an “exceptionally difficult year”, which saw it make a loss for the first time in five years.

The company was required to secure a £300,000 loan from its own chief executive Terry Donovan, last month.

"The Group's reliance on the SME market and its historic business model left us particularly vulnerable in the ensuing downturn and, regrettably, the group's financial results for 2009 bear witness to this,” said Donovan.

Those results for the year ended 31 August 2009, which were published today, confirmed that it incurred a loss for the year of £7.2m (2008 - profit of £1.5m), although this incorporated a loss (including goodwill write offs) of £3.2m attributable to the discontinued operations in Germany and Australasia.

The statement also confirmed the group is continuing with an extensive cost-cutting programme.

This will see the loss of 40% of its workforce, the sale of its Australian arm and a 45% cut in overhead costs in the UK.

It has also undertaken a full review of its loss-making European operations.

Minorplanet is now focussing on larger private and public sector fleets to secure future business.

It has also introduced separate maintenance and warranty contracts to provide regular cash flow.

“The financial climate remains very difficult, with funding challenges for the group which give rise to material uncertainties,” its results statement said.

“The directors are confident that these can be adequately addressed.”

They point to the company’s January 2010 sales performance, which was a big improvement in the UK on previous months, saying this is expected to continue.

"The past five years have been a rollercoaster ride for the group, its employees and its shareholders,” said Donovan.

“We completed a turnaround, stabilising sales and returning the business to profitability prior to 2009, and improved Minorplanet's product and service beyond recognition. Our strategy to shift focus from SMEs to large corporates was starting to gain foothold, when unprecedented economic turmoil hit the world.

"Although the climate is expected to remain difficult, I firmly believe that the longer-term prospects for Minorplanet remain sound. Our cost base is now repositioned, our product is a highly valuable, cost-saving resource efficiency tool and we are making tangible progress in our chosen markets.”

The group raised working capital of £1.6m in September 2009, through a placing and open Offer to existing shareholders totalling £1.2m.

The group's existing bank overdraft facility of £0.75m was also converted into a five-year Enterprise Finance Guarantee Loan and an agreement was reached with HMRC in “respect of a phased repayment of sums outstanding”.

Despite these actions and the £300,000 loan from its chief executive, the company is still facing a number of "funding challenges".

It hopes the sale of its Australian arm will “provide a vital cash injection” to the group.