1816K Interim Report
RNS Number : 1816K
Trakm8 Holdings PLC
16 December 2008
TRAKM8 HOLDINGS PLC
("Trakm8" or "the Group")
Unaudited Interim Report
for the six months to 30 September 2008
Highlights
Substantial strategic and operational review undertaken in period resulting in shift to
focus on higher margin business and establishment of a lower more efficient cost
base
Turnover declined by £0.5m to £2.0m due to focus on higher margin business
Gross Profit of £1.1m (2007: £1.0m) reflecting a margin improvement of 15.2% to
55.4%
Operating loss reduced by £0.1m to £0.3m
Regulatory Announcement
Go to market news section
Company Trakm8 Holdings PLC
TIDM TRAK
Headline Half Yearly Report
Released 07:00 16-Dec-08
Number 1816K07
Restructuring costs of £0.1m generating annualised savings of £0.4m
Net assets of £1.2m (2007: £1.3m) and net debt of £0.1m (2007: net cash £0.3m)
Customers successfully migrated to T6 with encouraging levels of interest from new
customers
Product innovation ongoing
New management team in place
Improved current trading and more positive outlook
Dawson Buck, Chairman, said "The first half of the year has been challenging for the Company but
the changes implemented by the new management have put the Company on a stronger footing
going forward. The focus on higher margin business, our strong product offering and efficient
operating base have resulted in encouraging trading in the period to date and, whilst we are
mindful of the wider uncertainty in the macroeconomic environment, we are optimistic for the
second half of the year. I would like to take this opportunity to thank our committed staff for their
efforts during this period and beyond."
For further information, please visit www.trakm8.com or contact:
Chairman's Statement
The first six months of this financial year have seen a number of changes at Trakm8 but we are
now in a stronger position with improved current trading and an optimistic outlook. Following a
strategic review by the new management, the Company is now focused on higher margin business
through the provision of value added services and products to telematics service provider (TSP)
integrators. In addition, towards the end of the period, the Company undertook a restructuring
programme to reduce its cost base and improve operational efficiencies.
Revenue in the period reduced to £2.0m (2007: £2.5m) but Gross Profit increased to £1.1m (2007:
£1.0m), reflecting the focus on higher margin business. Operating loss (after £0.1m one off
restructuring costs) reduced to £0.3m (2007: £0.4m) which generated a loss before tax of £0.4m
(2007: loss £0.5m). At the period end the Group had net assets of £1.2m (2007: £1.3m) and net
debt of £0.1m (2007: net cash £0.3m).
The launch of the next generation hardware platform, T6, has been completed with the majority of
customers having successfully migrated across to T6. The T6 is also generating strong interest
from new customers. Additionally, considerable progress has also been made on the government
funded projects.
During the period Cary Knapton resigned as Chief Executive and Tim Couling resigned as Finance
Director. I would like to thank them for their considerable contribution to the development of the
Group over many years and wish them well for the future.
Trakm8 plc
John Watkins, Chief Executive Officer
James Hedges, Finance Director
01747 858 444
Tavistock Communications
Simon Hudson
020 7920 3150
Arbuthnot Securities
Paul Vanstone / Richard Tulloch
020 7012 2000
John Watkins, previously non-executive Director, has been appointed as Chief Executive and
James Hedges, previously Group Financial Controller, has been appointed Finance Director. I am
pleased to welcome them to their new responsibilities.
Outlook
The restructuring coupled with the focus on higher margin business and the successful launch of
the T6 puts the Group on a stronger footing going forward. The marketing and product initiatives
now in place are already indicating that improved revenues should be achieved despite the
troubled economic times. Indeed our products and solutions provide our customers with a dynamic
management tool that enables them to reduce costs, better serve the needs of their customers and
ultimately increase profitability for relatively little investment and ongoing cost. These factors
combined with the improved current trading, leads the Board to look forward with optimism to an
improved second half of the financial year although we are mindful of the wider uncertainty in the
macroeconomic environment.
This period of considerable change has required significant efforts from everyone in the Group and
I would like to thank the Executive team and staff for their continuing hard work and dedication.
DAWSON BUCK
CHAIRMAN
15 December 2008
Chief Executive Officer's Report
Operational Review
During the first half of the year the Group, following a strategic review, has modified its strategy of
becoming an integrated TSP to focus on the provision of valued added services and products to
TSP integrators. Trakm8 has an excellent hardware/firmware platform and scalable server
applications and is focusing efforts on supplying these core technologies to our major customers.
The Group is now concentrated on delivering higher margin solutions and products. This includes
the integration of onboard vehicle diagnostic and vehicle data information into the T6 tracking
solution package. As a result of the greater functionality of our platform, Swift revenues have also
increased with some customers now electing to operate the complete service under their own
brand. This continues the Group's transition from a telematics box supplier into a value added
systems supplier.
The launch of the next generation hardware platform has been completed with the majority of
customers having successfully migrated across to the T6. The T6 has been well received by
existing customers and is also generating significant interest from new customers. The T6 has
strong functionality benefits compared to most competitor products with full controller area network
("CAN") communications integrated into the hardware platform. In 2009 we will introduce a variant
of the T6 which is expected to generate further interest in this exciting product.
Considerable progress has been made on the government funded projects. These projects are
jointly funded and have varied applications that will benefit both the project objectives but also the
long term product portfolio of the Group.
Annualised savings of £0.4m were made to Group operating costs towards the period end and the
organisation has been restructured with better defined responsibilities. These savings were
achieved with a one off restructuring cost of only £0.1m which was fully incurred in the period. The
new team has gelled well and operational efficiencies have been improved.
Financial Review
Revenue in the period reduced to £2.0m (2007: £2.5m) but Gross Profit increased to £1.1m (2007:
£1.0m) reflecting the focus on higher margin business. Income from Government Grants totalled
£0.3m (2007: £nil). Operating loss (after £0.1m one off restructuring costs) reduced to £0.3m
(2007: £0.4m) which generated a loss before tax of £0.4m (2007: loss £0.5m). At the period end
the Group had net assets of £1.2m (2007: £1.3m) and net debt of £0.1m (2007: net cash £0.3m). The Company also issued a further 340,136 ordinary shares of 1p each in relation to the in relation
to the acquisition of PJSoft s.r.o.
Current Trading and Outlook
The strategic and operational review undertaken during the first half has enabled the Group to
emerge as a leaner business focused on delivering higher margin services. The new marketing
and business development activities are expected to drive increased revenues. We are developing
stronger relationships with TSP integrators providing them with key system elements that are
being built into complete turnkey solutions. The benefits of these initiatives began to be observed
in the latter part of the period and have continued to gain momentum since then, resulting in
encouraging current trading. However the recent strengthening of the euro has added to our costs
and we are taking steps to mitigate such adverse currency movements.
The integration of vehicle tracking systems with vehicle diagnostic information on the T6 is
generating strong interest and several new customer programmes are in place. Software created
in conjunction with the Government funded projects is increasing the functionality and
competitiveness of the application and server solutions. As the scale of telematic applied fleets
grow, then the Trakm8 solutions will be capable of expanding with them.
The market for telematic solutions with smarter management information is growing rapidly. The
need for greater fleet operational efficiencies alongside the marked reduced costs of telematic
provision has strongly improved the economics of investing in such solutions. Further we believe
that new applications for telematics are beginning to arise and Trakm8 is seeking to innovate
within these sub markets. In this challenging economic environment companies are under
increased pressure to maintain market share and profitability. We believe our products and
services enable our customers to deliver value added solutions to the end user. Trakm8 is well
placed to benefit from these trends.
Trakm8 is a refreshed business and recent trading has been encouraging. Whilst we recognise the
need to closely monitor our business in these uncertain and challenging times I am hopeful that
this positive trend will continue throughout the second half.
JOHN WATKINS
CHIEF EXECUTIVE OFFICER
15 December 2008
CONSOLIDATED INCOME STATEMENT
for the six months to 30 September 2008
Note
Six months to
30 September
2008
Unaudited
Six months to
30 September
2007
Unaudited
Year to
31 March
2008
Audited
Continuing Operations £'000 £'000 £'000
Revenue 1,995 2,458 4,656
Cost of sales (889) (1,470) (2,632)
Gross profit 1,106 988 2,024
Other income 275 - 79
Operating expenses (1,635) (1,420) (2,994)
Restructuring costs 3 (84) - -
Operating loss (338) (432) (891)
Interest receivable 3 7 10
(335) (425) (881)
Bank and other interest
charges
(17)
(40)
(77)
Loss before taxation (352) (465) (958)
Taxation - - 57
Loss attributable to the
equity shareholders of the
parent
(352)
(465)
(901)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months to 30 September 2008
Basic loss per share (pence) 4 (2.6) (4.0) (7.6)
Six months to
30 September
2008
Unaudited
Six months to
30 September
2007
Unaudited
Year to
31 March
2008
Audited
£'000 £'000 £'000
Total equity at beginning of
period
1,573
1,483
1,483
Loss for the period (352) (465) (901)
Shares issued 106 - 523
Shares to be issued (106) 246 246
Exchange difference on
translation of overseas
operations
-
-
203
IFRS 2 share based
payments
6 7 19
CONSOLIDATED BALANCE SHEET
as at 30 September 2008
Total equity at end of
period
1,227 1,271 1,573
30 September
2008
Unaudited
30 September
2007
Unaudited
31 March
2008 Audited
£'000 £'000 £'000
Non-current assets
Intangible assets 1,478 1,514 1,598
Plant, property and equipment
460
489
478
1,938 2,003 2,076
Current assets
Inventories 123 300 146
Trade and other receivables
856
557
810
Current tax - - 33
Cash and cash equivalents
264
416
363
1,243 1,273 1,352
Current liabilities
Bank overdrafts (398) (167) (210)
Bank and other loans (51) (50) (51)
Trade and other payables (1,225) (926) (1,287)
Obligations under finance leases
CONSOLIDATED CASH FLOW STATEMENT
for the six months to 30 September 2008
Current tax - (25) -
(1,674) (1,174) (1,550)
Current assets less current
liabilities
(431)
99
(198)
Total assets less current
liabilities
1,507
2,102
1,878
Non-current liabilities
Bank loans (213) (228) (220)
Other loans (49) (585) (67)
Deferred tax (18) (18) (18)
(280) (831) (305)
Net assets 1,227 1,271 1,573
Equity
Called up share capital 139 115 135
Share premium 1,358 754 1,256
Shares to be issued 140 246 246
Merger reserve 510 510 510
Share based payment reserve
54
36
48
Translation Reserve 203 - 203
Retained loss (1,177) (390) (825)
Total equity attributable to the
equity shareholders of the parent 1,227 1,271 1,573
Six months to
30 September
2008
Unaudited
Six months to
30 September
2007
Unaudited
Year to
31 March
2008
Audited
Note £'000 £'000 £'000
Net cash (used in) from
operating activities
5
(257)
293
239
Investing activities
Acquisition of subsidiary net
of cash acquired
-
(319)
(319)
Proceeds on disposal
of property, plant
and equipment
-
-
1
Expenditure on product
development
-
(124)
(124)
Purchases of property, plant
and equipment
(3)
(10)
(23)
Net cash used in investing
activities
(3)
(453)
(465)
Financing activities
Repayment of loans (27) (30) (60)
Net cash used in financing
Notes to the financial information (unaudited)
activities (27) (30) (60)
Net decrease in cash and
cash equivalents
(287)
(190)
(286)
Cash and cash
equivalents at beginning
of period
153
439
439
Cash and cash equivalents
at end of period
(134)
249
153
1. The financial information contained in this interim statement has not been audited or
reviewed by the Company's auditor and does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The financial information for the full
preceding year is extracted from the statutory accounts for the financial year ended 31
March 2008. Those accounts, upon which the auditor issued an unqualified opinion,
have been delivered to the Registrar of Companies.
2. Trakm8 Holdings PLC is a public limited company incorporated in the United Kingdom
under the Companies Act 1985. The Company is domiciled in the United Kingdom and
its ordinary shares are traded on the Alternative Investment Market ("AIM").
As permitted this Interim Report has been prepared in accordance with UK AIM Rules
for Companies and not in accordance with IAS 34 "Interim Financial Reporting" and
therefore is not fully in compliance with IFRS.
3. Restructuring costs
Restructuring costs in the six months to 30 September 2008 comprise:
£'000
Redundancy costs 36
Cessation of overseas ventures 48
84
Weighted average number of ordinary shares in issue
The diluted loss per share has not been calculated as this would reduce the reported loss per
share.
4. Loss per ordinary share
Six months to
30 September
2008
(Unaudited)
Six months to
30 September
2007
(Unaudited)
Year to
31 March
2008
(Audited)
£'000 £'000 £'000
Loss after taxation (352) (465) (901)
No.
'000
No.
'000
No.
'000
Basic 13,617 11,472 13,517
5. Reconciliation of cash flows from operating activities:
Six months to
Six months to
Year to 30 September
2008
(Unaudited)
30 September
2007
(Unaudited)
31 March
2008
(Audited)
£'000 £'000 £'000
Net loss before taxation (352) (465) (958)
Adjustments for:
Depreciation 21 36 59
Bank and other interest
charges
14
33
67
Amortisation of intangible
assets
120
66
178
Share based payment
expense
6
7
19
Net loss before changes in
working capital
(191)
(323)
(635)
Retranslation of overseas
operations
-
-
5
Movement in inventories 23 35 190
Movement in trade and
other receivables
(46)
736
484
Movement in trade and
other payables
(62)
(122)
262
Cash (absorbed by)
This information is provided by RNS
The company news service from the London Stock Exchange
END
generated from operations (276) 326 306
Interest paid (17) (40) (77)
Interest received 3 7 10
Income taxes received 33 - -
Net cash (used in) from
operating activities
(257)
293
239
6. Copies of the report are available at the Companies website www.trakm8.com and also
from the registered office of Trakm8 Holdings PLC. The address of the registered office
is: Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ.
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