Interim Results
Trakm8 Holdings PLC
15 December 2006
Embargoed until 7am 15 December 2006
TRAKM8 HOLDINGS PLC
("Trakm8" or "the Group")
Interim Results
For the 6 Months to 30 September 2006
Trakm8, the leading technology provider, designer and developer of GPRS based
hardware and software to the vehicle tracking and security market, is pleased to
announce its Interim Results for the six months to 30 September 2006.
Highlights
• 30% increase in turnover
• 49% increase in gross profit
• Increase in gross profit percentage from 32.2% to 36.7%
• 207% increase in net assets
• Completion of acquisition of Interactive Projects Ltd
Unaudited Results for the six months to 30 September 2006
Six months Six months
ended ended
30 Sept 2006 30 Sept 2005
Unaudited Unaudited
£000's £000's
Turnover 3,206 2,460
Gross Profit 1,177 792
Gross Profit % 36.7% 32.2%
Operating Profit 141 153
Profit on ordinary activities before
taxation 131 129
Cash at bank and in hand 257 112
Net Assets 1,445 470
Commenting on the results, Cary Knapton, CEO of Trakm8 said: "The first half of
our financial year has been a very successful one for the Company. We have
secured our Intellectual property, delivered a profitable set of results and
begun the transition to the next phase of our business model. The launch of
Trakm8 SWIFT has the potential to revolutionise the smaller fleet management
market. I look forward to reporting further progress in due course for Trakm8
SWIFT."
Chairman's Statement
It is with pleasure that I report the unaudited Trakm8 Holdings PLC interim
results for the six months ended 30th September 2006.
I am pleased to report that turnover in the period increased 30% to £3.206
million (2005: £2.460 million) generating a profit before tax of £0.13 million
(2005: profit £0.13 million).
This year the Company has embarked on a strategy to strengthen and grow
shareholder value. The strategy commenced with the acquisition of Interactive
Projects Limited (IPL) on 26th May 2006, an acquisition designed to secure a
significant proportion of the Group's core Intellectual Property Rights ("IPR");
and continued with the recently announced launch of Trakm8 SWIFT (TM).
The Group designs and develops GPS (Global Positioning System) based hardware
and software for the vehicle telematics market. During the period our hardware
sales volumes grew significantly and we continued to supply our products to
partners around the globe. In addition the Group recently launched Trakm8
SWIFT (TM); our first ASP (Application Service Provider) based service offering
and a major expansion to our product portfolio. The Directors firmly believe
that our innovative business model of focusing solely on the primary activity
areas within our industry can be successfully evolved to support service
offerings and that this will allow us to maintain our differentiation
successfully in the market.
Trakm8 SWIFT (TM)
Trakm8 SWIFT (TM) enjoyed a soft launch late October and initiates a strategy of
taking our products direct to market. With an intuitive web-based front end
supported by our STREAM server architecture this product is priced
competitively. Initial customer feedback has been excellent and we expect this
revenue stream to grow in importance for the Group.
Acquisition of Interactive Projects Limited
On 26th May 2006 the Group completed the acquisition of Interactive Projects
Limited (IPL) thereby securing protection for the core intellectual property
used by the Group. Due to the existing close working relationship between Trakm8
and IPL no integration issues were expected and indeed none have materialised. I
am pleased therefore to note that the integration of the two companies is now
complete and the expanded organisation is now working to full effect. In
accordance with the Terms of Sale the Group applied for the admission to the
Alternative Investment Market (AIM) of the remaining 446,423 Consideration
Shares effective from 29th November 2006.
Outlook
The Trakm8 Group has had a successful past 6 months and the Board believes that
the outlook is promising. We consider that our differentiated offerings combined
with the launch of Trakm8 SWIFT (TM) offer our clients the functionality and
flexibility they require. The roll-out of further services and product solutions
remain on track.
The launch of Trakm8 SWIFT (TM) has been a major milestone for the Group and the
project team are to be congratulated. This project demonstrates that revenue
growth, achieving greater profitability and delivering increased shareholder
value remain the core tenets of the Group strategy. I would like to thank the
Executive team and staff for their continuing hard work, dedication to the Group
and the continuing success this is creating.
DAWSON BUCK
CHAIRMAN
Chief Executive Officer's Review
Financial Review
Turnover for the six months ended 30th September 2006 was £3.206m (2005:
£2.460m), an increase of 30%. Gross profit increased to £1.18m (2005: £0.79m).
Gross margins improved to 36.7% (2005: 32.2%), a 4.5% improvement. Despite
increased administrative expenses of £1.03m (2005: £0.64m) the Group is pleased
to announce a profit on ordinary activities before taxation for the period of
£0.13 (2005: £0.13).
Project costs to enable the delivery of Trakm8 SWIFT (TM) totalled £0.19m. In
accordance with our accounting policy these amounts have been capitalised and
will be amortised over the life expectancy of the product.
Net cash decreased in the period by £0.08m (2005: £0.16m) but this includes
£0.19m acquisition costs associated with the purchase of Interactive Projects
Limited.
Operational Review
The Group has seen revenue grow further in this half year. A continued increase
in recognition of the business benefits of vehicle tracking technology in
general and our innovative products in particular accounts for this growth.
These, together with a general increase in both public awareness and acceptance
of telematics technologies, give the Group reason for optimism for the future.
Organisations are now not just realising the benefits of telematics technology
to their operations but increasingly seeking out the most capable and cost
effective platforms. The Board strongly believe that our competitive products
which combine technical innovation and high capability are well placed to
benefit from this increasing market awareness.
Trakm8's products continue to be used around the globe. Distributors in the
Americas, Asia Pacific and Africa are showing increasing growth. In our core
market of the UK, where the Group operates through both distributors and other
partnerships, there has been significant growth in the period. In Europe the
Co-operation Agreement with Punch Telematix is now starting to bear fruit. In
the UK, the Groups relationships with the two major vehicle tracking
subsidiaries of FTSE 100 companies have continued to mature.
Nevertheless the Group has recognised for some time that this business model
needed overhaul. Whilst initially very successful, saving the Group unnecessary
set up costs and marketing expenses, continued price pressure has constrained
the Group's scope to significantly increase margins. Trakm8's route to market is
therefore set to change, commencing with Trakm8 SWIFT (TM), which will see the
Group deliver a targeted proposition direct to market for the first time.
Although not entirely risk free initial indications are that the proposition is
being well received by customers with a growing order book emerging.
Whilst Trakm8's hardware sales currently provide the majority of the Group's
revenue the Board believes that its higher margin software offerings will
account for a significantly increased proportion of future revenues. Spearheaded
by Trakm8 SWIFT (TM) and building on enhancements to STREAM (the Group's
scaleable software architecture) the Group expects to transition a growing
portion of revenues to ASP based solutions delivering higher margins in the
coming years.
Outlook
Building on the launch of Trakm8 SWIFT (TM), the acquisition of IPL and the
increased volume of sales the Board took the decision in October to internally
restructure the organisation. This will allow the Board to focus more clearly on
the strategic opportunities available whilst day-to-day direction now rests with
operational management. The board believes that this change will considerably
enhance the ability of the Group to strengthen its position globally through
in-country SWIFT launches and joint ventures.
The Group has continued to carefully observe developments in government
legislation and other regulatory initiatives; where road tolling, congestion
charging, energy efficiency and Health & Safety responsibility are all rapidly
becoming key factors in the expansion of the telematics market. In addition, a
heightened UK corporate governance regime is leading to a requirement emerging
with business leaders to successfully manage and mitigate in-vehicle employee
related risk.
The telematics industry is seeing exciting developments and businesses are
reaping the benefits of this efficiency driven technology. I am delighted to
report that Trakm8 has a strong order book moving into the second half of the
financial year and with the addition of Trakm8 SWIFT (TM) remains well placed to
capitalise on the opportunities presenting themselves in the market place.
The Group looks forward to the immediate future with enthusiasm and I am
confident we will continue to successfully deliver our innovative products to
the market.
CARY KNAPTON
CHIEF EXECUTIVE OFFICER
(TM) Trade Mark
Profit & loss account of Trakm8 Holdings PLC
For the six months ended 30 September 2006
Note Six months to Six months to Year ended
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited
restated*)
£000's £000's £000's
TURNOVER
Continuing operations 3,205 2,460 5,213
Acquisition 1 - -
-------- -------- --------
3,206 2,460 5,213
Cost of Sales (2,029) (1,668) (3,349)
-------- -------- --------
Gross Profit 1,177 792 1,864
Operating Expenses (1,036) (639) (1,645)
-------- -------- --------
OPERATING PROFIT
Continuing operations 179 153 219
Acquisition (38) - -
-------- -------- --------
141 153 219
Interest receivable 7 0 5
-------- -------- --------
148 153 224
Interest payable (17) (24) (25)
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 131 129 199
Taxation 3 (25) (25) (44)
-------- -------- --------
PROFIT FOR THE
PERIOD 106 104 155
======== ======== ========
Basic earnings
per share(pence) 4 1.0 - 1.4
Diluted earnings per
share (pence) 0.9 - 1.4
======== ======== ========
* The restatement of comparatives applies solely to the charge for share based
payments that is required by FRS 20 (see note 2).
Balance Sheet of Trakm8 Holdings PLC
As at 30 September 2006
As at As at As at
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited
restated*)
£000's £000's £000's
FIXED ASSETS
Intangible Assets 875 - -
Tangible Assets 471 389 393
--------- -------- --------
1,346 389 393
CURRENT ASSETS
Stocks 472 339 398
Debtors 1,300 1,062 1,071
Cash at bank and in hand 257 112 403
--------- -------- --------
2,029 1,513 1,872
CREDITORS: Amounts falling
due within one year (1,558) (991) (1,027)
--------- -------- --------
NET CURRENT
ASSETS 471 522 845
--------- -------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES 1,817 911 1,238
CREDITORS:Amounts falling
due after more than one year (372) (441) (253)
--------- -------- --------
NET ASSETS 1,445 470 985
========= ======== ========
CAPITAL & RESERVES
Called up Share Capital 110 101 110
Share Premium Account 435 - 435
Shares to be issued 324 - -
Share based payment Reserve 50 - 20
Merger Reserve 510 510 510
Profit & Loss account 16 (141) (90)
--------- -------- --------
SHAREHOLDERS' FUNDS 1,445 470 985
========= ======== ========
* The restatement of comparatives applies solely to the charge for share based
payments that is required by FRS 20 (see note 2).
Cash flow statement of Trakm8 Holdings PLC
For the six months ended 30 September 2006
Note Six months to Six months to Year ended
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited)
£000's £000's £000's
Cash flow from
operating activities 5 201 (124) (265)
Returns on
investments and
servicing of finance
Interest received 7 - 5
Interest paid (17) (24) (25)
-------- -------- --------
-------- -------- --------
Net cash (outflow)from
returns on investments
and servicing of
finance (10) (24) (20)
Capital expenditure &
financial investment
Purchase of tangible
fixed assets (68) (9) (32)
-------- -------- --------
-------- -------- --------
Cash inflow/(outflow)
before acquisitions 123 (157) (317)
Purchase of IPL (189) - -
-------- -------- --------
Net Cash outflow
before financing (66) (157) (317)
Proceeds from the
issue of New
Ordinary Shares - - 914
Expenses paid in
connection with
share issue - - (470)
Repayment of Bank
Loans (18) (5) (8)
-------- -------- --------
(Decrease)/Increase
in cash in period (84) (162) 119
======== ======== ========
Cash flow statement of Trakm8 Holdings PLC
For the six months ended 30 September 2006
Continued
Six months to Six months to Year ended
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited)
£000's £000's £000's
Reconciliation of net cash flow
to movement in net debt
(Decrease)/Increase in cash
in period (84) (162) 119
Cash outflow from
loan repayments 18 5 8
-------- -------- --------
(66) (157) 127
Loans and finance
leases acquired with
subsidiary (193) - -
-------- -------- --------
Movement in net debt
in the period (259) (157) 127
Opening net funds (212) (339) (339)
-------- -------- --------
Closing net funds (471) (496) (212)
-------- -------- --------
Notes to the financial information
1. Basis of Preparation
This report was approved and authorised for issue by the Directors on 12
December 2006. The interim financial information comprise the unaudited results
for the six months to 30 September 2006 and the six months to 30 September 2005;
and the audited financial statements for the year to 31 March 2006. The interim
financial statements have been prepared on a consistent basis and using the
accounting policies set out in the accounts for the year ended 31 March 2006
with the exception of the application of FRS 20 (see note 2).
Interactive Projects Limited ("IPL") was acquired on 26 May 2006. The financial
statements include the profit & loss results for the four months to 30 September
2006.
The financial information contained in this interim statement has not been
audited or reviewed by the Group's auditors and does not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985.
Statutory financial statements for the Company for the year to 31 March 2006,
prepared on the basis of the accounting policies set out in those accounts, were
reported on by the auditors without qualification or statement under section 237
(2) or (3) of the Companies Act 1985 and have been delivered to the Registrar of
Companies. Comparative information for the year ended 31 March 2006 shown in
this report has been extracted from those accounts but they have been restated
for the impact of FRS 20.
2. Adoption of new accounting policy
The adoption of FRS 20 (Share based payments), which is effective for accounting
periods beginning on or after 1 January 2006, requires a prior period adjustment
to be made.
The Group issues share based payments to certain employees. Share based payments
are measured at fair value (excluding the effect of non market based vesting
conditions) at the date of grant. The fair value determined at the grant date of
the share based payments is expensed on a straight line basis for the effect of
non market based vesting conditions.
Fair value is measured by use of the Black Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate for the
effects of non-transferability, exercise restrictions and behavioural
considerations.
Six months to Six months to Year ended
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited)
£000's £000's £000's
Profit /(loss) for the
financial period under 2005
accounting policies 136 104 175
FRS 20 Share based payments (30) - (20)
-------- -------- -------
Profit for the financial
period under 2006
accounting policies 106 104 155
======== ======== =======
There is no impact on the balance sheet at any of the period ends covered by
this review.
3. Taxation
Taxation charged for the six months to September 2006 is calculated by applying
the directors' best estimate of the annual tax rate to the profit for the
period.
4. Basic and diluted earnings per share
The basic profit per share has been calculated based on the profit on ordinary
activities after taxation and the weighted average number of ordinary 1p each in
issue for the period of six months to 30 September 2006 of 11,026,000. The
earnings per share for the year ended 31 March 2006 has been restated to take
account of the adoption of FRS 20.
In 2005 the Group did not exist as a quoted entity and hence earnings per share
data has not been calculated.
5. Reconciliation of operating profit to net cash flow from operating activities
Six months to Six months to Year ended
30 September 30 September 31 March
2006 2005 2006
(unaudited) (unaudited) (audited)
£000's £000's £000's
Operating profit 141 153 219
Depreciation 28 7 26
Development Costs
capitalised (220) - -
Share Options expense 30 - 20
(Increase) in stocks (32) (196) (256)
(Increase) in debtors (185) (221) (249)
Increase/(decrease) in
creditors 439 133 (25)
-------- -------- -------
Net cash flow from
operating activities 201 (124) (265)
======== ======== =======
6. Net Debt as at 30 September 2006
At Cash flow IPL Acquisition Other At
1 April 2006 non - cash 30 September
Changes 2006
(£000's) (£000's) (£000's) (£000's) (£000's)
Cash at bank 402 (145) - - 257
Overdrafts and (164) 61 - - (103)
loans 238 (84) - - 154
Debts falling
due after 1 yr (253) - (132) 13 (372)
------- ------- ------- ------- -------
Debts falling
due within 1 yr (197) 13 (36) (13) (233)
Hire purchase - 5 (25) - (20)
------- ------- ------- ------- -------
(212) (66) (193) - (471)
======= ======= ======= ======= =======
7. Acquisition of Interactive Projects Limited
On 26 May 2006 the Company acquired the entire issued share capital of
Interactive Projects Limited. The consideration was £100,000 in cash paid to the
vendors on 26 May 2006 and 446,423 Ordinary shares were allotted and issued to
the vendors on 29 November 2006 at a market price of 72.5 pence per share. The
transaction has been accounted for by the acquisition method of accounting as
detailed in FRS 6 (Acquistions and Mergers). The following assets and
liabilities were acquired at the date of acquisition:
Book Value as Fair Value as
at May 2006 at May 2006
(unaudited) (unaudited)
£000's £000's
Intangible Assets 200 600
Tangible Assets 38 38
Stocks 42 42
Debtors 43 43
Bank overdraft (19) (19)
Loan & trading balance
with Trakm8 (48) -
Trade Creditors (47) (47)
Other Creditors (24) (24)
Finance Leases (25) (25)
DTi Loans (168) (168)
-------- --------
(8) 440
--------
Goodwill 54
--------
Total Consideration 494
========
Satisfied by:
Cash 100
Costs of acquisition 70
Fair value of shares
issued 324
--------
494
========
The results of IPL have been consolidated in the Profit & Loss account for the
Group for the four months from the date of acquisition to 30th September 2006.
8. Interim Report
The report containing the interim financial information is to be sent direct to
shareholders. Copies of the report are available to the public from the
registered office of Trakm8 Holdings plc. The address of the registered office
is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ.
Contacts:
Trakm8 Holdings PLC
Lydden House, Wincombe Business Park, Shaftesbury, Dorset SP7 9QJ
Tel: +44 (0)1747 858444
Nominated Advisor and Broker
Arbuthnot Securities Limited
Arbuthnot House, 20 Ropemaker Street, London, EC2Y 9AR
Tel: +44 (0)20 7012 2000
Accountants
Baker Tilly
1 Georges Square, Bath Street, Bristol, BS1 6BP
Tel: +44 (0)117 945 2000
Financial Public Relations
Tavistock Communications
131 Finsbury Pavement, London, EC2A 1NT
Tel: +44 (0)20 7920 3150
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