Half Yearly 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

  • 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:


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




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.


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


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)











Basic loss per share (pence)

4

(2.6)

(4.0)

(7.6)




CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months to 30 September 2008


 


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


19 






Total equity at end of period


1,227 

1,271 

1,573 




CONSOLIDATED BALANCE SHEET 

as at 30 September 2008



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 


-  


(6)


(2)

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 





CONSOLIDATED CASH FLOW STATEMENT 

for the six months to 30 September 2008




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


-  


-  


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 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 




Notes to the financial information (unaudited)


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


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)


Weighted average number of ordinary shares in issue


 

No.

'000

No.

'000

No.

'000

Basic

13,617

11,472

13,517


The diluted loss per share has not been calculated as this would reduce the reported loss per share.


5.

Reconciliation of cash flows from operating activities:




Six months to

30 September

2008

(Unaudited)


Six months to

30 September

2007

(Unaudited)


Year to

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




19 





Net loss before changes in working capital


(191)


(323)


(635)





Retranslation of overseas operations


-  


-  


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) generated from operations


(276)


326 


306 





Interest paid

(17)

(40)

(77)

Interest received

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.



This information is provided by RNS
The company news service from the London Stock Exchange
 
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