14 November 2012
TRAKM8 HOLDINGS PLC
("Trakm8" or "the Group")
Interim Results
Trakm8 (AIM: TRAK), the designer and developer of GPRS based hardware and software for the vehicle placement and security market, is pleased to announce its unaudited results for the six months ended 30 September 2012:
Highlights
|
|
Six months to 30 September 2012 Unaudited |
Six months to 30 September 2011 Unaudited |
Year to 31 March 2012 Audited |
|
||
|
|
£'000 |
£'000 |
£'000 |
|
||
|
Revenue |
2,322 |
2,517 |
5,216 |
|
||
|
Gross Profit |
1,737 |
1,635 |
3,326 |
|
||
|
Gross Profit % |
74.8% |
65.0% |
63.7% |
|||
|
Earnings before interest, tax, depreciation & amortisation |
228 |
151 |
359 |
|
||
|
Profit before tax |
74 |
18 |
84 |
|
||
|
Diluted earnings per share (pence) |
0.39 |
0.10 |
0.70 |
|
||
|
Net cash and cash equivalents |
1,133 |
443 |
1,087 |
|
||
|
Net assets |
2,431 |
2,262 |
2,380 |
|
||
· Underlying annualised recurring revenues increased by 15% to £2.01m
(2011: £1.74m)
· Gross Profit % increased by 9.8% to 74.8% (2011: 65.0%)
· Strong cash balance provides confidence to invest in growth opportunities:
- Major investment in sales and engineering teams
· ecoN fuel saver product launched with good initial sales pipeline
John Watkins, Chief Executive of Trakm8 said:
"Trakm8 has continued to consolidate its trading position and profitability and has also enhanced its robust financial position. We are pleased to announce a major investment in new personnel to strengthen our sales and engineering teams and we are confident this will lead in the medium term to an acceleration in the growth of the Group".
For further information, please visit www.trakm8.com or contact:
|
Trakm8 plc John Watkins, Chief Executive Officer James Hedges, Finance Director |
01747 858444 |
|
MHP Communications Reg Hoare / Vicky Watkins |
020 3128 8100 |
|
finnCap (Nominated Adviser and Broker) Ed Frisby / Christopher Raggett - corporate finance Simon Starr - corporate broking |
020 7220 0500 |
Chairman's Statement
I am pleased to report Trakm8's results for the six months ended 30 September 2012.
Revenues fell slightly in the period to £2,322K (2011: £2,517K). This reflects the tough economic climate which has impacted some of our customers and makes the quantum and timing of contract awards difficult to predict. However despite this the strength of the Trakm8 business model has resulted in increases in gross profit, profit before tax and cash balances.
There has been a strong increase of 15% in the annualised recurring revenues which are based on increased numbers of units reporting to Trakm8 Swift; these revenues are the bedrock of the company's financial future. In addition there has been an increase in the amount of Engineering Services work we have undertaken. This is the work that integrates our products into customers' own IT infrastructure and further enhances the benefits of a complete telematics solution.
I am pleased to report that Trakm8 has continued to develop new market leading products and has recently launched the ecoN Fuel Saver solution to assist businesses in improving driver behaviours. In addition we have continued to roll out further improvements to our core Trakm8 Swift solution.
Outlook
The Board has reviewed the strategy for the Group in recent months. The business has established a strong financial model and has built up considerable cash resources. This has given us the confidence to embark on a more rapid expansion of our sales, marketing and engineering activities to take advantage of growth opportunities, although it will increase our cost base in the short term as we make the necessary investment. In the medium term, this is expected to drive growth at a faster rate than previously anticipated and we are therefore confident about future prospects for the Group.
DAWSON BUCK
CHAIRMAN
CEO's Report
Product sales
The most significant event of the period was the supply of 2,300 units to a police force in South America. However sales to other integrators were disappointing and reflect the general uncertainty in many markets and countries. It is a fact that these sales are often very unpredictable, with long lead times, and can have a substantial impact from one month to the next.
We have many T8 Mini units on trial around the world. The response to the product has been very positive which has been encouraging. Generally the pipeline of opportunities is stronger than six months ago and reflects the success of our recent appointment of an International Business Development Manager.
Solution Sales
During the period Trakm8 was pleased to launch our ecoN Fuel Saver product and a major update to Trakm8 Swift. Our customer facing web based solutions are now market leading. In addition the quality of the data and the informative way it is delivered gives customers the management tools to drive costs down significantly. The ecoN product is on trial at a large number of customers and so although new sales in the period have been less than last year, the pipeline built is now stronger.
In addition we have finalised the production of our logistics planning software package which provides customers with significant benefits for the scheduling of orders at a reasonable cost.
Solution sales continue to increase the numbers of units reporting to our servers. The annualised recurring revenues derived from our installed base therefore grew considerably in the period to £2,014K (2011: £1,745K).
Engineering Services
The highlight of the period was a contract win to develop a bespoke version of the ecoN product for a new customer. This project is anticipated to be completed in the first quarter of 2013 and is expected to generate considerable increases in the number of units reporting to Trakm8 Swift.
A number of smaller engineering projects were also completed during the period and these too should deliver ongoing increases in our recurring revenues.
Strategy
As the Chairman has reported the Board conducted over recent months a review of the Group's current strategy and has decided to embark on a period of significant expansion.
The past few years have seen a major transition for the business; we have built a strong core of customers whilst growing service recurring revenues, based on a market leading portfolio of telematics products and solutions. This in turn has led to a turnaround in financial performance, with strong profitability following a period of trading losses, and a strong balance sheet with substantial cash resources available.
This fundamental improvement in the Group's position has provided the Board with the confidence and scope to consider a range of strategic options. At the same time the tough economic climate means that our strong financial position and business model gives us a competitive advantage compared to weaker competitors. Our analysis of the market confirms that it is a long term growth market, as our customers continue to focus on fuel economy, insurance costs and the impact of increasing government regulation.
We have looked at a number of possible acquisitions in order to expand the Group's portfolio of products and revenues but we have yet to find a suitable company which will add value. We will continue to respond to opportunities as they arise but eliminate anything that does not have a good strategic fit at a realistic economic price.
The Board believes that the time is right to build on this strong base more aggressively and to accelerate Trakm8's growth rate. So the Group is in the process of hiring a total of 15 new employees in addition to new recruits already planned for 2012/13. This investment is designed to strengthen our sales and marketing resources and our customer support functions. We also intend to establish a new team in our Prague office to address telematics opportunities in the Eastern part of Europe. Furthermore we will augment our engineering functions to expand both the products and solutions we offer and to grow the team undertaking customer bespoke developments. We will ensure that this growth in activity is matched by expansion of our support teams.
Outlook
This strategic investment is likely to impact the Group's profits in the short term, as in total this growth in staff numbers will increase our overheads by in excess of £400K per annum, with some initial impact in the second half of the current financial year. The benefits of this investment are expected to be realised in the medium term.
Notwithstanding the tough economic climate, we expect to have greater visibility by the New Year in respect of converting our strong pipeline of contract opportunities.
The Board is confident that the timing of the investment is opportune both in terms of the general economic climate and to drive forward our future growth in revenues and profits thereby improving shareholder value.
JOHN WATKINS
CEO
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months to 30 September 2012
|
|
Note |
Six months to 30 September 2012 Unaudited
|
Six months to 30 September 2011 Unaudited
|
Year to 31 March 2012 Audited
|
|
|
Continuing operations |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Revenue |
|
2,322 |
2,517 |
5,216 |
|
|
Cost of sales |
|
(585) |
(882) |
(1,890) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
1,737 |
1,635 |
3,326 |
|
|
|
|
|
|
|
|
|
Other income |
|
- |
- |
5 |
|
|
Administrative expenses |
|
(1,662) |
(1,615) |
(3,243) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from operations |
|
75 |
20 |
88 |
|
|
|
|
|
|
|
|
|
Finance income |
|
1 |
- |
1 |
|
|
Finance costs |
|
(2) |
(2) |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before taxation |
|
74 |
18 |
84 |
|
|
Income tax |
|
- |
- |
51 |
|
|
|
|
|
|
||
|
Profit attributable to the owners of the parent |
74 |
18 |
135 |
||
|
|
|
|
|
|
|
|
Other Comprehensive Income |
|
|
|
|
|
|
Currency translation differences |
|
- |
- |
1 |
|
|
|
|
|
|
|
|
|
Total Comprehensive Income for the period attributable to owners of the parent |
74 |
18 |
136 |
||
|
|
|
|
|
|
|
|
Basic earnings per share (pence) |
4 |
0.39 |
0.10 |
0.71 |
|
|
Diluted earnings per share (pence) |
4 |
0.39 |
0.10 |
0.70 |
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months to 30 September 2012
|
|
Share Capital |
Share premium |
Merger Reserve |
Translation reserve |
Retained earnings |
Total equity attributable to owners of the parent |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance as at 1 April 2011 |
188 |
1,719 |
510 |
206 |
(387) |
2,236 |
|
Comprehensive income |
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
- |
18 |
18 |
|
Total comprehensive income |
- |
- |
- |
- |
18 |
18 |
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
Exercise of share options |
1 |
4 |
- |
- |
- |
5 |
|
IFRS2 Share based payments |
- |
- |
- |
- |
3 |
3 |
|
Transactions with owners |
1 |
4 |
- |
- |
3 |
8 |
|
Balance as at 30 Sept 2011 |
189 |
1,723 |
510 |
206 |
(366) |
2,262 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
- |
117 |
117 |
|
Other comprehensive income |
|
|
|
|
|
|
|
Exchange differences on translation of overseas operations |
- |
- |
- |
(1) |
- |
(1) |
|
Total comprehensive income |
- |
- |
- |
(1) |
117 |
116 |
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
Transfer share based payment reserve to Retained earnings |
- |
- |
- |
- |
|
- |
|
IFRS2 Share based payments |
- |
- |
- |
- |
2 |
2 |
|
Transactions with owners |
- |
- |
- |
- |
2 |
2 |
|
Balance as at 31 March 2012 |
189 |
1,723 |
510 |
205 |
(247) |
2,380 |
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
|
|
|
|
|
|
Profit for the period |
- |
- |
- |
- |
74 |
74 |
|
Total comprehensive income |
- |
- |
- |
- |
74 |
74 |
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
Purchase of own shares |
- |
- |
- |
- |
(58) |
(58) |
|
Exercise of share options |
5 |
28 |
- |
- |
- |
33 |
|
IFRS2 Share based payments |
- |
- |
- |
- |
2 |
2 |
|
Transactions with owners |
5 |
28 |
- |
- |
(56) |
(23) |
|
Balance as at 30 Sept 2012 |
194 |
1,751 |
510 |
205 |
(229) |
2,431 |
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2012
|
|
30 September 2012 Unaudited |
30 September 2011 Unaudited
|
31 March 2012 Audited
|
|
|
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
Intangible assets |
878 |
1,081 |
1,005 |
|
Plant, property and equipment |
496 |
457 |
517 |
|
Deferred income tax asset |
99 |
63 |
99 |
|
|
1,473 |
1,601 |
1,621 |
|
Current assets |
|
|
|
|
Inventories |
566 |
478 |
410 |
|
Trade and other receivables |
648 |
1,318 |
782 |
|
Current tax |
- |
- |
15 |
|
Cash and cash equivalents |
1,133 |
443 |
1,088 |
|
|
2,347 |
2,239 |
2,295 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
(1,135) |
(1,338) |
(1,251) |
|
Borrowings |
(48) |
(21) |
(56) |
|
|
(1,183) |
(1,359) |
(1,307) |
|
|
|
|
|
|
Current assets less current liabilities |
1,164 |
880 |
988 |
|
Total assets less current liabilities |
2,637 |
2,481 |
2,609 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Borrowings |
(140) |
(149) |
(163) |
|
Provisions |
(66) |
(70) |
(66) |
|
|
(206) |
(219) |
(229) |
|
Net assets
|
2,431 |
2,262 |
2,380 |
|
Equity |
|
|
|
|
|
|
Note |
|
|
|
|
Called up share capital |
4 |
194 |
189 |
188 |
|
Share premium |
|
1,751 |
1,723 |
1,724 |
|
Merger reserve |
|
510 |
510 |
510 |
|
Translation Reserve |
|
205 |
206 |
205 |
|
Retained loss |
|
(229) |
(366) |
(247) |
|
Total equity attributable to owners of the parent |
|
2,431 |
2,262 |
2,380 |
CONSOLIDATED CASH FLOW STATEMENT
for the six months to 30 September 2012
|
|
|
Six months to 30 September 2012 Unaudited |
Six months to 30 September 2011 Unaudited
|
Year to 31 March 2012 Audited
|
|||
|
|
Note |
£'000 |
£'000 |
£'000 |
|||
|
Net cash inflow / (outflow) from operating activities |
5 |
109 |
(614) |
111 |
|||
|
|
|
|
|
|
|||
|
Cash flows from investing activities
|
|
|
|
||||
|
Purchase of intangible assets |
(2) |
(42) |
(90) |
||||
|
Purchases of property, plant and equipment |
|
(5) |
(11) |
(91) |
|||
|
Net cash used in investing activities |
|
(7) |
(53) |
(181) |
|||
|
|
|
|
|
|
|||
|
Cash flows from financing activities
|
|
|
|
||||
|
Proceeds from exercise of share options |
|
33 |
5 |
5 |
|||
|
Repayment of obligations under hire purchase contracts |
|
(21) |
(4) |
53 |
|||
|
Repayment of loans |
|
(10) |
(10) |
(20) |
|||
|
Purchase of own shares |
|
(58) |
- |
- |
|||
|
Net cash used in financing activities |
|
(56) |
(9) |
38 |
|||
|
Net increase / (decrease) in cash and cash equivalents |
46 |
(676) |
(32) |
||||
|
Cash and cash equivalents at beginning of period
|
1,087 |
1,119 |
1,119 |
||||
|
Cash and cash equivalents at end of period |
|
1,133 |
443 |
1,087 |
|||
Notes to the financial information (unaudited)
1. The financial information contained in this interim statement has not been audited or reviewed by the Group's auditor and does not constitute statutory accounts as defined Section 434 of the Companies Act 2006. The Directors approved and authorised this interim statement on 14 November 2012. The financial information for the preceding full year is extracted from the statutory accounts for the financial year ended 31 March 2012. Those accounts, upon which the auditor issued an unqualified opinion and did not include a statement under Section 498(2) or (3) of the Companies Act 2006, 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 2006. Trakm8 is domiciled in the United Kingdom and its ordinary shares are traded on AIM, the market operated by the London Stock Exchange plc.
3. 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. The Interim results have been prepared in a manner consistent with the accounting policies set out in the statutory accounts for the financial year ending 31 March 2012.
4. Profit per ordinary share attributable to the owners of the parent
|
|
Six months to 30 September 2012 Unaudited |
Six months to 30 September 2011 Unaudited |
Year to 31 March 2012 Audited
|
|
|
£'000 |
£'000 |
£'000 |
|
Profit attributable to the owners of the parent |
74 |
18 |
84 |
Weighted average number of ordinary shares in issue
|
|
Six months to 30 September 2012 Unaudited |
Six months to 30 September 2011 Unaudited |
Year to 31 March 2012 Audited
|
|
|
No. '000 |
No. '000 |
No. '000 |
|
Basic |
18,999 |
18,777 |
18,821 |
|
Diluted |
19,064 |
19,225 |
19,159 |
On 25 September 2012 Trakm8 Holdings PLC purchased 370,000 of its own ordinary shares at a price of 15.5 pence each. These shares are being held in treasury and have been excluded from the weighted average number of shares used for calculating basic and diluted earnings per share.
5. Reconciliation of cash flows from operating activities:
|
|
Six months to 30 September 2012 Unaudited |
Six months to 30 September 2011 Unaudited |
Year to 31 March 2012 Audited |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Net profit before taxation |
74 |
18 |
84 |
|
Adjustments for: |
|
|
|
|
Depreciation |
25 |
17 |
37 |
|
Bank and other interest charges |
1 |
2 |
4 |
|
Amortisation of intangible assets |
130 |
113 |
235 |
|
Share based payment expense |
2 |
3 |
5 |
|
|
|
|
|
|
Operating cashflows before movement in working capital |
232 |
153 |
365 |
|
|
|
|
|
|
Retranslation of overseas operations |
- |
- |
(1) |
|
Movement in inventories |
(156) |
(219) |
(151) |
|
Movement in trade and other receivables |
135 |
(424) |
110 |
|
Movement in trade and other payables |
(116) |
(139) |
(226) |
|
|
|
|
|
|
Cash generated from / (used in) operations |
95 |
(629) |
97 |
|
|
|
|
|
|
Interest paid |
(2) |
(3) |
(5) |
|
Interest received |
1 |
- |
1 |
|
Income taxes received |
15 |
18 |
18 |
|
|
|
|
|
|
Net cash generated from / (used in) operating activities |
109 |
(614) |
111 |
6. Copies of the report are available at the Group's 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.