TIDMTRAK
RNS Number : 6820J
Trakm8 Holdings PLC
21 December 2015
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR
RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO
SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS
OR REGULATIONS.
21 December 2015
TRAKM8 HOLDINGS PLC
("Trakm8", the "Group" or the "Company")
Proposed acquisition of Route Monkey Holdings Limited and GBP6
million placing
Adds fleet routing optimisation capability
Trakm8 Holdings Plc, the AIM listed telematics and data provider
to the global market place, is pleased to announce that it has
conditionally agreed to acquire the entire issued share capital of
Route Monkey Holdings Limited ("Route Monkey"), a provider of
technology solutions that optimise fleet routing, for a
consideration of up to GBP9.1 million, including maximum deferred
consideration of GBP2.0 million (the "Acquisition").
The Acquisition will be funded through a combination of a
drawdown of new Trakm8 debt facilities, a placing of 1,801,802 new
ordinary shares of one pence each in the Company ("Ordinary
Shares") ("Placing Shares") at a price of 333 pence per Placing
Share (the "Issue Price") to raise GBP6 million (the "Placing") and
184,441 new Ordinary Shares being issued as part of the
consideration to the senior management shareholders of Route Monkey
("Consideration Shares").
The Placing with new and existing institutional investors,
conducted by finnCap, was oversubscribed. The Placing adds new
blue-chip institutions to the share register. The Acquisition is
expected to complete ("Completion") on admission of the Placing
Shares to trading on AIM ("Admission").
The Acquisition is in line with Trakm8's strategy of augmenting
its organic growth with selective acquisitions that expand its
telematics offering to both insurance and fleet customers. The
Acquisition is expected to be immediately earnings enhancing.
Transaction Highlights
-- Trakm8 to acquire Route Monkey for a consideration of up to
GBP9.1 million, including a maximum of GBP2 million deferred cash
consideration;
-- Initial consideration of GBP5.4 million is payable on
Completion, in addition to a repayment of a company loan valued at
GBP1.7 million(1) ;
-- The initial consideration will be funded as follows:
GBP0.5m Debt draw down on new banking
facilities
GBP6.0m The Placing
GBP0.6m Consideration Shares
--------
GBP7.1m Total
Strategic Highlights
The Acquisition brings the following strategic benefits for
Trakm8:
-- Route Monkey adds new and complementary technology capability
to Trakm8 in the field of fleet route planning including a strong
capability for electric vehicles;
-- Trakm8 will integrate Route Monkey's algorithms and related
software into Trakm8's telematics and camera solutions to provide
an enhanced service offering;
-- Trakm8's existing Logistics solution is highly effective in
the organisation of orders, jobs and deliveries but will benefit
from a dynamic optimisation enhancement which Route Monkey
provides, and;
-- Trakm8 provides Route Monkey with access to its larger customer base and sales force.
John Watkins, Executive Chairman of Trakm8 commented:
"The acquisition of Route Monkey is highly complementary to
Trakm8 as it adds route planning and optimisation capability to our
existing technology, a key to enabling us to offer integrated
solutions to customers in line with the development of market
requirements.
"We look forward to welcoming the Route Monkey team into the
growing Trakm8 group and expect the business will add another
source of organic sales growth and recurring revenues.
"Together the acquisitions of Route Monkey and DCS (completed in
June 2015) significantly enhance Trakm8's competitive advantage,
add substantial growth opportunities, and are expected to be
earnings enhancing."
For further information please contact:
Trakm8 Holdings plc +44 1747 858444
John Watkins, Executive Chairman
James Hedges, Finance Director
MHP Communications (Financial
PR to Trakm8) +44 20 3128 8100
Reg Hoare / Jade Neal / Charlotte
Coulson
finnCap (Nomad & Broker to
Trakm8) +44 20 7220 0500
Ed Frisby / Simon Hicks -
corporate finance
Joanna Scott - corporate broking
Background on Route Monkey and Integration Plans
Route Monkey is a software provider which specialises in
solutions that optimise fleet route planning, for both conventional
and electric vehicles. Its software generates savings and
efficiencies for organisations by optimising their fleet, resources
and infrastructure. Its main products include mathematical
algorithms, software and consultancy. Customers include Shell, BMW,
Yodel and Iceland.
The business was founded in 2009, and will continue to be based
in Livingston, Scotland whilst retaining its small offices in
Gateshead and Amsterdam; it currently has 23 employees (including
six engineers and five sales people). Senior management are being
retained and incentivised.
Trakm8's strategy is to integrate Route Monkey's algorithms and
related software into Trakm8's telematics solutions. Trakm8 will
also consolidate Route Monkey's legal, accounting and HR functions
into its own. Route Monkey's sales force will be boosted by the
existing Trakm8 sales force and customer opportunities. Trakm8 will
continue to develop the Route Monkey brand and will undertake an
integration plan for both the product and engineering to combine
the best of both companies.
In the year ended 31 December 2014, Route Monkey recorded
revenues (including a proportion of recurring revenues) of GBP1.7
million and profit before tax of GBP0.7 million. Net debt was
GBP0.5 million at the year end, with net assets of GBP1.2
million.
Reasons For and Benefits of the Acquisition
The board of Directors of Trakm8 considers the opportunities
represented by the Acquisition to be:
-- Route Monkey's core technologies complement Trakm8's existing
Fleet Management solutions. Combining Route Monkey's optimisation
with Trakm8's telematics and camera solutions will provide an
enhanced service offering;
-- Route Monkey provides demonstrable expertise in the
increasingly important electric vehicle market;
-- Route Monkey software provides a dynamic optimisation
enhancement to Trakm8's existing Logistics solution which is highly
effective in the organisation of orders, jobs and deliveries;
-- Trakm8 provides Route Monkey with access to its larger customer base and sales force;
-- Significantly enhances Trakm8's competitive advantage, and;
-- Together with the acquisition of DCS (completed in June 2015)
adds growth opportunities for the combined Group.
The Directors expect the Acquisition to be immediately earnings
enhancing for the Group. This statement does not constitute a
profit forecast nor should it be interpreted to mean that the
future earnings per Ordinary Share of the Group following
Completion will necessarily match or exceed historical earnings per
Ordinary Share.
Terms of the Acquisition and New Banking Facilities
Trakm8 is acquiring Route Monkey from its senior management and
The North East Technology Fund L.P. and Northern I.T. Research Ltd
for a total maximum consideration of up to GBP9.1 million (on a
debt free cash free basis). The consideration is payable as
follows:
-- Initial consideration of GBP5.4 million (GBP4.8 million cash
and GBP0.6 million in Consideration Shares) payable on Completion,
subject to any adjustments against a targeted level of working
capital in Route Monkey on Completion(1) ;
-- Repayment of GBP1.7 million company loan payable in cash on Completion(1) ; and
-- Up to GBP2.0 million of deferred conditional cash
consideration payable on 1 April 2017 (based on performance in the
year to 31 December 2016).
In addition, following Completion new options over a total of
300,000 Ordinary Shares will be allocated amongst key Route Monkey
staff with an exercise price equal to the Issue Price.
To part fund the Acquisition and provide additional future
headroom, Trakm8 has increased its total banking facilities on
Completion to GBP10 million, comprised of:
-- GBP5 million term loan facility (1.95% + HSBC base rate); and
-- GBP5 million RCF facility (1.5% + LIBOR on drawn, 0.75% on undrawn).
The RCF facility will be undrawn following Completion. The
Acquisition remains subject to completion of the Placing and is
expected to complete on Admission.
(1) Initial cash consideration and repayment of a company loan
to equal GBP6.5 million. The loan is currently estimated at GBP1.7
million and the final quantum of the loan will be confirmed on
Completion.
Details of the Placing and Total Voting Rights
Pursuant to the Placing, the Company will issue 1,801,802 new
Ordinary Shares (the "Placing Shares") at the Issue Price.
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM and Admission is
expected to occur on 30 December 2015. The Placing Shares will rank
pari passu in all respects with the existing Ordinary Shares.
The Placing is conditional, inter alia, upon the placing
agreement not having been terminated, and admission of the Placing
shares having occurred by no later than 30 December 2015 (or such
time and date as the Company and finnCap may agree, being not later
than 29 January 2016). The Placing is not being underwritten.
Pursuant to the Acquisition Agreement, the Company will issue
184,441 Consideration Shares at the Issue Price. Application will
be made to the London Stock Exchange for the Consideration Shares
to be admitted to trading on AIM and Admission is expected to occur
on 30 December 2015. The Consideration Shares will rank pari passu
in all respects with the existing Ordinary Shares.
(MORE TO FOLLOW) Dow Jones Newswires
December 21, 2015 02:00 ET (07:00 GMT)
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