TIDMTRAK
RNS Number : 5184X
Trakm8 Holdings PLC
27 November 2017
27 November 2017
TRAKM8 HOLDINGS PLC
("Trakm8" or the "Group")
Half Year Results
Organic growth strategy delivering enhanced earnings and debt
reduction
Trakm8 Holdings plc (AIM: TRAK), the global telematics and data
insight provider, announces its unaudited results for the six
months ended 30 September 2017:
Financial Highlights
6 months 6 months Year to Change
to to 30 31 March
30 Sept Sept 2016 2017
2017 Unaudited Audited
Unaudited GBP'000 GBP'000
GBP'000
Revenue 14,752 13,181 26,759 12%
of which, recurring
revenue(1) 5,482 4,687 9,842 17%
Operating profit 806 362 858 123%
Adjusted operating
profit(2) 1,049 589 1,321 78%
Cash generated from
operating activities 3,574 128 668 2,692%
Profit before tax 726 282 693 157%
Adjusted basic earnings
per share(2) 3.56p 1.58p 5.81p 125%
Basic earnings per
share 2.97p 0.88p 4.51p 238%
-- 29% Solutions revenue growth (core telematics business)
-- 17% growth in recurring revenues
-- 35% Products revenue decline as planned exit from Contract
electronic manufacturing (CEM) progressed
-- Net debt(3) reduced to GBP2.32m (2016: GBP4.40m) (FY2017: GBP3.87m)
(1) Fees from service, support and data
(2) Adjustment for exceptional costs of operational
restructuring and share based payments
(3) Total borrowings less cash
Operating highlights
-- Continuation of underlying organic growth:
o New contract awards with major clients Intelematics Europe,
Calor Gas and Mecalac and extensions with Iceland Foods, Shell, and
DLG
o Installed base continues to grow strongly from existing and
new customers:
-- approximately 217,000 connections (Sept 2016: 177,000
connections), an increase of 27,000 connections (14%) in the six
month period since last year end
-- A year of planned investment for future growth:
o Continued additional investment in engineering, sales and
marketing resource totalling c.GBP1.2m in the period
o Roll out of highly innovative new technologies to major
customers
-- Cessation of contract electronic manufacturing to provide
capacity for more in house product build in support of solution
sales and business simplification
-- Operational costs reduced further by c.GBP0.8m for the six month period
John Watkins, Executive Chairman of Trakm8 said:
"Trakm8 has had a period of good organic growth from existing
and new customers. The installed base of devices continues to
increase resulting in growing recurring revenues which are the core
of Trakm8's long term growth and predictability."
"First half profitability has been very much in line with
expectations and is a positive improvement on last year's
result."
"The GBP1.55m reduction of net debt since the start of the
financial year provides the improved balance sheet to support
growth."
"We anticipate a stronger second half as usual. With our strong
range of substantial new contracts in place, and as a result of
increased sales and marketing activity, we have visibility to
support our second half expectations."
"The outcome for the full year is less dependent on securing
contracts from new customers than in previous years. The outcome is
dependent on existing customer contracts where there is a level of
uncertainty of end user demand. The Board remains confident that
the market expectations will be met for the full year."
For further information, please visit www.trakm8.com or
contact:
Trakm8 Holdings plc
John Watkins, Executive Chairman +44 (0) 1747 858
Jon Furber, Finance Director 444
Buchanan Communications
Henry Harrison-Topham / Victoria Hayns +44 (0) 20 7466 5000
finnCap (Nominated Adviser and Broker)
Ed Frisby / Simon Hicks - Corporate finance
Tim Redfern / Richard Chambers - Corporate
broking +44 (0) 20 7220 0500
A meeting for analysts will be held at Buchanan, 107 Cheapside,
London, EC2V 6DN today, Monday 27 November 2017, commencing at
9:30a.m. Trakm8's Half Year Results 2018 are available at
www.trakm8.com
About Trakm8
Trakm8 is a UK based technology leader in fleet management,
insurance telematics, optimisation and dashboard camera systems.
Through IP owned technology, the Group analyses data collected by
its installed base of telematics units to fine tune the algorithms
that are used to produce its telematics based solutions; these
score driver behavior, monitor vehicle health and continuously
improve the security and operational efficiency of both private
drivers and company fleets.
The Group's product portfolio includes cameras (including the
recently launched integrated telematics camera), self-installed
telematics units and technology to eliminate distracted driving due
to mobile phones, and it has over 217,000 installed units reporting
to its servers.
Headquartered in Coleshill near Birmingham alongside its
manufacturing facility, the Group supplies to the Fleet,
Optimisation, Insurance and Automotive sectors, to many well-known
customers in the UK and internationally including the AA, Saint
Gobain, EON, Direct Line Group and Young Marmalade.
Trakm8 has been listed on the AIM market of the London Stock
Exchange since 2005.
www.trakm8.com / @Trakm8
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Executive Chairman's Statement
Results
I am pleased to report Trakm8's results for the six months ended
30 September 2017, in line with expectations for the full year.
There has been continued progress for the Group as it migrates
into a pure telematics data solutions provider, with ongoing
reductions in hardware sales to other telematics companies and
contract electronic manufacturing (CEM) activities. This has the
effect in the short term of reducing the headline growth of the
Group but ensures focus on the long term higher quality of earnings
from data solutions. Increased engineering and sales &
marketing investments have borne fruit in new contracts and
revenues. Optimisation sales combined with telematics has gained
momentum. Integrated telematics and camera technology is generating
increased revenues and unit service fees.
Revenues grew 12% in the period to GBP14.75m (2016: GBP13.18m).
This includes 29% growth in Trakm8's core Solutions business to
GBP12.48m (2016: GBP9.69m). As planned, products sales reduced by
35% to GBP2.27m (2016: GBP3.49m) reflecting the policy to eliminate
the low margin CEM activity.
Total recurring revenues increased by 17% during the period to
GBP5.48m (2016: GBP4.69m), which are generated from increased
numbers of connections (units reporting to our servers). There is
an ongoing trend of lower service fees per unit for the same
functionality. This is a necessary trend as it widens the market
opportunity. Margins are protected with lower costs and overall the
Gross Margin was maintained. Higher service fees are generated from
the higher value added camera systems as a partial offset.
Recurring revenues remain the core of the Group's business model
and financial security.
As reported previously Brexit had a GBP0.6m adverse impact on
our gross margins, primarily in the second half of our 2017
financial year mainly through adverse currency movements on raw
materials purchases. This impact has continued through the first
half of this financial year, but we have taken certain steps to
reduce the effect with the result that gross profit margin has been
maintained at 48% (2016: 48%).
Financial year 2017 represented a year of significant investment
in which we made a deliberate decision to increase investment for
future growth given the potential opportunities we saw ahead. We
also implemented a streamlining of activities to reduce operating
costs offset by increased investment in sales and engineering.
During the current year we have maintained our investment in sales
and marketing, and as a result in this first half engineering,
sales and marketing expenditure has increased year on year by
GBP1.2m, of which GBP0.3m was capitalised R&D, resulting in a
net increase in operating expense of GBP0.9m.
Total overhead costs, excluding exceptional costs and a GBP0.3m
increase in depreciation and amortisation, increased by only
GBP0.1m year on year to GBP5.46m (2016: GBP5.34m). The GBP0.9m
increase in engineering, sales and marketing overhead expenditure
was offset by a reduction in other overhead costs of GBP0.8m as a
result of our efficiency and streamlining projects. Both these
projects are continuing in the second half of the year.
Adjusted operating profit increased by 78% to GBP1.05m (2016:
GBP0.59m). Adjusted operating profit excludes the share based
payment charge of GBP0.08m and exceptional costs of GBP0.16m. The
exceptional costs relate to the integration and streamlining of
operations which includes the consolidation of further resources in
Coleshill and costs relating to the exit from contract electronic
manufacturing. Adjusted basic earnings per share has increased by
125% to 3.56p (2016: 1.58p).
Financial position
Net cash generated from operating activities was GBP3.57m (2016:
GBP0.13m), which included R&D tax credit cash receipts of
GBP1.64m (2016: GBP0.14m). The cash generation, removing the impact
of the R&D tax cash is still GBP1.92m. There was a significant
reduction in inventory but this was offset by an increase in
debtors following good revenue months towards period end.
The transition of more customers to monthly payment models
(including SaaS) has continued to take place which impacts up front
cash generation, but this has been offset in part by monthly
payment deals of previous years and some deals with new customers
being financed by third parties.
Our net debt as at 30 September 2017 was reduced to GBP2.32m
(2016: GBP4.40m) (FY17: GBP3.87m) including GBP2.72m of cash (2016:
GBP1.44m) (FY17: GBP1.99m). In addition, the Group at 30 September
2017 held an increased undrawn credit facility of GBP3.70m at
HSBC.
We previously reported our revenues in two ways, Solution Sales
and Product Sales, and we report the summary analysis below for the
six months to 30 September 2017. As already highlighted we are
exiting Product Sales. In future we will only report Solution
Sales.
Solution Sales
This area of sales comprises Fleet Management, Optimisation,
Insurance and Automotive Solution revenues including associated
engineering services. This is the core activity for the Group.
Recurring revenues from this base have grown by 17% to GBP5.48m
(2016: GBP4.69m) and represent 37% of Group revenues (2016: 36%).
At the period end we had approximately 217,000 units (Sept 2016:
177,000 units) reporting to our servers, being an increase of 23%
over the last twelve months. This is an increase of 27,000 units
(14%) since 31 March 2017.
Since March 2017 Fleet units installed have increased by 4,000
units to 70,000, whilst Insurance & Automotive increased by
23,000 to 147,000.
Overall, Solution sales were 29% greater than the same period of
2016 at GBP12.48m (2016: GBP9.69m) and represent 85% of Group
revenue (2016: 74%).
We continue to have a high level of significant opportunities in
the pipeline as a result of the expansion of the sales teams. We
anticipate that revenues will continue to grow strongly in this
area.
Product Sales
This area of sales comprises all the hardware revenues from
sales to other telematics integrators, camera unit sales and sales
to our contract electronic manufacturing customers. As has been
previously announced we took the strategic decision to exit from
the contract electronic manufacturing activities undertaken at BOX
Telematics. The run out of this work extended into the first half
of this year but is now virtually eliminated.
Total Product revenues amounted to GBP2.27m (2016: GBP3.49m)
representing 15% of the Group total and a reduction of 35% on last
year.
Change of Registered Office
The Group advises that its registered office, with effect from
24 November 2017, has been changed to Trakm8 Holdings plc, Roman
Way, Roman Park, Coleshill, North Warwickshire, B46 1HG.
Board Changes
James Hedges resigned from the Board in August following over
eight years as Finance Director of the Group. This was as a result
of the relocation of the Group Finance function to Coleshill where
the Group has the manufacturing operations. We thank James for the
part he has played in the growth of the Group.
We were delighted to appoint Jon Furber as Group Finance
Director during September 2017.
Strategy
The Group has been following the strategy outlined in the 2017
Annual Report. Our focus is to provide ever more meaningful
insights to our customers using the data generated by our installed
devices so that they can run their operations more efficiently and
safely.
We continue to seek to increase the number of installed devices
reporting to our servers in order to generate long term, recurring
revenues. We will continue to own the majority of IP in our value
chain and are investing heavily in our technology to ensure we
remain at the leading edge of the telematics industry, seeking out
complimentary acquisitions to enhance capabilities, where
appropriate.
We continue to focus on streamlining the operations of the Group
to further increase the efficiency of our operations, maintaining
the already increased levels of engineering spend, whilst deploying
increasing sales and marketing resources to drive growth. During
the year the remaining Finance function was relocated from
Shaftesbury, Dorset to the centralised operations in Coleshill near
Birmingham and today we have announced that the Head Office has
relocated from Shaftesbury to Coleshill.
Outlook
We anticipate a stronger second half as usual. With our strong
range of substantial new contracts in place, and as a result of
increased sales and marketing activity, we have visibility to
support our second half expectations.
The outcome for the full year is less dependent on securing
contracts from new customers than in previous years. The outcome is
dependent on existing customer contracts where there is a level of
uncertainty of end user demand. The Board remains confident that
the market expectations will be met for the full year.
We continue to believe that subsequent years will benefit from
improved operational efficiency, investments in growth initiatives
and the growth in the telematics market both in the UK and
internationally to deliver long term value for shareholders.
JOHN WATKINS
Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months to 30
September 2017
Six months
Six months to 30 Year to
to 30 September September 31 March
2017 2016 2017
Unaudited Unaudited Audited
Note
Continuing operations GBP'000 GBP'000 GBP'000
Revenue 14,752 13,181 26,759
Cost of sales (7,676) (6,888) (13,550)
Gross profit 7,076 6,293 13,209
Other income 264 148 325
Administrative expenses excluding
exceptional costs (6,369) (5,983) (12,462)
Exceptional administrative
costs 6 (165) (96) (214)
Total administrative costs (6,534) (6,079) (12,676)
Operating Profit 806 362 858
Finance income 14 - -
Finance costs (94) (80) (165)
Profit before taxation 726 282 693
Income tax 335 - 777
Profit attributable to the
owners of the parent 4 1,061 282 1,470
Other Comprehensive Income
Items that may be subsequently
reclassified to profit or
loss:
Currency translation
differences - - -
Total other comprehensive
income - - -
--------------------- ------------------- -------------------
Total Comprehensive Income
for the period attributable
to owners of the parent 1,061 282 1,470
--------------------- ------------------- -------------------
Adjusted Operating Profit 5 1,049 589 1,321
------------------------------------ ----- --------------------- ------------------- -------------------
Basic earnings per share
(pence) 7 2.97 0.88 4.51
Diluted earnings per share
(pence) 7 2.92 0.84 4.36
Adjusted basic earnings per
share (pence) 7 3.56 1.58 5.81
Adjusted diluted earnings
per share (pence) 7 3.50 1.51 5.61
------------------------------ ---- ----- --------------------- ------------------- -------------------
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the six months
to 30 September 2017
Share Share Merger Translation Treasury Retained Total
capital Premium reserve reserve reserve earnings equity
attributable
to owners
of the
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at
1 April 2016 320 9,641 1,122 200 (5) 5,797 17,075
--------- --------- --------- ------------------ --------- ------------------ ------------------
Comprehensive
income
Profit for the
period - - - - - 282 282
--------- --------- --------- ------------------ --------- ------------------ ------------------
Total
comprehensive
income - - - - - 282 282
Transactions
with owners
Shares issued 5 90 - - - - 95
Share placing
fees - - - - - (649) (649)
IFRS 2 Share
based
payments - - - - - 131 131
--------- --------- --------- ------------------ --------- ------------------ ------------------
Transactions
with owners 5 90 - - - (518) (423)
--------- --------- --------- ------------------ --------- ------------------ ------------------
Balance as at
30 Sept 2016 325 9,731 1,122 200 (5) 5,561 16,934
--------- --------- --------- ------------------ --------- ------------------ ------------------
Comprehensive
income
Profit for the
period - - - - - 1,188 1,188
Other
comprehensive
income
Exchange
differences
on
translation
of overseas
operations - - - (1) - - (1)
--------- --------- --------- ------------------ --------- ------------------ ------------------
Total
comprehensive
income - - - (1) - 1,188 1,187
--------- --------- --------- ------------------ --------- ------------------ ------------------
Transactions
with owners
Shares issued 32 2,052 16 - - - 2,100
Share placing
fees - (109) - - - - (109)
IFRS2 Share
based
payments - - - - - 118 118
--------- --------- --------- ------------------ --------- ------------------ ------------------
Transactions
with owners 32 1,943 16 - - 118 2,109
--------- --------- --------- ------------------ --------- ------------------ ------------------
Balance as at
31 March 2017 357 11,674 1,138 199 (5) 6,867 20,230
--------- --------- --------- ------------------ --------- ------------------ ------------------
Comprehensive
income
Profit for the
period - - - - - 1,061 1,061
--------- --------- --------- ------------------ --------- ------------------ ------------------
Total
comprehensive
income - - - - - 1,061 1,061
--------- --------- --------- ------------------ --------- ------------------ ------------------
Transactions
with owners
IFRS2 Share
based
payments - - - - - 78 78
--------- --------- --------- ------------------ --------- ------------------ ------------------
Transactions
with owners - - - - - 78 78
--------- --------- --------- ------------------ --------- ------------------ ------------------
Balance as at
30 Sept 2017 357 11,674 1,138 199 (5) 8,006 21,369
--------- --------- --------- ------------------ --------- ------------------ ------------------
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
as at 30 September 2017
30 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited Audited
Note
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 18,138 15,990 17,108
Plant, property and equipment 1,847 1,839 1,855
Deferred income tax asset 295 801 297
Amounts receivable under
finance leases 418 - 499
20,698 18,630 19,759
-------------------- ------------------ ------------
Current assets
Inventories 2,579 2,542 3,674
Trade and other receivables 7,836 7,593 6,076
Corporation tax receivable 339 - 1,645
Cash and cash equivalents 2,720 1,439 1,990
13,474 11,574 13,385
-------------------- ------------------ ------------
Current liabilities
Trade and other payables (7,207) (6,827) (6,471)
Borrowings (1,094) (1,017) (1,051)
Provisions (62) (92) (62)
(8,363) (7,936) (7,584)
-------------------- ------------------ ------------
Current assets less current
liabilities 5,111 3,638 5,801
-------------------- ------------------ ------------
Total assets less current
liabilities 25,809 22,268 25,560
-------------------- ------------------ ------------
Non-current liabilities
Trade and other payables (455) (448) (480)
Borrowings (3,941) (4,826) (4,806)
Provisions (44) (60) (44)
(4,440) (5,334) (5,330)
-------------------- ------------------ ------------
Net assets 21,369 16,934 20,230
-------------------- ------------------ ------------
Equity
Share capital 7 357 325 357
Share premium 11,674 9,731 11,674
Merger reserve 1,138 1,122 1,138
Translation reserve 199 200 199
Treasury reserve (5) (5) (5)
Retained earnings 8,006 5,561 6,867
Total equity attributable to
owners of the parent 21,369 16,934 20,230
-------------------- ------------------ ------------
CONSOLIDATED CASH FLOW
STATEMENT
for the six months to
30 September 2017
Six months Six months Year
to to to
30 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Net cash generated from operating
activities 8 3,574 128 668
-------------------- ------------------- --------------
Cashflows from investing
activities
Acquisition of subsidiary undertaking
(net of cash) - (763) (763)
Purchases of property,
plant and equipment (75) (324) (181)
Purchases of software (3) (255) (262)
Proceeds from sale of
plant - - -
Capitalised Development
costs (1,756) (1,455) (3,241)
Net cash used in investing
activities (1,834) (2,797) (4,447)
-------------------- ------------------- --------------
Cashflows from financing
activities
Issue of new shares - 80 2,070
New bank loan 1,100 1,200 2,700
Repayment of bank loans (1,972) (474) (1,954)
New hire purchase contract - 177 -
Repayment of obligations under
hire purchase agreements (44) (17) (104)
Interest paid (94) (80) (165)
Dividend paid - (649) (649)
Net cash generated from financing
activities (1,010) 237 1,898
-------------------- ------------------- --------------
Net increase/ (decrease) in
cash and cash equivalents 730 (2,432) (1,881)
Cash and cash equivalents at
beginning of period 1,990 3,871 3,871
Cash and cash equivalents at
end of period 2,720 1,439 1,990
-------------------- ------------------- --------------
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 in Section 434 of the Companies Act 2006. The
Directors approved and authorised this interim statement
on 24 November 2017. The financial information for the
preceding full year is extracted from the statutory
accounts for the financial year ended 31 March 2017.
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 ("Trakm8") 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 the 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 2017.
4. Profit per ordinary share attributable to
the owners of the parent
Six months Six months
to to Year to
30 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit attributable to the
owners of the parent 1,061 282 1,470
-------------------- ------------------- ------------------
5. Adjusted operating profit
Adjusted Operating Profit is monitored by the
Board and measured as follows:
Six months Six months
to to Year to
30 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Operating profit 806 362 858
Exceptional administrative
costs 165 96 214
Share based payments 78 131 249
Adjusted Operating Profit 1,049 589 1,321
-------------------- ------------------- ------------------
6. Exceptional costs
Six months Six months
to to Year to
30 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Integration and business operations
streamlining costs (165) (96) (214)
------------------ ----------------- -----------------
Exceptional costs in the six months to 30 September
2017 relate to the integration and streamlining of operations,
which includes the exit from contract electronic manufacturing.
7. Shares in issue
Weighted average number of
ordinary shares in issue:
Six months Six months Year
to to to
30 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited Audited
No. No. No.
'000 '000 '000
Basic 35,723 32,315 32,595
Diluted 36,321 33,714 33,709
------------------ ----------------- ---------------
Adjusted basic earnings
per share
Adjusted diluted earnings 3.56p 1.58p 5.81p
per share 3.50p 1.51p 5.61p
adjusted for effects of Exceptional costs and
Share based payments
8. Reconciliation of cash flows from
operating activities:
Six months Six months Year
to to to
30 September 30 September 31 March
2017 2016 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Net profit before taxation 726 282 693
Adjustments for:
Depreciation 178 158 304
Amortisation of intangible
assets 729 481 1,157
Interest received (14) - -
Bank and other interest
charges 94 80 165
Share based payments 78 131 249
Operating cashflows before movement
in working capital 1,791 1,132 2,568
Movement in inventories 1,095 (245) (1,377)
Movement in trade and
other receivables (1,680) (35) 498
Movement in trade and
other payables 711 (867) (1,105)
Movement in provisions - - (46)
Cash generated from
operations 1,917 (15) 538
Interest received 14 - -
Income taxes received 1,643 143 129
Net cash inflow from
operating activities 3,574 128 667
-------------------- ------------------- ------------------
9. Copies of the report are available on the Group's
website www.trakm8.com and also from the registered
office of Trakm8 Holdings plc. The address of the registered
office is: Roman Way, Roman Park, Coleshill, North Warwickshire,
B46 1HG.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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