TIDMTRAK
RNS Number : 3779X
Trakm8 Holdings PLC
21 February 2017
TRAKM8 HOLDINGS PLC
("Trakm8" or the "Group")
Trading Update
Trakm8, the AIM-listed telematics and data insight provider,
today provides a trading update for its current financial year
ending 31 March 2017.
Overview
-- installed base of units reporting to our servers has grown to
190,000 units but lower than originally anticipated
-- reduction in our FY2017 expectations due to:
o new revenues being booked later in the current financial year
than expected or delayed into FY2018
o shift in revenue model (towards more SaaS and rental revenue)
continues to result in short term revenues, cash generation and
profitability being suppressed to the benefit of the longer
term
o continuing, deliberate reduction in contract manufacturing for
third parties, to provide capacity for solutions demand, leading to
a reduction of GBP2.5m in revenues this year
-- revenues are now expected to be only modestly ahead of FY2016
with adjusted operating profit significantly below FY2016, with a
consequent impact on cash flow and indebtedness
-- the Board has taken steps to reduce annualised overheads by
c.GBP1.5m and will ensure that any increases are held in line with
revenues
Order book
-- new orders booked for current and future financial years
valued in total at GBP24.2m in the 10 months to 31 January 2017 (up
24% compared to the same period last year)
-- adjusting for the elimination of contract manufacturing, this
equates to an increase of over 33%
-- increase in pipeline of new potential orders following
increased investment in sales and marketing, with confidence that
these will be signed in due course
-- orders being won in all of our chosen core markets (fleet
management, telematics insurance, optimisation and automotive)
Costs
The Group has invested heavily in R&D to support the sales
team meeting a number of customer opportunities and in the
development of several core new products and solutions. This
investment of c.GBP4m (expensed and capitalised combined) is
considerably above the 10% of revenues that is our disclosed
long-term objective (and compares to GBP2.8m incurred last
year).
The new products have taken longer to bring to market, as
previously stated, but the early customer reaction to these has
been excellent. For example:
-- we have produced our first production batch of integrated 4G
cameras and these are being field-tested
-- our latest generation micro telematics device has completed customer approval testing
-- our next generation server architecture with fully integrated optimisation is in beta test
Evolving business model
The Group's annual results are now more dependent on the mix of
orders secured than in the past. The Board reiterates (as stated at
the half year results in November 2016) that the Group's business
model continues to evolve in line with industry trends which have
resulted in a short term impact to financial performance; the two
principal changes are:
-- the Group's optimisation business (Route Monkey) is in a
trend to move from project revenues to SaaS revenues. This reduces
short-term revenues, profitability and cash generation to the
benefit of future years
-- the Group's fleet telematics customers are increasingly
purchasing telematics hardware over the lifetime of the contract or
renting the hardware. This does not affect the reported
profitability but reduces the short-term cash generation to the
benefit of future years
We are pleased to confirm that the Group has completed the
integration of all our acquisitions into the Trakm8 Group,
operating under the Trakm8 brand.
John Watkins, Executive Chairman of Trakm8 commented:
"We continue to be frustrated by the timing of new order wins
and it is very disappointing that we have to substantially reduce
expectations for this financial year despite having a very strong
pipeline.
"We are also on a journey of rapid expansion that has required
significant additional investment at the same time as our business
model has been evolving. We believe this investment is the correct
strategy to follow given the expected significant growth of the
fleet management, insurance and vehicle leasing telematics
markets.
"Over the last four years we have grown our installed base of
units reporting to Trakm8 servers from 20,000 to over 190,000
today. The future remains very positive and we believe that this
year, whilst very disappointing, should prove to have been a hiatus
in our continuing long term growth."
-ends-
For further information please contact:
+44 (0) 174 785
Trakm8 Holdings plc 8444
John Watkins, Executive Chairman
James Hedges, Finance Director
+44 (0) 20 7220
finnCap (Nomad and broker) 0500
Ed Frisby / Simon Hicks -
corporate finance
Tim Redfern - corporate broking
+44 (0) 20 3128
MHP Communications 8100
Reg Hoare
Charlie Barker
About Trakm8
Trakm8 is a UK based Big Data company utilising telematics as
its primary enabler. Through IP owned technology, over three
billion miles worth of data is collected annually through its fleet
management solutions to create and fine tune algorithms used to
score driver behaviour, monitor vehicle health and continuously
improve the security and operational efficiencies of customers'
vehicles.
With its headquarters in Dorset and a manufacturing facility in
the West Midlands, the Group supplies a number of well-known
customers in the fleet management and insurance sectors across the
UK and further afield including customers such as the AA, Saint
Gobain, EON, Direct Line Group and Young Marmalade.
The Group's portfolio offers complete telematics solutions
including dashboard cameras that enable customers to record driving
incidents and mitigate the risk from "crash to cash" accidents.
This is complemented through a comprehensive hardware range, which
includes a self-install unit that is one of the smallest available
on the global market.
The Group has recently acquired both Route Monkey and Roadsense
Technologies Ltd. Route Monkey has enhanced Trakm8's logistics
solution offering route scheduling and optimisation, including
routing for electric vehicles. Roadsense has been acquired to
strengthen the Group's presence in the SME fleet management
market.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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