2018/9: a year of massive growth in the cards

2nd Jul '18 by AnonymousUser226237

6 comments 2640 reads

Trakm8 Holdings (LON:TRAK) reported its full year results today and as expected it was a year of medium progress as they rebuilt the business into one consolidated unit, invested heavily in new Sales & Marketing resources as well as R&D..both of which they have plenty to show for.

Oh and SaaS impact is finally over, 2018/2019 will enjoy the cash benefits of all the contracts they converted since, so expect a much better FCF going forward.

Free cash flow improved to an inflow of GBP1.0m (2017: outflow GBP3.0m). This represents a 90% conversion of profit before tax to cash.

Migration to a Telematics Service Provider now complete with progress in core telematics division driving higher recurring revenues

Achieved planned reduction of annual operating costs by GBP1.5m with savings reinvested into sales and marketing - particularly in Fleet Management

-Core telematics business revenue (Solutions Revenue) grew by 26% and Group adjusted profit before tax grew by 142%.

Net debt decreased by GBP0.6m to GBP3.3m (2017: GBP3.9m)

We have continued to develop market leading software and hardware solutions and during the year launched the new Insight software platform and the RoadHawk 600, which have provided the Group with a strong pipeline of opportunities. During the year, we announced new contracts with Intelematics, Calor Gas UK and Mecalac, and a number of contract extensions with Marmalade, Iceland Foods, and Direct Line Group.

All in all progress across all fronts, with improvements in profits, net debt, revenue, contracts and consolidating costs.

What about Outlook?

We alreaady knew that they need to exit another £2m of CEM contracts so it waas always known that H1 will take a hit because of that, which is reflected in the first thing they mentioned on the outlook message.

But what what about the upcoming Solutions plans?

Since year end, the Group is also pleased to announce a contract award from Intelematics Australia, and a contract extension from FMG

In addition to continuing to grow our UK operations, we are focused on expanding our international business in Europe and Asia

Trakm8 has decided to expand its existing facilities in Coleshill to meet demand for both product and people resources

Their plans are evident. There is substantial demand in the cards to grow their manufacturing capabilities and people to meet that demand. When…

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pgs501

2nd Jul '18

Hi Blondeamon,

Thanks for the write up. I agree on reading the RNS it all looks good, the negative reaction this morning seems a surprise given all the positive aspects. I presume it is the comment about CEM contracts and H1 revenue for the coming year however as you say this was already known about so should not have acted as a massive surprise for anyone.

Looks like more of an opportunity to top up than an actual issue. Management are sending very positive signals in their facilities expansion comment.

Thanks,

Peter

Howard Marx

All sounds positive Blondeamon

What fundamental news would cause you to question the 'buy' case?

(other than a profit warning of a temporary nature e.g. due to adverse currency movement, new order shifted from one quarter to another, etc)

AnonymousUser226237

Thank you for the kind words guys. The build-up of devices on H2 is not in my opinion a one-off and this is the kind of volume we'll have from now on. Double the previous numbers as demand went massively up to satisfy the Road Clubs expansion and the new Intelematics Australia contract.

Simon Thompson on one of his books highlighted the importance of paying attention to when a company suddenly invests massively in its production lines and sounds more upbeat about the future. This is usually in my experience the turning point where the good news cycle begins.

@pgs501: if I had to list something that could question the Buy case here it would definitely have to be Brexit. It has the potential for massive disruption for supply lines, freeze customer contracts and postpone investment decisions. It is in my mind the #1 risk for all shares I'm in at the moment.

pete hodgkiss

I would top up but Ig not letting me exchange failure?

I used it this morning to buy more, was fine then. Use a Limit Order and see if it works better.

Bingo thanks for advice

2018/9: a year of massive growth in the cards

What about Outlook?

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AnonymousUser226237

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