REG - Trakm8 Holdings PLC - Final Results <Origin Href="QuoteRef">TKM8.L</Origin> - Part 1
RNS Number : 0661DTrakm8 Holdings PLC04 July 20164 July 2016
TRAKM8 HOLDINGS PLC
('Trakm8' or 'the Group' or 'the Company')
Preliminary Results
for the year ended 31 March 2016
Trakm8, the AIM quoted telematics and data provider to the global market place, is pleased to announce its unaudited preliminary results for the year ended 31 March 2016.
Financial highlights:
2016
2015
Change
Revenues
25.65m
17.85m
+44%
Operating Profit
3.11m
1.76m
+77%
Adjusted operating profit*
3.92m
1.88m
+109%
Cash generated from operations
4.45m
1.19m
+274%
Profit before tax
3.00m
1.70m
+76%
Adjusted earnings per share*
13.44p
6.24p
+115%
Basic earnings per share
11.15p
5.84p
+91%
Dividend per share (proposed)
2p
nil
n/a
Revenues up 44% year on year included:
o Strong organic growth of 28%
o First time contributions from the trade and assets of DCS Systems Ltd ("DCS") and Route Monkey Holdings Ltd ("RML") which were acquired in the year
o Recurring revenues up 49% to 8.31m
Orders received up 29% year on year (organic basis)
Net debt+ of 1.09m (2015: net cash 0.60m), following 10.4m acquisition cash spend, 6.0m equity placing and strong cash flow and conversion
Maiden final dividend of 2 pence per share to be proposed
Operating highlights:
151,000 units now reporting to our servers (2015: 102,000)
Two acquisitions, DCS and RML completed in the year; integrations proceeding to plan. Both are profitable, cash generative and earnings enhancing
Substantial contract wins for both fleet and insurance customers:
o during the year: with Iceland Foods, Kubota UK, and the AA
o post year end: with Scottish Power, BT Fleet, Allianz and Shell
Significant investment in R&D and sales and marketing resources to drive growth
*before exceptional costs and share based payments + total borrowings less cash
Outlook
Continuation of a strong order pipeline and increase in sales opportunities
Good visibility of revenue and cash flow due to recurring revenues and new contract wins
John Watkins, Executive Chairman said:
"This has been a rewarding year for the Group with revenues up by 44% and adjusted operating profit up by 109% despite a significant increase in overheads as we invested as planned in the future growth of the business. We have achieved strong organic growth, good first time contributions from acquisitions as well as robust cash flow and cash conversion. This strong financial performance is enabling the payment of a proposed maiden dividend.
The Group has had a successful start to the new financial year consistent with its expectations for the year as whole, notwithstanding the new uncertainties created due to the Brexit vote. The latest contract win with Allianz together with our strong pipeline of further opportunities provide additional visibility in our outlook for this year. Therefore the Board remains optimistic of a positive outlook for the year as a whole."
We expect to have our audited Annual Report and Financial Statements for the year ended 31 March 2016 available on our website on 11 July 2016.
A presentation for analysts is being hosted today (4 July 2016) at 9.15am for 9.30am at MHP's offices. For further information, please contact MHP Communications on trakm8@mhpc.com.
-ends-
For further information please contact:
Trakm8 Holdings plc
01747 858444
John Watkins, Executive Chairman
James Hedges, Finance Director
MHP Communications (Financial PR to Trakm8)
020 3128 8100
Reg Hoare / Jade Neal
finnCap (Nomad & Broker to Trakm8)
020 7220 0500
Ed Frisby / Simon Hicks - corporate finance
Joanna Weaving - corporate broking
J.P. Morgan Cazenove (Financial Adviser)
020 7742 4000
Robert Constant
Wendy Hohmann
Notes to Editors
About Trakm8
Trakm8 Group is a UK based Big Data company utilising telematics as their primary enabler. Through IP owned technology, over two billion miles worth of data is collected annually through their 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, which since the acquisition of the assets of DCS Systems, includes 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.
Recently, the Group acquired Route Monkey, significantly enhancing the Group's Logistics solution which offers both route scheduling and optimisation, including routing for Electric Vehicles.
Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005.
www.trakm8.com / @Trakm8
Trakm8 Holdings PLC
EXECUTIVE CHAIRMAN'S STATEMENT
Introduction
I am very pleased to present our results for the year ended 31 March 2016. This has been a rewarding year for the Group with revenues up by 44% to 25.65m and adjusted operating profit up by 109% to 3.92m despite a significant increase in overhead costs as we invested as planned in the future growth of the business. Our profit before tax increased to 3.00m (2015: 1.70m).
Our sales of new fleet management solutions and insurance products have culminated in growth in all areas and provide us with a solid base of recurring revenues from which we can continue to expand. Furthermore the range and breadth of the data we are now able to provide gives us an overwhelming proposition for all the business sectors we touch.
The revenue growth of 44% was made up of organic growth of 28% with the addition of first time contributions from the acquisitions we made during the year. Orders received are also up by 29% like for like.
Trakm8's business model is strongly cash generative now that it is a profitable business and given the robust core of recurring revenues, although this tends to be substantially skewed to the second half due to the timing of contract renewals. This year we have reported cash generation from operating activities of 4.45m (2015: 1.19m), with significantly improved free cashflow conversion*, after capex and capitalised development costs, of 51% (2015: -1%). The improved cash conversion is expected to continue as revenues increase and development spending as a percentage of revenues reduces.
* Free cashflow conversion being net cash from operating activities / adjusted operating profit
Acquisitions
During the financial year we completed two acquisitions. We acquired the trade and assets of DCS Systems Ltd ("DCS") in June 2015 giving us vital knowledge and experience of digital camera systems and included the Dogcam, RoadHawk and Lawmate brands. The purchase consideration was 3.28 million.
In December 2015 we acquired the Route Monkey Group ("RML") which provides routing and scheduling optimisation solutions. The purchase consideration was for a value of 5.04m,together with further contingent consideration of up to a 2.0m maximum. However, despite an earnings enhancing performance and encouraging prospects, it is unlikely that RML will achieve its target to trigger the payment of the contingent consideration (which has therefore not been provided for).
These two acquisitions complement our vehicle telematics solutions and are enabling us to develop the more integrated solutions that our customers are demanding, providing richer and more refined data. The integration of both of these acquisitions is on track and they have been earnings enhancing and cash generative since their acquisition dates.
Solutions
Solutions sales are the core of our telematics offerings and comprise revenues from customers where they pay for service fees in addition to the cost of the hardware, installation and other bespoke services. Sales increased by 57% to 17.21m (2015: 10.98m) and more importantly within this growth our recurring revenues grew by 49% to 8.31m (2015: 5.58m). Growing these service revenues is a key focus as it provides increasing confidence and predictability to future periods. In total we had 151,000 units (2015: 102,000) reporting to our servers at the year end.
Our solutions sales cover both the fleet management and insurance market sectors. The total fleet management units only increased marginally over the year to 58,522 (2015: 57,763) due to the loss of circa 5,000 units from our South African distributor who struggled with the weakness of the rand. Telematics for insurance is a newer market and is currently experiencing high levels of growth. At the year end we had 92,025 insurance solution units reporting to our servers (2015: 44,468). Market forecasts are predicting growth rates in excess of 42% and we have certainly seen an increased level of interest from established insurance businesses. As a result the lifetime cost of an installed unit has dropped significantly over the last couple of years with a growing appetite from customers for richer data.
We have invested in our First Notification of Loss ("FNOL") algorithms and are now able to identify the majority of crashes - particularly at speeds below 40 mph which are notoriously difficult to detect. According to the US National Highway Traffic Safety Administration in excess 90% of insurance claims are due to driver error and the ability to offer black box data in conjunction with video footage of events leading up to an accident is proving to be a powerful driver to enable insurance companies to reduce the cost and management of policyholder's claims.
We have accelerated the development of our Fleet management solutions and believe we offer one of the widest ranges of solutions available in addition to camera and optimisation capabilities. We are now able to download and report on vehicle diagnostic data from in excess of 95% of all vehicles since 2006 and this is providing valuable information in particular for fleet managers and our road side assistance customers. New contracts won during the year included Bibby Distribution and Kubota together with the contract extension we announced last December with the AA whereby our telematics solutions will be offered to the AA business customers. We were also delighted that Route Monkey secured a three year contract extension with Iceland for their optimisation software.
In addition since the year end we have announced a new contract with Scottish Power to provide our telematics solution with driver feedback devices to 1,600 vehicles and a contract with BT Fleet to market our telematics solutions to their business customers. We have also secured a 12 month contract extension from Shell, which has been Route Monkey's largest customer in recent years. Furthermore, we have been awarded two initial contracts by Allianz, the global insurance company, to supply devices with specifically developed software to Allianz's Global Telematics business. The initial supply contract comes with a launch order of 5,000 devices to start the pipe filling for Allianz Insurance telematics in China.
Products
Product sales are the sales of our hardware mainly to other telematics service providers and integrators. In addition the sales of the DCS camera products are now included together with the revenues from our contract electronic manufacturing facility in Coleshill, Birmingham. Total product revenues increased by 23% to 8.44m (2015: 6.87m) with 1.85m of this growth being accounted for by sales of camera products. Organic product sales reduced by 0.3m as we continue to focus on solutions sales to our own customers rather than lower margin product sales to third parties.
Reflecting this strategy, during the year our manufacturing facility made in excess of 138,000 telematics units and it is anticipated this growth will continue. Manufacturing our own telematics units gives the Group a lower overall unit cost together with a much shorter time to market for introducing new products. For example after only two years of marketing the smallest self fit telematics device, we are now developing our 4th version as we continue to refine the product and enhance the insights that can be gained from the richness of the data.
Research and Development
We operate in a competitive market where hardware costs are reducing, along with the costs of sending data over the mobile networks. At the same time customers are becoming increasingly aware of the variety and volumes of data that can be made available from telematics solutions and this is driving the market towards providing "more for less". We also exist in a fragmented market where there are many competitors with few barriers to entry. Trakm8 has always focussed on owning the intellectual property ("IP") we use in our products and solutions and we see this as one of our key competitive advantages. Telematics systems are complex but because we own all the elements that encompass a solution (with the exception of the mobile networks) we have the ability to understand and resolve problems more easily than our competitors.
The Group has invested in a 44% increase in the average number of Engineers in our research & development teams to 59 (2015: 41) during the year. We have rolled out our battery health monitoring algorithm and submitted an associated patent application. Our self fit telematics device continues to be the smallest on the market and is now auto-configurable when plugged into a new vehicle. We have also reduced the time our installers require to fit our fixed wired devices. Our hosting architecture has also been developed so that we can now manage much larger quantities of devices using Amazon Web Services.
We have continued to enhance our algorithms for the risk scoring of drivers for insurance companies so that their premiums can be more accurately calculated to match the level of risk. Our acquisition of the DCS assets in June 2015 has given us a valuable insight into dash cams and later this year we will be launching an integrated telematics and camera product. This will enable users to receive an instant summary of events leading up to a crash incident including visual data from the camera and vehicle data from our telematics unit.
During the year the Group initiated a data security audit by a third party to understand the strengths and weaknesses in our system for collecting, transferring, storing and presenting the growing volumes of data we are now managing. Data security is very important to us and to all of our customers and we were pleased to gain accreditation with ISO 27001 - the standard for Information Security Management.
Board Changes
During the year we made significant changes to our Board reflecting the need to strengthen and focus it as a result of our strong growth. First, Bill Duffy joined as an independent Non-Executive Director. Bill has considerable commercial experience having been CEO of Andrew Page, Halfords Autocentres and a number of other leading automotive aftermarket companies. He has also been a consultant to the Board over the past 12 months.
In addition Trakm8 appointed two of its executives to be Directors of the Group: Sean Morris, as Group Engineering Director and Mark Watkins as Group Operations Director. Sean joined the Group following senior engineering positions at Continental UK, RAC and Aston Martin. Mark joined the Group following a successful career in IT and operations at Continental UK and Ford Motor Co.
Paul Wilson resigned from the Board in December but remains a senior executive of the Group and we wish to thank him for his contribution over the past six years. He is now concentrating his efforts on supporting the AA Fleet Intelligence reseller opportunity.
Advisors
We were pleased to announce in April 2016 the appointment of JP Morgan Cazenove as financial adviser to the Company. finnCap remain the Company's Broker and Nominated Adviser. This appointment reflected the Board's belief that it is appropriate to broaden its advisory relationships given the evolution of the business and the telematics industry as a whole and to help us take the next steps in the Company's development.
Dividend
In April 2016 we announced that the Board had considered the payment of a dividend in light of the Group's strong financial performance and its confidence in Trakm8's prospects. As a consequence the Board is proposing to pay a maiden dividend of 2 pence per share subject to shareholder approval at our Annual General Meeting in September 2016. The dividend timetable will be confirmed in due course.
People
The number of people we employ has grown rapidly as we have continued to invest strongly in our customer service, sales and marketing and engineering teams. In total our organic staff numbers have grown by 24% over the year and in addition we have welcomed 24 new colleagues from the DCS and Route Monkey acquisitions. It has been a demanding year as the Group has experienced rapid growth and I would like to thank everyone for their hard work, dedication and contribution to the ongoing success of the business
Outlook
The Group has had a successful start to the new financial year consistent with its expectations for the year as whole. The first two months have continued with the strong organic growth of previous years with orders received 57% greater than the corresponding period last year (organic 44%). Following the high level of investment in the business last year, we anticipate costs growing more slowly this year. We will also benefit from full year contributions from our two recent acquisitions.
The referendum decision to leave the European Union will inevitably lead to uncertainty both politically and commercially for some time. Uncertainty is always unwelcome and may lead to potential customers choosing to delay their investment decisions until the outlook becomes clearer. In addition recent currency movements may lead to additional costs for many of our components which are not priced in sterling but equally our solutions will become more attractive to overseas customers.
We have also recently announced two contracts with Allianz, the global insurance company to provide the next generation of our self fit telematics device together with the development of specific software to meet their requirements. These important contracts together with our strong pipeline of further opportunities provide additional visibility in our outlook for this year.
Therefore the Board remains optimistic of a positive outlook for the year as a whole.
John Watkins
EXECUTIVE CHAIRMAN
1 July 2016
Trakm8 Holdings PLC
FINANCIAL REVIEW
Trading Results
Revenues for the year were up by 44% at 25.65m (2015: 17.85m).Organic growth was 28% and this was supplemented by a 1.85m contribution from our acquisition of the DCS assets in June 2015 and a further 0.86m from the acquisition of Route Monkey at the end of December 2015. Sales of digital cameras have performed broadly in line with our expectations and Route Monkey revenues benefited from the contract renewal with Iceland in January 2016. Particularly pleasing was the 49% increase in our recurring revenues to 8.31m (2015: 5.58m). Our recurring revenues are reported as fees from service and data feeds only and do not include any amortised hardware costs for contracts which have been offered at a fixed monthly fee for a specific term.
Our gross margin percentage increased by 3.1% to 48.3% (2015: 45.2%).We would anticipate our gross margin percentage to increase in future years as the proportion of our recurring revenues increases and as we concentrate our manufacturing facility on making a more focussed range of products.This however will be tempered by the increasing price pressure that exists in the telematics market towards lower cost hardware and richer data.Trakm8 is strongly placed to manage these demands through owning all of the intellectual property in its telematics solutions.
Adjusted Operating Profit
One of our key performance indicators is Adjusted Operating Profit (Operating Profit before exceptional costs and share based payments).The growth in our Adjusted Operating Profit was 109% to 3.92m (2015: 1.88m).
Overheads
Our overheads before exceptional costs increased by 39% to 8.76m (2015: 6.30m) reflecting a significant ramp up in expensed research and development, customer service, sales and marketing activities during the year. This led to a substantial increase in our average staff numbers over the year from 157 in 2014/15 to 224 in 2015/16. In total 24 staff members joined us as a result of the acquisitions of DCS and RML. The increase in our investment in new products and research and development over the year resulted in the capitalisation of development costs of 1.85m (2015: 0.86m) and the expensing of 1.00m (2015: 0.35m) in line with the accounting standards.
Profit before tax
Profit before tax has increased by 76% to 3.00m (2015: 1.70m). The tax credit for the year is 0.34m (2015: tax charge 0.0m). Profit before tax includes exceptional costs of 0.61m (2015: nil) which were incurred in relation to the acquisition and integration costs of the trade and assets of DCS and RML.
The Group has tax losses of 6.3m to utilise in future periods.
Earnings per share
Basic earnings per share increased by 91% to 11.15 pence (2015: 5.84 pence). Our adjusted earnings per share which is before exceptional costs and share based payments, increased by 115% to 13.44 pence (2015: 6.24 pence).
Balance Sheet, Financing and Cash Flow
Our intangible non current assets grew by 10.34m as a result of the two acquisitions we completed during the year together with our increased investment in development costs. Goodwill arising from the DCS acquisition was 2.18m with a further 0.32m intangibles relating to acquired development costs. The acquisition of Route Monkey created 5.59m of goodwill and in addition we acquired 0.98m of algorithms and related software.
A new five year bank facility was taken out with HSBC in December to replace existing facilities and to complete the acquisition of Route Monkey. In addition a new 5m revolving credit facility was granted by HSBC and this facility has yet to be drawn down.
In addition to this facility,to fund the Route Monkey acquisition 1,801,802 new ordinary shares were placed with institutional investors at a price of 333 pence, to raise 6m. 184,441 new ordinary shares were also issued as part of the consideration to the senior management shareholders of Route Monkey.
Total cash generated from operations during the year was an excellent 4.45m (2015: 1.19m) representing 114% of adjusted operating profit (2015: 63%). Free cashflow conversion, after capex and capitalised development costs, was 51% (2015: -1%). As a result we ended the year with total cash of 3.87m set against total borrowings of 4.96m, giving overall a net debt of 1.09m (2015: net cash 0.60m).
James Hedges
Finance Director
1 July 2016
Trakm8 Holdings PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2016
Note
Unaudited
Year ended 31 March 2016
Audited
Year ended 31 March 2015
REVENUE
3
25,649,188
17,853,436
Cost of sales
(13,251,581)
(9,791,655)
Gross profit
12,397,607
8,061,781
Other income
81,443
-
Administrative expenses excluding exceptional costs
(8,756,085)
(6,301,424)
Exceptional administrative costs
5
(612,559)
-
Total administrative costs
(9,368,644)
(6,301,424)
OPERATING PROFIT
4
3,110,406
1,760,357
Finance income
874
388
Finance costs
6
(108,208)
(58,439)
PROFIT BEFORE TAXATION
3,003,072
1,702,306
Income tax
340,678
(13,241)
PROFIT FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF THE PARENT
3,343,750
1,689,065
OTHER COMPREHENSIVE INCOME / (EXPENSE)
Items that may be subsequently reclassified to profit or loss:
Currency translation differences
3,811
(4,460)
TOTAL OTHER COMPREHENSIVE INCOME / (EXPENSE)
3,811
(4,460)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT
3,347,561
1,684,605
Adjusted Operating profit
4
3,921,044
1,877,289
EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT
Basic
7
11.15p
5.84p
Diluted
7
10.27p
5.48p
There were no discontinued operations in 2016 or 2015. Accordingly the results relate to continuing operations.
Trakm8 Holdings PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
Share capital
Share premium
Merger reserve
Translation reserve
Treasury reserve
Retained earnings
Total equity attributable to owners of the parent
Balance as at 1 April 2014
288,738
3,641,561
509,837
200,063
-
491,877
5,132,076
Comprehensive income
Profit for the year
-
-
-
-
-
1,689,065
1,689,065
Other comprehensive expense
Exchange differences on translation of overseas operations
-
-
-
(4,460)
-
-
(4,460)
Total comprehensive (expense) / income
-
-
-
(4,460)
-
1,689,065
1,684,605
Transactions with owners
Shares issued
1,000
11,500
-
-
-
-
12,500
Reclassification of previous Treasury share transactions
-
67,076
-
-
(23,250)
(43,826)
-
Sale of own shares
-
37,263
-
-
11,625
-
48,888
IFRS2 Share based payments
-
-
-
-
-
116,932
116,932
Transactions with owners
1,000
115,839
-
-
(11,625)
73,106
178,320
Balance as at 1 April 2015 (Audited)
289,738
3,757,400
509,837
195,603
(11,625)
2,254,048
6,995,001
Comprehensive income
Profit for the year
-
-
-
-
-
3,343,750
3,343,750
Other comprehensive income
Exchange differences on translation of overseas operations
-
-
-
3,811
-
-
3,811
Total comprehensive income
-
-
-
3,811
-
3,343,750
3,347,561
Transactions with owners
Shares issued
30,612
6,110,982
612,344
-
-
-
6,753,938
Share placing fees
-
(300,000)
-
-
-
-
(300,000)
Sale of own shares
-
72,680
-
-
7,130
-
79,810
IFRS2 Share based payments
-
-
-
-
-
198,079
198,079
Transactions with owners
30,612
5,883,662
612,344
-
7,130
198,079
6,731,827
Balance as at 31 March 2016 (Unaudited)
320,350
9,641,062
1,122,181
199,414
(4,495)
5,795,877
17,074,389
Trakm8 Holdings PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2016
Note
Unaudited
As at
31 March 2016
Audited
As at
31 March
2015
ASSETS
NON CURRENT ASSETS
Intangible assets
13,996,240
3,652,203
Property and equipment
1,572,613
1,246,669
Deferred income tax asset
801,365
665,688
16,370,218
5,564,560
CURRENT ASSETS
Inventories
2,258,882
1,493,417
Trade and other receivables
7,620,001
4,911,525
Cash and cash equivalents
3,871,110
3,407,959
13,749,993
9,812,901
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
(7,541,122)
(5,124,668)
Borrowings
(981,182)
(575,644)
Provisions
(92,208)
(92,193)
(8,614,512)
(5,792,505)
CURRENT ASSETS LESS CURRENT LIABILITIES
5,135,481
4,020,396
TOTAL ASSETS LESS CURRENT LIABILITIES
21,505,699
9,584,956
NON CURRENT LIABILITIES
Trade and other payables
(395,313)
(306,034)
Borrowings
(3,976,336)
(2,236,001)
Provisions
(59,661)
(47,920)
NET ASSETS
17,074,389
6,995,001
EQUITY
Share capital
8
320,350
289,738
Share premium
9,641,062
3,757,400
Merger reserve
1,122,181
509,837
Translation reserve
199,414
195,603
Treasury reserve
(4,495)
(11,625)
Retained earnings
5,795,877
2,254,048
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
17,074,389
6,995,001
Trakm8 Holdings PLC
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2016
Notes
Unaudited
Year ended 31 March 2016
Audited
Year ended 31 March 2015
NET CASH GENERATED FROM OPERATING ACTIVITIES
9
4,447,310
1,186,080
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
874
388
Acquisition of subsidiary undertaking (net of cash acquired)
(7,697,532)
(5,175)
Purchases of property, plant and equipment
(528,596)
(355,087)
Purchases of software
(79,134)
-
Proceeds from sale of plant and equipment
-
9,888
Capitalised development costs
(1,852,639)
(861,849)
NET CASH USED IN INVESTING ACTIVITIES
(10,157,027)
(1,211,835)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of new shares
5,839,751
12,500
Sale of Treasury shares
79,810
48,888
New bank loan
6,000,000
3,000,000
New HP agreement
126,242
-
Interest paid
(108,208)
(58,439)
Repayment of loans
(5,751,888)
(2,480,021)
Repayment of obligations under hire purchase agreements
(12,839)
-
NET CASH GENERATED FROM FINANCING ACTIVITIES
6,172,868
522,928
NET INCREASE IN CASH AND CASH EQUIVALENTS
463,151
497,173
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
3,407,959
2,910,786
CASH AND CASH EQUIVALENTS AT END OF YEAR
3,871,110
3,407,959
Trakm8 Holdings PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2016
1. GENERAL INFORMATION
Trakm8 Holdings PLC ("Company") and its subsidiaries (together the "Group") manufacture, distribute andselltelematicsdevicesandservices.
Trakm8 Holdings PLC is a public limited company incorporated in the United Kingdom (registration number 05452547). The Company is domiciled in the United Kingdom and its registered office address is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. The Company's Ordinary shares are traded on the AIM market of the London Stock Exchange.
The Group's principal activity is the manufacture, marketing and distribution of vehicle telematics equipment and services.
2. BASIS OF PREPARATION
The unaudited financial information included in this preliminary results announcement for the year ended 31 March 2016 and audited financial information for the year ended 31 March 2015 does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The information has been extracted from the unaudited statutory financial statements for the year ended 31 March 2016 which will be delivered to the Registrar of Companies in due course. Statutory financial statements for the year ended 31 March 2015 were approved by the Board of directors and have been delivered to the Registrar of Companies. The report of the auditors on these financial statements was unqualified and did not include an emphasis of matter paragraph.
These financial statements are presented on a going concern basis. The Group has cash balances of 3,871,110 at 31 March 2016 and the Directors have a reasonable expectation that the Group will have adequate financial resources to continue in operation for the foreseeable future.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, the interpretations of International Financial Reporting Interpretations Committee (IFRIC) and the Companies Act 2006 applicable to companies reporting under IFRS.
Whilst the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRS), this announcement does not contain sufficient information to comply with IFRS. The accounting policies used in the preparation of these unaudited financial statements are consistent with those used in the preparation of the audited financial statements for the year ended 31 March 2015.
3. SEGMENTAL ANALYSIS
The chief operating decision maker ("CODM") is identified as the Board. It continues to define all the Group's trading under the single Integrated Telematics Technology segment and therefore review the results of the group as a whole. Consequently all of the Group's revenue, expenses, results, assets and liabilities are in respect of one Integrated Telematics Technology segment.
The board as the CODM review the revenue streams of Integrated Fleet Management and Insurance Solutions (Solutions) and Hardware as Discrete Devices (Products) as part of their internal reporting. Products is the sale of hardware through the Group's distributors. Solutions represents the sale of the Group's full vehicle telematics service to customers, engineering services, professional services and mapping solutions.
A breakdown of revenues within these streams are as follows:
Unaudited
Year ended 31 March 2016
Audited
Year ended 31 March 2015
Solutions
17,208,779
10,981,695
Products
8,440,409
6,871,741
25,649,188
17,853,436
A geographical analysis of revenue by destination is as follows:
Unaudited
Year ended 31 March 2016
Audited
Year ended 31 March 2015
Solutions
Products
Total
Solutions
Products
Total
United Kingdom
16,769,774
8,048,848
24,818,622
10,268,761
6,174,260
16,443,021
USA
-
168,652
168,652
98,534
191,744
290,278
Canada
390
46,592
46,982
360
226,146
226,506
Norway
117,527
-
117,527
377,043
-
377,043
Rest of Europe
224,078
7,784
231,862
132,040
46,760
178,800
UAE
-
136,819
136,819
-
175,880
175,880
Rest of World
97,010
31,714
128,724
104,957
56,951
161,908
17,208,779
8,440,409
25,649,188
10,981,695
6,871,741
17,853,436
All non-current assets are located in the UK with the exception of 7,004 (2015: 5,023) which are held in Europe.
4. OPERATING PROFIT
The following items have been included in arriving at operating profit:
Unaudited
Year ended
31 March 2016
Audited
Year ended
31 March 2015
Depreciation
- owned fixed assets
227,194
176,571
- assets on hire purchase
5,075
-
Amortisation of intangible assets
655,528
542,713
Operating lease rentals
Land and buildings
92,173
51,862
Other
219,625
142,838
Research and development expenditure
1,002,096
350,177
Loss on foreign exchange transactions
46,212
18,227
Staff costs
6,036,138
4,479,252
Auditors' remuneration
Fees payable to the Company's auditors for the audit of the parent
company and consolidated financial statements
57,000
10,000
Fees payable to the Company's auditors for other services:
The audit of the Company's subsidiaries
40,000
30,000
Tax compliance services
12,500
-
Tax advisory services
12,450
7,500
Adjusted Operating profit is monitored by the Board and measured as follows:
Unaudited
Year ended
31 March 2016
Audited
Year ended
31 March 2015
Operating Profit
3,110,406
1,760,357
Exceptional administrative costs
612,559
-
Share based payments
198,079
116,932
Adjusted Operating profit
3,921,044
1,877,289
5. EXCEPTIONAL COSTS
Unaudited
Year ended
31 March 2016
Audited
Year ended
31 March 2015
Acquisition costs
578,943
-
Integration costs
33,616
-
612,559
-
The acquisition costs related to the purchase of the trade and assets of DCS Systems Ltd in June 2015 and 100% of the share capital of Route Monkey Holdings Ltd in December 2015. The integration costs related to the reorganisation of management and integration of business systems and processes following the acquisitions. These costs have been included as part of Administration costs.
6. FINANCE COSTS
Unaudited
Year ended 31 March 2016
Audited
Year ended 31 March 2015
Interest on bank loans
108,208
58,439
7. EARNINGS PER ORDINARY SHARE
The earnings per Ordinary share have been calculated using the profit for the year and the weighted average number of Ordinary shares in issue during the year as follows:
Unaudited
Year ended
31 March 2016
Audited
Year ended
31 March 2015
Profit for the year after taxation
3,343,750
1,689,065
Exceptional administrative costs
612,559
-
Share based payments
198,079
116,932
Tax effect of adjustments
(122,512)
-
Adjusted Profit for the year after taxation
4,031,876
1,805,997
No.
No.
Number of Ordinary shares of 1p each
32,035,064
28,973,821
Basic weighted average number of Ordinary shares of 1p each
30,000,972
28,944,151
Basic weighted average number of Ordinary shares of 1p each (diluted)
32,571,617
30,823,153
Earnings per share
11.15p
5.84p
Adjust for effects of:
Exceptional costs
1.63p
-
Share based payments
0.66p
0.40p
Adjusted earnings per share
13.44p
6.24p
Diluted earnings per share
10.27p
5.48p
Adjusted diluted earnings per share
12.38p
5.88p
Adjusted diluted earnings per share is based on the Adjusted Profit for the year after taxation and the same number of shares used in the calculation of Diluted earnings per share.
8. SHARE CAPITAL
Unaudited
As at 31 March 2016
Audited
As at 31 March 2015
No's
No's
'000's
'000's
Authorised
Ordinary shares of 1p each
200,000
2,000,000
200,000
2,000,000
Allotted, issued and fully paid
Ordinary shares of 1p each
32,035
320,350
28,974
289,738
Movement in share capital:
As at 31 March 2016
As at 31 March 2015
As at 1 April
289,738
288,738
New shares issued
30,612
1,000
As at 31 March
320,350
289,738
The Company currently holds 29,000 Ordinary shares in treasury representing 0.10% of the Company's issued share capital. The number of 1 pence Ordinary shares that the Company has in issue less the total number of Treasury shares is 32,006,064.
During the year the following shares were issued:
Date
Description
Shares
Consideration
Premium
number
04/09/2015
Exercise of options over Ordinary Shares by Directors and an employee of the Company
975,000
126,750
117,000
15/09/2015
Exercise of options over Ordinary Shares by an employee of the Company
100,000
13,000
12,000
21/12/2015
Share placing to fund acquisition of Route Monkey
1,801,802
6,000,000
5,981,982
21/12/2015
Share issue to senior management shareholders of Route Monkey
184,441
614,189
612,344
3,061,243
6,753,938
6,723,326
The shares issued to senior management shareholders of Route Monkey were issued at a premium which wassubjecttomergerreliefandhasbeentakentotheMergerreserve.
9. CASH GENERATED FROM OPERATIONS
Unaudited
Year ended 31 March 2016
Audited
Year ended 31 March 2015
Reconciliation of profit before tax to net cash flow from operating activities:
Profit before tax
3,003,072
1,702,306
Depreciation
232,269
202,159
Bank and other interest
107,334
58,051
Amortisation of intangible assets
655,528
517,125
Share based payments
198,079
116,932
Operating cash flows before movement in working capital
4,196,282
2,596,573
Movement on retranslation of overseas operations
3,190
(3,764)
Movement in inventories
(39,011)
(212,808)
Movement in trade and other receivables
(1,211,259)
(1,641,882)
Movement in trade and other payables
1,486,354
394,829
Movement in provisions
11,754
(21,073)
Cash generated from operations
4,447,310
1,111,875
Income taxes received
-
74,205
Net cash inflow from operating activities
4,447,310
1,186,080
10. BUSINESS COMBINATIONS
Route Monkey Holdings Limited
On 30 December 2015 the Company acquired the entire share capital of Route Monkey Holdings Ltd and its wholly owned subsidiary, Route Monkey Ltd "Route Monkey" for a total consideration of 5,036,584.
Route Monkey provides technology solutions that optimise fleet routing. The company was acquired to bring new and complimentary route planning and optimisation technology capability to the Group. The assets and liabilities as at 30 December 2015 arising from the acquisition were as follows:
Unaudited
Fair value
Intangible assets
979,891
Property and equipment
24,995
Trade receivables
1,380,632
Trade and other payables
(975,479)
Deferred tax
(181,000)
Borrowings
(1,784,357)
Net liabilities acquired
(555,318)
Goodwill
5,591,902
Total consideration
5,036,584
Satisfied by:
Cash
4,422,395
Fair value of shares in the Company
614,189
5,036,584
The acquisition was settled in cash of 4,422,395 and by issuing 184,441 shares in Trakm8 holdings PLC. The fair value of the equity shares issued was based on the market value of Trakm8 holdings PLC's traded shares with a fair value of 614,189 on the acquisition date. Merger relief has been applied, leading to the addition of 612,344 to the merger reserve rather than share premium.
The revenue included in the consolidated statement of comprehensive income since 30 December 2015 contributed by Route Monkey was 855,823. Route Monkey also contributed operating profit of 585,404 over the same period. The Directors have concluded that it is impractical to provide disclosure of the revenues and profit that Route Monkey would have contributed to the Group had it been consolidated from 1 April 2015. This is due to a combination of the fact that Route Monkey previously had a different year end and audited accounts are not available for the period 1 April 2015 to 31 December 2015, and significant adjustments have been required to Route Monkey's accounting policies in respect of revenue recognition to align with the requirements of IFRS and Trakm8's accounting policies and it is impractical to recalculate revenues for the period 1 April 2015 to 31 December 2015.
Acquisition related costs amounting to 404,743 have been recognised as an exceptional administrative expense in the consolidated statement of comprehensive income.
Under the purchase agreement to acquire Route Monkey, contingent consideration of up to 2,000,000 is payable subject to the business achieving certain performance targets during the year to 31 December 2016. No provision in relation to this consideration has been recognised in these consolidated financial statements, as the Directors consider the likelihood of any contingent amounts being payable under the agreement to be highly unlikely.
The goodwill arising on the acquisition represents the significant value of the software analytics acquired will bring when integrated principally into Trakm8's existing telematics offering, as well as further synergies.
DCS Systems Limited
On 16 June 2015 Trakm8 Limited acquired the business and assets of DCS Systems Limited "DCS" for a consideration of 3,275,136. DCS specialises in the design and distribution of camera systems for the motor vehicle, bicycle and security markets.
Thefairvaluesoftheidentifiableassetsofthebusinessasatthedateofacquisitionwere:
Unaudited
Fair value
Intangible assets
320,000
Property and equipment
4,000
Inventories
726,454
Trade receivables
92,583
Trade and other payables
(43,901)
Net assets acquired
1,099,136
Goodwill
2,176,000
Total consideration
3,275,136
Satisfied by:
Cash
3,275,136
The revenue included in the consolidated statement of comprehensive income since 15 6 2015 contributed by DCS was 1,851,789. DCS also contributed operating profit of 312,015 over the same period.
Had DCS been consolidated from 1 April 2015, the consolidated statement of comprehensive income would show revenue of 2,330,700 and operating profit of 392,709 in relation to this entity.
Acquisition related costs amounting to 174,200 have recognised as an exceptional administrative expense in the consolidated statement of comprehensive income.
The goodwill arising on the acquisition represents the value of the camera technology acquired. The value of which is considerably enhanced when combined with Trakm8's existing product range and further synergies.
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR AKNDBOBKDNOK
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