REG - Trakm8 Holdings PLC - Interim Results <Origin Href="QuoteRef">TKM8.L</Origin>

Trakm8 HoldingsAnnouncement

01/12/2014 07:10

RNS Number : 3816Y
Trakm8 Holdings PLC
01 December 2014
01 December 2014
TRAKM8 HOLDINGS PLC
("Trakm8" or "the Group")
Interim Results
Significant momentum in sales and strong cash position
Trakm8 Holdings plc, the telematics and data provider to the global market place, is pleased to announce its unaudited results for the six months ended 30 September 2014:
Highlights

Six months to 30September 
2014
Unaudited
Six months to 30September 
2013
Unaudited
Year to
31March 
2014
Audited

'000
'000
'000
Revenue
8,478
2,564
9,193
Gross Profit
3,933
1,924
5,261
Gross Profit %
46.4%
 75.0%
 57.2% 
Earnings before interest, tax, depreciation & amortisation
1,065
228
750
Profit before tax
717
24
396
Net cash and cash equivalents 
1,914
1,131
2,911
Net assets
5,975
2,579
5,132
 Revenues increased by 230%. Like for like revenues up 66%
 EBITDA increased by 367%
 Profit before tax increased 30 fold to 0.72m (2013: 0.02m)
 Like for like new orders received increased by 53% 
 Underlying annualised recurring revenues increased by 130% to 5.3m 
(2013: 2.3m)
 Strong cash balance maintained
 Direct Line contract shipments commenced
 New contract awards with Kubota, CE Downton & SAGA Systems 
 Significantly improved banking facilities agreed post period end
John Watkins, Executive Chairman of Trakm8 said:
"We are pleased that the period has been one of continued momentum, winning new customers which build our installed base of units reporting to our servers. The Group has made solid financial progress, achieving strong like for like growth in revenues and profit supplemented by the full period effect of the BOX business. 
"We continue to remain well placed to grow the Group, and we are confident we will achieve market expectations for the year as a whole."
For further information, please visit www.trakm8.com or contact:
Trakm8 Holdings plc
John Watkins, Executive Chairman
James Hedges, Finance Director
01747 858444
MHP Communications
Reg Hoare / Vicky Watkins
020 3128 8100
finnCap (Nominated Adviser and Broker) 
Ed Frisby / Chris Raggett - corporate finance
Joanna Weaving - corporate broking
020 7220 0500


Executive Chairman's Statement
I am pleased to report Trakm8's results for the six months ended 30 September 2014. 
Revenues grew 231% in the period to 8.5m. This is based on 66% growth in Trakm8's core business to 4.3m (2013 2.6m) plus a full six months of BOX Telematics Ltd ("BOX") revenues of 4.2m. The value of new orders received during the period continued the good trend of last year and were up by 53% like for like (excluding BOX). This reinforces the confidence we have that strong organic growth can be maintained. 
Profit before tax increased by 831% to 717,000 (2013: 24,000).
There has been an increase of 130% in our annualised recurring revenues to 5.3m (2013: 2.3m) which are generated from increased numbers of units reporting to our servers. This is also an increase of 17% since March 2014. These revenues remain the core of the Group's focus and financial future.
Gross margin percentages have reduced on account of high volume insurance market revenues and the impact of the BOX manufacturing margin. 
During the period the entire BOX product and solutions lines were updated to reflect the latest Trakm8 derived technologies in our telematics hardware, T10 and our web portal, Swift 6. This new programme will form the foundation of BOX sales over the coming periods, eliminating duplication of engineering resource and improving the overall customer experience.
We have maintained a strong cash position despite ongoing conversion to sales from the large contract prepayment we had received during March 2014. 
Post the period end, we were pleased to secure significantly improved banking facilities. Prior to the acquisition of BOX, both Trakm8 and BOX separately banked with HSBC. The acquisition finance was provided by Clydesdale. During October HSBC provided a replacement facility with a 3m term loan and a 1m revolving credit facility. This equates to a net increase in bank finance of 2m and gives the Group approximately 4m of net cash availability. The Group continues to actively seek acquisition opportunities, based on a set criteria, and this strong cash position leaves us well placed to move quickly and take advantage of opportunities if they arise. 
We are now reporting our revenues in just two segments following the full integration of BOX:
Product Sales
This segment comprises all the hardware revenues from our sales to other telematics integrators and to our manufacturing services customers.
Sales of product to other integrators have been well ahead of last year's levels. This is due to an increase in sales at Trakm8 of 55% and the full period impact of BOX. The broadening of our customer base has made this growth possible. The single major product that has generated revenues in this segment is the JCB Live Link telematics device, which represents 48% of revenues. Sales of our new T10 hardware has secured new customers and won again customers who had previously purchased BOX products. We also started shipments to Ramtech during the second quarter.
Total revenues in the product sales segment amounted to 3.5m representing 41% of the Group total.
Solution Sales
This segment comprises Solution revenues including associated engineering services. 
Our newly launched Swift 6 product, with its improved functionality, has been well received. This has helped us to secure growth in new customer wins for our fleet management solutions. The introduction of insurance based solutions has also had a positive impact on sales. As a result there has been very strong growth in new unit installations, units reporting to our servers and the consequent increase in recurring revenues.
Recurring revenues from this base have grown to an annualised 5.2m. This is due to a 30% increase in the Trakm8 figures supplemented by an annualised 2.0m at BOX. Sales to Direct Line are progressing well and currently 1 in 5 of their policies to under 25 year olds are being sold with a telematics device. Today we have approximately 80,000 units reporting to our servers.
During the period the product and solution portfolio has been updated to incorporate the latest technology. This positions BOX to offer its customers an even better proposition. Marketing activities remain underway to maximise the opportunity for revenue and margin growth. 
There were several small customer funded engineering projects completed during the period which should also deliver on-going increases in our recurring revenues.
Overall, Solution sales of 5.0m are 129% greater than the same period in the previous year based on 68% like for like growth supplemented by revenues of 1.3m during the period at BOX. 
Total revenues in the Solution sales segment represents 59% of the Group total. We currently have over 30 significant trials in progress and we anticipate that revenues will continue to grow strongly in this segment. 
Strategy 
The Group has been following the strategy outlined in the 2014 Annual Report. Our focus is to sell more devices reporting to our servers and their associated service revenues, along with the use of the considerable data we now derive from these devices to sell driver behaviour, risk analysis and vehicle service management knowledge. 
In addition to the excellent organic growth potential of this market, we have previously advised that Trakm8's strong financial business model, the cash generation and solid balance sheet would enable the Group to consider further acquisitions alongside the organic growth strategy. Several opportunities have been considered during the period but none fitted our tight criteria. We will continue to consider further opportunities, but we will not over pay in the current active market and acquisitive growth remains second in priority to our organic growth. 
Outlook 
The Group is achieving the growth expectations of the Directors and the market. The second half of our financial year should continue the trend of increasing revenues including service revenues, which we expect to be ahead of the first six months. 
The Board is confident in meeting market expectations for the full year.
JOHN WATKINS
Executive Chairman


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months to 30 September 2014

Note
Six months to 30September 
2014
Unaudited
Six months to 30September 
2013
Unaudited
Year to
31March 
2014
Audited
Continuing operations

'000
'000
'000





Revenue

8,478
2,564
9,193
Cost of sales

(4,545)
(640)
(3,932)










Gross profit

3,933
1,924
5,261





Administrative expenses

(3,181)
(1,837)
(4,399)










Operating Profit before exceptional items

752
87
862





Exceptional items
5
-
(63)
(433)










Operating Profit

752
24
429
Finance income

-
2
2
Finance costs

(35)
(2)
(35)










Profit before taxation

717
24
396
Income tax

-
11
75




Profit attributable to the owners of the parent
717
35
471





Other Comprehensive Income




Currency translation differences

-
-
(3)





Total Comprehensive Income for the period attributable to owners of the parent
717
35
468





Basic earnings per share (pence)
6
2.48
0.19
2.01
Diluted earnings per share (pence)
6
2.35
0.18
1.90


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months to 30 September 2014

Share capital
Share premium
Merger 
reserve
Translation reserve
Retained earnings
Total equity attributable to owners of the parent

'000
'000
'000
'000
'000
'000
Balance as at 1 April 2013
194
1,751
510
203
(135)
2,523
Comprehensive income






Profit for the period
-
-
-
-
35
35
Total comprehensive income
-
-
-
-
35
35







Transactions with owners






IFRS2 Share based payments
-
-
-
-
21
21
Transactions with owners
-
-
-
-
21
21
Balance as at 30 Sept 2013
194
1,751
510
203
(79)
2,579







Comprehensive income






Profit for the period
-
-
-
-
436
436
Other comprehensive income






Exchange differences on
translation of overseas 
operations
-
-
-
(3)
-
(3)
Total comprehensive income
-
-
-
(3)
436
433







Transactions with owners






Shares issued
95
1,981
-
-
-
2,076
Share placing fees
-
(91)
-
-
-
(91)
Sale of own shares
-
-
-
-
102
102
IFRS2 Share based payments
-
-
-
-
33
33
Transactions with owners
95
1,890
-
-
135
2,120
Balance as at 31 March 2014
289
3,641
510
200
492
5,132







Comprehensive income






Profit for the period
-
-
-
-
717
717
Total comprehensive income
-
-
-
-
717
717







Transactions with owners






Shares issued
1
12
-
-
-
13
Sale of own shares
-
-
-
-
48
48
IFRS2 Share based payments
-
-
-
-
65
65
Transactions with owners
1
12
-
-
113
126
Balance as at 30 Sept 2014
290
3,653
510
200
1,322
5,975









CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2014

30September
2014
Unaudited
30September
2013
Unaudited
31March
2014 Audited

'000
'000
'000
Non-current assets



Intangible assets
3,415
937
3,249
Plant, property and equipment
1,289
624
1,157
Deferred income tax asset
753
110
753

5,457
1,671
5,159
Current assets



Inventories
1,288
354
1,281
Trade and other receivables
4,052
864
3,269
Cash and cash equivalents
1,914
1,131
2,911

7,254
2,349
7,461
Current liabilities



Trade and other payables
(4,533)
(1,286)
(5,035)
Borrowings
(500)
(34)
(500)

(5,033)
(1,320)
(5,535)




Current assets less current liabilities
2,221
1,029
1,926
Total assets less current liabilities
7,678
2,700
7,085




Non-current liabilities



Borrowings
(1,542)
(105)
(1,792)
Provisions
(161)
(16)
(161)
(1,703)
(121)
(1,953)
Net assets
5,975
2,579
5,132
Equity





Note



Called up share capital
6
290
194
289
Share premium

3,653
1,751
3,641
Merger reserve

510
510
510
Translation reserve

200
203
200
Retained profit / (loss)

1,322
(79)
492
Total equity attributable to owners of the parent

5,975
2,579
5,132


CONSOLIDATED CASH FLOW STATEMENT 
for the six months to 30 September 2014

Sixmonthsto
30September
2014
Unaudited
Sixmonthsto
30September
2013
Unaudited
Year to
31March
2014
Audited

Note
'000
'000
'000
Net cash inflow / (outflow) from operating activities
 7
(565)
(151)
1,324





Cash flows from investing activities
Acquisition of subsidiary (net of cash)
-
-
(2,992)
Purchases of property, plant and equipment

(243)
(99)
(302)
Proceeds from sale of plant

-
-
10
Net cash used in investing activities

(243)
(99)
(3,284)





Cash flows from financing activities



Issue of new shares
-
-
1,985
Proceeds from exercise of share options

12
-
-
Repayment of obligations under hire purchase contracts

-
(13)
(25)
New bank loan

-
-
2,500
Repayment of loans

(250)
(11)
(1,096)
Sale / (purchase) of own shares

49
-
102
Net cash used in financing activities

(189)
(24)
3,466
Net increase / (decrease) in cash and cash equivalents
(997)
(274)
1,506
Cash and cash equivalents at beginning of period
2,911
1,405
1,405
Cash and cash equivalents at end of period

1,914
1,131
2,911


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 28November 2014. The financial information for the preceding full year is extracted from the statutory accounts for the financial year ended 31March2014. 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 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 UK 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 31March2014.
4. Profit per ordinary share attributable to the owners of the parent

Sixmonthsto
30September
2014
Unaudited
Six months to
30September
2013
Unaudited
Yearto
31March
2014
Audited

'000
'000
'000
Profit attributable to the owners of the parent
717
35
471
5. Exceptional costs

Sixmonthsto
30September
2014
Unaudited
Six months to
30September
2013
Unaudited
Yearto
31March
2014
Audited

'000
'000
'000
Exceptional costs
-
63
433
On 25 October 2013 Trakm8 Holdings PLC completed the acquisition of BOX Telematics and the readmission of its ordinary shares to trading on AIM. The exceptional costs related to fees incurred in connection with the acquisition and the readmission of its shares to AIM.
6. Shares in issue
Weighted average number of ordinary shares in issue

Sixmonthsto
30September
2014
Unaudited
Six months to
30September
2013
Unaudited
Yearto
31March
2014
Audited

No.
'000
No.
'000
No.
'000
Basic
28,914
19,045
23,477
 Diluted
30,521
19,447
24,767
 
7. Reconciliation of cash flows from operating activities:

Sixmonthsto
30September
2014
Unaudited
Sixmonthsto
30 September
2013
Unaudited
Yearto
31March
2014
Audited

'000
'000
'000




Net profit before taxation
717
24
396
Adjustments for:



Depreciation
110
35
119
Bank and other interest charges
35
-
33
Amortisation of intangible assets
203
118
202
Capitalised development costs
(368)
(185)
(614)
Share based payment expense
65
20
54




Operating cashflows before movement in working capital
762
12
190




Retranslation of overseas operations
-
-
(2)
Movement in inventories
(8)
194
251
Movement in trade and other receivables
(782)
(220)
(1,041)
Movement in trade and other payables
(502)
(249)
1,848




Cash generated from / (used in) operations
(530)
(263)
1,246




Interest paid
(35)
(2)
(35)
Interest received
-
2
2
Income taxes received
-
112
111




Net cash generated from / (used in) operating activities
(565)
(151)
1,324
8. 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: 
Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ.

This information is provided by RNS
The company news service from the London Stock Exchange
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