REG - Trakm8 Holdings PLC - Trading and Strategy Update and Issue of CLN

Trakm8 HoldingsAnnouncement

14/09/2022 08:00

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RNS Number : 3455Z  Trakm8 Holdings PLC  14 September 2022

     14 September 2022

 

Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
UK Market Abuse Regulation. With the publication of this announcement, this
information is now considered to be in the public domain.

 

Trakm8 Holdings plc

('Trakm8' or the 'Group')

 

Trading and Strategy Update and Issue of Convertible Loan Notes

 

Trading and Strategy Update

 

Trakm8 Holdings plc (AIM:TRAK), the global telematics and data insight
provider, provides the following trading update.

 

The Board is pleased to announce that the Group remains on target to meet
market expectations for revenues and adjusted profit for the current financial
year.

 

Trakm8 previously advised on 26 April 2022 that the results for this financial
year were expected to be significantly second half weighted due to contract
renewal timings. The Group's growing connected base is now expected to further
impact this weighting. As a result, whilst the performance of Trakm8 in the
second half of the year is expected to enable the Group to meet market
expectations as highlighted above, the Group will be loss making in the first
half of the year.

 

The Board has been reviewing the Group's strategy and operations in light of
the significant success Trakm8 is enjoying in the Insurance, Automotive and
Optimisation sectors. It believes it is important to build on this success and
ensure resources are available to enable Tarkm8 to address a narrower part of
the connected vehicle market with more focussed products, targeting enterprise
sales across all its chosen markets. The Board is also conscious that Trakm8
has moved out of the development phase of its platform "Trakm8 Insight" into a
more mature phase and that this should be reflected in its operations.
Finally, the refresh of Trakm8's hardware platforms to overcome previously
announced component availability challenges has been completed.

 

Reflecting the opportunities available to the Group and completion of the
developments highlighted above, the Board has decided to significantly reduce
the engineering investment Trakm8 has been making, in conjunction with
reducing its sales and marketing resources and associated support functions.
As a result, Trakm8 has commenced a consultation process with its staff with a
view to reducing Group headcount substantially which, together with related
efficiency improvements, will reduce overheads by approximately £2.4 million
in a full year.  The costs associated with this headcount reduction, which
are estimated to be approximately £0.8 m, will be financed from the proceeds
of a convertible loan note issue, further details of which are set out below.

 

While these initiatives will not impact the Group's trading performance in the
financial year ending 31 March 2023, the Board anticipates that the
initiatives should provide a platform for the Group's profitability to be
materially improved in the year ending 31 March 2024.

Issue of Convertible Loan Notes

Trakm8 is pleased to announce a fundraise via the issue of £1,580,000 nominal
of 12% Convertible Unsecured Loan Notes (together the "Loan Note"). The
primary purpose of the Loan Note issue is to provide the Group with the
working capital required to complete the strategic refocus of the business
outlined above.

 

The Loan Note, which contains customary terms of default, will have a two-year
term from its issue date, being 14 September 2022, and will attract interest,
payable quarterly, from this date until repayment on 13 September 2024. No
application has been or will be made to any Recognised Investment Exchange for
the listing of, or for permission to deal in, the Loan Note. The Loan Note is
convertible at a conversion price of 17.10p, a ten per cent. discount to the
closing mid-market price of a Trakm8 ordinary share on 13 September 2022, the
last practicable date prior to this announcement.  The terms of the Loan Note
prohibit the Company from entering into any further unsecured loans.  In
addition, in the event that the Company undertakes an equity funding raising
in excess of £0.5m prior to repayment of the Loan Note, the conversion price
of the Loan Note will be adjusted to a 10 per cent. discount to the price of
that equity funding, provided the equity funding is at a lower price than the
closing mid-market price of a Trakm8 ordinary share on 13 September 2022.  In
the absence of a default event, the principal sum of the Loan Note will be
repaid or converted, in full or in part, at the option of the Note holder at
the maturity date of 13 September 2024 into Trakm8 ordinary shares and will
not be redeemed. The Trakm8 ordinary shares so issued will rank pari passu in
all respects with the existing ordinary shares currently in issue.

 

Microlise Group plc, a 20% shareholder in Trakm8, will be subscribing for
£1,000,000 nominal of the Loan Note.  In addition, certain directors of the
Company will also be subscribing for the Loan Note in the following amounts:
John Watkins £400,000; Tim Cowley £60,000; and Matt Cowley £60,000.

 

Related party transaction disclosure

 

Microlise Group plc is a substantial shareholder of the Group in accordance
the AIM Rules for Companies (the "AIM Rules") and John Watkins, Tim Cowley and
Matt Cowley are directors of Trakm8 (together the "Connected Loan Note
Subscribers"). The Connected Loan Note Subscribers are therefore related
parties of the Group for the purposes of the AIM Rules. Participation in the
Loan Note by the Connected Loan Stock Subscribers is a related party
transaction under the AIM Rules. The independent Directors of Trakm8
consider, having consulted with the Group's nominated adviser, Allenby Capital
Limited, that the terms of the participation in the Loan Note by the
Connected Loan Note Subscribers are fair and reasonable insofar as the Group's
shareholders are concerned.

 

- Ends -

For further information:

 Trakm8 Holdings plc
 John Watkins, Executive Chairman                           Tel: +44 (0) 1675 434 200
 Jon Edwards, Chief Financial Officer                       www.trakm8.com (http://www.trakm8.com/)

 Allenby Capital Limited (Nominated Adviser & Broker)       Tel: +44 (0)20 3328 5656
 David Hart/ Vivek Bhardwaj, Corporate Finance              www.allenbycapital.com

Tony Quirke, Sales and Corporate Broking

 

About Trakm8

 

Trakm8 is a UK based technology leader in fleet management, insurance
telematics, connected car, and optimisation. Through IP owned technology, the
Group uses AI data analytics collected from its installed base of telematics
units to fine tune the algorithms that are used to produce its' solutions;
these monitor driver behaviour, identify crash events and monitor vehicle
health to provide actionable insights to continuously improve the security and
operational efficiency of both company fleets and private drivers.

The Group's product portfolio includes the latest data analytics and reporting
portal (Trakm8 Insight), integrated telematics/cameras/optimisation,
self-installed telematics units and one of the widest ranges of installed
telematics devices. Trakm8 has over 264,000 connections.

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, Iceland Foods, GSF, Direct Line Group,
Ticker and Ingenie.

Trakm8 has been listed on the AIM market of the London Stock Exchange since
2005. Trakm8 is also recognised with the LSE Green Economy Mark.

 

www.trakm8.com (http://www.trakm8.com/)  / @Trakm8

 

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