Source - LSE Regulatory
RNS Number : 8451J
Trakm8 Holdings PLC
03 July 2017
 

3 July 2017

 

TRAKM8 HOLDINGS PLC

 

('Trakm8' or 'the Group' or 'the Company')

 

Preliminary Results

for the year ended 31 March 2017

 

Trakm8, the AIM quoted telematics and data provider to the global market place, announces its audited preliminary results for the year ended 31 March 2017.

 

FINANCIAL SUMMARY:


2017

2016

Change

Revenues

£26.8m

£25.7m

+4%

Recurring revenues

£9.8m

£8.3m

+18%

Adjusted operating profit*

£1.3m

£3.9m

-67%

Operating Profit

£0.9m

£3.1m

-71%

Profit before tax

£0.7m

£3.0m

-77%

Profit after tax

£1.5m

£3.3m

-55%

Net debt**

£3.9m

£1.1m

+£2.8m

Adjusted earnings per share*

5.81p

13.44p

-57%

Basic earnings per share

4.51p

11.15p

-60%

Proposed dividend per share

nil

2p

n/a

* before exceptional costs and share based payments

** total borrowings less cash

OPERATING HIGHLIGHTS:

 

•     Financial performance in line with February 2017 revised expectation:

impacted by delayed contract wins and significant investment in preparation for growth

•     New orders booked up 37% year on year, benefitting the new financial year:

like for like growth of 33%

renewed contract momentum either side of year end

installed base increased 26% to 190,000 (2016: 151,000)

•     Organic revenues up 9% like for like:

excludes £2.5m contract manufacturing and Roadsense revenues

•     Placing of £2.1m completed in March 2017 to strengthen balance sheet and provide working capital

£2.0m cash and £3.3m undrawn RCF facility available to fund continued investment

•     Fully consolidated into four business units and reduced operating costs by annualised £1.5m

 

OUTLOOK

 

•     Continuation of strong new contract and extensions momentum, pipeline and opportunities

•     Good start to new financial year with revenues 10% higher than the corresponding two month period last year

•     Much improved performance expected, consistent with market expectations

 

John Watkins, Executive Chairman said:

"This has been a year of investment and preparation for growth. The investment resulted in a significant increase in costs whilst the contracts expected to be secured were won too late in the year to benefit revenues. This resulted in disappointing results for the year when compared to our original expectations.  However, this investment in new products provides a strong pipeline of opportunities for the future.

"We have recently announced new contracts with a roadside assistance technology company, and Mecalac, and renewed and extended contracts with Marmalade, Iceland Foods, Shell and Direct Line Group. These important contracts together with our strong pipeline of further opportunities provide additional visibility in our outlook for this year.

"Overall, we anticipate reaping the rewards of our investments as evidenced by our renewed contract momentum.  As a result we are confident of achieving a much improved performance in the new financial year consistent with market expectations."

 

A presentation for analysts is being hosted today (3 July 2017) at 9.15am for 9.30am at MHP's offices. For further information, please contact MHP Communications trakm8@mhpc.com.

 

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 / Charlie Barker




finnCap (Nomad & Broker to Trakm8)

020 7220 0500

Ed Frisby / Simon Hicks - corporate finance

Tim Redfern / Richard Chambers - corporate broking

 


Notes to editors

 

About Trakm8

Trakm8 is a UK based Big Data company supplying telematics-based solutions and data insight to the global market. Through IP owned technology, The Group analyses billions of miles worth of data to create and fine tune algorithms. These are used to produce telematics based solutions that score driver behaviour, monitor vehicle health and continuously improve the security and operational efficiency of both private drivers and company fleets.

The Group's product portfolio includes cameras (including the recently launched integrated telematics camera), self-installed telematics units and technology to eliminate distracted driving due to mobile phones.

Headquartered in Dorset with a manufacturing facility in the West Midlands, the Group supplies, through its dedicated business units Fleet, Optimisation, Insurance and Automotive, many well-known customers in the UK and internationally including the AA, Saint Gobain, EON, Direct Line Group and Young Marmalade.

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 is inside information for the purposes of Article 7 of Regulation 596/2014.

EXECUTIVE CHAIRMAN'S STATEMENT

 

A YEAR OF INVESTMENT

This has been a year of investment and preparation for growth for the Group. This resulted in a significant increase in our overhead costs before we converted the potential orders in our pipeline into revenues, profits and cash flows. This resulted in disappointing results for the year when compared to our original expectations.  However, we expect to reap the rewards of this investment in the new financial year, with a number of new contract wins and extensions either side of the year end providing new momentum, supporting our confidence.

Orders booked for the year were up by 33% like for like.  As contracts secured were won later in the year than expected, this translated into revenues for the year up by only 4% to £26.8m (2016: £25.7m).  This headline rate masked a 9% underlying organic growth in revenues (excluding Roadsense revenues, acquired during the year, and deliberate reductions in non-core product and contract manufacturing sales).

Our sales of new fleet management solutions and insurance products have increased our already solid base of recurring revenues, providing future visibility from which we can continue to expand. Furthermore, the range and breadth of the data we are now able to provide gives us a market leading proposition for all the business sectors we touch.

Adjusted operating profit (before exceptional costs and share based payments) reduced by 67% to £1.3m as a result of the significant increase in investment to drive long term growth, increasing overhead costs ahead of revenues.  Our total research and development expenditure increased from £2.9m to £4.5m.  We also incurred significantly increased sales and marketing costs. Our operating profits reduced by 71% to £0.9m (2016: £3.1m).  Our statutory profit before tax reduced to £0.7m (2016: £3.0m).

In February 2017, the Group decided to reduce debt and to underpin the working capital requirements of growing the business. It completed an oversubscribed fundraise of £2.0m (net of fees) on 3 March 2017. The Directors and senior management showed their commitment to the Company by investing £0.7m alongside the institutional and other investors. As a result at the year end the Group had cash and cash equivalents of £2.0m and an available revolving credit facility of £3.3m to draw down upon if required, compared to net debt of £3.9m (2016: £1.1m). This should be sufficient for the Group's requirements over the next twelve months.

The Group remains in a phase of rapid growth and significant investment; this requires it to invest heavily in working capital. This is likely to result in cash conversion as a percentage of operating profit being comfortably below 100% in the next few years, until such time as the Group reaches a more mature state.   However, the Board notes that recent corporate consolidation has valued target companies on the basis of revenue and installed base, rather than on profitability and cash flows, such is the growth profile of the telematics industry. 

As announced in March 2017, the Group has initiated a major streamlining exercise, the first phase of which is expected to generate annualised savings of £1.5m at a one-off cost of £0.1m. These savings have been achieved through the various consolidation activities that have been undertaken to focus the Group into one operating business, whilst retaining focus on our core activities of designing innovative products and selling them more effectively.

ACQUISITIONS

 

In August 2016, we completed the acquisition of Roadsense Technology Limited ("Roadsense") which provides fleet telematics solutions to the SME market. The purchase consideration was £0.8m paid in cash.

The acquisition complemented our vehicle telematics solutions enabling Trakm8 to address a wider customer base. The success of this acquisition along with that of Route Monkey in the previous year was demonstrated by the seven year contract extension announced post year end with Iceland Foods for a fully integrated camera, telematics and optimisation solution.  This was validation of the powerful business case for having made the DCS (cameras), Route Monkey (optimisation) and Roadsense (fleet sales) acquisitions. Roadsense is now fully integrated into the Group as part of Trakm8 Fleet Business Unit.

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. Revenues increased by 24% to £21.3m (2016: £17.2m) and more importantly within this growth our recurring revenues grew by 18% to £9.8m (2016: £8.3m). Growing these service revenues is a key focus as it provides increasing confidence and predictability to future periods. In total we had in excess of 190,000 units (2016: 151,000) reporting to our servers at the year end. The trend of increasing Solution sales is demonstrated by the share of the revenues that are now Solutions. This increased from 67% in 2016 to 80% in 2017.

Our solutions sales cover both the fleet management and insurance market sectors. The total fleet management units increased by 12% over the year to 66,000 (2016: 59,000). Telematics for insurance is experiencing higher levels of growth. At the year end we had 124,000 insurance solution units reporting to our servers (2016: 92,000), which is an increase of 35%. Market forecasts are predicting compound annual growth rates in excess of 46% for the number of insurance telematics policies in force and we have seen a corresponding increased level of interest from well known 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 continued to invest in our crash algorithms and driver scoring algorithms and believe that these are now very competitive. Broadening these in conjunction with video algorithms based on driver distraction analysis, will further improve these driver behaviour solutions.

Investment in the latest generation server and portal has progressed well so that the Group can deploy much higher levels of units and process much higher levels of data. The new product launched since year end, called Trakm8 Insight, replaces Trakm8 SWIFT. Trakm8 Insight is the new web portal which allows our customers to view information about their vehicles such as real-time locations, driver behaviour and vehicle health faults. Initial customer feedback is positive. This new architecture along with the new hardware platforms continue to give Trakm8 market leading solutions with the widest and deepest offer in the market today.

Since the year end, as stated above, we have announced a contract extension with Iceland Foods to provide our 4G integrated camera and telematics solution with driver feedback devices to 1,500 vehicles. This is the Group's first significant order for the complete fleet solution (fully integrated camera, telematics and optimisation). 

A contract was also recently announced with a roadside assistance technology company to supply devices based on our 4th generation self-fit hardware and Trakm8connectedcare software. This solution will be widely deployed to road side assistance providers across Europe. It follows a 12 month trial of the solution with the AA in the UK.

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 included together with the revenues from our contract electronic manufacturing facility in Coleshill, Birmingham. Total product revenues reduced by 35% to £5.5m (2016: £8.4m) with £2.7m of this reduction being accounted for by the deliberate elimination of sales to a single contract manufacturing customer. As a result Product sales accounted for 20% of total revenues down from 33% in 2017.

Although Trakm8 has market leading devices that are of interest to other Telematics companies, this is no longer a strategic sales focus for the Group due to the relatively low margins and the increased demand for Trakm8 solutions. As a result the Group expects to fill all its existing capacity this year and is not aiming to supply third parties; this is likely to lead to a further planned reduction in product revenues.

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 39% increase in the average number of Engineers in our research & development teams to 82 (2016: 59) during the year. The Trakm8connectedcare automotive connected solution has been considerably expanded and we now have a number of features important to our customers that can be derived from 95%+ of the vehicles that report this data to the diagnostic port.

The integrated 4G camera telematics unit has been launched and well received by the market.

Insurance propositions have been expanded to improve the crash detection algorithms and now include driver scoring solutions.

The next generation portal and server solution, Trakm8 Insight, was launched after year end. It replaces Trakm8 SWIFT which is now almost ten years old.

BOARD CHANGES

Keith Evans was appointed Deputy Chairman so that the Group could benefit from his extensive commercial and financial experience and expertise and to act as a further link to shareholders.

DIVIDEND

In September 2016, we paid a dividend of 2 pence per share, reflecting the very strong financial performance in that year. As a result of the disappointing trading last year, the Group does not propose to recommend a dividend for the year at the forthcoming AGM. However, the Board will continue to review its dividend policy and plans to recommend a dividend payment when the Group's financial performance justifies it again. 

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 staff numbers have grown by 18% over the year including six new colleagues we have welcomed from the Roadsense acquisition.

It has been a demanding year as the Group has experienced rapid growth. We have an exceptional team 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 started the new financial year consistent with its expectations for the year as whole. The revenues in the first two months of the new financial year are 10% greater than the corresponding period last year.

We have recently announced new contracts with a roadside assistance technology company, and Mecalac, the construction equipment group. We have also announced renewed and extended contracts with Marmalade, Iceland Foods, Shell and Direct Line Group. These important contracts together with our strong pipeline of further opportunities provide additional visibility in our outlook for this year.

Overall, we anticipate reaping the rewards of our investments as evidenced by our renewed contract momentum.  As a result we are confident of achieving a much improved performance in the new financial year consistent with market expectations.

 

John Watkins

EXECUTIVE CHAIRMAN

3 July 2017

 

FINANCIAL REVIEW

 

TRADING RESULTS

Revenues increased by 4% to £26.8m (2016: £25.7m) and organic growth was 9%, excluding the benefit of the acquisition of Roadsense, and excluding the impact of prior year acquisitions and reductions in non core product and contract manufacturing sales.

Solutions revenues continued to grow as we continued our investment in new products and the consolidation of our recent acquisitions.  These revenues increased by 24% to £21.3m (2016: £17.2m) and now account for 80% of our total revenues, up from 67% last year.  We had expected further growth in these revenues but the signing of certain new contracts occurred much later than anticipated.  Our recurring revenues increased by £1.5m to £9.8m (2016: £8.3m) and now represent 37% of total revenues (2016: 32%).

Product revenues reduced by 35% to £5.5m (2016: £8.4m) as we ended our contract with Microlise and continued to withdraw from our contract electronic manufacturing operations.  This strategy will continue into 2018 and is planned to lead to a further drop in product revenues.

Our gross margin increased by 1.1% to 49.4% (2016: 48.3%) helped by lower manufacturing revenues being replaced by higher margin solution revenues and their accompanying recurring revenues.  The effect of Brexit and increased raw material prices is estimated to have decreased our gross margin by 2%.  The total cost in the year of Brexit including adverse currency movements was £0.6m.

OVERHEADS

Total overheads (excluding exceptional costs) increased by 42% to £12.5m (2016: £8.8m).  During the year we have made substantial investments in our engineering and sales and marketing teams, increasing average staff numbers by 23 and 13 respectively.  Our total research and development costs increased to £4.5m from £2.9m out of which we have expensed £1.3m (2016: £1.0m).

ADJUSTED OPERATING PROFIT

Adjusted operating profit is one of our key performance indicators and is operating profit before exceptional costs and share based payments.  This dropped to £1.3m (2016: £3.9m) on account of disappointing revenue growth accompanied by the increases in our staff numbers.  Our operating profit was £0.9m (2016: £3.1m).

EXCEPTIONAL COSTS

Exceptional costs totalled £0.2m and consisted of costs incurred from the acquisition of Roadsense Technology Limited ("Roadsense") together with rationalisation and integration costs, and costs associated with our exit from our contract manufacturing operations.

PROFIT

Profits before tax were £0.7m (2016: £3.0m).  We realised a net tax credit of £0.8m (2016: £0.3m) during the year resulting from substantial R&D tax credits arising from our investment in research and development of new technologies.  Profits after tax were £1.5m (2016: £3.3m). The Group has tax losses carried forward of £7.3m (2016: £6.3m).

EARNINGS PER SHARE

Basic earnings per share decreased by 60% to 4.51 pence (2016: 11.15 pence).  Adjusted earnings per share which is before exceptional costs and share based payments also fell to 5.81 pence (2016: 13.44 pence).

BALANCE SHEET

Net assets increased to £20.2m (2016: £17.1m).  Continuing investment in our telematics solutions together with investments in software and goodwill arising from the acquisition of Roadsense increased our net intangibles by £3.1m to £17.1m (2016: £14.0m). 

Our inventories increased by £1.4m to £3.7m (2016: £2.3m) due to increasing our quantities of finished goods in expectation of additional demand in the final quarter.  These orders were delayed into the new financial year and so inventories were higher than anticipated at the year end.  However inventories are expected to reduce on the back of the substantial new orders we have announced since year end.

FINANCING

Net borrowings at the year end were £3.9m (2016: £1.1m).  Our bank facilities comprised our term loan of £3.9m and our £5.0m revolving credit facility of which £1.7m was drawn at 31st March 2017.  Our term loan is repayable by monthly instalments until 2021 and outstanding amounts under the revolving credit facility are repayable in December 2018.

In March 2017, the Group raised a net £2.0m (after fees) through a share placing of 3.2m shares at 65 pence per share.  The proceeds were used to repay part of our revolving credit facility and to strengthen our working capital position to support future growth.

At the year end the Group had cash balances of £2.0m (2016: £3.9m) and total borrowings of £5.9m (2016: £4.9m).

CASHFLOW

Net cash generated from operating activities was £0.7m (2016: £4.5m). This decrease was largely due to the reduction in our earnings before depreciation and amortisation plus the funding of increases in our inventories, reduction in trade and other payables and our investment in engineering resources.  In addition, we have experienced a net £1.9m working capital deterioration compared to 2016 due to our evolving business model, reflecting many customers' preference to sign SaaS (software as a service) type contracts which spreads the payments for hardware and software elements over the term of the contract. 

Our free cashflow (operating cashflow less capex and capitalised development costs) was a net outflow of £3.0m (2016: inflow £2.0m) after our substantial investment in capex and capitalised development costs of £3.7m. Our free cashflow as a percentage of adjusted operating profit was -228% (2016: +51%). We anticipate improved cash flows in the new financial year as our profitability improves.

James Hedges

FINANCE DIRECTOR

3 July 2017

 



 

Consolidated Statement of Comprehensive Income For The Year Ended 31 March 2017

 


Note

Year ended 31 March 2017

Year ended 31 March 2016

 



£

£

 

REVENUE

3

26,758,532

25,649,188

 

Cost of sales


(13,549,580)

(13,251,581)

 




 

Gross profit

13,208,952

12,397,607

 





 

Other income


325,058

81,443

 





 

Administrative expenses excluding exceptional costs


(12,461,917)

(8,756,085)

 

Exceptional administrative costs

5

(214,492)

(612,559)

 

Total administrative costs


(12,676,409)

(9,368,644)

 





 

OPERATING PROFIT

4

857,601

3,110,406

 





 

Finance income


45

874

 

Finance costs

6

(164,585)

(108,208)

 





 

PROFIT BEFORE TAXATION


693,061

3,003,072

 

Income tax


777,382

340,678

 




 

PROFIT FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF THE PARENT


1,470,443

3,343,750

 





 

OTHER COMPREHENSIVE INCOME




 

Items that may be subsequently reclassified to profit or loss:




 

Currency translation differences


(791)

3,811

 

TOTAL OTHER COMPREHENSIVE INCOME


(791)

3,811

 





 




 

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT


1,469,652

3,347,561

 




 





 

Adjusted Operating profit

4

1,321,518

3,921,044

 





 

EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT




 





 

Basic

7

4.51p

11.15p

 





 

Diluted

7

4.36p

10.27p

 





 

There were no discontinued operations in 2017 or 2016. Accordingly the results relate to continuing operations.

 

Consolidated Statement of Changes in Equity For The Year Ended 31 March 2017










Share capital

Share premium

Merger reserve

Translation reserve

Treasury reserve

Retained earnings

Total equity


£

£

£

£

£

£

£

Balance as at 1 April 2015

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

Reclassification of previous Treasury share transactions

-

(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 1 April 2016

320,350

9,641,062

1,122,181

199,414

(4,495)

5,795,877

17,074,389









Comprehensive income








Profit for the year

-

-

-

-

-

1,470,443

1,470,443

Other comprehensive income








Exchange differences on translation of overseas operations

-

-

-

(791)

-

-

(791)

Total comprehensive income

-

-

-

          (791)

               -

1,470,443

1,469,652









Transactions with owners








Shares issued

36,882

2,141,942

15,397

-

-

-

2,194,221

Equity dividend

-

-

-

-

-

(649,270)

(649,270)

Share placing fees

-

(108,667)

-

-

-

-

(108,667)

IFRS2 Share based payments

-

-

-

-

-

249,425

249,425

Transactions with owners

36,882

2,033,275

15,397

-

-

(399,845)

1,685,709

Balance as at 31 March 2017

357,232

11,674,337

1,137,578

198,623

(4,495)

6,866,475

20,229,750

 



 

Consolidated Statement of Financial Position As At 31 March 2017






Note

As at 31 March 2017

As at 31 March 2016

ASSETS


£

£

NON CURRENT ASSETS




Intangible assets


17,107,776

13,996,240

Property, Plant and equipment


1,854,885

1,572,613

Deferred income tax asset


297,368

801,365

Amounts receivable under finance leases


498,634

294,296


19,758,663

16,664,514

CURRENT ASSETS




Inventories


3,674,003

2,258,882

Trade and other receivables


6,075,575

7,239,954

Corporation tax receivable


1,645,169

24,001

Cash and cash equivalents


1,989,992

3,871,110


13,384,739

13,393,947

LIABILITIES




CURRENT LIABILITIES




Trade and other payables


(6,470,839)

(7,541,122)

Borrowings


(1,051,419)

(968,182)

Provisions


(61,749)

(92,208)







(7,584,007)

(8,601,512)





CURRENT ASSETS LESS CURRENT LIABILITIES

5,800,732

4,792,435




TOTAL ASSETS LESS CURRENT LIABILITIES

25,559,395

21,456,949




NON CURRENT LIABILITIES




Trade and other payables


(480,211)

(395,313)

Borrowings


(4,805,596)

(3,927,586)

Provisions


(43,838)

(59,661)




NET ASSETS

17,074,389




EQUITY




Share capital

8

357,232

320,350

Share premium


11,674,337

9,641,062

Merger reserve


1,137,578

1,122,181

Translation reserve


198,623

199,414

Treasury reserve


(4,495)

(4,495)

Retained earnings


6,866,475

5,795,877





TOTAL EQUITY


17,074,389

 



 

Consolidated Statement of Cash-Flows For The Year Ended 31 March 2017










Notes

Year ended 31 March 2017

Year ended 31 March 2016



£

£

NET CASH GENERATED FROM OPERATING ACTIVITIES

9

667,604

4,447,310

CASH FLOWS FROM INVESTING ACTIVITIES








Interest received


45

874

Acquisition of subsidiary undertaking (net of cash acquired)


(763,461)

(7,697,531)

Purchases of property, plant and equipment


(180,603)

(528,597)

Purchases of software


(262,149)

(79,134)

Proceeds from sale of plant and equipment


300

-

Capitalised development costs


(3,241,379)

(1,852,639)





NET CASH USED IN INVESTING ACTIVITIES


(4,447,247)

(10,157,027)





CASH FLOWS FROM FINANCING ACTIVITIES







Issue of new shares


2,070,157

5,839,751

Sale of Treasury shares


-

79,810

Increase in bank loan


2,700,000

6,000,000

Repayment of bank loans


(1,954,067)

(5,751,888)

Increase in HP agreement


-

126,242

Repayment of obligations under hire purchase agreements


(103,710)

(12,839)

Interest paid


(164,585)

(108,208)

Dividends paid to owners of the parent


(649,270)

-





NET CASH GENERATED FROM FINANCING ACTIVITIES


1,898,525

6,172,868





NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS


(1,881,118)

463,151





CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


3,871,110

3,407,959





CASH AND CASH EQUIVALENTS AT END OF YEAR


1,989,992

3,871,110

 



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                   

1.     GENERAL INFORMATION                                                                           

 

Trakm8 Holdings PLC ("Company") and its subsidiaries (together the "Group") manufacture, distribute and sell telematics devices and services.

                                                                                                                                               

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 Company is registered in England and is limited by shares.

                                                                                                                                               

The Group's principal activity is the manufacture, marketing and distribution of vehicle telematics equipment and services. The Company's principal activity is to act as a holding company for its subsidiaries.

 

 

2.     BASIS OF PREPARATION

 

The audited financial information included in this preliminary results announcement for the year ended 31 March 2017 and audited financial information for the year ended 31 March 2016 does not comprise statutory accounts within the meaning of sections 404 and 435 of the Companies Act 2006. The information has been extracted from the audited statutory financial statements for the year ended 31 March 2017 which will be delivered to the Registrar of Companies in due course. Statutory financial statements for the year ended 31 March 2016 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 £1,989,992 at 31 March 2017 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 audited financial statements are consistent with those used in the preparation of the audited financial statements for the year ended 31 March 2017.

 

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:







Year ended 31 March 2017



Year ended 31 March 2016





£



£


Solutions



21,255,795



17,208,779


Products



5,502,737



8,440,409













26,758,532



25,649,188









 


A geographical analysis of revenue by destination is as follows:













Year ended 31 March 2017

Year ended 31 March 2016



Solutions

Products

Total

Solutions

Products

Total



£

£

£

£

£

£










United Kingdom

20,921,406

5,405,002

26,326,408

16,769,774

8,048,848

24,818,622


USA

-

-

-

-

168,652

168,652


Canada

360

17,863

18,223

390

46,592

46,982


Norway

70,555

-

70,555

117,527

-

117,527


Rest of Europe

260,310

13,770

274,080

224,078

7,784

231,862


UAE

-

66,102

66,102

-

136,819

136,819


Rest of World

3,164

-

3,164

97,010

31,714

128,724



21,255,795

5,502,737

26,758,532

17,208,779

8,440,409

25,649,188









 

4.     OPERATING PROFIT












The following items have been included in arriving at operating profit:





Year ended 31 March 2017

Year ended 31 March 2016





£

£


Depreciation






 - owned fixed assets



282,229

227,194


 - assets on hire purchase



21,729

5,075


Amortisation of intangible assets


1,156,947

655,528


Operating lease rentals






 - Land and buildings



128,747

92,173


 - Other



229,510

219,625


Research and development expenditure



1,314,360

1,002,096


Loss on foreign exchange transactions



40,048

46,212


Staff costs



7,301,417

6,036,138


Profit on disposal of property plant & equipment


103

-





 

 

 

 

 






£

£


Auditors' remuneration






Fees payable to the Company's auditors for the audit of the parent




company and consolidated financial statements


71,000

57,000


Fees payable to the Company's auditors for other services:





The audit of the Company's subsidiaries



-

40,000


Tax compliance services



9,800

12,500


Tax advisory services



9,930

12,450














Adjusted Operating profit is monitored by the Board and measured as follows:












Year ended 31 March 2017

Year ended 31 March 2016





£

£


Operating Profit



857,601

3,110,406


Exceptional administrative costs



214,492

612,559


Share based payments



249,425

198,079








Adjusted Operating profit



1,321,518

3,921,044







5.     EXCEPTIONAL ADMINISTRATIVE COSTS









Year ended 31 March 2017

Year ended 31 March 2016





£

£


Acquisition costs



63,190

578,943


Integration costs



89,514

33,616


Contract manufacturing residual inventory provisions


61,788

-





214,492

612,559








The acquisition costs related to the purchase of 100% of the share capital of Roadsense Technology Limited in August 2016. The 2016 acquisition costs related to the purchase of the trade and assets of DCS in June 2015 and 100% of the share capital of Route monkey Holdings Limited. The integration costs related to the reorganisation of management and integration of business systems and processes following the acquisitions. The contact manufacturing residual inventory costs are associated with the cessation of our manufacturing contracts with third parties as part of our streamlining of the business. These costs have been included as part of Administration costs.

 

 

6.     FINANCE COSTS

 




Year ended 31 March 2017

Year ended 31 March 2016

 

 




£

£

 

 


Interest on bank loans


148,348

102,345

 

 


Interest on Hire Purchase agreements


16,237

5,863

 

 




164,585

108,208

 

 

 

 

 

 

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:






Year ended 31 March 2017

Year ended 31 March 2016





£

£








Profit for the year after taxation



1,470,443

3,343,750


Exceptional administrative costs



214,492

612,559


Share based payments



249,425

198,079


Tax effect of adjustments



(42,898)

(122,512)


Adjusted profit for the year after taxation



1,891,462

4,031,876











No.

No.








Number of Ordinary shares of 1p each



35,723,254

32,035,064








Basic weighted average number of Ordinary shares of 1p each

32,594,891

30,000,972


Diluted weighted average number of Ordinary shares of 1p each

33,708,702

32,571,617








Earnings per share



4.51p

11.15p


Diluted earnings per share



4.36p

10.27p








Adjust for effects of:






Exceptional costs



0.53p

1.63p


Share based payments



0.77p

0.66p








Adjusted earnings per share



5.81p

13.44p


Adjusted diluted earnings per share



5.61p

12.56p







8.     SHARE CAPITAL




As at 31 March 2017

As at 31 March 2016




No's

£

No's

£


Authorised


'000's


 '000's



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

35,723

357,232

32,035

320,350









Movement in share capital:










As at 31 March 2017

As at 31 March 2016






£

£


As at 1 April




320,350

289,738


New shares issued



36,882

30,612


As at 31 March




357,232

320,350









The Company currently holds 29,000 Ordinary shares in treasury representing 0.08% (2016: 0.09%) 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 35,694,254.









During the year the following shares were issued:


Date

Description


Shares

Consideration

Premium





number

£

£


07/04/2016

Exercise of options over Ordinary Shares by an employee

100,000

13,000

12,000


28/04/2016

Exercise of options over Ordinary Shares by an employee

100,000

19,500

18,500


03/05/2016

Exercise of options over Ordinary Shares by an employee

50,000

9,750

9,250


26/07/2016

Exercise of options over Ordinary Shares by an employee

200,000

36,500

34,500


30/09/2016

Share issue to senior management shareholders of Roadsense

7,420

15,471

15,397


10/03/2017

Share issue in connection with capital raising

3,230,770

2,100,000

2,067,692





3,688,190

2,194,221

2,157,339


The shares issued to senior management shareholders of Roadsense were issued at a premium which was subject to merger relief and has been taken to the Merger reserve.

 

9.     CASH GENERATED FROM OPERATIONS













Year ended 31 March 2017

Year ended 31 March 2016






£

£









Profit before tax



693,061

3,003,072


Depreciation



303,958

232,269


Profit on disposal of fixed assets




(103)

-


Net bank and other interest



164,540

107,334


Amortisation of intangible assets



1,156,947

655,528


Share based payments



249,425

198,079


Operating cash flows before movement in working capital



2,567,828

4,196,282


Movement in inventories



(1,376,921)

(39,011)


Movement in trade and other receivables



498,593

(1,211,259)


Movement in trade and other payables



(1,104,571)

1,489,544


Movement in provisions



(46,282)

11,754


Cash generated from operations



538,647

4,447,310


Income taxes received



128,957

-


Net cash inflow from operating activities



667,604

4,447,310

 

 

 

 

10.  BUSINESS COMBINATIONS                                                                        

 

Roadsense Technology Limited                                                                       

                                                                                                               

On 1 August 2016 the Company acquired the entire share capital of Roadsense Technology Limited for a total consideration of £778,932.

 

Roadsense provides telematics solutions to smaller businesses. The company was acquired to extend the customer base of the Group. The assets and liabilities as at 1 August 2016 arising from the acquisition were as follows:








Fair value








£


Intangible assets





100,000


Property and equipment





99,875


Inventory






38,200


Trade and other receivables





62,486


Trade and other payables





(186,584)


Net assets acquired





113,977


Goodwill






664,955


Total consideration





778,932










Satisfied by:








Cash






763,461


Fair value of shares in the Company




15,471








778,932

The acquisition was settled in cash of £763,461 and by issuing 7,420 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 £15,471 on the acquisition date. Merger relief has been applied, leading to the addition of £15,397 to the merger reserve rather than share premium.

The revenue included in the consolidated statement of comprehensive income since 1 August 2016 contributed by Roadsense was £580,010. Roadsense also contributed an operating loss of £235,239 over the same period. The Directors have concluded that it is impractical to provide disclosure of the revenues and profit that Roadsense would have contributed to the Group had it been consolidated from 1 April 2016. This is due to audited accounts not being available for the period 1 April 2016 to 31 July 2016, and significant adjustments have been required to Roadsense's accounting policies in respect of revenue recognition to align with the requirements of IFRS and Trakm8 Holdings PLC's accounting policies. Therefore it is impractical to recalculate revenues for the period 1 April 2016 to 31 July 2016.

Acquisition related costs amounting to £63,190 have been recognised as an exceptional administrative expense in the consolidated statement of comprehensive income. The goodwill arising on the acquisition represents the value of the marketing expertise and customer relationships acquired which Trakm8 Holdings PLC plans to integrate into their existing telematics offerings.

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 Limited. Under the purchase agreement, contingent consideration of up to £2,000,000 was payable subject to the business achieving certain performance targets during the year to 31 December 2016. None of this contingent consideration is payable. No provision in relation to this consideration was recognised in the prior year financial statements, so no adjustment has been made in these financial statements.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR OKBDDDBKBDOK
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.