Trakm8 Hldgs Regulatory News (TRAK)

15 Dec 2006 07:58

Trakm8 Holdings PLC15 December 2006 Embargoed until 7am 15 December 2006 TRAKM8 HOLDINGS PLC ("Trakm8" or "the Group") Interim Results For the 6 Months to 30 September 2006 Trakm8, the leading technology provider, designer and developer of GPRS based hardware and software to the vehicle tracking and security market, is pleased toannounce its Interim Results for the six months to 30 September 2006. Highlights • 30% increase in turnover • 49% increase in gross profit • Increase in gross profit percentage from 32.2% to 36.7% • 207% increase in net assets • Completion of acquisition of Interactive Projects Ltd Unaudited Results for the six months to 30 September 2006 Six months Six months ended ended 30 Sept 2006 30 Sept 2005 Unaudited Unaudited £000's £000's Turnover 3,206 2,460 Gross Profit 1,177 792Gross Profit % 36.7% 32.2% Operating Profit 141 153 Profit on ordinary activities beforetaxation 131 129 Cash at bank and in hand 257 112 Net Assets 1,445 470 Commenting on the results, Cary Knapton, CEO of Trakm8 said: "The first half of our financial year has been a very successful one for the Company. We have secured our Intellectual property, delivered a profitable set of results and begun the transition to the next phase of our business model. The launch of Trakm8 SWIFT has the potential to revolutionise the smaller fleet management market. I look forward to reporting further progress in due course for Trakm8 SWIFT." Chairman's Statement It is with pleasure that I report the unaudited Trakm8 Holdings PLC interimresults for the six months ended 30th September 2006. I am pleased to report that turnover in the period increased 30% to £3.206million (2005: £2.460 million) generating a profit before tax of £0.13 million(2005: profit £0.13 million). This year the Company has embarked on a strategy to strengthen and growshareholder value. The strategy commenced with the acquisition of InteractiveProjects Limited (IPL) on 26th May 2006, an acquisition designed to secure asignificant proportion of the Group's core Intellectual Property Rights ("IPR");and continued with the recently announced launch of Trakm8 SWIFT (TM). The Group designs and develops GPS (Global Positioning System) based hardwareand software for the vehicle telematics market. During the period our hardwaresales volumes grew significantly and we continued to supply our products topartners around the globe. In addition the Group recently launched Trakm8SWIFT (TM); our first ASP (Application Service Provider) based service offering and a major expansion to our product portfolio. The Directors firmly believe that our innovative business model of focusing solely on the primary activity areas within our industry can be successfully evolved to support service offerings and that this will allow us to maintain our differentiation successfully in the market. Trakm8 SWIFT (TM) Trakm8 SWIFT (TM) enjoyed a soft launch late October and initiates a strategy oftaking our products direct to market. With an intuitive web-based front endsupported by our STREAM server architecture this product is pricedcompetitively. Initial customer feedback has been excellent and we expect thisrevenue stream to grow in importance for the Group. Acquisition of Interactive Projects Limited On 26th May 2006 the Group completed the acquisition of Interactive ProjectsLimited (IPL) thereby securing protection for the core intellectual propertyused by the Group. Due to the existing close working relationship between Trakm8and IPL no integration issues were expected and indeed none have materialised. Iam pleased therefore to note that the integration of the two companies is nowcomplete and the expanded organisation is now working to full effect. Inaccordance with the Terms of Sale the Group applied for the admission to theAlternative Investment Market (AIM) of the remaining 446,423 ConsiderationShares effective from 29th November 2006. Outlook The Trakm8 Group has had a successful past 6 months and the Board believes thatthe outlook is promising. We consider that our differentiated offerings combinedwith the launch of Trakm8 SWIFT (TM) offer our clients the functionality andflexibility they require. The roll-out of further services and product solutionsremain on track. The launch of Trakm8 SWIFT (TM) has been a major milestone for the Group and theproject team are to be congratulated. This project demonstrates that revenuegrowth, achieving greater profitability and delivering increased shareholdervalue remain the core tenets of the Group strategy. I would like to thank theExecutive team and staff for their continuing hard work, dedication to the Groupand the continuing success this is creating. DAWSON BUCKCHAIRMAN Chief Executive Officer's Review Financial Review Turnover for the six months ended 30th September 2006 was £3.206m (2005:£2.460m), an increase of 30%. Gross profit increased to £1.18m (2005: £0.79m).Gross margins improved to 36.7% (2005: 32.2%), a 4.5% improvement. Despiteincreased administrative expenses of £1.03m (2005: £0.64m) the Group is pleasedto announce a profit on ordinary activities before taxation for the period of£0.13 (2005: £0.13). Project costs to enable the delivery of Trakm8 SWIFT (TM) totalled £0.19m. Inaccordance with our accounting policy these amounts have been capitalised andwill be amortised over the life expectancy of the product. Net cash decreased in the period by £0.08m (2005: £0.16m) but this includes£0.19m acquisition costs associated with the purchase of Interactive ProjectsLimited. Operational Review The Group has seen revenue grow further in this half year. A continued increasein recognition of the business benefits of vehicle tracking technology ingeneral and our innovative products in particular accounts for this growth.These, together with a general increase in both public awareness and acceptanceof telematics technologies, give the Group reason for optimism for the future. Organisations are now not just realising the benefits of telematics technologyto their operations but increasingly seeking out the most capable and costeffective platforms. The Board strongly believe that our competitive productswhich combine technical innovation and high capability are well placed tobenefit from this increasing market awareness. Trakm8's products continue to be used around the globe. Distributors in theAmericas, Asia Pacific and Africa are showing increasing growth. In our core market of the UK, where the Group operates through both distributors and other partnerships, there has been significant growth in the period. In Europe the Co-operation Agreement with Punch Telematix is now starting to bear fruit. In the UK, the Groups relationships with the two major vehicle tracking subsidiaries of FTSE 100 companies have continued to mature. Nevertheless the Group has recognised for some time that this business modelneeded overhaul. Whilst initially very successful, saving the Group unnecessaryset up costs and marketing expenses, continued price pressure has constrainedthe Group's scope to significantly increase margins. Trakm8's route to market istherefore set to change, commencing with Trakm8 SWIFT (TM), which will see theGroup deliver a targeted proposition direct to market for the first time.Although not entirely risk free initial indications are that the proposition isbeing well received by customers with a growing order book emerging. Whilst Trakm8's hardware sales currently provide the majority of the Group'srevenue the Board believes that its higher margin software offerings willaccount for a significantly increased proportion of future revenues. Spearheadedby Trakm8 SWIFT (TM) and building on enhancements to STREAM (the Group's scaleable software architecture) the Group expects to transition a growing portion of revenues to ASP based solutions delivering higher margins in the coming years. Outlook Building on the launch of Trakm8 SWIFT (TM), the acquisition of IPL and theincreased volume of sales the Board took the decision in October to internallyrestructure the organisation. This will allow the Board to focus more clearly onthe strategic opportunities available whilst day-to-day direction now rests withoperational management. The board believes that this change will considerablyenhance the ability of the Group to strengthen its position globally through in-country SWIFT launches and joint ventures. The Group has continued to carefully observe developments in governmentlegislation and other regulatory initiatives; where road tolling, congestioncharging, energy efficiency and Health & Safety responsibility are all rapidlybecoming key factors in the expansion of the telematics market. In addition, aheightened UK corporate governance regime is leading to a requirement emergingwith business leaders to successfully manage and mitigate in-vehicle employeerelated risk. The telematics industry is seeing exciting developments and businesses arereaping the benefits of this efficiency driven technology. I am delighted toreport that Trakm8 has a strong order book moving into the second half of thefinancial year and with the addition of Trakm8 SWIFT (TM) remains well placed tocapitalise on the opportunities presenting themselves in the market place. The Group looks forward to the immediate future with enthusiasm and I amconfident we will continue to successfully deliver our innovative products tothe market. CARY KNAPTONCHIEF EXECUTIVE OFFICER (TM) Trade Mark Profit & loss account of Trakm8 Holdings PLCFor the six months ended 30 September 2006 Note Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited restated*) £000's £000's £000's TURNOVERContinuing operations 3,205 2,460 5,213Acquisition 1 - - -------- -------- -------- 3,206 2,460 5,213 Cost of Sales (2,029) (1,668) (3,349) -------- -------- -------- Gross Profit 1,177 792 1,864 Operating Expenses (1,036) (639) (1,645) -------- -------- -------- OPERATING PROFITContinuing operations 179 153 219Acquisition (38) - - -------- -------- -------- 141 153 219 Interest receivable 7 0 5 -------- -------- -------- 148 153 224 Interest payable (17) (24) (25) -------- -------- -------- PROFIT ON ORDINARY ACTIVITIESBEFORE TAXATION 131 129 199 Taxation 3 (25) (25) (44) -------- -------- --------PROFIT FOR THEPERIOD 106 104 155 ======== ======== ======== Basic earnings per share(pence) 4 1.0 - 1.4Diluted earnings pershare (pence) 0.9 - 1.4 ======== ======== ======== * The restatement of comparatives applies solely to the charge for share basedpayments that is required by FRS 20 (see note 2). Balance Sheet of Trakm8 Holdings PLCAs at 30 September 2006 As at As at As at 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited restated*) £000's £000's £000's FIXED ASSETSIntangible Assets 875 - -Tangible Assets 471 389 393 --------- -------- -------- 1,346 389 393 CURRENT ASSETSStocks 472 339 398Debtors 1,300 1,062 1,071Cash at bank and in hand 257 112 403 --------- -------- -------- 2,029 1,513 1,872 CREDITORS: Amounts fallingdue within one year (1,558) (991) (1,027) --------- -------- --------NET CURRENTASSETS 471 522 845 --------- -------- -------- TOTAL ASSETS LESS CURRENTLIABILITIES 1,817 911 1,238 CREDITORS:Amounts fallingdue after more than one year (372) (441) (253) --------- -------- --------NET ASSETS 1,445 470 985 ========= ======== ======== CAPITAL & RESERVESCalled up Share Capital 110 101 110Share Premium Account 435 - 435Shares to be issued 324 - -Share based payment Reserve 50 - 20Merger Reserve 510 510 510Profit & Loss account 16 (141) (90) --------- -------- --------SHAREHOLDERS' FUNDS 1,445 470 985 ========= ======== ======== * The restatement of comparatives applies solely to the charge for share basedpayments that is required by FRS 20 (see note 2). Cash flow statement of Trakm8 Holdings PLCFor the six months ended 30 September 2006 Note Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £000's £000's £000's Cash flow fromoperating activities 5 201 (124) (265)Returns on investments and servicing of finance Interest received 7 - 5Interest paid (17) (24) (25) -------- -------- -------- -------- -------- --------Net cash (outflow)fromreturns on investments and servicing of finance (10) (24) (20) Capital expenditure &financial investment Purchase of tangible fixed assets (68) (9) (32) -------- -------- -------- -------- -------- --------Cash inflow/(outflow)before acquisitions 123 (157) (317)Purchase of IPL (189) - - -------- -------- --------Net Cash outflow before financing (66) (157) (317)Proceeds from theissue of NewOrdinary Shares - - 914Expenses paid inconnection withshare issue - - (470)Repayment of BankLoans (18) (5) (8) -------- -------- --------(Decrease)/Increase in cash in period (84) (162) 119 ======== ======== ======== Cash flow statement of Trakm8 Holdings PLCFor the six months ended 30 September 2006Continued Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £000's £000's £000's Reconciliation of net cash flow to movement in net debt(Decrease)/Increase in cash in period (84) (162) 119Cash outflow fromloan repayments 18 5 8 -------- -------- -------- (66) (157) 127Loans and financeleases acquired withsubsidiary (193) - - -------- -------- --------Movement in net debtin the period (259) (157) 127Opening net funds (212) (339) (339) -------- -------- --------Closing net funds (471) (496) (212) -------- -------- -------- Notes to the financial information 1. Basis of Preparation This report was approved and authorised for issue by the Directors on 12December 2006. The interim financial information comprise the unaudited resultsfor the six months to 30 September 2006 and the six months to 30 September 2005;and the audited financial statements for the year to 31 March 2006. The interimfinancial statements have been prepared on a consistent basis and using theaccounting policies set out in the accounts for the year ended 31 March 2006with the exception of the application of FRS 20 (see note 2). Interactive Projects Limited ("IPL") was acquired on 26 May 2006. The financialstatements include the profit & loss results for the four months to 30 September2006. The financial information contained in this interim statement has not beenaudited or reviewed by the Group's auditors and does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Statutory financial statements for the Company for the year to 31 March 2006,prepared on the basis of the accounting policies set out in those accounts, werereported on by the auditors without qualification or statement under section 237(2) or (3) of the Companies Act 1985 and have been delivered to the Registrar ofCompanies. Comparative information for the year ended 31 March 2006 shown inthis report has been extracted from those accounts but they have been restatedfor the impact of FRS 20. 2. Adoption of new accounting policy The adoption of FRS 20 (Share based payments), which is effective for accountingperiods beginning on or after 1 January 2006, requires a prior period adjustmentto be made. The Group issues share based payments to certain employees. Share based paymentsare measured at fair value (excluding the effect of non market based vestingconditions) at the date of grant. The fair value determined at the grant date ofthe share based payments is expensed on a straight line basis for the effect ofnon market based vesting conditions. Fair value is measured by use of the Black Scholes model. The expected life usedin the model has been adjusted, based on management's best estimate for theeffects of non-transferability, exercise restrictions and behaviouralconsiderations. Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £000's £000's £000's Profit /(loss) for thefinancial period under 2005accounting policies 136 104 175FRS 20 Share based payments (30) - (20) -------- -------- -------Profit for the financialperiod under 2006accounting policies 106 104 155 ======== ======== ======= There is no impact on the balance sheet at any of the period ends covered bythis review. 3. Taxation Taxation charged for the six months to September 2006 is calculated by applyingthe directors' best estimate of the annual tax rate to the profit for theperiod. 4. Basic and diluted earnings per share The basic profit per share has been calculated based on the profit on ordinaryactivities after taxation and the weighted average number of ordinary 1p each inissue for the period of six months to 30 September 2006 of 11,026,000. Theearnings per share for the year ended 31 March 2006 has been restated to takeaccount of the adoption of FRS 20. In 2005 the Group did not exist as a quoted entity and hence earnings per sharedata has not been calculated. 5. Reconciliation of operating profit to net cash flow from operating activities Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £000's £000's £000's Operating profit 141 153 219Depreciation 28 7 26Development Costscapitalised (220) - -Share Options expense 30 - 20(Increase) in stocks (32) (196) (256)(Increase) in debtors (185) (221) (249)Increase/(decrease) increditors 439 133 (25) -------- -------- -------Net cash flow fromoperating activities 201 (124) (265) ======== ======== ======= 6. Net Debt as at 30 September 2006 At Cash flow IPL Acquisition Other At 1 April 2006 non - cash 30 September Changes 2006 (£000's) (£000's) (£000's) (£000's) (£000's) Cash at bank 402 (145) - - 257Overdrafts and (164) 61 - - (103)loans 238 (84) - - 154Debts fallingdue after 1 yr (253) - (132) 13 (372) ------- ------- ------- ------- -------Debts fallingdue within 1 yr (197) 13 (36) (13) (233)Hire purchase - 5 (25) - (20) ------- ------- ------- ------- ------- (212) (66) (193) - (471) ======= ======= ======= ======= ======= 7. Acquisition of Interactive Projects Limited On 26 May 2006 the Company acquired the entire issued share capital ofInteractive Projects Limited. The consideration was £100,000 in cash paid to thevendors on 26 May 2006 and 446,423 Ordinary shares were allotted and issued tothe vendors on 29 November 2006 at a market price of 72.5 pence per share. Thetransaction has been accounted for by the acquisition method of accounting asdetailed in FRS 6 (Acquistions and Mergers). The following assets andliabilities were acquired at the date of acquisition: Book Value as Fair Value as at May 2006 at May 2006 (unaudited) (unaudited) £000's £000'sIntangible Assets 200 600Tangible Assets 38 38Stocks 42 42Debtors 43 43Bank overdraft (19) (19)Loan & trading balancewith Trakm8 (48) -Trade Creditors (47) (47)Other Creditors (24) (24)Finance Leases (25) (25)DTi Loans (168) (168) -------- -------- (8) 440 --------Goodwill 54 --------Total Consideration 494 ======== Satisfied by:Cash 100Costs of acquisition 70Fair value of sharesissued 324 -------- 494 ======== The results of IPL have been consolidated in the Profit & Loss account for theGroup for the four months from the date of acquisition to 30th September 2006. 8. Interim Report The report containing the interim financial information is to be sent direct toshareholders. Copies of the report are available to the public from theregistered office of Trakm8 Holdings plc. The address of the registered officeis Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. Contacts: Trakm8 Holdings PLC Lydden House, Wincombe Business Park, Shaftesbury, Dorset SP7 9QJTel: +44 (0)1747 858444 Nominated Advisor and Broker Arbuthnot Securities LimitedArbuthnot House, 20 Ropemaker Street, London, EC2Y 9ARTel: +44 (0)20 7012 2000 Accountants Baker Tilly1 Georges Square, Bath Street, Bristol, BS1 6BPTel: +44 (0)117 945 2000 Financial Public Relations Tavistock Communications131 Finsbury Pavement, London, EC2A 1NTTel: +44 (0)20 7920 3150 This information is provided by RNS The company news service from the London Stock Exchange