Trakm8 Hldgs Regulatory News (TRAK)

14 Dec 2007 07:01

Trakm8 Holdings PLC14 December 2007 Embargoed: for release at 0700h, 14 December 2007 TRAKM8 HOLDINGS PLC ("Trakm8" or "the Company") Half Year Results Trakm8 today announces its half year, unaudited results for the six months to 30September. Summary Six months to Six months to 30 Sept 2007 30 Sept 2006 (restated) Unaudited Unaudited £000's £000's Revenue 2,458 3,206 Gross Profit 988 1,177 Gross Profit % 40.2% 36.7% Operating (Loss) / Profit (432) 155 (Loss) / Profit on ordinary activities (465) 145before taxation Cash and cash equivalents 416 257 Net Assets 1,271 1,503 Key points: • Turnover and operating profit declined in part due to suspected brand impact from our reported supplier issue and a delay in orders as customers wait for our new platform launch • Gross margin 3.5% increase • Cash and cash equivalents increased • Acquisition of PJSoft completed • Partnership with Motorola and licence agreement with Tyco announced in May and November 2007 respectively • £1.1m government grant funding awarded for Trusted Road Usage & Emissions Profiling Project announced today For further information please contact: Trakm8 Holdings plcCary Knapton, Chief Executive Officer 0870 380 0531 Tim Couling, Finance Director Tavistock Communications 020 7920 3150Simon HudsonPaul Youens 07843 260 623 Arbuthnot Securities Paul Vanstone 020 7012 2000 Copies of the full report will be available either from the Company's offices oras a download from the Company's website from Friday 14 December 2007. Chairman's Statement During this half year the Group has continued its strategy to become anintegrated telematics service provider (TSP) and significant progress has beenmade in a number of areas. The Group also completed the acquisition of PJSofts.r.o. (PJSoft) and has continued its work in the design and testing of our nextgeneration telematics platform, the T6. Revenue in the period reduced 23.4% to £2.46m (2006: £3.21m) and this generateda loss before tax of £0.47m (2006: profit £0.15m). Cash and cash equivalentsincreased to £0.42m (2006: £0.26m).Turnover and operating profit declined in part due to suspected brand impactfrom our reported supplier issue affecting T4and Solo hardware sales and a delay in orders as customers wait for the T6 launch. However sales from Trakm8 SWIFT(R), our flagship TSP offering, haveincreased and we are witnessing a firming of pricing for our hardware products. The Company was pleased to report in May 2007 the signing of a partnershipagreement with Motorola to integrate its GPS tracking products with Motorola'sAstro radio network and, as announced on 9 November 2007, the Group entered intoa co-operation agreement with Tyco Electronics Limited (Tyco). As a result thehardware design of the Group's new platform, and its design costs, have beenshared with Tyco and the Group looks forward to developing this relationshipfurther once the product is launched in the next half year. As announced today the Group was awarded a £1.1m government grant to lead theTrusted Road Usage & Emissions Profiling Project. This three year project willsignificantly increase the speed of our R&D programme and positions the Group totake commercial advantage of future national and regional road user charginginitiatives. Outlook The Trakm8 Group is committed to its transition to a fully integrated TSPprovider and I believe we are firmly on track to achieving this. As reportedabove revenues from T4 & Solo hardware sales have reduced, however the pipelinefor these products is encouraging and sales of Trakm8 SWIFT(R) are expected tocontinue to increase and become a substantial part of the business in thefuture. Further, we expect demand for the T6, our next generation hardwareplatform, to be launched by March 2008, to be strong. Consequently we expect thesecond half of the financial year to demonstrate improved operating performanceresulting from a combination of increased sales and a cost cutting exerciseundertaken during the period. These major initiatives have required significant efforts from everyone in theGroup and I would like to thank the Executive team and staff for theircontinuing hard work and dedication. Dawson Buck,Chairman14 December 2007 Chief Executive Officer's Report Operational ReviewTrakm8 continues to drive forward the transition strategy as outlined in thelast Annual Report. The launch of the next generation platform, to be known asthe T6, is expected to further improve the Group's competitive edge. Thecontinuing programme of international rollout of Trakm8(R) SWIFT is expected toshow substantially increased future revenues. This will form the next phase ofthe transition to a fully integrated TSP. The Company was also pleased to reportin May 2007 the signing of a partnership agreement with Motorola to integrateits GPS tracking products with Motorola's Astro radio network and, as announcedon 9 November 2007, the Group entered into a co-operation agreement with TycoElectronics Limited (Tyco). In addition, and as announced today, the Group hasbeen awarded a government grant totalling £1.1m over three years to lead theTrusted Road Usage & Emissions Profiling Project. This project will acceleratethe Group's development of new hardware & service offerings and positions theGroup to take commercial advantage of future national and regional road usercharging initiatives. Turnover and operating profit have declined in the period in part due tosuspected brand impact from our reported supplier issue impacting T4 and Solohardware sales and a delay in orders as customers wait for our new platformlaunch. We believe that this impact has been confined to our hardware-onlyrevenues in the period. However the Group is encouraged to note that whilst operating in a relativelycompetitive industry our products are not materially suffering from continuedpricing and margin pressures that we have experienced in the past. Trakm8 SWIFT(R) has seen growing sales and it therefore remains the Group's firm belief thatour products are competitive and that a proportion of revenue shortfall islikely to have been delayed but not lost. The Group responded to this revenue shortfall with a review of operatingexpenses, which increased in the period primarily due to Trakm8 SWIFT(R) serviceand airtime costs. Non-impacting savings were therefore identified whichincluded a reduction in contract staff and a necessary reduction in permanentheadcount. Savings from this review are expected to start to flow through to theincome statement by the financial year end. Our research and development of new, expanded and more capable hardwareplatforms has continued in the period with significant effort having beendevoted to the T6. As reported on 9 November 2007 this has been a collaborativeexercise with Tyco Electronics Limited and I am pleased to report that thisproject is on track for commercial launch prior to the Company's 2008 year end. The T6 is the result of significant customer feedback on existing products andwill include features which the Group believes will provide opportunities fornew revenue streams to be targeted. Trakm8 SWIFT(R) Trakm8 SWIFT(R) is our flagship TSP offering that integrates any one of ourhardware products with a customer orientated proprietary software module. Thisenables us to provide our customers with a user friendly and flexible telematicssolution. I am pleased to report that Trakm8 SWIFT(R) sales are now growing with stronginterest emerging from larger fleet buyers, who have been particularly impressedwith its combination of price and functionality. The product has now beenlaunched in Ireland and further international launches are planned to take placebefore the end of this financial year. We have great confidence in Trakm8 SWIFT(R) and expect it to become a substantial part of the business Acquisition of PJSoft s.r.o. As announced on 7 August 2007 the Group acquired PJSoft; a Czech software housewith significant expertise in cartographic technologies. This acquisition, in acash and shares deal, brought the last external elements of our productintellectual property in-house and allows the Group to further leverage oursoftware offerings. No significant integration issues have been encountered andI am pleased to report that the PJSoft team is already making a positivecontribution to the Group's software product development. Financial Review The financial information contained in this report has been prepared underInternational Financial Reporting Standards (IFRS). Comparison figures have alsobeen restated under IFRS. Revenue for the six months ended 30 September 2007 was £2.46m (2006: £3.21m) adecrease of 23.4% on the same period last year. Gross profit decreased to £0.99m(2006: £1.18m) for reasons discussed elsewhere. However gross margins improvedto 40.2% (2006: 36.7%), a 3.5% improvement. Operating expenses totalled £1.42m(2006: £1.02m). The Group therefore reports an operating loss for the period of£0.43m (2006: profit £0.16m). As a result of the review of operating expenses previously commented on savingshave been made which, on an annualised basis, will amount to £0.38m. Project costs to enable the delivery of the T6 totalled £0.12m. In accordancewith IFRS these amounts have been capitalised. As at 30 September 2007 £0.1m of cash had been received by the Group for Trakm8SWIFT(R) service which has yet to be recognised in the Income Statement due tothe typical service revenue contract spanning 12 months but being paid annuallyin advance. Outlook Our products and services now span the telematics value chain and the Groupexpects to derive revenues from all areas of the portfolio. The Tycoco-operation and Motorola partnership agreements also demonstrate the Group'scommitment to and blue chip company confidence in our product offering. Weexpect these developments will contribute to driving the business forward anddeliver shareholder value. 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 arequirement is emerging with business leaders to successfully manage andmitigate in-vehicle employee related risk. The Group continues to believe that it is well placed to take advantage of thesedevelopments. As noted above the Group has been successful in attracting majorgovernment grant funding and at least one other strategic opportunity is beingdeveloped with the appropriate government department. More details of thisfurther collaborative programme will be announced at the appropriate time. The Group continues to identify international sales opportunities for its Soloand T4 hardware platforms and I am pleased to report that our pipeline currentlyincludes major bids in the Middle East, South Africa and South America. TheGroup is also actively pursuing organic growth routes in other regions andcountries for Trakm8 SWIFT(R). Our European strategic direction is built around the acquisition of PJSoft,which has historically operated wholly within the Czech Republic. The Groupintends to expand PJSoft's innovative offerings in both their home and widerEuropean markets. This expansion will be driven under a new trade marked brandwhich the Directors intend to be synonymous with cartographic softwareexcellence. The Directors can report that Trakm8 has a growing order book moving into thesecond half of the financial year. The imminent launch of the T6 significantlyimproves our hardware product capability and the Group remains well placed tocapitalise on the opportunities presenting themselves in the market place.Consequently we expect the second half of the financial year to demonstrateimproved operating performance resulting from the combination of increased salesand reduced operational expenses. The Group looks forward to the future with enthusiasm. We are on course tocomplete the transition to integrated TSP and I remain confident we will deliverour innovative products to market with increased success. Cary KnaptonChief Executive Officer14 December 2007 CONSOLIDATED INCOME STATEMENT (UNAUDITED)for the six months to 30 September 2007 Six months to Six months to Year ended 31 30 September 30 September March 2007 Note 2007 2006(restated) (restated) Continuing Operations £'000 £'000 £'000 Revenue 2,458 3,206 6,370Cost of sales (1,470) (2,029) (3,940) ---------------------------------------------- Gross profit 988 1,177 2,430Operating expenses (1,420) (1,022) (2,315) ----------------------------------------------Operating (loss) profit (432) 155 115Interest receivable 7 7 15 ---------------------------------------------- (425) 162 130Bank and other interest (40) (17) (39)charges ---------------------------------------------- (Loss) profit beforetaxation (465) 145 91 Taxation - (25) 18 ----------------------------------------------(Loss) profit attributable to the equity shareholdersof the parent (465) 120 109 ----------------------------------------------Basic (loss) earnings per 3 share (4.0)p 1.1p 1.0p CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)for the six months to 30 September 2007 Six months to Six months to Year ended 30 September 30 September 31 March 2007 2006 2007 (restated) (restated) Note £'000 £'000 £'000 Total equity at beginning of period(as previouslystated) 1,426 985 985 Impact of transition 2 to IFRS 57 44 44 ----------------------------------------------Total equity at beginning of period(restated) 1,483 1,029 1,029 (Loss) Profit for the period (465) 120 109IFRS 2 share based payments 7 30 21Net proceeds of share issue 246 324 324 ----------------------------------------------Total equity at end of period 1,271 1,503 1,483 ---------------------------------------------- CONSOLIDATED BALANCE SHEET (UNAUDITED)as at 30 September 2007 30 September 30 September 31 March 2007 2006 (restated) 2007 (restated) £'000 £'000 £'000Non-current assetsIntangible assets 1,514 937 823Plant, property and 489 534 509equipment ---------------------------------------------- 2,003 1,471 1,332 ----------------------------------------------Current assetsInventories 300 472 332Trade and other receivables 557 1,295 1,272Cash and cash equivalents 416 257 709 ---------------------------------------------- 1,273 2,024 2,313 ----------------------------------------------Current liabilitiesBank overdrafts (167) (103) (269)Bank loans (50) (48) (13)Trade and other payables (926) (1,225) (951)Obligations underfinance leases andhire purchasearrangements (6) (20) (12) Current tax (25) (25) (25)Other loans - (185) (36) ---------------------------------------------- (1,174) (1,606) (1,306) ---------------------------------------------- Current assets less current liabilities 99 418 1,007 ----------------------------------------------Total assets less current liabilities 2,102 1,889 2,339 ----------------------------------------------Non-currentliabilitiesBank loans (228) (252) (235)Other loans (585) (120) (603)Deferred tax (18) (14) (18) ---------------------------------------------- (831) (386) (856) ----------------------------------------------Net assets 1,271 1,503 1,483 ---------------------------------------------- Equity Called up share capital 115 110 115 Share premium 754 435 754Shares to be issued 246 324 - Merger reserve 510 510 510Share based payment reserve 36 50 29Retained (loss) earnings (390) 74 75 ----------------------------------------------Total equity attributableto the equity 1,271 1,503 1,483shareholders of theparent ---------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)for the six months to 30 September 2007 Six months to Six months to Year ended 30 September 30 September 31 March 2007 2006(restated) 2007 (restated) Note £'000 £'000 £'000 Net cash from 4 293 411 425operatingactivities ---------------------------------------------- InvestingactivitiesAcquisition of subsidiary (324) (170) (170)Cash (overdraft) 5 (19) (19)acquired onacquisitionProceeds on disposal ofproperty, plant andequipment - - 1Expenditure onproduct development (124) (220) (220)Purchases ofproperty, plant andequipment (10) (68) (71) ----------------------------------------------Net cash used ininvestingactivities (453) (477) (479) ---------------------------------------------- FinancingactivitiesRepayment of loans (30) (18) (245)Issue of loan stock - - 500 ---------------------------------------------- Net cash (used in)from financingactivities (30) (18) 255 ----------------------------------------------Net (decrease)increase in cashand cashequivalents (190) (84) 201 Cash and cash equivalents at beginning of period 439 238 238 ----------------------------------------------Cash and cashequivalents at endof period 249 154 439 ---------------------------------------------- Notes to the financial information (unaudited) 1. The financial information contained in this interim statement has not beenaudited or reviewed by the Company's auditor and does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. The financialinformation for the full preceding year is extracted from the statutory accountsfor the financial year ended 31 March 2007 amended for the impact of theadoption of International Financial Reporting Standards (IFRS). Those accounts,upon which the auditor issued an unqualified opinion and did not contain astatement under section 237(2) or (3) of the Companies Act 1985, have beendelivered to the Registrar of Companies. Details of the impact of the adoptionof IFRS are set out in Appendix 1 attached to this report on the Company's website. 2. Trakm8 Holdings PLC is a public limited company incorporated in the UnitedKingdom under the Companies Act 1985. The Company is domiciled in the UnitedKingdom and its ordinary shares are traded on the Alternative Investment Market("AIM"). This interim report is the Group's first set of financial statements prepared inaccordance with International Financial Reporting Standards (IFRS) andInternational Financial Reporting Committee ("IFRC") interpretations that areexpected to be applicable to the consolidated financial statements for the yearending 31 March 2008. These standards remain subject to ongoing amendment and /or interpretation and are therefore still subject to change. Accordingly,information contained in these interim financial statements may need updatingfor subsequent amendments to IFRS required for first time adoption or for newstandards issued post balance sheet date. As permitted this Interim Report has been prepared in accordance with UK AIMlisting rules and not in accordance with IAS 34 "Interim Financial Reporting"and therefore is not fully in compliance with IFRS. The basis of preparation and accounting policies followed in this interim reportdiffer from those set out in the Annual Report and Accounts for the year ended31 March 2007 which was prepared in accordance with United Kingdom accountingstandards (UK GAAP). A summary of the significant accounting policies used inthe preparation of this interim report under IFRS is provided below, howeverthis does not include accounting policies which are not currently expected tochange on transition from UK GAAP. (a) Basis of preparation of the financial statements The consolidated financial statements have been prepared in accordance with IFRSincluding standards and interpretations issued by the International AccountingStandards Board, as adopted by the European Union. They have been prepared usingthe historical cost convention except for the revaluation of certain properties.The principal accounting policies are set out below. The preparation of the financial statements requires management to makeestimates and assumptions that affect the reported amounts of revenues,expenses, assets and liabilities, and the disclosure of contingent liabilitiesat the date of the financial statements. If in the future such estimates andassumptions which are based on management's best judgement at the date of thefinancial statements, deviate from the actual circumstances, the originalestimates and assumptions will be modified as appropriate in the year in whichthe circumstances change. Where necessary, the comparatives have beenreclassified or extended from the previously reported results to take intoaccount presentational changes. (b) First time adoption of International Financial Reporting Standards IFRS 1, 'First-time adoption of International Financial Reporting Standards'sets out the procedures that the Group must follow when it adopts IFRS for thefirst time as the basis for preparing its consolidated financial statements. TheGroup is required to establish its IFRS accounting policies as at 31 March 2008and, in general, apply those retrospectively to determine the IFRS openingbalance sheet at its date of transition, 1 April 2006. Certain optional exemptions to this general principle are available under IFRS 1and the significant first time adoption choices made by the Group are asfollows: • Business combinations completed prior to 1 April 2006 have not been restated under IFRS 3 'Business combinations'; • Aside from freehold buildings, the opening fair values of fixed assets have been deemed to be their accounting values as at 1 April 2006, after reviewing for impairment as appropriate. Deemed cost for freehold buildings is their open market value for existing use. (c) Going concern The Directors have prepared these accounts on the going concern basis as theyconsider the Group to have the necessary cash resources to meet its liabilitiesas and when they fall due. They are confident that the trading performance willimprove. (d) Basis of consolidation The consolidated financial statements incorporate the financial statements ofthe Company and entities controlled by the Company (its subsidiaries) made up to31 March (30 September for interim accounts) each year. Control is achievedwhere the Company has the power to govern the financial and operating policiesof an investee entity so as to obtain benefits from its activities. The trading results of subsidiaries acquired or disposed of during the year areincluded in the consolidated income statement from the effective date ofacquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income and expenditure are eliminated onconsolidation. (e) Property, plant and equipment Property, plant and equipment are stated at cost less any subsequent accumulateddepreciation or impairment losses. With the exception of freehold buildings heldat 1 April 2006 (the date of transition to IFRS), cost represents purchase pricetogether with any incidental costs to acquisition. As permitted by IFRS 1, thecost of freehold buildings at 1 April 2006 represents deemed cost, being themarket value of the property for existing use at that date. Depreciation is provided on all property, plant and equipment, other thanfreehold land, at rates calculated to write each asset down to its estimatedresidual value over its expected useful life, as follows: Buildings 2% straight lineFurniture, fixtures and 25% reducingequipment balanceComputer equipment 33% straight line Assets held under finance leases or hire purchase arrangements are depreciatedover their expected useful lives on the same basis as owned assets or, whereshorter, over the term of the relevant agreement The assets' residual values and useful lives are reviewed at each balance sheetdate and adjusted if appropriate. (f) Goodwill Goodwill arising on consolidation is recorded as an intangible asset and is thesurplus of the cost of acquisition over the Group's interest in the fair valueof identifiable net assets acquired. Goodwill is reviewed annually forimpairment. Any impairment identified as a result of the review is charged inthe income statement. Negative goodwill is written off in the year in which itarises. On disposal of a subsidiary, associate or jointly controlled entity, theattributable amount of goodwill is included in the determination of the profitor loss on disposal. (g) Intangible assets other than goodwill An intangible asset, which is an identifiable non-monetary asset withoutphysical substance, is recognised to the extent that it is probable that theexpected future economic benefits attributable to the asset will flow to theGroup and that its cost can be measured reliably. Such intangible assets arecarried at cost less amortisation. Amortisation is charged on a straight linebasis over the intangible assets' useful economic life (1-10 years). Expenditure on research activities is recognised as an expense in the period inwhich it is incurred. Development expenditure is capitalised as an intangible asset only if thefollowing conditions are met: • an asset is created that can be identified; • it meets the company's criteria for technical feasibility; • it is probable that the asset created will generate future economic benefit; • the development cost of the asset can be measured reliably; and • sufficient resources are available to complete the development to either sell or use as an asset. Development expenditure thus capitalised is amortised on a straight-line basisover its useful life. Where the criteria are not met, development expenditure isrecognised as an expense in the income statement. (h) Leased assets Assets held under finance leases, which are leases where substantially all therisks and rewards of ownership of the asset have been transferred to the Group,are capitalised in the balance sheet and depreciated over the shorter of thelease term or their useful lives. The asset is recorded at the lower of its fairvalue and the present value of the minimum lease payments at the inception ofthe lease. The capital elements of future obligations under finance leases areincluded in liabilities in the balance sheet and analysed between current andnon-current amounts. The interest elements of future obligations under financeleases are charged to the income statement over the periods of the leases andrepresent a constant proportion of the balance of capital repayments outstandingin accordance with the effective interest rate method. Leases where the lessor retains substantially all the risks and rewards ofownership are classified as operating leases. The cost of operating leases (netof any incentives received from the lessor) is charged to the income statementon a straight line basis over the periods of the leases. (i) Impairment of long-term assets When the recoverable amount of an asset, being the higher of its net sellingprice and its value in use, is less than its carrying amount, then the carryingamount is reduced to its recoverable value. This reduction is reported in theincome statement as an impairment loss. Value in use is calculated usingestimated cash flows. These are discounted using an appropriate long-termpre-tax interest rate. When an impairment arises, the useful life of the assetin question is reviewed and, if necessary, the future depreciation/amortisationcharge is accelerated. (j) Taxes Income taxes include all taxes based upon the taxable profits of the company.Other taxes not based on income, such as property and capital taxes, areincluded within operating expenses or financial expenses according to theirnature. Deferred income tax is provided, using the liability method, on temporarydifferences between the tax bases of assets and liabilities and their carryingamounts, in the financial statements. Deferred income tax assets relating to thecarry-forward of unused tax losses are recognised to the extent that it isprobable that future taxable profit will be available against which the unusedtax losses can be utilised. Current and deferred income tax assets and liabilities are offset when theincome taxes are levied by the same taxation authority and when there is alegally enforceable right to offset them. (k) Financial instruments Financial assets and financial liabilities are recognised in the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Trade receivablesTrade receivables do not carry any interest and are initially recognised at fairvalue and subsequently at amortised cost using the effective interest methodless any provision for impairment. Cash and cash equivalentsCash and cash equivalents as stated in the cashflow statement include theGroup's cash balances and overdrafts. Financial liabilities and equity Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the group afterdeducting all of its liabilities. Bank borrowings Interest-bearing bank loans and overdrafts are recorded at the proceedsreceived, net of direct issue costs. Finance charges, including premiums payableon settlement or redemption, are accounted for on an accrual basis and are addedto the carrying amount of the instrument to the extent that they are not settledin the period in which they arise. Trade payables Trade payables are not interest bearing and are initially recognised at fairvalue and subsequently at amortised cost using the effective interest method. 3. (Loss) earnings per ordinary share Six months to Six months to Year ended 30 September 30 September 31 March 2007 2006(restated) 2007 (restated) £'000 £'000 £'000(Loss) profit (465) 120 109after taxation ---------------------------------------------- Weighted average number of ordinary shares in issue No. No. No. '000 '000 '000Basic 11,472 11,026 11,175 The diluted loss per share has not been calculated as this would reduce thereported loss per share. 4. Reconciliation of cash flows from operating activities: Six months to Six months to Year ended 30 September 30 September 31 March 2007 2006 2007 (restated) (restated) £'000 £'000 £'000 Net (loss) profit before taxation (465) 145 91Adjustments for:Depreciation 36 28 55Bank and other interest charges 33 10 24Amortisation of intangible assets 66 - 11Negative goodwill written off - (14) (14)Share based payment expense 7 30 21 ---------------------------------------------- Net (loss) profit beforechanges in working capital (323) 199 292 Decrease (increase) in inventories 35 (32) 107Decrease (increase) intrade and otherreceivables 736 (185) (159)(Decrease) increase intrade and other payables (122) 439 166 ---------------------------------------------- Cash generated fromoperations 326 421 406 Interest paid (40) (17) (39)Interest received 7 7 15Income taxes received - - 43 ---------------------------------------------- Net cash from operating 293 411 425activities ---------------------------------------------- 5. On 7 August 2007 the Company acquired the entire issued share capital of PJSoft s.r.o. The consideration was €385,000 in cash paid to the vendors on 7 August 2007, €150,000 in cash to be paid on 7 August 2008, 340,136 Ordinary shares to be allotted to and issued to the vendors on 7 August 2008 and 453,516 Ordinary shares to be allotted and issued to the vendors on 7 August 2009. The Ordinary shares have been valued using the Trakm8 mid market closing share price of 31.0p on 7 August 2007. The transaction has been accounted for by the purchase method of accounting as detailed by IFRS 3 (Business Combinations). The following assets and liabilities were acquired at the date of acquisition: Book value as at Fair value as August 2007 at August 2007 (unaudited) (unaudited) £'000 £'000 Intangible assets - 633Property, plant & equipment 6 6Inventories 3 3Trade and other receivables 21 21Cash and cash equivalents 5 5Trade and other payables (4) (4) --------------------------------------- 31 664 --------------------Goodwill - ------------------Total consideration 664 ------------------ Satisfied by:Cash 259Deferred cash 94Costs of acquisition 65Fair value of shares to be 246issued ------------------ 664 ------------------ 6. The report containing the unaudited Interim Report is to be sent direct to shareholders. Copies of the report are available to the public from the registered office of Trakm8 Holdings PLC. The address of the registered office is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. 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