Trakm8 Hldgs Regulatory News (TRAK)

15 Dec 2005 07:01

Trakm8 Holdings PLC15 December 2005 Embargoed until 7am 15 December 2005 TRAKM8 HOLDINGS PLC ("Trakm8" or "the Group") Interim Results For the 6 Months to 30 September 2005 Trakm8, a designer and developer of licensed GPRS based hardware and softwarefor the vehicle placement and security market, is pleased to announce its maideninterim results for the period ended 30 September 2005. Highlights • Revenue increased 125% to £2.46m (H1 2004: £1.09m) • Profit before tax of £153,000 (H1 2004: loss £125,000) • Two subsidiaries of FTSE 100 companies as distribution partners coming on line • Pace of global growth currently outstripping strong UK growth • Launched three new products • Admission to AIM in November • Reporting profitability for first time The Group supplies its GPRS ("General Packet Radio Service") based GPS vehicleplacement hardware, enabling software and information management platforms forthe end user through selected distribution partners, including directly to twosubsidiaries of FTSE 100 companies. The Directors believe the Group has an innovative business model. Instead ofbeing a fully integrated developer, manufacturer, distributor and maintainer ofits equipment, Trakm8 focuses on the key activity areas it believes make itsproducts attractive to the end users, and where it believes the financialreturns are greatest - these being the development of the control softwareinside the electronic boxes and the software used to track the vehicles. The Directors also believe that Trakm8's hardware and software products provideadvantages over alternative products in the market, both in terms ofspecifications and data management functionality. Cary Knapton, CEO of Trakm8 commented, "We are delighted to report profitabilityin our maiden results as a listed company. It has been a momentous year forTrakm8, culminating in a successful flotation on AIM in November. "Our unique mix of hardware and software products enables us to supply into avariety of potential markets within a fragmented industry. In addition to ourestablished markets, a number of additional industry trends are emerging fromwhich we believe the Group is well positioned to benefit, includingpay-as-you-drive insurance, personal security and road tolling. We believe thatour differentiated business model allows us to occupy an important gap in thevehicle placement industry and we view the future prospects of the Group withsome confidence." TRAKM8 HOLDINGS PLC ("Trakm8" or "the Group") Interim Results For the 6 Months to 30 September 2005 Chairman's Statement It is with great pleasure that I report the Trakm8 Holdings PLC interim resultsin a significant year that has seen us achieve admission to AIM, successfullylaunch three new products and report profitability for the first time. The Group designs and develops licensed Internet based GPS hardware and softwarefor the vehicle placement and security market. We firmly believe that ourinnovative business model of focusing solely on the key activity areas withinour industry will set us apart from others in the market. As explained fully in note 6 (Post Balance Sheet Events), since the balancesheet date Trakm8 Holdings PLC has been formed and has acquired the entireissued share capital of Trakm8 Limited in a share for share exchange. Thepurpose of the formation of the holding company was to effect the Admission ofthe Group onto AIM, which was successfully achieved in November 2005. It isexpected that the Admission to AIM will enhance the visibility and profile ofthe Group and open new opportunities for growth. As part of the Admission to AIMthe Group raised £0.86m which we expect will provide a solid base from which tolaunch future growth strategies. As the holding company was put in place after the balance sheet date, theinterim financial information presented below is purely in respect of Trakm8Limited and does not reflect the transactions, activities or balances of theparent company. Trakm8 Holdings PLC will produce its first statutory accountsfor the period ending 31 March 2006 that will incorporate the results of Trakm8Holdings PLC and Trakm8 Limited. The Directors expect to adopt the principles ofmerger accounting in the preparation of the accounts of the Group for the periodending 31 March 2006. The Board believes that the outlook for the Group is excellent. We consider thatour differentiated offering combined with the roll out of further servicesoffers our clients the functionality and flexibility they require. The Boardremains focused on enhancing service support in order to actively drive growthand take the business forward. Finally, on behalf of my Board, I would like to thank all the staff for theirhard work and dedication to the Group during the last few years. I would alsolike to thank our shareholders for their continued support of Trakm8'sdevelopment. RICHARD WHITECHAIRMAN Chief Executive Officer's Review Financial Review Turnover for the six months ended 30 September 2005 was £2.46 million (30September 2004: £1.09 million). Gross margin improved to 32.2% (2004: 28.0%) andwith operating expenses of £0.64 million (2004: £0.43 million) the Group ispleased to announce a net profit after taxation for the period of £0.10 million(2004: loss of £0.11 million). Net cash outflow for the period was £0.16 million (2004: £0.34 million). TheDirectors believe that taking into account the listing on AIM, which generated£0.86 million cash before expenses, following the end of this financial periodand the expected revenues from operations, that the Group has adequate financialresources. The Directors have not declared an interim dividend. Operational Review The Group has seen revenue grow in 2005 in part due to the transition in thevehicle placement market. There has been a recognised increase in both publicawareness and acceptance of the new technology available. Organisations are nowseeing the benefits of vehicle placement technology to their operations enablingthem to become more competitive and achieve incremental cost savings. Trakm8's products are now being used in the UK as well as across Europe and theAmericas. In the UK, the Group operates through its distributors, including twovehicle placement subsidiaries of FTSE 100 companies. In other territories,especially the Americas, operations have shown significant growth in the period.The business model has proven successful with the use of Value Added Resellers(VARs) saving the Group unnecessary set up costs and marketing expenses. Trakm8's route to market is through service providers that typically focus onparticular markets with their own tailored propositions and combinations offunctionality. This approach has allowed Trakm8 to benefit from the distributors' innovationand marketing skills to capture market share in a variety of segments in afragmented market. The Group has seen the nature of these distributors evolve from specialistvehicle placement companies to major trusted brands including vehicle placementsubsidiaries of two FTSE 100 companies. The Group's philosophy from an early stage has been that customer service isparamount and it has dedicated itself to this aim over the past two years. Thishas resulted in the Group being recognised as a leading vehicle placementenabler for providing support to its customers and in developing leading edgesector technology. Whilst Trakm8's hardware sales currently provide the majority of the Group'srevenue the Board believes that within two years that its higher margin softwareofferings, which will include maintenance charges, will account for asignificant increased proportion of revenues. The modular nature of Trakm8's software architecture means that the Group canmanage its operations via its two UK based server sites; one in London and thesecond in Manchester. This provides the Group with flexible, cost effectivecapacity that can be scaled up as and when required. This strategy has meant theGroup has avoided incurring large amounts of capital expenditure whilst ensuringit efficiently utilises the space available on the servers. In the period the Group's products have sold well, with its primary offering,the T2002, a Thatcham Category 5 tracking, security and safety device, sellingover 21,000 units since its launch in 2003. Launched in May 2005, the T4 is an onward development of the T2002 and itprovides higher sensitivity GPS, which allows greater installation flexibility.Also launched in the reporting period was the trakm8TM Solo, a "plug and play"solution targeted at the previously unaddressed volume market. It is aimed atvery large fleets looking for core fleet tracking at a good price but is equallypositioned as an innovative value proposition for the smaller fleet. It providesfleet management and vehicle usage profiling, with an integrated hands freecellular phone kit, whilst journey report data is delivered to customers simplyvia e-mail. The T2002 and T4 can both accommodate Radio Frequency IDentity (RFID) tags thatallow the location of a driver or an asset to be associated with the vehicle foruse respectively in timesheets or logistics applications. In combination with the introduction of the T2002, the Group developed acommunication software platform known as STREAM. STREAM is scaleable platform for delivering vehicle and asset information, withmultiple business-to-business interfaces and a fully featured Web based frontend. This enables a business or fleet manager to monitor the position, conditionand usage of his vehicles remotely, via the Internet. STREAM is designed to readily integrate with existing business logic andbusiness processes. This can dramatically reduce the time to implement anenterprise scale solution. STREAM is offered as either a fully managed, hosted,application or as a licensed stand-alone solution. The STREAM software platform allows the Group to increase the value of each unitsold by combining one or more elements of the portfolio. At the same time thisensures that product adoption barriers are easily overcome by reducing the workrequired to get the hardware working. Outlook The Group has identified developments in government legislation for thetransport industries as a potential source of revenue, including road tollingand health and safety within the fleet and haulage industries. One of the specific applications for the Group's technology that the Boardbelieves has great potential, is the pay-as-you-drive insurance market. Trakm8'sproducts will be able to provide greater resolution for the companies looking toroll-out this new insurance option and it expects that this is to become amaterial source of revenue within two years. Excitingly, Trakm8's technology facilitates access to vehicle information andstatistics for use by organisations including local councils and centralgovernment for increased operational efficiencies. The Board believes that thiswill ultimately enable Trakm8 to become one of the leading content aggregatorsin the sector. The Group is also in the advanced stages of launching its global tool-kit, whichwill enable Trakm8 customers to closely monitor the placement and status oftheir products and fleets on a real time basis wherever they are in the world.The tool-kit, which will combine Trakm8's hardware with a new modular softwareapplication, will enable diversified fleets to be efficiently managed acrossdifferent time zones and in different languages. The vehicle placement industry is seeing exciting developments and businessesare reaping the benefits of this efficiency driven technology. I am delighted toreport that Trakm8 has a strong order book moving into 2006 and remains wellplaced to capitalise on the opportunities presenting themselves in the marketplace. The Group anticipates significant growth in the vehicle placement market, drivenby potential fleet management benefits, PAYG insurance, congestion charging,road tolling, green taxes, CAT5 vehicle theft recovery, navigation and employerduty of care. Trakm8 firmly believes in the convergence of these applicationsonto a single unit and, due to its integrated platform approach and scaleableserver facilities, is ideally placed to capture an increased market share of thebroadening vehicle placement market. The Board looks forward to the second half of the year with enthusiasm andoptimism and is confident it will continue to successfully deliver its productsto the market. -ends- For further information please contact: Trakm8 Holdings plc On the results day: 020 7920 3150From 16th December:01747 858 444Cary Knapton, Chief Executive OfficerTim Couling, Finance Director Tavistock Communications 020 7920 3150 Christian Taylor-WilkinsonMatt Ridsdale Profit & loss account of Trakm8 LimitedFor the period ended 30 September 2005 Note 6 months 6 months Year ended 30 September 30 September 31 March 2005 2004 2005 (unaudited) (unaudited) (audited) £000's £000's £000's TURNOVER 2,460 1,093 2,952Cost of Sales (1,668) (787) (1,992) ---------- ------------ ----------- Gross Profit 792 306 960 OperatingExpenses (639) (431) (1,096) ---------- ------------ ----------- OPERATINGPROFIT (LOSS) 153 (125) (136)Interestreceivable 0 1 2 ---------- ------------ ----------- 153 (124) (134) Interestpayable (24) (11) (25) ---------- ------------ ----------- PROFIT (LOSS)ON ORDINARYACTIVITIESBEFORE TAXATION 129 (135) (159) Taxation 3 (25) 26 26 ---------- ------------ ----------- PROFIT (LOSS)ON ORDINARYACTIVITIESAFTER TAXATION 104 (109) (133) Dividends 0 0 0 RETAINED PROFIT(LOSS) FOR THEPERIOD 104 (109) (133) ========== ============ =========== Basic & dilutedearnings pershare 2 - - - ========== ============ =========== Balance Sheet of Trakm8 Limited As at 30 September 2005 Note As at As at As at 30 September 30 September 31 March 2005 2004 2005 (unaudited) (unaudited) (audited) £000's £000's £000's FIXED ASSETSTangible Assets 389 381 387 ---------- ---------- --------- CURRENT ASSETSStocks 339 304 143Debtors 1,062 342 866Cash at bank andin hand 112 26 117 ---------- ---------- --------- 1,513 672 1,126 CREDITORS: Amountsfalling due withinone year (991) (548) (701) NET CURRENT ASSETS 522 124 425 TOTAL ASSETS LESSCURRENTLIABILITIES 911 505 812 CREDITORS: Amountsfalling due after (441) (266) (446)more than one year ---------- ---------- ---------NET ASSETS 470 239 366 ========== ========== ========= CAPTIAL & RESERVESCalled up ShareCapital 13 12 13Share PremiumAccount 598 449 598Profit & Lossaccount (141) (222) (245) ---------- ---------- ---------SHAREHOLDERS FUNDS 470 239 366 ========== ========== ========= Cash flow statement of Trakm8 Limited For the period ended 30 September 2005 Note six months to six months to Year ended 30 September 30 September 31 March 2005 2004 2005 (unaudited) (unaudited) (audited) £000's £000's £000's Cash flow fromoperatingactivities 4 (124) (311) (424)Returns on investments and servicingof financeInterest received 0 1 2Interest paid (24) (11) (25) ---------- --------- ---------Net cash outflowfrom returns oninvestments andservicing offinance (24) (10) (23) ========== ========= ========= Taxation 0 0 0 ---------- --------- --------- Capital expenditure & financialinvestment Purchase oftangible fixedassets (9) (11) (27) ---------- --------- --------- ---------- --------- ---------Net cash outflowfrom capital (9) (11) (27)expenditure & financialinvestment ---------- --------- --------- Equity Dividendspaid 0 0 (9) ---------- --------- --------- ---------- --------- ---------Cash outflowbefore financing (157) (332) (482) ========== ========= ========= FinancingProceeds from theissue of NewOrdinary Shares 0 0 150Repayment of BankLoans (5) (5) (8)New Unsecured Loan 0 0 185 ---------- --------- --------- (5) (5) 327 ---------- --------- --------- ---------- --------- ---------(Decrease) in cashin period (162) (337) (155) ========== ========= ========= Notes to the financial information 1. Basis of Preparation The interim financial statements comprise the unaudited results for the sixmonths to 30 September 2005 and for the six months to 30 September 2004; and theaudited financial statements for the year to 31 March 2005. 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 2005 asamended to incorporate the adoption of FRS 21 'Events after the balance sheetdate'. The interim results are unaudited and do not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. Statutory financial statements for the Company for the year to 31 March 2005,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 2005 shown inthis report has been extracted from those accounts. 2. Basic and diluted earnings per share As noted elsewhere in this interim report the financial information is inrespect of Trakm8 Limited and not Trakm8 Holdings PLC and as such the company isnot required to provide earnings/(loss) per share information. In addition theearnings/(loss) per share information will be calculated by reference to theresults and weighted average number of shares in issue in the parent company(Trakm8 Holdings PLC) and not the company. Accordingly Earnings/(loss) per shareinformation has not been provided for the company. As noted in note 6; 10,112,000 £0.01 ordinary shares were issued by Trakm8Holdings PLC in a share for share exchange to acquire the entire issued sharecapital of the company. If this number of shares had been in issue throughoutthe period covered by the interim financial information, the earnings/(loss) pershare would have been Six months ended 30 September 2005: £0.01Six months ended 30 September 2004: (£0.01)Year ended 31 March 2005: (£0.01) Diluted earnings/(loss) per share numbers have not been calculated as there areno dilutive shares in the company and will be calculated for Trakm8 Holdings PLCin their accounts for the year ending 31 March 2006. 3. Taxation Taxation charged for the six months to September 2005 is calculated by applyingthe directors' best estimate of the annual tax rate to the profit for theperiod." 4. Reconciliation of operating profit/(loss) to net cash inflow from operating activities Six months to Six months to Year ended 30 September 30 September 31 March 2005 2004 2005 (unaudited) (unaudited) (unaudited) £000's £000's £000'sOperating profit (loss) 153 (125) (136) Depreciation 7 5 11Amortisation 0 0 0(Profit)/loss on sale offixed assets 0 0 (1)Decrease/(increase) instocks (196) (299) (138)Decrease/(increase) indebtors (221) 49 (488)Increase/(decrease) increditors 133 59 323 --------- --------- ---------Net cash flow fromoperating activities (124) (311) (429) ========= ========= ========= 5. Net Debt as at 30 September 2005 At Cash flow Other At 1 April 2005 non - cash 30 September Changes 2005 ('000s) ('000s) ('000s) ('000s) Cash at bank 117 (5) 0 112Overdrafts 0 (157) 0 (157) --------- --------- --------- --------- 117 (162) 0 (45) Hire purchase 0 0 0 0Debts fallingdue within 1yr (10) 5 (5) (56)Debts fallingdue after 1 yr (445) 0 5 (441) --------- --------- --------- --------- (339) (157) 0 (497) ========= ========= ========= ========= 6. Post Balance Sheet Events Trakm8 Holdings PLC was incorporated on 13 May 2005 with an authorised sharecapital of £2,000,000 divided into 200,000,000 Ordinary Shares of £0.01 each, ofwhich 2 were issued, nil paid, to the subscribers to the Memorandum ofAssociation. On 4 November 2005 the 2 issued and nil paid Ordinary shares were deemed fullypaid up and a further 10,111,998 Ordinary shares were issued credited as fullypaid in exchange for the transfer to Trakm8 Holdings PLC of the entire issuedshare capital of Trakm8 Limited pursuant to the terms of a share exchangeagreement. On 23 November 2005 11,026,000 Ordinary Shares, consisting of 10,112,000Ordinary Shares in consideration for the entire issued share capital of Trakm8Limited and a further 914,000 Ordinary Shares ranking pari-pasu, were allotted,at a Subscription Price of £1 per Ordinary Share, conditional upon admission toAIM. Admission to AIM was successfully completed on 29 November 2005 whereupon theallotment of Ordinary Shares was completed. This information is provided by RNS The company news service from the London Stock Exchange