Trakm8 Hldgs Regulatory News (TRAK)

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

Trakm8 Holdings plc

('Trakm8' or the 'Group')

Trading and Strategy Update and Issue of Convertible Loan Notes

Trading and Strategy Update

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

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

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

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

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

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

Issue of Convertible Loan Notes

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

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

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

Related party transaction disclosure

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

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About Trakm8

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

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

Headquartered in Coleshill near Birmingham alongside its manufacturing facility, the Group supplies to the Fleet, Optimisation, Insurance and Automotive sectors to many well-known customers in the UK and internationally including the AA, Saint Gobain, EON, Iceland Foods, GSF, Direct Line Group, Ticker and Ingenie.

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

www.trakm8.com / @Trakm8