Trakm8 Hldgs Regulatory News (TRAK)

1 Apr 2008 10:00

Trakm8 Holdings PLC01 April 2008 1 April 2008 TrakM8 TRAKM8 HOLDINGS PLC ("Trakm8" or "the Group") Trading Update Trakm8, (AIM: TRAK), one of the UK's leading telematics technology and serviceproviders to the global vehicle tracking and security markets, announces anupdate to trading prior to entering its close period before publication of theresults for the year ended 31 March 2008. The markets in which the Group operates have proved challenging in the secondhalf with strong competition emerging across the product range. This has beencompounded by a strengthening of the Euro in the second half year which haspushed the Group's cost of hardware up correspondingly. This latter change,together with the weakening of the US Dollar, has substantially reduced theGroup's competitiveness in Dollar denominated countries (principally the UnitedStates of America ("US")). Concurrent to this the Group was notified by itsmajor US customer that it was ceasing to take our product for competitivereasons which resulted in the Group losing significant but low margin hardwaresales in the US. The Group however perceives certain parts of the US to be anattractive market for direct telematics product sales and expects to commenceoperations in this market in the near future. Despite the factors noted above the Group has continued to see marginimprovement in all product areas as high margin service related revenuesincrease as a percentage of total sales. The Directors believe that this margintrend will continue as the development cost benefits flow through from theacquisition of PJSoft, the Group's Prague based software house. In addition thepartnership with Tyco is starting to bear fruit with over one thousand new T6hardware units now sold. The T6 has a lower cost of manufacture and will allowfor improved hardware related sales margins and continue the Groups ability tocompete on price. Whilst sales and pre exceptional profitability have beenbehind management's expectations for the second half of the year the Group ishowever expected to make lower pre exceptional losses than experienced in thefirst half due to the gross margin improvement and continued efforts to containcosts. This highly competitive landscape has also affected sales of the Trakm8 SWIFT(R)product where the sales process has extended and product price has emerged asthe primary purchasing decider. To counter this competitive threat and todiversify the Groups revenue generating capability the Group will shortlyannounce an expansion of Trakm8 SWIFT(R) aimed at increasing revenues from thissource in the half year commencing April 2008. The Group remains committed to increasing sales and generating profitablerevenue streams at all levels and to this end this has refocused the sales andtechnology elements of the business. The Directors remain confident that theincreased competitiveness offered by the T6 together with an encouragingimmediate order pipeline put Trakm8 in a good position to enter the nextfinancial year. The Company is also due to benefit from the Government fundingawarded to Trakm8 as announced on the 14 December 2006 and 11 March 2008. -ends- For further information please contact: Trakm8 plc 0870 380 0531Dawson Buck, Chairman Cary Knapton, Chief Executive Officer Tavistock Communications 020 7920 3150Simon Hudson Arbuthnot Securities 020 7012 2000Paul Vanstone About Trakm8 Trakm8, based in Shaftesbury, Dorset is the leading technology provider,designer and developer of GPRS based hardware and software to the vehicletracking and security market. The Company distributes its hardware and softwareworldwide through a network of distributors. In addition the Company providesASP vehicle monitoring and tracking services direct to the B2B market. Trakm8'sproducts allow vehicles and drivers to be monitored, allowing organisations tomanage deliveries and services, or track stolen vehicles down to 5 metres. This information is provided by RNS The company news service from the London Stock Exchange