Half Yearly Report
December 16 2008 - 2:00AM
UK Regulatory
RNS Number : 1816K
Trakm8 Holdings PLC
16 December 2008
TRAKM8 HOLDINGS PLC
("Trakm8" or "the Group")
Unaudited Interim Report
for the six months to 30 September 2008
Highlights
* Substantial strategic and operational review undertaken in period resulting in shift to focus on higher margin business and
establishment of a lower more efficient cost base
* Turnover declined by �0.5m to �2.0m due to focus on higher margin business
* Gross Profit of �1.1m (2007: �1.0m) reflecting a margin improvement of 15.2% to 55.4%
* Operating loss reduced by �0.1m to �0.3m
* Restructuring costs of �0.1m generating annualised savings of �0.4m
* Net assets of �1.2m (2007: �1.3m) and net debt of �0.1m (2007: net cash �0.3m)
* Customers successfully migrated to T6 with encouraging levels of interest from new customers
* Product innovation ongoing
* New management team in place
* Improved current trading and more positive outlook
Dawson Buck, Chairman, said "The first half of the year has been challenging for the Company but the changes implemented by the new
management have put the Company on a stronger footing going forward. The focus on higher margin business, our strong product offering and
efficient operating base have resulted in encouraging trading in the period to date and, whilst we are mindful of the wider uncertainty in
the macroeconomic environment, we are optimistic for the second half of the year. I would like to take this opportunity to thank our
committed staff for their efforts during this period and beyond."
For further information, please visit www.trakm8.com or contact:
Trakm8 plc 01747 858 444
John Watkins, Chief Executive Officer
James Hedges, Finance Director
Tavistock Communications 020 7920 3150
Simon Hudson
Arbuthnot Securities 020 7012 2000
Paul Vanstone / Richard Tulloch
Chairman's Statement
The first six months of this financial year have seen a number of changes at Trakm8 but we are now in a stronger position with improved
current trading and an optimistic outlook. Following a strategic review by the new management, the Company is now focused on higher margin
business through the provision of value added services and products to telematics service provider (TSP) integrators. In addition, towards
the end of the period, the Company undertook a restructuring programme to reduce its cost base and improve operational efficiencies.
Revenue in the period reduced to �2.0m (2007: �2.5m) but Gross Profit increased to �1.1m (2007: �1.0m), reflecting the focus on higher
margin business. Operating loss (after �0.1m one off restructuring costs) reduced to �0.3m (2007: �0.4m) which generated a loss before tax
of �0.4m (2007: loss �0.5m). At the period end the Group had net assets of �1.2m (2007: �1.3m) and net debt of �0.1m (2007: net cash
�0.3m).
The launch of the next generation hardware platform, T6, has been completed with the majority of customers having successfully migrated
across to T6. The T6 is also generating strong interest from new customers. Additionally, considerable progress has also been made on the
government funded projects.
During the period Cary Knapton resigned as Chief Executive and Tim Couling resigned as Finance Director. I would like to thank them for
their considerable contribution to the development of the Group over many years and wish them well for the future.
John Watkins, previously non-executive Director, has been appointed as Chief Executive and James Hedges, previously Group Financial
Controller, has been appointed Finance Director. I am pleased to welcome them to their new responsibilities.
Outlook
The restructuring coupled with the focus on higher margin business and the successful launch of the T6 puts the Group on a stronger
footing going forward. The marketing and product initiatives now in place are already indicating that improved revenues should be achieved
despite the troubled economic times. Indeed our products and solutions provide our customers with a dynamic management tool that enables
them to reduce costs, better serve the needs of their customers and ultimately increase profitability for relatively little investment and
ongoing cost. These factors combined with the improved current trading, leads the Board to look forward with optimism to an improved second
half of the financial year although we are mindful of the wider uncertainty in the macroeconomic environment.
This period of considerable change has required significant efforts from everyone in the Group and I would like to thank the Executive
team and staff for their continuing hard work and dedication.
DAWSON BUCK
CHAIRMAN
15 December 2008
Chief Executive Officer's Report
Operational Review
During the first half of the year the Group, following a strategic review, has modified its strategy of becoming an integrated TSP to
focus on the provision of valued added services and products to TSP integrators. Trakm8 has an excellent hardware/firmware platform and
scalable server applications and is focusing efforts on supplying these core technologies to our major customers.
The Group is now concentrated on delivering higher margin solutions and products. This includes the integration of onboard vehicle
diagnostic and vehicle data information into the T6 tracking solution package. As a result of the greater functionality of our platform,
Swift revenues have also increased with some customers now electing to operate the complete service under their own brand. This continues
the Group's transition from a telematics box supplier into a value added systems supplier.
The launch of the next generation hardware platform has been completed with the majority of customers having successfully migrated
across to the T6. The T6 has been well received by existing customers and is also generating significant interest from new customers. The T6
has strong functionality benefits compared to most competitor products with full controller area network ("CAN") communications integrated
into the hardware platform. In 2009 we will introduce a variant of the T6 which is expected to generate further interest in this exciting
product.
Considerable progress has been made on the government funded projects. These projects are jointly funded and have varied applications
that will benefit both the project objectives but also the long term product portfolio of the Group.
Annualised savings of �0.4m were made to Group operating costs towards the period end and the organisation has been restructured with
better defined responsibilities. These savings were achieved with a one off restructuring cost of only �0.1m which was fully incurred in the
period. The new team has gelled well and operational efficiencies have been improved.
Financial Review
Revenue in the period reduced to �2.0m (2007: �2.5m) but Gross Profit increased to �1.1m (2007: �1.0m) reflecting the focus on higher
margin business. Income from Government Grants totalled �0.3m (2007: �nil). Operating loss (after �0.1m one off restructuring costs) reduced
to �0.3m (2007: �0.4m) which generated a loss before tax of �0.4m (2007: loss �0.5m). At the period end the Group had net assets of �1.2m
(2007: �1.3m) and net debt of �0.1m (2007: net cash �0.3m).
The Company also issued a further 340,136 ordinary shares of 1p each in relation to the in relation to the acquisition of PJSoft s.r.o.
Current Trading and Outlook
The strategic and operational review undertaken during the first half has enabled the Group to emerge as a leaner business focused on
delivering higher margin services. The new marketing and business development activities are expected to drive increased revenues. We are
developing stronger relationships with TSP integrators providing them with key system elements that are being built into complete turnkey
solutions. The benefits of these initiatives began to be observed in the latter part of the period and have continued to gain momentum since
then, resulting in encouraging current trading. However the recent strengthening of the euro has added to our costs and we are taking steps
to mitigate such adverse currency movements.
The integration of vehicle tracking systems with vehicle diagnostic information on the T6 is generating strong interest and several new
customer programmes are in place. Software created in conjunction with the Government funded projects is increasing the functionality and
competitiveness of the application and server solutions. As the scale of telematic applied fleets grow, then the Trakm8 solutions will be
capable of expanding with them.
The market for telematic solutions with smarter management information is growing rapidly. The need for greater fleet operational
efficiencies alongside the marked reduced costs of telematic provision has strongly improved the economics of investing in such solutions.
Further we believe that new applications for telematics are beginning to arise and Trakm8 is seeking to innovate within these sub markets.
In this challenging economic environment companies are under increased pressure to maintain market share and profitability. We believe our
products and services enable our customers to deliver value added solutions to the end user. Trakm8 is well placed to benefit from these
trends.
Trakm8 is a refreshed business and recent trading has been encouraging. Whilst we recognise the need to closely monitor our business in
these uncertain and challenging times I am hopeful that this positive trend will continue throughout the second half.
JOHN WATKINS
CHIEF EXECUTIVE OFFICER
15 December 2008
CONSOLIDATED INCOME STATEMENT
for the six months to 30 September 2008
Six months to 30 Six months to 30 September Year to
September 2007 31 March
Note 2008 Unaudited 2008
Unaudited Audited
Continuing Operations �'000 �'000 �'000
Revenue 1,995 2,458 4,656
Cost of sales (889) (1,470) (2,632)
Gross profit 1,106 988 2,024
Other income 275 - 79
Operating expenses (1,635) (1,420) (2,994)
Restructuring costs 3 (84) - -
Operating loss (338) (432) (891)
Interest receivable 3 7 10
(335) (425) (881)
Bank and other interest
charges (17) (40) (77)
Loss before taxation (352) (465) (958)
Taxation - - 57
Loss attributable to the
equity shareholders of the
parent
(352) (465) (901)
Basic loss per share (pence) 4 (2.6) (4.0) (7.6)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months to 30 September 2008
Six months to 30 Six months to 30 Year to
September 2008 September 31 March
Unaudited 2007 2008
Unaudited Audited
�'000 �'000 �'000
Total equity at beginning of
period 1,573 1,483 1,483
Loss for the period (352) (465) (901)
Shares issued 106 - 523
Shares to be issued (106) 246 246
Exchange difference on
translation of overseas
operations
- - 203
IFRS 2 share based payments 6 7 19
Total equity at end of period 1,227 1,271 1,573
CONSOLIDATED BALANCE SHEET
as at 30 September 2008
30 September 30 September 31 March
2008 2007 2008 Audited
Unaudited Unaudited
�'000 �'000 �'000
Non-current assets
Intangible assets 1,478 1,514 1,598
Plant, property and equipment
460 489 478
1,938 2,003 2,076
Current assets
Inventories 123 300 146
Trade and other receivables
856 557 810
Current tax - - 33
Cash and cash equivalents
264 416 363
1,243 1,273 1,352
Current liabilities
Bank overdrafts (398) (167) (210)
Bank and other loans (51) (50) (51)
Trade and other payables (1,225) (926) (1,287)
Obligations under finance
leases - (6) (2)
Current tax - (25) -
(1,674) (1,174) (1,550)
Current assets less current
liabilities (431) 99 (198)
Total assets less current
liabilities 1,507 2,102 1,878
Non-current liabilities
Bank loans (213) (228) (220)
Other loans (49) (585) (67)
Deferred tax (18) (18) (18)
(280) (831) (305)
Net assets 1,227 1,271 1,573
Equity
Called up share capital 139 115 135
Share premium 1,358 754 1,256
Shares to be issued 140 246 246
Merger reserve 510 510 510
Share based payment reserve
54 36 48
Translation Reserve 203 - 203
Retained loss (1,177) (390) (825)
Total equity attributable to the equity shareholders 1,227 1,271 1,573
of the parent
CONSOLIDATED CASH FLOW STATEMENT
for the six months to 30 September 2008
Six months to Six months to Year to
30 September 30 September 31 March
2008 2007 2008
Unaudited Unaudited Audited
Note �'000 �'000 �'000
Net cash (used in) from
operating activities 5 (257) 293 239
Investing activities
Acquisition of subsidiary net
of cash acquired - (319) (319)
Proceeds on disposal
of property, plant - - 1
and equipment
Expenditure on product
development - (124) (124)
Purchases of property, plant
and equipment (3) (10) (23)
Net cash used in investing
activities (3) (453) (465)
Financing activities
Repayment of loans (27) (30) (60)
Net cash used in financing
activities (27) (30) (60)
Net decrease in cash and cash
equivalents (287) (190) (286)
Cash and cash
equivalents at beginning 153 439 439
of period
Cash and cash equivalents at
end of period (134) 249 153
Notes to the financial information (unaudited)
1. The financial information contained in this interim statement has not
been audited or reviewed by the Company's auditor and does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.
The financial information for the full preceding year is extracted from
the statutory accounts for the financial year ended 31 March 2008. Those
accounts, upon which the auditor issued an unqualified opinion, have been
delivered to the Registrar of Companies.
2. Trakm8 Holdings PLC is a public limited company incorporated in the
United Kingdom under the Companies Act 1985. The Company is domiciled
in the United Kingdom and its ordinary shares are traded on the
Alternative Investment Market ("AIM").
As permitted this Interim Report has been prepared in accordance with
UK AIM Rules for Companies and not in accordance with IAS 34 "Interim
Financial Reporting" and therefore is not fully in compliance with
IFRS.
3. Restructuring costs
Restructuring costs in the six months to 30 September 2008 comprise:
�'000
Redundancy costs 36
Cessation of overseas ventures 48
84
4. Loss per ordinary share
Six months to Six months to Year to
30 September 30 September 31 March
2008 2007 2008
(Unaudited) (Unaudited) (Audited)
�'000 �'000 �'000
Loss after taxation (352) (465) (901)
Weighted average number of ordinary shares in issue
No. No. No.
'000 '000 '000
Basic 13,617 11,472 13,517
The diluted loss per share has not been calculated as this would reduce the reported loss per share.
5. Reconciliation of cash flows from operating activities:
Six months to Six months to Year to
30 September 30 September 31 March
2008 2007 2008
(Unaudited) (Unaudited) (Audited)
�'000 �'000 �'000
Net loss before taxation (352) (465) (958)
Adjustments for:
Depreciation 21 36 59
Bank and other interest
charges 14 33 67
Amortisation of intangible
assets 120 66 178
Share based payment expense
6 7 19
Net loss before changes in
working capital (191) (323) (635)
Retranslation of overseas
operations - - 5
Movement in inventories 23 35 190
Movement in trade and other
receivables (46) 736 484
Movement in trade and other
payables (62) (122) 262
Cash (absorbed by) generated
from operations (276) 326 306
Interest paid (17) (40) (77)
Interest received 3 7 10
Income taxes received 33 - -
Net cash (used in) from
operating activities (257) 293 239
6. Copies of the report are available at the Companies website
www.trakm8.com and also from the registered office of Trakm8 Holdings
PLC. The address of the registered office is: Lydden House, Wincombe
Business Park, Shaftesbury, Dorset, SP7 9QJ.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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