Final Results

RNS Number : 2091I
Trakm8 Holdings PLC
01 July 2013
 



1 July 2013

TRAKM8 HOLDINGS PLC

 

('Trakm8' or 'the Group' or 'the Company')

 

Final Results

for year ended 31 March 2013

 

Trakm8, the AIM-listed designer and developer of GPRS based hardware and software for the vehicle placement and security market, is pleased to announce its results for the year ended 31 March 2013.

 

 

Financial

 

·    Revenue £4.75m (2012: £5.22m)

·    Recurring revenues up by 9.9% to an annualised £2.15m

·    Gross profit margin up to 71.9% (2012: 63.7%)

·    EBITDA £0.31m (2012: £0.36m)

·    Profit before tax £0.04m (2012: £0.08m)

·    Cash balances up 29.2% to £1.41m at year end

·    Net assets increased to £2.52m (2012: £2.38m)

 

Operating

 

·    Investment for Growth strategy successfully implemented

·    Successful transition to recurring revenue business model

·    Strong year for new product and service launches, including:

o Trakm8 ecoN, logistics, and tacho telematics solutions

·    Encouraging order pipeline and sales opportunities

·    Expanding range of international opportunities

·    Completion of product transfer agreement with Visilink

 

Current trading

 

·    Investments in new products and sales resource expected to positively impact the second half of new financial year and beyond

·    Successful integration of Visilink customers

·    Year to date revenues are 23% ahead of last year

 

John Watkins, CEO of Trakm8, commented on the results:

 

"I am pleased to report that Trakm8 has continued to progress well and our "Investment for Growth" strategy has been implemented smoothly.

 

"The prospects for the Group continue to be positive. The market is growing and Trakm8's solutions are increasingly capable. We are confident that the Group will continue to grow its revenues and installed base leading to improving profitability.

 

"With its strong balance sheet, good cash generation, and robust business model Trakm8 is in a position to consider augmenting growth through selective acquisitions alongside its current organic growth strategy."

 

The Company’s report and financial statements for the year ended 31 March 2013 will be available on the Company’s website shortly http://www.trakm8.com/

 

 

 

 

For further information please contact:

 

Trakm8 plc  

01747 858444

John Watkins, Chief Executive Officer


James Hedges, Finance Director

 


MHP Communications  

020 3128 8100

Reg Hoare / Vicky Watkins




finnCap

020 7220 0500

Ed Frisby / Christopher Raggett - corporate finance

Simon Starr - corporate broking

 

 

About Trakm8 (www.trakm8.com)

Trakm8, based in Shaftesbury, Dorset is a leading technology provider, designer and developer of GPRS based hardware and software to the vehicle tracking and security market.  The Group distributes its hardware and software worldwide through a network of distributors.  In addition the Group provides vehicle monitoring and tracking services direct to the B2B market.  Trakm8's products allow vehicles and drivers to be monitored, allowing organisations to manage deliveries and services, or track stolen vehicles down to five metres.

 



 

CHAIRMAN'S STATEMENT

 

 

I am pleased to report that Trakm8's strategy of reinvesting in the business in order to drive long term growth is bearing fruit.

 

Trakm8 has successfully introduced a number of new products and software solutions that have been well received by the market.

 

The strength of the Trakm8 financial model where little profit is taken on the original sales is demonstrated by the improvement in cash balances to £1.41m and rising recurring revenues which continues to be the key focus of our strategy.

 

I am encouraged by the outlook for the business. The Group is well positioned with a strong balance sheet in a growing market. With the increasingly advanced solutions offered by the Company's technology, I am confident that the business will continue to grow profitably and take advantage of opportunities as and when they arrive.

 

As announced separately today, I have decided to step down after seven years as Chairman and non-executive Director of Trakm8.  John Watkins, currently our Chief Executive, has become Executive Chairman, a new role.  At the same time we are appointing Keith Evans, a former partner of PricewaterhouseCoopers, as non-executive director.  It has been a pleasure contributing to the development of the Trakm8 story and I am confident that its future is bright and secure.     

 

 

Dawson Buck

Chairman


CEO'S STATEMENT

 

I am pleased with the progress summarised in the Chairman's Statement.

 

The decision was taken last year and implemented early in the second half, to make a game changing investment in engineering, sales and support staff.  This increased our operating costs by approximately £50,000 per month. This decision has also negatively impacted the profit and loss during the period as our revenues have as expected lagged these investments.

 

Due to delays on some product sales which took longer to complete than expected, overall revenues declined somewhat; although disappointing, this is a reflection of the increased emphasis on solutions sales and engineering services. The transition from the hardware supplier Trakm8 was five years ago to the full solutions supplier of today has made the revenue line move from one off sales today to long term recurring service revenues. As a result the top line can be strongly influenced by individual major contracts but the underlying revenue security of the Group continues to improve.

 

Trakm8 has enjoyed a significant improvement in sales of complete solutions and engineering services during the period. This has resulted in strong growth in recurring revenues and higher margins.

 

The Group revenues are accounted for in three segments:

 

Products 

 

This is the segment where Trakm8 supplies other Telematics Service Providers with hardware solutions. In most cases this also includes our market leading unit configuration firmware. This has been a year of transition. Many of our UK customers for our products in the past have migrated to alternative suppliers that do not compete with them in the solutions market. This migration is perhaps a validation of our success in competing at the end user level.

 

Following the appointment of an International Business Development Manager early in the year, we have increased our international sales of hardware. This has taken some time to build traction as customers conduct extensive trials to ensure that the hardware meets their requirements. New customers have started to buy units from us in North and South America. Overall, the total number of units sold to third parties declined during the year, but the trend towards year-end was positive. The highlight of the year was the significant sales of hardware to Motorola as announced on 2 July 2012.

 

Whilst the sales of hardware to third party integrators help us to ensure our manufactured cost of products are as low as can be achieved, these revenues are at lower margins and have no on-going recurring revenues. As such they remain important to us but not the most strategically important segment.

 

Solutions

 

This segment is where Trakm8 supplies customers with a fully integrated service provision. Customers include the AA, Eon and Jewson. This solution is also provided through a partner in South Africa.

 

The number of units reporting to Swift has continued to grow steadily throughout the year and this has increased the base of recurring monthly revenue, which provides the improved security and predictability to future income. By the end of the financial year the monthly recurring revenue had increased by 9.9% on the previous year to an annualised £2.15m. The majority of these revenues are not taken as upfront payments ensuring our cash receipts are close to sales booked.

 

We were pleased to announce on 25 April 2013 the completion of a product transfer agreement with Visilink, a Cheshire based Telematics Service Provider.   Under the agreement Visilink's entire customer base was offered the opportunity to transfer to our Swift solution. This process proved that we could communicate with third party hardware via our Stream servers. No revenues accrued during the year to March 2013 but we expect over 500 units to eventually migrate onto Swift, providing a lift in recurring revenues for the new financial year.

 

During the year the Company enhanced the engineering investments in new solutions and launched updated versions of Swift and ecoN.  We also launched a new fleet management routing and scheduling package called Logistics. This package has three early adopters and has an encouraging number of other inquiries.

 

Another new product developed during the year but launched in the last month is the Tachograph range of solutions that integrate the digital tachograph information into mobile applications for driver and operator status reporting and provide operators with the legal compliance data required to meet the driver hours regulations. Again early adopters have expressed positive feedback and the pipeline of opportunities is growing.

 

We have also undertaken a considerable amount of development to white label our ecoN solution for a new customer. This has been a considerable engineering task and no solutions revenues were derived during the period. There are, however, good opportunities as a result of this development.  It is encouraging that this product is taking market share from more established competitors.

 

The Solutions segment is the core value enhancing activity of the Group and, overall our revenues grew by 9.3% during the period.

 

Engineering Services

 

This is the segment where Trakm8 undertakes bespoke software development for customers. The customer specific application engineering has been a major feature of the product development team as the larger customers have demanded their particular requirements. This has also helped improve our core products.

 

These engineering projects provide profitable consultancy activities in themselves, but also help to integrate customers to Trakm8 solutions, and provide on-going support and maintenance revenues.

Projects for Jewson, St Gobain and others have been undertaken in the past 12 months and whilst this activity remains a small percentage of the Group revenues it is considered a key differentiator, skill and value added capability.

 

This segment increased by £0.19m over the previous year to £0.41m.

 

Outlook

 

The Board is confident that our investments in new products and sales resources will positively impact the second half of new financial year and beyond. In the meantime we have a strong pipeline of new products and solutions and we are confident that our recurring revenues will carry on growing.  We continue to receive inquiries for increasing levels of engineering services work.

 

The new solutions and agreements we have announced since the year end will provide additional revenues and opportunities in the current financial year and after the first two months of trading our revenues are ahead of last year.

 

With our strong balance sheet, good cash generation, and robust business model Trakm8 is in a position to consider augmenting growth through selective acquisitions alongside our current organic growth strategy. Any acquisition will need to meet our narrow market segment objectives and financial criteria.

 

Finally, I would like to thank all the Trakm8 staff for their tremendous hard work over the past twelve months.

 

 

John Watkins

CEO


 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2013

 


2013


2012








£


£






REVENUE

4,749,916


5,215,565

Cost of sales


(1,332,833)


(1,889,499)





Gross profit

3,417,083


3,326,066

 

Other income

-


5,039






3,417,083


3,331,105





Administrative expenses

(3,377,506)


(3,242,760)






OPERATING PROFIT

39,577


88,345

 

Finance income


2,423


788








42,000


89,133






Finance costs

(4,478)


(5,249)





PROFIT BEFORE TAXATION

37,522


83,884

 

Income tax credit

112,537


50,666





PROFIT FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF THE PARENT


150,059


134,550






OTHER COMPREHENSIVE INCOME





Currency translation differences


(1,615)


1,493





TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT


148,444


136,043





 






EARNINGS PER ORDINARY SHARE (PENCE) ATTRIBUTABLE TO OWNERS OF THE PARENT





Basic

0.79p


0.71p






Diluted

0.78p


0.70p






 

 

 

There were no discontinued operations in 2013 or 2012.  Accordingly the results relate to continuing operations.



 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2013

 

 

Share Capital

Share premium

Merger

Reserve

Translation reserve

Retained Earnings

Total equity attributable to owners of the parent


£

£

£

£

£

£







Balance as at 1 April 2011

187,647

1,719,402

509,837

206,321

(387,218)

Comprehensive income







Profit for the year

-

-

-

-

134,550

134,550

Other comprehensive income







Exchange differences on

translation of overseas

operations

-

-

-

(1,493)

-

(1,493)

Total comprehensive income

-

-

-

(1,493)

134,550

133,057








Transactions with owners







Shares issued

1,000

4,250

-

-

-

5,250

IFRS2 Share based payments

-

-

-

5,537

5,537

Transactions with owners

1,000

4,250

-

-

5,537

10,787

Balance as at 1 April 2012

188,647

1,723,652

509,837

204,828

(247,131)

2,379,833








Comprehensive income







Profit for the year

-

-

-

-

150,059

150,059

Other comprehensive income







Exchange differences on

translation of overseas

operations

-

-

-

(1,615)

-

(1,615)

Total comprehensive income

-

-

-

(1,615)

150,059

148,444








Transactions with owners







Shares issued

5,500

27,500

-

-

-

Purchase of own shares

-

-

-

-

(57,924)

IFRS2 Share based payments

-

-

-

-

19,656

19,656

Transactions with owners

5,500

27,500

-

-

111,791

143,176

Balance as at 31 March 2013

194,147

1,751,152

509,837

203,213

(135,340)

2,523,009








 

 


 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 March 2013

 







2013


2012







£


£

NON CURRENT ASSETS





Intangible assets

    

868,530


1,005,107

Property and equipment

    

560,175


517,118

Deferred income tax asset

    

110,290


98,421






1,538,995


1,620,646





CURRENT ASSETS


Inventories

    

548,143


410,016

Trade and other receivables

    

643,172


782,375

Current tax assets

    

100,668


15,488

Cash and cash equivalents


1,405,133


1,087,474






2,697,116


2,295,353






CURRENT LIABILITIES





Trade and other payables

    

(1,532,349)


(1,250,672)

Borrowings

    

(46,740)


(56,223)








(1,579,089)


(1,306,895)










CURRENT ASSETS LESS CURRENT LIABILITIES

1,118,027


988,458





TOTAL ASSETS LESS CURRENT LIABILITIES

2,657,022


2,609,104





NON CURRENT LIABILITIES





Borrowings

    

(116,343)


(163,093)

Provisions

    

(17,670)


(66,178)





NET ASSETS

2,523,009


2,379,833





EQUITY




  Share capital

194,147


188,647

  Share premium account

1,751,152


1,723,652

  Merger reserve account

509,837


509,837

  Translation reserve

203,213


204,828

  Retained earnings

(135,340)


(247,131)





TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT

2,523,009


2,379,833





 

 

 

 

 


 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 March 2013

 





2013

2012







£

£

NET CASH INFLOW FROM OPERATING ACTIVITIES

496,650

110,845





CASH FLOWS FROM INVESTING ACTIVITIES




Purchases of property, plant and equipment


(97,834)

(91,232)

Purchases of intangible assets

-

(89,241)



------------------------------------------

------------------------------------------

NET CASH USED IN INVESTING ACTIVITIES


(97,834)

(180,473)



------------------------------------------

------------------------------------------




CASH FLOWS FROM FINANCING ACTIVITIES



Issue of new shares

33,000

5,250

Purchase of Treasury shares

(57,924)

-

(Repayment) / new obligations under hire purchase agreements

(35,125)

53,296

Repayment of loans

(21,108)

(20,471)


----------------------------------------

------------------------------------------

NET CASH (USED IN) /FROM FINANCING ACTIVITIES

(81,157)

38,075


----------------------------------------

------------------------------------------

 

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS

317,659

(31,553)



---------------------------------------

------------------------------------------

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

1,087,474

1,119,027



---------------------------------------

------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR

1,405,133

1,087,474



========================

========================

 


NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

for the year ended 31 March 2013

 

1.     GENERAL INFORMATION

 

Trakm8 Holdings PLC ("Company") is a public limited company incorporated in the United Kingdom (registration number 05452547). The Company is domiciled in the United Kingdom and its registered address is Lydden House, Wincombe Business Park, Shaftesbury, Dorset, SP7 9QJ. The Company's Ordinary Shares are traded on the AIM market of the London Stock Exchange.

 

The Group's principal activity is the manufacture, marketing and distribution of vehicle telematics equipment and services. The Company's principal activity is to act as a holding company for its subsidiaries.

 

2.     AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS

 

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations as endorsed by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

3.     BASIS OF PREPARATION

 

The accounting policies set out in note 4 have been applied consistently to all periods presented in these consolidated financial statements.

 

These financial statements are presented in sterling as that is considered to be the currency of the primary economic environment in which the Group operates.  This decision was based on the Group's workforce being based in the UK and that sterling is the currency in which management reporting and decision making is based.

 

 

4      SEGMENTAL ANALYSIS

 

The format of segmental reporting is based on the Group's management and internal reporting of the segments below which carry different risks and rewards and are used to make strategic decisions.  Products is the sale of hardware through the Group's distributors.  Solutions represents the sale of the Group's full vehicle telematics service direct to customers.  Engineering services comprises bespoke professional services and mapping solutions.

 

The Board review the revenue results by segment and the gross margin.  Cost of sales comprise hardware costs and have been allocated to the segments based on the number of units sold.  Administration costs and assets and liabilities are not separated out by segment.

 

Year ended 31 March 2013

Products

 

 

£

Solutions

 

£

Engineering services

£

Unallocated

 

 

£

Total

 

 

£







Segment revenue

1,308,627

3,035,466

405,823

-

4,749,916







Gross profit

306,945

2,704,315

405,823

-

3,417,083







Depreciation & amortisation

(117,841)

(66,569)

(90,052)

-

(274,462)







Finance income

-

-

-

2,423

2,423







Finance costs

-

-

-

(4,478)

(4,478)







Income tax

-

-

-

112,537

112,537













 

 

 

 

Year ended 31 March 2012

Products

 

 

£

Solutions

 

£

Engineering services

£

Unallocated

 

 

£

Total

 

 

£







Segment revenue

2,226,230

2,776,872

212,463

-

5,215,565







Gross profit

789,858

2,323,746

212,462

-

3,326,066







Government grant income

-

-

5,039

-

5,039







Depreciation & amortisation

(124,058)

(53,703)

(93,230)

-

(270,991)







Finance income

-

-

-

788

788







Finance costs

-

-

-

(5,249)

(5,249)







Income tax

-

-

-

50,666

50,666







 

 

The Group's operations are located in the UK and the Czech Republic.  The following table provides an analysis of the Group's revenue by geography based upon location of the Group's customers. 

 

Year ended 31 March 2013

Products

 

£

Solutions

 

£

Engineering services

£

Total

 

£






United Kingdom

219,703

2,942,885

303,152

3,465,740

Europe

608,186

65,744

5,646

679,576

Africa

93,000

-

90,525

183,525

Rest of the World

387,738

26,837

6,500

421,075


1,308,627

3,035,466

405,823

4,749,916

 

The Group had one customer who accounted for more than 10% of the Group revenue (2012: one).

 

 

Year ended 31 March 2012

Products

 

£

Solutions

 

£

Engineering services

£

Total

 

£






United Kingdom

1,291,621

2,767,583

98,205

4,157,409

Europe

171,772

9,289

24,258

205,319

Africa

214,928

-

90,000

304,928

Rest of the World

547,909

-

-

547,909


2,226,230

2,776,872

212,463

5,215,565



 

5.     PROFIT FROM OPERATIONS

 


2013

2012


£

£

Profit from operations is stated after charging/ (crediting):






Other income - Government grant

-

(5,039)




Loss on disposal of fixed assets

2,633

-

Depreciation - owned fixed assets

                   - assets on hire purchase

33,560

18,417

30,205

6,417

Amortisation of intangible assets

219,852

234,369

Operating lease rentals



       Land and buildings

17,729

14,251

       Other

76,187

31,123

Loss on foreign exchange transactions

6,936

11,180

Staff costs (note 10)

1,945,388

1,714,323

 


2013

2012


£

£

Auditor's remuneration



                  - audit services



                         Parent Company and consolidation

4,825

4,680

                         Subsidiary audits

11,250

10,920

                  - tax advisory services

2,340

2,285


====================

====================





2013

2012


£

£

R&D Cost 



-     Expensed

457,067

598,818

-     Amortised

66,978

55,109


====================

====================

 

 

6.     FINANCE COSTS

 


 

2013

 

2012


£

£




Interest on finance leases

-

54

Interest on other loans

4,478

5,195


------------------------------

-------------------------------


4,478

5,249


===================

===================




 



 

 

 

7.     EARNINGS PER ORDINARY SHARE

 

The earnings per ordinary share has been calculated using the profit for the year and the weighted average number of ordinary shares in issue during the year as follows:

 


 

2013

2012

 


£

£

Earnings for the year after taxation


150,059

134,550



========================

========================

 




 


              No.

              No.

Number of ordinary shares of 1p each


19,044,731

18,864,731

 




Basic weighted average number of ordinary shares of 1p each


18,999,526

18,820,621

Basic weighted average number of ordinary shares of 1p each (diluted)


19,208,565

19,159,446



           ======================    ==

           ======================    ==

Basic profit pence per share


0.79p

0.71p





Diluted profit pence per share


0.78p

0.70p



     ======================    ==

     ======================    ==



 

8.     CASH FLOWS

 

 



2013

2012

 



£

£


Reconciliation of profit before tax to net cash flow from operating activities:

 




Profit before tax

37,522

83,884


Depreciation

54,610

36,622


Bank and other interest charges

2,055

4,461


Amortisation of intangible assets

219,852

234,369


Capitalised development costs

(126,375)

-


Share based payments

19,656

5,537



---------------------------------

---------------------------------


Operating cash flows before movement in working capital

207,320

364,873


Movement on retranslation of overseas operations

(1,446)

(994)


Movement in inventories

(138,127)

(150,974)


Movement in trade and other receivables

139,203

110,797


Movement in trade and other payables

276,267

(226,224)



----------------------------------

----------------------------------


Cash generated from operations

483,217

97,478






Interest paid

(4,478)

(5,249)


Interest received

2,423

788


Income taxes received

15,488

17,828



-----------------------------------

-----------------------------------


Net cash inflow from operating activities

496,650

110,845



=====================

=====================

 

Cash and cash equivalents comprise cash at bank, other short-term highly liquid investments with a maturity of three months or less (together presented as 'Cash and cash equivalents' on the face of the balance sheet).

 

 

 

 

 

 

 

These financial statements were approved by the Board of Directors and authorised for issue on 28 June 2013 and are signed on their behalf by:

 

 

 

 

J Watkins                                                                                        J Hedges

Director                                                                                          Director

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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