Trakm8 Holdings PLC – Year End Trading Update & Contract Awards
Trakm8 Holdings plc (AIM:TRAK) a leading telematics and data supplier to global markets today announces a trading update, for its financial year ended 31 March 2019.
Trakm8 revenues for the Period met current market expectations at £19.2 million, which at 35% less than last year and 28% less on a like-for-like basis (excluding the contract electronic manufacturing activities that the Group exited last year) are at the bottom end of the range previously communicated.
The Group achieved market expectations, set at the time of the half year results announcement, of adjusted loss before tax of £1.4 million for the Period. Whilst overall the full year was significantly loss making the Group achieved a positive adjusted profit for the second half of the year..
The net debt at 31 March 2019 was £5.6 million (31 March 2018: £3.3 million) as a result of the loss referred to above. There was cash of £1.2 million and an additional unused revolving credit facility of £0.65 million at the year end. Additionally the Group received £1.4 million of receipts from Customers in the first week of April.
Fleet connections have grown 4% to 76,000 (FY-2018: 73,000). Despite Fleet & Optimisation recurring revenues growing 6% to £6.8 million (FY-2018: £6.4m), overall total Fleet & Optimisation solution revenues declined 23% to £10.9 million (FY-2018: £14.2m) because of lower hardware and optimisation system sales.
Insurance & Automotive connections have declined by 5% to 167,000 (FY-2018: 178,000) primarily as a result of a major customer's loss of market share in the young driver space. Insurance and Automotive recurring revenues declined 25% to £3.3 million (FY-2018: £4.4m) and total solution revenues declined 35% to £8.2 million (FY-2018: £12.6m) as a result of the declining connections and lower selling prices on the insurance side and by a delay into the financial year ending 31st March 2020 of the consumer marketing programme by a key customer in the Automotive space.
It was encouraging that the value of new contracts secured by the Group during the final three months of the year were 67% higher than the average of the previous three quarters. This makes the H2 value of new contracts secured 41% higher than H1.
During the last quarter deliveries started to LexisNexis. At the period end contracts were secured with Ingenie, one of the UK's leading insurance brokers that uses telematics to deliver real driving improvements through behavioural coaching within the UK motor insurance market and another one of the UK's innovative insurance providers. Post year end Trakm8 signed a contract with another new insurance provider. This combined gives us four new customers in the insurance market to build with for the future.
The number of roadside assistance customers deploying Trakm8 solutions across Europe has increased to 7 and the product has been launched in Australia.
In the Fleet space new contracts were secured with a number of medium sized fleets, and renewed for many years each with two of Trakm8's largest and longest standing customers. The launch of the Fleet solution with EE has now taken place.
As previously announced, the Group has implemented an annualised operational cost reduction of over £2.0m. These savings have enabled us to deploy greater resources towards sales and marketing, which is in line with our previously expressed strategy.
The Board is confident in the Group's future prospects and an update on trading for the current financial year commencing 1 April 2019 will be provided in conjunction with the 2018/19 final results.
Notice of Results
The Group expects to announce its final results for the year ended 31 March 2019 on Monday, 8th July 2019.
John Watkins, Executive Chairman of Trakm8 commented:
"Trakm8 finished last year with expected but disappointing results.
"Insurance and Automotive revenues were badly impacted by delayed new contracts and customers resetting their marketing plans. Final quarter revenues and the new contract wins give confidence that better times are ahead for us in these markets.
"Fleet and Optimisation revenues were impacted by the continued economic uncertainty and by poor performance of the sales teams early in the year. The restructured and widened sales team started to win significantly higher levels of new business in the fourth quarter and we expect that trend to continue to improve. The growth in recurring revenues due to improved service revenue per unit is encouraging. Growth in RH600 integrated camera business and the Insight platform are expected to accelerate. The scale up with EE is expected to provide significant additional connections during this year and beyond.
"We have continued to focus on improving efficiencies in all aspects of the business, whilst increasing our resources in sales and marketing and continuing our investment in market leading products.
"We expect that this new financial year will benefit from lower direct and indirect costs. These and higher performing sales activities are expected to deliver a much stronger financial performance."