Trakm8 warns on profits after dismal first half

Telematics and data insight provider Trakm8 Holdings issued its unaudited results for the six months ended 30 September on Friday, reporting a 38% decline in group revenue year-on-year to £8.84m.

The AIM-traded firm said its solutions revenue was 26% lower and made up all of the group revenue, with recurring revenue sliding 7% to £5.12m.

Its operating loss was £2.82m, swinging from an operating profit of £0.2m a year ago, while its loss before tax for the period was £2.93m, compared to a £0.12m profit.

The company’s adjusted loss before tax was £2.46m, dropping from a profit of £0.36m.

Cash generated from operations was 112% lower at a negative flow of £0.42m, with net debt growing to £5.73m from £2.31m a year ago.

Basic losses per share were 6.08p for the period, compared to earnings of 1.56p 12 months ago, with adjusted basic losses per share swinging to 4.94p from earnings of 2.15p.

On the operational front, Trakm8 said its first half results disappointed as a result of its exit from contract electronics manufacturing, the working down of launch stocks by one of its significant customers, modest attrition in one of its significant insurance customers, and lower-than-expected fleet and optimisation revenues due to lower pipeline conversion rates than normal.

The board did say that the firm continued with new contract wins during the period, with new awards from major clients LexisNexis, EE and Intelematics Australia.

Its installed base also continued to grow in fleet from existing and new customers, although that was offset by Insurance reductions.

Looking ahead, Trakm8 said it had a “stronger outlook” with its mid-term opportunity intact, as it restructured its fleet and optimisation sales teams with experienced new staff recruited.

It also reported fresh investment in its increased manufacturing capacity, a continued focus on driving internal operational improvements and efficiencies, and the launch of the “latest generation” of telematics devices.

Trakm8 also said it saw a “strong” level of orders post period-end from existing and new customers.

“Since the group's trading update announced in September it has become clear that the improved second half financial performance, driven by continued growth in the telematics business, will not materialise as the group anticipated,” the Trakm8 board said in its statement.

“Continuing delays in decisions by customers is preventing the return to the usual levels of success in fleet and optimisation, a move to a rental model in the automotive space, and the loss, due to sanctions, of a multi-million-pound contract for the supply of Insurance solutions into Iran, has meant that revenue for the current financial year is now expected to be 20-25% below the 2018 outcome, and 10-15% below on a like-for-like basis.

“The directors expect that while the current year will be loss making, the market for Trakm8's solutions will be robust in the longer term and that the group's strategy will drive Trakm8's future operational and financial performance, evidenced by contract wins from LexisNexis and an initial two year agreement to supply EE, part of the BT Group, with telematics based services, using its Connectedcare product.”