2732R Trading Update
RNS Number:2732RTrakm8 Holdings PLC
01 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
service providers to the global vehicle tracking and security markets,
announces an update to trading prior to entering its close period
before publication of the results for the year ended 31 March 2008.
The markets in which the Group operates have proved challenging in the
second half with strong competition emerging across the product range.
This has been compounded by a strengthening of the Euro in the second
half year which has pushed the Group's cost of hardware up
correspondingly. This latter change, together with the weakening of the
US Dollar, has substantially reduced the Group's competitiveness in
Dollar denominated countries (principally the United States of America
("US")).
Concurrent to this the Group was notified by its major US customer that
it was ceasing to take our product for competitive reasons which
resulted in the Group losing significant but low margin hardware
sales in the US. The Group however perceives certain parts of the US to
be an attractive market for direct telematics product sales and expects
to commence operations in this market in the near future.
Despite the factors noted above the Group has continued to see margin
improvement in all product areas as high margin service related
revenues increase as a percentage of total sales. The Directors believe
that this margin trend will continue as the development cost benefits
flow through from the acquisition of PJSoft, the Group's Prague based
software house. In addition the partnership with Tyco is starting to
bear fruit with over one thousand new T6 hardware units now sold. The
T6 has a lower cost of manufacture and will allow for improved hardware
related sales margins and continue the Groups ability to compete on
price. Whilst sales and pre exceptional profitability have been
behind management's expectations for the second half of the year the
Group is however expected to make lower pre exceptional losses than
experienced in the first half due to the gross margin improvement and
continued efforts to contain costs.
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 as the primary purchasing decider. To counter this
competitive threat and to diversify the Groups revenue generating
capability the Group will shortly announce an expansion of Trakm8 SWIFT(R) aimed at increasing revenues from this source in the half year
commencing April 2008.
The Group remains committed to increasing sales and generating
profitable revenue streams at all levels and to this end this has
refocused the sales and technology elements of the business. The
Directors remain confident that the increased competitiveness offered
by the T6 together with an encouraging immediate order pipeline put
Trakm8 in a good position to enter the next financial year. The Company
is also due to benefit from the Government funding awarded to Trakm8 as
announced on the 14 December 2006 and 11 March 2008.
-ends-
For further information please contact:
Trakm8 plc 0870 380 0531
Dawson Buck, Chairman
Cary Knapton, Chief Executive Officer
Tavistock Communications 020 7920 3150
Simon Hudson
Arbuthnot Securities 020 7012 2000
Paul Vanstone
About Trakm8 Trakm8, based in Shaftesbury, Dorset is the leading technology
provider, designer and developer of GPRS based hardware and software to
the vehicle tracking and security market. The Company distributes its
hardware and software worldwide through a network of distributors. In
addition the Company provides ASP 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 5 metres.
This information is provided by RNS
The company news service from the London Stock Exchange
END