Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation. With the publication of this announcement, this information is now considered to be in the public domain.
3 April 2024
Trakm8 Holdings plc
("Trakm8", the "Group" or the "Company")
Trading Update, Purchase of IP, Contract Extension & Issue of Convertible Loan Notes
Trakm8 Holdings plc (AIM: TRAK), the global telematics and data insight provider, provides the following update.
Trading Update
On 22 March 2024, the Group announced a trading update relating to the financial year ended 31 March 2024 ("FY-2024" or the "Period"). Post completion of the Period, the Group can now confirm that operational cash generation for the Period is expected to be £5.4m (FY-2023: £4.3m). In addition, cash on hand amounted to £1.4m (FY-2023: £1.1m) and net debt, excluding IFRS16 lease liabilities, was £4.9m (FY-2023: £5.6m). The Group also has an unused overdraft facility of £0.5m.
The Group separately noted that the extent of any shortfall in its results for the financial year ending 31 March 2025 ("FY-2025") would ultimately depend on, inter alia, insurance capacity returning. The Group is pleased to confirm that insurance capacity has now been restored to the Group's largest insurance customer. Accordingly, the board of directors of the Group (the "Board") now believes that shipments into the insurance market are expected to recover during April 2024.
Purchase of Intellectual Property
Trakm8 is pleased to announce that, on 2 April 2024, the Group completed the purchase of certain Intellectual Property ("IP") from Action 365 Limited, a Freedom Services Group Company ("Freedom"), under a software licence agreement, for a total consideration of £500,000.
Under the licence agreement, the Group has acquired industry approved technology that will complement the Group's existing extensive risk management and driver profiling capabilities including accident detection. This will further improve the breadth of service that the Group can offer to its existing and potential new customers.
Supply Agreement Extension
Under a separate agreement with Freedom, Trakm8 has agreed a supply contract extension for four years. Under this agreement, Freedom has committed to purchase a minimum of 90% of its OBD (on-board diagnostics) and 12v devices and related services from Trakm8.
The Board believes that these agreements will provide increased certainty to the Group's financial results this year and beyond.
Banking Update
Trakm8 and HSBC have agreed to an extension of the Company's existing £5.3m term loan on the same terms for a further year, to July 2025. HSBC has also agreed that Trakm8 will not be required to make capital repayments on the loan until October 2024. Interest will continue to be paid as usual. As at 31 March 2024, the outstanding balance on the loan was £3.6m.
Issue of Convertible Loan Notes
Trakm8 is also pleased to announce a fundraise via the issue of £990,000 nominal of 18% Convertible Unsecured Loan Notes (together the "2024 Loan Notes"). The primary purpose of the issue of the 2024 Loan Notes is to provide the Group with the funds required to complete the purchase of IP outlined above and to provide an increase in working capital to meet the anticipated volume increases from both the supply agreement extension and the driver scoring algorithms.
The 2024 Loan Notes, which contain customary terms of default, will attract interest from its issue date of 2 April 2024, payable quarterly, until repayment on 13 September 2025. No application has been or will be made to any Recognised Investment Exchange for the listing of, or for permission to deal in, the 2024 Loan Notes. The 2024 Loan Notes are convertible at a conversion price of 8.1p, being a ten per cent. discount to the closing mid-market price of a Trakm8 ordinary share of 9p (the "Reference Price") on 2 April 2024, the last practicable date prior to this announcement. The terms of the 2024 Loan Notes prohibit the Company from entering into any further unsecured loans, other than in the normal course of business and subject to the prior consent of holders of the 2024 Loan Notes. In addition, in the event that the Company undertakes an equity funding raising in excess of £0.5m prior to repayment of the 2024 Loan Notes, the conversion price of the 2024 Loan Notes will be adjusted to a 10 per cent. discount to the price of that equity funding, provided the issue price of the equity funding is lower than the Reference Price. In the absence of a default event, the principal sum of the 2024 Loan Notes will be repaid or converted, in full or in part, at the option holders of the 2024 Loan Notes at the maturity date of 13 September 2025 into Trakm8 ordinary shares and will not be redeemed. The Trakm8 ordinary shares so issued will rank pari passu in all respects with the existing ordinary shares currently in issue.
Certain directors of the Company will also be subscribing for the 2024 Loan Notes in the following amounts: John Watkins £275,000; Nadeem Raza £100,000; and Jon Edwards £25,000.
Variation to 2022 convertible loan notes
On 13 September 2022, the Group issued £1,580,000 nominal of 12% Convertible Unsecured Loan Notes (the "2022 Loan Notes"). These were due for repayment on 13 September 2024. All of the holders of the 2022 Loan Notes have agreed: (i) that the Company can issue the 2024 Loan Notes; and (ii) to extend the repayment period for the 2022 Loan Notes to 13 September 2025. In order to obtain the agreement of the holders of the 2022 Loan Notes to these variations, the interest rate on the 2022 Loan Notes has been increased to 18% and the conversion price amended to 8.1p, matching that of the 2024 Loan Notes. Other terms, as detailed in the announcement of the 2022 CLNs on 14 September 2022, remain unchanged.
Related party transactions
Nadeem Raza, John Watkins and Jon Edwards are directors of Trakm8 (together the "Connected 2024 Loan Note Subscribers"). The Connected 2024 Loan Note Subscribers are therefore related parties of the Group for the purposes of the AIM Rules for Companies (the "AIM Rules"). Participation in the 2024 Loan Notes by the Connected 2024 Loan Note Subscribers and the variation to the terms of the 2022 Loan Notes in respect of the related parties that participated in those constitute related party transactions under the AIM Rules. Keith Evans, the Director independent of the related party transactions considers, having consulted with the Group's nominated adviser, Allenby Capital Limited, that the terms of the participation in the 2024 Loan Notes by the Connected 2024 Loan Note Subscribers and the variations to the terms of the 2022 Loan Notes held by the related parties are fair and reasonable insofar as the Group's shareholders are concerned.
John Watkins, Trakm8's Executive Chairman, commented "We are delighted to extend our partnership with Freedom and to increase our capability in Insuretech services. We also thank the subscribers to the 2024 Loan Notes who are not directors of the Company in helping to facilitate this."
The FCA notification, made in accordance with the requirements of the UK Market Abuse Regulation, is appended further below.
- Ends -
For further information:
| Trakm8 Holdings plc |
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| John Watkins, Executive Chairman | Tel: +44 (0) 1675 434 200 |
| Jon Edwards, Chief Financial Officer | |
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| Allenby Capital Limited (Nominated Adviser & Broker) | Tel: +44 (0)20 3328 5656 |
| David Hart / Vivek Bhardwaj, Corporate Finance | www.allenbycapital.com |
About Trakm8
Trakm8 is a UK based technology leader in fleet management, insurance telematics, connected car, and optimisation. Through IP owned technology, the Group uses AI data analytics collected from its installed base of telematics units to fine tune the algorithms that are used to produce its' solutions; these monitor driver behaviour, identify crash events and monitor vehicle health to provide actionable insights to continuously improve the security and operational efficiency of both company fleets and private drivers.
The Group's product portfolio includes the latest data analytics and reporting portal (Trakm8 Insight), integrated telematics/cameras/optimisation, self-installed telematics units and one of the widest ranges of installed telematics devices. Trakm8 has over 275,000 connections.
Headquartered in Coleshill near Birmingham alongside its manufacturing facility, the Group supplies to the Fleet, Optimisation, Insurance and Automotive sectors to many well-known customers in the UK and internationally including the AA, Saint Gobain, EON, Iceland Foods, GSF, Direct Line Group, Ticker and Freedom Group.
Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005. Trakm8 is also recognised with the LSE Green Economy Mark.
www.trakm8.com / @Trakm8
| 1. | Details of the person discharging managerial responsibilities / person closely associated | |||||||||
| a) | Name | John Watkins Nadeem Raza Jon Edwards
All Directors of the Company | ||||||||
| 2. | Reason for the Notification | |||||||||
| a) | Position/status | PDMRs | ||||||||
| b) | Initial notification/Amendment | Initial Notification | ||||||||
| 3. | Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor | |||||||||
| a) | Name | Trakm8 Holdings plc | ||||||||
| b) | LEI | 213800I7RQRIKCSHY846 | ||||||||
| 4. | Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted | |||||||||
| a) | Description of the Financial instrument, type of instrument | Ordinary shares of 1p each in the Company ("Ordinary Shares") | ||||||||
| Identification code | ISIN: GB00B0P1RP10 | |||||||||
| b) | Nature of the transaction | Participation in the subscription of the 2024 Loan Notes | ||||||||
| b) | Price(s) and volume(s) | Price: base conversion price of 8.1p per Ordinary Share
| ||||||||
| d) | Aggregated information: - Aggregated volume - Price | n/a | ||||||||
| e) | Date of the transaction | 2 April 2024 | ||||||||
| f) | Place of the transaction | Outside a trading venue | ||||||||
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