THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.
8 October 2013
TRAKM8 HOLDINGS PLC
('Trakm8' or 'the Company')
Acquisition of BOX Telematics, placing and re admission to AIM
Trakm8 (AIM: TRAK), the designer and developer of GPRS based hardware and software for the vehicle placement and security market, is pleased to announce, the proposed acquisition of one of the UK leading providers of fleet management systems, BOX Telematics Limited ("BOX") (the "Acquisition"), for an initial cash consideration of £3.5 million. Following Admission, the Company will also procure the repayment by BOX of a director's loan of £750,000. The Acquisition is in line with Trakm8's strategy of augmenting its organic growth with selective acquisitions, and will expand Trakm8's telematics offering by consolidating its existing technical and software expertise with the manufacturing capabilities of BOX.
The Acquisition will be funded from the Company's cash reserves, a newly signed debt facility of £2.5 million and subscription by the directors for new ordinary shares ("Ordinary Shares") at a price of 22p per Ordinary Share (the "Issue Price") to raise £720,000. To provide additional working capital the Company has undertaken a placing and subscription for new Ordinary Shares at the Issue Price to raise £1.35 million.
The Acquisition constitutes a reverse takeover under Rule 14 of the AIM Rules for Companies and is therefore subject to shareholder approval, accordingly, the Company has today published an Admission Document containing detailed information about the Company and Box (the "Enlarged Group") and convening a general meeting of shareholders in the Company to be held at the offices of Trakm8, Lydden House, Wincombe Business Park, Shaftesbury, Dorset SP7 9QJ at 9.30 a.m. on 24 October 2013. The Admission Document, to be sent to shareholders today, is available to view at www.trakm8.com. Dealings are expected to commence in the Enlarged Group on AIM on 25 October 2013.
finnCap Limited is acting as Nominated Adviser and sole broker to the Company.
Transaction Highlights
· Trakm8 announces that it has conditionally agreed to purchase the entire issued share capital of BOX for an initial cash consideration of £3.5 million.Following Admission the Company will also procure the repayment by BOX of a director's loan of £750,000. The Company also expects to make additional consideration payments to the vendor in respect of working capital and net cash adjustments which will be determined by completion accounts prepared following Admission;
· This consideration will be funded from Trakm8's existing cash resources, £2.5 million of committed debt financing and a subscription by the directors for 3,272,727 new Ordinary Shares at 22p per Ordinary Share to raise £720,000;
· To provide additional working capital for the Enlarged Group, Trakm8 has also conditionally raised £1.35 million (before expenses) by way of a placing and subscription for 6,136,363 new Ordinary Shares at a price of 22p per Ordinary Share (the placing and the subscriptions by the directors and two existing shareholders together being the "Fundraising"). The Fundraising is not being underwritten; and
· The Acquisition constitutes a reverse takeover under Rule 14 of the AIM Rules for Companies and accordingly requires Shareholder approval, which is being sought at the general meeting being convened by a notice set out in the Admission Document.
Financial and Strategic Highlights
The Acquisition brings the following financial and strategic benefits for the Enlarged Group:
· Increased installed base of customers offers cross selling opportunities, new routes to market and new relationships
· Benefit from inherent scale advantage of a larger group
· Access to manufacturing and assembly facilities provides opportunity to enhance margins
· Substantial synergy opportunity arising from the similar operations of the two businesses being combined
· Strong recurring revenues from the installed customer bases and the Directors are encouraged by the sales pipeline for 2013/14
Related party transactions
As part of the Fundraising, the following Shareholders, all of whom are related parties for the purposes of the AIM Rules for Companies by virtue of the size of their interests in existing Ordinary Shares, or because they are Directors, have indicated that they will subscribe for new Ordinary Shares as follows:
Name |
Interest in existing Ordinary Shares |
Percentage of voting rights in respect of existing Ordinary Shares |
Number of new Ordinary Shares subscribed for |
Percentage of voting rights in respect of issued share capital following the Fundraising |
John Watkins* |
4,581,162 |
24.05 |
1,818,182 |
22.49 |
Edric Property & Investment Company** |
2,244,252 |
11.78 |
1,136,364 |
11.88 |
Timothy Cowley* |
1,534,002 |
8.05 |
363,636 |
6.67 |
James Hedges* |
1,470,808 |
7.72 |
681,818 |
7.57 |
Madeline Cowley* |
1,269,203 |
6.66 |
272,727 |
5.42 |
Paul Wilson* |
555,512 |
2.92 |
136,364 |
2.43 |
* the interests of these Directors includes the interests of their immediate families and any persons connected with them (within the meaning of section 252 of the Act).
** includes the interests of Edmund Clarke and Richard Clarke.
Keith Evans, the independent director, having consulted with the Company's Nominated Adviser, finnCap, considers that the terms of the subscription by these Shareholders is fair and reasonable in so far as Shareholders are concerned.
John Watkins, Chief Executive Officer of Trakm8 commented:
"The acquisition of BOX is a significant milestone for Trakm8, bringing strong financial and strategic benefits as it will enable us to exploit the growing demand for vehicle telematics in a fragmented market place.
"We have been delighted by the positive reaction to acquire this profitable and complementary business and furthermore are pleased to welcome a number of high quality UK institutions to our share register."
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 |
NOTES TO EDITORS
Overview of Trakm8
Trakm8 is based in Shaftesbury, Dorset and provides fleet management solutions. Trakm8 distributes its hardware and software internationally through a network of distributors. In addition, Trakm8 provides vehicle monitoring and tracking services direct to the business to business market. Trakm8's products allow vehicles and drivers to be monitored, allowing organisations to manage deliveries and services, or track stolen vehicles and plant equipment. Over the past 10 years Trakm8 has sold in excess of 175,000 units worldwide. Trakm8 has been extending the range of fleet management solutions beyond the Swift tracking product into fuel saving by its driver behaviour package ecoN, logistics routing and scheduling and Tachograph data integration. These solutions generate recurring revenues.
Overview of Box Telematics Limited
BOX was founded in 1989 and began to focus on vehicle telematics in 2000. It has since become one of the leading providers of fleet management systems in the UK. BOX provides in-house telematics design, manufacturing and services and has delivered OEM telematic solutions for several blue-chip clients. In addition BOX provides non-telematic third party contract manufacturing services. BOX's products include BOXoptions, a customisable range of end-to-end telematic and vehicle tracking solutions; BOXtracker INSIGHT and BOXtrackerEco, vehicle tracking solutions; BOXsolo, a water resistant tracking device; iSpot, a smartphone based GPS tracker; and SpotOn, a data collection system. In the year ended 31 December 2012, BOX recorded revenues of £8.4 million and profit before tax of £850,000.
Reasons for Acquisition
The board of Directors of Trakm8 considers the opportunity represented by the Acquisition to be in the best interests of Trakm8 and the shareholders of Trakm8 for the following reasons:
· BOX will provide a large installed base of customers of its existing products. The Enlarged Group will have significant cross selling opportunities and will make use of the Trakm8 CANbus, driver behaviour and tachograph technologies in the Box solutions;
· the Enlarged Group will benefit from an additional route to market and will aim to leverage BOX's existing relationships;
· there is an inherent scale advantage from which the Enlarged Group will benefit. For example, the Enlarged Group will be able to amortise technology and engineering investment over a larger base of customers as well as generating economies of scale from suppliers;
· Trakm8 currently outsources all major manufacturing to third parties. The Enlarged Group will have access to BOX's manufacturing and assembly facilities. BOX's facilities have sufficient capacity to absorb anticipated Trakm8 production volumes and the Directors intend that this, combined with the scale advantages mentioned above, will in future lead to improved margins; and
· there is a substantial synergy opportunity arising from the similar operations of the two businesses being combined. The Directors intend to take advantage of these synergies to seek efficiency gains and costs savings.
Market Opportunity
The provision of telematics is a very fragmented marketplace and encompasses a wide range of products and businesses. No single supplier accounts for more than 15 per cent. of the total market worldwide (Source: Fleet & Asset Management Report 2012 available at www.telematicsupdate.com). As such, the directors of Trakm8 believe the scale opportunities and in-house manufacturing facilities presented by the Acquisition create a genuine opportunity for the Enlarged Group to gain further traction within the market. Furthermore, the directors of Trakm8 are of the opinion that the Enlarged Group, which will combine the benefits of an integrated manufacturing facility with a flexible and technically skilled workforce, will continue to deliver and support reliable products, services and solutions.
Expected timetable of principal events
Publication date of the Admission Document |
8 October 2013 |
Latest time and date for receipt of Forms of Proxy |
9.30 a.m. on 22 October 2013 |
General Meeting |
9.30 a.m. on 24 October 2013 |
Completion of the Acquisition |
25 October 2013 |
Admission effective and dealings in the Enlarged Issued Share Capital expected to commence on AIM |
25 October 2013 |
CREST accounts expected to be credited with the New Ordinary Shares |
25 October 2013 |
Definitive share certificates for the New Ordinary Shares to be despatched by |
8 November 2013 |
Admission statistics
Number of Existing Ordinary Shares |
19,414,731 |
Number of New Ordinary Shares |
9,409,090 |
Issue Price |
22 pence |
Enlarged Issued Share Capital on Admission |
28,823,821 |
New Ordinary Shares expressed as a percentage of the Enlarged Issued Share Capital |
32.6 % |
Gross proceeds receivable by the Company pursuant to the Fundraising |
£2.07 million |
Market capitalisation of the Company at Admission based on the Issue Price |
£6.34 million |
Important Notice
Neither the content of the Company's website nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this announcement. The distribution of this announcement and any other documentation associated with the Fundraising into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in, into or from the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction where to do so may constitute a violation of the securities laws or regulations of any such jurisdiction (each a "Restricted Jurisdiction").
This announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any Ordinary Shares. In particular, this announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.
This announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company or finnCap. Subject to the AIM Rules for Companies, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this announcement or that the information contained in it is correct at any subsequent date.
finnCap, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and no one else in connection with the Fundraising and the Acquisition and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Fundraising and the Acquisition and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Fundraising and the Acquisition or any matters referred to in this announcement.
Apart from the responsibilities and liabilities, if any, which may be imposed on finnCap by the Financial Services and Markets Act 2000, finnCap does not accept any responsibility whatsoever for the contents of this announcement, and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company or the Fundraising or the Acquisition, and nothing in this announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future. finnCap accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this announcement or any such statement.
No statement in this announcement is intended to be a profit forecast or estimate and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the AIM Rules for Companies, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this announcement.
This announcement should not be considered a recommendation by the Company, finnCap or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for Ordinary Shares. Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.
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