6 December 2018
TRAKM8 HOLDINGS PLC
("Trakm8" or the "Group")
Proposed Issue of Equity and Notice of General Meeting
Trakm8 Holdings plc (AIM: TRAK), the global telematics and data insight provider, is pleased to announce a subscription to raise gross proceeds of approximately £3 million by the issue and allotment by the Group of 13,930,748 new Ordinary Shares at a Subscription Price of 22 pence per share (the "Subscription").
Key highlights:
· Net proceeds of approximately £3.0 million to fund general working capital requirements and further strengthen the Group's balance sheet
· Subscription completed at a 22% premium to the closing mid-market price on 5 December 2018
· Subscription includes a key strategic investor, Microlise Group Holdings Limited ("Microlise"), whose partnership will lead to stronger growth and increased opportunities for the Group both immediately and in the mid-term
o Significant cross-sale opportunities for both entities, with complementary technology, market focus and geographical footprint
o Microlise already has a significant international presence with offices in India, Australia, France and UAE which will therefore support Trakm8's international growth ambitions
· Directors are contributing £0.7 million in aggregate to the Subscription
· A non-executive director, nominated by Microlise, will be appointed to the Board of Trakm8, subject to satisfactory regulatory due diligence
· The Directors' subscription constitutes a related party transaction for the purposes of the AIM Rules
The General Meeting will be held at 9.30 a.m. on 24 December 2018 at Double Tree by Hilton Hotel, Newbury North, M4 Junction 13, Oxford Road, Newbury, RG20 8XY.
The Company will be posting a circular to shareholders tomorrow containing details of the proposed allotment of shares, the related party transaction and the notice of the General Meeting.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of the Circular |
7th December 2018 |
Latest time and date for receipt of Forms of Proxy and CREST voting instructions |
9.30a.m. on 20th December 2018 |
General Meeting |
9.30 a.m. on 24th December 2018 |
Admission and dealings in the Subscription Shares expected to commence on AIM |
8.00 a.m. on 27th December 2018 |
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
- Ends -
For further information:
Trakm8 Holdings plc |
|
John Watkins, Executive Chairman |
Tel: +44 (0) 167 543 4200 |
Jon Furber, Finance Director |
www.trakm8.com |
|
|
Arden Partners plc (Nominated Adviser & Broker) |
Tel: +44 (0) 20 7614 5900 |
Paul Shackleton / Alex Penney |
www.arden-partners.com |
Media enquiries:
About Trakm8
Trakm8 is a UK based technology leader in fleet management, insurance telematics, connected car, and optimisation. Through IP owned technology, the Group analyses data collected by 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 and reporting portal (Trakm8 Insight), integrated telematics/cameras, self-installed telematics units and one of the widest ranges of installed telematics devices. Trakm8 has over 250,000 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, Direct Line Group and Young Marmalade.
Trakm8 has been listed on the AIM market of the London Stock Exchange since 2005.
www.trakm8.com / @Trakm8
The following is an extract from the Circular to be mailed to Shareholders on 7 December 2018
Notice of General Meeting
1. Introduction and summary
The Company announced on 6th December 2018 that it had conditionally raised approximately £3.0 million (net of expenses) by way of a Subscription of 13,930,748 new Ordinary Shares at a price of 22 pence per share. The Subscription is conditional, inter alia, upon the Company obtaining approval from its Shareholders to disapply statutory pre-emption rights and to grant the Board authority to allot the Subscription Shares. The Subscription is also conditional upon Admission and has not been underwritten. The Subscription proceeds payable to the Company will be used to fund general working capital requirements and further strengthen the Group's balance sheet; further details of which are set out below.
The purpose of this document is to provide you with information about the background to and the reasons for the Subscription, to explain why the Independent Director considers the Subscription to be in the best interests of the Company and its Shareholders as a whole and why the Independent Director unanimously recommends that you vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out at the end of this document.
2. Background to and reasons for the Subscription
Following the disappointing set of results for the six months ended 30 September 2018 and resultant significant drop in share price it has become clear of the requirement to strengthen the working capital position of the Group to provide confidence to all stakeholders in the business and support future growth. The Directors believe that the Subscription will lead to stronger growth and increased opportunities for the Group both immediately and in the mid-term, especially due to the strategic nature of the key investor in this subscription. As part of this subscription Microlise Group Holdings Limited ("Microlise"), a UK-based telematics and transport management business, will subscribe alongside Directors as detailed in section 4 at a premium of 22.2% to the closing mid-market price of 18 pence on 5th December 2018 being the last practicable date prior to signing the subscription. Trakm8 has been in discussions with various potential strategic investors and has decided to develop the relationship with Microlise in the firm belief that is the best option to accelerate Trakm8's future growth.
The Directors see that the strategic investment by Microlise will bring many benefits to the Group. The companies are both pure telematics service providers focused on providing customers with market leading solutions of high quality and performance and a focus on customer service. Importantly, Trakm8 and Microlise serve separate markets, resulting in significant cross-sale opportunities for both entities, and are complementary in terms of technology, market focus and geographical footprint. Microlise focuses on delivering solutions to the heavy goods vehicle market, both direct and through Original Equipment Manufacturers relationships, in the UK and overseas, particularly India. Trakm8 focuses on delivering solutions for light commercial vehicles and passenger cars, primarily in the UK but with a growing international presence. Microlise already has a significant international presence with offices in India, Australia, France and UAE which will therefore support Trakm8's international growth ambitions. There are relatively few times the two companies compete so this closer working relationship will deliver opportunities to collaborate on product development, regional marketing, purchasing and the resell of each other's solutions.
Today's announcement of the subscription by Directors is a demonstration of our belief in the long term opportunities for the Group.
As part of the Microlise subscription, a non-executive director, nominated by Microlise, will be appointed to the Board of the Company, subject to satisfactory regulatory due diligence.
3. Current trading and prospects
The half year results released on 16 November 2018 detailed revenues for the 6-month period of £8.8m which are 38% down on the prior year and 26% lower on a like-for-like basis. The decline year on year was due to the exit from Contract Electronics Manufacturing, working down of launch stocks by one of the Group's significant customers, modest attrition in one of the Group's significant insurance customers and lower than expected Fleet and Optimisation revenues due to lower pipeline conversion rates than normal. Revenue for the current financial year is now expected to be 20-25% below the FY2018 outcome, and 10-15% below on a like-for-like basis as 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. Despite the improved H2 financial performance the directors expect the current year will be loss making. However, 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 driven 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. In addition, the strategic investment by Microlise and resultant close relationship will deliver opportunities to collaborate on product development, regional marketing, purchasing and broaden the technology portfolio of both companies by access to each other's solutions and products that can be sold into the separate markets both companies serve.
4. The Subscription
The Company has conditionally raised approximately £3.0 million (net of expenses) through the conditional allotment of the Subscription Shares at the Subscription Price, which represents a premium of 22.2 per cent. to the closing middle market price of 18p per Existing Ordinary Share on 5th December 2018, being the latest Dealing Day prior to the announcement of the proposed Subscription, being 6th December 2018.
The Subscription Agreements
The Company has entered into subscription agreements with the following investors:
Name |
Number of Existing Ordinary Shares |
Number of Subscription Shares |
% interest in the Company following Admission |
John Watkins |
6,177,859 |
1,590,909 |
15.5% |
Keith Evans |
153,846 |
227,273 |
0.8% |
Jon Furber |
28,321 |
568,182 |
1.2% |
Mark Watkins |
250,128 |
68,182 |
0.6% |
Tim Cowley & related parties |
1,949,945 |
318,182 |
4.5% |
Matt Cowley & related parties |
1,744,203 |
250,000 |
4.0% |
Bill Duffy |
140,000 |
235,000 |
0.8% |
Microlise Group Holdings Limited |
- |
10,000,000 |
20% |
Edric Property & Investment Company and related parties |
3,605,616 |
209,384 |
7.6% |
Others |
2,095,535 |
463,636 |
5.1% |
Each Subscription Agreement is conditional upon, inter alia, the Resolutions being duly passed at the General Meeting and on Admission becoming effective.
In addition, Microlise Group Holdings Limited and the Directors have agreed that their Subscription Shares may not be sold for 12 months following Admission and are subject to an orderly marketing arrangement for the following 12-month period.
Settlement and dealings
Application will be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM. It is expected that Admission will become effective on 27th December 2018. Following Admission, the Enlarged Share Capital of the Company will comprise 49,975,002 Ordinary Shares (excluding treasury shares).
The Subscription Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared following Admission.
5. Use of proceeds
The Directors intend that the net proceeds of the Subscription received by the Company (being approximately £3.0 million) will be used by the Group primarily to fund general working capital requirements.
6. Related party transaction
As noted above, each of the Directors other than Sean Morris has agreed to participate in the Subscription. Sean Morris is therefore able to act as the Independent Director. Such Subscriptions are classified as related party transactions for the purposes of the AIM Rules. The Independent Director, having consulted with the Company's nominated adviser, Arden Partners plc, considers that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.
7. The General Meeting
Set out at the end of this document is a notice convening the General Meeting to be held on 24th December 2018 at Double Tree by Hilton Hotel, Newbury North, M4 Junction 13, Oxford Road, Newbury, RG20 8XY at 9.30 a.m., at which the Resolutions will be proposed for the purposes of implementing the Subscriptions.
Resolution 1, which will be proposed as an ordinary resolution and which is conditional upon the passing of Resolution 2, is to authorise the Directors to allot the Subscription Shares in connection with the Subscriptions.
Resolution 2, which will be proposed as a special resolution and which is conditional upon the passing of Resolution 1, disapplies Shareholders' statutory pre-emption rights in relation to the issue of the Subscription Shares pursuant to the Subscriptions.
Both Resolutions are required to be passed in order that the Subscription may take place.
The authorities granted pursuant to Resolutions 1 and 2 is in addition to, and without prejudice to, the existing authorities of the Directors to allot shares pursuant to the resolutions passed at the last annual general meeting of the Company.
Each of the investors participating in the Subscription has irrevocably undertaken to vote their Existing Ordinary Shares in favour of the Resolutions. As at the date of this document, such undertakings are in respect of 44.8% Existing Ordinary Shares.
8. Action to be taken
A Form of Proxy for use at the General Meeting accompanies this document. The Form of Proxy should be completed and signed in accordance with the instructions thereon and returned to the Company's registrars, Neville Registrars Limited, as soon as possible, but in any event so as to be received by no later than 9.30a.m. on 20th December 2018 (or, if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a working day) before the time fixed for the adjourned meeting).
If you hold your Existing Ordinary Shares in uncertificated form in CREST, you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual. Further details are also set out in the notes accompanying the Notice of General Meeting at the end of this document. Proxies submitted via CREST must be received by the Company's registrar, Neville Registrars Limited at Neville House, Steelpark Road, Halesowen, B62 8HD (ID 7RA11) by no later than 9.30 a.m. on 20th December 2018 (or, if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a working day) before the time fixed for the adjourned meeting).
The completion and return of a Form of Proxy or the use of the CREST Proxy Voting Service will not preclude Shareholders from attending the General Meeting and voting in person should they so wish.
9. Recommendation
The Independent Director of the Company consider the Subscriptions to be in the best interests of the Company and its Shareholders as a whole and accordingly recommend unanimously that the Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.
The Independent Director urges you to complete, sign and return your Form of Proxy or vote electronically as soon as possible, and in any event, by no later than such time as necessary to ensure receipt of your votes by the Company's registrars by 9.30am (UK time) on 20th December 2018.
