Datatrak’s half-yearly report to 30 June 2007 was published following a Board of Directors’ meeting held on 27 August.
During the first six months of the year, Group turnover decreased by 12% to Lm623,838 as all subsidiaries registered marginal decreases in revenue with the exception of Datatrak Solutions Ltd. (DSOL), which generated a higher income. Operating costs decreased by 4.7% to Lm490,032 resulting in earnings before, interest, tax, depreciation, and amortisation (EBITDA) of Lm139,406, 28% below the EBITDA registered in the first half of 2006. Wages and salaries increased by 23.4% to Lm210,575 following the increase in the number of employees within the Group’s 50% owned subsidiary DSOL. Moreover, market costs of Lm56,127 (June 2006: 14,003) mainly relate to market penetration and business development activities by DSOL in Italy. The Directors reported that eight partners have signed up on a non-exclusive basis to promote, market and sell DSOL’s packaged systems (TrakIT, DispatchIT and RouteIT). During the second half of the year the Directors expect that DSOL will conclude an important strategic alliance it Italy with ACI Informatica SpA which should help DSOL’s products to be promoted across Italy.
During the first half of 2007, the charge for depreciation and amortisation increased by 19% to Lm154,685 due to the increase in amortisation of DSOL’s flagship product DispatchIT which is currently undergoing a major technological upgrade. The increase in depreciation and amortisation resulted in the Group incurring a marginal loss compared to a profit of Lm65,012 in the comparative period last year. After accounting for an increase in financing costs, a loss arising from the Group’s associate company, Datatrak Holdings registered a pre-tax loss of Lm55,726 compared to a profit of Lm52,397 in the first half of 2006. The Group recognised a tax credit of Lm15,800 during the period under review helping the loss to narrow to Lm39,926. However after deducting the share of profits attributable to the 50% owned subsidiary companies Datatrak Solutions Ltd. and Datatrak IT Services Ltd. of Lm37,034 (June 2006: Lm93,878), the group’s loss during the first six months of 2007 amounted to Lm76,960.
The Group’s balance sheet as at 30 June 2007 shows total assets of Lm4.6 million with shareholders’ funds of Lm3.3 million. The net asset value per share works out at 20c8.
In the Half-Yearly Report the Directors note that during the first half of the year, continued efforts were made in order to conclude the sale of the Datatrak network in Nigeria. Due to the delay in the negotiations related to the operating licences and the financing of the project, the Directors and management of Datatrak Holdings believe that the network and other assets may need to be written down to a value that excludes the potential cash flows from the Nigerian project. Should this occur, the net asset value of the Group will be impacted negatively in the region between Lm1.8 million to Lm2.8 million and in such an event, an Extraordinary General Meeting will be convened to explain to shareholders the reason behind this decision, the effect of the significant write down and the restructuring proposals for the Group.
Moreover, the Directors stated in the 2007 Half-Yearly Report, that additional financing will be required in the coming months to enable the Group’s fully-owned subsidiary Datatrak Systems Ltd. to upgrade its tracking technology to a nation-wide GPS/GPRS coverage. Datatrak Solutions Ltd. should also require additional funding to expand its product portfolio and increase its marketing efforts in Italy, Spain, France and China.
During the second half of the year, the Directors expect that the business developments efforts within Spain will lead to a non-disclosure agreement between DSOL and a Spanish partner with a view to actively market DSOL’s products in Spain as from early 2008. Moreover, it is anticipated that the trial period of DispatchIT with Euro Car Parts in the UK will be concluded successfully and a contract with DSOL will be signed off for the use of this product on 450 vehicles. This is expected to significantly improve DSOL’s recurring revenues.
Meanwhile, it was recently announced that CI Omnibridge Limited acquired 1,288,920 Datatrak Holdings plc shares (8.08% of the company’s issued share capital) from Siemens VDO through a special trade at 26c per share. This resulted from the acquisition by Control Instruments Group of the global distribution of the Siemens VDO fleet management product range. The transaction effected on the Malta Stock Exchange forms part of the overall acquisition of Siemens by CI Omnibridge, which is a wholly owned subsidiary of Control Instruments Group that specialises in the development and provision of globally applicable fleet management products and services for the commercial vehicle market. The Directors of Datatrak Holdings stated that given the past relationships with CI Omnibridge Limited and following encouraging talks held in the first half of 2007, this acquisition should have a positive effect on Datatrak’s international business.