Loqus Holdings plc - Interim Directors’ Statement

On 20 November, Datatrak Holdings plc published its interim statement.

The Directors explained that in August 2008, the Group launched three new business units in line with its strategy of being an end-to-end solutions provider.  These units, which address a particular market offering and delineate the core business activities of the Group, cover the following areas: (i) International ICT Projects (ii) ICT Solutions and (iii) Business and IT Consultancy. With regards to the latter, a subsidiary company, Datatrak Business Consultancy Limited, was established in October 2008 with Datatrak Holdings plc owning 75% of the business. The Group explained that since all three business units are in their early stages, it is not envisaged that significant revenues will be registered in 2008.

At the time of the June 2008 half-year report, it was stated that due to the complexity of the restructuring transaction, the Group’s business plan was delayed by 6 months. Additionally, the Group stated that the weakening of the sterling against the euro had a material effect on the financial results of the Group since these are denominated in euro. The Group’s strategy of geographical market diversification came in force in the third quarter of 2008 which brought about the conclusion of the first non-UK based contracts. The Directors commented that this should help the Group to minimize exchange rate risk and dilute the effects of the international economic slowdown.

Datatrak noted that during the third quarter of 2008, it secured a further multi-year contract for the use of DispatchIT in the UK, but the effect of this contract to be registered in 2009. Also monthly revenues from Datatrak On-line remained in line with the Group’s forecast. Furthermore, in the same period, Datatrak Italia srl (the Group’s Italian subsidiary) registered its first contracts with revenues from the latter also expected to materialize in 2009. Moreover in Libya, Datatrak also successfully registered its first sales during the third quarter of 2008 and the revenues generated covered all marketing and set-up costs incurred. However, in the Netherlands the trial-to-buy trials are still on-going.  Locally, the Group explained that it continued to register further subscriptions with its tracking service which in turn led to an increase in the Group’s customer base. The Group explained that even though competition continued to persist, placing pricing pressure on the market operators, Datatrak invested in newer technology which allowed the Company to be very competitive.

Furthermore, during the third quarter, other local revenues generated from projects and services (such as the Vessel Monitoring System) other than those generated from vehicle tracking services, were in line with the sales forecasts.

The Directors concluded by stating that overall, the operational performance of the Group (January to October 2008) compared to the same period in 2007 saw an improvement in turnover, notwithstanding the incurred GBP-EURO exchange rate loss. The Group’s costs increased marginally due to an increase in the Group’s human resources. All other items are in line with the January to October 2007 costs.

The Board of Directors have also approved that the Financial Year End of the Group shall change from 31st December to 30th June with immediate effect. The Directors explained that this was necessary so as to red circle the ‘6 month, one time’ effect of the Group restructuring process, and thus depict post-restructuring results in a full year. In this context, the post-restructuring year will run from January 2008 to June 2009, and will subsequently run from July to June every year thereafter.

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