Telematics and data supplier Trakm8 Holdings updated the market on its trading for the financial year ended 31 March on Friday, reporting 26% growth in its core solutions business to £26.9m, which drove 13% year-on-year headline revenue growth to more than £30m.
The AIM-traded company said that was achieved despite a year-on-year reduction of £2.2m, following the group fully exiting the contract electronic manufacturing business to focus on the manufacture of hardware devices for the fleet, insurance and automotive markets.
Its board said it expected that the current 2019 financial year would be the final period of such a year-on-year decline in product revenues, which would be approximately £2m.
The group said it had now ceased all activities outside of the provision of telematics services.
Trakm8 said the number of connections in the year increased 31% to 251,000, with recurring revenue improving 11% to £10.9m and year-end net debt falling by £0.5m to £3.4m.
"The group has continued to secure new contract wins and extensions, including new contracts with a global vehicle leasing company and Truline, part of the EVO Group of Companies, and an expanded contract with Scottish Power respectively," the board said in its statement.
"These are in addition to previously announced new contracts secured and contract extensions."
Customer demand for its 'RoadHawk 600 4G' integrated camera was said to have been better than anticipated, with almost 3,000 devices already installed.
As it outlined at the time of its interim results in November, the board said the outcome for the full year was dependent on existing customer contracts where there was a level of uncertainty of end-user demand.
Although revenues from existing customer contracts were lower than anticipated, Trakm8 said recent order entry had been strong.
In addition to that, several new contract wins had moved into the first quarter of the new financial year.
The group's digital strategy, launched in November, was targeting the small-to-medium enterprise fleet market - a sector which Trakm8 had not historically been focused on.
It said the online sale of solutions had gained "good traction", and was now showing potential to be a significant contributor to group revenues over the medium-to-long term.
"Recent product launches include several next generation hardware devices which offer outstanding performance and competitiveness," the board explained.
"To meet the anticipated demand for these devices from existing and new customers, the group is planning to assemble these new hardware devices with increased levels of automation."
As it had previously announced, the group achieved an annualised operational cost reduction of more than £1.5m as the business continued its major project to streamline activities, and during the year closed its offices in Livingston and Bodmin.
The activities undertaken in those locations had been absorbed within the remainder of the group's activities, the board confirmed.
Those cost savings enabled the company to deploy greater resources towards sales and marketing, which was in line with its stated strategy.
Trakm8 said it also recently completed a rationalisation and simplification process of its legal entities to consolidate its trading activities.
Additionally, an ERP-wide implementation programme was launched to migrate to a platform provided by Epicor, which the board said it believed would lead to further operational and reporting improvements for the group.
Looking ahead, the board said it remained confident in Trakm8's future prospects, with an update on trading for the current financial year to be provided in conjunction with the full-year results.
"Following a strong performance in the first half of the current financial year, I am pleased to report continued progress with headline double digit revenue growth achieved despite our strategic decision to exit from sub-contract manufacturing," said Trakm8 executive chairman John Watkins.
"Importantly, underlying solutions revenue increased by over 25% and we have continued to focus on improving efficiencies in all aspects of our business, whilst continuing to invest in engineering, sales and marketing."
Watkins said it was also encouraging to note that the AA had commenced the roll out to its private members of Car Genie, its connected car product.
He said that move by the AA had potential to "considerably increase" the number of connections for Trakm8.
"Given the successful mix of new contract awards, increased sales and marketing investment and robust demand from our existing customers, the board anticipates that we will maintain positive momentum in revenue generation in our core telematics solutions business as the market continues to be rich in opportunities.
"We view the future of Trakm8 with much optimism."
The group said it expected to announce its final results for the year ended 31 March on 2 July.