TIDMTRCS
RNS Number : 8298V
Tracsis PLC
08 November 2017
Tracsis plc
('Tracsis', 'the Company' or 'the Group')
Audited results for the year ended 31 July 2017
Tracsis plc (AIM: TRCS), a leading provider of software and
services for the traffic data and transportation industry, is
pleased to announce its audited results for the year ended 31 July
2017.
Financial Highlights:
-- A further period of good trading across the Group
-- Revenue increased 6% to GBP34.5m (2016: GBP32.6m)
-- Adjusted EBITDA* increased 11% to GBP8.5m (2016: GBP7.6m)
-- Statutory Pre-tax Profit increased 14% to GBP4.6m (2016: GBP4.0m)
-- Fully diluted adjusted Earnings Per Share increased 4% to 23.29p (2016: 22.37p)
-- Cash balances at 31 July of GBP15.4m (2016: GBP11.4m)
-- Final dividend of 0.8p per share proposed (2016: 0.7p). Full
year dividend increased 17% to 1.4p per share (2016: 1.2p)
-- Tracsis continues to trade well and remains highly cash
generative with significant balance sheet strength. The Group
remains debt free
Strategic and Operational Highlights:
-- Significant multi-million pound contract win secured for
TRACS Enterprise Software - largest software contract secured to
date
-- Recently-acquired businesses On-Trac and SEP trading well and above expectation
-- Successful delivery of a North American contract for the Group's RCM technology
-- Structural changes completed within Traffic & Data
Services Division, which should be beneficial to margins
-- Strategic investment in Vivacity Labs Limited, a machine
learning software business operating in the field of transport and
traffic analytics
John McArthur, Chief Executive Officer, commented:
"This was a further year of progress, consolidation and
continued growth for Tracsis following the acquisitions of SEP and
Ontrac, which have substantially increased the Group's product
depth, breadth and client base. The Group has adapted well to the
needs of our customers and we have made significant progress in
product innovation whilst also building our team.
Revenue and profit were both ahead of the previous year and the
Group continues to benefit from a strong balance sheet as a result
of excellent cash generation and sizeable reserves.
The Group continues to hold a great position within our
respective markets. Our financial strength coupled with favourable
market conditions and good customer momentum provides a good
platform for growth in the year to come."
(*) Calculation unchanged from previous years and in line with
broker forecasts and research coverage on Tracsis. Full definition
and reconciliation in Note 6.
Enquiries:
Tracsis plc
John McArthur / Max Cawthra Tel: 0845 125 9162
Investec Bank plc
Corporate Finance: Andrew Tel: 020 7597 5970
Pinder / Sebastian Lawrence
Corporate Broking: Matt Lewis
Chairman & Chief Executive Officer's Report
A welcome from Chris Cole, Non-Executive Chairman
Tracsis has performed well over the past 12 months and delivered
a good financial result set against a backdrop of substantial
industry change within the rail sector and renewed impetus into
'intelligent' technology and solutions across the entire traffic
and transport sector. The Group continues to evolve, diversify and
professionalise its offering and I am pleased with the significant
progress that was made over the past year that will form the
foundations on which Tracsis will continue to grow. On behalf of
the Board, I wish to thank everyone for their hard work and
dedication and remain excited about our future prospects.
Introduction
The financial year ended 31 July 2017 was a year of further
growth and Group wide consolidation given it included the first
full year of trading for Ontrac and SEP (acquired 2015/16), and
also excludes Tracsis Traffic Data Pty Australia (disposed of Dec
'15). The new businesses have added significant strength and depth
to our market offering and have created synergies within the Group.
These synergies have been realised primarily in the form of
technology, process and people improvements which has put the
business on an excellent footing as it enters the new financial
year. These changes also contributed to a further period of growth
in revenue and profitability and Tracsis remains in excellent
financial health.
Business overview
Tracsis specialises in providing software, hosting services,
consultancy services and bespoke technology solutions to high
value, mission critical challenges within the transport and traffic
sector. The Group's market offering can be broadly categorised into
two distinct offerings:
-- Rail Technology & Services: Application software
development and licensing, remote condition monitoring technology
(RCM), and associated operational and strategic consulting
services.
The Group has a long pedigree in developing industrial strength
application software that covers a variety of resource/asset
optimisation that removes extraneous cost, increase network uptime
and robustness and improves overall service delivery. Our software
offering is complemented by the Group's RCM offering (hardware and
software) that allows for real-time reporting on the status of
critical infrastructure assets, to identify problems and aid with
preventative maintenance. Utilizing our expertise in the sector,
the Group's professional services division provides consultancy and
specialist advice across the operational and strategic planning
horizons and play a key role in advising owning Groups, operators
and a range of regulatory bodies.
-- Traffic & Data Services: Data capture, analysis and
interpretation of traffic and pedestrian movement and demand
volumes to aid with the planning, investment into, and ultimate
operations of a transport environment.
Over a number of years, the Group has developed what is now the
largest traffic and transport data capture and analytics business
in the UK, and this was bolstered through the most recent
acquisition of SEP Events and the investment made into Vivacity
Labs. With the acquisition of SEP this division has expanded its
addressable markets from rail, roads and highways to include the
pedestrian rich environments of the events industry which is a
significant and growing market within the UK.
The Group's mission is to help our clients solve complex, high
value, data driven problems for which there is typically very
little by way of an alternative offering. Tracsis chooses to
operate within the traffic and transport markets due to the
abundance of complex problems where our expertise and software have
clear and demonstrable benefits. These markets also exhibit several
attractive traits for the Group - high barriers to entry due to
domain knowledge, large and disparate data sets, and well informed
customers that understand the inherent value that can be released
through the provision of a good solution or service. In short,
Tracsis focuses on solving problems that are well understood by its
customers but for which there is poor provision from traditional
technology providers due to the niche nature of these problems.
The Directors believe that the traffic, transport and pedestrian
rich environments (such as events and the built space), are
particularly well positioned for further, long term, growth and the
Group will capitalise on this via an expanding portfolio of
products and services that have a common theme of 'smart' planning
and 'intelligent' mobility.
Financial summary
The Group delivered revenues of GBP34.5m which was an increase
of 6% on the previous year (2016: GBP32.6m). This was a good
performance given the level of consolidation within the Group, and
as it was set against a difficult comparator in 2016 when Tracsis
achieved revenue growth of 29%.
Adjusted EBITDA* of GBP8.5m was an increase of 11% on the
previous year (2016: GBP7.6m), with Adjusted Profit** of GBP7.7m
being 12% higher than the previous year (2016: GBP6.9m). The impact
of acquisitions was a key contributor to the increased profit in
the year and through further consolidation and integration of these
business in future years Tracsis should be able to continue to
leverage enhanced margins. Statutory Profit before Tax was also
higher than the previous year at GBP4.6m (2016: GBP4.0m), with an
increased charge being taken in respect of amortisation of acquired
intangible assets and an increased share based payment charge.
At 31 July 2017, the Group's cash balances had grown to GBP15.4m
(2016: GBP11.4m), and cash generation continues to be strong.
Overall cash balances increased by GBP4.0m in the financial year,
after paying contingent consideration of GBP1.1m (in respect of
Ontrac and SEP year one earn outs) and also making a strategic
investment in Vivacity Labs of GBP0.4m. The business therefore
generated net cash of c. GBP5.5m which demonstrates excellent
conversion of profits to cash. The Group continues to be debt free.
Contingent consideration in respect of Ontrac and SEP year two earn
outs is expected to be finalised and paid in due course, once the
Group has clarity on a major sales opportunity that is being
negotiated.
* Earnings before finance income, tax, depreciation,
amortisation, exceptional items, other operating income, and
share-based payment charges and share of result of equity accounted
investees - see note 6 for reconciliation
** Earnings before finance income, tax, amortisation,
exceptional items, other operating income, share-based payment
charges, and share of result of equity accounted investees - see
note 6 for reconciliation
Trading Progress and Prospects
Rail Technology & Services
Summary segment results:
Revenue GBP16.0m (2016: GBP14.1m)
EBITDA GBP6.5m (2016: GBP5.3m)
Profit before Tax GBP6.3m (2016: GBP5.1m)
Software
Software sales, excluding Ontrac, were GBP6.4m (2016: GBP6.6m)
with the vast majority of this revenue being made up by software
licences, which are typically long term customer relationships and
recurring in nature each year. All aspects of the software
portfolio continued to perform well, with renewal rates for the
TRACS, Compass and Retail & Operations product suites remaining
very high. The Group continued its strategy of upselling and cross
selling existing and new products to its customer base and was
pleased to secure an additional sale of DayOne which should pave
the way for broader market uptake of this new product. The lack of
franchise bid work in the period under review impacted slightly on
anticipated performance although a quiet year within rail
franchising is often followed by a busy one.
Most significantly, in July 2017, the Group was delighted to
announce a major, multiyear contract with one of the largest Train
Operating Companies in the UK for its TRACS Enterprise solution.
The value of this contract runs to several million pounds, and will
be delivered over the next four years. This win was highly
significant for the Group as once successfully implemented, it
should lead to follow-on reference sales with other operators. We
look forward to delivering this contract on time and to the
satisfaction of our client and have already bolstered our software
delivery team in Leeds and Manchester to accommodate the work
planned in the year ahead. Elsewhere, a good contract win for our
Compass product was secured in New Zealand, which builds upon our
long standing relationship with this customer.
Remote Condition Monitoring (RCM)
Revenues of GBP2.6m were higher than the previous year (2016:
GBP2.2m), largely due to successful delivery of a major order from
a North American Class 1 railroad operator that was announced
previously. This marked the Group's first major contract outside of
the UK and the Group continues to target further sales to this
operator and the broader class 1 freight operators alongside the
Transit/Metro industry within North America. As noted previously,
whilst the specific timing of new sales within a new geography will
always be hard to predict, management remains confident that the US
is the largest potential market for our goods and services and
expect to growth our footprint in the near and medium term. To this
end, Tracsis now has an agreement in place with a trusted reseller
and channel partner who, alongside promoting our RCM offering, is
also tasked with marketing our full range of resource planning
software to the US rail industry.
In the UK, RCM trading remained buoyant, and was comparable with
the previous year. The Group was delighted to have completed
product development for busbar monitoring technology and delivered
the first units as part of a pilot with its major UK customer. If
successful, there is significant opportunity for this product, and
our customer has indicated the viable addressable market demand
would be a requirement is some 20,000 units for the UK network
alone.
The Group continues to target alternative applications for its
RCM technology and during the year, delivered its first revenue
generating projects in respect of distributed power generation
monitoring. This market remains viable and Tracsis continue to
retain dedicated resources to grow this, and other, applications
outside of rail.
Consultancy and Professional Services
Due to changes made by the DfT to the timetable of rail
franchise competitions, revenue in the year was lower than
originally anticipated. Consultancy and professional services
revenue was GBP1.7m (2016: GBP2.1m) which was a good result given
the circumstances where a high number of planning and performance
related projects were successfully won and delivered to replace the
revenue that would otherwise have been delivered via bid support to
owning Groups. Tracsis acknowledged some time ago that it needed to
be more resilient to unforeseen changes to the franchise bid
timetable (which are not uncommon). This acknowledgement has
created a far more robust business, not only in terms of service
offering, but also in relation to staff competency and client
reach.
In 2017-18, we anticipate supporting bidders for the
Southeastern and West Coast franchise competitions which should
lead to a significantly better consultancy performance.
Ontrac
Ontrac, performed well in the period and contributed revenue of
GBP5.3m (2016: GBP3.2m) in its first full year as part of the
Tracsis Group. Revenue was delivered from a combination of software
licences, hosting services, and bespoke software development work
along with related consultancy services. The business continues to
work extensively with Network Rail and a wide variety of
engineering and construction companies within the railway supply
chain who use Ontrac's Connect, Rail Hub and National Hazard
Directory products.
Ontrac continues to work on the next iteration of its 'Rail Hub'
product suite and in particular the eTrac product which allows for
geospatial visualisation of railway networks and asset mapping.
There has been significant interest for this innovation from key
customers and the Ontrac team have high confidence that a
significant sale of eTrac will be delivered in the coming financial
year. Looking ahead, with the contractual earn-out period relating
to Ontrac coming to an end in 2017, further consideration will be
given to how Ontrac can be integrated more fully into the rest of
the Tracsis Group and how skills and resources can be leveraged for
mutual benefit.
Traffic & Data Services
Summary segment results:
Revenue GBP18.5m (2016: GBP18.5m)
EBITDA GBP2.0m (2016: GBP2.3m)
Profit before Tax GBP1.4m (2016: GBP1.3m)
Traffic Data and Passenger Counts
Traffic Data and Passenger Counts has historically been the
fastest growing division in terms of pure organic growth. Revenues
of GBP12.8m were delivered in the year (2016: GBP14.4m), reflecting
the disposal of the non-core Australian business in 2015, and also
taking account of the challenging market conditions that were
announced in February 2017 (2016: GBP13.2m excluding
Australia).
In response to the trading environment and challenges posed
within this part of the business, the Group undertook and completed
significant restructuring from October 2016 through to February
2017, which should result in savings of c.GBP0.6m on an annualised
basis, with the full effects being realised during the current
financial year ending 31 July 2018.
The Group continues to have a strong position and enjoys a
favourable market share. Tracsis is excited by the opportunity that
the Vivacity technology presents in terms of the potential to
improve gross margins by reducing analysis costs significantly, and
looks forward to adopting this in due course. The strategy for this
part of our business remains unchanged - to transition what was
historically a 'project led services business' to a 'product led
technology business'. In doing so the Group believes it can achieve
enhanced operational efficiencies via increased use of technology
and process improvements to improve both gross and net margin.
SEP
SEP achieved revenues of GBP5.7m (2016: GBP4.1m) in its first
full year as part of the enlarged Group which was a fantastic
achievement and significantly ahead of any previous year as an
independent entity. Along with delivering a large number of
prominent events to a retained blue chip client base, the team was
successful in growing its market share and winning several new
customers on a retained basis. SEP continues to target the stadium
and fixed venue event market and sees Premier League football clubs
as a major opportunity. The Group continues to work closely with
one of the largest clubs in the English Premiership and looks
forward to replicating our success within this market in the year
ahead.
The year also saw the launch of Tracsis Live Traffic (TLT) which
provides event operators with a real time insight into traffic and
pedestrian dynamics that comprises ANPR technology, together with
application software developed internally by the Group's technical
development team. Use of this technology means the Group can
differentiate itself from the competitors, and also provide
incremental, high value services as part and parcel of an
engagement. Early signs for the adoption of this system have been
positive, with good revenues being achieved in the year. The
opportunity continues to exist to roll out to other existing and
potential new clients.
Dividends
In February 2012, the Board implemented a progressive dividend
policy and the Group intends to maintain this going forwards. An
interim dividend of 0.6p per share for FY 2016/17 was paid in April
2017. A final dividend of 0.8p per share in respect of FY 2016/17
is proposed, to take the full year dividend to 1.4p. This
represents a 17% increase on the previous year's dividend of 1.2p
per share.
The dividends remain well covered by the Group's profitability
and cash position, which supports its primary focus on growth via
acquisition and through further development of new products and
services. The Board is committed to maintaining the progressive
dividend policy as the business continues to trade profitably and
in line with its expectations.
The dividend will be paid on 16 February 2018 to shareholders on
the register on 2 February 2018.
Acquisitions
The Group did not make any acquisitions in the year under
review, but assessed multiple opportunities in line with our stated
strategy. Although no transaction was completed in the period,
Tracsis' appetite for continued aggregation in selected traffic and
transport markets remains unchanged and so too does the standard by
which we critique potential acquisition targets. Looking ahead, the
pipeline of opportunities remains strong and Tracsis has never been
in a stronger position to make further acquisitions.
Investments
The Group was pleased to announce that it had made a strategic
investment of up to GBP1.3m into Vivacity Labs Limited
("Vivacity"), a provider of smart, hyperlocal data for smart cities
and intelligent transport systems, in return for a 28.1% equity
stake.
Vivacity has developed novel Machine Learning software and
sensor technology which can be applied across a wide range of
traffic and transport issues, most specifically for the automatic
counting and classification of pedestrian and vehicle flows in a
variety of environments. The business has secured a number of
client wins and pilot projects with local governments,
infrastructure owners and transport providers. In March 2017 the
Group was successful in winning a significant Smart Cities grant
with a value of GBP1.7m.
Adoption of the Vivacity technology has the potential for the
Group to significantly reduce its existing costs for processing
video footage within the Traffic & Data Services Division
whilst also leading to improvements in operational performance such
as increased accuracy of traffic counts and the reduction of
turnaround times for clients.
As part of a broader investment round for Vivacity, the Group
agreed to invest up to GBP1.0m via a tranched equity funding in
return for 23.3% of the enlarged share capital of Vivacity. The
first investment of GBP0.4m was made in the year, with the balance
of GBP0.6m expected to be made in the year ending 31 July 2018,
subject to performance milestones being fulfilled. In addition,
Tracsis holds a warrant to subscribe for a further 4.8% of the
enlarged share capital for an additional GBP0.3m.
Tracsis is entitled to a seat on the Board of Directors of
Vivacity (currently filed by John McArthur - Group CEO) to help
monitor our investment and promote the Vivacity offering to the
Tracsis customer base. The investment round also included Downing
Ventures EIS Fund and the London Co-Investment Fund with Tracsis
being lead investor.
Summary and Outlook
FY 2016-17 was another year of significant progress,
consolidation and continued growth for Tracsis following the
acquisitions of SEP and Ontrac, which substantially increased the
Group's product reach and client base. The Group has demonstrated
maturity and resilience to dynamic market conditions and continues
to take the initiative to innovate and evolve in new areas that
should provide for significant margin improvement and competitive
advantages in the years ahead.
Revenue, adjusted EBITDA and adjusted profit were once again all
well ahead of the previous year and the Group continues to benefit
from a strong balance sheet that benefits from the business'
excellent cash generation and sizeable reserves.
The Group believes that the significant Software contract win,
investment in Vivacity Labs, restructuring of its Traffic Data
business and North American success all provide a good platform for
growth in 2017-18.
Tracsis' growth strategy remains unchanged: to deliver
shareholder value both organically and through acquisition of
complementary businesses, and by developing products and services
that solve well recognised, high value problems that are poorly
served by existing technology. The Group's business model continues
to focus on markets that generally have high barriers to entry,
with contracts that are sold on a recurring/repeat basis, and to a
retained customer base that is predominantly blue chip in nature.
This strategy has worked well in the past to generate good growth
and significant returns for shareholders and the Group believes it
will continue to work well in the future especially given the pace
of change within its target markets.
As always, our thanks go to our numerous customers and partners
who support our growth plans, and most importantly our talented and
dedicated staff across the whole Group.
Chris Cole, Chairman
John McArthur, Chief Executive Officer
8 November 2017
Consolidated Statement of Comprehensive Income for the year
ended 31 July 2017
2017 2016
Continuing Continuing Discontinued Total
operations operations operations
Notes GBP000 GBP000 GBP000 GBP000
----------------------------------- ------ ------------ ------------ ------------- ---------
Revenue 3 34,486 31,403 1,238 32,641
Cost of sales (15,279) (12,559) (715) (13,274)
----------------------------------- ------ ------------ ------------ ------------- ---------
Gross profit 19,207 18,844 523 19,367
Administrative costs (14,491) (14,745) (662) (15,407)
Adjusted EBITDA* 3,6 8,494 7,444 201 7,645
Depreciation (799) (744) (29) (773)
----------------------------------- ------ ------------ ------------ ------------- ---------
Adjusted profit ** 6 7,695 6,700 172 6,872
Amortisation of intangible
assets (1,674) (1,378) - (1,378)
Exceptional items (139) (136) (311) (447)
Other operating income 134 - - -
Share-based payment charges (1,300) (1,087) - (1,087)
----------------------------------- ------ ------------ ------------ ------------- ---------
Operating profit / (loss) 4,716 4,099 (139) 3,960
Finance income 15 36 - 36
Finance expense (38) (37) (4) (41)
Share of result of equity (77) - - -
accounted investees
Profit / (loss) before
tax 4,616 4,098 (143) 3,955
Taxation (901) (372) (50) (422)
Profit / (loss) after tax 3,715 3,726 (193) 3,533
----------------------------------- ------ ------------ ------------ ------------- ---------
Other comprehensive income:
Items that are or may be
reclassified subsequently
to profit or loss
Foreign currency translation
differences - foreign operations - - 189 189
Total recognised income
for the year 3,715 3,726 (4) 3,722
----------------------------------- ------ ------------ ------------ ------------- ---------
Earnings per ordinary share
Basic 4 13.36p 13.40p (0.69p) 12.71p
Diluted 4 12.93p 12.93p (0.67p) 12.26p
----------------------------------- ------ ------------ ------------ ------------- ---------
* Earnings before finance income, tax, depreciation,
amortisation, exceptional items, other operating income, and
share-based payment charges and share of result of equity accounted
investees - see note 6.
** Earnings before finance income, tax, amortisation,
exceptional items, other operating income, share-based payment
charges, and share of result of equity accounted investees - see
note 6.
Consolidated Balance Sheet as at 31 July 2017
2017 2016
GBP000 GBP000
---------------------------------------- ------- -------
Non-current assets
Property, plant and equipment 2,461 2,608
Intangible assets 24,458 26,132
Investments - loan notes receivable - 125
Investments - equity 675 375
Loans due from associated undertakings 187 125
Investments in equity accounted
investees 111 125
Deferred consideration receivable - 167
Deferred tax assets 457 573
28,349 30,230
---------------------------------------- ------- -------
Current assets
Inventories 239 271
Trade and other receivables 8,480 6,166
Deferred consideration receivable - 133
Cash and cash equivalents 15,350 11,385
----------------------------------------- ------- -------
24,069 17,955
---------------------------------------- ------- -------
Total assets 52,418 48,185
----------------------------------------- ------- -------
Non-current liabilities
Hire-purchase contracts 230 296
Contingent & Deferred consideration
payable - 4,485
Deferred tax liabilities 3,718 4,284
----------------------------------------- ------- -------
3,948 9,065
---------------------------------------- ------- -------
Current liabilities
Hire-purchase contracts 320 368
Trade and other payables 8,842 8,354
Contingent & Deferred consideration
payable 5,041 1,665
Current tax liabilities 620 67
----------------------------------------- ------- -------
14,823 10,454
---------------------------------------- ------- -------
Total liabilities 18,771 19,519
----------------------------------------- ------- -------
Net assets 33,647 28,666
----------------------------------------- ------- -------
Equity attributable to equity
holders of the company
Called up share capital 112 110
Share premium reserve 5,948 5,622
Merger reserve 3,010 3,010
Retained earnings 24,577 19,924
Total equity 33,647 28,666
----------------------------------------- ------- -------
Consolidated Statement of Changes in Equity
Share Share Merger Retained Translation
Capital Premium reserve Earnings reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 August
2015 106 4,776 1,846 15,838 (189) 22,377
Profit for the
year - - - 3,533 - 3,533
Other comprehensive
income - - - - 22 22
Reclassification
on disposal - - - - 167 167
--------------------- --------- --------- --------- ---------- ------------ ----------
Total comprehensive
income - - - 3,533 189 3,722
--------------------- --------- --------- --------- ---------- ------------ ----------
Transactions
with owners:
Dividends - - - (301) - (301)
Share based
payment charges - - - 1,087 - 1,087
Tax movements
in equity - - - (233) - (233)
Exercise of
share options 3 846 - - - 849
Shares issued
as consideration 1 - 1,164 - - 1,165
At 31 July 2016 110 5,622 3,010 19,924 - 28,666
--------------------- --------- --------- --------- ---------- ------------ ----------
At 1 August
2016 110 5,622 3,010 19,924 - 28,666
Profit for the
year - - - 3,715 - 3,715
Total comprehensive
income - - - 3,715 - 3,715
--------------------- ---- ------ ------ ------- -------
Transactions
with owners:
Dividends - - - (362) - (362)
Share based
payment charges - - - 1,300 - 1,300
Exercise of
share options 2 326 - - - 328
At 31 July 2017 112 5,948 3,010 24,577 - 33,647
--------------------- ---- ------ ------ ------- -------
Consolidated Cash Flow Statement
2017 2016
Notes GBP000 GBP000
---------------------------------------- ------ -------- --------
Operating activities
Profit for the year 3,715 3,533
Finance income (15) (36)
Finance expense 38 41
Depreciation 799 773
Loss on disposal of plant and
equipment 12 2
Loss on disposal of business - 272
Exceptional items 139 -
Other operating income (134) -
Amortisation of intangible
assets 1,674 1,378
Share of result of equity accounted 77 -
investees
Income tax charge 901 422
Share based payment charges 1,300 1,087
---------------------------------------- ------ -------- --------
Operating cash inflow before
changes in working capital 8,506 7,472
Movement in inventories 32 3
Movement in trade and other
receivables (2,314) (506)
Movement in trade and other
payables 488 (17)
Cash generated from operations 6,712 6,952
Finance income 15 36
Finance expense (38) (41)
Income tax paid (664) (1,081)
---------------------------------------- ------ -------- --------
Net cash flow from operating
activities 6,025 5,866
---------------------------------------- ------ -------- --------
Investing activities
Purchase of plant and equipment (558) (795)
Proceeds from disposal of plant
and equipment 56 83
Acquisition of subsidiaries - (6,761)
Proceeds from disposal of subsidiaries - 166
Equity investments and loans
to investments (550) (750)
Repayment of loans from investments 111 -
Receipt of deferred consideration 300 74
Payment of contingent & deferred
consideration (1,109) (30)
---------------------------------------- ------ -------- --------
Net cash flow used in investing
activities (1,750) (8,013)
---------------------------------------- ------ -------- --------
Financing activities
Dividends paid 5 (362) (301)
Proceeds from exercise of share
options 328 849
Hire purchase repayments (276) (369)
Net cash flow from / (used
in) financing activities (310) 179
---------------------------------------- ------ -------- --------
Net increase / (decrease) in
cash and cash equivalents 3,965 (1,968)
Effect of exchange fluctuations - 12
Cash and cash equivalents at
the beginning of the year 11,385 13,341
Cash and cash equivalents at
the end of the year 15,350 11,385
---------------------------------------- ------ -------- --------
Notes to the Consolidated Financial Statements
1 Financial information
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 July 2017 or
2016 but is derived from those accounts. Statutory accounts for
2016 have been delivered to the registrar of companies, and those
for 2017 will be delivered in due course. The auditors have
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006.
2 Basis of preparation
(a) Statement of compliance
The Group consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
('IFRSs') as adopted by the EU and applicable law. The Company has
elected to prepare its parent company financial statements in
accordance with FRS 101. These parent company statements appear
after the notes to the consolidated financial statements
(b) Basis of measurement
The Accounts have been prepared under the historical cost
convention.
(c) Functional and presentation currency
These consolidated financial statements are presented in
sterling, which is the Group and Company's functional currency. All
financial information presented in sterling has been rounded to the
nearest thousand.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision only
affects that period, or in the period of the revision and future
periods, if the revision affects both current and future
periods.
(e) Accounting Developments
The Group and Company financial statements have been prepared
and approved by the directors in accordance with International
Financial Reporting Standards as adopted by the EU ("Adopted
IFRSs"). The accounting policies have been applied consistently to
all periods presented in the consolidated financial statements,
unless otherwise stated.
Certain new standards, amendments and interpretations to
existing standards have been published that are mandatory for the
Group's accounting period beginning on or after 1 August 2016. The
following new standards and amendments to standards are mandatory
and have been adopted for the first time for the financial year
beginning 1 August 2016:
-- Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)
-- Investment Entities: Applying the Consolidation Exception
(Amendments to IFRS 10, IFRS 12 and IAS 28)
-- Clarification of Acceptable Methods of Depreciation and
Amortisation (Amendments to IAS 16 and IAS 38)
-- Equity Method in Separate Financial Statements (Amendments to IAS 27)
-- Disclosure Initiative (Amendments to IAS 1)
-- Annual Improvements to IFRSs 2012-2014 Cycle - various standards
These standards have not had a material impact on the
Consolidated Financial Statements.
The following new or revised standards and interpretations
issued by the International Accounting Standards Board (IASB) have
not been applied in preparing these accounts as their effective
dates fall in periods beginning on or after 1 August 2017.
Effective for the year ending 31 July 2018
-- IAS 7 'Statement of cash flows' - amendments relating to the
IASB's disclosure initiative intended to provide information to
help investors better understand changes in a company's debt
-- IAS 12 'Income taxes' - amendments relating to the accounting
for deferred tax assets for unrealised losses on debt instruments
measured at fair value.
Effective for the year ending 31 July 2019
-- IFRS 2 'Share-based payment' - amendments clarifying how to
account for certain types of share-based payment transactions
-- IFRS 9 'Financial instruments' - introduces new requirements
for classification and measurement of financial assets and
financial liabilities, impairment methodology and hedge
accounting.
-- IFRS 15 'Revenue from contracts with customers' - provides a
single model for measuring and recognising revenue arising from
contracts with customers, unless the contracts are in the scope of
other standards, such as IAS 17. It supersedes all existing revenue
requirements in IFRS.
Effective for the year ending 31 July 2020
-- IFRS 16 'Leases' - provides a single lessee accounting model,
specifying how leases are recognised, measured, presented and
disclosed
(f) Going concern
The Group is debt free and has substantial cash resources. The
Board has prepared cash flow forecasts for the forthcoming year
based upon assumptions for trading and the requirements for cash
resources.
Based upon this analysis, the Board has concluded that the Group
has adequate working capital resources and that it is appropriate
to use the going concern basis for the preparation of the
consolidated financial statements.
3 Segmental analysis
The Group has divided its results into two segments being 'Rail
Technology and Services' and 'Traffic & Data Services'. 'Rail
Technology and Services' includes the Group's Software, Consultancy
and Remote Condition Monitoring technology and also includes Ontrac
which was acquired in the previous period. Traffic & Data
Services includes SEP which was acquired in the previous
period.
In accordance with IFRS 8 'Operating Segments', the Group has
made the following considerations to arrive at the disclosure made
in these financial statements. IFRS 8 requires consideration of the
Chief Operating Decision Maker ("CODM") within the Group. In line
with the Group's internal reporting framework and management
structure, the key strategic and operating decisions are made by
the Board of Directors, who review internal monthly management
reports, budgets and forecast information as part of this.
Accordingly, the Board of Directors are deemed to be the CODM.
Operating segments have then been identified based on the
internal reporting information and management structures within the
Group. From such information it has been noted that the CODM
reviews the business as a single operating segment, receiving
internal information on that basis. The management structure and
allocation of key resources, such as operational and administrative
resources, are arranged on a centralised basis.
Sales revenue is summarised below
2017 2016
GBP000 GBP000
------------------------------------------ ------- -------
Rail Technology & Services 15,964 14,066
Traffic & Data Services - continuing 18,522 17,337
Total revenue from continuing operations 34,486 31,403
------------------------------------------ ------- -------
Discontinued operations - 1,238
Total revenue 34,486 32,641
------------------------------------------ ------- -------
Revenue can also be analysed as follows:
2017 2016
GBP000 GBP000
------------------------------- ------- -------
Software and related services 11,711 9,817
Other 22,775 22,824
Total 34,486 32,641
------------------------------- ------- -------
Reconciliations of reportable segment revenues, profit or loss,
assets and liabilities and other material items
Information regarding the results of the reportable segment is
included below. Performance is measured based on segment profit
before income tax, as included in the internal management reports
that are reviewed by the Board of Directors. Segment profit is used
to measure performance. There are no material inter-segment
transactions, however, when they do occur, pricing between segments
is determined on an arm's length basis. Revenues disclosed below
materially represent revenues to external customers.
2017
Rail
Technology Traffic
& Services & Data Unallocated Total
Services
GBP000 GBP000 GBP000 GBP000
------------------------------------ ------------ ----------- -------------- --------
Revenues
Total revenue for reportable
segments 15,964 18,522 - 34,486
Consolidated revenue 15,964 18,522 - 34,486
------------------------------------ ------------ ----------- -------------- --------
Profit or loss
EBITDA for reportable
segments 6,451 2,043 - 8,494
Amortisation of intangible
assets - - (1,674) (1,674)
Depreciation (124) (675) - (799)
Exceptional items - - (139) (139)
Other operating income 134 134
Share-based payment charges - - (1,300) (1,300)
Interest receivable/payable(net) - - (23) (23)
Share of result of equity
accounted investees - - (77) (77)
------------------------------------ ------------ ----------- -------------- --------
Consolidated profit before
tax 6,327 1,368 (3,079) 4,616
------------------------------------ ------------ ----------- -------------- --------
2016
Rail Traffic
Technology & Data
& Services Services Unallocated Total
GBP000 GBP000 GBP000 GBP000
---------------------------------- ------------ ---------- ------------- --------
Revenues
Total revenue for reportable
segments 14,066 18,575 - 32,641
Consolidated revenue 14,066 18,575 - 32,641
---------------------------------- ------------ ---------- ------------- --------
Profit or loss
EBITDA for reportable
segments 5,346 2,299 - 7,645
Amortisation of intangible
assets - - (1,378) (1,378)
Depreciation (111) (662) - (773)
Exceptional items (79) (368) - (447)
Share-based payment charges - - (1,087) (1,087)
Interest receivable/payable(net) - - (5) (5)
---------------------------------- ------------ ---------- ------------- --------
Consolidated profit before
tax 5,156 1,269 (2,470) 3,955
---------------------------------- ------------ ---------- ------------- --------
2017
Rail Traffic
Technology & Data
& Services Services Unallocated Total
GBP'000 GBP000 GBP000 GBP000
----------------------------- ---------------------- ---------- -------------- ---------
Assets
Total assets for reportable
segments (exc. cash) 3,581 7,599 - 11,180
Intangible assets and
investments - - 25,431 25,431
Deferred tax assets - - 457 457
Cash and cash equivalents 3,784 1,844 9,722 15,350
Consolidated total
assets 7,365 9,443 35,610 52,418
----------------------------- ---------------------- ---------- -------------- ---------
Liabilities
Total liabilities for
reportable segments (6,142) (3,870) - (10,012)
Deferred tax - - (3,718) (3,718)
Contingent & deferred
consideration - - (5,041) (5,041)
Consolidated total
liabilities (6,142) (3,870) (8,759) (18,771)
----------------------------- ---------------------- ---------- -------------- ---------
2016
Rail Traffic
Technology & Data
& Services Services Unallocated Total
GBP'000 GBP000 GBP000 GBP000
----------------------------- ---------------------- ---------- -------------- ---------
Assets
Total assets for reportable
segments (exc. cash) 2,401 6,944 - 9,345
Intangible assets and
investments - - 26,882 26,882
Deferred tax assets - - 573 573
Cash and cash equivalents 4,365 1,507 5,513 11,385
Consolidated total
assets 6,766 8,451 32,968 48,185
----------------------------- ---------------------- ---------- -------------- ---------
Liabilities
Total liabilities for
reportable segments (5,004) (4,081) - (9,085)
Deferred tax - - (4,284) (4,284)
Contingent & deferred
consideration - - (6,150) (6,150)
Consolidated total
liabilities (5,004) (4,081) (10,434) (19,519)
----------------------------- ---------------------- ---------- -------------- ---------
Major customers
Transactions with the Group's largest customer represent 16% of
the Group's total revenues (2016: 14%).
Geographic split of revenue
A geographical analysis of revenue 2017 2016
is provided below:
GBP000 GBP000
------------------------------------ ------- -------
United Kingdom 33,224 30,798
North America 437 32
Australia - 1,238
Rest of the World 825 573
Total 34,486 32,641
------------------------------------ ------- -------
4 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 July 2017 was
based on the profit attributable to ordinary shareholders of
GBP3,715,000 (2016: GBP3,533,000) and a weighted average number of
ordinary shares in issue of 27,804,000 (2016: 27,807,000),
calculated as follows:
Weighted average number of ordinary shares
In thousands of shares
2017 2016
Issued ordinary shares at 1 August 27,546 26,564
Effect of shares issued related
to business combinations - 360
Effect of shares issued for cash 258 883
Weighted average number of shares
at 31 July 27,804 27,807
------------------------------------ ------- -------
Diluted earnings per share
The calculation of diluted earnings per share at 31 July 2017
was based on profit attributable to ordinary shareholders of
GBP3,715,000 (2016: GBP3,533,000) and a weighted average number of
ordinary shares in issue after adjustment for the effects of all
dilutive potential ordinary shares of 28,738,000 (2016:
28,811,000):
Adjusted EPS
In addition, Adjusted Profit EPS is shown below on the grounds
that it is a common metric used by the market in monitoring similar
businesses. A reconciliation of this figure is provided below:
2017 2016
GBP'000 GBP'000
Profit attributable to ordinary shareholders 3,715 3,533
Amortisation of intangible assets 1,674 1,378
Share-based payment charges 1,300 1,087
Exceptional items 139 447
Other operating income (134) -
Adjusted profit for EPS purposes 6,694 6,445
---------------------------------------------- -------- --------
Weighted average number of ordinary
shares
In thousands of shares
---------------------------------------------- -------- --------
For the purposes of calculating Basic
earnings per share 27,804 27,807
Adjustment for the effects of all
dilutive potential ordinary shares 28,738 28,811
---------------------------------------------- -------- --------
Basic adjusted earnings per share 24.08p 23.18p
Diluted adjusted earnings per share 23.29p 22.37p
---------------------------------------------- -------- --------
5 Dividends
The Group introduced a progressive dividend policy during
previous years. The cash cost of the dividend payments is shown
below:
2017 2016
GBP000 GBP000
------------------------------ ------- -------
Final dividend for 2014/15
of 0.60p per share paid - 164
Interim dividend for 2015/16
of 0.50p per share paid - 137
Final dividend for 2015/16 195 -
of 0.70p per share paid
Interim dividend for 2016/17 167 -
of 0.60p per share paid
Total dividends paid 362 301
------------------------------- ------- -------
The dividends paid or proposed in respect of each financial year
is as follows:
2017 2016 2015 2014 2013 2012
GBP'000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ ---------- --------- --------- --------- -------- -------
Interim dividend for 2011/12
of 0.20p per share paid - - - - - 48
Final dividend for 2011/12
of 0.35p per share paid - - - - - 87
Interim dividend for 2012/13 - - - - 75 -
of 0.30p per share paid
Final dividend for 2012/13 - - - - 102 -
of 0.40p per share paid
Interim dividend for 2013/14 - - - 89 - -
of 0.35p per share paid
Final dividend for 2013/14 - - - 119 - -
of 0.45p per share paid
Interim dividend for 2014/15 - - 106 - - -
of 0.40p per share paid
Final dividend for 2014/15 - - 164 - - -
of 0.60p per share paid
Interim dividend for 2015/16 - 137 - - - -
of 0.50p per share paid
Final dividend for 2015/16 - 195 - - - -
of 0.70p per share proposed
Interim dividend for 2016/17 167 - - - - -
of 0.60p per share paid
Final dividend for 2016/17 222 - - - - -
of 0.80p per share proposed
------------------------------ ---------- --------- --------- --------- -------- -------
The total dividends paid or proposed in respect of each
financial year ended 31 July is as follows:
2017 2016 2015 2014 2013 2012
Total dividends paid per
share 1.4p 1.2p 1.0p 0.8p 0.7p 0.55p
-------------------------- ------ ------ ------ ------ ----- ------
The dividend will be payable on 16 February 2018 to shareholders
on the Register at 2 February 2018.
6 Reconciliation of adjusted profit metrics
In addition to the statutory profit measures of Operating profit
and profit before tax, the Group quotes Adjusted EBITDA and
Adjusted profit.
Adjusted EBITDA is defined as Earnings before finance income,
tax, depreciation, amortisation, exceptional items, other operating
income, and share-based payment charges and share of result of
equity accounted investees.
Adjusted EBITDA can be reconciled to statutory profit before tax
as set out below:
2017 2016
GBP000 GBP000
----------------------------- ------- -------
Profit before tax 4,616 3,955
Finance income / (expense)
- net 23 5
Share-based payment charges 1,300 1,087
Exceptional items 139 447
Other operating income (134) -
Amortisation of intangible
assets 1,674 1,378
Depreciation 799 773
Share of result of equity 77 -
accounted investees
Adjusted EBITDA 8,494 7,645
------------------------------ ------- -------
Adjusted profit is defined as Earnings before finance income,
tax, amortisation, exceptional items, other operating income,
share-based payment charges, and share of result of equity
accounted investees.
Adjusted profit can be reconciled to statutory profit before tax
as set out below:
2017 2016
GBP000 GBP000
----------------------------- ------- -------
Profit before tax 4,616 3,955
Finance income / (expense)
- net 23 5
Share-based payment charges 1,300 1,087
Exceptional items 139 447
Other operating income (134) -
Amortisation of intangible
assets 1,674 1,378
Share of result of equity 77 -
accounted investees
Adjusted profit 7,695 6,872
------------------------------ ------- -------
Adjusted EBITDA reconciles to adjusted profit as set out
below:
2017 2016
GBP000 GBP000
----------------- ------- -------
Adjusted EBITDA 8,494 7,645
Depreciation (799) (773)
Adjusted profit 7,695 6,872
------------------ ------- -------
7 Annual Report and Annual General Meeting
The Company anticipates dispatching a copy of its annual report
and accounts to all shareholders on or around 29 November 2017. A
copy will also be available on the Company's website
www.tracsis.com.
The Annual General Meeting of the Company will be held at Leeds
Innovation Centre, 103 Clarendon Road, Leeds, LS2 9DF on Wednesday
24 January 2018 at 1pm.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UGGPPGUPMGAM
(END) Dow Jones Newswires
November 08, 2017 02:00 ET (07:00 GMT)
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