TIDMTRCS
RNS Number : 5586G
Tracsis PLC
26 November 2020
Tracsis plc
('Tracsis', 'the Company' or 'the Group')
Unaudited final results for the year ended 31 July 2020
Tracsis, a leading provider of software, hardware and services
for the rail, traffic data and wider transport industries, is
pleased to announce its unaudited final results for the year ended
31 July 2020. The Group will make a further announcement when the
audited Annual Report for the year ended 31 July 2020 has been
published, which is expected to be sent to shareholders in early
December.
Financial Highlights:
-- Revenue of GBP48.0m (2019: GBP49.2m)
-- Adjusted EBITDA* of GBP10.5m (GBP9.6m excluding IFRS 16) (2019: GBP10.5m)
-- Operating profit before exceptional items of GBP4.3m (2019: GBP6.7m)
-- Statutory Profit before Tax of GBP4.1m (2019: GBP6.6m)
-- Cash balances of GBP17.9m (2019: GBP24.1m) with no Covid-19
deferrals due to be paid. Cash conversion rates remain high
-- Fully diluted adjusted Earnings Per Share of 23.66p (2019: 27.42p)
Strategic and Operational Highlights:
-- Strong trading from our Rail Technology & Services
Division, outperforming budget expectations and generally
unaffected by the pandemic
o 17% revenue growth, and 33% EBITDA growth
o Continued high levels of recurring revenue across all of our
software products
o Strong trading in our rail infrastructure businesses - MPEC
(Remote Condition Monitoring Hardware and Software) and Ontrac
(Safety and Risk Management Software)
o Further large multi-year contract secured with a major Train
Operator for our TRACS Enterprise product
-- Covid-19 impacted Traffic & Data Services Division by an
estimated GBP10m of revenue versus budgeted expectations, but
action taken to reduce cost base and to mitigate the impact. Some
loss of revenue offset at Group level by outperformance in Rail
Technology & Services Division
-- Completion of the acquisition of iBlocks Limited which offers
exciting opportunities in Smart Ticketing
Post year end Highlights:
-- Q1 trading has been in line with Board's expectations
-- Two major rail contracts in latter stages of negotiation
-- Renewal and extension of several large multi-year agreements
for Traffic Data and Event contracts
-- All software licence renewals secured
-- Implementation of Groupwide shared services model to accelerate integration
Chris Barnes, Chief Executive Officer, commented:
"After a strong H1, I am pleased that the business was able to
robustly navigate itself through the H2 challenges linked to
Covid-19. The team did a great job in proactively responding to
these challenges whilst protecting the health and wellbeing of all
our employees.
We continue to see strong demand and growth across our Rail
Technology & Services division and in our data & analytics
capabilities. These continue to underpin our growth strategy and
improving EBITDA margins. Whilst we believe we have successfully
navigated the first phase of the Covid-19 crisis, and are well
positioned for the future, we continue to closely monitor short
term trading conditions in our Events and Traffic Data business
units within the Traffic & Data Services Division.
We are confident that the medium to long term growth prospects
for all parts of the Group are unchanged and we therefore remain
committed to our overall strategic growth and investment plans. We
will continue to proactively manage costs for as long as Covid-19
continues to impact the Group whilst maintaining the skills and
capacity required to quickly respond post the end of the
pandemic."
(*) Calculation unchanged from previous years and in line with
broker forecasts and research coverage on Tracsis. Full definition
and reconciliation in Note 6.
Presentations and Overview video
Tracsis is hosting an investor webinar today, Thursday 26th
November, at 1300 hrs GMT. If you would like to
attend please register here : http://bit.ly/Tracsis_FY20_piworld_webinar
A video overview of the results from the CEO, Chris Barnes, and
CFO, Max Cawthra, is available to watch here:
https://bit.ly/TRCS_FY20_overview_video
Enquiries:
Tracsis plc Tel: 0845 125 9162
Chris Barnes, CEO
Max Cawthra, CFO
finnCap Ltd Tel: 020 7220 0500
Christopher Raggett, Charlie Beeson, Corporate Finance
Andrew Burdis, Corporate Broking
Alma PR Tel: 020 3405 0205
Rebecca Sanders-Hewett/David Ison/Helena Bogle/Joe Pederzolli
tracsis@almapr.co.uk
Chairman & Chief Executive Officer's Report
Introduction
The year ended 31 July 2020 was on the whole a satisfactory
year, with a strong performance from the Rail Technology &
Services Division compensating for evident challenges caused by
Covid-19, primarily in respect of the Traffic & Data Services
Division. As we reflect on the previous twelve months, having
completed the acquisition of iBlocks Limited, navigated the early
phases of Covid-19, generated revenues of GBP48m, whilst
maintaining EBITDA margin, and ended the year with almost GBP18m of
cash, the Board is pleased with the resilient performance.
Business Overview
Tracsis specialises in providing a wide range of products and
services to clients within the transport and traffic sector. The
Group's market offering can be broadly categorised into two
distinct strands:
1. Rail Technology & Services:
-- Operational Software : A suite of software products covering
timetabling, resource and rolling stock planning and optimisation,
real time performance and control, service recovery, retail
services, delay attribution and delay repay;
-- Infrastructure Software : A range of software products that
are used to collect, manage, visualise and analyse rail asset
information. They deliver improvements in safety, productivity and
communication by automating heavily regulated business processes
and reducing risk;
-- Remote Condition Monitoring : Rail approved data loggers and
sensors to monitor asset performance and predict failure modes
(level crossings, interlockings, switch machines, bus-bars etc.)
supported by our own data acquisition software platform;
-- Consultancy : Rail operations consultancy expertise and
training covering operational planning and modelling, franchise and
concession support, data capture and evaluation and innovative
bespoke software tool development; and
-- Transit and Ticketing solutions : the provision of Smart
Ticketing software and TIS accredited Account Based Back Office
capable of performing the full cycle from tap capture through to
fare generation, payment collection and revenue settlement.
2. Traffic & Data Services:
-- Traffic Surveys : Traditional and advanced transport data
collection for all travel modes using ANPR, video and mobile
network data, manual survey methods, big data sources and,
increasingly, AI technology;
-- Transport Insights : Provision of innovative and effective
transport related advice, saving time and cost and generating
increased efficiencies through the provision of sustainable
transport solutions supported by data hosting and visualisation
tools;
-- Passenger Analytics : Software-delivered passenger research
and statistical analysis for transport operators using our skilled
market research staff and digital data collection tools (activities
include passenger counting, ticket audits, mystery shopping and
market research);
-- Location Analytics : Software, mobile app and analytical
platform development combining Geographic Information Systems
(GIS), location technologies, data analytics and field computing
across different industrial sectors (rail, automotive, bus,
utilities, environmental etc.); and
-- Event Transport Management : covering planning, control,
consultancy, signage, CSAS/PATO and car parking. Technologies like
Tracsis Live Technology (TLT) are also offered to improve traffic
monitoring and traffic flow in and out of major event venues.
Covid-19
The Board estimates that Covid-19 had an impact on Group
revenues of around GBP10m when compared against the Group's
internal budget for the year, taking account of acquisitions made
in the previous year. The majority of this was felt within the
Traffic & Data Services Division within which large Events and
Transport Data Collection projects were either cancelled or
postponed. The Group's cost base in respect this part of the Group
consists of a number of casual workers who it was not necessary to
utilise given the circumstances. Accordingly, some of the loss of
revenue from this part of the Group was offset by the reduced cost
base.
The Rail Technology & Services Division was generally
unaffected by the pandemic other than a reduction in delay-repay
related revenues given the significant reduction in rail passenger
numbers that occurred post the implementation of the March lockdown
in the UK.
Our key priority during these unprecedented times was the health
and wellbeing of our employees, our clients and their families. As
such, the vast majority of staff immediately transitioned to
working at home which on the whole was deemed to be a success. The
Company also placed a number of staff on furlough but ensured that
they retained their full remuneration until July 2020.
The business has also taken actions to reduce its fixed cost
base which have now all been fully implemented. All our offices are
open and have been signed off as 'Covid secure'. The majority of
staff continue to work from home although small numbers of staff
have returned to the office.
Financial Summary
Group revenues of GBP48.0m (2019: GBP49.2m) were slightly less
than the previous year, due to the challenges of Covid-19. This was
mitigated to some extent by a full year contribution from
acquisitions made in the previous year which were not impacted by
Covid-19 (Bellvedi and Compass Informatics), and also the
acquisition of iBlocks Limited in the year. Overperformance versus
budget in our Rail Technology & Services Division was an
important contributor to the overall results.
The Group has also adopted IFRS 16 in the year which brought
'Right of Use Assets' on to the Balance Sheet and a corresponding
"Lease Liability". At 31 July 2020 the impact of the transition was
a Right of Use asset recognised of GBP1.4m and a 'Lease Liability'
of GBP1.7m. The impact on EBITDA was GBP0.8m, with a corresponding
reduction in overheads and so had no significant impact on Profit
before Tax.
Adjusted EBITDA* of GBP10.5m (GBP9.6m excluding the impact of
IFRS 16) was adverse compared to the previous year on a like for
like basis (2019: GBP10.5m) due to the impact of Covid-19 on the
Traffic & Data Services Division. Adjusted Profit** was
GBP8.6m, less than the previous year (2019: GBP9.7m). Statutory
Profit before Tax was GBP4.1m (2019: GBP6.6m) after taking account
of large charges in respect of amortisation, share based payment
charges, and a share of results of associated undertakings. In
addition, the Group has recognised a net credit of GBP0.1m relating
to exceptional items. This credit includes an exceptional credit
adjustment to fair value of contingent consideration payable at
year end of GBP1.5m, offset by exceptional deal costs of GBP0.2m,
plus impairments against the Citi Logik investment and TCS
acquisition of GBP1.2m in total.
At 31 July 2020, the Group's cash balances were GBP17.9m (2019:
GBP24.1m), and cash generation continues to be strong. Cash
balances are reduced compared to the previous year due to the
acquisition of iBlocks Limited. All contingent consideration due in
the year has been paid. The Group has also paid all VAT, PAYE and
Corporation Tax due and has not taken advantage of any Government
Support in respect of taxes, but has claimed grant money in respect
of furloughed staff in the year with support to the Income
Statement of c. GBP0.7m.
* 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. 2020 prepared under IFRS
16, 2019 prepared under IAS 17
** 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. 2020 prepared under IFRS 16, 2019
prepared under IAS 17
Trading Progress and Prospects
Rail Technology & Services
Summary segment results:
Revenue GBP25.6m (2019: GBP21.9m)
Adjusted EBITDA * GBP9.2m (2019: GBP6.9m)
Adjusted Profit before Tax GBP8.6m (2019: GBP6.7m)
After making significant investment in our products and people,
overall EBITDA margin within the Rail Technology & Services
Division was an improvement on the previous year, which was
pleasing.
Software
Sales of Operational Software and Infrastructure software,
excluding current year acquisitions, increased to GBP17.7m (2019:
GBP15.2m) which represents strong growth. This takes account of the
various revenue streams from our TRACS, ATTUne, Ontrac, COMPASS,
Retail & Operations, and Delay-Repay product suites. As always,
all software products continue to benefit from high renewal rates
from existing clients.
Work continues on implementing our TRACS Enterprise product at
two major TOCs which were secured in previous years and we were
delighted to have secured a third major Operator during the year
where work on the implementation started in the year. There remains
a significant market opportunity for this offering, which we hope
to be able to further tap into.
Our Bellvedi business has traded very well during the year and
the ATTUne product forms an integral part of the overall TRACS
Enterprise solution. Bellvedi also secured a significant RSSB grant
to develop innovative dynamic train planning software over the next
two years which was very pleasing.
Ontrac traded well in the year and secured a number of good
bespoke software development contracts, and remains supported by
high levels of recurring revenue. The business also secured an
important initial contract win which is expected to result in a
multi-year enterprise wide licence deployment in due course. Work
on the 'Discovery' and 'Design' commenced in the year, and remains
ongoing with the target of securing a major multi year licence and
support contract. Ontrac's software product offering focuses on
driving improvements in risk management and safety for rail
infrastructure operators which continues to be a high priority area
of interest across the rail industry.
Our Delay Repay business traded well prior to the start of
Covid-19 but naturally suffered an adverse impact due to
significantly reduced passenger journeys. Even in spite of this,
revenues were still ahead of the previous year and the business
continues to operate from a modest cost base. Tracsis as a Group
processed over 70% of all industry delay repay claims during the
reporting period.
Remote Condition Monitoring (RCM)
Revenues of GBP4.8m compare very well against the previous year
(2019: GBP4.9m), which was a very strong comparative period due to
the end of Network Rail's 'Control Period 5' in March 2019. The
Group did not expect such a strong year but naturally was delighted
to be able to support its key customer in the first year of the new
'Control Period 6' that runs to 31 March 2024. During the year we
received formal approval for the Busbar units, and have now begun
to ship the first of these units. This remains a key growth area
for the future. MPEC's product offering focuses on d riving
improvements in asset performance for rail infrastructure owners
which is a key factor in improving overall rail performance and
reducing maintenance costs.
We announced a major order in May 2020 and this was largely
fulfilled by the end of the financial year.
Consultancy
Consultancy and professional services revenue was GBP2.2m (2019:
GBP1.8m) which was a very good performance and shows the continued
resilience in this part of the Group as it transitions away from a
historical reliance on franchise bid work. We have been pleased to
secure work with various government bodies, infrastructure
providers, a range of other train operating companies (TOCs), and
multi-disciplinary engineering companies.
Acquisitions: iBlocks Limited
In the three months post acquisition, iBlocks contributed
revenue of GBP0.9m which was in line with expectations for the
short period. We are seeing good levels of interest in iBlocks'
smart ticketing product offering which in a post Covid world is
well aligned to future rail passenger requirements. Integration
into the wider Tracsis Group is going well and iBlocks forms part
of a wider Customer Experience product offering.
Traffic & Data Services
Summary segment results:
Revenue GBP22.4m (2019: GBP27.3m)
Adjusted EBITDA* GBP1.3m (2019: GBP3.6m)
Adjusted Profit before Tax GBPnil (2019: GBP2.9m)
Traffic Surveys, Transport Insights and Passenger Analytics
Revenues of GBP10.0m were delivered in the year (2019:
GBP14.7m), which were adverse to the previous year due to the
impact of Covid-19 which had an immediate and severe impact with
much work either being cancelled or postponed. The business was
trading well prior to the Covid-19 pandemic and had a strong order
book as it entered the crisis, but this naturally did not
materialise. However, a huge amount of credit must be given to the
entire team as it delivered the Spring and Summer work as part of
the major National Road Traffic Census in spite of Covid-19 which
was a major achievement and a valuable source of revenue during
challenging times. Cost reduction measures have been implemented in
this part of the Group to ensure that it is well placed to weather
the challenging market conditions that inevitably lie ahead. We are
still waiting for postponed work to be rescheduled which we now
expect to be workable in Spring 2021.
Our Passenger Analytics team performed its traditional manual
count work during the Autumn but the Spring counts did not take
place due to Covid-19 meaning that revenues were adverse to the
previous year. However, the business was supported by the software
product that it had developed in previous years for automatic train
loading data, which is expected to be a key technology platform for
potential future growth.
Location Analytics
This was the first full year contribution from Compass
Informatics since its acquisition in 2019 and it has performed very
well during the year, with work also continuing regardless of
Covid-19. Most of the work was derived from its existing customer
base in Ireland, across a wide range of bodies and clients, but the
business also delivered some major UK based projects for a range of
utility companies. Overall revenues of GBP5.5m (2019: GBP2.4m) were
pleasing.
The Group sought to launch a full UK Analytics and GIS offering
though due to challenges caused by Covid-19, this has been placed
on hold given the current economic climate.
Event Transport Management
Revenues in this part of the Group were naturally significantly
impacted by Covid-19 with total revenues of GBP6.9m (2019:
GBP10.2m) which was the same as the previous year given the
cancellation and postponement of many of the events that were
scheduled to take place across the Spring and Summer and had
already been booked in. Revenues should have been much higher given
the full year contribution from CTM that was expected in this year
following its acquisition in January 2019.
Despite the pandemic, the business continued to secure some new
work, and also has been supported by the work that takes place at
its fixed venue clients.
Cost reduction measures have been implemented in this part of
the Group to ensure that we proactively manage the cost base whilst
maintaining sufficient operational expertise so that we can
mobilise the teams to quickly respond to the post Covid return to
normal.
EBITDA margin was less than the previous year due to the impact
of Covid-19.
Dividends
In February 2012, the Board implemented a progressive dividend
policy. In view of the challenges and uncertainty caused by
Covid-19, the Group decided not to pay an interim dividend for the
six months ended 31 January 2020 and committed to reviewing it at
the full year stage. The Board does not consider it appropriate to
pay a final dividend this year. The impact on cash of not paying
the dividend is around GBP0.6m. The Board is committed to restoring
the progressive dividend policy in the future and will review this
at the earliest appropriate opportunity.
Acquisitions
We were pleased to have completed the acquisition of iBlocks
Limited (iBlocks) in the year, which is a business that we have
known for a number of years now. We believe the unique technology
offering that iBlocks has developed along with long established
client relationships will open up an exciting new area of
opportunity for Tracsis. The smart/account based ticketing market
in particular is an area of the rail industry that is expected to
see future industry change and growth.
Established in 2000, iBlocks is a UK based software company that
specialises in the provision of smart ticketing solutions,
automated delay repay and the development of mission critical back
office systems that are used by the Rail Delivery Group, the wider
community of train operating companies (TOCs) and the rail supply
chain. This acquisition strategically aligns with our objective of
strengthening our rail product portfolio in areas where we can
offer a unique market proposition, gain access to strategically
important partnerships and leverage the cross-selling opportunities
that exist across our Rail Technology division.
The Directors believe that smart/account based ticketing and
automated delay repay is a sizeable and natural growth area for the
rail industry and that iBlocks is well placed to help facilitate
the move towards a paperless ticketing environment. The acquisition
will enhance Tracsis Group's overall technology and software
offering and should be significantly earnings enhancing.
The acquisition consideration comprised an initial cash payment
of GBP12.5m which was funded out of Tracsis cash reserves and the
issue of 192,926 new ordinary shares in Tracsis with a value of
GBP1.5m. An additional payment of GBP3m was made on a pound for
pound basis to reflect the net current asset position of the
business at completion. Additional contingent consideration of up
to GBP8.5m is payable subject to iBlocks achieving certain
stretched profit financial targets in the three years post
acquisition. An amount of GBP3.3m has been included in the Balance
Sheet as the best estimate of the amount payable at the year end
date.
The UK's decision to leave the European Union
The Group does not expect to be impacted by Brexit. Current
sales to European Union customers represent around 12% of overall
Group sales, and there continues to be no significant reliance on a
supply chain involving European Union suppliers or workforce.
People
As always, the Group is thankful to the whole team for their
hard work during the year, especially during the unprecedented
times which have been challenging for many members of the team. It
has been pleasing to see the business come together to support
colleagues.
In September 2020 we announced that Max Cawthra would be
standing down as Chief Financial Officer in 2021 and that Andy
Kelly would be joining the business. The Board would like to thank
Max for the contribution he has made since joining Tracsis in 2010,
since then the Group has grown significantly, both organically and
by acquisition, which Max has played a key part in achieving. We
look forward to Andy joining us, who the Board believe is a very
strong replacement.
Revised Group Structure
From 1 August 2020 onwards, the Group has been reorganised into
a new structure in order to align with key areas of future
transport industry growth. This will be adopted for future external
reporting purposes too.
Rail Technology & Services:
-- Rail Operations (includes core Operational Planning Software and Bellvedi)
-- Customer Experience (includes iBlocks, Travel Compensation
Services and Tracsis Passenger Analytics)
-- Rail Infrastructure (includes MPEC and Ontrac)
Data, Analytics Consultancy and Events:
-- Traffic Data
-- Events (includes SEP and CTM)
-- Analytics/GIS (includes Compass Informatics)
-- Transport Consultancy
Our GIS business Compass Informatics and Consultancy offering
will be expanded to be 'Groupwide' offerings and will operate
across the whole of the Group but will be reported within the Data,
Analytics Consultancy and Events sector.
In addition, on 1 August 2020 the Group implemented a central
shared services model covering HR, IT, Quality, Health and Safety
and Risk with the objective of implementing best practice across
the Group and accelerating the integration of the different
business units.
Summary and Outlook
Q1 trading has been in line with the Board's expectations. As we
look to the remainder of the financial year, we are aspiring to
achieve modest revenue growth and EBITDA margin improvement despite
the ongoing challenges of Covid-19, and we expect our cash position
to remain equally as strong.
These are unprecedented times and whilst the Board believes it
has successfully navigated the first phase of the Covid-19 crisis,
and is well structured for the future, it is vigilant about short
term trading conditions in particular with regards to its Traffic
& Data Services Division. At the time of writing, the impact on
the Rail Technology & Services Division has not been
significant but the Board continues to monitor the situation and
will respond should challenges arise.
We are confident that the medium to long term growth prospects
for all parts of the Group are unchanged and we therefore remain
committed to our overall strategic growth and investment plans. We
will continue to proactively manage costs whilst the Covid-19
pandemic continues to impact the Group whilst maintaining the
skills and capacity required to respond post the pandemic.
Chris Cole, Chairman Chris Barnes, Chief Executive Officer
26 November 2020
Consolidated Statement of Comprehensive Income for the year
ended 31 July 2020
2020 2019
Group excluding
in-year Acquisitions Total Total
acquisitions in-year
Note GBP000 GBP000 GBP000 GBP000
---------------------------------- ----- ---------------- --------------- --------- ---------
Revenue 3 47,115 883 47,998 49,219
Cost of sales (16,669) (127) (16,796) (20,163)
---------------------------------- ----- ---------------- --------------- --------- ---------
Gross profit 30,446 756 31,202 29,056
Administrative costs (26,162) (617) (26,779) (22,360)
---------------------------------- ----- ---------------- --------------- --------- ---------
Adjusted EBITDA* 3,6 10,250 213 10,463 10,514
Depreciation (1,819) (63) (1,882) (831)
---------------------------------- ----- ---------------- --------------- --------- ---------
Adjusted profit ** 6 8,431 150 8,581 9,683
Amortisation of intangible
assets (3,176) (423) (3,599) (2,251)
Other operating income 353 23 376 260
Share-based payment
charges (1,050) - (1,050) (1,034)
---------------------------------- ----- ---------------- --------------- --------- ---------
Operating profit before
exceptional items 4,558 (250) 4,308 6,658
Exceptional items: 9
Impairment losses (1,155) - (1,155) (623)
Other 881 389 1,270 661
---------------------------------- ----- ---------------- --------------- --------- ---------
Operating profit 4,284 139 4,423 6,696
Finance income 76 - 76 58
Finance expense (75) (4) (79) (21)
Share of result of equity accounted
investees (309) - (309) (174)
Profit before tax 3 3,976 135 4,111 6,559
Taxation (1,201) (33) (1,234) (1,488)
Profit after tax 2,775 102 2,877 5,071
---------------------------------- ----- ---------------- --------------- --------- ---------
Other comprehensive income/(expense)
Items that are or may be reclassified
subsequently to profit or loss
Foreign currency translation
differences 21 - 21 17
----------------------------------------- ---------------- --------------- --------- ---------
Total recognised income for
the year 2,796 102 2,898 5,088
----------------------------------------- ---------------- --------------- --------- ---------
Earnings per ordinary
share
Basic 4 9.95p 17.78p
Diluted 4 9.67p 17.26p
---------------------------------- ----- ---------------- --------------- --------- ---------
Consolidated Balance Sheet as at 31 July 2020
2020 2019
Note GBP000 GBP000
------------------------------------------- ----- ------- -------
Non-current assets
Property, plant and equipment 3,581 2,678
Intangible assets 54,376 38,812
Investments - equity 50 350
Loans due from associated undertakings - 250
Investments in equity accounted investees 1,039 1,098
Deferred tax assets 877 667
59,923 43,855
------------------------------------------- ----- ------- -------
Current assets
Inventories 430 381
Trade and other receivables 6,382 9,729
Cash and cash equivalents 17,920 24,104
------------------------------------------- ----- ------- -------
24,732 34,214
------------------------------------------- ----- ------- -------
Total assets 84,655 78,069
------------------------------------------- ----- ------- -------
Non-current liabilities
Lease Liabilities 986 285
Contingent consideration payable 8 5,587 5,304
Deferred tax liabilities 8,234 5,942
------------------------------------------- ----- ------- -------
14,807 11,531
------------------------------------------- ----- ------- -------
Current liabilities
Lease liabilities 1,128 277
Trade and other payables 13,509 16,936
Contingent consideration payable 8 1,747 879
Current tax liabilities 439 505
------------------------------------------- ----- ------- -------
16,823 18,597
------------------------------------------- ----- ------- -------
Total liabilities 31,630 30,128
------------------------------------------- ----- ------- -------
Net assets 53,025 47,941
------------------------------------------- ----- ------- -------
Equity attributable to equity holders
of the company
Called up share capital 116 115
Share premium reserve 6,373 6,343
Merger reserve 5,420 3,921
Retained earnings 41,078 37,545
Translation reserve 38 17
------------------------------------------- ----- ------- -------
Total equity 53,025 47,941
------------------------------------------- ----- ------- -------
Consolidated Statement of Changes in Equity
Share Share Premium Merger Retained Translation Total
Capital GBP'000 reserve Earnings reserve GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
At 1 August 2018 113 6,243 3,160 32,593 - 42,109
Adjustment on initial
application of IFRS
15 - - - (667) - (667)
Profit for the year - - - 5,071 - 5,071
Other comprehensive
income - - - - 17 17
Total comprehensive
income - - - 5,071 17 5,088
------------------------ ---- ------ ------ ------- --- -------
Transactions with
owners:
Dividends - - - (486) - (486)
Share based payment
charges - - - 1,034 - 1,034
Exercise of share
options 1 100 - - - 101
Shares issued as
consideration for
business combinations 1 - 761 - - 762
At 31 July 2019 115 6,343 3,921 37,545 17 47,941
------------------------ ---- ------ ------ ------- --- -------
At 1 August 2019 115 6,343 3,921 37,545 17 47,941
Adjustment on initial
application of
IFRS 16 - - - (106) - (106)
Profit for the
year - - - 2,877 - 2,877
Other comprehensive
income - - - - 21 21
------------------------ ---- ------ ------ ------- --- -------
Total comprehensive
income - - - 2,877 21 2,898
Transactions with
owners:
Dividends - - - (288) - (288)
Share based payment
charges - - - 1,050 - 1,050
Exercise of share
options - 30 - - - 30
Shares issued as
consideration for
business combinations 1 - 1,499 - - 1,500
At 31 July 2020 116 6,373 5,420 41,078 38 53,025
------------------------ ---- ------ ------ ------- --- -------
Consolidated Cash Flow Statement
2020 2019
Notes GBP000 GBP000
----------------------------------------------- ------ --------- --------
Operating activities
Profit for the year 2,877 5,071
Finance income (76) (58)
Finance expense 79 21
Depreciation 1,882 831
(Profit) / loss on disposal of plant
and equipment (12) 12
Non cash exceptional items (320) (99)
Other operating income (376) (260)
Amortisation of intangible assets 3,599 2,251
Effect of foreign exchange adjustments 21 17
Share of result of equity accounted investees 309 174
Income tax charge 1,234 1,488
Share based payment charges 1,050 1,034
----------------------------------------------- ------ --------- --------
Operating cash inflow before changes
in working capital 10,267 10,482
Movement in inventories (49) (128)
Movement in trade and other receivables 5,121 (1,349)
Movement in trade and other payables (3,875) 4,877
Cash generated from operations 11,464 13,882
Interest received 76 58
Interest paid (79) (21)
Income tax paid (908) (1,545)
----------------------------------------------- ------ --------- --------
Net cash flow from operating activities 10,553 12,374
----------------------------------------------- ------ --------- --------
Investing activities
Purchase of plant and equipment (387) (731)
Proceeds from disposal of plant and equipment 66 165
Acquisition of subsidiaries (net of cash
acquired) 7 (13,852) (6,757)
Payment of contingent consideration 8 (1,228) (2,149)
Equity investments and loans to investments - (400)
Net cash flow used in investing activities (15,401) (9,872)
----------------------------------------------- ------ --------- --------
Financing activities
Dividends paid 5 (288) (486)
Proceeds from exercise of share options 30 101
Lease liability payments (1,089) (342)
Lease receivable receipts 11 -
Net cash flow used in financing activities (1,336) (727)
----------------------------------------------- ------ --------- --------
Net (decrease)/increase in cash and cash
equivalents (6,184) 1,775
Cash and cash equivalents at the beginning
of the year 24,104 22,329
Cash and cash equivalents at the end
of the year 17,920 24,104
----------------------------------------------- ------ --------- --------
Notes to the Consolidated Financial Statements
1 Financial information
The financial information set out herein does not constitute the
Group's statutory accounts for the 12 months 31 July 2020 or the
year ended 31 July 2019 within the meaning of sections 434 of the
Companies Act 2006. The financial information set out herein has
not been audited or reviewed by the auditors. The 2020 statutory
accounts have not been finalised but this preliminary announcement
has been prepared by the Directors based on the results and
position which they expect will be reflected in the statutory
accounts. The comparative information in respect of the year ended
31 July 2019 has been derived from the audited statutory accounts
for the year ended on that date upon which an unmodified audit
opinion was expressed and which did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006. The audited
accounts will be posted to all shareholders in due course and will
be available on the Group's website. A further announcement will be
made at that time.
2 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in
accordance with the recognition and measurement criteria of
International Financial Reporting Standards ('IFRSs') as adopted by
the EU and applicable law.
(b) Basis of measurement
The Accounts have been prepared under the historical cost
convention, with the exception of the valuation of investments and
contingent consideration which are included on a fair value
basis.
(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 2019. 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 2019:
-- IFRS 16 Leases
-- IFRIC 23 Uncertainty over Income Tax Treatments
-- IAS 28 Long-term interests in Associates and Joint Ventures (Amendments to IAS 28)
-- Annual Improvements to IFRS 2015-2017 Cycle
These standards have not had a material impact on the
Consolidated Financial Statements with the exception of the
adoption of IFRS 16.
The Group has adopted IFRS 16 "Leases" from 1 August 2019. It
has brought more leases on to the Balance Sheet eliminating the
distinction between operating leases and finance leases, and
recognising a right-of-use asset and a corresponding lease
liability, except for those identified as low-value or having a
remaining lease term of less than 12 months from the date of
initial application. Rentals on operating leases which were
previously charged to the income statement, have been replaced by
depreciation charge on the asset and interest expense on the lease
liability.
The Group has adopted IFRS 16 using the modified retrospective
approach with the cumulative effect of initially adopting IFRS 16
recognised as an adjustment to retained earnings at 1 August 2019
with no restatement of comparative information. The Group has
applied the practical expedient to grandfather the definition of a
lease on transition. This means that it has applied IFRS 16 to all
contracts entered into before 1 August 2019 and identified as
leases in accordance with IAS 17 and IFRIC 4.
Instead of performing an impairment review on the right-of-use
assets at the date of initial application, the Group has relied on
its historical assessment as to whether leases were onerous
immediately before the date of initial application of IFRS 16.
For those leases previously classified as finance leases, the
right-of-use asset and lease liability are measured at the date of
initial application at the same amounts as under IAS 17 immediately
before the date of initial application.
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 2020. These
standards are not expected to have a significant impact on
adoption.
-- Definition of a Business (Amendments to IFRS 3)
-- Definition of Material (Amendments to IAS 1 and IAS 8)
-- Conceptual Framework for Financial Reporting
For the year ended 31 July 2020, cash flows relating to the
settlement of contingent consideration are included within
investing activities in the Statement of Cash flows. For the year
ended 31 July 2019, it was included within financing activities in
the Statement of Cash Flows.
(f) Going concern
The Group is debt free and has substantial cash resources. At 31
July 2020 the Group had net cash and cash equivalents totalling
GBP17.9m. The Board has prepared cash flow forecasts for the
forthcoming year based upon assumptions for trading and the
requirements for cash resources, these forecasts take into account
reasonably possible changes in trading financial performance and
have also factored in a continued reduced contribution from its
Traffic & Data Services Division which has been impacted the
most by Covid-19.
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 Revenue and Segmental analysis
a) Revenue
Sales revenue is summarised below
2020 2019
GBP000 GBP000
---------------------------- ------- -------
Rail Technology & Services 25,595 21,934
Traffic & Data Services 22,403 27,285
Total revenue 47,998 49,219
---------------------------- ------- -------
Revenue can also be analysed as follows:
2020 2019
GBP000 GBP000
------------------------------- ------- -------
Software and related services 18,840 14,839
Other 29,158 34,380
Total 47,998 49,219
------------------------------- ------- -------
Major customers
Transactions with the Group's largest customer represent 21% of
the Group's total revenues (2019: 18%).
Geographic split of revenue
A geographical analysis of revenue is provided below:
2020 2019
GBP000 GBP000
------------------- ------- -------
United Kingdom 41,529 45,511
Europe 6,127 3,437
North America 57 106
Rest of the World 285 165
Total 47,998 49,219
------------------- ------- -------
b) Segmental analysis
The Group has divided its results into two segments being 'Rail
Technology and Services' and 'Traffic & Data Services'. iBlocks
Limited is included in 'Rail Technology and Services'.
The Group has a wide range of products and services and products
and services for the rail industry, such as software, hosting
services, consultancy and remote condition monitoring, and these
have been included within the Rail Technology & Services
segment as they have similar customer bases (such as Train
Operating Companies and Infrastructure Providers), whereas traffic
data collection and event planning & traffic management have
similar economic characteristics and distribution methods and so
have been included within the Traffic & Data Services
segment.
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 two operating segments, 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.
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.
2020
Rail Technology
& Services Traffic
& Data Unallocated Total
Services
GBP000 GBP000 GBP000 GBP000
------------------------------------ ---------------- ----------- -------------- --------
Revenues
Total revenue for reportable
segments 25,595 22,403 - 47,998
Consolidated revenue 25,595 22,403 - 47,998
------------------------------------ ---------------- ----------- -------------- --------
Profit or loss
EBITDA for reportable segments 9,170 1,293 - 10,463
Amortisation of intangible
assets - - (3,599) (3,599)
Depreciation (648) (1,234) - (1,882)
Exceptional items (net) - - 115 115
Other operating income - - 376 376
Share-based payment charges - - (1,050) (1,050)
Interest receivable/payable(net) 31 (34) - (3)
Share of result of equity
accounted investees - - (309) (309)
------------------------------------ ---------------- ----------- -------------- --------
Consolidated profit before
tax 8,553 25 (4,467) 4,111
------------------------------------ ---------------- ----------- -------------- --------
2019
Rail Technology
& Services Traffic
& Data Unallocated Total
Services
GBP000 GBP000 GBP000 GBP000
------------------------------------ ---------------- ----------- -------------- --------
Revenues
Total revenue for reportable
segments 21,934 27,285 - 49,219
Consolidated revenue 21,934 27,285 - 49,219
------------------------------------ ---------------- ----------- -------------- --------
Profit or loss
EBITDA for reportable segments 6,932 3,582 - 10,514
Amortisation of intangible
assets - - (2,251) (2,251)
Depreciation (166) (665) - (831)
Exceptional items (net) (60) (1) 99 38
Other operating income - - 260 260
Share-based payment charges - - (1,034) (1,034)
Interest receivable/payable(net) - - 37 37
Share of result of equity
accounted investees - - (174) (174)
------------------------------------ ---------------- ----------- -------------- --------
Consolidated profit before
tax 6,706 2,916 (3,063) 6,559
------------------------------------ ---------------- ----------- -------------- --------
2020
Rail Technology Traffic
& Services & Data
Services Unallocated Total
GBP'000 GBP000 GBP000 GBP000
----------------------------------- -------------------------- ---------- -------------- --------
Assets
Total assets for reportable
segments (exc. cash) 5,551 4,842 - 10,393
Intangible assets and investments - - 55,465 55,465
Deferred tax assets - - 877 877
Cash and cash equivalents 11,254 4,676 1,990 17,920
Consolidated total assets 16,805 9,518 58,332 84,655
----------------------------------- -------------------------- ---------- -------------- --------
Liabilities
Total liabilities for reportable
segments 12,102 3,960 - 16,062
Deferred tax liabilities - - 8,234 8,234
Contingent consideration - - 7,334 7,334
Consolidated total liabilities 12,102 3,960 15,568 31,630
----------------------------------- -------------------------- ---------- -------------- --------
2019
Rail Technology Traffic
& Services & Data
Services Unallocated Total
GBP'000 GBP000 GBP000 GBP000
----------------------------------- -------------------------- ---------- -------------- ---------
Assets
Total assets for reportable
segments (exc. cash) 3,257 9,531 - 12,788
Intangible assets and investments - - 40,510 40,510
Deferred tax assets - - 667 667
Cash and cash equivalents 12,866 5,817 5,421 24,104
Consolidated total assets 16,123 15,348 46,598 78,069
----------------------------------- -------------------------- ---------- -------------- ---------
Liabilities
Total liabilities for reportable
segments (10,568) (7,435) - (18,003)
Deferred tax - - (5,942) (5,942)
Contingent consideration - - (6,183) (6,183)
Consolidated total liabilities (10,568) (7,435) (12,125) (30,128)
----------------------------------- -------------------------- ---------- -------------- ---------
4 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 July 2020 was
based on the profit attributable to ordinary shareholders of
GBP2,877,000 (2019: GBP5,071,000) and a weighted average number of
ordinary shares in issue of 28,919,000 (2019: 28,521,000),
calculated as follows:
Weighted average number of ordinary shares
In thousands of shares
2020 2019
Issued ordinary shares at 1 August 28,749 28,334
Effect of shares issued related to business
combinations 76 54
Effect of shares issued for cash 94 133
Weighted average number of shares at 31
July 28,919 28,521
--------------------------------------------- ------- -------
Diluted earnings per share
The calculation of diluted earnings per share at 31 July 2020
was based on profit attributable to ordinary shareholders of
GBP2,877,000 (2019: GBP5,071,000) and a weighted average number of
ordinary shares in issue after adjustment for the effects of all
dilutive potential ordinary shares of 29,740,000 (2019:
29,387,000):
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. These figures are relevant to the Group and are
provided to provide a comparison to similar businesses and are
metrics used by Equities Analysts who cover the Group. The largest
components of the adjusting items, being amortisation, and share
based payment charges are deemed to be 'non cash' in nature, and
therefore excluded in order to assist with the understanding of
underlying trading. A reconciliation of this figure is provided
below. The Group has also presented an 'adjusted Profit' metric as
detailed in note 6, with the key difference between the numbers
presented below, and those disclosed in note 6 being the income tax
charge.
2020 2019
GBP'000 GBP'000
Profit attributable to ordinary shareholders 2,877 5,071
Amortisation of intangible assets 3,599 2,251
Share-based payment charges 1,050 1,034
Exceptional items (net) (115) (38)
Other operating income (376) (260)
Adjusted profit for EPS purposes 7,035 8,058
--------------------------------------------------- -------- --------
Weighted average number of ordinary shares
In thousands of shares
--------------------------------------------------- -------- --------
For the purposes of calculating Basic earnings
per share 28,919 28,521
Adjustment for the effects of all dilutive
potential ordinary shares 821 866
--------------------------------------------------- -------- --------
For the purposes of calculating Dilutive earnings
per share 29,740 29,387
--------------------------------------------------- -------- --------
Basic adjusted earnings per share 24.33p 28.25p
Diluted adjusted earnings per share 23.66p 27.42p
--------------------------------------------------- -------- --------
5 Dividends
The Group introduced a progressive dividend policy during
previous years. The cash cost of the dividend payments is
below:
2020 2019
GBP000 GBP000
-------------------------------------- ------- -------
Final dividend for 2017/18 of 0.9p
per share paid - 257
Interim dividend for 2018/19 of 0.8p
per share paid - 229
Final dividend for 2018/19 of 1.0p 288 -
per share paid
Total dividends paid 288 486
--------------------------------------- ------- -------
In February 2012, the Board implemented a progressive dividend
policy. In view of the challenges and uncertainty caused by
Covid-19, the Group decided not to pay an interim dividend for the
six months ended 31 January 2020 and committed to reviewing it at
the full year stage. The Board does not consider it appropriate to
pay a final dividend this year. The impact on cash of not paying
the dividend is around GBP0.6m. The Board is committed to restoring
the progressive dividend policy in the future and will review this
at the earliest appropriate opportunity.
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. These figures are relevant to the Group and are
provided to provide a comparison to similar businesses and are
metrics used by Equities Analysts who cover the Group as they
better reflect the underlying performance of the Group, and its
ability to generate cash. The largest components of the adjusting
items, being depreciation, amortisation, share based payments, and
share of associates are 'non cash' items and so separately analysed
in order to assist with the understanding of underlying trading.
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:
2020 2019
GBP000 GBP000
------------------------------------- ------- -------
Profit before tax 4,111 6,559
Finance income / expense - net 3 (37)
Share-based payment charges 1,050 1,034
Exceptional items - net (115) (38)
Other operating income (376) (260)
Amortisation of intangible assets 3,599 2,251
Depreciation 1,882 831
Share of result of equity accounted
investees 309 174
Adjusted EBITDA 10,463 10,514
-------------------------------------- ------- -------
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:
2020 2019
GBP000 GBP000
------------------------------------- ------- -------
Profit before tax 4,111 6,559
Finance income / expense - net 3 (37)
Share-based payment charges 1,050 1,034
Exceptional items - net (115) (38)
Other operating income (376) (260)
Amortisation of intangible assets 3,599 2,251
Share of result of equity accounted
investees 309 174
Adjusted profit 8,581 9,683
-------------------------------------- ------- -------
Adjusted EBITDA reconciles to adjusted profit as set out
below:
2020 2019
GBP000 GBP000
----------------- -------- -------
Adjusted EBITDA 10,463 10,514
Depreciation (1,882) (831)
Adjusted profit 8,581 9,683
------------------ -------- -------
7 Acquisitions in the current year
On 10 March 2020 the Group acquired iBlocks, a UK based software
company that specialises in the provision of smart ticketing
solutions, automated delay repay and the development of mission
critical back office systems that are used by the Rail Delivery
Group, the wider community of train operating companies (TOCs) and
the rail supply chain. This acquisition strategically aligns with
our objective of strengthening our rail product portfolio in areas
where we can offer a unique market proposition, gain access to
strategically important partnerships and leverage the cross-selling
opportunities that exist across our Rail Technology division. The
Group believes that smart/account based ticketing and automated
delay repay is a significant and natural growth area for the rail
industry and that iBlocks are uniquely placed to help facilitate
the move towards a paperless ticketing environment. The acquisition
will enhance Tracsis Group's overall technology and software
offering and should be significantly earnings enhancing.
The acquisition consideration comprised an initial cash payment
of GBP12.5m which was funded out of Tracsis cash reserves and the
issue of shares in Tracsis to a value of GBP1.5m. An additional
payment of GBP3.0m was also made on a pound for pound basis to
reflect the net current asset position of the business, alongside
additional contingent consideration of up to GBP8.5m is payable
subject to iBlocks achieving certain stretched profit financial
targets in the three years post acquisition.
In the period to 9 March 2020, iBlocks generated revenue of
GBP3.0m, Profit before Tax of GBP1.1m, and had net assets of
GBP3.5m. The business is highly cash generative, debt free and
benefits from an excellent reputation within its retained customer
base and wider UK rail industry. Under the terms of the acquisition
there is a three year earn out period during which Tracsis expects
the business to achieve growth.
The contingent consideration could range from GBPnil to GBP8.5m
depending on the financial performance over the three years since
acquisition and the Directors concluded that GBP3.9m was the fair
value of the contingent consideration payable at the acquisition
date and GBP3.3m at the year end date.
In the period to 31 July 2020 iBlocks contributed revenue of
GBP0.9m and pre tax profit of GBP0.2m to the Group's results,
before amortisation of associated intangible assets and exceptional
deal costs. If the acquisition had occurred on 1 August 2019,
management estimates that the contribution to Group revenue would
have been GBP2.7m and Group pre tax profit for the period of
GBP0.8m. In determining these amounts, management has assumed that
the fair value adjustments, determined provisionally that arose on
the date of acquisition would have been the same if the acquisition
had occurred on 1 August 2019. The fair value of intangible assets
will be assessed throughout the measurement period up to 12 months
from the date of acquisition.
Pre-acquisition carrying amounts were determined based on
applicable IFRSs, immediately prior to the acquisition. The values
of assets and liabilities recognised on acquisition are the
estimated fair values. The gross contractual amounts receivable for
acquired receivables is consistent with fair value. Acquired
receivables are expected to be collected in full following
acquisition. The goodwill that arose on acquisition can be
attributed to a multitude of assets that cannot readily be
separately identified for the purposes of fair value accounting and
includes the workforce of iBlocks.
The fair value adjustments arise in accordance with the
requirements of IFRSs to recognise intangible assets acquired. In
determining the fair values of intangible assets the Group has used
discounted cash flow forecasts. The fair value of shares issued was
based on market value at the date of issue. The Group incurred
acquisition related costs of GBP0.2m which are included within
administrative expenses.
The acquisition had the following effect on the Group's assets
and liabilities on the acquisition date:
Recognised
Pre-acquisition Fair value value on
carrying adjustments acquisition
amount
GBP000 GBP000 GBP000
---------------------------------------- ---------------- ------------ ------------
Intangible assets: Technology assets - 8,919 8,919
Intangible assets: Customer related
intangibles - 3,990 3,990
Tangible fixed assets 33 459 492
Cash and cash equivalents 1,603 - 1,603
Trade and other receivables 1,980 (275) 1,705
Trade and other payables (484) - (484)
Income tax receivable 185 - 185
Lease liabilities - (459) (459)
Deferred tax asset/(liability) 202 (2,453) (2,251)
---------------------------------------- ---------------- ------------ ------------
Net identified assets and liabilities 3,519 10,181 13,700
Goodwill on acquisition 7,109
---------------------------------------- ---------------- ------------ ------------
20,809
---------------------------------------- ---------------- ------------ ------------
Consideration paid in cash 15,455
Consideration paid: fair value of
shares issued 1,500
Fair value of contingent consideration
payable 3,854
Total consideration 20,809
---------------------------------------- ---------------- ------------ ------------
8 Contingent consideration
During the financial year, the Group acquired iBlocks Limited.
Under the share purchase agreement in place for this acquisition,
contingent consideration is payable which is linked to the
profitability of the acquired businesses for a three year period
post acquisition. The maximum amount payable is GBP8.5m, and the
fair value of the amount payable was assessed at GBP3.9m at the
acquisition date and GBP3.3m at the year end date.
During the previous financial year, the Group acquired Cash
& Traffic Management Limited, Compass Informatics Limited and
Bellvedi Limited. Under the share purchase agreements for each of
these companies, contingent consideration is payable which is
linked to the profitability of the acquired businesses over a two
to four year period post acquisition. The maximum amount payable is
GBP750,000 for Cash & Traffic Management Limited, EUR2,000,000
for Compass Informatics Limited and GBP7,900,000 for Bellvedi
Limited. The fair value of the amount payable was assessed at
GBP112,000 for Cash & Traffic Management Limited, GBP681,000
for Compass Informatics Limited and GBP3,193,000 for Bellvedi
Limited.
During the financial year, contingent consideration of
GBP348,000 was paid in respect of the Tracsis Travel Compensation
Services Limited acquisition which was made in year ended 31 July
2018 (2019: GBP84,000), GBP491,000 in respect of the Cash &
Traffic Management Limited acquisition which was made in year ended
31 July 2019 (2019: GBPnil), GBP332,000 in respect of the Compass
Informatics Limited acquisition which was made in the year ended 31
July 2019 (2019: GBPnil), and GBP57,000 in respect of the Bellvedi
Limited acquisition which was made in the year ended 31 July 2019
(2019: GBPnil)
At the balance sheet date, the Directors assessed the fair value
of the remaining amounts payable which were deemed to be as
follows.
2020 2019
GBP000 GBP000
---------------------------------------------- ------- -------
Tracsis Travel Compensation Services Limited
& Delay Repay Sniper Ltd 88 394
Cash & Travel Management Limited 112 600
Compass Informatics Limited 681 1,132
Bellvedi Limited 3,193 4,057
iBlocks Limited 3,260 -
7,334 6,183
---------------------------------------------- ------- -------
The Group has made numerous acquisitions over the past few years
and carries contingent consideration payable in respect of them,
which is considered to be a 'Level 3 financial liability' as
defined by IFRS 13. These are carried at fair value, which is based
on the estimated amounts payable based on the provisions of the
Share Purchase Agreements which specify the specific arrangements
and calculations relating to each acquisition. This involves
assumptions about future profit forecasts, which results from
assumptions about revenues and costs, and is discounted back to the
present value using an appropriate discount rate and an estimate of
when it is expected to be payable. A range of outcomes is
considered, and a probability/likelihood weighting is applied to
each of them in order to produce a weighted assessment of the
amount payable.
The Group has considered multiple profit related scenarios in
estimating the fair value of contingent consideration payable in
the future. In all cases, contingent consideration payable could
range from zero to the maximum amount included in the Share
Purchase Agreements. Each Share Purchase Agreement contains
different provisions for calculating contingent consideration,
timeframes over which it is calculated and payable, and therefore
sensitivities regarding the total amount to be paid. The movement
on contingent consideration can be summarised as follows:
2020 2019
GBP000 GBP000
---------------------------------------- ------------- --------
At the start of the year 6,183 3,265
Arising on acquisition 3,854 5,789
Cash payment (1,228) (2,149)
Fair value adjustment to Statement of
Comprehensive Income (1,475) (722)
At the end of the year 7,334 6,183
---------------------------------------- ---- -------- ----------
The ageing profile of the remaining liabilities can be
summarised as follows:
2020 2019
GBP000 GBP000
------------------------------- ------- -------
Payable in less than one year 1,747 879
Payable in more than one year 5,587 5,304
Total 7,334 6,183
-------------------------------- ------- -------
9 Exceptional items
The Group incurred a number of exceptional items in 2020 and
2019 which are analysed as follows:
2020 2019
GBP000 GBP000
------------------------------------------------ -------- -------
Impairment losses
Non cash:
Goodwill and investment impairment 1,155 623
------------------------------------------------ -------- -------
Total impairment losses 1,155 623
Other
Non cash:
Contingent consideration fair value adjustment (1,475) (722)
Cash:
Disposal of non core data capture operation - (179)
Legal and professional fees in respect of
acquisitions 205 240
------------------------------------------------ -------- -------
Total other (1,270) (661)
Total exceptional items (115) (38)
------------------------------------------------ -------- -------
2020 2019
Split GBP000 GBP000
---------- ------- -------
Non cash (320) (99)
Cash 205 61
---------- ------- -------
Total (115) (38)
---------- ------- -------
2020
During 2020, the Group acquired iBlocks Limited and incurred
GBP205,000 of exceptional deal related costs as a result. In
addition, the Group reviewed the carrying value of the investment
in Citi Logik Limited and concluded it was impaired, and as such a
loss of GBP300,000 was recognised. A further impairment charge of
GBP855,000 was also made against the remaining intangible assets of
Tracsis Travel Compensation Services Limited. An exercise has
additionally been completed to assess the fair value of contingent
consideration payable at the year end date across recent
acquisitions. An exceptional credit has been recognised in the year
totalling GBP1,475,000 as a result of this exercise. These are all
deemed to be exceptional items due to the size and volatility of
the items which can vary significantly from year to year.
2019
During 2019, the Group acquired Compass Informatics Limited,
Cash & Traffic Management Limited and Bellvedi Limited, and
incurred GBP240,000 of exceptional deal related costs as a result.
The Group also disposed of a small, non core data capture business
with a net profit on disposal of GBP179,000. This operation had
revenue in the period prior to its disposal of GBP0.3m and a
profit/loss of GBPnil. The Group conducted a review of the
remaining intangible assets which arose on the acquisition of
Travel Compensation Services Limited (renamed Tracsis Travel
Compensation Services Limited) and Delay Repay Sniper Limited.
Following this review, the Group has determined that an impairment
of GBP623,000 existed in goodwill. The contingent consideration
related to this acquisition was also re-assessed, resulting in an
exceptional credit to the Statement of Comprehensive Income of
GBP722,000.
10 Annual Report and Annual General Meeting
The Company anticipates dispatching a copy of its annual report
and accounts to all shareholders in early December 2020. 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 Nexus,
Discovery Way, Leeds, LS2 3AA on 19 January 2021 at 1pm. In view of
the current situation regarding Covid-19, it is unlikely that
shareholders will be able to attend in person. Further details will
be provided in due course.
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END
FR FIFVILDLRFII
(END) Dow Jones Newswires
November 26, 2020 02:00 ET (07:00 GMT)
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