REG - Tracsis PLC - Interim Results
Tracsis plc
('Tracsis', 'the Company' or 'the Group')
Interim results for the six months ended 31 January 2018
Tracsis plc (AIM: TRCS), a leading provider of software and services for the traffic data and transportation industry, is pleased to announce its interim results for the six months ended 31 January 2018.
Financial Highlights:
· Revenue increased 16% to £18.1m (2017: £15.6m)
· Adjusted EBITDA* increased 21% to £4.3m (2017: £3.5m)
· Statutory Pre-tax Profit increased 33% to £2.4m (2017: £1.8m)
· Cash balances at 31 January of £18.5m (31 July 2017: £15.4m, 31 January 2017: £12.7m)
· The business remains debt free with excellent cash flow and cash conversion
· Proposed interim dividend increased by 17% to 0.7p per share (2017: 0.6p)
Operational Highlights:
· Commenced work on delivery of a major contract for our TRACS Enterprise software with a major UK TOC
· On-Trac secured a number of bespoke software development projects
· Traffic & Data Services division traded well following a series of operational improvements made in 2017
· Renewal of a major multi-year contract with a global engineering company
· Further progress in the USA for our Remote Condition Monitoring technology
· Strategic investment into Vivacity Labs showing promising results and expected to provide H2 support for our video analytics work
Post period end Highlights:
· Acquisition of Travel Compensation Services Limited and Delay Repay Sniper Limited
John McArthur, Chief Executive Officer, commented:
"I am very pleased with the Group's performance in H1 and all key financial and operational metrics were comfortably ahead of the previous year, with good progress being made on a number of strategic initiatives which culminated in the acquisition of TCS and DRS. Looking ahead to H2, given the strength of our trading coupled with the number of new opportunities in play the Group is confident of delivering full year results in line with market expectations."
Enquiries:
John McArthur / Max Cawthra, Tracsis plc
Tel: 0845 125 9162
Andrew Pinder / Seb Lawrence, Investec Bank plc
Tel: 020 7597 4000
* Calculation unchanged from previous years and in line with broker forecasts and research coverage on Tracsis. Full definition and reconciliation in Note 9.
The information communicated in this announcement is inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Chairman & Chief Executive Officer's Report
Introduction
The Group has once again reported a further period of growth, with both divisions performing well, and all key financial metrics ahead of the previous year, and in line with management expectations.
Group revenues were £18.1m (2017: £15.6m), EBITDA of £4.3m (2017: £3.5m) and statutory profit before tax was £2.4m (2017: £1.8m). Cash balances remained strong at £18.5m (2017: £12.7m), and the business continues to be debt free.
Trading Progress and Prospects
A summary of performance in the period is as follows:
Rail Technology & Services
Summary segment results:
Revenue £9.2m (2017: £7.9m) +17%
EBITDA £3.5m (2017: £3.2m) +12%
Profit before Tax £3.4m (2017: £3.1m) +12%
Software & Consultancy
Software sales of £3.7m (2017: £3.1m) continued to benefit from high renewal rates for existing products, with the uplift on the previous year being partly driven by the specific timing of renewals given changes to franchise operators, and partly a result of new sales. Furthermore, we achieved revenue from our recently announced TRACS Enterprise sale, working alongside a major UK train operator. This is an exciting win with positive long term implications and should position Tracsis for further success within the wider rail industry for similar Enterprise sales.
Growth in our consultancy sales to £0.9m (2017: £0.8m) was achieved predominantly from non-franchise bid work, though the team did support franchise bidders in relation to Southeastern, West Coast Partnership, and Wales & Borders. We also continued our strategy of forging closer relationships with other parts of the rail supply chains, which has proved successful and a good source of regular revenue.
Ontrac (acquired December 2015) performed very well in the period, generating revenues of £3.1m (2017: £2.7m), with excellent software sales. Growth was also driven by increasing consultancy and hosting revenue, and the business was successful in securing a number of bespoke development projects with key clients. Ontrac continues to progress a major product sale with a key customer.
Total revenues from the Group's software, hosting and consulting offerings were £7.7m (2017: £6.6m) taking account of all of the above revenue streams.
Remote Condition Monitoring
Revenues of £1.5m were significantly ahead of the previous year (2017: £1.3m), with good trading in the core UK market and a further contribution from custom in North America. As we approach the end of Network Rail's Control Period 5 (CP5) UK sales were steady, and we also achieved additional revenue from a new monitoring project for a different asset class (electrical bus-bars).
As anticipated, the process of unlocking the large potential opportunity for Tracsis RCM within the United States has remained gradual but we remain confident of unlocking this in the fullness of time. The Group's overall growth trajectory will not be impeded by the specific adoption rate within the US, and continues to be predicated on UK organic growth supplemented by sensible accretive M&A.
Traffic & Data Services (T&DS)
Summary segment results:
Revenue £8.8m (2017: £7.7m) +15%
EBITDA £0.8m (2017: £0.3m) +102%
Profit before Tax £0.4m (2017: £0.1m) +647%
Tracsis T&DS performed well in the first half of the year, with trading momentum in H2 expected to remain strong, partly due to the inherent seasonality in the business, favouring the summer months when more traffic surveys and outdoor events take place. During the previous financial year, the Group made several process, people and technology improvements, with the division beginning to experience the benefit of these improvements (the full benefit is expected to be realised on an on-going basis in FY'18/'19).
Revenues from Traffic Data and Passenger Counts were much improved on the previous year at £6.6m (2017: £5.9m), which reflects a reinvigorated management team who have driven both efficiencies and growth whilst also securing a major contract win in London. The team was also successful in renewing a major multi-year contract with a global engineering company that will underpin a significant part of this division's income for years to come.
As we move into H2, T&DS will begin the technological shift towards Machine Learning for processing video capture that remains one of the major sources of data collection. Our 'Felicity' software will support this transition to intelligent video analytics and in doing so further cement the relationship with our investee company Vivacity Labs. We anticipate the adoption of Machine Learning technologies to create a fully automated process will take more than 12 months to complete but will lead to significant cost savings in the fullness of time along with demonstrable benefits to our customers (such as faster turnaround times of data, enhanced accuracy, and a range of additional statistical information that should be useful in transport planning decision making).
SEP has continued to trade well and delivered revenues of £2.2m (2017: £1.8m), which shows encouraging growth against the previous year. The majority of revenue and profit from this business continues to be delivered over the summer months and the second half of the financial year is expected to be significantly stronger than the first. The business continues to benefit from several multiyear agreements with major customers which provide a good source of recurring revenue.
Overseas
North America remains our principal focus whilst continuing to work in other geographies as and when opportunities arise. We were pleased to secure a further order in North America for our Remote Condition Monitoring technology from a key client. We are confident of further sales to this client in the future and our sales team continues to target other operators in North America, though current progress remains slow. We continue to work with our existing clients in Sweden, Ireland and New Zealand, and have recently secured further work in New Zealand.
Dividend
The Group remains committed to the progressive dividend policy that was adopted in 2012. Accordingly, the Directors propose an interim dividend of 0.7p per share, a 17% increase on the 0.6p paid in the interim period last year and will mark the 13th successive period of this policy. The dividend will be paid on 27 April 2018 to shareholders on the register on 13 April 2018.
Acquisitions
On 1 February 2018, we were pleased to announce the acquisition of Travel Compensation Services Limited (TCS) and Delay Repay Sniper Limited (DRS). This continues Tracsis' disciplined strategy of making sensible, accretive acquisitions within the transport technology and services space.
TCS is a software provider of enterprise delay repay solutions to the UK Rail Industry. The business has novel technology that allows train operators to automatically process large volumes of consumer claims arising from rail delays. In doing transactional costs are lowered whilst concurrently speeding up response times and helping to eliminate fraud. The benefits to the rail industry are significant and in a short space of time TCS has already secured several major TOC customers.
DRS is a consumer facing web portal (www.delayrepaysniper.com) that allows rail passengers to quickly and easily submit valid claims to rail operators under the UK Government's 'Delay Repay' scheme. The business operates a subscription service model and is relevant to regular rail travellers and commuters who can often be delayed many times per month and wish to forego the time and effort involved in submitting multiple individual claims.
The UK delay repay market is increasingly topical among transport operators, rail passengers and regulatory bodies alike with increasing consumer awareness and political interest, set against a backdrop of rising rail fares. The Board believe both TCS and DRS are highly complementary to Tracsis, and will offer significant cross sell and growth opportunities in the foreseeable future. Integration of these recently acquired businesses continues to plan and cross selling opportunities are currently being worked on with a view to growing both businesses.
In the period, Tracsis also completed further investments into Vivacity Labs Limited and Nutshell Software Limited which were anticipated given the tranched approach agreed as part of our initial investments.
Income statement
A summary of the Group's results is set out below.
Unaudited
Unaudited
Audited
Six months
Six months
Year
ended
ended
ended
31 January
31 January
31 July
2018
2017
2017
£'000
£'000
£'000
Revenue
18,077
15,622
34,486
Adjusted EBITDA
4,306
3,545
8,494
Adjusted Pre-Tax Profit
3,917
3,152
7,695
Profit before tax
2,382
1,788
4,616
Sales revenue is analysed further below:
Unaudited
Unaudited
Audited
Six months
Six months
Year
Ended
Ended
Ended
31 January
31 January
31 July
2018
2017
2017
£'000
£'000
£'000
Rail Technology & Services
9,249
7,922
15,964
Traffic & Data Services
8,828
7,700
18,522
Total revenue
18,077
15,622
34,486
Balance sheet
The Group continues to have significant levels of cash and remains debt free. Cash balances at 31 January were £18.5m (31 January 2017: £12.7m, 31 July 2017: £15.4m), and cash conversion levels remain good. Contingent consideration of £0.3m was paid in respect of the SEP acquisition as part of the second year's earn out. Ontrac's second year earn-out is still being finalised, with payment expected to be made in the second half of the financial year. We also made further investments into Vivacity Labs Limited and Nutshell Software Limited in line with the previous investment agreements.
A summary of cash flows is set out below:
Six months
Six months
Year
ended
ended
ended
31 January
31 January
31 July
2018
2017
2017
£'000
£'000
£'000
Net cash flow from operating activities
4,303
2,315
6,025
Net cash used in investing activities
(1,215)
(1,062)
(1,750)
Net cash from financing activities
52
60
(310)
Movement during the period
3,140
1,313
3,965
Outlook
The Group has performed well in the period and a number of interesting and exciting opportunities remain ongoing. The management team is confident of delivering a second half performance in line with market expectations and that is the focus in the months ahead. The business remains well placed within the UK transport market and our core target markets of rail technology and traffic and transport data services continue to be supported by a favourable market backdrop and positive growth drivers. The Group continues to rigorously assess new strategic opportunities, but as ever we remain naturally prudent in our approach in order to maximise value for shareholders.
Chris Cole
Non-Executive Chairman
John McArthur
Chief Executive Officer
28 March 2018
Tracsis plc
Condensed consolidated interim income statement for the six months ended 31 January 2018
Continuing operations
.
Unaudited
6 months ended 31 January 2018
Unaudited
6 months ended 31 January 2017
Audited
Year ended 31 July 2017
£'000
£'000
£'000
Revenue
18,077
15,622
34,486
Cost of sales
(7,489)
(6,632)
(15,279)
Gross profit
10,588
8,990
19,207
Administrative costs
(8,120)
(7,159)
(14,491)
Adjusted EBITDA *
4,306
3,545
8,494
Depreciation
(389)
(393)
(799)
Adjusted profit **
3,917
3,152
7,695
Amortisation of intangible assets
(837)
(837)
(1,674)
Exceptional items
-
-
(139)
Other operating income
-
-
134
Share-based payment charges
(612)
(484)
(1,300)
Operating profit
2,468
1,831
4,716
Finance income
9
11
15
Finance expense
(29)
(18)
(38)
Share of result of equity accounted investees
(66)
(36)
(77)
Profit before tax
2,382
1,788
4,616
Taxation
(482)
(387)
(901)
Profit for the period
1,900
1,401
3,715
Other comprehensive income
-
-
-
Total recognised income for the period
1,900
1,401
3,715
Earnings per ordinary share
Basic
5
6.76p
5.06p
13.36p
Diluted
5
6.55p
4.90p
12.93p
* 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 9
** 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 9
Tracsis plcCondensed consolidated interim balance sheet as at 31 January 2018
Unaudited
Unaudited
Audited
At 31 January
At 31 January
At 31 July
2018
2017
2017
£'000
£'000
£'000
Non-current assets
Property, plant and equipment
2,264
2,525
2,461
Intangible assets
23,621
25,295
24,458
Investments - loan notes receivable
-
40
-
Investments - equity
250
375
675
Loans due from associated undertakings
250
125
187
Investments in equity accounted investees
1,107
89
111
Deferred consideration receivable
-
59
-
Deferred tax assets
573
623
457
28,065
29,131
28,349
Current assets
Inventories
137
210
239
Trade and other receivables
7,583
5,568
8,480
Deferred consideration receivable
-
118
-
Cash and cash equivalents
18,490
12,698
15,350
26,210
18,594
24,069
Total assets
54,275
47,725
52,418
Non-current liabilities
Hire-purchase contracts
111
242
230
Deferred tax liabilities
3,576
4,133
3,718
3,687
4,375
3,948
Current liabilities
Hire-purchase contracts
306
398
320
Trade and other payables
8,473
6,550
8,842
Contingent & deferred consideration payable
4,718
5,061
5,041
Current tax liabilities
747
526
620
14,244
12,535
14,823
Total liabilities
17,931
16,910
18,771
Net assets
36,344
30,815
33,647
Equity attributable to equity holders of the Company
Called up share capital
113
111
112
Share premium reserve
6,132
5,834
5,948
Merger reserve
3,010
3,010
3,010
Retained earnings
27,089
21,860
24,577
Net assets
36,344
30,815
33,647
Tracsis plc- Consolidated statement of changes in equity
For the six months ended 31 January 2018
Share Capital
Share Premium Reserve
Merger Reserve
Retained Earnings
Total
Unaudited
£'000
£'000
£'000
£'000
£'000
At 1 August 2016
110
5,622
3,010
19,924
28,666
Profit for the six month period ended 31 January 2017
-
-
-
1,401
1,401
Total comprehensive income
-
-
-
1,401
1,401
Transactions with owners:
Tax movements in equity
-
-
-
51
51
Share based payment charges
-
-
-
484
484
Exercise of share options
1
212
-
-
213
At 31 January 2017
111
5,834
3,010
21,860
30,815
Audited
At 1 August 2016
110
5,622
3,010
19,924
28,666
Profit for the year ended 31 July 2017
-
-
-
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
Unaudited
At 1 August 2017
112
5,948
3,010
24,577
33,647
Profit for the six month period ended 31 January 2018
-
-
-
1,900
1,900
Total comprehensive income
-
-
-
1,900
1,900
Transactions with owners:
Share based payment charges
-
-
-
612
612
Exercise of share options
1
184
-
-
185
At 31 January 2018
113
6,132
3,010
27,089
36,344
Tracsis plc
Condensed consolidated interim statement of cash flows for the six months to 31 January 2018
Unaudited
Six months to
Unaudited
Six months to
Audited
Year ended
31 Jan 2018
31 Jan 2017
31 July 2017
£'000
£'000
£'000
Operating activities
Profit for the period
1,900
1,401
3,715
Finance income
(9)
(11)
(15)
Finance expense
29
18
38
Depreciation
389
393
799
Loss on disposal of plant & equipment
-
-
12
Share of result of equity accounted investees
66
36
77
Exceptional items
-
-
139
Other operating income
-
-
(134)
Amortisation of intangible assets
837
837
1,674
Income tax charge
482
387
901
Share based payment charges
612
484
1,300
Operating cash inflow before changes in working capital
4,306
3,545
8,506
Movement in inventories
102
61
32
Movement in trade and other receivables
897
598
(2,314)
Movement in trade and other payables
(369)
(1,804)
488
Cash generated from operations
4,936
2,400
6,712
Finance income
9
11
15
Finance expense
(29)
(18)
(38)
Income tax paid
(613)
(78)
(664)
Net cash flow from operating activities
4,303
2,315
6,025
Investing activities
Purchase of plant and equipment
(229)
(184)
(558)
Proceeds from disposal of plant and equipment
37
3
56
Equity investments and loans to investments and associated undertakings
(700)
-
(550)
Repayment of loans from investments
-
85
111
Receipt of deferred consideration
-
123
300
Payment of contingent & deferred consideration
(323)
(1,089)
(1,109)
Net cash flow used in investing activities
(1,215)
(1,062)
(1,750)
Financing activities
Dividends paid
-
-
(362)
Proceeds from the exercise of share options
185
213
328
Hire purchase repayments
(133)
(153)
(276)
Net cash flow from / (used in) financing activities
52
60
(310)
Net increase in cash and cash equivalents
3,140
1,313
3,965
Cash and cash equivalents at beginning of period
15,350
11,385
11,385
Cash and cash equivalents at end of period
18,490
12,698
15,350
Notes to the consolidated interim report
For the six months ended 31 January 2018
1 Basis of preparation
Tracsis plc (the 'Company') is a company domiciled in England. The condensed consolidated interim financial report of the Company as at and for the six months ended 31 January 2018 comprises the Company and its subsidiaries (together referred to as the 'Group'). The principal activities of the Group are the provision of software, services and technology for the rail industry ('Rail Technology & Services'), along with traffic surveys, event planning and traffic management, and data capture ('Traffic Data & Services') (see note 4).
The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 July 2017, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.
The interim financial information for each of the six month periods ended 31 January 2018 and 31 January 2017 has not been audited and does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. The information for the year ended 31 July 2017 does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006, but is based on the statutory accounts for that year, on which the Group's auditors issued an unqualified report and which have been filed with the Registrar of Companies.
The principal risks and uncertainties are unchanged from the previous year end, are expected to be largely unchanged for the remainder of the financial year, and are as disclosed on pages 9 to 12 of the Annual Report & Accounts for the year ended 31 July 2017. The Board considers risks on a periodic basis and has maintained the key risks as follows, on a Group wide basis:
· Changes to the structure of the UK rail industry
· Competition
· Reduced government spending
· Reliance on certain key customers
· Attraction and retention of key employees
· Delays to project delivery
· Technological changes
· Customer pricing pressure
· Health & Safety
· Brand reputation
· Impact of Brexit negotiations and resulting UK trading position
Further detail on risks is provided in the Annual Report & Accounts for the year ended 31 July 2017.
The condensed consolidated interim financial information was approved for issue on 28 March 2018.
2 Accounting Policies
The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its audited consolidated financial statements for the year ended 31 July 2017 and which will form the basis of the 2018 Annual Report except as described below. The basis of consolidation is set out in the Group's accounting policies in those financial statements.
The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on historical experience and other factors, such as expectations of future events and are believed to be reasonable under the circumstances. Actual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited consolidated financial statements for the year ended 31 July 2017.
3 Changes in accounting policies
The following amendments to financial reporting standards were adopted from 1 August 2017, the start of the new financial year. None of them have had a significant impact on the Group:
· 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.
The following new amendments to standards were in issue but are not yet effective for the financial year beginning 1 August 2017:
· 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
· IFRS 16 'Leases' - provides a single lessee accounting model, specifying how leases are recognised, measured, presented and disclosed
4 Segmental analysis
The Group has divided its results into two segments being 'Rail Technology and Services' and 'Traffic & Data Services'.
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:
Six months
Six months
Year
Ended
ended
ended
31 January
31 January
31 July
2018
2017
2017
£'000
£'000
£'000
Rail Technology & Services
9,249
7,922
15,964
Traffic & Data Services
8,828
7,700
18,522
Total revenue
18,077
15,622
34,486
A geographical analysis of revenue is provided below:
Six months ended 31 January 2018
Six months ended 31 January
2017
Year
ended
31 July
2017
£'000
£'000
£'000
United Kingdom
17,282
14,804
33,224
North America
194
414
437
Rest of the World
601
404
825
Total
18,077
15,622
34,486
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.
Six months ended 31 January 2018
Rail Technology & Services
Traffic & Data Services
Unallocated
Total
£000
£000
£000
£000
Revenues
Total revenue for reportable segments
9,249
8,828
-
18,077
Consolidated revenue
9,249
8,828
-
18,077
Profit or loss
EBITDA for reportable segments
3,536
770
-
4,306
Amortisation of intangible assets
-
-
(837)
(837)
Depreciation
(67)
(322)
-
(389)
Share-based payment charges
-
-
(612)
(612)
Share of result of equity accounted investees
-
-
(66)
(66)
Interest receivable/payable(net)
-
-
(20)
(20)
Consolidated profit before tax
3,469
448
(1,535)
2,382
Six months ended 31 January 2017
Rail Technology & Services
Traffic & Data Services
Unallocated
Total
£000
£000
£000
£000
Revenues
Total revenue for reportable segments
7,922
7,700
-
15,622
Consolidated revenue
7,922
7,700
-
15,622
Profit or loss
EBITDA for reportable segments
3,163
382
-
3,545
Amortisation of intangible assets
-
-
(837)
(837)
Depreciation
(71)
(322)
-
(393)
Share-based payment charges
-
-
(484)
(484)
Share of result of equity accounted investees
-
-
(36)
(36)
Interest receivable/payable(net)
-
-
(7)
(7)
Consolidated profit before tax
3,092
60
(1,364)
1,788
Year ended 31 July 2017
Rail Technology & Services
Traffic & Data Services
Unallocated
Total
£000
£000
£000
£000
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 results of equity accounted investees
-
-
(77)
(77)
Consolidated profit before tax
6,327
1,368
(3,079)
4,616
31 January 2018
Rail Technology & Services
Traffic & Data Services
Unallocated
Total
£'000
£000
£000
£000
Assets
Total assets for reportable segments (exc. cash)
4,699
5,285
-
9,984
Intangible assets & investments
-
-
25,228
25,228
Deferred tax assets
-
-
573
573
Cash and cash equivalents
8,189
1,919
8,382
18,490
Consolidated total assets
12,888
7,204
34,183
54,275
Liabilities
Total liabilities for reportable segments
(7,126)
(2,511)
-
(9,637)
Deferred tax
-
-
(3,576)
(3,576)
Contingent & deferred consideration
-
-
(4,718)
(4,718)
Consolidated total liabilities
(7,126)
(2,511)
(8,294)
(17,931)
31 January 2017
Rail Technology & Services
Traffic & Data Services
Unallocated
Total
£'000
£000
£000
£000
Assets
Total assets for reportable segments (exc. cash)
3,405
5,075
-
8,480
Intangible assets & investments
-
-
25,924
25,924
Deferred tax assets
-
-
623
623
Cash and cash equivalents
5,112
1,674
5,912
12,698
Consolidated total assets
8,517
6,749
32,459
47,725
Liabilities
Total liabilities for reportable segments
(5,469)
(2,247)
-
(7,716)
Deferred tax
-
-
(4,133)
(4,133)
Contingent & deferred consideration
-
-
(5,061)
(5,061)
Consolidated total liabilities
(5,469)
(2,247)
(9,194)
(16,910)
31 July 2017
Rail Technology & Services
Traffic & Data Services
Unallocated
Total
£'000
£000
£000
£000
Assets
Total assets for reportable segments (exc. cash)
3,581
7,599
-
11,180
Intangible assets
-
-
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)
5 Earnings per share
Basic earnings per share
The calculation of basic earnings per share for the Half Year to 31 January 2018 was based on the profit attributable to ordinary shareholders of £1,900,000 (Half Year to 31 January 2017: £1,401,000, Year ended 31 July 2017: £3,715,000) and a weighted average number of ordinary shares in issue of 28,121,000 (Half Year to 31 January 2017: 27,706,000, Year ended 31 July 2017: 27,804,000), calculated as follows:
Weighted average number of ordinary shares
In thousands of shares
Six months ended 31 January
2018
Six months ended 31 January
2017
Year
ended
31 July
2017
Issued ordinary shares at start of period
27,964
27,546
27,546
Effect of shares issued for cash
157
160
258
Weighted average number of shares at end of period
28,121
27,706
27,804
Diluted earnings per share
The calculation of basic earnings per share for the Half Year to 31 January 2018 was based on the profit attributable to ordinary shareholders of £1,900,000 (Half Year to 31 January 2017: £1,401,000, Year ended 31 July 2017: £3,715,000) and a weighted average number of ordinary shares in issue after adjustment for the effects of all dilutive potential ordinary shares of 29,010,000 (Half Year to 31 January 2017: 28,591,000, Year ended 31 July 2017: 28,738,000).
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:
Six months ended 31 January
2018
Six months ended 31 January
2017
Year
ended
31 July
2017
£'000
£'000
£'000
Profit attributable to ordinary shareholders
1,900
1,401
3,715
Amortisation of intangible assets
837
837
1,674
Share-based payment charges
612
484
1,300
Exceptional items
-
-
139
Other operating income
-
-
(134)
Adjusted profit for EPS purposes
3,349
2,722
6,694
Weighted average number of ordinary shares
In thousands of shares
For the purposes of calculating Basic earnings per share
28,121
27,706
27,804
Adjustment for the effects of all dilutive potential ordinary shares
29,010
28,591
28,738
Basic adjusted earnings per share
11.91p
9.82p
24.08p
Diluted adjusted earnings per share
11.54p
9.52p
23.29p
6 Seasonality
The Group offers a range of products and services within its overall suite, meaning that revenues can fluctuate depending on the status and timing of certain sales. Some of these are exposed to high levels of seasonality for example:
· The Group's Traffic & Data Services division also derives revenue from work taking place at certain times of the year and is exposed to seasonality, in particular for SEP which has a very high level of seasonality based on the timing of events;
· Ontrac Limited performs some significant software development projects and the specific timing of these can vary depending on the commercial terms;
· Revenues from remote condition monitoring are also driven by the size and timing of significant orders received from major customers;
· Finally, the timing of certain software licence renewals and new sales along with consultancy offerings can also impact on when work is performed, revenues are delivered and therefore recognised.
As such, the overall Group continues to be exposed to a high degree of seasonality throughout the year and reporting period.
7 Dividends
As part of the Group's commitment to a progressive dividend policy adopted in 2012, the Directors recommend an interim dividend payment of 0.7p per share, with a total expected value of c. £198k based on the number of shares in issue at the date of this interim report.
The cash cost of the dividend payments made is shown below:
Six months ended 31 January
2018
Six months ended 31 January
2017
Year
ended
31 July
2017
£000
£000
£000
Final dividend for 2015/16 of 0.70p per share paid
-
-
195
Interim dividend for 2016/17 of 0.60p per share paid
-
-
167
Total dividends paid
-
-
362
The dividends paid or proposed in respect of each financial year ended 31 July is as follows:
2018
2017
2016
2015
2014
2013
2012
£'000
£'000
£'000
£000
£000
£000
£000
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 of 0.30p per share paid
-
-
-
-
-
75
-
Final dividend for 2012/13 of 0.40p per share paid
-
-
-
-
-
102
-
Interim dividend for 2013/14 of 0.35p per share paid
-
-
-
-
89
-
-
Final dividend for 2013/14 of 0.45p per share paid
-
-
-
-
119
-
-
Interim dividend for 2014/15 of 0.40p per share paid
-
-
-
106
-
-
-
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 of 0.70p per share paid
-
-
195
-
-
-
-
Interim dividend for 2016/17 of 0.60p per share paid
-
167
-
-
-
-
-
Final dividend for 2016/17 of 0.80p per share paid
-
222
-
-
-
-
-
Interim dividend for 2017/18 of 0.70p per share proposed
198
-
-
-
-
-
-
The total dividends paid or proposed in respect of each financial year ended 31 July is as follows:
2018
2017
2016
2015
2014
2013
2012
Total dividends paid per share
n/a
1.4p
1.2p
1.0p
0.8p
0.7p
0.55p
8 Related party transactions
The following transactions took place during the year with other related parties:
Purchase of
Amounts owed to
goods and services
related parties
H1 2018
H1 2017
FY 2017
H1 2018
H1 2017
FY 2017
£'000
£'000
£'000
£'000
£'000
£'000
Leeds Innovation Centre Limited
50
41
79
9
8
8
Ashtead Plant Hire Co Limited
1
10
13
-
1
2
Citi Logik Limited
18
-
126
-
-
-
Nutshell Software Limited
44
-
6
-
-
7
Vivacity Labs Limited
31
-
7
36
-
-
Leeds Innovation Centre Limited is a company which is connected to The University of Leeds. Tracsis plc rents its office accommodation, along with related office services, from this company.
Ashtead Plant Hire Co Limited is a subsidiary of Ashtead Group plc (Ashtead) of which Chris Cole is Chairman. SEP Limited, one of the Group's subsidiaries purchased goods and services from Ashtead during the year. All transactions with Ashtead took place at arm's length commercial rates and were not connected to Mr Cole's position at Ashtead. SEP Limited traded with Ashtead prior to its acquisition by Tracsis plc.
On 21 July 2016, the Group entered into an agreement to make an investment in Nutshell Software Limited, a company connected to Martyn
Cuthbert who is a Director of Ontrac Limited and Ontrac Technology Limited, subsidiary companies of the Group following their acquisition in
December 2015.
Vivacity Labs Limited and Citi Logik Limited are related parties by virtue of the Group's shareholding in these entities.
Sale of
Amounts owed by
goods and services
related parties
H1 2018
H1 2017
FY 2017
H1 2018
H1 2017
FY 2017
£'000
£'000
£'000
£'000
£'000
£'000
WSP UK Limited
1,202
1,015
2,489
49
69
708
WSP UK Limited (WSP) is a company which is connected to Chris Cole who serves as non-executive Chairman of Tracsis plc and also of WSP Global Inc, WSP's parent company. Sales to WSP took place at arm's length commercial rates and were not connected to Mr Cole's position at WSP.
9 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:
Six months ended 31 January 2018
Six months ended 31 January 2017
Year ended 31 July 2017
£'000
£000
£000
Profit before tax
2,382
1,788
4,616
Finance income / expense - net
20
7
23
Share-based payment charges
612
484
1,300
Exceptional items
-
-
139
Other operating income
-
-
(134)
Amortisation of intangible assets
837
837
1,674
Depreciation
389
393
799
Share of result of equity accounted investees
66
36
77
Adjusted EBITDA
4,306
3,545
8,494
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:
Six months ended 31 January 2018
Six months ended 31 January 2017
Year ended 31 July 2017
£'000
£000
£000
Profit before tax
2,382
1,788
4,616
Finance income / expense - net
20
7
23
Share-based payment charges
612
484
1,300
Exceptional items
-
-
139
Other operating income
-
-
(134)
Amortisation of intangible assets
837
837
1,674
Share of result of equity accounted investees
66
36
77
Adjusted profit
3,917
3,152
7,695
Adjusted EBITDA reconciles to adjusted profit as set out below:
Six months ended 31 January 2018
Six months ended 31 January 2017
Year ended 31 July 2017
£'000
£000
£000
Adjusted EBITDA
4,306
3,545
8,494
Depreciation
(389)
(393)
(799)
Adjusted profit
3,917
3,152
7,695
10 Events after the balance sheet date
On 1 February 2018, the Group completed the acquisition of Travel Compensation Services Limited ('TCS'), Delay Repay Sniper ('DRS'), and S Dalby Consulting Limited.
TCS is the leading software provider of enterprise delay repay solutions to the UK Rail Industry. The business has developed novel technology that allows train operators to automatically process the large volumes of consumer claims arising from rail delays and in doing so lower the transactional costs involved whilst speeding up response times and helping eliminate fraud. The benefits to the rail industry are significant and in a short space of time TCS has already secured several major TOC customers. DRS is a consumer facing web portal that enables rail passengers to quickly and easily submit valid claims under the delay repay scheme to rail operators. The business operates a subscription service model and is highly relevant to regular rail travellers and commuters who are often delayed many times per month and wish to forego the time and effort involved in submitting multiple individual claims.
In the year ended 30 September 2017, TCS and DRS generated revenue of £0.7m and adjusted Profit before Tax of £0.3m. The TCS and DRS offerings are highly complementary to Tracsis' rail offering and will bring substantial cost benefits to our TOC client base whilst also improving customer satisfaction. The Directors of Tracsis believe this market is set for significant growth in the years ahead.
The acquisition consideration comprises an initial cash payment of £1.75m which was funded out of Tracsis cash reserves and the issue of 28,571 new ordinary shares in Tracsis (issued at a price of 525p which valued the shares at £0.15m), along with a payment of around £0.2m that represents the value of the Company's tangible net assets at completion. Additional contingent consideration of up to £4.7m is payable subject to TCS and DRS achieving certain financial targets in the three years post acquisition.
The Directors are still assessing the fair value of the contingent consideration payable and the associated fair value of the assets and liabilities and full details will be provided in the Annual report for the year ending 31 July 2018.
Statement of Directors' Responsibilities
The Directors confirm to the best of their knowledge that:
i) The condensed consolidated interim financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;
ii) The interim management report includes a fair review of the information required by the FSA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R).
Financial statements are published on the Group's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Group's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
The Directors of Tracsis plc and their functions are listed below.
Further information for Shareholders
Company number:
05019106
Registered office:
Leeds Innovation Centre
103 Clarendon Road
Leeds
LS2 9DF
Directors:
Chris Cole (Non-Executive Chairman)
John McArthur (Chief Executive Officer)
Max Cawthra (Group Finance Director)
John Nelson (Non-Executive Director)
Lisa Charles-Jones (Non-Executive Director)
Liz Richards (Non-Executive Director)
Company Secretary:
Max Cawthra
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR BSGDXXDDBGIR
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