TIDMTRCS
RNS Number : 3339T
Tracsis PLC
14 November 2019
Tracsis plc
('Tracsis', 'the Company' or 'the Group')
Audited results for the year ended 31 July 2019
Tracsis, a leading provider of software, hardware and services
for the rail, traffic data and wider transport industries, is
pleased to announce its audited results for the year ended 31 July
2019.
Financial Highlights:
-- Revenue increased 24% to GBP49.2m (2018: GBP39.8m)
-- Adjusted EBITDA* increased 12% to GBP10.5m (2018: GBP9.4m)
-- Operating profit before exceptional items increased 13% to GBP6.7m (2018: GBP5.9m)
-- Cash balances of GBP24.1m (2018: GBP22.3m)
-- Full year dividend increased 13% to 1.8p per share (2018: 1.6p)
-- Fully diluted adjusted Earnings Per Share increased 8% to 27.42p (2018: 25.47p)
Strategic and Operational Highlights:
-- Completion of three acquisitions in the period to enhance the
overall product and service offering, all of which have contributed
to the Group since ownership:
o Compass Informatics Limited ("Compass");
o Cash & Traffic Management Limited ("CTM"); and
o Bellvedi Limited ("Bellvedi"),
-- Five-year Framework Agreement secured with a major Train
Owning Group for our TRACS Enterprise product - Tracsis' largest
software contract to date
-- Continued high levels of recurring revenue across all of our software products
-- Strong trading in our rail infrastructure businesses - MPEC
(Remote Condition Monitoring Hardware and Software) and Ontrac
(Safety and Risk Management Software)
-- Continued margin improvement within our Traffic & Data
Services division with an increased focus on data analytics and a
stronger technology offering
-- Chris Barnes succeeded John McArthur as Group CEO, with the transition now complete
Chris Barnes, Chief Executive Officer, commented:
"In my first report as the new CEO, I am delighted to present
these results which show good growth for the Tracsis Group compared
to the previous year. The results reflect the impact of the
acquisitions that we have completed in the period along with strong
organic growth, something which is a key focus as we look to
increase collaboration and expand our product offerings across the
Group. The acquisitions we have completed in the year will have a
full impact in the next year, and combined with the strong pipeline
of organic sales opportunities provide a good platform for future
growth of the business in the years to come. I have inherited a
great business, with a wide range of compelling product and service
offerings, a great team of colleagues, an excellent blue-chip
client base, and I am excited about the prospects for the
Group."
(*) Calculation unchanged from previous years and in line with
broker forecasts and research coverage on Tracsis. Full definition
and reconciliation in Note 6.
Enquiries:
Tracsis plc Tel: 0845 125 9162
Chris Barnes, CEO
Max Cawthra, CFO
finnCap Ltd Tel: 020 7220 0500
Christopher Raggett/Scott Mathieson, Corporate Finance
Andrew Burdis, Corporate Broking
Chairman & Chief Executive Officer's Report
A welcome from Chris Cole, Non-Executive Chairman
This was another good year for Tracsis. The completion of three
further acquisitions combined with good levels of organic growth,
and increased levels of profitability has culminated in our 2019
results being in line with market expectations. The second half of
the year was particularly strong for the Group, reflecting
seasonality in the business, strong underlying trading and the
timing of acquisitions made. all of which is very pleasing.
This year was also important in that we achieved a successful
transition of CEO from John McArthur to Chris Barnes which was very
smooth and is now complete, and is testament to the efforts of all
involved. John continues to work for the Group in an advisory role
focused solely on acquisitions. Following his appointment, Chris
Barnes, together with the senior management team, has generated a
strategic plan for the business to ensure that Tracsis maximises
its future organic and acquisitive growth opportunities.
Introduction
The year ended 31 July 2019 was another year of growth, with
Group revenues of GBP49.2m, an overall increase of 24%, and Group
adjusted EBITDA of GBP10.5m an overall increase of 12%. This was
achieved through a mix of good levels of organic revenue growth,
and also a good contribution from three acquisitions completed
during the year. The full benefit of the new acquisitions will be
realised in the next financial year. The Group's financial position
at year end remained strong, with cash balances in excess of GBP24m
and no debt, even after investing over GBP9m on acquisitions,
investments, and paying GBP2.1m of contingent consideration.
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 offerings:
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; and
-- 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.
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 Traffic (TLT) are also offered to improve traffic
monitoring and traffic flow in and out of major event venues.
Financial Summary
Group revenues of GBP49.2m (2018: GBP39.8m) represent a 24%
increase on the previous year which came via a combination of
organic growth of 9% (GBP3.5m) and by acquisition of 15% (GBP5.9m),
which is a good mix of revenue growth. The adjustment in respect of
IFRS 15 had an impact of around GBP0.4m to revenues, and this was
the first time that this new standard has been adopted.
Adjusted EBITDA* of GBP10.5m was an increase of 12% on the
previous year (2018: GBP9.4m), with Adjusted Profit** of GBP9.7m
being 12% higher than the previous year (2018: GBP8.7m). Statutory
Profit before Tax was GBP6.6m (2018: GBP8.3m), although the
previous year included an exceptional GBP2.65m credit relating to
contingent consideration in respect of the Ontrac acquisition which
arose due to specific target milestones not being met. All of the
Group's key financial metrics show good growth on the previous year
and reflect a good mix of organic and acquired performance. A net
exceptional item of GBP0.1m was recognised this year in respect of
the TCS acquisition made in the previous year, following a detailed
review of the contingent consideration, and the carrying value of
the goodwill recognised previously in respect of this
acquisition.
At 31 July 2019, the Group's cash balances increased to GBP24.1m
(2018: GBP22.3m), and cash generation continues to be strong.
Overall cash balances increased by GBP1.8m in the financial year,
even after paying GBP9.6m in respect of the three companies that
were acquired during the year (GBP6.8m outflow net of cash
acquired), investing GBP0.4m, and paying contingent consideration
of GBP2.1m in respect of the Ontrac acquisition. After taking
account of these investments, the Group therefore generated
GBP11.1m of cash, which again demonstrates strong conversion of
profits to cash. The Group continues to be debt free.
* Earnings before finance income, tax, depreciation,
amortisation, exceptional items, other operating income, and
share-based payment charges and share of result of equity accounted
investees - see note 6 for reconciliation.
** Earnings before finance income, tax, amortisation,
exceptional items, other operating income, share-based payment
charges, and share of result of equity accounted investees - see
note 6 for reconciliation.
Trading Progress and Prospects
Rail Technology & Services
Summary segment results:
Revenue GBP21.9m (2018: GBP19.0m)
EBITDA * GBP6.9m (2018: GBP6.8m)
Profit before Tax GBP6.7m (2018: GBP6.6m)
Software
Sales of Operational Software and Infrastructure software,
excluding acquisitions, increased by 9% to GBP14.8m (2018:
GBP14.1m) which represents good growth. This takes account of the
various revenue streams from our TRACS, Ontrac, COMPASS, Retail
& Operations, and Delay-Repay product suites. All software
products continue to benefit from high renewal rates from existing
clients.
In January 2019, we were pleased to announce a significant
five-year Framework Agreement with a major Train Owning Group
(which operates several Train Operating Company (TOC) franchises)
for our TRACS Enterprise product, which will increase operational
resilience and performance, with the roll out well underway. In the
fullness of time, this should lead to further revenue and EBITDA
growth for the Group, assuming roll out across the client owning
Group's other TOCs continues as planned. As part of this offering,
Tracsis also offers business change support and have launched an
Alliancing model which aims to deliver a ground breaking
performance uplift to the industry.
We were also pleased to secure a significant order for data
hosting services and licences with another major rail client. The
order was primarily a renewal and extension of existing
arrangements over a two year period, with a value in excess of
GBP2m. The Ontrac business was also supported by winning a number
of bespoke development projects, plus continued growth of its core
RailHub suite of desktop and mobile applications with multiple new
subscriptions across the rail infrastructure sector of the
industry. Ontrac was also involved in supporting the development
and implementation of exciting new platforms with its key client,
as well as developing 'virtual reality on demand' which enables
users to virtually manage and optimise their rail infrastructure
assets.
Our Travel Compensation Services business successfully
implemented its Delay Repay application into two new train
operators, and also launched its cross-TOC fraud platform Exposure,
plus also its 'One Click' application to support political and
consumer demands for simplified/claim processing, for which it won
an award, which was particularly pleasing.
The Group has invested heavily in its technology base and in
March 2019, also relocated its Leeds headquarters to larger more
modern offices that are far better suited to accommodate our
expanding software team and future growth ambitions.
Remote Condition Monitoring (RCM)
Revenues of GBP4.9m were significantly higher than the previous
year (2018: GBP3.0m), with the growth being driven by high demand
from a key UK customer at the end of Control Period Five and this
performance represents one of the strongest financial years in this
part of the Group's history. Progress continues to be made in the
North American market with paid trials with a number of railroad
and transit operators, and further sales were secured from other
overseas geographies. The United States continues to be a key
target market and offers significant opportunities albeit with a
longer sales cycle as we develop relationships with new customers
who require time to familiarise themselves with and system test the
Group's offering.
Consultancy
Consultancy and professional services revenue was GBP1.8m (2018:
GBP1.9m) which was a good performance given the reduction in
franchise bid work compared to the previous year which demonstrates
the resilience that has been built up in this part of the Group; as
we secured work with other government bodies, a variety of other
train operating companies (TOCs), and several multi-disciplinary
engineering companies.
Acquisitions: Bellvedi
In the three months post acquisition, Bellvedi contributed
GBP0.4m of revenue to the overall Group revenues and the full year
benefit will be experienced in the next financial year. In recent
years, Bellvedi has grown rapidly, and its ATTUne software is a key
part of the TRACS Enterprise offering, in addition to having its
own client base. The Bellvedi development team has been increased
in size to facilitate delivery to an expanding user base plus
delivery on other large projects and new products, such as ATTUne4C
which brings the Bellvedi systems into the control room
environment.
Overall EBITDA growth in the period in the Rail Technology and
Services division was impacted by the mix of work delivered during
the period with a change in focus to the delivery of previously
announced milestone based multi-year large software development
contracts for products like TRACS Enterprise at the expense of
short-term bespoke development work.
Traffic & Data Services
Summary segment results:
Revenue GBP27.3m (2018: GBP20.8m)
EBITDA* GBP3.6m (2018: GBP2.6m)
Profit before Tax GBP2.9m (2018: GBP2.0m)
Traffic Surveys, Transport Insights and Passenger Analytics
Revenues of GBP14.7m were delivered in the year (2018:
GBP14.5m), accompanied by an increase in profitability. Notable
highlights in the year include delivery of the largest set of
National Road Traffic Census survey sites across the UK in a single
financial year, the utilisation of innovative Artificial
Intelligence software (through the Group's investment in Vivacity
Labs) to deliver large scale surveys for a major client, growth of
our data analytics capabilities and delivery of innovative product
solutions and dashboards to clients.
Our Passenger Analytics team were pleased to have maintained
historic levels of traditional manual count business whilst also
winning new business including a multi-year ticketless travel
survey framework. The business also continues to develop its own
software product for automatic train loading data, which is
expected to be a key technology platform for future growth.
Location Analytics
The majority of the revenue of GBP2.4m from Compass Informatics
since its acquisition was derived from Ireland, though the business
has secured a number of projects/contracts with UK water companies
which will continue to be delivered in financial year 2019-20. The
strategy remains to grow their business footprint in the UK, by
selling its range of leading products and services to the Group's
existing UK client base, where there are clear market
opportunities. Much of the current revenue is derived from Irish
government bodies which provides stability for some of the larger
more innovative projects to be undertaken. The Compass business was
successful in securing some awards for its work at the National
Biodiversity Data Centre and the BIO platform, being delivered to
three UK water companies, was a finalist at the Water Industry
Awards.
Event Transport Management
Our existing SEP business achieved revenues of GBP7.1m (2018:
GBP6.3m) which again showed further growth. A good contribution of
GBP3.1m from CTM was experienced, which takes total combined
revenue from this part of the Group in the year to GBP10.2m which
is a significant offering. Both businesses continue to work with
some extremely high-profile events and organisations, which are
blue chip by nature, and in many cases secured under multi-year
contracts, with one large contract in particular being renewed in
the year.
Integration planning for CTM is well underway, and synergy
benefits are expected to be progressively realised once the two
businesses are combined into one Combined Events Business. The
businesses have already started working together to exploit each
other's strengths and ensuring that internal capabilities are
maximised by taking best practice from each business.
The business successfully delivered traffic management and car
parking for record numbers of people at key events, plus the
planning, delivery, monitoring and control of Transport Management
Systems for other key clients, and also successfully delivered
Tracsis Live Traffic (TLT) into several major events. The Group
also works with one of the largest outdoor music festivals in the
world which was again successfully delivered on a huge scale.
In general for the Traffic & Data Services Division it was
pleasing to see an improvement in overall profit margins versus the
previous year, which has been a key strategic objective for some
time now.
Dividends
In February 2012, the Board implemented a progressive dividend
policy and the Group intends to maintain this going forwards. An
interim dividend of 0.8p per share was paid in April 2019. A final
dividend of 1.0p per share in respect of 2018/19 is proposed, to
take the full year dividend to 1.8p. This represents a 13% increase
on the previous year's dividend of 1.6p per share.
The dividend remains well covered by the Group's profitability
and cash position, which supports its primary objective of growth
via acquisition and through further development of new products and
services. The Board remains committed to maintaining the
progressive dividend policy as the business continues to trade
profitably and in line with its expectations. The dividend will be
paid on 14 February 2020 to shareholders on the register on 31
January 2020.
Acquisitions
We were pleased to have completed three acquisitions in the
period, all of which will increase and enhance our overall product
and service offering. These three acquisitions contributed combined
revenues of GBP5.9m to Group numbers in the year.
Compass Informatics
On 15 January 2019 we acquired Compass Informatics, a
long-established Dublin based business which we have known for a
number of years now and is a natural fit with our Traffic &
Data Services division in terms of our strategy of improving our
data analytic capabilities. This acquisition, our first overseas
transaction, strengthens the product and service offerings to our
client base in the UK and also benefits those existing clients
retained by Compass Informatics in Ireland, and offers potential
benefit and cross-sell potential to Tracsis' existing transport
clients. Compass Informatics is a software development and data
analytics company that specialises in combining geographical
information systems (GIS), location technologies, data analytics
and field computing. The business works across a variety of sectors
but derives most of its revenue from transport, asset management,
planning, and environmental clients.
The acquisition consideration comprised an initial cash payment
of EUR3.15m which was funded out of Tracsis cash reserves and the
issue of shares in Tracsis to a value of EUR350k. An additional
payment of EUR0.5m was made to reflect the net current asset
position of the business, and additional contingent consideration
of up to EUR2.0m is payable subject to Compass Informatics
achieving certain stretched financial targets in the three years
post acquisition.
CTM
On 16 January 2019, we acquired CTM, a well-established provider
of event traffic planning, admission control, and a range of other
event-related services to some of the UK's largest and most
prestigious event clients. CTM is highly complementary to the
Tracsis Traffic & Data Services division with good cross-sell
potential along with clear synergy benefits with Tracsis' existing
SEP Events business which was an excellent acquisition for Tracsis,
that should lead to margin improvement in the fullness of time.
CTM has an excellent track record of organic growth, client
retention and profitability over many years. The acquisition
consideration comprised an initial cash payment of GBP1.3m which
was funded out of Tracsis cash reserves and the issue of shares in
Tracsis to a value of GBP0.15m, along with an additional payment of
GBP0.5m to reflect the net current asset position of the business.
Additional contingent consideration of up to GBP0.75m is payable
subject to CTM achieving certain stretch financial targets in the
two years post acquisition.
Bellvedi
On 30 April 2019, we acquired Bellvedi, a software company that
operates within the rail industry and specialises in timetabling
optimisation software. Bellvedi's key product, ATTUne, is a
timetable planning software package and is extensively used by
Train Operating Companies, infrastructure providers, franchise
bidding teams and rail consultancies for the creation, validation,
optioneering and optimisation of timetables in time pressured
environments. Tracsis and Bellvedi have partnered on several
significant software projects - most notably on Tracsis' recent
major contract wins - with the ATTUne software forming a key part
of the TRACS Enterprise offering. As such, the acquisition of
Bellvedi is strategically important and highly complementary to the
Tracsis rail software offering and future product roadmap.
The acquisition consideration comprised an initial cash payment
of GBP3.7m which was funded out of Tracsis cash reserves and the
issue of shares in Tracsis to a value of GBP0.3m. An additional
payment of circa GBP0.9m was made to reflect the net current asset
position of the business at completion. Additional contingent
consideration of up to GBP7.9m is payable subject to Bellvedi
achieving certain stretched EBITDA financial targets in the four
years post acquisition.
Integration of all newly acquired businesses is well underway.
Due to the timing of the acquisitions, only a partial contribution
from the acquired businesses was made in the period, with the full
impact coming in the next financial year.
Furthermore, the Group exercised a GBP0.3m warrant in Vivacity
Labs, and also participated in a fundraising for Citi Logik for
GBP0.1m, which rounded off a busy year of acquisitions and
investments. The Group remains debt free and continues to benefit
from a strong market reputation with a good pipeline of potential
acquisition opportunities.
We continue to have a strong pipeline of acquisition
opportunities under consideration.
The UK's decision to leave the European Union
There is wider economic uncertainty as a result of the UK's
decision to leave the European Union. As at the date of this report
the Directors consider that the risks specific to Tracsis are
reduced, due to the fact that current sales to European Union
customers are c. 5% of overall Group sales, there is no significant
reliance on a supply chain involving European Union suppliers or
workforce.
Board Changes and people
Chris Barnes joined the Group during the year, succeeding John
McArthur as Chief Executive Officer on 1 May 2019, and the
transition is now complete. John continues to work with Tracsis in
a part-time advisory capacity primarily supporting our M&A
activities. John Nelson stood down as a Non-Executive Director on 1
September 2018, and was replaced by Mac Andrade. On behalf of
everyone at Tracsis, we would like to thank John McArthur for his
significant contribution, and achievements since founding Tracsis.
We would also like to thank John Nelson for his counsel as a
Non-Executive Director over the years and also welcome Mac Andrade
to the Board.
We would also like to thank the entire Tracsis team for all of
the hard work and dedication that has gone into the successful
delivery of new products and projects this year.
Summary and Outlook
2018-19 was another good year for Tracsis and an important one
in terms of the evolution of the Group, with three acquisitions
being made and a change of Chief Executive, all delivered whilst
achieving further growth in revenue and profitability and
maintaining our excellent health and safety record, which was a
great team effort.
Tracsis continues to operate in an area where there are strong
drivers for business growth. These include
-- Rapid Urbanisation: driven by population growth, finite
capacity for the movement of goods and people, transformational
technology changes and Mobility as a Service, all underpinned by
advanced data analytic methodologies and the growing concept of
smart cities and infrastructure;
-- Big Data / Connectivity: driven by huge growth in connected
devices, intelligent transport solutions, condition monitoring and
data visualisation all leading to the opportunity to make more
informed decisions and preventative interventions;
-- Enhanced Performance: a growing requirement across the
transportation industry for greater levels of operational
efficiency, performance improvement, asset optimisation and
enhanced safety all with lower operational costs and real time
control.
Tracsis' range of products and services are well suited to
support all of these growth drivers, given the Group offers a wide
range of products and services covering data acquisition and smart
analytics, virtualisation and digitalisation of assets, remote
condition monitoring and predictive maintenance and 'real time'
control supported as hosted enterprise solutions.
For this reason, the directors believe that Tracsis is well
placed for further growth and have confidence in the core markets
that the Group serves and operates in.
Thanks go to our colleagues, clients and other industry
partners, and we look forward to continuing to share further
success with them in the future.
Chris Cole, Chairman
Chris Barnes, Chief Executive Officer
November 14, 2019
Consolidated Statement of Comprehensive Income for the year
ended 31 July 2019
2019 2018
Continuing
operations Acquisitions Total
Note GBP000 GBP000 GBP000 GBP000
-------------------------------------- ----- ------------ --------------- --------- ---------
Revenue 3 43,325 5,894 49,219 39,834
Cost of sales (17,539) (2,624) (20,163) (16,623)
-------------------------------------- ----- ------------ --------------- --------- ---------
Gross profit 25,786 3,270 29,056 23,211
Administrative costs (19,158) (3,202) (22,360) (14,727)
-------------------------------------- ----- ------------ --------------- --------- ---------
Adjusted EBITDA* 3,6 9,662 852 10,514 9,425
Depreciation (798) (33) (831) (760)
-------------------------------------- ----- ------------ --------------- --------- ---------
Adjusted profit ** 6 8,864 819 9,683 8,665
Amortisation of intangible
assets (1,831) (420) (2,251) (1,774)
Other operating income 244 16 260 214
Share-based payment charges (927) (107) (1,034) (1,193)
-------------------------------------- ----- ------------ --------------- --------- ---------
Operating profit / (loss) before
exceptional items 6,350 308 6,658 5,912
Exceptional items (net) 9 278 (240) 38 2,572
-------------------------------------- ----- ------------ --------------- --------- ---------
Operating profit / (loss) 6,628 68 6,696 8,484
Finance income 58 - 58 19
Finance expense (21) - (21) (27)
Share of result of equity accounted
investees (174) - (174) (201)
Profit / (loss) before tax 3 6,491 68 6,559 8,275
Taxation (1,337) (151) (1,488) (1,029)
Profit / (loss) after tax 5,154 (83) 5,071 7,246
-------------------------------------- ----- ------------ --------------- --------- ---------
Other comprehensive income/(expense)
Items that are or may be reclassified
subsequently to profit or loss
Foreign currency translation
differences - foreign operations - 17 17 -
-------------------------------------- ----- ------------ --------------- --------- ---------
Total recognised income for
the year 5,154 (66) 5,088 7,246
-------------------------------------- ----- ------------ --------------- --------- ---------
Earnings per ordinary share
Basic 4 18.07p (0.29p) 17.78p 25.70p
Diluted 4 17.54p (0.28p) 17.26p 24.85p
-------------------------------------- ----- ------------ --------------- --------- ---------
* Earnings before finance income, tax, depreciation,
amortisation, exceptional items, other operating income, and
share-based payment charges and share of result of equity accounted
investees - see note 6.
** Earnings before finance income, tax, amortisation,
exceptional items, other operating income, share-based payment
charges, and share of result of equity accounted investees - see
note 6.
Consolidated Balance Sheet as at 31 July 2019
2019 2018
Note GBP000 GBP000
-------------------------------------------- ----- ------- -------
Non-current assets
Property, plant and equipment 2,678 2,181
Intangible assets 38,812 26,223
Investments - equity 350 250
Loans due from associated undertakings 250 250
Investments in equity accounted investees 1,098 972
Deferred tax assets 667 602
43,855 30,478
-------------------------------------------- ----- ------- -------
Current assets
Inventories 381 253
Trade and other receivables 9,729 7,329
Cash and cash equivalents 24,104 22,329
-------------------------------------------- ----- ------- -------
34,214 29,911
-------------------------------------------- ----- ------- -------
Total assets 78,069 60,389
-------------------------------------------- ----- ------- -------
Non-current liabilities
Finance leases and hire-purchase contracts 285 121
Contingent consideration payable 8 5,304 1,100
Deferred tax liabilities 5,942 3,875
-------------------------------------------- ----- ------- -------
11,531 5,096
-------------------------------------------- ----- ------- -------
Current liabilities
Finance leases and hire-purchase contracts 277 157
Trade and other payables 16,936 10,316
Contingent consideration payable 8 879 2,165
Current tax liabilities 505 546
-------------------------------------------- ----- ------- -------
18,597 13,184
-------------------------------------------- ----- ------- -------
Total liabilities 30,128 18,280
-------------------------------------------- ----- ------- -------
Net assets 47,941 42,109
-------------------------------------------- ----- ------- -------
Equity attributable to equity holders
of the company
Called up share capital 115 113
Share premium reserve 6,343 6,243
Merger reserve 3,921 3,160
Retained earnings 37,545 32,593
Translation reserve 17 -
-------------------------------------------- ----- ------- -------
Total equity 47,941 42,109
-------------------------------------------- ----- ------- -------
Consolidated Statement of Changes in Equity
Share Capital Share Merger Retained Translation
GBP'000 Premium reserve Earnings reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 August 2017 112 5,948 3,010 24,577 - 33,647
Profit for the year - - - 7,246 - 7,246
Total comprehensive
income - - - 7,246 - 7,246
----------------------------- ---------- --------- --------- -------------- ---------- ------------
Transactions with
owners:
Dividends - - - (423) - (423)
Share based payment
charges - - - 1,193 - 1,193
Exercise of share
options 1 295 - - - 296
Shares issued as
consideration for
business combinations - - 150 - - 150
At 31 July 2018 113 6,243 3,160 32,593 - 42,109
----------------------------- ---------- --------- --------- -------------- ---------- ------------
At 1 August 2018 113 6,243 3,160 32,593 - 42,109
Adjustment on initial
application of IFRS
15 (net of tax)
- Note 10 - - - (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
------------------------ ---- ------ ------ ------- --- -------
Consolidated Cash Flow Statement
2019 2018
Note GBP000 GBP000
----------------------------------------------- ----- -------- --------
Operating activities
Profit for the year 5,071 7,246
Finance income (58) (19)
Finance expense 21 27
Depreciation 831 760
Loss on disposal of plant and equipment 12 17
Non cash exceptional items (99) (2,653)
Other operating income (260) (214)
Amortisation of intangible assets 2,251 1,774
Effect of foreign exchange adjustments 17 -
Share of result of equity accounted investees 174 201
Income tax charge 1,488 1,029
Share based payment charges 1,034 1,193
----------------------------------------------- ----- -------- --------
Operating cash inflow before changes
in working capital 10,482 9,361
Movement in inventories (128) (14)
Movement in trade and other receivables (1,349) 1,259
Movement in trade and other payables 4,877 1,411
Cash generated from operations 13,882 12,017
Interest received 58 19
Interest paid (21) (27)
Income tax paid (1,545) (1,407)
----------------------------------------------- ----- -------- --------
Net cash flow from operating activities 12,374 10,602
----------------------------------------------- ----- -------- --------
Investing activities
Purchase of plant and equipment (731) (509)
Proceeds from disposal of plant and equipment 165 53
Acquisition of subsidiaries (net of cash
acquired) 7 (6,757) (1,714)
Equity investments and loans to investments (400) (700)
Net cash flow used in investing activities (7,723) (2,870)
----------------------------------------------- ----- -------- --------
Financing activities
Dividends paid 5 (486) (423)
Proceeds from exercise of share options 101 296
Hire purchase repayments (342) (303)
Payment of contingent consideration 8 (2,149) (323)
Net cash flow used in from financing
activities (2,876) (753)
----------------------------------------------- ----- -------- --------
Net increase in cash and cash equivalents 1,775 6,979
Cash and cash equivalents at the beginning
of the year 22,329 15,350
Cash and cash equivalents at the end
of the year 24,104 22,329
----------------------------------------------- ----- -------- --------
Notes to the Consolidated Financial Statements
1 Financial information
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 July 2019 or
2018 but is derived from those accounts. Statutory accounts for
2018 have been delivered to the registrar of companies, and those
for 2019 will be delivered in due course. The auditors have
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2)
or (3) of the Companies Act 2006.
2 Basis of preparation
(a) Statement of compliance
The Group consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
('IFRSs') as adopted by the EU and applicable law. The Company has
elected to prepare its parent company financial statements in
accordance with FRS 101. These parent company statements appear
after the notes to the consolidated financial statements
(b) Basis of measurement
The Accounts have been prepared under the historical cost
convention, 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 2018. 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 2018:
-- Annual Improvements to IFRS Standards 2014-2016 Cycle
-- IFRIC 22 Foreign Currency Transactions and Advance Consideration
-- IFRS 9 Financial Instruments
-- Amendments to IFRS 2: Classification and Measurement of
Share-Based Payment Transaction contracts
-- IFRS 15 Revenue from Contracts with Customers
These standards have not had a material impact on the
Consolidated Financial Statements with the exception of the
adoption of IFRS 15. Further information regarding the adoption of
this standard has been detailed in note 10.
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 2019. Apart
from IFRS 16, these standards are not expected to have a
significant impact on adoption.
Effective for the year ending 31 July 2020
-- IFRS 16 Leases (effective date 1 January 2019). Provides a
single lessee accounting model, specifying how leases are
recognised measured, presented and disclosed.
-- IFRIC 23 Uncertainty over Income Tax Treatments (effective date 1 January 2019).
Effective date for EU adoption to be confirmed
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective date to be confirmed)
-- Annual Improvements to IFRS Standards 2015-2017 Cycle (effective date to be confirmed).
IFRS 16 "Leases"
The Group is required to adopt IFRS 16 "Leases" from 1 August
2019. It will bring most leases on to the balance sheet,
eliminating the distinction between operating leases and finance
leases. The Group has a number of operating lease arrangements and
it is considered that the broad impact of IFRS 16 will be to
recognise a right-of-use asset and a corresponding lease liability
for the lease commitments. Additionally, rentals on operating
leases currently charged to the statement of comprehensive income
will be replaced by a depreciation charge on the asset and an
interest expense on the lease liability. The Group will adopt IFRS
16 using the modified retrospective approach. The cumulative effect
of initially adopting IFRS 16 will be recognised as an adjustment
to retained earnings at 1 August 2019 with no restatement of
comparative information. The Group plans to apply the practical
expedient to grandfather the definition of a lease on transition.
This means that it will apply IFRS 16 to all contracts entered into
before 1 August 2019 and identified as leases in accordance with
IAS 17 and IFRIC 4. The Group has assessed the estimated impact
that initial application of IFRS 16 will have on its consolidated
financial statements, as described below. Based on currently
available information, the Group estimates that it will recognise
additional lease assets and liabilities of GBP1.2m to GBP1.4m as at
1 August 2019. The impact on the Income Statement is estimated to
be immaterial.
(f) Going concern
The Group is debt free and has substantial cash resources. At 31
July 2019 the Group had net cash and cash equivalents totalling
GBP24.1m. 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.
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
2019 2018
GBP000 GBP000
---------------------------- ------- -------
Rail Technology & Services 21,934 18,968
Traffic & Data Services 27,285 20,866
Total revenue 49,219 39,834
---------------------------- ------- -------
Revenue can also be analysed as follows:
2019 2018
GBP000 GBP000
------------------------------- ------- -------
Software and related services 14,839 14,010
Other 34,380 25,824
Total 49,219 39,834
------------------------------- ------- -------
Revenue to come from contracts entered into with performance
obligations not fulfilled or only partially fulfilled amounted to
GBP16.1m as at 31 July 2019.
Major customers
Transactions with the Group's largest customer represent 18% of
the Group's total revenues (2018: 14%).
Geographic split of revenue
A geographical analysis of revenue is provided below:
2019 2018
GBP000 GBP000
------------------- ------- -------
United Kingdom 45,511 38,388
North America 106 260
Rest of the World 3,602 1,186
Total 49,219 39,834
------------------- ------- -------
b) Segmental Analysis
The Group has divided its results into two segments being 'Rail
Technology and Services' and 'Traffic & Data Services'.
Bellvedi Limited is included in "Rail Technology and Services", and
Cash & Traffic Management Limited and Compass Informatics
Limited are included in "Traffic & Data 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.
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 (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
------------------------------------ ---------------- ----------- -------------- --------
2018
Rail Technology
& Services Traffic
& Data Unallocated Total
Services
GBP000 GBP000 GBP000 GBP000
--------------------------------------- ---------------- ----------- -------------- --------
Revenues
Total revenue for reportable
segments 18,968 20,866 - 39,834
Consolidated revenue 18,968 20,866 - 39,834
--------------------------------------- ---------------- ----------- -------------- --------
Profit or loss
EBITDA for reportable segments 6,802 2,623 - 9,425
Amortisation of intangible
assets - - (1,774) (1,774)
Depreciation (135) (625) - (760)
Exceptional items 2,572 - - 2,572
Other operating income - - 214 214
Share-based payment charges - - (1,193) (1,193)
Interest receivable/payable(net) - - (8) (8)
Share of result of equity accounted
investees - - (201) (201)
--------------------------------------- ---------------- ----------- -------------- --------
Consolidated profit before tax 9,239 1,998 (2,962) 8,275
--------------------------------------- ---------------- ----------- -------------- --------
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 liabilities - - (5,942) (5,942)
Contingent consideration - - (6,183) (6,183)
Consolidated total liabilities (10,568) (7,435) (12,125) (30,128)
----------------------------------- -------------------------- ---------- -------------- ---------
2018
Rail Technology Traffic
& Services & Data
Services Unallocated Total
GBP'000 GBP000 GBP000 GBP000
----------------------------------- -------------------------- ---------- -------------- ---------
Assets
Total assets for reportable
segments (exc. cash) 3,142 6,621 - 9,763
Intangible assets and investments - - 27,695 27,695
Deferred tax assets - - 602 602
Cash and cash equivalents 5,673 3,520 13,136 22,329
Consolidated total assets 8,815 10,141 41,433 60,389
----------------------------------- -------------------------- ---------- -------------- ---------
Liabilities
Total liabilities for reportable
segments (6,489) (4,651) - (11,140)
Deferred tax - - (3,875) (3,875)
Contingent consideration - - (3,265) (3,265)
Consolidated total liabilities (6,489) (4,651) (7,140) (18,280)
----------------------------------- -------------------------- ---------- -------------- ---------
4 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 July 2019 was
based on the profit attributable to ordinary shareholders of
GBP5,071,000 (2018: GBP7,246,000) and a weighted average number of
ordinary shares in issue of 28,521,000 (2018: 28,196,000),
calculated as follows:
Weighted average number of ordinary shares
In thousands of shares
2019 2018
Issued ordinary shares at 1 August 28,334 27,964
Effect of shares issued related to business
combinations 54 14
Effect of shares issued for cash 133 218
Weighted average number of shares at 31
July 28,521 28,196
--------------------------------------------- ------- -------
Diluted earnings per share
The calculation of diluted earnings per share at 31 July 2019
was based on profit attributable to ordinary shareholders of
GBP5,071,000 (2018: GBP7,246,000) and a weighted average number of
ordinary shares in issue after adjustment for the effects of all
dilutive potential ordinary shares of 29,387,000 (2018:
29,159,000):
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.
2019 2018
GBP'000 GBP'000
Profit attributable to ordinary shareholders 5,071 7,246
Amortisation of intangible assets 2,251 1,774
Share-based payment charges 1,034 1,193
Exceptional items (38) (2,572)
Other operating income (260) (214)
Adjusted profit for EPS purposes 8,058 7,427
------------------------------------------------ -------- -----------
Weighted average number of ordinary shares
In thousands of shares
------------------------------------------------ ------------ -------
For the purposes of calculating Basic earnings
per share 28,521 28,196
Adjustment for the effects of all dilutive
potential ordinary shares 29,387 29,159
------------------------------------------------ -------- -----------
Basic adjusted earnings per share 28.25p 26.34p
Diluted adjusted earnings per share 27.42p 25.47p
------------------------------------------------ -------- -----------
5 Dividends
The Group introduced a progressive dividend policy during
previous years. The cash cost of the dividend payments is
below:
2019 2018
GBP000 GBP000
--------------------------------------- ------- -------
Final dividend for 2016/17 of 0.80p
per share paid - 225
Interim dividend for 2017/18 of 0.70p
per share paid - 198
Final dividend for 2017/18 of 0.9p 257 -
per share paid
Interim dividend for 2018/19 of 0.8p 229 -
per share paid
Total dividends paid 486 423
---------------------------------------- ------- -------
The dividends paid or proposed in respect of each financial year
is as follows:
2019 2018 2017 2016 2015 2014 2013 2012
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- --------- --------- --------- --------- --------- --------- -------- -------
Interim dividend
for 2011/12 of 0.20p
per share paid - - - - - - - 48
Final dividend for
2011/12 of 0.35p
per share paid - - - - - - - 87
Interim dividend - - - - - - 75 -
for 2012/13 of 0.30p
per share paid
Final dividend for - - - - - - 102 -
2012/13 of 0.40p
per share paid
Interim dividend - - - - - 89 - -
for 2013/14 of 0.35p
per share paid
Final dividend for - - - - - 119 - -
2013/14 of 0.45p
per share paid
Interim dividend - - - - 106 - - -
for 2014/15 of 0.40p
per share paid
Final dividend for - - - - 164 - - -
2014/15 of 0.60p
per share paid
Interim dividend - - - 137 - - - -
for 2015/16 of 0.50p
per share paid
Final dividend for - - - 195 - - - -
2015/16 of 0.70p
per share paid
Interim dividend - - 167 - - - - -
for 2016/17 of 0.60p
per share paid
Final dividend for - - 225 - - - - -
2016/17 of 0.80p
per share paid
Interim dividend - 198 - - - - - -
for 2017/18 of 0.70p
per share paid
Final dividend for - 257 - - - - - -
2017/18 of 0.90p
per share paid
Interim dividend 229 - - - - - - -
for 2018/19 of 0.8p
per share paid
Final dividend for 287 - - - - - - -
2018/19 of 1.0p per
share proposed
----------------------- --------- --------- --------- --------- --------- --------- -------- -------
The total dividends paid or proposed in respect of each
financial year ended 31 July is as follows:
2019 2018 2017 2016 2015 2014 2013 2012
Total dividends paid
per share 1.8p 1.6p 1.4p 1.2p 1.0p 0.8p 0.7p 0.55p
---------------------- ------ ------ ------ ------ ------ ------ ----- ------
The dividend will be payable on 14 February 2020 to shareholders
on the Register at 31 January 2020.
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:
2019 2018
GBP000 GBP000
------------------------------------- ------- --------
Profit before tax 6,559 8,275
Finance income / expense - net (37) 8
Share-based payment charges 1,034 1,193
Exceptional items (38) (2,572)
Other operating income (260) (214)
Amortisation of intangible assets 2,251 1,774
Depreciation 831 760
Share of result of equity accounted
investees 174 201
Adjusted EBITDA 10,514 9,425
-------------------------------------- ------- --------
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:
2019 2018
GBP000 GBP000
------------------------------------- ------- --------
Profit before tax 6,559 8,275
Finance income / expense - net (37) 8
Share-based payment charges 1,034 1,193
Exceptional items (38) (2,572)
Other operating income (260) (214)
Amortisation of intangible assets 2,251 1,774
Share of result of equity accounted
investees 174 201
Adjusted profit 9,683 8,665
-------------------------------------- ------- --------
Adjusted EBITDA reconciles to adjusted profit as set out
below:
2019 2018
GBP000 GBP000
----------------- ------- -------
Adjusted EBITDA 10,514 9,425
Depreciation (831) (760)
Adjusted profit 9,683 8,665
------------------ ------- -------
7 Acquisitions in the current year
a) Acquisition: Compass Informatics Limited ('Compass')
On 15 January 2019 the Group acquired Compass, a
long-established Dublin based business which has been well known
for a number of years now and is a natural fit for the Group's
Traffic & Data Services division in terms of its strategy of
improving its data service. This acquisition, the Group's first
overseas transaction, strengthens the product and service offerings
to the client base in the UK and also benefit those existing
clients retained by Compass in Ireland, and offers potential
benefit and cross-sell potential to Tracsis' existing transport
clients. Compass is a software development and data analytics
company that specialises in combining geographical information
systems (GIS), location technologies, data analytics and field
computing. The business works across a variety of sectors but
derives most of its revenue from transport, asset management,
planning, and environmental customers.
The acquisition consideration comprised an initial cash payment
of EUR3.15m (GBP2.81m) which was funded out of Tracsis cash
reserves and the issue of shares in Tracsis to a value of EUR350k
(GBP0.31m). An additional payment of EUR0.5m (GBP0.49m) was also
made on a euro for euro basis to reflect the net current asset
position of the business, alongside additional contingent
consideration of up to EUR2.0m is payable subject to Compass
achieving certain stretched financial targets in the four years
post acquisition.
In the year ended 30 September 2018, Compass generated revenue
of EUR4.8m, Profit before Tax of EUR0.6m, and had net assets of
EUR1.8m.
Under the terms of the acquisition there is a four year earn out
period during which Tracsis expects the business to achieve
growth.
The contingent consideration could range from EURnil to EUR2.0m
depending on the financial performance over the four years since
acquisition and the Directors concluded that GBP1.1m was the fair
value of the contingent consideration payable and included this in
the balance sheet.
In the period to 31 July 2019 Compass contributed revenue of
GBP2.4m and pre tax profit of GBP0.3m to the Group's results,
before amortisation of associated intangible assets and exceptional
deal costs. If the acquisition had occurred on 1 August 2018,
management estimates that the contribution to Group revenue would
have been GBP4.3m and Group pre tax profit for the period of
GBP0.1m. 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 2018.
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 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 Compass.
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 GBP124,000 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 - 1,183 1,183
Intangible assets: Customer related
intangibles - 2,313 2,313
Tangible fixed assets 25 - 25
Cash and cash equivalents 444 - 444
Trade and other receivables 533 - 533
Trade and other payables (273) - (273)
Income tax payable (53) - (53)
Deferred tax asset/(liability) 105 (594) (489)
---------------------------------------- ---------------- ------------ ------------
Net identified assets and liabilities 781 2,902 3,683
Goodwill on acquisition 1,021
---------------------------------------- ---------------- ------------ ------------
4,704
---------------------------------------- ---------------- ------------ ------------
Consideration paid in cash 3,260
Consideration paid: fair value of
shares issued 312
Fair value of contingent consideration
payable 1,132
Total consideration 4,704
---------------------------------------- ---------------- ------------ ------------
b) Acquisition: Cash & Traffic Management Limited ('CTM')
On 16 January 2019, the Group acquired CTM, a well-established
provider of event traffic planning, admission control, and a range
of other event-related services to some of the UK's largest and
most prestigious event clients. CTM is highly complementary to the
Tracsis Traffic & Data Services division with good cross-sell
potential along with clear synergy benefits with Tracsis' existing
SEP Events business which was an excellent acquisition for Tracsis,
that should lead to margin improvement in the fullness of time.
CTM has an excellent track record of organic growth, client
retention and profitability over many years. The acquisition
consideration comprised an initial cash payment of GBP1.305m which
was funded out of Tracsis cash reserves and the issue shares in
Tracsis to a value of GBP0.155m, along with an additional payment
of GBP0.528m to reflect the net current asset position of the
business. Additional contingent consideration of up to GBP0.75m is
payable subject to CTM achieving certain stretch financial targets
in the two years post acquisition.
In the period ended 15 January 2019, CTM generated revenue of
GBP5.2m, Profit before Tax of GBP0.35m, and had net assets of
GBP1.1m.
Under the terms of the acquisition there is a two year earn out
period during which Tracsis expects the business to achieve
growth.
The contingent consideration could range from GBPnil to GBP0.75m
depending on the financial performance over the two years since
acquisition and the Directors concluded that GBP0.6m was the fair
value of the contingent consideration payable and included this in
the balance sheet.
In the period to 31 July 2019 CTM contributed revenue of GBP3.1m
and pre tax profit of GBP0.4m to the Group's results, before
amortisation of associated intangible assets and exceptional deal
costs. If the acquisition had occurred on 1 August 2018, management
estimates that the contribution to Group revenue would have been
GBP5.5m and Group pre tax profit for the period of GBP0.5m. 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 2018.
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 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 CTM.
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 GBP56,000 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: Customer related
intangibles - 1,768 1,768
Tangible fixed assets 116 - 116
Cash and cash equivalents 955 - 955
Trade and other receivables 488 - 488
Trade and other payables (372) - (372)
Income tax payable (77) - (77)
Deferred tax liability (22) (300) (322)
---------------------------------------- ------------------ ------------- ------------
Net identified assets and liabilities 1,088 1,468 2,556
Goodwill on acquisition 32
---------------------------------------- ------------------ ------------- ------------
2,588
---------------------------------------- ------------------ ------------- ------------
Consideration paid in cash 1,833
Consideration paid: fair value of
shares issued 155
Fair value of contingent consideration
payable 600
Total consideration 2,588
---------------------------------------- ------------------ ------------- ------------
c) Acquisition: Bellvedi Limited ('Bellvedi')
On 1 May 2019, the Group acquired Bellvedi Limited a UK based
software company that operates within the rail industry and
specialises in timetabling optimisation software. Bellvedi's key
product, ATTUne, is a timetable planning software package and is
extensively used by Train Operating Companies, infrastructure
providers, franchise bidding teams and rail consultancies for the
creation, validation, optioneering and optimisation of timetables
in time pressured environments.
Tracsis and Bellvedi have partnered on several significant
software projects - most notably on Tracsis' recent major contract
wins - with the ATTUne software forming a key part of the TRACS
Enterprise offering. As such, the acquisition of Bellvedi is
strategically important and highly complementary to the Tracsis
software offering and future product roadmap.
The acquisition consideration comprised an initial cash payment
of GBP3.7m which was funded out of Tracsis cash reserves and the
issue of shares in Tracsis to a value of GBP0.3m. An additional
payment of GBP0.91m 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 GBP7.9m is payable
subject to Bellvedi achieving certain stretched financial targets
in the four years post acquisition.
In the 13 month period ended 29 April 2019, Bellvedi generated
revenue of GBP1.8m, Profit before Tax of GBP0.8m, and had net
assets of GBP0.9m.
Under the terms of the acquisition there is a four year earn out
period during which Tracsis expects the business to achieve
significant growth.
The contingent consideration could range from GBPnil to GBP7.9m
depending on the financial performance over the four years since
acquisition and the Directors concluded that GBP4.1m was the fair
value of the contingent consideration payable and included this in
the balance sheet.
In the period to 31 July 2019 Bellvedi contributed revenue of
GBP0.4m and pre tax profit of GBP0.1m to the Group's results,
before amortisation of associated intangible assets and exceptional
deal costs. If the acquisition had occurred on 1 August 2018,
management estimates that the contribution to Group revenue would
have been GBP1.6m and Group pre tax profit for the period of
GBP0.7m. 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 2018.
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 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 Bellvedi.
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 GBP60,000 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 - 4,663 4,663
Intangible assets: Customer related
intangibles - 4,443 4,443
Tangible fixed assets 7 - 7
Cash and cash equivalents 1,490 - 1,490
Trade and other receivables 239 (63) 176
Trade and other payables (750) 417 (333)
Income tax payable (69) - (69)
Deferred tax liability - (1,512) (1,512)
---------------------------------------- ------------------ ------------- ------------
Net identified assets and liabilities 917 7,948 8,865
Goodwill on acquisition 40
---------------------------------------- ------------------ ------------- ------------
8,905
---------------------------------------- ------------------ ------------- ------------
Consideration paid in cash 4,553
Consideration paid: fair value of
shares issued 295
Fair value of contingent consideration
payable 4,057
Total consideration 8,905
---------------------------------------- ------------------ ------------- ------------
8 Contingent consideration
During the financial year, the Group acquired Cash & Traffic
Management Limited, Compass Informatics Limited and Bellvedi
Limited. Under the share purchase agreements in place for each of
these acquisitions, contingent consideration is payable which is
linked to the profitability of the acquired businesses for 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
GBP600,000 for Cash & Traffic Management Limited, GBP1,132,000
for Compass Informatics Limited and GBP4,057,000 for Bellvedi
Limited.
During the previous financial year, the Group acquired Travel
Compensation Services Limited (renamed Tracsis Travel Compensation
Services Limited) and Delay Repay Sniper Limited. Under the share
purchase agreement, 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
GBP4,700,000. The fair value of the amount payable was assessed at
GBP1,200,000 at the previous financial year end date. Contingent
consideration of GBP84,000 has been paid in the year, and the fair
value of the consideration has been assessed as GBP394,000 at 31
July 2019, following an exceptional credit to the Statement of
Comprehensive Income of GBP722,000.
During the financial year, contingent consideration of
GBP2,058,000 was paid in respect of the Ontrac acquisition which
was made in year ended 31 July 2016 (2018: GBPnil), GBP7,000 in
respect of the SEP acquisition which was made in year ended 31 July
2016 (2018: GBP323,000) and GBP84,000 in respect of the Travel
Compensation Services acquisition which was made in the year end 31
July 2018 (2018: GBPnil).
At the balance sheet date, the Directors assessed the fair value
of the remaining amounts payable which were deemed to be as
follows.
2019 2018
GBP000 GBP000
---------------------------------------------- ------- -------
SEP Limited - 7
Ontrac Limited - 2,058
Tracsis Travel Compensation Services Limited
& Delay Repay Sniper Limited 394 1,200
Cash & Travel Management Limited 600 -
Compass Informatics Limited 1,132 -
Bellvedi Limited 4,057 -
6,183 3,265
---------------------------------------------- ------- -------
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 and involves assumptions about future
profit forecasts, which results from assumptions about revenues and
costs. 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:
2019 2018
GBP000 GBP000
--------------------------------------- -------- --------
At the start of the year 3,265 5,041
Arising on acquisition 5,789 1,200
Cash payment (2,149) (323)
Release to Statement of Comprehensive
Income (722) (2,653)
At the end of the year 6,183 3,265
---------------------------------------- -------- --------
The ageing profile of the remaining liabilities can be
summarised as follows:
2019 2018
GBP000 GBP000
------------------------------- ------- -------
Payable in less than one year 879 2,165
Payable in more than one year 5,304 1,100
Total 6,183 3,265
-------------------------------- ------- -------
9 Exceptional items
The Group incurred a number of exceptional items in 2019 and
2018 which are analysed as follows:
2019 2018
GBP000 GBP000
-------------------------------------------------------- ------- --------
Non cash:
Goodwill impairment 623 -
Contingent consideration credit (722) (2,653)
Cash:
Disposal of non core data capture operation (179) -
Legal and professional fees in respect of acquisitions 240 81
Total exceptional items (38) (2,572)
-------------------------------------------------------- ------- --------
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 has also
been re-assessed, resulting in an exceptional credit to the
Statement of Comprehensive Income of GBP722,000.
2018
During 2018, the Group acquired Travel Compensation Services
Limited and Delay Repay Sniper Limited, and incurred GBP81,000 of
exceptional deal related costs as a result. An exceptional credit
on contingent consideration arose as the final amounts in respect
of the acquisition of Ontrac Limited was finalised and GBP2,058,000
was paid post year end against an amount included in the Balance
Sheet of GBP4,711,000 resulting in an exceptional credit of
GBP2,653,000.
10 IFRS 15 Reconciliation
The Group adopted IFRS 15 with effect from 1 August 2018, using
the cumulative effect method, under which the comparative
information is not restated. The impact of adopting this is set out
below, but can be summarised as the removal of certain accrued
income balances to be replaced with contract assets, and the
reversal of certain revenue previously recognised on a stage of
completion basis, for which performance obligations had not been
fully met at year end under IFRS 15. The net impact was a charge to
reserves of GBP667,000 which can be summarised as follows:
As previously IFRS 15 Adjustment
reported at 31 July Under IFRS
at 31 July 2018 15 as at
2018 GBP'000 31 July 2018
GBP'000 GBP'000
Trade and other receivables 7,329 (146) 7,183
Trade and other payables (10,316) (765) (11,081)
Deferred tax (liabilities)/asset (3,273) 244 (3,029)
-------------------
Retained earnings (32,593) 667 31,926
-------------------
Impact on the consolidated income statement for the year ended
31 July 2019
Amounts
As reported Adjustments without
adoption
of IFRS
15
GBP'000 GBP'000 GBP'000
Revenue 49,219 395 49,614
Cost of sales (20,163) 51 (20,112)
-------------------------------------- -------------- -------------- -----------
Gross profit 29,056 446 29,502
Administrative costs (22,360) - (22,360)
-------------------------------------- -------------- -------------- -----------
Adjusted EBITDA 10,514 446 10,960
Depreciation (831) - (831)
-------------------------------------- -------------- -------------- -----------
Adjusted profit 9,683 446 10,129
Amortisation of intangible
assets (2,251) - (2,251)
Other operating income 260 - 260
Share-based payment charges (1,034) - (1,034)
-------------------------------------- -------------- -------------- -----------
Operating profit before exceptional
items 6,658 446 7,104
Exceptional items 38 - 38
-------------------------------------- -------------- -------------- -----------
Operating profit 6,696 446 7,142
Finance income 58 - 58
Finance expense (21) - (21)
Share of result of equity accounted
investees (174) - (174)
Profit before tax 6,559 446 7,005
Taxation (1,488) (85) (1,573)
-------------------------------------- -------------- -------------- -----------
Profit after tax 5,071 361 5,432
Foreign currency translation 17 - 17
-------------------------------------- -------------- -------------- -----------
Total recognised income for
the year 5,088 361 5,449
-------------------------------------- -------------- -------------- -----------
Impact on the consolidated balance sheet as at 31 July 2019:
Amounts
without
adoption
As reported Adjustments of IFRS
15
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------------- ---------------- --------------
Non-current assets
Property, plant and equipment 2,678 - 2,678
Intangible assets 38,812 - 38,812
Investments - equity 350 - 350
Loans due from associated undertakings 250 - 250
Investments in equity accounted
investees 1,098 - 1,098
Deferred tax assets 667 - 667
---------------------------------------- ---------------- ---------------- --------------
43,855 - 43,855
---------------------------------------- ---------------- ---------------- --------------
Current assets
Inventories 381 - 381
Trade and other receivables 9,729 67 9,796
Cash and cash equivalents 24,104 - 24,104
---------------------------------------- ---------------- ---------------- --------------
34,214 67 34,281
---------------------------------------- ---------------- ---------------- --------------
Total assets 78,069 67 78,136
---------------------------------------- ---------------- ---------------- --------------
Non-current liabilities
Finance leases and hire-purchase
contracts 285 - 285
Contingent consideration payable 5,304 - 5,304
Deferred tax liabilities 5,942 244 6,186
11,531 244 11,775
---------------------------------------- ---------------- ---------------- --------------
Current liabilities
Finance leases and hire-purchase
contracts 277 - 277
Trade and other payables 16,936 (1,290) 15,646
Contingent consideration payable 879 - 879
Current tax liabilities 505 85 590
---------------------------------------- ---------------- ---------------- --------------
18,597 (1,205) 17,392
---------------------------------------- ---------------- ---------------- --------------
Total liabilities 30,128 (961) 29,167
---------------------------------------- ---------------- ---------------- --------------
Net assets 47,941 1,028 48,969
---------------------------------------- ---------------- ---------------- --------------
Equity attributable to equity holders of the
Company
Called up share capital 115 - 115
Share premium reserve 6,343 - 6,343
Merger reserve 3,921 - 3,921
Retained earnings 37,545 1,028 38,573
Translation reserve 17 - 17
---------------------------------------- ---------------- ---------------- --------------
Net assets 47,941 1,028 48,969
---------------------------------------- ---------------- ---------------- --------------
11 Annual Report and Annual General Meeting
The Company anticipates dispatching a copy of its annual report
and accounts to all shareholders at the end of November 2019. 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 22 January 2020 at 1pm.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LLFERLFLVLIA
(END) Dow Jones Newswires
November 14, 2019 02:00 ET (07:00 GMT)
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