Preliminary Results

TRACSIS PLC Preliminary Results for the year ended 31 July 2009 A year of significant progress on all fronts Tracsis plc ("Tracsis" or "the Group") (AIM: TRCS), a provider of performance and planning optimisation software and consultancy services for the transport industries, today announces preliminary results for the financial year ending 31 July 2009. Highlights: * Year of further growth and profitability: * Turnover of £2.31M (FY'08: £805K); recurring revenue under contract in excess of £650K * Operating profit of £666K (FY'08: £300K) * Net assets in excess of £3.9M (FY'08: £2.59M) and cash balances of £ 2.9M (FY'08: £1.9M) * Strong, debt free balance sheet * Successful acquisition and integration of RWA Rail Limited, a leading rail consultancy serving both the UK and overseas rail markets * Successful acquisition of Peeping Limited (July 2009), a market leading company involved with rail passenger analysis to UK train operating companies, adding further depth and strength to the Tracsis rail offering * Design, development and delivery of a new optimisation software product `TRACS Roster' * Result of a 15 month development project which was carried out in conjunction with the UK's largest train operating companies * Delivery of the first long term licence sale of TRACS Roster in October 2009 * Excellent growth potential for this product both within the UK and abroad for both rail and bus clients * Broadening of the Group's sales pipeline and client book as a result of the acquisitions and additional marketing efforts * Several new train operating companies signed up to the TrainTRACS product * Expanded internal resources and company infrastructure to accommodate the growing opportunity John McArthur, Chief Executive Officer, commented: "Tracsis has completed another strong year of trading during which we have completed two important strategic acquisitions whilst at the same time growing our client base and increasing both turnover and operating profit. Furthermore, we have made some great hires into the business and expanded both our client delivery and technical development teams. These developments have enabled us to release an entirely new optimisation product to the rail industry in the form of TRACS Roster. This product has already been adopted by a major inter city rail operator on a long term basis and we believe will be well received by the rest of our customer base. "Looking ahead, the Group is rapidly moving towards its goal of becoming a leading provider of operational planning software and consultancy services to the transport markets and we are pleased to report our customers now include all the major operators such as First Group, Go-Ahead, Stagecoach, Virgin, Arriva, and National Express. We remain confident of maintaining a trend of delivering further growth via our existing products and services which are now complemented by TRACS Roster. Furthermore, we will continue to entertain relevant, well priced acquisitions which can help us achieve our goal of becoming a leading provider of `smart' planning systems. Our thanks go out to customers, shareholders and staff who have continued to support us during this period of growth." 25 November 2009 Enquiries: Tracsis plc +44 (0) 845 125 9162 John McArthur, Chief Executive Officer Haggie Financial LLP +44 (0) 207 417 8989 Nicholas Nelson/Kathy Boate Zeus Capital Limited +44 (0) 161 831 1512 Alex Clarkson / Bobby Fletcher Chairman's and Chief Executive Officer's Statement Introduction The Group is pleased to report on a further period of profitable growth, strengthened industry position, and significant investment into personnel and infrastructure to ensure a solid foundation on which to continue our expansion plans. The past 12 months have seen delivery of Tracsis's acquisition policy through the purchases of RWA Rail Ltd ("RWA") and Peeping Limited ("Peeping") which has broadened the Group's product offering, enhanced profitability and provided opportunities to market to a wider base of potential customers. The Group has also been successful in growing organic revenue of existing products and services whilst at the same time putting in place the resources and infrastructure required for further expansion. Business Description Tracsis Plc is a provider of resource optimisation software and operational planning consultancy to companies in the passenger transport industries (primarily passenger rail) within the UK and overseas markets. Tracsis's products and services can be broadly categorised into three profitable areas: resource optimisation software; passenger demand analysis and surveys; and operational and performance planning consultancy. The majority of these services and the revenue generated therein remain within the passenger bus and rail sector. The Group's core product suite, developed in conjunction with applied research from the University of Leeds, is used to automate and optimise the process by which labour schedules and rosters are created, allowing for this activity to be done with greater speed and with a higher degree of accuracy and efficiency than existing methods. Financial Summary The Group experienced buoyant trading during the period which was in line with expectations. The growth in revenue reflects the successful integration of RWA which contributed £1.4m to the overall total of £2.3m, whilst the original Tracsis software licensing business demonstrated organic growth in sales of 15% over the period. Likewise operating profit was boosted by RWA which contributed £390,000 to the total £666,000. The original Tracsis business showed operating profits of £276,000 following investment in staff resources and office infrastructure, for which the business will see benefits come through in future periods. It is also noteworthy to report that significant time has been spent by the business on new product development which did not generate any revenue in the past financial year; although the Directors feel confident that revenue from these developments will start during early 2010 and should be visible within our next interim statement. Income statement A summary of the Group's results is set out below: Year Year ended Ended 31 July 31 July 2009 2008 £'000 £'000 Turnover 2,311 805 Operating profit 666 300 Profit for the period 511 299 Revenues are derived from the sale of software licences along with associated customer support and maintenance and the provision of consultancy services to customers in the rail industry. Sales revenue is analysed further below. Year Year ended ended 31 July 31 July 2009 2008 £'000 £'000 Software licences 576 491 Customer support and maintenance 142 119 contracts Consultancy and training revenue 1,593 195 Total revenue 2,311 805 Balance sheet and cash flow The Group continues to have a strong, debt free balance sheet following a year of positive operational cash flow, further augmented by the additional placing of shares in August 2008 which raised £181,000 of additional funding for the Group. Cash balances have increased in the period from £1,898,000 at 31 July 2008 to £2,986,000 at 31 July 2009 with the principal elements of the movement being: Year Year ended Ended 31 July 31 July 2009 2008 £'000 £'000 Net cash generated by operating 1,579 (398) activities Net cash used in investing (672) (3) activities Net cash generated from financing 181 1,584 activities Movement during the period 1,088 1,183 Trading Progress Software Licences and Maintenance Tracsis continues to operate a software lease licence business model and these licences usually last for the duration of the operator's franchise. The Group also provides full technical support and maintenance services to customers as they undertake the software adoption process. Given the nature of the UK and overseas transport markets the business finds that the majority of software sales are made via word of mouth referrals as the reputation of the Group grows, and there is a high degree of repeat custom due to the leasing model. At present, the Directors believe there is a low level of direct competition for the Group's optimisation products in both scheduling and rostering markets. We are pleased to announce the release of an entirely new optimisation product we have named TRACS Roster. This tool is a rostering optimisation package which allows transport operators to rapidly create legal, highly efficient `base' (i.e. long term) staff rosters while taking into account all the various labour constraints and service parameters. Poor roster construction can often lead to large inherent inefficiencies being built into rosters which are costly to transport operators whilst at the same time being potentially detrimental to staff morale and motivation. TRACS Roster has been demonstrably proven to speed up the back office process of roster creation, create legal and acceptable work rosters, whilst at the same time achieving tangible cost and performance benefits. By way of background TRACS Roster was developed in collaboration with some of the UK's largest train operating companies ("TOCs"). The project started in July 2008 and the first long term licence sale was achieved in October 2009. Since the release of this product and unveiling at our annual user group conference in September 2009 Tracsis has seen significant interest and demand from other rail and bus operators in both the UK and abroad and expects to deliver further sales in the near future. Consultancy and training Tracsis provides a range of operational consultancy services to clients in the rail industry via its wholly owned subsidiary RWA Rail Ltd. These consultancy services include revenue generating software pilots and one-off engagements, but also include larger, more diverse projects which include the following elements: timetable planning and formulation; performance modelling; fleet and crew scheduling; and a variety of feasibility studies into new rail infrastructure. A large part of the consultancy's revenue is devised from rail franchise bidding where the RWA team provides a range of strategic operational advice on all aspects of a prospective bid. The addition of RWA provides the business with a unique foothold in the performance planning, timetabling and rostering field. The Group's enlarged team is now able to undertake larger, broader software and consultancy projects within the transport industry and provide a more end-to-end service offering to customers. Peeping Limited acquisition On 24 July 2009, the Group announced the acquisition of Peeping for an initial cash consideration of £260,000 and the issue of 172,744 ordinary shares in Tracsis. Peeping is a leading provider of research based services to train operating companies including passenger footfall assessments and railway station surveys. The business works with the majority of train operating companies in the UK and has a long track record within the sector. For the financial year ending April 2009 (i.e. pre-acquisition) Peeping generated revenue of £432,000 and EBITDA of £153,000. The Directors of Tracsis consider that Peeping has strong synergies with the business activities and client base of Tracsis and will strengthen the Group's market position in the years ahead. Outlook Tracsis has completed another strong year of trading during which we have completed two important strategic acquisitions whilst at the same time growing our client base and increasing both turnover and operating profit. Furthermore, we have made some great hires into the business and expanded both our client delivery and technical development teams. These developments have enabled us to release an entirely new optimisation product to the rail industry in the form of TRACS Roster. This product has already been adopted by a major inter city rail operator on a long term basis and we believe will be well received by the rest of our customer base. Looking ahead, the Group is rapidly moving towards its goal of becoming a leading provider of operational planning software and consultancy services to the transport markets and we are pleased to report our customers now include all the major operators such as First Group, Go-Ahead, Stagecoach, Virgin, Arriva, and National Express. We remain confident of maintaining a trend of delivering further growth via our existing products and services which are now complemented by TRACS Roster. Furthermore, we will continue to entertain relevant, well priced acquisitions which can help us achieve our goal of becoming a leading provider of `smart' planning systems. Our thanks go out to customers, shareholders and staff who have continued to support us during this period of growth. R D Jones J C McArthur Chairman Chief Executive Officer 24 November 2009 Consolidated Income Statement 2009 2008 for the year ended 31 July 2009 £000 £000 Revenue - acquisitions 1,376 - - continuing 935 805 Total revenue 2,311 805 Administrative costs (1,645) (505) Operating profit before share-based payment 707 361 charges Share-based payment charges (41) (61) Operating profit - acquisitions 390 - - continuing 276 300 Total operating profit 666 300 Finance income 63 93 Profit before tax 729 393 Taxation (218) (94) Profit for the year 511 299 Earnings per ordinary share Basic 2.69p 2.47p Diluted 2.45p 2.37p Consolidated Statement of Recognised Income and 2009 2008 Expense For the year ended 31 July 2009 £000 £000 Profit for the year 511 299 Total recognised income attributable to equity 511 299 holders of the parent Consolidated Balance Sheet 2009 2008 as at 31 July 2009 £000 £000 Non-current assets Property, plant and equipment 8 6 Intangible assets 1,892 - Deferred tax assets - 18 1,900 24 Current assets Trade and other receivables 729 1,081 Cash and cash equivalents 2,986 1,898 3,715 2,979 Total assets 5,615 3,003 Non-current liabilities Deferred tax liabilities 271 - 271 - Current liabilities Trade and other payables 1,003 302 Current tax liabilities 346 109 1,349 411 Total liabilities 1,620 411 Net assets 3,995 2,592 Equity attributable to equity holders of the company Called up share capital 77 70 Share premium reserve 2,485 1,641 Share based payments reserve 102 61 Retained earnings 1,331 820 Total equity 3,995 2,592 Company Balance Sheet 2009 2008 as at 31 July 2009 £000 £000 Fixed assets Tangible fixed assets 6 6 Investments 2,469 - Deferred tax 29 18 Current assets Debtors 371 1,081 Cash at bank and in hand 2,623 1,898 2,994 2,979 Creditors: amounts falling due within one year (1,771) (411) Net current assets 1,223 2,568 Net assets 3,727 2,592 Capital and reserves Called up share capital 77 70 Share premium reserve 2,485 1,641 Share based payments reserve 102 61 Retained earnings 1,063 820 Shareholders' funds 3,727 2,592 Consolidated statement of changes in equity Share Share-based for the year ended 31 July 2009 Share Premium Payments Retained Capital Reserve Reserve Earnings Total £000 £000 £000 £000 £000 At 1 August 2007 - 17 5 624 646 Profit for the year - - - 299 299 Share based payment charges - - 61 - 61 Adjustment for share options - - (5) 7 2 subsequently exercised Arising on the Placing (net of 70 1,624 - (50) 1,644 issue costs) Dividends paid - - - (60) (60) At 31 July 2008 70 1,641 61 820 2,592 Profit for the year - - - 511 511 Share based payment charges - - 41 - 41 Additional placing 2 198 - - 200 Shares issued as consideration for 5 646 - - 651 business combinations At 31 July 2009 77 2,485 102 1,331 3,995 Consolidated Cash Flow Statement 2009 2008 for the year ended 31 July 2009 £000 £000 Operating activities Profit for the year 511 299 Net finance income (63) (93) Depreciation 4 5 Income tax charge 218 94 Share based payment charges 41 61 Operating cash inflow before changes in 711 366 working capital Movement in trade and other receivables 960 (917) Movement in trade and other payables 21 153 Operating cash flow from operations 1,692 (398) Finance income 63 93 Income tax paid (176) (93) Net cash flow from operating activities 1,579 (398) Investing activities Purchase of plant and equipment (6) (3) Acquisition of subsidiaries (666) - Net cash flow from investing activities (672) (3) Financing activities Proceeds from the Placing (net of costs) 181 1,644 Dividends paid to equity shareholders - (60) Net cash flow from financing activities 181 1,584 Net increase in cash and cash equivalents 1,088 1,183 Cash and cash equivalents at the beginning of 1,898 715 the year Cash and cash equivalents at the end of the 2,986 1,898 year Notes to the Preliminary Announcement 1 Accounting Policies Significant accounting policies Tracsis plc (the `Company') is a company incorporated in the United Kingdom. The consolidated financial statements of the Company for the year ended 31 July 2009 comprise the Company and its subsidiaries (together referred to as the `Group'). The following paragraphs summarise the significant accounting policies of the Group, which have been consistently applied in dealing with items which are considered material in relation to the Group's financial statements. Basis of preparation 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 UK accounting standards and applicable law (`UK GAAP'). These parent company statements appear after the notes to the consolidated financial statements. The Accounts have been prepared under the historical cost convention except for derivative financial instruments that are stated at their fair value. The accounting policies set out below have been applied consistently throughout the Group and to all accounting periods presented for the purposes of the consolidated financial statements. 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 ongoing 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. Judgements made by management in the application of IFRSs that have a significant effect on the Group financial statements and estimates with a significant risk of material adjustment in future years are disclosed in Note 2. There are a number of new standards and interpretations issued and endorsed by the EU but not yet effective which may be applicable to the Group but which have not been applied in these Accounts, including IFRS 8 Operating Segments, revision to IAS 23 Borrowing Costs, revisions to IAS 1, revision to IFRS 2 Share Based Payments, revisions to IFRS 3 Business Combinations and revisions to IFRS 1 and IAS 27 Cost of Investment in a subsidiary. No endorsed standard is expected to have a material impact on the financial statements. All other endorsed standards and IFRICs have been reviewed by management and are not considered applicable for the Group's financial statements. Basis of consolidation Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases. All intra-group balances and transactions, including unrealised profits arising from intra-group transactions, are eliminated fully on consolidation. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable (excluding value added tax and discounts given) derived from the provision of goods and services to customers during the period. The Group derives revenue from software licences, post contract customer support and consultancy services. The Group recognises the revenue from the sale of software licences and specified upgrades upon shipment of the software product or upgrade, when there are no significant vendor obligations remaining, when the fee is fixed and determinable and when collectability is considered probable. Where appropriate the Group provides a reserve for estimated returns under the standard acceptance terms at the time the revenue is recognised. Payment terms are agreed separately with each customer. Revenue from post contract customer support and consultancy services is recognised on a straight-line basis over the term of the contract. Revenue received and not recognised in the income statement under this policy is classified as deferred income in the balance sheet. Revenue from other products and services is recognised as the products are shipped or services provided. Foreign currencies Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the balance sheet date and the gains and losses on translation are recognised in the income statement. Property, plant and equipment Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs. The corresponding liability is recognised within provisions. Items of property, plant and equipment are carried at depreciated cost. Depreciation is provided on all items of property, plant and equipment so as to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates: Computer equipment - 33 1/3% on cost Office fixtures and fittings - 20% on cost Intangible assets Goodwill Goodwill arising on acquisitions comprises the excess of the fair value of the consideration plus any associated costs for investments in subsidiary undertakings over the fair value of the net identifiable assets acquired at the date of acquisition. Adjustments are made to fair values to bring the accounting policies of the acquired businesses into alignment with those of the Company. The costs of integrating and reorganising acquired businesses are charged to the post acquisition income statement. Goodwill arising on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units represents the lowest level within the group at which the associated level of goodwill is monitored for management purposes and are not larger than the reporting segments determined in accordance with IFRS 8 "Operating Segments". Other intangible assets An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights. Intangible assets, primarily customer relationships, acquired as part of a business combination are capitalised separately from goodwill and are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is calculated using a straight line method over the estimated useful life of the assets of 40 years. Impairment of non-current assets Where an indication of impairment is identified, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). If the recoverable amount (higher of fair value less cost to sell and value in use of an asset) is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Research and Development Costs Expenditure on internally developed products is capitalised as intangible assets if it can be demonstrated that: * it is technically feasible to develop the product for it to be sold; * adequate resources are available to complete the development; * there is an intention to complete and sell the product; * the Group is able to sell the product; * sale of the product will generate future economic benefits; and * expenditure on the project can be measured reliably. Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed. The amortisation expense is included within the administrative expenses line in the income statement. Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the income statement as incurred. Financial instruments The Group classifies its financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on the balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument. Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group's ordinary shares are classified as equity instruments, net of issue costs. (i) Cash and cash equivalents Cash and cash equivalents in the balance sheet are included at cost and comprise cash at bank, cash in hand and short term deposits with an original maturity of three months or less. (ii) Trade receivables Trade receivables do not carry interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. (iii) Trade payables Trade payables are not interest bearing and are stated at their nominal value. (iv) Equity instruments Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs. Taxation The tax on the profit or loss for the year represents current and deferred tax. The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted at the balance sheet date. Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying value in the financial statements. The principal temporary differences arise from depreciation on plant and equipment and share options granted by the Group to employees and directors. Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Dividend distribution Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders, or in the case of interim dividends, when paid. Leases Rentals applicable where substantially all of the benefits and risks of ownership remain with the lessor are classified as operating leases and payments are charged to the income statement on a straight line basis over the period of the lease. Employee benefits Wages, salaries, social security contributions, paid annual leave, bonuses and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the Group. Where the Group provides long term employee benefits, the cost is accrued to match the rendering of the services by the employees concerned. Share based payments The Group issues equity-settled share based payments to certain employees (including directors). Equity-settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight line basis over the vesting period, together with a corresponding increase in equity, based upon the Group's estimate of the shares that will eventually vest. Fair value is measured using the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. Where the terms and conditions of options are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled transaction is cancelled, it is treated as if it had vested on the date of the cancellation, and any expense not yet recognised for the transaction is recognised immediately. However, if a new transaction is substituted for the cancelled transaction, and designated as a replacement transaction on the date that it was granted, the cancelled and new transactions are treated as if they were a modification of the original transaction as described in the previous paragraph. Retirement benefits Contributions to defined contribution pension schemes are charged to the income statement in the year to which they relate. 2 Critical Accounting Estimates and Judgements The Group's accounting policies are set out in Note 1. The Directors consider that the key judgements and estimates made in the preparation of the consolidated financial statements are: Intangible fixed assets Reviews of the Group's intangible fixed assets have been carried out, using commercial judgements and a number of assumptions and estimates have been used to support the carrying value of these assets. Revenue recognition Certain of the Group's contracts for software licences, maintenance services and other consultancy projects have a term of more than one year. The Directors assess the fair value of the entire contract attributable to each of the different services and the timing of when revenues should be recognised and this assessment can differ from the legally contracted values. Share-based payments The Group has equity settled share-based remuneration schemes for employees. The fair value of share options is estimated by using the Black-Scholes valuation model, on the date of grant based on certain assumptions. These assumptions include, among others, expected volatility, expected life of the options and number of options expected to vest. 3 Acquisition of subsidiaries On 5 August 2008, the Group acquired 100% of the issued share capital of R.W.A. Rail Limited, for a combination of cash and share based consideration. The company provides specialist consultancy services to companies in the rail industry. In the 12 months to 31 July 2009 the company contributed profit of £ 395,000 before tax. 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 amount Adjustments Acquisition £000 £000 £000 Intangible assets - 708 708 Trade and other receivables 596 6 602 Trade and other payables (154) - (154) Income tax payable (138) - (138) Deferred tax liability (2) (198) (200) Net identified assets and liabilities 302 516 818 Goodwill on acquisition 671 1,489 Consideration paid: - cash 801 Costs incurred 180 Net cash acquired (362) Net cash flow 619 Consideration paid: fair value of shares 580 issued Deferred contingent consideration: - cash 145 - fair value of shares to be issued 145 Total consideration 1,489 The deferred contingent consideration was paid during August 2009 following the achievement of certain agreed financial targets for R.W.A. Rail Limited for the year to 31 July 2009. 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 fair value adjustments are provisional and 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 goodwill arising on the acquisition arises from the value attributed to the skills and technical talent of the workforce of R.W.A. Rail Limited acquired. On 24 July 2009, the Group acquired 100% of the issued share capital of Peeping Limited, for a combination of cash and share based consideration. The company provides specialist consultancy services to companies in the rail industry. In the seven day period from acquisition to 31 July 2009 the company did not contribute to the Group's profit before tax. 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 amount adjustments acquisition £000 £000 £000 Intangible assets - 369 369 Trade and other receivables 5 - 5 Trade and other payables (13) - (13) Income tax payable (40) - (40) Deferred tax liability - (103) (103) Net identified assets and liabilities (48) 266 218 Goodwill on acquisition 144 362 Consideration paid: - cash 260 Costs incurred 42 Net cash acquired (255) Net cash flow 47 Consideration paid: fair value of shares 90 issued Deferred contingent consideration: - cash 157 - fair value of shares to be issued 68 Total consideration 362 The deferred contingent consideration is payable during August 2010 based on the results of Peeping Limited for the year to 31 July 2010. 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 fair value adjustments are provisional and 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 goodwill arising on the acquisition arises from the value attributed to the skills and technical talent of the workforce of R.W.A. Rail Limited acquired. 4 Basic and diluted earnings per ordinary share Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume the conversion of all dilutive potential ordinary shares. The Company has one class of dilutive potentially ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. 2009 2008 Earnings (£000) 511 299 Weighted average number of shares - basic (number 18,949 12,081 `000) Weighted average number of shares - diluted (number 20,780 12,607 `000) Basic earnings per ordinary share (pence) 2.69 2.47 Diluted earnings per ordinary share (pence) 2.45 2.37 5 Share capital 2009 2009 2008 2008 Number £ Number £ Authorised: Ordinary shares of 0.4p each 35,000,000 140,000 35,000,000 140,000 Allotted, called up and fully paid: Ordinary shares of 0.4p each 19,134,139 76,536 17,503,450 70,014 The following share transactions have taken place during the year ended 31 July 2009: On 5 August 2008, 1,084,113 ordinary shares of 0.4p each were issued as consideration for the acquisition of RWA Rail Limited. On 5 August 2008, 373,832 ordinary shares of 0.4p each were issued pursuant of a placing of shares for cash consideration of £200,000. On 24 July 2009, 172,744 ordinary shares of 0.4p each were issued as consideration for the acquisition of Peeping Limited. 6 Events after the balance sheet date Payment of contingent consideration On 12 August 2009, the Company issued 271,029 ordinary shares of 0.4p each at a price of 53.5p per share and made a cash payment of £145,000 which, together, comprise the contingent consideration agreed by the board in respect of the acquisition of R.W.A. Rail Limited. The board considers that the company has achieved the criteria stipulated at the date of acquisition. 7 Publication of Annual Report and Accounts In accordance with AIM Rule 20, Tracsis plc confirms that its Annual Report and Accounts for the year ended 31 July 2009 will shortly be sent to all shareholders and will then be available for download from the Company's website at www.tracsis.com.

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