Final Results

RNS Number : 2452R

Tracsis PLC

24 October 2013

 



Tracsis plc

Final Results for the year ended 31 July 2013

24 October 2013

Tracsis plc, a leading provider of software and technology led products and services for the transportation industry is pleased to announce its audited final results for the year ended 31 July 2013.

Financial Highlights:

·      Revenues increased 25% to £10.8m (2012: £8.7m)

·      Adjusted EBITDA* increased 3% to £3.4m (2012: £3.3m)

·      Following acquisition of Sky High cash balance remains high at £6.6m (2012: £7.6m)

·      Final dividend proposed of 0.4p per share. Interim dividend of 0.3p per share paid during the year, hence full year dividend of 0.7p

* Earnings before finance income, tax, depreciation, amortisation, exceptional items and share-based payment charges

Operational Highlights:

·     Acquisition of Sky High Plc completed

·     New software products successfully launched and new contracts won

·     Good client retention with very high level of recurring software revenue

·     UK rail franchising process back on track with forward timetable issued by the DfT leading to increased visibility of consultancy opportunities

·     Geographic footprint increased with new sales being delivered in New Zealand and the Group's presence in Australia

Post Period Highlight:

·    Selected to continue with a major framework agreement for five years for Tracsis remote condition monitoring technology 

John McArthur, Chief Executive Officer, commented:

"This has been a further year of growth for the Group, which included the acquisition of Sky High. This significant milestone has increased the Group's scale and offering, and extended the Group's geographic footprint to Australia. We are also delighted, post year end, to have been selected to continue with the Framework Agreement for our condition monitoring technology.

"As an acquisitive business, we continue to evaluate opportunities that would fit the Group whilst also driving organic growth. The potential for Tracsis overseas is significant, and we will continue to build on the presence we have in place.

"We look forward to the year ahead with optimism, and are confident it holds an abundance of opportunity for the Group. Our progress this year, plus the return to stability within the rail industry and associated franchise renewal process, provides the Group with a firm foundation for further growth and return for shareholders."

Enquiries:

John McArthur/Max Cawthra, Tracsis plc	Tel: [phone]
Katy Mitchell, WH Ireland Limited	Tel: [phone]
Rebecca Sanders Hewett/Jenny Bahr, Redleaf Polhill	Tel: [phone] [e-mail]

Chief Executive Officer's Report

Introduction

Once again, the Group has enjoyed a further successful year of growth and has continued to evolve and diversify into a larger, well rounded business that now provides a range of niche technology and service offerings to the transportation industry.  

The year's highlights included Group revenue exceeding £10m for the first time (£10.8m being reported against a forecast of £10.4m), the launch and first sales of our TRACS-RS and FreightTRACS software products, new overseas sales being delivered in New Zealand, and perhaps most notably our fifth successful acquisition: Sky High Plc which whilst complementing our existing business, also extends our geographical presence outside of the UK. 

Since the period end, the Group was selected to continue with a major Framework Agreement for its remote condition monitoring technology, and the agreement with major infrastructure player will be extended for 5 years.

Elsewhere, it was pleasing to see a return to stability within the UK rail franchising environment following a period of economic and political uncertainty, which should be of significant benefit to Tracsis in the coming years.  

Business overview

The Group specialises in solving a variety of resource optimisation, data capture, and reporting problems via the provision of a range of software, hardware and associated high value professional services.  Historically the Group has predominantly operated in the UK but is continuing to deliver on its strategy of expanding our horizons to overseas markets; the Sky High acquisition brings a significant presence in Australia which we hope to capitalise on in due course for the Group's other offerings.

Tracsis' market offering can be broadly categorised into four distinct revenue streams;

1.         Software: Industrial strength resource optimisation software that covers a variety of asset classes.

2.         Remote Condition Monitoring:  Hardware and embedded software for real-time reporting on critical infrastructure assets, to identify problems, predict failure, and aid with preventative maintenance.

3.         Data Capture: Collation and analytical services within traffic and pedestrian rich environments.

4.         Professional Services: Consulting and related high value professional services across the operational and strategic planning horizon.

These products and services of Tracsis have a common theme running through them - they are all aimed at customers within the transport industry, and are designed to help provide  a more efficient and productive operation based on better information to assist in front line decision making.  The increasing importance of passenger transport markets within both the UK and abroad is widely acknowledged, and the Directors believe these to be growth markets for now and in years to come which will lead to further demand for the Group's various product and service offerings.

Financial summary

The Group delivered revenue of £10.8m for the year, which is an increase of 25% on our 2012 revenue of £8.7m and exceeded the current market forecast of £10.4m. 

Adjusted EBITDA* rose 3% to £3.4m (2012: £3.3m).  This is the second year in succession that the Group has reported an EBITDA* in excess of £3m. Given the continued challenging economic conditions and competitive environment, the Directors believe that this continues to be a strong performance and are pleased with level of profitability generated in the period.

Statutory profit before tax was £2.6m (2012: £3.0m). This takes into account higher share based payment charges in respect of the LTIP (Long Term Incentive Plan) scheme that nearly all Tracsis staff have elected to participate in, increased depreciation due to the nature of the Sky High business, and also one-off exceptional professional fees in respect of the Sky High acquisition which amounted to £0.2m.

At 31 July 2013, the Group had cash balances of £6.6m (2012: £7.6m).  This was in spite of the purchase of Sky High, which absorbed cash of £2.8m. The Group's cash position continues to be strengthened due to strong working capital management and a high conversion of operating profit to cash.  The Group paid dividends in the year amounting to £0.2m.

The Group has diversified revenue streams and as such is well positioned to absorb short term revenue fluctuations and movement in the timing of orders. The strength of both the business model and the Group's organic and acquisitive growth strategy has been illustrated this year with the delays in the retendering for the Group's condition monitoring technology, along with well documented delays in the franchise bidding process which impacted on demand for our consultancy offerings.

* Earnings before finance income, tax, depreciation, amortisation, exceptional items and share-based payment charges

Trading Progress and Prospects

Software

Sales of the Group's core software offerings remained resilient throughout the year and the Group continues to benefit from a high level of recurring software licence revenue (c. £1.8m) whilst also winning several new customers as part of upsells to the existing customer base.  New sales of our staff rostering optimisation tool TRACSRoster were made to several new clients, and our new rolling stock tool TRACS-RS was adopted by several TOC clients following a successful formal launch earlier in the year. 

We are also pleased to have secured the first sale of our FreightTRACS solution, which was developed in conjunction with one of the UK's major freight operators. Further growth will come from continued cross-sell/upsell opportunities.

New product sales with major transportation clients were a key achievement during the year. This demonstrates that Tracsis is developing software that is both relevant to our target customers and priced appropriately for them to procure in spite of continued economic pressure.

Furthermore, the Group was successful in winning and completing a major system delivery of its COMPASS software product in New Zealand. The customer feedback has been exceptionally positive and will lead to recurring revenue for the Group in the future. 

Consultancy and Professional Services

During the period, our Consultancy team worked extensively on the Great Western and Essex Thameside franchise bids, and had been anticipating high volumes of workload with other bids in line with the original timetable proposed by the DfT. The well documented 'pausing' of the franchise renewal process in 2012 was a setback for the division in the current year, however the Group mitigated a proportion of this through its ability to transition resources onto other projects. This led to several new projects being won and successfully delivered.  We are pleased that the DfT has now published a revised timetable for future franchise bids, and we look forward to the opportunity for increased levels of consultancy work along with the stability that a long term franchise timetable can bring. This should also assist with forecasting and staff resourcing.

Remote Condition Monitoring

The Group's condition monitoring and data logging arm continued to see high levels of demand for its products in the past year. As previously announced, the balance of a major order was delivered and completed in the financial year under review, and in addition, there was continued demand amongst other customers for our condition monitoring technology. This part of the business works with a range of customers and has delivered several major projects in the year.  Due to the timing of renegotiating a contract within a current Framework Agreement, revenues in this division were behind the previous year, however since period end, we were extremely pleased to be able announce that we were selected to continue this agreement for a further five years. 

We believe that the concept of Intelligent Infrastructure is firmly here to stay and that the technology and products delivered by our remote condition monitoring division are at the forefront of this paradigm shift from reactive 'fail and replace' maintenance to a predictive 'plan and prevent' environment.  Given the UK is leading the charge with adoption of this technology, we believe that this change will inevitably take hold in other geographies in the fullness of time and to this end the Group is in the process of aligning our resources with how to access and exploit these markets.  As with other change process, progress from old methods to new is anticipated to be a slow process but we are pleased to see our overseas partners being responsive to discussions and keen to explore pilot projects.

Data capture and passenger counting

Traditionally, our passenger counting operations have been reported within Consultancy. We have now reclassified them, and included within our 'data capture' revenue stream. Demand for this service has continued to be strong, and further sales opportunities have been identified post the Sky High acquisition. Sky High itself has made an excellent start of life under Tracsis ownership, and has made a significant contribution during the first few months of trading. This is the peak selling season due to the seasonality of this part of the business, and so should not be representative of the level of activity that is expected on an annual basis, but nonetheless, their contribution in both the UK and Australia is significant. We believe Sky High has already proved to be a good acquisition for the Group, and we look forward to growing this part of the enlarged group in the future.

Our team

Raymond Kwan resigned as Director on 31 January 2013 and Rodney Jones stood down as Chairman on 30 June 2013. Ray continues to work with Tracsis in the same part time capacity as he did previously and remains an important part of our technical team. 

Both Ray and Rod played an important role in the Group's growth and evolution, and were instrumental in our successes during our formative years.  Now that Tracsis is a well-established company with people and processes both Ray and Rod felt that it an appropriate time to step down from the Board to make room for new faces who can lead the company in the next phase of growth.  On behalf of the Board, I thank them both for their significant contribution to Tracsis over the years and wish them all the best for the future. 

The Board is currently in the process of carrying out a search for a new Non-executive Director/Chairman and is hopeful of making a further announcement in due course.

Dividends

During 2012, the Board implemented the Group's maiden dividend.  The progressive dividend policy began with an interim dividend of 0.2p per share being paid at the interim stage in 2011/12, and was followed up with a final dividend of 0.35p, bringing the total payment for 2011/12 to 0.55p per share.

In the current year, an interim dividend of 0.3p per share was declared and paid, and the Directors propose a final dividend of 0.4p per share, subject to shareholder approval. This gives a total payment of 0.7p per share for the financial year 2012/13, and this represents an increase of c. 27% on the 2011/12 figure. The overall level of dividends continues to be very well covered by the Group's profitability and cash position, which supports the Group's primary focus on growth via acquisition and development of new products and services. The progressive dividend policy will be continued going forwards provided that the business continues to trade in line with expectation. The dividend will be payable on 31 January 2014 to shareholders on the Register at 17 January 2014.

Acquisitions

The Group completed the acquisition of Sky High Plc in April of this year. This was an important deal for Tracsis for several reasons: firstly, it increases the scale of the Group significantly; secondly, it increases the Group's breadth of product and service offering; and thirdly, Sky High has a significant Australian presence which will allow Tracsis access into a new overseas geography that had already been identified as a target growth market.

The consideration paid for Sky High was £3.3m which was satisfied largely by way of a cash offer although it is important to note that incumbent management swapped a large portion of their stock in Sky High for stock in Tracsis.  This not only shows faith in the Tracsis growth model, but aligns the motivations of their senior team with ours and indeed with Tracsis shareholders. Sky High was included in the Group's results with effect from 17 April 2013 and will make an increased contribution in 2013/14 when a full year of trading will be included.   

In addition to the acquisition of Sky High, several other opportunities were appraised during the period although none were able to be progressed to completion due to failing to meet the Group's strict investment criteria.  As ever, the Group continues to evaluate new opportunities on a regular basis and has a strong pipeline of potential prospects.  The Directors remain committed to a strategy of growth by acquisition as part of the overall growth strategy for the Group and feel confident that further earnings enhancing acquisitions will complete in the fullness of time.

Overseas growth

The Group has historically been largely based in the UK with only a small amount of revenue derived from overseas customers.  Given the significant presence that Sky High already has in Australia, and coupled with this being a key target market of Tracsis, we anticipate a higher proportion of overseas work in the coming year.

The Group recognises the importance and potential for growth in overseas markets as part of its overall growth strategy and geographic diversification, and as such will continuing to exploit other overseas opportunities. In line with this strategy, during the period, the Group carried out a major software implementation in New Zealand, and continued to make further sales to our customers in Sweden and Ireland.  Further sales opportunities are currently being explored, with potential leads in mainland Europe and further afield being considered and appraised.

Summary and Outlook

Tracsis has continued to perform very well over the past year, as illustrated by further revenue growth, further enhancements in underlying EBITDA and a strong Balance Sheet even after taking into consideration the acquisition of Sky High Plc.  

The Group continues to explore opportunities to grow by acquisition as well as organically, and has the Balance Sheet strength to support this future growth.  The potential for overseas opportunities is exciting, as is the prospect of further acquisitions. The return to stability within the rail industry and associated franchise renewal process provides the Group with a foundation for further growth in the coming year and we look forward with confidence to the opportunities this will bring.

Our thanks must be given to our loyal customers, supportive shareholders and, above all, our valued employees who continue to support us and contribute towards our growth and success.

John McArthur, Chief Executive Officer

23 October 2013 

Consolidated Statement of Comprehensive Income

for the year ended 31 July 2013

			2013		2012
	Notes		£000		£000
Revenue
- continuing			7,641		8,668
- acquisitions			3,190		-
Total revenue	4		10,831		8,668
Cost of sales			(3,033)		(1,880)
Gross profit			7,798		6,788
Administrative costs			(5,272)		(3,835)
Adjusted EBITDA*			3,367		3,279
Amortisation of intangible assets			(273)		(222)
Depreciation			(154)		(49)
Exceptional item: Acquisition costs			(225)		-
Share-based payment charges			(189)		(55)
Operating profit
- continuing			2,534		2,953
- acquisitions			217		-
- exceptional acquisition costs			(225)		-
Total operating profit			2,526		2,953
Finance income			75		61
Finance expense			(11)		-
Profit before tax			2,590		3,014
Taxation			(486)		(598)
Profit after tax			2,104		2,416
Other comprehensive income/(expense):
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences - foreign operations			(62)		-
Total recognised income for the year			2,042		2,416
Earnings per ordinary share
Basic	5		8.42p		9.96p
Diluted	5		8.15p		9.83p

* Earnings before finance income, tax, depreciation, amortisation, exceptional items and share-based payment charges. 

Consolidated Balance Sheet

as at 31 July 2013

Company number: 05019106

	2013	2012
	£000	£000
Non-current assets
Property, plant and equipment	1,600	463
Intangible assets	6,067	4,246
	7,667	4,709
Current assets
Inventories	236	236
Trade and other receivables	3,865	1,282
Cash and cash equivalents	6,571	7,568
	10,672	9,086
Total assets	18,339	13,795
Non-current liabilities
Hire-purchase contracts	232	-
Deferred tax liabilities	1,046	702
	1,278	702
Current liabilities
Hire-purchase contracts	96	-
Trade and other payables	3,532	1,928
Current tax liabilities	224	732
	3,852	2,660
Total liabilities	5,130	3,362
Net assets	13,209	10,433
Equity attributable to equity holders of the company
Called up share capital	102	99
Share premium reserve	4,280	4,113
Merger reserve	1,472	935
Share based payments reserve	383	194
Retained earnings	7,034	5,092
Translation reserve	(62)	-
Total equity	13,209	10,433

Consolidated Statement of Changes in Equity

		Share		Share-based
	Share	Premium	Merger	Payments	Retained	Translation
	Capital	Reserve	Reserve	Reserve	Earnings	Reserve	Total
	£000	£000	£000	£000	£000	£000	£000
At 1 August 2011	96	3,762	935	139	2,724	-	7,656
Profit for the year	-	-	-	-	2,416	-	2,416
Total comprehensive income	-	-	-	-	2,416	-	2,416
Transactions with owners:
Dividends	-	-	-	-	(48)	-	(48)
Share based payment charges	-	-	-	55	-	-	55
Exercise of share options	1	143	-	-	-	-	144
Exercise of warrants	2	208	-	-	-	-	210
At 31 July 2012	99	4,113	935	194	5,092	-	10,433

At 1 August 2012	99	4,113	935	194	5,092	-	10,433
Profit for the year	-	-	-	-	2,104	-	2,104
Other comprehensive income/(expense)	-	-	-	-	-	(62)	(62)
Total comprehensive income	-	-	-	-	2,104	(62)	2,042
Transactions with owners:
Dividends	-	-	-	-	(162)	-	(162)
Share based payment charges	-	-	-	189	-	-	189
Exercise of share options	2	167	-	-	-	-	169
Shares issued as consideration for business combinations	1	-	537	-	-	-	538
At 31 July 2013	102	4,280	1,472	383	7,034	(62)	13,209

Consolidated Cash Flow Statement

for the year ended 31 July 2013

	2013	2012
	£000	£000
Operating activities
Profit for the year	2,104	2,416
Finance income	(75)	(61)
Finance expense	11	-
Depreciation	154	49
Amortisation of intangible assets	273	222
Income tax charge	486	598
Share based payment charges	189	55
Operating cash inflow before changes in working capital	3,142	3,279
Movement in inventories	-	(102)
Movement in trade and other receivables	(539)	700
Movement in trade and other payables	116	191
Cash generated from operations	2,719	4,068
Finance income	75	61
Finance expense	(11)	-
Income tax paid	(1,093)	(521)
Net cash flow from operating activities	1,690	3,608
Investing activities
Purchase of plant and equipment	(75)	(38)
Payment of deferred consideration	-	(1,000)
Acquisition of subsidiaries                                                        3	(2,462)	2
Net cash flow used in investing activities	(2,537)	(1,036)
Financing activities
Dividends paid                                                                          7	(162)	(48)
Proceeds from exercise of warrants	-	210
Proceeds from exercise of share options	169	144
Hire purchase repayments	(95)	-
Net cash flow from financing activities	(88)	306
Net (decrease)/increase in cash and cash equivalents	(935)	2,878
Effect of exchange fluctuations	(62)	-
Cash and cash equivalents at the beginning of the year	7,568	4,690
Cash and cash equivalents at the end of the year	6,571	7,568

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 2013 or 2012 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the registrar of companies, and those for 2012 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 UK accounting standards and applicable law ('UK GAAP').  These parent company statements appear after the notes to the consolidated financial statements.

(b)        Basis of measurement

The Accounts have been prepared under the historical cost convention.

(c)        Functional and presentation currency

These consolidated financial statements are presented in sterling, which is the 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)       Changes in accounting policies

IFRS and IFRIC are issued by the International Accounting Standards Board (the IASB) and must be adopted into European Union law, referred to as endorsement, before they become mandatory under the IAS Regulation. 

The following new standards and amendments to standards have become effective for the current financial year and hence are reflected in these financial statements: These standards have not had a material impact on the financial statements.

·      Amendment to IAS 1 'Presentation of financial statements' - Presentation of items in other comprehensive income

·      Amendments to IAS 12 'Income Taxes' - Recovery of underlying assets

At the date of approval of these financial statements the following Standards and Interpretations were in issue and endorsed by the EU but not yet effective. It is not expected that the implementation of these standards will have a material effect on the financial statements:

·      Amendment to IFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities

·      IFRS 9: Financial instruments and subsequent amendments

·      IFRS 10: Consolidated Financial Statements

·      IFRS 11: Joint arrangements

·      IFRS 12: Disclosure of Interests in Other Entities

·      IFRS 13: Fair Value Measurement

·      Amendment to IAS 19: Employee Benefits

·      IAS 27: Separate Financial Statements

·      IAS 28: Investments in Associates and Joint Ventures

(f)         Going concern

The Group is debt free and has substantial cash resources.  The Board has prepared cash flow forecasts for the forthcoming year based upon assumptions for trading and the requirements for cash resources.

Based upon this analysis, the Board has concluded that the Group has adequate working capital resources and that it is appropriate to use the going concern basis for the preparation of the consolidated financial statements.

3          Acquisition of subsidiaries - Acquisition in the current year: Sky High plc

On 26 March 2013, the Group published a recommended cash offer to acquire the entire issued share capital of Sky High plc, for a combination of cash and share based consideration, with the share based consideration being dealt with via a Management Agreement and Prowse Trust Agreement. On 17 April 2013, the offer was declared unconditional in all respects as the Group had received valid acceptances of over 90% of the Offer Shares. Following this announcement, the Group exercised its rights under Sections 979 and 980 of Companies Act 2006 to compulsory transfer the remaining shares to Tracsis by applying the 'squeeze out' provisions of the Act. Sky High was delisted from AIM on 16 May 2013.

Sky High is a traffic data collection, aggregation and analysis company that provides primary information to a variety of clients that include government bodies, private companies well known within the market place and public sector groups. Its primary markets are the transport and people moving sectors ranging from highway agencies, stations and railways, to festival and conference organisers.

The acquisition took place as the Directors believe that Sky High operates in a similar market, cross selling opportunities exist, there is some overlap of customer base, and Sky High has a sizeable Australian presence which the Group may seek to capitalise on in the future. By removing duplicate PLC costs and achieving other synergies, there is also an opportunity to increase profitability, and Sky High management will be able to devote more time to the running of the business as opposed to being distracted by PLC related matters.

In the period to 31 July 2013 the company contributed revenue of £3,190,000 and operating profit of £217,000 to the Group's results.  If the acquisition had occurred on 1 August 2012, management estimates that consolidated revenue would have been £9,594,000 and consolidated profit for the year would have been £349,000.  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 2012.

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: Customer relationships	-	1,704	1,704
Other intangible assets	861	(861)	-
Tangible fixed assets	1,200	-	1,200
Trade and other receivables	2,294	(250)	2,044
Hire purchase contract obligations	(407)	-	(407)
Trade and other payables	(1,488)	-	(1,488)
Income tax payable	(21)	-	(21)
Deferred tax liability	(64)	(358)	(422)
Net identified assets and liabilities	2,375	235	2,610
Goodwill on acquisition			390
			3,000
Consideration paid in cash			2,759
Net cash acquired			(297)
Net cash flow			2,462
Consideration paid: fair value of shares issued			538
Total consideration			3,000

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. These include an Australian presence which may be used to facilitate Tracsis overseas growth, cross selling opportunities, operating synergies, staff skills and capabilities, and a brand/reputation.

The fair value adjustments were 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 fair value of shares issued was based on market value at the date of issue.

The Group incurred acquisition related costs of £225,000 which are included within administrative expenses.

4          Segmental analysis

The Group's revenue and profit was derived from its principal activity which is the solving a variety of data capture, reporting and resource optimisation problems along with the provision of a range of associated professional services.

In accordance with IFRS 8 'Operating Segments', the Group has made the following considerations to arrive at the disclosure made in these financial statements.

IFRS 8 requires consideration of the Chief Operating Decision Maker ("CODM") within the Group.  In line with the Group's internal reporting framework and management structure, the key strategic and operating decisions are made by the Board of Directors, who review internal monthly management reports, budgets and forecast information as part of this.  Accordingly, the Board of Directors are deemed to be the CODM.

Operating segments have then been identified based on the internal reporting information and management structures within the Group.  From such information it has been noted that the CODM reviews the business as a single operating segment, receiving internal information on that basis.  The management structure and allocation of key resources, such as operational and administrative resources, are arranged on a centralised basis.  Due to the small size and low complexity of the business, profitability is not analysed in further detail beyond the operating segment level and is not divided by revenue stream.

The CODM reviews a split of revenue streams on a monthly basis and, as such, this additional information has been provided below.

		Re-analysed
	2013	2012
Revenue	£000	£000
Software licences and post contract customer support	2,142	1,992
Rail Consultancy and professional services	1,145	1,401
Data capture and passenger counting	4,124	807
Condition monitoring technology and embedded software & associated hardware	3,420	4,468
Total revenue	10,831	8,668

Following the acquisition of Sky High plc in the year, the Group has represented the way revenues are presented. Some of the revenue in respect of the Group's existing passenger counting operations prior to the Sky High acquisition have been reclassified in the 2012 comparatives.

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.

		2013
	UK		Australia	Total
	£000		£000	£000
Revenues
Total revenue for reportable segments	10,374		457	10,831
Consolidated revenue	10,374		457	10,831
Profit or loss
Total profit or loss for reportable segments	3,422		(55)	3,367
Unallocated amounts:
Share based payment charge	(189)		-	(189)
Other exceptional items (net)	(225)		-	(225)
Depreciation	(129)		(25)	(154)
Amortisation of intangible assets	(273)		-	(273)
Interest receivable/payable(net)	67		(3)	64
Consolidated profit/(loss) before tax	2,673		(83)	2,590

		2012
	UK		Australia	Total
	£000		£000	£000
Revenues
Total revenue for reportable segments	8,668		-	8,668
Consolidated revenue	8,668		-	8,668
Profit or loss
Total profit or loss for reportable segments	3,279		-	3,279
Unallocated amounts:
Share based payment charge	(55)		-	(55)
Depreciation	(49)		-	(49)
Amortisation of intangible assets	(222)		-	(222)
Interest receivable	61		-	61
Consolidated profit before tax	3,014		-	3,014

			2013
	UK	Australia		Total
	£'000	£000		£000
Assets
Total assets for reportable segments	11,622	650		12,272
Unallocated assets - intangible assets	6,067	-		6,067
Consolidated total assets	17,689	650		18,339
Liabilities
Total liabilities for reportable segments	3,858	226		4,084
Unallocated liabilities - deferred tax	1,046	-		1,046
Consolidated total liabilities	4,904	226		5,130

			2012
	UK	Australia		Total
	£'000	£000		£000
Assets
Total assets for reportable segments	9,549	-		9,549
Unallocated assets - intangible assets	4,246	-		4,246
Consolidated total assets	13,795	-		13,795
Liabilities
Total liabilities for reportable segments	2,660	-		2,660
Unallocated liabilities - deferred tax	702	-		702
Consolidated total liabilities	3,362	-		3,362

Geographic split of revenue

A geographical analysis of revenue is provided below:	2013	2012
	£000	£000
United Kingdom	9,951	8,376
Australia	457	-
Rest of the World	423	292
Total	10,831	8,668

5          Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 July 2013 was based on the profit attributable to ordinary shareholders of £2,104,000 (2012: £2,416,000) and a weighted average number of ordinary shares in issue of 24,982,000 (2012: 24,260,000), calculated as follows:

Weighted average number of ordinary shares

In thousands of shares

	2013	2012
Issued ordinary shares at 1 August	24,839	24,036
Effect of shares issued related to business combinations	70	-
Effect of shares issued for cash	73	224
Weighted average number of shares at 31 July	24,982	24,260

Diluted earnings per share

The calculation of diluted earnings per share at 31 July 2013 was based on profit attributable to ordinary shareholders of £2,104,000 (2012: £2,416,000) and a weighted average number of ordinary shares in issue after adjustment for the effects of all dilutive potential ordinary shares of 25,827,000 (2012: 24,582,000):

In addition, adjusted EBITDA* is shown below on the grounds that it is a common metric used by the market in monitoring similar businesses.

	2013	2012
	£000	£000
Adjusted EBITDA*	3,367	3,279
Basic adjusted EBITDA* per share	13.48p	13.52p
Diluted adjusted EBITDA* per share	13.04p	13.34p

* Earnings before finance income, tax, depreciation, amortisation, exceptional items and share-based payment charges.

6          Annual Report and Annual General Meeting

The Company anticipates dispatching a copy of its annual report and accounts to all shareholders on or around 15 November 2013. A copy will also be available on the Company's website www.tracsis.com.

The Annual General Meeting of the Company will be held at Leeds Innovation Centre, 103 Clarendon Road, Leeds, LS2 9DF on Wednesday 15 January 2013 at 1pm.

7          Dividends

The Group introduced a progressive dividend policy during the previous year. The cash cost of the dividend payments is shown below:

		2013	2012
		£000	£000
Interim dividend for 2011/12 of 0.20p per share paid		-	48
Final dividend for 2011/12 of 0.35p per share paid		-	87
Interim dividend for 2012/13 of 0.30p per share paid		75	-
Final dividend for 2012/13 of 0.4p per share proposed		102	-

The dividend will be payable on 31 January 2014 to shareholders on the Register at 17 January 2014.

 

END

 

 

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