Final Results

RNS Number : 7665W

Tracsis PLC

12 November 2014

 



Tracsis plc

Final Results for the year ended 31 July 2014

12 November 2014

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 2014.

Financial Highlights:

·      Revenues increased 106% to £22.4m (2013: £10.8m)

·      Adjusted EBITDA* increased 61% to £5.4m (2013: £3.4m)

·      Profit Before Tax increased 62% to £4.2m (2013: £2.6m)

·      Earnings Per Share increased 53% to 12.90p to (2013: 8.42p)

·      Cash balances rose to £8.9m (2013: £6.6m)

·      Full year dividend increased 14% to 0.8p per share (2013: 0.7p)

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

Operational Highlights:

Buoyant trading across all divisions set against a background of favourable industry drivers:

·      Software and Professional Services

o  Extensive work with all the major transport owning groups for both day-to-day operations and franchise bidding

o  Continued high levels of recurring revenue under contract

o  Acquisition of rail software company Datasys Integration Limited

·      Remote Condition Monitoring 

o  Successful renewal of a key five year Framework Agreement

o  North American pilot established and since extended.  All indications point to a significant long term market opportunity

·      Data Capture & Analytics

o  Record year of trading following significant contract wins within the traffic, rail and retail markets

o  Sky High fully integrated with existing passenger counts business

·      Group

o  Significant investment in people and processes with organisational structure aligned with long term growth plan

o  Appointment of new independent non-executive Chairman and non-executive Director

John McArthur, Chief Executive Officer, commented:

"Tracsis has delivered another excellent year of growth across all areas of our business whilst at the same time expanding our geographic footprint to new overseas markets and completing our sixth acquisition since IPO.  

We continue to benefit from transport markets that are experiencing record levels of government spending, steadily rising passenger numbers and regulatory change.  This environment provides for good growth opportunities as we look to help solve the transportation problems of tomorrow.  In the year ahead we intend to make further in-roads into overseas markets, most notably the US, whilst continuing to diversify our technology portfolio and UK offering through a combination of in-house development and further well placed acquisitions."

Enquiries:

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

Chairman & Chief Executive Officer's Report

A welcome from Chris Cole, Non-Executive Chairman

I am pleased, with John, to provide this year's combined Chairman and CEO report.  I was appointed in April 2014 as the Group's new Non-Executive Chairman and I can confirm that my expectations regarding the Business, its people and the Markets in which they work have been upheld. 

I am excited by the opportunities available to Tracsis, indeed it was a key factor in my decision to join, and one of my jobs is to ensure direction and support as we navigate and deliver on these opportunities whilst making sure that the Group continues to mature as we grow.  My thanks to the Directors and Management for assisting my induction into Tracsis.

Introduction

The Group has enjoyed a further year of substantial growth, with overall Group revenues exceeding £20m for the first time, and an EBITDA in excess of £5m.  Both of these are significantly ahead of the previous year and a considerable achievement for Tracsis.  This has been a year of rapid growth and success for the Group, and the Directors are very pleased with the performance in the year and the resulting financial position.

Business overview

The Tracsis Group specialises in solving a variety of resource optimisation, rail management, data capture, and reporting problems via the provision of a range of software, hardware, and associated high value technology led professional services.  We choose to operate in these niche areas where we believe there is clear customer pain and where existing technology solutions are not available. 

The Group's market offering can be broadly categorised into four distinct revenue streams;

1.     Software: Industrial strength resource optimisation and rail management 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 & Analytics: Collection, collation and analytical services of traffic and pedestrian data such as volumes, queuing times, categorisation, crowding and dwell times.

4.     Professional Services: Transport consulting and related professional services across the operational and strategic planning horizon.

The Group's mission is to solve well recognised issues within transportation. Through the provision of its products and services, Tracsis provides its clients with better visibility and information to assist in front line decision making whilst driving efficiency and productivity. The Directors believe that the transport industry, in particular rail which forms a key part of the Group's business, is well positioned for further growth and the Group should be able to capitalise on this with its product and service offerings.

Financial summary

The Group delivered revenue of £22.4m for the year, an increase of 106% on the prior year (2013: £10.8m) which exceeded the Board's original expectations.

Organic revenues increased to £21.8m, which represents good growth across all other parts of the Group and a full year contribution from Sky High. Revenues from Datasys Integration Limited (acquired May 2014) contributed £0.5m to the total.  The full benefit of this latest acquisition will be experienced in the next financial year ending July 2015.

Adjusted EBITDA* rose 61% to £5.4m (2013: £3.4m) with statutory profit before tax 62% higher at £4.2m (2013: £2.6m).

The full year contribution of Sky High and Datasys has led to higher amortisation of intangible asset charges and higher depreciation. It has also led to an additional share based payment charge relating to stock options that were granted to senior management within the team in order to retain and motivate key individuals for the future. 

At 31 July 2014, the Group had cash balances of £8.9m (2013: £6.6m). The Group's strong cash generation and conversion capabilities is illustrated by the increase of £2.3m, which was in spite of the purchase of Datasys for net cash of £2.9m.

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

Trading Progress and Prospects

Software

Software sales increased to £2.8m, which includes a contribution of £0.5m from the acquisition of Datasys. Organic revenues were ahead of the prior year at £2.3m (2013: £2.1m). This demonstrates both the high levels of recurring revenue for the suite of products and also the high levels of renewals taking place.  During the year we continued our strategy of cross selling products to our existing customer base and achieved new sales of TRACS Roster, TRACS-RS and also converting one of the few remaining UK TOCs to adopt TrainTRACS for operational use.

Our COMPASS team was also successful in winning a significant piece of work in Sweden with a major rail and bus operator. This work will be delivered during the FY14/15 financial year and follows on from other successful large projects the Group has delivered in both this territory as well as other international locations.

Professional Services

During the period, our Consultancy team worked extensively on various rail franchise bids for a number of transport owning Groups.  Our teams supported submissions for the recent East Coast and Scot Rail franchises and earlier in the year worked on Essex Thameside, Docklands Light Railway (DLR) and Crossrail bids.  This work contributed towards revenues delivered by our consultancy team amounting to £1.8m, which was a significant increase on the £1.1m delivered in the previous year largely due to the UK rail franchising model being back on track.  Looking forward, the team expects to support bidders for the Northern and TransPennine Express franchise bids which are due to be submitted shortly. The DfT's revised timetable for bidding activity outlines what is expected to be a busy period in the coming years. The Group has also taken active measures to increase the level of non-TOC related consultancy revenue and in this vein has established new revenue streams within the signalling consultancy field.

Remote Condition Monitoring (RCM)

Trading within this part of the Group was once again buoyant with revenues increasing significantly from £3.4m to £5.8m.  In October 2013, the Group secured the renewal of a Framework Agreement with a major UK infrastructure customer for a further five years through to 2018 which underpins our technology footprint and trading prospects for this division going forwards.  In January 2014, the Group secured a significant initial order of £2.2m under this Framework Agreement and this was fulfilled prior to the end of the financial year. There was significant demand for this technology out with this agreement for substantial sales across a range of other customers.

North America roll-out

The Group secured a pilot project for its RCM technology with one of the largest class 1 railroad operators in the United States.  The first sale was announced on 14th November 2013 which comprised hardware and software to cover five discrete geographies on the customer's rail network.  On 24^th July 2014, Tracsis announced a further sale to the same customer for a further six geographies, all of which have now been installed and are currently being monitored on a daily basis.

The Group anticipates further orders in due course as the client continues to evaluate the Group's technology and its benefits for its wider network.  Following this success, the Group is now working towards developing commercial relationships with other large class 1 railroads.  Our expansion plans within the US are a key driver of growth for this division and whilst the specific timing of technology uptake is difficult to predict, we see a considerable market opportunity that is many times larger than what we have achieved thus far within the UK.

Data capture and passenger counting

This part of the Group made a key contribution to revenues in the past year with an increase from £4.1m to £12.0m.  This takes into account a full year contribution from Sky High which was acquired in April 2013.  Following a period of integration with the wider Group, Sky High has performed extremely well and has diversified its range of data capture and analytics offering by moving into non-transport areas and adopting new technologies such as Wi-Fi and Bluetooth sensing that can be utilised in various ways to provide for greater project diversity. Our existing passenger counts division continued to operate well in its niche market and these two parts of the group have now been integrated.

Sky High was also selected to deliver a significant piece of traffic data collection work through a global engineering consultancy for a UK transport agency under a two year contract with the potential to be extended for a further period of two years, which was an important contract win.

Our team

We were delighted to strengthen our Board during the year with two non-executive Director appointments.  Chris Cole was appointed as non-executive Chairman on 28 April 2014. As the founder, former Chief Executive, and now current Chairman of WSP Group, Chris brings with him a wealth of experience in growing successful businesses and has made an immediate impact. 

On 1 November 2013, Sean Lippell was appointed as a non-executive Director and has also helped to strengthen the Board with his experience. As a former managing partner of a major law firm, Sean also has significant commercial experience and we welcome him to the Group. 

Dividends

In February 2012, the Board implemented a progressive dividend policy and since then the Group has maintained this approach of growing its dividend in line with the Group's growth.  To this end, an interim dividend of 0.35p per share for 2013/14 was paid in April 2014.  A final dividend of 0.45p per share in respect of 2013/14 is proposed, to take the full year dividend to 0.80p. This represents a 14% increase on the 2012/13 total dividend paid of 0.70p per share, which in itself was a 27% increase on the 0.55p per share paid in respect of 2011/12. 

The overall level of dividends continues to be 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.

Acquisitions

On 16 May 2014, the Group completed the acquisition of Datasys Integration Limited (the 100% holding company of the trading subsidiary Datasys Limited together referred to as 'Datasys'). The gross headline consideration was £4.5m, albeit £0.4m of this consideration was satisfied in Tracsis shares, and £1.3m of cash was acquired to give a net cash consideration of £2.9m.  Datasys had been known to Tracsis for many years given both companies are specialist providers of software to UK rail. Datasys is an excellent strategic fit for the Group, given it has a strong software product offering, high levels of recurring revenue and profit, and a customer base that is highly complementary to certain parts of Tracsis.  Integration of this business is well underway and Datasys made a positive contribution to the Group's results in the two month period from acquisition to year end, contributing revenues in excess of £0.5m.

Overseas growth

Overseas growth is a key part of the Group's future growth strategy and whilst this remains relatively untapped, further progress has been made.  In the year under review, the Group generated £2.1m of revenue from overseas customers (9% of overall Group revenues).  The majority of this (£1.7m) came from Sky High Australia, with the balance of £0.4m coming from clients in Sweden, Ireland and New Zealand. A small amount of revenue came from the American pilot for the Remote Condition Monitoring technology and this represents an exciting opportunity for the year ahead.

Summary and Outlook

Tracsis has performed well in the period and delivered another significant year of growth across all areas of the Group with revenue, adjusted EBITDA and Profit before Tax being well ahead of the same period last year.  Good progress has been made in expanding the geographic footprint of our business with new customers and a technology partner within the US, whilst within the UK, the Group's acquisition has broadened our product offering to UK rail.  Tracsis continues to benefit from a strong balance sheet with good cash generation and significant cash reserves that will allow us to realise our growth plans for the future. 

The Group's strategy remains unchanged: to deliver shareholder value and growth both organically and by acquisition, by creating products and services that solve well recognised transport problems that are typically poorly served by existing technology. Our business model remains focussed on niche specialist offerings that have high barriers to entry, are sold on a recurring basis under contract, and to a retained customer base that is largely blue chip in nature with limited competitive pressures.  

Looking ahead, the passenger transport markets both within the UK and internationally are experiencing record levels of government spending, rising passenger numbers, and regulatory change.  This environment gives rise to greater demands for quality, safety, and the need from both passengers and operators for value for money.  To this end, Tracsis is well placed to help solve some of these challenges and sees a wide range of opportunities for further growth across the Group.  In the period ahead we intend to make further in-roads into overseas markets, most notably the US, whilst continuing to diversify our technology portfolio through a combination of in-house development and further prudent allocation of capital to fund new acquisitions. 

As always, our thanks go to our valued customers, supportive shareholders and, most of all, our talented employees for their ongoing support towards the Group's growth and success.

Chris Cole, Chairman

John McArthur, Chief Executive Officer

12 November 2014

Consolidated Statement of Comprehensive Income

for the year ended 31 July 2014

			2014		2013
	Notes		£000		£000
Revenue
- continuing			21,843		10,831
- acquisitions			514		-
Total revenue	4		22,357		10,831
Cost of sales			(9,546)		(3,033)
Gross profit			12,811		7,798
Administrative costs			(8,614)		(5,272)
Adjusted EBITDA*			5,434		3,367
Amortisation of intangible assets			(460)		(273)
Depreciation			(431)		(154)
Exceptional item: Acquisition costs			(31)		(225)
Share-based payment charges			(315)		(189)
Operating profit
- continuing			4,153		2,751
- acquisitions			75		-
- exceptional acquisition costs			(31)		(225)
Total operating profit			4,197		2,526
Finance income			36		75
Finance expense			(32)		(11)
Profit before tax			4,201		2,590
Taxation			(898)		(486)
Profit after tax			3,303		2,104
Other comprehensive income/(expense):
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences - foreign operations			(38)		(62)
Total recognised income for the year			3,265		2,042
Earnings per ordinary share
Basic	5		12.90p		8.42p
Diluted	5		12.44p		8.15p

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

Consolidated Balance Sheet

as at 31 July 2014

Company number: 05019106

		2014	2013
		£000	£000
Non-current assets
Property, plant and equipment		1,689	1,600
Intangible assets		10,724	6,067
		12,413	7,667
Current assets
Inventories		263	236
Trade and other receivables		4,442	3,865
Cash and cash equivalents		8,920	6,571
		13,625	10,672
Total assets		26,038	18,339
Non-current liabilities
Hire-purchase contracts		133	232
Deferred tax liabilities		1,388	1,046
		1,521	1,278
Current liabilities
Hire-purchase contracts		100	96
Trade and other payables		6,075	3,532
Current tax liabilities		493	224
		6,668	3,852
Total liabilities		8,189	5,130
Net assets		17,849	13,209
Equity attributable to equity holders of the company
Called up share capital		105	102
Share premium reserve		4,591	4,280
Merger reserve		1,846	1,472
Share based payments reserve		698	383
Retained earnings		10,709	7,034
Translation reserve		(100)	(62)
Total equity		17,849	13,209

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 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
At 1 August 2013		102		4,280		1,472		383	7,034			(62)		13,209
Profit for the year		-		-		-		-	3,303			-		3,303
Other comprehensive income/(expense)		-		-		-		-	-			(38)		(38)
Total comprehensive income		-		-		-		-	3,303			(38)		3,265
Transactions with owners:
Dividends		-		-		-		-	(191)			-		(191)
Share based payment charges		-		-		-		315	-			-		315
Tax movements in equity		-		-		-		-	563			-		563
Exercise of share options		2		311		-		-	-			-		313
Shares issued as consideration for business combinations		1		-		374		-	-			-		375
At 31 July 2014		105		4,591		1,846		698	10,709			(100)		17,849

Consolidated Cash Flow Statement

for the year ended 31 July 2014

		2014	2013
	Notes	£000	£000
Operating activities
Profit for the year		3,303	2,104
Finance income		(36)	(75)
Finance expense		32	11
Depreciation		431	154
Amortisation of intangible assets		460	273
Income tax charge		898	486
Share based payment charges		315	189
Operating cash inflow before changes in working capital		5,403	3,142
Movement in inventories		(27)	-
Movement in trade and other receivables		(94)	(539)
Movement in trade and other payables		1,080	116
Cash generated from operations		6,362	2,719
Finance income		36	75
Finance expense		(32)	(11)
Income tax paid		(649)	(1,093)
Net cash flow from operating activities		5,717	1,690
Investing activities
Purchase of plant and equipment		(446)	(75)
Acquisition of subsidiaries	3	(2,886)	(2,462)
Net cash flow used in investing activities		(3,332)	(2,537)
Financing activities
Dividends paid	7	(191)	(162)
Proceeds from exercise of share options		313	169
Hire purchase repayments		(120)	(95)
Net cash flow from/(used in) financing activities		2	(88)
Net increase/(decrease) in cash and cash equivalents		2,387	(935)
Effect of exchange fluctuations		(38)	(62)
Cash and cash equivalents at the beginning of the year		6,571	7,568
Cash and cash equivalents at the end of the year		8,920	6,571

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 2014 or 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 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 amendments to financial reporting standards were adopted from 1 August 2013, the start of the new financial year. None of them have had a significant impact on the Group:

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

·      IFRS 13: Fair Value Measurement

·      Amendment to IAS 1: Presentation of Financial Statements - comparative periods

·      Amendment to IAS 16: Property, Plant and Equipment - servicing equipment

·      Amendment to IAS 19: Employee Benefits - post employment benefits and termination benefits projects

·      Amendment to IAS 32: Financial Instruments Presentation - tax effect of equity dividends

·      Amendment to IAS 34: Interim Financial reporting - interim reporting of segment assets

The following new amendments to standards were in issue but are not yet effective for the financial year beginning 1 August 2013 and are not currently relevant for the Group:

·      IFRS 10 - Consolidated Financial Statements

·      IFRS 11 - Joint arrangements

·      IFRS 12 - Disclosure of Interests in Other Entities

·      IFRS 15 - Revenue from contracts with customers (replacement of IAS11, IAS18, IFRIC13, IFRIC15, IFRIC18 and SIC-31) (effective 1 January 2017, not yet endorsed by EU).

·      IFRS 9 Amendments - Financial Instruments (replacement of IAS39) (effective 1 January 2015, not yet endorsed by EU).

·      IAS 36 Amendments - Impairment of Assets (effective 1 January 2014, endorsed by EU on 19 December 2013).

No new standards becoming effective and applied in the current year have had a material impact on the financial statements.  The impact of IFRS15 - Revenue from contracts with customers, will be considered for future periods.

The Group continues to monitor the potential impact of other new standards and interpretations which may be endorsed by the European Union and require adoption by the Group in future reporting periods.

(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 in the current year: Datasys Integration Limited

On 16 May 2014, the Group acquired 100% of the share capital of Datasys Integration Limited and its wholly owned subsidiary Datasys Limited (Datasys). Datasys Integration Limited is a holding company whilst Datasys Limited is a trading company. Based in Manchester, Datasys provides rail management software systems, business applications and hosting services for the majority of the UK's train operating companies. Its client base includes all of the major transport owning groups. The principle activity of the business is software development, sales and licensing with revenues predominantly derived from products that assist train operators capture, report and analyse the root causes of delays and other performance critical information. The vast majority of Datasys revenue comes from long term recurring software leases.

In the period to 31 July 2014 the company contributed revenue of £514,000 and operating profit of £75,000 to the Group's results, net of amortisation of associated intangible assets.  If the acquisition had occurred on 1 August 2013, management estimates that consolidated revenue would have been £2,474,000 and consolidated profit for the year would have been £526,000.  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 2013.

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: Technology assets	-		1,660		1,660
Intangible assets: Customer relationships	-		3,098		3,098
Other intangible assets	1,362		(1,362)		-
Tangible fixed assets	49		-		49
Trade and other receivables	483		-		483
Deferred tax asset	110		(110)		-
Trade and other payables and deferred income	(1,463)		-		(1,463)
Income tax receivable /(payable)	27		-		27
Deferred tax liability	-		(952)		(952)
Net identified assets and liabilities	568		2,334		2,902
Goodwill on acquisition					359
					3,261
Consideration paid in cash					4,150
Stamp Duty					23
Net cash acquired					(1,287)
Net cash flow					2,886
Consideration paid: fair value of shares issued					375
Total consideration					3,261

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.

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 £31,000 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.

	2014	2013
Revenue	£000	£000
Software licences and post contract customer support	2,798	2,142
Rail Consultancy and professional services	1,815	1,145
Data capture and passenger counting	11,987	4,124
Condition monitoring technology and embedded software & associated hardware	5,757	3,420
Total revenue	22,357	10,831

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.

4          Segmental analysis (continued)

	2014
	UK	Australia	Total
	£000	£000	£000
Revenues
Total revenue for reportable segments	20,634	1,723	22,357
Consolidated revenue	20,634	1,723	22,357
Profit or loss
Total profit or loss for reportable segments	5,295	139	5,434
Unallocated amounts:
Share based payment charge	(315)	-	(315)
Other exceptional items (net)	(31)	-	(31)
Depreciation	(339)	(92)	(431)
Amortisation of intangible assets	(460)	-	(460)
Interest receivable/payable(net)	17	(13)	4
Consolidated profit/(loss) before tax	4,167	34	4,201

	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

4          Segmental analysis (continued)

		2014
	UK	Australia	Total
	£'000	£000	£000
Assets
Total assets for reportable segments	14,686	628	15,314
Unallocated assets - intangible assets	10,724	-	10,724
Consolidated total assets	25,410	628	26,038
Liabilities
Total liabilities for reportable segments	6,428	373	6,801
Unallocated liabilities - deferred tax	1,388	-	1,388
Consolidated total liabilities	7,816	373	8,189

		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

Geographic split of revenue

A geographical analysis of revenue is provided below:	2014	2013
	£000	£000
United Kingdom	20,252	9,951
Australia	1,723	457
Rest of the World	382	423
Total	22,357	10,831

5          Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 July 2014 was based on the profit attributable to ordinary shareholders of £3,303,000 (2013: £2,104,000) and a weighted average number of ordinary shares in issue of 25,608,000 (2013: 24,982,000), calculated as follows:

Weighted average number of ordinary shares

In thousands of shares

	2014	2013
Issued ordinary shares at 1 August	25,526	24,839
Effect of shares issued related to business combinations	26	70
Effect of shares issued for cash	56	73
Weighted average number of shares at 31 July	25,608	24,982

Diluted earnings per share

The calculation of diluted earnings per share at 31 July 2014 was based on profit attributable to ordinary shareholders of £3,303,000 (2013: £2,104,000) and a weighted average number of ordinary shares in issue after adjustment for the effects of all dilutive potential ordinary shares of 26,559,000 (2013: 25,827,000):

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

	2014	2013
	£000	£000
Adjusted EBITDA*	5,434	3,367
Basic adjusted EBITDA* per share	21.22p	13.48p
Diluted adjusted EBITDA* per share	20.46p	13.04p

* 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 28 November 2014. 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 Thursday 22 January 2015 at 1pm.

7          Dividends

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

		2014	2013
		£000	£000
Final dividend for 2011/12 of 0.35p per share paid		-	87
Interim dividend for 2012/13 of 0.30p per share paid		-	75
Final dividend for 2012/13 of 0.40p per share paid		102	-
Interim dividend for 2013/14 of 0.35p per share paid		89	-
Total dividends paid		191	162

The dividends paid or proposed in respect of each financial year is as follows:

	2014	2013	2012
	£000	£000	£000
Interim dividend for 2011/12 of 0.20p per share paid	-	-	48
Final dividend for 2011/12 of 0.35p per share paid	-	-	87
Interim dividend for 2012/13 of 0.30p per share paid	-	75	-
Final dividend for 2012/13 of 0.40p per share paid	-	102	-
Interim dividend for 2013/14 of 0.35p per share paid	89	-	-
Final dividend for 2013/14 of 0.45p per share proposed	119	-	-

The dividend will be payable on 13 February 2015 to shareholders on the Register at 30 January 2015.

 

END

 

 

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