Final Results

RNS Number : 4493E

Tracsis PLC

04 November 2015

 

Date:	4 November 2015
On behalf of:	Tracsis plc
Embargoed until 0700hrs

Tracsis plc

('Tracsis', 'the Company' or 'the Group')

Audited results for the year ended 31 July 2015

Tracsis plc, a leading provider of software and technology led products and services for the traffic data and transportation industry, is pleased to announce audited results for the year ended 31 July 2015.

Financial Highlights:

·      Revenue increased 14% to £25.4m (2014: £22.4m)

·      Adjusted Pre-tax Profit¹ increased 16% to £5.8m (2014: £5.0m)

·      Statutory Profit Before Tax increased 6% to £4.5m (2014: £4.2m)

·      Basic Earnings Per Share increased 9% to 14.10p (2014: 12.90p)

·      Fully diluted Adjusted² Earnings per share increased 18% to 18.32p (2014: 15.47p)

·      Cash balances increased to £13.3m (2014: £8.9m)

·      Final dividend of 0.6p per share proposed.  Full year dividend increased 25% to 1.0p per share (2014: 0.8p)

¹Profit before tax, plus amortisation, share based payments and exceptional items

²Adjusted for amortisation, share based payments and exceptional items.

Both metrics are used in research coverage on Tracsis and is included for clarity for the benefit of shareholders.

Operational Highlights:

·     All parts of the Group performed well in the year set against a background of dynamic transport markets  undergoing significant growth and structural change

·   Strong maiden performance from Datasys (acquired May 2014) with high levels of recurring software  revenue

·    Strong contribution from the Group's Traffic & Data Services offering which achieved significant organic  growth in the year

·    Broadening of target markets for Remote Condition Monitoring outside of core UK market.  Continued  progress in the US and Europe

·     UK rail franchising continues to provide opportunities

Post Year end Highlights:

·      4th September - Investment of up to £1m into Citi Logik Limited ('Citi Logik') in return for a 29.4% equity stake.  This business specialises in mobile telephone data analytics and has a preferred provider with a major UK telco.

·      25th September - Completed the acquisition of SEP Limited ('SEP') for a consideration of up to £2.6m.  SEP are leading providers of traffic management services for major sporting and outdoor events.

John McArthur, Chief Executive Officer, commented: 

"Once again, I am pleased to report on another period of growth for the Tracsis Group with all key metrics significantly ahead of last year.  Tracsis has consolidated on the strong performance in 2014 and achieved good organic growth, with revenues for the year passing £25m for the first time.

Post year end, we are delighted to have acquired SEP and completed a strategic investment into Citi Logik. These represent exciting opportunities for Tracsis and are exactly the sorts of transactions which have driven shareholder value in the past, and will drive forward growth in the future."

Enquiries:

John McArthur/Max Cawthra, Tracsis plc	Tel: [phone]
Dominic Emery/Matt Lewis, Investec Bank plc	Tel: [phone]
Rebecca Sanders Hewett, Redleaf PR	Tel: [phone] [e-mail]

Chairman & Chief Executive Officer's Report

My expectations for the progress of our Company since joining the Board as Non-Executive Chairman continued through 2015 in terms of financial results, integration of the Group and the post-year transaction highlights.

I am confident that we are well placed to create opportunities and value in the busy Rail and Transportation sectors we serve. 

My thanks to the Directors and Management of Tracsis for delivering excellent results and a sound platform to continue to build upon.

Introduction

The Group has enjoyed a further year of growth and consolidation, with total Group revenues rising to in excess of £25m, and EBITDA in excess of £6m.  Both of these are significantly ahead of the previous year and represent a considerable achievement for Tracsis.  The business continues to benefit from significant financial strength, great products and services, and an engaged customer base which operates within a challenging environment of public and political scrutiny.  

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 there is clear customer pain, an opportunity to create significant value for customers, and where existing technology solutions are not available.  Working in this way, Tracsis can share in the upside of the benefit we bring to our clients and generate significant value for our shareholders.  This approach has worked for us since our IPO in 2007 and we continue to deploy this strategy today.

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

·   Software and technology led consulting:  Industry-strength resource optimisation and rail management software that covers a variety of asset classes.  Our technology offering is delivered alongside in-house professional services where we have deep industry knowledge across the operational and strategic planning horizons.

·  Remote Condition Monitoring:  Hardware and software that allows for real-time reporting on critical infrastructure assets.  We collect, process and analyse significant amounts of data from over 12,000 installations and help our customers identify problems that aid with preventative maintenance.  In a nutshell this offering removes considerable delay, cost and uncertainty from a transport network and leads to a safer railway; and,

·   Traffic & Data Services:  Data capture, processing and analysis of traffic and pedestrian data to aid with the planning, investment and ultimate operations of a transport environment.  By revenue, this is the largest and most diverse part of the Tracsis Group and we use a variety of technology (WiFi, ATC, ANPR, telco data) to deliver projects for a wide range of blue chip clients.

The Group's mission from the outset has been to solve complex, data driven problems within the transportation markets.  Through the provision of its products and services, Tracsis provides its clients with better visibility and information to assist decision making whilst driving efficiency, productivity and enhanced safety.  The Directors believe that the transport industry, in particular passenger 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 expanding portfolio of product and service offerings.

Financial summary

The Group achieved revenue of £25.4m for the year, an increase of 14% on the prior year (2014: £22.4m) which exceeded the Board's original expectations and was the first time that Group revenues have exceeded £25m. Adjusted pre-tax profit of £5.8m was ahead of market expectations of £5.5m and the previous year result of £5.0m.

Adjusted EBITDA* increased by 20% to £6.5m (2014: £5.4m) with statutory Profit Before Tax 6% higher at £4.5m (2014: £4.2m).  Statutory PBT was impacted by higher amortisation due to the Datasys acquisition from 2014, and higher share based payment charges due to the high take up of the Group's share schemes.  The Group also incurred costs of c. £95K in relation to professional fees and due diligence enquiries associated with aborted acquisitions.

At 31 July 2015, the Group had cash balances of £13.3m (2014: £8.9m), with cash conversion remaining strong. Overall cash balances increased by £4.4m in the financial year.  In spite of a healthy pipeline of opportunities, no acquisitions were completed during the year.

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

Trading Progress and Prospects

Software

Software sales increased significantly to £5.6m (2014: £2.8m), which reflects the full year contribution from Datasys which was acquired in May 2014.  This strong performance continues to demonstrate the high levels of recurring revenue for our software which comes from a retained user base under contract. 

We now have 10 distinct products across the TRACS, COMPASS and Datasys software range, and continue our strategy of cross selling products to our customer base which is made up of all the major Train Operating Companies along with several smaller transit/metro players and non-franchised rail operators.  We continued to invest in new product development, with the bulk of our time being spent developing the Bugle Day One product which won a Modern Railways Industry Innovation Award back in June.   Our software division were also successful in delivering a significant installation of COMPASS to a major rail and bus operator in Sweden following on from other successful projects the Group has delivered in this territory.  In the past year we also created a new post of Head of Software to help the Group manage technology risk and standardise our approach to technology development, testing and quality assurance.   

Professional Services

Revenue rose 8% to £2.0m (2014: £1.8m) which was a strong performance and follows on from the achievements made last year.  Our consultancy division is broader and more diverse than it was a year ago and we have made a concerted effort to bring in new resources to our team to broaden the service offering.  Along with several new hires made during the year we also appointed a new Head of Consultancy.  These changes were partly to enable a reduction of our reliance on franchise bidding work (which is inherently lumpy in nature) but primarily in order to build a team that was able to quickly take advantage of opportunities in other areas of the rail supply chain which historically have been outside of the core operational planning space. 

These changes are beginning to bear fruit and in the first half of the financial year, our team worked on a variety of major projects for Network Rail outside of the franchise bidding space.   In the second half of the year, we chose to get heavily involved with two high profile franchise bids working for the transport owning Groups.  Tracsis supported submissions for the recent Northern and TransPennine Express franchise bids, and we expect to support bidders for the Greater Anglia and South Western franchises in the coming financial year.  Looking ahead, our professional services team will continue to diversify our offering whilst remaining a key source of expertise within the franchise bidding arena.

Remote Condition Monitoring (RCM)

Revenues of £3.0m (2014: £5.8m) were adverse to the previous year although this decrease was anticipated following a very strong performance in 2014.  The trading performance and profitability of RCM in the year remained buoyant and in April 2015 we announced a large order for £1.1m from our major UK based customer.  This order was substantially fulfilled by the end of the financial year, and we remain under a Framework agreement with this customer until 2018.  Within the UK, Tracsis now has an installed base in excess of 12,000 data loggers and this population is growing steadily as the rail industry continues to invest in smarter ways of working to deliver a most cost effective railway to the customer.

Outside of the UK, we have continued to invest time and effort to develop overseas markets and earlier in the year, we were pleased to announce a distribution agreement with a US rail technology partner on an exclusive basis. This agreement has led to three active pilots for the adoption of our RCM technology with major Class 1 operators in North America (i.e. those defined by freight revenue in excess of $500M per annum).  As alluded to at the half year, the specific adoption rate of Remote Condition Monitoring technology will vary significantly from customer to customer and will be impacted by several factors which Tracsis are not able to impact such as the adoption of Positive Train Control within North America.  To this end we have yet to see significant revenue contribution from overseas markets although we continue to believe there is a large and viable market.  In the meantime, Tracsis will continue to promote RCM technology both directly and via our partners to seed the US market and management believes this is the best approach that will lead to success in the fullness of time.

Traffic & Data Services

Now the largest part of the Group by revenue, our rebranded T&DS (Traffics & Data Services) offering saw considerable organic growth in the period with a sharp increase in sales from £12.0m to £14.8m.  Macroeconomic conditions in the UK have remained positive, though the increase in revenue was also attributable to management achieving most of the strategic goals that were set out at the beginning of the year.  These included further technology innovation (i.e. WiFi, Bluetooth, mobile), proactive account management, and continued professionalisation of our tendering process that has allowed us to bid for and win several very large traffic data capture projects.  Outside of the UK, our Australia operations made a great contribution to the Group and traded ahead expectations with revenues of £2.2m (2014: £1.7m). 

Post year end, the acquisition of SEP Events and the equity investment into Citi Logik were great additions to our traffic and data capture capabilities.  SEP opens up an entirely new market to Tracsis through which obvious cross selling opportunities to the event industry exist whilst the mobile analytics capability of Citi Logik presents an entirely new product offering which has exciting possibilities. 

Dividends

In February 2012, the Board implemented a progressive dividend policy and the Group maintains this approach of growing the dividend in line with growth.  To this end, an interim dividend of 0.4p per share for 2014/15 was paid in May 2015.  A final dividend of 0.6p per share in respect of 2014/15 is proposed, to take the full year dividend to 1.0p.  This represents a 25% increase on the 2014/15 total dividend paid of 0.8p per share. 

The dividends remain 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 Board is committed to maintaining the progressive dividend policy going forwards provided that the business continues to trade in line with expectation.

Acquisitions

The Group appraised a number of acquisition opportunities in the year but none passed with the Group's strict investment and diligence criteria in order to complete.  The Group incurred costs of circa £95K in relation to our company investigations, research and general due diligence. 

Post year end, we were delighted to have completed the acquisition of SEP Limited and make a £1.0m investment into Citi Logik Limited in exchange for a 29.41% equity stake.  Both transactions are of strategic importance to Tracsis and met with the approval of our investment committee.  

SEP Limited

Based in Boroughbridge, North Yorkshire, SEP is a market leading provider of traffic planning and management services for the events industry.   The business was formed in 1989, and has a 25 year pedigree which has seen its client list expand to now include many of the UK's largest and most prestigious outdoor entertainment and sporting fixtures.

In terms of capabilities, SEP works with event organisers and 'blue light' services (police, ambulance, fire brigade) to plan and deliver traffic management services for major events.  This remit includes significant amounts of preparation, planning and delivery work and revolves around how to maximise the safe and effective mass movement of people and vehicles into and out of a specific location.  SEP provides end to end traffic management services and will be involved from the pre-planning consultation stage right through to deliver of traffic management services (road closures and signage) and on the day delivery (parking management, meet and greet, revenue collection).

The Directors believe that SEP is highly complementary to Tracsis' existing Traffic & Data Services division and will offer strong cross-sell and upsell opportunities given the nature of this business offering.  Both SEP and Tracsis have worked together in the past and collaborated on major events such as Royal Ascot, T in the Park, The Grand National, and the Wings and Wheels air show.

In the year ended 30 September 2014, SEP generated revenue of £4.0m, an adjusted EBITDA of £0.4m and Profit before Tax of £0.3m.  The business employs 30 permanent staff, all of whom will remain with the business post transaction.  

The acquisition consideration comprised an initial cash payment of £1.625m and the issue of 55,005 ordinary shares of 0.4p each in Tracsis at an issue price of 454.5p (a total value of £0.25m).  Deferred consideration of £0.1m is payable over two years with performance consideration of up to £0.6m is payable based on SEP achieving certain financial targets in the two years post acquisition, giving a total consideration of up to £2.6m.

Citi Logik Limited

On 4th September Tracsis completed a strategic investment of up to £1.0m to acquire 29.4% of Citi Logik.  Citi Logik was established in 2011, and has developed unique technology and expertise in mobile analytics to improve the understanding of interactions between people, transport and the built environment using large anonymised mobile phone datasets.  The business has a global framework agreement with a major FTSE 100 telecommunications business to source mobile data and works with a range of public and private customers on projects ranging from transport analysis to consumer behaviour and travel patterns.

The Directors believe Citi Logik has a highly novel technology platform that will be complementary to the existing Tracsis Traffic & Data Services division.  Mobile analytics offers strong cross-sell and upsell opportunities to the Tracsis Group and complements existing survey methods which will expand the market into larger projects of greater size and complexity.

Tracsis will invest up to £1.0m via a combination of equity and debt funding with £0.5m being made immediately with a further £0.5m invested within the next 12 months subject to delivery of agreed business plan milestones.  A Tracsis executive will join the Board of Directors of Citi Logik to help grow the business and promote mobile analytics to the Tracsis customer base.

Overseas growth

Overseas growth continues to be a key part of the Group's future growth strategy and whilst this still remains relatively untapped, significant progress has been made in the past year.   In the year under review, the Group generated £2.8m of revenue from overseas customers (2014: £2.1m) which accounted for 11% of Group revenues (2014: 9%).  The majority of this (£2.2m) again came from our Australian operations, with the balance of £0.6m again coming from clients in Sweden, Ireland and New Zealand (2014: £0.4m), with a major implementation of COMPASS being delivered in Scandinavia.  A small amount of revenue was delivered from our various North American pilots for our Remote Condition Monitoring technology which continues to be an area of focus for the year ahead.   Tracsis now employs a full time business development resource for European markets and, as discussed above, has a signed agreement in place with a US partner.  Looking ahead, we anticipate our overseas footprint to grow in the coming year albeit at a pace that is hard for us to predict given market forces beyond our control.  With that said, management believe the Group is well positioned to take advantage of new customer opportunities as and when these present themselves.

Summary and Outlook

Tracsis has once again performed well and delivered another year of growth with revenue, adjusted EBITDA and Profit Before Tax being well ahead of the same period last year.  The Group has consolidated and built upon the successes of 2014 and made genuine strides forward to put in place the building blocks that allow us to scale our enterprise for the years ahead.  The post year-end investments were a welcome addition and shows management's commitment to not only breaking into new and related markets but also our passion for technology and innovation.  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 organically and via acquisition, by creating products and services that solve well recognised problems that are poorly served by existing technology.  Our business model remains focussed on niche offerings that typically 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.  This strategy has worked well in the past to generate significant returns for shareholders and we believe it will continue to work well in the future especially given the pace of change within our target markets.

Looking ahead, Tracsis remains well placed to benefit from a growing UK traffic and transport industry and will continue to develop our overseas footprint which we believe remains a significant opportunity for the future.  In the meantime we will, as ever, continue to diversify our technology portfolio through working hand in glove with our customers and making the right acquisitions as and when these present themselves.

As always, our thanks go to our supportive clients, shareholders and, above all, our talented team who continue to make Tracsis the business it is.

Chris Cole, Chairman

John McArthur, Chief Executive Officer

4 November 2015

Consolidated Statement of Comprehensive Income

for the year ended 31 July 2015

			2015		2014
	Notes		£000		£000
Revenue from continuing operations	3		25,382		22,357
Cost of sales			(9,632)		(9,546)
Gross profit			15,750		12,811
Administrative costs			(11,282)		(8,614)
Adjusted EBITDA*			6,529		5,434
Amortisation of intangible assets			(714)		(460)
Depreciation			(724)		(431)
Exceptional item: Acquisition costs			-		(31)
Share-based payment charges			(623)		(315)
Operating profit from continuing operations			4,468		4,197
Finance income			31		36
Finance expense			(29)		(32)
Profit before tax			4,470		4,201
Taxation			(741)		(898)
Profit after tax			3,729		3,303
Other comprehensive income/(expense):
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences - foreign operations			(89)		(38)
Total recognised income for the year			3,640		3,265
Earnings per ordinary share
Basic	4		14.10p		12.90p
Diluted	4		13.48p		12.44p

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

 

Consolidated Balance Sheet

as at 31 July 2015

Company number: 05019106

		2015	2014
		£000	£000
Non-current assets
Property, plant and equipment		1,930	1,689
Intangible assets		10,010	10,724
Deferred tax assets		882	560
		12,822	12,973
Current assets
Inventories		274	263
Trade and other receivables		4,273	4,442
Cash and cash equivalents		13,341	8,920
		17,888	13,625
Total assets		30,710	26,598
Non-current liabilities
Hire-purchase contracts		229	133
Deferred tax liabilities		1,734	1,948
		1,963	2,081
Current liabilities
Hire-purchase contracts		171	100
Trade and other payables		5,697	6,075
Current tax liabilities		502	493
		6,370	6,668
Total liabilities		8,333	8,749
Net assets		22,377	17,849
Equity attributable to equity holders of the company
Called up share capital		106	105
Share premium reserve		4,776	4,591
Merger reserve		1,846	1,846
Share based payments reserve		1,321	698
Retained earnings		14,517	10,709
Translation reserve		(189)	(100)
Total equity		22,377	17,849

 

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 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
At 1 August 2014		105			4,591			1,846			698		10,709				(100)				17,849
Profit for the year		-			-			-			-		3,729				-				3,729
Other comprehensive income/(expense)		-			-			-			-		-				(89)				(89)
Total comprehensive income		-			-			-			-		3,729				(89)				3,640
Transactions with owners:
Dividends		-			-			-			-		(225)				-				(225)
Share based payment charges		-			-			-			623		-				-				623
Tax movements in equity		-			-			-			-		304				-				304
Exercise of share options		1			185			-			-		-				-				186
At 31 July 2015		106			4,776			1,846			1,321		14,517				(189)				22,377

 

Consolidated Cash Flow Statement

for the year ended 31 July 2015

		2015	2014
	Notes	£000	£000
Operating activities
Profit for the year		3,729	3,303
Finance income		(31)	(36)
Finance expense		29	32
Depreciation		724	431
Loss on disposal of plant and equipment		3	-
Amortisation of intangible assets		714	460
Income tax charge		741	898
Share based payment charges		623	315
Operating cash inflow before changes in working capital		6,532	5,403
Movement in inventories		(11)	(27)
Movement in trade and other receivables		169	(94)
Movement in trade and other payables		(378)	1,080
Cash generated from operations		6,312	6,362
Finance income		31	36
Finance expense		(29)	(32)
Income tax paid		(964)	(649)
Net cash flow from operating activities		5,350	5,717
Investing activities
Purchase of plant and equipment		(697)	(446)
Proceeds from disposal of plant and equipment		59	-
Acquisition of subsidiaries		-	(2,886)
Net cash flow used in investing activities		(638)	(3,332)
Financing activities
Dividends paid		(225)	(191)
Proceeds from exercise of share options		186	313
Hire purchase repayments		(186)	(120)
Net cash flow (used in)/from financing activities		(225)	2
Net increase in cash and cash equivalents		4,487	2,387
Effect of exchange fluctuations		(66)	(38)
Cash and cash equivalents at the beginning of the year		8,920	6,571
Cash and cash equivalents at the end of the year		13,341	8,920

 

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 2015 or 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 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 Group and Company's functional currency.  All financial information presented in sterling has been rounded to the nearest thousand.

(d)        Use of estimates and judgements

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.  The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

 (e)       Accounting Developments

The Group and Company financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). The accounting policies have been applied consistently to all periods presented in the consolidated financial statements, unless otherwise stated.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting period beginning on or after 1 August 2014. The following new standards and amendments to standards are mandatory and have been adopted for the first time for the financial year beginning 1 August 2014:

·      IFRS 10 - "Consolidated Financial Statements" and IAS 27 - "Separate Financial Statements". These are part of a new suite of standards on consolidation and related standards, replacing the existing accounting for subsidiaries and making limited amendments in relation to associates.

·      IFRS 12 - "Disclosure of Interest in Other Entities". This contains the disclosure requirements for entities that have interests in subsidiaries, joint arrangements (i.e. joint operations or joint ventures), associates and/or unconsolidated structured entities.

·      Amendments to IAS 32 - "Offsetting Financial Assets and Financial Liabilities".

·      Amendments to IAS 36 - "Recoverable Amounts Disclosures for Non-Financial Assets".

·      IFRIC 21 - "Levies".

These standards have not had a material impact on the Consolidated Financial Statements.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting period beginning on or after 1 August 2015. The Group has elected not to adopt early these standards which are described below:

·      Annual Improvements to IFRSs 2010 - 2012 Cycle

·      Annual Improvements to IFRSs 2011 - 2013 Cycle

The above are not expected to have a material impact on the group's reported results.

IFRS 15 - "Revenue From Contracts With Customers" has been published which will be mandatory for the group's accounting period beginning on or after 1 August 2018. The group is still considering the impact of this standard however it is anticipated the impact on the financial position and performance of the group will not be material. In addition, the IASB has indicated that it will issue a new standard on accounting for leases. Under the proposals, lessees would be required to recognise assets and liabilities arising from both operating and finance leases on the balance sheet. The IASB also plans to issue a new standard on insurance contracts. The group will consider the financial impacts of this new standard when finalised. There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the group.

(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          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.

Following the acquisition of SEP Limited (SEP) in September 2015, the Board will consider the segments and how it allocates resource following the integration of SEP in the year ending 31 July 2016.

3          Segmental analysis (continued)

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

	2015	2014
Revenue	£000	£000
Software	5,593	2,798
Consultancy	1,956	1,815
Operations & Planning Systems	7,549	4,613
Traffic & Data Services	14,858	11,987
Remote Condition Monitoring Technology	2,975	5,757
Total revenue	25,382	22,357

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.

	2015
	UK & Rest of the World	Australia	Total
	£000	£000	£000
Revenues
Total revenue for reportable segments	23,137	2,245	25,382
Consolidated revenue	23,137	2,245	25,382
Profit or loss
Total profit or loss for reportable segments
Unallocated amounts:	6,197	332	6,529
Share based payment charge	(623)	-	(623)
Depreciation	(652)	(72)	(724)
Amortisation of intangible assets	(714)	-	(714)
Interest receivable/payable(net)	11	(9)	2
Consolidated profit before tax	4,219	251	4,470

	2014
	UK & Rest of the World	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 before tax	4,167	34	4,201

 

3          Segmental analysis (continued)

		2015
	UK & Rest of the World	Australia	Total
	£'000	£000	£000
Assets
Total assets for reportable segments	18,926	892	19,818
Unallocated assets - intangible assets	10,010	-	10,010
Unallocated assets - deferred tax assets	882	-	882
Consolidated total assets	29,818	892	30,710
Liabilities
Total liabilities for reportable segments	6,199	400	6,599
Unallocated liabilities - deferred tax	1,734	-	1,734
Consolidated total liabilities	7,933	400	8,333

		2014
	UK & Rest of the World	Australia	Total
	£'000	£000	£000
Assets
Total assets for reportable segments	14,686	628	15,314
Unallocated assets - intangible assets	10,724	-	10,724
Unallocated assets - deferred tax assets	560	-	560
Consolidated total assets	25,970	628	26,598
Liabilities
Total liabilities for reportable segments	6,428	373	6,801
Unallocated liabilities - deferred tax	1,948	-	1,948
Consolidated total liabilities	8,376	373	8,749

Geographic split of revenue

A geographical analysis of revenue is provided below:	2015	2014
	£000	£000
United Kingdom	22,534	20,252
Australia	2,245	1,723
Rest of the World	603	382
Total	25,382	22,357

 

4          Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 July 2015 was based on the profit attributable to ordinary shareholders of £3,729,000 (2014: £3,303,000) and a weighted average number of ordinary shares in issue of 26,443,000 (2014: 25,608,000), calculated as follows:

Weighted average number of ordinary shares

In thousands of shares

	2015	2014
Issued ordinary shares at 1 August	26,258	25,526
Effect of shares issued related to business combinations	-	26
Effect of shares issued for cash	185	56
Weighted average number of shares at 31 July	26,443	25,608

Diluted earnings per share

The calculation of diluted earnings per share at 31 July 2015 was based on profit attributable to ordinary shareholders of £3,729,000 (2014: £3,303,000) and a weighted average number of ordinary shares in issue after adjustment for the effects of all dilutive potential ordinary shares of 27,656,000 (2014: 26,559,000):

Adjusted EPS

In addition, Adjusted Profit EPS is shown below on the grounds that it is a common metric used by the market in monitoring similar businesses. A reconciliation of this figure is provided below:

	2015	2014
	£'000	£'000
Profit attributable to ordinary shareholders	3,729	3,303
Amortisation of intangible assets	714	460
Share-based payment charges	623	315
Exceptional items: Acquisition costs	-	31
Adjusted profit for EPS purposes	5,066	4,109
Weighted average number of ordinary shares In thousands of shares
For the purposes of calculating Basic earnings per share	26,443	25,608
Adjustment for the effects of all dilutive potential ordinary shares	27,656	26,559
Basic adjusted earnings per share	19.16p	16.05p
Diluted adjusted earnings per share	18.32p	15.47p

5          Dividends

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

		2015	2014
		£000	£000
Final dividend for 2012/13 of 0.40p per share paid		-	102
Interim dividend for 2013/14 of 0.35p per share paid		-	89
Final dividend for 2013/14 of 0.45p per share paid		119	-
Interim dividend for 2014/15 of 0.40p per share paid		106	-
Total dividends paid		225	191

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

	2015	2014	2013		2012
	£000	£000	£000		£000
Interim dividend for 2011/12 of 0.20p per share paid	-	-	-		48
Final dividend for 2011/12 of 0.35p per share paid	-	-	-		87
Interim dividend for 2012/13 of 0.30p per share paid	-	-	75		-
Final dividend for 2012/13 of 0.40p per share paid	-	-	102		-
Interim dividend for 2013/14 of 0.35p per share paid	-	89	-		-
Final dividend for 2013/14 of 0.45p per share paid	-	119	-		-
Interim dividend for 2014/15 of 0.40p per share paid	106	-	-		-
Final dividend for 2014/15 of 0.60p per share proposed	159	-	-		-

The dividend will be payable on 12 February 2016 to shareholders on the Register at 29 January 2016.

6          Events after the Balance Sheet date

a)    Strategic Investment in Citi Logik Limited

On 4 September 2015, the Group made a strategic investment to acquire 29.4% of Citi Logik Limited (Citi Logik). Under the terms of the agreement, the Group will invest up to £1.0m via a combination of equity and debt funding in return for 29.4% of the issued share capital in Citi Logik. Investment of £0.5m (£0.375m equity and £0.125m debt) was made immediately with a further £0.5m to be invested on the same basis, within the 12 months of completion, subject to delivery of agreed business plan milestones. A Tracsis executive will join the Board of Directors of Citi Logik to help grow the business and promote mobile analytics to the Tracsis customer base.

b)    Acquisition of SEP Limited

On 25th September 2015, the Group acquired the entire issued share capital of SEP Limited and SEP Events Limited ("SEP"), a company which provides traffic planning and management services for the events industry. The consideration comprised an initial cash payment of £1.625m and the issue of 55,005 ordinary shares of 0.4p at an issue price of 454.5p (total value of £0.25m).  Deferred consideration of £0.1m is payable over two years along with performance consideration of up to £0.6m, based on SEP achieving certain financial targets in the two years post acquisition, giving a total potential maximum consideration of up to £2.6m. At the date of signing of these accounts, the Group was in the process of completing a fair value exercise to identify assets and liabilities acquired, with the results and impact expected to be incorporated into the Group's interim report for the six months ending 31 January 2016.

7          Annual Report and Annual General Meeting

The Company anticipates dispatching a copy of its annual report and accounts to all shareholders on or around 27 November 2015. 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 Friday 22 January 2016 at 1pm.

 

END

 

 

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