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TRACSIS PLC NEX:TRCS.GB NEX Ordinary Share GB00B28HSF71
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Tracsis PLC Interim Results

10/04/2019 7:00am

UK Regulatory (RNS & others)


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Tracsis PLC

10 April 2019

Tracsis plc

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

Interim results for the six months ended 31 January 2019

Tracsis plc (AIM: TRCS), a leading provider of software and services for the rail, traffic data and wider transportation industries, is pleased to announce its interim results for the six months ended 31 January 2019.

Financial Highlights:

   --      The Group continues to trade well, with a further period of profitable growth 

-- Key financial metrics now reported under IFRS 15 and compared to last year are summarised as follows:

 
                   2019 under   2019 under   2018 actual    Variance      Variance 
                      IFRS 15       IAS 18        IAS 18       under    under IFRS 
                  As reported                                 IAS 18            15 
 Revenue             GBP18.8m     GBP19.1m      GBP18.1m     GBP1.0m       GBP0.7m 
 EBITDA *             GBP4.2m      GBP4.4m       GBP4.3m     GBP0.1m     (GBP0.1m) 
 Profit before        GBP2.1m      GBP2.3m       GBP2.4m   (GBP0.1m)     (GBP0.3m) 
  Tax 
                               ----------- 
 

-- Cash balances at 31 January 2019 of GBP18.7m (31 July 2018: GBP22.3m, 31 January 2018: GBP18.5m)

   --      The business remains debt free with strong cash flow and cash conversion 
   --      Proposed interim dividend increased by 14% to 0.8p per share (2018: 0.7p) 

Operational Highlights:

-- Five-year Framework Agreement secured with a major Train Owning Group for our TRACS Enterprise product - Tracsis' largest software contract to date

-- Acquisitions of Compass Informatics Limited ("Compass") and Cash & Traffic Management Limited ("CTM") completed in the period (January 2019) - full impact will be felt in H2

   --      Significant investment made in rail technology software development 
   --      Remote Condition Monitoring business has traded well 

-- Ontrac and Travel Compensation Services secured new multi-year software deals with UK rail clients

-- Traffic & Data Services division margin improvement strategy continues, and the division traded in line with expectations.

-- Chris Barnes joined the Group on 4 February as CEO Designate and will succeed John McArthur on 1 May as Group CEO

John McArthur, Chief Executive Officer, commented:

"This was another busy period for the Group and we have made good progress in delivering to our strategy of organic and acquisitive growth. We were pleased to have completed two acquisitions in the period which will benefit the second half of the financial year, and also secured a significant software contract which is strategically important for Tracsis and the wider rail industry. The Directors are pleased with the results for the period and the business is well placed to deliver full year results in line with market expectations, with the second half of the year expected to be stronger given the seasonality in the business and the contribution from the newly acquired businesses."

(*) Calculation unchanged from previous years and in line with broker forecasts and research coverage on Tracsis. Full definition and reconciliation in Note 9.

Enquiries:

Tracsis plc Tel: 0845 125 9162

John McArthur, CEO

Chris Barnes, CEO Designate

Max Cawthra, CFO

finnCap Ltd Tel: 020 7220 0500

Christopher Raggett/Scott Mathieson, Corporate Finance

Andrew Burdis, Corporate Broking

The information communicated in this announcement is inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Chairman & Chief Executive Officer's Report

Introduction

The Group has again reported a further period of growth, with a good performance across both divisions which is in line with management expectations.

The Group adopted IFRS 15 for the first time this period, and the impact of this is summarised below:

 
                   2019 under   2019 under   2018 actual    Variance      Variance 
                      IFRS 15       IAS 18        IAS 18       under    under IFRS 
                  As reported                                 IAS 18            15 
 Revenue             GBP18.8m     GBP19.1m      GBP18.1m     GBP1.0m       GBP0.7m 
 EBITDA               GBP4.2m      GBP4.4m       GBP4.3m     GBP0.1m     (GBP0.1m) 
 Profit before        GBP2.1m      GBP2.3m       GBP2.4m   (GBP0.1m)     (GBP0.3m) 
  Tax 
 Cash                GBP18.7m     GBP18.7m      GBP18.5m     GBP0.2m       GBP0.2m 
                               ----------- 
 

Trading Progress and Prospects

A summary of performance in the period is as follows:

Rail Technology & Services

Summary segment results:

   Revenue                        GBP9.9m               (H1 2018: GBP9.2m) 
   EBITDA                         GBP3.5m               (H1 2018: GBP3.5m) 
   Profit before Tax GBP3.5m               (H1 2018: GBP3.4m) 

Software & Consultancy (including Ontrac)

Total revenues from the Group's rail software, hosting and consulting offerings were GBP7.9m (2018: GBP7.7m) taking account of all of the various revenue streams across our TRACS, Ontrac, COMPASS, Retail & Operations product suites and consultancy. Software sales once again benefited from high renewal rates for existing products. In January 2019, we were pleased to announce a significant five-year Framework Agreement with a major Train Owning Group (which operates several Train Operating Company (TOC) franchises) for our TRACS Enterprise product. This roll out is well underway and revenues from this contract are expected to be realised in the second half of the financial year and beyond, assuming roll out across the client owning Group's other TOCs continues as planned.

We were also pleased to secure a significant order for data hosting services and software licences with another major rail client. The order was predominantly a renewal and extension of existing arrangements over a two year period, with a value in excess of GBP2m.

The Group has invested heavily in its technology base with incremental development costs of c. GBP0.5m in the period, all of which have been expensed, and the benefits will be experienced in the second half of the financial year and beyond. In March 2019, post period end, the Group also relocated its Leeds headquarters to larger more modern offices that are far better suited to accommodate our expanding team and future growth ambitions.

Remote Condition Monitoring

Revenues of GBP2.0m were significantly ahead of the previous year (2018: GBP1.5m), which represents very solid trading in the core UK market. This was partly due to the end of Network Rail's Control Period 5 (CP5) which saw an increase in activity in this part of the Group. A small contribution was achieved from overseas sales in the United States which continues to be a target market and offers significant opportunities albeit with a longer sales cycle as we develop relationships with new customers who require time to familiarise themselves with the Group's offering.

Traffic & Data Services (T&DS)

Summary segment results:

   Revenue                        GBP8.9m               (H1 2018: GBP8.8m) 
   EBITDA                         GBP0.7m               (H1 2018: GBP0.8m) 
   Profit before Tax GBP0.2m               (H1 2018: GBP0.4m) 

Overall trading was in line with expectations in the first half of the year, with the business typically performing much stronger in the second half of the financial year due to the timing of traffic surveys and outdoor events taking place. Given the acquisitions of Compass and CTM the seasonality in this part of the Group will continue to be biased to the second half of the year which is expected to be strong.

Given the timing of acquisitions made in January, the divisional results only include a small contribution in respect of the Compass and CTM with revenue of GBP0.25m and a small loss which was fully anticipated.

Tracsis Traffic Data secured a major contract in London, which was a collaboration with Vivacity Labs (a Tracsis investee company), to deliver a compelling solution to the end client. Further roll out of the Vivacity Machine Learning software is expected in the second half of the financial year. In addition, the addition of Compass analytics to the product and service portfolio will enhance the overall data offering, and the strategy is to sell Compass products and services to existing Tracsis based customers in the UK whilst continuing to expand within its domestic Irish market.

Tracsis Passenger Counts again performed well, and its development of analysis software that allows for automatic train load data (i.e. passenger counting) to be taken directly from trains currently in service has continued to generate good sales. SEP Events has continued to trade well, though as always the majority of revenue and profit from this business will be delivered over the summer months. The integration of CTM remains ongoing, and the Directors are confident that synergy benefits will be realised in the fullness of time.

Overseas

The Group's acquisition of Compass Informatics, which is discussed in more detail below, increases our Ireland presence significantly and is the first overseas acquisition that the Group has made. Progress in North America, which remains the Group's principal focus outside of the UK, remains ongoing with further sales generated from a key client and a growing pipeline of client interest.

Dividend

The Group is committed to the progressive dividend policy that it adopted in 2012. The Directors propose an interim dividend of 0.8p per share, a 14% increase on the 0.7p paid in the interim period last year and will mark the 15th successive period of this policy. The dividend will be paid on 3 May 2019 to shareholders on the register on 26 April 2019.

Acquisitions

We were pleased to have completed two acquisitions in the period, both of which will enhance the offering for our Traffic & Data Services division.

On 15 January 2019 we acquired Compass, a long-established Dublin based business which we have known for a number of years now and is a natural fit for our Traffic & Data Services division in terms of our strategy of improving our data service. This acquisition, our first overseas transaction, strengthens the product and service offerings to our client base in the UK and also benefit those existing clients retained by Compass in Ireland, and offers potential benefit and cross-sell potential to Tracsis' existing transport clients. Compass is a software development and data analytics company that specialises in combining geographical information systems (GIS), location technologies, data analytics and field computing. The business works across a variety of sectors but derives most of its revenue from transport, asset management, planning, and environmental customers.

The acquisition consideration comprised an initial cash payment of EUR3.15m which was funded out of Tracsis cash reserves and the issue of shares in Tracsis to a value of EUR350k. An additional payment of circa EUR0.6m will be made on a euro for euro basis to reflect the net current asset position of the business, alongside additional contingent consideration of up to EUR2.0m is payable subject to Compass achieving certain stretched financial targets in the three years post acquisition.

On 16 January 2019, we acquired CTM, a well-established provider of event traffic planning, admission control, and a range of other event-related services to some of the UK's largest and most prestigious event clients. CTM is highly complementary to the Tracsis Traffic & Data Services division with good cross-sell potential along with clear synergy benefits with Tracsis' existing SEP Events business which was an excellent acquisition for Tracsis, that should lead to margin improvement in the fullness of time.

CTM has an excellent track record of organic growth, client retention and profitability over many years. The acquisition consideration comprised an initial cash payment of GBP1.3m which will be funded out of Tracsis cash reserves and the issue shares in Tracsis to a value of GBP0.15m, along with an additional payment of circa GBP0.45m to reflect the net current asset position of the business. Additional contingent consideration of up to GBP0.75m is payable subject to CTM achieving certain stretch financial targets in the two years post acquisition.

Integration of both newly acquired businesses is well underway. Due to the timing of the acquisitions, only a small contribution from the acquired businesses was made in the period, with the full six month impact coming in the second half of the financial year.

Furthermore, the Group exercised a GBP0.3m warrant in Vivacity Labs increasing the Group's equity stake to 28% and also participated in a fundraising for Citi Logik for GBP0.1m, which rounded off a busy period of acquisitions and investments. The Group remains debt free and continues to benefit from a strong market reputation with a good pipeline of potential acquisition opportunities.

Income statement

A summary of the Group's results is set out below.

 
                                   Unaudited    Unaudited    Unaudited   Audited 
                                  Six months   Six months   Six months      Year 
                                       ended        ended        ended     ended 
                                  31 January   31 January   31 January   31 July 
                                        2019         2019         2018      2018 
                                     IFRS 15       IAS 18       IAS 18    IAS 18 
                                     GBP'000      GBP'000      GBP'000   GBP'000 
-------------------------------  -----------  -----------  -----------  -------- 
 Revenue                              18,750       19,055       18,077    39,834 
 Adjusted EBITDA (note 9)              4,239        4,407        4,306     9,425 
 Adjusted Pre-Tax Profit (note 
  9)                                   3,873        4,041        3,917     8,665 
 Profit before tax                     2,121        2,289        2,382     8,275 
-------------------------------  -----------  -----------  -----------  -------- 
 

Sales revenue is analysed further below:

 
 
                                Unaudited    Unaudited    Unaudited   Audited 
                               Six months   Six months   Six months      Year 
                                    ended        ended        Ended     Ended 
                               31 January   31 January   31 January   31 July 
                                     2019         2019         2018      2018 
                                  IFRS 15       IAS 18       IAS 18    IAS 18 
                                  GBP'000      GBP'000      GBP'000   GBP'000 
----------------------------  -----------  -----------  -----------  -------- 
 Rail Technology & Services         9,895       10,053        9,249    18,968 
 Traffic & Data Services            8,855        9,002        8,828    20,866 
 Total revenue                     18,750       19,055       18,077    39,834 
----------------------------  -----------  -----------  -----------  -------- 
 

Balance sheet

The Group continues to have significant levels of cash and remains debt free. Cash balances at 31 January were GBP18.7m (31 January 2018: GBP18.5m, 31 July 2018: GBP22.3m), and cash conversion levels continue to be good.

During the period, GBP3.1m was paid in respect of the Compass and CTM acquisitions (net of cash acquired), and also contingent consideration in respect of the Ontrac acquisition of GBP2.1m was paid.

A summary of cash flows is set out below:

 
                                            Six months   Six months      Year 
                                                 ended        ended     ended 
                                            31 January   31 January   31 July 
                                                  2019         2018      2018 
                                               GBP'000      GBP'000   GBP'000 
-----------------------------------------  -----------  -----------  -------- 
 Net cash flow from operating activities         2,400        4,303    10,602 
 Net cash used in investing activities         (6,002)      (1,215)   (3,193) 
 Net cash (used in) / from financing 
  activities                                      (24)           52     (430) 
 Movement during the period                    (3,626)        3,140     6,979 
-----------------------------------------  -----------  -----------  -------- 
 

Board changes

As announced previously, Chris Barnes, CEO Designate, joined Tracsis on 4 February 2019 and the transitioning process from John McArthur is well underway and proceeding to plan. Chris will succeed John and Group CEO on 1 May. John will continue to work with Tracsis in a part-time advisory capacity with a remit of advising and assisting on further M&A which continues to be an integral part of the Tracsis growth strategy.

Outlook

The first half of the financial year was busy on a number of fronts in delivering the Group's growth strategy of both organic and acquisition. The Directors are pleased with the performance which included good progress such as the completion of two acquisitions, securing and commencing delivery of a major software contract, and good trading across the Group. The management team is focussed on delivering a second half performance in line with market expectations, and the second half of the year is expected to be stronger given the seasonality in the business and also due to the second half including a contribution from the newly acquired businesses.

 
 
   Chris Cole                 John McArthur 
   Non-Executive Chairman     Chief Executive Officer 
 
   10 April 2019 
 

Tracsis plc

Condensed consolidated interim income statement for the six months ended 31 January 2019

 
 
                                                            Unaudited                Unaudited       Audited 
                                                    6 months ended 31 January         6 months    Year ended 
                                                               2019                   ended 31       31 July 
                                                                                       January          2018 
                                                                                          2018 
                                        Note   Continuing   Acquisitions     Total 
                                                  GBP'000        GBP'000   GBP'000     GBP'000       GBP'000 
 
 Revenue                                   4       18,499            251    18,750      18,077        39,834 
 
 Cost of sales                                    (7,011)           (96)   (7,107)     (7,489)      (16,623) 
-------------------------------------  -----  -----------  -------------  --------  ----------  ------------ 
 
 Gross profit                                      11,488            155    11,643      10,588        23,211 
 
 Administrative costs                             (9,005)          (406)   (9,411)     (8,120)      (14,727) 
 
 
 Adjusted EBITDA *                         4        4,265           (26)     4,239       4,306         9,425 
 Depreciation                                       (363)            (3)     (366)       (389)         (760) 
-------------------------------------  -----  -----------  -------------  --------  ----------  ------------ 
 
 Adjusted profit **                                 3,902           (29)     3,873       3,917         8,665 
 Amortisation of intangible 
  assets                                            (952)           (38)     (990)       (837)       (1,774) 
 Other operating income                                 -              -         -           -           214 
 Share-based payment charges                        (467)            (7)     (474)       (612)       (1,193) 
-------------------------------------  -----  -----------  -------------  --------  ----------  ------------ 
 
 Operating profit before exceptional 
  items                                             2,483           (74)     2,409       2,468         5,912 
 Exceptional items                                      -          (177)     (177)           -         2,572 
-------------------------------------  -----  -----------  -------------  --------  ----------  ------------ 
 
 Operating profit                                   2,483          (251)     2,232       2,468         8,484 
 Finance income                                        29              -        29           9            19 
 Finance expense                                      (9)              -       (9)        (29)          (27) 
 Share of result of equity 
  accounted investees                               (131)              -     (131)        (66)         (201) 
 
 Profit before tax                                  2,372          (251)     2,121       2,382         8,275 
 Taxation                                           (424)              -     (424)       (482)       (1,029) 
-------------------------------------  -----  -----------  -------------  --------  ----------  ------------ 
 Profit for the period                              1,948          (251)     1,697       1,900         7,246 
-------------------------------------  -----  -----------  -------------  --------  ----------  ------------ 
 
 Other comprehensive income                             -              -         -           -             - 
 Total recognised income for 
  the period                                        1,948          (251)     1,697       1,900         7,246 
-------------------------------------  -----  -----------  -------------  --------  ----------  ------------ 
 
   Earnings per ordinary share 
 Basic                                     5        6.86p        (0.89p)     5.97p       6.76p        25.70p 
 Diluted                                   5        6.64p        (0.86p)     5.78p       6.55p        24.85p 
 

* Earnings before finance income, tax, depreciation, amortisation, exceptional items, other operating income, and share-based payment charges and share of result of equity accounted investees - see note 9

** Earnings before finance income, tax, amortisation, exceptional items, other operating income, share-based payment charges, and share of result of equity accounted investees. - see note 9

Tracsis plc

Condensed consolidated interim balance sheet as at 31 January 2019

 
                                                         Unaudited       Unaudited      Audited 
                                                     At 31 January   At 31 January   At 31 July 
                                                              2019            2018         2018 
                                              Note         GBP'000         GBP'000        GBP'000 
-------------------------------------------  -----  --------------  --------------  ------------- 
 Non-current assets 
 Property, plant and equipment                               2,476           2,264        2,181 
 Intangible assets                                          31,550          23,621       26,223 
 Investments - equity                                          350             250          250 
 Loans due from associated undertakings                        250             250          250 
 Investments in equity accounted investees                   1,141           1,107          972 
 Deferred tax assets                                           634             573          602 
-------------------------------------------  -----  --------------  -------------- 
                                                            36,401          28,065       30,478 
-------------------------------------------  -----  --------------  --------------  ----------- 
 Current assets 
 Inventories                                                   357             137          253 
 Trade and other receivables                                 8,330           7,583        7,329 
 Cash and cash equivalents                                  18,703          18,490       22,329 
-------------------------------------------  -----  --------------  --------------  ----------- 
                                                            27,390          26,210       29,911 
-------------------------------------------  -----  --------------  --------------  ----------- 
 
 Total assets                                               63,791          54,275       60,389 
-------------------------------------------  -----  --------------  --------------  ----------- 
 Non-current liabilities 
 Hire-purchase contracts                                       138             111          121 
 Contingent consideration payable               10           2,700               -        1,100 
 Deferred tax liabilities                                    4,520           3,576        3,875 
                                                             7,358           3,687        5,096 
-------------------------------------------  -----  --------------  --------------  ----------- 
 Current liabilities 
 Hire-purchase contracts                                       119             306          157 
 Trade and other payables                                   10,879           8,473       10,316 
 Contingent consideration payable               10             834           4,718        2,165 
 Current tax liabilities                                       495             747          546 
-------------------------------------------  -----  --------------  --------------  ----------- 
                                                            12,327          14,244       13,184 
-------------------------------------------  -----  --------------  --------------  ----------- 
 
 Total liabilities                                          19,685          17,931       18,280 
-------------------------------------------  -----  --------------  --------------  ----------- 
 
 Net assets                                                 44,106          36,344       42,109 
-------------------------------------------  -----  --------------  --------------  ----------- 
 
 Equity attributable to equity holders of the Company 
 Called up share capital                                       114             113          113 
 Share premium reserve                                       6,314           6,132        6,243 
 Merger reserve                                              3,627           3,010        3,160 
 Retained earnings                                          34,051          27,089       32,593 
-------------------------------------------  -----  --------------  --------------  ----------- 
 
 Net assets                                                 44,106          36,344       42,109 
-------------------------------------------  -----  --------------  --------------  ----------- 
 
 

Tracsis plc - Consolidated statement of changes in equity

For the six months ended 31 January 2019

 
 
                                                  Share 
                                      Share     Premium      Merger     Retained 
                                    Capital     Reserve     Reserve     Earnings     Total 
 Unaudited                          GBP'000     GBP'000     GBP'000      GBP'000   GBP'000 
-------------------------------  ----------  ----------  ----------  -----------  -------- 
 At 1 August 2017                       112       5,948       3,010       24,577    33,647 
 Profit for the six month 
  period ended 31 January 
  2018 and total comprehensive 
  income                                  -           -           -        1,900     1,900 
 
 Transactions with owners: 
 Share based payment 
  charges                                 -           -           -          612       612 
 Exercise of share options                1         184           -            -       185 
 At 31 January 2018                     113       6,132       3,010       27,089    36,344 
-------------------------------  ----------  ----------  ----------  -----------  -------- 
 
 
 Audited 
--------------------------------      ----  ------  ------  -------- 
 At 1 August 2017                      112   5,948   3,010    24,577    33,647 
 Profit for the year 
  ended 31 July 2018 and 
  total comprehensive 
  income                                 -       -       -     7,246     7,246 
 
 Transactions with owners: 
 Dividends                               -       -       -     (423)     (423) 
 Share based payment 
  charges                                -       -       -     1,193     1,193 
 Exercise of share options               1     295       -         -       296 
 Shares issued as consideration 
  for business combinations              -       -     150         -       150 
 At 31 July 2018                       113   6,243   3,160    32,593    42,109 
--------------------------------  --------  ------  ------  --------  -------- 
 
   Unaudited 
 At 1 August 2018                      113   6,243   3,160    32,593    42,109 
 Adjustment on initial 
  application of IFRS 
  15 (net of tax) - Note 
  3                                      -       -       -     (713)     (713) 
 Profit for the six month 
  period ended 31 January 
  2019 and total comprehensive 
  income                                 -       -       -     1,697     1,697 
 
 Transactions with owners: 
 Share based payment 
  charges                                -       -       -       474       474 
 Exercise of share options               1      71       -         -        72 
 Shares issued as consideration 
  for business combinations              -       -     467         -       467 
 At 31 January 2019                    114   6,314   3,627    34,051    44,106 
--------------------------------  --------  ------  ------  --------  -------- 
 
 

Tracsis plc

Condensed consolidated interim statement of cash flows for the six months to 31 January 2019

 
                                                         Unaudited     Unaudited 
                                                        Six months    Six months       Audited 
                                                                to            to    Year ended 
                                                                                       31 July 
                                                       31 Jan 2019   31 Jan 2018          2018 
                                                Note       GBP'000       GBP'000       GBP'000 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Operating activities 
 Profit for the period                                       1,697         1,900         7,246 
 Finance income                                               (29)           (9)          (19) 
 Finance expense                                                 9            29            27 
 Depreciation                                                  366           389           760 
 Loss on disposal of plant & equipment                           -             -            17 
 Non-cash exceptional items                                      -             -       (2,653) 
 Other operating income                                          -             -         (214) 
 Amortisation of intangible assets                             990           837         1,774 
 Share of result of equity accounted 
  investees                                                    131            66           201 
 Income tax charge                                             424           482         1,029 
 Share based payment charges                                   474           612         1,193 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Operating cash inflow before changes 
  in working capital                                         4,062         4,306         9,361 
 Movement in inventories                                     (104)           102          (14) 
 Movement in trade and other receivables                     (126)           897         1,259 
 Movement in trade and other payables                        (847)         (369)         1,411 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Cash generated from operations                              2,985         4,936        12,017 
 Interest received                                              29             9            19 
 Interest paid                                                 (9)          (29)          (27) 
 Income tax paid                                             (605)         (613)       (1,407) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Net cash flow from operating activities                     2,400         4,303        10,602 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Investing activities 
 Purchase of plant and equipment                             (445)         (229)         (509) 
 Proceeds from disposal of plant and 
  equipment                                                      -            37            53 
 Acquisition of subsidiaries (net of 
  cash acquired)                                  11       (3,092)             -       (1,714) 
 Equity investments and loans to investments                 (400)         (700)         (700) 
 Payment of contingent consideration              10       (2,065)         (323)         (323) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Net cash flow used in investing activities                (6,002)       (1,215)       (3,193) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Financing activities 
 Dividends paid                                                  -             -         (423) 
 Proceeds from the exercise of share 
  options                                                       72           185           296 
 Hire purchase repayments                                     (96)         (133)         (303) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Net cash flow from / (used in) financing 
  activities                                                  (24)            52         (430) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Net increase in cash and cash equivalents                 (3,626)         3,140         6,979 
 Cash and cash equivalents at beginning 
  of period                                                 22,329        15,350        15,350 
 Cash and cash equivalents at end of 
  period                                                    18,703        18,490        22,329 
---------------------------------------------  -----  ------------  ------------  ------------ 
 

Notes to the consolidated interim report

For the six months ended 31 January 2019

   1          Basis of preparation 

Tracsis plc (the 'Company') is a company domiciled in England. The condensed consolidated interim financial report of the Company as at and for the six months ended 31 January 2019 comprises the Company and its subsidiaries (together referred to as the 'Group'). The principal activities of the Group are the provision of software, services and technology for the rail industry ('Rail Technology & Services'), along with traffic surveys, event planning and traffic management, and data analytics including software development ('Traffic Data & Services') (see note 4).

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 July 2018, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The interim financial information for each of the six month periods ended 31 January 2019 and 31 January 2018 has not been audited and does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. The information for the year ended 31 July 2018 does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006, but is based on the statutory accounts for that year, on which the Group's auditors issued an unqualified report and which have been filed with the Registrar of Companies.

The principal risks and uncertainties are unchanged from the previous year end, are expected to be largely unchanged for the remainder of the financial year, and are as disclosed on pages 9 to 12 of the Annual Report & Accounts for the year ended 31 July 2018. The Board considers risks on a periodic basis and has maintained the key risks as follows, on a Group wide basis:

   --      Changes to the structure of the UK rail industry 
   --      Competition 
   --      Reduced government spending 
   --      Reliance on certain key customers 
   --      Impact of Brexit negotiations and resulting UK trading position 
   --      Attraction and retention of key employees 
   --      Delays to project delivery 
   --      Technological changes 
   --      Customer pricing pressure 
   --      Health & Safety 
   --      Brand reputation 

Further detail on risks is provided in the Annual Report & Accounts for the year ended 31 July 2018.

The condensed consolidated interim financial information was approved for issue on 10 April 2019.

   2          Accounting Policies 

The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its audited consolidated financial statements for the year ended 31 July 2018 and which will form the basis of the 2019 Annual Report except as described below. The basis of consolidation is set out in the Group's accounting policies in those financial statements.

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on historical experience and other factors, such as expectations of future events and are believed to be reasonable under the circumstances. Actual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited consolidated financial statements for the year ended 31 July 2018.

   3          Changes in accounting policies 

The following amendments to financial reporting standards were adopted from 1 August 2018, the start of the new financial year. None of them have had a significant impact on the Group other than IFRS 15 whish is detailed in further detail below:

-- IFRS 2 'Share-based payment' - amendments clarifying how to account for certain types of share-based payment transactions

-- IFRS 9 'Financial instruments' - introduces new requirements for classification and measurement of financial assets and financial liabilities, impairment methodology and hedge accounting.

-- IFRS 15 'Revenue from contracts with customers' - provides a single model for measuring and recognising

-- revenue arising from contracts with customers, unless the contracts are in the scope of other standards, such as IAS 17. It supersedes all existing revenue requirements in IFRS.

   --      Annual Improvements to IFRSs 2014-2016 Cycle (Amendments to IFRS 1 and IAS 28) 

The following new amendments to standards were in issue but are not yet effective for the financial year beginning 1 August 2018:

-- IFRS 16 'Leases' - provides a single lessee accounting model, specifying how leases are recognised, measured, presented and disclosed

IFRS 15

The Group adopted IFRS 15 with effect from 1 August 2018, using the cumulative effect method, under which the comparative information is not restated. The impact of adopting this is set out below, but can be summarised as the removal of certain accrued income balances to be replaced with contract assets, and also the reversal of work in progress assessed under the stage of completion method regarding certain major software project implementations. The net impact was a charge to reserves of GBP713,000 which can be summarised as follows:

 
                                As previously   IFRS 15 Adjustment      Under IFRS 
                                     reported           at 31 July        15 as at 
                                   at 31 July                 2018    31 July 2018 
                                         2018              GBP'000         GBP'000 
                                      GBP'000 
 
 Trade and other receivables            7,329                (146)           7,183 
 Trade and other payables            (10,316)                (765)        (11,081) 
 Current tax liabilities                (546)                  198             348 
                                               ------------------- 
 Retained earnings                   (32,593)                  713          31,880 
                                               ------------------- 
 

Impact on the condensed consolidated interim income statement for the six months ended 31 January 2019

 
                                                                         Amounts without 
                                                                                adoption 
                                                                              of IFRS 15 
                                           As reported     Adjustments 
                                               GBP'000         GBP'000           GBP'000 
 
 Revenue                                        18,750             305            19,055 
 Cost of sales                                 (7,107)           (137)           (7,244) 
--------------------------------------  --------------  --------------  ---------------- 
 Gross profit                                   11,643             168            11,811 
 Administrative costs                          (9,411)               -           (9,411) 
--------------------------------------  --------------  --------------  ---------------- 
 Adjusted EBITDA                                 4,239             168             4,407 
 Depreciation                                    (366)               -             (366) 
--------------------------------------  --------------  --------------  ---------------- 
 Adjusted profit                                 3,873             168             4,041 
 Amortisation of intangible assets               (990)               -             (990) 
 Share-based payment charges                     (474)               -             (474) 
--------------------------------------  --------------  --------------  ---------------- 
 Operating profit before exceptional 
  items                                          2,409             168             2,577 
 Exceptional items                               (177)               -             (177) 
--------------------------------------  --------------  --------------  ---------------- 
 Operating profit                                2,232             168             2,400 
 Finance income                                     29               -                29 
 Finance expense                                   (9)               -               (9) 
 Share of result of equity accounted 
  investees                                      (131)               -             (131) 
 Profit before tax                               2,121             168             2,289 
 Taxation                                        (424)            (32)             (456) 
--------------------------------------  --------------  --------------  ---------------- 
 Profit for the period and total 
  recognised income for the period               1,697             136             1,833 
--------------------------------------  --------------  --------------  ---------------- 
 

Impact on the condensed consolidated interim balance sheet as at 31 January 2019:

 
                                                                                Amounts 
                                                                                without 
                                                                               adoption 
                                                As reported     Adjustments     of IFRS 
                                                                                     15 
                                                    GBP'000         GBP'000     GBP'000 
-------------------------------------------  --------------  --------------  ---------- 
 Non-current assets 
 Property, plant and equipment                        2,476               -       2,476 
 Intangible assets                                   31,550               -      31,550 
 Investments - equity                                   350               -         350 
 Loans due from associated undertakings                 250               -         250 
 Investments in equity accounted investees            1,141               -       1,141 
 Deferred tax assets                                    634               -         634 
-------------------------------------------  --------------  -------------- 
                                                     36,401               -      36,401 
-------------------------------------------  --------------  --------------  ---------- 
 Current assets 
 Inventories                                            357               -         357 
 Trade and other receivables                          8,330             156       8,486 
 Cash and cash equivalents                           18,703               -      18,703 
-------------------------------------------  --------------  --------------  ---------- 
                                                     27,390             156      27,546 
-------------------------------------------  --------------  --------------  ---------- 
 
 Total assets                                        63,791             156      63,947 
-------------------------------------------  --------------  --------------  ---------- 
 Non-current liabilities 
 Hire-purchase contracts                                138               -         138 
 Contingent consideration payable                     2,700               -       2,700 
 Deferred tax liabilities                             4,520               -       4,520 
                                                      7,358               -       7,358 
-------------------------------------------  --------------  --------------  ---------- 
 Current liabilities 
 Hire-purchase contracts                                119               -         119 
 Trade and other payables                            10,879           (923)       9,956 
 Contingent consideration payable                       834               -         834 
 Current tax liabilities                                495             230         725 
-------------------------------------------  --------------  --------------  ---------- 
                                                     12,327           (693)      11,634 
-------------------------------------------  --------------  --------------  ---------- 
 
 Total liabilities                                   19,685           (693)      18,992 
-------------------------------------------  --------------  --------------  ---------- 
 
 Net assets                                          44,106             849      44,955 
-------------------------------------------  --------------  --------------  ---------- 
 
 Equity attributable to equity holders of the 
  Company 
 Called up share capital                                114               -         114 
 Share premium reserve                                6,314               -       6,314 
 Merger reserve                                       3,627               -       3,627 
 Retained earnings                                   34,051             849      34,900 
-------------------------------------------  --------------  --------------  ---------- 
 
 Net assets                                          44,106             849      44,955 
-------------------------------------------  --------------  --------------  ---------- 
 
   4                      Segmental analysis 

The Group has divided its results into two segments being 'Rail Technology and Services' and 'Traffic & Data Services'. The companies acquired during the period, Compass Informatics Limited, and Cash & Traffic Management Limited are reported within the 'Traffic & Data Services' division.

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.

Sales revenue is summarised below:

 
                               Six months   Six months      Year 
                                    ended        ended     Ended 
                               31 January   31 January   31 July 
                                     2019         2018      2018 
                                  GBP'000      GBP'000   GBP'000 
----------------------------  -----------  -----------  -------- 
 Rail Technology & Services         9,895        9,249    18,968 
 Traffic & Data Services            8,855        8,828    20,866 
 Total revenue                     18,750       18,077    39,834 
----------------------------  -----------  -----------  -------- 
 

A geographical analysis of revenue is provided below:

 
                      Six months   Six months       Year 
                        ended 31     ended 31      ended 
                         January      January    31 July 
                            2019         2018       2018 
                         GBP'000      GBP'000    GBP'000 
-------------------  -----------  -----------  --------- 
 United Kingdom           17,834       17,282     38,388 
 North America               101          194        260 
 Rest of the World           815          601      1,186 
 Total                    18,750       18,077     39,834 
-------------------  -----------  -----------  --------- 
 

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.

 
                                                    Six months ended 31 January 2019 
                                          Rail Technology     Traffic 
                                               & Services      & Data     Unallocated 
                                                             Services                     Total 
                                                   GBP000      GBP000          GBP000    GBP000 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Revenues 
 Total revenue for reportable 
  segments                                          9,895       8,855               -    18,750 
 Consolidated revenue                               9,895       8,855               -    18,750 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Profit or loss 
 EBITDA for reportable segments                     3,562         677               -     4,239 
   Amortisation of intangible 
    assets                                              -           -           (990)     (990) 
   Depreciation                                      (69)       (297)               -     (366) 
   Exceptional items                                    -       (177)               -     (177) 
   Share-based payment charges                          -           -           (474)     (474) 
   Share of result of equity accounted 
    investees                                           -           -           (131)     (131) 
   Interest receivable/payable(net)                     -           -              20        20 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Consolidated profit before tax                     3,493         203         (1,575)     2,121 
---------------------------------------  ----------------  ----------  --------------  -------- 
 
 
                                                    Six months ended 31 January 2018 
                                          Rail Technology     Traffic 
                                               & Services      & Data     Unallocated 
                                                             Services                     Total 
                                                   GBP000      GBP000          GBP000    GBP000 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Revenues 
 Total revenue for reportable 
  segments                                          9,249       8,828               -    18,077 
 Consolidated revenue                               9,249       8,828               -    18,077 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Profit or loss 
 EBITDA for reportable segments                     3,536         770               -     4,306 
   Amortisation of intangible 
    assets                                              -           -           (837)     (837) 
   Depreciation                                      (67)       (322)               -     (389) 
   Share-based payment charges                          -           -           (612)     (612) 
   Share of result of equity accounted 
    investees                                           -           -            (66)      (66) 
   Interest receivable/payable(net)                     -           -            (20)      (20) 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Consolidated profit before tax                     3,469         448         (1,535)     2,382 
---------------------------------------  ----------------  ----------  --------------  -------- 
 
 
                                                           Year ended 31 July 2018 
                                                 Rail Technology     Traffic 
                                                      & Services      & Data 
                                                                    Services     Unallocated      Total 
                                                          GBP000      GBP000          GBP000     GBP000 
------------------------------------  --------------------------  ----------  --------------  --------- 
 Revenues 
 Total revenue for reportable 
  segments                                                18,968      20,866               -     39,834 
 Consolidated revenue                                     18,968      20,866               -     39,834 
------------------------------------  --------------------------  ----------  --------------  --------- 
 Profit or loss 
 EBITDA for reportable segments                            6,802       2,623               -      9,425 
   Amortisation of intangible 
    assets                                                     -           -         (1,774)    (1,774) 
   Depreciation                                            (135)       (625)               -      (760) 
   Exceptional items                                       2,572           -               -      2,572 
   Other operating income                                      -           -             214        214 
   Share-based payment charges                                 -           -         (1,193)    (1,193) 
   Interest receivable/payable(net)                            -           -             (8)        (8) 
   Share of results of equity 
    accounted investees                                        -           -           (201)      (201) 
 Consolidated profit before tax                            9,239       1,998         (2,962)      8,275 
------------------------------------  --------------------------  ----------  --------------  --------- 
 
                                                                 31 January 2019 
                                                 Rail Technology     Traffic 
                                                    & Services        & Data 
                                                                    Services     Unallocated        Total 
                                                         GBP'000      GBP000          GBP000       GBP000 
------------------------------------  --------------------------  ----------  --------------  ----------- 
 Assets 
 Total assets for reportable 
  segments (exc. cash)                                     5,330       5,833               -       11,163 
 Intangible assets and investments                             -           -          33,291       33,291 
 Deferred tax assets                                           -           -             634          634 
 Cash and cash equivalents                                 8,335       3,710           6,658       18,703 
 Consolidated total assets                                13,665       9,543          40,583       63,791 
------------------------------------  --------------------------  ----------  --------------  ----------- 
 
 Liabilities 
 Total liabilities for reportable 
  segments                                               (7,933)     (3,698)               -     (11,631) 
 Deferred tax                                                  -           -         (4,520)      (4,520) 
 Contingent consideration                                      -           -         (3,534)      (3,534) 
 Consolidated total liabilities                          (7,933)     (3,698)         (8,054)     (19,685) 
------------------------------------  --------------------------  ----------  --------------  ----------- 
 
 
 
                                                              31 January 2018 
                                                Rail Technology     Traffic 
                                                   & Services        & Data 
                                                                   Services     Unallocated      Total 
                                                        GBP'000      GBP000          GBP000     GBP000 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 Assets 
 Total assets for reportable 
  segments (exc. cash)                                    4,699       5,285               -      9,984 
 Intangible assets and investments                            -           -          25,228     25,228 
 Deferred tax assets                                          -           -             573        573 
 Cash and cash equivalents                                8,189       1,919           8,382     18,490 
 Consolidated total assets                               12,888       7,204          34,183     54,275 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 
 Liabilities 
 Total liabilities for reportable 
  segments                                              (7,126)     (2,511)               -    (9,637) 
 Deferred tax                                                 -           -         (3,576)    (3,576) 
 Contingent consideration                                     -           -         (4,718)    (4,718) 
 Consolidated total liabilities                         (7,126)     (2,511)         (8,294)   (17,931) 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 
 
 
                                                                31 July 2018 
                                                Rail Technology     Traffic 
                                                   & Services        & Data 
                                                                   Services     Unallocated      Total 
                                                        GBP'000      GBP000          GBP000     GBP000 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 Assets 
 Total assets for reportable 
  segments (exc. cash)                                    3,142       6,621               -      9,763 
 Intangible assets and investments                            -           -          27,695     27,695 
 Deferred tax assets                                          -           -             602        602 
 Cash and cash equivalents                                5,673       3,520          13,136     22,329 
 Consolidated total assets                                8,815      10,141          41,433     60,389 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 
 Liabilities 
 Total liabilities for reportable 
  segments                                              (6,489)     (4,651)               -   (11,140) 
 Deferred tax                                                 -           -         (3,875)    (3,875) 
 Contingent consideration                                     -           -         (3,265)    (3,265) 
 Consolidated total liabilities                         (6,489)     (4,651)         (7,140)   (18,280) 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 
 
   5          Earnings per share 

Basic earnings per share

The calculation of basic earnings per share for the Half Year to 31 January 2019 was based on the profit attributable to ordinary shareholders of GBP1,697,000 (Half Year to 31 January 2018: GBP1,900,000, Year ended 31 July 2018: GBP7,246,000) and a weighted average number of ordinary shares in issue of 28,406,000 (Half Year to 31 January 2018: 28,121,000, Year ended 31 July 2018: 28,196,000), calculated as follows:

Weighted average number of ordinary shares

In thousands of shares

 
                                                Six months   Six months       Year 
                                                  ended 31     ended 31      ended 
                                                   January      January    31 July 
                                                      2019         2018       2018 
 Issued ordinary shares at start of period          28,334       27,964     27,964 
 Effect of shares issued related to business 
  combinations                                           7            -         14 
 Effect of shares issued for cash                       65          157        218 
 Weighted average number of shares at end 
  of period                                         28,406       28,121     28,196 
---------------------------------------------  -----------  -----------  --------- 
 

Diluted earnings per share

The calculation of basic earnings per share for the Half Year to 31 January 2019 was based on the profit attributable to ordinary shareholders of GBP1,697,000 (Half Year to 31 January 2018: GBP1,900,000, Year ended 31 July 2018: GBP7,246,000) and a weighted average number of ordinary shares in issue after adjustment for the effects of all dilutive potential ordinary shares of 29,359,000 (Half Year to 31 January 2018: 29,010,000, Year ended 31 July 2018: 29,159,000).

Adjusted EPS

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

 
                                                 Six months   Six months       Year 
                                                   ended 31     ended 31      ended 
                                                    January      January    31 July 
                                                       2019         2018       2018 
                                                    GBP'000      GBP'000    GBP'000 
 Profit attributable to ordinary shareholders         1,697        1,900      7,246 
 Amortisation of intangible assets                      990          837      1,774 
 Share-based payment charges                            474          612      1,193 
 Exceptional items                                      177            -    (2,572) 
 Other operating income                                   -            -      (214) 
----------------------------------------------  -----------  -----------  --------- 
 Adjusted profit for EPS purposes                     3,338        3,349      7,427 
----------------------------------------------  -----------  -----------  --------- 
 
 
 
   Weighted average number of ordinary shares 
   In thousands of shares 
----------------------------------------------  -----------  -----------  --------- 
 For the purposes of calculating Basic 
  earnings per share                                 28,406       28,121     28,196 
 Adjustment for the effects of all dilutive 
  potential ordinary shares                          29,359       29,010     29,159 
----------------------------------------------  -----------  -----------  --------- 
 
 Basic adjusted earnings per share                   11.75p       11.91p     26.34p 
 Diluted adjusted earnings per share                 11.37p       11.54p     25.47p 
----------------------------------------------  -----------  -----------  --------- 
 
   6          Seasonality 

The Group has completed two acquisitions towards the end of the first half of the financial year and so only a small contribution from these businesses has been experienced, with the full impact to be realised in the second half of the year which will impact on the specific H1-H2 split.

The Group offers a wide range of products and services within its overall suite, meaning that revenues can fluctuate depending on the status and timing of certain sales. Some of these are exposed to high levels of seasonality for example:

-- The Group's Traffic & Data Services division derives significant amounts of revenue from work taking place at certain times of the year and is highly exposed to seasonality, in particular for SEP and CTM which has a very high level of seasonality based on the timing of events, but also Traffic Data where work typically takes place when the weather conditions;

-- Ontrac performs some significant software development projects and the specific timing of these can vary depending on the commercial terms;

-- Revenues from remote condition monitoring are also driven by the size and timing of significant orders received from major customers;

   --      Finally, the timing of certain software licence renewals, new sales, and also major project implementations along with consultancy offerings can also impact on when work is performed, revenues are delivered and therefore recognised. 

As such, the overall Group continues to be exposed to a high degree of seasonality throughout the year and reporting period, with the current year expected to be even more pronounced due to the timing and nature of the acquisitions made in the first half.

   7          Dividends 

As part of the Group's commitment to a progressive dividend policy adopted in 2012, the Directors recommend an interim dividend payment of 0.8p per share, with a total expected value of c. GBP228k based on the number of shares in issue at the date of this interim report.

The cash cost of the dividend payments made is shown below:

 
                                           Six months    Six months       Year 
                                             ended 31      ended 31      ended 
                                              January       January    31 July 
                                                 2019          2018       2018 
                                               GBP000        GBP000     GBP000 
---------------------------------------  ------------  ------------  --------- 
 Final dividend for 2016/17 of 0.80p 
  per share paid                                    -             -        225 
 Interim dividend for 2017/18 of 0.70p 
  per share paid                                    -             -        198 
 Total dividends paid                               -             -        423 
---------------------------------------  ------------  ------------  --------- 
 

The dividends paid or proposed in respect of each financial year ended 31 July is as follows:

 
                                     2019        2018        2017        2016       2015       2014      2013     2012 
                                  GBP'000     GBP'000     GBP'000     GBP'000     GBP000     GBP000    GBP000   GBP000 
-----------------------------  ----------  ----------  ----------  ----------  ---------  ---------  --------  ------- 
 Interim dividend for 2011/12 
  of 0.20p per share paid               -           -           -           -          -          -         -       48 
 Final dividend for 2011/12 
  of 0.35p per share paid               -           -           -           -          -          -         -       87 
 Interim dividend for 2012/13           -           -           -           -          -          -        75        - 
  of 0.30p per share paid 
 Final dividend for 2012/13             -           -           -           -          -          -       102        - 
  of 0.40p per share paid 
 Interim dividend for 2013/14           -           -           -           -          -         89         -        - 
  of 0.35p per share paid 
 Final dividend for 2013/14             -           -           -           -          -        119         -        - 
  of 0.45p per share paid 
 Interim dividend for 2014/15           -           -           -           -        106          -         -        - 
  of 0.40p per share paid 
 Final dividend for 2014/15             -           -           -           -        164          -         -        - 
  of 0.60p per share paid 
 Interim dividend for 2015/16           -           -           -         137          -          -         -        - 
  of 0.50p per share paid 
 Final dividend for 2015/16             -           -           -         195          -          -         -        - 
  of 0.70p per share paid 
 Interim dividend for 2016/17           -           -         167           -          -          -         -        - 
  of 0.60p per share paid 
 Final dividend for 2016/17             -           -         225           -          -          -         -        - 
  of 0.80p per share paid 
 Interim dividend for 2017/18           -         198           -           -          -          -         -        - 
  of 0.70p per share paid 
 Final dividend for 2017/18             -         255           -           -          -          -         -        - 
  of 0.90p per share paid 
 Interim dividend for 2018/19         228           -           -           -          -          -         -        - 
  of 0.80p per share proposed 
-----------------------------  ----------  ----------  ----------  ----------  ---------  ---------  --------  ------- 
 

The total dividends paid or proposed in respect of each financial year ended 31 July is as follows:

 
                               2019    2018    2017    2016    2015    2014   2013    2012 
 Total dividends paid per 
  share                         n/a    1.6p    1.4p    1.2p    1.0p    0.8p   0.7p   0.55p 
--------------------------  -------  ------  ------  ------  ------  ------  -----  ------ 
 
   8          Related party transactions 

The following transactions took place during the year with other related parties:

 
                                             Purchase of                 Amounts owed to 
                                         goods and services              related parties 
 
                                     H1 2019   H1 2018   FY 2018   H1 2019   H1 2018   FY 2018 
                                     GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
----------------------------------  --------  --------  --------  --------  --------  -------- 
 
 Leeds Innovation Centre Limited 
  (1)                                     67        50        99        13         9        13 
 Ashtead Plant Hire Co Limited 
  (2)                                      -         1         5         -         -         1 
 Flash Forward Consulting Limited 
  (3)                                      -         -        28         -         -         5 
 Citi Logik Limited (4)                    -        18        36         -         -         - 
 Nutshell Software Limited 
  (4)                                    107        44       107         -         -         9 
 Vivacity Labs Limited (4)               101        31        17        69        36         - 
 
 
                                               Sale of                   Amounts owed by 
                                         goods and services              related parties 
 
                                     H1 2019   H1 2018   FY 2018   H1 2019   H1 2018   FY 2018 
                                     GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
----------------------------------  --------  --------  --------  --------  --------  -------- 
 
 WSP UK Limited (5)                    1,337     1,202     3,180        38        49       883 
 Flash Forward Consulting Limited          -         -         1         -         -         - 
  (3) 
 Citi Logik Limited (4)                    -         -        30         -         -        36 
 

(1) Leeds Innovation Centre Limited is a company which is connected to The University of Leeds. Tracsis plc rented its office accommodation, along with related office services, from this company. All transactions took place at arm's length commercial rates.

(2) Ashtead Plant Hire Co Limited is a subsidiary of Ashtead Group plc (Ashtead) of which Chris Cole was Chairman until he resigned from Ashtead on 11 September 2018. SEP Limited, one of the Group's subsidiaries purchased goods and services from Ashtead during the year. All transactions with Ashtead took place at arm's length commercial rates and were not connected to Mr Cole's position at Ashtead. SEP Limited traded with Ashtead prior to its acquisition by Tracsis plc.

(3) Flash Forward Consulting Limited was a related party as John Nelson served as a Non-executive Director of Tracsis plc until 1 November 2018 and was also Chairman of Flash Forward Consulting Limited.

(4) Citi Logik Limited, Nutshell Software Limited and Vivacity Labs Limited are related parties by virtue of the Group's shareholding in these entities.

(5) WSP UK Limited (WSP) is a company which is connected to Chris Cole who serves as non-executive Chairman of Tracsis plc and also of WSP Global Inc, WSP's parent company. Sales to WSP took place at arm's length commercial rates and were not connected to Mr Cole's position at WSP.

   9          Reconciliation of adjusted profit metrics 

In addition to the statutory profit measures of Operating profit and profit before tax, the Group quotes Adjusted EBITDA and Adjusted profit.

Adjusted EBITDA is defined as Earnings before finance income, tax, depreciation, amortisation, exceptional items, other operating income, and share-based payment charges and share of result of equity accounted investees.

Adjusted EBITDA can be reconciled to statutory profit before tax as set out below:

 
                                            Six months      Six months 
                                              ended 31        ended 31     Year ended 
                                          January 2019    January 2018        31 July 
                                                                                 2018 
                                               GBP'000          GBP000         GBP000 
-------------------------------------   --------------  --------------  ------------- 
 Profit before tax                               2,121           2,382          8,275 
 Finance income / expense - net                   (20)              20              8 
 Share-based payment charges                       474             612          1,193 
 Exceptional items                                 177               -        (2,572) 
 Other operating income                              -               -          (214) 
 Amortisation of intangible assets                 990             837          1,774 
 Depreciation                                      366             389            760 
 Share of result of equity accounted 
  investees                                        131              66            201 
 Adjusted EBITDA                                 4,239           4,306          9,425 
--------------------------------------  --------------  --------------  ------------- 
 

Adjusted profit is defined as Earnings before finance income, tax, amortisation, exceptional items, other operating income, share-based payment charges, and share of result of equity accounted investees.

Adjusted profit can be reconciled to statutory profit before tax as set out below:

 
                                    Six months      Six months 
                                      ended 31        ended 31     Year ended 
                                  January 2019    January 2018        31 July 
                                                                         2018 
                                       GBP'000          GBP000         GBP000 
-----------------------------   --------------  --------------  ------------- 
 Profit before tax                       2,121           2,382          8,275 
 Finance income / expense - 
  net                                     (20)              20              8 
 Share-based payment charges               474             612          1,193 
 Exceptional items                         177               -        (2,572) 
 Other operating income                      -               -          (214) 
 Amortisation of intangible 
  assets                                   990             837          1,774 
 Share of result of equity 
  accounted investees                      131              66            201 
 Adjusted profit                         3,873           3,917          8,665 
------------------------------  --------------  --------------  ------------- 
 

Adjusted EBITDA reconciles to adjusted profit as set out below:

 
                        Six months      Six months 
                          ended 31        ended 31     Year ended 
                      January 2019    January 2018        31 July 
                                                             2018 
                           GBP'000          GBP000         GBP000 
-----------------   --------------  --------------  ------------- 
 Adjusted EBITDA             4,239           4,306          9,425 
 Depreciation                (366)           (389)          (760) 
 Adjusted profit             3,873           3,917          8,665 
------------------  --------------  --------------  ------------- 
 
   10        Contingent Consideration 

During the period, the Group acquired Compass Informatics Limited and Cash & Traffic Management Limited. Under the share purchase agreements, contingent consideration is payable which is linked to the profitability of the acquired businesses for a period post acquisition. The maximum amount payable is EUR2,000,000 in respect of Compass acquisition, over a three year period, and GBP750,000 in respect of the CTM acquisition over a two year period. The fair value of the amount payable was assessed at GBP600,000 for CTM plus a further GBP153,000 in respect of the balance of the completion accounts, and GBP1,000,000 in respect of Compass, and GBP581,000 in respect of the completion accounts.

During the period, contingent consideration of GBP7,000 was paid in respect of the SEP acquisition which was made in the year ended 31 July 2016, and GBP2,058,000 was paid in respect of the Ontrac acquisition which was made in the year ended 31 July 2016.

At the balance sheet date, the Directors assessed the fair value of the remaining amounts payable which were deemed to be as follows.

 
                                                 31 January   31 January   31 July 
                                                       2019         2018      2018 
                                                     GBP000       GBP000    GBP000 
----------------------------------------------  -----------  -----------  -------- 
 SEP Limited                                              -            7         7 
 Ontrac Limited                                           -        4,711     2,058 
 Tracsis Travel Compensation Services Limited 
  & Delay Repay Sniper Limited                        1,200            -     1,200 
 Compass Informatics Limited                          1,581            -         - 
 Cash & Traffic Management Limited                      753            -         - 
----------------------------------------------  -----------  -----------  -------- 
                                                      3,534        4,718     3,265 
----------------------------------------------  -----------  -----------  -------- 
 

The group has made numerous acquisitions over the past few years and carries contingent consideration payable in respect of them, which is considered to be a 'Level 3 financial liability' as defined by IFRS 13. These are carried at fair value, which is based on the estimated amounts payable based on the provisions of the Share Purchase Agreements and involves assumptions about future profit forecasts.

The movement on contingent consideration can be summarised as follows:

 
                                          31 January   31 January   31 July 
                                                2019         2018      2018 
                                              GBP000       GBP000    GBP000 
---------------------------------------  -----------  -----------  -------- 
 At the start of the year                      3,265        5,041     5,041 
 Arising on acquisition                        2,334            -     1,200 
 Cash payment                                (2,065)        (323)     (323) 
 Release to Statement of Comprehensive 
  Income                                           -            -   (2,653) 
 At the end of the year                        3,534        4,718     3,265 
---------------------------------------  -----------  -----------  -------- 
 

The ageing profile of the remaining liabilities can be summarised as follows:

 
                                  31 January   31 January   31 July 
                                        2019         2018      2018 
                                      GBP000       GBP000    GBP000 
-------------------------------  -----------  -----------  -------- 
 Payable in less than one year           834        4,718     2,165 
 Payable in more than one year         2,700            -     1,100 
 Total                                 3,534        4,718     3,265 
-------------------------------  -----------  -----------  -------- 
 
   11        Acquisitions in the period 
   a)   Compass Informatics Limited & Compass Informatics UK Limited 

On 15 January 2019, the Group acquired the entire issued share capital of Compass Informatics Limited (Ireland) and Compass Informatics UK Limited (collectively "Compass"). Compass is a systems development and data analytics company that specialises in combining geographical information systems (GIS), location technologies, data analytics and field computing. The business works across a variety of sectors but derives most of its revenue from transportation, asset management, planning, and environmental customers. The acquisition of Compass is the first overseas acquisition made by Tracsis and the Directors believe the business is highly complementary to the Traffic & Data Services division whilst also bringing potential benefit and cross-sell potential to Tracsis' existing transport clients.

In the year ended 30 September 2018, Compass generated revenue of EUR4.8m, Profit before Tax of EUR0.6m, and had net assets of EUR1.8m. The acquisition consideration comprises an initial cash payment of EUR3.15m and the issue of 53,204 new ordinary shares in Tracsis (issued at a price of 587p) to a value of EUR350k. An additional payment of circa EUR0.5m will be made on a euro for euro basis to reflect the net current asset position of the business (above a working capital hurdle) at completion and will be finalised in due course.

Additional contingent consideration of up to EUR2.0m is payable subject to Compass achieving certain stretched financial targets in the three years post acquisition.

The contingent consideration could range from EURnil to EUR 2.0m depending on the financial performance over the three years post acquisition and the Directors concluded that GBP1.0m was the fair value of the contingent consideration payable and included this in the balance sheet, along with GBP0.58m in respect of the completion accounts working capital.

The Group incurred acquisition related costs of GBP121,000 which are included within administrative expenses.

The acquisition had the following effect on the Group's assets and liabilities on the acquisition date:

 
                                                                               Recognised 
                                              Pre-acquisition    Fair value      value on 
                                                     carrying   adjustments   acquisition 
                                                       amount 
                                                       GBP000        GBP000        GBP000 
-------------------------------------------  ----------------  ------------  ------------ 
 Intangible assets: Technology assets                       -         1,183         1,183 
 Intangible assets: Customer relationships                  -         2,313         2,313 
 Tangible fixed assets                                     25             -            25 
 Cash and cash equivalents                                444             -           444 
 Trade and other receivables                              533             -           533 
 Trade and other payables                               (273)             -         (273) 
 Income tax payable                                      (53)             -          (53) 
 Deferred tax asset/(liability)                           105         (594)         (489) 
-------------------------------------------  ----------------  ------------  ------------ 
 Net identified assets and liabilities                    781         2,902         3,683 
 Goodwill on acquisition                                                            1,021 
-------------------------------------------  ----------------  ------------  ------------ 
                                                                                    4,704 
-------------------------------------------  ----------------  ------------  ------------ 
 
 Consideration paid in cash                                                         2,811 
 Consideration paid: fair value of 
  shares issued                                                                       312 
 Fair value of contingent consideration 
  payable                                                                           1,581 
 Total consideration                                                                4,704 
-------------------------------------------  ----------------  ------------  ------------ 
 

The fair values above were provisional and arise in accordance with the requirements of IFRSs to recognise intangible assets acquired.

   b)   Cash & Traffic Management Limited 

On 16 January 2019, the Group acquired the entire issued share capital of Cash & Traffic Management Limited ('CTM'). The Directors believe that the areas in which CTM operates are highly complementary to the Tracsis Traffic & Data Services Division with good cross-sell potential along with clear synergy benefits with Tracsis' existing SEP business that should lead to margin improvement in the fullness of time.

CTM is a provider of event traffic planning, admission control, and a range of other event-related services to some of the UK's largest and most prestigious event clients. The business employs 20 permanent staff, all of whom will remain with the business post transaction, and has an excellent track record of organic growth, client retention and profitability over many years. In the year ended 28 February 2018, CTM generated revenue of GBP5.5m, normalised Profit before Tax of GBP0.35m, and had net assets of GBP0.8m.

The acquisition consideration comprised an initial cash payment of GBP1.305m and the issue of 26,334 new ordinary shares in Tracsis (issued at a price of 589p) to a value of GBP0.155m, along with an additional payment of circa GBP0.5m to reflect the net current asset position of the business. Additional contingent consideration of up to GBP0.75m is payable subject to CTM achieving certain stretch financial targets in the two years post acquisition.

The contingent consideration could range from GBPnil to GBP0.75m depending on the financial performance over the two years post acquisition and the Directors concluded that GBP0.6m was the fair value of the contingent consideration payable and included this in the balance sheet, along with the balance of GBP0.15m in respect of the completion accounts working capital.

The Group incurred acquisition related costs of GBP56,000 which are included within administrative expenses.

The acquisition had the following effect on the Group's assets and liabilities on the acquisition date:

 
                                                                               Recognised 
                                              Pre-acquisition    Fair value      value on 
                                                     carrying   adjustments   acquisition 
                                                       amount 
                                                       GBP000        GBP000        GBP000 
-------------------------------------------  ----------------  ------------  ------------ 
 Intangible assets: Customer relationships                  -         1,768         1,768 
 Tangible fixed assets                                    116             -           116 
 Cash and cash equivalents                                955             -           955 
 Trade and other receivables                              488             -           488 
 Trade and other payables                               (372)             -         (372) 
 Income tax payable                                      (75)             -          (75) 
 Deferred tax liability                                  (24)         (300)         (324) 
-------------------------------------------  ----------------  ------------  ------------ 
 Net identified assets and liabilities                  1,088         1,468         2,556 
 Goodwill on acquisition                                                               32 
-------------------------------------------  ----------------  ------------  ------------ 
                                                                                    2,588 
-------------------------------------------  ----------------  ------------  ------------ 
 
 Consideration paid in cash                                                         1,680 
 Consideration paid: fair value of 
  shares issued                                                                       155 
 Fair value of contingent consideration 
  payable                                                                             753 
 Total consideration                                                                2,588 
-------------------------------------------  ----------------  ------------  ------------ 
 

The fair values above were provisional and arise in accordance with the requirements of IFRSs to recognise intangible assets acquired.

Statement of Directors' Responsibilities

The Directors confirm to the best of their knowledge that:

i) The condensed consolidated interim financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;

ii) The interim management report includes a fair review of the information required by the FSA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R).

Financial statements are published on the Group's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Group's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

The Directors of Tracsis plc and their functions are listed below.

Further information for Shareholders

 
 Company number:       05019106 
 
 Registered office:    Leeds Innovation Centre 
                       103 Clarendon Road 
                       Leeds 
                       LS2 9DF 
 
 Directors:            Chris Cole (Non-Executive Chairman) 
                       John McArthur (Chief Executive Officer) 
                       Max Cawthra (Group Finance Director) 
                       Lisa Charles-Jones (Non-Executive Director) 
                       Liz Richards (Non-Executive Director) 
                       Mac Andrade (Non-Executive Director) 
 
 Company Secretary:    Max Cawthra 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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