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Tracsis Plc LSE:TRCS London Ordinary Share GB00B28HSF71 ORD 0.4P
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Software & Computer Services 49.2 6.6 17.8 32.1 166

Tracsis PLC Interim Results

02/04/2020 7:00am

UK Regulatory (RNS & others)


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RNS Number : 4587I

Tracsis PLC

02 April 2020

Tracsis plc

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

Unaudited Interim results for the six months ended 31 January 2020

Tracsis, a leading provider of software, hardware and services for the rail, traffic data and wider transport industries, is pleased to announce its unaudited interim results for the six months ended 31 January 2020.

Financial Highlights:

   --      Revenue increased 41% to GBP26.4m (2019: GBP18.8m) 

-- Adjusted EBITDA* of GBP5.6m (2019: GBP4.2m), after adoption of IFRS 16 in the current period

-- Adjusted EBITDA* increased 23% to GBP5.2m (2019: GBP4.2m) on a like for like basis, excluding IFRS 16

   --      Operating profit before exceptional items increased 8% to GBP2.6m (2019: GBP2.4m) 
   --      Cash balances of GBP26.0m (31 July 2019: GBP24.1m, 31 January 2019: GBP18.7m) 
   --      Interim dividend deferred, pending a further review later in the year 

Operational Highlights:

-- Strong H1 performance from all parts of the Group especially our Traffic and Data division which had a strong start to the year

-- Acquired businesses in 2019, Compass Informatics, CTM and Bellvedi all performed well with integration and synergy savings already being realised

   --      Continued investment in technology base across all areas of the business 

-- Several large tenders in the final stages of negotiation across our Rail Technology division

Post period end Highlights:

-- Acquisition of iBlocks Limited in March 2020 which adds new capabilities and products to our Rail Technology product offering especially in the areas of smart ticketing

-- Important initial contract win for OnTrac (our risk and safety management software business) which is expected to result later this year in a multi-year enterprise wide licence deployment

-- Covid-19 has had an immediate impact on our Events and Traffic Data business units and as a result we have taken a series of immediate actions to mitigate the impact as much as possible

Chris Barnes, Chief Executive Officer, commented:

"We are pleased with the first half performance which was in line with expectations. All of the acquisitions from 2019 performed well, and we were also delighted in March to have completed the iBlocks acquisition which increases our rail technology product portfolio and takes us into exciting new areas of the rail industry. Despite the recent Covid-19 crisis, our Rail Technology & Services business currently remains resilient and we are in the final stages of negotiating several large multi-year software and hardware contract opportunities. Our Traffic & Data Services division is however being majorly impacted by Covid-19 and as a result we have taken a series of actions to mitigate the impact on the business as much as possible, with the full year outcome currently under review. The Group continues to have substantial cash balances and strong cash flow."

(*) EBITDA full definition and reconciliation is presented at note 9. Reconciliation of the impact of IFRS 16 is included in note 3

Enquiries:

Tracsis plc Tel: 0845 125 9162

Chris Barnes, CEO / Max Cawthra, CFO

finnCap Ltd Tel: 020 7220 0500

Christopher Raggett / Charlie Beeson, 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 reported a further period of growth, with a strong performance across both divisions which is in line with expectations, and provides a good platform for delivery of full year results.

The Group adopted IFRS 16 for the first time this period, and the impact of this on the Income Statement is summarised below. The impact on the Balance Sheet as at 31 January 2020 was to recognise a 'Right of Use Asset' of GBP1.0m, and a 'Lease Liability' of GBP1.1m.

 
                                    2020        2020        2019 
                             As reported   Pre- IFRS   Pre- IFRS 
                                                  16          16 
                                    GBPm        GBPm        GBPm 
--------------------------  ------------  ----------  ---------- 
 Revenue                            26.4        26.4        18.8 
 Adjusted EBITDA (note 9)            5.6         5.2         4.2 
 Adjusted Pre-Tax Profit 
  (note 9)                           4.8         4.8         3.9 
 Profit before tax                   2.4         2.4         2.1 
--------------------------  ------------  ----------  ---------- 
 

Trading Progress and Prospects

A summary of performance in the period is as follows:

Rail Technology & Services

Summary segment results:

   Revenue                      GBP11.9m             (H1 2019: GBP9.9m) 
   EBITDA                       GBP4.1m               (H1 2019: GBP3.5m) 
   Profit before Tax          GBP3.9m               (H1 2019: GBP3.5m) 

Software & Consultancy

Total revenues from the Group's rail software, hosting and consulting offerings were GBP9.6m (2019: GBP7.9m) taking account of all of the various revenue streams. The revenue contribution from Bellvedi was GBP0.7m, and therefore like for like revenues were GBP8.9m giving organic growth of some 13% on the previous period. Software sales again benefited from high renewal rates for existing products, and also income from multi-year contract wins from previous years which we are currently implementing for our clients. Bellvedi has performed well since acquisition and remains a key part of our TRACS Enterprise offering.

As highlighted previously, the Group continues to invest heavily in our technology base, and continues to make good progress developing the next generation of products for the transport industry. We remain focused on the following key areas:

-- Operational performance software - TRACS Enterprise and a range of standalone product solutions

   --      Safety and Risk Management Software - Rail Hub and VR on demand capability 
   --      RCM data acquisition software - Centrix 
   --      Activity Based Ticketing software - smartTIS 
   --      Automated Delay Repay software - One Click and smartREPAY 

During the Covid-19 crisis, we currently continue to work remotely on a business as usual basis with all of our rail clients. We continue to see good levels of interest in our software solutions and we are in the final stages of negotiating several large multi-year software licencing contracts which we expect to close over the coming weeks. We do though expect an impact in our delay repay businesses where revenues will be impacted by the significant decline in rail passenger numbers.

Remote Condition Monitoring

Revenues of GBP2.3m were ahead of the previous year (2019: GBP2.0m), which represents very good trading in the core UK market and organic growth of 15% on the previous period. As we entered the new Network Rail Control period, past experience would suggest a sharp reduction in revenues in the first year, but this has not materialised as yet. Our Remote Condition Monitoring business benefited from an extremely strong second half performance in 2019 and this is unlikely to repeat in 2020 given the buying patterns of the business' key customer, but nonetheless current trading remains solid and in line with expectations.

We are expecting imminent product type approval of a new RCM product which is designed to support Network Rail and others in their implementation of a risk-based maintenance approach linked to broader condition monitoring.

Our key concern with regards Covid-19 is whether we will be impacted by the closure of partner production facilities in the UK due to the future tightening of government lockdown restrictions, and we continue to monitor this situation.

Traffic & Data Services (T&DS)

Summary segment results:

   Revenue                        GBP14.5m             (H1 2019: GBP8.9m) 
   EBITDA                         GBP1.5m               (H1 2019: GBP0.7m) 
   Profit before Tax            GBP0.9m               (H1 2019: GBP0.2m) 

Our Traffic & Data Services division has historically been highly second-half weighted given the timing of our events work and also the timing of other traffic surveys. However, H1 performance was good and ahead of expectations, with organic growth of 6%. There was also a very strong contribution from the acquired businesses CTM and Compass Informatics, where integration is progressing well. These businesses contributed around GBP5.1m of additional revenue versus the same period last year which was ahead of expectations.

Our Traffic Data business performed well in H1 with an increasing focus on data analytics and the utilisation of the technology solutions developed in partnership with Vivacity Labs. The business secured a large multi-year contract in Ireland and continues to win work across a wide UK transport client base.

Compass Informatics has performed well in the period, working on a combination of long term projects with its Irish client base, and also exciting projects for UK based utility companies. We have also invested in a business development team to pursue opportunities in the UK which seeks to exploit cross selling opportunities with our existing UK traffic and transport client base.

Our events businesses SEP and CTM both performed well in H1, in particular CTM which has delivered a very strong first half performance supported by multi-year client contracts at fixed venues and also some other positive trading.

We have also been investing in our technology base with a focus in three areas:

   --      Automated rail passenger counts software - PCDS 
   --      Event traffic monitoring and management - Tracsis Live Technology (TLT) 
   --      Traffic insights / path tracing - Felicity portal 

Covid-19 has had an immediate impact on our events and traffic data business units, which will have a major impact on H2 performance. A number of large UK events have now been cancelled or postponed to the Autumn and this trend is continuing. We are also seeing significant disruption to our Traffic Data collection and Passenger Analytics activities that were scheduled to take place over the coming weeks, given road traffic and rail passenger activity will be heavily reduced and hence not representative. As a result, we have taken a series of immediate actions to mitigate the impact as much as possible through a reduction in casual labour costs, the redeployment of staff, reducing all discretionary spend, and taking advantage of the Government's Job Retention scheme. We continue to look at a range of medium to long term structures for this Division depending on the full impact of the Covid-19 crisis.

Overseas

The acquisition of Compass Informatics during the previous year, has increased our Ireland presence significantly. Slow progress continues to be made in other geographic areas where we operate, though we continue to be fully occupied servicing our core UK market in the short term.

Acquisitions

On 10 March we completed the acq uisition of iBlocks Limited, a UK based software company that specialises in the provision of smart ticketing solutions, automated delay repay and the development of mission critical back office systems that are used by the Rail Delivery Group, the wider community of train operating companies (TOCs) and the rail supply chain. This acquisition strategically aligns with our objective of strengthening our rail product portfolio in areas where we can offer a unique market proposition, gain access to strategically important partnerships and leverage the cross-selling opportunities that exist across our Rail Technology division.

Dividend

The Board has decided to defer the payment of the interim dividend in view of the current Covid-19 crisis, and this decision will be reviewed later in the year once the Group has more clarity about the ongoing effects of the pandemic on the business. The Board will consider what actions are in the best interests of shareholders, and this could result in the combination of an interim and full year dividend for the year ended 31 July 2020, or the retention of cash in the business to invest in future growth opportunities. The interim dividend would have had a cash cost of around GBP0.3m had it been paid, which has therefore been retained in the business.

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 
                                       2020         2020         2019        2019 
                             As reported(1)    Pre- IFRS    Pre- IFRS   Pre- IFRS 
                                                      16           16          16 
                                    GBP'000      GBP'000      GBP'000     GBP'000 
--------------------------  ---------------  -----------  -----------  ---------- 
 Revenue                             26,365       26,365       18,750      49,219 
 Adjusted EBITDA (note 9)             5,586        5,230        4,239      10,514 
 Adjusted Pre-Tax Profit 
  (note 9)                            4,805        4,766        3,873       9,683 
 Profit before tax                    2,419        2,396        2,121       6,559 
--------------------------  ---------------  -----------  -----------  ---------- 
 

(1) The results for the six month period ended 31 January 2020 are not directly comparable with the prior year due to the adoption of IFRS 16 leases. Further details are provided in note 3 to the financial statements, which sets out the impact of the adoption of IFRS 16 on the primary statements.

Sales revenue is analysed further below:

 
 
                                Unaudited    Unaudited   Audited 
                               Six months   Six months      Year 
                                    ended        Ended     Ended 
                               31 January   31 January   31 July 
                                     2020         2019      2019 
                                  GBP'000      GBP'000   GBP'000 
----------------------------  -----------  -----------  -------- 
 Rail Technology & Services        11,878        9,895    21,934 
 Traffic & Data Services           14,487        8,855    27,285 
 Total revenue                     26,365       18,750    49,219 
----------------------------  -----------  -----------  -------- 
 

Balance sheet

The Group continues to have significant levels of cash and remains debt free. Cash balances at 31 January were GBP26.0m (31 January 2019: GBP18.7m, 31 July 2019: GBP24.1m). Cash generation was good, though was naturally impacted by the unwinding of the positive year end working capital movements from the previous year end where cash generation was extremely strong, which were fully anticipated, and related to larger than previous VAT payments given the increased seasonal event work, revenue in advance and also staff bonuses. A summary of cash flows is set out below:

 
                                 Six months   Six months      Year 
                                      ended        ended     ended 
                                 31 January   31 January   31 July 
                                       2020         2019      2019 
                                    GBP'000      GBP'000   GBP'000 
------------------------------  -----------  -----------  -------- 
 Net cash flow from operating 
  activities                          2,670        2,400    12,374 
 Net cash used in investing 
  activities                          (222)      (3,937)   (7,723) 
 Net cash used in financing 
  activities                          (507)      (2,089)   (2,876) 
 Movement during the period           1,941      (3,626)     1,775 
------------------------------  -----------  -----------  -------- 
 

Outlook

The Board was pleased with the first half performance. We have secured a number of new contract wins which will help to secure future organic growth, and we are pleased to have secured the recent iBlocks acquisition, which adds an exciting new product range to our portfolio and enhances our overall Rail Technology & Services offering which is well aligned to our future growth strategy. Covid-19 clearly presents us with some significant challenges to H2 performance and therefore full year outturn, in particular within our Traffic & Data Services Division where the impact has been most felt, though our Rail Technology & Services Division currently remains resilient. The Group has substantial cash balances and strong cash flow, and the Board remain confident in the long term prospects for the business post Covid-19, in view of the positive growth drivers in the transport markets that the Group currently serves. Our key priority during these unprecedented times is the health and wellbeing of our employees, our clients and their families.

 
 
   Chris Cole                 Chris Barnes 
   Non-Executive Chairman     Chief Executive Officer 
 2 April 2020 
 

Tracsis plc

Condensed consolidated interim income statement for the six months ended 31 January 2020

 
 
                                                                              Unaudited   Unaudited 
                                                                              6 months     6 months        Audited 
                                                                              ended 31     ended 31     Year ended 
                                                                               January      January        31 July 
                                                                                2020           2019           2019 
                                  Note 
                                                                                GBP'000     GBP'000        GBP'000 
 
 Revenue                             4                                           26,365      18,750         49,219 
 
 Cost of sales                                                                 (10,463)     (7,107)       (20,163) 
-------------------------------  -----  -----------------------------------------------  ----------  ------------- 
 
 Gross profit                                                                    15,902      11,643         29,056 
 
 Administrative costs                                                          (13,291)     (9,411)       (22,360) 
 
 
 Adjusted EBITDA *                   4                                            5,586       4,239         10,514 
 Depreciation                                                                     (781)       (366)          (831) 
-------------------------------  -----  -----------------------------------------------  ----------  ------------- 
 
 Adjusted profit **                                                               4,805       3,873          9,683 
 Amortisation of intangible 
  assets                                                                        (1,628)       (990)        (2,251) 
 Other operating income                                                               -           -            260 
 Share-based payment charges                                                      (566)       (474)        (1,034) 
-------------------------------  -----  -----------------------------------------------  ----------  ------------- 
 
 Operating profit before 
  exceptional 
  items                                                                           2,611       2,409          6,658 
 Exceptional items                                                                    -       (177)             38 
-------------------------------  -----  -----------------------------------------------  ----------  ------------- 
 
 Operating profit                                                                 2,611       2,232          6,696 
 Finance income                                                                      42          29             58 
 Finance expense                                                                   (30)         (9)           (21) 
 Share of result of equity 
  accounted investees                                                             (204)       (131)          (174) 
 
 Profit before tax                                                                2,419       2,121          6,559 
 Taxation                                                                         (472)       (424)        (1,488) 
-------------------------------  -----  -----------------------------------------------  ----------  ------------- 
 Profit for the period                                                            1,947       1,697          5,071 
-------------------------------  -----  -----------------------------------------------  ----------  ------------- 
 
 Other comprehensive income                                                        (71)           -             17 
 Total recognised income for 
  the period                                                                      1,876       1,697          5,088 
-------------------------------  -----  -----------------------------------------------  ----------  ------------- 
 
   Earnings per ordinary share 
 Basic                               5                                            6.76p       5.97p         17.78p 
 Diluted                             5                                            6.56p       5.78p         17.26p 
 

* 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 2020

 
                                                         Unaudited       Unaudited   Audited 
                                                                     At 31 January     At 31 
                                                     At 31 January                      July 
                                                              2020            2019      2019 
                                              Note         GBP'000         GBP'000   GBP'000 
-------------------------------------------  -----  --------------  --------------  -------- 
 Non-current assets 
 Property, plant and equipment                               2,579           2,476       2,678 
 Right of Use assets                                           985               -           - 
 Intangible assets                                          37,184          31,550      38,812 
 Investments - equity                                          350             350         350 
 Loans due from associated undertakings                        250             250         250 
 Investments in equity accounted investees                     894           1,141       1,098 
 Deferred tax assets                                           744             634         667 
-------------------------------------------  -----  --------------  -------------- 
                                                            42,986          36,401      43,855 
-------------------------------------------  -----  --------------  --------------  ---------- 
 Current assets 
 Inventories                                                   384             357         381 
 Trade and other receivables                                 8,452           8,330       9,729 
 Cash and cash equivalents                                  26,045          18,703      24,104 
-------------------------------------------  -----  --------------  --------------  ---------- 
                                                            34,881          27,390      34,214 
-------------------------------------------  -----  --------------  --------------  ---------- 
 
 Total assets                                               77,867          63,791      78,069 
-------------------------------------------  -----  --------------  --------------  ---------- 
 Non-current liabilities 
 Finance lease and hire-purchase contracts                     270             138         285 
 Lease Liabilities                                             419               -           - 
 Contingent consideration payable               10           4,975           2,700       5,304 
 Deferred tax liabilities                                    5,701           4,520       5,942 
                                                            11,365           7,358      11,531 
-------------------------------------------  -----  --------------  --------------  ---------- 
 Current liabilities 
 Finance lease and hire-purchase contracts                     287             119         277 
 Lease liabilities                                             644               -           - 
 Trade and other payables                                   13,329          10,879      16,936 
 Contingent consideration payable               10           1,151             834         879 
 Current tax liabilities                                       793             495         505 
-------------------------------------------  -----  --------------  --------------  ---------- 
                                                            16,204          12,327      18,597 
-------------------------------------------  -----  --------------  --------------  ---------- 
 
 Total liabilities                                          27,569          19,685      30,128 
-------------------------------------------  -----  --------------  --------------  ---------- 
 
 Net assets                                                 50,298          44,106      47,941 
-------------------------------------------  -----  --------------  --------------  ---------- 
 
 Equity attributable to equity holders of the Company 
 Called up share capital                                       115             114         115 
 Share premium reserve                                       6,364           6,314       6,343 
 Merger reserve                                              3,921           3,627       3,921 
 Retained earnings                                          39,952          34,051      37,545 
 Translation reserve                                          (54)               -          17 
-------------------------------------------  -----  --------------  --------------  ---------- 
 Net assets                                                 50,298          44,106      47,941 
-------------------------------------------  -----  --------------  --------------  ---------- 
 
 

Tracsis plc - Consolidated statement of changes in equity

For the six months ended 31 January 2020

 
 
                                                   Share 
                                       Share     Premium      Merger     Retained     Translation 
                                     Capital     Reserve     Reserve     Earnings         Reserve     Total 
 Unaudited                           GBP'000     GBP'000     GBP'000      GBP'000         GBP'000   GBP'000 
--------------------------------  ----------  ----------  ----------  -----------  --------------  -------- 
 At 1 August 2018                        113       6,243       3,160       32,593               -    42,109 
 Impact on initial application 
  of IFRS 15 (net of tax)                  -           -           -        (713)               -     (713) 
 Adjusted balances at 
  1 August 2018                          113       6,243       3,160       31,880               -    41,396 
 Total comprehensive income 
  for the period 
 Profit for the six month 
  period ended 31 January 
  2019 and total comprehensive 
  income                                   -           -           -        1,697               -     1,697 
--------------------------------  ----------  ----------  ----------  -----------  --------------  -------- 
 Total Comprehensive income 
  for the period                           -           -           -        1,697               -     1,697 
--------------------------------  ----------  ----------  ----------  -----------  --------------  -------- 
 Transactions with owners 
  of the Company 
 Share based payment charges               -           -           -          474               -       474 
 Exercise of share options                 1          71           -            -               -        72 
 Shares issued as consideration 
  for business combinations                -           -         467            -               -       467 
--------------------------------  ----------  ----------  ----------  -----------  --------------  -------- 
 Total transactions with 
  owners of the Company                    1          71         467          474               -     1,013 
--------------------------------  ----------  ----------  ----------  -----------  --------------  -------- 
 At 31 January 2019                      114       6,314       3,627       34,051               -    44,106 
--------------------------------  ----------  ----------  ----------  -----------  --------------  -------- 
 
 
 Audited 
--------------------------------  ----  ------  ------  -------  -----  ------- 
 At 1 August 2018                  113   6,243   3,160   32,593      -   42,109 
 Impact on initial application 
  of IRS 15 (net of tax)             -       -       -    (667)      -    (667) 
 Adjusted balances at 1 
  August 2018                      113   6,243   3,160   31,926      -   41,442 
 Total comprehensive income 
  for the period 
 Profit for the year ended 
  31 July 2019                       -       -       -    5,071      -    5,071 
 Other comprehensive income 
  for the year ended 31 
  July 2019                          -       -       -        -     17       17 
--------------------------------  ----  ------  ------  -------  -----  ------- 
 Total Comprehensive income 
  for the period                     -       -       -    5,071     17    5,088 
--------------------------------  ----  ------  ------  -------  -----  ------- 
 
 Transactions with owners 
  of the Company 
 Dividends                           -       -       -    (486)           (486) 
 Share based payment charges         -       -       -    1,034           1,034 
 Exercise of share options           1     100       -        -             101 
 Shares issued as consideration 
  for business combinations          1       -     761        -             762 
--------------------------------  ----  ------  ------  -------  -----  ------- 
 Total transactions with 
  owners of the Company              2     100     761      548      -    1,411 
--------------------------------  ----  ------  ------  -------  -----  ------- 
 At 31 July 2019                   115   6,343   3,921   37,545     17   47,941 
--------------------------------  ----  ------  ------  -------  -----  ------- 
 
 

Tracsis plc - Consolidated statement of changes in equity (continued)

For the six months ended 31 January 2020

 
 
 Unaudited                       Share 
                      Share    Premium      Merger     Retained    Translation 
                    Capital    Reserve     Reserve     Earnings        Reserve     Total 
                    GBP'000    GBP'000     GBP'000      GBP'000        GBP'000   GBP'000 
 At 1 August 
  2019                  115      6,343       3,921       37,545             17    47,941 
 Impact on 
  initial 
  application 
  of IFRS 16 
  (net of 
  tax) - note 3           -          -           -        (106)              -     (106) 
---------------  ----------  ---------  ----------  -----------  -------------  -------- 
 Adjusted 
  balances at 
  1 August 2019         115      6,343       3,921       37,439             17    47,835 
---------------  ----------  ---------  ----------  -----------  -------------  -------- 
 Total 
 comprehensive 
 income for the 
 period 
 Profit for the 
  six 
  month period 
  ended 
  31 January 
  2020                    -          -           -        1,947              -     1,947 
 Other 
  comprehensive 
  income for 
  the period 
  ended 31 
  January 2020            -          -           -            -           (71)      (71) 
---------------  ----------  ---------  ----------  -----------  -------------  -------- 
 Total 
  Comprehensive 
  income for 
  the period              -          -           -        1,947           (71)     1,876 
---------------  ----------  ---------  ----------  -----------  -------------  -------- 
 
 Transactions 
 with owners 
 of the Company 
 Share based 
  payment 
  charges                 -          -           -          566              -       566 
 Exercise of 
  share options           -         21           -            -              -        21 
---------------  ----------  ---------  ----------  -----------  -------------  -------- 
 Total 
  transactions 
  with owners 
  of the 
  Company                 -         21           -          566              -       587 
---------------  ----------  ---------  ----------  -----------  -------------  -------- 
 At 31 January 
  2020                  115      6,364       3,921       39,952           (54)    50,298 
---------------  ----------  ---------  ----------  -----------  -------------  -------- 
 
 

Tracsis plc

Condensed consolidated interim statement of cash flows for the six months to 31 January 2020

 
                                                         Unaudited     Unaudited 
                                                        Six months    Six months       Audited 
                                                                to            to    Year ended 
                                                                                       31 July 
                                                       31 Jan 2020   31 Jan 2019          2019 
                                                Note       GBP'000       GBP'000       GBP'000 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Operating activities 
 Profit for the period                                       1,947         1,697         5,071 
 Finance income                                               (42)          (29)          (58) 
 Finance expense                                                30             9            21 
 Depreciation                                                  781           366           831 
 Loss on disposal of plant & equipment                           -             -            12 
 Non-cash exceptional items                                      -             -          (99) 
 Other operating income                                          -             -         (260) 
 Amortisation of intangible assets                           1,628           990         2,251 
 Effect of foreign exchange adjustments                       (71)             -            17 
 Share of result of equity accounted 
  investees                                                    204           131           174 
 Income tax charge                                             472           424         1,488 
 Share based payment charges                                   566           474         1,034 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Operating cash inflow before changes 
  in working capital                                         5,515         4,062        10,482 
 Movement in inventories                                       (3)         (104)         (128) 
 Movement in trade and other receivables                     1,219         (126)       (1,349) 
 Movement in trade and other payables                      (3,571)         (847)         4,877 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Cash generated from operations                              3,160         2,985        13,882 
 Interest received                                              42            29            58 
 Interest paid                                                (30)           (9)          (21) 
 Income tax paid                                             (502)         (605)       (1,545) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Net cash flow from operating activities                     2,670         2,400        12,374 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Investing activities 
 Purchase of plant and equipment                             (222)         (445)         (731) 
 Proceeds from disposal of plant and 
  equipment                                                      -             -           165 
 Acquisition of subsidiaries (net of 
  cash acquired)                                                 -       (3,092)       (6,757) 
 Equity investments and loans to investments                     -         (400)         (400) 
 Net cash flow used in investing activities                  (222)       (3,937)       (7,723) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Financing activities 
 Dividends paid                                                  -             -         (486) 
 Proceeds from the exercise of share 
  options                                                       21            72           101 
 Lease Liability payments                                    (323)             -             - 
 Hire purchase repayments                                    (148)          (96)         (342) 
 Payment of contingent consideration              10          (57)       (2,065)       (2,149) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Net cash flow used in financing activities                  (507)       (2,089)       (2,876) 
---------------------------------------------  -----  ------------  ------------  ------------ 
 Net increase/(decrease) in cash and 
  cash equivalents                                           1,941       (3,626)         1,775 
 Cash and cash equivalents at beginning 
  of period                                                 24,104        22,329        22,329 
 Cash and cash equivalents at end of 
  period                                                    26,045        18,703        24,104 
---------------------------------------------  -----  ------------  ------------  ------------ 
 

Notes to the consolidated interim report

For the six months ended 31 January 2020

   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 2020 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 2019, 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 2020 and 31 January 2019 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 2019 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 largely unchanged from the previous year end with the exception of the Covid-19 threat which is new in the current year. These risks and uncertainties are expected to be unchanged for the remainder of the financial year, Further details are provided on pages 9 to 12 of the Annual Report & Accounts for the year ended 31 July 2019. The Board considers risks on a periodic basis and has maintained the key risks as follows, on a Group wide basis:

-- Covid-19 - short term disruption to the T&DS Division and potentially the wider Group, and the potential for future economic slowdown in the medium term

   --      Impact of EU Referendum 
   --      Rail industry structure changes 
   --      Reduced government spending 
   --      Reliance on certain key customers 
   --      Competition 
   --      Attraction and retention of key employees 
   --      Technological changes 
   --      Customer pricing pressure 
   --      Project delivery 
   --      Health & Safety 
   --      Brand reputation 
   --      Integration risk 

The condensed consolidated interim financial information was approved for issue on 2 April 2020.

   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 2019 and which will form the basis of the 2020 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 2019.

   3          Changes in accounting policies 

The following amendments to financial reporting standards were adopted from 1 August 2019, the start of the new financial year. None of them have had a significant impact on the Group other than IFRS 16 which is detailed in further below:

   --      IFRS 16 Leases 
   --      IFRIC 23 Uncertainty over Income Tax Treatments 

IFRS 16 Leases

The Group has adopted IFRS 16 "Leases" from 1 August 2019. It has brought most leases on to the balance sheet, eliminating the distinction between operating leases and finance leases, and recognising a right-of-use asset and a corresponding lease liability. Rentals on operating leases which were previously charged to the income statement, have been replaced by depreciation charge on the asset and interest expense on the lease liability. The Group has adopted IFRS 16 using the modified retrospective approach with the cumulative effect of initially adopting IFRS 16 recognised as an adjustment to retained earnings at 1 August 2019 with no restatement of comparative information. The group has applied the practical expedient to grandfather the definition of a lease on transaction. This means that it has applied IFRS 16 to all contracts entered into before 1 August 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.

   3          Changes in accounting policies (continued) 

Impact on Retained Earnings at 1 August 2019

 
 
                                             GBP'000 
-------------------------------------------  ------- 
 Recognition of Property, Plant and 
  Equipment                                    1,302 
 Trade and other receivables (rent 
  prepaid)                                      (58) 
 Trade and other payables (rent accrual 
 derecognised)                                    36 
 Current lease liabilities                     (628) 
 Non-current lease liabilities                 (758) 
 Retained earnings                             (106) 
-------------------------------------------  ------- 
 
 
 

Impact on the condensed consolidated interim income statement for the six months ended 31 January 2020:

 
 
                                         As reported   Adjustments      Amounts 
                                           (IFRS 16)                  pre- IFRS 
                                                                             16 
 
                                             GBP'000       GBP'000      GBP'000 
 
 Revenue                                      26,365             -       26,365 
 Cost of sales                              (10,463)             -     (10,463) 
--------------------------------------  ------------  ------------  ----------- 
 Gross profit                                 15,902             -       15,902 
 Administrative costs                       (13,291)          (39)     (13,330) 
--------------------------------------  ------------  ------------  ----------- 
 Adjusted EBITDA *                             5,586         (356)        5,230 
 Depreciation                                  (781)           317        (464) 
--------------------------------------  ------------  ------------  ----------- 
 Adjusted profit **                            4,805          (39)        4,766 
 Amortisation of intangible assets           (1,628)             -      (1,628) 
 Other operating income                            -             -            - 
 Share-based payment charges                   (566)             -        (566) 
--------------------------------------  ------------  ------------  ----------- 
 Operating profit before exceptional 
  items                                        2,611          (39)        2,572 
 Exceptional items                                 -             -            - 
-------------------------------------   ------------  ------------  ----------- 
 Operating profit                              2,611          (39)        2,572 
 Finance income                                   42             -           42 
 Finance expense                                (30)            16         (14) 
 Share of result of equity accounted 
  investees                                    (204)             -        (204) 
 Profit before tax                             2,419          (23)        2,396 
 Taxation                                      (472)             -        (472) 
--------------------------------------  ------------  ------------  ----------- 
 Profit for the period                         1,947          (23)        1,924 
--------------------------------------  ------------  ------------  ----------- 
 
 Other comprehensive income                     (71)             -         (71) 
 Total recognised income for the 
  period                                       1,876          (23)        1,853 
--------------------------------------  ------------  ------------  ----------- 
 
   3          Changes in accounting policies (continued) 

Impact on the condensed consolidated interim balance sheet as at 31 January 2020:

 
 
                                             As reported                      Amounts 
                                               (IFRS 16)     Adjustments    pre- IFRS 
                                                                                   16 
                                                 GBP'000         GBP'000      GBP'000 
 Non-current assets 
 Property, plant and equipment                     2,579               -          2,579 
 Right of Use assets                                 985           (985)              - 
 Intangible assets                                37,184               -         37,184 
 Investments - equity                                350               -            350 
 Loans due from associated 
  undertakings                                       250               -            250 
 Investments in equity accounted 
  investees                                          894               -            894 
 Deferred tax assets                                 744               -            744 
------------------------------------------  ------------  -------------- 
                                                  42,986           (985)         42,001 
------------------------------------------  ------------  --------------  ------------- 
 Current assets 
 Inventories                                         384               -            384 
 Trade and other receivables                       8,452              53          8,505 
 Cash and cash equivalents                        26,045               -         26,045 
------------------------------------------  ------------  --------------  ------------- 
                                                  34,881              53         34,934 
------------------------------------------  ------------  --------------  ------------- 
 Total assets                                     77,867           (932)         76,935 
------------------------------------------  ------------  --------------  ------------- 
 Non-current liabilities 
 Hire-purchase contracts                             270               -            270 
 Lease liabilities                                   419           (419)              - 
 Contingent consideration payable                  4,975               -          4,975 
 Deferred tax liabilities                          5,701               -          5,701 
                                                  11,365           (419)         10,946 
------------------------------------------  ------------  --------------  ------------- 
 Current liabilities 
 Hire-purchase contracts                             287               -            287 
 Lease liabilities                                   644           (644)              - 
 Trade and other payables                         13,329              48         13,377 
 Contingent consideration payable                  1,151               -          1,151 
 Current tax liabilities                             793               -            793 
------------------------------------------  ------------  --------------  ------------- 
                                                  16,204           (596)         15,608 
------------------------------------------  ------------  --------------  ------------- 
 Total liabilities                                27,569         (1,015)         26,554 
------------------------------------------  ------------  --------------  ------------- 
 Net assets                                       50,298              83         50,381 
------------------------------------------  ------------  --------------  ------------- 
 
 Equity attributable to equity holders of 
  the Company 
 Called up share capital                             115               -            115 
 Share premium reserve                             6,364               -          6,364 
 Merger reserve                                    3,921               -          3,921 
 Retained earnings                                39,952              83         40,035 
 Translation reserve                                (54)               -           (54) 
------------------------------------------  ------------  --------------  ------------- 
 
 Net assets                                       50,298              83         50,381 
------------------------------------------  ------------  --------------  ------------- 
 
 
   4                      Revenue and Segmental analysis 
   a)                     Revenue 

Sales revenue is summarised below:

 
                               Six months   Six months      Year 
                                    ended        ended     Ended 
                               31 January   31 January   31 July 
                                     2020         2019      2019 
                                  GBP'000      GBP'000   GBP'000 
----------------------------  -----------  -----------  -------- 
 Rail Technology & Services        11,878        9,895    21,934 
 Traffic & Data Services           14,487        8,855    27,285 
 Total revenue                     26,365       18,750    49,219 
----------------------------  -----------  -----------  -------- 
 

A geographical analysis of revenue is provided below:

 
                      Six months   Six months       Year 
                        ended 31     ended 31      ended 
                         January      January    31 July 
                            2020         2019       2019 
                         GBP'000      GBP'000    GBP'000 
-------------------  -----------  -----------  --------- 
 United Kingdom           23,621       17,834     45,511 
 North America                75          101        106 
 Rest of the World         2,669          815      3,602 
 Total                    26,365       18,750     49,219 
-------------------  -----------  -----------  --------- 
 
   b)         Segmental Analysis 

The Group has divided its results into two segments being 'Rail Technology and Services' and 'Traffic & Data Services'. The Group has a wide range of products and services and products and services for the rail industry, such as software, hosting services, consultancy and remote condition monitoring, and these have been included within the Rail Technology & Services segment as they have similar customer bases (such as Train Operating Companies and Infrastructure Providers), whereas traffic data collection and event planning & traffic management have similar economic characteristics and distribution methods and so have been included within the Traffic & Data Services segment.

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 two operating segments, 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.

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 2020 
                                          Rail Technology     Traffic 
                                               & Services      & Data     Unallocated 
                                                             Services                     Total 
                                                   GBP000      GBP000          GBP000    GBP000 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Revenues 
 Total revenue for reportable 
  segments                                         11,878      14,487               -    26,365 
 Consolidated revenue                              11,878      14,487               -    26,365 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Profit or loss 
 EBITDA for reportable segments                     4,122       1,464               -     5,586 
   Amortisation of intangible 
    assets                                              -           -         (1,628)   (1,628) 
   Depreciation                                     (251)       (530)               -     (781) 
   Share-based payment charges                          -           -           (566)     (566) 
   Share of result of equity accounted 
    investees                                           -           -           (204)     (204) 
   Interest receivable/payable(net)                   (9)         (8)              29        12 
---------------------------------------  ----------------  ----------  --------------  -------- 
 Consolidated profit before tax                     3,862         926         (2,369)     2,419 
---------------------------------------  ----------------  ----------  --------------  -------- 
 
 
                                                    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 
---------------------------------------  ----------------  ----------  --------------  -------- 
 
 
                                                           Year ended 31 July 2019 
                                                 Rail Technology     Traffic 
                                                      & Services      & Data 
                                                                    Services     Unallocated      Total 
                                                          GBP000      GBP000          GBP000     GBP000 
------------------------------------  --------------------------  ----------  --------------  --------- 
 Revenues 
 Total revenue for reportable 
  segments                                                21,934      27,285               -     49,219 
 Consolidated revenue                                     21,934      27,285               -     49,219 
------------------------------------  --------------------------  ----------  --------------  --------- 
 Profit or loss 
 EBITDA for reportable segments                            6,932       3,582               -     10,514 
   Amortisation of intangible 
    assets                                                     -           -         (2,251)    (2,251) 
   Depreciation                                            (166)       (665)               -      (831) 
   Exceptional items                                        (60)         (1)              99         38 
   Other operating income                                      -           -             260        260 
   Share-based payment charges                                 -           -         (1,034)    (1,034) 
   Interest receivable/payable(net)                            -           -              37         37 
   Share of results of equity 
    accounted investees                                        -           -           (174)      (174) 
 Consolidated profit before tax                            6,706       2,916         (3,063)      6,559 
------------------------------------  --------------------------  ----------  --------------  --------- 
 
                                                                 31 January 2020 
                                                 Rail Technology     Traffic 
                                                    & Services        & Data 
                                                                    Services     Unallocated        Total 
                                                         GBP'000      GBP000          GBP000       GBP000 
------------------------------------  --------------------------  ----------  --------------  ----------- 
 Assets 
 Total assets for reportable 
  segments (exc. cash)                                     5,418       6,982               -       12,400 
 Intangible assets and investments                             -           -          38,678       38,678 
 Deferred tax assets                                           -           -             744          744 
 Cash and cash equivalents                                10,479       4,750          10,816       26,045 
 Consolidated total assets                                15,897      11,732          50,238       77,867 
------------------------------------  --------------------------  ----------  --------------  ----------- 
 
 Liabilities 
 Total liabilities for reportable 
  segments                                              (10,893)     (4,849)               -     (15,742) 
 Deferred tax                                                  -           -         (5,701)      (5,701) 
 Contingent consideration                                      -           -         (6,126)      (6,126) 
 Consolidated total liabilities                         (10,893)     (4,849)        (11,827)     (27,569) 
------------------------------------  --------------------------  ----------  --------------  ----------- 
 
 
 
                                                              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 July 2019 
                                                Rail Technology     Traffic 
                                                   & Services        & Data 
                                                                   Services     Unallocated      Total 
                                                        GBP'000      GBP000          GBP000     GBP000 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 Assets 
 Total assets for reportable 
  segments (exc. cash)                                    3,257       9,531               -     12,788 
 Intangible assets and investments                            -           -          40,510     40,510 
 Deferred tax assets                                          -           -             667        667 
 Cash and cash equivalents                               12,866       5,817           5,421     24,104 
 Consolidated total assets                               16,123      15,348          46,598     78,069 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 
 Liabilities 
 Total liabilities for reportable 
  segments                                             (10,568)     (7,435)               -   (18,003) 
 Deferred tax                                                 -           -         (5,942)    (5,942) 
 Contingent consideration                                     -           -         (6,183)    (6,183) 
 Consolidated total liabilities                        (10,568)     (7,435)        (12,125)   (30,128) 
-----------------------------------  --------------------------  ----------  --------------  --------- 
 
 
   5          Earnings per share 

Basic earnings per share

The calculation of basic earnings per share for the Half Year to 31 January 2020 was based on the profit attributable to ordinary shareholders of GBP1,947,000 (Half Year to 31 January 2019: GBP1,697,000, Year ended 31 July 2019: GBP5,071,000) and a weighted average number of ordinary shares in issue of 28,795,000 (Half Year to 31 January 2019: 28,406,000, Year ended 31 July 2019: 28,521,000), 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 
                                                      2020         2019       2019 
 Issued ordinary shares at start of period          28,749       28,334     28,334 
 Effect of shares issued related to business 
  combinations                                           -            7         54 
 Effect of shares issued for cash                       46           65        133 
 Weighted average number of shares at end 
  of period                                         28,795       28,406     28,521 
---------------------------------------------  -----------  -----------  --------- 
 

Diluted earnings per share

The calculation of basic earnings per share for the Half Year to 31 January 2020 was based on the profit attributable to ordinary shareholders of GBP1,947,000 (Half Year to 31 January 2019: GBP1,697,000, Year ended 31 July 2019: GBP5,071,000) and a weighted average number of ordinary shares in issue after adjustment for the effects of all dilutive potential ordinary shares of 29,665,000 (Half Year to 31 January 2019: 29,359,000, Year ended 31 July 2019: 29,387,000).

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 
                                                       2020         2019       2019 
                                                    GBP'000      GBP'000    GBP'000 
 Profit attributable to ordinary shareholders         1,947        1,697      5,071 
 Amortisation of intangible assets                    1,628          990      2,251 
 Share-based payment charges                            566          474      1,034 
 Exceptional items                                        -          177       (38) 
 Other operating income                                   -            -      (260) 
----------------------------------------------  -----------  -----------  --------- 
 Adjusted profit for EPS purposes                     4,141        3,338      8,058 
----------------------------------------------  -----------  -----------  --------- 
 
 
 
 Weighted average number of ordinary shares 
  In thousands of shares 
--------------------------------------------  -------  -------  ------- 
 For the purposes of calculating Basic 
  earnings per share                           28,795   28,406   28,521 
 Adjustment for the effects of all dilutive 
  potential ordinary shares                    29,665   29,359   29,387 
--------------------------------------------  -------  -------  ------- 
 
 Basic adjusted earnings per share             14.38p   11.75p   28.25p 
 Diluted adjusted earnings per share           13.96p   11.37p   27.42p 
--------------------------------------------  -------  -------  ------- 
 
   6          Seasonality 

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 are more predictable;

-- Ontrac and Compass Informatics both perform 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. The impact of Covid-19 will have a significant impact on the second half of the financial year, in particular the Traffic & Data Services Division.

   7          Dividends 

The Board has decided to defer the payment of the interim dividend in view of the current Covid-19 crisis, and this decision will be reviewed later in the year once the Group has more clarity about the ongoing effects of the pandemic on the business. The Board will consider what actions are in the best interests of shareholders, and this could result in the combination of an interim and full year dividend for the year ended 31 July 2020, or the retention of cash in the business to invest in future growth opportunities. The interim dividend would have had a cash cost of around GBP0.3m had it been paid, which has therefore been retained in the business.

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 
                                                 2020          2019       2019 
                                               GBP000        GBP000     GBP000 
---------------------------------------  ------------  ------------  --------- 
 Final dividend for 2017/18 of 0.90p 
  per share paid                                    -             -        257 
 Interim dividend for 2018/19 of 0.80p 
  per share paid                                    -             -        229 
 Total dividends paid                               -             -        486 
---------------------------------------  ------------  ------------  --------- 
 

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

 
                         2020        2019        2018        2017        2016       2015       2014      2013     2012 
                      GBP'000     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           -           -           -           -           -          -          -        75        - 
  for 2012/13 of 
  0.30p per share 
  paid 
 Final dividend             -           -           -           -           -          -          -       102        - 
  for 2012/13 of 
  0.40p per share 
  paid 
 Interim dividend           -           -           -           -           -          -         89         -        - 
  for 2013/14 of 
  0.35p per share 
  paid 
 Final dividend             -           -           -           -           -          -        119         -        - 
  for 2013/14 of 
  0.45p per share 
  paid 
 Interim dividend           -           -           -           -           -        106          -         -        - 
  for 2014/15 of 
  0.40p per share 
  paid 
 Final dividend             -           -           -           -           -        164          -         -        - 
  for 2014/15 of 
  0.60p per share 
  paid 
 Interim dividend           -           -           -           -         137          -          -         -        - 
  for 2015/16 of 
  0.50p per share 
  paid 
 Final dividend             -           -           -           -         195          -          -         -        - 
  for 2015/16 of 
  0.70p per share 
  paid 
 Interim dividend           -           -           -         167           -          -          -         -        - 
  for 2016/17 of 
  0.60p per share 
  paid 
 Final dividend             -           -           -         225           -          -          -         -        - 
  for 2016/17 of 
  0.80p per share 
  paid 
 Interim dividend           -           -         198           -           -          -          -         -        - 
  for 2017/18 of 
  0.70p per share 
  paid 
 Final dividend             -           -         257           -           -          -          -         -        - 
  for 2017/18 of 
  0.90p per share 
  paid 
 Interim dividend           -         229           -           -           -          -          -         -        - 
  for 2018/19 of 
  0.80p per share 
  paid 
 Final dividend             -         287           -           -           -          -          -         -        - 
  for 2018/19 of 
  1.0p per share 
  paid 
 Interim dividend           -           -           -           -           -          -          -         -        - 
  for 2019/20 
  proposed 
 
 

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

 
                     2020    2019    2018    2017    2016    2015    2014   2013    2012 
 Total dividends 
  paid per share      n/a    1.8p    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 2020   H1 2019   FY 2019   H1 2020   H1 2019   FY 2019 
                                    GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
---------------------------------  --------  --------  --------  --------  --------  -------- 
 
 Leeds Innovation Centre Limited 
  (1)                                     -        67        78         -        13         - 
 Nexus Leeds Limited (1)                115         -        73         5         -        19 
 Citi Logik Limited (2)                   -         -         -         -         -         - 
 Nutshell Software Limited 
  (2)                                    63       107       254         -         -        12 
 Vivacity Labs Limited (2)              176       101       202        51        69        36 
 WSP UK Limited                           5         -         -         -         -         - 
 
 
 
                                        Sale of                   Amounts owed by 
                                  goods and services              related parties 
 
                              H1 2020   H1 2019   FY 2019   H1 2020   H1 2019   FY 2019 
                              GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
---------------------------  --------  --------  --------  --------  --------  -------- 
 
 WSP UK Limited (3)             1,190     1,337     3,709        33        38     1,364 
 Citi Logik Limited (2)             -         -         -         -         -         - 
 Vivacity Labs Limited (2)         20         -         -         -         -         - 
 Nutshell Software Limited          -         -        10         -         -         - 
  (2) 
 

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

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

(3) 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. These figures are relevant to the Group and are provided to provide a comparison to similar businesses and are metrics used by Equities Analysts who cover the Group as they better reflect the underlying performance of the group, and its ability to generate cash. The largest components of the adjusting items, being depreciation, amortisation, share based payments, and share of associates are 'non cash' items and so separately analysed in order to assist with the understanding of underlying trading. 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      January        31 July 
                                               2020         2019           2019 
                                            GBP'000       GBP000         GBP000 
-------------------------------------   -----------  -----------  ------------- 
 Profit before tax                            2,419        2,121          6,559 
 Finance income / expense - net                (12)         (20)           (37) 
 Share-based payment charges                    566          474          1,034 
 Exceptional items                                -          177           (38) 
 Other operating income                           -            -          (260) 
 Amortisation of intangible assets            1,628          990          2,251 
 Depreciation                                   781          366            831 
 Share of result of equity accounted 
  investees                                     204          131            174 
 Adjusted EBITDA                              5,586        4,239         10,514 
--------------------------------------  -----------  -----------  ------------- 
 

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      January        31 July 
                                       2020         2019           2019 
                                    GBP'000       GBP000         GBP000 
-----------------------------   -----------  -----------  ------------- 
 Profit before tax                    2,419        2,121          6,559 
 Finance income / expense - 
  net                                  (12)         (20)           (37) 
 Share-based payment charges            566          474          1,034 
 Exceptional items                        -          177           (38) 
 Other operating income                   -            -          (260) 
 Amortisation of intangible 
  assets                              1,628          990          2,251 
 Share of result of equity 
  accounted investees                   204          131            174 
 Adjusted profit                      4,805        3,873          9,683 
------------------------------  -----------  -----------  ------------- 
 

Adjusted EBITDA reconciles to adjusted profit as set out below:

 
                     Six months   Six months 
                       ended 31     ended 31     Year ended 
                        January      January        31 July 
                           2020         2019           2019 
                        GBP'000       GBP000         GBP000 
-----------------   -----------  -----------  ------------- 
 Adjusted EBITDA          5,586        4,239         10,514 
 Depreciation             (781)        (366)          (831) 
 Adjusted profit          4,805        3,873          9,683 
------------------  -----------  -----------  ------------- 
 
   10        Contingent Consideration 

During the financial year ended 31 July 2019, the Group acquired Cash & Traffic Management Limited, Compass Informatics Limited and Bellvedi Limited. Under the share purchase agreements in place for each of these acquisitions, contingent consideration is payable which is linked to the profitability of the acquired businesses for a two to four year period post acquisition. The maximum amount payable is GBP750,000 for Cash & Traffic Management Limited, EUR2,000,000 for Compass Informatics Limited and GBP7,900,000 for Bellvedi Limited. The fair value of the amount payable was assessed at GBP600,000 for Cash & Traffic Management Limited, GBP1,132,000 for Compass Informatics Limited and GBP4,057,000 for Bellvedi Limited.

The movement on contingent consideration can be summarised as follows:

 
                                          31 January   31 January   31 July 
                                                2020         2019      2019 
                                              GBP000       GBP000    GBP000 
---------------------------------------  -----------  -----------  -------- 
 At the start of the year                      6,183        3,265     3,265 
 Arising on acquisition                            -        2,334     5,789 
 Cash payment                                   (57)      (2,065)   (2,149) 
 Release to Statement of Comprehensive 
  Income                                           -            -     (722) 
 At the end of the year                        6,126        3,534     6,183 
---------------------------------------  -----------  -----------  -------- 
 

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

 
                                  31 January   31 January   31 July 
                                        2020         2019      2019 
                                      GBP000       GBP000    GBP000 
-------------------------------  -----------  -----------  -------- 
 Payable in less than one year         1,151          834       879 
 Payable in more than one year         4,975        2,700     5,304 
 Total                                 6,126        3,534     6,183 
-------------------------------  -----------  -----------  -------- 
 
   11        Events after the Balance Sheet date 

On 10 March 2020, the Group acquired iBlocks Limited for an initial consideration of GBP14.0m plus additional performance consideration linked to future performance. The Group is currently evaluating the fair value of the assets and liabilities 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:    Nexus 
                       Discovery Way 
                       Leeds 
                       LS2 3AA 
 
 Directors:            Chris Cole (Non-Executive Chairman) 
                       Chris Barnes (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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