TIDMTRCS
RNS Number : 7263F
Tracsis PLC
09 November 2022
Tracsis plc
('Tracsis', 'the Company' or 'the Group')
Audited results for the year ended 31 July 2022
Tracsis, a leading provider of software, hardware, data
analytics/GIS and services for the rail, traffic data and wider
transport industries, is pleased to announce its audited final
results for the year ended 31 July 2022.
Financial Highlights:
-- Strong financial performance with high levels of organic and acquisitive growth
-- Revenue increased by 37% to GBP68.7m (2021: GBP50.2m)
o Organic revenue growth of 24%
o 63% revenue growth in Data, Analytics, Consultancy and Events
Division, including post-Covid recovery and contribution from
acquisitions
o Rail Technology and Services Division revenue increased by 13%
including the benefit from multi-year software contract wins that
went live during the year and the RailComm acquisition
-- Adjusted EBITDA* increased by 9% to GBP14.2m (2021: GBP13.0m)
-- Profit before tax of GBP2.6m (2021: GBP4.6m) after GBP3.1m of
exceptional items including increase in fair value of contingent
consideration and transaction costs associated with acquisition of
businesses
-- Total cash balances** of GBP17.2m with no debt (31 July 2021:
GBP25.4m) after GBP13.5m net investment in acquisitions, and
contingent and deferred consideration
-- Proposed final dividend of 1.1p per share, with total
dividend of 2.0p per share (2021: nil) consistent with the Group's
progressive dividend policy that was restored at the half-year
Operational Highlights:
-- Strong growth in rail technology software licence usage:
o First full deployment of TRACS Enterprise went live in summer
2022. Work continues on delivering our orderbook of further
deployments from previously announced contract wins
o Roll-out of RailHub enterprise software contract won in the
prior year progressing to plan and will more than double the user
base to c.40,000 individuals by late 2022
o 20% growth in user base of Centrix, our cloud-base Remote
Condition Monitoring data acquisition platform
-- Won several multi-year rail technology software contracts as
previously announced, that will support further revenue growth
-- Acquisition of RailComm LLC ("RailComm") a US based rail
technology software and services provider, giving direct access to
the large and growing North American market. RailComm has performed
well post acquisition
-- Strong post-Covid recovery of activities in Events and
Traffic Data, made possible by actions taken to safeguard these
businesses during the pandemic, and including some activities not
expected to repeat in the forthcoming financial year
-- Enhanced the Group's technology capabilities with the
acquisition of geoscience company Icon GEO, now fully
integrated
-- Formalised our sustainability strategy, with a target of
being carbon neutral by 2030 for scope 1 and scope 2 emissions from
Tracsis operations
-- Further progress in implementing a more integrated operating
model to support future growth, with continued investment in
management capability, people development, and common processes and
systems
* Earnings before net finance expense, tax, depreciation,
amortisation, exceptional items, other operating income,
share-based payment charges and share of result of equity accounted
investees. See note 6 for reconciliation.
** Cash and cash equivalents, and cash held in escrow
Chris Barnes, Chief Executive Officer, commented:
"I am pleased with the progress the Group has made this year in
executing its growth strategy.
We have delivered a financial performance aligned to our long
term strategic growth plan, with high levels of organic and
acquisitive growth. Our Rail Technology and Services Division has
won several multi-year software contracts, and in Data, Analytics,
Consultancy and Events we have seen a strong post-Covid recovery in
activity levels.
We have a growing pipeline of opportunities in both Divisions,
and we have expanded our addressable markets including our first
direct entry into the large and growing North America rail market
with the acquisition of RailComm. The post-acquisition performance
of this business has been particularly pleasing, with good revenue
and profit performance, new orders secured for its core products,
and an encouraging level of interest in products from elsewhere in
the Group that are already well established in the UK. These
opportunities leave us well placed to deliver further growth.
The UK rail industry's transition to a new Great British
Railways structure is ongoing and the overall objective is to
create a data-driven, customer-focused, safety-critical future for
the industry. Digital transformation will play a significant role
in the industry's transition and our range of rail technology
products and services is well placed to help the rail industry
deliver operational performance improvements and efficiency
savings.
We continue to invest in implementing a more integrated
operating model to help us to execute our growth strategy. I was
particularly pleased to see the launch of the OneTracsis leadership
development programme during the year, which is an important
initiative as part of our commitment to investing in developing our
people and growing the next generation of leaders in our business.
We are also making good progress in implementing a single groupwide
IT operating model, under the direction of an experienced
technology leader who has been recruited to further enhance senior
management bandwidth.
Tracsis is fully committed to delivering sustainable growth that
benefits the communities in which we, and our customers, operate.
The Group's products and services are well aligned with this
vision, and support our customers in delivering positive
environmental and social outcomes. This year we have formalised our
sustainability strategy and set ourselves the ambition of being
carbon neutral by 2030 for scope 1 and scope 2 emissions from
Tracsis operations.
Q1 trading is in line with the Board's expectations. We are
confident that there are strong growth prospects for all parts of
our Group and therefore remain committed to implementing our
overall strategic growth and investment plans. We will continue to
pursue organic and acquisitive growth supported by a strong balance
sheet."
Presentation and Overview videos
Tracsis is hosting an online presentation open to all investors
on Friday 11 November 2022 at 1.00pm UK time. Anyone wishing to
connect should register here: https://bit.ly/TRCS_FY22_results
A video overview of the results featuring CEO Chris Barnes and
CFO Andy Kelly is available to view here:
https://bit.ly/TRCS_FY22_overview
Tracsis will be presenting at the MelloLondon investor
conference on Wednesday 16 November 2022. Further information is
available here: MelloLondon ticket page - Mello Events
Demonstration videos of the Group's TRACS Enterprise, Remote
Condition Monitoring, Smart Ticketing, and Safety and Risk
Management rail technology products are available to view here:
Rail Technology Product Demonstration for Investors | Tracsis
Enquiries:
Tracsis plc Tel: 0845 125 9162
Chris Barnes, CEO / Andy Kelly, CFO
finnCap Ltd Tel: 020 7220 0500
Christopher Raggett / Charlie Beeson, Corporate Finance
Andrew Burdis / Sunila de Silva Corporate Broking
Alma PR Tel: 020 3405 0205
David Ison / Hilary Buchanan / Joe Pederzolli
tracsis@almapr.co.uk
Management Overview
Introduction
The Group has performed well during the year ended 31 July 2022,
delivering strong organic and acquisitive growth, winning new
multi-year software contracts that will support further growth in
recurring revenues, expanding its addressable rail market into
North America and its technology offering into earth observation,
and making further progress in implementing a more integrated
operating model.
Large multi-year software contract wins and deployments support
further Rail Technology and Services revenue growth
We continue to secure multi-year technology contracts in the
Rail Technology and Services Division that will support further
growth in annual recurring licence revenue consistent with our
strategy. During the year we secured new contracts for our TRACS
Enterprise, Centrix, Pay As You Go ("PAYG") smart ticketing and
delay repay technologies previously announced, and we have a strong
pipeline of further opportunities. We are also making good progress
in implementing large contracts that were won in previous years.
The first end-to-end deployment of TRACS Enterprise went live with
a large Train Operating Company ("TOC") in summer 2022, replacing
disparate legacy systems, and we have a pipeline of further
passenger and freight implementations for this product that are due
to go-live through the next two financial years. The roll-out of
the large RailHub contract won in July 2021 has been progressing to
plan and is on schedule to be completed before the end of 2022,
which will double the user base for this product to over 40,000
individuals. Post year-end we have secured further orders for the
next phase of development of the RailHub product. The conversion of
our large pipeline of opportunities is delivering growth in annual
recurring and routinely repeat revenue(+) . For the Rail Technology
and Services Division this increased in the year by 13% to
GBP21.1m.
(+) Recurring software licence revenue and annually repeating
hardware revenue from framework agreements.
Significant recovery completed in Events and Traffic Data
We have seen a significant recovery in activity levels in the
Events and Traffic Data businesses that were most impacted by
Covid-19. Both were able to respond quickly to improving market
demand as a result of the actions taken to safeguard those
businesses and protect jobs and skills during the pandemic.
Activity levels in Events returned to pre-pandemic levels in the
first half of the year and maintained this through the remainder of
the year. The final quarter in particular saw very high volumes as
demand for sporting and music events increased. The performance in
the year included some activities that are not expected to repeat
in the forthcoming financial year. The recovery in Traffic Data was
slower, however in this market we also saw demand return close to
pre-pandemic levels in the final quarter of the year. Activity
levels in this market are more sensitive to central and local
authority funding. Alongside the incremental contribution from the
acquisitions of Icon GEO in November 2021 and Flash Forward
Consulting in February 2021, this recovery in activity levels drove
extremely strong revenue growth in the Data, Analytics, Consultancy
and Events Division of 63%.
US growth strategy underway, with RailComm performing well
The acquisition of RailComm in March 2022 provides direct access
to the large and growing North American rail market. There are
opportunities to deliver growth both in RailComm's core markets of
rail yard automation and computer aided dispatching, as well as by
progressively marketing Tracsis' existing portfolio of rail
products and services. An experienced Tracsis rail managing
director has relocated to the US to oversee delivery of this growth
strategy.
RailComm has performed well since acquisition, delivering a good
revenue and profit performance and winning new contracts for its
core products. Implementation work continues on a number of large
projects with North American customers that will support further
revenue and profit growth. We are seeing good levels of interest in
our Remote Condition Monitoring, Movement Planner and Crew Calling
solutions that are already well established in the UK rail
market.
Continuing to build the foundations for future growth
The Group has made further good progress this year in
implementing a more integrated business model and adopting common
processes and systems. As part of our commitment to investing in
our people we have launched a 'OneTracsis' leadership development
scheme with 100 managers and senior leaders enrolled on an 18 month
programme that will also promote collaboration and innovation
across the Group. This is part of a comprehensive people strategy
that has been developed, under a new Group People Director, with a
focus on succession planning, talent acquisition, and reward &
benefits. We are expanding our shared services operating model by
implementing a single groupwide IT operating environment, under the
direction of a Group Managing Director who was recruited in the
year and is an experienced technology leader. Furthermore, we have
formalised our sustainability strategy and targets, with the goal
of making Tracsis carbon neutral for scope 1 and scope 2 emissions
by 2030.
Progress on Delivering our Strategy
Our vision for Tracsis is to become the leading provider of high
value, niche technology solutions and services that solve complex
problems which maximise efficiency in regulated industries. Our
business model remains focused on specialist offerings that have
high barriers to entry, are sold on a recurring basis under
contract, and to a retained customer base that is largely blue chip
in nature. Our strategy to achieve this is focused on four areas as
outlined below. We believe this strategy will allow Tracsis to
continue the growth trajectory it has achieved since IPO in 2007
and to deliver further significant value to shareholders in the
short, medium and longer term.
We have made good progress in executing this growth strategy
this year, which leaves the Group well positioned to deliver
further growth. Key progress against the objectives for each of our
four strategic priorities is summarised in the table below:
Strategic Progress in 2022 Future Focus
Priority
Drive Organic
Growth * 24% organic revenue growth for the Group * Complete deployments of TRACS Enterprise contracts
Delivery of won in previous years where development work is
our pipeline, underway
continual * Multi-year TRACS Enterprise contract wins with two UK
innovation passenger operators, and our first contract win in
of products the rail freight sector * Secure further multi-year rail technology contracts
and services, across all product lines
flawless high
quality * New smart ticketing contract won and implemented with
delivery and a large passenger Train Operating Company ("TOC"). * Leverage RailComm to cross-sell existing Tracsis
an excellent Two new delay repay contracts also secured and products and services into North America
close working implemented with UK TOCs.
relationship
with our * Continued investment in software & technology product
customers * Large multi-year Centrix software contract win in development
Remote Condition Monitoring and an extension to our
long-running data logger framework contract
* Support UK Rail Industry to deliver the strategic
vision outlined in the Williams-Shapps plan
* Roll-out of RailHub enterprise software contract won
in previous financial year progressing to plan and
will more than double the user base to c.40,000
individuals by late 2022
* First full deployment of TRACS Enterprise went live
in summer 2022; work continues on implementing other
TRACS Enterprise contracts due to go-live over the
next 2 years
* Large pipeline of rail technology contract
opportunities
* Strong post-Covid recovery of activities in Events
and Traffic Data, made possible by actions taken to
safeguard these businesses during the pandemic
------------------------------------------------------------ ------------------------------------------------------------
Expand
Addressable * RailComm acquisition provides direct access to a * Execute growth strategy for North America
Markets significant number of rail clients in the large and
Selling our growing North American market
products * Continued growth in data informatics/GIS
and services
into new * Secured new contract wins in both Icon GEO and
markets, RailComm post acquisition * Targeted growth opportunities overseas or in adjacent
including markets
overseas, and
expansion * Further growth from Compass Informatics
into selected
sectors
that share
problems
with the
industries
we currently
serve
------------------------------------------------------------ ------------------------------------------------------------
Enhance
Growth * Acquisition of RailComm providing direct access to * Active pursuit of M&A to extend rail software and
Through North American market technology footprint - focus on recurring revenue
Acquisition growth
Reinvesting
Group * Expanded technology addressable market into Earth
profits to Observation through Icon acquisition
fund further
accretive
acquisitions * Further potential targets evaluated
that meet our
disciplined
investment
criteria
------------------------------------------------------------ ------------------------------------------------------------
Integration
and * Developed a comprehensive people strategy to attract, * Execution of people strategy, including further
Capability retain and develop talent development programmes
Enhanced
integration
and * Enhanced management capability and bandwidth with * Complete IT transformation
collaboration recruitment of Group Managing Director
across
the Group, * Further R&D collaboration via Innovation Hub
increasing * Launched 'OneTracsis' leadership training programme
management
capability * Implement ISO 14001 (Environmental management)
and * Started workstream to implement a single groupwide IT
bandwidth, operating model
and * Continued alignment of groupwide systems and
improving our processes
systems * ESG strategy and targets agreed
and
processes, as
key * Developed Hopsta PAYG smart ticketing app through
foundations Innovation Hub programme
to deliver
our growth
strategy * Icon GEO acquisition fully integrated
------------------------------------------------------------ ------------------------------------------------------------
Trading Progress and Prospects
Rail Technology & Services
Summary segment results:
Revenue GBP29.9m (2021: GBP26.4m)
Adjusted EBITDA* GBP9.8m (2021: GBP9.1m)
Profit before Tax GBP4.8m (2021: GBP5.0m)
Activity levels in our Rail Technology & Services Division
remain high, which has driven further revenue growth. All parts of
the Division won new contracts in the year, many of which went live
with customers in the second half of the year, and we have a strong
pipeline of additional multi-year software opportunities. Work has
also continued on implementing contracts won in previous years,
including the first go-live of the end-to-end TRACS Enterprise
solution in summer 2022 and the ongoing roll-out of the large
RailHub enterprise software contract that was won in the previous
financial year and is due to be completed before the end of
2022.
Total revenue of GBP29.9m was 13% higher than prior year as a
result of strong organic growth in our Rail Operations &
Planning and Customer Experience businesses, as well as a good
initial contribution from RailComm. Revenue in both our Remote
Condition Monitoring ("RCM") business and our safety and risk
management business (OnTrac) was lower than the record levels
achieved in the prior year, reflecting the typical investment cycle
in RCM and the timing of a large licence contribution in the prior
year in OnTrac. Both businesses are well positioned to deliver
growth in the coming year.
As a result of the new contract wins and the deployment of
contacts won in previous years, annual recurring and routinely
repeating revenue in the Rail Technology & Services Division
increased by 13% to GBP21.1m.
Adjusted EBITDA* increased by 8% to GBP9.8m (2021: GBP9.1m).
Profit before Tax decreased by GBP0.2m after GBP0.4m of
transaction costs related to the acquisition of RailComm (2021:
GBPnil) and GBP0.4m increase in the amortisation of acquired
intangible assets.
The industry's transition to a new Great British Railways
structure, which aims to create a data-driven, customer-focused,
safety-critical future for the industry, is ongoing, and we have
been asked at senior client level to formally input our ideas into
how the UK can achieve this vision. This demonstrates the value the
industry attaches to Tracsis' expertise and range of rail
technology products, which offer a compelling and, in some cases,
unique value proposition. Digital transformation will play a
significant role in the rail industry's transition and our range of
products and services is well placed to help the industry deliver
operational performance improvements and efficiency savings.
Rail Operations & Planning
Total revenues from the Group's rail operations & planning
software and hosting offerings grew by 17% to GBP12.7m (2021:
GBP10.9m). This includes the various revenue streams from our
TRACS, ATTUne, COMPASS and Retail & Operations product suites.
We continue to benefit from high renewal rates from existing
customers. The strong revenue growth was mainly driven by new
multi-year TRACS Enterprise contracts won in the year, which were
previously announced and which we are currently implementing for
our clients.
Our focus on these projects is to work closely with our
customers as a partner to deliver significant value over the
long-term. Delivery timelines in this sector are typically
determined in partnership with our customers.
Work has also continued on implementing contracts won in
previous years. The first end-to-end implementation of all TRACS
Enterprise modules went live with a customer in the summer of 2022.
We expect the second to be completed in 2023.
The TRACS Enterprise contract wins have also resulted in
increased contribution from Bellvedi, that was acquired in 2019. As
a result the fair value of contingent consideration payable in
respect of this acquisition has increased.
We have a strong pipeline of new multi-year TRACS Enterprise
opportunities in both the passenger and freight sectors of the
industry.
Digital Railway & Infrastructure
Total revenues across the Digital Railway and Infrastructure
offerings were GBP13.3m (2021: GBP13.0m). This includes revenue
from RailComm following its acquisition in March 2022, as well as
from Remote Condition Monitoring ("RCM") within MPEC and from our
RailHub safety and risk management product suites within OnTrac.
Both MPEC and OnTrac delivered record levels of revenue in the
prior year. Whilst these were not repeatable in FY 21/22 as
anticipated, reflecting the investment cycle of its UK customer
base which consists of 5 year 'Control Periods', both businesses
are well positioned for future growth and the lower revenue was
more than offset by a strong post-acquisition performance from
RailComm.
We saw lower RCM volumes in the first half of the year which was
consistent with the historic investment cycle trend of its UK
customer base. Activity levels increased in the second half of the
year, and revenue over this period was at a similar level to the
second half of the prior financial year. Having secured a large
multi-year Centrix contract and the extension of our long-running
RCM data logger framework contract as previously announced, the
business is well placed to deliver growth moving forward.
OnTrac revenue was lower than the prior year which included a
large, high margin RailHub licence sale. Activity was dominated by
the roll-out of this product with our customer which has delivered
implementation and support revenue in the year. This has been
proceeding according to plan and is expected to be completed before
the end of 2022, at which point the user base for our RailHub
product will have more than doubled to over 40,000 individuals.
There is a growing pipeline of future opportunities for the RailHub
platform including additional functionality that is being developed
by Tracsis and the opportunity to host third party applications on
the platform. Post year end we have secured new orders for the next
phase of development of the RailHub product, and work on these is
underway.
RailComm has delivered a strong revenue contribution for the
period under Tracsis ownership. This includes completion of some
large project milestones that were in the business' order book on
acquisition. Implementation work is underway on several other large
rail technology projects, and since acquisition the business has
also won several new contracts in the North American market that
will support ongoing revenue and profit growth. RailComm also opens
up direct access into North America for Tracsis' existing portfolio
of rail products and services. We see RCM as the initial area of
focus here, and an experienced Tracsis managing director has
relocated to the US to oversee these growth opportunities.
Rail Customer Experience
There was very strong growth from our Customer Experience
products, with revenue increasing by 56% to GBP3.9m (2021:
GBP2.5m). This was mainly driven by the 'go-live' in H2 of the
financial year of new contract wins that were previously announced
- one with a UK TOC for our Pay As You Go (PAYG) smart ticketing
solution, and two further delay repay contracts. This part of the
Group also benefitted from increased delay repay transaction
volumes across its existing customer base as rail passenger numbers
recovered post Covid-19.
We are seeing increased interest in iBlocks' smart ticketing
product offering that is well aligned with passenger requirements
and with the UK Government's strategic intent to deliver increased
PAYG, multi-modal ticketing as outlined in the Williams-Shapps plan
for Rail. Through our Innovation Hub R&D incubator, iBlocks has
developed a mobile app ("Hopsta") that puts this technology
directly in the hands of the consumer and avoids the requirement
for expensive gateline infrastructure. The first pilots of this
product with train operators are expected to start during financial
year 22/23.
Data, Analytics, Consultancy & Events
Summary segment results:
Revenue GBP38.8m (2021: GBP23.8m)
Adjusted EBITDA* GBP4.4m (2021: GBP3.9m)
Profit before Tax GBP1.8m (2021: GBP1.9m)
We have seen a significant recovery in activity levels in the
Events and Traffic Data businesses that were most impacted by
Covid-19. As a result of the actions taken during the pandemic to
protect jobs, look after our people, and safeguard these
businesses, we have been able to respond quickly to this increase
in demand, and both businesses are currently operating at monthly
run rates close to pre-pandemic levels. In Events we benefitted
from certain activities that are not expected to repeat in the
forthcoming financial year. The Division has also benefitted from
the incremental contribution from the acquisitions of Flash Forward
Consulting in February 2021 and Icon GEO in November 2021 and both
businesses have been fully integrated into the Group. After
excluding the growth from acquisition, organic revenue growth for
the Division was GBP12.1m (51%). This also included underlying
growth in both Compass Informatics and in Transport Insights.
Adjusted EBITDA increased by 12% to GBP4.4m (2021: GBP3.9m). The
prior period included GBP0.9m of support to the Income Statement
from the Coronavirus Job Retention Scheme ("CJRS"). We did not take
any CJRS support in the financial year ended 31 July 2022.
Data Analytics / GIS
Revenue increased to GBP7.9m (2021: GBP5.7m) which includes the
incremental contribution from Icon GEO as well as continued
underlying growth in Compass Informatics. Icon GEO has been fully
integrated within this business to create an Irish-based Data
Analytics centre of excellence with c.130 staff specialising in
providing location-related technologies, earth observation and
analytics solutions to government and commercial organisations. The
combined business has secured additional contracts with government
agencies in Ireland based on the combined skillset and service
offering it can now offer.
Transport Insights
Revenue of GBP5.2m was 49% higher than prior year (2021:
GBP3.5m). After adjusting for the year-on-year benefit from the
acquisition of Flash Forward Consulting in February 2021, this
represents organic growth of c22% across the expanded range of
consulting and specialist services this business offers in the
transport space. We are seeing ongoing strong demand for our
specialist timetabling and rail performance expertise.
Traffic Data
Revenue increased by 29% to GBP9.9m (2021: GBP7.7m) with
activity levels steadily increasing as Covid-related restrictions
were eased. The return of some restrictions linked with the Omicron
variant did present some headwinds in the first half of the
financial year, with work being postponed or cancelled as the
prevailing traffic conditions were not representative of client
needs. There has been a steady recovery of activity levels through
the second half of the financial year, and the final quarter was
particularly strong. The business is now operating at close to the
monthly run-rate seen pre-pandemic although some month-to-month
variability in demand remains and activity levels in this market
are more sensitive to central and local authority funding.
Event Transport Planning & Management
The Events business delivered a very strong performance, with
record revenue of GBP15.7m (2021: GBP6.9m). Activity levels in its
market returned to pre-pandemic levels very quickly, with high
demand for sporting and music events particularly in the final
quarter of the financial year. We were able to quickly respond to
this increased in demand as a result of actions taken to protect
the business during the pandemic. We continued to support Covid
testing and vaccination centres which delivered cGBP1.4m revenue in
the period and is not expected to repeat.
Financial Summary
Group revenue of GBP68.7m was GBP18.5m (37%) higher than the
prior year (2021: GBP50.2m), reflecting strong organic and
acquisitive growth. Revenue in the Data, Analytics, Consultancy and
Events Division increased by GBP15.0m (63%) principally as a result
of a strong post-Covid recovery in Events and Traffic Data. There
was also strong revenue growth in both our Transport Insights and
Data Analytics/GIS businesses, including the benefit from the
acquisition of Icon GEO in November 2021. Revenue in the Rail
Technology and Services Division was GBP3.5m (13%) higher than
prior year, which includes strong organic growth in our Rail
Operations & Planning and Customer Experience businesses as
well as the benefit from the acquisition of RailComm in the
year.
Adjusted EBITDA* of GBP14.2m was GBP1.2m (9%) higher than prior
year (2021: GBP13.0m), which included GBP0.9m of support to the
Income Statement from the Coronavirus Job Retention Scheme
("CJRS"). No claims have been made under the CJRS in this financial
year. Excluding the CJRS benefit in the prior year, adjusted
EBITDA* increased by 17%. Adjusted EBITDA* margin of 20.6% was
lower than the prior year as anticipated (2021: 25.8%) reflecting
the increased mix of revenue from the post Covid recovery in Data,
Analytics, Consultancy and Events.
Statutory profit before tax of GBP2.6m is GBP2.0m lower than
prior year (2021: GBP4.6m) after GBP3.1m of exceptional items
(FY21: GBP1.1m). These principally reflect an increase in the fair
value of contingent consideration following strong underlying
trading performance in Bellvedi (part of our Rail Operations &
Planning business), as well as transaction costs associated with
acquisitions made in the year.
In addition to the GBP1.2m increase in adjusted EBITDA*
described above, the movement in profit before tax reflects the
following items:
-- GBP1.8m depreciation charge at a similar level to the prior year (2021: GBP1.6m);
-- GBP5.0m amortisation of intangible assets (2021: GBP4.3m).
The increase versus prior year includes charges relating to the
acquisitions of Icon GEO in November 2021 and RailComm in March
2022, as well as a full year charge from the acquisition of Flash
Forward Consulting in February 2021;
-- GBP1.5m share based payment charges (2021: GBP1.3m);
-- GBP3.1m exceptional items (2021: GBP1.1m) representing: a net
GBP1.8m increase in the assessed fair value of contingent
consideration based on the future expectations of performance from
previous acquisitions (2021: GBP0.3m) which principally relates to
the expected performance from Bellvedi in the final year of its
earnout; GBP0.8m unwinding of previously discounted contingent
consideration balances in accordance with IFRS accounting standards
(2021: GBP0.7m); GBP0.6m of transaction costs associated with the
acquisitions of Icon GEO (GBP0.2m) and RailComm (GBP0.4m) (2021:
GBP0.1m relating to the acquisition of Flash Forward Consulting);
and GBP0.1m impairment charge relating to an equity accounted
investee (2021: GBPnil); partly offset by GBP0.2m credit relating
to the fair value adjustment and subsequent gain on settlement of a
financial liability (2021: GBPnil);
-- GBP0.1m net finance expense (2021: GBP0.1m); and
-- GBP0.6m charge (2021: GBP0.4m) relating to the share of the
result of equity accounted investees
Adjusted diluted earnings per share increased by 4% to 32.3
pence (2021: 30.9 pence). Statutory diluted earnings per share was
5.0 pence (2021: 7.8 pence).
Cash Generation
The Group continues to have significant levels of cash and
remains debt free. At 31 July 2022 the Group's cash balances,
including balances held in escrow, were GBP17.2m (2021: GBP25.4m).
Cash generation remains strong.
Cash generated from operations was GBP9.5m (2021: GBP10.8m)
after a net GBP4.0m increase in working capital (2021: GBP2.0m
increase). This reflects normal trading patterns and includes an
increase in trade receivables in the final trading months of the
year following the strong post-Covid recovery in Events and Traffic
Data. The Group has not had any material bad debt incidences. There
was GBP0.6m cash outflow on transaction costs for acquisitions
completed in the year (2021: GBP0.1m). Adjusted EBITDA* includes
GBP0.1m profit on disposal of plant and equipment (2021:
<GBP0.1m).
Net capital expenditure increased to GBP1.0m (2021: GBP0.3m)
which principally reflects the post-Covid recovery in activity
levels in Events and Traffic Data, as well as investment in IT
assets. Net lease liability payments of GBP1.4m were GBP0.2m higher
than prior year (2021: GBP1.2m) which includes the effect of
acquisitions. Tax paid of GBP1.3m was at a similar level to the
prior year (2021: GBP1.4m),
As a result free cash flow* was GBP5.8m (2021: GBP7.8m)
Free Cash Flow*
Year Year
Ended ended
31 July 31 July
2022 2021
GBP'm GBP'm
---------------------------------- -------- --------
Adjusted EBITDA * 14.2 13.0
Changes in working capital (4.0) (2.0)
Other adjustments(1) (0.7) (0.2)
---------------------------------- -------- --------
Cash generated from operations 9.5 10.8
Purchase of plant and equipment
(net of proceeds from disposal) (1.0) (0.3)
Lease liability payments (net
of lease receivable receipts) (1.4) (1.2)
Tax paid (1.3) (1.4)
Other(2) - (0.1)
Free Cash Flow* 5.8 7.8
---------------------------------- -------- --------
(*) Net cash flow from operating activities after purchase of
plant and equipment, proceeds from disposal of plant and equipment,
proceeds from exercise of share options, lease liability payments,
and lease liability receipts
(1) Includes cash outflows on exceptional items (see note 9) and
profit on disposal of plant & equipment
(2) Includes net interest received or paid and proceeds from
exercise of share options
The Group invested GBP9.1m in the acquisitions of Icon GEO and
RailComm, net of cash acquired (2021: (GBP0.1m)) and there was a
further outflow of GBP0.3m relating to deferred consideration for
the prior year acquisition of Flash Forward Consulting (2021: nil).
Cash payments of GBP4.1m (2021: GBP0.4m) were made in the year
relating to contingent consideration on the previous acquisitions
of: Bellvedi, part of Rail Operations & Planning, GBP3.5m; Cash
& Traffic Management Limited, part of Events, GBP0.3m; and
Compass Informatics Limited, part of Data Analytics/GIS, GBP0.3m.
GBP0.4m was paid to repurchase "A" shares in Tracsis Rail
Consultancy, as described below (2021: nil). Dividends paid to
shareholders were GBP0.3m (2021: nil) and there was a GBP0.2m
favourable impact from foreign exchange (2021: GBP0.1m
adverse).
As a result, total cash balances decreased by GBP8.2m to
GBP17.2m. GBP2.2m of this is held in escrow following the
acquisition of RailComm and will be payable during the year ending
31 July 2023 to satisfy any contingent consideration associated
with this acquisition.
Acquisitions & Other Corporate Activity
Icon GEO
On 3 November 2021 the Group acquired The Icon Group Limited
("Icon GEO"). Headquartered in Dublin, Icon GEO is an
interdisciplinary geosciences business specialising in earth
observation, geographical information systems, and spatial data
analytics. The acquisition consideration comprised an initial cash
payment of EUR2.2m (GBP1.9m) which was funded out of Tracsis cash
reserves, a further cash payment to reflect the working capital
position of the business (above a working capital hurdle) on
completion totalling EUR2.2m (GBP1.9m) and the issue of 68,762 new
ordinary shares in Tracsis plc to a value of EUR0.8m (GBP0.6m).
Additional contingent consideration of up to EUR1.8m (GBP1.5m) is
payable subject to Icon GEO achieving certain stretched financial
targets in the three years post acquisition.
RailComm LLC & RailComm Associates Inc
The Group acquired RailComm LLC and its wholly owned subsidiary
RailComm Associates Inc (together "RailComm") on 11 March 2022.
Headquartered in Fairport, New York and established in 1999,
RailComm provides mission critical automation and control solutions
that reduce costs, increase safety, and improve operational
efficiency for rail passenger/freight operators and rail served
ports/industrials. The acquisition consideration comprised an
initial cash payment of $11.5m (GBP8.8m) which was funded out of
Tracsis cash reserves. Additional contingent consideration of up to
$2.7m (GBP2.2m) is payable subject to RailComm achieving certain
financial targets in the first full year post acquisition through
to 31 March 2023. This cash is being held in escrow through that
period.
Tracsis Rail Consultancy
In the previous financial year the Group acquired Flash Forward
Consulting Limited. As part of the transaction the sellers were
allotted 10,225 "A" shares in Tracsis Rail Consultancy Limited. The
"A" shares have full dividend and capital distribution rights
attached but do not have any voting rights attached to them. "A"
shares guarantee the holder a dividend each financial year. The
fair value of this liability at 31 July 2021 was assessed as
GBP590,000. On 17 June 2022 the Group acquired all of these "A"
shares in return for a cash payment of GBP416,000. The fair value
of the "A" shares at this date was GBP463,000. A fair value
adjustment of GBP127,000 and a gain on purchase of GBP47,000 have
been recognised in exceptional items in the year.
Dividend
The Group remains committed to the progressive dividend policy
that was adopted in 2012. In the financial year ended 31 July 2022,
we have seen a strong recovery in activity levels in those parts of
the Group most impacted by Covid-19, and we did not utilise the UK
Government's CJRS scheme. In this context the Board has recommended
a final divided of 1.1 pence per share. The final dividend, subject
to shareholder approval at the forthcoming Annual General Meeting,
will be paid on 10 February 2023 to shareholders on the register at
the close of business on 27 January 2023. This will bring the total
dividend for the year to 2.0 pence per share.
Board
Jill Easterbrook was appointed to the Board as a Non-Executive
Director on 5 October 2022. Lisa Charles-Jones will step down from
the Board on 31 December 2022 after six years with the Group. Lisa
will be succeeded as Chair of the Remuneration Committee by Jill
Easterbrook at this date.
Outlook
Our end market drivers are strong and Tracsis' products and
services are well aligned with these drivers. We deliver positive
benefit cases to our clients by enabling them to deliver
mission-critical activities with increased efficiency, enhanced
performance, higher productivity, and improved safety.
The Group has a clear growth strategy and has a strong balance
sheet to support its delivery. We are making good progress in
implementing this strategy, including winning new multi-year
software contracts, and continuing to deliver on contracts won in
previous years. We recognise the need to continue to integrate the
Group's activities, technologies and operating model in order to
provide a solid platform for ongoing scalable growth. We have made
good progress in the year and will continue to invest in this
area.
M&A remains a core part of our strategy and we have taken an
important step in the year with our first acquisition in North
America. This further increases our addressable markets and
diversifies our growth opportunities. We will continue to actively
pursue further M&A opportunities, with a focus on extending our
software and technology footprint and enhancing recurring revenue
growth.
Q1 trading has been in line with the Board's expectations and
the Group remains well positioned to deliver further growth in the
coming financial year and beyond.
Chris Cole Chris Barnes
Non-Executive Chairman Chief Executive Officer
8 November 2022
Consolidated Statement of Comprehensive Income for the year
ended 31 July 2022
2022 2021
Group excluding Acquisitions Total Total
in-year in-year
acquisitions
Notes GBP000 GBP000 GBP000 GBP000
----------------------- ----------------- ---------------- ------------- ------------ ---------
Revenue 3 63,380 5,343 68,723 50,237
Cost of sales (25,246) (1,237) (26,483) (15,424)
----------------------- ----------------- ---------------- ------------- ------------ ---------
Gross profit 38,134 4,106 42,240 34,813
Administrative costs (34,649) (4,336) (38,985) (29,657)
------------------------------------------ ---------------- ------------- ------------ ---------
Adjusted EBITDA* 3,6 13,018 1,143 14,161 12,978
Depreciation (1,700) (67) (1,767) (1,603)
----------------------- ----------------- ---------------- ------------- ------------ ---------
Adjusted profit
** 6 11,318 1,076 12,394 11,375
Amortisation of intangible
assets (4,253) (747) (5,000) (4,269)
Other operating income 426 - 426 440
Share-based payment charges (1,502) - (1,502) (1,276)
---------------- ------------- ------------ ---------
Operating profit before
exceptional items 5,989 329 6,318 6,270
Exceptional
items: 9
Impairment losses (49) - (49) -
Other (2,455) (559) (3,014) (1,114)
----------------------- ----------------- ---------------- ------------- ------------ ---------
Operating profit/(loss) 3,485 (230) 3,255 5,156
Net finance expense (132) (9) (141) (87)
Share of result of equity
accounted investees (556) - (556) (434)
Profit/(loss)
before tax 3 2,797 (239) 2,558 4,635
Taxation (987) (69) (1,056) (2,279)
Profit/(loss) after tax 1,810 (308) 1,502 2,356
------------------------------------------ ---------------- ------------- ------------ ---------
Other comprehensive (expense)/income
Items that are or may be
reclassified subsequently
to profit or loss
Foreign currency translation
differences 423 - 423 (126)
Items not to be reclassified
to profit and loss in subsequent
period
Revaluation of financial
assets (50) - (50) -
---------------- ------------- ------------ ---------
Total comprehensive income/(expense)
for the year 2,183 (308) 1,875 2,230
------------------------------------------ ---------------- ------------- ------------ ---------
Earnings per Ordinary Share
Basic 4 5.09p 8.06p
Diluted 4 4.95p 7.82p
-------------------------------------- ---------------- ------------- ------------ ---------
* Earnings before net finance expense, tax, depreciation,
amortisation, exceptional items, other operating income,
share-based payment charges and share of result of equity accounted
investees - see note 6
** Earnings before net finance expense, tax, amortisation,
exceptional items, other operating income, share-based payment
charges and share of result of equity accounted investees - see
note 6
Consolidated Balance Sheet as at 31 July 2022
2022 2021
Note GBP000 GBP000
------------------------------------------- ----- -------- -------
Non-current assets
Property, plant and equipment 4,897 3,540
Intangible assets 65,867 51,745
Investments - equity - 50
Investments in equity accounted investees - 605
Deferred tax assets 410 551
71,174 56,491
------------------------------------------- ----- -------- -------
Current assets
Inventories 1,090 381
Trade and other receivables 18,454 11,263
Cash held in escrow 2,217 -
Cash and cash equivalents 14,970 25,387
------------------------------------------- ----- -------- -------
36,731 37,031
------------------------------------------- ----- -------- -------
Total assets 107,905 93,522
------------------------------------------- ----- -------- -------
Non-current liabilities
Lease liabilities 1,476 1,131
Contingent consideration payable 8 736 3,220
Deferred consideration payable 8 297 584
Deferred tax liabilities 10,671 8,517
------------------------------------------- ----- -------- -------
13,180 13,452
------------------------------------------- ----- -------- -------
Current liabilities
Lease liabilities 1,291 928
Trade and other payables 24,092 17,007
Contingent consideration payable 8 8,585 4,689
Deferred consideration payable 8 308 308
Current tax liabilities - 473
------------------------------------------- ----- -------- -------
34,276 23,405
------------------------------------------- ----- -------- -------
Total liabilities 47,456 36,857
------------------------------------------- ----- -------- -------
Net assets 60,449 56,665
------------------------------------------- ----- -------- -------
Equity attributable to equity holders
of the company
Called up share capital 119 117
Share premium reserve 6,436 6,401
Merger reserve 6,161 5,525
Retained earnings 47,448 44,710
Translation reserve 335 (88)
Fair value reserve (50) -
------------------------------------------- ----- -------- -------
Total equity 60,449 56,665
------------------------------------------- ----- -------- -------
Consolidated Statement of Changes in Equity
Share Share Merger Retained Translation Fair Total
Capital Premium Reserve Earnings Reserve Value
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
--------------------- --------- --------- --------- ---------- ------------ --------- ---------
At 1 August
2020 116 6,373 5,420 41,078 38 - 53,025
Profit for
the year - - - 2,356 - - 2,356
Other comprehensive
income - - - - (126) - (126)
--------------------- --------- --------- --------- ---------- ------------ --------- ---------
Total comprehensive
income - - - 2,356 (126) - 2,230
--------------------- --------- --------- --------- ---------- ------------ --------- ---------
Transactions
with owners:
Share based
payment charges - - - 1,276 - - 1,276
Exercise of
share options 1 28 - - - - 29
Shares issued
as consideration
for business
combinations - - 105 - - - 105
At 31 July
2021 117 6,401 5,525 44,710 (88) - 56,665
--------------------- --------- --------- --------- ---------- ------------ --------- ---------
At 1 August
2021 117 6,401 5,525 44,710 (88) - 56,665
Profit for
the year - - - 1,502 - - 1,502
Other comprehensive
income - - - - 423 (50) 373
--------------------- ---- ------ ------ ------- ----- ----- -------
Total comprehensive
income - - - 1,502 423 (50) 1,875
--------------------- ---- ------ ------ ------- ----- ----- -------
Transactions
with owners:
Dividends - - - (266) - - (266)
Share based
payment charges - - - 1,502 - - 1,502
Exercise of
share options 2 35 - - - - 37
Shares issued
as consideration
for business
combinations - - 636 - - - 636
At 31 July
2022 119 6,436 6,161 47,448 335 (50) 60,449
--------------------- ---- ------ ------ ------- ----- ----- -------
Consolidated Cash Flow Statement for the year ended 31 July
2022
2022 2021
Notes GBP000 GBP000
----------------------------------------------- ------ --------- --------
Operating activities
Profit for the year 1,502 2,356
Net finance expense 141 87
Depreciation 1,767 1,603
Profit on disposal of plant and equipment (70) (46)
Non cash exceptional items 2,441 985
Other operating income (426) (440)
Amortisation of intangible assets 5,000 4,269
Share of result of equity accounted
investees 556 434
Income tax charge 1,056 2,279
Share based payment charges 1,502 1,276
----------------------------------------------- ------ --------- --------
Operating cash inflow before changes
in working capital 13,469 12,803
Movement in inventories (233) 49
Movement in trade and other receivables (4,103) (4,796)
Movement in trade and other payables 383 2,784
Cash generated from operations 9,516 10,840
Interest received 6 7
Interest paid - (74)
Income tax paid (1,334) (1,417)
----------------------------------------------- ------ --------- --------
Net cash flow from operating activities 8,188 9,356
----------------------------------------------- ------ --------- --------
Investing activities
Purchase of plant and equipment (1,129) (400)
Proceeds from disposal of plant and
equipment 123 88
Acquisition of subsidiaries (net of
cash acquired) 7 (9,097) 127
Payment of contingent consideration 8 (4,126) (410)
Cash held in escrow for payment of contingent (2,217) -
consideration
Payment of deferred consideration 8 (315) -
Net cash flow used in investing activities (16,761) (595)
----------------------------------------------- ------ --------- --------
Financing activities
Dividends paid 5 (266) -
Proceeds from exercise of share options 37 27
Settlement of financial liability (416) -
Lease liability payments (1,421) (1,260)
Lease receivable receipts 32 32
Net cash flow used in financing activities (2,034) (1,201)
----------------------------------------------- ------ --------- --------
Net (decrease)/increase in cash and
cash equivalents (10,607) 7,560
Exchange adjustments 190 (93)
Cash and cash equivalents at the beginning
of the year 25,387 17,920
Cash and cash equivalents at the end
of the year 14,970 25,387
----------------------------------------------- ------ --------- --------
Notes to the Consolidated Financial Statements
1 Financial information
The financial information set out herein does not constitute the
Group's statutory accounts for the 12 months 31 July 2022 or the
year ended 31 July 2021 within the meaning of sections 434 of the
Companies Act 2006, but is derived from those accounts. The audited
accounts for the year ended 31 July 2022 will be posted to all
shareholders in due course and will be available on the Group's
website. The auditors have reported on those accounts and expressed
an unmodified audit opinion which did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The financial information for the year ended 31 July 2021 is
derived from the statutory accounts for that year, which have been
delivered to the Registrar of Companies. The auditors have reported
on those accounts and expressed an unmodified audit opinion which
did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
Selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the
changes in financial position and performance of the Group.
2 Basis of preparation
(a) Statement of compliance
The Group consolidated financial statements have been prepared
in accordance with UK adopted international accounting standards
("IFRSs").
(b) Basis of measurement
The Accounts have been prepared under the historical cost
convention, with the exception of the valuation of investments,
contingent consideration, financial liabilities and initial
valuation of assets and liabilities acquired in business
combinations which are included on a fair value basis.
(c) Presentation currency
These consolidated financial statements are presented in
sterling. All financial information presented in sterling has been
rounded to the nearest thousand.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision only
affects that period, or in the period of the revision and future
periods, if the revision affects both current and future
periods.
(e) Accounting developments
The Group financial statements have been prepared and approved
by the directors in accordance with UK adopted international
accounting standards ("IFRSs"). The accounting policies have been
applied consistently to all periods presented in the consolidated
financial statements, unless otherwise stated.
There are no new standards, amendments to existing standards or
interpretations that are not yet effective that are expected to
have a material impact on the Group.
(f) Going concern
The Group is debt free and has substantial cash resources. At 31
July 2022 the Group had net cash and cash equivalents totalling
GBP15.0m, with a further GBP2.2m held in an escrow account for
settlement of contingent consideration relating to the Railcomm
acquisition. The Board has prepared cash flow forecasts for the
period through to December 2023 based upon assumptions for trading
and the requirements for cash resources, these forecasts take into
account reasonably possible changes in trading financial
performance.
Further to this, management prepared a severe but plausible
scenario, reducing revenues from budget and including a more
pessimistic view of working capital. There was still ample headroom
under this scenario. A reverse stress test was also considered. The
revenue and cashflow assumptions required to eliminate any headroom
under the reverse stress test are considered by the Board to be
highly unlikely and particularly given trading performance to
date.
Based upon this analysis, the Board has concluded that the Group
has adequate working capital resources and that it is appropriate
to use the going concern basis for the preparation of the
consolidated financial statements.
3 Revenue and Segmental analysis
a) Revenue
Sales revenue is summarised below:
2022 2021
GBP000 GBP000
--------------------------------------- ------- -------
Rail Technology & Services 29,935 26,424
Data, Analytics, Consultancy & Events 38,788 23,813
Total revenue 68,723 50,237
--------------------------------------- ------- -------
Revenue can also be analysed as follows:
2022 2021
GBP000 GBP000
------------------------------------------ ------- -------
Software and related services 22,088 20,980
Data, Analytics, Consultancy, and Events 38,788 23,813
Other 7,847 5,444
Total 68,723 50,237
------------------------------------------ ------- -------
Major customers
Transactions with the Group's largest customer represent 12% of
the Group's total revenues (2021: 17%).
Geographic split of revenue
A geographical analysis of revenue is provided below:
2022 2021
GBP000 GBP000
------------------- ------- -------
United Kingdom 55,849 43,965
Ireland 8,827 5,449
Rest of Europe 280 338
North America 3,343 189
Rest of the World 424 296
Total 68,723 50,237
------------------- ------- -------
b) Segmental Analysis
The Group has divided its results into two segments being 'Rail
Technology & Services' and 'Data, Analytics, Consultancy &
Events' consistent with disclosure in the 2021 Financial
Statements.
The Group has a wide range of products and services for the rail
industry, such as software, hosting services, 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). Traffic
data collection and event planning & traffic management, and
data and analytics and consultancy offerings have similar economic
characteristics and distribution methods and so have been included
within the Data, Analytics, Consultancy & Events 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 Executive Directors, who review internal monthly management
reports, budgets and forecast information as part of this.
Accordingly, the Executive 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. Presented
below segmental analysis of profit before tax for 2021 has been
further analysed to allocate amortisation and exceptional items,
assets and liabilities for 2021 has been further analysed to
allocate Intangibles & Investments, Contingent Consideration
and Deferred Consideration to each individual segment.
2022
Rail Technology
& Services Data,
Analytics, Unallocated Total
Consultancy
& Events
GBP000 GBP000 GBP000 GBP000
--------------------------------------- ---------------- -------------- -------------- --------
Revenues
Total revenue for reportable segments 29,935 38,788 - 68,723
Consolidated revenue 29,935 38,788 - 68,723
--------------------------------------- ---------------- -------------- -------------- --------
Profit or loss
EBITDA for reportable segments 9,780 4,381 - 14,161
Amortisation of intangible assets (3,731) (1,269) - (5,000)
Depreciation (748) (1,019) - (1,767)
Exceptional items (net) (444) (176) (2,443) (3,063)
Other operating income - - 426 426
Share-based payment charges - - (1,502) (1,502)
Interest payable (net) (46) (68) (27) (141)
Share of result of equity accounted
investees - - (556) (556)
--------------------------------------- ---------------- -------------- -------------- --------
Consolidated profit before tax 4,811 1,849 (4,102) 2,558
--------------------------------------- ---------------- -------------- -------------- --------
2021
Rail Technology Data, Analytics,
& Services Consultancy
& Events Unallocated Total
GBP000 GBP000 GBP000 GBP000
--------------------------------------- ---------------- ----------------- -------------- --------
Revenues
Total revenue for reportable segments 26,424 23,813 - 50,237
Consolidated revenue 26,424 23,813 - 50,237
--------------------------------------- ---------------- ----------------- -------------- --------
Profit or loss
EBITDA for reportable segments 9,059 3,919 - 12,978
Amortisation of intangible assets (3,345) (924) - (4,269)
Depreciation (699) (904) - (1,603)
Exceptional items (net) - (129) (985) (1,114)
Other operating income - - 440 440
Share-based payment charges - - (1,276) (1,276)
Interest payable (net) (36) (37) (14) (87)
Share of result of equity accounted
investees - - (434) (434)
--------------------------------------- ---------------- ----------------- -------------- --------
Consolidated profit before tax 4,979 1,925 (2,269) 4,635
--------------------------------------- ---------------- ----------------- -------------- --------
2022
Rail Technology Data,
& Services Analytics,
Consultancy Unallocated Total
& Events
GBP'000 GBP000 GBP000 GBP000
----------------------------------- -------------------------- ------------- -------------- ---------
Assets
Total other assets for reportable
segments 10,935 13,506 - 24,441
Intangible assets and investments 54,277 11,590 - 65,867
Deferred tax assets - - 410 410
Cash held in escrow 2,217 - - 2,217
Cash and cash equivalents 8,918 6,052 - 14,970
Consolidated total assets 76,347 31,148 410 107,905
----------------------------------- -------------------------- ------------- -------------- ---------
Liabilities
Total other liabilities for
reportable segments (17,070) (9,789) - (26,859)
Deferred tax liabilities - - (10,671) (10,671)
Contingent consideration (8,320) (1,001) - (9,321)
Deferred consideration - (605) - (605)
Consolidated total liabilities (25,390) (11,395) (10,671) (47,456)
----------------------------------- -------------------------- ------------- -------------- ---------
2021
Rail Technology Data, Analytics,
& Services Consultancy
& Events Unallocated Total
GBP'000 GBP000 GBP000 GBP000
----------------------------------- -------------------------- ----------------- -------------- ---------
Assets
Total other assets for reportable
segments 6,515 8,669 - 15,184
Intangible assets and investments 42,171 9,574 655 52,400
Deferred tax assets - - 551 551
Cash and cash equivalents 16,862 6,483 2,042 25,387
Consolidated total assets 65,548 24,726 3,248 93,522
----------------------------------- -------------------------- ----------------- -------------- ---------
Liabilities
Total other liabilities for
reportable segments (11,913) (7,036) (590) (19,539)
Deferred tax - - (8,517) (8,517)
Contingent consideration (7,194) (715) - (7,909)
Deferred consideration - (892) - (892)
Consolidated total liabilities (19,107) (8,643) (9,107) (36,857)
----------------------------------- -------------------------- ----------------- -------------- ---------
4 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 July 2022 was
based on the profit attributable to ordinary shareholders of
GBP1,502,000 (2021: GBP2,356,000) and a weighted average number of
ordinary shares in issue of 29,486,000 (2021: 29,229,000),
calculated as follows:
Weighted average number of ordinary shares
In thousands of shares
2022 2021
Issued ordinary shares at 1 August 29,332 29,122
Effect of shares issued related to business
combinations 51 7
Effect of shares issued for cash 103 100
Weighted average number of shares at 31 July 29,486 29,229
---------------------------------------------- ------- -------
Diluted earnings per share
The calculation of diluted earnings per share at 31 July 2022
was based on profit attributable to ordinary shareholders of
GBP1,502,000 (2021: GBP2,356,000) and a weighted average number of
ordinary shares in issue after adjustment for the effects of all
dilutive potential ordinary shares of 30,330,000 (2021:
30,131,000).
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. These figures are relevant to the Group and are
provided to enable a comparison to similar businesses and are
metrics used by Equities Analysts who cover the Group. Amortisation
and share based payment charges are deemed to be 'non-cash at the
point of recognition' in nature, and exceptional items by their
very nature are one-off, and therefore excluded in order to assist
with the understanding of underlying trading. A reconciliation of
this figure is provided below. The Group has also presented an
'Adjusted Profit' metric as detailed in note 6, with the key
difference between the numbers presented below, and those disclosed
in note 6 being the income tax charge.
2022 2021
GBP'000 GBP'000
----------------------------------- -------- --------
Profit after tax 1,502 2,356
Amortisation of intangible assets 5,000 4,269
Share-based payment charges 1,502 1,276
Exceptional items (net) 3,063 1,114
Other operating income (426) (440)
Tax impact of adjusting items (847) 746
----------------------------------- -------- --------
Adjusted profit for EPS purposes 9,794 9,321
----------------------------------- -------- --------
Weighted average number of ordinary shares
In thousands of shares
------------------------------------------------------ ----------- -------
For the purposes of calculating Basic earnings
per share 29,486 29,229
Adjustment for the effects of all dilutive potential
ordinary shares 844 902
------------------------------------------------------ ------- -----------
For the purposes of calculating Dilutive earnings
per share 30,330 30,131
------------------------------------------------------ ------- -----------
Basic adjusted earnings per share 33.22p 31.89p
Diluted adjusted earnings per share 32.29p 30.93p
------------------------------------------------------ ------- -----------
5 Dividends
The Group did not pay an interim or final dividend in financial
year 2019/20 or 2020/21. The Group is committed to a progressive
dividend policy, and an interim dividend for financial year 2021/22
has been paid. The cash cost of the dividend payments is below:
2022 2021
GBP000 GBP000
----------------------------- ------- -------
Interim dividend for 2021/22 266 -
Total dividends paid 266 -
----------------------------- ------- -------
The dividends paid or proposed in respect of each financial year
is as follows:
2022 2021
GBP000 GBP000
--------------------------------------------- -------- --------
Interim dividend for 2020/21 of 0.0p per - -
share paid
Final dividend for 2020/21 of 0.0p per share - -
paid
Interim dividend for 2021/22 of 0.9p per 266 -
share paid
Final dividend for 2021/22 of 1.1p per share 327 -
proposed
--------------------------------------------- -------- --------
The total dividends paid or proposed in respect of each
financial year ended 31 July is as follows:
2022 2021 2020 2019 2018 2017 2016 2015 2014
---------------------- -----
Total dividends paid
per share 2.0 Nil Nil 1.8p 1.6p 1.4p 1.2p 1.0p 0.8p
---------------------- ----- ----- ----- ----- ----- ----- ----- ----- -----
6 Reconciliation of alternative performance measures ("APMs")
The Group uses APMs, which are not defined or specified under
the requirements of International Financial Reporting Standards
("IFRS"), to improve the comparability of reporting between
different periods. These metrics adjust for certain items which
impact upon IFRS measures, to aid the user in understanding the
activity taking place across the Group's businesses. The largest
components of the adjusting items, being depreciation,
amortisation, share based payments, and share of result of equity
accounted investees, are 'non-cash' items and are separately
analysed to assist with the understanding of underlying trading.
Share based payments are adjusted to reflect the underlying
performance of the group as the fair value is impacted by market
volatility that does not correlate directly to trading performance.
APMs are used by the Directors and management for performance
analysis, planning, reporting and incentive purposes.
Adjusted EBITDA
Calculated as Earnings before net finance expense, tax,
depreciation, amortisation, exceptional items, other operating
income, share-based payment charges and share of result of equity
accounted investees. This metric is used to show the underlying
trading performance of the Group from period to period in a
consistent manner and is a key management incentive metric. The
closest equivalent statutory measure is profit before tax. Adjusted
EBITDA can be reconciled to statutory profit before tax as set out
below:
2022 2021
GBP000 GBP000
------------------------------------- ------- -------
Profit before tax 2,558 4,635
Finance expense - net 141 87
Share-based payment charges 1,502 1,276
Exceptional items - net 3,063 1,114
Other operating income (426) (440)
Amortisation of intangible assets 5,000 4,269
Depreciation 1,767 1,603
Share of result of equity accounted
investees 556 434
Adjusted EBITDA 14,161 12,978
-------------------------------------- ------- -------
Adjusted Profit
Calculated as Earnings before net finance expense, tax,
amortisation, exceptional items, other operating income,
share-based payment charges, and share of result of equity
accounted investees. This metric is used to show the underlying
business performance of the Group from period to period in a
consistent manner. The closest equivalent statutory measure is
profit before tax. Adjusted profit can be reconciled to statutory
profit before tax as set out below:
2022 2021
GBP000 GBP000
------------------------------------- ------- -------
Profit before tax 2,558 4,635
Finance expense - net 141 87
Share-based payment charges 1,502 1,276
Exceptional items - net 3,063 1,114
Other operating income (426) (440)
Amortisation of intangible assets 5,000 4,269
Share of result of equity accounted
investees 556 434
Adjusted profit 12,394 11,375
-------------------------------------- ------- -------
Adjusted EBITDA reconciles to adjusted profit as set out
below:
2022 2021
GBP000 GBP000
----------------- -------- --------
Adjusted EBITDA 14,161 12,978
Depreciation (1,767) (1,603)
Adjusted profit 12,394 11,375
------------------ -------- --------
Adjusted Basic Earnings per Share
Calculated as profit after tax before amortisation, share-based
payment charges, exceptional items and other operating income
divided by the weighted average number of ordinary shares in issue
during the period. This is a common metric used by the market in
monitoring similar businesses and is used by Equities Analysts who
cover the Group to better understand the underlying performance of
the Group. See note 4 "Earnings per share".
Free Cash Flow
Calculated as net cash flow from operating activities after
purchase of plant and equipment, proceeds from disposal of plant
and equipment, proceeds from exercise of share options, lease
liability payments, and lease liability receipts. This measure
reflects the cash generated in the period that is available to
invest in accordance with the Group's growth strategy and capital
allocation policy.
Free cash flow reconciles to net cash flow from operating
activities as set out below:
2022 2021
GBP000 GBP000
----------------------------------------- -------- --------
Net cash flow from operating activities 8,188 9,356
Purchase of plant and equipment (1,129) (400)
Proceeds from disposal of plant
and equipment 123 88
Proceeds from exercise of share
options 37 27
Lease liability payments (1,421) (1,260)
Lease receivable receipts 32 32
Free Cash Flow 5,830 7,843
------------------------------------------ -------- --------
7 Acquisitions and investments in the current year
(a) The Icon Group Limited ("Icon")
On 3 November 2021 the Group acquired the entire issued share
capital of The Icon Group Limited ("Icon"). Icon is an Ireland
based interdisciplinary geoscience company specialising in Earth
Observation (EO), Geographical Information System (GIS) and spatial
data analytics. Icon has several long-term repeat contracts. The
acquisition of Icon Group adds EO capabilities that enhance the
Group's offering in this growing market. Icon has a customer base
that is complementary to Tracsis'.
The acquisition consideration comprised an initial cash payment
of EUR2.2m (GBP1.9m) which was funded out of Tracsis cash reserves
and the issue of 68,762 new ordinary shares in Tracsis to a value
of EUR0.8m (GBP0.6m). An additional payment of approximately
EUR2.2m (GBP1.9m) reflects the net current asset (above a working
capital hurdle) position at completion on a euro for euro basis.
Additional contingent consideration of up to EUR1.8m (GBP1.5m) is
payable subject to Icon Group achieving certain stretched financial
targets in the three years post acquisition.
The business is cash generative and debt free. In the period
from acquisition to 31 July 2022 The Icon Group Limited contributed
revenue to the Group of GBP2.0m and pre-tax profit of GBP0.3m,
before amortisation of associated intangible assets and exceptional
deal costs (pre tax loss GBP0.2m including amortisation of
associated intangible assets and exceptional deal costs). If the
acquisition had occurred on 1 August 2021 management estimates that
the contribution to Group revenue would have been GBP2.7m and Group
pre-tax profit for the period of GBP0.4m (estimated pre tax loss
GBP0.2m including amortisation of associated intangible assets and
exceptional deal costs if the acquisition had occurred on 1 August
2021).
Pre-acquisition carrying amounts were determined based on
applicable IFRSs, immediately prior to the acquisition. The values
of assets and liabilities recognised on acquisition are the
estimated fair values. The gross contractual amounts receivable for
acquired receivables is consistent with fair value. Acquired
receivables are expected to be collected in full following
acquisition.
The goodwill that arose on acquisition can be attributed to a
multitude of assets, including the skills and experience of staff
within the acquired business and anticipated synergies arising from
the acquisition, that cannot readily be separately identified for
the purposes of fair value accounting.
The fair value adjustments arise in accordance with the
requirements of IFRSs to recognise intangible assets acquired. Due
to the nature of the company acquired, this often requires the
recognition of additional intangible assets, specifically in
relation to customer relationships. An external valuation
specialist has been engaged by the Group to assist with the
valuation of the intangibles. In determining the fair values of
intangible assets, at the Group has used discounted cash flow
forecasts. The fair value of shares issued was based on market
value at the date of issue. The Group incurred acquisition related
costs of GBP0.2m which are included within administrative
expenses.
The acquisition had the following effect on the Group's assets
and liabilities on the acquisition date:
Recognised Recognised
Pre-acquisition Fair value value on Value on
carrying amount adjustments acquisition acquisition
EUR000 EUR000 EUR000 GBP000
----------------------------- ---------------- ------------ ------------ ------------
Intangible assets: Customer
related intangibles - 2,367 2,367 2,014
Tangible fixed assets 15 - 15 13
Cash and cash equivalents 2,069 - 2,069 1,760
Trade and other receivables 1,037 - 1,037 882
Trade and other payables (493) - (493) (419)
Deferred tax liability - (296) (296) (252)
----------------------------- ---------------- ------------ ------------ ------------
Net identified assets and
liabilities 2,628 2,071 4,699 3,998
Goodwill on acquisition 1,537 1,308
----------------------------- ---------------- ------------ ------------ ------------
6,236 5,306
----------------------------- ---------------- ------------ ------------ ------------
Consideration paid in cash 4,484 3,820
Consideration paid: fair
value of shares issued 750 636
Fair value of contingent
consideration payable 1,002 850
Total consideration 6,236 5,306
----------------------------- ---------------- ------------ ------------ ------------
(b) Railcomm LLC & Railcomm Associates Inc
On 11 March 2022 the Group acquired the entire members interests
of Railcomm LLC and its wholly owned subsidiary Railcomm Associates
Inc (together "Railcomm"). Railcomm is a US based company providing
mission critical automation and control solutions that reduce
costs, increase safety, and improve operational efficiency for rail
passenger/freight operators and rail served ports/industrials. Its
two core products are rail yard automation and computer aided
dispatching and it has a wide and diversified client base across
the North American market. The acquisition is in line with Tracsis'
strategy of extending its rail software footprint and expanding the
addressable markets for its products and services.
The acquisition consideration comprised an initial cash payment
of $11.5m (GBP8.8m) which was funded out of Tracsis cash reserves.
Additional contingent consideration of up to $2.7m (GBP2.1m) is
payable subject to Railcomm delivering certain financial targets in
the first full year after acquisition through to 31 March 2023. A
further $0.1m (GBP0.1m) post completion adjustment in accordance
with the purchase agreement was due to the sellers following
completion.
The business was acquired on a debt free basis. In the period
from acquisition to 31 July 2022 Railcomm contributed revenue to
the Group of GBP3.3m and pre-tax profit of GBP0.8m, before
amortisation of associated intangible assets and exceptional deal
costs (pre tax loss GBP0.1m including amortisation of associated
intangible assets and exceptional deal costs). If the acquisition
had occurred on 1 August 2021 management estimates that the
contribution to Group revenue would have been GBP8.9m and Group
pre-tax profit for the period of GBP2.0m (estimated pre-tax profit
GBP0.7m including amortisation of associated intangible assets and
exceptional deal costs if the acquisition had occurred on 1 August
2021). The fair value of intangible assets will be assessed
throughout the measurement period up to 12 months from the date of
acquisition.
Pre-acquisition carrying amounts were determined based on
applicable IFRSs, immediately prior to the acquisition. The values
of assets and liabilities recognised on acquisition are the
estimated fair values. The gross contractual amounts receivable for
acquired receivables is consistent with fair value. Acquired
receivables are expected to be collected in full following
acquisition.
The goodwill that arose on acquisition can be attributed to a
multitude of assets, including the skills and experience of staff
within the acquired business, and anticipated synergies arising
from the acquisition, that cannot readily be separately identified
for the purposes of fair value accounting.
The fair value adjustments arise in accordance with the
requirements of IFRSs to recognise intangible assets acquired. Due
to the nature of the companies acquired, this often requires the
recognition of additional intangible assets, specifically in
relation to technology, customer relationships, order backlog and
marketing. An external valuation specialist has been engaged by the
Group to assist with the valuation of the intangibles In
determining the fair values of intangible assets, the Group has
used discounted cash flow forecasts. The Group incurred acquisition
related costs of GBP0.4m which are included within administrative
expenses.
The acquisition had the following effect on the Group's assets
and liabilities on the acquisition date:
Recognised Recognised
Pre-acquisition Fair value value on value on
carrying adjustments acquisition acquisition
amount
$000 $000 $000 GBP000
------------------------------- ---------------- ------------ ------------ ------------
Intangible assets: Technology
intangibles - 7,398 7,398 5,654
Intangible assets: Customer
related intangibles - 1,481 1,481 1,132
Intangible assets: Order
backlog intangible - 501 501 383
Intangible assets: Marketing
related intangibles - 1,082 1,082 827
Tangible fixed assets 345 - 345 264
Cash and cash equivalents 2,257 - 2,257 1,725
Trade and other receivables 2,687 - 2,687 2,053
Inventory 576 - 576 440
Trade and other payables (2,837) - (2,837) (2,168)
Contract liabilities (5,302) - (5,302) (4,052)
Deferred tax liability - (2,825) (2,825) (2,159)
------------------------------- ---------------- ------------ ------------ ------------
Net identified assets and
liabilities (2,274) 7,637 5,363 4,099
Goodwill on acquisition 8,841 6,756
------------------------------- ---------------- ------------ ------------ ------------
14,204 10,855
------------------------------- ---------------- ------------ ------------ ------------
Consideration paid in cash 11,610 8,873
Fair value of contingent
consideration payable 2,594 1,982
Total consideration 14,204 10,855
------------------------------- ---------------- ------------ ------------ ------------
8 Contingent and deferred consideration
a Contingent consideration
During this financial year the Group acquired The Icon Group
Limited ("Icon") and Railcomm, LLC and Railcomm Associates Inc
(together "Railcomm"). Under the share purchase agreement in place
for Icon, contingent consideration is payable which is based on the
profitability of Icon in the 3 year period after the acquisition,
and on the successful renewal of certain key contracts. Contingent
consideration is payable in Euros up to a maximum of EUR1,750,000
(GBP1,471,000), and the fair value of the amount payable was
assessed as EUR902,000 (GBP757,000). Contingent consideration under
the share purchase agreement for Railcomm is payable up to a
maximum of $2,700,000 (GBP2,217,000) linked to the financial
performance of the business in the year following the acquisition
through to 31 March 2023. At the year- end date the fair value of
the amount payable was assessed at $2,626,000 (GBP2,157,000). Cash
held in escrow for the purpose of settlement of the contingent
consideration for the Railcomm acquisition totalled GBP2,217,000 at
the balance sheet date. The cash held in escrow is held as a
financial asset not within the overall cash and cash equivalents
balance, due to restrictions on access to the cash on demand. Prior
approval of any transfers must be completed by both Tracsis and the
seller before they can take place, and as such the cash is not
considered to be available on demand. If the financial performance
metrics linked to the contingent consideration are not met in full,
the balance will be returned to Tracsis.
In 2020, the Group acquired iBlocks Limited. Under the share
purchase agreement in place for this acquisition, contingent
consideration is payable which is linked to the profitability of
the acquired business for a three- year period post acquisition and
the signing of certain contracts currently under negotiation. The
maximum amount payable is GBP8.5m, and the fair value of the amount
payable was assessed at GBP2,224,000 at the year -end date.
In 2019, the Group acquired Compass Informatics Limited and
Bellvedi Limited. Under the share purchase agreements for each of
these companies, contingent consideration is payable which is
linked to the profitability of the acquired businesses over a two
to four year period post acquisition. The maximum amount payable
over the contingent consideration period is EUR1,500,000
(GBP1,261,000) for Compass Informatics Limited and GBP7,900,000 for
Bellvedi Limited. The fair value of the amount payable was assessed
at GBP243,000 for Compass Informatics Limited and GBP3,940,000 for
Bellvedi Limited at the year-end date.
During the financial year, the final contingent consideration
due on the 2019 acquisition of Cash & Traffic Management
Limited was paid totalling GBP259,000 (2021: GBPnil). Contingent
consideration of EUR329,000 (GBP281,000) was paid in respect of the
Compass Informatics Limited acquisition (2021: GBP410,000) and
GBP3,586,000 in respect of the Bellvedi Limited acquisition (2021:
GBPnil).
As detailed in note 9, a net exceptional charge of GBP1,792,000
was recognised, following a review of the assumptions of the fair
value of the contingent consideration as at 31 July 2022. At the
balance sheet date, the Directors assessed the fair value of the
remaining amounts payable which were deemed to be as follows.
2022 2021
GBP000 GBP000
---------------------------------- ------- -------
Cash & Travel Management Limited - 253
Compass Informatics Limited 243 462
Bellvedi Limited 3,940 4,357
iBlocks Limited 2,224 2,837
The Icon Group Limited 757 -
Railcomm, LLC 2,157 -
9,321 7,909
---------------------------------- ------- -------
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 which specify the specific arrangements
and calculations relating to each acquisition. This involves
assumptions about future profit forecasts, which results from
assumptions about revenues and costs, and is discounted back to the
present value using an appropriate discount rate and an estimate of
when it is expected to be payable. A range of outcomes is
considered, and a probability/likelihood weighting is applied to
each of them in order to produce a weighted assessment of the
amount payable.
The Group has considered multiple profit related scenarios in
estimating the fair value of contingent consideration payable in
the future. In all cases, contingent consideration payable could
range from zero to the maximum amount included in the Share
Purchase Agreements as detailed in this note and also note 7. Each
Share Purchase Agreement contains different provisions for
calculating contingent consideration, timeframes over which it is
calculated and payable, and therefore sensitivities regarding the
total amount to be paid. In respect of Compass Informatics Limited,
Bellvedi Limited, iBlocks Limited, The Icon Group, and Railcomm a
change in the estimated profit of 10% would result in a change in
the fair value of contingent consideration of GBP1.0m.
The movement on contingent consideration can be summarised as
follows:
2022 2021
GBP000 GBP000
------------------------------------ -------- -------
At the start of the year 7,909 7,334
Arising on acquisition (note 7) 2,832 -
Cash payment (4,126) (410)
Fair value adjustment to Statement
of Comprehensive Income 1,792 327
Unwind of discounting 774 658
Exchange adjustment 140 -
At the end of the year 9,321 7,909
------------------------------------- -------- -------
The ageing profile of the remaining liabilities can be
summarised as follows:
2022 2021
GBP000 GBP000
------------------------------- ------- -------
Payable in less than one year 8,585 4,689
Payable in more than one year 736 3,220
Total 9,321 7,909
-------------------------------- ------- -------
b. Deferred consideration
The Group acquired Flash Forward Consulting Limited on 26
February 2021. As part of this acquisition cash consideration
totalling GBP945,000 is payable in three equal instalments on the
1st, 2nd and 3rd anniversary of the acquisition date. At
acquisition the present value of this deferred consideration was
assessed as GBP878,000 discounted using a rate of 3.75%. At 31 July
2022 the present value of this deferred consideration is
GBP605,000. The movement on deferred consideration can be
summarised as follows:
2022 2021
GBP000 GBP000
-------------------------- ------- -------
At the start of the year 892 -
Arising on acquisition - 878
Cash payment (315) -
Unwind of discounting 28 14
At the end of the year 605 892
--------------------------- ------- -------
The ageing profile of the remaining liabilities can be
summarised as follows:
2022 2021
GBP000 GBP000
------------------------------- ------- -------
Payable in less than one year 308 308
Payable in more than one year 297 584
Total 605 892
-------------------------------- ------- -------
9 Exceptional items:
The Group incurred a number of exceptional items in 2022 and
2021 which are analysed as follows:
2022 2021
GBP000 GBP000
-------------------------------------------------------- ------- -------
Impairment losses
Non cash:
Investment in Associate 49 -
-------------------------------------------------------- ------- -------
Total impairment losses 49 -
-------------------------------------------------------- ------- -------
Other
Non cash:
Contingent consideration fair value adjustment 1,792 327
Unwind of discounting of contingent consideration 774 658
Fair value adjustment - Financial Liability (127) -
Gain on settlement of Financial liability (47) -
Cash:
Legal and professional fees in respect of acquisitions
and other corporate activities 622 129
Total other 3,014 1,114
Total exceptional items 3,063 1,114
-------------------------------------------------------- ------- -------
2022 2021
Split GBP000 GBP000
---------- ------- -------
Non cash 2,441 985
Cash 622 129
---------- ------- -------
Total 3,063 1,114
---------- ------- -------
2022
An exceptional cost has been recognised to increase the fair
value of the contingent consideration payable at the end of the
financial year. A GBP1,792,000 charge to the income statement has
been recorded which reflects the increased pipeline for software
contract opportunities, and the impact of software contracts which
have been secured in the financial year. A further charge totalling
GBP774,000 has been recognised which reflects the unwinding of the
discounting of contingent consideration. The discount rates applied
vary by acquisition and are in the range of 3.25% to 14.5%. A
breakdown of the remaining fair value of contingent consideration
by acquisition is included in note 8. These costs are deemed to be
exceptional items due to the size and volatility of the items which
can vary significantly from year to year. On 17 June 2022 the Group
acquired the minority shareholding of 10,225 TRC A Shares which
were issued as part of the consideration on the acquisition of
Flash Forward Consulting in February 2021. The fair value was
determined on acquisition as GBP590,000 and was recognised as a
financial liability in the Statement of Financial Position held at
Fair Value through Profit and Loss. The fair value of these shares
was assessed as GBP463,000 immediately prior to the re-purchase and
a resulting fair value adjustment recognised of GBP127,000.
Consideration for the shares paid was GBP416,000 and a resulting
one-off gain has been recognised totalling GBP47,000.
During 2022 the Group made two acquisitions. In November 2021
the Group acquired The Icon Group Limited. Legal and professional
fees related to this acquisition totalled GBP167,000. In March 2022
the Group acquired Railcomm LLC incurring acquisition related fees
of GBP392,000. As part of the acquisition the Group incurred
GBP40,000 (2021: GBPnil) of legal and professional costs associated
with the transfer of a UK employee to oversee the integration of
the acquisition.
Legal and professional fees have also been incurred in relation
to one off transactions (including the re-purchase of TRC A Shares)
and as they will not recur in future years, are deemed to be
exceptional in nature.
An impairment loss of GBP49,000 has been recognised in the year
in relation to the Investment in the Associate in Nutshell Software
Limited. Following an assessment of the anticipated future cash
flows anticipated from the investment a judgement was taken to
write down the remaining carrying value to GBPnil.
2021
In the previous financial year, the Group acquired Flash Forward
Consulting Limited and incurred exceptional deal related costs
totalling GBP129,000 in relation to this. A net exceptional charge
of GBP327,000 was also recognised to increase the assessed fair
value of the contingent consideration based on future expectations
of performance of the entities. The increase in the fair value of
contingent consideration payable principally reflects an increased
pipeline of software contract opportunities, partly offset by some
extension of procurement cycles from certain customers. Unwind of
discounting of contingent consideration totalling GBP0.7m was
completed in the year. Contingent consideration at 31 July 2021 has
been discounted at 12%.
10 Subsequent Events
On 5 October 2022 Jill Easterbrook was appointed to the Board as
a non-executive director. Jill joined the Audit, Remuneration and
Nomination Committees with immediate effect. On the same date it
was also announced that Lisa Charles-Jones intends to resign from
the Board from 31 December 2022 and Jill will assume Chair of the
Remuneration Committee at this date
11 Annual Report and Annual General Meeting
The Company anticipates dispatching a copy of its annual report
and accounts to all shareholders in December 2022. A copy will also
be available on the Company's website: www.tracsis.com. The Annual
General Meeting of the Company will be held at Nexus, Discovery
Way, Leeds, LS2 3AA on 18 January 2023 at 1pm.
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END
FR EVLFBLFLXFBF
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November 09, 2022 02:00 ET (07:00 GMT)
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