Tracsis plc - Interim results for the six months ended 31 January 2012

28 Feb 2012

Tracsis, a developer and aggregator of resource optimisation software, remote condition monitoring technology, and consultancy services to passenger transport industries, is pleased to announce its interim results for the six months ended 31 January 2012.

Highlights:
·      Increase in revenue to £3.66m (H1 2011: £1.24m), reflecting very strong trading performance across the Group
·      Adjusted EBITDA* increased to £1.26m (H1 2011: £180k), with Profit Before Tax of £1.13m (H1 2011: £127k)
·      Basic Earnings Per Share increased to 3.47p (H1 2011: 0.47p)
·      Healthy balance sheet maintained. Cash at bank now stands at £5.95m and the business remains debt free. The Group generated £1.26m of cash in the six month period
·      Strong visibility on H2 order book resulting in management expectation that full year outturn will exceed current market expectations
·      Due to strength of trading and general outlook going forwards the Company announces payment of an interim dividend of 0.2p per share. This maiden dividend signals the adoption of a progressive dividend policy.
·      The Group continues to appraise new acquisition opportunities as part of the Company's broader strategy to consolidate/aggregate complimentary businesses within the optimisation and data capture/reporting field.

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

John McArthur, Chief Executive Officer, commented: "These interim results reflect the Group's continued growth and maturity as a diversified technology company with both revenues and profits increasing significantly against the same period last year. The contribution made by MPEC Technology Limited has been a significant boost and we believe their success demonstrates increasing strength and depth with our market offering. Trading across the rest of the Group has remained strong and Tracsis continues to boast a healthy balance sheet.  We remain excited about further growth opportunities, both organic and by way of acquisition.

As a result of recent trading, profitability and general outlook, Tracsis will initiate the start of a progressive dividend policy which our Board believe is sensible and sustainable.  This policy endorses our success achieved to date and also our strong belief in the future growth of the business."

Enquiries:

John McArthur, Tracsis plc

Tel: 0845 125 9162

Katy Mitchell, WH Ireland Limited

Tel: 0113 394 6618

Chairman's and Chief Executive Officer's Report

Business Summary

I am pleased to report on a period of further growth and success for the Tracsis Group for the first six months of the 2011/12 financial year.  All areas of the Group have enjoyed growth compared to the same period last year, and in particular there was a strong performance from MPEC Technology Limited (MPEC) which was acquired in June 2011.

Operationally, our business continues to expand to meet the needs of our customers and in the past 6 month period there has been a significant recruitment drive within both our consultancy, software and hardware divisions.  We continue to develop our range of resource optimisation and reporting technologies and are now looking at ways of integrating these systems together with the goal of shortening overall planning horizons which will bring further benefit to our customers.

Software

Whilst there are healthy indicators to suggest rail markets continue to grow, software sales in the current economic climate has been challenging.  Our target customers continue to suffer from cost pressures partly imposed by the recession at large and also in part due to cuts in public sector funding.  Coupled with these pressures, UK Rail is going through widespread evolution as operating companies become increasingly aligned with Network Rail.  This change holds new opportunities for Tracsis but we believe it has slowed the decision making process with potential customers.  However, in spite of this the Group achieved several new contract wins in the 6 month period and secured a three year deal with a major rail operator, as announced on 11 January 2012.

In addition to opportunities in the UK, the Group has won new software sales in Sweden and a pilot project in Australia.  Looking ahead, we anticipate further software sales being made in Scandinavia and Australia/New Zealand but the Group does not underestimate the challenge posed in entering new markets and we remain cost conscious about how best to do this.

Consultancy and services

Our consultancy teams remain busy with high utilisation which has been buoyed by recent re-franchising activity which will continue throughout 2012 and for several years thereafter.  This provides Tracsis with good visibility on services revenue in the coming months and provides confidence in H2 consultancy revenue.  We are currently engaged with multiple organisations that are taking part in these tenders and provide them with a wide range of operational planning consultancy and advice.  Furthermore, demand for our passenger counting and analytics services has been considerably higher than expected.  This seems to be partly due to the general rise in the rail consulting market but moreover we believe this is due to the concerted efforts this part of the business has made to win new sales and raise our profile with potential customers.

Hardware

Revenue from our intelligent condition monitoring software and hardware products has contributed a significant amount to the overall Group performance in this period.  The Group is mid-way through a Framework Agreement with a major infrastructure provider which has led to significant and sustained demand for our condition monitoring and data logging equipment.  As announced on 21 February 2012, MPEC recently secured a further order with a value of £2.9m.  This order will be fulfilled over the coming 12 months and suffice to say this will make a large contribution to both our final results for 2011/12 and for the first half of the new financial year.  Looking ahead the Board remain confident that the market for intelligent condition monitoring is set for growth although we remain cautious about the timing of large orders which can be difficult to predict.

Dividend

Due to strong trading in the period and a positive market outlook, the Directors are pleased to introduce a progressive dividend policy, commencing with the initial payment of 0.2p per share at the interim stage.  It is hoped that this will increase progressively over time, but such payments will clearly depend on future profitability and growth.  The Directors believe that the adoption of such a policy is a sensible step forward in the evolution of the Group and is an endorsement of management's confidence that further profitable growth can be achieved in the future. The dividend will be payable on 30 March 2012 to shareholders on the Register at 16 March 2012.

Income statement

A summary of the Group's results is set out below. These figures reflect both the strong contribution of MPEC and also continued organic growth, with the net result that both revenues and profits are significantly ahead of the corresponding period last year, and profits at the interim stage are ahead of the full year results for the year ended 31 July 2011. Much of the growth has come from MPEC, and whilst management have confidence such growth will continue, this cannot be guaranteed.

 

Six months

 Six months 

Year 

 

ended

ended 

ended 

 

31 January

31 January 

31 July 

 

2012 

2011 

2011 

 

£'000

£'000 

£'000 

Turnover

3,658

1,244 

4,083 

Adjusted EBITDA*

1,258

180 

1,242 

Operating profit

1,109

119 

1,098 

Profit for the period

836

91 

907 

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

Revenues are derived from the sale of software licences along with associated customer support and maintenance contracts, the supply of data capture and reporting technologies, and the provision of consultancy services to companies in the passenger transport industries.  Sales revenue is analysed further below:

 

 

Six months

Six months 

Year 

 

ended

 ended 

ended 

 

31 January

31 January 

31 July 

 

2012

 2011 

2011 

 

£'000

£'000 

£'000 

Software licences

592

512 

1,138

Post contract customer support

165

139 

304

Consultancy services, training & other revenue*

931

 593 

1,573

Hardware

1,970

-

1,068

Total revenue

3,658

1,244 

4,083

* A significant element of consultancy revenue is derived from use of software products.

Balance sheet

The Group continues to have a robust balance sheet, with no external borrowings. Cash balances have increased by £1,260,000 in the period, from £4,690,000 at 31 July 2011 to £5,950,000 at 31 January 2012 with the principal elements of the movement being:

 

Six months

 Six months 

Year 

 

ended

 ended 

ended 

 

31 January

 31 January 

31 July 

 

2012

 2011 

2011 

 

£'000

£'000

£'000

Net cash flow from operating activities

1,275

490

1,701

Net cash used in investing activities

(15)

(127)

(1,497)

Net cash from financing activities

 -

 -

1,940 

Movement during the period

 1,260

 363

2,144 

The Group has always been in a strong financial position, with significant cash balances maintained.  Following the raising of £1.95m in the previous financial year, the position was strengthened further.  Due to continued tight cost control and proactive working capital management, the cash position has increased further to £5.95m.  It is the Group's strategy to identify suitable acquisition opportunities in which to invest this cash, which will contribute towards the on-going growth of the Group in the future. The Group continually appraises new potential acquisition opportunities, but has strict criteria to meet before proceeding.

It is anticipated that a significant amount, if not all, of the £1m deferred consideration in respect of the MPEC acquisition will be paid by the end of the financial year. This liability is fully provided in the accounts, and the settlement will represent the significant achievements MPEC has made since its acquisition in June 2011.

Outlook

Despite a challenging economic climate, the Group has performed well and looks forward to developing its range of products and services in the future. There are many opportunities for growth in both the UK and abroad, and the Group is actively seeking to capitalise on these whilst at the same time assessing new acquisition targets. 

RD Jones

Chairman

JC McArthur

Chief Executive Officer

28 February 2012

 

For full announcement, please see RNS.