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Kapsch TrafficCom AG

Quarterly Report Aug 19, 2015

747_rns_2015-08-19_2ffbe969-ef32-44f6-b294-bf676933a6d9.pdf

Quarterly Report

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Kapsch TrafficCom

Kapsch TrafficCom Selected Key Financial Data.

2014/15 (fiscal year 2014/15): 1 April 2014 – 31 March 2015 2014/15 Q1 (first quarter of fiscal year 2014/15): 1 April – 30 June 2014 2015/16 Q1 (first quarter of fiscal year 2015/16): 1 April – 30 June 2015

The positive free cash flow of EUR 14.7 million demonstrates the financial strength.

The capital expenditure of EUR 1.6 million remained at a low level after EUR 1.1 million in the previous year.

The net debt was reduced by 62% from EUR -67.2 million to EUR -25.9 million.

Total assets (in million EUR) and equity ratio (in %)

The total assets declined by 9%, while the equity ratio increased to 44.2%.

Selected Key Financial Data.

2014/15 (fiscal year 2014/15): 1 April 2014 – 31 March 2015 2014/15 Q1 (first quarter of fiscal year 2014/15): 1 April – 30 June 2014 2015/16 Q1 (first quarter of fiscal year 2015/16): 1 April – 30 June 2015

Earnings Data 2015/16 Q1 2014/15 Q1 +/- 2014/15
Revenues in million EUR 117.1 118.0 -1% 456.4
EBITDA in million EUR 16.9 4.8 256% 61.5
EBITDA margin in % 14.4 4.0 13.5
EBIT in million EUR 12.8 0.6 >500% 32.7
EBIT margin in % 10.9 0.5 7.2
Profit before tax in million EUR 15.0 2.7 459% 19.9
Profit for the period in million EUR 11.5 0.3 >500% 11.4
Profit for the period attributable to equity holders in million EUR 9.8 -0.8 3.6
Earnings per share 1 in EUR 0.75 -0.06 0.28
Free cash flow 2 in million EUR 14.7 32.9 -55% 68.2
Capital expenditure 3 in million EUR 1.6 1.1 47% 8.4
Employees 4 3,494 3,336 5% 3,545
On-board units delivered in million units 2.33 1.57 49% 7.42
Business Segments 2015/16 Q1 2014/15 Q1 +/- 2014/15
Road Solution Projects (RSP)
Revenues (share in revenues) in million EUR 14.9 (12.7%) 24.4 (20.7%) -39% 60.2 (13.2%)
EBIT (EBIT margin) in million EUR -7.1 (-47.9%) -12.4 (-50.9%) 42% -50.7 (-84.4%)
Services, System Extensions, Components Sales (SEC)
Revenues (share in revenues) in million EUR 96.5 (82.4%) 87.0 (73.7%) 11% 372.6 (81.6%)
EBIT (EBIT margin) in million EUR 19.5 (20.2%) 12.9 (14.9%) 51% 82.2 (22.1%)
Others (OTH)
Revenues (share in revenues) in million EUR 5.7 (4.9%) 6.6 (5.6%) -14% 23.6 (5.2%)
EBIT (EBIT margin) in million EUR 0.5 (8.0%) 0.1 (1.5%) 369% 1.3 (5.4%)
Regions 2015/16 Q1 2014/15 Q1 +/- 2014/15
Austria 5 in million EUR 9.0 (8 %) 8.8 (7%) 3% 38.2 (8%)
Europe 5 in million EUR 59.4 (51 %) 62.4 (53%) -5% 234.0 (51%)
Americas 5 in million EUR 26.1 (22 %) 23.3 (20%) 12% 92.6 (20%)
Rest of World5 in million EUR 22.6 (19 %) 23.5 (20%) -4% 91.6 (20%)
Balance Sheet Data 30 June 2015 30 June 2014 +/- 31 March 2015
Total assets in million EUR 505.7 554.2 -9% 515.6
Total equity 6 in million EUR 223.3 205.7 9% 219.4
Equity ratio6 in % 44.2 37.1 42.5
Net debt in million EUR -25.9 -67.2 62% -35.9
Capital employed in million EUR 349.6 355.4 -2% 357.3
Net working capital in million EUR 217.3 179.4 21% 209.9
Stock Exchange Data 2015/16 Q1 2014/15 Q1 +/- 2014/15
Number of shares 7 in million 13.0 13.0 0% 13.0
Free float 7 in % 36.9 38.1 -3% 36.9
Ø daily trading volume 8 in shares 23,917 10,741 123% 27,574
Closing price 7 in EUR 22.20 33.90 -35% 23.85
Market capitalization 7 in million EUR 288.54 440.70 -35% 309.99
Share performance in % -6.9 -15.2 -40.4

1 Earnings per share relate to 13.0 million shares, calculated from the profit for the period attributable to the equity holders of the company

2 Operating cash flow minus capital expenditure from operations (excl. payments for acquisition of companies and purchases of securities and investments) plus proceeds from the disposal of property, plant and equipment and intangible assets

3 Capital expenditure from operations (excl. payments for acquisition of companies and purchases of securities and investments)

4 Each Q1 as of 30 June; 2014/15 as of 31 March 2015

5 Revenues (share on total revenues in %); Europe excl. Austria

6 Incl. non-controlling interests

7 Each Q1 as of 30 June; 2014/15 as of 31 March 2015; please find additional information of shares on page 6

8 Average daily trading volume (double counting)

Kapsch TrafficCom Letter from the Chief Executive Officer.

Dear shareholders,

The first quarter of the fiscal year 2015/16 was characterized by dynamic developments for the Kapsch TrafficCom Group, and we also opened up new potential for the future.

Program 2020, the set of measures to lower costs and improve earnings initiated in the previous year, is showing an effect: The first positive impacts yielded significant contributions to improved earnings. In April, we also passed our Strategy 2020, which is intended to prepare the Kapsch TrafficCom Group for potential future business.

In the past fiscal year, we obtained several projects that also positively affected our revenues and earnings in the first quarter. And finally, I can report to you that the period of waiting for new large projects has come to an end. Just yesterday, we were able to announce that we have received an important order within the framework of the CHARM program for cross-border traffic management systems in England and the Netherlands.

Projects and markets. During the reporting period, we worked successfully on our existing installation projects as well as the new installation projects obtained in the previous year. These include the major project in Belarus, for which we were awarded the next stage of extension, and the projects in Australia and New Zealand. The projects in the U.S.A. also played a significant part, including the order for the Ohio River Bridges obtained in May, which represents our first end-to-end solution in this market.

This increase in business reflects the size and reputation that we have achieved in North America over the past few years.

In Chile, we received an order in May for a system expansion, and in Italy, we put another ITS project into operation, an automated access system in the city of Prato.

The existing operation projects supplied stable revenue contributions in the first quarter, and the sale of on-board units once again exhibited an upward trend. After postponements in the previous year, the sales figures have returned to the level from before two years ago. This also has a positive impact on the EBIT margin.

Asset, financial and earnings situation. The revenue in the first quarter was at the same level of the previous year at EUR 117.1 million. The EBIT experienced an enormous improvement from EUR 0.6 million in the same quarter of the previous year to EUR 12.8 million. We therefore succeeded in the reporting quarter to raise the EBIT margin above the targeted 10% threshold. This increase can be attributed to the revenue mix with a strong on-board unit business as well as the implementation of Program 2020. The profit for the period was EUR 11.5 million, and the profit per share, which was negative in the same quarter of the previous year, increased to EUR 0.75.

The balance sheet figures such as equity ratio and net debt confirm the strengthening of the Kapsch TrafficCom Group and the potential for future projects. The free cash flow is positive at EUR 14.7 million, and the cash and cash equivalents increased to EUR 100.4 million.

Program 2020 and strategy. In the past year, we implemented both short-term and long-term measures in order to improve our earnings and prepare for future growth. The initial successes show that we are on the right path. Through the insourcing of processes and the reduction of procured services, for example, we reduced the direct project costs and further increased our profitability as well as our liquidity and balance sheet strength.

We passed our Strategy 2020 in April, which calls for operational excellence and a strengthening of our core business. In addition, we will establish a business in intelligent mobility solutions (IMS) with new business models and integrated multi-application solutions. The future will see us expand our offerings from the highway into the city. In addition to public agencies, our customers will in future also include end-users.

With the acquisition of the Californian company Streetline in April, our group now includes the pioneer in smart parking solutions, which we are now developing even further.

The major order that we were able to announce yesterday significantly strengthens our core business.

Kapsch TrafficCom has been awarded a contract by the Dutch national road authority Rijkswaterstaat and has received the intention to award a contract by the English road authority Highways England to supply a traffic management system as part of the collaborative program CHARM. This is Europe's first integrated advanced traffic management system. It is not only the largest order that we have received in the past two years, it also has strategic significance for the Kapsch TrafficCom Group. With this order, we attain a globally recognized position in the area of TMS (traffic management systems) alongside the position we already enjoy in the area of ETC (electronic toll collection).

We are therefore well on the way to implementing our Strategy 2020. We will continue developing the existing projects over the coming months. Continued system expansions in Belarus and in Poland have been ordered, and these will also contribute significantly to revenues and earnings in the current fiscal year 2015/16. In addition, we look forward to invitations to tender and potential contract extensions: In Slovenia, an invitation to tender was recently announced in which we will again take part. In Austria, the new invitation to tender for the existing toll system is under way, and an invitation to tender is also in preparation in the Czech Republic. Another major project is currently in the offer phase in the U.S.A., and we are stepping up our efforts to actively contact potential customers like we already successfully did it in Belarus.

We expect the fiscal year 2015/16 to be both challenging and rich in opportunities. The profitability of the core business should offer us sufficient freedom for future investments.

Sincerely,

Georg Kapsch CEO

Kapsch TrafficCom Kapsch TrafficCom Shares.

The Kapsch TrafficCom shares are listed on the Vienna Stock Exchange and are included in the Austrian indexes ATX Prime, ATX Global Players and the sustainability index VÖNIX.

The share price continued to exhibit a high level of volatility in the first quarter of the fiscal year 2015/16. The recovery in the previous quarter to EUR 23.85 was followed in April by a price decline of more than 15%, after which the price of the Kapsch TrafficCom shares rose back to the level of the start of the fiscal year. At the end of the quarter on 30 June 2015, the shares closed down roughly 7% at EUR 22.20. The rest of the market experienced similar developments during

the reporting period, although with significantly lower volatility. The ATX Prime index and the international comparison indexes also declined by single-digit percentages.

The number of shares is 13 million. KAPSCH-Group Beteiligungs GmbH holds 63.1 % of the shares. The remaining 36.9 % are in free float, of which approximately 5.4% have been held according to the company's information by The Bank of New York Mellon Corporation as well as its affiliated companies since the start of July. The market capitalization with respect to the closing share price of EUR 22.20 was EUR 288.5 million at the end of the quarter.

The final price of the Kapsch TrafficCom shares and the final value of the ATX Prime Index on 31 March 2015, both indexed to 100.

Information on the Shares Investor Relations Officer Marcus Handl
Shareholders' Telephone +43 50 811 1120
E-Mail [email protected]
Website www.kapschtraffic.com
Stock Exchange Vienna, Prime Market
ISIN AT000KAPSCH9
Trading Symbol KTCG
Reuters KTCG.VI
Bloomberg KTCG AV
09 September 2015 Ordinary Shareholders' Meeting for fiscal year 2014/15
Financial Calendar 16 September 2015 Deduction of dividends for fiscal year 2014/15
23 September 2015 First day of payment for fiscal year 2014/15 dividends
19 November 2015 Interim report for fiscal year 2015/16 Q2
24 February 2016 Interim report for fiscal year 2015/16 Q3
16 June 2016 Preliminary results of fiscal year 2015/16
07 September 2016 Ordinary Shareholders' Meeting for fiscal year 2015/16

Kapsch TrafficCom Analysis of the Results and Balance Sheet.

Revenues and earnings.

The revenues of Kapsch TrafficCom Group were EUR 117.1 million in the first quarter of the current fiscal year 2015/16 (2015/16 Q1), down by 0.7% from EUR 118.0 million in the same period of the previous fiscal year. While revenue in the Road Solution Projects (RSP) segment declined, increased revenue was recorded in the Services, System Extensions, Components Sales (SEC) segment.

Revenues by segment in the first three months were as follows:

  • ¾The segment RSP (Road Solution Projects) recorded a revenue of EUR 14.9 million after EUR 24.4 million in the same period of the previous fiscal year, a decrease of 38.8%. The revenue contributions in the reporting quarter for the installation project in Belarus, the managed lane system project in Texas, U.S.A., and the GNSS (Global Navigation Satellite System) project in France were below those of the same quarter of the previous year since these projects have already reached advanced stages of completion. The system project in Texas, U.S.A., is currently being expanded in small stages. The projects obtained in the fiscal year 2014/15 in New Zealand (Tauranga), Australia (WestConnex M4 highway, Sydney, amongst others) and in the U.S.A. (New York State Thruway) are included now for the first time.
  • ¾ In the segment SEC (Services, System Extensions and Components Sales), revenue increased by 10.9% from EUR 87.0 million in the previous fiscal year to EUR 96.5 million this year. Significant contributors to this increase in revenue were the component sales as well as the ongoing expansion of the Polish toll system. The technical and commercial operation of the nationwide system in the Czech Republic, the operation project in Poland, the technical operation including maintenance of the nationwide system in Austria and the technical and commercial operation project in Belarus continued to provide stable revenue contributions. The project in South Africa also contributed to revenue as expected.

The number of on-board units sold amounted to 2.33 million units (2014/15 Q1: 1.57 million units). Increases were observed in particular in North America, France and Spain, while the sales figures in Chile declined relative to the comparison period.

¾The segment OTH (Others) recorded revenue of EUR 5.7 million in the first quarter of 2015/16, a decrease of 13.5% (2014/15 Q1: EUR 6.6 million). This decline resulted from the lower production and deliveries for the GSM-R project of Kapsch CarrierCom compared with the same period of the previous year. A positive contribution to segment revenue was made by the non-ITS-related business of KTC USA Inc., largely due to the operational monitoring of environmental facilities in the U.S.A. and Australia.

In the first three months of the current fiscal year, the Kapsch TrafficCom Group reported an operating result (EBIT) of EUR 12.8 million (2014/15 Q1: EUR 0.6 million). The successful implementation of the cost-reducing program enabled an improvement of the EBIT margin to 10.9% in the first quarter of 2015/16 (2014/15 Q1: 0.5%). Operating results by segment were as follows:

  • ¾The segment RSP achieved an EBIT of EUR -7.1 million during the reporting period after EUR -12.4 million in the first quarter of the previous year. The new projects obtained in the previous fiscal year contributed to this improved result. The result also reflects the initial successes of Program 2020, which comprises a set of measures for reducing costs and increasing earnings. Nevertheless, it was not possible to fully cover the expenditures for development and preparatory work for potential tenders as well as expenditures for ongoing tenders attributed to this segment.
  • ¾The segment SEC achieved an EBIT of EUR 19.5 million (2014/15 Q1: EUR 12.9 million). This increase can be largely attributed to higher earnings contributions from the components business. The positive effects of Program 2020 can be seen in this segment as well.
  • ¾The segment OTH exhibited an EBIT of EUR 0.5 million in the reporting quarter (2014/15 Q1: EUR 0.1 million). The most significant influence here came from KTC USA Inc.

The financial result improved from EUR 1.9 million in the comparison period of the previous year to EUR 2.3 million. The finance income increased largely due to the profit from the sale of securities in the amount of EUR 3.3 million (2014/15 Q1: EUR 0.0 million). Under finance costs, an increase in the as yet unrealized foreign currency losses in the amount of EUR -1.1 million was recorded (2014/15 Q1: EUR -0.2 million).

The profit for the period improved significantly. In particular, the share attributable to the equity holders of the company increased to EUR 9.8 million (2014/15 Q1: EUR -0.8 million). This resulted in a profit per share for the Kapsch TrafficCom Group of EUR 0.75 (2014/15 Q1: EUR -0.06).

Financial position and cash flows.

The total assets as on 30 June 2015 were below those of the previous year at EUR 505.7 million (31 March 2015: EUR 515.6 million). The total equity of EUR 223.3 million was EUR 4.0 million above the comparison value at the end of the fiscal year of EUR 219.4 million. The equity ratio of the Kapsch TrafficCom Group improved as a result from 42.5% on 31 March 2015 to 44.2% on 30 June 2015.

The most significant changes in assets involved the non-current assets. Other non-current assets decreased by EUR 10.9 million due to the contractually agreed repayments from the Belorussian installation project over a period of 36 months and the associated movement from non-current to current trade receivables. In addition, the other current financial assets declined due to the sale of securities.

The largest change on the liabilities side of the balance sheet occurred in the non-current financial liabilities, which declined by EUR 9.2 million. This is related to the buyback of corporate bonds in the amount of EUR 4.2 million as well as the repayment of the financing for the installation of the nationwide electronic truck toll system in Belarus. The current liabilities decreased by EUR 4.9 million, which is attributable on the one hand to the decrease in trade payables from the project business by EUR 9.4 million as on the reporting date, while on the other hand other liabilities and deferred income increased by EUR 5.9 million due to open liabilities to minority shareholders and the assumption of liabilities in connection with the acquisition of Streetline, Inc., U.S.A.

The net cash flow from operating activities amounted to EUR 16.0 million. This development was largely influenced by the positive profit from operating activities as well as the decrease in non-current receivables and assets, which was however partially compensated for by the increase in current receivables and assets. The sale of securities also had a positive effect on the cash flows. The cash flow from investing activities was determined in the first quarter by the sale of securities as well as the cash inflow from the purchase of the shares in Streetline, Inc., U.S.A., and was positive at EUR 6.6 million. The free cash flow was also once again positive at EUR 14.7 million. The decrease in the current and non-current financial liabilities due to the buyback of corporate bonds, the repayment of project financing and the dividends paid out to minority shareholders of group companies resulted in a negative net cash flow from financing activities of EUR -17.5 million.

Cash and cash equivalents increased from EUR 96.8 million on 31 March 2015 to EUR 100.4 million on 30 June 2015. The decline in non-current financial liabilities and the increase in cash and cash equivalents led to a decline in net debt to EUR -25.9 million on 30 June 2015 (31 March 2015: EUR -35.9 million).

Condensed consolidated interim financial information as of 30 June 2015.*)

Kapsch TrafficCom Group – Consolidated statement of comprehensive income.

All amounts in TEUR Notes 2015/16 Q1 2014/15 Q1
Revenues (5) 117,126 117,970
Other operating income 3,306 3,068
Changes in finished and unfinished goods and work in progress -3,361 2,218
Own work capitalized 221 0
Cost of materials and other production services -38,591 -58,593
Staff costs -39,008 -36,554
Amortization and depreciation -4,129 -4,108
Other operating expenses -22,772 -23,357
Operating result (5) 12,791 643
Finance income 5,391 3,441
Finance costs -3,126 -1,535
Financial result 2,264 1,906
Result from associates -38 137
Result before income taxes 15,017 2,686
Income taxes (13) -3,545 -2,404
Result for the period 11,472 282
Result attributable to:
Equity holders of the company 9,758 -755
Non-controlling interests 1,714 1,037
11,472 282
Earnings per share from the result for the period attributable
to the equity holders of the company (in EUR) 0.75 -0.06
Other comprehensive income for the period
Items subsequently reclassified to the result for the period:
Currency translation differences -214 -263
Currency translation differences from net investments in foreign operations 1,602 298
Available-for-sale financial assets:
Fair value gains/losses recognized in other comprehensive income 611 -889
Reclassification of cumulated net gains to the result for the period
(sale of available-for-sale financial assets) -3,318 0
Income tax relating to items subsequently reclassified to the result for the period 461 -118
Total items subsequently reclassified to the result for the period -858 -972
Items subsequently not reclassified to the result for the period:
Remeasurements of liabilities from post-employment benefits 0 0
Income tax relating to items subsequently not reclassified to the result for the period 0 0
Total items subsequently not reclassified to the result for the period 0 0
Other comprehensive income for the period net of tax (14) -858 -972
Total comprehensive income for the period 10,615 -691
Total comprehensive income attributable to:
Equity holders of the company 8,872 -1,740
Non-controlling interests 1,743 1,050
10,615 -691

Earnings per share relate to 13.0 million shares.

The notes on the following pages form an integral part of this condensed interim financial information.

*) The condensed consolidated interim report has neither been audited nor been reviewed by an auditor.

Kapsch TrafficCom Group – Consolidated balance sheet.

All amounts in TEUR Notes 30 June 2015 31 March 2015
ASSE
TS
Non-current assets
Property, plant and equipment (6) 22,386 22,393
Intangible assets (6) 69,143 71,250
Interests in associates (7) 1,961 2,014
Other non-current financial assets and investments (8) 23,712 23,099
Other non-current assets 17,242 28,138
Deferred tax assets 14,547 13,590
148,991 160,485
Current assets
Inventories 46,509 47,670
Trade receivables and other current assets 209,826 205,387
Other current financial assets (8) 0 5,291
Cash and cash equivalents 100,415 96,765
356,750 355,113
Total assets 505,741 515,597
EQUI
TY
Capital and reserves attributable to equity holders of the company
Share capital (9) 13,000 13,000
Capital reserve 117,509 117,509
Retained earnings and other reserves 86,321 77,449
216,830 207,958
Non-controlling interests 6,503 11,403
Total equity 223,333 219,361
LIA
BILITIES
Non-current liabilities
Non-current financial liabilities (10) 79,792 88,985
Liabilities from post-employment benefits to employees (11) 25,104 25,210
Non-current provisions (12) 1,692 1,661
Other non-current liabilities 4,453 4,657
Deferred income tax liabilities 2,952 2,380
113,995 122,892
Current liabilities
Trade payables 39,066 48,441
Other liabilities and deferred income 71,459 65,535
Current tax payables 2,672 1,174
Current financial liabilities (10) 46,473 48,969
Current provisions (12) 8,741 9,225
168,413 173,344
Total liabilities 282,408 296,236
Total equity and liabilities 505,741 515,597

The notes on the following pages form an integral part of this interim financial information.

Kapsch TrafficCom Group – Consolidated statement of changes in equity.

All amounts in TEUR

Non
controlling Total
Attributable to equity holders of the company interests equity
Consolidated
Share Capital Other retained
capital reserve reserves earnings
Carrying amount as of 31 March 2014 13,000 117,509 -13,713 86,004 10,310 213,110
Dividend 0 -6,750 -6,750
Result for the period -755 1,037 282
Other comprehensive income for the period:
Currency translation differences -52 13 -39
Fair value gains/losses on available-for-sale
financial assets -933 0 -933
Carrying amount as of 30 June 2014 13,000 117,509 -14,698 85,249 4,610 205,670
Carrying amount as of 31 March 2015 13,000 117,509 -12,184 89,634 11,403 219,361
Dividend 0 -6,663 -6,663
Effects from acquisition of shares in subsidiaries 0 21 21
Result for the period 9,758 1,714 11,472
Other comprehensive income for the period:
Currency translation differences 959 28 988
Fair value gains/losses on available-for-sale
financial assets -1,845 0 -1,845
Carrying amount as of 30 June 2015 13,000 117,509 -13,070 99,391 6,503 223,333

The effects from the acquisition of shares in subsidiaries in the first quarter of the fiscal year 2015/16 result from the acquisition of shares in Streetline, Inc., California (see note 15). The notes on the following pages form an integral part of this interim financial information.

Kapsch TrafficCom Group – Consolidated cash flow statement.

All amounts in TEUR 2015/16 Q1 2014/15 Q1
Cash flow from operating activities
Operating result 12,791 643
Adjustments for non-cash items and other reconciliations:
Scheduled amortization and depreciation 4,129 4,108
Increase/decrease in liabilities from post-employment benefits -106 -73
Increase/decrease in other non-current liabilities and provisions -25 -160
Increase/decrease in other non-current receivables -1,022 -1,578
Increase/decrease in trade receivables (non-current) 13,006 8,248
Increase/decrease in trade payables (non-current) -214 -328
Other (net)
Increase/decrease in trade receivables and other assets
Increase/decrease in inventories
Increase/decrease in trade payables and other current payables
Increase/decrease in current provisions
4,222 496
32,781 11,356
Changes in net current assets:
-2,960 19,745
1,161 3,157
-8,604 1,700
-483 67
-10,887 24,670
Cash flow from operations 21,894 36,026
Interest received 313 445
Interest payments -1,331 -1,207
Net payments of income taxes -4,870 -1,473
Net cash flow from operating activities 16,007 33,791
Cash flow from investing activities
Purchase of property, plant and equipment -1,548 -1,011
Purchase of intangible assets -19 -57
Purchase of securities and investments 0 -208
Increase in cash from the acquisition of entities (less payment for the acquisition of the entity) 2,543 0
Proceeds from the disposal of property, plant and equipment and intangible assets 291 131
Proceeds from the disposal of securities and investments 5,335 0
Net cash flow from investing activities 6,601 -1,144
Cash flow from financing activities
Dividends paid to non-controlling interests -6,663 -6,750
Increase in non-current financial liabilities 44 45
Decrease in non-current financial liabilities -9,237 -5,263
Increase in current financial liabilities 892 1,299
Decrease in current financial liabilities -2,490 -2,600
Net cash flow from financing activities -17,454 -13,269
Net increase/decrease in cash and cash equivalents 5,154 19,379
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period 96,765 57,731
Net increase/decrease in cash and cash equivalents 5,154 19,379
Exchange gains/losses on cash and cash equivalents -1,504 307
Cash and cash equivalents at end of period 100,415 77,417

The notes on the following pages form an integral part of this interim financial information.

Selected notes to the condensed consolidated interim financial information.

1 General information.

Kapsch TrafficCom Group is an international supplier of superior intelligent transportation systems (ITS).

The business activities of the Kapsch TrafficCom Group are subdivided into the following three segments: ¾Road Solution Projects (RSP)

  • ¾Services, System Extensions, Components Sales (SEC)
  • ¾Others (OTH)

The segment Road Solution Projects relates to the installation of ITS solutions.

The segment Services, System Extensions, Components Sales relates to the sale of services (maintenance and operation) and components in the area of ITS solutions.

The segment Others relates to non-core business activities conducted by Kapsch Components GmbH & CoKG. In this segment, Kapsch TrafficCom Group offers engineering solutions, electronic manufacturing and logistics services to affiliated entities and third parties. Furthermore, the non-ITS relevant business of KTC USA Inc. is allocated to this segment, including solutions, systems and services for operational monitoring of public transportation and environmental infrastructure.

2 Basis of preparation.

This condensed interim financial information for the first quarter of the current fiscal year 2015/16 ended 30 June 2015 has been prepared in accordance with IAS 34 "Interim financial reporting". The interim condensed financial report should be read in conjunction with the annual financial statemtents for the year ended 31 March 2015.

For ease of presentation, amounts have been rounded and, unless indicated otherwise, are presented in thousand Euro (TEUR). However, calculations are done using exact amounts, including the digits not shown, which may lead to rounding differences.

3 Accounting policies.

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 March 2015, as described in the annual financial statements for the year ended 31 March 2015.

In the condensed interim financial information for the first quarter of the current fiscal year 2015/16 the following new or amended IFRS and IFRIC have been adopted.

New/adopted IFRSs Applicable to financial years beginning on or after
IAS 19 Employee Benefits (Amendment) 1 January 2015
Annual improvement to IFRS, 2010–2012
IFRS 2 Share-based Payment 1 January 2015
IFRS 3 Business Combinations 1 January 2015
IFRS 8 Operating Segments 1 January 2015
IFRS 13 Fair Value Measurement 1 January 2015
IAS 16 Property, Plant and Equipment 1 January 2015
IAS 24 Related Party Disclosures 1 January 2015
IAS 38 Intangible Assets 1 January 2015
New/adopted IFRSs Applicable to financial years beginning on or after
Annual improvement to IFRS, 2011–2013
IFRS 1 First-time Adoption of International Financial Reporting Standards 1 January 2015
IFRS 3 Business Combinations 1 January 2015
IFRS 13 Fair Value Measurement 1 January 2015
IAS 40 Investment Property 1 January 2015

Adoption of the new/amended standards did not result in any significant effects on the condensed consolidated interim financial information.

4 Risk management.

The financial risks to which Kapsch TrafficCom Group is exposed are generally consistent with those of the consolidated financial statements for the year ended 31 March 2015 and are described therein.

5 Segment information.

Services,
2015/16 Q1 Road Solution System Extensions, Consolidated
All amounts in TEUR Projects Components Sales Others group
Revenues 14,914 96,495 5,717 117,126
Operating result -7,142 19,476 457 12,791
Services,
2014/15 Q1 Road Solution System Extensions, Consolidated
All amounts in TEUR Projects Components Sales Others group
Revenues 24,371 86,988 6,611 117,970
Operating result -12,394 12,939 98 643

The following table contains all single external customers which contributed more than 10% to the total revenues of the period and additionally shows the information of the respective operating segment.

All amounts in TEUR 2015/16 Q1 2014/15 Q1
Services, Services,
Road Solution System Extensions, Road Solution System Extensions,
Revenues Projects Components Sales Revenues Projects Components Sales
Customer 1 20,431 x 19,426 x
Customer 2 18,829 x 14,665 x
Customer 3 8,222 x x 14,568 x x

6 Capital expenditure.

All amounts in TEUR 30 June 2015 30 June 2014
Carrying amount as of 31 March of prior year 93,644 113,014
Additions 1,567 1,067
Additions from the acquisition 1,297 0
Disposals -291 -129
Depreciation, amortization, impairments and other movements -4,129 -4,108
Currency translation differences -558 331
Carrying amount as of 30 June of fiscal year 91,529 110,175

7 Interests in associates.

All amounts in TEUR 30 June 2015 30 June 2014
Carrying amount as of 31 March of prior year 2,014 1,596
Currency translation differences -14 73
Additions from foundations and acquisitions 0 0
Disposals 0 0
Share in result -38 137
Carrying amount as of 30 June of fiscal year 1,961 1,806

On 31 July 2012 the group acquired 33% of the shares in SIMEX, Integración de Sistemas, S.A.P.I. de C.V., Mexico City, Mexico. Taking potential voting rights into account (options for purchase of the remaining shares) the group has the majority of the shares. As the potential voting rights are not assessed to be substantial the presumption of control was rebutted. As significant influence over the financial and business policies exists, the investment is accounted for using the equity method.

8 Current and non-current financial assets.

30 June 2015 31 March 2015 30 June 2014 31 March 2014
Other non-current financial assets and investments 23,712 23,099 27,709 28,506
Other current financial assets 0 5,291 5,050 4,924
23,712 28,390 32,759 33,430
Available Available Other
Other non-current financial assets and investments for-sale for-sale non-current
2015/16 Q1 securities investments financial assets Total
Carrying amount as of 31 March 2015 3,803 19,296 0 23,099
Currency translation differences 0 0 0 0
Additions 0 0 2 2
Disposals 0 0 0 0
Change in fair value -129 740 0 611
Carrying amount as of 30 June 2015 3,675 20,036 2 23,712
Available Available Other
Other non-current financial assets and investments for-sale for-sale non-current
2014/15 Q1 securities investments financial assets Total
Carrying amount as of 31 March 2014 3,655 23,758 1,093 28,506
Currency translation differences 0 0 10 10
Additions 0 208 0 208
Disposals 0 0 0 0
Change in fair value 49 -1,064 0 -1,015
Carrying amount as of 30 June 2014 3,704 22,902 1,103 27,709
Available
Other current financial assets for-sale Other current
2015/16 Q1 securities financial assets Total
Carrying amount as of 31 March 2015 5,291 0 5,291
Currency translation differences 0 0 0
Additions 0 0 0
Disposals -5,291 0 -5,291
Change in fair value 0 0 0
Carrying amount as of 30 June 2015 0 0 0
Available
Other current financial assets for-sale Other current
2014/15 Q1 securities financial assets Total
Carrying amount as of 31 March 2014 4,924 0 4,924
Currency translation differences 0 0 0
Additions 0 0 0
Disposals 0 0 0
Change in fair value 126 0 126
Carrying amount as of 30 June 2014 5,050 0 5,050

As of 30 June 2015, available-for-sale securities relate to government and bank bonds as well as shares in investment funds. As of 30 June 2015, investments classified as available-for-sale mainly relate to a 19.48% investment in the listed company Q-Free ASA, Trondheim, Norway.

In the first quarter of the fiscal year 2015/16, the disposal of the available-for-sale securities relate to the sale of a mutual fund (ESPA Cash Asset-Backed) and led to a gain amounting to TEUR 3,363 (effect in the result for the period) and TEUR 44 (effect in total comprehensive income for the period).

As of 30 June 2014, other non-current financial assets mainly related to a loan from the group to Simex, Integración de Sistemas, S.A.P.I. de C.V., Mexico, which was repaid in full in the third quarter of fiscal year 2014/15.

Fair value-hierarchies and determination of fair value

Financial assets and liabilities have to be classified in one of the three following fair value-hierarchies:

Level 1. There are quoted prices in active markets for identical assets and liabilities. In the group, the investment in Q-Free ASA, Trondheim, Norway, as well as listed equity instruments are attributed to Level 1.

Level 2. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques based on observable direct or indirect market data. This category comprises availablefor-sale securities, such as government and other bonds, which are quoted, however not regularly traded on a stock market.

Specific valuation techniques used to value financial instruments include:

  • ¾Quoted market prices or dealer quotes for similar instruments;
  • ¾The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves;
  • ¾The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value;
  • ¾Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

Level 3. Financial instruments are included in level 3 if the valuation information is not based on observable market data.

The classification of current and non-current financial assets is as follows:

Level 3
Level 2 Not based on
Level 1 Observable observable
Quoted prices market data market data 2015/16 Q1
Non-current financial assets
Available-for-sale securities 2,969 706 0 3,675
Available-for-sale investments 20,031 0 0 20,031
22,999 706 0 23,706
Current financial assets
Available-for-sale securities 0 0 0 0
0 0 0 0
Total 22,999 706 0 23,706

As of 30 June 2015, available-for-sale investments amounting to TEUR 6 are recognized at amortized cost.

Level 3
Level 2 Not based on
Level 1 Observable observable
Quoted prices market data market data 2014/15 Q1
Non-current financial assets
Available-for-sale securities 2,958 746 0 3,704
Available-for-sale investments 22,897 0 0 22,897
25,855 746 0 26,601
Current financial assets
Available-for-sale securities 5,050 0 0 5,050
5,050 0 0 5,050
Total 30,905 746 0 31,651

As of 30 June 2014, other non-current financial assets amounting to TEUR 1.108 are recognized at amortized cost.

9 Share capital.

The registered share capital of the company amounts to EUR 13,000,000. The share capital is fully paid in. The total number of ordinary shares issued is 13,000,000. The shares are ordinary bearer shares and have no par value.

10 Financial liabilities.

All amounts in TEUR 30 June 2015 31 March 2015 30 June 2014 31 March 2014
Non-current financial liabilities 79,792 88,985 104,276 109,494
Current financial liabilities 46,473 48,969 45,407 46,560
Total 126,266 137,954 149,683 156,054

Movements in borrowings are analyzed as follows:

Non-current Current
financial financial
All amounts in TEUR liabilities liabilities Total
Carrying amount as of 31 March 2015 88,985 48,969 137,954
Additions 44 892 936
Repayments of borrowings -9,237 -2,490 -11,727
Reclassification 0 0 0
Currency translation differences 0 -897 -897
Carrying amount as of 30 June 2015 79,792 46,473 126,266
Non-current Current
financial financial
All amounts in TEUR liabilities liabilities Total
Carrying amount as of 31 March 2014 109,494 46,560 156,054
Additions 45 1,299 1,344
Repayments of borrowings -5,263 -2,600 -7,863
Reclassification 0 0 0
Currency translation differences 0 149 149
Carrying amount as of 30 June 2014 104,276 45,407 149,683

On 28 April 2015, Kapsch TrafficCom made holders of the corporate bond a buyback offer at a rate of 105.75%, valid until 19 May 2015. This offer was utilized at a nominal value of TEUR 4,182. The purchased debt instruments were submitted to the Oesterreichische Kontrollbank (OeKB) for redemption on 22 May 2015, leaving the corporate bond with an outstanding volume of TEUR 70,818 with maturity on 3 November 2017.

The fair values and the gross cash flows (including interests) of current and non-current financial liabilities are as follows:

30 June 2015 30 June 2014
Carrying amount 126,266 149,683
Fair value 139,063 155,703
Gross cash flows:
Up to 1 year 49,831 47,037
Between 1 and 3 years 86,706 31,536
Between 3 and 5 years 0 74,346
136,537 152,919

The classification of financial liabilities is as follows:

Level 2 Level 3
Level 1 Observable Not based on observ
Quoted prices market data able market data 2015/16 Q1
Corporate bond 74,323 0 0 74,323
Other financial liabilities 0 64,740 0 64,740
Total 74,323 64,740 0 139,063
Level 2 Level 3
Level 1 Observable Not based on observ
Quoted prices market data able market data 2014/15 Q1
Corporate bond 79,388 0 0 79,388
Other financial liabilities 0 76,315 0 76,315
Total 79,388 76,315 0 155,703

The fair value of the other financial liabilities (level 2) was derived through discounting the gross cash flows over the contracted term at a risk-adjusted interest rate.

11 Liabilities from post-employment benefits to employees.

All amounts in TEUR 30 June 2015 31 March 2015 30 June 2014 31 March 2014
Termination benefits 9,632 9,690 8,742 8,790
Retirement benefits 15,472 15,520 13,337 13,363
Total 25,104 25,210 22,079 22,153

Termination benefits

Termination benefits include legal and contractual entitlements to one-off payments to employees of the group which result from events such as dismissal by the employer, amicable termination of the employment, retirement or death of the employee. For termination benefits the group bears the risk of inflation due to compensation increases. The obligations from termination benefits mainly result from the Austrian entities of the group.

Retirement benefits

Liabilities for retirement benefits recognized at the balance sheet date relate to retirees only. All pension agreements are based on the final salary, are granted as fixed monthly pension payments and are not covered by external plan assets (funds). In addition, contributions are paid to an external pension fund for employees of the group. For retirement benefits the group bears the risk of longevity and inflation due to pension increases.

12 Provisions.

All amounts in TEUR 30 June 2015 31 March 2015 30 June 2014 31 March 2014
Non-current provisions 1,692 1,661 1,322 1,303
Current provisions 8,741 9,225 28,445 28,378
Total 10,434 10,886 29,767 29,680
Addition re
sulting from Currency
2015/16 Q1 company translation
All amounts in TEUR 31 March 2015 acquisition Addition Utilization Disposal differences 30 June 2015
Obligations from anniversary bonuses 1,189 0 7 0 -21 0 1,175
Other 472 0 76 -5 0 -25 518
Non-current provisions, total 1,661 0 82 -5 -21 -25 1,692
Warranties 1,611 711 0 0 -82 -40 2,201
Losses from pending transactions and rework 1 0 0 0 0 0 1
Legal fees, costs of litigation and contract risks 402 0 0 -30 -36 1 337
Costs of dismantling, removing and
restoring assets 0 183 0 0 -7 -10 166
Other 7,211 0 1,339 -1,351 -1,059 -102 6,037
Current provisions, total 9,225 894 1,340 -1,381 -1,185 -151 8,741
Total 10,886 894 1,422 -1,386 -1,206 -176 10,434
Addition re
sulting from Currency
2014/15 Q1 company translation
All amounts in TEUR 31 March 2014 acquisition Addition Utilization Disposal differences 30 June 2014
Obligations from anniversary bonuses 1,120 0 19 0 -7 0 1,132
Other 183 0 10 0 0 -2 190
Non-current provisions, total 1,303 0 29 0 -7 -2 1,322
Warranties 1,637 0 6 -29 0 -8 1,606
Losses from pending transactions and rework 16,201 0 0 0 0 59 16,260
Legal fees, costs of litigation and contract risks 4,071 0 17 -50 0 14 4,051
Other 6,468 0 924 -883 -2 21 6,528
Current provisions, total 28,378 0 946 -961 -2 85 28,445
Total 29,680 0 975 -961 -10 83 29,767

13 Income taxes.

Income taxes relate to current taxes and to deferred tax assets and deferred tax liabilities. Applying the Austrian corporate tax rate of 25% to the Group's pre-tax result gives rise to the theoretical value for the tax expense/ income. The effective tax expense/income differs from the above due to, among others, different tax regimes in the various countries, the treatment of tax losses, tax allowances and permanent differences.

14 Other comprehensive income.

2015/16 Q1 Tax expense/
All amounts in TEUR Before taxes income After taxes
Fair value gains/losses on available-for-sale financial assets:
Unrealized gains/losses in the current period 611 32 643
Gains/losses recognized in the result for the period -3,318 829 -2,488
Currency translation differences -214 -214
Currency translation differences from net investments
in foreign business 1,602 -401 1,202
Fair value changes recognized in equity -1,319 461 -858

In the first quarter of the fiscal year 2015/16 the unrealized gains/losses on available-for-sale financial assets amounting to TEUR 740 relate to fair value changes on the investment in Q-Free ASA, Norway, which are tax neutral.

In the first quarter of the fiscal year 2015/16, the gains/losses recognized in the result for the period relate to the disposal of current available-for-sale financial assets (see note 8).

2014/15 Q1 Tax expense/
All amounts in TEUR Before taxes income After taxes
Fair value gains/losses on available-for-sale financial assets:
Unrealized gains/losses in the current period -889 -44 -933
Currency translation differences -263 -263
Currency translation differences from net investments
in foreign business 298 -74 223
Fair value changes recognized in equity -854 -118 -972

In the first quarter of the fiscal year 2014/15 the unrealized gains/losses on available-for-sale financial assets amounting to TEUR -1,064 relate to fair value changes on the investment in Q-Free ASA, Norway, and are tax neutral.

15 Business combinations.

On 14 April 2015 the group acquired a controlling interest in Streetline, Inc., California. Streetline is a leading smart parking company that offers intelligent data and modern analytics to solve parking space problems for end users.

All amounts in TEUR
Consideration paid 189
Less fair value of net assets acquired (provisionally determined) -189
Goodwill 0

Assets and liabilities resulting from the acquisition are shown as follows (provisionally determined):

All amounts in TEUR Fair value
Property, plant and equipment 1,251
Intangible assets 46
Receivables and other assets 580
Cash and cash equivalents 2,732
Provisions -894
Liabilities, other liabilities and deferred income -3,504
Net assets acquired 210
thereof controlling interest (90%) 189
thereof non-controlling interest (10%) 21

The acquired company contributed revenue of TEUR 651 and a net loss of TEUR 761 to the group's result for the period from 14 April 2015 to 30 June 2015. If the acquisition had occurred on 1 April 2015, there would not have been a significant change in revenue or profit of the group.

16 Contingent liabilities and other commitments.

The group's contingent liabilities primarily result from large-scale projects. Other commitments mainly relate to contract and warranty bonds, bank guarantees, performance and bid bonds as well as sureties.

Details of contingent liabilities and other commitments are as follows:

All amounts in TEUR 30 June 2015 31 March 2015
Contract, warranty, performance and bid bonds
North America (toll collection systems and traffic management) 97,282 79,441
South Africa (toll collection system) 84,758 87,578
Australia (toll collection systems) 20,128 20,593
Austria (toll collection system) 8,500 8,500
Poland (toll collection system) 7,053 7,236
Czech Republic (toll collection system) 4,168 4,126
Portugal (toll collection system) 167 167
Other 1,534 1,647
223,591 209,288
Bank guarantees 1,673 1,664
Sureties 62 61
Total 225,325 211,014

17 Related parties.

The following tables provides an overview of revenues and expenses in the respective fiscal years as well as receivables from and payables due to related parties at the respective balance sheet dates:

All amounts in TEUR 2015/16 Q1 2014/15 Q1
Affiliated companies outside the Kapsch TrafficCom Group
Revenues 2,733 5,045
Expenses 5,277 6,389
Other related parties
Revenues 0 0
Expenses 61 239
All amounts in TEUR 30 June 2015 30 June 2014
Affiliated companies outside the Kapsch TrafficCom Group
Trade receivables and other current assets 2,613 5,381
Trade payables and other liabilities 8,097 12,054
Liabilities from share purchase 2,046 0
Other related parties
Trade receivables and other current assets 112 127
Trade payables and other liabilities 13,179 11,794

The members of the executive and supervisory boards have management functions or are members in supervisory boards of other companies of the Kapsch Group.

18 Events occurring after 30 June 2015.

No material events have occurred after 30 June 2015.

Vienna, 19 August 2015

The Managing Board

Georg Kapsch Chief Executive Officer

André Laux Executive board member

Disclaimer. Certain statements contained in this report constitute "forward-looking statements." These statements, which contain the words "believe", "intend", "expect" and words of similar meaning, reflect management's beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. As a result, readers are cautioned not to place undue reliance on such forward-looking statements. The company disclaims any obligation to publicly announce the result of any revisions to the forward-looking statements made herein, except where it would be required to do so under applicable law. Slight differences in calculations may arise due to the rounding of individual items and percentages. The English translation is for convenience; only the German text is binding.

Kapsch TrafficCom is a provider of intelligent transportation systems (ITS) in the solution segments of road user charging, urban access and parking, traffic management, road safety enforcement, commercial vehicle operations, electronic vehicle registration and V2X cooperative systems. With end-to-end solutions, Kapsch TrafficCom covers the entire value creation chain of its customers as a one-stop shop, from components and design to the installation and operation of systems. The core business is to design, build and operate electronic toll collection and traffic management systems. References in 44 countries on all continents make Kapsch TrafficCom a recognized ITS provider worldwide. As part of the Kapsch Group, a family-owned Austrian technology group founded in 1892, Kapsch TrafficCom, headquartered in Vienna, Austria, has subsidiaries and offices in 33 countries, has been listed on the Vienna Stock Exchange (KTCG) since 2007, and generated with more than 3,500 employees revenues of EUR 456 million in fiscal year 2014/15.

Kapsch TrafficCom AG | Am Europlatz 2 | 1120 Vienna | Austria | www.kapschtraffic.com Investor Relations | Marcus Handl | Phone +43 50 811 1120 | Fax +43 50 811 99 1120 | E-Mail [email protected] Public Relations | Ingrid Lawicka | Phone +43 50 811 1705 | Fax +43 50 811 99 1705 | E-Mail [email protected]

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