Interim / Quarterly Report • Nov 26, 2019
Interim / Quarterly Report
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Kapsch TrafcCom
2019/20 and 2018/19: refers to the respective financial year (April 1 until March 31) H1: first half of a financial year (April 1 until September 30) Unless otherwise stated, all values in EUR million.
| Earnings Data | 2018/19 | H1 2018/19 | H1 2019/20 | +/- |
|---|---|---|---|---|
| Revenues | 737.8 | 335.8 | 359.2 | 7.0% |
| Share of ETC segment | 75.7% | 78.1% | 78.3% | 0.2%p |
| Share of IMS segment | 24.3% | 21.9% | 21.7% | -0.2%p |
| EBITDA 1) | 71.5 | 24.8 | 26.6 | 7.2% |
| EBITDA margin | 9.7% | 7.4% | 7.4% | 0.0%p |
| EBIT 1) | 57.0 | 17.8 | 8.8 | -50.6% |
| EBIT margin | 7.7% | 5.3% | 2.4% | -2.9%p |
| Profit before tax | 55.1 | 12.0 | 3.6 | -69.5% |
| Profit for the period | 46.6 | 8.4 | 2.3 | -72.1% |
| Profit for the period attributable to equity holders | 47.8 | 9.0 | 2.3 | -74.8% |
| Earnings per share (EUR) 2) | 3.68 | 0.70 | 0.18 | -74.8% |
| Business segments | 2018/19 | H1 2018/19 | H1 2019/20 | +/- |
| Electronic Toll Collection (ETC) | ||||
| Revenues | 558.4 | 262.1 | 281.2 | 7.3% |
| EBIT | 64.9 | 24.8 | 17.5 | -29.5% |
| EBIT margin | 11.6% | 9.5% | 6.2% | -3.2%p |
| Intelligent Mobility Solutions (IMS) | ||||
| Revenues | 179.4 | 73.7 | 78.1 | 5.9% |
| EBIT | -7.9 | -7.0 | -8.7 | -23.9% |
| EBIT margin | -4.4% | -9.5% | -11.1% | -1.6%p |
| Revenues by region | 2018/19 | H1 2018/19 | H1 2019/20 | +/- |
| EMEA | 58.4% | 61.5% | 57.5% | -3.9%p |
| Americas | 34.3% | 32.0% | 38.2% | 6.2%p |
| APAC | 7.2% | 6.5% | 4.3% | -2.2%p |
| Balance sheet data | March 31, 2019 | Sept. 30, 2019 | +/- | |
| Total assets 3) | 677.7 | 705.4 | 4.1% | |
| Total equity 2) | 258.7 | 239.4 | -7.5% | |
| Equity ratio 2) | 38.2% | 33.9% | -4.2%p | |
| Net cash (+)/debt (-) 3,4) | -73.5 | -169.0 | 130.0% | |
| Net gearing 5) | 28.4% | 70.6% | 42.2%p | |
| Net working capital 6) | 193.3 | 212.1 | 9.7% | |
| Cash flow | 2018/19 | H1 2018/19 | H1 2019/20 | +/- |
| Net CAPEX 7) | 11.7 | 2.8 | 5.9 | 114.0% |
| Free cash flow 8) | -57.5 | -19.9 | -17.8 | 10.9% |
| Other information | 2018/19 | H1 2018/19 | H1 2019/20 | +/- |
| Employees, end of period | 4,981 | 5,407 | 4,997 | -7.6% |
| On-board units, in million units | 13.46 | 6.77 | 6.25 | -7.7% |
1) In the first half of 2019/20 including EUR 6.5 million from depreciation on right-of-use assets from leases due to IFRS 16 and an EBIT efect EUR 0.3 million
2) Including non-controlling interests
3) As of September 30, 2019 including lease liabilities amounting to EUR 49.2 million from the initial application of IFRS 16 (increase in net debt and total assets in a similar amount)
4) Cash and cash equivalents + other current financial assets – financial liabilities – lease liabilities
5) Net debt/equity
6) Inventories + trade receivables and other current assets + current contract assets + current tax receivables – trade payables – current contract liabilities – current tax liabilities – current provisions – current other liabilities and deferred income
7) Capital expenditure less proceeds from the disposal of property, plant and equipment and intangible assets
8) Cash flow from operating activities + cash flow from investing activities
EUR 359.2 million 7.0%
EUR 8.8 million -50.6%
Revenues H1 EBIT H1 Earnings/share H1
EUR 0.18 -74.8%
As in past financial years, we must also describe the first half of this year as mixed. While revenue development was thoroughly positive, profitability was disappointing. If we take a closer look, there are good reasons for the decline in profits, so I am not worried, although I am not satisfied either.
Revenues rose by 7.0% to EUR 359.2 million relative to the comparable period in the previous year, with both segments contributing towards this positive development.
First half of 2019/20: Revenues +7.0% EBIT -50.6%
Revenues in the "Electronic Toll Collection" (ETC) segment rose to EUR 281.2 million (+7.3%). In particular, the performance of the implementation business was very good in the Americas (+87.4%) and EMEA (+43.3%) regions. By contrast,
revenues from the operation of toll systems decreased (-9.1%), mainly due to the lower scope of service in Poland. After our (old) contract ended on November 2, 2018, Kapsch TrafcCom was contracted to support the operation of the toll system for another 27 months as of November 3, 2018. After two record years, sales of on-board units in North America returned to a normal level. The decline in unit sales led to a drop in component revenues in the Americas (-11.5%) despite a higher-quality product mix. Unit sales also fell in the APAC region, with this partly being due to shifts in the timing of orders.
Revenues in the "Intelligent Mobility Solutions" (IMS) segment rose to EUR 78.1 million (+5.9%). The critical factor here consisted of higher operations revenues in the Americas region and implementation revenues that rose strongly in the APAC region and were able to more than ofset a decline in the EMEA region.
The operating result (EBIT) was EUR 8.8 million and was thus about half as high as in the comparable period of the previous year (EUR 17.8 million). However, one-of efects must be taken into account here:
In connection with the German infrastructure charge:
Due to early termination we had to impair costs to obtain a contract of EUR 4.2 million.
In connection with the toll project in the Czech Republic:
Our contract ends in the third quarter of the financial year. Since our employees will not be hired en bloc by the designated operator, we have set up a provision of EUR 0.9 million for severance payments.
Excluding these one-of efects, EBIT in the first half of the year would have been EUR 13.9 million (previous year: EUR 17.8 million).
The main reasons for the lower profitability are investments in future growth, namely in the form of:
Cost of materials.
The performance of the implementation business – particularly in the ETC segment – in the first half of 2019/20 was very positive, although it required relatively high material investments (i.e. higher costs of materials). The newly installed systems must, however, be operated later on, which ofers additional sales revenue potential for Kapsch TrafcCom.
Personnel expenses.
Since business in North America is growing rapidly, the company needed to hire actively in order to take full advantage of the available market potential. In the first half of the year, the number of employees in the USA (excluding the Smart Parking subsidiary Streetline) rose by around 70 to a total of 714.
One major new development starting in financial year 2019/20 is the initial application of the IFRS 16 "Leases". The changed reporting of leases significantly increases the balance sheet total and net debt as of April 1, 2019, lowering the equity ratio.
| IFRS 16 with significant efect on: | |
|---|---|
| EBITDA |
IFRS 16 has only a minor impact on the EBIT, financial result and profit for the period. Only the EBITDA rises.
At EUR -17.8 million, free cash flow was better than in the comparable period of the previous year (EUR -19.9 million). The reclassification of lease payments on account of the new IFRS 16 accounting standard had a positive impact of EUR 6.4 million. Net working capital rose again, but to a lesser extent than in
the previous year. Financing granted to the German joint venture with CTS EVENTIM negatively impacted the free cash flow in the first half of 2019/20 by EUR 14.5 million.
On September 30, 2019, net debt was EUR 169.0 million. Without the initial application of IFRS 16, it would have been EUR 119.8 million (March 31, 2019: EUR 73.5 million). The increase in the net debt resulted primarily from the dividend payment
Solid balance sheet:
Net gearing: 70.6%
Equity ratio: 33.9%
(EUR 19.5 million) and the negative free cash flow (EUR 17.8 million). The lease payments (EUR 6.4 million), previously included in the free cash flow, must now be explicitly reported in the calculation of the net debt (due to IFRS 16). The equity ratio as of September 30, 2019 was still strong despite the efect of IFRS 16 at 33.9% (March 31, 2019: 38.2%). Net gearing rose to 70.6%, and
would have been 50.0% without the application of IFRS 16. The balance sheet total – also mainly due to the initial application of IFRS 16 – rose to EUR 705.4 million (March 31, 2019: EUR 677.7 million).
In 2018 our joint venture with CTS EVENTIM, in which both companies hold 50%, was awarded the contract to collect the passenger vehicle toll. In addition, we were previously engaged as the sole service provider for automatic monitoring of the passenger vehicle toll in a separate awarding procedure.
On June 18, 2019, the European Court of Justice (ECJ) ruled contrary to expectations that the passenger vehicle toll in its planned form violates the principles of the free movement of goods and services. To our surprise, Kapsch TrafcCom received
notice of termination of the contract on automatic monitoring the following day. The joint venture with CTS EVENTIM received the termination of the contract on the collection of the passenger vehicle toll. The reasons given for the termination of the contracts were the ruling by the European Court of Justice as well as the alleged poor performance in the submission of the planning documents.
Subsequently, the customer also referred to the conduct of the contractors. The notices of termination were issued efective September 30, 2019.
In the event of termination of a contract for "regulatory reasons", particularly on account of a ruling by the European Court of Justice, the contracts for both projects contain special provisions on the compensation of the contractors. If, however, at least one of the performance- or conduct-based reasons for termination given by the customer were acknowledged, the claims for compensation of damages under the corresponding contract could be lower or not apply at all.
Kapsch TrafcCom is currently working on the preparation of the claims from the enforcement contract. By the end of 2019 at the latest, the joint venture must submit the claims from the contract on the collection of the passenger vehicle toll to a final auditor (public accountant).
To clarify the various claims, the first step according to the contracts is a negotiation procedure with the customer. This dispute settlement procedure can take several weeks, but can also be quickly declared unsuccessful by one party. In the event of failure, the two contracts provide for separate arbitration procedures to achieve a final decision. These procedures would be governed by the Rules of Arbitration of the German Institution of Arbitration (Schiedsordnung der Deutschen Institution für Schiedsgerichtsbarkeit, DIS) and would take place in private arbitral tribunals in Berlin. We must reckon with the fact that arbitral awards may not be handed down for a number of years.
Kapsch TrafcCom has been systematically pursuing the Strategy 2020 adopted in 2015 for many years. Now it is time to take stock and look to the future. I do not believe that a radical change of strategy will be necessary because we have already scrutinized it regularly in the past and adapted it wherever necessary.
Society and global relations change; new business models are brought to the market and partially replace old ones; technological development continues to move ahead rapidly and opens up completely new application areas. Therefore, it is healthy and important to check carefully at certain intervals: What are the megatrends relevant for us and how can we respond? What role can the company assume in the future? How do we have to develop and what solutions, services, technologies and business models will gain or lose importance?
Kapsch TrafcCom would like to shape these and make a positive contribution to society. Only in this way can we be successful over the long term. We expect to publish the results of our strategy process in the middle of 2020.
The outlook for financial year 2019/20 originally published by Kapsch TrafcCom contained a similar projection as in the previous year: A weaker first half-year should be followed by a strong second half-year. This forecast should remain true. The outlook for the annual revenues can be confirmed from today's perspective: The amount in the previous year (EUR 737.8 million) should be exceeded by at least 5%.
We did have to revise the expectation for EBIT in the current financial year. From today's perspective, a figure of around EUR 35 million (excluding one-of efects and with a fluctuation range of +/- 10%) should be achieved. Previously, the compa-
Outlook 2019/20: Revenues: Exceed previous year amount by at least 5% EBIT (excl. one-of efects): EUR 35 million (fluctuation range +/- 10%) ny assumed that EBIT (adjusted for one-of efects) would exceed the comparable figure in the previous year (EUR 57 million) by at least 5%. The main reasons for this adjustment are related to the loss of major projects in Germany and to growth in North America. As mentioned above, the margins in the first half of the year were significantly below expectations there. Therefore, we were not able to build up any bufer that could ofset the loss of the project in the Czech Republic in the third quarter. On the contrary, the costs hurt the results.
The extent and the fact that this circumstance would last for a longer period of time became visible in October (when tangible preliminary results for the second quarter were available) and surprised us.
The departure of the United Kingdom from the EU (Brexit) is once again around the corner. In the meantime, hardly any turn in this chaotic process can produce a surprise. However it turns out, Brexit should not have any significant impact on the results for Kapsch TrafcCom, as our local revenues there are in the single-digit million range.
Even if we are currently, at first glance, in a difcult phase, this does not change my positive attitude. Naturally, we must work through the forthcoming loss of the project in the Czech Republic, create capacities for additional, sustainable growth in North America and carefully manage costs. Our market position continues to be strong, however, as we are among the drivers of innovation and there is sufcient business in the market. I am therefore persuaded that we will exit the current period of weakness and be stronger over the long term.
Sincerely,
Georg Kapsch Chief Executive Ofcer
The Annual General Meeting of Kapsch TrafcCom AG took place on September 10, 2019. The following resolutions were adopted: Payout of a dividend of EUR 1.50 per share. This equates to a total distribution of EUR 19.5 million. Ex-dividend date was September 13, 2019, the dividend payment date was September 18, 2019. Shares present for the vote: 77.8% (of a total of 13,000,000 shares, each with one vote) Approved by: > 99% (votes against: 0, abstentions: 500 votes) Formal approval of the actions of the members of the Executive Board for the financial year 2018/19. Shares present for the vote: 77.8% Approved by: > 99% (votes against: 707, abstentions: 3,883 votes) Formal approval of the actions of the members of the Supervisory Board for the financial year 2018/19. Shares present for the vote: 77.8% Approved by: > 99% (votes against: 707, abstentions: 3,483 votes) Appointment of PwC Wirtschaftsprüfung GmbH, Vienna, as the auditor and Group auditor for the financial year 2019/20. Shares present for the vote: 77.8% Approved by: > 99% (votes against: 13,505, abstentions: 0 votes) Election of Dr. Franz Semmernegg, Dr. Kari Kapsch and Dr. Harald Sommerer to the Supervisory Board. The term of ofce will end at the end of the Annual General Meeting deciding on the formal approval for the financial year 2022/23.
| Election of Dr. Franz Semmernegg | |
|---|---|
| Shares present for the vote: | 77.8% |
| Approved by: | > 96% (votes against: 369,250, abstentions: 110 votes) |
| Election of Dr. Kari Kapsch | |
| Shares present for the vote: | 77.8% |
| Approved by: | > 99% (votes against: 25,730, abstentions: 110 votes) |
| Election of Dr. Harald Sommerer | |
| Shares present for the vote: | 77.8% |
| Approved by: | > 99% (votes against: 10,453, abstentions: 0 votes) |
Authorization of the Management Board
| Shares present for the vote: | 77.8% |
|---|---|
| Approved by: | > 99% (votes against: 1,140, abstentions: 1,116 votes) |
The closing prices of the stock in the first half of financial year 2019/20 ranged between EUR 30.15 and EUR 36.00.
The stock opened at EUR 29.60 on April 1, 2019. This price was also the lowest intraday price in the reporting period. On May 17, 2019, Kapsch TrafcCom announced that its earnings before interest and taxes (EBIT) for the past financial year were
Market cap end of H1 2019/20: EUR 403.0 million
expected to exceed expectations. As a result of this news, the stock price rose, although the reference index (ATX Prime) fell slightly. On May 24, the stock reached EUR 36.50, its intraday high during the reporting period.
On June 18, 2019, the day of the annual press conference, the European Court of Justice (ECJ) ruled that the German infrastructure charge ("passenger vehicle toll") in its proposed form violated European law. The next day, Kapsch TrafcCom
+2.8%
surprisingly received notices of termination for both contracts in connection with the passenger vehicle toll. As a result of this, the stock price fell from EUR 34.90 (closing price on the day before the ECJ ruling) to EUR 32.80 (receipt of the notices of termination). Afterwards, the price fluctuated in a range of
+/- 5%. It did not move outside of this range either after the profit warning on July 20, 2019, or as a result of the ex-dividend markdown of EUR 1.50 on September 13, 2019 (ex-dividend date). Only on September 25 and September 30 did the stock price fall below this range. The stock closed (on both days) at EUR 31.00.
The Kapsch TrafcCom stock rose 2.8% in the first half of 2019/20. The benchmark, the ATX Prime, lost 0.5% during the same period.
| In EUR, unless otherwise stated | H1 2018/19 | H1 2019/20 |
|---|---|---|
| Earnings per share | 0.70 | 0.18 |
| High (intraday) | 41.60 | 36.50 |
| Low (intraday) | 33.45 | 29.60 |
| Closing price on September 30, | 35.80 | 31.00 |
| Share performance | -10.1% | 2.8% |
| Ø trading volume (shares, double counting) | 8,462 | 8,615 |
In the last twelve months, the following financial institutions published reports on the share (in alphabetical order):
Raifeisen Centrobank acts as Specialist, the following institutions as Market Maker for the Kapsch TrafcCom share (as of September 30, 2019):
In the first half of the financial year, Kapsch TrafcCom again engaged with capital market participants at several opportunities:
In total, apart from the Annual General Meeting, the presentation of results and group presentations at events, the company communicated directly with capital market participants about 100 times on a bilateral basis or in small groups.
The Annual General Meeting followed the proposal of the Executive Board and the Supervisory Board to pay out a dividend of EUR 1.50 per share. This corresponds to a total dividend payment of EUR 19.5 million and was in line with the company's dividend policy. Dividend payment date was September 18, 2019.
| Earnings per share | |||
|---|---|---|---|
| Year | Dividend per share | in the previous financial year | Payout ratio |
| 2016 | EUR 1.50 | EUR 2.39 | 62.7% |
| 2017 | EUR 1.50 | EUR 3.35 | 44.7% |
| 2018 | EUR 1.50 | EUR 2.21 | 68.0% |
| 2019 | EUR 1.50 | EUR 3.68 | 40.8% |
| Investor Relations Ofcer | Hans Lang |
|---|---|
| Shareholders' telephone line | +43 50 811 1122 |
| [email protected] | |
| Website | www.kapschtrafc.com/ir |
Kapsch TrafcCom addresses the market for intelligent transportation systems (ITS). ITS refers to systems in which information and communication technologies are employed to support and optimize transportation, including infrastructure, vehicles, users and industry.
Kapsch TrafcCom addresses the market for intelligent transportation systems (ITS).
Kapsch TrafcCom has developed its own understanding and its own view of the ITS market in order to define and develop its own market positioning. From
this perspective, the ITS market was divided into four customer segments and the corresponding primary addressees were identified:
Kapsch TrafcCom has identified the most important trends and drivers in the currently addressed markets as follows:
Further information can be found in the Group Management Report 2018/19.
The transportation industry is undergoing radical change with new technologies and concepts such as electric mobility, mobility as a service (MaaS), networked vehicles, and applications based on "Big Data". This is increasingly leading to convergence in the ITS market segments, which calls for intelligent, holistic mobility solutions.
The current focus of Kapsch TrafcCom aims at the operator/infrastructure-related ITS segment. Vehicle- and user-oriented ITS continue to gain in importance. Kapsch TrafcCom also continuously monitors developments in industry-oriented ITS.
Kapsch TrafcCom strives to play a leading role in intelligent, integrated mobility solutions.
In the first half of the current financial year, Kapsch TrafcCom's revenues reached EUR 359.2 million, and were thus 7.0% higher compared to the same period in the previous year. This positive development was attributable to both segments. The Electronic Toll Collection (ETC) segment increased by 7.3% to EUR 281.2 million and the Intelligent Mobility Solutions (IMS) segment saw a rise of 5.9% to EUR 78.1 million.
The growth in the Americas region (North, Central and South America) was very pleasing, with an increase of 27.5% to EUR 137.2 million. In the EMEA region (Europe, Middle East, Africa), revenues of EUR 206.7 million were at the previous year's level. Revenues only dropped in the APAC region (Asia-Pacific) – to EUR 15.4 million (-29.6%).
The operating result (EBIT) of EUR 8.8 million was significantly (-50.6%) below the
comparable figure of the previous year. The EBIT margin fell to 2.4% (previous year: 5.3%). The major reasons for this were:
The operating currency efects (net) were positive in the first half of the current financial year at EUR 1.1 million (previous year: EUR +0.7 million). Without the initial application of the IFRS 16 standard, the EBIT would have been EUR 0.3 million lower and the EBITDA EUR 6.8 million lower.
The financial result of EUR -4.4 million in the first half of 2019/20 was better than in the comparable period of the previous year (EUR -5.8 million). The change in the reporting of interest expenses due to the application of IFRS 16, from other operating expenses to financial result, totaled EUR -0.8 million. The lower market valuation of the equity investment in Q-Free ASA, Norway, led to a loss of EUR 1.7 million. The currency efects totaled EUR -0.4 million (previous year: EUR -5.1 million).
In the first half of 2019/20, an income tax rate of 25% (previous year: 30%) was used. It was applied to the consolidated result before income taxes, without taking into account the (already taxed) proportional result from associated companies and joint ventures. This resulted in income tax expenses of EUR 1.3 million (previous year: EUR 3.6 million).
The profit for the period in the first half of the current financial year therefore decreased by 72.1% to EUR 2.3 million (previous year: EUR 8.4 million).
The segments developed as follows in the first half of 2019/20:
ETC revenues: EUR 281.2 million (+7.3%).
Revenues. Revenues in the ETC segment increased by 7.3% to EUR 281.2 million and contributed 78.3% to total revenues, as in the previous year.
The largest revenue contribution of EUR 166.0 million was again generated in the EMEA region with nation-wide toll projects in the Czech Republic, Poland, Belarus and Austria as well as projects in South Africa (previous year: EUR 165.1 million), with lower operating revenues being ofset by higher implementation revenues. The lower operations revenues are mainly attributable to the toll project in Poland. In the first half of the previous year, an old contract with a larger scope of service was still in force. However, the volume of implementation projects rose relative to the comparable period in the previous year (+43.3%), primarily due to the German infrastructure projects, until termination in June 2019.
Revenues in the Americas region increased substantially to EUR 102.9 million in the first half of the year (+35.1%). The drivers were revenues from the implementation of toll systems, primarily in the USA, which increased by 87.4%. Component revenues fell by 11.5%, however. After two record years, sales of on-board units in North America returned to a normal level. A higher-quality product mix was not able to ofset the decline in units.
In the APAC region, there was a decline in revenues of EUR 8.6 million to EUR 12.2 million relative to the comparable period of the previous year. A portion of the implementation projects, above all in Australia, have already reached an advanced stage or the final phase. Therefore, revenues from implementation projects fell compared to the previous year. Component revenues in Australia fell in the first half of 2019/20 when compared to the previous year due to deferrals in the delivery of components.
In the first half of 2019/20, 6.25 million on-board units were sold (previous year: 6.77 million units). Increases were mainly seen in Spain and South Africa, while sales figures declined in the USA after two record years, and due to timing deferrals in Australia, relative to the comparable period. As a result, component revenues also fell by 10.3%.
Revenues per business type in this segment were as follows:
| in EUR million | H1 2018/19 | H1 2019/20 | +/- |
|---|---|---|---|
| Revenues | 262.1 | 281.2 | 7.3% |
| Implementation | 73.6 | 110.5 | 50.1% |
| Operations | 133.4 | 121.2 | -9.1% |
| Components | 55.1 | 49.5 | -10.3% |
| EBIT | 24.8 | 17.5 | -29.5% |
EBIT. The EBIT in the ETC segment totaled EUR 17.5 million, a 29.5% drop relative to the first half of 2018/19. The cost of materials and other production services rose faster than revenues due to the increase in implementation business, which
requires a relatively high material investment. Amortization and depreciation increased due to the application of IFRS 16, which led to a change from other operating expenses to depreciation (EUR 5.3 million) and interest (EUR 0.5 mil-
lion), and the impairment of assets amounting to EUR 3.8 million in connection with the passenger vehicle toll projects in Germany. Rental expenses decreased, mainly due to the application of IFRS 16, by EUR 4.7 million; marketing and advertising costs fell by EUR 1.2 million, while travel and IT expenses rose by EUR 1.1 million and EUR 1.0 million, respectively. The exchange rate gains and losses from operating activities (net) resulted in EUR +1.3 million and were EUR 0.5 million lower than in the previous year.
IMS revenues: EUR 78.1 million (+5.9%).
Revenues. Revenues in the IMS segment increased by 5.9% to EUR 78.1 million and contributed 21.7% to total revenues, as in the previous year.
Revenues in the EMEA region decreased by 1.5%, but revenues rose by 9.2% in the Americas region and doubled to EUR 3.2 million in the APAC region. In the Americas region, it was possible to increase operations revenues by 17.1% to EUR 14.9 million and implementation revenues to EUR 18.1 million (+4.2%).
Revenues per business type in this segment were as follows:
| in EUR million | H1 2018/19 | H1 2019/20 | +/- |
|---|---|---|---|
| Revenues | 73.7 | 78.1 | 5.9% |
| Implementation | 30.3 | 32.0 | 5.8% |
| Operations | 38.4 | 40.7 | 6.0% |
| Components | 5.0 | 5.3 | 5.8% |
| EBIT | -7.0 | -8.7 | -23.9% |
EBIT. EBIT in the IMS segment totaled EUR -8.7 million in the first half of 2019/20 and was below the previous year's figure of EUR -7.0 million. The cost of materials and other production services rose in line with revenues, whereas staf costs increased
EUR -8.7 million (-23.9%).
disproportionately, mainly in the USA. Amortization and depreciation mainly increased due to the application of IFRS 16, which led to a change from other expenses to depreciation (EUR 1.2 million) and interest. Other operating expenses fell by EUR 2.4 million, with rental expenses dropping by EUR 0.7 mil-
lion due to IFRS 16. However, there were operating losses in the Smart Urban Mobility business unit, as well as weaker sales development and therefore a lower EBIT in Africa.
The balance sheet total as of September 30, 2019 amounted to EUR 705.4 million (March 31, 2019: EUR 677.7 million).
IFRS 16 was applied for the first time in financial year 2019/20 (on April 1, 2019). As a result, right-of-use assets for lease agreements are capitalized as property, plant and equipment, and depreciated on a scheduled basis. Lease liabilities must be recognized for the lease agreements. In the case of subleasing agreements, that are classified as finance lease, there is no capitalization of property, plant and equipment, but rather receivables.
The carrying amount of property, plant and equipment as of September 30, 2019 was EUR 47.2 million above the balance sheet value as of March 31, 2019. This increase largely relates to the initial application of IFRS 16, which required the recognition of right-of-use assets from lease agreements in the amount of EUR 50.8 million as of April 1, 2019. "Other non-current financial assets and investments" rose by EUR 12.8 million compared to the amount as of March 31, 2019 and largely related to the financing provided by Kapsch TrafcCom to a joint venture. The other non-current assets of EUR 7.3 million reported on the balance sheet as of March 31, 2019 mainly related to costs to obtain a contract. In connection with the termination of the contracts for the German infrastructure charge, EUR 4.2 million had to be impaired in the first half of 2019/20, and as a result of the final purchase price allocation of Intelligent Mobility Solutions Ltd., Zambia, in August 2019 the other non-current assets were not recognized as an asset.
The item "Trade receivables and other current assets" fell significantly relative to March 31, 2019. The decrease by a total of EUR 53.1 million largely resulted from a payment in connection with the implementation of the nation-wide vehicle and truck toll system in Bulgaria and lower trade receivables in Austria. By contrast, "contract assets" rose by EUR 39.0 million, which was largely due to projects in the USA and in Bulgaria.
"Cash and cash equivalents" decreased by EUR 13.6 million compared to March 31, 2019, mainly due to the dividend payment (EUR 19.5 million) and the negative free cash flow in the first half of 2019/20.
Appropriate lease liabilities were reported due to the initial application of IFRS 16. As of September 30, 2019, non-current lease liabilities amounted to EUR 36.1 million and current lease liabilities amounted to EUR 13.1 million. On April 1, 2019, the date of initial application, these liabilities amounted to EUR 40.5 million and EUR 12.4 million, respectively.
Current financial liabilities rose in the first half of 2019/20 by EUR 38.6 million to EUR 68.5 million. Trade payables fell, in particular in Austria. Other liabilities and deferred income declined, particularly in Bulgaria and the USA.
Equity fell by EUR 19.3 million to EUR 239.4 million compared to the balance sheet date of March 31, 2019. The main reasons for this are the paid-out dividend of EUR 19.5 million and the reduction in minority interests of EUR 1.7 million due to the final purchase price allocation of Intelligent Mobility Solutions Ltd., Zambia. The equity ratio as of September 30, 2019 was 33.9% (March 31, 2019: 38.2%). The decline in equity just described and the increase in the balance sheet total due to the initial application of IFRS 16 were responsible for this. The equity ratio would have been 36.5% without the initial application of the new accounting standard.
Cash flow from operating activities in the first half of the current financial year was positive at EUR 2.7 million (previous year: EUR -14.1 million). It should be mentioned that lease payments (EUR -6.4 million) are reported in the cash flow from financing activities as of financial year 2019/20. Furthermore, at EUR -17.4 million, the change in net working capital in the first half of 2019/20 was lower than in the same period of the previous year (EUR -32.9 million). Two efects were critical for this: "Trade receivables and other current assets"—including "contract assets"—fell by EUR 14.2 million (previous year: increase of EUR 31.1 million). At the same time, "trade payables and other current liabilities"—including "contract liabilities"—dropped by EUR 23.7 million (previous year: increase of EUR +4.1 million).
Cash flow from investing activities amounted to EUR -20.5 million in the first half of 2019/20 and was thus significantly more negative than in the first half of 2018/19 (EUR -5.8 million). There were two main reasons for this: Net investments, mostly in the USA, Canada and Zambia, increased by a total of EUR 3.1 million. In addition, EUR 14.5 million in financing was provided to a joint venture in Germany.
Free cash flow, defined as cash flow from operating activities plus cash flow from investing activities, amounted to EUR -17.8 million in the first half of financial year 2019/20 and was thus slightly more positive than in the comparable period of the previous year (EUR -19.9 million). The aforementioned reclassification of lease payments (first half of 2019/20: EUR 6.4 million) due to the initial application of IFRS 16 must be taken into account.
The cash flow from financing activities totaled EUR 5.0 million in the first half of the year (previous year: EUR -26.1 million). This is primarily due to the increase in current financial liabilities by EUR 33.1 million. Lease payments totaled EUR -6.4 million in the first half of 2019/20. As already mentioned above, these were part of the cash flow from operating activities in the previous year.
Cash and cash equivalents as of September 30, 2019 totaled EUR 81.1 million (March 31, 2019: EUR 94.7 million).
Net working capital totaled EUR 212.1 million (March 31, 2019: EUR 193.3 million).
Net debt reached EUR 169.0 million (March 31, 2019: EUR 73.5 million), which corresponded to a net gearing of 70.6% (March 31, 2019: EUR 28.4%). The increase in the net debt resulted primarily from the initial application of IFRS 16 (EUR -49.2 million), the negative free cash flow (EUR -17.8 million) and the dividend payment (EUR -19.5 million). Without the application of IFRS 16, the net debt would have been EUR 119.8 million and the net gearing 50.0%.
With efect as of May 31, 2019, the afliated company Kapsch CarrierCom AG, including its subsidiaries, and the operating business unit of the afliated company Kapsch PublicTransportCom were sold to S&T AG and are not reported as related party since then.
With the exception of the details included in the consolidated financial statements 2018/19 and the information included in note 15, there were no other transactions with related parties that had a significant impact on the financial position or operating result during the first half of the financial year.
On May 1, 2019, Mr. Alfredo Escribá Gallego was appointed to the Executive Board of Kapsch TrafcCom AG. He will hold this ofce for a term of five years. Mr. Escribá followed former Chief Technology Ofcer (CTO) Alexander Lewald, who left the company amicably.
On June 18, 2019, the European Court of Justice (ECJ) ruled contrary to expectations that the passenger vehicle toll in its planned form violates the principles of the free movement of goods and services. To our surprise, Kapsch TrafcCom received notice of termination of the contract on automatic monitoring the following day. The joint venture with CTS EVENTIM received the termination of the contract on the collection of the passenger vehicle toll. The reasons given for the termination of the contracts were the ruling by the European Court of Justice and the alleged poor performance of the contractors in the submission of the planning documents. The notices of termination were issued efective September 30, 2019.
Kapsch TrafcCom is currently working on the preparation of the claims from the contract on the monitoring of the passenger vehicle toll. By the end of 2019 at the latest, the joint venture must submit the claims from the contract on the collection of the passenger vehicle toll to a final auditor (public accountant) for review. To clarify the various claims, the first step according to the contracts is a negotiation procedure with the customer. In the event of failure, the two contracts provide for separate arbitration procedures to achieve a final decision.
Kapsch TrafcCom Dominican Republic S.R.L., Dominican Republic, was founded on May 25, 2019 and is a subsidiary of Kapsch TrafcCom AG (99%) and Kapsch TrafcCom Chile S.A., Chile (1%).
Furthermore, Kusa Kokutsha (Pty.) Ltd., South Africa, was founded on August 26, 2019.
In June 2019, the consortium Consorcio KRIV, Columbia, was formed. Since Kapsch TrafcCom has control over the relevant activities of this consortium, it is fully consolidated.
Kapsch TrafcCom has initiated a number of processes with a view to increasing the efectiveness of its risk management activities and upholding best practice standards. Risk management has been designated a discrete function within the finance department of Kapsch TrafcCom AG, which is concerned with group-wide risk management (Enterprise Risk Management, ERM). Key areas of ERM are project risk management and risk management during the bidding process. In the context of ERM significant risks are identified and aggregated in a risk report.
The material risks of Kapsch TrafcCom are as follows:
An internal control system (ICS) has been established within the Group to document the existing internal control processes implemented in the accounting context. Responsibility for the implementation, design and monitoring of the ICS with a view to ensuring compliance with group-wide guidelines and regulations is incumbent upon the competent local management bodies in each case. To support the Management of the subsidiaries, an ICS ofcer has been appointed at Kapsch TrafcCom AG.
No risks which could pose a threat to the continued operation of Kapsch TrafcCom can be identified at the present time. Ever greater geographical diversification and the continuous expansion of its portfolio of products and solutions to include selected new IMS solutions have enabled Kapsch TrafcCom to broaden the scope of its business model while keeping its focus on its core business, thereby reducing the concentration of risks within individual regions or individual major projects.
The major risks faced by the Group are addressed in Section 3.3 of the Group Management Report 2018/19. In the first half of 2019/20 changes in risks in connection with the passenger car toll projects in Germany occurred and are addressed in note 17. No significant new risks or uncertainties are expected to emerge over the remainder of financial year 2019/20.
The outlook for financial year 2019/20 originally published by Kapsch TrafcCom contained a similar projection as in the previous year: A weaker first half-year should be followed by a strong second half-year. This forecast should remain true. The outlook for the annual revenues can be confirmed from today's perspective: The amount in the previous year (EUR 737.8 million) should be exceeded by at least 5%.
Management did have to revise the expectation for EBIT in the current financial year, however. From today's perspective, a figure of around EUR 35 million (excluding one-of efects and with a fluctuation range of +/-10%) should be achieved. Previ-
Revenues: Previous year revenue should be exceeded by at least 5% EBIT (excl. one-of efects): EUR 35 million (fluctuation range +/- 10%)
ously, the company assumed that EBIT (adjusted for one-of efects) would exceed the comparable figure in the previous year (EUR 57 million) by at least 5%. The main reasons for this adjustment are related to the loss of the major projects in Germany and to the growth in North America. The margins in the first half of the year were significantly below expectations there. Consequently, it was not possible to build up any bufer that could ofset the loss of the project in the Czech Republic in Q3. On the contrary, the costs hurt the results. The
extent and the fact that this circumstance would last for a longer period of time came as a surprise.
For Kapsch TrafcCom, the forthcoming departure of the United Kingdom from the EU (Brexit) should have no significant impact on results. Kapsch TrafcCom's revenues in the UK are in the single-digit million range.
Vienna, November 18, 2019
The Executive Board
Georg Kapsch Chief Executive Ofcer
André Laux Executive Board member
Alfredo Escribá Gallego Executive Board member
We declare to the best of our knowledge that the condensed consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group as required by the applicable accounting standards and that the Group management report gives a true and fair view of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties faced by the Group.
Vienna, November 18, 2019
The Executive Board
Georg Kapsch Chief Executive Ofcer
André Laux Executive Board member
Alfredo Escribá Gallego Executive Board member
as of September 30, 2019.*)
| Revenues (4) 335,839 359,232 Other operating income (5) 5,507 5,170 Changes in fnished and unfnished goods and work in progress 3,885 1,765 Cost of materials and other production services -140,528 -156,856 Staff costs -120,157 -130,083 Amortization and depreciation (6) -7,009 -13,606 Impairment charges (6) 0 -4,200 Other operating expenses (7) -60,008 -51,776 |
|---|
| Proportional result of associates and joint ventures 2) (10) 268 -857 |
| Operating result 17,797 8,789 |
| Finance income 1,972 2,567 |
| Finance costs -7,810 -6,977 |
| Financial result -5,838 -4,410 |
| Proportional results from associates and joint ventures as fnancial investment (10) 0 -732 |
| Result before income taxes 11,960 3,647 |
| Income taxes (8) -3,568 -1,309 |
| Result for the period 8,392 2,338 |
| Attributable to equity holders of the company 9,047 2,277 |
| Non-controlling interests -655 |
| 8,392 2,338 |
| Earnings per share from the result for the period |
| attributable to the equity holders of the company (in EUR) |
| diluted and undiluted 3) 0.70 0.18 |
| Other comprehensive income for the period |
| Currency translation differences -3,208 -1,569 |
| Currency translation differences from net investments in foreign operations 2,685 1,486 |
| Fair value adjustments of cash fow hedges 61 |
| Income tax relating to items subsequently to be reclassifed to the result for the period -671 -372 |
| Total items subsequently to be reclassified to the result for the period -1,134 -455 |
| Total items subsequently not to be reclassified to the result for the period 0 |
| Other comprehensive income for the period net of tax -1,134 -455 |
| Total comprehensive income for the period 7,258 1,883 |
| Attributable to equity holders of the company 8,442 1,921 |
| Non-controlling interests -1,184 |
| 7,258 1,883 |
1) The new standard IFRS 16 was adopted as of April 1, 2019 using the modifed retrospective approach, thus not resulting in any adjustment of comparative fgures for the previous fnancial year 2018/19.
2) The proportional result of associates and joint ventures also includes gains from the revaluation of investments in the amount of EUR 79 k in fnancial year 2018/19.
3) Earnings per share relate to 13.0 million shares.
*) The condensed consolidated interim report has neither been audited nor been reviewed by an auditor.
| All amounts in k EUR | Note | March 31, 2019 | Sept. 30, 2019 1) |
|---|---|---|---|
| ASSETS | |||
| Property, plant and equipment | (9, 18) | 21,956 | 69,159 |
| Intangible assets | (9) | 82,874 | 82,499 |
| Interests in associates and joint ventures | (10) | 19,973 | 18,401 |
| Other non-current fnancial assets and investments | (11) | 15,861 | 28,674 |
| Non-current contract assets | (11) | 16,847 | 11,289 |
| Non-current lease receivables | (18) | 0 | 1,404 |
| Other non-current assets | 7,334 | 269 | |
| Deferred tax assets | 18,462 | 19,641 | |
| Non-current assets | 183,307 | 231,336 | |
| Inventories | 64,054 | 68,219 | |
| Trade receivables and other current assets | (11) | 209,419 | 156,278 |
| Current contract assets | (11) | 122,555 | 161,549 |
| Current lease receivables | (18) | 0 | 501 |
| Current tax receivables | 2,573 | 4,986 | |
| Other current fnancial assets | (11) | 1,135 | 1,448 |
| Cash and cash equivalents | (11) | 94,652 | 81,093 |
| Current assets | 494,389 | 474,075 | |
| TOTAL ASSETS | 677,696 | 705,411 | |
| EQUITY | |||
| Share capital | 13,000 | 13,000 | |
| Capital reserve | 117,509 | 117,509 | |
| Retained earnings and other reserves | 126,656 | 109,076 | |
| Capital and reserves attributable to equity holders of the company | 257,165 | 239,585 | |
| Non-controlling interests | 1,507 | -232 | |
| TOTAL EQUITY | 258,672 | 239,353 | |
| LIABILITIES | |||
| Non-current fnancial liabilities | (11, 12) | 139,330 | 133,854 |
| Non-current lease liabilities | (18) | 0 | 36,054 |
| Liabilities from post-employment benefts to employees | 26,125 | 25,462 | |
| Non-current provisions | (13) | 6,681 | 5,501 |
| Non-current contract liabilities | (11) | 5,213 | 1,868 |
| Other non-current liabilities | (11) | 1,346 | 774 |
| Deferred tax liabilities | 5,103 | 1,488 | |
| Non-current liabilities | 183,799 | 205,002 | |
| Current fnancial liabilities | (11, 12) | 29,934 | 68,518 |
| Current lease liabilities | (18) | 0 | 13,145 |
| Trade payables | (11) | 89,560 | 75,955 |
| Current contract liabilities | (11) | 26,905 | 28,422 |
| Current provisions | (13) | 14,734 | 10,996 |
| Current tax liabilities | 2,292 | 3,099 | |
| Other liabilities and deferred income | (11) | 71,800 | 60,920 |
| Current liabilities | 235,225 | 261,056 | |
| TOTAL LIABILITIES | 419,024 | 466,058 | |
| TOTAL EQUITY AND LIABILITIES | 677,696 | 705,411 |
1) The new standard IFRS 16 was adopted as of April 1, 2019 using the modifed retrospective approach, thus not resulting in any adjustment of comparative fgures as at March 31, 2019.
| All amounts in k EUR | Attributable to equity holders of the company | Non controlling interests |
Total equity | |||
|---|---|---|---|---|---|---|
| Share capital |
Capital reserve |
Other reserves |
Retained earnings |
|||
| Carrying amount as of March 31, 2019 | 13,000 | 117,509 | -48,762 | 175,418 | 1,507 | 258,672 |
| Effects from acquisition of shares in subsidiaries | ||||||
| (see note 3) | -1,678 | -1,678 | ||||
| Effects from capital changes in a subsidiary | -24 | -24 | ||||
| Dividend | -19,500 | 0 | -19,500 | |||
| Result for the period | 2,277 | 61 | 2,338 | |||
| Other comprehensive income for the period: | ||||||
| Currency translation differences | -356 | -98 | -455 | |||
| Carrying amount as of September 30, 2019 | 13,000 | 117,509 | -49,119 | 158,195 | -232 | 239,353 |
| Carrying amount as of March 31, 2018 | 13,000 | 117,509 | -47,050 | 147,515 | -1,045 | 229,930 |
| Adjustments due to new IFRS 9 standard | -650 | -650 | ||||
| Deferred taxes on adjustments due to new IFRS 9 standard |
146 | 146 | ||||
| Reclassifcation from other reserves to retained earnings | -86 | 86 | 0 | |||
| Carrying amount as of April 1, 2018 adjusted | 13,000 | 117,509 | -47,136 | 147,097 | -1,045 | 229,425 |
| Effects from acquisition of shares in subsidiaries | 3,426 | 3,426 | ||||
| Effects from capital contribution in a subsidiary | 325 | 325 | ||||
| Dividend | -19,500 | 0 | -19,500 | |||
| Result for the period | 9,047 | -655 | 8,392 | |||
| Other comprehensive income for the period: | ||||||
| Currency translation differences | -665 | -529 | -1,194 | |||
| Fair value adjustments of cash fow hedges | 61 | 61 | ||||
| Carrying amount as of September 30, 2018 | 13,000 | 117,509 | -47,740 | 136,644 | 1,522 | 220,935 |
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. Each share entitles the holder to one vote. At the reporting date of September 30, 2019 Kapsch TraffcCom AG does not hold any treasury shares.
| All amounts in k EUR | Note | H1 2018/19 | H1 2019/20 5) |
|---|---|---|---|
| Operating result | 17,797 | 8,789 | |
| Scheduled depreciation and amortization | 7,009 | 13,606 | |
| Impairment charges | 0 | 4,200 | |
| Change in obligations for post-employment benefts | 318 | -663 | |
| Change in other non-current liabilities and provisions 2) | -1,750 | -4,834 | |
| Change in other non-current receivables and assets 1) | 703 | 5,781 | |
| Change in non-current trade receivables | 77 | 0 | |
| Change in non-current trade payables | -127 | -309 | |
| Net payments of income taxes | -2,615 | -5,948 | |
| Interest received | 413 | 430 | |
| Interest payments | -1,638 | -2,255 | |
| Other (net) | -1,358 | 1,382 | |
| Cash flow from earnings | 18,829 | 20,178 | |
| Change in net working capital: | |||
| Change in trade receivables and other current assets 1) | -31,091 | 14,156 | |
| Change in inventories | -7,158 | -4,164 | |
| Change in trade payables and other current payables 2) | 4,137 | -23,683 | |
| Change in current provisions | 1,165 | -3,737 | |
| Change in net working capital | -32,947 | -17,429 | |
| Cash flow from operating activities | -14,118 | 2,749 | |
| Purchase of property, plant and equipment | (9) | -2,474 | -4,195 |
| Purchase of intangible assets | (9) | -932 | -2,004 |
| Purchase of securities, investments and other non-current fnancial assets | -2,172 | -14,584 | |
| Payments for the acquisition of entities (less cash and cash equivalents of these entities) | (3) | 3 | 0 |
| Payments for the acquisition of shares in at-equity-consolidated entities and joint operations | (10) | -952 | -19 |
| Proceeds from the disposal of property, plant and equipment and intangible assets | 647 | 294 | |
| Proceeds from the disposal of securities and other fnancial assets | 69 | 0 | |
| Cash flow from investing activities | -5,811 | -20,509 | |
| Free cash flow 3) | -19,929 | -17,760 | |
| Contributions from shareholders in a subsidiary | 325 | 0 | |
| Dividend paid to parent company's shareholders | -19,500 | -19,500 | |
| Payments for the acquisition of non-controlling interests | -5,000 | -1,000 | |
| Increase in non-current fnancial liabilities | (12) | 45 | 2,193 |
| Increase in current fnancial liabilities | (12) | 1,263 | 33,132 |
| Decrease in current fnancial liabilities | (12) | -3,251 | -3,444 |
| Lease payments | (18) | 0 | -6,363 |
| Cash flow from financing activities | -26,119 | 5,017 | |
| Cash and cash equivalents at beginning of year | 181,835 | 94,652 | |
| Net increase/decrease in cash and cash equivalents 4) | -46,047 | -12,743 | |
| Exchange gains/losses | -2,258 | -816 | |
| Cash and cash equivalents at the end of the period | 133,529 | 81,093 |
1) Including "contract assets"
2) Including "contract liabilities"
3) Cash fow from operating activities + Cash fow from investing activities 4) Free cash fow + Cash fow from fnancing activities
5) The new standard IFRS 16 was adopted as of April 1, 2019 using the modifed retrospective approach, thus not resulting in any adjustment of comparative fgures for the previous fnancial year 2018/19.
Outline.
| General information | 23–24 |
|---|---|
| 1 – General information | 23 |
| 2 – Basis of preparation | 23 |
| 3 – Changes in the scope of consolidation | 23 |
| Consolidated statement of comprehensive income | 25–26 |
| 4 – Segment information | 25 |
| 5 – Other operating income | 25 |
| 6 – Amortization, depreciation, and impairment charges | 25 |
| 7 – Other operating expenses | 25 |
| 8 – Income taxes | 26 |
| Consolidated balance sheet | 26–31 |
| 9 – Changes in property, plant and equipment and intangible assets | 26 |
| 10 – Interests in associates and joint ventures | 26 |
| 11 – Financial instruments by category | 27 |
| 12 – Financial liabilities | 29 |
| 13 – Provisions | 30 |
| 14 – Contingent liabilities and other commitments | 31 |
| Other information | 31–35 |
| 15 – Related parties | 31 |
| 16 – Material accounting estimates and assumptions | 33 |
| 17 – Risk management | 33 |
| 18 – Accounting policies | 33 |
| 19 – Significant events occurring after September 30, 2019 | 35 |
Kapsch TraffcCom, headquartered in Vienna, Austria, is a global supplier of Intelligent Transportation Systems.
The Group operates in two segments:
The ETC segment comprises activities relating to the installation and the technical and commercial operation of toll collection systems. Projects are generally awarded by public agencies or private concessionaires in the context of tender procedures. Toll collection systems may comprise both individual road sections and nation-wide road networks. The manufacture and procurement of components both for the expansion and adaptation of the systems installed by Kapsch TraffcCom and on behalf of third parties complete the portfolio of Kapsch TraffcCom; toll services further complete it.
The IMS segment comprises activities relating to the installation and the technical and commercial operation of systems for traffc monitoring, traffc control and traffc safety. Projects for the monitoring of utility vehicles and for electronic vehicle registration, as well as intelligent parking solutions and systems for intermodal mobility (networked modes of transport), are also allocated to this segment, as are systems and services for operational surveillance of public transportation and environmental installations. Components related business also completes the range of IMS services offered by Kapsch TraffcCom.
This condensed interim fnancial information for the frst half of the fnancial year ended September 30, 2019 has been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the IASB, as adopted by the EU, according to IAS 34 Interim Financial Statements, and should only be read in conjunction with the annual fnancial statements for the year ended March 31, 2019.
The interim report was neither subject to an audit nor to a review by an auditor.
For ease of presentation, amounts have been rounded and, unless indicated otherwise, are presented in thousands of euros (k EUR). However, calculations are done using exact amounts, including the digits not shown, which may lead to rounding differences.
Kapsch TraffcCom Dominican Republic S.R.L., Dominican Republic, was founded on May 25, 2019 and is a subsidiary of Kapsch TraffcCom AG (99%) and Kapsch TraffcCom Chile S.A., Chile (1%).
Furthermore, Kusa Kokutsha (Pty.) Ltd., South Africa, was founded on August 26, 2019.
In June 2019, the consortium Consorcio KRIV, Columbia, was formed. Since Kapsch TraffcCom has control over the relevant activities of this consortium, it is fully consolidated.
Intelligent Mobility Solutions Ltd., Zambia, was consolidated for the frst time in August 2018. The purchase price allocation was fnalized in August 2019 in compliance with the 12-month deadline. This resulted in the following fair values of the acquired identifed assets and liabilities assumed at the acquisition date:
| Fair value | |
|---|---|
| Intangible assets | 2,959 |
| Intangible assets from service concession arrangements | 10,503 |
| Receivables and other current assets | 1,285 |
| Cash and cash equivalents | 3 |
| Non-current fnancial liabilities | -2,895 |
| Deferred tax liabilities | -1,685 |
| Current fnancial liabilities | -320 |
| Trade payables | -4,719 |
| Other current liabilities and deferred income | -1,259 |
| Net assets acquired | 3,871 |
The intangible assets from service concession arrangements relate to a concession agreement, which covers a period of 17 years. The other non-current assets, which as of March 31, 2019 were preliminary recorded in the amount of EUR 3,425 k, were not recognized in the fnal purchase price allocation according to the fnal analysis. The receivables and other current assets relate mainly to advance payments made. A cash infow from this position is therefore not expected. Cash and cash equivalents were acquired in the context of the acquisition (thus the net cash infow in fnancial year 2018/19 from the acquisition) amounted to EUR 3 k. Transaction costs directly attributable to the acquisition amounted to EUR 0 k.
The difference between the fair value of the shares previously held including non-controlling interests, and the fair value of the net assets acquired, is calculated as follows:
| Difference | |
|---|---|
| Fair value of the previously held shares | 5,356 |
| Fair value of non-controlling interests | 1,897 |
| Less fair value of net assets acquired | -3,871 |
| Goodwill | 3,382 |
The above presentation results from a purchase price allocation, based on the company's planning data until the end of the contract term and the application of an adequate interest rate.
The goodwill resulted mainly from the market entry and was recognized on the basis of the proportionate share of the net assets. The amount of EUR 3,382 k is based on the fnal purchase price allocation (preliminary calculated value as of March 31, 2019: EUR 1,636 k). The goodwill was allocated to the cash-generating unit IMS-EMEA.
For the period from September 1, 2018 to August 30, 2019, the acquired company contributed an amount of EUR 3,263 k (September 1, 2018 to March 31, 2019: EUR 1,996 k) to revenues and of EUR -1,844 k (September 1, 2018 to March 31, 2019: EUR -1,807 k) to the Group's result for the period.
For the business combination of eTrans Systems Inc. (eTrans), USA, in fnancial year 2018/19, there were no adjustments until the end of September 2019.
The segment results by business type, which also correspond to performance obligations pursuant to IFRS 15 are as follows:
| H1 2018/19 | H1 2019/20 | |||||
|---|---|---|---|---|---|---|
| ETC | IMS | Total | ETC | IMS | Total | |
| Revenues | 262,132 | 73,707 | 335,839 | 281,152 | 78,081 | 359,232 |
| Implementation | 73,613 | 30,280 | 103,893 | 110,479 | 32,039 | 142,518 |
| Operations | 133,396 | 38,404 | 171,800 | 121,204 | 40,726 | 161,930 |
| Components | 55,123 | 5,023 | 60,146 | 49,469 | 5,315 | 54,784 |
| Operating result | 24,813 | -7,016 | 17,797 | 17,482 | -8,694 | 8,789 |
| EBIT margin | 9.5% | -9.5% | 5.3% | 6.2% | -11.1% | 2.4% |
The following table shows those customers who contributed more than 10% of revenues in the frst half of 2019/20 or in the same period of the previous year.
| H1 2018/19 | H1 2019/20 | |||||
|---|---|---|---|---|---|---|
| Revenues | ETC | IMS | Revenues | ETC | IMS | |
| Customer 1 | 37,727 | x | x | 37,045 | x | x |
| H1 2018/19 | H1 2019/20 | |
|---|---|---|
| Exchange rate gains from operating activities | 3,528 | 3,633 |
| Sundry operating income | 1,980 | 1,537 |
| 5,507 | 5,170 |
Exchange rate gains from operating activities in the frst half of 2019/20 mainly relate to gains from exchange rate fuctuations of the Argentine peso and US dollar in respect to euro. Argentina is classifed as a hyperinfationary country, however the effects from IAS 29 are not material.
In the frst half of 2019/20 an amount of EUR 6,481 k was included for depreciation on right-of-use assets from leases due to the application of IFRS 16. In addition, costs to obtain a contract in the amount of EUR 4,200 k were recognized as impairment in connection with the early termination of projects for the German infrastructure charge.
| H1 2018/19 | H1 2019/20 | |
|---|---|---|
| Communication and IT expenses | 9,554 | 9,317 |
| Legal and consulting fees | 7,969 | 7,591 |
| Travel expenses | 6,105 | 7,228 |
| Rental expenses | 9,085 | 3,629 |
| Marketing and advertising expenses | 4,766 | 3,579 |
| License and patent expenses | 3,081 | 2,720 |
| Maintenance costs | 2,978 | 2,719 |
| Exchange rate losses from operating activities | 2,812 | 2,551 |
| Automobile expenses | 3,193 | 2,436 |
| Offce expenses | 1,400 | 1,908 |
| Insurance costs | 2,717 | 1,694 |
| Other | 6,348 | 6,403 |
| 60,008 | 51,776 |
Increased travel activity, especially in the USA, led to an increase in travel expenses. Lower marketing and advertising expenses and lower insurance costs in Poland made a major contribution to the decline in other operating expenses. The initial application of IFRS 16 to lease contracts reduced rental expenses by EUR 6,262 k.
Income taxes relate to current taxes and to deferred tax assets and liabilities. The effective tax expense is not determined until the end of the fnancial year. During the fnancial year, Kapsch TraffcCom uses a theoretical tax rate. This rate is applied to Group earnings before taxes adjusted for the already taxed proportional results from associates and joint ventures. At year-end, the effective tax rate may differ from the (theoretical) tax rate during the year. This may result from differences in taxation in the various countries, the recognition or impairment of tax loss carryforwards, tax allowances and permanent tax differences.
In the frst half of 2019/20 a theoretical tax rate of 25% (previous year: 30%) was applied to the Group's pre-tax result. This lower tax rate is based on a revenue-weighted analysis of the nominal tax rates of the individual countries in which Kapsch TraffcCom operates.
| H1 2018/19 | H1 2019/20 | |
|---|---|---|
| Carrying amount as of March 31 of financial year | 92,207 | 104,830 |
| Adjustment due to initial application of IFRS 16 | - | 50,755 |
| Carrying amount as of April 1 of financial year | 92,207 | 155,585 |
| Additions | 3,406 | 5,172 |
| Additions from business combinations | 12,663 | 0 |
| Additions from service concession agreements | 167 | 1,027 |
| Additions of right-of-use assets from leases | - | 2,919 |
| Disposals | -427 | -267 |
| Disposals of right-of-use assets from leases | - | -469 |
| Depreciation, amortization and other movements | -7,009 | -5,477 |
| Depreciation on right-of-use assets from leases | - | -6,481 |
| Currency translation differences | -1,248 | -350 |
| Carrying amount as of September 30 of financial year | 99,759 | 151,658 |
As of September 30, 2019 property, plant and equipment included right-of-use assets from leases in the amount of EUR 46,731 k.
Details of associates and joint ventures are shown in the consolidated fnancial statements of 2018/19.
| H1 2018/19 | H1 2019/20 | |
|---|---|---|
| Carrying amount as of March 31 of financial year | 7,502 | 19,973 |
| Addition | 1,293 | 19 |
| Proportional result of the period from core business | 189 | -857 |
| Gain from revaluation of shares due to business combination | 79 | 0 |
| Disposal due to business combination | -9,048 | 0 |
| Proportional result of the period from fnancial investments | 0 | -732 |
| Currency translation differences | 0 | -3 |
| Carrying amount as of September 30 of financial year | 15 | 18,401 |
| thereof interests in associates | 0 | 8,349 |
| thereof interests in joint ventures | 15 | 10,052 |
As of March 31, 2019, shares in associates relate to Traffc Technology Services Inc., USA.
The interests in joint ventures as of September 30, 2019 mainly relate to the joint venture with CTS EVENTIM AG & Co. KGaA, autoTicket GmbH, Germany. In 2018, the joint venture was awarded the contract to collect the passenger vehicle toll. However, effective September 30, 2019, notices of termination were issued. By the end of 2019 at the latest, the joint venture must submit the claims from the contract on the collection of the passenger vehicle toll to a fnal auditor (public accountant) for review. To clarify the various claims, the frst step according to the contracts is a negotiation procedure with the customer. This dispute settlement procedure can take several weeks, but can also be quickly declared unsuccessful by one party. In the event of failure, the contracts provide for separate arbitration procedures to achieve a fnal decision. These procedures would be governed by the Rules of Arbitration of the German Institution of Arbitration (Schiedsordnung der Deutschen Institution für Schiedsgerichtsbarkeit, DIS) and would take place in private arbitral tribunals in Berlin. It needs to be reckoned with the fact that arbitral awards may not be handed down for a number of years.
The business combination in the frst half of 2018/19 related to the full consolidation of Intelligent Mobility Solutions Ltd., Zambia.
Proportional results from associates and joint ventures are split in the presentation in the income statement and are individually valued. Results from associates and joint ventures whose activities and strategic directions are part of the core business of Kapsch TraffcCom are reported in the operating result. Results from other associates and joint ventures are reported in the result before income taxes.
Details on the fair value-hierarchies can be found in the consolidated fnancial statements of 2018/19. No reclassifcations between fair value hierarchy levels were made.
The carrying amount of the following positions, which are valued at amortized cost, is a reasonable approximation of the fair value in accordance with IFRS 7.29: "trade receivables and other current assets", "contract assets", "other fnancial assets and investments", "cash and cash equivalents", "trade payables", "contract liabilities", and "other liabilities and deferred income". Therefore no fair value-hierarchy is disclosed.
As of September 30, 2019, the fair value of non-current and current fnancial liabilities amounted to EUR 73,892 k for the promissory note bond (March 31, 2019: EUR 72,818 k), EUR 41,715 k for the project fnancing (March 31, 2019: EUR 47,194 k) and EUR 83,648 k for other fnancial liabilities (March 31, 2019: EUR 43,468 k).
Impairment on "trade receivables" decreased by EUR 178 k in the frst half of 2019/20 (frst half of 2018/19: EUR -473 k). The impairment on "contract assets" increased by EUR 216 k in the frst half of 2019/20 (frst half of 2018/19: EUR 219 k). Both effects were recognized through proft or loss in the statement of comprehensive income.
The addition to non-current and current fnancial assets relate to loans to the joint venture autoTicket GmbH, Germany, amounting to EUR 14,535 k. The valuation of investments that are classifed at fair value through proft or loss led to a loss in the frst half of 2019/20 amounting to EUR 1,731 k (frst half of 2018/19: EUR +934 k) which was recognized in total comprehensive income for the period.
The development of level 3 earn-out liabilities is as follows:
| Earn-out liabilities | H1 2018/19 | H1 2019/20 | |
|---|---|---|---|
| Carrying amount as of March 31 of financial year | 12,751 | 1,989 | |
| Addition | 341 | 0 | |
| Disposal | -5,206 | -1,000 | |
| Interest | 24 | 8 | |
| Carrying amount as of September 30 of financial year | 7,910 | 997 |
There were no adjustments in the frst half of 2019/20 for investments valued at level 3.
| Financial instruments by category at carrying amount | March 31, 2019 | Sept. 30, 2019 |
|---|---|---|
| Trade receivables and other current assets | 209,419 | 156,278 |
| At amortized cost | 171,443 | 116,392 |
| Trade receivables | 171,443 | 116,392 |
| At fair value through profit or loss | 50 | 5 |
| Derivative fnancial instruments (Fair value level 2) | 50 | 5 |
| Hedging instruments | 0 | 0 |
| Derivative fnancial instruments – Cash fow hedges (Fair value level 2) | 0 | 0 |
| Other non-financial assets 1) | 37,926 | 39,882 |
| Contract assets (non-current and current) at amortized cost | 139,402 | 172,838 |
| Other financial assets and investments (non-current and current) | 16,996 | 30,391 |
| At fair value through profit or loss | 15,205 | 13,471 |
| Securities (Fair value level 1) | 3,700 | 3,774 |
| Derivative fnancial instruments (Fair value level 2) | 79 | 0 |
| Investments (Fair value level 1) | 11,389 | 9,658 |
| Investments (Fair value level 3) | 36 | 39 |
| At amortized cost | 1,791 | 16,920 |
| Other fnancial assets and loans (non-current) | 657 | 15,472 |
| Other fnancial assets and loans (current) | 1,135 | 1,448 |
| Cash and cash equivalents at amortized cost | 94,652 | 81,093 |
| Financial liabilities (non-current and current) at amortized cost | 169,264 | 202,373 |
| Promissory note bond (Fair value level 2) | 74,794 | 75,222 |
| Project fnancing (Fair value level 2) | 50,000 | 43,750 |
| Other fnancial liabilities (Fair value level 2) | 44,470 | 83,400 |
| Trade payables at amortized cost | 89,560 | 75,955 |
| Contract liabilities (non-current and current) at amortized cost | 32,118 | 30,291 |
| Other liabilities and deferred income (non-current and current) | 73,146 | 61,694 |
| At amortized cost | 3,336 | 1,756 |
| Variable purchase price components (earn-out, fair value level 3) | 1,989 | 997 |
| Other fnancial liabilities | 1,346 | 759 |
| At fair value through profit or loss | 196 | 57 |
| Derivative fnancial instruments (Fair value level 2) | 196 | 57 |
| Hedging instruments | 0 | 0 |
| Derivative fnancial instruments – Cash fow hedges (Fair value level 2) | 0 | 0 |
| Other non-financial liabilities 1) | 69,614 | 59,881 |
1) Non-fnancial receivables and liabilities are only included for reconciliation with the respective balance sheet item.
| March 31, 2018 | Sept. 30, 2018 | March 31, 2019 | Sept. 30, 2019 | |
|---|---|---|---|---|
| Non-current fnancial liabilities | 141,759 | 140,938 | 139,330 | 133,854 |
| Current fnancial liabilities | 26,675 | 26,913 | 29,934 | 68,518 |
| 168,434 | 167,851 | 169,264 | 202,373 |
Movements in fnancial liabilities are as follows:
| H1 2018/19 | H1 2019/20 | |||||
|---|---|---|---|---|---|---|
| Non-current | Current | Total | Non-current | Current | Total | |
| Carrying amount as of March 31 | ||||||
| of financial year | 141,759 | 26,675 | 168,434 | 139,330 | 29,934 | 169,264 |
| Reclassifcation | -1,824 | 1,824 | 0 | -8,042 | 8,042 | 0 |
| Additions | 45 | 1,263 | 1,308 | 2,193 | 33,132 | 35,324 |
| Addition from business combinations | 227 | 0 | 227 | 0 | 0 | 0 |
| Repayments | 0 | -3,251 | -3,251 | 0 | -3,444 | -3,444 |
| Currency translation differences and | ||||||
| interest accrued | 731 | 403 | 1,134 | 374 | 855 | 1,229 |
| Carrying amount as of September 30 | ||||||
| of financial year | 140,938 | 26,913 | 167,851 | 133,854 | 68,518 | 202,373 |
Additions and repayments are cash effective.
The fair values and gross cash fows (including interest) of fnancial liabilities are as follows:
| Sept. 30, 2018 | Sept. 30, 2019 | |
|---|---|---|
| Gross cash flows up to one year | 29,169 | 72,011 |
| In the next 6 months | 3,795 | 32,512 |
| In the next 7 to 12 months | 25,374 | 39,499 |
| Gross cash flows 2-5 years | 130,721 | 128,155 |
| Between 1 and 2 years | 13,840 | 61,521 |
| Between 2 and 3 years | 62,202 | 17,641 |
| Between 3 and 4 years | 16,928 | 40,269 |
| Between 4 and 5 years | 37,751 | 8,724 |
| Gross cash flows more than 5 years | 14,871 | 8,841 |
| Total | 174,761 | 209,007 |
| March 31, 2018 | Sept. 30, 2018 | March 31, 2019 | Sept. 30, 2019 | |
|---|---|---|---|---|
| Non-current provisions | 8,911 | 8,005 | 6,681 | 5,501 |
| Current provisions | 9,600 | 10,765 | 14,734 | 10,996 |
| 18,510 | 18,769 | 21,415 | 16,498 |
| March 31, 2019 |
Addition and accu mulation |
Utilization | Disposal | Reclassifi cation |
Currency differences |
Sept. 30, 2019 |
|
|---|---|---|---|---|---|---|---|
| Obligations from anniversary | |||||||
| bonuses | 1,758 | 37 | 0 | -23 | 0 | 1 | 1,773 |
| Warranties | 2,472 | 0 | 0 | 0 | -946 | 0 | 1,527 |
| Projects (excl. impending losses) | 151 | 0 | 0 | 0 | 179 | 0 | 330 |
| Other non-current provisions | 2,301 | 113 | -35 | -51 | -430 | -26 | 1,872 |
| Non-current provisions, total | 6,681 | 150 | -35 | -74 | -1,196 | -25 | 5,501 |
| Warranties | 538 | 0 | -765 | 0 | 946 | -6 | 713 |
| Provision for losses from onerous | |||||||
| contracts | 3,461 | 1,131 | -81 | -2,938 | -1 | 64 | 1,635 |
| Projects (excl. impending losses) | 5,734 | 141 | -25 | -8 | -179 | -6 | 5,657 |
| Legal fees, costs of litigation and | |||||||
| contract risks | 2,709 | 21 | -658 | -1,194 | 0 | 37 | 915 |
| Other current provisions | 2,292 | 6,108 | -6,427 | -261 | 431 | -66 | 2,078 |
| Current provisions, total | 14,734 | 7,401 | -7,956 | -4,401 | 1,196 | 23 | 10,996 |
| Total | 21,415 | 7,551 | -7,991 | -4,475 | 0 | -2 | 16,498 |
In the frst half of 2019/20 an important court ruling was passed in connection with legal disputes with the company Neology, Inc., USA. The Supreme Federal Court for Patent Law Issues has fnally ruled against the competitor that the patent claims cited are invalid. An appeal has been fled with the Surpreme Court by Neology, Inc., USA. The provision was released in the frst half of 2019/20 as Kapsch TraffcCom does not expect any further obligations.
| March 31, 2018 |
Addition and accu mulation |
Utilization | Disposal | Reclassifi cation |
Currency differences |
Sept. 30, 2018 |
|
|---|---|---|---|---|---|---|---|
| Obligations from anniversary | |||||||
| bonuses | 1,391 | 37 | 0 | -7 | 0 | 5 | 1,426 |
| Warranties | 1,906 | 0 | 0 | 0 | -202 | 0 | 1,704 |
| Projects (excl. impending losses) | 689 | 0 | 0 | 0 | -42 | 0 | 648 |
| Other non-current provisions | 4,923 | 262 | 0 | 0 | -488 | -471 | 4,227 |
| Non-current provisions, total | 8,911 | 299 | 0 | -7 | -731 | -467 | 8,005 |
| Warranties | 435 | 311 | -84 | -9 | 202 | 61 | 916 |
| Losses from pending | |||||||
| transactions and rework | 0 | 1,355 | -211 | -138 | -142 | 5 | 869 |
| Projects (excl. impending losses) | 4,887 | 0 | -75 | -343 | 42 | 28 | 4,539 |
| Legal fees, costs of litigation | |||||||
| and contract risks | 3,033 | 461 | -806 | -60 | 86 | 171 | 2,886 |
| Other current provisions | 1,245 | 827 | -915 | -29 | 543 | -116 | 1,555 |
| Current provisions, total | 9,600 | 2,955 | -2,091 | -580 | 731 | 150 | 10,765 |
| Total | 18,510 | 3,254 | -2,091 | -587 | 0 | -317 | 18,769 |
The contingent liabilities primarily result from large-scale projects. In this context, Kapsch TraffcCom may be required to issue contract and warranty obligations, sureties and performance bonds. Securities from third parties – usually fnancial institutes or insurance companies – in the form of guarantees and bid bonds must also be provided if required. In case contractual obligations cannot be fulflled, there is a risk of corresponding claims being brought by the customer in question. This can result in a recourse claim of the fnancial institute or insurance company against Kapsch TraffcCom.
The contingent liabilities solely comprise obligations owed to third parties, in line with standard industry practice. They detail as follows:
| Contract, warranty, performance and bid bonds | March 31, 2019 | Sept. 30, 2019 |
|---|---|---|
| South Africa (toll collection systems) | 30,742 | 30,198 |
| Australia (toll collection systems) | 29,926 | 29,360 |
| Other | 161 | 161 |
| 60,829 | 59,719 |
Outfows of resources in connection with other commitments amounting to EUR 403,978 k (March 31, 2019: EUR 319,055 k), the actual occurrence of which is considered to be unlikely, are neither reported on the balance sheet nor in the table above.
With shareholder agreements as of February 8, 2019 and March 21, 2019 Kapsch TrafcCom AG has committed itself against autoTicket GmbH, Germany, to grant a subordinated shareholder loan in an amount up to EUR 32,500 k and to take over a joint and several liability for the third-party financing of autoTicket GmbH in the total amount of EUR 175,000 k (together with second shareholder CTS EVENTIM AG & Co KGaA). According to the loan agreement that joint and several liability will be converted to a guarantee of both shareholders after the start of the toll collection, the collection of the reimbursement costs and end of the first year of operations. Each of the shareholders has to guarantee half of the amount outstanding at that moment.
As of September 30, 2019 shareholder loans of Kapsch TrafcCom AG in autoTicket GmbH in the amount of EUR 14,535 k are outstanding. Due to the termination of the operations contract no bank liabilities are outstanding in autoTicket GmbH.
In connection with the termination of the passenger car toll contracts in Germany, contingent assets beyond the balance sheet values cannot be estimated due to the ongoing proceedings.
The following tables provide an overview of revenues and expenses as well as receivables and liabilities for related parties.
| H1 2018/19 | H1 2019/20 | |
|---|---|---|
| Parent company | ||
| Revenues | 0 | 0 |
| Expenses | -535 | -642 |
| Income (+) / Expense (-) from tax allocation | 2,661 | -1,762 |
| Affiliated companies | ||
| Revenues | 2,817 | 2,232 |
| Expenses | -13,758 | -7,918 |
| Associated companies | ||
| Revenues | 13 | 13 |
| Expenses | 0 | 0 |
| Joint ventures | ||
| Revenues | 188 | 12,801 |
| Expenses | 0 | 0 |
| Other related parties | ||
| Revenues | 52 | 79 |
| Expenses | -59 | -5,460 |
| March 31, 2019 | Sept. 30, 2019 | |
|---|---|---|
| Parent company | ||
| Trade receivables and other assets | 0 | 0 |
| Trade payables and other payables (-) | -342 | -352 |
| Receivables (+) / Liabilities (-) from tax allocation | -3,603 | -5,365 |
| Affiliated companies | ||
| Trade receivables and other non-current and current assets | 2,436 | 206 |
| Trade payables and other payables (-) | -4,401 | -6,941 |
| Associated companies | ||
| Trade receivables and other non-current and current assets | 335 | 348 |
| Trade payables and other payables (-) | 0 | 0 |
| Joint ventures | ||
| Trade receivables and other non-current and current assets | 0 | 14,535 |
| Contract assets | 9,058 | 0 |
| Trade payables and other payables (-) | -400 | 0 |
| Other related parties | ||
| Trade receivables and other non-current and current assets | 15 | 12 |
| Trade payables and other payables including pension benefts (-) | -11,277 | -12,597 |
The immediate parent company of the reporting entity is KAPSCH-Group Beteiligungs GmbH, Vienna. Affliated companies are all subsidiaries of KAPSCH-Group Beteiligungs GmbH which are not part of the Kapsch TraffcCom AG Group.
Effective May 31, 2019 Kapsch CarrierCom AG including its subsidiaries as well as the operating business unit of Kapsch PublicTransportCom were sold. These were affliated companies of Kapsch TraffcCom AG.
In the previous fnancial year, expenses from transactions with affliated companies for goods and services related to IT, data processing and telephone services provided by Kapsch BusinessCom AG. As of fnancial year 2019/20, most of these goods and services have been provided by Kapsch Financial Services GmbH, Vienna, an other related party. This change explains the decrease in the expenses of affliated companies as well as the increase in the expenses of other related companies to a signifcant extent.
Intelligent Mobility Solutions Ltd., Zambia, was included as a joint venture until end of August 2018, and is fully consolidated starting from September 2018. Trade receivables and other non-current and current assets from joint ventures relate to loans to autoTicket GmbH, Germany.
Individual members of the Executive and Supervisory Boards of Kapsch TraffcCom AG have management functions or are members in the Supervisory Boards of KAPSCH-Group Beteiligungs GmbH and/or its subsidiaries. In this context, please refer to the consolidated Corporate Governance Report 2018/19.
A comprehensive presentation of the relationships with related parties is shown in note 32 of the consolidated fnancial statements 2018/19.
In the context of the preparation of the condensed consolidated interim financial information, the Group makes judgements, estimates and assumptions in relation to the application of accounting methods and the reported amounts of assets, liabilities, income and expenses. The actual results may difer from these estimates. All estimates and judgments are continually re-evaluated and are based on historical experience and other factors, including expectations as to future events which are believed to be reasonable under the given circumstances.
The Group bases its fair value measurement of assets and liabilities on observable market data to the greatest extent possible. The fair value can be assigned to one of various levels within a fair value hierarchy using a number of evaluation techniques. Further information on the fair value measurement can be found in the consolidated financial statements as of March 31, 2019.
The estimates made by the Management are in line with those adopted in the consolidated financial statements for the year ended March 31, 2019 (note 36) and described therein.
The fnancial risks to which Kapsch TraffcCom is exposed are described in the consolidated fnancial statements for the year ended March 31, 2019 (note 37). In the frst half of 2019/20 changes in risks in connection with the termination of the passenger car toll projects in Germany occurred, which could have an impact on the following carrying amounts as of September 30: Interests in joint ventures EUR 9,909 k, other fnancial assets and loans EUR 14,535 k, as well as trade receivables EUR 3,210 k.
The accounting policies adopted in this condensed interim fnancial information for the frst half year ended September 30, 2019 are generally consistent with those of the annual fnancial statements for the year ended March 31, 2019, and described therein, except for the application of the following new or amended IFRS and IFRIC:
| New/amended IFRS | Published by the IASB and adopted by the EU |
Applicable to financial years beginning on or after |
Material impact on Group's consolidated financial statement |
|
|---|---|---|---|---|
| IFRS 16 | Leases | January 2016 | January 1, 2019 | Described below |
| IFRS 9 | Prepayment Features with Negative Compensation | October 2017 | January 1, 2019 | None |
| IFRIC 23 | Uncertainty over Income Tax Treatments | June 2017 | January 1, 2019 | None |
| IAS 28 | Long-term Interests in Associates and Joint Ventures | October 2017 | January 1, 2019 | None |
| IAS 19 | Plan Amendment, Curtailment or Settlement | February 2018 | January 1, 2019 | None |
| AIP 2015– 2017 |
Annual improvement to IFRSs, Cycle 2015–2017: Amendment of IFRS 3 "Business Combinations" and IFRS 11 "Joint Arrangements", IAS 12 "Income Taxes" as well as IAS 23 |
|||
| "Borrowing Costs" | December 2017 | January 1, 2019 | None |
IFRS 16 "Leases" specifies the recognition, measurement, presentation as well as disclosure requirements with regard to leases in financial statements. As for Kapsch TrafcCom, this mainly relates to buildings, motor vehicles and IT equipment. IFRS 16 introduces a single accounting model that recognizes leases, regardless of whether they are operating or finance leases under the criteria of IAS 17, in the lessee's balance sheet. A lessee recognizes a right-of-use asset on the underlying asset and a liability that represents its liability to lease payments. The lessor continues to distinguish between finance or operating leases for accounting purposes. In this regard, the accounting model of IFRS 16 does not difer significantly from that in IAS 17.
The Group adopted the new standard as of the mandatory date of initial application (April 1, 2019) and elected to apply the modifed retrospective approach as a transitional method, not providing comparative fgures for the previous period. The Group applies the exemptions regarding short-term leases with a term of not more than twelve months or a remaining term of not more than twelve months at the date of initial application, and leases of low-value assets. Those leases are not recognized in the balance sheet, instead, payments made for such leases continue to be recognized as expenses. The Group only acts as lessor to an insignificant extent, thus there is no material impact on the Group's financial statements in this respect.
The Group established a project team, which reviewed and assessed all of the Group's leases with respect to IFRS 16 in the previous fnancial year. A software solution for recording the lease contracts was implemented and the individual lease contracts were recorded in that software solution. This software solution calculates the effects of IFRS 16 on a contract basis and provides them for accounting purposes. For the calculation of the present values of the lease liabilities, the incremental borrowing rates for the respective terms are determined and used.
As of April 1, 2019, the initial application of IFRS 16 had the following efects:
| March 31, 2019 | April 1, 2019 | ||
|---|---|---|---|
| Adjustments due to IFRS 16 | Carrying amount | Adjustments due to new IFRS |
Carrying amount adjusted |
| Property, plant and equipment | 21,956 | 50,755 | 72,711 |
| Land and buildings | 3,400 | 47,449 | 50,849 |
| Technical equipment and machinery | 8,855 | 0 | 8,855 |
| Construction in progress | 2,723 | 0 | 2,723 |
| Other equipment, factory and offce equipment incl. vehicle feet | 6,978 | 3,305 | 10,283 |
| Prepayments | 0 | 0 | 0 |
| Non-current and current lease receivables | - | 2,176 | 2,176 |
| Non-current lease receivables | 0 | 1,666 | 1,666 |
| Current lease receivables | 0 | 510 | 510 |
| Non-current and current lease liabilities | - | 52,931 | 52,931 |
| Non-current lease liabilities | 0 | 40,548 | 40,548 |
| Current lease liabilities | 0 | 12,382 | 12,382 |
As a result of the recognition of lease liabilities, net debt increased by EUR 52.9 million and the net gearing increased to 48.9% (from 28.4%) at the time of initial application. The equity ratio declined slightly to 35.4% (from 38.2%) as of April 1, 2019, due to the significant balance sheet extension.
The following table shows the reconciliation of the obligation arising from non-cancellable operating leases as of March 31, 2019 to the lease liabilities recognized as of April 1, 2019. The weighted average incremental borrowing rate applied for the valuation of lease liabilities as of April 1, 2019 amounted to 1.92%.
| Reconciliation | |
|---|---|
| Financial obligations from operating lease contracts disclosed as of March 31, 2019 | 64,670 |
| Recognition exemptions for short-term leases and low-value leases | -15,574 |
| Adjustments as a result of different treatment of extension and termination options and other changes | 7,654 |
| Lease liabilities before discounting | 56,750 |
| Effect from discounting at incremental borrowing rate at the date of initial application | -3,819 |
| Lease liabilities recognized as of April 1, 2019 | 52,931 |
The initial application of IFRS 16 had the following efects on key figures in the interim financial information:
| March 31, 2019 | April 1, 2019 | Sept. 30, 2019 | |||
|---|---|---|---|---|---|
| Reported | IFRS 16 | Reconciled | Reported | IFRS 16 | |
| amount | effect | amount | amount | effect 1) | |
| Total assets | 677,696 | 52,931 | 730,627 | 705,411 | 48,636 |
| Total equity | 258,672 | 0 | 258,672 | 239,353 | -517 |
| Equity ratio | 38.2% | -2.8%p | 35.4% | 33.9% | -2.6%p |
| Net cash (+)/debt (-) | -73,478 | -52,931 | -126,409 | -169,030 | -49,199 |
| Net gearing | 28.4% | 20.5%p | 48.9% | 70.6% | 20.7%p |
| 2018/19 | H1 2018/19 | H1 2019/20 | |||
| Reported | Reported | Reported | IFRS 16 | ||
| amount | amount | amount | effect 1) | ||
| EBIT | 57,028 | 17,797 | 8,789 | 328 | |
| EBITDA | 71,540 | 24,807 | 26,594 | 6,809 | |
| Financial result | -1,714 | -5,838 | -4,410 | -844 | |
| Proft for the period | 46,567 | 8,392 | 2,338 | -517 |
1) Comparison with the reported amount as of March 31, 2019, or for the frst half of 2018/19, respectively.
Property, plant and equipment reported in the consolidated balance sheet as of September 30, 2019 include right-of-use assets from leases according to IFRS 16 in the amount of EUR 46,731 k. Lease receivables amount to EUR 1,905 k and lease liabilities amount to EUR 49,199 k.
For the frst half of fnancial year 2019/20 depreciation on right-of-use assets in the amount of EUR 6,481 k (EUR 5,712 k for land and buildings, EUR 749 k for motor vehicles and EUR 20 k for IT equipment) as well as interest expenses for lease liabilities in the amount of EUR 509 k, foreign exchange differences in the amount of EUR 345 k and interest income for lease receivables in the amount of EUR 10 k were recognized in the income statement. Within other operating expenses, rental expenses declined by EUR 6,262 k, automobile expenses by EUR 779 k and IT expenses by EUR 21 k.
The cash flow from operating activities increased due to the absence of rental and leasing expenses, while the cash flow from financing activities decreased accordingly due to the repayment of the lease liabilities. Lease payments in the first half of 2019/20 amounted to EUR 6,363 k.
Kapsch TraffcCom has been informed on November 15, 2019 to be best bidder for a tolling project in the EMEA region (Europe, Middle East, Africa). Following a fnal due diligence, the end of the objection period and subject to successful negotiations with the customer, the project could be awarded within the upcoming three weeks. The total project volume over its six year lifetime is expected to exceed EUR 400 million.
No other subsequent events to be reported, have occurred after September 30, 2019.
Vienna, November 18, 2019
The Executive Board
Georg Kapsch Chief Executive Offcer
André Laux Executive Board member
Alfredo Escribá Gallego Executive Board member
| February 18, 2020 | Highlights Q1–Q3 2019/20 |
|---|---|
| June 16, 2020 | Results FY 2019/20 |
| August 12, 2020 | Highlights Q1 2020/21 |
| August 30, 2020 | Record Date: Annual General Meeting |
| September 9, 2020 | Annual General Meeting |
| September 11, 2020 | Dividend Ex Date |
| September 14, 2020 | Dividend Record Date |
| September 16, 2020 | Dividend Payment Date |
| November 18, 2020 | Results H1 2020/21 |
| February 16, 2021 | Highlights Q1-Q3 2020/21 |
| Investor Relations Officer | Hans Lang |
|---|---|
| Shareholders' telephone line | +43 50 811 1122 |
| [email protected] | |
| Website | www.kapschtraffc.com/ir |
Certain statements contained in this annual report constitute "forward-looking statements". These statements, which contain the words "believe", "intend", "expect" and words of similar meaning, refect the 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. Kapsch TraffcCom AG 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.
This annual report was created with the greatest possible care, and all data has been checked conscientiously. Nevertheless, the possibility of layout and printing errors cannot be completely excluded. 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.
In order to signalize that general references made to individuals in this annual report apply equally to women and men, male and female gender forms have been used in part.
Media owner and publisher: Kapsch TraffcCom AG Place of publishing: Vienna, Austria
Kapsch TrafcCom is a provider of intelligent transportation systems in the fields of tolling, trafc management, smart urban mobility, trafc safety and security, and connected vehicles. As a one-stop solution provider, Kapsch TrafcCom ofers end-to-endsolutions covering the entire value creation chain of its customers, from components and design to the implementation and operation of systems. The mobility solutions supplied by Kapsch TrafcCom help to make road trafc safer and more reliable, efcient, and comfortable in urban areas and on highways while helping to reduce pollution.
Kapsch TrafcCom is an internationally renowned provider of intelligent transportation systems thanks to the many projects it has brought to successful fruition in more than 50 countries around the globe. As part of the Kapsch Group, Kapsch TrafcCom has subsidiaries and branches in more than 30 countries. It has been listed in the Prime Market of the Vienna Stock Exchange since 2007 (ticker symbol: KTCG).
In financial year 2018/19, Kapsch TrafcCom's about 5,000 employees generated revenues of EUR 738 million.
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