REG - Tracsis PLC - Trading Update and Notice of Results

TracsisAnnouncement

29/08/2024 07:00

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RNS Number : 0471C  Tracsis PLC  29 August 2024

29 August 2024

 

Tracsis plc

("Tracsis" or "the Group")

 

Trading Update and Notice of Results

 

A year of significant operational transformation, with performance in line
with revised guidance

 

Tracsis (LSE: TRCS), a leading transport technology provider, is pleased to
provide the following trading update for the year ended 31 July 2024.

 

Financial performance in line with revised guidance(*)

 

Group revenue is expected to be in excess of £81.0m (2023: £82.0m) with
adjusted EBITDA** expected to be c.£13.0m (2023: £16.0m) and adjusted
EBITDA** margin c.16%. This performance is in line with the revised guidance
provided in the 13 June 2024 trading update*.

 

Cash balances increased by over £4m since the previously announced position
at the end of May 2024 and stood at £19.8m as at the end of July 2024 (2023:
£15.3m). The Group's robust cash position and healthy levels of cash
generation leave it well positioned to continue to invest in its technology
base and to pursue organic growth supplemented with targeted acquisition
opportunities.

 

* 13 June 2024 trading update noted FY24 revenue range of between £80.0m to
£82.0m and FY24 adjusted EBITDA** margin slightly higher than the 15.5%
delivered in H1 24.

**Adjusted EBITDA is defined as earnings before net finance income or expense,
tax, depreciation, amortisation, exceptional items, other operating income,
and share-based payment charges.

 

Activity levels returning to normal following the UK General Election

 

Following the earlier than expected short term impact of the UK General
Election in July 2024 on the Group's UK Rail Technology, Transport Consultancy
and Traffic Data businesses, we have seen activity returning to normal levels,
and expect this to continue through the FY25 financial year.

 

The new Government has outlined its strategic plans for the future of UK Rail,
including the creation of Great British Railways, the re-nationalisation of
train operating companies, and a focus on improving service efficiency,
reliability, safety, and customer experience including pay-as-you-go ("PAYG")
smart ticketing, best value fare guarantees, and automated delay repay.
Tracsis's products and services are well aligned with these objectives.

 

Positive commercial progress

 

The Group has made significant progress in executing its operational growth
strategy during the year, including:

 

·      Double digit organic revenue growth from the Rail Technology and
Services Division in the UK despite activity restrictions in the final two
months of the financial year due to the UK General Election. The Group has
also delivered an increase in rail technology licence usage and annual
recurring revenue.

·      New contract awards in smart ticketing and delay repay and the
next funded phase of RailHub development from Network Rail.

·      Continued growth in the Group's pipeline of major software
opportunities across both the UK and North American markets. The Group
estimates this has more than doubled in size during the 12 months ended 31
July 2024.

·      Completed the development of a new Computer Aided Dispatch
product ("PTC BOS") in North America. This opens a large new product segment
opportunity for Tracsis in this market, where we have a growing pipeline of
new opportunities.

·      Secured renewals with several of the Group's largest customers in
the Data, Analytics, Consultancy and Events Division for delivery in FY25,
which underpin expectations for this division.

 

Completion of operating model transformation and increased focus on
fast-growing, higher margin opportunities

 

The Group has executed a programme of actions during the year to transform its
operating model, positioning it well to deliver long-term scalable growth,
increased annual recurring software revenue, and improved profitability.

 

These one-off actions were delivered to plan and included optimising the
Group's organisational structure, integrating the Rail Technology UK
businesses, enhancing its IT and software operating model, upgrading operating
systems and processes, and streamlining its operating footprint.

 

As part of the operating model transformation, the Group has re-focused its
product and services portfolio on fast-growing, higher margin activities. As a
result, the Group will no longer pursue new contracts for certain non
software-related activities which are not aligned with these objectives. These
activities are principally within its Transport Consultancy business in the UK
and within part of its Rail Technology North America portfolio. Whilst this
will see a short-term reduction of c.£5m in revenue and a reduction in
associated EBITDA, we are confident this will enable the Group to deliver on
its strategy of focusing on higher growth, higher margin application software
activities.

 

Non-repeat exceptional costs associated with the delivery of the operating
model transformation, including the actions to re-focus the Group's portfolio,
are expected to total c.£3m for the full year ended 31 July 2024, inclusive
of the £1.3m exceptional costs disclosed in the interim results.

 

Well positioned for long-term growth

 

The actions taken to transform the Group's operating model, re-focus its
product and services portfolio, strengthen the leadership teams, and
accelerate pipeline growth have put the Group in a strong position to deliver
further growth.

 

The Group continues to build a large pipeline of major software opportunities
in the UK and North American rail technology markets as the industry looks to
modernise and adopt digital solutions, underpinning its growth ambitions for
the next financial year and beyond.

 

Chris Barnes, Chief Executive Officer of Tracsis, commented:

 

"With the disruption caused by the timing of the UK General Election now
behind us, we have continued to make good progress towards our strategic
objectives in the year.

 

The business remains well placed, with all signs suggesting that the UK rail
industry's transition to a data-driven, customer-focused, safety-critical
future will continue under the new government. Alongside the positive momentum
we have seen in our pipeline of software opportunities in both the UK and
North American markets, this leaves us in a strong position to drive ongoing
scalable growth in FY25 and beyond.

 

We are committed to our strategy to deliver long-term value for all our
stakeholders through the continued pursuit of both organic and acquisitive
growth, supported by a strong balance sheet and healthy cash generation, and
look to the future with confidence."

 

Notice of Results and Investor Presentation

 

Results for the year ended 31 July 2024 will be announced on Wednesday 20
November 2024.

 

The Board is committed to communicating with all investors equally and
directly, to ensure that its strategy, business model and performance are
clearly understood. Accordingly, as part of the Group's full year results
roadshow, a live online investor presentation will be given by management on
Friday 22 November 2024 at 1.00pm UK time.

 

Anyone wishing to participate should register here:
https://bit.ly/TRCS_FY24_results_webinar
(https://bit.ly/TRCS_FY24_results_webinar)

 

The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to be in the
public domain.

 

Enquiries:

 Tracsis plc                                                                     +44 (0)845 125 9162

 Chris Barnes, CEO

 Andy Kelly, CFO

 Cavendish Capital Markets Ltd (Nominated Adviser & Joint Corporate Broker)      +44 (0)20 7220 0500

 Jonny Franklin-Adams / Giles Balleny (Corporate Finance)

 Andrew Burdis / Sunila de Silva (Corporate Broking)

 Berenberg (Joint Corporate Broker & Financial Adviser)                          +44 (0)20 3207 7800

 Mark Whitmore / Richard Andrews / James Thompson

 Alma Strategic Communications                                                   +44 (0)20 3405 0205
 David Ison / Rebecca Sanders-Hewett / Joe Pederzolli

                                                                                 tracsis@almastrategic.com

 

 

Notes to editors:

 

·      Tracsis plc is a technology company and a leading provider of
software and hardware products, data capture and data analytics/GIS services
for the rail, traffic data and wider transport industries.

 

·      Tracsis's products and services are widely used to increase
efficiency, reduce cost and risk, improve operational and asset performance,
improve safety management and decision making capabilities and improve the
overall end-user experience for clients and customers.

 

·      The Group is split into two principal operating areas built
around detailed industry knowledge and expertise:

 

-    Rail Technology & Services:  A software, technology and product
led business. It develops and supplies software that solves complex resource,
asset optimisation and control problems for Train Operators, and smart
ticketing, delay repay and other retail software to improve the customer
experience for rail users. It also develops remote condition monitoring
hardware, data acquisition software, and safety and risk management software
for rail infrastructure providers.

-    Data, Analytics, Consultancy & Events: A largely services led
business that focuses on data capture, data analytics, GIS, earth observation,
data insights, consultancy and event traffic management within a range of
transport and pedestrian rich environments. The business provides technology
and bespoke products and data that underpin large scale intelligent transport
systems, smart city planning and positive environmental decision making.

 

·      Tracsis has a blue-chip client base which includes all major UK
transport owning groups, Network Rail, Passenger and Freight Train Operating
Companies, the Department for Transport, TfL, multiple local authorities,
major outdoor music and sporting event organisers, and a wide variety of large
engineering and infrastructure companies. In North America our clients include
Class 1 rail freight companies, transit operators, shortline railroads and
several large rail served ports and industrials.

 

·      The business drives growth both organically and through
acquisition and has made seventeen acquisitions since 2008.

 

For more information on Tracsis please visit http://www.tracsis.com
(http://www.tracsis.com)

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