REG - Tracsis PLC - Trading Update and Notice of Results

TracsisAnnouncement

26/02/2025 07:15

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RNS Number : 4501Y  Tracsis PLC  26 February 2025

 

26 February 2025

 

Tracsis plc

("Tracsis" or "the Group")

 

Trading Update and Notice of Results

 

Tracsis (LSE: TRCS), a leading transport technology provider, provides the
following trading update for the six months ended 31 January 2025 ("H1 FY25").

 

Summary

 

·      Expected H1 FY25 revenue of c.£36.3m (H1 FY24: c.£35.5m
like-for-like), reflecting modest growth after excluding c.£1.1m of
discontinued H1 FY24 revenue

·      Further growth in UK Rail Technology, aside from Remote Condition
Monitoring hardware revenue which declined as expected due to previously
signposted Network Rail Control Period 7 ("CP7") funding impact

·      Significant contract wins and operational progress, including
major multi-year PAYG Tap Converter system and first intercity deployment of
TRACS Enterprise in the UK, and first full deployment of Train Dispatch in the
US

·      Expected H1 FY25 adjusted EBITDA margin of c.10% (H1 FY24: 16%),
reflecting revenue mix changes resulting from CP7 headwinds and lower
profitability in Traffic Data & Events

·      H2 FY25 revenue and EBITDA margin performance will strengthen,
underpinned by order book including recent contract wins, and underlying
seasonality in Traffic Data & Events

·      FY25 performance will be influenced by pipeline conversion in the
UK and North America rail markets, with procurement decisions expected in the
coming weeks

·      The Board also continues to monitor UK rail market developments
in relation to CP7 funding and the rail reform consultation

·      Healthy cash generation with cash of £22.1m at 31 January 2025
(31 January 2024: £16.8m, 31 July 2024: £19.8m)

 

Adjusting for c.£1.1m of discontinued H1 FY24 Transport Consultancy revenue,
Tracsis delivered modest H1 revenue growth despite the previously signposted
challenges in the UK rail market in relation to CP7.

 

Expected H1 FY25 Adjusted EBITDA reflects a c.£1m impact of CP7 headwinds,
and reduced profitability in Traffic Data & Events, with margin expected
at c.10% (H1 FY24: 16%).

 

Rail Technology & Services

 

The Rail Technology & Services division delivered H1 revenue at a similar
level to the prior period, despite lower UK Remote Condition Monitoring
("RCM") hardware revenue, which declined as expected due to the CP7 impact.
This included the benefit from the following activities:

 

·      In Safety & Risk Management, the Group progressed the next
funded phase of RailHub for Network Rail to expand the functionality of this
safety and risk management platform. This has been unaffected by CP7
headwinds.

·      In Customer Experience, the Group made good strategic progress,
securing a major deal for the National Rail network pay-as-you-go ("PAYG") Tap
Converter system at the start of H2 2025 and launching its Hopsta mobile app
with ScotRail.

·      In Operations & Planning, the Group completed the first
intercity deployment of TRACS Enterprise with a UK passenger operator with the
next full deployment expected during H2 FY25.

·      In Remote Condition Monitoring the Group secured and delivered a
hardware and software expansion with a large US transit customer.

 

EBITDA performance in this division was slightly lower than the prior period,
reflecting revenue mix changes resulting from CP7 headwinds, and a lower level
of project delivery revenue in North America.

 

Diversifying Rail Technology into North America remains an important strategic
priority for Tracsis given the size of the market opportunity. The first full
deployment of Train Dispatch with a US commuter rail provider was completed in
H1 FY25 and marked a major milestone, opening a new product segment
opportunity. Several similar contracts are now in procurement, though
timelines remain subject to evolving customer requirements.

 

Data, Analytics, Consultancy & Events

 

There was modest revenue growth in the Data, Analytics, Consultancy &
Events division after c£1.1m of discontinued H1 FY24 Transport Consultancy
revenue. The previously announced cyber-attack suffered by a major Traffic
Data customer reduced H1 FY25 revenue by c.£0.5m. The issue is now resolved,
activity levels have recovered and FY25 revenue from this customer is expected
to be similar to FY24. The Group is currently delivering its largest ever
Traffic Data survey in the UK, and has a full orderbook of Events work for the
remainder of FY25.

 

EBITDA performance in this division was lower than the prior period, with a
significant margin decrease in Traffic Data & Events reflecting
inflationary input cost increases from across our supply chain that we are
focused on recovering through pricing.

 

Outlook

 

The slow start to CP7 continues to affect the UK rail supply chain, and is
impacting the Group's RCM business where order visibility is lower. We expect
RCM volumes to return closer to historical levels in H2 FY25 as CP7 enters its
second year in April 2025, however the timing of this remains uncertain.

 

On 18 February 2025, the UK government released a rail reform consultation
paper outlining plans to create Great British Railways and integrate the
activities of Network Rail, the TOCs and the Rail Delivery Group. While
Tracsis' products and services are well aligned with the UK government's
strategic plans for the future of UK Rail, a consultation is ongoing which may
delay procurement timelines for future contract awards, particularly in
Operations & Planning. We have a large installed base of mission-critical
solutions with UK TOCs that drives significant recurring software revenue, and
we do not expect this to be impacted by the proposed changes.

 

In Customer Experience, the Tap Converter contract will deliver incremental
development revenue in H2 FY25, and the recent launches of PAYG deployments in
Wales and Scotland are expected to drive further growth in transaction revenue
in the coming months.

 

In line with previous years, revenue and EBITDA margin are expected to
increase in H2 FY25, with underlying seasonality in Traffic Data & Events
supplemented by recent contract wins, an order book of work for H2 FY25
delivery, and a pipeline of opportunities in the UK and North America.
Successful conversion of this pipeline positions the Group to deliver an FY25
performance in line with market expectations. This will be influenced by
customer procurement decisions and timelines, as well as by how UK rail market
developments unfold, including the level of CP7 activity and the ongoing rail
reform consultation.

 

The Group's robust cash balance and healthy cash generation position it well
to continue to invest in its technology base to drive organic growth while
exploring targeted acquisition opportunities.

 

Chris Barnes, CEO of Tracsis, said:

 

"While external factors have slowed activity in parts of the UK rail market,
the industry's structural shift towards modernisation and digital adoption
continues. Tracsis remains well-positioned to lead this transformation,
meeting the growing demand for data-driven, customer-focused and
safety-critical solutions.

 

Despite headwinds impacting RCM, our UK Rail Technology division saw growth
across its other product categories. Our diversification strategy is steadily
building momentum, granting us access to larger strategic opportunities such
as the nationwide PAYG Tap Converter contract. Our ability to win and deliver
these complex, multi-year contracts has been enhanced by the investment we
have made in technology and delivery capabilities. We are now seeking to
repeat this in the North American Train Dispatch market, following the
completion of our first full product deployment during the period.

 

With a strong foundation, a clear strategy and disciplined execution, Tracsis
is well-placed to deliver on its long-term strategy despite the localised
short-term headwinds. Our focus remains on delivering sustainable growth,
expanding our market presence, and creating lasting value for shareholders."

 

Notice of Results and Investor Presentation

 

The Group's interim results will be announced on 24 April 2025.

 

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 interim results, a
live online investor presentation will be given by management on 25 April at
1.00pm UK time.

 

Investor registration link: https://engageinvestor.news/TRCS_IP25
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fengageinvestor.news%2FTRCS_IP25&data=05%7C02%7CAndrew.Kelly%40tracsis.com%7Cf288a431533a4c7fab2908dd54fc20f9%7C6b98f2667d234d0a8b8a7e4cf7fded86%7C0%7C0%7C638760165615221723%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C4000%7C%7C%7C&sdata=dSpZ0HPfpc6kxCwPwWaw7qOFw9OmXU9D%2F%2Bh2%2B748U1A%3D&reserved=0)

 

The information contained within this announcement is deemed by the Group to
constitute inside information under the Market Abuse Regulation (EU)
No.596/2014

 

Enquiries:

 Tracsis plc                                                              +44 (0)845 125 9162

 Chris Barnes, CEO

 Andy Kelly, CFO

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

 Mark Whitmore / Richard Andrews / Mollie D'Arcy Rice

 James Thompson (QE)

 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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