Regulatory news

Regulatory news

Trading Update

Tracsis plc

("Tracsis" or the "Group")

Trading update

Tracsis plc, a leading provider of software and services for the traffic data and transportation industry, is pleased to provide the following trading update for the year ended 31 July 2016.

Group overview

FY 2015-16 was a year of significant progress for Tracsis on all fronts. Core operations traded well and in line with expectations and the Group completed the acquisitions of Ontrac Limited ('Ontrac') and SEP Limited ('SEP'), whilst also making a strategic investment into Citi Logic Limited ('Citi Logic') and the disposal of Tracsis Traffic Data Pty Limited, a non-core trading subsidiary in Australia.

Both acquisitions, Ontrac and SEP, have performed well in the period since acquisition, with Ontrac securing several major orders for its software products, hosting and bespoke development work, and SEP experiencing a record year of trading bolstered by a busy summer calendar of events whilst working on several intra-Group technology initiatives. Both businesses are trading profitably and performing to expectation. In addition, the enlarged Group and our customer base has benefited from the extension and broadening of our service offering.

Elsewhere, core Group operations have traded well and to expectation. Our Rail Technology & Services Division which incorporates our software, services and remote condition monitoring (RCM) offerings, has once again experienced good organic growth and continues to expand both our portfolio of products and our range of consulting services. Our RCM business has invested a lot of time and effort on new markets outside of the UK which has resulted in the latest contract win announced on 17 August. Meanwhile, our Traffic & Data Services Division grew their market position and remain the foremost traffic data business within the UK having now successfully expanded into event traffic management (via SEP) and winning several significant new contracts in the period.

Financial results

Revenues for the year were in excess of £32m (2015: £25.4m, a rise of 26%) which is comfortably ahead of market expectations, with good contributions made from all parts of the business including the acquisitions completed during the year.

As communicated at the interim results, due to the impact of SEP seasonality and the specific timing of acquisitions made, the second half of the financial year was considerably stronger than the first half. H2 revenues exceeded £18m (H1 2016: £14.3m), and profitability was also stronger in the second half (H1 2016: EBITDA £3.4m, Adjusted Profit £3.0m).

Adjusted EBITDA and Adjusted Profit for the year ended 31 July 2016 are expected to be in line with market expectations and also ahead of the previous year. As noted at the Group's interim results, Statutory Profit before Tax will include the exceptional costs incurred in relation to the acquisitions made (i.e. legal and due diligence costs) and the disposal of the Australian non-core operations which crystallised a non-cash loss.

At 31 July 2016, Group cash balances remained strong at over £11m (2015: £13.3m), which reflects the cash utilised on acquisitions and investments during the year (cash outflow of c. £7m net of cash acquired). The Group continues to be debt free and highly cash generative.

Investment in Nutshell Software

The Group is pleased to announce that it has made an investment in Nutshell Software Limited ('Nutshell'), a joint investment with Martyn Cuthbert who was the majority shareholder of Ontrac Limited and Ontrac Technology Limited ('Ontrac') which were acquired by the Group in December 2015.

Nutshell specialises in application software for the rapid creation of mobile business applications (apps) across multiple platforms for large enterprise organisations within the transport, utilities, healthcare and energy sectors. The business was formed in 2015, and is currently revenue generating although has yet to post accounts. Tracsis management believes there are good opportunities for Nutshell to benefit from the Group's links to the UK transport industry along with entering related industries.

Under the terms of the investment, Tracsis have agreed to invest up to £500k via a combination of equity and convertible debt to acquire up to 37.8% of Nutshell. The funds raised will be used primarily to promote sales and business development activity as the product is taken to market.

North America

The Group provided an update on a contract award for our Remote Condition Monitoring technology in North America on 17 August and was pleased to report progress on this important strategic development.

Impact of the EU Referendum

Following the EU Referendum decision, the Group has not experienced any material change in business activity or demand for its products and services. Whilst it is too early to assess the long term implications of this decision, the Group has not made any changes to financial forecasts in light of this.

Tracsis continues to benefit from operating within specific niche verticals of the traffic data and transport markets where it can provide demonstrable cost and efficiency savings to our customers. Management believes our market offering and sectors in which we operate provide the Group with good resilience to external influences such as Brexit and remain vigilant of the situation.

Results Announcement

A date for the announcement of Full Year results will be communicated to the market in due course.

For more information please contact:

John McArthur/Max Cawthra, Tracsis plc
Tel: 0845 125 9162

Dominic Emery/Matt Lewis, Investec Bank plc
Tel: 020 7597 4000

Rebecca Sanders-Hewett / Sarah Fabietti / Sam Modlin Redleaf Communications
Tel: 0207 382 4730
Tracsis@redleafpr.com