Tracsis on the right track

Tracsis’s revenues are well diversified, with roughly similar contributions from its two core business areas: rail technology and services, and traffic and data services. Rail revenues climbed from £14.1m to £16m in the 2017 financial year, buoyed by a first full-year contribution of £5.3m from Ontrac – acquired in December 2015. Ontrac’s ‘eTrac’ software, which provides digital mapping of railway networks, has generated interest among key customers: its team “have high confidence” of a significant sale in 2018, which could materially bolster the P&L.

The rail business also won a software contract last July with one of the UK’s leading train operators, to use its ‘TRACS Enterprise’ product. This four-year, multimillion pound contract could generate leads with other operators.

Moreover, another rail segment – remote condition monitoring – delivered a major order with a North American railroad operator during FY2017. This marked Tracsis’s first major contract outside of the UK. Analysts at finnCap say the total order value of over $0.4m (£0.29m) is “enough for just 5 per cent of this particular network”, implying an $8m opportunity.

Last year wasn’t without challenges for rail. Its consultancy practice suffered from changes to the Department for Transport’s rail franchise competition timetable. However, management softened the blow by replacing missing revenues with new project wins; sales fell by just £0.4m to £1.7m. Tracsis has since “created a far more robust business”.

Meanwhile, the group’s traffic and transport data offering is now the largest in the UK. While its full-year sales were flat at £18.5m, these were supported by the first full-year contribution of £5.7m from SEP – an events traffic business, purchased in September 2015 for £2.6m. SEP sees Premier League football clubs as a “major opportunity”.

Traffic has faced its own difficulties, with competitive market conditions and gross margin pressure. But restructuring has helped to achieve annualised cost savings of around £0.6m, starting this financial year. Plus, last April, Tracsis paid £1.3m for a 28 per cent stake in Vivacity Labs – a provider of data for smart cities and intelligent transport systems. This should reduce traffic analysis costs.