Tracsis : Interim Results Investor Presentation - April 2024

24 April 2024

Tracsis plc

('Tracsis', 'the Company' or 'the Group')

Unaudited Interim results for the six months ended 31 January 2024

H1 performance in line with expectations, with an H2 weighting for FY24 and

exciting growth of UK and US pipeline

Tracsis plc (LSE: TRCS), a leading transport technology provider, is pleased to announce its unaudited interim results for the six months ended 31 January 2024.

Financial Results (£'m)	H1 24	H1 23
Revenue	36.6	39.2	-6.7%
Adjusted EBITDA *	5.7	7.5	-24.0%
Adjusted EBITDA * %	15.5%	19.0%	-350bps
Cash **	16.8	17.0
Adjusted diluted earnings per share *	10.3p	16.1p	-36.1%
Statutory Results
Operating (loss) / profit	(0.3)	2.4	-112.9%
(Loss) / profit before tax	(0.3)	2.3	-111.9%
Basic (loss) / earnings per share	(1.6p)	5.6p	-129.2%
Interim dividend per share	1.1p	1.0p	+10%

Financial Highlights:

• Financial performance in line with expectations

• 1. Rail Technology & Services recurring and repeat revenue increased by 12% to £12.1m o Growth in Data, Analytics, Consultancy & Events Division
     o Total revenue decreased by 7% driven primarily by the non-repeat of H1 23 perpetual rail technology software licences as anticipated
     o FY24 revenue growth will be weighted towards H2 reflecting milestone delivery timelines in the orderbook and SaaS transition for new contract wins in North America
• Adjusted EBITDA* margin includes the impact of investments made in the prior year; expected to return to historical levels over the full year
• Healthy cash generation and strong debt-free balance sheet to invest in further growth
• Statutory results include £1.3m of non-repeating exceptional cash costs associated with Group transformation
• Continuation of progressive dividend policy. Interim dividend of 1.1p per share (H1 2023: 1.0p)

Operational and Strategic Highlights:

• Significant pipeline growth of major software opportunities in both UK and North American markets

• 1. Following investment in sales teams, we estimate this has more than doubled since 31 July 23
• Secured several new contracts that will generate revenue in H2, including next phase of development work to expand RailHub
• Further growth in Pay As You Go ("PAYG") smart ticketing
• 1. Deployments with Transport for Wales and Merseyrail

• 1. First deployment of PAYG mobile app platform ('Hopsta') underway with a UK train operator
• Entry into a large US software market segment through the launch of a new Computer Aided Dispatch product with Northern Indiana Commuter Transportation District ("NICTD"), a commuter rail customer, going live in May 2024
• Transformation of the Group's operating model proceeding to plan, creating a scalable platform for accelerated growth

Current Trading and Outlook:

• Encouraging start to H2 with high activity levels across both Divisions, and further growth in the Rail Technology pipeline post period end
• Several Rail Technology opportunities are in the final stages of procurement, particularly in North America and these are forecast to deliver revenue in H2. The Board therefore expects FY24 performance to be in line with market expectations
• End market drivers are strong and the Group is well positioned to deliver future growth following a year of transformation
• Growing pipeline of M&A opportunities

Chris Barnes, Chief Executive Officer, commented:

"The programme of actions to transform the Group's operating model is progressing to plan and we are beginning to see the benefit in the growth of our pipeline of major software opportunities. Our financial performance for the period reflects this period of transition, with further growth anticipated in H2 and beyond.

We have secured important new contract wins and made good progress in growing rail technology software licence usage and recurring revenue in the period. I am particularly encouraged by the success we are achieving in North America, where we are soon to go live with an important new dispatch product. Our team has done a great job to deliver this, opening up a large new segment in this market.

Digital transformation will continue to play a significant role in the rail industry's transition to a data-driven,customer-focused,safety-critical future and Tracsis' product offering aligns well with this. We are confident in the Group's growth prospects, underpinned by recent contract wins and a fast-growing pipeline, and we continue to see significant long-term tailwinds in both the UK and North America.

We therefore remain committed to our strategic growth and investment plans and will continue to pursue both organic and acquisitive growth supported by a strong balance sheet."

• In addition to statutory reporting, Tracsis plc reports alternative performance measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). These metrics adjust for certain items which impact upon IFRS measures, to aid the user in understanding the activity taking place across the Group's businesses. APMs are used by the Directors and management for performance analysis, planning, reporting and incentive purposes. A summary of APMs used and their closest equivalent statutory measures is given in note 10.
• Cash and cash equivalents, and cash held in escrow

Presentation and Overview videos

Tracsis is hosting an online presentation open to all investors on Friday 26 April 2024 at 1.00pm UK time. Anyone wishing to connect should register here: https://bit.ly/TRCS_H124_webinar

A video overview of the results featuring CEO Chris Barnes and CFO Andy Kelly is available to view here: https://bit.ly/TRCS_H124

Tracsis plc	[phone]
Chris Barnes, CEO
Andy Kelly, CFO
Cavendish Capital Markets Ltd (Nominated Adviser & Joint	[phone]
Corporate Broker)
Jonny Franklin-Adams / Giles Balleny / Charlie Beeson (Corporate
Finance)
Andrew Burdis / Sunila de Silva (Corporate Broking)
Berenberg (Joint Corporate Broker & Financial Adviser)	[phone]
Mark Whitmore / Richard Andrews / Alix Mecklenburg-Solodkoff
Alma Strategic Communications	[phone]
David Ison / Rebecca Sanders-Hewett / Joe Pederzolli	[e-mail]

The information communicated in this announcement is inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Management Overview

Introduction

The Group has made good progress in the first half of the year in executing its strategy to create a scalable platform for accelerated growth and to transition to a broader SaaS operating model. Actions to transform the Group's operating model are progressing at pace and to plan. The investment made in the prior year to enhance our commercial and senior leadership capabilities is delivering significant growth in the pipeline of major software opportunities in both the UK and North American markets. We have secured several new contract wins and the Group remains well placed to deliver growth in the second half of this financial year and beyond.

First half in review

Our activities in the first half of the year have been focused around five key areas, as summarised below. This is followed by a table updating on progress against our strategy and a comprehensive divisional breakdown of trading progress and prospects:

1. New contract wins and continued progress in delivering orderbook to drive organic growth

Further growth in recurring revenue: Recurring and repeat revenue in the Rail Technology & Services Division for the first half increased by 12% to £12.1m, driven by new contract wins and the deployment of contracts won in previous years.

Continued growth in smart ticketing: The two new Pay As You Go ("PAYG") contracts with UK train operators that were announced with the full year 2023 results have been fully deployed. The deployment with Transport for Wales ("TfW") is the first EMV (contactless bankcard) deployment of this versatile solution on the UK's rail network outside of Transport for London. The second deployment is a smartcard system with Merseyrail. During the period we have been awarded a new multi-year delay repay deployment that is being contracted and will go live later in 2024.

First pilot deployment of 'Hopsta' is underway: The first pilot deployment of our unique PAYG mobile app platform 'Hopsta' has started with a UK train operator. This contract was secured during the period. Under the pilot, this technology will be in the hands of consumers during Q4 of this financial year. We have a second contract for a pilot deployment with another UK operator, as was announced with the full year 2023 results. This is still awaiting approval of a contract start date.

The next phase of RailHub development has started: In the UK we have contracted the next significant funded phase of development work to expand the functionality of the RailHub safety and risk management platform. Work to deliver this has started in the second half of this financial year, with go-live expected in early 2026.

Work continues on implementing three TRACS Enterprise deployments: These are due to go fully live starting from FY25.

Remote Condition Monitoring activity levels remain high: Revenue for the first half of the year was close to the record levels delivered during H1 23. Post period end we have started to receive orders funded from Network Rail's new UK Control Period that started on 1 April 2024.

Investing in 'next generation' technology: We are investing in technology where we see opportunities to accelerate further growth in our markets. During H1 24 this included further development of the Hopsta smart ticketing mobile app platform that is now in pilot deployment.

2. Significant and ongoing pipeline growth in UK and North American rail markets

Investment to enhance our commercial teams is delivering significant pipeline growth: During FY23 we invested to build out and upskill our commercial teams in the UK and North American rail markets. The H1 24 EBITDA* performance includes the cost of this investment, which is already delivering significant growth in the pipeline of major software opportunities. We estimate that in both markets, this pipeline has more than doubled in the six months to 31 January 2024, and has continued to grow post period end.

North American software deployment will open up a new, large market segment: The first implementation of a new Computer Aided Dispatch system is due to go live with Northern Indiana Commuter Transportation District ("NICTD"), a US commuter rail customer, in May 2024. The successful delivery of this system will open a large new product segment opportunity for Tracsis in North America where the industry is actively looking for new participants.

Unique market position in North America: Tracsis operates as a mid-market participant in the North American rail market with a differentiated range of products and services supported by a track record of delivery and a strong balance sheet. Feedback from train operators and ports/industrials owners emphasises the need for new market entrants to challenge incumbent suppliers and introduce innovative digital solutions for immediate efficiency and operational benefits.

End market drivers remain strong:Digital transformation remains integral to the rail industry's future: The delivery of a data-driven,customer-focused and safety-critical rail industry will remain a core priority in the UK and overseas. Tracsis' range of products and services are aligned with these end market drivers, enabling customers to enhance efficiency, productivity, performance and safety in mission-critical activities. As we have previously stated, external factors including the ongoing industrial action in the UK, delays to the implementation of Great British Railways, and potential government changes in the UK and US may have some near-term effect on procurement and delivery timelines, however they are not anticipated to adversely affect future growth. We continue to see significant long-term tailwinds in both the UK and North American rail markets.

3. High activity levels in Data, Analytics, Consultancy & Events

Record revenue in Traffic Data & Events: H1 revenue increased by 16% to £12.9m. The strong performance reflects Events remaining in high demand, supplemented by high activity levels in Traffic Data including survey work to support large UK transport infrastructure projects. The Events business has secured renewals with several of its largest customers, including the multi-year renewal of a large fixed-venue Events management contract at an increased value.

Launched Tracsis Geo Intelligence: Targeting the deployment of our earth observation technology offering into the UK and North America rail markets, which are facing increasingly complex rail infrastructure challenges from the impact of climate change and severe weather events. In combination with the unique data sets that Tracsis' rail technology solutions generate or process, and our existing data analytics and GIS capabilities, we are well placed to deliver integrated solutions that can provide additional insight and capabilities to our customers in areas such as network performance, climate resilience and scenario planning.

4. Further progress in transforming the Group operating model

Transformation activities are progressing to plan: As previously announced, during FY24 the Group is delivering a programme of one-off actions to transform its operating model and to accelerate its future growth trajectory. These actions are progressing to plan and will be substantially completed during FY24. During the six months to 31 January 2024 we have incurred £1.3m of non-repeat cash costs to deliver the actions summarised below. We expect to incur c£1m further non-repeat costs during the second half of this financial year related to these actions.

Optimising our organisational structure: During FY23 we implemented a new organisational structure based around common operating models. Alongside this, we invested in expanding and upskilling both our SaaS delivery capabilities and our UK and North American commercial teams. During FY24 we are taking a series of actions to reduce headcount where certain roles are duplicated or no longer required in the new organisational structure. This process is ongoing and is expected to be completed by 31 July 2024. Cost savings from these actions will be largely re-invested in further strengthening our core operational, commercial and management capabilities.

Integrating the Rail Technology UK business: During the period the component businesses of the Rail Technology UK segment have been fully integrated under a single senior leadership team. As part of the ongoing process to further strengthen our capabilities referenced above, this has included recruiting a Chief Technology Officer to oversee all aspects of product development and architecture across the rail technology portfolio.

Enhanced IT and software product operating model: We are establishing a fully consistent group-wide approach to how we develop and deliver enterprise software solutions based on industry best practice. This will enhance the resilience of our operations and improve the timeliness, quality and repeatability of delivery. Alongside this we are implementing a single group-wide IT support service.

Upgrading operating systems and processes: The implementation of a single group-wide IT operating environment is ongoing. This will enhance the efficiency of our operations and deliver improved management information, as well as facilitating collaboration across the Group. This includes implementing a new group-wide finance system that will go live during summer 2024.

Streamlining our footprint: We have consolidated locations and closed two operating sites during H1 as the first stage of streamlining our operating footprint. Further locations are under review as we fully align this with the Group's new organisational structure. During the period we have started work to reduce our legal entity footprint.

Continued commitment to sustainability: The group-wide implementation of ISO14001 (environmental management) was completed in the period to support the delivery of our carbon neutral 2030 objective. Post period end a group-wide carbon reduction plan aligned to delivering this objective has been agreed.

5. Pursuit of M&A as a core component of our growth strategy

Growing pipeline of M&A opportunities: We continue to actively pursue M&A to supplement organic growth, with a focus on extending our software and technology footprint and enhancing recurring revenue growth. We have a growing pipeline of opportunities in the UK, North America and targeted overseas markets that are being evaluated in line with our disciplined criteria.

Progress on Delivering our Strategy

Tracsis' purpose is to empower the world to move freely, safely and sustainably. Our business model remains

focused on specialist product offerings that have high barriers to entry, are sold on a recurring basis under contract, and to a retained customer base that is largely blue chip in nature. Our strategy to achieve this is focused on four areas as outlined below.

We have made good progress in executing this growth strategy during the period, which leaves the Group well positioned to deliver further growth. Key progress against the objectives for each of our four strategic priorities is summarised in the table below:

Drive Organic Growth

Delivery of our pipeline, increasing annual recurring software revenue, continual innovation of products and services, high quality delivery and an excellent close working relationship with our customers

Focus for FY 24	Progress since 31 July 2023
• Delivery of orderbook of rail technology contracts	• Two further deployments of Pay As You Go
	(PAYG) smart ticketing technology completed
	with UK TOCs
	• Secured next significant phase of development
	work to expand the RailHub safety and risk
	management platform
	• Work continues on three full deployments of
	TRACS Enterprise solution
	• New multi-year delay repay deployment due to
	go live in second half of 2024.
• Grow pipeline of rail technology opportunities in	• Addressable pipeline of major software
UK and North America	opportunities has more than doubled since 31
	July 2023 across UK and North American rail
	technology markets
• Leverage our unique position in North America	• Large software licence deployment for a new
to accelerate growth in this market	Computer Aided Dispatch product in the North
	American transit market goes live in May 2024
• Continue to improve the quality, timeliness, and	• Continued to enhance capabilities including
repeatability of future product delivery	recruitment of Rail Technology UK CTO and
	launch of group-wide IT support team

Expand Addressable Markets

Selling our products and services into new markets, including overseas, and expansion into selected sectors that share problems with the industries we currently serve

Focus for FY 24	Progress since 31 July 2023
• Continue to execute organic growth strategy in	• 12% increase in Rail Technology & Services
UK and North America	recurring and repeat revenue
	• Completed targeted investment in sales team
	expansion in North America and UK to
	accelerate pipeline growth
	• First pilot deployment of PAYG mobile app
	platform ('Hopsta') underway
• Utilise data analytics, GIS and Earth Observation	• Launched Tracsis Geo Intelligence, targeting the
capabilities to deliver additional insight to our	deployment of our earth observation technology
customers across the transportation sector	offering into the UK and North American rail
	markets
• Disciplined capital allocation for investment in	• Invested to complete Hopsta development
software and technology products	ahead of first pilot deployment
	• Growing pipeline of further R&D opportunities
	being evaluated

Implementing 'OneTracsis'

Enhanced integration and collaboration across the Group, increasing management capability and bandwidth, and improving our systems and processes, as key foundations to deliver our growth strategy

Focus for FY 24	Progress since 31 July 2023
• Transformation of the Group operating model	• Transformation activities progressing to plan
	• Headcount reductions where roles duplicated or
	no longer required
	• Rail Technology UK fully integrated under a
	common management team
	• Closed two operating locations as first stage in
	streamlining our operating footprint; further
	rationalisation planned for H2
	• Work has started to streamline legal entity
	footprint
• Alignment of group-wide systems and processes	• Implemented new system to support group-wide
built around 'OneTracsis'	IT support services model
	• Finance systems upgrade progressing to plan
	and on target for go live during H2
• Continue to execute people strategy	• Further strengthened our core capabilities with
	targeted recruitment for senior technology and
	commercial roles
	• Continued to deliver development programmes
	for manager and senior leaders, with a focus on
	high performing teams
• Continue to execute sustainability strategy	• Group-wide ISO14001 (environmental
aligned with our 2030 carbon neutral ambition	management) implementation completed
	• Carbon reduction plan being implemented

Enhance Growth Through Acquisition

Supplementing organic growth with value accretive acquisitions that meet our disciplined investment criteria, supported by healthy cash generation and a strong balance sheet

Focus for FY 24				Progress since 31 July 2023
• Active pursuit of M&A to extend technology and	• Significant growth in M&A pipeline, focused on
data analytics footprint			UK, North America and targeted overseas
				markets
				• Several targets are being evaluated
Trading Progress and Prospects
Rail Technology & Services
Summary segment results:
Revenue	£16.5m	(H1	2023: £19.8m)
Adjusted EBITDA*	£3.4m	(H1	2023: £5.5m)
Profit before Tax	£0.1m	(H1	2023: £2.5m)

Activity levels in our Rail Technology & Services Division remain high. We have delivered further growth in rail technology software usage, have made good progress in delivering our orderbook, and have secured new contract wins that will deliver organic growth going forward.

First half revenue was £3.3m lower than the prior period including the non-repeat of c£2m of perpetual licence revenue in H1 23, as we continue to transition to an increasingly SaaS-focused model for new contract wins. In addition there were lower levels of contract delivery revenue in North America, reflecting the timing of milestone delivery in the orderbook.

We have continued to deliver growth in recurring and repeat revenue as a result of new contract wins and the deployment of contracts won in previous years. This increased by 12% to £12.1m in the first half.

Adjusted EBITDA* decreased by £2.1m to £3.4m. In addition to the lower revenue, this includes c£0.7m of incremental investment made in the second half of the prior year to expand and upskill our SaaS delivery capabilities and the commercial teams in both the UK and North America. This investment has delivered significant growth in the pipeline of major software opportunities. We estimate this has more than doubled in both the UK and North American rail markets during the period, and continues to grow.

Alongside an existing orderbook of rail technology contracts, this leaves the Division well placed to return to growth.

Rail Technology UK

Total revenues from the Group's Rail Technology UK business of £14.3m were at a similar level to the prior period (H1 23: £14.5m), with the non-repeat of £0.8m point in time revenue from software licence deployments in H1 23 offset by underlying growth in recurring software licence revenue across the rail operations & planning product suite.

This was driven by new contract wins and orderbook delivery, including expanding our TRACS Enterprise product suite to support the optimisation of station rostering, which is a further extension of our operational

performance capabilities. Work continues on the three full deployments of the TRACS Enterprise solution that are in the orderbook that are due to go fully live from FY25. Delivery timelines in this sector are typically determined in partnership with our customers based around combined resource availability. We continue to see a good pipeline of opportunities for this product.

We have made further progress in growing usage of our Pay As You Go ("PAYG") smart ticketing solution. This technology is well aligned with passenger requirements and with the UK Government's strategic intent to deliver increased PAYG, multi-modal ticketing. The two new PAYG contracts with UK train operators that were announced with the full year 2023 results have been fully implemented and are now live. The deployment with Transport for Wales ("TfW") is the first EMV (contactless bankcard) deployment of this versatile solution on the UK's rail network outside of Transport for London. This will be integrated with our delay repay product to provide an automated, frictionless experience for the customer. TfW intends to ultimately extend this offering to deliver a multi-modal PAYG solution including bus. The second deployment is a smartcard system with Merseyrail that was delivered in March 2024.

We have continued to invest in the deployment of a mobile app platform ('Hopsta') that puts this smart ticketing technology directly in the hands of the consumer and avoids the requirement for expensive gateline infrastructure in stations. The first pilot deployment of this unique solution has started with a UK train operator; this contract was secured during the period. Under this pilot, this technology will be available for customer use for travel during Q4 of this financial year. We have a second contract for a pilot deployment with another UK operator, as was announced with the full year 2023 results. This is still awaiting approval of a contract start date. We continue to see high levels of interest in our smart ticketing product across ITSO smartcard, EMV and barcode solutions.

During the period we have been awarded a new multi-year delay repay deployment. This is being contracted and will go live later in 2024.

Having completed the roll-out of the RailHub safety and risk management platform across Network Rail and its supply chain in the prior year, we have now been contracted to deliver the next significant funded phase of development work to add further functionality to this platform. Work to deliver this has started in the second half of this financial year.

Remote Condition Monitoring volumes remain high, and H1 24 revenue was close to the record level delivered in the prior period. Performance in this product area is linked to the investment cycle trend of its UK customer base which consists of 5 year 'Control Periods'. There was some softening of demand towards the end of Control Period 6 which ran to 31 March 2024. Funding for Control Period 7 has been confirmed and we are already receiving orders funded from this budget.

Rail Technology North America

Revenue of £2.2m was £3.0m lower than the prior period (H1 2023: £5.2m). This is attributable to two main factors. During H1 23 we delivered a £1.2m perpetual software licence deployment that was not repeated in the period. In addition, in the prior year we delivered £1.8m increased revenue from contract milestones based on delivery timelines in the orderbook. We expect this business to return to growth in the second half of this financial year, supported by new contract wins and a large and growing pipeline.

Our strategic focus in North America is on growing and converting the pipeline of large software opportunities, and on increasingly transitioning from a perpetual licence model to SaaS for new contract wins. Having invested in enhancing our sales team in this market during the prior year, we have seen significant growth in the

opportunity pipeline during the first half. There will likely be more volatility in the phasing of revenue growth in this market as we procure these opportunities and transition to a SaaS model.

Operational activity in the first half was focused on delivering the full roll-out of the new Computer Aided Dispatch product (PTC BOS1) with Northern Indiana Commuter Transportation District ("NICTD"), a US commuter rail customer. Timelines for this are determined in partnership with the customer's operational requirements and regulatory approval, and it is expected to be completed in May 2024. This deployment with NICTD represents the completion of a large project that was in the orderbook when Tracsis acquired the business in 2022. The successful delivery of this system will result in increased recurring revenues, and will open a large new product segment opportunity for Tracsis in North America where the industry is actively looking for new participants. There is a large and growing pipeline of future deployment opportunities for this product.

We continue to see strong demand for our Yard Automation product offering in North America. Post period end we have secured a number of new contracts that will deliver revenue in the second half of this financial year. There is a pipeline of further opportunities that are in the final stages of procurement that are also expected to deliver FY24 revenue.

Data, Analytics, Consultancy & Events

Summary segment results:

Revenue	£20.1m	(H1	2023: £19.5m)
Adjusted EBITDA*	£2.2m	(H1	2023: £1.9m)
Profit before Tax	£0.9m	(H1	2023: £0.5m)

Activity levels across the Data, Analytics, Consultancy & Events Division were high, including record revenue from the Traffic Data & Events business. This more than offset the anticipated non-repeat of c£1.5m Professional Services revenue, resulting in revenue growth of 3% to £20.1m. Adjusted EBITDA* increased by £0.3m to £2.2m. Profit before Tax increased by £0.4m to £0.9m.

During the period we launched Tracsis Geo Intelligence which is targeting the deployment of our earth observation technology offering into the UK and North America rail markets. In combination with the unique data sets that Tracsis' rail technology solutions generate or process, and our existing data analytics and GIS capabilities, we are well placed to deliver integrated solutions that can provide additional insight and capabilities to our customers in areas such as network performance, climate resilience and scenario planning.

The Data, Analytics, Consultancy & Events Division delivered record revenue in FY23, including the benefit from certain revenue items that will not repeat in FY24. This includes certain events and sporting fixtures that are not scheduled to re-occur in the second half of the financial year. We expect the Division overall to deliver a financial performance at a similar level to FY23, with underlying growth elsewhere offsetting this non-repeat revenue.

Professional Services

Total revenue across our Data Analytics/GIS and Transport Insights businesses decreased by 14% to £7.2m (H1 2023: £8.3m). This was principally driven by the non-repeat of certain revenue items in Data Analytics/GIS

1 Positive Train Control Back Office Solution. This integrates Tracsis' Computer Aided Dispatching ('CAD') product with the Positive Train Control ('PTC') family of automatic train protection systems in the US.