Tracsis : Interims – 6m to 31 January 2022

7 April 2022

Tracsis plc

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

Unaudited Interim results for the six months ended 31 January 2022

Tracsis, a leading provider of software, hardware, data analytics/GIS and services for the rail, traffic data and wider transport industries, is pleased to announce its unaudited interim results for the six months ended 31 January 2022.

Financial Highlights:

• • Revenue increased by 31% to £29.2m (H1 2021: £22.2m)

  • o Significant revenue growth in Data, Analytics, Consultancy and Events Division, including post-Covid recovery

  • o Rail Technology and Services Division revenue at a similar level to prior year; recent multi-year Rail Technology software contract wins will drive future revenue growth

• • Adjusted EBITDA* increased by 14% to £6.2m (H1 2021: £5.4m)

  • o Data, Analytics, Consultancy and Events Division increased by 35%

  • o Rail Technology and Services Division increased by 4%

• • Profit before tax increased by 16% to £1.3m (H1 2021: £1.1m)

• • Cash balances of £25.1m with no debt (31 July 2021: £25.4m, 31 January 2021: £20.8m)

• • Restoring the progressive dividend policy; proposed interim dividend of 0.9p per share

Operational Highlights:

• • Won several multi-year rail technology software contracts including our first in the rail freight sector for TRACS Enterprise, as well as additional smart ticketing and delay repay contracts

• • Events and Traffic Data businesses have responded quickly to capitalise on post-Covid increase in demand, made possible by actions taken to safeguard these businesses during the pandemic

• • Large multi-year TRACS Enterprise contracts won in previous years now in deployment phase ahead of go-live dates in summer 2022

• • Enhanced the Group's Data Analytics/GIS capabilities with the acquisition of geoscience company Icon GEO, with the integration progressing well

• • Further progress in Group operational improvements: continued investment in implementing a more integrated operating and shared services model, improving our processes and systems, and people development

Post period end Highlights:

• • Acquisition of RailComm LLC ("RailComm") a US based rail technology software and services provider, giving direct access to the large and growing North American market

• • Further contract wins in the Rail Technology and Services Division

  • o Two additional multi-year TRACS Enterprise contracts with passenger operators in the UK

  • o Secured a large multi-year Centrix software contract and an extension to our long-running

    Remote Condition Monitoring data logger framework contract with the UK's rail infrastructure provider

• • Encouraging start to Q3 trading with high activity levels across large parts of the Group

• • Well positioned to deliver further growth in H2 and beyond

* Earnings before finance income & expense, tax, depreciation, amortisation, exceptional items, other operating income, share-based payment charges and share of result of equity accounted investees. See note 10 for reconciliation.

Chris Barnes, Chief Executive Officer, commented:

"I am pleased with the first half performance which was in line with our expectations. We have seen strong revenue and adjusted EBITDA growth, and have made some important progress in executing our strategic growth agenda and converting our sales pipeline. We have won several multi-year recurring revenue software contracts and have a growing pipeline of other opportunities, which together leave us well placed to deliver further growth.

The UK rail industry's transition to a new Great British Railways structure is ongoing and the overall objective is to create a data-driven, customer-focused, safety-critical future for the industry. Our range of rail technology products and services is well placed to help the rail industry deliver its strategic goals and as a result we have been asked to actively participate in helping to shape future decision making.

The recent acquisition of RailComm is an important strategic development for Tracsis, providing a platform onto which we can start to internationally expand the Group and its rail product portfolio via direct access to the significant and growing North American rail technology market. We have received a very positive reaction across RailComm's North American client base.

We continue to invest in implementing a more integrated operating model to help us to execute our growth strategy. I am particularly pleased to see the launch of the OneTracsis leadership development programme during the period, which is an important initiative as part of our commitment to investing in developing our people and growing the next generation of leaders in our business.

We are confident that there are strong growth prospects for all parts of our Group and therefore remain committed to implementing our overall strategic growth and investment plans. We will continue to pursue organic and acquisitive growth supported by a strong balance sheet."

Presentation and Overview video

Tracsis is hosting an online presentation open to all investors on Friday 8 April 2022 at 1.00pm UK time. Anyone wishing to connect should register here:https://bit.ly/TRCS_Interim_webinar_r

A video overview of the results featuring CEO Chris Barnes and CFO Andy Kelly is available to view here:https://bit.ly/TRCS_H122_overview

Enquiries:

Tracsis plc	Tel: [phone]
Chris Barnes, CEO / Andy Kelly, CFO
finnCap Ltd	Tel: [phone]
Christopher Raggett / Charlie Beeson, Corporate Finance
Andrew Burdis / Sunila de Silva Corporate Broking
Alma PR	Tel: [phone]
Rebecca Sanders-Hewett / David Ison / Hilary Buchanan / 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.

Chairman & Chief Executive Officer's Report

Introduction

The Group has reported first half performance in line with management's expectations, with strong growth in revenue and adjusted EBITDA.

Large multi-year software contract wins will support ongoing Rail Technology and Services revenue growth

We have secured several multi-year technology contracts in the Rail technology and Services Division during the first half and post period end. In Rail Operations and Planning we have won two new contracts for our TRACS Enterprise product suite with UK passenger operators, as well as our first contract for this product in the rail freight sector. In Digital Railway and Infrastructure, we have secured a large multi-year Centrix software contract win and an extension to our long-running Remote Condition Monitoring ("RCM") data logger framework contract with the UK's rail infrastructure provider, both of which will lead to future RCM hardware procurement. And in Rail Customer Experience we have won two new contracts for our delay repay solution, in addition to the smart ticketing contract win that was detailed in our Final Results announcement. These contract wins across the Division will deliver an increase in annual recurring licence revenue consistent with our growth expectations.

Significant recovery in Events and Traffic Data

We have seen a significant recovery in activity levels in the Events and Traffic Data businesses that were most impacted by Covid-19. Both were able to quickly respond to improving market demand as a result of the actions taken to safeguard those businesses and protect jobs and skills during the pandemic. Activity levels in Events have returned to pre-pandemic levels. We anticipate that a full recovery in Traffic Data will be completed through the second half of the year, although the timing of this remains uncertain. Alongside the incremental contribution from the acquisitions of Icon GEO in November 2021 and Flash Forward Consulting in February 2021, this drove extremely strong revenue growth in the Data, Analytics, Consultancy and Events Division of 72%.

Acquisition gives direct access to an established sales network in North America

Post period end the Group completed an important strategic acquisition, making our first direct entry into the North American market with the acquisition of RailComm. This is consistent with our strategy to extend Tracsis' rail software footprint and to expand the addressable markets for our products and services. In addition to the growth opportunities that exist in RailComm's core markets of rail yard automation and computer aided dispatching, the acquisition provides Tracsis with direct access to a long-established sales network into a significant number of rail clients in North America. This will enable the Group to progressively market its existing portfolio of rail products and services, with Remote Condition Monitoring the initial area of focus.

Building a strong foundation for future growth

The Group has made further good progress during the period in implementing a more integrated business model and adopting common processes and systems. As part of our commitment to investing in our people we have launched a 'OneTracsis' leadership development scheme with 100 managers and senior leaders enrolled on an 18 month programme that will also promote collaboration and innovation across the Group. This is part of a comprehensive people strategy that is being developed, with a focus on succession planning, talent acquisition, and reward & benefits. We have started to expand our shared services operating model by working towards implementing a single groupwide IT operating environment, and we continue to accelerate the implementation of our ESG initiatives.

Progress on Delivering our Strategy

Our vision for Tracsis is to become the leading provider of high value, niche technology solutions and services that solve complex problems which maximise efficiency in regulated industries. Our business model remains focused on specialist 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 believe this strategy will allow Tracsis to continue the growth trajectory it has achieved since IPO in 2007 and to deliver further significant value to shareholders in the short, medium and longer term.

We have made good progress in executing this growth strategy since the end of the previous financial year, which leaves the Group well positioned to deliver further growth. Key progress against the objectives for each of our four strategic priorities are summarised in the table below:

Strategic Priority	Progress since 31 July 2021	Future Focus
Drive Organic Growth Delivery of our pipeline, continual innovation of products and services, flawless high quality delivery and an excellent close working relationship with our customers	• Multi-year TRACS Enterprise contract wins with two UK passenger operators, and our first contract win in the rail freight sector • New smart ticketing contract secured with a large passenger Train Operating Company ("TOC"). • Two new delay repay contracts secured with UK TOCs • Large multi-year Centrix software contract win in Remote Condition Monitoring and an extension to our long-running data logger framework contract • Work continues on implementing TRACS Enterprise contracts won in previous years; two major TOCs due to go-live in summer 2022 • Large pipeline of other rail software opportunities	• Delivery of recent contract wins and pipeline of large multi-year software contracts • Support UK Rail Industry to deliver the strategic vision outlined in the Williams-Shapps plan • Continued investment in software & technology products • Complete post-Covid recovery in affected business units
• Strong post-Covid recovery ongoing in Events and Traffic Data
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	• Post period-end acquisition of RailComm provides direct access to a significant number of rail clients in the North American market • Further growth in Data Analytics / GIS revenue	• Progressively market existing portfolio of Tracsis products and services in North America • Continued growth in Data Analytics / GIS
Enhance Growth Through Acquisition Reinvesting Group profits to fund further accretive acquisitions that meet our disciplined investment criteria	• Completed acquisitions of RailComm and Icon GEO • Further potential targets evaluated	• Active pursuit of M&A to extend rail software and data informatics footprint - focus on recurring revenue growth
Integration and Capability 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	• Developing a comprehensive people strategy to attract, retain and develop talent • Launched 'OneTracsis' leadership training programme • Started expanding shared services model to cover IT operations • Continuing to accelerate impact of ESG activities • Using Innovation Hub to drive increasing levels of collaboration and future R&D	• R&D collaboration via Innovation Hub • Enhance management capability and bandwidth • Continued alignment of Group-wide systems and processes • Focused people development