Tracsis ends year in line with revised guidance

29th Aug 2024 12:44

(Sharecast News) - Tracsis said in an update on Thursday that its financial performance for the year ended 31 July was in line with revised guidance, despite a challenging operational environment.

The AIM-traded company said it expected to achieve revenue slightly above £81m, compared to £82m in the prior year, with adjusted EBITDA of about £13m, down from £16m in 2023.

It said its EBITDA margin was expected to be around 16%.

Tracsis said it had strengthened its cash position, with cash balances increasing by over £4m since May, reaching £19.8m by the end of July.

That strong cash flow positioned the group well to continue investing in technology and pursuing organic growth, supplemented by targeted acquisitions.

The company's performance was impacted by the short-term effects of the UK general election in July, particularly in its UK rail technology, transport consultancy, and traffic data businesses.

However, activity levels were returning to normal, with Tracsis optimistic about its prospects for the 2025 financial year, supported by strategic plans outlined by the new government for the future of UK rail.

Operationally, Tracsis achieved double-digit organic revenue growth in its rail technology and services division in the UK, despite the election-related slowdown.

The group also made significant commercial progress, securing new contracts in smart ticketing and delay repay, and expanding its pipeline of major software opportunities in the UK and North America.

In North America, Tracsis completed the development of a new computer-aided dispatch product, opening up a significant new market segment.

The group also secured key renewals in its data, analytics, consultancy and events division, supporting future expectations.

Tracsis completed a major operational transformation during the year, optimising its structure, integrating its UK rail technology businesses, and streamlining its operating footprint.

The company said the transformation had refocussed the group on higher-margin, fast-growing activities, including software-related services, while exiting lower-margin, non-software activities.

Despite incurring exceptional costs of around £3m related to the transformation, Tracsis said it was now well-positioned for long-term scalable growth, with a strong leadership team and a growing pipeline of digital opportunities in the rail technology sector.

"With the disruption caused by the timing of the UK general election now behind us, we have continued to make good progress towards our strategic objectives in the year," said chief executive officer Chris Barnes.

"The business remains well placed, with all signs suggesting that the UK rail industry's transition to a data-driven, customer-focused, safety-critical future will continue under the new government."

Barnes said that alongside the positive momentum seen in the company's pipeline of software opportunities in both the UK and North American markets, it left Tracsis in a "strong position" to drive ongoing scalable growth in the 2025 financial year and beyond.

"We are committed to our strategy to deliver long-term value for all our stakeholders through the continued pursuit of both organic and acquisitive growth, supported by a strong balance sheet and healthy cash generation, and look to the future with confidence."

At 1230 BST, shares in Tracsis were up 0.76% at 660p.

Reporting by Josh White for Sharecast.com.