Tracsis : Interims - 6m to 31 January 2023

3 April 2023

Tracsis plc

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

Unaudited Interim results for the six months ended 31 January 2023

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 2023.

Financial Highlights:

• 34% increase in revenue to £39.2m (H1 2022: £29.2m) o 13% organic revenue growth

1. 69% revenue growth in Rail Technology and Services Division including further growth in recurring software licence revenue and a strong performance in North America

• • 1. 11% revenue growth in Data, Analytics, Consultancy and Events Division
  • Adjusted EBITDA* increased by 21% to £7.5m (H1 2022: £6.2m)
  • 1. Continuing to invest in integrating the Group's activities, technologies and operating model to accelerate future growth
  • 76% increase in profit before tax to £2.3m (H1 2022: £1.3m)
  • Total cash balances** of £17.0m with no debt (31 July 2022: £17.2m, 31 January 2022: £25.1m)
  • Interim dividend of 1.0p per share
• Earnings before net finance 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.
• Cash and cash equivalents, and cash held in escrow

Operational Highlights:

• Further growth in rail technology software licence usage and annual recurring revenue:

1. Second full deployment of TRACS Enterprise went live in January 2023. Work continues on further passenger and freight deployments from previously announced contract wins

1. Roll-outof RailHub enterprise software contract completed in December 2022, more than doubling the user base to over 40,000 individuals

• 1. Won two new contracts for the deployment of our Pay-As-You-Go (PAYG) smart ticketing technology
• Record first half revenue for Remote Condition Monitoring technology (46% increase over the same period last year)
• Strong revenue contribution from RailComm following its acquisition in the prior year, including a large software licence deployment for a new product serving the transit market. Growing pipeline of other opportunities in North America
• Increased activity in Data Analytics / GIS including multi-year Earth Observation contract win utilising enhanced capabilities following the prior year acquisition of Icon GEO
• Post-Covidlockdown recovery complete in Events and Traffic Data businesses, with new contract wins in both markets. These business are now fully integrated under a single leadership team
• Accelerating actions to simplify the Group, further integrate our operating model, and invest in new product development to position Tracsis for scalable growth
• Have started work on ISO14001 implementation and other ESG priorities that will enable the business to deliver its objective of being carbon neutral by 2030

Outlook:

• Positive start to Q3 trading with high activity levels across the Group
• Unchanged expectations for the full year

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, underpinned by strong rail technology recurring revenue growth in both the UK and North America and new large contract wins across Remote Condition Monitoring and Smart Ticketing. I am also delighted to see good growth in our Data, Analytics, Consultancy and Events division which is huge testament to the team and all their hard work throughout the Covid pandemic to ensure that we could respond quickly to market demand post the removal of all lockdown restrictions.

Our future opportunity pipeline is strong and the UK rail industry's transition to a new Great British Railways structure will continue to drive interest in product solutions that will deliver a data-driven,customer-focused,safety-critical future for the industry. Tracsis is well positioned to benefit from the digital transformation of the rail industry both in the UK and North American markets.

We continue to invest in implementing a simplified and more integrated operating model to help us to execute our growth strategy, to improve the speed and robustness of large SaaS programme delivery, to strengthen the resilience of our IT infrastructure, to attract and retain talent, and to meet our objectives of being carbon neutral by 2030.

We are confident that there are strong growth prospects for all parts of our Group and therefore we remain committed to implementing our overall strategic growth and investment plans. We will continue to pursue organic and acquisitive growth, including greater investment in self-funded R&D supported by a strong balance sheet."

Presentation and Overview videos

Tracsis is hosting an online presentation open to all investors on Wednesday 5 April 2023 at 1.00pm UK time. Anyone wishing to connect should register here: https://bit.ly/TRCS_H1_webinar

A video overview of the results featuring CEO Chris Barnes and CFO Andy Kelly is available to view here: https://bit.ly/TRCS_H123_overview_video

Demonstration videos of the Group's TRACS Enterprise, Remote Condition Monitoring, Smart Ticketing and Safety and Risk Management rail technology products are available to view here: Rail Technology Product Demonstration for Investors | Tracsis

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]
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.

Management Overview

Introduction

The Group has performed well in the first half, delivering strong organic and acquisitive growth, making further progress in delivering software deployments from contracts won in previous years, winning new multi-year software contracts that will support further growth in recurring revenues, and accelerating the progression towards a more integrated operating model.

New contract wins and implementations support ongoing Rail Technology revenue growth

We have delivered further growth in rail technology software licence usage in the first half, with new contract wins supplemented by completing delivery milestones on several large deployments. Recurring and repeat revenue for the Rail Technology and Services Division increased by 16% in the period to £10.8m.

In Rail Operations and Planning we completed the second end-to-end deployment of TRACS Enterprise with a Train Operating Company ("TOC") in January 2023, replacing disparate legacy systems. There is an orderbook of three further passenger and freight implementations for this product from previously announced contract wins, and the next full deployment will go-live in our next financial year. We continue to look at opportunities to modularise the product architecture to facilitate faster SaaS deployment. In RailComm we completed acceptance testing with a North American transit customer for a large software licence deployment that was in the business' order book on acquisition. This contributed to a strong total first half revenue performance from RailComm of £5.2m.

In Digital Railway and Infrastructure, the roll-out of the large RailHub contract won in July 2021 was completed in December 2022, which has doubled the user base for this product to over 40,000 individuals. Work is underway on the next phase of development of the RailHub product, and there is a good pipeline of further opportunities. We have also seen record first half revenue for our Remote Condition Monitoring hardware and software.

In Rail Customer Experience, we won another new contract for our PAYG smart ticketing solution with a UK Transport Authority. This will go live later this calendar year and is the first EMV (contactless bank card) deployment of this versatile solution on the UK's national rail network. We have also secured the first pilot deployment of our mobile app platform ("Hopsta") with a UK TOC. We are seeing continued high levels of interest in this product across ITSO smartcard, EMV and barcode solutions.

Post Covid recovery and business integration completed in Events and Traffic Data

Activity levels in both the Events and Traffic Data businesses that were most impacted by Covid-19 have now returned to pre-pandemic levels. Total revenue of £11.1m in the first half was at a similar level to the prior period, however the prior period included c£1m of revenue from supporting Covid testing and vaccination centres that has not been repeated in the current financial year.

During the period these businesses have been fully integrated into a single operating unit under a common leadership team. This will support margin optimisation from operating efficiencies, and enable a consistent and focused approach to health and safety, as well as to reducing the carbon emissions from our vehicle fleet as we move towards our 2030 carbon neutral target.

Location data is critical in helping many organisations deliver their ESG commitments

Activity levels in our Data Analytics, GIS and consultancy businesses continue to accelerate. We are seeing increasing demand from across the transport and environmental sectors for a more detailed understanding of how they use geographic tagging and location data to monitor and track the performance of their assets to deliver operational performance improvements, cost savings and ultimately meet regulatory and wider ESG requirements. The Tracsis combination of GIS/Data Analytics, IoT, earth observation services, and custom client web and mobile solutions is well positioned alongside our broad portfolio of software product and modelling solutions to enable Tracsis to expand its footprint across the transport, utilities, and environmental sectors. We see Data-as-a-Service provision as an area of specific future interest given the large amounts of data that Tracsis processes from across the transportation industry each day.

Building a strong foundation for future growth

We recognise the need to continue to integrate the Group's activities, technologies and operating model in order to provide a solid platform for ongoing scalable growth, and have made further progress in the period. We are continuing to invest in this area in order to accelerate future growth.

This includes restructuring our operating model in order to simplify the business, implement a single groupwide IT operating environment, accelerate the implementation of our ESG initiatives, and expand our management capabilities and bandwidth in order to deliver a growing pipeline. This will be completed in the next financial year.

We have continued to deliver our "OneTracsis" leadership programme for managers and senior leaders across the Group. The next phase of this will focus on high performing teams.

We are also investing in technology where we see opportunities to accelerate further growth in our markets. In the first half of the year this has included continuing to develop the Hopsta smart ticketing mobile app platform that is now in pilot stage. We have a pipeline of innovative technology development opportunities under review that leverage our existing product portfolio, industry expertise, and customer relationships. We will review the most appropriate investment model to realise these opportunities, which may include self-funded development where this can deliver an attractive return on investment.

As a result of these actions to better position the Group for the future, we will incur one-off cash costs this financial year of approximately £1m, of which c£0.4m were incurred in the first half.

Digital transformation remains integral to the rail industry's future

Digital transformation will play a significant role in delivering a data-driven,customer-focused,safety-critical rail industry in both the UK and globally, including North America. Tracsis' range of products and services are well aligned with these end market drivers, as they enable our customers to deliver mission-critical activities with increased efficiency, enhanced performance, higher productivity and improved safety.

The UK Transport Secretary recently reaffirmed the Government's commitment to a new Great British Railways (GBR) structure, which will lead the digital transformation of the rail industry in the UK. A recent government announcement confirmed that the new headquarters for GBR will be in Derby where Tracsis already has a strong operational presence. New National Rail Contracts for train operators are driving an ever-increasing focus on operational efficiencies and cost savings aligned to clearly defined Quality Target Measures (QTMs). The industrial action in the UK that has been ongoing since June 2022 is creating some near-term uncertainty

in procurement and delivery timelines, as our customers focus on the operational challenges of continually replanning timetables and services at short notice. However, the benefits case of our rail technology products remain closely aligned with QTMs and with the operational challenges of running the railway safely and sustainably.

The rail industry in North America is undergoing a similar digital transformation in pursuit of increased efficiency and improved safety outcomes. We are seeing a growing pipeline of opportunities in North America for Tracsis' products. The successful deployment of a new product offering in the period, which fully integrates our Computer Aided Dispatch system with the Positive Train Control protection systems now deployed on the US rail network, opens a large new product segment opportunity for Tracsis in the North American transit market.

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 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: