Tracsis : Interims – 6m to 31 January 2021

8 April 2021

Tracsis plc

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

Unaudited Interim results for the six months ended 31 January 2021

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 2021.

Financial Highlights:

• Revenue decreased to £22.2m (H1 2020: £26.4m), with growth in the Rail Technology & Services Division offset by lower sales in our Events and Traffic Data businesses as expected due to ongoing Covid-19 restrictions on their end markets
• £6.1m decrease in revenue in those businesses directly impacted by Covid-19. Revenue growth of 5% across the rest of the Group before the contribution from prior period acquisitions+
• Adjusted EBITDA* of £5.4m (H1 2020: £5.6m) only slightly lower than the same period last year, including the positive impact of cost reduction actions taken in response to the pandemic
• Cash balances of £20.8m with no Covid deferrals due to be paid (31 July 2020: £17.9m, 31 January
  2020: £26.0m)
• No interim dividend declared. The Board continues to review the situation and is committed to restoring the dividend policy at the earliest appropriate date

Operational Highlights:

• Further growth in higher margin Rail Technology & Services Division, as well as in Data Analytics / GIS
• Continuing to implement a number of large multi-year rail contracts won in previous years
• Two large multi-year rail opportunities in the final stages of contract award
• Traffic Data and Events business units continue to win new projects but at significantly reduced levels
• Cost reduction actions tracking in line with expectations
• Group integration activities progressing well

Post period end Highlights:

• • Appointment of Andy Kelly as Chief Financial Officer
  • Remote condition monitoring hardware and software contract win with major transit agency in North America
  • Launch of new Group-wide branding to improve collaboration and enhance market awareness
  • Strengthened the Group's transport consultancy offering through the acquisition of Flash Forward Consulting Ltd
  • Encouraging start to Q3 trading with high activity levels across large parts of the Group
• Group revenue growth excluding the Events, Traffic Data and Delay Repay businesses where activity levels were impacted by Covid-19; and excluding iBlocks that was acquired in March 2020.
  * 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 and I'm encouraged by the trading momentum in the business as we move through the third quarter. The entire Tracsis team has done an outstanding job over the past 12 months in protecting jobs and employee wellbeing, in identifying and winning new business and in robustly responding to the challenges linked to Covid-19.

We have a significant pipeline of large multi-year opportunities across our Rail Technology and Services Division in both UK and international markets, and in our Data Analytics/GIS business unit. In addition, we are now starting to see an increase in new business enquiries across those businesses that have been hardest hit by the Covid pandemic and this is driving increased confidence around future growth prospects.

We continue to focus on integration and consolidation activities which alongside the launch of a new Group- wide Tracsis brand will increase the opportunities for R&D collaboration and cross selling. We remain committed to pursuing 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 Tuesday 13 April 2021 at 1.30pm UK time. Anyone wishing to connect should register here: http://bit.ly/TRCS_FY21_interim_results_retail

A video overview of the results featuring CEO Chris Barnes and CFO Andy Kelly is available to view here: http://bit.ly/TRCS_H1_overview

Enquiries:
Tracsis plc	Tel: [phone]
Chris Barnes, CEO / Andy Kelly, CFO
finnCap Ltd	Tel: [phone]
Christopher Raggett / Charlie Beeson, Corporate Finance
Andrew Burdis, Corporate Broking
Alma PR	Tel: [phone]
David Ison / Helena Bogle / Kieran Breheny / 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

The Group has reported first half performance in line with management's expectations. There was further growth in the Rail Technology & Services Division, where activity levels remain high. As anticipated, there were Covid- 19 related headwinds in the Events and Traffic Data business units. Cost reduction actions taken last summer in response to these headwinds are tracking in line with expectations.

Results Summary

H1 revenue of £22.2m was £4.2m lower than the prior year (H1 2020: £26.4m). Revenues in the Rail Technology

• Services Division grew, with the impact of Covid-19 limited only to the effect of lower passenger numbers on delay repay transaction revenues. This growth was offset, however, by lower revenue in our Events and Traffic Data businesses as a result of Covid-19 restrictions on their end markets. The estimated total adverse impact to revenue from Covid-19 for the Group was £6.1m across the Events, Traffic Data and Delay Repay businesses. There was revenue growth of 5% versus H1 20 across the rest of the Group, before the £1.3m revenue contribution from iBlocks that was acquired in March 2020.

Despite the reduction in revenue, adjusted EBITDA* of £5.4m was only £0.2m lower than the prior year (H1 20: £5.6m). This reflects the positive impact of cost reduction actions taken in response to the pandemic, which delivered a benefit to EBITDA versus the comparative period last year of £1.3m. In addition the Group has claimed through the Coronavirus Job Retention Scheme in respect of furloughed staff in the period, with support to the Income Statement of £0.5m.

Statutory profit before tax of £1.1m is £1.3m lower than the prior year (H1 20: £2.4m). In addition to the £0.2m decrease in adjusted EBITDA*, this includes £0.5m higher amortisation of acquired intangible assets following the acquisition of iBlocks in March 2020; £0.4m relating to the unwinding of previously discounted contingent consideration balances in accordance with IFRS accounting standards; and £0.3m exceptional charge relating to deal costs and the fair value of contingent consideration.

A summary of the Group's results is set out below:

	Unaudited	Unaudited	Audited
	Six months	Six months	Year
	ended	ended	ended
	31 January	31 January	31 July
	2021	2020	2020
	£'000	£'000	£'000
Revenue	22,239	26,365	47,998
Adjusted EBITDA (note 10)	5,431	5,586	10,463
Adjusted Pre-Tax Profit (note 10)	4,655	4,805	8,581
Profit before tax	1,102	2,419	4,111

*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.

Revised Segmental Structure

As reported in the Group's final results for the year ended 31 July 2020, the Group has been reorganised into a new segmental structure in order to better align with key areas of future transport industry growth. Segmental performance in both the current and prior periods reflects the new segmental structure, as summarised below:

Rail Technology & Services

• Rail Operations & Planning (includes Bellvedi)
• Digital Railway / Infrastructure

1. Remote condition monitoring hardware and data acquisition (MPEC)

• 1. Safety and risk management software and asset visualisation (OnTrac)
• Customer Experience
• 1. Transit and ticketing solutions (iBlocks)

1. Automated delay repay

Data, Analytics, Consultancy & Events

• Traffic Data Capture & Analysis
• Event Transport Planning and Management (includes SEP and CTM)
• Data Analytics / GIS (Compass Informatics)
• Transport Consultancy (includes Tracsis Passenger Analysis)

Data Analytics / GIS and Transport Consultancy operate across the whole of the Group, but are reported within the Data, Analytics, Consultancy & Events segment. The Group's previous segmental structure included Rail Consultancy within the Rail Technology & Services segment.

Trading Progress and Prospects

Rail Technology & Services

Activity levels in this segment remain high. The Covid-19 pandemic has resulted in a significant decrease in rail passenger numbers, however this has had only a modest impact on Tracsis' performance as the majority of our products and services are derived from the operational requirements of running and maintaining the railway. They are integral to the rail industry delivering its future vision for a digital railway. Our first half performance demonstrates the robustness of our business model in this regard and we have a significant pipeline of future opportunities.

Summary segment results:

Revenue	£12.1m	(H1	2020: £10.9m)
Adjusted EBITDA*	£3.8m	(H1	2020: £3.9m)
Profit before Tax	£3.4m	(H1	2020: £3.8m)

The Division has delivered further revenue growth in the period. It continues to benefit from high levels of recurring software revenue, and revenue from multi-year contract wins in previous years. The impact of Covid- 19 was limited to delay repay revenues, with fewer people travelling due to Government restrictions. This was more than offset by the contribution from iBlocks, the smart ticketing business acquired in March 2020. Adjusted EBITDA* margin of 31% was lower than the comparative period last year, reflecting the phasing of contract

milestones for development work undertaken in the period. These milestones will be delivered in the second half of this financial year.

We have two large rail opportunities in the final stages of contract awards, and all parts of the Division have been involved in major multi-year tenders, some in international markets. Many of these opportunities involve recurring software licence revenues.

Rail Operations & Planning

Total revenues from the Group's rail operations & planning software and hosting offerings were £4.9m (H1 2020: £4.8m). This takes account of the various revenue streams from our TRACS, ATTUne, COMPASS, and Retail

• Operations product suites. Software sales continue to benefit from high renewal rates from existing customers, and also from multi-year contract wins from previous years which we are currently implementing for our clients. Work continues on implementing our TRACS Enterprise product at three major Train Operating Companies which were secured in previous years, and which are expected to go-live during the summer. Bellvedi continues to perform well, and the ATTUne product forms an integral part of the overall TRACS Enterprise solution. We continue to see large multi-year TRACS Enterprise opportunities in both the passenger and freight sectors of the industry.

Digital Railway & Infrastructure

Total revenues across the Digital Railway and Infrastructure offerings increased by 9% to £5.8m (H1 2020: £5.3m). This includes the revenue from remote condition monitoring (MPEC) which continued to see strong demand from our core UK client base, and from our safety and risk management product suites within OnTrac where activity was dominated by design and development work on our RailHub product suite as part of a funded enterprise licence opportunity. Both businesses have a strong pipeline of large contract opportunities.

Post period end we announced the award of new contracts for the supply of remote condition monitoring hardware and software to a major North American transit agency, which will expand our installed base into a new growth market.

Rail Customer Experience

Revenue of £1.4m increased by £0.6m (H1 2020: £0.8m). As anticipated, the reduction in rail passenger numbers as a result of Covid-19 restrictions resulted in a reduction in delay repay transaction revenues. This business continues to operate from a modest cost base. The decrease in revenue from delay repay was more than offset by the revenue contribution from iBlocks which was acquired in March 2020. We are seeing good levels of interest in iBlocks' smart ticketing product offering, which is well aligned with future passenger requirements as Covid-19 restrictions are lifted. We have a number of contract opportunities under discussion.

Data, Analytics, Consultancy & Events

As anticipated, the Covid-19 restrictions continue to have a significant impact on the end markets of our Events and Traffic Data businesses. In both cases, we believe the underlying demand remains strong and that activity levels will progressively return to normal as restrictions are lifted. The timing of this remains uncertain, and we therefore retain a cautious outlook for the second half of this financial year.