UK Stock Stories - Tracsis

As we all start to move around a little more by road and rail, actually meeting people and doing things again, we can all benefit from the contribution of Tracsis PLC, the subject of this month’s Castlefield UK stock story.

Tracsis is one of those companies you’ve probably never heard of, but you have almost certainly benefitted from its products and services and the company likes to describe what it does as “automation of the unglamorous.” It is a technology company that uses data to solve problems across the transport sector, developing software and hardware products and providing consultancy, data capture, analytics and informatics plus event transport management services. Although its services seem mundane, the requirements are complex, such that information systems are essential to the process, adding more analysis as well as real-time insight. The company has two divisions: Rail Technology and Services as well as Data, Analytics, Consultancy and Events.

Spun out of Leeds University and still based in the city, the business was established in 2004 and has grown successfully through both investment in technology and acquisition; it now employs around 450 people. When it floated in 2007, the company raised £3m from the markets but, since then, it has built itself up solely through its own cash resources and has never returned to investors for more money, despite now reaching a valuation of over £270m[1].

So, as an average person, where might you have come across Tracsis in your daily life? If you’ve ever had one of those rail journeys and needed to claim a refund from a train company, they could well be using Tracsis’ Travel Compensation Service; its automated “delay repay” system has already processed more than three million claims, automatically settling over two million straight away and processing the average claim in around two minutes[2]. The company’s rail safety software, called Ontrac, is integrated into existing operating systems on the Crossrail project in London, helping workers there to create standardised Safe Work Packs with digital sign-off across desktop, tablet, and mobile applications, helping to improve safety and efficiency in the toughest of working environments.

Tracsis’ Traffic Surveys operation analyses trends in areas such as Active Travel, i.e. cycling and walking, to ensure that local infrastructure can properly support future trends. Data on where people start and end their journeys; what routes they take; how often they go and why, are the core data sets that enable Tracsis to provide the insight required by local authorities. Also, through two subsidiaries, Tracsis provides traffic management solutions and event admission control services to the organisers of some of Britain’s biggest events, such as the Jockey Club, Silverstone motor racing circuit and Glastonbury Festival.

What we like about the company is that is well placed to benefit from some societal trends. Firstly, population growth and increased urbanisation has created a need for smarter management of towns and cities with the requirement to manage finite resources such as transport infrastructure more efficiently. Secondly, the advent of big data and the Internet of Things means that more remote monitoring and performance monitoring can take place, enabling better management all modes of transport more intelligently and safely. Tracsis is at the centre of both developments.  The company is also likely to be a beneficiary of the recommendations  from the Williams-Shapps Plan for Rail, which  is expected to sweep away the old franchise system and subsume Network Rail into the single responsible authority of Great British Railways.

Clearly, the pandemic and lockdowns dealt a financial blow to Tracsis, as they did to many other companies. For example, a total of 388 million rail passenger journeys were made in Great Britain in 2020-21, equal to 22.3% of 1,739 million journeys made in 2019-20, which was the lowest level of annual passenger usage since at least 1872[3]. That said, trains still ran and most of Tracsis’ products and services, such as remote condition monitoring, were still required. The cancellation and postponement of surveys and large events such as music festivals and sporting events impacted that portion of the company’s business.

While not ignoring the ongoing challenges of the pandemic, we think Tracsis is in a good place right now. We like the fact that company has no debt, has delivered consistent returns and is very self-sufficient. The recent acquisitions made by the company are delivering and we’re positive about its future.

Written by David Gorman

Information is accurate as at 08.07.2021. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment capital is at risk.

[1] Source: London Stock Exchange

[2] http://www.travelcompensationservices.com/

[3] https://dataportal.orr.gov.uk/statistics/usage/passenger-rail-usage/