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Problems on the line could bring Tracsis more revenue
TURMOIL surrounding rail franchises including the East Coast Main Line looks set to boost software company Tracsis.
The Leeds-based group, which designs and sells software for bus and rail operators to increase their rota efficiency, said it would benefit if the recession forced franchises to end early, as new companies took over operation.
Train companies are being hit by falling passenger numbers, business travellers downgrading to second class, and passengers increasingly opting to travel on cheaper off-peak services.
National Express is in urgent talks with the Government about its badly-performing 1.4bn East Coast Main Line contract.
First Group's First Great Western contract performed so badly in the year to the end of March the Government was forced to make up the shortfall in revenue with a 50m handout.
Stagecoach is also understood to be in dispute with Ministers about the terms of its 1.2bn South West Trains deal.
Tracsis chief executive John McArthur said the business is counter-cyclical and can benefit from the recession.
"We are all about saving money and increasing efficiency," he said.
"We are hoping that the turbulence that transport companies are going to feel will add to the amount of people that are knocking on our door.
"If there are more train operating companies that go to the wire that's a good thing for us because refranchising is basically very lucrative for us."
Tracsis, which was spun out of the University of Leeds' School of Computing, worked on the last four rail re-franchises.
Mr McArthur said Tracsis could expect to earn about 250,000 per re-franchise, as all companies bidding to run the service tend to use its software.
He said:"Historically they would go to an accountancy firm and stick a finger in the air. We can be far more scientific about it."
Tracsis's software works by analysing how many staff transport operators need to service their schedule.
It can account for breaks, holidays and staff alighting and departure points. Firms including Virgin Trains, Stagecoach, Arriva, First Group and National Express, which previously relied on a manually-drawn rota, now use its software to draw up a computerised rota which eliminates wasted time and over-staffing and improves service reliability.
"At the moment it's a totally pen and paper approach," said Mr McArthur. "We are replacing pen and paper with a simplified calculator."
The company is about a quarter owned by IP Group, which turns university research into business.
It is also working on a prototype to automate vehicle schedules, which it intends to have working by next summer. This would allow firms to reduce costs such as wasted journeys and the amount of rolling stock needed.
"The plan is to become an end-to-end service provider within operations planning service space," said Mr McArthur.
The group leases its software to transport operators, which provides "very good recurring earnings".
The company is on the hunt for acquisitions, and expects to make at least one within the three months.
The company, which launched on the Alternative Investment Market in 2007, recently said half-year pre-tax profits more than doubled to 249,000 and turnover grew close to 1m.
FIVE YEARS OF STEADY GROWTH
Software group Tracsis was founded in 2004 when it was spun out from the University of Leeds' School of Computing.
It raised 2m three years later when it launched on the Alternative Investment Market.
Since then it has grown organically and by acquisition, snapping up Loughborough consulting firm RWA Rail in August last year.
It now employs about 30 staff in total in Leeds and Loughborough.
Tracsis, which has 2.8m cash, intends to continue this growth by acquiring small, profitable businesses over the next year.
The firm is understood to be looking at companies which measure passenger demand, with a view to expanding its offer from rota planning.
In total, it has a watch list of about 12 companies. However, the group has no immediate plans to expand into airline or ferry scheduling.
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