Cancellation of Glastonbury and The Grand National hits Yorkshire firm

A number of large UK events have been cancelled, or postponed to the autumn, and Leeds-based Tracsis said this trend is continuing.

Both Glastonbury and The Grand National have been cancelled and a decision on whether to postpone the British Grand Prix will be made at the end of April.

Tracsis said it is too early to say what the impact will be, but it is working hard to help affected employees and to ensure that other parts of the business, such as the unaffected rail operations, continue to run smoothly.

Tracsis CEO Chris Barnes said: “Cheltenham Festival went ahead as planned. That was a success and that’s been paid which is great.

“Glastonbury and all horse racing has been cancelled for the time being. The Grand National is the biggest one of those, which has been cancelled.

“A number of big events in the summer haven’t been cancelled, which is why we’ve not updated our forecasts.”

Tracsis has taken immediate action to mitigate the impact as much as possible through a reduction in casual labour costs, the redeployment of staff, reducing all discretionary spend, and taking advantage of the Government’s Job Retention Scheme.

“The events business is very heavily gig economy labour driven,” said Mr Barnes.

“Over the summer we might have 2,000 to 5,000 staff supporting us across major events. Obviously those staff won’t be recruited this year, so although the revenue will drop on our traffic and data side we can offset that because we’ve got a very variable and flexible labour cost.”

He said the group’s primary objective is maintaining jobs and a strong level of working capital.

Tracsis said it is keen to help out wherever it can.

“Interestingly, we are seeing hospitals and places like the Excel Centre asking for expertise on how to manage logistics and traffic movements,” said Mr Barnes.

“Bizarrely, new opportunities are starting to emerge where we might be able to help. Clearly if we can help, we will do so and bring back some of those casual labour members back into the team.”

The firm has not yet quantified what the cost of the virus will be, but it has a range.

“As soon as Boris Johnson stands up and announces what happens next, that will be the trigger for us to exactly quantify what the impact will be for the second half.

“The traffic and data division did £18m of revenue last year. Part of that group is not impacted, so what we do in Ireland isn’t impacted, but the traffic, data and events part are affected.

“£18m is the worst case scenario.”

The virus outbreak overshadowed a successful first half for the group. Revenue rose 41 per cent to £26.4m in the six months to January 31 and operating profit before exceptional items increased 8 per cent to £2.6m.

“The message to investors today is that nothing that is going on right now is structurally changing how we operate as a business,” said Mr Barnes.

“We are taking some short term actions, but as soon as this is over, we expect things to return pretty much to normal. We are trying to make sure we retain the skills, retain the people and minimise the costs through things like the Government’s Job Retention Scheme. So when things do switch back on, we are ready to go.”

The group’s rail business has performed strongly.

“The rail side is fully resilient. We are seeing lots of enquiries and lots of work,” said Mr Barnes.

“We are trying to reassure everybody that the reason you invested in us in the first place is still there. Stick with us and it will come good again once we are out the other side of this.”

Tracsis is bidding for four large rail tenders, which should be announced over the coming weeks. The tenders cover a software solution that Tracsis has been selling to train operators and another one covers smart ticketing. There are also two large opportunities in the infrastructure side of the business.

“We are not seeing any drop off in demand from our rail customers,” said Mr Barnes.

“We expect to be able to announce, over the coming weeks, a number of new contracts, which hopefully gives everybody confidence that our business is going to continue to do what it has always done.”

Tracsis has already furloughed over 100 staff under the Government scheme.

“That side of the business is generally lower paid staff so the scheme covers the majority of their costs,” said Mr Barnes.

Tracsis has decided to defer the payment of the interim dividend in view of the current Covid-19 crisis.

This decision will be reviewed later in the year once the group has more clarity about the ongoing effects of the pandemic on the business.

The board said it will consider what actions are in the best interests of shareholders and this could result in the combination of an interim and full year dividend for the year to July 31, or the retention of cash in the business to invest in future growth opportunities.

The interim dividend would have had a cash cost of around £300,000 had it been paid, which has now been retained in the business.

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