Tracsis’ first freight contract could lead to overseas deals

The Leeds University spin-out, which produces software can prevent train derailments and delays, has just won its first contract with a major UK freight operator.

It believes this will pave the way for overseas contracts.

Tracsis’ chief executive John McArthur said: “The two big English speaking countries with freight are Australasia and the US. The freight market is as big, if not bigger, than passenger. We’re fairly bullish we can replicate the success we’ve had with the UK client.”

Tracsis is already pitching its freight software to Australian and American operators.

In the past the company has focused on passenger trains, but it has now successfully devised software suitable for the freight market.

“In the past all our software has been for the passenger rail operators.

“We’ve never generated revenue from freight rail before. It’s sizeable in the UK but enormous in the US. Most people fly in the US so rail tends to be freight,” said Mr McArthur.

Freight runs a different operating model to passenger rail as drivers can be gone for a week.

“We believe we can offer a unique product,” said Mr McArthur. “In the past the problem has been solved with pen and paper and a large amount of people. It was solved manually.”

Freight trains run to customer orders rather than a passenger timetable and operators have to plan the trains and the labour that will drive those trains.

Tracsis’s software can reduce costs and driving hours.

Mr McArthur said the overseas market is ten times bigger than the UK market, offering the group plenty of scope for growth.

He was speaking yesterday as the company announced a 50 per cent increase in pre-tax profits to £1.7m in the six months to January 31.

Revenues rose 29 per cent to £4.7m and all areas of the group performed better than last year.

Mr McArthur said the core TRACS software product is being well received by transport operators, with high levels of renewals by existing clients.

Another software product TRACS Roster was sold to two existing UK clients and will deliver long term recurring revenues.

In December, the group won a new client in New Zealand for its COMPASS software product

Tracsis said demand for its various consultancy and professional services offerings has been mixed.

Its team worked extensively on the Great Western franchise bid in the early part of the financial year, before franchise bid activity was halted by the Government pending the outcome of two independent reviews.

The industry is waiting for the Department for Transport to re-start the franchising model.

Tracsis said there is increasing pressure from owning groups, supply chain intermediaries and the recent Brown report, which is encouraging a swift resolution to the rail re-franchising process.

“Whilst a prolonged delay of rail franchising activity may impact our consultancy offering, any impact on other group trading is anticipated to be negligible,” said Mr McArthur.

“We have been actively seeking other business development opportunities in more traditional non-franchise bid consultancy work in order to counter the impact of ongoing delays, and have won several major projects recently.”

The group continues to look for acquisitions and has cash balances of £8.5m that could be used to fund deals.

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