A YORKSHIRE company which produces software that can prevent train derailments and delays has sold a non-core business to help boost the performance in its core markets.
Leeds-based Tracsis has disposed of Tracsis Traffic Data Pty Limited (TTD), its data capture operation in Australia, to Martin Prowse, the company’s managing director, as part of a management buyout.
In a statement, Tracsis, which is led by chief executive John McArthur, said: “The disposal aligns with the group’s strategy to maintain strength in its core markets and operate in high value, niche markets.
“The board is focused on continuing to drive its growth strategy in the UK and overseas but no longer believe TTD’s data capture operations in Australia is required to achieve this goal.”
In the year ended July 31 2015, TTD generated revenue of £2.2m.
Tracsis’ directors said they believed the disposal will not have a material impact on group profitability in the current financial year, and it will lead to an overall improvement in net margin.
The statement added: “The directors, having consulted with the group’s nominated adviser, are satisfied that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.”
Software firm Tracsis has a blue chip client base which includes major UK transport operators such as Arriva, First, Stagecoach, Go-Ahead, National Express and Virgin.
The business also works with Network Rail, the Department of Transport, multiple local authorities, and a variety of large engineering and infrastructure companies.
Tracsis is a Leeds University spin-out, which listed on AIM in 2007.
Tracsis’ products allow transport operators to computerise their staff and rolling stock schedules, so they can run their trains more efficiently.
The company offers software and technology-led consulting, and remote condition monitoring, which can spot infrastructure problems immediately.
It also provides traffic and data services.
The company has made eight acquisitions since 2008, as part of a strategy to increase its market share.
Eric Burns of WH Ireland said the disposal was compatible with Tracsis concentrating on its core, higher value markets “and enables it to exit a sub scale business in a structured manner”.
He added: “In addition, Tracsis’ overall net margin should also improve... We retain a ‘buy’ recommendation and 560p price target.”
Earlier this month, Tracsis revealed that it is to pay up to £19.5m for Ontrac, an award-winning software development and IT company that works with clients in the transport, construction, and local government sectors.
At the time, Mr McArthur said: “This acquisition continues our trend of acquiring well-run, profitable, niche businesses that are complementary to the broader goals of Tracsis and our customer base.”
Tracsis said that as a result of this acquisition, its annual results will exceed market forecasts.
In 2014, Tracsis was named Tech Growth Business of the Year at the UK tech awards, which were held at The Park Plaza, in Westminster.