Tracsis Share Discussion Threads

[tudes100] 13/6/2013 14:09

Hope you're right cestnous

[cestnous] 13/6/2013 12:53

Should bounce around this point Tudes. It's just the market generally imo and not stock specific. I would be somewhat coincerned if it dropped heavily from here. Strong support around 160.

[tudes100] 13/6/2013 12:08

anyone know whats going on here ?

[cestnous] 21/5/2013 09:23

Second up day in a row. Chart breakout coming here?

[tudes100] 16/5/2013 14:08

there was a trading statement end of April last year so why no update this year ?

[pj 1] 05/5/2013 15:05

Finals end October unless an unplanned Trading statement is issued

[fruitninja84] 04/5/2013 18:47

Can anyone tell me when the next trading statement is due?

[canteatvalue] 25/4/2013 11:55

Small Cap Company of the year - fairly deserved I feel :)

[canteatvalue] 22/4/2013 13:25

Hmm, not sure, the sum is pretty close to £7500 so maybe it was a purchase but of an amount rather than a specific number of shares? I do the same thing and always buy an amount in pounds rather than decide on a number of shares.

[apad] 22/4/2013 10:33

Odd number CeV,
Scrip dividend perhaps?
apad

[canteatvalue] 22/4/2013 09:44

Good to see John buying here, even if it's a relatively small amount compared to his main holding!

[buffetteer] 08/4/2013 15:04

Thx stewy.
If we add 3p (annualised earnings of 500k net for Sky High )onto earnings of 13.6p we get 16.6p for a company growing fast with 25-30p of cash
PE 9x -far too cheap ! 30% upside excluding any further use of cash.

[stewy_18] 04/4/2013 14:48

13.6 pence was the target and that was before the acquisition.

[buffetteer] 04/4/2013 12:46

ANYONE KNOW WHAT EPS WE CVAN EXPECT THIS YEAR PLS - MY OLD ONE OF 10.6P SEEMS OUTDATED?

[apad] 01/4/2013 19:07

Good debate about the very low margins of the acquisition over on the iiiboard.
apad

[timpernel] 28/3/2013 10:44

The nature of the deal process tends to lead to relatively high benchmarks for post-acquisition bonuses for the management of the acquired business. If you think about it, Sky High management will (if they have been doing their jobs properly) have talked up their prospective earnings for the current year because it is those earnings that Tracsis are buying - the earnings multiple for the last completed financial year is largely irrelevent, albeit it is seized on by investors and analysts because we are not privy to the forecast earnings.

Having talked up the prospective earnings for the purposes of maximising the sale value, the Sky High management team can scarcely talk them down again for the purposes of earning their bonus!

The process of negotiating a deal should lead to exactly this healthy tension - and indeed is why so many deals tie at least some of the sale consideration into an earn-out mechanism, though this is difficult for listed company acquisitions.

As a TRCS shareholder, I hope of course that the Sky High management team will easily earn their bonuses!

[canteatvalue] 27/3/2013 13:49

Stuart,

Indeed, those profits will be far ahead of what they have achieved historically. However, the last interims show PBT to be up significantly so there is a positive trend there. It would be odd for management to agree to a bonus structure they felt was impossible, so at least it shows us what they are aiming for and what they think they are capable of - they may just be being far too optimistic but given their financial incentives are to downplay their expectations to make it easier to achieve their bonuses this would be odd.

It's always going to be hard for TRCS to find acquisitions at the kind of prices they like to pay (i.e. very low!) but I know the CEO spends the majority of his time 'on the hunt' as it were and reviews many, many opportunities so he's not shooting at the first thing that moves. As you say, management are good at avoiding doing acquisitions for all the wrong reasons and getting caught up in 'deal heat'. They'll buy when it makes sense for them to do so, and this deal looks like it makes a lot of sense even before factoring in any synergies & cross-sell.

[stewy_18] 27/3/2013 13:39

Hi CantEatValue,

I have had a look at last years figures for Sky High and I have to say it would be a remarkable turnaround if they were able to do £750K PBT this year. Last year they managed £80K PBT and the year before that a loss of £250K.


Whilst they say they have had a strong start to this year, they would really have to motor to get their bonus's. I hope it happens but I'm not sure a 1000% swing (almost) in PBT is really possible. As you say, it will be difficult to attain any synergies with Tracsis this year. As I mentioned on the fool, I really wanted to see an acquisition that gave Tracsis a compliment to their MPEC tooling. I read in the SCSW that Network rail were looking for something to check the tension of overhead power cables. That kind of thing would have been very interesting, especially if it had the same margins as MPEC.

However, this is what we have and I'm not complaining. We will just have to wait and see what they can do this year. I hope it does turn into a gem of an acquisition.

I think it will get harder for Tracsis on the acquisition front. Companies will have seen how well they did with MPEC and may drive a harder bargin. By my calculations MPEC has paid for itself already (in just under 2 years). For this reason, I think patience will be needed when it comes to further acquisition news. One of the good things about this management is they don't seem to get caught up in 'deal heat'.

For that reason, it think it is important they have a lot of acquisition options (as they said they have in the last presentation). They can then cherry pick the companies which offer the right price.

Time will tell but I am very relaxed about this investment. Without acquisition news they seem to be on target for 13.6 EPS this year. Anything over that will be a bonus.

Regards

Stuart

[canteatvalue] 27/3/2013 10:56

Surprised no one has commented on the bonus structure in the takeover disclosure. The management get £0 bonus if the PBT is less than £750k in the 12 months after acquisition. I make that to be a P/E of 5.5 (assuming ~20% tax rate) for their base level of profit expectation! The top level of bonus only kicks in over £950k, which would put the acq on a P/E of 4.3. And this is only in the next twelve months, before any real time for any cross sell / synergies to kick in in full.

Classic cheap Tracsis acquisition! It still doesn't even make that big a dent in the cash pile given the rate at which they are piling it up, so they are probably still on the prowl for more. Guess it must be hard to find deals going so cheaply!

[mmelody] 26/3/2013 17:18

i didnt get enough out of skhg so moved over here now. had looked in a couple of years ago...maybe I should have dipped in then. but i see a rosy future.

[cestnous] 26/3/2013 08:36

Looks like a nice acquisition...

"We believe that this acquisition, whilst being immediately earnings enhancing, will also drive growth for the combined Group and in turn provide further value to our shareholders."

[valustar1] 25/3/2013 21:57

Maybe the news that the rail franchising process is to restart helped today

[kalkanite] 25/3/2013 18:42

Bought into Tracsis today. Have had them on my watch list since Stewy's excellent post on TMF. We are now close to full year figures which should hopefully be around 13.6p EPS. That would then put Tracsis on a historical EPS multiple of around 13 which seems very cheap for a company with excellent growth prospects.

With £8.5m in the bank and a history of shrewd acquisitions I'm looking forward to the next year.

There are quite a few synergies with C21 which I also hold, sales, research and head office costs could be pooled and we could have a company that has a strong hold in both rail and road transportation, I'm sure Tracsis could use the CCTV arm on trains with their market penetration. Just a thought as that would be win win for me :-)

[sparkymoc] 18/3/2013 23:42

Just read a report form this company for the first time. Good growth, high margins, great balance sheet, PE fine. Not many negatives here.

Looks worth a punt.

[apad] 05/3/2013 09:28

Tracsis' first freight contract could lead to overseas deals
Yorkshire Post

Published on Tuesday 5 March 2013 01:00

TRANSPORT software group Tracsis is setting its sights on international expansion to tap into growing markets in the US, New Zealand, Australia and Scandinavia.

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.