LONDON (ShareCast) - (Sharecast News) - Rail, traffic data and transport software and services company Tracsis has acquired the entire issued share capital of iBlocks, it announced on Wednesday.
The AIM-traded firm said that iBlocks, established in 2000, is a UK-based software company specialising in the provision of smart ticketing solutions, automated delay repay and the development of mission critical back-office systems that are used by the Rail Delivery Group, the wider community of train operating companies (TOCs), and the rail supply chain.

It said the acquisition "strategically aligns" with its objective of strengthening its rail product portfolio in areas where it could offer a unique market proposition, gain access to strategically-important partnerships, and leverage the cross-selling opportunities that existed across its rail technology division.

The board said it believed that smart and account based ticketing, and automated delay repay, was a "significant and natural" growth area for the rail industry, and that iBlocks was "uniquely placed" to help facilitate the move towards a paperless ticketing environment.

It said the acquisition would enhance its overall technology and software offering, and should be "significantly" earnings-enhancing.

In the year ended 28 February, iBlocks generated revenue of around ?3m, profit before tax of about ?1.1m, and had net assets totalling ?3.5m.

The business was said to be "highly" cash generative, debt free, and benefitted from an "excellent reputation" within its retained customer base and wider UK rail industry.

The acquisition consideration comprised an initial cash payment of ?12.5m, which would be funded out of Tracsis' cash reserves and the issue of 192,926 new ordinary shares with a value of ?1.5m.

An additional payment of around ?3.2m would be made on a pound-for-pound basis to reflect the net current asset position of the business at completion, and will be finalised in due course.

Additional contingent consideration of up to ?8.5m would be payable, subject to iBlocks achieving certain stretched profit financial targets in the three years post-acquisition.

"We are delighted to have come together with iBlocks, a business we have known for a number of years now," said chief executive officer Chris Barnes.

"We believe the unique technology offering that iBlocks has developed along with long established client relationships will open up an exciting new area of opportunity for Tracsis."

Barnes said the smart and account-based ticketing market in particular was an area of the rail industry that would see "significant" future industry change and growth.

"We welcome the iBlocks management team and all staff to the Tracsis Group, and look forward to helping them achieve their growth aspirations as part of a larger organisation."

Tim Brewer, director of iBlocks, added that the transaction marked the start of an "exciting new chapter" for the iBlocks business and team.

"Over the past 15 years, iBlocks has established a reputation in the rail industry as a provider of high-quality software products, which deliver unique, innovative and robust solutions for our customers especially within the smart ticketing and delay repay sectors of the industry.

"Being part of a larger group will enable us to unlock opportunities that will benefit the UK rail industry and accelerate our growth."

Tracsis said an application had been made for the new ordinary shares to be admitted to trading on AIM, with dealings expected to start on 16 March.

It said the shares issued would be subject to a one-year lock-in agreement, whereby no disposals could be made within the first six months, with any disposals thereafter up to 12 months subject to orderly market conditions.

At 1338 GMT, shares in Tracsis were up 0.64% at 707p.

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