TrakM8 (TRAK) – Chairman/FD interview – 25 Jan 2016
PART 1
PART 2
Paul Scott interviews John Watkins (Exec. Chairman) and James Hedges (FD) of TrakM8 (TRAK)
Company website is here
Most recent published accounts – interims to 30 Sep 2015
As usual, questions were submitted by investors, see question list below
Disclosures: at the time of publication, Paul does hold a long position in this share. No fee was charged. This audiocast is for general information only, it is not a recommendation, nor financial advice. Please do your own research.
| Q. no. | Category | Question | Submitted by? |
| Intro | Paul Scott to do intros & disclaimers, share price & ticker. | ||
| Intro | Please could you give us an overview of TrakM8 | Paul Scott | |
| 1 | Accounts | Net cash issue – it seems clear to me that the bullet points in the accounts announcements were incorrect, in that gross cash was wrongly stated as net cash. Can you explain what went wrong? | Paul Scott |
| 2 | Accounts | There was a discrepancy of about £115k in the profits reported at Companies House of your subsidiary “Box”, and the figures mentioned in the reverse takeover announcement. Why was this? | Tom |
| 3 | Accounts | Do you feel the bearish attacks on TrakM8 are a witchhunt that will culminate in nothing? | James |
| 4 | Board | Why do you call yourself Executive Chairman, instead of CEO? | Bearish Bull |
| 5 | Board | Do you think it would be better to have an independent Non-Exec Chairman? | Curly |
| 6 | Dividends | How long will it be, realistically until you start paying dividends? | Simon, David J |
| 7 | Products | Vehicles are becoming increasingly technology led, straight from the factory, therefore what barriers to entry exist that would prevent automotive manufacturing companies from creating their own software equivalents of your product? How will you preserve and grow market share if this poses a risk ? | Brian & Richard S |
| 8 | Products | What is the key competitive advantages of TRAK in a crowded sector? | Brian & Flintstone |
| 9 | Products | There seem a lot of smaller telematics companies about. What are the main competitive threats to TrakM8? | Paul Bailey |
| 10 | Products | Why the absence of major customers, such as DHL, UPS, etc? | Ramridge |
| 11 | Products | How big do you see the potential telematics market growing to and are there any plans for international expansion | Fedor |
| 12 | Products | How much od your technology is protected by Patents? | |
| 13 | Products | Are you in direct competition with Quartix Holdings? If so, does TrakM8 have a competitive edge? (he notes that Quartix has a much higher operating margin than TrakM8, at 37% Why is this?) | Peter |
| 14 | Products | Surely bad drivers will refuse to have this technology in their cars, as it could incriminate them if they have a crash? Even good drivers will resist this Big Brother snooping over their driving. | Richard |
| 15 | Products | Jokingly – wouldn’t this App be used as spyware by suspicious wives, to track their husband’s movements?! | Richard |
| 16 | Products | TrakM8 claims to have over 200k units installed worldwide. How sticky is the revenue – i.e. what is the churn rate? How many of that 200k are paying ongoing monthly fees to you? | Mark M |
| 17 | Products | What is the gross margin for monthly subscriptions? What Cost of Sales is there, or is it just mobile telephony charges? | Mark M |
| 18 | Products | hi could I ask the geograffical spread of trakm8 and your plans for the geograffical spread thanks. | Paul Fish |
| 19 | Growth | Which overseas regions offer the most potential for growth? | James |
| 20 | Growth | How does your sales pipeline compare with say 6 and 12 months ago? | FREng |
| 21 | Growth | Is it true that most of your growth has come from acquisitions? How much organic growth potential is there? | Paul |
| 22 | Growth | So youve bought a electronics manufacturing company, a camera company and a scheduling company. What other technologies do you want to buy next? | Dan |
| 23 | Growth | What skills do you need to hire to continue your growth | James |
| 24 | Growth | What are your plans for long term growth for TRAK? | blondeamon |
| 25 | Growth | I invest in Companies of quality with a long term view on any such holding. What can the CEO say that would encourage my investment in his Company | Roy Edwards |
| 26 | Growth | Why has free cashflow been limited to date? Is this a function of up-front installation costs, and costs of customer acquisition? When will FCF increase? | Gus |
| 27 | Growth | Paul, the fact that TrakM8 have made initial inroads to the US market was referenced at the AGM in September – not however the specifics of the strategy for penetration. Would be interesting to hear further details as, whilst it’s large, it’s a notorious hard and fragmented market for any player to crack. Thanks | Lear |
| 28 | Growth | (trakm8) In what particular areas of the market place is future growth going to come from? What are the ideas/concepts/market developments that business intends to exploit? | Andrew |
| 29 | Growth | Can you explain the potential of the new AA deal? | R |
| 30 | Growth | Could you give some colour on the long term potential of deals with Direct Line, AA, Saint Gobain? Presumably lower margin hardware comes first, then cash is generated fropm service revenues? | R |
| 31 | Growth | How will the company finance future acquisitions, given that positive cashflows are not going to happen in the near future? I am worried about shareholder dilution. | Peter |
| 32 | Growth | Is the sliding price of oil having an impact on your business? Or is safety more important to customers than cost savings? | LightningTiger |
| 33 | Route Monkey | Can you explain why you acquired Route Monkey? | Paul Bailey |
| 34 | Route Monkey | What Due Diligence did you perform on RM? Are you still happy with the acquisition? | |
| 35 | Route Monkey | Its published accounts show abnormally high debtors, of £2.4m vs annual turnover of £1.7m – surely revenue recognition (and hence profits) cannot be right? Will these figures be restated, with a more prudent revenue recognition policy? | Bob |
| 36 | Route Monkey | How did you arrive at the price for RM? Did you overpay for RM? | David, Gus |
| 37 | Route Monkey | Given concerns over previous RM revenue recognition, how do you intend to ensure the earn out is not abused or ends up in dispute or paid when it should not be? | Dave |
| 38 | Route Monkey | You state you bought RM for its IP not profit, but why was RM unable to generate real profit/cash from this IP and how will you manage it if they couldn’t? | Dave |
| 39 | Route Monkey | He & his wife have had bad experiences with deliveries from Yodel, and it has received bad press for unreliable service. Is there a risk to TrakM8 being associated with Yodel? | Gus |
| 40 | Route Monkey | Who participated in the 330p Placing, as no TR-1 disclosures have been published? | KTM |
| 41 | Route Monkey | In a 2014 interview in the telegraph available online, the guy from route monkey claims they made a “£1.1m net profit last year” but the stat accounts show a different picture which is somewhat less than this. Are you happy with the due diligence on historical numbers and trading and management assertions? | Dave |
| 42 | Share Price | Given that there was an oversubscribed Placing recently at 330p, why is the share price now below that (i.e. why are Instis not buying in the market now?) | FREng |
| 43 | Share Price | Why haven’t Directors bought shares after recent fall? | FREng |
| 44 | Share Price | Have any Institutions expressed concern over recent SP fall? | FREng |
| 45 | Share price | Concerning recent share price volatility, is the company concerned about high volumes of shares changing hands before & after (what he calls) ill-informed blog posts? (meaning Tom Winnifrith) Have you, or do you intend alerting the authorities to this? | michaelmouse |
| 46 | Share price | Did you think the shares reaching 395p over-valued the company? | Simon |
| 47 | Conclusion | Any closing remarks you would like to make, or anything we have missed? |