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Much clearer.
Not sure why Trakm8 couldn't lay it out in a similar fashion in the RNS.
Does sound like they can weather the loss for now, due to their cost savings plan.
Huge loss of connections isn't great, but the hope (BOD's words) is for a surge.
If the contract gets signed shortly after April, then this will be back to 13-14p. If not, then could sit around 8p for the foreseeable - unless there's an offer / placement.
For some reason I'm still drawn to this horrendous saga, so will keep an eye on developments.
Looking at QTX and SAAS - both consistently profitable (albeit some reduction over at QTX) - and it does suggest that Trakm8 is simply badly run.
Not a lot said but 2025 estimates remains broadly the same which implies Trak don't see an immediate recovery in insurance (probably not said correcly, more like the contract, if signed, compensates for loss of business). A significant loss of device connections (down to 275k) and the fact that no money was expected to change hands in FY24 (at the signing of the contract). No talk of fair price.
https://www.allenbycapital.com/client/trakm8-holdings-plc/
I am not sure you are looking at it incorrectly - another way to look at it (assuming the contract does indeed have a high value) is that the November update would have been the profit warning. Putting the contract to the side, the question is how long can Trak sustain poor performance in insurance.
Perhaps I’m looking at it through jaded glasses. Doesn’t help that the RNS is characteristically vague and ambiguous.
I do however wish everyone here the best of luck.
That’s certainly one way of looking at it and you may well be right . I genuinely hope you are.
I’m curious as to how they’re supposed to keep the lights on with such a massive loss and only £0.4m in cash.
Are we getting things out of proportion here?
i) A contract signing slipped into the next financial year - they did not say it was dead in the water.
ii) A couple of bad months in insurance - it isn't the only thing they do AND they have approximately the same amount of cash as forecast by Allenby 6 months earlier.
The swing from profit to loss is large, implies the contract is very significant.
Obviously if the contract does not get signed and the insurance side does not recover then we are in trouble.
I believe the first investment was to save an important/significant contract - it was described as 'strategic' at the time and there's no doubt Trakm8 was finished without the investment. The second injection probably sprang from a false hope / mirage of jam somewhere on a near horizon. Lord knows there have been enough promises made over the last decade really. Hope springs eternal but can also cloud judgement.
Not sure we can rely on the judgement of the previous FD either. And one thing is clear, JFW is one hell of a salesman ...everyone has been buying whatever he's been selling, despite the delivery of absolutely nothing.
I remember a bear on another BB saying years ago that trakm8 were excellent at making no money. In 20 years how often has a profit been turned? Meanwhile the BOD has been drawing fat salaries for delivering very little. The slight consolation in that respect is they've also seen the value of their holdings evaporate over the years ...the difference however is twofold:
1. They've been well paid to watch the show; and
2. Most of their holdings came for very little, if any, outlay. And remember, they sold a bunch at £1.70p a few years back.
No. This is exactly as it look: the music has stopped, the lights are on and the party is over. Only the route to the exit remains unclear, but not for long; not for long.
GLA
A couple of points.
If Trak is so badly run, why have ML - and Raza personally - invested so heavily (starting with £2.3m in shares, before digging themselves in even deeper by lending £1m?) Have they too been fooled? Or have they just been distracted by running their own business? Or do they know/believe something – something positive about Trak – that we don’t?
Also, why have the large shareholders not bailed? They include the ex-FD with roughly 5% of the shares – surely he, of all people, should be able to judge the situation the company is in.
Whatever the situation, let’s hope something happens soon to bring this sorry saga to a conclusion.
For the whole time I have held TRAK (5+ years) every rns is moving the goalposts after previously advising that the next half year will be the one that delivers. Either a really unfortunate run of bad luck, or as I'm now starting to suspect, a complete load of tosh being forecast here.
It 2020 trakm8 turnover 19.6
Four years later its 16.4
With inflation at 20% over that period
Look at the report lots of talk of jam tomorrow
It will be all over by September
At the end of the day, all we can do now is sit and wait for the next news - something we're all well used to doing....
If nothing else, it's livened up this discussion board!
Raza gets it for 14p per share is my bet
I guess one thing. If this is the end - at least we will be put out of our misery.
Agree with Pianista - both about the brainstorm and impending announcement - perhaps from both Trak and ML. I suspect there are some on the ML BOD questioning the wisdom of getting into bed with Trakm8 in the first place. I believe it was to salvage an order at the time and they foolishly bought Trakm8's nonsense (like so many of us). Interestingly, Raza has made a number of personal share purchases at way about current prices.
Anyway, they have only £0.4m of cash at hand (whether this includes revolving facilities isn't clear )- never mind what kind of covenants may be on the verge of being breached (or have now been). They also say they are having a bad time of it in the insurance market currently and a 'hoping for' (read, completely relying on) a sudden surge in demand for Trakm8 products. Even with the contract and projected revenues, they basically said there is no jam at the end of FY-2025. The first RNS that has no jam for the long, stale toast of long-suffering holders.
No, they simply must raise cash or sell. So, whilst ML are brainstorming, JFW is probably calling around the city with his cap in hand. Either option will be the next announcement, I believe. My money is on sell, as I can't see how anyone can be persuaded to back this almost fatally wounded horse. Unless, Watkins and the BOD come to rescue entirely alone - which is possible, but at what cost to PIs?!
You have to hand it to them dc2, they've managed to fool everyone, including Microlise, Allenby - and the lenders probably.
As implied by a recent posting of yours, they could miraculously secure the contract and the insurance market could miraculously recover. But in the meantime, I hate to think what the balance sheet at 31/3/24 will look like. It certainly won't look pretty, so I'd expect further announcements shortly.
Microlise will be particularly put out - 20% of the results of Trak are reflected in ML's profit and loss account, so the swing of £3.2m represents a "hit" of £0.64m. In a company with PBT of £3m that's gonna hurt, so this fiasco arguably requires an RNS from ML too!
So I'd be amazed if ML weren't holding a brainstorming session entitled "How do you solve a problem like Trak?" as I speak.
Surely the swing is more of a reflection of the untapped value of the software contract and then the rest is made up from losses incurred in recent months. As KBYK points out the real problem is the £1.4m loss itself - how did that just suddenly happen when they were £0.4m in profit 6 months prior. Some must be attributable to the software contract itself but that is quite a difference.
That software contract raises a lot of questions (which we have gone over before but I like to vocalise):
i) How much is it worth
ii) Why is it front loaded to signing (or why is does it have such a large sign up value) - although, there may be a simple answer here i.e that they are not doing a SaaS but selling it as a stand-alone product so no on-going revenue.
iii) Why would anyone be so confident of signing it that they would announce it in the way they have done. i.e. 6 months early
iv) Like iii) above - why would Allenby buy into this.
v) I thought the client may be Microlise - this would explain iii) and iv) above BUT if ii) is correct about it being a one off purchase then it is unlikely to be ML as they would be paying circa (made up figure coming) £2m - they would be better taking the company.
vi) What work has been done - at what cost and has the client paid towards it - if so, why is this not under a contract.
vii) Why did Trak decide not to sign it this FY if they are signing their own death warrant by not doing so - even getting 25% of the contract value is worth it if you need the cash. Perhaps the contract is linked to renewed bank terms and this is the real issue (that the terms will not be strong enough to persuade the banks). If the software is done, the ongoing costs won't be much, so take as much cash as you can (if you are sinking)
viii). Will the contract ever be signed. Perhaps the client won't meet the demands of Trak.
This contract, or the announcement of it, has been the most perplexing thing I have read in a while. It just makes no sense. They obviously know something critical that we don't know (yeah doh!). What will Allenby say (they too look like ars*s at the moment for buying into this garbage).
As per usual, we are kept in the dark, left fearing for the worst (which is the very definition of Trakm8). The glimmer of hope for me is that they have enough cash to survive the next 6 months - enough time to get this contract over the line.
Finally, QTX pulled out of the insurance game a long time ago - looks like they called it right. If I am honest, Trak always appear to be behind the curve - take the RH800 - now multi camera DVR - whilst not a complete package, mDVRs have been out for donkey's years.
Waffle over.....
Your right
The end is nigh
Come on razza make your move
This lot would struggle to run a bath
As recently as 24/11/23, Allenby were expecting an adjusted PBT of £1.8m. Trak now say they are expecting an adjusted loss before tax of £1.4m, i.e. a £3.2m turnaround. And that's even after cutting out £1m of overheads. Incredible! Heads must roll, surely.
How does Trakm8 soak up a £1.4m loss?
And what if the hoped for surge doesn’t turn up?
Two huge questions I’d want answered, personally.
They have to raise cash or sell the business. Perhaps I’m missing something but that to me seem obvious.
I know I have Stockholm syndrome when it comes to this share....On reflection of today's announcement, was it really that bad - I mean, is this really the last nail in the coffin - I am not so sure?
1) From their H1 update they had £0.87m in cash with net outgoings of £0.25m. They now have approximately £0.4m (and this was expected by Allenby due to capital investment). If they maintain the same burn as H1 going forward then 6 months are assured. They should even do better if these data centres do provide immediate ROI. Obviously there are bank loans to pay back soon.
2) This is the big one for me. If JW is being honest (no clue) about the motive for not signing the contract (not the best commercial outcome) then it implies a deal was on the table. If Trakm8 are in such a desperate state you would expect them to sign whatever i.e. something is better than nothing going into the abyss. Obviously, if the talks broke down then they should not be saying there is a deal is still to be had. Main point it why sign your own death warrant.
Don't get me wrong - the RNS does not read well and JW and the team excel in disappointment. I sometimes wonder if they just hate the share holders and long for the share price to be so low that they can take it private.
All this speculation would be moot, if the company provided clear and detailed RNS. What was provide seems rushed and ill-thought-out. It probably wasn't but that's the impression.
Lots of sells over at SAAS - Probably feeding through a little. At the very least, their continuing faith in Watkins must be denting the credibility of what was/is a pretty stellar reputation.
ML now also have the recoverability of their £1m convertible loan note to worry about, so I don't think it would suit them to just allow Trak to fall into admin.
Agree.
This is pure take out play now. Question is simply how much.
Could Micro let it fall into admin before picking up or picking over the bones? (genuine comment - not being facetious)
At the current SP, ML are nursing a big loss - over £1m - on their investment in Trak. ML's annual PBT is only around £3m, so it must be quite worrying for them.
The question is, will it galvanise them into action at last?
If not, is there anyone else who would be interested in Trak? A bid at, say, 20p from someone else may even be attractive to ML as a way of ending their own misery. Either that or they'd be prompted to match it.
Indeed - I noticed a 10 today - translation - suckers!