Tiny Qonnectis is at present in an embryonic stage, but seems to have an interesting product with great potential. Their flagship product connects energy and water meters to the Internet via Qonnectis' own server and users' website, providing 24-hour real-time accessibility as well as the opportunity for instant data comparison and updates as frequently as every 15 minutes. This avoids the costs of traditional meter-reading methods (i.e. reading by eye or the more recent "drive-by" technology). The new technology has already saved one early customer a reported 180,000 after it spotted a water leak and alerted the user. Early adopters include utilities such as Scottish Water and Generale des Eaux Lyon, plus public sector clients such as the NHS, the RAF and various District Councils (the list is numerous, so please see QTI's press releases for the whole picture). In November 2005 QTI announced a distribution deal with Compteurs Farnier of France, providing potential access to the USA and Canada in addition to the French market.

The business case for QTI seems strong: the product is inexpensive and provides cost savings both in terms of labour-saving and of cutting wastage. Sales include an element of subscription on a five-year basis; it seems logical that satisfied customers will both increase their number of meters in use and come back for further subscriptions after the five-year period has elapsed. The potential market is huge. The real question is, when will QTI achieve break-even?

CEO Mike Tapia previously built up the Talisman remote/drive-by meter-reading business, which was then sold to Severn Trent Water Co around 1997.

Does anyone have any figures on the Talisman sale, or perhaps on Compteurs Farnier? It would be good to get some idea of the current market.


EDIT: New charts added, 21Dec2007.

Tipton, I have learned you have to be very patient with these minnows as they can take a long time to break through to profitability.

I wish you better luck in the future.

ST - one curious feature of the latest results when compared with the unaudited first half results released in March is that if turnover/sales costs for the first half were 66,983/(29,043) then for the second half they were 44,442/(48,510) - i.e. sales costs were higher than turnover in the second half. As, according to the trading update released in July, orders were higher in the second half it seems reasonable to assume that, without the distortions produced by the extraordinary factors affecting the second half, turnover for the year would have been of the order of 150,000.
Have you had any recent indications of the renewal rate? I would expect this to be very high.

JMAC, you are probably right. As to the renewal rate, what do you mean exactly? Clients buying the smart metering package get a five-year subscription to the service, so it will be a while before meaningful numbers of renewals start filtering through. If you mean repeat business from existing customers in the process of rolling out smart metering to a number of sites, I believe there is a general atmosphere of confidence about this, but I have not heard of any figures.

Obviously if all goes according to plan, there should be some kind of snowballing of revenues; most encouraging so far is the pub sector contract win (RNS: 25May2006) I discussed in an earlier post, which could be worth 3 million over three years, and which hopefully gives a guide to what can be achieved.

soul trader .... thanks for your note ... it is interesting how AIM shares have failed to recover from the May correction, perhaps frustrating would be more appropriate.

Tipton I see you decided to sell theses shares. likely as not they will go up now although i wouldnt want you to feel dissapointed with my comments, for as i said more often than not i am wrong. very often these patterns do not fulfill their target levels and reverse on themselves. now you tell me , i hear you say.
good luck to you .

Tipton, I agree it's frustrating. One aspect of investing in companies of such small market cap is that they do not react in line with the broader market; QTI didn't lose any value during the slide earlier this week, for example.

Such companies can remain overlooked for a long time because the market s looking for evidence of profitability (or they are simply too small to appear on most peoples' "radar"). I believe QTI will show this, but it is a matter of time and patience, and this is something worth bearing in mind when investing in very small companies on AIM.

JKD - On the "radar" note I would argue that QTI might not be a good stock for technical analysis due to low trading volume. It's the proximity to profit that will drive this one. Actually there has been enough good news this year released to justify a bit of a positive rerating, IMO, but again there is not the interest from the market and that's something we punters have to live with.

On the positive side, that at least gives us all plenty of buying oportunities and hopefully the chance to get the biggest baggers by being there ahead of the crowd.

All IMO, WDIK, etc.

A bit of a skid today on turnover of just 76K shares:

QTI Bid: 0.5p Offer: 1p Change: -0.25

Offer price via online trade currently 0.8p. Makes me wonder what the MM's are playing at - is there a stock overhang?

0.75p 500k T trade at 16.10 indicated as a sell but looks like a buy,

You're probably right, JMAC, given that brief window in which one could have bought online for 0.8. Pity all the rest of us had to take a hit though!

another 500k just came through as a sell which looks like another buy.

6 December 2006

Qonnectis plc
Trading Update

The Board of Qonnectis plc ('Qonnectis' or 'the Company') wishes to update its
shareholders regarding the Company's performance as we approach the end of the
first half-year to 31st December 2006 by highlighting the following:

* Growth in the period has been significant, with sales and margins in the
first half expected to be well in excess of those achieved in the same
period last year, and also ahead of the last full financial year ending 30th
June 2006.

* We are winning notable repeat business from Scottish Water, who have
placed a 56,000 order for 'iStaq' data loggers and web services in
December.

* Qonnectis continues to sign up energy and water end users, with recent
examples including multi-utility monitoring for Schlumberger Oilphase and
multi-utility energy and water efficiency monitoring for Redditch Borough
Council.

* Qonnectis''Key Account' marketing campaign - launched in September 2006
and aimed at attracting more UK water companies to offer 'myMeter' web
services to their key business customers - has received a positive response
from various UK water companies, with new trial orders being placed.

* The recent contract announced with a major utility for the development of
a new product is proceeding well. Pre-production units of this product are
already being delivered this month to the utility customer for field trials,
with a launch envisaged in the second half.

Fantastic. JMAC, thanks for the post.

Any idea why this has been issued?

Qonnectis plc
Total Voting Rights

Qonnectis plc announces that, as at 11 December 2006, the total number of its
issued ordinary shares of 1p each carrying voting rights was 218,608,023.

Not sure, JMAC. I thought they may be warming up for another fundraising, but they seem to have some cash in the bank, which from the date of the fundraising in July seemed to be enough for about 12 months.

Which would be nice, as maybe by the middle of 2007 they will have more turnover and an increase in the SP. We can hope . . . :o)

On the basis of the latest trading update turnover to June 07 should reach 250k - i.e. about 4x the turnover to June 05. If they could keep that up......

I think the foundations have been laid. I keep thinking about that big order from the pub business. If QTI really does roll out 2,000 units over three years then it could be worth 1 million p.a.

MT hasn't mentioned the pub order since the RNS,though, so maybe the rollout is not proceeding as quickly in the initial stages.

It's all heading in the right direction, though.

jmacroesus - 11 Dec 2006 14:23 - 117 of 120
Any idea why this has been issued?

Qonnectis plc
Total Voting Rights

Qonnectis plc announces that, as at 11 December 2006, the total number of its
issued ordinary shares of 1p each carrying voting rights was 218,608,023.
--------------------------------------------------------

Seems to be two schools of opinion on this, jmc. BLR, amongst several others, have just done the same thing. It could just be a 'time of the year' regulatory announcement but several people have noticed that companies also issue this information immediately before announcing takeover talks.

40p a share would suit me fine :o)

4p would put me in profit. I'm not greedy!

i am interested in investing in QTI but the share chart is putting me off! The trading statement sounds great,
* Growth in the period has been significant, with sales and margins in the
first half expected to be well in excess of those achieved in the same
period last year, and also ahead of the last full financial year ending 30th
June 2006.
This to me is this saying that QTI in 6 months from july-december 06 will make a bigger profit than the whole of 2005. A certain buy for me.