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.

Marvellous, marvellous, marvellous news!!

2,000 installations ought to be worth at least 2 million in revenues to QTI, allowing for partner commissions, etc. Clearly this represents a major increase in turnover, albeit spread over the next three years.

12,000 sites overall is fantastic - hopefully repeat business every five years will ensure a strong and loyal customer base.

One thought:

QTI is clearly well on the road to break-even. They could even achieve this on a turnover of 2 million (WDIK, PDYOR!).

I'd be expecting them still to show some kind of loss on the second half of this year, and therefore for the full year, possibly achieving break-even in the next financial year (ending June 2007).

The current cash position seems to be a bit slim and may not be enough to cover QTI through to profitability. Therefore my question: how much more cash are they likely to need and over what period of time. Is a placing in the offing?

I would not be surprised if they decided to raise around 500k - 1 mil, possibly before summer ends.

Any views?

Looking cheap today. I haven't checked by performing a dummy trade, but the offer price is down a smidge:

QTI Bid: 1.5p Offer: 1.875p Change: -0.0625

Soul, your post 39 says it all. Breakeven is on the horizon... but they could go bust before getting there. Given QTI's slow progress, (and even allowing for their apparent timidity and admirable reluctance to fritter away cash) I cannot see how they can get through to autumn without raising some more cash. Given the sp movement following the relatively upbeat rns in May, they may just have a problem finding further backing unless some "business angel" with vision thinks he may have stumbled onto a bargain!

diydave, suggest you contact Michael Tapia (e-mail/phone) and ask him the question about their cash position. He's very approachable. :-)

Dave, I'm inclined to be a little more optimistic regarding QTI's chances of raising funds. Most tiddlers go through a spell of fundraising - with some it lasts for years (I invite the court to consider Osmetech and Scotty as prime examples of this phenomenon). I'm not at all worried about QTI's prospects on this score - certainly if I was sufficiently solvent I'd back them myself in the event of a share placing.

I second Silvermede's thought re Mike Tapia - I have exchanged mails with him from time to time myself. However, he will not disclose price-sensitive info, as befits any director.

I'm also wondering if we'll be lucky enough to get a trading update any time soon. Would be nice to have a little newsflow.

I agree with you about the cash situation - it's unlikely they would have entered into an agreement in May to provide equipment to pub operators over three years if they were likely to hit insuperable cash problems later this year.

Dead right. We may see a little dilution but there's no way this'll go down the tubes.

I'm not as downbeat as I sounded on this. In fact I nearly edited my last post along the lines that if I was in a position to be a bus angel, I might well be the backer myself... already echoed by soul... unfortunately I am not. But this one ought to be a winner.
As a placing is pretty price sensitive, I think I'll leave MT alone for the moment. Having already pressed him for info this year, I don't want to get a reputation as a pain in the a...
rgds.

Quite right Dave - I'm the P I T A around here :o)

Cheep, cheep!

QTI Bid: 1.25p Offer: 1.75p

That sounds like a sparrow with an eye for a bargain!

:o)

14 July 2006


QONNECTIS PLC
TRADING UPDATE


The Board of Qonnectis plc ('Qonnectis' or 'the Company'), the energy and water
conservation IT service provider, is pleased to announce that the Company has
continued to make significant progress in its water and energy markets.


In relation to the financial year ended 30 June 2006, the Company announces that
sales for the year will be substantially ahead of the corresponding period last
year. Sales for the second half, which were also ahead of the same period last
year, were however lower than the first half of the financial year. Although
orders were higher in the second half, some shipments were delayed and as a
result have been carried forward into the current financial year. The production
issue has been resolved and the level of customer re-orders are continuing to
increase in line with the Board's expectations.


The Board is encouraged by the substantial increase in percentage terms in the
level of sales for the year as a whole compared with the previous year and by
the continuing progress being made in winning new clients in new and existing
market sectors.


In particular, the Board is pleased to announce that is has an agreed roll-out
plan with Scottish Water which has commenced in the last two months. The Company
has trained Scottish Water's field personnel who are now carrying out site
installations throughout Scotland to selected commercial and industrial water
customers as the main component of Scottish Water's 'Smart Metering' initiative.
Orders in the last three months from this customer alone are significantly
greater than the Company's total turnover in 2004-5. (Turnover for year ended 30 June 2005 was 60,007-jmac)


The Board feels that the company now has the momentum and sales team in place to
take advantage of the increasing opportunities in the water and energy
industries for its monitoring, leakage and energy efficiency technologies and
services, and is optimistic the sales pipeline will deliver strong growth
throughout 2006-7.

JMAC, Thanks for posting. This is good news and confirms that QTI is heading in the right direction. We even got a headline mention on the MoneyAM homepage! The pubs rollout in particular ought to be very good for the bottom line.

So, our confidence is indeed not misplaced. I especially liked the tone of the last paragraph and the Scottish Water cooperation will hopefully bring in a welcome jump in revenue which might just off-set our (my!) cash concerns.

Dave, I think if we're being realistic that QTI will probably have to raise cash, but since there's almost no such thing as an AIM company that didn't have to issue new stock, I don't think that it's too much of a problem. By my calculations, QTI would have to do at least 2 million of turnover to break even, and they won't get that from Scottish Water, certainly not in one year, unless I have grossly underestimated the scope of the contract. I think if QTI were about to break even, management would have phrased things very differently and not compared forthcoming revenue with the frankly not-very-spectacular 60 grand. Still, the Scottich water scenario could be worth 250K or more in the current full year, if the figures above are to be relied upon, which is a decent amount.

If you add up all the large contracts now in place: Scottish Water, the Emergency Services, the caravan parks and the pubs, that's beginning to look like quite a lot, so I think we could see a very much bigger T/O in the current year. Forgive me if I sound too pessimistic at times - I actually believe that this co has great potential as I am sure you're aware, but one has to be realistic. Still, if I compare the discussion on this thread, with, say St**elco, then I think you'll agree that the prospects offer a lot of upside and none of the hype.

WDIK, PDYOR.

In the meantime there's been a welcome jump in the sp/volume.
Difficult to evaluate the comments on Scottish Water as there's no indication of numbers, phasing etc. However the combination of rising sales and increasing repeat business looks promising.

True there has been an increase in volume, but that total volume is only worth about 11,500. Not a huge amount by anyone's standards. There ought to be more buying opportunities below 2p at least until the FY results are published, unless more big contracts are announced that really wow the market. I think it will be the December 2006 interims/trading statement that will be of more interest to the market.